In This Article:
Sallie Mae SLM reported first-quarter 2025 earnings per share of $1.40, which outpaced the Zacks Consensus Estimate of $1.19. The bottom line increased from the prior-year quarter’s $1.27.
The quarterly results were primarily aided by a rise in non-interest income, robust loan originations and lower non-interest expenses. However, higher provisions for credit losses and a fall in net interest income (NII) negatively impacted SLM’s results.
The company’s GAAP net income was $305 million compared with $290 million in the prior-year quarter.
Sallie Mae’s NII & Expenses Decline
First-quarter NII totaled $375 million, down 3.1% year over year. However, the reported figure beat the Zacks Consensus Estimate of $359.7 million. The quarterly net interest margin was 5.27%, which shrank 22 basis points from the prior-year quarter's level.
Non-interest income amounted to $206 million, up 18.3% year over year.
Non-interest expenses came down 4.4% year over year to $154.6 million.
SLM’s Credit Quality: Mixed Bag
Provision for credit losses was $23.3 million, up from $12 million reported in the prior-year quarter.
Net charge-offs for private education loans were $76.2 million, down 7.7% year over year.
Private education loans held for investment net charge-offs, as a percentage of average private education loans held for investment in repayment (annualized), were 1.88%. The figure contracted 26 basis points year over year.
Sallie Mae’s Balance Sheet Position: Mixed Bag
As of March 31, 2025, deposits were $20.07 billion, down 4.7% sequentially.
Private education loans held for investment were $21.09 billion, up 7.1% from the prior year quarter reported figure.
In the reported quarter, the company’s private education loan originations increased 7.3% from the year-ago quarter.
SLM’s Share Repurchase Update
In the first quarter, SLM repurchased 1 million shares for $31 million under its 2024 share buyback program.
Sallie Mae’s 2025 Outlook Reaffirmed
The company expects its diluted earnings per share to be in the range of $3.00-$3.10.
It anticipates total loan portfolio net charge-offs as a percentage of average loans in repayment in the band of 2.0-2.2%.
Private education loan originations are expected to grow 6-8% year over year.
SLM’s non-interest expenses are expected to be in the range of $655-$675 million.
Final Thoughts on SLM
Sallie Mae’s overall financial performance seems decent. Robust loan origination, a rise in non-interest income and lower non-interest expenses are positives. However, a rise in provisions for credit losses is a major near-term headwind.