SLM Corp at Bank of America Financial Services Conference Summary

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

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : <_ALACRA_META_ABSTRACT>I think many of you are familiar with Sallie Mae, the largest private originator of student loans in the U.S. with about 60% market share. So I'm not going to dive too deep into that, but I want to start more high level before diving into the specifics. Pete you joined company about 1.5 years ago. What has surprised you most about Sallie Mae and the broader industry?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Awesome. Say you had earnings just a few weeks ago, raised some solid guidance. It was like you're going to return some more moderate balance sheet growth. So maybe talk about the drivers of the guide. You talked a little bit about dynamics between REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 12, 2025 / 5:10PM, SLM.OQ - SLM Corp at Bank of America Financial Services Conference origination growth with the 6% to 8% range you have right now and how that might shape out between the mini peak you're currently seeing and the peak season we'll see in the fall?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : That's very helpful. And then on the origination range. I guess, what gets you to the high versus the low end? Is it more so the execution on your side, maybe in the back half of this year and how the market shape -- the market size shapes out? Or is it more so the flow-through of loans into this peak or mini peak season we have right now?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Keeping on share and for this current season later on this year, how would you describe the competitive intensity currently and your ability to maintain it like you're about 60% market share you currently have given current dynamics?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Awesome. And then on the dynamic of the competitive intensity. And like you mentioned earlier in this conversation, Discover left the market about a year ago. How has that exit played out to your expectations? Have you like -- I think you said you took you more than your fair share, but how has it played out, I guess, with other competitors in the space too, just as well as you?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Got it. And then we've seen some, I guess, call it fintechs and some newer entrants in the in-school product recently. Is that something you see as a material threat to your market share? And how do you see those shaping out in the next few years?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Got it. So now the CECL transition is behind us. You guys are now targeting balance sheet growth of about 5% for 2025. And on the earnings call, you noted that you could modestly exceed that, can you discuss a bit why 5% is the right level? And how much higher could growth be in this year over 5% without putting much pressure on funding?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Got it. Very helpful. On the funding side, is there a ratio you try to seek between deposit funding versus using ABS? And how do you think about deposit pricing going into 2025?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : That makes sense. Is there anything you can tell us about trends quarter-to-date? We're about halfway through the quarter, not sure if you have anything else you can give us there?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Awesome. And then on the loan sale comment you just made. I know you can't talk about execution of this sale entirely, but can you talk a bit about the demand you're seeing in the market for your loans and the pricing you're receiving on the transaction, just broadly speaking?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Got it. Previously -- I think still currently, your level of loan sales do contribute to the level of buybacks you put back to the business. Can you just delve a little bit into your capital return strategy now that you're planning for a faster balance sheet growth? Would that -- I know it might imply some more loan sales, but is there anything that might also change these factors going forward?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Got it. I want to touch on both the capital point and the dividend point. I think also to part of your litmus there is the share price appreciation you've had in the last year and like how that goes back to buybacks. At this like higher stock price or lower loan sales, can you speak a little bit to how you might approach the dividend raises or special dividends to return capital to shareholders?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : That's very helpful. And then how much do you factor in like your CET1 ratio into this equation? And I guess like what target level would you want to be at or remain above?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Great. Switching to credit. Guidance was very encouraging with net charge-offs improving on a year-over-year basis for 2025. That would be the third straight year improvement for credit where -- it's an environment where a lot of consumer debt has seen a lot of credit rising across the credit cards or personal loans or whatever. Can you give some color about the underwriting changes Sallie Mae made? And I guess, how loan modifications have driven strength in your credit over the last couple of years?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Got it. And then these loan mods, are they used by a specific type of borrower? Like is it a recent grad who may have not got a job yet even after the grace period? Or is it more attributable to like individual circumstance like onetime items?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Got it. And then I was just curious if Sallie Mae takes any like preemptive actions, like we've seen from other credit providers in event like disasters, like the hurricanes we saw in the fall and the winter or like the fire we see in California. Do you guys do anything like that to be on a preventive bases?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Got it. And then are there any learnings you think are most notable or any areas you think these loan loss can be enhanced even further?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Are there any learnings that you think are most notable or any ways like these loan modifications can be enhanced any further?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Got it. And then on this credit conversation we're having currently, are there any macro like impacts you're looking for that might affect this business? I imagine unemployment might be one of them, but is cumulative inflation something you also think about for these consumers as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 12, 2025 / 5:10PM, SLM.OQ - SLM Corp at Bank of America Financial Services Conference

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Got it. Turning to NIM really quickly. You've spoken to this low to mid-5% range as like the rate level for the portfolio over the medium to long term. NIM in the fourth quarter was 4.9%. Can you just walk through the moving pieces about how we get back to this level, both on the yield side on the funding side?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Got it. Very helpful. Obviously, there's a lot of focus on it on the last earnings call, but the potential for new business arising from the PLUS loan opportunity is of pre-large interest for a lot of investors. I know you probably can't speak to specific numbers, but can you give some background about what the opportunity is and how you're preparing for it.

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Got it. And then on that point, of that like $14 billion, obviously, like all of it won't be directly to the private market probably. But would there be anything you need to do on an operational standpoint to, I guess, take in that much more capacity if you took your fair share?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Got it. Staying on the regulatory topic, Sallie Mae in the broader industry saw some noise last year from the FAFSA issues. And recently, there's some confusion from the federal government on the whole funding freeze and whether or not there will be federal student loans or (inaudible) all that. And (inaudible) and that's more like a messaging issue versus a structural issue we saw before with FAFSA. Do you expect any similar impacts to the business just from the recent news and confusion that arose from it?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Got it. And then -- are there any other potential regulatory changes you're keeping an eye out for, whether it be like any CPV stuff or anything else.

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Got it. We're coming up on time here. So I just want to make sure if anybody has any questions in the audience, we'll be able to accommodate that. There's one over here. Unidentified Participant I'm just wondering the pressure on the NIM that will then get to 4.5%. Are the -- does the MOD program have anything to do with that? Because we noticed on your securitizations that there has been a massive increase in those like 24-month MODs, and the coupons have come down decently and your trends have come down decently that you're charging borrowers.

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Like if you're doing originations for in-school and then they get out and all these people have these problems for the first 24 months of balancing their budget and maturing, like what percent of the borrowers will go through that of your -- of any vintage -- how do you think about?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : And any comment on the CFPB because they've driven a lot of student lenders little crazy now with the shutdown. Is there regulatory cost savings that you may have? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 12, 2025 / 5:10PM, SLM.OQ - SLM Corp at Bank of America Financial Services Conference

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Any other questions? Okay. I have a few more. You've made some acquisitions in the last couple of years between Nitro and Scholly. Can you just detail a bit about what those additions did for the business and how they could probably grow from here?

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Awesome. We're coming up of time just to wrap up, what do you think investors are missing about the Sallie Mae story? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 12, 2025 / 5:10PM, SLM.OQ - SLM Corp at Bank of America Financial Services Conference

Question: Nate Richam-Odoi - BofA Global Research (US) - Analyst : Okay. Awesome. Thank you for joining us. Appreciate it.