[Management View]
SLM Corporation reported steady loan origination and increased net interest income for Q2 2025, with management emphasizing the impact of federal student loan reforms on future private loan demand. Strategic priorities include capital return through share repurchases and exploring alternative funding mechanisms.

[Outlook]
Management provided performance guidance, expecting year-over-year growth in the private student loan portfolio and continued strategic loan sales. The impact of federal lending reforms is anticipated to ramp up in 2027, with significant additional origination volume.

[Financial Performance]
SLM Corporation's Q2 2025 GAAP diluted EPS was $0.32 per share. Loan originations were $686 million, stable year-over-year but below expectations. Net interest income increased by $5 million YoY, with a net interest margin of 5.31%. Provision for credit losses rose to $149 million, influenced by macroeconomic factors and disaster forbearance.

[Q&A Highlights]
Question 1: Can you provide details on the $1.8 billion loan sale in Q3 and the gain on sale margin?
Answer: The gain on sale margin is in line with expectations, with pricing adjusted modestly due to changes in the rates environment. Execution on the transaction was satisfactory.

Question 2: Will there be another loan sale in Q4, or is the $3.8 billion total for the year?
Answer: Management will evaluate based on peak season results and capital stress testing, with decisions made accordingly.

Question 3: Can you explain the uptick in net charge-off rate due to California wildfires?
Answer: Disaster forbearance shifted charge-offs from Q1 to Q2. The impact was larger due to the wide area affected, but the uptick is attributed to this cohort.

Question 4: How do federal lending changes affect SLM's growth algorithm?
Answer: The framework remains relevant, with potential for higher growth rates due to increased volume opportunities from federal reforms.

Question 5: How are borrowers performing as they exit extended grace programs?
Answer: Trends are following normal seasonal patterns, with loan modification programs performing well.

Question 6: What is the basis for the $4.5 billion to $5 billion incremental volume estimate?
Answer: Estimates are based on current risk appetite and credit buy box, with growth in average loan size considered.

Question 7: How will private credit partnerships affect EPS growth and funding structure?
Answer: Management is open to different structures, aiming for attractive economics while maintaining predictable returns.

Question 8: Will new funding structures expand the $4.5 billion to $5 billion opportunity?
Answer: Potential partnerships may allow expansion into areas not currently underwritten for the balance sheet.

Question 9: How will the new market opportunity affect competition and market share?
Answer: SLM is confident in its ability to compete, leveraging data insights, systems, and school relationships.

Question 10: What is the timing goal for private partnerships in relation to federal loan reforms?
Answer: Ideally, partnerships will be in place before additional volume from reforms, serving as a supplement to existing loan sales.

Question 11: How are loan modifications preparing borrowers for program end?
Answer: Programs are designed to ensure borrowers transition smoothly to regular payment patterns.

Question 12: What is the impact of California wildfires on credit quality in upcoming quarters?
Answer: Year-to-date performance aligns with expectations, with no significant impact anticipated.

Question 13: What is the breakdown of the $4.5 billion to $5 billion opportunity between Grad PLUS and Parent PLUS?
Answer: Approximately two-thirds is Grad PLUS, and one-third is Parent PLUS.

Question 14: How will the mix of graduate loans affect the balance sheet?
Answer: Graduate loans have a lower loss profile and higher return, with repayment varying by program type.

[Sentiment Analysis]
Analysts expressed interest in the strategic implications of federal reforms and loan sales, with management maintaining a confident and optimistic tone regarding future growth and competitive positioning.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 | Change |
|-------|---------|---------|--------|
| GAAP Diluted EPS | $0.32 | N/A | N/A |
| Loan Originations | $686M | N/A | Stable |
| Net Interest Income | $377M | $372M | +$5M |
| Net Interest Margin | 5.31% | N/A | +4 bps |
| Provision for Credit Losses | $149M | $17M | +$132M |
| Cosigner Rate | 84% | 80% | +4% |
| Average FICO at Approval | 754 | 752 | +2 |
| 30+ Day Delinquencies | 3.5% | 3.3% | +0.2% |
| Allowance for Loan Losses | 5.95% | 5.90% | +0.05% |
| Net Charge-Offs | $94M | N/A | +17 bps YoY |
| Noninterest Expenses | $167M | $159M | +$8M |
| Liquidity Ratio | 17.8% | N/A | N/A |
| Total Risk-Based Capital Ratio | 12.8% | N/A | N/A |
| Common Equity Tier 1 Capital Ratio | 11.5% | N/A | N/A |
| GAAP Equity Plus Reserves / Risk-Weighted Assets | 16.3% | N/A | N/A |

[Risks and Concerns]
Risks include macroeconomic uncertainties, regulatory changes, and potential impacts from natural disasters. Management is monitoring these factors closely and adjusting strategies accordingly.

[Final Takeaway]
SLM Corporation's Q2 2025 performance reflects steady loan origination and increased net interest income, with management optimistic about future growth driven by federal student loan reforms. Strategic priorities include capital return through share repurchases and exploring alternative funding mechanisms to support increased origination volume. Analysts expressed interest in the strategic implications of federal reforms and loan sales, with management maintaining a confident and optimistic tone regarding future growth and competitive positioning. The company is well-positioned to capitalize on new opportunities while managing risks and maintaining strong financial performance.