Summary of SLM (Sallie Mae) Q2 2026 Earnings Call

1Key Financial Results and Metrics

GAAP Diluted EPS: $0.29 per share.

Loan Originations: $716 million, up 4.5% year-over-year.

Net Interest Income: $333 million, down $44 million from the prior year.

Other Income: $45 million, up $16 million, driven by increased program management and servicing fees.

Net Interest Margin (NIM): 4.75%, expected to improve in the second half of the year.

Net Charge-Offs: $113 million, up from $94 million year-over-year, attributed to third-party debt resolution practices.

Delinquency Rate: 30-day delinquency at 3.7%, up from 3.5% year-over-year but down from 4% in Q1 2026.

Efficiency Ratio: 48.6%, reflecting investments in growth.

2Strategic Updates and Business Highlights

Sallie Mae is positioned for growth due to recent federal PLUS reforms, anticipating an increase in annual originations of $4.5 billion to $5 billion.

Successfully launched new products, including enhancements to existing loan offerings and a new parent loan, with application trends exceeding expectations.

Continued focus on maintaining strong partnerships with over 2,100 schools, reinforcing its status as a preferred lender.

Ongoing improvements in credit quality, with a modest increase in average FICO scores and strong performance in loan modification programs.

3Forward Guidance and Outlook

Net Charge-Off Guidance: Narrowed to a range of $365 million to $385 million, reflecting improved recovery practices.

NIM Expectations: Anticipated to rebound as liquidity is deployed into new loan originations, aiming to normalize closer to long-term targets of around 5%.

Capital Return: Completed a $200 million accelerated share repurchase program, reducing shares outstanding by approximately 59% since 2020.

4Bad News, Challenges, or Points of Concern

Increased Net Charge-Offs: The rise in charge-offs is concerning, primarily linked to misaligned third-party debt resolution practices.

Delinquency Trends: While recent delinquency rates improved sequentially, there are concerns about potential seasonal increases in the second half of the year, especially with a larger repayment cohort.

Market Pressures: Competitive pressures in the graduate loan market and potential impacts from new product offerings could affect margins and overall performance.

5Notable Q&A Insights

NIM Trajectory: Management expects NIM to improve as liquidity is utilized for new originations, with a target of returning to long-term averages.

Partnership Developments: Ongoing negotiations with a new loan sale partner are progressing well, with potential for credit box expansion.

Credit Performance: The company is optimistic about the underlying health of its portfolio, citing strong performance in loan modifications and a stable borrower performance trend.

Market Landscape: Competitive pricing remains rational, but there is slight upward pressure on marketing expenses as peak season approaches. Overall, Sallie Mae's Q2 2026 results reflect a company in a strong position to capitalize on recent regulatory changes, despite facing challenges with credit performance and market competition. The outlook remains cautiously optimistic, with strategic investments aimed at future growth.