SLM Corporation

Welcome to the Sallie Mae fourth quarter and full year 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 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 others can hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star and zero. I would now like to turn the call over to Melissa Brinall, Managing Vice President, Head of FP&A and Investor Relations. Please go ahead. Melissa Brinall, Managing Vice President, Head of FP&A and Investor Relations. Please go ahead. Melissa Brinall, Managing Vice President, Head of FP&A and Investor Relations. Please go ahead.

Melissa Brinall, Managing Vice President, Head of FP&A and Investor Relations. Please go ahead. Melissa Brinall, Managing Vice President, Head of FP&A and Investor Relations. Please go ahead. Melissa Brinall, Managing Vice President, Head of FP&A and Investor Relations. Please go ahead. Melissa Brinall, Managing Vice President, Head of FP&A and Investor Relations. Please go ahead. Melissa Brinall, Managing Vice President It's 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-K 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, Thursday, January 23rd, 2025. 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 fourth quarter and full year 2024 results. I'm pleased to report on a successful year and discuss our outlook for 2025. I hope you'll take away three key messages today. First, we delivered strong results in 2024. Second, we exceeded our expectations for originations, both in terms of volume and credit quality. And third, we believe that we have strong momentum entering 2025 and are well positioned to deliver on the strategy and investment thesis that we outlined a little over a year ago. Let's begin with the discussion of 2024 results. Private education loan originations for the fourth quarter of 24 were $982 million, and our new unfunded commitments were $817 million. For the fourth quarter, our originated loan volume increased 17% compared to the prior year quarter. For the full year, we originated $7 billion of private education loans, 10% over 2023, and meaningfully ahead of our revised full year guidance of 8% to 9%. Going into 2024, we knew there would be opportunity for us to expand our share of the private student lending market, and we were pleased to acquire what we believe to be our fair share, if not slightly more, of the market opportunity created by the recent changes in competitive dynamics. Our total balance sheet growth was 3.1% for the full year 2024, inclusive of the FELP loan sale. and our private education loan portfolio grew at 5.7%. GAAP diluted EPS in the fourth quarter was 50 cents, and our full year GAAP diluted EPS was $2.68 compared to $2.41 in 2023, an 11.2% increase year over year. Achieving originations growth greater than our revised estimates from Q3 did put some pressure on EPS as we built required reserves and incurred additional operating expenses. As a result, we finished the year two cents below our revised guidance range for 2024 full year gap diluted EPS. We are pleased that this growth was accompanied by an improvement in credit quality of originations for the year. Cosigner rates increased from 87% in 23 to 90% in 24, and the average FICO score at approval increased from 748 to 752 over the same period. Credit performance also remained strong throughout the year. in part due to the success of our enhanced payment programs that have proven to be a useful tool in helping borrowers work through periods of adversity while also establishing positive payment habits. Net charge-offs for our private education loan portfolio were $93 million in the fourth quarter of 24 and $332 million for the full year, representing 2.2% of average private education loans in repayment which is down 25 basis points from the full year of 23. We continued our capital return strategy in the fourth quarter, repurchasing 2 million shares at an average price of $23.05. We have reduced the shares outstanding since January 1st of 2024 by 11.6 million at an average price of $21.59, and by 52% since January 1st of 2020 at an average price of $16.22. Before I hand the call over to Pete, I am pleased to share that earlier this week, we reached a preliminary agreement on indicative pricing terms for the sale of approximately $2 billion of private education loans. We expect the transaction to close in early February. We are encouraged by the price we received, which is in line with our expectations for the year. We expect to sell additional loans in 2025, with market conditions dictating the timing and volume driven by our balance sheet growth targets. We expect our balance sheet growth to be in line with or slightly above the strategy we shared at our December 2023 investor forum for year two for roughly 5% balance sheet growth in 2025. Pete will now take you through some additional financial highlights of the quarter and the year. Pete, over to you.