Sallie Mae Q1 Earnings & Revenues Beat Estimates, Expenses Decline

Sallie Mae SLM reported first-quarter 2025 earnings per share of $1.40, which outpaced the Zacks Consensus Estimate of $1.19. The bottom line increased from the prior-year quarter’s $1.27.

The quarterly results were primarily aided by a rise in non-interest income, robust loan originations and lower non-interest expenses. However, higher provisions for credit losses and a fall in net interest income (NII) negatively impacted SLM’s results.

The company’s GAAP net income was $305 million compared with $290 million in the prior-year quarter.

Sallie Mae’s NII & Expenses Decline

First-quarter NII totaled $375 million, down 3.1% year over year. However, the reported figure beat the Zacks Consensus Estimate of $359.7 million. The quarterly net interest margin was 5.27%, which shrank 22 basis points from the prior-year quarter's level.

Non-interest income amounted to $206 million, up 18.3% year over year.

Non-interest expenses came down 4.4% year over year to $154.6 million.

SLM’s Credit Quality: Mixed Bag

Provision for credit losses was $23.3 million, up from $12 million reported in the prior-year quarter.

Net charge-offs for private education loans were $76.2 million, down 7.7% 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 1.88%. The figure contracted 26 basis points year over year.

Sallie Mae’s Balance Sheet Position: Mixed Bag

As of March 31, 2025, deposits were $20.07 billion, down 4.7% sequentially.

Private education loans held for investment were $21.09 billion, up 7.1% from the prior year quarter reported figure.

In the reported quarter, the company’s private education loan originations increased 7.3% from the year-ago quarter.

SLM’s Share Repurchase Update

In the first quarter, SLM repurchased 1 million shares for $31 million under its 2024 share buyback program.

Sallie Mae’s 2025 Outlook Reaffirmed

The company expects its diluted earnings per share to be in the range of $3.00-$3.10.

It anticipates total loan portfolio net charge-offs as a percentage of average loans in repayment in the band of 2.0-2.2%.

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

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

Final Thoughts on SLM

Sallie Mae’s overall financial performance seems decent. Robust loan origination, a rise in non-interest income and lower non-interest expenses are positives. 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 #2 (Buy). 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 first-quarter 2025 earnings per share of $1.38 exceeded the Zacks Consensus Estimate and the year-ago figure of $1.28. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Results benefited from an increase in non-interest income and NII. Lower provisions were another positive. However, higher adjusted expenses alongside lower loans and deposits balances were headwinds for HWC.

Bank OZK’s OZK first-quarter 2025 earnings per share of $1.47 surpassed the Zacks Consensus Estimate of $1.42. The bottom line, however, reflected a decline of 2.6% from the prior-year quarter’s actual.

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

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

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