SLM (SLM) 24 Jan 242023 Q4 Earnings call transcript

Company Profile

Participants

Melissa Bronaugh	executive
Jonathan Witter	executive
Peter Graham	executive
Arren Cyganovich	analyst
Moshe Orenbuch	analyst
Terry Ma	analyst
Sanjay Sakhrani	analyst
Michael Kaye	analyst
John Hecht	analyst
Jeffrey Adelson	analyst
Vincent Caintic	analyst
Mark DeVries	analyst
Richard Shane	analyst
Giuliano Anderes-Bologna	analyst

Call transcript

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Operator

Hello, and thank you for standing by. Welcome to Sallie Mae 2023 Q4 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 Fourth welcome Call. XXXX and evening, Sallie Quarter Mae's Earnings Good is here Pete CEO; be pleasure Graham, with CFO. It to our today my Jon Witter, our and questions. we the prepared will the remarks, call After for open

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

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

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

Jonathan Witter

everyone. Thank quarter discuss joining Sallie you, and results. Thank Mae's full Good Melissa and us Towanda. evening, fourth for you today to year XXXX

key today. discuss for XXXX. outlook messages year I our to take pleased and a you'll away on I'm X successful report hope

in results strong delivered we First, XXXX.

in the year. XXXX well Second, third, out the and we we have to year, and performance we continued approximately will that a thesis our in of introduced entering the deliver beginning positioned ago. momentum And laid in we month the credit coming is on are believe we improvement the investment with we strong line anticipate expectations experience

compared of discussion share the GAAP of a quarter the in fourth with diluted was XXXX. begin a in results. XXXX QX EPS to of $X.XX loss me Let $X.XX

to which within and $X.XX would GAAP noncash and in well XXXX. intangible was the in with name detail, $X.XX discuss of have year will the associated diluted GAAP guidance compared asset $X.XX trademark, write-down the Pete for year, XXXX. expectations EPS been $X.XX trade for our for QX full Our EPS diluted more Without Nitro the

originations Private our of is XXXX. our quarter up million, loan call, for provided originations the education were last guidance of billion, $XXX earnings X% on quarter ended over 'XX Consistent fourth which over X% with full up which is approximately XXXX. $X.X at year fourth

a class also by volume potential by applications. Application in increase group. this has important the given fueled year-over-year value This under increased is and been XX% especially serialization XX%, and of lifetime greater

market to most in lending was record consistent private with In to where of post student pleased campus XX% loan pandemic, Credit we years. of were recent a we past able students year return industry report. are the to numbers share maintain our the quality that according originations

of Our was the of cosigner in fourth XX% up from slightly for 'XX. the rate quarter XX%, quarter fourth 'XX

an was the over XXXX fourth the Our of score fourth XXX. quarter FICO for quarter XXX, at 'XX average of increase

XX% over were an score both average XXXX. XXX, of originations full co-signed our year, and improvements full the For had year FICO

repayment We percentage We of seen net our lower at at remain have in loans the the we of net expected $XXX end our path credit normalcy with and and for this pleased year performance as a are back of charge-offs X.X% focused on million. guidance to and year. improvement the charge-off that average the ended and year

from to for range. 'XX date to environment. 'XX those with into changes the continued the changes that of progress assuming the economic progress and operational Having XX, low performance to are we high and immediately, is our net Understanding made we reversion from our X% we to rates underwriting, programmatic segmented course, and broader portfolio, Xs won't of right see the that goal made to continue happy to expect the no assessed a the believe charge-off 'XX portfolio

X.X%. in did a borrowers this We in believe result We fourth to worsening a in mechanical broader are performance. new of their is of quarter period see largely the rise enrolling delinquencies in programs the who versus qualifying

we indicators default are December, In rate [ fact, years. over new of seeing the success ] and our of programs, to in lowest observed X in early payment roll

at of return. fourth In quarter the $XX.XX. X an to 'XX, shares capital price repurchased of we Turning million average

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

over Before I for agreed share private I'm $X terms loans. approximately to to the of sale indicative last Pete, hand we pricing of to pleased call that billion the week, education

expect the year. ABS by February. the are ] of fourth we we the the received, with quarter transaction Lending spreads, [ saw close for which We line in well general the encouraged With improvements the price as in is expectations to we improvements in early during segment in market Consumer that as our 'XX

sell sales be XXXX. our by balance driven conditions volume timing will sheet growth and additional Market the loans will We expect to targets. dictate in of additional

we Pete X% balance at Forum XXXX. just you roughly growth through We to ago, take balance expect some now you. month over additional be quarter. Pete, highlights our will to sheet or X% in with in slightly to our of growth the above strategy a financial line shared sheet the Investor

Peter Graham

Thanks, Jon. everyone. evening, Good

of with our continue loss provision. loan Let's allowance and discussion a

by loan driven was sale offset credit the closed that associated million for $XX billion $X fourth million almost income $XX of with provision total quarter. was the entirely Our in in statement The a million quarter. reduction and by on our increases fourth $XX the build volume losses was provision

compared in $XXX quarter. X.X% to or our quarter. fourth loan provision or year-ago This from for quarter fourth a decrease charge-offs $XXX the year million in prior education $XXX the a X.X% $XX million ago [indiscernible] the of decrease represents Net million were private portfolio from quarter and million the

X.X% our and charge-offs were X.X% and loan provisions quarter private in education end or net at the our or of billion These plus $X.X Full billion. loan of on-balance receivable student of sheet the CECL under exposure, which billion interest commitments includes the the low unfunded and million the reserve of reduced $X.X total $X.X $XXX accrued for charge-offs guidance year. portfolio to loan fourth our net year

continues rate to reserve X% XXXX. end to as this the the of compared quarter Our improve year X.X% of third at and in

and XX delinquent of the this third enrollment in programs repayment, X.X% more loans quarter the end of in at increase our Jon as delinquencies X.X% education ago. Private end year an of at loans a in We loss discussed mitigation uptick new the or X.X% by the indicator. believe over primarily rather well as credit days are that than is earlier driven increase the negative

Year quality net significant loan our portfolio after income. interest year, generated

XXXX than the income, Net for For year full XXXX, to year XXXX. interest X.X% net of X.X% of margin higher full earned in interest XXXX. compared we $X.X was billion

Going to into in range. the our be low XXXX, we continue NIM to mid-X% expect to

expenses Nitro related million compared the Total with trademark. ago million, $XXX our were compared $XXX expenses quarter trade million noninterest in prior the million in The in expenses in the the $XXX from quarter Operating which name and the to increase peak ago prior are fourth quarter, to fourth the million $XXX quarter. $XXX the down lending was noninterest write-down quarter to in expenses the quarter. prior year associated season. Fourth operating year quarter in and and quarter were to million the $XXX

down very driven more be as cost our to resilient and of it continue acquire. acquisition us build We our marketing pleased model a with Nitro has helped to

and as we've to strategies, better we've Nitro programs and using seen Sallie test begun the Mae meaningfully performance Interestingly, integrated effectiveness of the [indiscernible] Sallie platforms. and the

will performed than rates. the Nitro believe the in the testing one example, with better measuring We our For brand Mae continuing XX% affiliate that performance Sallie build and accelerate growth. in conversion Mae channels, Sallie to brand on of platforms Sallie

using the With we this that associated zero. trademark the asset and to name intangible brand, down Nitro determined with decision the to [indiscernible] trade Nitro stop

have per a XXXX. approximately to impacted year that established share to an have a fourth guidance asset asset Absent quarter this noncash in decision incur until resulted was $XXX XX-year amortization charge year, The this using intangible this quarter within would reminder, and noninterest been the life for a of year That this million $X down As expense the would write $XXX continued million year our and earnings expectations. expenses for by the write-down, per in $X.XX. million. million the full $X.XX by $XX of for

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

XX.X%. strong loss grow and loan Another loss We GAAP risk-weighted positioned absorption to assets, forward. well which on is we're capital plus of a sheet our the shareholders was very measure balance reserves over going believe business return to capacity equity

turn Now the I'll call to back Jon.

Jonathan Witter

exit of a considerable 'XX XXXX credit of in business. progress. growth excellent incredible We competitors to was on like and originations the and Pete. performance Thanks, finish our XXXX feel normalizing right originations with We to experienced growth happy one consistent the previous and path with largest are credit expectations. our 'XX year expect we're 'XX in as

meaningful are this return for able loan also share arbitrage seeing in and buyback to sale the positive and space were capital We momentum through shareholders XXXX. to successful already strategy

sheet X fourth, Forum, thesis we strong second, and growth; manageable a on EPS third, strong and on over investment balance our Just within in principles: return Investor month common all ago return; predictable capital first, meaningful introduced equity; risk. and an performance built

We return sales we like and It allow to on provide the focus on capital with As to coupled steadfast earnings guidance I'd our expect to meaningful organic moderate on that both we generous year, will next management for expense expansion, these origination shareholders. principles. in growth context, is and growth to for loan XXXX. deliver this the embark believe

X% loan $XXX repayment, net in per average expenses full Specifically, million $X.XX. of non-GAAP between and diluted total $XXX of to $X.XX year loans X.X% and earnings or be XXXX growth X.X% for $XXX between core $XXX full and to to million between we Education and expect year of will X%, noninterest year million charge-offs million origination be full loan share the portfolio

to today, we X repurchase repurchase XXXX. we and in Well and a million dependent share expect share common continued authority sales the planned stock next roughly are XXXX $XXX years. factors, over up in other the remainder announcing half new buy addition, of In to price loan on to

X continue for opportunities to days on stock over look buying expect conditions favorable. are programmatically market and more when buy our the back We next to years

longer-term Thank to open for continue that, questions. and some call up clear let's our go the support We capital With return. commitment you. Keith, our to shareholder plans ahead return and

Operator

from standby. comes Please with question first line Our Instructions] the Citi. Arren Cyganovich [Operator of

Arren Cyganovich

me? hear you Can

Operator

can hear we you. Yes,

Arren Cyganovich

Got it.

that. about Sorry

market 'XX-'XX the this you So -- year. it like assumed in that trends, with share of looks kind of like there for have in modest next of year other market cetera, academic any terms exiting items for included increase the larger your there et of some have year? X Are note enrollment you competitors

Jonathan Witter

Yes, Jon. Arren, it's

Let up me and top-down. build take our projections that. bottom-up We

sort like, year, and were So the is we a absolutely we're enrollment we do analysis, of those a close. do a things analysis and And this top-down more triangulate looking of which bottom-up we And pretty share-based those where of numbers trends approach. X at together. sort

So enrollment do competitor around effective over the we we we've various the done. yes, year we getting organic which views acquisitions the be potential been both the have given years, have space. yes, around we a there assumptions views investments have our do several more Yes, And feel exiting marketing effectiveness for the have and in increases. to each programs, of around last

spread than years, will from do market gains will the comments, impact spring and exit driven resident any it think [ it that's we entirely I'll fall, any I believe say may X share so likely impact that be not will within and you more remember the likely [indiscernible] just the important, XXXX. by ] just proactively, thing my over

Arren Cyganovich

high? question bit sense. gain it that And said lower first second the were than XQ during It a quarter ]? sale. what that struck improve was the normal Was been Yes, or the because in recently. on believe then is you [ $X quarter billion the rates makes of expect to third on the I that has And that you like looked sale when it

Peter Graham

the of That's Arren, was we obviously of in struck, improvement is was And sort this into rate seen year. rates. timing Yes. in the peak environment -- Pete. that rate The deal that we've when as moved at right.

And year the it's said expectations so in with what our in largely we again, line were. for as remarks, prepared this

Operator

Our next the from of TD Orenbuch question comes line Cowen. Moshe with

Moshe Orenbuch

The about loan the the million of large how $XXX you the can over capital a if little number. months? fact year, bit first ] that Jon, already talk deployment. XX given or you next to could you've the Maybe, deployment sale that of think you agreed And about is the pace [ talk a capital nice the about XX

Jonathan Witter

Yes. if you Moshe, happy Pete, jump add and anything want that. to to in to

I really, one been has think low rate the given quickly because if very, deploying NIM. very that, of the you capital that environment, back philosophy historically, has look impact our potential of on

divulge you bit thoughtful, around more how should deployment, While to or that not give we think timing bit strategic do plans specific higher flexibility us a a we and capital. assume capital about opportunistic deploy more that I be rates

opportunistic But that will times reasonably buybacks. we also a in and sort our consistent should more -- And approach approach our so take being obviously in comments consistent I at to We'll we are be period. of said you I for time I favorable make think approach. are we think where that expect programmatic conditions we think this we to our think across that or sure want in market look

Moshe Orenbuch

it the share you Great. of on that kind had you're sold maybe I about sheet, the elements the year amount or of was you of that your mean gains do that with were likely something of think month I call plan. in market a you little thought about origination little better loans you about the than a kind around process. think just difference? gains your you time the you do later and about Can staying Is balance dynamic And to your as increase the of what your more bit about increase how we of included than how just forecast. amount the in of things talk you if mean, can kind the one talked would talk a last follow-up,

Jonathan Witter

to. happy I'm Yes,

And and the X% back my Moshe, balance X% talked in you about our if comments, sheet we X sheet this investment I that strong in think predictable growth go to growth. on thesis, I year number is balance likely to think range.

think primary the of I sales, sort end. that push how of that market the of we versus we should conditions sheet, or bit of where we how much extremely favorable the minus. And to market we sort maybe many -- up as to are going that loans obviously, on that, is a to plus little determinant sort upper where how assume to place sell balance a you loan conditions be found in weren't place if lower we much it bit end push favorable, end. might If a the we a little keep

operating EPS is much, But that sheet balance investor discussed sure capital be during our shareholders. returning to think I have that quite that to driving very as the predictable we're time, but with we measured also in forum couple strong to growth, goal, significant really attractive leverage really growth

I think, It we growth say we that's again, basis. in is, as I the really predictable it. balance sheet So based investment how about think think on

Operator

comes with of line Ma Barclays. the question from next Terry Our

Terry Ma

maybe you much implies the the outlook on credit year? comment improvement It to the high like XXXX. Can end seems this just range compared of not for

target talk for maybe gets within underwriting your longer gets you low should the frame high about getting then So the what about or just think end end? to time we And back versus term, us how the levels?

Jonathan Witter

to. Yes, happy

sort it's to programs, those What And effectively of a those pretty we've up sort developed recognizing I sort year sort continue economic and sensitive of is we've to to of have range, course, bit a be, early I seen, think, programs, think of tried effectiveness little programs give the look we the days. of of deep of at a new I be uptake that. to early of that forecast use obviously, we the the in the the those we've think, a in in are environment. building done want recognizing we in of some volatile programs,

behave looked the at those credit loans made like we sort things the we've the of at and and differential continue looked between don't. changes differently versus underwriting things we've to versus at vintaging again, down knowing those We've our standard things have into over different time. of like performance that variable portfolio, the We of that rate, And understanding a portfolios those looked of rate we performance balances underwrite and and is loans details aging of fixed the that little different. bit some that

kind of end how And [ of sort think of we day, came to the ] at I arose, you. the that's

in is the put sort would and we've I things days. think more would us the slightly in I of we the upper than to of end were early take that. of like be the And would programs we seen thing felt the that the to opposite effective had the sort that place end us lower take that better if think

ought confident and are But be we I think you in to credit. is in year-over-year of what sort improvement take continue away to very

in that makes detailed I comfortable, see for And to described as changes, more performance us say place be. we have at in right I of to should and my the 'XX, said that macroeconomic believe points Xs continued broader I really course, is think to expect Xs high us think that. the assuming I no low talking we'll improvement analysis you I

level it's think make a to we far meaningful of all Whether I in and we little [ I back a confident continued close, the are get or call. improvement. out too way bit just 'XX that to normalized ] But think

Terry Ma

evolves think then how years competitor And Got market fully the as that exits? the few longer how we should about next share, it. term for over your

Jonathan Witter

Yes.

I think would. we

media the the made when there share there for [ years compete suggested, as expect be jump plans we to that has much Wells ] leave of us that will several decision would market was to forward for the marketplace like all ago. Assuming those all think move I

way which of we expected compete the end of that for for characteristics, those business. loans. just will to decide and know competing necessarily exactly like business in It's the pricing sort up any of compete compete We versus of for a of My ROE will tell. But in that on we based resulting that for don't sort too other that of credit it. guess we early all is piece compete same We'll characteristics, we'll for all I to good it. not trying

is that sort our and I excited -- a with competitors very [indiscernible]. I And compete opportunity what hope as competitive But be does onetime to up is increase equal that show and share. we're to to zeal multiyear a think but marketplace this of near-term to represent think compete for expect nicely where much other we continues we're and

Operator

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

Sanjay Sakhrani

what guess Pete. you're talk assuming level question guidance? the sale assumptions XXXX on of for you in terms share repurchases gain about of I Could and a like in just maybe sales, margins the the on loan

Peter Graham

second we program Jon we'll approach repurchase. And loan installment a in said, is kind in laid out -- we as begin on the that The as determine the do that in part, some that year of $X year, start point that pretty And we're will then of of Yes, to similar the terms sheet to to utilize indicative terms balance our at of a the programmatic at again, that. sort sales year, capital this of the to build sort that guidance when of program overall a for the for large level. go. we'll we overall on share that is targeting by the sizing agreed to and billion we've Forum, later generated ultimate good and X% Investor growth, X% that

Sanjay Sakhrani

in range like bit at sold like that then the than $X billion guys so higher been Forum, consistent that's that the little mid-singles, a already, you Investor that's articulated And that?

Peter Graham

Correct.

Sanjay Sakhrani

rates what's rates, rates you've affects just done Could that and you Okay. around been And us on interest maybe what sort guidance? just and down, of in assumed the how as the remind rates. of P&L sort come

Peter Graham

sure. Yes,

because tend the our why course the peaked on to tailwind in had last of did rising of liabilities bit that's a 'XX. couple reprice. So our little than And rate we've we NIM reprice environment, in we loans of the of faster our a kind years, at over where

than to year. a funding have bias that that, is of And year in why as start around is just terms on timing position lower a reprice. this is expectation liabilities guidance will moderate, we're over which the this Our for course We're rates. last we do some taking pricing where NIM year that for lower not incrementally were we our acknowledging of of disconnects our necessarily and cost

Sanjay Sakhrani

in you rate here? many factored have How cuts

Peter Graham

base assumptions curves. on of our We forward kind

the think I rate there probably market So assumption X is cuts.

Sanjay Sakhrani

Okay.

the equal. that help impact X So all NIM the To extent rate should cuts there's of right in happen, a now. [ that punitive else doesn't ]

Peter Graham

mean, future I happens. tend perhaps. it's balance We Yes, to of be rates, going until book. -- always that's anytime some level actually unknowable there's interest to again, [indiscernible] forecasting variability you're a it run

So any and range the likely within gradual articulated. kind be moves that guidance should we've of

Operator

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

Michael Kaye

the dig could going? implemented? you assistance how programs Is How us it recovery you you and about which recently little early you bit is to borrower to. of that's but early could rolled hoping more those plan? secondly, And strategy, out alluded you I you that that that going days, could it's know how performing. signs enhanced into new some of give according just was I talk a

Jonathan Witter

it's happy Yes, Jon, to. Michael,

more quick program the very much has several all pretty test OCC moved will to also their terms still as efficient sort tailored, guidance. aligned effective with of we that administration time, with specific That new. the of programs again, think, general context, over advantage having for In more of us, a of credit made had design recognizing effective and developed. the focused years really different we in allows more I being really we've, be they're forbearance specifics, you at customer and to programs, but and strategy of It we've from effectiveness there's the where programs And a very a since needs. the we much few on remember time flavors changes those ago,

really or that, a newer sort program a again, that of on to take of program. [ loan modification a you This of financial the allows permanent to specifically modification, circumstances give school mod their yet, us just who of their more to and needs the that developed experiencing the permanent and a borrower. reduction tenure to and idea folks a income. program out at we've it who is repayment and of to but unique We've and/or sort help offer designed of to establishing tailoring tailor coming we term ] specifically of were developed And loan obligations. assistance looking are we of more So for modification literally slightly starting in rate haven't longer-term sense extension done early sort borrowers to are hardship really combinations

put of as so context And I would the had for programs in hopefully, of replacement little tailored substitute kinds it we But that bit focused that programs. a again, specific the of before. more a flexible and very a program sense gives the general and a you of and or

think seeing Michael, answer that question. I of the we we're like far, so the to part results

foremost, agents of being are communicate our able I to these we seeing, programs to think customers. our the first and benefit

of offer need. monitor those it. And largely we the and go we've of of We what I and think can programs customers are listen all see sort calls can that literally when very, those we that see because developed we to improved back programs very closely. that matching the uptake

to and we be generating meaningfully sort It be have we able to a have certainly going will what the not and observe is the which that to of do, success outcomes will they But of better we quarters behavior over to whether or term not. are will the too programs start do do or obviously, curves the longer-term is their ahead. forward. those early then loss of fine-tuning programs customers and run That of eventually part to

their here there as all recognize borrowers as fallen human as in is want note, is productively goal direction. our important a behind are great helpful we We is every can. And I who times. we work customers we one think that it with the a loans. our on really And targeted be really approach can struggling we of think this to as hard step that with who is to that of have to

Michael Kaye

enhanced you've made at I part about And know How going some that is on? the that strategy, changes. recovery

Jonathan Witter

expectations. there, continued to and in that perform is update has have that, along confidence no continue the program to and It our believe There's we right that decision.

Michael Kaye

is one of looking second And and question new there competition with your exit. players Great. my any increased signs early of to from existing competitors follow-up is,

called For example, word private I company of in a student [ investment ] Monogram [ [ saw made that strategic million the ] ]. a $XXX Carlyle purchased and Group loans a

Jonathan Witter

the think intensity. competitive Yes, Michael, I and change it's early sort of to see really too not the in season

the the the spring competitors they but that 'XX, were the ] and end remember, our fall up the lots set disbursements to [ have 'XX in of we of by very happen or of number season. You beginning during peak great work one, really do

on were very going clear announcement conclusion. to stop obviously through to a were nod if look that way, question, that of in to want X, at originations they already we they a that articulate to February is imagine competitor natural By see committed dynamic. the They they've to you the the business which

the dynamics this season of move really we'll understand to peak as competitive start sort in summer. think change into we I

lot it a I'm into sure As Carlyle, ] to by that. Monogram read [ not relates investment I the

I the asset of investor, incredible we it asset private all in from sees strategy. certainly equity That's interest of savvy another by it as there's their sign a is, that a Carlyle of away manner class. smart view is take while been think think players positive. generators now. in And that a for and I I very What part really this value clear net-net

Operator

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

John Hecht

the to Sanjay's with student back tell going excuse of cadence talking just Maybe of a some or specifically mortgages of about rates? loans. me, us have inquiry Can guess I the -- rate you interest about side. I move NIM. kind the assets adjustable asset you mix how do mean

Peter Graham

the in as I repricing to [ say, they're [indiscernible]. ] SOF-based a large price on the and quarterly side, on Yes. would the part, said tends be whereas earlier, I funding -- -- cadence, monthly more

John Hecht

how reprice SOFR And assets the against [ monthly much of ]?

Peter Graham

loans rate our of floating bulk variable be The would [indiscernible]. or

John Hecht

maybe I Okay. have commitments. second is unfunded the the And -- provision question then against

I in against fluctuated with you how CECL refresh and loan, ratio we're against provision new the unfunded maybe year this I same period. because can us familiar would think think year provision but commitments about the you you last how versus the

Peter Graham

Yes.

think in a general to we're commitment. I it rate, taking reserve and terms, we're applying that

our And we've we've, to programmatic we we balances of fully the that out together. the rates, provision for into combining CECL, fund, overall for give those loan statistics under when And in do we're as [indiscernible] and But transfer a loss provision. those around and expectation for then life commitments. new again, got we our so manner

remarks the including the the So quoting kind as piece commitments. balance of my to is prepared view was as rates related combined I provision in on loans the sheet unfunded a on of well

John Hecht

that And is or consistent? of some unfunded commitments are part originations, CECL there kind equation? do percentage fluctuations they Or in a of of the as typical fairly

Peter Graham

on serialization. dependent Again, to of kind largely it's going be the

that university an commitment again, those largely most commitments other X semesters fall that's of Again, semester make we and will a unfunded tranche generalization the the -- are students fund -- as season. spring experiences. the piece the the We'll on assume remain until in then first peak the so based disbursements. And and as entering

[indiscernible] for slightly than programs types different other have that. schools differently We that of

Operator

go mute. Mark Our comes the line on next participant. from question with Deutsche Bank. No I'll DeVries next the of to response, [indiscernible]

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

Jeffrey Adelson

could your sale there of in about circle as demand about understand loan also sales to wanted supply And on or that of potential competitors, of of of back one credit just this that loan any sort here here. thinking benefits understood exit you sales result be through that? to your originations. in upside? just the market as large of a to the loan anything forward? So terms the to benefits is other we from could But impacting potential think the portfolio, Or going be benefit Are to flow your any of contemplating that

Jonathan Witter

don't obviously, guesses we that, make think of and some underwriting it. Jeff, level assessments different at sort hypotheses they buy within And competitors where we end that. through our credit. we make have and perfect have we the about Yes, industry of us insight impact can knowledge day, on allow But grades. their on or nature and the sort favor that general of the I have to would of box thought And of the educated that disfavor I would have think around the

the stay credit would think I to comment very will I I is we think true make general continue discipline. to our

take favorable will turn is We Jeff? will a think ways how of sort it our Remind around we've true directly in think because out of which the given But continue our part slightly of I think stay about question, we But profitability for of framework the could that less to to of ROE a more your how bit ways. origination to favorable outcomes second of a little why think sort range favorable the I slightly see all very or are the me it loan. plays I still ones. time around obviously year guidance through

Jeffrey Adelson

Yes.

billion Just just the sort thinking sales as be with considerations. your there, about coming about we impact loan to sales of another think $XX any market, into of

Peter Graham

to parties for loans going various impact demand we year. our into demand the general that this for don't asset including funding our as we classes, Look, asset-backed market, And is our for Yes. the matter, deep. in class or in move that's feel discussions with for pretty asset various like

Jonathan Witter

Yes.

I add. In would Jeff, fact,

it It large net encourages for the I a was space. space. lots that. that it because we space, only positive the demand of the be X think heard for lots left people to may the actually loans been major And last transaction. a have of get there when obviously, anecdotally, smart on people winner can of to resources to allocate encourages competitor It

like a probably this. we again, the as think But decade, lots last from of We significantly neutral, feel come like worst positives for a positive. will asset slight half over and the be market we it's class think the view deep. is I there So that we matured feel it at

Jeffrey Adelson

loan half it sales case like conservative Is contemplate about for part? of you forum below half? also half more the million on doing base it you Does I $XXX half kind that know outlook your Because that and laid is what or past just authorization, year? look And next a repurchase year. year, of the the Great. this the on bit Okay. and at does investor little a did you talked plan out this

Peter Graham

will be this We amount And we my be approximately that said didn't when year. mean the loan as And quarter. to and that governed the it's that dictated loan amounts by in question, in do close this roughly we the sales on exactly we through of will line. with good I say said the sales by additional year. off do and We're $X will I pace billion half. start timing the a a prior half, remarks, Yes.

Jeffrey Adelson

you Okay. from what loan me. for student And payments. update federal X those bars last making can you're Anything are on that just X On seeing your payments. loan, us

think still come have you're maybe a of expiring then -- in I takes the year? new benefit but seeing, came July, quick full there expecting are what to and the you income-driven new the in in, Just with give there. on-ramp this here update us what later puts you're some on the plan

Jonathan Witter

sense those track have program sort it. don't. enrolled repayment loans and happy have a of pretty of Jeff, has perfectly Yes, which who We in the who sort our don't of to. who good or federal as we we other as can, know performance programs. We income-driven of But student best customers

I last between pretty which loans. any the of we data was yet in performance or for, those recently, material month, with have saw not seen without federal divergence As

that powerful we've continue it tool a for income-driven us would And are seen a material divergence. as so on-ramp But we We is not watch closely. strike the powerful We customers. federal of a to that the recognize that as understand yet, anything tool repayment plans customers. for

Operator

comes Vincent the of from question line next Our Caintic with Stephens.

Vincent Caintic

First how sheet growth? on of your or the student on would market the expectation for one, any do? Sallie consolidation on wanted you're thoughts X then maybe to what get pressure the balance rate your refinancing Mae that about thoughts thinking And cuts, loan industry specifically,

Peter Graham

points. first miss I on a rate-driven Yes, is take Jon, of if exercise. part, you Obviously, I'll the add and high really the consolidation can market any

we for the because think programs be to going And terms space to deterring rates do are from able it potential sort the of in federal they But down, so big wants programs to a a is generally, lower loans their might have return on as expect in consolidation that consolidating going order of in us wildcard be in overall in what an new that's factor the the give impact up some rate. someone federal folks I whether benefits get of the respect players. get to in

So expectations yes, consolidations eye have we our for within that's And it's out that's to guidance. But on. play something our certainly, to one we've and I our got going what be think and outlook considered that's have

Jonathan Witter

who at I of This But preface there look Yes. I'm in assumed, refi I us to low living way the than always the out uber the for I deeper me back insight think XX is that sure you economics on I sort doesn't not cuts the rate of into that get rate ] have the this last sort of environment we thing obviously being people are core I that anywhere [ when there's the even I let and think And think if business. that years. do the only game Vincent, would take add been of we've do. our questions kind consolidation.

again. I And don't you low my I think ] going you asked kind will we're for to give uber opinion, that [ of ever me my opinion. see rate environment

realize recent quite frankly, awful the seniors, you under the an loans we've and grads than there's and lot lower an what XX of college college seen months. awful to And lot made course sophomores, who there's of, current so interest think environment have last much over a I even of juniors rate

do of time Pete analyses. the of I consolidations today. to I golden And what come different than loan So you are they where those loans? the the to those larger low will I will what interest refi the manners of think of back agree sort when borrowers loans, There the economics, when rate have think prevailing we did made consolidations lens in future But age and make it look environment. are be with you today? through at some a super rate what and the continue have done rate is given when We are think said. saw they I about think

golden ever I see to kind again. think we we'll all see of if have that age

Vincent Caintic

second just forbearance numbers. think about actually And question, the programs helpful. and the should That's Okay. on we how

this success, these guess number just as we if usually, be advance. because modification should might but guess we just I that be I if out, level? how anticipate wondering some will concerned, that expecting And it's forbearance, So I'm to programs increase are want out stay more that roll new plays see we in I driving these from the that -- forbearance programs will from

Jonathan Witter

Yes, duration it the today, really hardship systematic short sort and complicated. both of it is in make OCC our it's and using of for is The tailored what customers to I'm most a limited a as we is that slightly forbearance longer It last Vincent, for under years I wonderful answer. geared used today and still programs described It's a simple which absolutely program no more answer question in we've few call and is answer the used earlier. or going it deserving simple for to guidance that. more use. Pete substitute highly have kind allowable

separately system is to plan break that some forbearance can of of our those. the But that not sort there a I our the in different programs of so expect part years. point think because for I changes I it's time. day, those programs see which I is are the out the But at huge end recipe. last you think And we've for new necessarily forbearance of reporting X than our There be think would in purpose under would this fundamentally a these in operated serving the other largely at

Operator

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

Mark DeVries

hear now? me Can you

Jonathan Witter

Yes.

Mark DeVries

Great. Okay.

on credit. questions of couple follow-up that. about a had I Sorry

delinquencies Is clarify related what's enrollment dynamic thought be you of else treated you of I kind wanted some the is rise indicate Jon, programs. Just part reason if some for there? the delinquent? heard the the Did made. of I status of to something correctly? in moving I of assistance a comments And the has borrower in these into that? that to hear as that so, there to Are affecting that them some

Jonathan Witter

Yes.

someone and one of So re-age qualifying to programs, it's I think can current standards X it's them enters fairly the guidelines really When mechanical before say -- our answer. to typically a have we payment payments. they make

Several default In we used on may that more a past so to a gone past have customer. current And world, quickly. have world, years through a world. past may and may in collected ago, they have forbearance been brought in they

that Here, to we of pay them. re-age see we positive can have period before

delinquent talked this the small situations parse we about. versus I increase so payments but portion caused as look would we has that sort re-age, of normal and is the by customers what apart of which of what what at data sort of driven we by And waiting driven delinquency it believe we that's making call phenomena are to

Mark DeVries

sounds start And Okay. year you're year-over-year like weather the kind be of expect helpful. charge-offs, first comes end in the of half this to down back of and that in confident still half guidance trending about improvement in That's charge-off at XXXX? high the included, year the of Got charge-offs the range. end then it. Should low the it pretty higher we or in

Jonathan Witter

a charge-offs, because a likely repayment. financial into financial entered talked soon -- distress we calls. Yes. about borrower I The be would have to this have on most in young occurs past may any gets not at unfortunately, have may later force. They experiencing seasonality they've they is savings pretty sort They up our is think which same after I the habits when time, labor just built There and point. think always They moving life. These of that into may that disruptions yet borrowers. the are not

you results. always 'XX. seasonality of seasonality persist expect same in in of And pattern think period should And a we our so to see I that

Operator

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

Richard Shane

end essentially entrants. about been at X originators, binding has been this have of your the historically, in amongst some concentrated conversation the an new Look, industry that constraint business. of exited market is But terms what day, share? the There's X the was

Jonathan Witter

of competition face, not think I to going months. over the of that little lots the customer private I choice. day, think, other absolutely out think little this look, a I bit And a different happen focusing at market credit set we potential of strategies smaller, and the continue what's with much deeper of marketing It's But spectrum. to good business, I formidable And want Rick. the couple what latest predicting compete I'm and go to players see next sure is on we the of play end It's against. bit our in sort there share again, news. that Rick, in of bit -- different a of of are competition. We'll parts binds of little very

expect nicely we we end for be day, that XX% it I the the share grown share. obviously opportunity We bit. our market will anyone It's go of player. last should love up don't X to XX% think think XX%, years. But the a At over there's market little

there welcome good And quite will competition I market. think always frankly, we be that. in the

great better competition got I there. out think we've it us when makes

better I think it's for the customers.

number and a be of limit So by to forces. I factors would there that driven expect probably different

Richard Shane

it. Got

dimensionalize this for helpful. and sale in Look, grabs. growth window asked now trying prospects, we're Gain is there That's unique share lot right improved. of has sort of on Okay. a a up asset, market where growth to question Moshe

the going the X% shifting there it scenario -- to times shifting [ in sale looking earnings end be for, also And favorable end form to but the to gives where were or be is solid, favor. be gives your share beyond market about more year -- grow are you high of your enough what than will of going where ability not on the 'XX it's are you're potentially a X% at When the to ability you or to they hit the capital last of guidance are better so gain clearly the that range. Conversely, to your is economics priority potentially, think you ]. volumes than end imagine

Is the Or factor? be to the be priority swing let growth going to letting earnings the asset it of assets fluctuate? the targeting going and for to earnings solve is growth and

Peter Graham

think I relatively in growth clear the over pretty investor to December going step year. be to flat we're We're time. into this forum going we're

modestly then of transition grow we'll subsequent sort years. CECL final Our and in year,

governor do And sales That's balance strategy. growth. as calls fully for we to this to as intend of sheet embark what a us so on we that that use loan framework

then from as do margins, scenario dynamic in your economic makes we an pricing at long of sales might higher growth, the sense more So originations the loan as perspective.

Richard Shane

it. Got

you So a in laid possible not your as X-year but priority within follow that of regardless profile to that asset reasonable closely -- out is as set of conditions, case that growth expectations?

Peter Graham

Yes.

sheet that start more to think bit we're for we'll do the there. there things the quo, status and I market getting if implied balance more the said marginally getting little a our the of equity in And loan value to that. we we is growth, extent then see we're sheet the a of sales in as as rewarded that stay trade multiple the we'll dynamic sale expansion loan versus long getting valuation do balance market. evaluation of it's But

Richard Shane

in the harder the to fun XX even what's ] happen Great. it's next questions [ I next It's years. going over know X months. answering

answering So thank you that. for

Operator

of Point. question with Giuliano Bologna from Our Compass next line comes the

Giuliano Anderes-Bologna

question, higher I'm you to of future. strategy do on peak loans kind one you've fixed that think but about back think as susceptible rates point different pivoting more fixed has curious pivoted mix originally a your towards pivoting about originations angle, curious, rate them I point fixed originations. is liability had on much because consolidations more obviously do curious at make could a moving I'm a also because or what from of down about sensitive. touching more at the what rate mix a move in I'm at you it follow-up was will rate, of of benefits But of thing little a make of which [indiscernible] bit rates kind maybe kind that towards

Peter Graham

element I pricing dramatic started the terms the human And the as mean at emotional you something have borrowers there that inflation for what over to fall, making. subside we increase is last think to if also there's potential I think not Yes. reaction emotional rates the dynamic the control always of yet. selections margins. I the think of are in the during year in increases more had about and further was But

I that pretty So think impact been has of origination. overall customer a the choice mix dramatic on

this into set I we at peak grids that as pricing of we this naturally into we'll looking year. subside year. think we our in But as how that mix go will be terms go

Jonathan Witter

We Yes. to through only but don't that clearly the isolation. I of the that do have of economic And pricing I in also realities. the Pete, those would the add grids of thing think ability lens we is set through lens competitive we models, do sort our

much customers certain fixed want Pete a competitive are if on is that but competitors our dynamic ability think what at a level that there the is fact of is as attractive, if it rate the pricing well, that is influence so is and the makes that it I to margin, set. broader competitive rate part And said fixed

Operator

on think That's about sales the is when million so $XXX quick midpoint share the of to [indiscernible]? based the helpful. of or thinking if X% you're able kind more of the for potential growth to for already I'd market just forum the one, one market it, X% the capture investor depth you additional very about be numbers gains. some curious market share, And call above the loan then

Peter Graham

out. to could mic. You're closer Maybe you fading and in get if your

Giuliano Anderes-Bologna

a now. bit Hopefully, Sorry about that. better it's little

the market. you about sell could potentially you think limitation gain the any absorbed given could calendar at sales? loans loan market there year curious share, you to think amount of sales in loan this depth any As margins Is when point? be by the there's Or you I'm do -- of

Peter Graham

Yes.

dramatic that liabilities, search a the over and fund last liabilities assets dynamic we've mutual support the insurance [indiscernible]. pension seen to pretty for half yielding the is think decade I

So there's strong a for loans. I student think demand

ABS for infinite any growth don't sit we think both issue but platform I a as sheet infinite, fund demand now. see And we don't have not [ sales in assets. or I to this space. ] It's ] [indiscernible] loan here in the balance ABS need [ we preeminent

Operator

back showing I'm further Jon to remarks. no gentlemen, turn the CEO, to questions. closing like call would over Witter, and now Ladies I for

Jonathan Witter

I I tonight. you. Sallie interest dialing appreciate Mae. Thank And Great. everyone in the appreciate in

happy always, you folks turn may is X IR to the standing And time on business. that again team to all With questions little to and back help I'll months' by in our a about our that, in to first I look you up As closing Melissa, forward for, about it bit have. performance talking quarter. of specific think, follow

Melissa Bronaugh

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

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

Operator

call. today's concludes Thank this gentlemen, and Ladies you for conference your participation.

now may You disconnect.

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