SLM Corp Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Terry Ma - Barclays - Analyst : So I think you called out that over the long term, the mid to low 5% range is still kind of the right target for NIM, but as we think about kind of the short and intermediate term and the impact of the most recent round of rate cuts and potentially some more rate cuts up the head, like can we see NIM dip below 5%? And what's the kind of time frame to get back to that long-term target?

Question: Terry Ma - Barclays - Analyst : Got it. Okay. And then I appreciate the color on the mod programs and the reserve commentary. But as I look at kind of delinquencies this quarter, it ticked up quite a bit, particularly in the 30 to 59 day bucket. Any color on what's going on there? How much of that was attributed to seasonality or anything else?

Question: Sanjay Sakhrani - Keefe, Bruyette & Woods, Inc. - Analyst : Sorry, I guess I got dropped off earlier. My apologies. Pete, could you just -- and I'm sorry if this was asked already. But just when we think about -- relative to consensus, reiterating the full year number, this quarter was a little bit weaker on higher provisions and maybe a weaker NIM. As we think about what's going to make up for it in the fourth quarter, is it really that reserve rate can come down and provisions can help get us back to what the full year number is? I'm just trying to think through those dynamics.

Question: Sanjay Sakhrani - Keefe, Bruyette & Woods, Inc. - Analyst : And as far as like the NIM's progression from here, like into next quarter maybe?

Question: Sanjay Sakhrani - Keefe, Bruyette & Woods, Inc. - Analyst : Got it. And just my follow-up is on the reclassification of the federal loans there held for sale. I mean can you just talk about the decision to sell and how we should think about that impact?

Question: Mark DeVries - Deutsche Bank AG - Analyst : Yeah. First, just to follow up on that last point. Should we expect any kind of gain or loss on the disposition of those FFELP loans?

Question: Mark DeVries - Deutsche Bank AG - Analyst : Okay. Got it. And then just thinking about this quarter's originations, do you think the volumes did reflect the new run rate market share in kind of a post-discover world? Or is there still a lot of jockeying going on with share that could be gained or lost? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 9:30PM, SLM.OQ - Q3 2024 SLM Corp Earnings Call

Question: Mark DeVries - Deutsche Bank AG - Analyst : Got it. That's helpful. And then just do you have any updated observations on payment behavior you may be observing from your borrowers who may also have direct loan balances that went into repayment in recent months?

Question: Rick Shane - JPMorgan Chase & Co. - Analyst : Look, I just want to delve in a little bit deeper on the issues that Sanjay raised related to the optics of stronger growth in terms of earnings, the fact that you've reiterated guidance. There was a comment that you could consider a small sale in the fourth quarter. When we think about that sale, would it be roughly the size of sort of the variance of your volume versus prior expectations because that would set you back in terms of your loan -- your asset growth objectives, et cetera? Is that a good way to start thinking about it?

Question: Rick Shane - JPMorgan Chase & Co. - Analyst : Got it. And again, look, we understand that stronger volume is a virtuous thing that has a -- distorts earnings in the short term in a way that you have to think about, but want to be clear that obviously gaining market share and building the business is clearly constructive. But it is interesting. I guess, in that context, keeping guidance where it is and not framing the possibility that there could be an optical distortion related to strong growth, it doesn't sound like you guys will go there.

Question: Jeff Adelson - Morgan Stanley - Analyst : Pete, I appreciate the color you've given on the modification program so far. But just wanted to make sure we understood, what was the driver of this procedural refinement on the modifications? I know that you gave some color on that, but just wondering if you could put it in your own words. And was that the entirety of the reason of why your early-stage buckets did increase this quarter? And I know you've also in prior quarters given us that excluding modifications DQ rate, which I think was running around 50 bps lower than the total DQ rate in prior quarters. So could you maybe just give us an update on that number as well?

Question: Jeff Adelson - Morgan Stanley - Analyst : Okay. So was there anything else that maybe was driving the early stage this quarter?

Question: Jeff Adelson - Morgan Stanley - Analyst : Okay. And are you guys still thinking about a reasonable target of the high 1% to low 2%? And just given that your charge-offs have come in at the low end and even slightly outperformed the low end this quarter, as we're thinking into next year, is there a chance that you could see something below 2%.

Question: Jon Arfstrom - RBC Capital Markets - Analyst : Pete, I think you're on the early stage delinquencies. You're just saying, look at year-over-year, don't look at sequential, but that's the right way to look at it.

Question: Jon Arfstrom - RBC Capital Markets - Analyst : Okay. And you're signaling that things are potentially getting a little bit better, Pete, comfortable enough to tell us that you think reserves could trend down. Can you give us any clues to what you're thinking in terms of what's possible there, kind of the pace and timing of some of those reserve percentage of clients?

Question: Jon Arfstrom - RBC Capital Markets - Analyst : Okay. Fair enough. And then just one more if I could. It's probably in here, but I couldn't quite figure it out. But can you give us deposit rates on kind of your new money that you're bringing in and how that compares to your average, how big that gap is? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 9:30PM, SLM.OQ - Q3 2024 SLM Corp Earnings Call

Question: John Hecht - Jefferies LLC - Analyst : Actually, most of my questions have been asked and answered. I guess maybe a follow-on to the last question. Maybe talk about -- you talked about the deposit markets and pricing. But maybe how do you guys stack in that regard, like meaning like what's the maturity profile of some of the brokered deposits and stuff like that so that you can move when the markets are moving?

Question: John Hecht - Jefferies LLC - Analyst : And then I apologize if you addressed this, but you guys -- you clearly beat on the originations in the quarter. You're raising the guidance for the year. Are you able to attribute -- like how much market share you're getting from Discover's exit in that increase in guidance versus just sort of overall market advancements?