SLM (SLM) Barclays 22nd Annual Global Financial Services Conference summary

Origination trends and guidance

• Peak origination season was delayed and compressed due to FAFSA rollout issues, but origination activity remained strong into September, supporting full-year guidance.

• Fiscal year 2024 originations are expected to be up 7%-8% year-over-year, with quarter-to-date originations up about 10% year-over-year.

• Guidance for balance sheet growth is 2%-3% for this year, trending toward the high end, with 5%-6% growth targeted for next year.

• Loan sales are likely done for the year unless origination volumes exceed expectations, in which case a smaller sale may occur.

• EPS guidance incorporates high-end origination expectations and CECL provisioning.

Loan sales, market demand, and competition

• Demand for loan sales has been strong, with premiums above expectations and increased interest following Discover’s exit.

• Private equity-backed players have entered the market as banks exit, but pricing and competition remain rational.

• The company maintains discipline on pricing and marketing spend, focusing on return thresholds.

• No specific market share target is set; focus remains on maximizing originations that meet return criteria.

Credit quality, delinquencies, and loan modification programs

• Early-stage delinquencies rose due to seasonality and extended grace periods, but no concerns about net charge-off guidance.

• Loan modification programs, introduced after ceasing broad forbearance, are key to maintaining long-term charge-off rates.

• Borrowers in modification programs remain in delinquency buckets until three payments are made, after which they return to performing status.

• Credit performance is stable, with no significant impact from changes in unemployment rates.