SLM NASDAQ: SLM reported what CEO Jon Witter called a “strong” first quarter of 2026, highlighting year-over-year growth in earnings per share and private student loan originations, steady credit performance, and an accelerated capital return effort supported by significant loan sales.
Diluted EPS was $1.54 for the quarter, up from $1.40 in the year-ago period, Witter said. Loan originations were $2.9 billion, up 5% from the prior-year quarter, which he attributed to “strength in our loan disbursement funnel.”
Management emphasizes preparation for expected federal reform-driven growth
Witter said the company’s first-quarter performance came “before the expected multi-year growth in both undergrad and graduate lending tied to federal reforms,” adding that Sallie Mae believes those reforms “could increase our originations by up to 70% over the next several years.” He said the company has been preparing by improving its “full delivery system,” including “products and features,” “enhanced client acquisition strategies,” and “improved servicing and fulfillment capabilities.”
Witter noted that the company has already rolled out enhancements, including “our new medical and dental school offering,” with additional changes planned.
Loan sales and buybacks drive capital return strategy
CFO Pete Graham said the company executed $3.3 billion in loan sales during the quarter, generating $146 million in gains “at attractive economics.” Graham said the total included:
- $1.3 billion of planned new-origination sales through Sallie Mae’s strategic partnerships business
- A $2.0 billion seasoned loan portfolio sale completed at gains “in the mid to high single-digit range”
Following the loan sale, Graham said Sallie Mae entered into a $200 million accelerated share repurchase (ASR) program. Year to date, the company repurchased about 12 million shares—representing 6% of shares outstanding at the end of 2025—at an average price of $21.50 per share. Graham added that since 2020, the company has reduced shares outstanding by about 58% at an average price of $17.15.
Graham said the company expects to fully utilize its $500 million share repurchase authorization during calendar year 2026.
In the Q&A, Witter said the company expects to launch another strategic partnership before year-end. He referenced the inaugural partnership with KKR, which he said was “sized and scoped to deal with our traditional undergrad student loan product,” and added that expansion is needed “to be at scale for the grad opportunity.” Witter said he would expect the next partnership to be structured similarly—starting with a flow agreement and “some sort of a seasoned portfolio sale.”
Net interest margin rises; expenses increase on growth investments
Graham reported first-quarter net interest income of $375 million, consistent with the prior-year period. Net interest margin was 5.29%, up sequentially and year over year, driven by “lower funding costs and continued discipline in balance sheet management.” He added that the company expects NIM to “moderate modestly” as the year progresses due to “higher liquidity we’re carrying following the loan sale we executed in March.”
The provision for credit losses was a $11 million negative provision, which Graham said was driven primarily by a $131 million reserve release associated with loan sales and loans held for sale, partially offset by growth in loan commitments and updated economic assumptions.
Non-interest expenses were $171 million versus $155 million a year earlier, reflecting “targeted investments to support growth,” particularly within graduate lending programs, Graham said. Despite higher expenses, he cited an efficiency ratio of 30.6% for the quarter.
In response to a question about the cadence of spending, Graham said readiness investments would be “more front-loaded before peak,” while marketing spend would be more concentrated “in the moment in that peak season.” He added that the company was “modestly ahead of plan for the first quarter” but still comfortable with full-year expense guidance.
Credit metrics stable; guidance updated on EPS
On credit, Witter said net charge-offs and delinquencies were “consistent with or slightly better than our expectations.” Net charge-offs were $89 million, which he said reflected continued underwriting discipline and optimization in loss mitigation, collections, and recovery. Graham characterized net charge-offs as “modestly ahead of our expectations.”
Graham said the reserve rate was 6.05% at quarter-end, “modestly higher than the prior quarter,” which he attributed to seasonal origination patterns rather than a shift in underlying credit. He also said credit quality in new originations remained strong, with cosigner rates increasing to 95% and the average FICO at approval rising to 754.
Delinquencies were stable, according to Graham: loans delinquent 30 days or more were 3.98% of loans in repayment at quarter-end, modestly lower than at the end of 2025, while later-stage delinquency buckets “remained steady at 1%.”
Witter noted that customers began exiting the company’s loan modification program at the end of 2025, and he said their performance has been “slightly better than what we assumed in our loss outlook,” though he cautioned more time is needed to build confidence in the trend. In the Q&A, he added that new modification entries would fluctuate with payment waves, and that overall new mods “will begin to stabilize as we move through this year and into next.”
For 2026, Witter raised EPS guidance and said the company expects diluted earnings per common share of $3.10 to $3.20. He said the revised outlook assumes full utilization of the $500 million repurchase authorization and “roughly $1 billion of incremental loan sales beyond our initial plan.” He said all other elements of the company’s 2026 outlook—including originations growth, net charge-offs, and net interest expense metrics—were reaffirmed.
Graham later said the increase in EPS guidance is “roughly split half and half” between share count reduction and incremental gain from the additional loan sale.
The company also provided updates on liquidity and capital. Graham said Sallie Mae ended the quarter with liquidity at 21.2% of total assets, total risk-based capital of 13.7%, and common equity Tier 1 capital of 12.4%.
About SLM NASDAQ: SLM
SLM Corporation, operating as Sallie Mae Bank, is a leading U.S.-based consumer banking company specializing in education financing and related banking products. The company provides a range of private student loans for undergraduate and graduate studies, Parent PLUS loans, and specialized financing for career and certificate programs. In addition to its core lending services, Sallie Mae offers deposit products including savings accounts, checking accounts, money market accounts, certificates of deposit, and credit cards tailored to students and young adults.
Founded in 1972 as the Student Loan Marketing Association—a government-sponsored enterprise—Sallie Mae was privatized in 2004 and has since focused on expanding its private education loan offerings and digital banking solutions.
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