Earnings call transcript Q1 2023

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Operator

Hello. Thank you for standing by, and welcome to Sallie Mae Q1 2023 Earnings Conference Call. [Operator Instructions].

I would now like to hand the conference over to Melissa Bronaugh, you may begin.

Melissa Bronaugh

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

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

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

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

Jonathan Witter

you you Melissa take pleased a Sallie Good Towanda. you, everyone. joining will key and progress results. morning, quarter today. discuss goals. successful Thank today hope us away to XXXX to Mae's Thank I XXXX and quarter on first for I'm report our messages towards three

quarter. the in results strong delivered we First,

the liquidity position performance momentum And positive sheet year. solid, for Second, industry. have of third, the the and our we banking rest throughout disruption believe balance are despite in we larger continued

per the as of diluted quarter. quarter's year XXXX compared EPS to Let's was in the results. in the first GAAP begin ago $X.XX quarter share $X.XX with

XXXX the of over in is trends. of a first were the Our $X.X improvements first education performance business of combination quarter billion, XXXX. as the results first up Private loan quarter credit XX% well were for which as by originations strong driven for quarter

highest history. level were group our company's marked company's QX originations quarter freshman in the students. with of the coming this -- history. of of This the originations also XX% in originations highest from

have As previously, due we have lifetime to class value us serialization greater higher opportunity. under to mentioned originations

is for peak seasons. this future trend encouraging especially So

strong the XXXX our than a tracking is and is start plan This to year. better for

also are communicate full year happy year basis points we share the XX increase to able XXXX, our We to of for that XXXX. by full over were market

Our market past of full of XX% share is with quality student the was lending years. Credit consistent private marketplace. originations

Average the the of in the XXX quarter XXXX of quarter for XXXX. score rate XXXX. first XX% cosigner first FICO first of for of first quarter in versus Our XX% quarter the XXX was versus was XXXX

X.XX% first also representing the were basis seen in loan down quarter. $XX about and expected, in loans of million, we compared the from where are XXXX. for ago points private trends average quarter of encouraged 'XX, year fourth to we This credit is but elevated in QX We have repayment. the improvements charge-offs quarter the ahead's X.XX% of XXX Net of and still

were already we improvements results. default and During January in our trends seeing continued March. our February have that call, improvements I delinquency earnings fourth in XXXX into mentioned quarter and Those

in in over into saw XXXX, rate the year. default XXXX, rate quarter of we to lowest March roll delinquency XXXX of entry lowest since QX first For the and a the of

the factors number transient of a of continued We are we the This factors. improvement is seeing normalization last year. discussed believe we driven by

last we also made see starting We benefits year. and are the operational to strategic starting believe changes we of

end seeing You portfolio that we may also remember our levels delinquency the of pockets and of elevated charge-offs narrow of discussed in 'XX. toward

of said, the performance other the that does levels X we not parts of portfolio. not loans expand those monitor sustained constitute trend. quarter months of have over our a closely into elevated With yet performance to and seen improved acknowledge continued have that We similar

the possibility. economic worsening economic still general a uncertain is and is environment Additionally,

our normalization and to continue trends around expectations will credit these for the as monitor We adjust appropriate. full year

Following to additional in and the our funding liquidity thought the about prudent the larger banking provide in banking liquidity. position strong. Despite the it commentary sheet sector, recent we industry, remains balance and disruption turbulence

approximately on totaled first liquidity of and We million. of liquidity up ended of the $XXX QX the unrealized portion quarter XX.X% of assets. of portfolio XXXX make -- with a our Marketable at that XXXX total of portfolio end securities loss billion our and $X

of were unlikely base. XXXX. XXXX quarter this and slightly of Deposits both QX Mae. the of recognize stable XX the our points. fourth charge of had a the of Sallie end have XXXX, first losses. capital basis uninsured been would event the very at up of QX XXXX deposits In portfolio sell the approximately regulatory end for quarter higher made only of deposit than At we our end and We X% to the of incur at Balances

an we execute funding that the better came to basis about transaction previous ABS spreads in quarter, during completed at able XXXX. Additionally, our in were points XX transaction than

to margin the interest of quarter 'XX first risk X.XX% our and to X.X% from continues rate XXXX. grown effectively QX in team treasury Our in has manage net of interest

in loans place XXXX to quarters. In likely stated second we February, sell take third that of with $X expected to we the and in billion sales

pricing billion terms pleased $X to approximately to agreed education sale private for have of of the are that We loans. share we

the So we are able to transaction. discuss

the transaction of XXXX. close in May expect early We to

in valuation our that the thing I'm is completing sale investors a will bank earlier prudent agree to general do. larger trends, confident the year Given

our the had prices We were with to assumptions this reach able our preliminary with agreement in XXXX guidance. buyer consistent

the from of stock shareholder back minimize and levels current in value the to at capital more Our the plan to buy release our on impact to create NIM. gain sale is capital use

uncertain prudent do to macroeconomic expect capital levels, the and environment. We so recognizing while maintaining liquidity

Our assets a loan of be to from demand continue pool well-informed buyers. deep in

we execute attractive premiums. loan As to expect such, future at sales

of the through third likely Steve the now quarter. expect We year you take in highlights $X Steve? to additional billion an this of quarter. financial sell additional will loans some

Steven McGarry

some morning, discussion our good loan drivers including on-balance and this a continue includes the morning's our $XXX $X.X capital metrics finally, John, CECL commitments, reserve portfolio exposure position. of unfunded of another plus discussion allowance, key our the performance billion education loan you, a I'll sheet loan reserve, the everyone. liquidity private billion loan or which interest X.X% of under look with a private detailed total at was and commitments The Thank unfunded and loss strong for of $X.X education million. accrued receivable of

is quarter. X.X% prior at reserve of our from Our unchanged portfolio the

allowance SX when and These quarter-to-quarter and several inputs used the and incorporate current necessary subject slated management. our We for XX%, preparing include Economic deemed allowance forecast forecasts year-ago drive losses. to XX% in change SX the by from Moody's model quarter-to-quarter inputs respectively. and movement weightings XX%, loan that and we base overlays are in quarters, CECL

expect uncertainty. We of to extraordinary this periods use mix forward, except going during

about Moody's economy, provided by forecast the remarkably concerns health of the stable. Despite are the

average prior As a X.XX%. quarter for an unemployment at example, graduate college unchanged weighted from forecast the is virtually

QX unchanged Prepay meaningful compared QX in were speeds to no resulting 'XX, reserve essentially in 'XX requirement changes.

were quarter, in year-over-year speeds lower change the the is contributor reserve. a to which prepaid However, the year ago than

books speeds assets are for as continue view our a our to as positive expected on stay longer. We slower real to prepay

of spring in -- students While for funding 'XX. quarter. the commitment million of reserved the new first $XX quarter the unfunded these is Provision many of disbursement for a in semester, quarter the totaled commitments were for loans large fall the time at

losses total quarter Our our was income provision for $XXX statement on booked loan million. this

we saw metrics As our this Jon of mentioned, many improvements in credit quarter.

days found can in time be to expect improve year So Private day from as these in year ago but in more X.X% our with compared the to in mid-X% continue for detail. well in some X.XX% I in wanted delinquent QX They loans X.X% at XXXX. on XX-plus to as the 'XX, We repayment, X. Page delinquencies loans remain the quarter. of do looking range XX-plus to from investor presentation spend down education prior

Private and education usage, seen is we the 'XX from effectiveness and end big have increase are of appropriately as mitigation from were X.X% an loans at staffed at improve we a which by positive. believe agent quarter. as across collection evidenced the in loss We tenure of agent program X.X% all our end unchanged increases ago the year a buckets, the QX of decrease forbearance quarter, do in

the in in the X.XX% X.XX% 'XX to quarter ago Net year were QX charge-offs compared quarter. first the portfolio and for X.XX% in

to we encouraged this our NIM our predictable solid outlook full while are the we for sharp of has sustained increase our The of and by is earlier, and for mentioned look we performance. Jon approach, already the before conservative year the decline quality. NIM consistent the origination charge-offs funding reserve will asset on As adjust improvement net result reported performance Jon on XXXX.

of amount long-term brokered Because through manageable. funding is required year funding are raise and raised the each to asset-backed very deposits, we securities we have

a a our the of We rate also period, earnings tables the benefit period. year our than first year interest-earning in liability-sensitive revert funds. in period interest rate cost rising asset of sensitivity full slightly and X-year of over The environment while assets measure our continue XX-Q remain a we sensitive because second over reprice to faster position we to full

or our no This the If cycle, asset with sales. we are and if sensitive. we to with strategy expect of additional sales our and strategy, however, easily it position loan At static current rate changes. is do, analysis, outlook we this continue derivatives which we stage assumes comfortable a remain could hedge loan

NIM disbursements, be XXXX we and but heavily higher with can influenced year and comparable be XXXX. Lastly, year full expect season to seasonal is by associated liquidity to than quarter-over-quarter full peak builds NIM slightly

we QX future ago the to of slightly below run even most XX%, the million, the and by our annual expense guidance, reorganizational included the expected Regarding of is elevated million, of close 'XX expenses first for $XXX quarter. sales. expect the expect million attractiveness quarter environments. driven tax in $XX demonstrates This operating process was were $X.X the rate and with did representing both year-over-year in effective the sale first bidders $XXX in million of Consistent participants costs. May, additional loan the an we which in volatile $XXX from quarter have that assets year new tax loan increase onetime Income XX%. million at rate was in

by TDR that lower made and the in 'XX. quality, of year funding. change stable driven the application higher assessment FDIC in of access consider our 'XX and in and partially received fees. Roughly assessment increase relates This we part due increase 'XX the cost higher the benefit the to company-specific partially having be than period to late cost a related 'XX to low accounting this of do We changes We to over fees to FDIC is assessment $X a industry in to ago high factors. million expect of

in levels increase year increase the servicing current Volume the inflationary increases originations, effects acquisition, our of staffing account were remaining increase well and The XXXX, as to the XXXX. million of for costs and early the QX in quarter. environment $X.X of Nitro related they in in our expenses $X.X our over over where this to relates occurred the operations operating as the in of collections March million both absorption includes ago which our

Finally, our liquidity strong. and positions capital are

substantially Tier referenced, with the strong loss year an quarter X XX.X% we risk-weighted XX.X%, was equity liquidity reserves over GAAP the of and was the higher loan than liquidity measure very plus John capital total important post ago a common ended As risk-based the XX.X%. CECL equity first assets assets, And at end of quarter, of XX% of XX.X%. total

the CECL phasing we course, adjusted beginning year, regulatory XX% each of at of of As the impacts amount, in absorbed to capital which, ratios. transition the impact we capital are our

turn back the 'XX. We our and with January transition capital return and have in going of to XX% believe Jon. XX% in well of In remaining the be call to we I'll to phased now forward. grow in, are shareholders 'XX phased closing, to positioned we business now the

Jonathan Witter

trend Dave. you that know XXXX. executed to my well in agree share continue that quarter if I we Thanks, throughout the belief that and are first we positioned well

second to trading arbitrage we that sale discount. is and to at settlement We are in excited loan the while is loan what eager to our stock quarter, our be sale share about put work the believe buyback a are significant pending

as continuation the of of In to the our speeds, and interest mentioned prepayment quarter income origination second in we toward addition the are look both of sheet quarter, growth the which growth first for year. slower balance positive Steve also

to We operational and to execution, drive management expense on will focus continue NIM results.

discussion of the me conclude with Let guidance. XXXX

As the I performance. as seeing are QX we encouraged successful positive trends earlier, as origination well season mentioned by we the with both are credit

XXXX. things a successful We are optimistic these lead that to will

quarter fourth were we as cautious building reserve just in year. However, 'XX, we for in the of cautious guide our our about remain the

guidance let's up earnings some our With we communicated for we Thank on the Steve, questions. XXXX key last that that, Thus, metrics. for all call the you. are reaffirming call open

Operator

Instructions]. [Operator

Fargo. comes line question the Kaye of Michael Our first from with Wells

Michael Kaye

On It what's sounds you wondering than I $X sell where the but the do demand loan I more. potentially wanted price to know pretty just given to to billion, selling more the good to stock plan the was and on that. check I like appetite sale, just is openness there's

Jonathan Witter

for Michael, it's Jon, your and thanks question.

Our the plan one arbitrage strategy the sort demonstrated at thing an of loan couple is point we think of I that allocation if of sales. of contemplates over in last the $X billion have the our additional there's and we've years, that capital belief this hopefully power underway. But

the sort of assess to the continue the of So grid. depth premium, arbitrage our every of the market, we year, of state sort

think create significant look billion. and opportunity our But additional if value adjusting doing favorably can our will we have you on point, $X plan that have see to by at in we I plan And this what an Board confidence is that. shareholder our an we look will again,

Michael Kaye

guidance. strong more was the even quarter, concerns year, early your you conservatism back the on it left all guidance unchanged, it's I the surprised a really you macro. early know increasing from it was the particularly on outperformance the holding Is it I And credit outperformance what's in on? but is more about guidance? originations outlook

Jonathan Witter

obviously good internally. debated something a it's extensively think I It's Michael, question. we

time potential said. to a in has many year. heavily understand early originations the you and long by view It impact what I season, peak think an the less that which and and is environment on as -- yet you is our I uncertain, The others obviously economic has are have have for to just who to us is and for think followed which credit have there's happen. know exactly influenced

are So very guidance. a updated seeing with see felt happy and while prudent we what I just performance sustained think encouraged to we more bit we are it very we little before

Operator

question comes line Credit next Orenbuch Suisse. the Our from with of Moshe

Moshe Orenbuch

Sorry you hear Can about now? that. me

Jonathan Witter

you hear Moshe. you? are How can We

Moshe Orenbuch

right. All Great.

you've there you that trying origination of a of players the can highest had kind couple level mentioned seen kind growth origination think out high market. kind long of in-school been success some of to a XX% in have So that are year? the I histories the lending there of are about and some freshman we student what that for talk bit about of which should have how the now drove the in little entering that Could you think enter, balance the

Jonathan Witter

also we Sure, but the that little some the Moshe. call we sure well. And in we Happy a to. bit sensitive be on investors call, as have obviously, have I'm competitors on want to

whether investments couple I investments -- is we of significant technology, in originations making and investments and think in that's outlined that's our of use, I acquisition the channels partnerships, channels analytics data would sort sort the that and have both last that and and the significant have our whether look we years, things for I that whether or been to the like and look we whether in significant of Nitro. marketing machine the of to investments effectiveness of would also expanding but in

to marketing through a But we of increase tangible that those inflation belief can that over and think and over the do us real way control so importantly, things that we our a both do have also I I there time. cost a gives effectiveness think in greater basis to are levers.

cost that acquire trends encouraged we're seeing the encouraged of right by are the general by in both composition now so especially are that that environment also digital and volumes inflationary we're we to are in in many metrics, in volumes, those trends we seeing So our but the experiencing. the marketers

the it So results that are things I of we is really seeing. are think those that driving sort

of the my In which for always of like, are addition forward. and a opportunity view potential which to things our year. all with I growth to certainly great heavily At that slightly as brand, are had, schools going originations in we've invest relationships a us continue we for in. said the would we point, remarks, the strong ahead just as really this plan I

ago little year. But to a as We out to shapes peak much season. we so think driven want looking Michael, in the to I of said quarter by sort a that run-up bit few guidance I the second the early a for minutes is see peak is changed how of before

Moshe Orenbuch

that into kind about to on that capital loans, the is could you going for anything about taking recognizing premium premium of and to want on of up total sense say after-tax the Give reserve capital get And much kind account talk Steve. you that, the didn't some sale. in how the freed together. us the loan you're the But

Steven McGarry

sure, Moshe. Yes,

the XX% So have we total as risk-based can balance capital see, you on sheet.

gives sell think we of free a will you of that when see up these representative loss samples We we and had how I loan X.X% our reserve, balance indication we a pool. our sheet. from good loans pretty much capital

gives you we considerable a reserve that up this with indication good So free that amount of a of loan will sale. pretty

look, guidance. the we good that And put our Jon I very of together you indication regarding saying premium, assumed a the when it's gave what within we range think by

on respectable a that and earned we very sale. it's premium this nice So loan

the So the in you expect market stock near in to reasonable can us buy in be term. to back a fashion back

Jonathan Witter

math on first quickly of the for And anyone Steve time. that tax touch for just the adjustment the who's doing

Steven McGarry

Yes, sure.

course, the capital on statement. impact no through the there's of So release. And the income tax provision goes

tax effective. be will that So

Jonathan Witter

premium. the with As

Steven McGarry

Yeah. premium. As with the

Operator

Our Sanjay next KBW. Sakhrani line of from question with the comes

Sanjay Sakhrani

sale I'm not rate about I'm But stuff talk during obviously sure risk the and Maybe curious even terms banking just the point how if could of able of positive. sale. on wasn't loan prospects the the just all of quarter, it sale. there the question the very that being to across was Because any that because of do migrated first Steve, at sort you quarter? happening any was movements. in the Obviously,

Steven McGarry

operating the very a I Sanjay, were are earnings, after these But the loans to premium we shortly a mean, started product. rates fixed important it rate of XX% we and takes we Base are X look, a released period of volatile very that incredibly was typically weeks. in. the process part process X since

loans of the well. I've performance now As these the flows credit in times of portfolios buyers of cash and past, very these understand said many the the the

sales, whether the we hedge give not continue should chose little rate the to not for probably internally, understood wildcard. and We loan to to, debated very we fixed or well a and well-known hedge is are as that's future for the and process. And or worked I should and out ourselves component pretty Credit of us. favorable flows we be rates of whether the process bit by insurance. probably cash And John process of daily And component well well. not biggest a buyers the discuss factor that pretty

Jonathan Witter

I sort loan the Sanjay, that of, time. years of could about And said of is I recollection always questions right. the exactly sale But done. over or it we've strategy some one in been we quarters there were for before marketplace. really where same think in this, we likewise get amount each economic-driven of would a look saw here the think there's just couple if I X of the I've quarters, and add, those you been back Steve volatility industry-driven now that and also executing been My

can't there that And is happen. an may the where day, situation there come a and economic volatility they so certainly, great come may

the happening markets quarters happens. a where not certainly I you, sort where I'm a globally. resilience broadly of guaranteeing these been have will lot I during could things by impressed even was of and be never more case there tell So of there that But

volatility. I this sort the of a very at taken periods always you I seen rebounded interest we some may of off, And you're we're quickly end the the day of having have But think seeing. the as quarter, of factors exactly have during other kinds but worry when X or of day, that think

Sanjay Sakhrani

every any you thinking Steve, It's I mentioned be operational Are think quite the we seems improved. resolving got heard the everything positive. themselves need seem milestones -- issues of to has has also stabilized -- And tenor that about? be there it the -- I like I have assume more there. in you average to collector

Jonathan Witter

Look, we sort company. call, the I and as in think on the in Yes, ourselves for performance for us worked Sanjay, as I'll back take a and quarter the said very predictably real to last had we area that took historically fourth opportunity an well very step challenge our that one. of

us better do and bunch of and changes. a changes that implemented to care on But will are, a ideas there effective have attractive in our and working team and quite able think, We think make really continue we is the way. take I frankly, more that to that of additional cost-effective just both customers

environment. should because that economic to And of good first we the a will so as reliant trends good to hopefully, there's this about continue expect But we view But I broader talk it's step. always you think step, on more long-term charge-off come. think And work sort to a they're I hard this. at so

Operator

next Our Rick from Shane JPMorgan. with comes of line the question

Richard Shane

NCO that. at recoveries, quarter one And out contributed to look the things recoveries when rate. obviously Look, the we stands strong that is of in the

You've the of a was of exclusively were when in operational the changes talked about charge-off sales improvement loans? look changes. -- at I'm that recoveries, operational increased there you or of function curious

Steven McGarry

improve to in in anything, charge-offs X No, we future for was sales recoveries there's of remainder significant sell is of have after room think months terms and regarding to the left. and had we the back for probably process what as as worked nothing the charge end quarters sell in then If recoveries there literally and on I XXXX. then X half going off our months sell loan unusual remainder they Rick, is

through we there is our that acceleration the worked think can't just a spend worked And from completely which its in portfolio, was results I we related has the its performance the [indiscernible] scores. of reminder, a their transitory I time an the way and the in has effects population, have about We through. considerable And defaults of that validate much think that pretty big XXX%. as way now acceleration fact improvement policies. lot was think of forbearance 'XX to the that talking that amount that a changes run in the

And look, our Jon? like collection us sharply that, to a improve add unit and performance helping our for improve here. you'd their that out to performance Anything to shout

Operator

the with next line comes Our Stanley. question Morgan of Jeff from Adelson

Jeffrey Adelson

liked Understood that you guys did have think about I last to yet to close on in this this to $X been billion May. you early year, trying October. how of just compares loans being maybe But sold Can the in you guess a this some buyers and what of they the to sense of What recent takes about of puts that get didn't to how deal the compares you did. versus last a like? your year? trying talk little deal Just bit about

Steven McGarry

our sell I'll crack pools of of like that. Jeff. literally try Sure, and But we at representative assets. take a

pool there loans. buyers we to pros put grow cons of from evolve field in continues I and of of process to front think to same sale or don't any from previous sale. essentially process different were what any the The So is the and buyers

forward to is what gaining look come seeing we think buyers we'll asset quite of each participate class. a thorough a And that are population more potential we of to understanding that the market. continue to time simply the I are

as the that's the underlying discussed The all the same marketplace of fact in and same. flows I cash that operating. are the just wildcard is conversation mean rate earlier the the one interest is environment. the performance we're we And basically the credit

Jonathan Witter

Is was the where sale, at maybe answer to or was just correct? finish to the close rate think Steve, to I Thanks, last pretty that, higher. it slightly environment interest that

Steven McGarry

time by almost the sale. we It close the was identical

Jeffrey Adelson

And quarter, then some this of result benefit for the originations coming really through. you saw nice freshman a obviously, with

maybe wanted are Nitro benefit point? your this at keen is maybe how channel understand expectations to you're the Can that coming your there. of And much for you little the that a -- flow going getting help us bit on through what Just forward? Nitro

Jonathan Witter

of through volumes is take one, impacted don't the Yes, world hard of by so And a we've the not. it versus that to think happy know there. was that. two, what becoming rest to specific marketing sort digital is unfortunately, Nitro with that come disclosed a oftentimes in multi-touch Nitro And what integrated was I our

of high-quality, I they But I'll looking one, for a customer-initiated Nitro couple necessarily student establishing trust-based of relationships private job a offer with I is a relationships customers before think are what does great think thoughts. Number level.

allows look with in student for relationships to allows offer kind and have trust might we right that through to insights And start private the allows us build customer when a that anticipate us those to the to it cultivate brand the that affinity us to to a and right way. loan the and be them there with time at of communicating right them and

reason is sometimes branded it's machine, to I powerful very The is separate that hard action for So the customer Nitro. to think, strategic value us. acquisition is that of call

branded acquisitions action call by Sometimes Mae. of that customer the through. the that the positive to Sallie end driven at day, it's is all But comes

content even expect generated of continue should acquisition forward. beyond going of you us kind that think in invest sort to Nitro models to I for

as it's and think We we life attractive which it is CTA that us to. we're to to effective. would relationships think compete Google customers allows like not really a from much talk think in to we to to highly We perspective. it much the auctions get the cost earlier having cycle, And in want establish access and to means and own customer

strategically. all like we that of So

we has saying deal. overall economics happy would ago the expectations I is deal from year the deal a the very with are our feel I the that Nitro think what performance comfortable out surpassed and we of set

Operator

Instructions]. [Operator

the from Barclays. comes Our question next with Mark line of DeVries

Mark DeVries

you've Jon, what from a update the of continuation January delinquency so think saw on you provide and April? you can you us and I February seen mentioned in March. Any far improved that trends

Jonathan Witter

No.

not at the anything month. disclosed loaded And you the case is in back-end shops, look end to as for of We of honestly, very collection the when patterns have April. many normal they the are operations,

a just short the with month anything you, complete days picture. So a even that few far be from we left in gave

monthly you I trends. issue point do quarterly data to on and So would we credit

to We be tend think those indicators we're of rough where pretty good going.

we who's time. I so those which would releases, interested over And do to point anyone

Mark DeVries

Got kind thinking a now it. And the Can can then, of about around tightening Steve, their think nearing sensitive I think the you hedging little about you more Fed end you your appears mentioned be to remain cycle? given that that that talk that. bit of asset

Steven McGarry

essentially our Sure. you And let margin net And interest is is. tell me approach portfolio. Great on our approach to question, Mark. our lock what a steady in

So think did of for fixed rate for fact increase. to in that motivation interest the did, continued were that that going our more motivation primary Yes, wasn't we that choosing that us we The fixed loans the funding. rise? rates was primary rates to component borrowers laying were the but

about So or X%. minus I sensitivity, it tends sensitivity to of the talk X%, between kind liability asset go plus

rise. really steady the interest we may But like put some interest very rates making on be fixed end like cycle. I'm to So rate well on if does good a the to not but maintain decline, swaps, or forward rate but We look to -- starting spread bets, And of does at may are any continue we example. are for going pay to going a look just continue aren't to trying rates we sorry, might would rate your portfolio. it point, to

next do limited, to business lot seasonal to which peak a a our now, prior pretty not there's and be lending are season, nice like this. in is exposures the But right to

it. interest But get to a things going to primary unfold Fed we play not watch summer the margin good, solid, here. do goal is how through to lock consistent is So to net what our in and the

Mark DeVries

hold deal in do pause were what's are had just in squeeze of to really the on hoping they hit loans your to to them is companies I'm the markets? what to volatility really color these ABS one bit I as on sensitive you the like buyers as was how And who do whole thinking get about and insurance going last trying in you nature quarter? and of -- funding have Or don't a the the if little care markets? Or just could first like they for buyers are in And loans? I question. understand

Steven McGarry

and the they buyers point, insurance the of accordingly. classes to securitized what being to funds And So rates up of sensitive rising and portfolios are they basically end and ends subordinated that rises or absolutely more funds. the their bids and large being of very interest end residuals look, the your the up price credit falling and

is much absolutely of loan be the we that I I future mentioned life. like that whether are and we fact susceptible review to that. hedging not here, to interest on a to earlier, John and rate But have should we we focus ability do It's something sales, or very continue So environment. the

Operator

Our the Hecht comes from next line Jefferies. with of John question

John Hecht

of deconstruct be on -- one asked clipping well. positive But But my kind as any the earnings I guess the buyers. would I'm just one, had second NIM -- course where half over And couple characteristics this speaking, how a thoughts questions. of my and -- of I just that the the ago of different of trend year-over-year, you questions you have pain of if you and think maybe affects moratorium a credit then year this. the but if the on Mark and the of kind payments betas a question demand morning. of yields expansion marginal broadly quality. Actually, obviously, with deposit kind can Number moment few on second how go the comments forgive commentary the the of juggling me kind

Jonathan Witter

the Yes, question. for question. Steve first take the John, I'll over second to turn it I'll

just I habits very -- -- a X, encourage X.X-plus and that with our hard in federal sort them into post so customers has loan back everybody pause of I record is years, think, have federal a while even been, of that remind patterns place and well has very had program. the folks and been we last forbearance different experience. to worked the established end We First payment over good, our regular track COVID now hard to would worked disaster all, that

a of of have of major practices. that and the I great things sort to payment our the of think through federal customers our net credit of both of continue that I administration today FICO our so scores on With the discussed said, would sort customers, lens, we quality policies general the and feel being creditworthiness. and of And great sort repayment we kind think habits underwriting about about refreshed feel like positive of

forgiveness Certainly, sort to on on positive moves average repayment strong a a, impact of certainly, net us. have has loan federal would impact any of majority income-based anything of credit a And type whom on the customers, our also loans. that have

talked sort a type and impact certainly We've material restarting long-term really we we see But the done for payments it John, some talked, I've don't a of sort we has having the past of detractor. federal it about. And think loan impact probably of and any things of is as of a originations. in creditworthiness don't modest that have on on the reasons the think sort work

and John, different customers reasons federal from be topic. they seek bonus a very term. other us loan. longer continue to the they're complementary the would are think We think We out one I out very complementary seek think in add why just they will

hope I around are program. fact program really there is a the issues our the the think all discussion with Plus that light on of bright it federal real the that shines

to of both an certainly an see we the from almost programs I students those of families is impact make have sensible being that that evidence Plus forward program position has to any And to on sort smart to dialogue in but complete think a reform access college, starting reform productive political sides that we a And that think to is untenable term, and ability sensible aisle sure in our appreciation are for business, does the there federal dialogues. on need look both and of there part longer and positive the a debt to load not and constructive put we perspective. the

Steven McGarry

Yes.

deposit for you betas, question. -- our the thank Regarding

strong deposits. we XXXX to up with our That's bank to insured like very insured ended repeat look, now is in position. XX% that So disclosures. I'd XX% a deposits based our on

was see we should a compliment retail/Internet deposits of about of I very can people of just $XXX and Mae of the $XXX quarter regarding over we that million just strength strongly in that take deposits, interesting those largely that guess the that the feel course Sallie deposits, left industry. You our as Bank. so million centered a uninsured banking had

deposit vast our the of And market is leaves way, of that market, in deposits about billion the $X And The retail by term retail Mae of locked Bank in. the Sallie strong the that majority matter or does our either the deposits have are money pricing just deposits. fact very are a reputation. is market-based

extreme through months on We have the and seen March stability even April. that of front into

is one. the to percent-ish of betas low deposit ZIP Fed sort through Our fundraising with the rising sort code run recent rate the we the seeing compete not and course in season right now bank and very have not we're -- that cycle throughout of the of in over pack continuing of aggressive most we are what even our big And deposits the And of we're April. is inflows with. the competitors into pricing

in seasonal. repeat on on interest and the very other we're NIM expect call, you're But feel we you about net position conversation. because we guess already good the I'll that margin be commented that tends I our in it And missed the to earlier that

full our margin interest it rises a having higher on. slightly XXXX. that, a good And in interest in five after than we periods that periods handle margin our net net has feel was expect liquidity for about to during where declines then we It in big very come and year, disbursement for the

is XXXX. good So the very for outlook

Operator

you. the Ladies queue. now the back would gentlemen, showing questions no and I'm to I Thank like turn call Jon. to further in

Jonathan Witter

Sallie Towanda. any participation and Mae. provide here answer the is your your digest resources without as standing It and goes whatever I saying everyone, this much, help questions the follow-up very the by call and that IR the look you morning. the for entire can appreciate end quarter and you, to Thank Thank on additional interest of forward we team to you year. in

back business. to will I that, hand some closing With it for Melissa

Melissa Bronaugh

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

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

Operator

participation. for Thank your you

disconnect. You may now

SLM (SLM) 27 Apr 232023 Q1 Earnings call transcript