SLM Corporation

GAAP diluted EPS was $0.29. Loan originations were $716 million, up nearly 4.5% from the prior-year quarter, with average FICO improving from 754 to 755 and cosigner rates at 84%. Net interest income was $333 million, down $44 million year over year, and other income was $45 million, up $16 million. Net interest margin was 4.75%. Net charge-offs were $113 million versus $94 million a year ago, and provision for credit losses was $126 million versus $149 million a year ago. Noninterest expense was $195 million, up $28 million year over year, and the efficiency ratio was 48.6%. The reserve rate was 5.89%, delinquency 30+ days was 3.7% of loans in repayment, liquidity was 18.6% of total assets, total risk-based capital was 13.1%, and CET1 was 11.8%. Guidance: management narrowed 2026 net charge-off guidance to $365 million-$385 million, citing about a $25 million potential recoveries impact tied to recovery-strategy changes, and affirmed all other guidance metrics. Management also said Q2 likely marks the low point for NIM this year, with margin expected to move back toward around 5% in the second half as liquidity is deployed into peak-season originations.

Jon Witter emphasized that Sallie Mae is entering its first peak season under the revised federal PLUS framework with products, features, and functions completed as planned. He said early application and volume trends across new offerings are at the higher end of expectations or better, and he framed the company as well positioned for both 2026 and the longer-term originations opportunity. On credit, he was constructive, saying loan modification outcomes are better than expected and that current loss pressure is concentrated, understood, and manageable.

Pete Graham focused on the earnings drivers and balance sheet management. He said the quarter reflected lower NII because of higher liquidity after the late-March loan sale, but he expects margin expansion to resume in the second half as that liquidity is deployed; he also said the second quarter will likely be the low point for margin this year. On credit and capital, he cited the 5.89% reserve rate, 13.1% total risk-based capital, 11.8% CET1, and 18.6% liquidity, and noted the completion of the $200 million ASR with 9.3 million shares repurchased. He added that $242 million remains under buyback authorization and expects to substantially deploy it this year.

Analysts pressed on NIM recovery, the new loan-sale partner, the second partnership’s economics, and whether the credit issue signals broader deterioration. Management said NIM should normalize closer to its long-term target as peak-season originations redeploy excess liquidity, and said the new partner process is progressing well with a possible close in Q3 or early Q4. On credit, management said the debt-resolution issue affects a small segment of borrowers and that the $25 million recoveries headwind is more a timing issue than a broad credit problem; they also said modified borrowers are showing better-than-expected repayment success.