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Sallie Mae's (SLM) Q2 Earnings Top Estimates, Expenses Rise
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Sallie Mae’s (SLM - Free Report) , formally SLM Corporation, second-quarter 2024 earnings per share (EPS) of $1.11 surpassed the Zacks Consensus Estimate of 79 cents. The bottom line compared favorably with the prior-year quarter’s $1.10 per share.
Lower provisions for credit losses and robust loan originations were positives. However, a decline in the net interest income (NII) and a rise in non-interest expenses impeded results.
The company’s GAAP net income was $252 million compared with $265 million in the prior-year quarter.
NII Declines, Expenses Climb
Second-quarter NII was $372 million, down 3.9% year over year. The reported figure surpassed the Zacks Consensus Estimate of $369 million.
The quarterly net interest margin (NIM) was 5.39%, down from 5.52% in the prior-year quarter.
Non-interest income was $142 million compared with $144 million in the prior-year quarter.
Non-interest expenses inched up 1.9% year over year to $159 million. The uptick mainly resulted from higher compensation and benefits, other operating expenses and FDIC assessment fees.
Credit Quality Improves
Provision for credit losses was $17 million, down from $18 million in the prior-year quarter.
Net charge-offs for private education loans were $80 million, down 22.3% 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 2.19%. The figure contracted down 50 basis points year over year.
Balance Sheet Position: Mixed Bag
As of Jun 30, 2024, deposits were $20.7 billion, up 1.9% year over year. Private education loans held for investment were $18.43 billion, down 1.2% from the year-ago tally.
In the reported quarter, the company’s private education loan originations increased 6% from the year-ago quarter’s tally.
Share Repurchase Update
In the second quarter, SLM repurchased 2.9 million shares for $62 million under its 2024 share buyback program.
2024 Outlook
The company expects diluted earnings per share of $2.70-$2.80.
It anticipates total loan portfolio net charge-offs of $325-$345 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. Robust loan origination and lower provisions for credit loss 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 second-quarter 2024 adjusted EPS (excluding restructuring and regulatory-related expenses and write-off related to loan premium) of 53 cents, surpassing the Zacks Consensus Estimate of 42 cents. It reported 52 cents in the prior-year quarter.
A decline in total expenses drove NAVI’s results. A solid liquidity position was another positive.
Ally Financial’s (ALLY - Free Report) second-quarter 2024 adjusted earnings of 97 cents per share surpassed the Zacks Consensus Estimate of 62 cents. Also, the bottom line reflects a rise of 1% from the year-ago quarter.
In the reported quarter, ALLY saw a marginal increase in loans. Also, the capital ratios increased, which was a positive. However, a decline in revenues and higher expenses were undermining factors.
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Sallie Mae's (SLM) Q2 Earnings Top Estimates, Expenses Rise
Sallie Mae’s (SLM - Free Report) , formally SLM Corporation, second-quarter 2024 earnings per share (EPS) of $1.11 surpassed the Zacks Consensus Estimate of 79 cents. The bottom line compared favorably with the prior-year quarter’s $1.10 per share.
Lower provisions for credit losses and robust loan originations were positives. However, a decline in the net interest income (NII) and a rise in non-interest expenses impeded results.
The company’s GAAP net income was $252 million compared with $265 million in the prior-year quarter.
NII Declines, Expenses Climb
Second-quarter NII was $372 million, down 3.9% year over year. The reported figure surpassed the Zacks Consensus Estimate of $369 million.
The quarterly net interest margin (NIM) was 5.39%, down from 5.52% in the prior-year quarter.
Non-interest income was $142 million compared with $144 million in the prior-year quarter.
Non-interest expenses inched up 1.9% year over year to $159 million. The uptick mainly resulted from higher compensation and benefits, other operating expenses and FDIC assessment fees.
Credit Quality Improves
Provision for credit losses was $17 million, down from $18 million in the prior-year quarter.
Net charge-offs for private education loans were $80 million, down 22.3% 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 2.19%. The figure contracted down 50 basis points year over year.
Balance Sheet Position: Mixed Bag
As of Jun 30, 2024, deposits were $20.7 billion, up 1.9% year over year. Private education loans held for investment were $18.43 billion, down 1.2% from the year-ago tally.
In the reported quarter, the company’s private education loan originations increased 6% from the year-ago quarter’s tally.
Share Repurchase Update
In the second quarter, SLM repurchased 2.9 million shares for $62 million under its 2024 share buyback program.
2024 Outlook
The company expects diluted earnings per share of $2.70-$2.80.
It anticipates total loan portfolio net charge-offs of $325-$345 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. Robust loan origination and lower provisions for credit loss 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 #3 (Hold). 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 second-quarter 2024 adjusted EPS (excluding restructuring and regulatory-related expenses and write-off related to loan premium) of 53 cents, surpassing the Zacks Consensus Estimate of 42 cents. It reported 52 cents in the prior-year quarter.
A decline in total expenses drove NAVI’s results. A solid liquidity position was another positive.
Ally Financial’s (ALLY - Free Report) second-quarter 2024 adjusted earnings of 97 cents per share surpassed the Zacks Consensus Estimate of 62 cents. Also, the bottom line reflects a rise of 1% from the year-ago quarter.
In the reported quarter, ALLY saw a marginal increase in loans. Also, the capital ratios increased, which was a positive. However, a decline in revenues and higher expenses were undermining factors.