SLM Corp at Barclays Global Financial Services Conference Transcript

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

Question: Terry Ma - Barclays Bank PLC - Analyst : Yes. Thanks for coming. So maybe we'll just jump right into it. I was going to start with peak origination season. Obviously, you guys filed the 8-K this morning. I took a brief look at it. It looked pretty promising. So maybe just talk about how it shaped up so far.

Question: Terry Ma - Barclays Bank PLC - Analyst : Got it. That's helpful. And maybe just to take a step back, can you maybe just give -- I was speaking with some international investors that were less familiar with FAFSA, maybe just explain briefly what the issue was and what's been corrected for it.

Question: Terry Ma - Barclays Bank PLC - Analyst : Got it. Okay. Maybe just going back to the origination guide. You guys had reiterated last quarter fiscal year '24 origination guide. It was going to

Question: Terry Ma - Barclays Bank PLC - Analyst : I guess, to the extent that the faster delay is a nonissue, which would sound like that's the case. How do you think about growing the balance sheet versus doing another loan sale?

Question: Terry Ma - Barclays Bank PLC - Analyst : Got it. So maybe you can just expand on the factors that are driving you to maybe just retain more of the originations for the balance sheet and maybe just also touch on what the demand for loan sales look like based on the recent deals that you have done in the current environment today?

Question: Terry Ma - Barclays Bank PLC - Analyst : Got it. That's helpful. Just to switch gears and maybe just touched on touching on competition. You mentioned Discover. It's exited the market, obviously. What's the level of competition been like as you progress through this lending season? And what have you seen from other lenders?

Question: Terry Ma - Barclays Bank PLC - Analyst : Got it. That's helpful. And then just switching gears and maybe just touching on credit. Your July trust data showed early stage delinquencies are

Question: Terry Ma - Barclays Bank PLC - Analyst : Got it. That's helpful. And then maybe just on the unemployment picture. We had a worse-than-expected trends two months ago, improved a little bit this past month. Can you maybe just talk about -- have you seen any early signs of higher unemployment manifest itself in like the repayment rates that you've seen.

Question: Terry Ma - Barclays Bank PLC - Analyst : Got it. And you mentioned you still feel pretty comfortable about your long-term charge-off guide in the high 1s to low 2s, how much of that is actually contingent upon the success of your loan log programs?

Question: Terry Ma - Barclays Bank PLC - Analyst : Got it. Is there an aspect where these loan programs delay the path to migrate back to that long-term range because you're essentially just freezing certain waves of borrowers and the delinquency buckets.

Question: Terry Ma - Barclays Bank PLC - Analyst : Okay. That's helpful. Just to switch gears and maybe let's talk about NIM. Your EPS guidance range for the year contemplated low to mid-5s and then for the year. The market is pricing in probably about three cuts for this year compared to about five at the time we gave the guide. So does (inaudible) this NIM still feel right to you?

Question: Terry Ma - Barclays Bank PLC - Analyst : Got it. Maybe just to switch gears and talk about the decision again of portfolio growth versus loan sales. I'm at your Investor Forum, you laid out this five-year framework for tilting the portfolio back to growth with some continued out the loan sales. But you also indicated that if the company does see portfolio growth being rewarded by the market to a higher valuation, you may consider more growth versus sales. So where do you sit in that growth over sale equation right now taking into account maybe just your current valuation and also the demand you're seeing for loan sales?

Question: Terry Ma - Barclays Bank PLC - Analyst : Got it. And just staying on the topic of share repurchase. Last quarter, seemingly, there's a lot of focus on the buybacks. You maintained your $650 million guide split roughly between 2024 and 2025, so any color you can give on just the cadence we can expect for the rest of the year or maybe even just talk more broadly about your appetite for additional buybacks at this share price and valuation?

Question: Terry Ma - Barclays Bank PLC - Analyst : Got it. That's helpful color. Maybe just to pivot back to the rate cut topic. I want to just ask about maybe your outlook on the potential for consolidation activity to pick up again with rate cuts. Again, like I think the market is crossing in three rate cuts for the rest of the year and as many as nine to next year, debate about whether or not we get that.

Question: Terry Ma - Barclays Bank PLC - Analyst : It does seem like a lot. What's the outlook for consolidation activity?

Question: Terry Ma - Barclays Bank PLC - Analyst : Got it. New consolidation risk seemed so long ago. But can you just remind the investors, I guess, what normalized consolidation activity is?

Question: Terry Ma - Barclays Bank PLC - Analyst : Got it. And back during peak consolidation activity, there was talk of exploring defense mechanisms or measures against consolidation. Where do you stand with that now?

Question: Terry Ma - Barclays Bank PLC - Analyst : Got it. That's helpful. And maybe just to switch gears and talk about just potential policy actions and with the election coming up. Any thoughts on, depending on who's in the White House, what that could mean for just private student lending.

Question: Terry Ma - Barclays Bank PLC - Analyst : Got it. Maybe just staying on the topic in terms of the caps on the Plus program that would, of course, obviously, increase in need for GAAP financing. Like how do you think about the addressable market in terms of what Sallie is willing to target and underwrite in the Plus program.

Question: Terry Ma - Barclays Bank PLC - Analyst : Got it. And you touched on just the various loan forgiveness programs and even the SAVE program, which it seems like it's been held up in the courts. I think we've spoken in the past about a bit that impacts the federal program. And I think most of your borrowers both have loans with Sallie Mae and also federal loans, which the SAVE program should only mean it's probably like modest credit positive for Sallie. So I guess, to the extent that the safe program is no more, how do you think about how that impacts the credit outlook?

Question: Terry Ma - Barclays Bank PLC - Analyst : Okay. About 10 or 15 minutes left. I'm just going to pause and see if there are any questions from the audience. Okay, I'll keep going. So I want to talk about market share. Do you have -- I guess we decided to go to the audience through smart questions, so maybe we'll just do that first. Over next year do you expect your position of Sallie to 1 increase, 2 decrease, or 3 stay the same? You can please just registering response using the controller in front of you. So 50% increase and 33% stay the same. So pretty bullish. So back to my question. Do you have an aspirational target for market share? I think last reported metric you're in the 50s. And is there some natural limitation or ceiling to what the market share can be?

Question: Terry Ma - Barclays Bank PLC - Analyst : Got it. And you touched a little bit on the competitive dynamics currently with Discover having exited. Have you seen any new entrants trying to take up more share or maybe just even talk more broadly about the barriers of entry in private student lending?

Question: Terry Ma - Barclays Bank PLC - Analyst : Got it. Just to switch gears. Can you maybe just talk about your funding outlook? And also any competitive dynamics you're seeing on the deposit side? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 10, 2024 / 2:30PM, SLM.OQ - SLM Corp at Barclays Global Financial Services Conference

Question: Terry Ma - Barclays Bank PLC - Analyst : Got it. Helpful. Maybe just taking a step back and thinking longer term? Are there any products that makes sense for Sallie Mae where your customers can potentially continue to grow with you? I know you've explored credit card in the past. But how should investors think about that?

Question: Terry Ma - Barclays Bank PLC - Analyst : Got it. Okay. So those are the opportunities, maybe just to round out the discussion. Can you maybe just talk about just key risks that you're focused on? Like what keeps you up at night? Is it overall macro credit risk defending your market share? Just maybe talk about that.

Question: Terry Ma - Barclays Bank PLC - Analyst : Great. Helpful. We have just a few minutes left. I'll turn it over and see if there's any Q&A from the audience one last time. You have one back there? Unidentified Participant I guess, can you talk about if there's been any changes in payment prioritization for consumers in these newer vintages versus what you saw on pre-pandemic, you're seeing one of your consumer peers give pretty poor guidance this morning. And so I'm just wondering if the payment prioritization is still the same as what you saw during the pandemic.

Question: Terry Ma - Barclays Bank PLC - Analyst : Any more questions? I think we'll end it there. Thank you very much.