SLM Corporation

Welcome to the Sallie Mae First Quarter 2024 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the prepared remarks. If you would like to ask a question at that time, please press the star and 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star and 2. So that others can hear your questions clearly, sound quality. Lastly, if you should require operator assistance, please press star zero. I would now like to turn the call over to Melissa Brano, Head of Investor Relations. Please go ahead.

Thank you, David. Good evening, and welcome to Sallie Mae's first quarter 2024 earnings call. It is my pleasure to be here today with John Witter, our CEO, and Pete Graham, our CFO. After the prepared remarks, we will open 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 from those discussed here due to a variety of factors. Listeners should refer to the discussion of those factors in the company's form and other filings with the SEC. For Sallie Mae, these factors include, among others, results of operations, financial conditions, and or cash flows, as well as any potential impacts of various external factors on our business. We undertake no obligation to update or revise any predictions, expectations, or forward-looking statements to reflect events or circumstances that occur after today, Wednesday, April 24th, 2024. Thank you, and now I'll turn the call over to John.

Thank you, Melissa and David. Good evening, everyone. Thank you for joining us today to discuss Sallie Mae's first quarter 2024 results. I'm pleased to report on a successful quarter and progress towards our 24 goals. I hope you'll take away three key messages today. First, we're off to a fast start in 2024. Second, we're encouraged by the trends we have seen in our credit performance And third, we believe we have positive momentum for the rest of the year. Let's begin with the quarter's results. GAAP diluted EPS in the first quarter of 24 was $1.27 per share as compared to 47 cents in the year-ago quarter. Our results for the first quarter were driven by a combination of strong business performance, improvement in credit trends, and the gain on our first loan sale of the year. Loan originations for the first quarter of 24 were $2.6 billion, which is up 6% over the first quarter of 23. We have seen our application volume grow as well, increasing 4% year over year. We believe that this is a solid start to 2024. Credit quality of originations was consistent with past years. Our cosigner rate for the first quarter of 24 was 91% versus 89% in the first quarter of 2023. Average FICO score for the first quarter of 2024 was 748 versus 746 in the first quarter of 2023. The credit improvement that we observed in 2023 has continued through the first quarter of 2024. Net private education loan charge-offs in Q1 were $83 million, representing 2.14% of average loans in repayment. This is down 29 basis points from fourth quarter of 2023 and better than expectations. Although we are still in the early stages of implementation, we are pleased with the medium-term performance of our loss mitigation programs and are seeing improvement in our role to default rates, as well as positive performance trends in all stages of delinquency. As we mentioned in our year-end call, we did see a rise in delinquencies in the fourth quarter due to what we described at that point as the mechanical results of borrowers entering into new payment programs who were in their qualifying period. We have added additional disclosure around both our delinquency and forbearance metrics and are seeing the desired results. Excluding those borrowers that are in their loan modification qualifying period, delinquencies are down quarter over quarter from 3.1% in Q1 of 2023 to 2.7% in Q1 of 2024. Loans in disaster or hardship forbearance were 1% at the end of Q1 2024, consistent with performance in Q1 of 23. The $2.1 billion loan sale that we were able to execute in the first quarter generated $143 million in gains. We are encouraged by the price we received, which is in line with our expectations. We still expect to sell additional loans in 2024 with market conditions dictating the timing and our balance sheet growth targets dictating the volume. The balance sheet growth expectations for the year remains at 2% to 3%. In the first quarter of 2024, we continued our capital return strategy by repurchasing 1.3 million shares at an average price of $20.32. We have reduced the shares outstanding since we began this strategy in 2020 by just over 50% at an average price of $15.95. We expect to continue to use the gain and capital released from future loan sales to programmatically and strategically buy back stock throughout the year. Pete will now take you through some additional financial highlights of the quarter. Pete?