SLM Corporation

Please stand by. We're about to begin. Good day, everyone, and welcome to the Sallie Mae second quarter 2024 earnings conference call. At this time, all participants have been placed on 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 star 1 on your telephone keypad. And if at any point your question has been answered, you may remove yourself from the queue by pressing star 2. So others can hear your questions clearly, we ask that you please pick up your handset for best sound quality. Lastly, if you should require any assistance today, please press star zero. And now at this time, I would like to turn things over to Melissa Brunaud, Head of Investor Relations. Please go ahead, ma'am.

Thank you, Beau. Good evening, and welcome to Sally Mae's second 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 10-Q and other filings of the FCC. 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, July 24th, 2024. Thank you, and now I'll turn the call over to John.

Thank you, Melissa and Beau. Good evening, everyone. Thank you for joining us today to discuss Sallie Mae's second quarter 2024 results. I'm pleased to report on a successful quarter and progress toward our 2024 goals. I hope you'll take away three key messages today. We delivered strong results in the second quarter and first half of the year. We remain encouraged by the trends we have seen in our credit performance. And third, we believe we are well positioned to deliver solid results for the year by continuing to drive our core business and serve our customers. Let's begin with the quarter's results. GAAP diluted EPS in the second quarter of 2024 was $1.11 per share as compared to $1.10 in the year-ago quarter. Our results were driven by a combination of strong business performance, improvements in credit trends, and a gain on our second loan sale of the year. Loan originations for the second quarter of 2024 were $691 million, which is up 6% over the second quarter of 2023. In the quarter, we have seen slight year-over-year improvements in credit quality of originations. with cosigner rates increasing to 80% from 76% in the second quarter of 2023, and the average FICO score increasing five points from 747 to 752. We continue to be pleased with our credit performance through the second quarter. Net private education loan charge-offs in Q2 were $80 million, representing 2.19% of average private education loans in repayment. This is down 50 basis points from the second quarter of 2023 and better than our expectations. Our enhanced payment programs are proving to be a useful tool in helping our borrowers work through periods of adversity while establishing positive payment habits. We saw both delinquencies and forbearance decline this quarter over the year-ago quarter. We remain optimistic about future performance as we observe continued roll rate improvements in our late-stage delinquency buckets as compared to this time last year. The $1.6 billion loan sale that we executed in the second quarter generated $112 million in gains. the balance sheet growth expectations for the year remained at 2% to 3%. In the second quarter of 2024, we continued our capital return strategy by repurchasing 2.9 million shares at an average price of $21.17. We have reduced the shares outstanding since we began this strategy in 2020 by 51% at an average price of $16.03. We expect to continue to use the gain and capital released from 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?