SLM Corporation

Welcome to the Sallie Mae Second Quarter 2025 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. 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 pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star 0. I would now like to turn the call over to Kate DeLacy, Senior Director and Head of Investor Relations. Please go ahead.

Thank you, Chloe. Good evening and welcome to Sally Mae's second quarter 2025 earnings call. It is my pleasure to be here today with John Witter, our CEO, Pete Graham, our CFO, and Melissa Bernal, Managing Vice President of Strategic Finance. 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 10Q and other filings with the SEC. For Sallie Mae, those 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, July 24th, 2025. Thank you, and now I'll turn the call over to John.

Thank you, Kate and Chloe. Good evening, everyone. Thank you for joining us to discuss Sallie Mae's second quarter of 2025 results. I hope you'll take away three key messages today. First, we delivered solid results in the second quarter and first half of the year. Second, recognizing ongoing economic certainties, we believe we have momentum going into the second half of the year. And third, we're optimistic about the long-term outlook for private student lending, particularly in light of the recently passed federal student loan reforms. Let's begin with the quarter's results. GAAP diluted EPS in the second quarter was 32 cents per share. Loan originations for the second quarter were $686 million, roughly in line with the same period last year and slightly below our expectations. The second quarter typically represents our lowest origination volume, less than 10% of the annual total, and includes a higher concentration of nontraditional borrowers and programs. A handful of our nontraditional school partners faced unique challenges such as short-term enrollment caps and disbursement volume shifts to later in the year. We do not expect these factors to have a similarly significant impact in future quarters. Looking forward, conversations with school partners indicate they are navigating considerable uncertainty as they evaluate impacts from federal lending reforms, reductions in grant funding, and other recent policy developments. While peak volumes are beginning to build, these factors may be causing a delayed peak season similar to what we experienced last year. We will continue to monitor this actively and optimize our marketing strategies accordingly. The credit quality of originations continues to be robust with incremental improvement compared to the second quarter of 2024. Our cosigner rate for the second quarter was 84%, up from 80 percent in the year-ago quarter, and average FICO at approval rose slightly to 754 from 752. These indicators reflect continued discipline in our underwriting standards and borrower selection. For the second quarter of 25, we continued our capital return strategy, repurchasing 2.4 million shares at an average price of $29.42 per share. We have reduced the shares outstanding since we began this strategy in 2020 by over 53% at an average price of $16.43. We expect to continue programmatically and strategically buying back stock throughout the year. Before I hand the call over to Pete, I'm pleased to share that earlier this week, we agreed to indicative pricing on a transaction for the sale of $1.8 billion of private education loans. We are encouraged by the price that has been agreed on, which is in line with our expectations for the year. As we look ahead to the second half of the year, we will continue to take a disciplined approach to managing balance sheet capacity, particularly as we prepare for anticipated plus reform and will remain open to opportunities that support our strategic and financial objectives. We continue to expect year-over-year growth in our private student loan portfolio with any additional loan sales evaluated in the context of our broader strategy and evolving balance sheet priorities. Pete will now take you through some of the additional financial highlights of the quarter. Pete?