Sallie Mae SLM, formally SLM Corporation, reported a third-quarter 2024 loss per share of 23 cents, wider than the Zacks Consensus Estimate of 7 cents. The bottom line compared unfavorably against the prior-year quarter’s earnings of 11 cents. 

Find the latest earnings estimates and surprises on the Zacks Earnings Calendar.

A decline in the net interest income (NII) and a rise in non-interest expenses negatively impacted SLM’s results. However, lower provisions for credit losses and robust loan originations created tailwinds.

Following the announcement of the third-quarter results, SLM shares fell 1%.

The company’s GAAP net loss was $45 million against the net income of $29 million in the prior-year quarter.

Sallie Mae’s NII Declines, Expenses Climb

Third-quarter NII was $359 million, down 6.8% year over year. The reported figure missed the Zacks Consensus Estimate by 1.1%.

The quarterly net interest margin (NIM) was 5%, down 53 basis points from the prior-year quarter.

Non-interest income was $24 million, flat year over year.

Non-interest expenses inched up 1.2% year over year to $172 million. The uptick mainly resulted from higher compensation and benefits, and FDIC assessment fees.

SLM’s Credit Quality Improves

Provision for credit losses was $271 million, down 37% million from the prior-year quarter.

Net charge-offs for private education loans were $77 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 2.08%. The figure contracted 45 basis points year over year.

Sallie Mae’s Balance Sheet Position: Mixed Bag

As of Sept. 30, 2024, deposits were $21.4 billion, down 0.5% year over year.

Private education loans held for investment were $20.5 billion, up 0.6% from the year-ago figure.

In the reported quarter, the company’s private education loan originations increased 13% from the year-ago quarter.

SLM’s Share Repurchase Update

In the third quarter, SLM repurchased 5.3 million shares for $115 million under its 2024 share buyback program.

Sallie Mae’s 2024 Outlook

The company expects diluted earnings per share of $2.70-$2.80.

It anticipates total loan portfolio net charge-offs of $325-$340 million.

Private education loan originations are projected to grow 8-9% year over year.

SLM’s non-interest expenses are expected to be $635-$655 million.

Final Thoughts on SLM

Sallie Mae’s 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

Mr. Cooper Group Inc. COOP reported third-quarter 2024 earnings of $2.84 per share, which beat the Zacks Consensus Estimate by 11.8%. The bottom line rose 1.8% year over year.

Solid growth in the Servicing and Originations segments were major tailwinds for COOP in the third quarter. The servicing portfolio increased year over year, surpassing the $1.2-trillion mark. However, a decline in revenues and an increase in expenses were spoilsports.

Ally Financial’s ALLY third-quarter 2024 adjusted earnings of 95 cents per share surpassed the Zacks Consensus Estimate of 81 cents. Also, the bottom line reflected a rise of 14.5% from the year-ago quarter.

In the reported quarter, ALLY witnessed increased revenues and lower expenses. Capital ratios rose, which was a positive. However, a decline in net finance receivables and loans and deposits were the undermining factors. Also, an increase in provisions hurt results to some extent.

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