SLM - Earnings call transcript Q3 2021

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Operator

Good day and thank you for standing by. Welcome to the Sallie Mae Third Quarter 2021 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. now today, hand of Brian would to conference Investor I speaker your Cronin, Instructions] like the to over Relations. [Operator Vice President ahead. go Please

Brian Cronin

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

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

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

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

Jon Witter

quarter results. you us for joining XXXX everybody. a for Shannon Sallie you, Thank Good of Mae's Brian. Thank third morning, and discussion

going finish return a First, XXXX. normalcy. strong and capacity away hope a third, to Second, are believe the in to take represents positive we've and and quarter; a program; you performance quarter the today: expect strong toward we results key in year third well trajectory of I messages our we positioned delivered X continue the adding reflects our XXXX Our success into we had continuing more trend capital for continuation to XXXX we're will

$X.XX was of in year-ago in diluted compared quarter. the the third Let XXXX right EPS GAAP in. jump to me quarter $X.XX

in were provision outlook. was strong decline Our the a improvements from release the economic combination substantial and continued by quarter year. last results of The a ago by driven largely driven business performance year

remember may an outlook of which impact as million originations Private quarter the education is economic time billion, loss as of we over third the that of at expectations for of the You improving $XXX COVID that $X.X XXXX. the result XXXX our subsided. lowered up or XX.X% loan quarter were third

below XXXX, restrained rebound original Although were this falls expectations. this a for X is noteworthy reasons. our originations from believe that We

To in equity billion liquidity $XX the the education direct due higher total system by stimulus, emergency on annual to HEERF financially pandemic. this directly HEERF. intended students significant in remains to to were fund, the provided from $XX federal who as this there and referred aid perspective, thriving spend impacted higher higher nearly subsidies represents to billion in commonly First, education help institutions schools relief to was put XX% markets the of and education.

be of The XX% HEERF lower academic the a support. down were of last less than Year-to-date, in most XXXX-XXXX year you of type Student over the loans student. XXX by Aid impact discretion loans, XX% Our in expire that be to see distributed volume the our balance would schools, had our are $XXX,XXX especially used the direct and $XXX this, set without to the which Grants be that not-for-profit funding and top of between ago. this We million same to XX HEERF during could impacted of for the received funds at top would our compared imagine year. point limitation. distributed per $X,XXX in surveyed HEERF schools school We

flat XX% foreign out-of-state in business to enrollments. numbers The impacted enrollment level of surveyed reported enrollment. to and and with due composition the The segments GAAP U.S. percentage and of schools our reporting fewer was greater minor factor as impacting chose have cosigners of need increases students composition year. these the to of current these lower typically originations in also are and we financing, in students second a our of the close schools students for the changed academic a Students home. to lower students stay

to Consumer in impact Equifax impacting clearly positive factors the private reported both a XXXX loans. in including U.S. believe low- the having are led Report likely compared in these student quarter sixth the loan share likely their half our the growth student loans, the to market this that XX% total digits We market of If gains. in first student same federal demand suggesting the private, fell number for the National While X% to on Credit the Trends represents consecutive mid-single September in private true, share of credit, XXXX. gains. market of and period XXXX grew quarter

consistent origination years. was at on, quality past Moving with credit

XX%, in of a of quarter FICO was the was rate which quarter XXX for relatively QX was Average QX XXX cosigner XXXX third versus The CECL for to XXXX. was Our QX perspective. XXXX XXXX. of score flat from quiet

loss $XXX million for a provision was the by primarily loan third for loan provision XXXX, new driven total commitments. quarter Our of

to higher changes outlook fourth recoveries. for an by and practices, Additionally, the This we expected forbearance took offset in our quarter. expect additional execute to was economic improved reserves we

shares believe used XX XXbX-X We detail. the per challenges. plan aggressively of more XXXX, quarter forbearance quarter of third continue an a share changes we quarterly specifics effective in of appropriately financial is short-term at at helping customers discuss return price the We the capital In will in when average executed our that the under repurchased $XX.XX. to Steve million overcome strategy.

outstanding an average January January of the average $XX.XX. XXXX XX%, price price $XX.XX share an X, share and shares at We per of have per X, since by reduced at since XXXX, XX%

have plans. XXXX return to updates our X We capital

original of billion has additional remaining repurchase board share our million plan. $XX our First, $X.XX $XXX the to incremental million authorized of authority,

of into January. make and $XXX deploying to expect authority the this balance year over significant We progress the in million

this original our incremental return is and driven capital by to performance plans and improving Importantly, capital levels. is

with fourth in share. X% XXXX This believe we our yield, important approved second dividend We our interested Our Mae competitive dividend which universe banking approximate believe forward, and will per add line to shares. investors stock increase quarter is Sallie update a an increase peers. represents in the attractiveness $X.XX an is owning our dividend going of common maintaining has to the Board of

to the arbitrage and increase our have current repurchase loans exists. program, remain selling As stock, in we especially repurchasing committed while we valuation the signaled with share

share several over Going forward, we next expect years be dividend repurchase. approximately the mix capital return XX% of will and the XX%

board billion the time. In this of terms of we the closing subject we our to preliminary appropriate sale late-breaking received look forward have for terms news, first quarter in indicative The coming receiving a sale. requisite approvals Of on at our to the is transaction and $X loan agreement all next exceeded weeks. terms some course, reached the

me again, received sale. Let quarter exceeded our we that the say of terms the terms first

Steve? spreads the interest remain rising up our strong. will tightened of have performance sale, will now last While our through financial a environment. credit will that even remains and have ticked Steve premiums you quarter. The rates belief support strong our since in of completion this the rate highlights transaction take successful

Steven McGarry

morning, Thank you, Good Jon. everyone.

allowance of commitments the interest exposure, total X.X% which and discussion portfolio billion or private a student CECL nearly $X of includes with on-balance The provision. loan loss reserve plus of billion. unfunded $X.X $X.X our loan under education start the billion our receivable loan Let's sheet and was loan accrued of

pandemic. in from from prior X.X% in reserve quarter, Our the year down but in rate X.X% of significantly is the we were midst when down the ago quarter slightly the

loan fact, reserve lower loss a ago. year than $XXX In our million is

the we quarter, XX%, uncertainties the the continued weighted forecast major to adverse XXXX, ago. respectively. second In Let's look just and in of forecast and appropriate we and This base major shape model. year In Moody's SX was SX Moody's XX%, and to XX% SX XX%. and variables reserve. calculate given forecasts our each forecasts, third at quarters Economic are weightings the the were used our of economy severely base used weighted using the a prior a and a resulted input CECL of which year

in reserve, were are impact requirement Forecasts an in no QX can become meaningful have stable In more and the the in Prepayment resulting compared to weightings reserve the have essentially changes. environment. major year-over-year unchanged 'XX, they change they reserve. current also a although in the on speeds driver QX

However, prepaid year-over-year which the speeds year ago, a in change significantly higher were contributor major than is to reserve. the another

New under also are to for we as them. need commitments reserve CECL, important

change the peak from our were To speed season added year-over-year weightings change billion commitments, which major little is lending $X.X reserve forecasts As $XXX million. had in a provision to changes the and impact the prepay in of and we required but and quarter-to-quarter. in summarize, drivers QX unfunded

our As portfolio. Jon our our $XXX portfolio. changes for forbearance offset outlook loan losses of million increase by The portfolio mentioned, was on in the and reserve private practice our for loan improvements impact performance booked our we credit for the largely student reserve provision in to from a adjustments the economic potential in

and slightly as the Let's year ago quarter. metrics, loans delinquent quarter. repayment, we changes the QX be economic to Page take X.X% we down a and in look have given loans implemented X% ago usage. in found of Private down have and year X% X.X% investor in improvements of can were from were X.X%, up from our our seen days from the on loans at forbearance XX-plus credit and the Private our education which X but QX, is in already X.X% presentation. This expected, forbearance education

on year from performance, now you we just months we our ago. again move metrics a guidance. full Based meaningful X represents outlook credit in see net to for charge-offs expect the defaults, post to continue expected were strong just right We reduced continued be saw X.XX%. the expecting over once pandemic. direction improvement We our in what This as for

in net look well. a take on assets quick X. X.XX% QX. interest interest-earning the prior on can and as year you margin from which our Page is ago was find quarter quarter The Let's up at the This NIM,

down we our deposit with lending NIM to in rates in our our more line have have position managed We And factors liquidity asset our contributed peak as yields. our concluded addition, become Both season. increase.

expect in as result a NIM of continue NIM and quarter. the at the fourth come full to of continued X.XX% in expansion We XXXX to for year

the year-over-year accruals. X%. insurance in student service dispersed and -- up which differences of QX being comp flat in our XX% 'XX incentive expenses million the to fees 'XX, prior expenses, $XXX in year compared quarter. were core quarter in operating our to insurance turn excluding $XXX In there ago actually these in million loan volume despite and FDIC business, Let's and our were FD $XXX and items, million timing were Operating up being loan

lower. moving Our efficiency we is are unchanged, and focus portfolio cost the to seeing our on service

Finally, capital XX.X%. and our ended capital liquidity total assets. and XX.X% equity common of quarter strong. We total positions with capital of XX.X% liquidity And Tier are risk-based the was was X

reserves XX.X%. GAAP risk-weighted Finally, a over was loss assets very loan strong equity plus

Our you, forward. Back well remains in sheet and capital of balance to shareholders return reserves, our capital going solid very positioning to business grow our us terms and liquidity, to Jon.

Jon Witter

Steve. Thanks,

me wrap the environment provide Let description our on and comments outlook. broader of brief a with few up a

times, immune. costs marketing not are certain wages peak inflationary for During and activities higher seen We've we and costs season. this drift also increase

focus believe We us drive efficiency unit days continue levels. for this. well quality tightly cost and We prepared to ongoing pursue costs or efficiency our manage without opportunities and to like service sacrificing have

constructive, closely. are process, about grants funding for The not particularly simplifying trends increasing the the increasing we administration service Pell with but inflationary focused loan public are remains forgiveness worried such, As political on and environment pressures, the HBCUs. watching

support As efforts previously discussed, to types target those assistance they these need of who most. it as we

services brand additional to providing continue our broaden leadership. We and also by thought

FAFSA tool X This families as a free complete quarter, little rolled we out minutes. in the as new that helps

garner America I'd discussing for industry-leading the anticipated by guidance including USA billion has media like News. of report and year. addition, and TODAY the for In conclude media FOX research from outlets, our All College told, Bloomberg, generated impressions. to CNBC, research to remainder Pays continues highly How this our X coverage nearly

earnings core $X.XX to diluted share to We $X.XX, from to the $X.XX. $X.XX are our of previous range range per raising

to will our our exceeded the lower quarter were January components of resulted expect additional multiple impact $X.XX. be year. in sale for forecast our the that Expected reference, originations levels economic quarter opposed on contributed X% outlook repurchases to to annual your fourth closer significant our adds The continued $X.XX. X% the range. X% student For This second initial in more beginning was an most $X.XX of in The impact improvement. our loan led private guidance and to premium $X.XX. an loan came at share to We this to X% provisions This education credit of guidance. There from improvement as additional $X.XX losses. from now our original increase growth

QX the We compared believe XXXX pleased see originations we to share in are and QX market XX% quarter. our to grew of growth in the XXXX

described, factors However, previously while maintaining discipline. difficult the hitting our due target to our original ROE prove

Our is academic of level current continue will year. expectation the into stimulus next federal not

to continue our borrowers We and improved on see in outlook performance an strong future. from the credit

prior result, a continued loan result to our We of original of continued $XXX down is $XXX portfolio As loss is million and federal a be will $XXX on we million the loan of guidance our in between guidance January focus holiday. million payment from expect this $XXX our from $XXX strong quarter million. believe charge-offs which and our $XXX total million net million, down to and mitigation

for $XXX million. at our expect million to expect that pleased the Finally, to end year in continued performance the between In and we $XXX non-interest $XXX with lower and our expense strong. original our between million. discipline, and conclusion, and range approximately XXXX end $XXX to am million deliver I of Due focus was XXXX now expenses range

We high-quality same and loans at market time. are gaining share originating the

our controlling our are improve. to quality enhancing franchise. We continues expenses the while of Credit

capital stock proof commitment we intrinsic and and return. dividend believe are value. are that share authorization appropriate our capital buying to discount common strong additional repurchase believe we our shareholder by at increased at allocation discipline and Finally, I back are demonstrating stock points a to prices

questions. into Looking next during call and simple January for strategic powerful our to the Steve, imperatives, goals we the you. further call. make on earnings same proving look forward thesis. investment but continue XXXX, some focus discussing to let's progress open our year With our for expect X-part I that, Thank to

Operator

Credit comes Suisse. first Our Moshe Instructions] question with from [Operator Orenbuch

is open. Your line

Moshe Orenbuch

kind of of foreign loan made, congrats the you kind level. the about thanks industry and season high that feels that sale. do the at of like reverses last -- I be what to kind prospect the and students. with the and see that government Great, if that had bit? on government some guess -- and is comments kind Like mean some you you about you of of and mentioned itself off it of about certainly think of kind going the rolling left of you out-of-state perhaps I into aid The other growth next do aid the the of it that? of a can And mean, focusing trends, the on been? how trends is similar little how talk to kind year's manifesting I other that Jon. you're growth a

Jon Witter

legislation on that Super we question. is the hard built other in in that's at has here. Number couple be into A HEERF X think the of D.C., think one, plan of specifically funding out priorities. I it a very end into look to know the that an date thoughts That's HEERF environment statute. light there's going the built to I comes the imagine if current And you it. that

current we believe good to So will academic feel the we absolutely that date really I anticipate be of about I subside. when program during very the the end and of think and that, begin think that impact sort know will And that of very, year.

out-of-state research. broader to that to seen one we broader come state, On students, desire where wanes. industry no have seen a nothing students, we in I school nothing think I desire foreign desire share that specific a suggests suggest their U.S. best trends trend to to student information. But to I will the anything have the the is have direct what the in would think believe. We've in foreign of views we seen pandemic possible, enrollments to go to out that go of and We've think I as change trends, reason our less study. this those don't that is

our lot we most now vaccinations. to can what the perspective, probably like that are right that, origination on point, is XXXX the sharpening continues rates I quite on that's that from we we enrollment pencil at going both this on to by obviously, say the what an given but trends So, look seeing But we're signs depend, much a improve. encouraged will and especially pandemic the And I know. how infection we're think of think

Moshe Orenbuch

discuss there's at whether Great. And less that Pell sounds what it community mean, mentioned like that for and we're package least HBCUs, college aspect? can for hearing free also you college, the or just you additional in support support the it's thoughts otherwise. current Grants I just on from

Jon Witter

And I but can anyone if today, my claims what's I'm read think way, or happy to perspectives. happy realistic, honest probably Yes, are they not that D.C. by totally perfectly in to. being provide the they happening

I not First have along, a do maintained think those of clear need that very our enough for for federal and many programs and all, much too that too the all position, we really who current is said view have I it. think

customer we the base not as Dream otherwise, clearly have on things going large do business. a particularly I after. the feasible By who our impact And think so to different a to for and/or general really start them about way, very provide great help afford fundamentally also historically supportive continuing not members Pell it Grants, when students been of think and we've when the college be otherwise. all thing those that are support to think are are for it absolutely and a reality American things We is would think not who who those able students It's start to have you about to we makes marginalized have of you would do. had the HBCUs, community. not in We think said that

I think look I been. been have X growing how D.C., you there have a of recognition proposals happening. are regressive the one, Number think I past things think in suggestions of current going t policy if there's sort that just many on the some been of among

was cancellations. about didn't year you things debt ask That all So like newspapers it, but a the in ago.

in barely think thing on come I think the ensured, I the anymore and fiscal realities in mention creeping community going not even college, are would here have free the cutting policy. floor. room now are have to great because on plan, I been college, seemingly it's it things I free think build-back is like Gosh have other up better that's realize what And people just which you the

So I think the policy catching up. debate is

good all productive think starting I to is policy years. probably and I coming you environments are and is think a put that of we And are best quite think emerge, political environment. I in. that seen together, fiscal the we've among political this comfortable the benign very realities when in

Moshe Orenbuch

Thanks so much.

Operator

Thank you.

next Shane, Rick question from Our comes JPMorgan.

is line open. Your

Rick Shane

taking my for Good Thanks. questions and today. morning thanks

we that versus So by when be to Balance sales your I'm sheet into conceptually? sell look forward. production Are smaller this sheet to how balance year, about how about targeting grow this help little starting track for you about to going think year. a thinking are about the we us curious you're you that think understand year-end. of XXXX again? X/X loan will originations sale? balance bit you on and the back Just of probably Or a percentage originations the

Jon Witter

repeat a said bit provide let previously what color. little we've bit And me new and of little Yes, question. great a of

for specific said XXXX. our not plans of all, First we've

think obviously we that aggressively that of with use XX-XX and is between is split stock. to said a a flat-ish what further detail us proceeds today on our people buybacks the balance exists, of arbitrage we little sheet maintain gave to that long and And this general dividends. expect should as between buyback thought have I process bit as

I always is we sheet balance guide representative important cross of sort here. sell to It's a a of section flat-ish the section think, portfolio of our -- So our really, portfolio. cross note our

a sell. for us. our obviously sample as we important We I as think, the representative close sell to not buyers. it's important And It's can So just get. we originations also, that's for

Rick Shane

homogeneous hadn't if getting XX% you thought okay. resist That's you're and that helpful. about distribution for actually it's I every vintage realistically, makes keeping it, to And that that. the sense. that hard than better loan more Got sell,

Jon Witter

Yes.

we yes. to quarter, first closer the in but got XX%, think I

Operator

next Our Steven with question KBW. from comes Kwok

Steven Kwok

to that Steven market sales? this there first is around your get the of new you're for advantage see I opportunistically next Like if year, even perhaps filling the we to loan loan the just sales? the one able This commentaries for do guess and is I condition is Sanjay. continue more take in ability have into on yields the

Jon Witter

Yes, Steven.

the we much and found is less the we the thing on amount can really more it we've that year the do limitation think quickly capital. loan this us sales is how is I can of deploy

that to. of tender a So you'll beginning we subscribed billion $X XX% was, remember at the year, this offer, Steve, feel it

and And much so us lesson think you about important that an capital I how quickly. how deploy taught can

capital earning of at Steve our a rationale by of lower NIM which of sheet be capital want work the So how that quickly put can the slightly the think to think to we loan sort would shareholders. we guidance if can return I sell that that it's on and stressing, put rate quarter really gave to balance slightly that since sitting strong it for would robust returns, saw we to smaller in certainly you'll But tempered work general margin and of strategy, and I is free I specific last beginning of we more less. we this a that loan this it we the our that on remember sales, for a conditions that market versus of always think time, really feel was productively favor not bit is what lower a at year. number and downside small been sort the capital do sales little is we've explanation again, because we slightly

and of and that just knowing get hold balance to part being when right. we're I think knowing trying on what good sheet, to to when to formula and So, capital sell your knowing a allocator buy is

Steven Kwok

if interested specialty like Are the what of Today, M&A credit up. And on card anything in a guys just within potential main one opportunity it. we in peers acquisition space. you the the M&A finance -- shows side? saw Got -- your

Jon Witter

Yes.

think strategic our clear this about we've imperatives. I been about and pretty talking

And And was Our We make play even role customer through brand the franchise always and in a buy build build we real in bigger better. analysis would, investments about families be to education. products fits journey students We independent options that it any over more mechanism the our we if Gosh, to navigate when from me we smart lens they is we that well And well with it for a goal know. we like the do pay we more of to accrue thought helping strategy getting and think of think because what that's think fits businesses. to business and to let versus core build us we into revenue-generating with our allocation, higher it. those capabilities, who on any of time, way, into we best on our benefits are. course, capital really turn core business. for do new sort of the And whatever that clear. But to would by and through sort their do would than the

shareholders. on a for the being company believe, We our return what focus education for I'm solutions the great value get staying diversification pursuing our focused at best sorry, of maximizing really -- point, sake. not we'll our franchise this diversification's are is and We

Operator

comes Our Henry Coffey Wedbush. from next with question

Henry Coffey

any bit was you is Maybe look gain how the looks we and when Yes. loan $X in versus about at everyone. first cost a securitization first plays in Good related and what terms like really we securitization the gain transactions to morning, what better. billion you And of out. little in sale When did can the quarter, to talk quarter? compare it the gains what the gain both this today the it

Steven McGarry

Sure, Henry.

is securitization at interest seen So increase had seen spreads. loans tightening I higher which market a people to advance right you're the the now. the fact, we've we've and we've in helps increase increases residual. in the an offsetting improvements think in also of rise some our The of program, trust, securitization rates, which very what And a strong in getting is and leverage enables get value the rate the size in

So the off securitize the been last of buyers right market several loan think transactions but these that's do Mae will the of the is now. platform, friendly case We Sallie that actually very that loans done. for the sale ultimate them we've

really no So difference there.

Henry Coffey

So and be there end getting, "off-balance you are loan get sort securitizations" sale the is the but better some gain, that a sheet not getting of buyer buyer are lower the or only it's the of captured to sides. better a the loans that is about thinking both of win-win so getting on their kind it? transaction purchase, costs better way Is execution on within

Steven McGarry

the get on securitized. the execution will loans back are They correct. when very end absolutely that's think good I

Henry Coffey

the be some And comments just if the next that balance to X say it's very years, made or we over generally, is predict sheet this, were you that about these their fair as gains sales, it the know today remain to levels assuming good growth modest, that most into to on prices balance to but I X be work going and will are production as of they overall related will loan the same. way sheet

Steven McGarry

mid-single-digit So talked past and to I haven't $X upon good we're see sales, and add to we have do are is the when in think out to quick 'XX, for it. map to down five-year going optimistic three and three see growth more but billion our probably to depending in stable balance out loan But sales less make we originations to getting going low a we that and plan, we guided Jon two, of a point, how want per going loan about I'll year and no sheet four. forward. growth We out, years originations shape

going company core very to So, the both the generate is think strong from the earnings I and business sale. loan

Henry Coffey

What was two, four? three said you to that number,

Steven McGarry

year... sold billion $X We this

Henry Coffey

percent. or... No, the Was percent a number no, that

Steven McGarry

to low- of probably sell 'XX, said $X balance and see long-term. the I no. will four in mid-single-digit years billion No, three, two, in loans we'll sheet growth of we

Jon Witter

I would the think Steve Henry, is that exactly and thing I add, right. Yes,

in from balance best that's offered we're long And valuation to further value not create of unattractive, two these and very as level have think loans very, back take think to because income one. number also buy modelable it around our equal, shareholder the We a we'd consumption think through going so fabulous about, return. And and that And our manage it aggressively shareholder stock things loans that number sell we as that are number we is what to and loan predictable and we sales advantage love CECL these way loans. we sales. loans capital that sheet great of specific during talked go long consumption that less knowable as phase remains I year, think, capital think we've going arbitrage the and being so market. the again next we're that and there's been can we time. of be remember, I to impact a spread earn us disciplined way continue to guidance we've arbitrage, that is out. of capital can phase-in. But And to two, attractive, I off much them loan happens There are for we also help things been love drive the between very These on we've being will all clear keep and our level of one as over loan arbitrage continue whole what's clear

and understandable. modelable very that's very So

modest we're if that I balance window factors. those we're and that to growth view likely X think of from of important holding loans, closes, moving note forward But about growing year-by-year asked look it's during be because sort we of in of I on And go our think this that flat-ish these as that to happy very kind period sort of there. to going forward. also guidance we to that the arbitrage you is phase sheet would give again,

Steven McGarry

an With equity. appropriately valued

Jon Witter

valued With an equity, appropriately absolutely.

Operator

Markets. question comes Capital Arfstrom RBC from next Our with Jon

Jon Arfstrom

How gap? define should that willing extent at the the somebody on On can do that outside size of the to topic, look that? share, arbitrage how you you to or

Jon Witter

zones invite is, as mean, couple -- full sale sort not Yes. effort. look, a multiple process, look one, X And bounds. full think dilution value price And loan through and make economic of at of value. of where green sort I'd places it of tell economic can the the it, on you analysis them. where cautious we We an accretion but you're sort have greater share and an of of zones we're a different And effectively happy sort on There's our us of internally, clearly are specific jump at about which number We more when us. sort premium here yellow of our or model of we loans a of red value out in put sure it than we've I'm sort multiyear and looked to underlying to the you guidance with little have you to where finish. together at economic what I and matrix there's getting near want we driving yellow getting we planning I full we be red think thought zones value provided strategic We're Steve zones things but those accretion type to ways. and the bit sell mental it. full, green, when assumptions look we've and to EPS to of to accretion perspective. between

But probably anything add will guidance we we've I out. rigorous know the So, that to you'd about if that. nor don't go pretty thought and we pretty how that's realistic have we're And Steve, I modeled through. not we provided -- think process that ever.

Steven McGarry

portfolio it you've can perfectly. a just multiple. think our on premiums I would described earn higher, seven I exceed or we we're loan add, a at or still that trading No, XX% six and

Jon Witter

squarely green pretty in That's zone. the

Steven McGarry

made... arbitrage That

Jon Arfstrom

also, it's Yes. as right? It -- did. you're can saying lot well? It it a get is It's just sounds of you a of matter seems like the like stock

Jon Witter

Yes.

price back us, as back earlier, there without starting what we or to price. buy day As again, And can in the at think valuation stock year to slow attractive as how any low contort attempt the would to learned we many an overly given for investor, to we've I we the much and in really more. spikes want want artificially say higher want us drive an opposed to you, this rather limits that. is and shares we you price. go are steady We influence to But done do in sell as don't driving to to that buy said

to makes is employ sort to continue for return strategy persistent. the we're as and it this long-term This best creation our yes, So sense. the this We're of to knowledge this going long patient. value in as capital of is

Jon Arfstrom

Okay.

a I to but a topics. quarter, to how think sheet, obviously, step movement more there's in going the flat reserves. requirements and two we balance growing a lot provision sale from Just provision modestly down the you'll the forward? pandemic, of have loan assuming and this Steve, been should mean, due about

Steven McGarry

the it of of of ZIP in the changed. A sort of originations. the of mean, at new have that CECL, I I gave in code the I were you all. morning think details couple we for mean say I X% reserve, components things pretty beginning this reserve much the

the model And has has Low these lower commitments, X receivable now neighborhood and third, reserve think become quarters economic the And have vicinity. creating last to new in second more number. right X% commitments need in we for Our the see interest the stable, could been in like is disbursing accrued The loan that's be has and the seems to new clearly, that lot environment today in be days. loans. commitments portfolio, new new things the to of that for quarters anyway, we're creating changed. as hovering the a not going improved. the provision the where I quarters, you X.X% where are And

Jon Arfstrom

Yes.

question. Okay, okay. last the then And

us a Just rate Do up? you -- that of environment? But walk gains kind you keep higher this business how the a rising You through rising concerned your talked costs? you kind up spreads rates, think you sale. about the Are yields guys obviously asset touched picked in of loan metrics and and in tightened but still you on bit your nice do with rate think the at you through can on environment. all about a funding sale,

Steven McGarry

Sure.

angst should know rising about there I is thing point generate about in ability that environment. strong of out to continue the loan one a sale. So a I rate our to And premiums lot

I plus think of a we yield have XX% And probably that LIBOR have of base our taken that is sort off XX% fixed rate variable the keep of variable loans mind portfolio our is. just table and whatever for X.XX% now. rate. rate is But in

more a compile to rate portfolio returns. on is continue strong the a student investors the are more talk comfortable a with about environment, and that. class, the pay So community. I rising the longer the other And asset to others become generated -- and going as loans, generate we history the before just I premium of willing think to we the interest And to lot investor have they for it's more in the begun topic, sell

feel portfolio. to very environment. sort about base Getting of generate the any in So good we to returns the strong ability back

rising XX-Q, you'll increase look at generate see environment, a small in in a our rate So you interest if income. net we

the good to where have XX securitization turns be. next positioned we the the feel whatever have pretty very positioned and And very good out to both favorable, to about very, deposit we rising rate for environment. We months, well XX our markets been and how a are we're access spreads for environment -- economic

Operator

time. call of like over Jon short to And the turn I'm this currently remarks. back for I'd at Witter the questions closing to

Jon Witter

orders next business. listen, busy for you And to And over dialing of you, that, in I forward and the not for appreciate folks with a talking I'll everyone, interest you. in it's look if Brian, really and to turn thank Sallie Mae. before. season quarter, know Right, Thank it our closing

Brian Cronin

thank and at presentation will call this questions of the and replay A Investors today. time you salliemae.com. Thanks, for the on And your your page available be Jon.

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

Operator

today's you Thank This conference concludes for call. participating.

You may now disconnect.

SLM (SLM) 21 Oct 212021 Q3 Earnings call transcript