Sallie Mae Reports Second-Quarter 2024 Financial Results
NEWARK, Del., July 24, 2024 - Sallie Mae (Nasdaq: SLM), formally SLM Corporation, today released second-quarter 2024 financial results. Complete financial results and related materials are available at www.SallieMae.com/investors. The materials will also be available on the Securities and Exchange Commission’s website at www.sec.gov.
Sallie Mae will host an earnings conference call today, July 24, 2024, at 5:30 p.m. ET. Executives will be on hand to discuss various highlights of the quarter and to answer questions related to Sallie Mae’s performance. A live audio webcast of the conference call and presentation slides may be accessed at www.SallieMae.com/investors and the hosting website.
A replay of the webcast will be available via the company’s investor website approximately two hours after the call’s conclusion.
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Sallie Mae (Nasdaq: SLM) believes education and life-long learning, in all forms, help people achieve great things. As the leader in private student lending, we provide financing and know-how to support access to college and offer products and resources to help customers make new goals and experiences, beyond college, happen. Learn more at SallieMae.com. Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.
Contacts:
Media
Rick Castellano, 302-451-2541, rick.castellano@salliemae.com
NEWARK, Del., July 24, 2024 — Sallie Mae (Nasdaq:SLM), formally SLM Corporation, today released its second-quarter 2024 financial results.
$1.11
GAAP Diluted Earnings Per Common Share
6%
Private Education Loan Originations Growth from Year-Ago Quarter
$1.6B
Sale of Private Education Loans in
Q2 2024
$80M
Total Net Charge-Offs (2.1% of Average Loans in Repayment (annualized))
$159M
Non-Interest Expenses
“We delivered strong results in the second quarter and first half of the year driven by our core Private Education Loan business, improvements in credit trends, and the gain on our second loan sale of the year. We believe we are well-positioned to continue this positive performance throughout the remainder of the year, which is reflected in our updated guidance.”
Jonathan Witter, CEO, Sallie Mae
Private Education Loan Portfolio Trends
▪$20.5B of average loans outstanding, net, down 1% from Q2 2023.
▪$17M in provisions for credit losses in Q2 2024, compared with $18M in Q2 2023.
▪6.1% allowance as a percentage of the ending total loan balance and accrued interest to be capitalized, compared with 6.5% in Q2 2023.
▪0.8% loans in a hardship forbearance, up from 0.2% in Q2 2023.(1)
▪2.8% delinquencies, excluding those loans within a loan modification qualifying period, as a percentage of loans in repayment, down from 3.3% in Q2 2023.(2)
▪2.19% net charge-offs as a percentage of average loans in repayment (annualized), compared with 2.69% in Q2 2023.
Balance Sheet & Capital Allocation
$0.11
Common stock dividend paid in Q2 2024
14.7%
Total risk-based capital ratio and CET1 capital ratio of 13.4%
2.9M
Shares repurchased in Q2 2024 for $62M(3)
$562M
Capacity remaining under the 2024 Share Repurchase Program as of
June 30, 2024
Income Statement & Earnings Summary
2024 Guidance*
For the full year 2024, the Company expects:
$247M
GAAP Net Income attributable to common stock in Q2 2024
5.36%
Net interest margin for Q2 2024; decrease of 16 basis points from Q2 2023
Gain on sale of loans in Q2 2024; decrease of $13M from Q2 2023
$17M
Provision for credit losses; decrease from Q2 2023 attributable to $103M release of provision from loan sale and improvements in the economic outlook, offset by originations
$325 million - $345 million
Total Loan Portfolio Net Charge-Offs, or 2.1% - 2.3% of Average Loans in Repayment
$635 million - $655 million
Non-Interest Expenses
Investor Contact: Melissa Bronaugh, 571-526-2455 Media Contact: Rick Castellano, 302-451-2541
* The 2024 Guidance and related comments constitute forward-looking statements and are based on management’s current expectations and beliefs. There can be no guarantee as to whether and to what extent this guidance will be achieved. The Company undertakes no obligation to revise or release any revision or update to these forward-looking statements. See our Forward-Looking Statements disclosures on pg. 4 for more information.
Quarterly Financial Highlights
Q2 2024
Q1 2024
Q2 2023
Income Statement ($ millions)
Total interest income
$641
$664
$634
Total interest expense
269
277
247
Net interest income
372
387
387
Less: provisions for credit losses
17
12
18
Total non-interest income
142
174
144
Total non-interest expenses
159
162
156
Income tax expense
87
97
92
Net income
252
290
265
Preferred stock dividends
5
5
4
Net income attributable to common stock
$247
$285
$261
Ending Balances ($ millions)
Private Education Loans held for investment, net
$18,433
$19,688
$18,649
FFELP Loans held for investment, net
483
513
571
Deposits
$20,744
$20,903
$20,361
Brokered
10,033
10,289
8,720
Retail and other
10,711
10,614
11,641
Key Performance Metrics ($ in millions)
Net interest margin
5.36%
5.49%
5.52%
Yield - Total interest-earning assets
9.25%
9.41%
9.05%
Private Education Loans
10.91%
11.01%
10.79%
Cost of Funds
4.16%
4.18%
3.75%
Return on Assets (“ROA”)(4)
3.6%
4.1%
3.7%
Return on Common Equity (“ROCE”)(5)
50.6%
65.6%
65.2%
Private Education Loan sales
$1,590
$2,100
$2,100
Per Common Share
GAAP diluted earnings per common share
$1.11
$1.27
$1.10
Average common and common equivalent shares outstanding (millions)
222
224
238
2
Footnotes:
(1) We calculate the percentage of loans in hardship and other forbearances as the ratio of (a) Private Education Loans in hardship and other forbearances (excluding loans in an extended grace period) numerator to (b) Private Education Loans in repayment and forbearance denominator. If the customer is in financial hardship, we work with the customer and/or cosigner and identify any available alternative arrangements designed to reduce monthly payment obligations, which may include a short-term hardship forbearance. Loans in hardship and other forbearances (excluding loans in an extended grace period) were approximately $145 million and $154 million at June 30, 2024 and 2023, respectively.
(2) This metric excludes loans in a loan modification qualifying period, which at June 30, 2024 and 2023, totaled approximately $169 million and $77 million, respectively. When giving a customer facing financial difficulty an interest rate reduction under our programs, we evaluate their ability to pay and provide customized repayment terms based upon their financial condition. As part of demonstrating the ability and willingness to pay, the customer must make three consecutive monthly payments at the reduced payment to qualify for the program. After successfully completing the qualifying period (if eligible), borrowers will have their interest rate reduced, term extended and, if re-age eligible, be brought current, consistent with established loan program servicing policies and procedures.
(3) Common shares were repurchased under Rule 10b5-1 trading plans authorized under the Company’s 2024 Share Repurchase Program. As of June 30, 2024, we had $562 million of capacity remaining under the 2024 Share Repurchase Program.
(4) We calculate and report our Return on Assets (“ROA”) as the ratio of (a) GAAP net income numerator (annualized) to (b) the GAAP total average assets denominator.
(5) We calculate and report our Return on Common Equity (“ROCE”) as the ratio of (a) GAAP net income attributable to common stock numerator (annualized) to (b) the net denominator, which consists of GAAP total average equity less total average preferred stock.
***
3
CAUTIONARY NOTE AND DISCLAIMER REGARDING FORWARD LOOKING STATEMENTS
This press release contains “forward-looking statements” and information based on management’s current expectations as of the date of this press release. Statements that are not historical facts, including statements about the Company’s beliefs, opinions, or expectations and statements that assume or are dependent upon future events, are forward-looking statements. These include, but are not limited to: strategies; goals and assumptions of SLM Corporation and its subsidiaries, collectively or individually as the context requires (the “Company”); the Company’s expectation and ability to execute loan sales and share repurchases; statements regarding future developments surrounding COVID-19 or any other pandemic, including, without limitation, statements regarding the potential impact of any such pandemic on the Company’s business, results of operations, financial condition, and/or cash flows; the Company’s expectation and ability to pay a quarterly cash dividend on our common stock in the future, subject to the approval of our Board of Directors; the Company’s 2024 guidance; the Company’s three-year horizon outlook; the impact of acquisitions we have made or may make in the future; the Company’s projections regarding originations, net charge-offs, non-interest expenses, earnings, balance sheet position, and other metrics; any estimates related to accounting standard changes; and any estimates related to the impact of credit administration practices changes, including the results of simulations or other behavioral observations.
Forward-looking statements are subject to risks, uncertainties, assumptions, and other factors, many of which are difficult to predict and generally beyond the control of the Company, which may cause actual results to be materially different from those reflected in such forward-looking statements. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. The Company cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. These factors include, among others, the risks and uncertainties set forth in Item 1A. “Risk Factors” and elsewhere in the Company’s most recently filed Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission; the societal, business, and legislative/regulatory impact of pandemics and other public heath crises; increases in financing costs; limits on liquidity; increases in costs associated with compliance with laws and regulations; failure to comply with consumer protection, banking, and other laws or regulations; our ability to timely develop new products and services and the acceptance of those products and services by potential and existing customers; changes in accounting standards and the impact of related changes in significant accounting estimates, including any regarding the measurement of our allowance for credit losses and the related provision expense; any adverse outcomes in any significant litigation to which the Company is a party; credit risk associated with the Company’s exposure to third parties, including counterparties to the Company’s derivative transactions; the effectiveness of our risk management framework and quantitative models; and changes in the terms of education loans and the educational credit marketplace (including changes resulting from new laws and the implementation of existing laws). We could also be affected by, among other things: changes in our funding costs and availability; reductions to our credit ratings; cybersecurity incidents, cyberattacks, and other failures or breaches of our operating systems or infrastructure, including those of third-party vendors; damage to our reputation; risks associated with restructuring initiatives, including failures to successfully implement cost-cutting programs and the adverse effects of such initiatives on our business; changes in the demand for educational financing or in financing preferences of lenders, educational institutions, students, and their families; changes in law and regulations with respect to the student lending business and financial institutions generally; changes in banking rules and regulations, including increased capital requirements; increased competition from banks and other consumer lenders; the creditworthiness of our customers, or any change related thereto; changes in the general interest rate environment, including the rate relationships among relevant money-market instruments and those of our earning assets versus our funding arrangements; rates of prepayments on the loans owned by us; changes in general economic conditions and our ability to successfully effectuate any acquisitions; and other strategic initiatives. The preparation of our consolidated financial statements also requires management to make certain estimates and assumptions, including estimates and assumptions about future events. These estimates or assumptions may prove to be incorrect.
All oral and written forward-looking statements attributed to the Company are expressly qualified in their entirety by the factors, risks, and uncertainties set forth in the foregoing cautionary statements, and are made only as of the date of this press release or, where the statement is oral, as of the date stated. We do not undertake any obligation to update or revise any forward-looking statements to conform to actual results or changes in our expectations, nor to reflect events or circumstances that occur after the date on which such statements were made. In light of these risks, uncertainties, and assumptions, you should not put undue reliance on any forward-looking statements discussed.
4
SLM CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
June 30,
December 31,
(Dollars in thousands, except share and per share amounts)
2024
2023
Assets
Cash and cash equivalents
$
5,262,448
$
4,149,838
Investments:
Trading investments at fair value (cost of $45,171 and $43,412, respectively)
60,473
54,481
Available-for-sale investments at fair value (cost of $2,428,037 and $2,563,984, respectively)
2,283,262
2,411,622
Other investments
107,064
91,567
Total investments
2,450,799
2,557,670
Loans held for investment (net of allowance for losses of $1,269,652 and $1,339,772, respectively)
18,915,333
20,306,357
Restricted cash
142,230
149,669
Other interest-earning assets
6,362
9,229
Accrued interest receivable
1,391,081
1,379,904
Premises and equipment, net
126,440
129,501
Goodwill and acquired intangible assets, net
66,102
68,711
Income taxes receivable, net
351,126
366,247
Other assets
56,923
52,342
Total assets
$
28,768,844
$
29,169,468
Liabilities
Deposits
$
20,744,030
$
21,653,188
Long-term borrowings
5,403,012
5,227,512
Other liabilities
338,564
407,971
Total liabilities
26,485,606
27,288,671
Commitments and contingencies
Equity
Preferred stock, par value $0.20 per share, 20 million shares authorized:
Series B: 2.5 million and 2.5 million shares issued, respectively, at stated value of $100 per share
251,070
251,070
Common stock, par value $0.20 per share, 1.125 billion shares authorized: 440.3 million and 438.2 million shares issued, respectively
88,056
87,647
Additional paid-in capital
1,173,735
1,148,689
Accumulated other comprehensive loss (net of tax benefit of ($25,378) and ($24,176), respectively)
(78,809)
(75,104)
Retained earnings
4,107,980
3,624,859
Total SLM Corporation stockholders’ equity before treasury stock
5,542,032
5,037,161
Less: Common stock held in treasury at cost: 222.8 million and 217.9 million shares, respectively
(3,258,794)
(3,156,364)
Total equity
2,283,238
1,880,797
Total liabilities and equity
$
28,768,844
$
29,169,468
5
SLM CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
(Dollars in thousands, except per share amounts)
2024
2023
2024
2023
Interest income:
Loans
$
565,338
$
568,342
$
1,161,945
$
1,151,126
Investments
15,139
12,037
29,646
23,368
Cash and cash equivalents
60,999
53,526
113,443
97,009
Total interest income
641,476
633,905
1,305,034
1,271,503
Interest expense:
Deposits
211,286
191,407
431,731
374,938
Interest expense on short-term borrowings
3,310
3,299
6,872
6,317
Interest expense on long-term borrowings
54,708
52,568
107,243
98,549
Total interest expense
269,304
247,274
545,846
479,804
Net interest income
372,172
386,631
759,188
791,699
Less: provisions for credit losses
16,830
17,729
28,871
131,841
Net interest income after provisions for credit losses
355,342
368,902
730,317
659,858
Non-interest income:
Gains on sales of loans, net
111,929
124,754
254,968
124,745
Gains (losses) on securities, net
2,103
(1,213)
4,221
498
Other income
27,773
20,513
56,774
40,522
Total non-interest income
141,805
144,054
315,963
165,765
Non-interest expenses:
Operating expenses:
Compensation and benefits
85,261
78,233
181,737
165,882
FDIC assessment fees
11,727
9,851
25,039
21,380
Other operating expenses
60,218
66,080
110,863
121,441
Total operating expenses
157,206
154,164
317,639
308,703
Acquired intangible assets amortization expense
1,394
2,245
2,609
4,517
Total non-interest expenses
158,600
156,409
320,248
313,220
Income before income tax expense
338,547
356,547
726,032
512,403
Income tax expense
86,554
91,482
184,108
128,820
Net income
251,993
265,065
541,924
383,583
Preferred stock dividends
4,628
4,274
9,281
8,337
Net income attributable to SLM Corporation common stock
$
247,365
$
260,791
$
532,643
$
375,246
Basic earnings per common share
$
1.13
$
1.11
$
2.42
$
1.57
Average common shares outstanding
218,924
235,061
219,670
238,261
Diluted earnings per common share
$
1.11
$
1.10
$
2.39
$
1.56
Average common and common equivalent shares outstanding
