Full-Year 2023 Private Education Loan Originations of $6.4 Billion,
Up 7% From Year-Ago Period

NEWARK, Del., Jan. 24, 2024 - Sallie Mae (Nasdaq: SLM), formally SLM Corporation, today released fourth-quarter and full-year 2023 financial results. Highlights of those results are included in the attached supplement. Complete financial results are available at www.SallieMae.com/investors.

Sallie Mae will host an earnings conference call today, Jan. 24, 2024, at 5:30 p.m. ET. Executives will be on hand to discuss various highlights of the quarter and year 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:

Rick Castellano, 302-451-2541, rick.castellano@SallieMae.com

Melissa Bronaugh, 571-526-2455, melissa.bronaugh@SallieMae.com

Fourth-Quarter GAAP Net Income Attributable to Common Stock of $164 Million, $0.72 Per Diluted Share; Full-Year 2023 GAAP Net Income Attributable to Common Stock
of $564 Million, $2.41 Per Diluted Share

•GAAP net income of $168 million, up 319%.

•Net interest income of $386 million, up 1%.

•Net interest margin of 5.37%, unchanged from the year-ago period.

•Private education loan originations of $839 million, up 2%.

•Average private education loans outstanding of $21.1 billion, up 4%.

•Private education loan provisions for credit losses, including amounts for unfunded commitments, was $16 million, compared with a provision of $297 million.

•Private education loans held-for-investment delinquencies as a percentage of private education loans held-for-investment in repayment were 3.90%, up from 3.77%.

•Private education loans held-for-investment net charge-offs as a percentage of average private education loans held-for-investment in repayment (annualized) were 2.43%, down from 3.15%.

•Total operating expenses of $143 million, up from $138 million.

•Repurchased 6 million shares of common stock under share repurchase program in the fourth quarter of 2023, compared with 10 million shares of common stock repurchased in the year-ago period.

•Paid fourth-quarter common stock dividend of $0.11 per share, unchanged from the fourth quarter of 2022.

The following are significant items or events that occurred in the fourth quarter of 2023 or early in the first quarter of 2024:

The following provides guidance on the company’s expected performance in 2024.

* See page 6 for a cautionary note regarding forward-looking statements.

** See Non-GAAP “Core Earnings” to GAAP Reconciliation on page 10 for a description of non-GAAP “Core Earnings”. GAAP net income attributable to SLM Corporation common stock is the most directly comparable GAAP measure. However, this GAAP measure is not accessible on a forward-looking basis because the company is unable to estimate the net impact of derivative accounting and the associated net tax expense (benefit) for future periods.

(1) Sallie Mae provides non-GAAP “Core Earnings” because it is one of several measures management uses to evaluate management performance and allocate corporate resources. The difference between non-GAAP “Core Earnings” and GAAP net income is driven by mark-to-fair value unrealized gains and losses on derivative contracts recognized in GAAP, but not in non-GAAP “Core Earnings” results. See the Non-GAAP “Core Earnings” to GAAP Reconciliation in this press release for a full reconciliation of GAAP and non-GAAP “Core Earnings.” Non-GAAP “Core Earnings” exclude periodic unrealized gains and losses caused by the mark-to-fair value valuations on derivatives that do not qualify for hedge accounting treatment under GAAP, but include current period accruals on the derivative instruments. Under GAAP, for our derivatives held to maturity, the cumulative net unrealized gain or loss over the life of the contract will be equal to $0. Management believes the company’s derivatives are effective economic hedges, and, as such, they are a critical element of the company’s interest rate risk management strategy. Our non-GAAP “Core Earnings” are not defined terms within GAAP and may not be comparable to similarly titled measures reported by other companies.

(2) We calculate and report our Return on Assets (“ROA”) as the ratio of (a) GAAP net income (loss) numerator (annualized) to (b) the GAAP total average assets denominator.

(3) We calculate and report our non-GAAP “Core Earnings” Return on Assets (“Non-GAAP Core Earnings ROA”) as the ratio of (a) non-GAAP “Core Earnings” net income (loss) numerator (annualized) to (b) the GAAP total average assets denominator.

(4) We calculate and report our Return on Common Equity (“ROCE”) as the ratio of (a) GAAP net income (loss) attributable to common stock numerator (annualized) to (b) the net denominator, which consists of GAAP total average equity less total average preferred stock.

(5) We calculate and report our non-GAAP “Core Earnings” Return on Common Equity (“Non-GAAP Core Earnings ROCE”) as the ratio of (a) non-GAAP “Core Earnings” net income (loss) attributable to common stock numerator (annualized) to (b) the net denominator, which consists of GAAP total average equity less total average preferred stock.

This press release contains “forward-looking statements” and information based on management’s current expectations as of the date of this release. Statements that are not historical facts, including statements about our beliefs, opinions, or expectations and statements that assume or are dependent upon future events, are forward-looking statements. This includes, but is not limited to: statements regarding future developments surrounding COVID-19 or any other pandemic, including, without limitation, statements regarding the potential impact of COVID-19 or any other 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 its common stock in the future, subject to the determination by the company’s Board of Directors, and based on an evaluation of the company’s earnings, financial condition and requirements, business conditions, capital allocation determinations, and other factors, risks, and uncertainties; the company’s 2024 guidance; the company’s three-year horizon outlook; the company’s expectation and ability to execute loan sales and share repurchases; 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 that may cause actual results to be materially different from those reflected in 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 Annual Report on Form 10-K for the year ended Dec. 31, 2022 (filed with the Securities and Exchange Commission (“SEC”) on Feb. 23, 2023) and subsequent filings with the SEC; 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; 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; 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; 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 that we own; 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 us to make certain estimates and assumptions, including estimates and assumptions about future events. These estimates or assumptions may prove to be incorrect. All forward-looking statements contained in this release are qualified by these cautionary statements and are made only as of the date of this release. We do not undertake any obligation to update or revise these forward-looking statements to conform such statements to actual results or changes in our expectations.

 

 

SLM CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
						Quarters Ended												Years Ended
						December 31,												December 31,
(Dollars in thousands, except per share amounts)						2023						2022						2023						2022
Interest income:
Loans						$	595,537					$	527,143					$	2,327,743					$	1,914,554
Investments						14,174						11,052						50,810						35,304
Cash and cash equivalents						58,839						45,405						213,750						81,722
Total interest income						668,550						583,600						2,592,303						2,031,580
Interest expense:
Deposits						223,206						153,441						808,065						368,914
Interest expense on short-term borrowings						3,608						3,054						13,501						11,956
Interest expense on long-term borrowings						55,850						45,674						208,524						161,929
Total interest expense						282,664						202,169						1,030,090						542,799
Net interest income						385,886						381,431						1,562,213						1,488,781
Less: provisions for credit losses						15,599						297,260						345,463						633,453
Net interest income after provisions for credit losses						370,287						84,171						1,216,750						855,328
Non-interest income (loss):
Gains on sales of loans, net						35,550						2,894						160,290						327,750
Gains (losses) on securities, net						690						(58,245)						2,678						(60,267)
Losses on derivatives and hedging activities, net						—						—						—						(5)
Other income						20,873						14,708						84,148						67,160
Total non-interest income (loss)						57,113						(40,643)						247,116						334,638
Non-interest expenses:
Operating expenses:
Compensation and benefits						77,095						67,359						326,554						270,354
FDIC assessment fees						12,103						9,438						45,766						20,939
Other operating expenses						53,903						60,965						246,886						260,169
Total operating expenses						143,101						137,762						619,206						551,462
Acquired intangible assets impairment and amortization expense						59,013						2,301						66,364						7,779
Total non-interest expenses						202,114						140,063						685,570						559,241
Income (loss) before income tax expense (benefit)						225,286						(96,535)						778,296						630,725
Income tax expense (benefit)						56,843						(19,492)						196,905						161,711
Net income (loss)						168,443						(77,043)						581,391						469,014
Preferred stock dividends						4,726						3,466						17,705						9,029
Net income (loss) attributable to SLM Corporation common stock						$	163,717					$	(80,509)					$	563,686					$	459,985
Basic earnings (loss) per common share						$	0.73					$	(0.33)					$	2.44					$	1.78
Average common shares outstanding						223,224						244,615						231,411						258,439
Diluted earnings (loss) per common share						$	0.72					$	(0.33)					$	2.41					$	1.76
Average common and common equivalent shares outstanding						226,552						244,615						234,063						261,503
Declared dividends per common share						$	0.11					$	0.11					$	0.44					$	0.44

The following table reflects adjustments associated with our derivative activities.

						Quarters Ended												Years Ended
						December 31,												December 31,
(Dollars in thousands, except per share amounts)						2023						2022						2023						2022
Non-GAAP “Core Earnings” adjustments to GAAP:
GAAP net income (loss)						$	168,443					$	(77,043)					$	581,391					$	469,014
Preferred stock dividends						4,726						3,466						17,705						9,029
GAAP net income (loss) attributable to SLM Corporation common stock						$	163,717					$	(80,509)					$	563,686					$	459,985
Adjustments:
Net impact of derivative accounting(1)						—						—						—						248
Net tax expense(2)						—						—						—						60
Total non-GAAP “Core Earnings” adjustments to GAAP						—						—						—						188
Non-GAAP “Core Earnings” (loss) attributable to SLM Corporation common stock						$	163,717					$	(80,509)					$	563,686					$	460,173
GAAP diluted earnings (loss) per common share						$	0.72					$	(0.33)					$	2.41					$	1.76
Derivative adjustments, net of tax						—						—						—						—
Non-GAAP “Core Earnings” diluted earnings (loss) per common share						$	0.72					$	(0.33)					$	2.41					$	1.76

(1) Derivative Accounting: Non-GAAP “Core Earnings” exclude periodic unrealized gains and losses caused by the mark-to-fair value valuations on derivatives that do not qualify for hedge accounting treatment under GAAP, but include current period accruals on the derivative instruments. Under GAAP, for our derivatives held to maturity, the cumulative net unrealized gain or loss over the life of the contract will equal $0.

(2) Non-GAAP “Core Earnings” tax rate is based on the effective tax rate at Sallie Mae Bank, where the derivative instruments are held.

The following table reflects the rates earned on interest-earning assets and paid on interest-bearing liabilities and reflects our net interest margin on a consolidated basis.  

        

						Quarters Ended December 31,																								Years Ended December 31,
						2023												2022												2023												2022
(Dollars in thousands)						Balance						Rate						Balance						Rate						Balance						Rate						Balance						Rate
Average Assets
Private Education Loans						$	21,060,947					11.02		%				$	20,254,373					10.12		%				$	21,039,701					10.86		%				$	20,576,737					9.14		%
FFELP Loans						546,892						7.46						628,187						6.03						574,218						7.19						662,194						4.62
Credit Cards						—						—						29,521						7.54						11,096						14.02						28,547						5.10
Taxable securities						2,556,037						2.20						2,380,810						1.84						2,543,586						2.00						2,509,215						1.41
Cash and other short-term investments						4,351,285						5.38						4,898,994						3.69						4,215,164						5.09						4,284,442						1.93
Total interest-earning assets						28,515,161						9.30		%				28,191,885						8.21		%				28,383,765						9.13		%				28,061,135						7.24		%
Non-interest-earning assets						390,422												629,678												301,749												605,447
Total assets						$	28,905,583											$	28,821,563											$	28,685,514											$	28,666,582
Average Liabilities and Equity
Brokered deposits						$	10,286,204					3.68		%				$	10,044,571					2.75		%				$	9,803,802					3.29		%				$	9,871,787					1.95		%
Retail and other deposits						11,222,652						4.76						11,293,695						3.10						11,605,215						4.40						11,109,675						1.65
Other interest-bearing liabilities(1)						5,407,513						3.85						5,420,742						3.24						5,366,365						3.66						5,517,489						3.03
Total interest-bearing liabilities						26,916,369						4.17		%				26,759,008						3.00		%				26,775,382						3.85		%				26,498,951						2.05		%
Non-interest-bearing liabilities						121,754												111,315												83,895												107,611
Equity						1,867,460												1,951,240												1,826,237												2,060,020
Total liabilities and equity						$	28,905,583											$	28,821,563											$	28,685,514											$	28,666,582
Net interest margin												5.37		%										5.37		%										5.50		%										5.31		%

(1)     Includes the average balance of our unsecured borrowings, as well as secured borrowings and amortization expense of transaction costs related to our term asset-backed securitizations and our Secured Borrowing Facility.

Basic earnings (loss) per common share (“EPS”) are calculated using the weighted average number of shares of common stock outstanding during each period. A reconciliation of the numerators and denominators of the basic and diluted EPS calculations follows.

    

(1)     Includes the potential dilutive effect of additional common shares that are issuable upon exercise of outstanding stock options, restricted stock, restricted stock units, performance stock units and the outstanding commitment to issue shares under the ESPP, determined by the treasury stock method.

(2)  For the quarter and year ended December 31, 2023, securities covering approximately 1 million and 1 million shares, respectively, were outstanding but not included in the computation of diluted earnings per share because they were anti-dilutive. For the quarter and year ended December 31, 2022, securities covering approximately 5 million and 1 million shares, respectively, were outstanding but not included in the computation of diluted earnings per share because they were anti-dilutive.

(1)  See “Unfunded Loan Commitments” on page 17 for a summary of the activity in the allowance for and balance of unfunded loan commitments, respectively.

(2) Below is a reconciliation of the provisions for credit losses reported in the consolidated statements of income. When a new loan commitment is made, we record the CECL allowance as a liability for unfunded loan commitments by recording a provision for credit losses. When the loan is funded, we transfer that liability to the allowance for credit losses.

Consolidated Statements of Income Provisions for Credit Losses Reconciliation
Quarter Ended December 31, 2023 (dollars in thousands)
Private Education Loan provisions for credit losses:
Provisions for loan losses						$	(25,364)
Provisions for unfunded loan commitments						40,964
Total Private Education Loan provisions for credit losses						15,600
Other impacts to the provisions for credit losses:
FFELP Loans						(1)
Total						(1)
Provisions for credit losses reported in consolidated statements of income						$	15,599

(3) Loans in repayment include loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period (but, for purposes of the table, do not include those loans while they are in forbearance).

(4) Accrued interest to be capitalized on loans in repayment includes interest on loans that are in repayment but have not yet entered into full principal and interest repayment status after any applicable grace period (but, for purposes of the table, does not include interest on those loans while they are in forbearance).

(5) Accrued interest to be capitalized on Private Education Loans only.

(1)     See “Unfunded Loan Commitments” on page 17 for a summary of the activity in the allowance for and balance of unfunded loan commitments, respectively.

(2)     Below is a reconciliation of the provisions for credit losses reported in the consolidated statements of income. When a new loan commitment is made, we record the CECL allowance as a liability for unfunded loan commitments by recording a provision for credit losses. When the loan is funded, we transfer that liability to the allowance for credit losses.

(3)     Loans in repayment include loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period (but, for purposes of the table, do not include those loans while they are in forbearance).

(4) Accrued interest to be capitalized on loans in repayment includes interest on loans that are in repayment but have not yet entered into full principal and interest repayment status after any applicable grace period (but, for purposes of the table, does not include interest on those loans while they are in forbearance).

(5) Accrued interest to be capitalized on Private Education Loans only.

(1) See “Unfunded Loan Commitments” on page 17 for a summary of the activity in the allowance for and balance of unfunded loan commitments, respectively.

(2) Below is a reconciliation of the provisions for credit losses reported in the consolidated statements of income. When a new loan commitment is made, we record the CECL allowance as a liability for unfunded loan commitments by recording a provision for credit losses. When the loan is funded, we transfer that liability to the allowance for credit losses.

(3) Loans in repayment include loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period (but, for purposes of the table, do not include those loans while they are in forbearance).

(4) Accrued interest to be capitalized on loans in repayment includes interest on loans that are in repayment but have not yet entered into full principal and interest repayment status after any applicable grace period (but, for purposes of the table, does not include interest on those loans while they are in forbearance).

(5) Accrued interest to be capitalized on Private Education Loans only.

(1) See “Unfunded Loan Commitments” on page 17 for a summary of the activity in the allowance for and balance of unfunded loan commitments, respectively.

(2) Below is a reconciliation of the provisions for credit losses reported in the consolidated statements of income. When a new loan commitment is made, we record the CECL allowance as a liability for unfunded loan commitments by recording a provision for credit losses. When the loan is funded, we transfer that liability to the allowance for credit losses.

(3) Loans in repayment include loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period (but, for purposes of the table, do not include those loans while they are in forbearance).

(4) Accrued interest to be capitalized on loans in repayment includes interest on loans that are in repayment but have not yet entered into full principal and interest repayment status after any applicable grace period (but, for purposes of the table, does not include interest on those loans while they are in forbearance).

(5) Accrued interest to be capitalized on Private Education Loans only.

(1) Net of expirations of commitments unused. Also includes incremental provision for new commitments and changes to provision for existing commitments.

(2) When a loan commitment is funded, its related liability for credit losses (which originally was recorded as a provision for unfunded loan commitments) is transferred to the allowance for credit losses.

    

Private Education Loans Held for Investment As of December 31, (dollars in thousands)						Credit Quality Indicators
						2023												2022
						Balance(1)						% of Balance						Balance(1)						% of Balance
Cosigners:
With cosigner						$	18,291,994					87		%				$	17,689,003					87		%
Without cosigner						2,733,850						13						2,614,685						13
Total						$	21,025,844					100		%				$	20,303,688					100		%
FICO at Original Approval(2):
Less than 670						$	1,640,463					8		%				$	1,553,602					8		%
670-699						3,122,407						15						3,038,659						15
700-749						6,749,628						32						6,591,619						32
Greater than or equal to 750						9,513,346						45						9,119,808						45
Total						$	21,025,844					100		%				$	20,303,688					100		%
FICO-Refreshed(2)(3):
Less than 670						$	2,738,066					13		%				$	2,363,090					12		%
670-699						2,589,805						12						2,437,243						12
700-749						5,965,882						28						5,915,687						29
Greater than or equal to 750						9,732,091						47						9,587,668						47
Total						$	21,025,844					100		%				$	20,303,688					100		%
Seasoning(4):
1-12 payments						$	4,482,002					21		%				$	4,460,121					22		%
13-24 payments						3,696,870						18						3,550,854						18
25-36 payments						2,305,944						11						2,239,312						11
37-48 payments						1,557,809						7						1,684,452						8
More than 48 payments						3,691,228						18						3,473,896						17
Not yet in repayment						5,291,991						25						4,895,053						24
Total						$	21,025,844					100		%				$	20,303,688					100		%

(1)Balance represents gross Private Education Loans held for investment.

(2)Represents the higher credit score of the cosigner or the borrower.

(3)Represents the FICO score updated as of the respective fourth-quarter.

(4)Number of months in active repayment (whether interest only payment, fixed payment, or full principal and interest payment status) for which a scheduled payment was due.

The following table provides information regarding the loan status of our Private Education Loans held for investment. Loans in repayment include loans making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period (but for purposes of the following table, do not include those loans while they are in forbearance).

(1)Deferment includes customers who have returned to school or are engaged in other permitted educational activities and are not yet required to make payments on the loans (e.g., residency periods for medical students or a grace period for bar exam preparation).

(2)Loans for customers who have requested extension of grace period generally during employment transition or who have temporarily ceased making full payments due to hardship or other factors, consistent with established loan program servicing policies and procedures.

(3)The period of delinquency is based on the number of days scheduled payments are contractually past due.

(1)      Loans for customers still attending school and who are not yet required to make payments on the loans.

(2)     Includes loans in deferment or forbearance. Loans in repayment include loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period (but, for purposes of the table, do not include those loans while they are in forbearance).