We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Sallie Mae’s (SLM - Free Report) , formally SLM Corporation, first-quarter 2024 earnings per share of $1.27 surpassed the Zacks Consensus Estimate of $1.09. The bottom line compared favorably with the prior-year quarter’s 47 cents.
Lower provisions for credit losses, robust loan originations and higher non-interest income were positives. However, a decline in the net interest income (NII) and a rise in non-interest expenses impeded the results.
The company’s GAAP net income was $290 million compared with $119 million in the prior-year quarter.
NII Declines, Expenses Climb
First-quarter NII was $387 million, down 4.4% year over year. The reported figure surpassed the Zacks Consensus Estimate of $376.4 million.
The quarterly net interest margin (NIM) was 5.49%, down from 5.70% in the prior-year quarter.
Non-interest income was $174 million compared with $22 million in the prior-year quarter. This was mainly attributable to improvements in all non-interest income components.
Non-interest expenses jumped 3.1% year over year to $162 million. The surge mainly resulted from higher compensation and benefits, as well as FDIC assessment fees.
Credit Quality Improves
Provision for credit losses was $12 million, down substantially from $114 million in the prior-year quarter.
Net charge-offs for private education loans were $83 million, down 1.2% year over year. Private education loans held for investment net charge-offs as a percentage of average private education loans held for investment in repayment (annualized) was 2.14%, up 3 basis points year over year.
Balance Sheet Position Weakens
As of Mar 31, 2024, deposits were $20.9 billion, sequentially down 3.4%. Private education loans held for investment were $19.68 billion, sequentially down marginally.
In the reported quarter, the company witnessed private education loan originations of $2.6 billion, increasing 6% from the year-ago quarter.
Share Repurchase Update
In the first quarter, SLM repurchased 1 million shares at an average price of $20.32 per share under its 2024 share buyback program.
2024 Outlook
The company expects core earnings per share (on a non-GAAP basis) of $2.60-$2.70.
It anticipates total loan portfolio net charge-offs of $340-$370 million.
Private education loan originations are projected to grow 7-8% year over year.
SLM’s non-interest expenses are expected to be $635-$655 million.
Conclusion
The overall financial performance of the company seems decent. Lower provisions for credit losses, robust loan originations and higher non-interest income are positives. However, a decline in the NII and a rise in non-interest expenses are major near-term headwinds.
Navient Corporation (NAVI - Free Report) reported first-quarter 2024 adjusted earnings per share (excluding regulatory-related and restructuring expenses) of 63 cents, surpassing the Zacks Consensus Estimate of 58 cents. It reported 86 cents in the prior-year quarter.
NAVI’s results were driven by a rise in total other income and a fall in expenses. However, a decline in NII affected the results.
Ally Financial’s (ALLY - Free Report) first-quarter 2024 adjusted earnings of 45 cents per share surpassed the Zacks Consensus Estimate of 33 cents. However, the bottom line reflects a decline of 45.1% from the year-ago quarter.
ALLY’s results were primarily aided by an improvement in other revenues. However, a decline in net financing revenues, along with higher expenses and provisions, were the undermining factors.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Sallie Mae's (SLM) Q1 Earnings Beat Estimates, Expenses Rise
Sallie Mae’s (SLM - Free Report) , formally SLM Corporation, first-quarter 2024 earnings per share of $1.27 surpassed the Zacks Consensus Estimate of $1.09. The bottom line compared favorably with the prior-year quarter’s 47 cents.
Lower provisions for credit losses, robust loan originations and higher non-interest income were positives. However, a decline in the net interest income (NII) and a rise in non-interest expenses impeded the results.
The company’s GAAP net income was $290 million compared with $119 million in the prior-year quarter.
NII Declines, Expenses Climb
First-quarter NII was $387 million, down 4.4% year over year. The reported figure surpassed the Zacks Consensus Estimate of $376.4 million.
The quarterly net interest margin (NIM) was 5.49%, down from 5.70% in the prior-year quarter.
Non-interest income was $174 million compared with $22 million in the prior-year quarter. This was mainly attributable to improvements in all non-interest income components.
Non-interest expenses jumped 3.1% year over year to $162 million. The surge mainly resulted from higher compensation and benefits, as well as FDIC assessment fees.
Credit Quality Improves
Provision for credit losses was $12 million, down substantially from $114 million in the prior-year quarter.
Net charge-offs for private education loans were $83 million, down 1.2% year over year. Private education loans held for investment net charge-offs as a percentage of average private education loans held for investment in repayment (annualized) was 2.14%, up 3 basis points year over year.
Balance Sheet Position Weakens
As of Mar 31, 2024, deposits were $20.9 billion, sequentially down 3.4%. Private education loans held for investment were $19.68 billion, sequentially down marginally.
In the reported quarter, the company witnessed private education loan originations of $2.6 billion, increasing 6% from the year-ago quarter.
Share Repurchase Update
In the first quarter, SLM repurchased 1 million shares at an average price of $20.32 per share under its 2024 share buyback program.
2024 Outlook
The company expects core earnings per share (on a non-GAAP basis) of $2.60-$2.70.
It anticipates total loan portfolio net charge-offs of $340-$370 million.
Private education loan originations are projected to grow 7-8% year over year.
SLM’s non-interest expenses are expected to be $635-$655 million.
Conclusion
The overall financial performance of the company seems decent. Lower provisions for credit losses, robust loan originations and higher non-interest income are positives. However, a decline in the NII and a rise in non-interest expenses are major near-term headwinds.
SLM Corporation Price, Consensus and EPS Surprise
SLM Corporation price-consensus-eps-surprise-chart | SLM Corporation Quote
Currently, SLM carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performances of Other Consumer Loan Providers
Navient Corporation (NAVI - Free Report) reported first-quarter 2024 adjusted earnings per share (excluding regulatory-related and restructuring expenses) of 63 cents, surpassing the Zacks Consensus Estimate of 58 cents. It reported 86 cents in the prior-year quarter.
NAVI’s results were driven by a rise in total other income and a fall in expenses. However, a decline in NII affected the results.
Ally Financial’s (ALLY - Free Report) first-quarter 2024 adjusted earnings of 45 cents per share surpassed the Zacks Consensus Estimate of 33 cents. However, the bottom line reflects a decline of 45.1% from the year-ago quarter.
ALLY’s results were primarily aided by an improvement in other revenues. However, a decline in net financing revenues, along with higher expenses and provisions, were the undermining factors.