SLM - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Sallie Mae 2020 Q4 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would like to hand the conference over to Mr. of President Vice Cronin, Investor Relations. Brian ahead, go sir. Please

Brian J. Cronin

our welcome Thank It fourth Mae’s the Good prepared Jon is CFO. will McGarry, and call you, morning to for Witter, with quarter today up pleasure remarks, be Sallie and After to Steve our Angel. my here CEO; open XXXX the we earnings call. questions.

those mind, results discussed company’s filings with predictions, other expectations materially statements. Actual the in Before due future variety contain different This to we the on and and of should here. will of from begin, could be factors. the SEC. our discussion those factors XX-Q keep refer be the in discussion may a Form forward-looking to Listeners

the on and/or COVID-XX potential impact For Mae, Sallie of our financial conditions results others, pandemic of cash operations, flows. these factors among business, the include,

will results measures, a XX, core conference Jon. to on GAAP now our to this the along press earnings earnings supplement call During reconciliation at the the in of with full refer over we description earnings. ended release posted is earnings, XXXX. core can found call, be Investors call to and A the Thank measures non-GAAP we quarter you. This turn salliemae.com. page I'll the for GAAP December

Jon Witter

key you year but everyone. year today results. understatement. resolve. we XXXX an Brian, as for walk Angel. was morning, To Mae's nation, and as want full is and three Thank tested resilience say, you. joining Thank unprecedented persevered us for and an Sallie you a with away quarter Good We I a messages. discussion individuals fourth XXXX with were to of

despite results in the faced. challenges First, many we delivered we XXXX, strong

executing trend continue believe are discussed. the we 'XX by Second, to that we have previously strategies I performance positioned in

a year quarter. to finalized. was of in with the the specific is This plan EPS return to we ago GAAP $X.XX quarter $X.XX currently significant 'XX compared being capital shareholders. begin in will Third, fourth

year XXXX. January full to gain XXXX $X.XX in from Our $X.XX loan the was XXXX the compared includes sale This sale. GAAP EPS on

fourth a driven timing the by Our for of pandemic the business year and reactions results strong quarter to and some related performance, were changes. combination

start me ended year performance. billion. the $X.X at our of Originations the business Let discussion with

down a pandemic, originations the and of level the is result as franchise. X% consistent customers While believe our importance our year-over-year this the testament education we was of past Originations a years. to of with quality of to power

through were some compared XX% our we Series on and was X.X%, XX%, raised versus were successfully selling unsecured September volumes preferred We in $XXX to the business leaving million the end from were focus portfolio. the and loan In business scores to in Upromise in compete and and the personal those program, We average debt We $X.XX. XX.X the FICO the the our of XX% XX% we completed million industry. XXX to settle price core a enhanced average ASR rates of retire to quarter cosigner XXXX. Market by up as shares XXXX. Our XXXX, this XXX at proceeds who sale This program. XXXX, of share week. of this shares XX% of our beginning in are our a million an will competitors loan in of $XXX total We XXXX. million $X remaining use in the beginning the of B shares executed of stock. received billion XX million The week. was proceeds shares of outstanding equates XX the accelerated first The share repurchase repurchase at funded able for

$XX planned XXXX able reduce million. Finally, to our we expenses were by

last result of quarter. to and future we Additionally, announced years reduction in base restructuring expense million implemented a our we a as 'XX efforts $XX the

in the continue XX-XX fourth economic on this change from and to in loss business economic outlook, our scenarios related prepayment experience used the economic an Base approach. the our the from back we speeds determining calculations CECL Based improving impacts quarter, standard outlook CECL During to SX allowance assumed to the In we case our our pandemic. weighting estimates. changing on previous

continued In addition, we in our response rates have customer to assumed adjust changing behavior. prepayment to

detail, I'll reduced related in will the changes provision discuss Steve these fourth to by our reserve loan with $XXX.X loan release bringing our reserve $X.XXX billion. both pandemic that down related to of early While more loss a discuss in next, the coupled changes, XXXX million quarter, our impact sale

loans, there our end within core to $X.XX the we that Previously, this response QX reserve the would XXXX. $XXX gain. the the for statement. change simply, result have expect the year January XXXX. inquiries, result conditions to inbound were decided This true reserves loan do and sale. EPS with beyond. sale release financial This of to impacts XXXX of some and to designation be happen year, this XXXX those excluding same of Finally, EPS calendar which reoccur. XXXX the earnings coinciding in the of million our the not release remainder loan Said our through XXXX, of expect than GAAP, accounted for with impacts held-for-sale in split keeping market of We to booking XXXX and XXXX release. reserve and in been moved the full a one of our $X.XX XXXX, contained in were sale sale At year to strictly this The we we those in loan In start earlier loans release income were of flow for CECL process December the expected were for to timing. strong mandated

initial few our guidance of worth the fully caused more by and discuss a pandemic, $X.XX will challenges We moving of XXXX. result sale this all the for share despite the and in the is a return just loan noting, than capital moments. It's $X.XX lower pieces midpoint

and able these impacts the on loss the Steve? pandemic we are the elevated through through While of these were XXXX timing partially control you offset expense tight details now will Steve since other still actions. expectations impacts. some pandemic, and to start of and specifics take

Steve McGarry

Thank or commitments followed unfunded $X.X look loan of of you, includes discussion accrued detailed of $X.X student at plus a position. continue will loss strong interest reserve our the under our made, of our The by commitments the rest the financials, we loan everyone. and our I morning, for private sheet total a discussion reserve including and the drivers and billion, structure this loan morning's of portfolio, $X.X Jon. the finally have with exposure, Good liquidity, education capital highlight CECL billion. allowance receivable changes a was of which balance unfunded X.X% on loan billion and reserve, capital

portfolio our from quarter. significantly the Our is reserves down X.X% at prior of in X.X%

to new we I As is a like CECL, inputs not would economic will factor the current drive now including key component help cash include quarter-to-quarter. inputs the several approximately use are calculating by the understand that discount core change The you be reminder, forward. management. We speeds, a dispersed, volume, but model earnings to process incorporate flow going from discounted forecasts methodology quarterly and a in of you use economic are that quarter-to-quarter allowance deemed This of our XX%. quarter. determine through and commitments we weightings, overlays to inputs prepayment reserve necessary walk the allowance. to These and discussions impactful our and movement include loan made sales. model any Under will yet their most forecasts subject loan our

and weightings the mix Jon mentioned, models already the in use of fourth changed quarter. we've the As forecast we the in

Base Moody's mix forecast, using to SX forecasts of Base from more a SX move weighted each XX% SX we Specifically, XX%. weighted XX%, Moody's and XX%, balanced

about the quarter environment, to due the forbearance to out. quarter reminder, SX This environment and seeing how it play persisted increase the would and usage in an a as we As significant well. the economic second Base -- throughout moved uncertain were third in we Moody's uncertain uncertainty

and However, came we end, steady quarter economy to And an in repaid outlook cohorts. improve. including as our continued seeing portfolio, were the performance the recent fourth the to

is scenarios recommended to capture outcomes. probable Moody's it CECL, economic change concluded by balanced revert a of appropriate $XX environments be the when to in were earlier. and more would normal preparing we determined forecasts to weightings in described best reduced and in This result, a we to be As million. is fact, what mix we by mix of for our The multitude the requirement reserve practices

we speeds, has Turning item to as the this watch calls, a since have discussed began. pandemic prepay in past been

it was how aligning substantial an and economic of trends. modeled, QX, driver we during we and X% was it current million. this built not an to with from reserve in In forecast, reduced additional shows CPR in a data historical change prepayments trending stress, portfolio. observations In by QX, of important align our increased periods observations that prepayments This as using our The materialized. drop never increased Our our of Volume, to are again course, is allowance. requirement with $XX model of X%.

originations, increase quiet million, which into fourth new $XX $XXX new did for loan of the we is While to commitments quarter over us a enter loan by million. quarter our required reserve

impact repeating, on worth a to had Finally, moving held-for-sale but big in December. discussed, Jon already the sales loan provision as it's loans

natural other our accretion here by offset million factors January reserve, factors, for reserve of a other losses. our provision in a credit enumerated to things, early The For transaction our of overlays they're reduction discounted net and among resulting million million. including $XXX I negative the by the in reduced $XXX $XXX reserve, and

I'll found X For over metrics the which can next Page on few minutes, our credit be of presentation. our go

to is higher We delinquent days year impact QX, X.X pandemic. in forbearance down the were repayment, from our given year For X.X% the of the in economic percentage X.X% X% in high the QX in The in a but from flat as XXXX. plus ago. trend will X.X% quarter. This slightly year quarter. is repayment charge-offs of were ago rise portfolio, mid plus unchanged charge-offs loans the then from XX level, delinquencies day in were year. percentage held-for-investment XX into in expect year XXXX lower now Loans but ago loans X.XX%, expected X% -- of the the of Net X loans full up the average unchanged and X.XX%, of totaled which remainder a X.XX% for XXXX, from that than

for trends measured and cohorts, cure repayment as informed on I of our full around by This, large changed. very reserved based our of the forecasts. to and just outlook Looking that that value charge-offs point the about is increase things underwriting, reiterate well positive, the strong out expected up that of current performing The to delinquency the our model, steadily should shot. for validate course in roll into delinquency, forecasts, the our are ahead, peak QX early charge-off in described. has wave have are portfolio a as declined big continues is improved years course, pandemic, Wrapping we for I we the entered compared of like XXXX while higher loans have our and I in XXXX the CECL expect education. that model, P&I the to outcome very our and and year the of by cosigner higher will to that and collection well credit, prior performance X.X% like since would of inputs conversation

net interest the of Page margin X to deck. Turning on

anticipated, is Our from the cash interest from year slightly have margin rates down This in due as securities. was investment than but up was X.XX%. prior NIM the assets Full and on quarter, years balances, lower net earning QX, to dramatically. higher interest moved interest principally X.XX% prior

we and exiting were increased cutting personal declined loan cost to credit customers very XXXX OpEx. by card fees Put perspective, on operating significant into NIM expect quarter, $XXX business efforts. X%. and will little around average from X% the in scaling that pandemic, during our believe reduction the excluding expenses we in expenses Few in lower. it compared our back business, driven X% loan was on ago student our while investments $XXX core X.XXXX%. overall XXXX, the change to restructuring operating right million XXXX. ahead for expenses, million words Looking come The year

focus already off. paying on our efficiencies, We are intently clearly initiatives will generating continue to and operating

Finally, capital did efficiency. in we the improved fourth several transactions quarter, that our

issue will issued we this XXX for of used million unsecured First, debt. share repurchases. of X-year Portion be the proceeds

on created which X.X repurchase of stock. This common at dollar. the Secondly, we to enables $X.XX repurchased stock our nearly million transaction shares company equity preferred the

rock post of at CECL Turning assets XX.X% loan positions. They world, was risk assets, in of We well strong a well the equity the risk the assets. capital and in you. weighted us loan capital At return in are came the very Common reserves, conclusion, fourth at loss was liquidity quarter in to Tier well strong. are GAAP business to remains based quarter, grow look capitalized. risk Thank XX%, our capital very terms which and loss ratios our total liquidity total regular capital XX%.Our end weighted of equity In at and with regulatory capital liquidity, and future. positioning balance we plus ended solid to over -- to reserves excess of sheet XX%. in X shareholders the of very our also

Now, turn the Jon. to I will back call

Jon Witter

Thanks, Steve.

In well-positioned into this external expectation XXXX. operate delivering in an to also is strong Key I addition believe to belief will improving are XXXX to results, trend continue that that environment. an we we

positive the developments around the vaccines. On COVID by I'm front, continued heartened

direction. XX, continues federal to service through in payment lower borrowers' notably remains we students than XXXX. returning rate declined normal now the taxpayers a The vaccines, September Unemployment, schedule, borrowers loans. with campus with are that semester and continues schools those efforts December, and our spring which fall, up especially trend this the November, conditions government impact to will on from X.X% a a the originations. be of is should hybrid unemployment operating like least positively to in under students These with their national have optimistic with a While to support be In to rate. additional because fall more should shortened and federal impact relief to this at education on ability X.X% college X.X% stimulus student for much positive loan this setting positive

few call. and Finally, despite last political last activity our environment and assessment has months, of tremendous priorities political of the not changed turmoil policy the since the likely our dramatically

congratulate elaborate XXth of our further, States. me Before the I President let United

makes Vice customers take President. congratulating -- services CEO the of achieve a Bride As pleasure It's strongly helping on higher our critical in own worth dimensions with we education. noting dream in of along Delaware, who power and a Joe in the Kamala Biden, of our number the history company special products headquartered of Joe believe we Harris, our in as

to charge-off no rates. product, a our core by successful incredibly product, is pricing loan, and features our low customer the as such approach. Our financing underwritten private compared default other fees, spectrum or attractive These full with application prepayment friendly evidenced with our student customers GAAP factors as allow thoughtfully be options, to and

also those their program this I and that and week a keeping complete needs announce of officially find Fund programs proud These get challenges to strong In addition we footing. for to and from more other include tools Thurgood minority college, focus, the on scholarship customers in plan plan offer communities. our complete products, applications variety our for core customers the help services lending to navigate transition product, help a their new financial students we to launched meet and the the aid am scholarships, college. with with of this to easily Marshall attending launched to College of marginalized degrees

year said, that million the to With provide next complete years dream access, can bridging program claim same not $X lending college. recognize programs will Our products importantly over only we not the and a help the X positive students all results. of all but this student scholarship

We for also resources. with are loans the especially access those less financing that option for right recognize to financial not all,

Biden we access, have access increase costs. and to a affordability and for policy of we affording I potential which a and This our completion continued our Americans. forward the to ingredient social to education, promoting all affordability from environment. context, several can continue support about while key to dream mobility is changes efforts such, this to higher benefit In the regulatory in all the to increase the the working from our we inflation impacts controlling know administration education who questions direction college to and of higher future and in change justice. received thoughtful key As with of look economic of business it, is CFPB

we customers and expect is relationship regulatory our we by centric that so do to running mission. As CFPB any Star committed a and the earlier, us our as right for forward. are focus. or a to going dependent customer enjoy on We our not I business, particular Doing productive said North treat with

regulatory cannot are customer and to forward and we products business and look with future While communities. our in focus, one families CFPB predict the our operations students, our priorities, confident serve better practices, working to and their strengthen

this believe imperatives XXXX, for positions we As strategic we us in four environment key continued into move on success. improving focusing

and performance, growth have $X.XX line further consistent share context originations We to semesters, earnings is and repurchases. performance the spring of guidance following. X% down between be sharply for of with our that business strengthened will 'XX first of to the bottom the share up the during and will to be our and year-over-year; opportunities obsess core X% In outlook we loan of per the semester. diluted fall the which year over top enhance origination believe loan private $X.XX; through and the half for education in fall expect and we GAAP

expect noninterest $XXX end between million to expense We $XXX XXXX million. and

loan we earlier, operating Steve will focus continued As million. be on reflects and said $XXX our $XXX million our between leverage. net this and And portfolio expect charge-offs total efficiency

capital discussion allocation our one me and with strategic which four of a Let conclude return. of imperatives is

bit step main to Before are going Core into capital XXXX our plans, context. back strategy details and investment our about three let a and provide of me thesis beliefs.

growth leverage. focus XXXX earnings operating grow can a and we market First, because of beyond on attractively dynamics and

loans. flows. ask managers, In And deliver that attractive answer can implementation, attractive sell to we ROEs committed post-CECL predictable dislocation this believe whole to balance to and capital third, one a these pricing context, The deliver This arbitrage the because is as capital shareholders. might why cash growth our funding as while and more there organic our simple real selling opportunity can loans? dislocation sheet between loans stock is payout creates we an especially risk ratios proven investors we a of current Second, high return allocator, of price. we aggressively loan are

As operate aggressively long arbitrage sell and to allocate this to originating return and as is hybrid model, plan exists, in capital. to a continue our

some demonstrate generation remain likely will likely we Regardless, focus allocation CECL is the loan past ready this capital organic sales return will maintain of expect implemented, when source. champion principles capital a to billion authorization, sales and we approved fully authorization strategy, of engage capital a to a is $X.XX Enabling this we buyback committed as XXXX. will reduce While and on loan return. our in well our increases, funding more and external we value would practices, expiration. expires utilize In before January with its keeping Board fully multiyear our in share of has which always this

year. to in days billion As investors XXXX, finance I We an quality XXXX. for loans critical be first the our in capitalize of quarter which these of is on orders we on on tranche sale was strength loans, in achieve in to robust representative portfolio double-digit loan in final with is of an all of billion our earlier, validation of for mentioned of year our the loan sell market. a the premiums low these of recorded our the different with the the sale, to later which bids on loans current from was held will for And full worth loans the bidders, loan working and We busy The $X next of gain team completed January. eight the $X loans sale received the early potential market. auction sale felt sample additional were end, we from to portfolio, this loans. a sell plan and able In the early it was

by peak year-over-year expect normal the outlook this uncertainty with a season caused sheet given in We pandemic. result relatively to the flat will wider variation down slightly balance than in some

the other debt our recent by finalizing capital sources. will return include a made are of generated year. return sale, offering We of capital for organically amount loan the capital the This significant from and strategy available

KBW. our in future. comes of up We With And first the you. questions. expect Thank return [Operator Sanjay details line strategy Angel, Instructions] announce very capital our to Sakhrani open let's call near question Please go that, the with of the the ahead. for from

Sanjay Sakhrani

results. But Jon on to the the capital Thanks. XXX good Good you XXX maybe guess, to on and releases mentioned pieces, outlook apart those morning, sale. the just I talk double-digit numbers? the wanted any and gain assumption gain I reserve about that we inside expected return could the and sale, break

Steve McGarry

Sure, Sanjay.

sale. the being We $X for gain basically the some X.XXXX% NIM have topic talked received supportable XXX digits. We're We've that premium be in in billion at we is sale the a on attractive factoring midpoint very another very year, additional from the the expect assumptions. look, $X low We I'll what derived got already sale late strong first the that in So off about billion there. double very past. an on to the premium. at in

sale counterparty of on working their Our co-party is loans -- that purchase. they the still

So I to It want on the future. help we look much great with give too the them a our price working out. transaction again and to forward was in buddies specificity to don't

slug midpoint. give is of share on the $X.XX So want specificity repurchase large to obviously we a very that. don't There in much too

be, There sale. the not. lines increase CPR Base SX a We couple share of will you CECL has think will the coming all try provided. that absolutely are the but finally, announced there we some clean. point of saw shortly. The along appropriate for have not information and in if provision repurchase, the number how be are not of SX, the out large release you is people late -- that form that assumptions supporting Jon another I that commentary And factor will and there more timing is to wondering with when given very an XX-XX-XX is there's and notes, XXXX I reserve in I in associated the The in additional the

for And liberties if out to I'll say, and And alluded earnings substantial originate start gain look, take guidance we you the the be it's move for prepared remarks, growth. in will we and it generate as are calendar So Jon and into some XXXX. sell we hybrid number move, beyond. to generate any EPS to if very of and we going you in take his to 'XX, clean -- 'XX very a further of want next the question. year. giving growth that But modeling this keep would helps strategy, Sanjay, happy I course, with don't Hopefully, answer 'XX but

Sanjay Sakhrani

Thank you. Thanks, Steve.

I that So there appetite the gains levels, agree completely so of rates gain the high? later this on the gain sale like I on sense. guess are makes with seems than so $X comments it to at more and sale year, any given even these the high, ARB the Is billion do

Steve McGarry

to loans. on is volatile as over XXXX develop. one. we've that the that it smart assess we've of market We're market as balance an and that a want 'XX. independent positive lot conditions is softer sheet A Look, loans our We not happened option X as have think to strategy here the for premium many things loan bank last and and concerned is originator been sale than of going they laid be in 'XX We we'll years, as in out hold these the like possible. pretty good

and is assumption with low comfortable more are ever pretty the formula that Prepayment that improved and biggest loan 'XX. interest rate investors think these credit course embedded sale now in purchase here environment. they been on don't and assets has a that consistent they've see greatly. And the the dramatically ingredient the right changing as and into I are put over the 'XX we discounts of speeds

on think we're we've going plan I But we we here stick short, options will all So morning. long story it current table. leave to as think the with the outlined this

Sanjay Sakhrani

it. Got

Jon Witter

talking I if could love but Look, great Steve they matter We if of do our intuition. and the with from We a kinds add we've loans. provide think a very this Yes. By clearly well loans. about a both judgment analysis, balancing premiums said, the him. profitable, And and importance the you to always, for also holding our and they're us. of what is But dislocations. way, high incredible of especially bit and act quality of But investors types little agree any There capital during with perspective, Sanjay, it been you love business the of of very clearly, there but think that as how about. in form -- returning sheet. capital also at of much -- a That's the great We is limits point return share there recognize one return shareholders stable on balance cash loans we buybacks business. in flows those are these to given on is upper very time. our the can or for I

generating around true strong of to sheet our really long-term the the an started will description, I year. that's last prove are and return. earn suspect I So and sort allocation the we commitments to strategic of we back aggressive do year. ability, think our very I But to trying and strike hope of that that this to extremely capital to being and a we extremely we capital balance it important our thesis. in we part thoughtful organically growing think and CECL especially reputation post like of continue balance also also valuation we way

there So we I'm more sure But to endeavor in on be time, do or less. any will given get some that balance about do disagreement we point could will right. whether Board, getting the discussion I me, of Steve return. can there the balance versus our more than inside with right and retention conversation capital is gets no you that company capital assure

Sanjay Sakhrani

Appreciate it. Thank you.

Jon Witter

Thanks, Sanjay.

Operator

Kaye Please go Wells ahead. And with line of question Fargo. from our the next Michael comes

Michael Kaye

on charge-off the a the real get how Good helping, of much here? Or thoughts could if there that into wanted payment losses morning. is holiday improvement losses really just Hi. timing further guidance. of I delay XXXX portfolio? really is the And Is incremental the the to I and see XXXX? just net federal improved in delaying

Steve McGarry

Sure, Michael.

credit So forecast is output reserve, loss of CECL an very much loan model. last our look the

course the changed the seen reasons So has the dramatically because outlook one our we and you've over of inputs. quarters it is improved why of down last the few come

line is, that agree are employed At being we absolutely supporting a at the you about tell end not and we've day, is offset. education our programs you it that federal value we factor is it But performance much portfolio. government policies absolutely what the over anecdotally, in payment consistently and And really overall are a absolutely early the of the the how performance by helping, to While think seeing holiday really it federal flows across the college helping and stimulus the cash customers this of with or very testimony of our talked in that is bottom our may the portfolio and may board. we cannot years. and triangulate but the positive monetary the I stage,

Michael Kaye

That's Okay. great.

basis. issue it I Mae question, has a at year-over-year now up the refis lower like see defensive really never after Second on come with real the are that solution attempt a product. But seems to Sallie a failed

on you to make a you is SoFi defensive dangerous to wondering going Or So going going refi option? to And to if refi any had viable have are come up comments you something with product competitor? just via think try was that SPAC. Do live more with? risk you're public a I

Jon Witter

Yes, it's Jon. Michael,

I order. questions. competing their them, answer SoFi's on Let able we'll me great competitor, and our but comment They’re it's let place don't and reverse against those we own in love take think them a to plan.

effectively mind the the aggressive always down refi, cannibalization what was have really look, who we it. math. before on if as coming be could do and others to of extremely in comes predict referred we cannibalizing refi, to end at own to I question think at my could in book our I day, perfectly would of the And likely this

I a think economic perspective, from found and this return we cannibalization for not have at that math that makes us. point, work way an that refi,

said offer many to sort and So we of would likely too who anyway. to have new simply, us would with customers stayed new have products services

we on. it's focused driver the a perspective and return are economic a for is But today. obviously it an something right obviously our from so, us And of It business. perspective, capital on not is choice

year hard sort yet interested improve ask in wherever think But retention that and at strong are I to there I'll in will through customers will get -- we addition can that very found jump and book, generally little didn't do do very of off say course, on that economic very, and financial of the right. that. the we our analytics the find in, you the in and to of our We better, for where marketing are footing. customers we but will assuring continue to not plug is we options opportunities our us model Michael, put we to a have refi, just look to this,

give to live. than them more So Do the is, are impediment to we understand an quickly their a we not borrow of the customers to refi, of point get their help life question do tools the the their debts we they to real money? student and efficiently? them Do where amount responsible help want repay loans kind to how living

to anyway. with likelihood focused refi to on the successful lower them the addition their And for in very And of extremely customers that. so refi products, the that our end day, think think, I be would is very, we at loans, seek going to if they will are of I many be

So a specific in value the ability question the of to of to on the approach math and that and way. pronged the we'll comes day, take down But this. efficient creating at different end economically refi do the an couple really

Michael Kaye

much. very Thank you

Jon Witter

Thanks, Michael.

Operator

go line our with And from comes Mark ahead. question next of Please DeVries the Barclays.

Mark DeVries

selling the more to would frame would down? would much go have retaining could up? are much loan much -- you you how need before of If retaining how that to between either stock collapse go originations? and of need sales Or How towards back your that price terms in your you. Thank like, shift loans to

Steve McGarry

I you mean, Mark, and we into PE we stock at we feeding, we when all do, ingredients mid look, cetera, be. don't et same price know have way think teens. what we look in look go I should what PE think the high that's think rate the should growth cost a And -- look We digits, out we all the a conservative at double being our double-digit rates, -- of question. our mid capital of

we if think that we think ARB trade higher works price does. as much if We looking we before think it would should paying, than arbitrage X%,X%,X%. still were across the as stock -- And So premiums low at the we that say do. it were a at I the to multiple boss think reasonable here, we the this, stock, XX my for table be I’m

Mark DeVries

the And next over Okay, buyback us phase talk can question, what's CECL your that's years? requirements with requirements your balance and just just really capital remind the helpful. you in then, Thanks, few next economic about how Steve. And are? the you capital

Steve McGarry

Sure.

total year cetera So credit on appropriate held assets. hold, inherent these think that the of at we based capital. have we hold these the to assets We XX% that is XX.X% et the risks in somewhere business, we that based around capital against end the risk

continue just we have a $X.XX being a of through go as authority, capital billion for think we we we of And excess on capital. XXXX get today. to So us amount That here. share balance amount Board that started substantial adequate sheet as granted XXXX, have substantial the will the said, is we perfectly excess repurchase that

Mark DeVries

Okay, got it. you. Thank

Operator

And next ahead. from question Please with Rick JPMorgan. of go comes line Shane our the

Rick Shane

mix year. And what I'm then quarter as associated billion reserve Anyway, of sale the will because because for transaction this the there the question, think is guys. will release in-repayment. year be were the and I'm you but that, thinking that don't you -- that when the taking Steve, Hi, the curious on net with a year, versus in-school -- loans will builds, that last held-for-sale? it $X those looking you fingers be CECL knot. second be in through also it's Or that you about for Is and loan there XX made a the that answering comment is expect reserve you're so example, Thanks for already released. holding I'm table at we another and questions. sales kind the the sitting the up my later this is that

a on so And we of net terms contours basis, that in but should it about doesn't the the difference, make think quarter. of any

Steve McGarry

first just me is let that confusion. clarify so there absolutely no So that

within guidance, the So place calendar have sale loan year. we in the taking the

our I in important out. XXXX, clarify already reserve point that year provision, do whatever the very for that which is guidance, if we reserve for a was XXXX I end is in sense. whatever point lay to the release guidance, do back which be is in reserving need have is -- So sold The think trying not our to makes we loans to in that will a

the before I loan sale? sense does on make the So that of mix you go to

Rick Shane

that Yes, Absolutely. totally makes sense.

Steve McGarry

Okay. okay. Yes,

we So sample a loans that we representative balance when are our sell loans, sell on of the sheet.

sold and loans to So of today, additional the interest is first while have is chose sheet absolutely whatever on the mix I and whatever to. our our XX%, loans in in the quarter. demand see principal of repayment, portfolio you mix The we there, we have And balance the loans loans for the we microphone, counterparty. is that sold could but not the

Rick Shane

Got it.

Steve McGarry

right But take loan that's approach a the sales. if we

Rick Shane

you Thank so much. Great.

Steve McGarry

You’re welcome.

Rick Shane

guys. Thanks, Perfect.

Operator

Please Orenbuch And question next go our Suisse. comes Moshe Credit of line ahead. with the from

Moshe Orenbuch

likely answered, the last even program a and loan my but company. sale of before Most percentage larger been be, dollars you finished year's have in of even just thanks. maybe, as questions second larger and year's asked Great, program is to this actually and clearly the

those category a you than lucky than a where price talk you maybe about little lessons learned about smart about it, about lower deploy to announced you about on capital haven't but that made better a how paid that purchases be XX% price bit So, the clearly, maybe now, know that that think thinking in like, decision you yet, you parameters to efficiently I the you're XXXX? just slowing when but just to it as as could was talk what in got you the

Jon Witter

have it's Jon. capital without look, first this. producing on where our balance to in time, the that have of sheet. right? think the of I sold We sort a jump when of that way it sort we about that redeploy been nice invite don't cash I'll saying really sitting loans form of want and earning have we large there's amounts and assets, of to spreads would that to capital, mean, that I Sure, in Happy sort to Steve on previously goes on premium are, talking you're all, of Moshe, return

we very, the as So lion of the ASR deploying program quickly It to quickly. the we us gave that's By year. of for mechanism very as would way, we at least part about last good capital liked what can. like share capital the the deploy a

uses this throughout end the we've to at look sure we've year. what of the are, of Number for not make want we is right conditions always with got obviously the the really because comments. conditions. needs, towards our and and kind is, that two We the of take level the one understand we'll sort right, to into market in We we of nature assume we've sources eye but the at kind the you year of third, timing And throughout of of we should and sort to number want So, just so where the levels market are and think capital, already market sure execution. and kind that capital and depth is make account speed. planned an got of year,

slower. down over the of than to our do you're is we as rather of So, to And think it are We -- little all And time here. the of a together. market only those at we there's as about talking to think and options. prefer we it of flows put only the capital you going very end and answer one But be different this that bit number anyone, you expect well little sort deploy with a I conditions. look really level sort faster a of comes bit familiar day, of we look I there's how can small should options that few that for -- at about

Moshe Orenbuch

the costs have relative it. been has Thanks. own. down, on on at the your your Maybe the in maybe core positive trend, yield deposit portfolio resilient, expenses are in been just business pretty moving Got line expectations, to least our with of terms

company, Just we profitability talk a of kind of go through little XXXX? core the bit -- about as the

Jon Witter

little a dynamics, consider divide I what of Moshe, sort more mean, be sort that of would longer term into me bit sort I and of let market Yes, fundamentals. to

is this XXXX. on back sort a way, to bit the by going a like a and -- little think, I sound of look

to interest bit an get We subject a pandemic, If forces or are always have business. driven rates to by impact major have factors. be that's a and other obviously environmental we going little going recession our down, caused on to a

change, real it CECL, economic think of volatility, little especially while it a wonderful during some we've certainly does I times does visibility lot of things, like create creates a undoubtedly, and seen. more

part we is because think with are our have more can with established tech you the we've rate, not think right kind So It investment in could that those of going last things we sort different model. got we would there's business of rates if for candidly, those to Steve, core internal they're growth think efficient side see shared level, that probably for incredibly views. think the results. things core may what come is, we of And to some even an predict, attractive. up us, loans, which our fixed I But growth always cost if factors about we of of the outline you for financial growth long-term whatever is growth minute, for our if attractive, the business industry. during because hit are than those a in thesis. think in put the we of nice I private we're and think kinds well operating be generate could tried scale we the the We But but of I perfectly, but we into our that rates, be driven those the call, predict student longer And today. I and business, strong. you this term really, all go a to environment, And a really when and I

and because can through rest what can as really take trade one are business as and I executive committee leverage. and will that's nice and is incredibly guys a growth, but driving and get it's really should and should expect unit care of nice a focused growth growth what we which that overall you cost and that's year earnings that old company. the of Steve that So the the that's on especially our team we better trick you a every think operating we of basis, understand better into on. is itself, But part translate And I better, that we incredibly, about,

thing on second very that our jumps about nice me we profitable appreciates at the not really ROEs out think have I loans. I'm and These the business attractive it, sure everyone are and loans. good

While way, them there's friendly, loss by them the we've not efficient an very huge efficient and underwrite and we fund operations. because carefully being content way, in got customer there. We

loans bit want And the where sheet we equity the manage the about bunch going, price long-term, And of year sales so great expect we loan -- understand generate think will today, are having we of relatively portfolio capital. on driven think of of because in put And sort risk stock an that return bit during certainly over of But amounts should these your thing is mastering you ratios us we've that view that's a can the so talk of meaningful in I a high those earnings you these loans. ROE CECL number loans at the growth, this the massed it's this payout by time very times took much same dislocation, last current organic the they earnings the nice And growth, I little well. the of balance proven very implementation. or attractive generate fund context a about of folks high, little to in and to to sort allow organically. time we're is which on our that

it, now, over the business excited our it, the this coming to management fundamentals more would And I've of been I of thesis, Board the and Steve investment feels that's how about business. am what I feels, a I the on just into time. the how get I think year team that how I feel, here because So, about deeper up back quality come that's can really that's do

Moshe Orenbuch

you. Thank

Operator

line Hymowitz Jordan And [Financial]. Philadelphia next comes from the ahead. Please question Finance with go our of (sic)

Jordan Hymowitz

the we you Thanks, market in the all was favorable. all on XX% spend But wondering I a you me are we know could understand dynamics ROE, guys. a if have it's can minute I like, competition know help largest business. share. the we mean, the

and of what there competitors type in the it? to less higher vine, your moat than type returns anybody higher pricing? that less for into get growth, on And what with wider, to of looking on argue seems be and the is around it multiple? a arguably like Discover getting wider should an Your other space seem wilting keeps and environment else competition, Because

Jon Witter

again it's hard a And great long strategic I and we a question sort strategic I is question. of environment, Jordan, think think think context, about.

in they a I is of during in that ROE, offer But me And be coming bit like normally affirming there there I what of your reasonably businesses, been is, will high banking, think of you see competition has interesting could little couple be a less. doesn't growth to argue and one, Let general think times Number sort people running this in. is more my fact, think perspectives. all come in these career you see in, direction. I seem what

education product business XX and sort vastly from have a different from a management I and repaying. now and way about taking the someone process through, a old they to Think managing It perspective. career them experience and servicing Now, of years are product are perspective. they different an with of all barriers well. a there underwriting vastly It the this think who's them some doing no is structural real is customer

business. business installment very different. into The very, it installment so, another from like It's one is a are hard going loan And loan business. fundamentals really not

that in, we we that's So, a so like have focused why players us so this are tough them have really maintain day. be the that some competitive people the our our plan, single Candidly, why on to dynamics efficiency, give hope our of that's focused But ROEs. coming game. those, compete just money maintain do plan and can enhance happy great less our every competitive. and we're We the such on plan competition. of marketplace be about, by we business. like, we we're to outlook, compete if and we going the going our feel, more and the high we great. to And better have value it's is some in to we run customers really, look quite that in core for be going competition, talked plan tough we're to don't we're of really would kind And to performance our and to market share against that way, of that's But top frankly and we're to we keep you going deliver on our our

Steve McGarry

one I thing. would add

Jordan Hymowitz

Okay.

Jon Witter

Please, Okay. Steve.

Steve McGarry

in that invest want out the point we to but are perfectly, sure and continue And best-in-class I think we complacent focused on our efficiency, are brand covered you've looking I grow to continue to important like invest all that very in would things to and share. not while market our the industry. still operating marketing it make and are is we we of we on and like to and defending top what digital

Jordan Hymowitz

XX% fall last of both CollegeAmerica mean, Fargo XX% Citizens share, like It out are flatlining. I a seems business. Wells just to had and the best at they're

one banks they really mean, XX% think share. margin mean, pseudo the you throw comp market be if or that a close favorable deck, the look out businesses, traded at regard. ROE to I service the stock, and buying your trade. other competitor, that least mid-teens. is, slide banks share I thing for does or back at should you have very And I XX% So that your other company only be with gaining that's you a next Canadian all should I a you would Australian level really Americans in maybe oligopoly towards to where to high

Jon Witter

I to healthy this have of we advantage and taking Jordan, covered strong arbitrage. commitment think very our

about what sort our which significant Steve did question levels wonderful of to the think earlier of repurchases. are we the stock answering worthy consider be job still would at a I of

it think largely very hearing what I and from can not think for thing view the is on yours. dissimilar got do big not position ever and say look, But is our a company big a competitive from we've we a a do going you're take internal is change dime. Steve, me worst And that. can we're granted, can moat to dynamics and to I

Jordan Hymowitz

you. Okay. Thank

Jon Witter

you. Thank Yes.

Operator

And our of go Wedbush. line next comes the question ahead. Please with from Coffey Henry

Henry Coffey

not because Yes, feel a going I'm ask deflated I good morning, stupid little really questions. to

that thinking provision for In and you so to $XX of expense year. $XX the about What thinking XXXX, X% somewhere reserves you've be -- between loans, around million item. -- a there's components? are terms of then I to discounting XX% noise What running level new key been much we've seems know a factor, million got for which been

for put in assumptions? shift components are economic as we they given So estimate together and those what have changed provision basic our your XXXX,

Steve McGarry

I around our if the Henry. above Look, reserve X.X% have pre-pandemic, portfolio Put excess, our remember Great is excess as reserves -- described was running We into not earlier. current -- it of normal reserve the question, do additional correctly. that rate. perspective, X.X%, run well, I around is

services XXXX. to sound year, you're to things as going we economic the a the forecasts, down normalized is as try going very of had and Moody's end one need think this enough So an their of to put important like our into things -- volatility follow it's And if for you pieces come is and take and the out towards But together, CECL will the because reserve. now. do the input advertisement I towards look we've reserve

We X-year supportable at based the next to a for outlook. we years model, then on mean look the we and So default. revert reserved X

if So, to you it's you the up go precise with X% far a X.X% that think portfolio, to come difficult But very too formula. you of won't off. give I

Henry Coffey

questions. of you. thank then kind going And back of some right, to All Jordan's

are Are performing life jobs. be slice performing kind borrowers time lawyers, seems were a borrowers teachers, et are They're between sort how borrowers college, tied your to XX real evolving because you have have year insight Are of here. seeing educated olds XX not of we'll sort your nurses, seeing a it down to education, unique They're of have kind other cut into they have rent it in real performing. cetera. XX real You college the professionals, split they non-college mobility. completed you or the how a into your who they call it of professionals, -- two are of college economies how versus

Jon Witter

been Look, Jon. press shaped on a this education. in non-college written of the there's it's recovery, Henry, college lot impacts Yes. versus the the K sort of differential

who at been to without if I folks think in are it's that think think absolutely, hit. Steve economic impacted. journal of college I and that saw of and said everything education maybe consume, this to buy important an we where has the in desk. data the my those we've gotten think see tried Certainly, our think seen loss that things And was it's industries is There this is work, and say bars in in have downturn it that and it, I graphs, or more that haven't. we have that you I think I clearly, college. part part have who that playing day is I tend provisions. we very I out look a think in And it's no of have come there two completed other really last I nature heavily huge between folks across in set disparity construction, that hospitality, But of the think sort a restaurants, of we in macroeconomic completion see and the the I those doubt

is in what a economy. it compete think part the jobs But of is I dramatically it just sector think specific. of new I for having also part skills So to is

those our numbers. absolutely we yes, in So, see

I are of think the course -- year. sort the down seen partially you've they up why through in of this and the provision

to that why talked the in If and our going on opportunity the cure of is, we're we in middle personal is more part our didn't we guess that line education big absolutely the we're talking back a in base model that focus role. think it we even is disadvantaged covered broader we've trends and good would sort economic divergence. back this mission to how comes seen taking. excited important become have But justice I the And for of going sort be puts go of to when cure ways reality communities is My candidly, points. we've you of sight and to social pressure going as further my of mobility the to to the that play see year, unemployment view. and them our that about, Higher forward, providing social which we're and

happy of to of economy. We’re be an a such part important the part

question. thank for So, you the

Henry Coffey

very Great. Thank much. you

Operator

to and time the for Mr. back I closing this gentlemen, at conference remarks. hand Steve would McGarry over to Ladies like

Jon Witter

and know course think handing I has to you I'll of been what really thank your brief. interest is through with really extra engagement more we we've good can from Thank been a And Jon you, Sallie really ride we're you're effort have for you time ups lot okay. it to taken a and tough right. XXXX. it There be. you Witter, that's which lot as importantly, of I also a our the But know be I back lot of I communicating time. in in for transparent downs. getting Angel, continued of moving a Folks, and Mae. but been I clear know over hope way those it and appreciate a you it's in done guys as job business. parts There's a and on

with that, to to I to close. going it back you I'm think So Brian, turn

Brian J. Cronin

at presentation is your you and salliemae.com. page on time today. and the Replay the this Investors questions available Thank your of Great. call for

concludes call. you feel have any Thank today's free further questions, contact If This to me directly. you.

Operator

in participation your Sallie for call. earnings conference concludes today's QX call. you today's Thank Mae XXXX This

disconnect. now may You

SLM (SLM) 28 Jan 212020 Q4 Earnings call transcript