SLM Corporation Q4 FY2025 earnings call

• Private student lending sector remains robust with college enrollment up and cosigner rates for new originations increased.
• Federal student lending reforms could contribute an estimated $5 billion in annual originations for SLM, representing ~70% growth over 2025.
• Inaugural private credit strategic partnership combines bank's earnings profile with loan sale benefits.
• GAAP diluted EPS: Q4 $1.12, full year $3.46 vs $2.68 in 2024.
• Capital return strategy: Repurchased 12.8 million shares for $373 million in 2025, new $500 million share repurchase authorization.
• Net interest margin: Q4 5.21%, full year 5.24%, up 5 basis points year over year.
• Negative provision for credit losses in 2025 due to reserve release from loan sales.
• Credit metrics: Reserve rate 6%, net charge-offs 2.42% of average loans in repayment, delinquency rates adjusted for loan sales strategy.
• Expenses: Full year non-interest expenses $659 million, 2.6% increase, efficiency ratio 33.2%.
• Liquidity and capital: Liquidity 18.6% of total assets, total risk-based capital 12.4%, common equity Tier one capital 11.1%.

Private education loan originations for 2025: Q4 was $1.02 billion, full year was $7.4 billion, a 6% growth over 2024 and at the higher end of revised full year guidance. Net charge-offs for the private education loan portfolio in 2025 were $98 million in Q4 and $346 million for the full year, representing 2.15% of average private education loans in repayment, down 4 basis points from 2024.

• 2026 private education loan origination growth expected 12%-14%.
• Non-interest expenses 2026: $750 million-$780 million, driven by growth, one-time investments, marketing.
• 2027 expense growth expected half of 2026, efficiency ratio to be back in low 30s by 2030.
• Private credit partnership business expected to grow in 2026, portfolio growth flat to slightly negative.
• Net charge-offs 2026: $345 million-$385 million.
• 2026 diluted EPS guidance: $2.7-$2.8, EPS acceleration expected from 2027 with high teens to low 20% growth.

• External factors impacting results of operations, financial conditions, cash flows.
• Volatility in early-stage delinquencies not necessarily indicative of future net charge-offs.
• Macro-economic uncertainties and job market conditions affecting borrowers.
• Competition in the private student lending sector.

Q: Can you talk about how you guys think about the postponement of wage garnishment and treasury offset will impact the performance of in-school and private student loans?

A: Yeah. Sure, Caroline. I'm happy to. First of all, I think it's important to remind folks that while many of our customers have federal loans, most federal loan customers do not have SLM Corporation private student loans. And I think in general and we've talked on past calls about just the difference in performance and impacts that we've been seeing as the federal program has gone through various stages of its evolution. In general, I think for any customers who have federal loans, who are severely delinquent, and I think our estimates suggest that number is quite small. The postponement is obviously a net benefit. I don't think we would expect that to have a significant impact on our business just given the difference in customer basis.

Q: You guys highlighted the $5 billion origination or opportunity from the Grad PLUS. Which is driving some of the origination growth year over year. Given those changes come into effect in July, how should we think about modeling 1H versus 2H growth?

A: Yes. I think we've talked on prior calls about kind of the staging of this. If you think about it, it is new freshmen in the undergrad class and new to graduate school for graduate programs, you know, beginning in the fall academic period. And so you know, think about that in the context of a four-year program as, like, one-fourth of the volume and you know, grad programs can be some a little shorter and some a little longer than that. So we're expecting the sort of the incremental plus volume this year to be relatively modest and that's included in our guidance on growth for this year. And we expect that to step up measurably as we move through the next two to three years until it gets to kind of a steady state.