SLM Corp

Previous wording

The following discussion and analysis presents a review of our business and operations as of and for the three months ended March 31, 2026.

Current wording

The following discussion and analysis presents a review of our business and operations as of and for the three and six months ended June 30, 2026.

Previous wording

For the three months ended March 31, 2026, net income attributable to common stock was $304 million, or $1.54 diluted earnings per common share, compared with net income attributable to common stock of $301 million, or $1.40 diluted earnings per common share, for the three months ended March 31, 2025.

Current wording

For the three months ended June 30, 2026, net income attributable to common stock was $55 million, or $0.29 diluted earnings per common share, compared with net income attributable to common stock of $67 million, or $0.32 diluted earnings per common share, for the three months ended June 30, 2025.

Previous wording

•Net interest income was $375 million in both the current quarter and the year-ago quarter. Our net interest margin increased 2 basis points in the current quarter from the year-ago quarter primarily because the yields on our interest-earning assets decreased slightly less than our cost of funds decreased. The yields on both our interest-earning assets and our cost of funds decreased primarily due to the decline in the 30-day average SOFR rate compared to the year-ago quarter.

Current wording

•Net interest income decreased by $44 million in the current quarter compared with the year-ago quarter primarily due to a $1.4 billion decrease in our average Private Education Loans outstanding and an $866 million increase in the average balance of lower yielding cash and short-term investments compared to the year-ago period. The decline in average loans outstanding was due to the $2.04 billion seasoned loan sale in March 2026. Our net interest margin decreased 56-basis points in the current quarter from the year-ago quarter primarily because the yields on our interest-earning assets decreased more than our cost of funds decreased. The yields on our interest-earning assets primarily decreased because the proportion of total interest-earning assets that were Private Education Loans was lower in the current quarter than the year-ago quarter due to the seasoned loan sale in March 2026. Our cost of funds decreased primarily due to the decline in the 30-day average SOFR rate compared to the year-ago quarter.

Previous wording

•Other income was $41 million in the first quarter of 2026, compared with $29 million in the year-ago quarter. Third-party servicing fees in the first quarter of 2026 increased $6 million compared to the year-ago quarter due to an additional $6.28 billion of loans that we sold during the past year that we continue to service on behalf of the owners of the loans. Other income also increased due to the program management fees from the strategic partnership we entered into during the fourth quarter of 2025.

Current wording

•Other income was $45 million in the second quarter of 2026, compared with $29 million in the year-ago quarter. Third-party servicing fees in the second quarter of 2026 increased $9 million compared to the year-ago quarter due to an additional $6.22 billion of loan principal balance sold during the past year that we continue to service on behalf of the owners of the loans. Other income also increased due to the program management fees from the strategic partnership we entered into during the fourth quarter of 2025.

Previous wording

•First quarter 2026 total operating expenses were $170 million, up from $154 million in the year-ago quarter. The increase in total operating expenses was primarily due to increased personnel costs and higher spending on information technology initiatives, offset by lower FDIC fees.

Current wording

•Second quarter 2026 total operating expenses were $194 million, up from $166 million in the year-ago quarter. The increase in total operating expenses was primarily due to increased personnel costs, additional marketing spend, and higher spending on information technology initiatives, offset by lower FDIC fees.

Previous wording

•During the first quarter of 2026, we recorded $1 million in amortization of acquired intangible assets, consistent with $1 million in the year-ago quarter.

Current wording

•During the second quarter of 2026, we recorded $1 million in amortization of acquired intangible assets, consistent with $1 million in the year-ago quarter.

Previous wording

•First quarter 2026 income tax expense was $92 million, compared with $99 million income tax expense in the year-ago quarter. Our effective income tax rate decreased to 23.1 percent in the first quarter of 2026 from 24.5 percent in the year-ago quarter. The decrease in the effective rate for the first quarter of 2026 was primarily due to a decrease in state income taxes.

Current wording

•Second quarter 2026 income tax expense was $22 million, compared with $16 million income tax expense in the year-ago quarter. Our effective income tax rate increased to 27.3 percent in the second quarter of 2026 from 18.7 percent in the year-ago quarter. The increase in the effective rate for the second quarter of 2026 was primarily due to a non-recurring deferred tax revaluation benefit recognized in the second quarter of 2025.

Previous wording

•Provision for credit losses in the current quarter was $11 million in negative provisions, compared with $23 million of provisions in the year-ago quarter. The year-over-year decrease was primarily due to $120 million in negative provisions recorded in the current quarter, resulting from the $3.33 billion in Private Education Loan sales during the first quarter of 2026 and the $10 million reversal of provision in the current quarter due to the transfer of loans to held for sale. These drivers were offset by new loan commitments, net of expired commitments, and changes in the economic outlook. In the year-ago quarter, the provision for credit losses was primarily affected by new loan commitments, net of expired commitments, and changes in the economic outlook, offset by $116 million in negative provisions resulting from the $2.00 billion Private Education Loan sale during the quarter and adjustments to the weightings of our economic forecast scenarios.

Current wording

•Provision for credit losses in the six months ended June 30, 2026 was $114 million compared with $172 million of provisions in the year-ago period. The year-over-year decrease was primarily due to $131 million in negative provisions recorded in the first six months of 2026, resulting from the $3.75 billion in Private Education Loan sales during the first six months of 2026 and changes in economic outlook. These drivers were offset by new loan commitments, net of expired commitments. In the year-ago period, the provision for credit losses was primarily affected by new loan commitments, net of expired commitments, and changes in economic outlook, offset by $116 million in negative provisions resulting from the $2.00 billion Private Education Loan sales during the first six months of 2025.

Previous wording

•Gains on sales of loans, net, were $146 million in the first quarter of 2026, as a result of the $3.33 billion Private Education Loan sales that occurred in the quarter. There were $188 million gains on sales of loans, net, in the year-ago quarter, as a result of $2.00 billion Private Education Loans sold in the first quarter of 2025. Gains on sales of loans, net, in the first quarter of 2026 was less than the year-ago quarter primarily due to the January 2026 loan sale, which included newly originated loans that were not fully-disbursed, and the resulting gain on sale expressed as a percentage was in the low single-digits, as well as lower pricing in the first quarter 2026 seasoned loan sale compared to the loan sales in the year-ago quarter.

Current wording

•Gains on sales of loans, net, were $161 million in the six months ended June 30, 2026, as a result of the $3.75 billion Private Education Loan sales that occurred in the period. There were $188 million gains on sales of loans, net, in the year-ago period, as a result of the $2.00 billion in Private Education Loan sales that occurred in the first six months of 2025. Gains on sales of loans, net, in the first six months of 2026 was less than the year-ago period primarily due to the January 2026 and April 2026 loan sales, which included newly originated loans for the strategic partner that were not fully-disbursed, and causing the resulting gain on sale expressed as a percentage to be in the low single-digits. Due to market driven dynamics, pricing in the first quarter 2026 seasoned loan sale was also lower compared to the loan sales in the year-ago period.

Previous wording

•Losses on securities, net, were $2 million in losses in the current quarter compared with $10 million of losses in the year-ago quarter. The change compared to the year-ago quarter was primarily due to an impairment recorded in the first quarter of 2025 on certain of our non-marketable equity securities, and the changes in mark-to-fair value of our trading investments.

Current wording

•Gains (losses) on securities, net, were $6 million in gains in the first six months of 2026 compared with $13 million of losses in the year-ago period. The change compared to the year-ago period was primarily due to an impairment recorded in the first quarter of 2025 on certain of our non-marketable equity securities, and the changes in mark-to-fair value of our trading investments.

Previous wording

“Loan consolidations to third parties” and “Repayments and other” are both significantly affected by the volume of loans in our held for investment portfolio in P&I repayment status. Loans in P&I repayment status include loans in full principal and interest repayment status as well as certain loans in short-term interest-only payment programs (such as loans in a Graduated Repayment Period program and loans in a short-term interest only alternative program). The amount of loans in P&I repayment status in our Private Education Loans held for investment portfolio at March 31, 2026 was consistent with March 31, 2025, and now totals 43 percent of our Private Education Loans held for investment portfolio at March 31, 2026. The balance of loans held for investment in P&I repayment status was primarily affected in the first three months of 2026 by loan sales.

Current wording

“Loan consolidations to third parties” and “Repayments and other” are both significantly affected by the volume of loans in our held for investment portfolio in P&I repayment status. Loans in P&I repayment status include loans in full principal and interest repayment status as well as certain loans in short-term interest-only payment programs (such as loans in a Graduated Repayment Period program and loans in a short-term interest only alternative program). The amount of loans in P&I repayment status in our Private Education Loans held for investment portfolio at June 30, 2026 decreased by 1.7 percent compared with June 30, 2025, and now totals 45.3 percent of our Private Education Loans held for investment portfolio at June 30, 2026. The balance of loans held for investment in P&I repayment status was primarily affected in 2025 and the first six months of 2026 by loan sales.

Previous wording

“Loan consolidations to third parties” for the three months ended March 31, 2026 total 3.8 percent of our Private Education Loans held for investment portfolio in P&I repayment status at March 31, 2026, or 1.6 percent of our total Private Education Loans held for investment portfolio at March 31, 2026, compared with the year-ago quarter of 2.6 percent of our Private Education Loans held for investment portfolio in P&I repayment status, or 1.1 percent of our total Private Education Loans held for investment portfolio, respectively. The increase in consolidations compared to the year-ago quarter is primarily attributable to lower interest rates in 2026. Historical experience has shown that loan consolidation activity is heightened in the period when the loan initially enters full principal and interest repayment status and then subsides over time.

Current wording

“Loan consolidations to third parties” for the three months ended June 30, 2026 total 3.8 percent of our Private Education Loans held for investment portfolio in P&I repayment status at June 30, 2026, or 1.7 percent of our total Private Education Loans held for investment portfolio at June 30, 2026, compared with the year-ago quarter of 2.3 percent of our Private Education Loans held for investment portfolio in P&I repayment status, or 1.0 percent of our total Private Education Loans held for investment portfolio, respectively. The increase in consolidations compared to the year-ago quarter is primarily attributable to lower interest rates in 2026. Historical experience has shown that loan consolidation activity is heightened in the period when the loan initially enters full principal and interest repayment status and then subsides over time.

Previous wording

(2) For the three months ended March 31, 2026, the Graduate Loan originations include $8.7 million of Smart Option Loans where the student was in a graduate status. For the three months ended March 31, 2025, the Graduate Loan originations include $8.7 million of Smart Option Loans where the student was in a graduate status.

Current wording

(2) For the three months ended June 30, 2026, the Graduate Loan originations include $3.6 million of Smart Option Loans where the student was in a graduate status. For the three months ended June 30, 2025, the Graduate Loan originations include $3.2 million of Smart Option Loans where the student was in a graduate status. For the six months ended June 30, 2026, the Graduate Loan originations include $12.3 million of Smart Option Loans where the student was in a graduate status. For the six months ended June 30, 2025, the Graduate Loan originations include $11.9 million of Smart Option Loans where the student was in a graduate status.

Previous wording

Private Education Loans held for investment in P&I repayment status were 43 percent of our total Private Education Loans held for investment portfolio at March 31, 2026, compared with 41 percent at March 31, 2025.

Current wording

Private Education Loans held for investment in P&I repayment status were 45 percent of our total Private Education Loans held for investment portfolio at June 30, 2026, compared with 43 percent at June 30, 2025.

Previous wording

(4)We calculate the percentage of loans in an extended grace period as the ratio of (a) Private Education Loans in forbearance in an extended grace period numerator to (b) Private Education Loans in repayment and forbearance denominator. An extended grace period aligns with The Office of the Comptroller of the Currency definition of an additional, consecutive, one-time period during which no payment is required for up to six months after the initial grace period. We typically grant this extended grace period to customers who may be having difficulty finding employment before the full principal and interest repayment period starts or once it has begun. Loans in forbearance in an extended grace period were approximately $331 million and $314 million at March 31, 2026 and 2025, respectively. See “— Use of Forbearance and Rate Modifications as a Private Education Loan Collection Tool” below for additional details.

Current wording

(4)We calculate the percentage of loans in an extended grace period as the ratio of (a) Private Education Loans in forbearance in an extended grace period numerator to (b) Private Education Loans in repayment and forbearance denominator. An extended grace period aligns with The Office of the Comptroller of the Currency definition of an additional, consecutive, one-time period during which no payment is required for up to six months after the initial grace period. We typically grant this extended grace period to customers who may be having difficulty finding employment before the full principal and interest repayment period starts or once it has begun. Loans in forbearance in an extended grace period were approximately $164 million and $154 million at June 30, 2026 and 2025, respectively. See “— Use of Forbearance and Rate Modifications as a Private Education Loan Collection Tool” below for additional details.

Previous wording

(5)We calculate the percentage of loans in hardship and other forbearances as the ratio of (a) Private Education Loans in hardship and other forbearances (excluding loans in an extended grace period and delinquent loans in disaster forbearance) numerator to (b) Private Education Loans in repayment and forbearance denominator. If the customer is in financial hardship, we work with the customer and/or cosigner and identify any available alternative arrangements designed to reduce monthly payment obligations, which may include a short-term hardship forbearance. Loans in hardship and other forbearances (excluding loans in an extended grace period and delinquent loans in disaster forbearance) were approximately $157 million and $151 million at March 31, 2026 and 2025, respectively. See “— Use of Forbearance and Rate Modifications as a Private Education Loan Collection Tool” below for additional details.

Current wording

(5)We calculate the percentage of loans in hardship and other forbearances as the ratio of (a) Private Education Loans in hardship and other forbearances (excluding loans in an extended grace period and delinquent loans in disaster forbearance) numerator to (b) Private Education Loans in repayment and forbearance denominator. If the customer is in financial hardship, we work with the customer and/or cosigner and identify any available alternative arrangements designed to reduce monthly payment obligations, which may include a short-term hardship forbearance. Loans in hardship and other forbearances (excluding loans in an extended grace period and delinquent loans in disaster forbearance) were approximately $164 million and $150 million at June 30, 2026 and 2025, respectively. See “— Use of Forbearance and Rate Modifications as a Private Education Loan Collection Tool” below for additional details.

Previous wording

Delinquencies as a percentage of Private Education Loans (held for investment) in repayment increased to 4.0 percent at March 31, 2026 from 3.6 percent at March 31, 2025. The increase in the delinquency metric is primarily attributable to changes and refinements to our loss mitigation programs in late 2024 which generally restricted loan modification eligibility to borrowers in later-stage delinquency. While the changes and refinements were made in late 2024, the full impact on delinquencies was not observed until late in the first quarter of 2025. Also impacting the delinquency percentage, was a shift in the composition of the loans in repayment portfolio (which does not include the loans held for sale) due to the sale of younger loans as part of our strategic partnership funding model. $236 million of newly originated loans were transferred to held for sale status during the first quarter of 2026 and sold in April 2026 to our strategic partner. See Note 16, “Subsequent Events” in this Form 10-Q for additional information. See additional discussion related to collections activity in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Allowance for Credit Losses — Use of Forbearance and Modifications as a Private Education Loan Collection Tool” in the 2025 Form 10-K.

Current wording

Delinquencies as a percentage of Private Education Loans (held for investment) in repayment increased to 3.7 percent at June 30, 2026 from 3.5 percent at June 30, 2025. We believe the increase in the delinquency metric is primarily driven by misaligned third-party debt resolution practices affecting a segment of high-ability-to-pay borrowers resulting in their loans progressing straight through delinquency to default. Also impacting the delinquency percentage, was a shift in the composition of the loans in repayment portfolio (which does not include the loans held for sale) due to the sale of younger loans as part of our strategic partnership funding model and the larger size of the recent repayment cohort compared to prior quarters. $172 million of newly originated loans were transferred to held for sale status during the second quarter of 2026 and sold in July 2026 to our strategic partner. See Note 16, “Subsequent Events” in this Form 10-Q for additional information. See additional discussion related to collections activity in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Allowance for Credit Losses — Use of Forbearance and Modifications as a Private Education Loan Collection Tool” in the 2025 Form 10-K.

Previous wording

The percentage of loans in an extended grace forbearance increased to 2.1 percent at March 31, 2026 from 1.9 percent at March 31, 2025. The increase was due to additional enrollments in extended grace forbearance and the shift in the composition of the loans in repayment portfolio (which does not include the loans held for sale) due to the sale of younger loans as part of our strategic partnership funding model. $236 million of newly originated loans were transferred to held for sale status during the first quarter of 2026. See Note 16, “Subsequent Events” in this Form 10-Q for additional information. The percentage of loans in hardship and other forbearances remained relatively consistent at 1.0 percent and 0.9 percent at March 31, 2026 and March 31, 2025, respectively.

Current wording

The percentage of loans in an extended grace forbearance increased to 1.1 percent at June 30, 2026 from 0.9 percent at June 30, 2025. The increase was primarily due to additional enrollments in extended grace forbearance and the shift in the composition of the loans in repayment portfolio (which does not include the loans held for sale) due to the sale of younger loans as part of our strategic partnership funding model. $172 million of newly originated loans were transferred to held for sale status during the second quarter of 2026. See Note 16, “Subsequent Events” in this Form 10-Q for additional information. The percentage of loans in hardship and other forbearances remained relatively consistent at 1.0 percent and 0.9 percent at June 30, 2026 and June 30, 2025, respectively.

Previous wording

(2)See “—Financial Condition— Allowance for Credit Losses— Provision for Credit Losses” in this Item 2 for a reconciliation of the provisions for credit losses reported in the consolidated statements of income.

Current wording

(2)See “—Financial Condition— Allowance for Credit Losses— Allowance for Loan Losses” in this Item 2 for a reconciliation of the provisions for credit losses reported in the consolidated statements of income.

Previous wording

(6)Unfunded loan commitments for loans held for investment and the calculation of the Total Allowance Percentage of Private Education Loan Exposure do not include $35 million of unfunded loan commitments associated with loans classified as held for sale at March 31, 2026. Due to the near-term timing of the loan sale and credit quality of the loans, we believe there is no risk of credit loss and are not recording an allowance for the unfunded loan commitments related to the loans classified as held for sale.

Current wording

(6)Unfunded loan commitments for loans held for investment and the calculation of the Total Allowance Percentage of Private Education Loan Exposure do not include $28 million of unfunded loan commitments associated with loans classified as held for sale at June 30, 2026. Due to the near-term timing of the loan sale and credit quality of the loans, we believe there is no risk of credit loss and are not recording an allowance for the unfunded loan commitments related to the loans classified as held for sale.

Previous wording

The tables below show the composition and status of the Private Education Loan portfolio held for investment aged by number of months in active repayment status (months for which a scheduled monthly payment was due). Active repayment status includes loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period. Our experience shows that the percentage of loans in forbearance status generally decreases the longer the loans have been in active repayment status. At March 31, 2026, Private Education Loans (held for investment) in forbearance that have been in active repayment status for fewer than 25 months as a percentage of all loans in repayment and forbearance were 2.3 percent. At March 31, 2026, approximately 75 percent of our Private Education Loans (held for investment) in forbearance status have been in active repayment status for fewer than 25 months.

Current wording

The tables below show the composition and status of the Private Education Loan portfolio held for investment aged by number of months in active repayment status (months for which a scheduled monthly payment was due). Active repayment status includes loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period. Our experience shows that the percentage of loans in forbearance status generally decreases the longer the loans have been in active repayment status. At June 30, 2026, Private Education Loans (held for investment) in forbearance that have been in active repayment status for fewer than 25 months as a percentage of all loans in repayment and forbearance were 1.5 percent. At June 30, 2026, approximately 74 percent of our Private Education Loans (held for investment) in forbearance status have been in active repayment status for fewer than 25 months.

Previous wording

(1)The allowance for uncollectible interest at March 31, 2026 and 2025 represents the expected losses related to the portion of accrued interest receivable on those loans that are in repayment (at March 31, 2026 and 2025, relates to $153 million and $156 million, respectively, of accrued interest receivable) that is/was not expected to be capitalized. The accrued interest receivable that is/was expected to be capitalized ($1.4 billion at both March 31, 2026 and 2025) is/was reserved in the allowance for credit losses.

Current wording

(1)The allowance for uncollectible interest at June 30, 2026 and 2025 represents the expected losses related to the portion of accrued interest receivable on those loans that are in repayment (at June 30, 2026 and 2025, relates to $154 million and $159 million, respectively, of accrued interest receivable) that is/was not expected to be capitalized. The accrued interest receivable that is/was expected to be capitalized ($1.5 billion at both June 30, 2026 and 2025) is/was reserved in the allowance for credit losses.

Previous wording

Our primary funding and liquidity objective is to support our businesses throughout market cycles, including during periods of financial stress. Our business needs primarily include funding originations of Private Education Loans and meeting any deposits outflows at the Bank. To achieve these objectives, we maintain access to a diverse set of funding sources, such as retail deposits, brokered deposits, asset-backed securitizations, unsecured debt, other financing facilities, and loan sales. We maintained liquidity reserves in the form of unrestricted cash and liquid investments of $6.3 billion and $5.4 billion as of March 31, 2026 and December 31, 2025, respectively, as noted in the table below.

Current wording

Our primary funding and liquidity objective is to support our businesses throughout market cycles, including during periods of financial stress. Our business needs primarily include funding originations of Private Education Loans and meeting any deposits outflows at the Bank. To achieve these objectives, we maintain access to a diverse set of funding sources, such as retail deposits, brokered deposits, asset-backed securitizations, unsecured debt, other financing facilities, and loan sales. We maintained liquidity reserves in the form of unrestricted cash and liquid investments of $5.6 billion and $5.4 billion as of June 30, 2026 and December 31, 2025, respectively, as noted in the table below.

Previous wording

At both March 31, 2026 and December 31, 2025, our sources of liquidity included liquid investments with unrealized losses of $61.2 million. It is our policy to maintain a liquidity stockpile that is sufficiently liquid and sized to meet our financial obligations in normal and stressed times. Our liquidity management is governed by policies approved by our Board of Directors. Oversight of these policies is performed at the Asset and Liability Committee, a management-level committee. These policies consider the volatility of cash flow forecasts, expected asset and liability maturities, anticipated loan demand, and a variety of other factors to establish minimum liquidity guidelines.

Current wording

At June 30, 2026 and December 31, 2025, our sources of liquidity included unrestricted cash, primarily held at the Federal Reserve Bank, and liquid investments with unrealized losses of $59.1 million and $61.2 million, respectively. It is our policy to maintain a liquidity stockpile that is sufficient in size and quality to meet our financial obligations in normal and stressed times. Our liquidity risk management is governed by policies approved by our Board of Directors. Oversight of these policies is performed at the Asset and Liability Committee, a management-level committee. These policies consider the volatility of cash flow forecasts, expected asset and liability maturities, anticipated loan demand, and a variety of other factors to establish minimum liquidity guidelines.

Previous wording

Key risks associated with our liquidity relate to our ability to access the capital markets and deposit markets at reasonable rates. This ability may be affected by our performance, competitive pressures, the macroeconomic environment, and the impact they have on the availability of funding sources in the market. We target maintaining sufficient on-balance sheet and contingent sources of liquidity to enable us to meet all contractual and contingent obligations under various stress scenarios, including severe macroeconomic stresses and specific stresses that test the resiliency of our balance sheet. At March 31, 2026, we held a significant liquidity buffer of cash and government-backed investments, which we expect to maintain in the future. Due to the seasonal nature of our business, our liquidity levels will likely vary from quarter to quarter.

Current wording

Key risks associated with our liquidity relate to our ability to access the capital markets and deposit markets at reasonable rates. This ability may be affected by our performance, competitive pressures, the macroeconomic environment, and the impact they have on the availability of funding sources in the market. We target maintaining sufficient on-balance sheet and contingent sources of liquidity to enable us to meet all contractual and contingent obligations under various stress scenarios, including severe macroeconomic stresses and specific stresses that test the resiliency of our balance sheet. At June 30, 2026, we held a significant liquidity buffer of unrestricted cash and government-backed investments, which we expect to maintain in the future. Due to the seasonal nature of our business, our liquidity levels will likely vary from quarter to quarter.

Previous wording

Our total deposits of $20.5 billion were comprised of $8.7 billion in brokered deposits and $11.8 billion in retail and other deposits at March 31, 2026, compared with total deposits of $21.1 billion, which were comprised of $8.8 billion in brokered deposits and $12.3 billion in retail and other deposits, at December 31, 2025.

Current wording

Our total deposits of $19.9 billion were comprised of $8.2 billion in brokered deposits and $11.6 billion in retail and other deposits at June 30, 2026, compared with total deposits of $21.1 billion, which were comprised of $8.8 billion in brokered deposits and $12.3 billion in retail and other deposits, at December 31, 2025.

Previous wording

Some of our deposit products are serviced by third-party providers. Placement fees associated with the brokered CDs are amortized into interest expense using the effective interest rate method. We recognized placement fee expense of $2 million in both the three months ended March 31, 2026 and 2025. There were $5 million in fees paid to third-party brokers related to brokered CDs for the three months ended March 31, 2026. There were no fees paid to third-party brokers related to brokered CDs for the three months ended March 31, 2025.

Current wording

Some of our deposit products are serviced by third-party providers. Placement fees associated with the brokered CDs are amortized into interest expense using the effective interest rate method. We recognized placement fee expense of $2 million in both the three months ended June 30, 2026 and 2025 and placement fee expense of $4 million in both the six months ended June 30, 2026 and 2025. There were no fees paid to third-party brokers related to brokered CDs in the three months ended June 30, 2026 and $5 million in fees paid to third-party brokers related to brokered CDs for the six months ended June 30, 2026. There were no fees paid to third-party brokers related to brokered CDs for either the three or six months ended June 30, 2025.

Previous wording

As of March 31, 2026 and December 31, 2025, there were $651 million and $557 million, respectively, of deposits exceeding FDIC insurance limits. Accrued interest on deposits was $56 million and $71 million at March 31, 2026 and December 31, 2025, respectively.

Current wording

As of June 30, 2026 and December 31, 2025, there were $615 million and $557 million, respectively, of deposits exceeding FDIC insurance limits. Accrued interest on deposits was $70 million and $71 million at June 30, 2026 and December 31, 2025, respectively.

Previous wording

Title VII of the Dodd-Frank Act requires all standardized derivatives, including most interest rate swaps, to be submitted for clearing to central counterparties to reduce counterparty risk. Two of the central counterparties we use are the CME and the LCH. All variation margin payments on derivatives cleared through the CME and LCH are accounted for as legal settlement. As of March 31, 2026, $11 million notional of our derivative contracts were cleared on the CME and $5 million were cleared on the LCH. The derivative contracts cleared through the CME and LCH represent 66.6 percent and 33.4 percent, respectively, of our total notional derivative contracts of $16 million at March 31, 2026.

Current wording

Title VII of the Dodd-Frank Act requires all standardized derivatives, including most interest rate swaps, to be submitted for clearing to central counterparties to reduce counterparty risk. Two of the central counterparties we use are the CME and the LCH. All variation margin payments on derivatives cleared through the CME and LCH are accounted for as legal settlement. As of June 30, 2026, $10 million notional of our derivative contracts were cleared on the CME and $2 million were cleared on the LCH. The derivative contracts cleared through the CME and LCH represent 79.2 percent and 20.8 percent, respectively, of our total notional derivative contracts of $12 million at June 30, 2026.

Previous wording

The Bank is chartered under the laws of the State of Utah, and its deposits are insured by the FDIC. The Bank’s ability to pay dividends is subject to the laws of Utah and the regulations of the FDIC. Generally, under Utah’s industrial bank laws and regulations as well as FDIC regulations, the Bank may pay dividends from its net profits without regulatory approval if, following the payment of the dividend, the Bank’s capital and surplus would not be impaired. The Company relies on dividends from the Bank, as necessary, to enable the Company to pay any declared dividends and other payments and consummate share repurchases, as described herein. The Bank declared $200 million and $100 million in dividends to the Company for the three months ended March 31, 2026 and 2025, respectively, with the proceeds primarily used to fund share repurchase programs and stock dividends. We expect that the Bank will pay dividends to the Company as may be necessary to enable the Company to pay any declared dividends on its Series B Preferred Stock and common stock and to consummate any common share repurchases by the Company under the share repurchase programs.

Current wording

The Bank is chartered under the laws of the State of Utah, and its deposits are insured by the FDIC. The Bank’s ability to pay dividends is subject to the laws of Utah and the regulations of the FDIC. Generally, under Utah’s industrial bank laws and regulations as well as FDIC regulations, the Bank may pay dividends from its net profits without regulatory approval if, following the payment of the dividend, the Bank’s capital and surplus would not be impaired. The Company relies on dividends from the Bank, as necessary, to enable the Company to pay any declared dividends and other payments and consummate share repurchases, as described herein. The Bank declared $200 million and $400 million in dividends to the Company for the three and six months ended June 30, 2026, respectively, and $94 million and $194 million in dividends to the Company for the three and six months ended June 30, 2025, respectively, with the proceeds primarily used to fund share repurchase programs and stock dividends. We expect that the Bank will pay dividends to the Company as may be necessary to enable the Company to pay any declared dividends on its Series B Preferred Stock and common stock and to consummate any common share repurchases by the Company under the share repurchase programs.

Previous wording

On November 1, 2021, we issued $500 million of 3.125 percent unsecured Senior Notes due November 2, 2026, at a price of 99.43 percent. At March 31, 2026, the outstanding carrying value, net of deferred financing fees, was $499 million.

Current wording

On January 31, 2025, we issued $500 million of 6.50 percent unsecured Senior Notes due January 31, 2030 (the “2030 Senior Notes”), at a price of 99.78 percent. At June 30, 2026, the outstanding carrying value, net of deferred financing fees, was $494 million.

Previous wording

On January 31, 2025, we issued $500 million of 6.50 percent unsecured Senior Notes due January 31, 2030, at a price of 99.78 percent. At March 31, 2026, the outstanding balance was $494 million.

Current wording

On May 15, 2026, we issued $500 million of 6.495 percent unsecured Senior Notes due May 15, 2032 (the “2032 Senior Notes”), at a price of 100 percent. At June 30, 2026, the outstanding carrying value, net of deferred financing fees, was $494 million.

Previous wording

On June 13, 2025, we amended our Secured Borrowing Facility to increase the amount to be borrowed under the facility from $2 billion to $2.5 billion and extended the maturity. We hold 100 percent of the residual interest in the Secured Borrowing Facility Trust. The amendment extended the revolving period, during which we may borrow, repay, and reborrow funds, until June 12, 2026. The scheduled amortization period, during which amounts outstanding under the Secured Borrowing Facility must be repaid, ends on June 12, 2027 (or earlier, if certain material adverse events occur).

Current wording

On June 13, 2025, we amended our Secured Borrowing Facility to increase the amount to be borrowed under the facility from $2 billion to $2.5 billion and extended the maturity. We hold 100 percent of the residual interest in the Secured Borrowing Facility Trust. The amendment extended the revolving period, during which we may borrow, repay, and reborrow funds, until June 12, 2026, and a subsequent amendment on June 12, 2026 further extended the revolving period to July 27, 2026. The scheduled amortization period, during which amounts outstanding under the Secured Borrowing Facility must be repaid, ends on June 12, 2027 (or earlier, if certain material adverse events occur). The one-year revolving period plus the one-year amortization period results in a contractual maturity that is two years from the date of inception or renewal. At both June 30, 2026 and December 31, 2025, there were no outstanding borrowings under the Secured Borrowing Facility.

Previous wording

We maintain discretionary uncommitted Federal Funds lines of credit with various correspondent banks, which totaled $125 million at March 31, 2026. The interest rate we are charged on these lines of credit is priced at Fed Funds plus a spread at the time of borrowing and is payable daily. We did not utilize these lines of credit in the three months ended March 31, 2026, nor in the year ended December 31, 2025.

Current wording

We maintain discretionary uncommitted Federal Funds lines of credit with various correspondent banks, which totaled $125 million at June 30, 2026. The interest rate we are charged on these lines of credit is priced at Fed Funds plus a spread at the time of borrowing and is payable daily. We did not utilize these lines of credit in the six months ended June 30, 2026, nor in the year ended December 31, 2025.

Previous wording

We established an account at the FRB to meet eligibility requirements for access to the Primary Credit borrowing facility at the FRB’s Window. The Primary Credit borrowing facility is a lending program available to depository institutions that are in generally sound financial condition. All borrowings at the Window must be fully collateralized. We can pledge asset-backed and mortgage-backed securities, as well as Private Education Loans, to the FRB as collateral for borrowings at the Window. Generally, collateral value is assigned based on the estimated fair value of the pledged assets. At March 31, 2026 and December 31, 2025, the value of our pledged collateral at the FRB totaled $2.3 billion and $2.5 billion, respectively. The interest rate charged to us is the discount rate set by the FRB. We did not utilize this facility in the three months ended March 31, 2026, nor in the year ended December 31, 2025.

Current wording

We established an account at the FRB to meet eligibility requirements for access to the Primary Credit borrowing facility at the FRB’s Window. The Primary Credit borrowing facility is a lending program available to depository institutions that are in generally sound financial condition. All borrowings at the Window must be fully collateralized. We can pledge asset-backed and mortgage-backed securities, as well as Private Education Loans, to the FRB as collateral for borrowings at the Window. Generally, collateral value is assigned based on the estimated fair value of the pledged assets. At June 30, 2026 and December 31, 2025, the value of our pledged collateral at the FRB totaled $2.2 billion and $2.5 billion, respectively. The interest rate charged to us is the discount rate set by the FRB. We did not utilize this facility in the six months ended June 30, 2026, nor in the year ended December 31, 2025.

Previous wording

When we approve a Private Education Loan at the beginning of an academic year, that approval may cover the borrowing for the entire academic year. As such, we do not always disburse the full amount of the loan at the time of such approval but, instead, have a commitment to fund a portion of the loan later (usually at the start of the second semester or subsequent trimesters). We estimate expected credit losses over the contractual period in which we are exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by us. At March 31, 2026, we had $588 million of outstanding contractual loan commitments that we expect to fund during the remainder of the 2025/2026 academic year, including $35 million of contractual loan commitments associated with loans classified as held for sale. At March 31, 2026, we had a $24 million reserve recorded in “Other Liabilities” to cover lifetime expected credit losses on the unfunded commitments. See Note 2, “Significant Accounting Policies — Allowance for Credit Losses — Off-Balance Sheet Exposure for Contractual Loan Commitments” in our 2025 Form 10-K and Note 5, “Allowance for Credit Losses and Unfunded Loan Commitments” in this Form 10-Q for additional information.

Current wording

When we approve a Private Education Loan at the beginning of an academic year, that approval may cover the borrowing for the entire academic year. As such, we do not always disburse the full amount of the loan at the time of such approval but, instead, have a commitment to fund a portion of the loan later (usually at the start of the second semester or subsequent trimesters). We estimate expected credit losses over the contractual period in which we are exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by us. At June 30, 2026, we had $1.7 billion of outstanding contractual loan commitments that we expect to fund during the remainder of the 2026/2027 academic year, including $28 million of contractual loan commitments associated with loans classified as held for sale. At June 30, 2026, we had a $66 million reserve recorded in “Other Liabilities” to cover lifetime expected credit losses on the unfunded commitments. See Note 2, “Significant Accounting Policies — Allowance for Credit Losses — Off-