SLM Corporation Q3 FY2025 earnings call

Key messages: successful quarter and peak season, strong YTD performance, optimistic long-term outlook for private student lending. Strong credit quality of originations. Completed loan sale and capital return. Discussed net interest income, provision, noninterest expenses. Opportunities and challenges from federal reforms, exploring alternative funding partnerships. 2025 guidance revised to GAAP EPS $3.20 - $3.30, reaffirming other outlooks

Third quarter GAAP diluted EPS was $0.63 per share. Loan originations were $2.9 billion, up 6.4% y-o-y and 6% year-to-date. Private education loan net charge-offs in Q3 '25 were $78 million, 1.95% of average loans, down 13 bps y-o-y. Sold ~$1.9 billion loans for $136 million gains. Repurchased 5.6 million shares at $29.45 avg. Net interest income was $373 million, up $14 million y-o-y. Net interest margin 5.18%. Provision for credit losses $179 million. Noninterest expenses $180 million. Liquidity ratio 15.8%, total risk-based capital 12.6%, common equity Tier 1 11.3%

Expect GAAP earnings per common share for 2025 to be between $3.20 and $3.30. Anticipate selling a small portfolio of seasoned loans and portion of recent originations in Q4 or early 2026, designate portion of loans as held for sale by year-end. Reaffirm other 2025 outlook elements

Economic ambiguity may affect borrowers' ability to meet obligations, new challenges from federal reforms, credit market volatility impacting gain on sale margins

Q: Moshe Orenbuch asked about credit outlook and delinquency trends.

A: Pete Graham said change in program terms accounted for majority of delinquency change, delinquencies stable, roll rates stabilized, comfortable with guidance.

Q: Jeffery Adelson asked about loan modification and partnership.

A: Pete Graham said mods performing well, close to finalizing partnership, loans in current book part of it.

Q: Mark DeVries asked about credit outlook and charge-offs.

A: Jon Witter said change in program terms mainly accounts for delinquency change, delinquencies flat within operational variability.

Q: Terry Ma asked about credit and net charge-offs.

A: Peter Graham said loan modification programs expected to perform as intended, stable late-stage delinquency and roll rates.

Q: Donald Fandetti asked about credit and ABS market volatility.

A: Peter Graham said gain on sale margins tied to market spreads and purchaser structure.

Q: Sanjay Sakhrani asked about loans to held for sale and earnings.

A: Peter Graham said accounting for held for sale means lower CECL provision, release of provision reflected in guidance.

Q: Jonathan Witter answered about graduate repayment wave.

A: Said graduation period always challenging, early graduate unemployment rates slightly elevated but not impacting operating results much.

Q: Richard Shane asked about loan sale and guidance.

A: Jonathan Witter said guidance not incorporating gain on sale, strategy to create multiyear partnership, loans part of new program.

Q: Giuliano Bologna asked about loans to held for sale.

A: Peter Graham said loans identified are start of multiyear partnership, some new originations to go into it.

Q: Jon Arfstrom asked about credit outlook and stock.

A: Peter Graham said Q3 delinquencies seasonal peak, concerned about late-stage and roll rates. Jonathan Witter said unemployment for early grads slightly elevated but not seen in operating results.

Q: Caroline Latta asked about PLUS program.

A: Jonathan Witter said PLUS reform presents opportunity, phases in over time, expected to increase origination