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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.
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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.