SLM Corporation

Good day, and welcome to the 2021 fourth quarter Sallie Mae conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star then one on your touchstone telephone. If anyone should require assistance during the conference, please press star then zero to reach an operator. As a reminder, this call is being recorded. I would now like to turn the call over to Brian Cronin, Vice President, Investor Relations. You may begin.

Thank you, Michelle. Good morning, and welcome to Sally Mae's fourth quarter and year-end 2021 earnings call. It is my pleasure to be here today with John Witter, our CEO, and Steve McGarry, our CFO. After the prepared remarks, we will open up the call for questions. Before we begin, keep in mind our discussion will contain predictions, expectations, and forward-looking statements. Actual results in the future may be materially different than those discussed here. This could be due to a variety of factors. Listeners should refer to the discussion of those factors in the company's Form 10-Q and other filings with the SEC. For Sally Mae, these factors include, among others, the potential impact of COVID-19 pandemic on our business, results of operation, financial conditions, and or cash flows. During this conference call, we referred to non-GAAP measures we call our core earnings. a description of core earnings, a full reconciliation of gap measures, and our gap results can be found in the earnings supplement for the quarter ended December 31st, 2021. This is posted along with the earnings press release on the investors page at sallymay.com. Thank you. I'll now turn the call over to John.

Thank you, Brian and Michelle. Good morning, everyone. Thank you for joining us to discuss Sally May's fourth quarter and full year 2021 results. I'm pleased to report on a successful year in 2021, discuss our plans for 2022, and announce the beginning of an exciting new chapter for Sallie Mae stemming from last night's announced agreement to acquire Nitro College. I hope you'll take away three key messages today. First, we delivered strong results in 2021. Second, we expect to continue execution against our strategic imperatives, and that will drive strong results in 2022. And three, we will look for creative opportunities to enhance our core business and strategically evolve our company as evidenced by the acquisition of Nitro College. Let me begin with the discussion of the 2021 results. During the year, we maintained a focus on our core business, executed a capital return program that exceeded our original expectations and rigorously managed expenses. Our earnings outlook improved throughout the year based on this focus and an improving economy. As our performance improved, we increased our share repurchase goals and our dividend, further returning capital to shareholders. GAAP diluted EPS in the fourth quarter of 2021 was $1.04, compared to $1.13 in the year-ago quarter. Our strong results were driven by the premium we earned on the $1 billion loan sale we executed in the quarter and the associated reserve release. These earnings are lower than the prior quarter, given two unique events that occurred in Q4 of last year. You may remember from our earnings call last January, we reduced our fourth quarter 2020 provision by $316.4 million due to the combined impact of improving pandemic conditions coupled with the reserve release actually related to our early 2021 loan sale. Private education loan originations for the fourth quarter of 2021 were $737 million, which is up 18% over the fourth quarter of 2020. Consistent with our guidance from our last call, Our full-year originations ended at $5.4 billion, which is up 2% over 2020. Credit quality at origination was consistent with past years. Our cosigner rate for fourth quarter of 2021 was 83%, flat to the fourth quarter of 2020. And our average FICO score for the fourth quarter of 2021 was 749 versus 751 in the fourth quarter of 2020. In the fourth quarter of 2021, we continued our capital return strategy, repurchasing 14 million shares at an average price of $18.52. We have reduced the shares outstanding since January 1st of 2021 by 26% at an average price per share of $17.37. We have reduced the shares outstanding since January 1st of 2020 by 35% at an average price of $15.52. Steve will now take you through the financial highlights of the quarter. Steve?