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Sallie Mae Q2 Earnings Miss Estimates, NII Dips, Expenses Rise Y/Y
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Key Takeaways
Sallie Mae missed Q2 earnings and revenue estimates as lower NII and higher expenses hurt the results.
SLM's non-interest income grew on gains from loan sales and higher other income.
Sallie Mae's private education loans held for investment declined y/y to $19.5 billion.
Sallie Mae (SLM - Free Report) , reported second-quarter 2026 earnings per share (EPS) of 29 cents, missing the Zacks Consensus Estimate of 46 cents. The metric declined 9.4% from the year-ago quarter.
Revenues of $338.8 million missed the Zacks Consensus Estimate of $355.2 million by 4.6%. This compares with the year-ago revenues of $376.82 million.
The quarterly results were hurt by lower net interest income (NII), higher provisions for credit losses and an increase in expenses. However, growth in non-interest income and private education loan originations offered some support.
The company’s GAAP net income attributable to common stock was $55 million compared with $67 million in the year-ago quarter.
Sallie Mae’s NII Declines, Expenses Rise
Second-quarter NII totaled $332.8 million, down 11.7% from $376.8 million in the prior-year quarter.
The quarterly net interest margin was 4.75%, contracting 56 basis points year over year.
Quarterly non-interest income was $68.3 million, up significantly from $26.8 million in the year-ago quarter. Gains on sales of loans were $14.9 million against a loss of $13,000 in the prior-year quarter. Other income grew 54.1% year over year to $45.3 million.
Non-interest expenses increased 16.6% year over year to $195 million. Compensation and benefits expenses rose 18.1% to $100.3 million. Other operating expenses were $88.9 million, up 24.1%.
SLM’s Credit Quality: Mixed Bag
In the second quarter, provisions for credit losses were $125.7 million, down from $148.7 million in the prior-year quarter.
Net charge-offs were $113 million in the reported quarter, up from the year-ago quarter.
Delinquencies as a percentage of loans in repayment were 3.72% for the second quarter of 2026 compared with 3.51% in the prior-year quarter.
Sallie Mae’s Balance Sheet Position
As of June 30, 2026, deposits totaled $19.9 billion, down from $20.5 billion in the year-ago quarter.
Private education loans held for investment, net, were $19.5 billion, down from $21.2 billion in the prior-year quarter.
Average loans outstanding, net, totaled $21.1 billion in the quarter. In the reported quarter, private education loan originations increased 4.5% year over year.
Key Ratios of SLM
The efficiency ratio was 48.6% compared with 41.4% in the year-ago quarter.
Return on assets was 0.8% compared with 1% in the prior-year quarter.
Return on common equity was 9.9% compared with 12.6% in the year-ago quarter.
SLM Share Repurchase Update
The company’s $200-million accelerated share repurchase concluded in June 2026. It repurchased 9.3 million shares under the program, including the final delivery of 0.9 million shares in the second quarter. As of June 30, 2026, $242 million remained available under the company’s 2026 share repurchase program.
Sallie Mae Reaffirms 2026 Outlook
Management reaffirmed its 2026 EPS guidance of $3.10-$3.20.
Sallie Mae expects year-over-year private education loan origination growth of 12-14%, net charge-offs of $365-$385 million and non-interest expenses of $750-$780 million.
The company sold $420 million in private education loans during the quarter, including $399 million of principal and $21 million of capitalized interest through its strategic partnerships business.
Final Thoughts on SLM
Sallie Mae delivered a disappointing second-quarter performance. Lower NII, margin contraction, higher expenses, declining loan and deposit balances, and elevated delinquencies remain concerning. Nonetheless, lower provisions for credit losses, growth in non-interest income and higher private education loan originations were positives.
OneMain Holdings (OMF - Free Report) is slated to announce second-quarter 2026 numbers on July 29.
In the past week, the Zacks Consensus Estimate for OneMain’s quarterly earnings has been revised downward to $1.31. This implies a 9.7% decrease from the prior-year reported number.
Navient (NAVI - Free Report) is scheduled to announce quarterly numbers on Aug. 6.
In the past seven days, the Zacks Consensus Estimate for Navient’s quarterly earnings has been unchanged at 19 cents. This indicates a 9.5% decline from the prior-year reported number.
View the Zacks #1 Rank List
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Sallie Mae Q2 Earnings Miss Estimates, NII Dips, Expenses Rise Y/Y
Key Takeaways
Sallie Mae (SLM - Free Report) , reported second-quarter 2026 earnings per share (EPS) of 29 cents, missing the Zacks Consensus Estimate of 46 cents. The metric declined 9.4% from the year-ago quarter.
Revenues of $338.8 million missed the Zacks Consensus Estimate of $355.2 million by 4.6%. This compares with the year-ago revenues of $376.82 million.
The quarterly results were hurt by lower net interest income (NII), higher provisions for credit losses and an increase in expenses. However, growth in non-interest income and private education loan originations offered some support.
The company’s GAAP net income attributable to common stock was $55 million compared with $67 million in the year-ago quarter.
Sallie Mae’s NII Declines, Expenses Rise
Second-quarter NII totaled $332.8 million, down 11.7% from $376.8 million in the prior-year quarter.
The quarterly net interest margin was 4.75%, contracting 56 basis points year over year.
Quarterly non-interest income was $68.3 million, up significantly from $26.8 million in the year-ago quarter. Gains on sales of loans were $14.9 million against a loss of $13,000 in the prior-year quarter. Other income grew 54.1% year over year to $45.3 million.
Non-interest expenses increased 16.6% year over year to $195 million. Compensation and benefits expenses rose 18.1% to $100.3 million. Other operating expenses were $88.9 million, up 24.1%.
SLM’s Credit Quality: Mixed Bag
In the second quarter, provisions for credit losses were $125.7 million, down from $148.7 million in the prior-year quarter.
Net charge-offs were $113 million in the reported quarter, up from the year-ago quarter.
Delinquencies as a percentage of loans in repayment were 3.72% for the second quarter of 2026 compared with 3.51% in the prior-year quarter.
Sallie Mae’s Balance Sheet Position
As of June 30, 2026, deposits totaled $19.9 billion, down from $20.5 billion in the year-ago quarter.
Private education loans held for investment, net, were $19.5 billion, down from $21.2 billion in the prior-year quarter.
Average loans outstanding, net, totaled $21.1 billion in the quarter. In the reported quarter, private education loan originations increased 4.5% year over year.
Key Ratios of SLM
The efficiency ratio was 48.6% compared with 41.4% in the year-ago quarter.
Return on assets was 0.8% compared with 1% in the prior-year quarter.
Return on common equity was 9.9% compared with 12.6% in the year-ago quarter.
SLM Share Repurchase Update
The company’s $200-million accelerated share repurchase concluded in June 2026. It repurchased 9.3 million shares under the program, including the final delivery of 0.9 million shares in the second quarter. As of June 30, 2026, $242 million remained available under the company’s 2026 share repurchase program.
Sallie Mae Reaffirms 2026 Outlook
Management reaffirmed its 2026 EPS guidance of $3.10-$3.20.
Sallie Mae expects year-over-year private education loan origination growth of 12-14%, net charge-offs of $365-$385 million and non-interest expenses of $750-$780 million.
The company sold $420 million in private education loans during the quarter, including $399 million of principal and $21 million of capitalized interest through its strategic partnerships business.
Final Thoughts on SLM
Sallie Mae delivered a disappointing second-quarter performance. Lower NII, margin contraction, higher expenses, declining loan and deposit balances, and elevated delinquencies remain concerning. Nonetheless, lower provisions for credit losses, growth in non-interest income and higher private education loan originations were positives.
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.
Earnings Dates & Expectations of SLM’s Peers
OneMain Holdings (OMF - Free Report) is slated to announce second-quarter 2026 numbers on July 29.
In the past week, the Zacks Consensus Estimate for OneMain’s quarterly earnings has been revised downward to $1.31. This implies a 9.7% decrease from the prior-year reported number.
Navient (NAVI - Free Report) is scheduled to announce quarterly numbers on Aug. 6.
In the past seven days, the Zacks Consensus Estimate for Navient’s quarterly earnings has been unchanged at 19 cents. This indicates a 9.5% decline from the prior-year reported number.