Sallie Mae Q2 Earnings Miss Estimates, Expenses & Provisions Rise Y/Y

Sallie Mae SLM reported second-quarter 2025 earnings per share (EPS) of 32 cents, which missed the Zacks Consensus Estimate of 49 cents. The bottom line declined from the prior-year quarter’s EPS of $1.11.

The quarterly results were affected by higher provisions for credit losses, a fall in non-interest income and a rise in expenses. Nonetheless, a rise in net interest income (NII) was positive.

The company’s GAAP net income was $71 million compared with $252 million in the prior-year quarter.

Sallie Mae’s NII & Expenses Rise

Second-quarter NII totaled $376.8 million, up 1.2% year over year. The reported figure beat the Zacks Consensus Estimate by 0.5%. The quarterly net interest margin was 5.31%, which shrank 5 basis points from the prior-year quarter.

Non-interest income amounted to $26.8 million, down from $141.8 million in the year-ago quarter.

Non-interest expenses rose 5.5% year over year to $167.2 million.

SLM’s Credit Quality Deteriorates

Provision for credit losses was $148.7 million, up from $16.8 million in the prior-year quarter.

Net charge-offs for private education loans were $94 million, up 17.5% 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), were 2.36%. The figure expanded 17 basis points year over year.

Sallie Mae’s Balance Sheet Position Improves

As of June 30, 2025, deposits were $20.5 billion, up 2% sequentially.

Private education loans held for investment were $21.2 billion, up 14.8% from the prior-year quarter.

In the reported quarter, the company’s private education loan originations declined marginally from the year-ago quarter to $686 million.

SLM’s Share Repurchase Update

In the second quarter, SLM repurchased 2.4 million shares for $70 million under its 2024 share buyback program.

Sallie Mae’s 2025 Outlook Reaffirmed

The company expects diluted earnings per share of $3.00-$3.10.

SLM anticipates total loan portfolio net charge-offs as a percentage of average loans in repayment of 2-2.2%.

Private education loan originations are expected to grow 6-8% year over year.

SLM’s non-interest expenses are expected to be $655-$675 million.

Final Thoughts on SLM

Sallie Mae’s overall financial performance seems decent. Robust loan origination and a rise in net interest income are encouraging. However, a rise in provisions for credit losses is a major near-term headwind.

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 Banks

Hancock Whitney Corp.’s HWC second-quarter 2025 adjusted earnings per share of $1.37 exceeded the Zacks Consensus Estimate of $1.34. The bottom line rose 4.6% from the prior-year quarter.

HWC’s results benefited from an increase in non-interest income and NII. Also, higher loans were another positive. However, higher adjusted expenses and provisions alongside lower deposit balances were headwinds.

Bank OZK’s OZK second-quarter 2025 earnings per share of $1.58 surpassed the Zacks Consensus Estimate of $1.51. Moreover, the bottom line reflected a rise of 3.9% from the prior-year quarter’s actual.

Overall, OZK’s results benefited from a rise in NII and non-interest income, and lower provisions. Also, higher loans and deposit balances were other positives. However, higher non-interest expenses acted as spoilsports.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research