SLM Corp
For the period ended Jun 30, 2024. Filed Jul 24, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 24, 2024
SLM$16.94-3.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-24.
0001628280-24-017666
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-24.
0001628280-24-032836
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 185 previous paragraphs and 222 current paragraphs.
124 unchanged; 45 reworded; 40 added; 14 removed; 2 previous and 13 current paragraphs rearranged.
Tables are not compared: 27 previous and 32 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (40)
Current report
2024-C Securitization
Current report
On May 15, 2024, we executed our $668 million SMB Private Education Loan Trust 2024-C term ABS transaction, which was accounted for as a secured financing. We sold $668 million of notes to third parties and retained a 100 percent interest in the residual certificates issued in the securitization, raising approximately $668 million of gross proceeds. The Class A and Class B notes had a weighted average life of 5.36 years and priced at a weighted average SOFR equivalent cost of SOFR plus 1.19 percent.
Current report
Secured Borrowing Facility
Current report
On May 7, 2024 and June 14, 2024, we amended our Secured Borrowing Facility to extend the maturity of the facility. The amount that can be borrowed under the facility is $2 billion. We hold 100 percent of the residual interest in the Secured Borrowing Facility trust. Under the Secured Borrowing Facility, we incur financing costs on unused borrowing capacity and on outstanding advances. The amended Secured Borrowing Facility extended the revolving period, during which we may borrow, repay, and reborrow funds, until June 13, 2025. The scheduled amortization period, during which amounts outstanding under the Secured Borrowing Facility must be repaid, ends on June 13, 2026 (or earlier, if certain material adverse events occur).
Current report
•Gains (losses) on securities, net, were $2 million of gains in the current quarter compared with $1 million in losses in the year-ago quarter. The change quarter-over-quarter was due to the change in mark-to-fair value of our trading investments.
Current report
Six Months Ended June 30, 2024 Compared with Six Months Ended June 30, 2023
Current report
•Gains on sales of loans, net, were $255 million in the six months ended June 30, 2024, compared with $125 million in the year-ago period. The increase in gains on sales of loans was primarily the result of selling $3.69 billion of Private Education Loans in the first six months of 2024, compared with the sale of $2.10 billion of Private Education Loans in the first six months of 2023. We also sold our Credit Card loan portfolio in May 2023 and recorded a $3.5 million loss on the sale in the six months ended June 30, 2023.
Current report
•Gains (losses) on securities, net, were $4 million of gains in the first six months of 2024 compared with less than $1 million in gains in the year-ago period. The increase from the year-ago period was due to the change in mark-to-fair value of our trading investments.
Current report
•Income tax expense for the six months ending June 30, 2024 was $184 million, compared with $129 million in the year-ago period. Our effective income tax rate increased to 25.4 percent in the first six months of 2024 from 25.1 percent in the year-ago period. The increase in the effective rate for the first six months of 2024 was was primarily due to an increase in state income taxes.
Current report
When we give a borrower facing financial difficulty an interest rate reduction under our programs, we evaluate their ability to pay and provide customized repayment terms based upon their financial condition. As part of demonstrating the ability and willingness to pay, as of the end of the reporting period, the borrower was required to make three consecutive monthly payments at the reduced payment amount in order to qualify for enrollment in a modification program and, if applicable, for the loan to re-age. Any loan that has received a previous rate reduction or permanent extension is generally not re-age eligible following a modification. In that case, following the modification, the loan will remain in delinquency unless and until all past due amounts are paid and the loan is brought current.
Current report
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Current report
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Current report
Short-term Borrowings
Current report
On May 7, 2024 and June 14, 2024, we amended our Secured Borrowing Facility to extend the maturity of the facility. The amount that can be borrowed under the facility is $2 billion. We hold 100 percent of the residual interest in the Secured Borrowing Facility trust. Under the Secured Borrowing Facility, we incur financing costs on unused borrowing capacity and on outstanding advances. The amended Secured Borrowing Facility extended the revolving period, during which we may borrow, repay, and reborrow funds, until June 13, 2025. The scheduled amortization period, during which amounts outstanding under the Secured Borrowing Facility must be repaid, ends on June 13, 2026 (or earlier, if certain material adverse events occur). At both June 30, 2024, and December 31, 2023, there were no secured borrowings outstanding under the Secured Borrowing Facility.
Current report
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Current report
We maintain an allowance for credit losses for the lifetime expected credit losses on loans in our portfolios, as well as for future loan commitments, at the reporting date.
Current report
In determining the lifetime expected credit losses on our Private Education Loan portfolio loan segments, we use a discounted cash flow method. This method requires us to project future principal and interest cash flows on our loans in those portfolios.
Current report
To estimate the future expected cash flows, we use statistical loan-level models that consider life of loan expectations for defaults, prepayments, recoveries, and any other qualitative adjustments deemed necessary, to determine the adequacy of the allowance at each balance sheet date. These cash flows are discounted at the loan’s effective interest rate to calculate the present value of those cash flows. Management adjusts the effective interest rate used to discount expected cash flows to incorporate expected prepayments. The difference between the present value of those cash flows and the amortized cost basis of the underlying loans is the allowance for credit losses. Entities that measure credit losses based on the present value of expected future cash flows are permitted to report the entire change in present value as credit loss expense, but may alternatively report the change in present value due to the passage of time as interest income. We have elected to report the entire change in present value as credit loss expense.
Current report
We estimate future default rates used in our current expected credit losses at a loan level using historical loss experience, current borrower characteristics, current conditions, and economic factors forecasted over a reasonable and supportable period. At the end of the reasonable and supportable forecast period, we immediately revert our forecasted economic factors to long-term historical averages.
Current report
We estimate future prepayment speeds used in our current expected credit losses at a loan level using historical prepayment experience, current borrower characteristics, current conditions, and economic factors forecasted over a reasonable and supportable period. At the end of the reasonable and supportable forecast period, we immediately revert our forecasted economic factors to long-term historical averages.
Current report
The reasonable and supportable forecast period is meant to represent the period in which we believe we can estimate the impact of forecasted economic factors in our expected losses. We use a two-year reasonable and supportable forecast period, although this period is subject to change as our view evolves on our ability to reasonably forecast economic conditions to estimate future losses.
Current report
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Current report
In estimating future default rates and prepayment speeds in our current expected credit losses, we use a combination of expected economic scenarios coupled with our historical experience to derive a base case adjusted for any qualitative factors (as described below). We also develop an adverse and favorable economic scenario. At each reporting date, we determine the appropriate weighting of these alternate scenarios based upon the current economic conditions and our view of the risks of alternate outcomes. This weighting of expectations is used in calculating our current expected credit losses recorded each period.
Current report
In estimating recoveries, we use both estimates of what we would receive from the sale of defaulted loans as well as historical borrower payment behavior to estimate the timing and amount of future recoveries on charged-off loans.
Current report
In addition to the above modeling approach, we also take certain other qualitative factors into consideration when calculating the allowance for credit losses, which could result in management overlays (increases or decreases to the allowance for credit losses). These management overlays can encompass a broad array of factors not captured by model inputs, including, but not limited to, changes in lending policies and procedures, including changes in underwriting standards, changes in servicing policies and collection administration practices, state law changes that could impact servicing and collection practices, charge-offs, recoveries not already included in the analysis, the effect of other external factors such as legal and regulatory requirements on the level of estimated current expected credit losses, the performance of the model over time versus actual losses, and any other operational or regulatory changes that could affect our estimate of future losses.
Current report
The evaluation of the allowance for credit losses is inherently subjective, as it requires material estimates that may be susceptible to significant changes. If actual future performance in delinquency, charge-offs, and recoveries is significantly different than estimated, or management assumptions or practices were to change, this could materially affect the estimate of the allowance for credit losses, the timing of when losses are recognized, and the related provision for credit losses in our consolidated statements of income.
Current report
When calculating our allowance for credit losses and liability for unfunded commitments, we incorporate several inputs that are subject to change period to period. These include, but are not limited to, CECL model inputs and any overlays deemed necessary by management. The most impactful CECL model inputs include:
Current report
•Economic forecasts;
Current report
•Weighting of economic forecasts; and
Current report
•Recovery rates.
Current report
Of the model inputs outlined above, economic forecasts, weighting of economic forecasts, and recovery rates are subject to estimation uncertainty, and changes in these inputs could have a material impact to our allowance for credit losses and the related provision for credit losses.
Current report
In the second quarter of 2024, we implemented a loan-level future default rate model that includes current portfolio characteristics and forecasts of real gross domestic product and college graduate unemployment. In the second quarter of 2024, we also implemented a future prepayment speeds model to include forecasts of real gross domestic product, retail sales, SOFR, and the U.S. 10-year treasury rate. These models reduce the reliance on certain qualitative overlays compared to the previous default rate and prepayment speeds models. Prior to these changes, our loss models used forecasts of college graduate unemployment, retail sales, home price index, and median family income. Both the future default rate model and the future prepayment speeds model are used in determining the adequacy of the allowance for credit losses. The combined impact of these model enhancements and the changes in the related qualitative overlays did not have a material impact on the overall level of our allowance for credit losses.
Current report
We obtain forecasts for our loss model inputs from Moody’s Analytics. Moody’s Analytics provides a range of forecasts for each of these inputs with various likelihoods of occurrence. We determine which forecasts we will include in our estimation of allowance for credit losses and the associated weightings for each of these inputs. At June 30, 2024, December 31, 2023, and June 30, 2023, we used the Baseline (50th percentile likelihood of occurring)/S1 (stronger near-term growth scenario - 10 percent likelihood of occurring)/S3 (unfavorable (or downside) scenario - 10 percent likelihood of occurring) and weighted them 40 percent, 30 percent, and 30 percent, respectively. Management reviews both the scenarios and their respective weightings each quarter in determining the allowance for credit losses.
Current report
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Current report
To demonstrate the sensitivity of the allowance for credit losses for our Private Education Loan portfolio to a more pessimistic forecast of expected economic outcomes, we considered what our allowance for credit losses would be if we applied a 100 percent probability weighting to the S3 unfavorable (or downside) scenario (with a concomitant 0 percent weighting for both the Baseline and S1 stronger near-term growth scenarios) under the range of scenarios noted above. Excluding consideration of qualitative adjustments, this sensitivity analysis would result in a hypothetical increase in our allowance for credit losses as of June 30, 2024 of $153 million or 11.7 percent. This scenario does not reflect our current expectations as of June 30, 2024, nor does it capture other qualitative adjustments or all the potential unknown variables that could arise in the forecast period, but it provides an approximation of a possible outcome under hypothetical pessimistic conditions. The estimated impact was calculated for the two-year reasonable and supportable period, but was not calculated for the remaining periods since long-term assumptions used to calculate the allowance for the remaining periods are based on longer term averages and only change when we determine there is a fundamental change that will affect the long-term rate.
Current report
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Removed paragraphs (14)
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Discontinuation of Previously Used Non-GAAP “Core Earnings” Metric
Previous report
Non-GAAP “Core Earnings”
Previous report
We prepare financial statements in accordance with GAAP. However, we previously also produced and reported our after-tax earnings on a separate basis that we referred to as “Core Earnings.” The difference between our previously reported non-GAAP “Core Earnings” and GAAP results of operations, net of tax was driven by unrealized, mark-to-fair value gains (losses) on derivative contracts that did not qualify for hedge accounting treatment under GAAP. While derivatives continue to be a critical element of our interest rate risk management strategy, and we continue to enter into derivative instruments to economically hedge interest rate and cash flow risk associated with our portfolio, we have only invested in derivative instruments that qualify for hedge accounting treatment under GAAP during the past eight quarters (including the first quarter of 2024), and as such there has been no difference between GAAP results of operations, net of tax and non-GAAP "Core Earnings" reported for those quarters. As a result, we no longer believe that it is meaningful to report this non-GAAP metric, and have discontinued doing so beginning in this quarterly report on Form 10-Q for the first quarter of 2024. We are continually assessing how best to present our financial results, and if useful and meaningful, may decide to report future non-GAAP earnings (with appropriate reconciliation to GAAP) in a different way.
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Allowance for Credit Losses
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Reworded paragraphs (45)
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, 2024.
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, 2024.
Previous wording
During the first three months of 2024, we made the following progress on the above corporate strategic imperatives.
Current wording
During the first six months of 2024, we made the following progress on the above corporate strategic imperatives.
Previous wording
2024 Loan Sales and 2024-A Transaction
Current wording
2024 Loan Sales and 2024-A, 2024-B, and 2024-D Transactions
Previous wording
In the first three months of 2024, we recognized $143 million in gains from the sale of approximately $2.10 billion of Private Education Loans, including $1.95 billion of principal and $151 million in capitalized interest, to an unaffiliated third party. The transactions qualified for sale treatment and removed the balance of the loans from our balance sheet on the respective settlement dates. We remained the servicer of these loans pursuant to applicable servicing agreements executed in connection with the sales. For additional information regarding these transactions, see Notes to Consolidated Financial Statements, Note 3, “Loans Held for Investment” and Note 8, “Borrowings - Unconsolidated VIEs” in this Form 10-Q.
Current wording
In the first six months of 2024, we recognized $255 million in gains from the sale of approximately $3.69 billion of Private Education Loans, including $3.42 billion of principal and $274 million in capitalized interest, to unaffiliated third parties. The transactions qualified for sale treatment and removed the balance of the loans from our balance sheet on the respective settlement dates. We remained the servicer of these loans pursuant to applicable servicing agreements executed in connection with the sales. For additional information regarding these transactions, see Notes to Consolidated Financial Statements, Note 3, “Loans Held for Investment” and Note 8, “Borrowings - Unconsolidated VIEs” in this Form 10-Q.
Previous wording
During the three months ended March 31, 2024, we repurchased 1.3 million shares of our common stock at a total cost of $27 million under a Rule 10b5-1 trading plan authorized under our 2024 Share Repurchase Program.
Current wording
During the six months ended June 30, 2024, we repurchased 4.2 million shares of our common stock at a total cost of $89 million under Rule 10b5-1 trading plans authorized under our 2024 Share Repurchase Program.
Previous wording
For the three months ended March 31, 2024, net income attributable to common stock was $285 million, or $1.27 diluted earnings per common share, compared with net income attributable to common stock of $114 million, or $0.47 diluted earnings per common share, for the three months ended March 31, 2023.
Current wording
For the three months ended June 30, 2024, net income attributable to common stock was $247 million, or $1.11 diluted earnings per common share, compared with net income attributable to common stock of $261 million, or $1.10 diluted earnings per common share, for the three months ended June 30, 2023.
Previous wording
•Net interest income decreased by $18 million in the current quarter compared with the year-ago quarter primarily due to a 21-basis point decrease in our net interest margin and a $388 million decrease in our average Private Education Loans and FFELP Loans outstanding. Our net interest margin decreased in the current quarter from the year-ago quarter primarily because our cost of funds increased more than the yields on our interest-earning assets. This occurs because as interest rates change, changes in the cost of our interest-bearing liabilities tend to lag compared to changes in our interest-earning assets. In a rising interest rate environment, as we experienced in 2022 and the first part of 2023, our variable-rate interest earning assets repriced faster than our cost of funds. As such, we saw an expansion in our net interest margin throughout most of 2023. As interest rates stabilized in the latter half of 2023 and into the first quarter of 2024, our cost of funds increased faster than our interest-earning assets and reduced our net interest margin.
Current wording
•Net interest income decreased by $14 million in the current quarter compared with the year-ago quarter primarily due to a 16-basis point decrease in our net interest margin and a $308 million decrease in our average Private Education Loans and FFELP Loans outstanding. Our net interest margin decreased in the current quarter from the year-ago quarter primarily because our cost of funds increased more than the yields on our interest-earning assets. This occurs because as interest rates change, changes in the cost of our interest-bearing liabilities tend to lag compared to changes in the yields on our interest-earning assets. In a rising interest rate environment, as we experienced in 2022 and the first part of 2023, our variable-rate interest earning assets repriced faster than our cost of funds. As such, we saw an expansion in our net interest margin throughout most of 2023. As interest rates stabilized in the latter half of 2023 and into the first half of 2024, our cost of funds increased faster than our interest-earning assets yields and reduced our net interest margin.
Previous wording
•Gains on sales of loans, net, were $143 million in the current quarter, as a result of $2.10 billion in Private Education Loan sales that occurred in the first quarter of 2024. There were no gains on sales of loans, net, in the year-ago quarter, as we did not sell loans in the first quarter of 2023.
Current wording
•Gains on sales of loans, net, were $112 million in the current quarter, as a result of $1.59 billion in Private Education Loan sales that occurred in the second quarter of 2024. There were $125 million in gains on sales of loans, net, in the year-ago quarter, as result of $2.10 billion in Private Education Loan sales that occurred in the second quarter of 2023.
Previous wording
•First-quarter 2024 total operating expenses were $161 million, compared with $155 million in the year-ago quarter. The increase in total operating expenses was primarily driven by higher personnel costs and higher initiative spending.
Current wording
•Second-quarter 2024 total operating expenses were $157 million, compared with $154 million in the year-ago quarter. The increase in total operating expenses was primarily driven by higher personnel costs and higher FDIC fees.
Previous wording
•During the first quarter of 2024, we recorded $1 million in amortization of acquired intangible assets, down from $2 million in the year-ago quarter. The decrease is a result of the impairment write-down of the Nitro trade name intangible asset taken in the fourth quarter of 2023. For additional information, see Notes to Consolidated Financial Statements, Note 6, “Goodwill and Acquired Intangible Assets” in this Form 10-Q.
Current wording
•During the second quarter of 2024, we recorded $1 million in amortization of acquired intangible assets, down from $2 million in the year-ago quarter. The decrease is a result of the impairment write-down of the Nitro trade name intangible asset taken in the fourth quarter of 2023. For additional information, see Notes to Consolidated Financial Statements, Note 6, “Goodwill and Acquired Intangible Assets” in this Form 10-Q.
Previous wording
•First-quarter 2024 income tax expense was $97 million, compared with $37 million in the year-ago quarter. Our effective income tax rate increased to 25.2 percent in the first quarter of 2024 from 24.0 percent in the year-ago quarter. The increase in the effective rate for the first quarter of 2024 was primarily due to an increase in non-deductible expenses and a decrease in the tax benefit related to stock-based compensation.
Current wording
•Second-quarter 2024 income tax expense was $87 million, compared with $92 million in the year-ago quarter. Our effective income tax rate decreased slightly to 25.6 percent in the second quarter of 2024 from 25.7 percent in the year-ago quarter. The decrease in the effective rate for the second quarter of 2024 was primarily due to a decrease in state income taxes.
Previous wording
•Provision for credit losses in the current quarter was $12 million, compared with $114 million in the year-ago quarter. During the first quarter of 2024, the provision for credit losses was primarily affected by $133 million negative provisions resulting from the $2.10 billion Private Education Loan sales during the quarter, an improved economic outlook, and changes in management overlays and recovery rates, offset by new loan commitments, net of expired commitments, and increases to the provision as a result of decreases in our estimates of the historical long-term average prepayment speeds used after the two-year reasonable and supportable period. In the year-ago quarter, the provision for credit losses was primarily affected by provisions for new loan commitments, net of expired commitments, slower prepayment rates, and changes in economic outlook and recovery rates.
Current wording
•Provision for credit losses in the six months ended June 30, 2024 was $29 million, compared with $132 million in the year-ago period. During the first six months of 2024, the provision for credit losses was primarily affected by $236 million negative provisions resulting from the $3.69 billion Private Education Loan sales during the period, an improved economic outlook, and changes in management overlays and recovery rates, offset by new loan commitments, net of expired commitments, and increases to the provision as a result of decreases in our estimates of the historical long-term average prepayment speeds used after the two-year reasonable and supportable period. In the year-ago period, the provision for credit losses was primarily affected by new loan commitments, net of expired commitments, slower prepayment rates, and changes in economic outlook, which were offset by negative provisions recorded as a result of Private Education Loan sales during the first six months of 2023 and an increase in recovery rates.
Previous wording
•Other income was $29 million in the first quarter of 2024, compared with $20 million in the year-ago quarter. In the first quarter of 2024, there was a $6 million increase in third-party servicing fees from the year-ago quarter. The increase in third-party servicing fees was due to an additional $5.3 billion of loans that we sold during the past year where we continue to service on behalf of the owners of the loans. There was also a $3 million increase in early withdrawal penalty fee income compared with the year-ago quarter, which was related to a health savings account provider who redeemed its deposits early and paid an early withdrawal penalty in the first quarter of 2024.
Current wording
•Other income was $57 million in the first six months of 2024, compared with $40 million in the year-ago period. In the first six months of 2024, there was an $11 million increase in third-party servicing fees from the year-ago period. The increase in third-party servicing fees was due to an additional $4.7 billion of loans that we sold during the past year where we continue to service on behalf of the owners of the loans. There was also a $3 million increase in early withdrawal penalty fee income compared with the year-ago period, which was related to a health savings account provider who redeemed its deposits early and paid an early withdrawal penalty in the first quarter of 2024.
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 full principal and interest repayment status. The amount of loans in full principal and interest repayment status in our Private Education Loans held for investment portfolio at March 31, 2024 decreased by 7.7 percent compared with March 31, 2023, and now totals 40 percent of our Private Education Loans held for investment portfolio at March 31, 2024. The balance of loans held for investment in full principal and interest repayment status was affected in 2023 and in the first quarter of 2024 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 full principal and interest repayment status. The amount of loans in full principal and interest repayment status in our Private Education Loans held for investment portfolio at June 30, 2024 decreased by 2.6 percent compared with June 30, 2023, totaling 42 percent of our Private Education Loans held for investment portfolio at June 30, 2024. The balance of loans held for investment in full principal and interest repayment status was affected in 2023 and in the first six months of 2024 by loan sales.
Previous wording
“Loan consolidations to third parties” for the three months ended March 31, 2024 total 2.6 percent of our Private Education Loans held for investment portfolio in full principal and interest repayment status at March 31, 2024, or 1.0 percent of our total Private Education Loans held for investment portfolio at March 31, 2024, compared with the year-ago period of 3.4 percent of our Private Education Loans held for investment portfolio in full principal and interest repayment status, or 1.4 percent of our total Private Education Loans held for investment portfolio, respectively. The decrease in consolidations is attributable to higher interest rates in 2024 that made it less competitive for consolidators. 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, 2024 total 2.3 percent of our Private Education Loans held for investment portfolio in full principal and interest repayment status at June 30, 2024, or 1.0 percent of our total Private Education Loans held for investment portfolio at June 30, 2024, compared with the year-ago period of 2.7 percent of our Private Education Loans held for investment portfolio in full principal and interest repayment status, or 1.1 percent of our total Private Education Loans held for investment portfolio, respectively. The decrease in consolidations is attributable to higher interest rates in 2024 that made it less competitive for consolidators. 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, 2024, the Graduate Loan originations include $11.7 million of Smart Option Loans where the student was in a graduate status. For the three months ended March 31, 2023, the Graduate Loan originations include $10.4 million of Smart Option Loans where the student was in a graduate status.
Current wording
(2) For the three months ended June 30, 2024, the Graduate Loan originations include $6.6 million of Smart Option Loans where the student was in a graduate status. For the three months ended June 30, 2023, the Graduate Loan originations include $4.5 million of Smart Option Loans where the student was in a graduate status. For the six months ended June 30, 2024, the Graduate Loan originations include $18.3 million of Smart Option Loans where the student was in a graduate status. For the six months ended June 30, 2023, the Graduate Loan originations include $14.9 million of Smart Option Loans where the student was in a graduate status.
Previous wording
Private Education Loans held for investment in full principal and interest repayment status were 40 percent of our total Private Education Loans held for investment portfolio at March 31, 2024, compared with 41 percent at March 31, 2023.
Current wording
Private Education Loans held for investment in full principal and interest repayment status were 42 percent of our total Private Education Loans held for investment portfolio at June 30, 2024, compared with 43 percent at June 30, 2023.
Previous wording
The table below presents our Private Education Loans held for investment portfolio delinquency trends. Loans in repayment include loans making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period (but, for purposes of the following table, do not include those loans while they are in forbearance).
Current wording
The table below presents our Private Education Loans held for investment portfolio delinquency trends. Loans in repayment include loans making interest only or fixed payments, as well as loans that have entered full principal and
Previous wording
(4)This metric excludes loans in a loan modification qualifying period, which at March 31, 2024 and 2023, totaled approximately $214 million and $81 million, respectively. When giving a customer facing financial difficulty an interest rate reduction under our programs, we evaluate their ability to pay and provide customized repayment terms based upon their financial condition. As part of demonstrating the ability and willingness to pay, the customer must make three consecutive monthly payments at the reduced payment to qualify for the program. After successfully completing the qualifying period (if eligible), borrowers will have their interest rate reduced, term extended and be brought current, consistent with established loan program servicing policies and procedures.
Current wording
(4)This metric excludes loans in a loan modification qualifying period, which at June 30, 2024 and 2023, totaled approximately $169 million and $77 million, respectively. When giving a customer facing financial difficulty an interest rate reduction under our programs, we evaluate their ability to pay and provide customized repayment terms based upon their financial condition. As part of demonstrating the ability and willingness to pay, the customer must make three consecutive monthly payments at the reduced payment to qualify for the program. After successfully completing the qualifying period (if eligible), borrowers will have their interest rate reduced, term extended and, if re-age eligible, be brought current, consistent with established loan program servicing policies and procedures.
Previous wording
(5)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 $243 million and $59 million at March 31, 2024 and 2023, 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 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 $115 million and $30 million at June 30, 2024 and 2023, respectively. See “Use of Forbearance and Rate Modifications as a Private Education Loan Collection Tool” below for additional details.
Previous wording
(6)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) 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) were approximately $145 million and $162 million at March 31, 2024 and 2023, respectively. See “Use of Forbearance and Rate Modifications as a Private Education Loan Collection Tool” below for additional details.
Current wording
(6)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) 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) were approximately $145 million and $154 million at June 30, 2024 and 2023, 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 remained unchanged at 3.4 percent at March 31, 2024 and March 31, 2023. Delinquencies, excluding those loans within a loan modification qualifying period, as a percentage of Private Education Loans (held for investment) in repayment decreased to 2.7 percent at March 31, 2024 from 3.1 percent at March 31, 2023. The percentage of Private Education Loans in hardship and other forbearances (excluding loans in an extended grace period) remained unchanged at 1.0 percent at March 31, 2024 and March 31, 2023. 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 Rate Modifications as a Private Education Loan Collection Tool” in the 2023 Form 10-K.
Current wording
Delinquencies as a percentage of Private Education Loans (held for investment) in repayment decreased to 3.3 percent at June 30, 2024 from 3.7 percent at June 30, 2023. Delinquencies, excluding those loans within a loan modification qualifying period, as a percentage of Private Education Loans (held for investment) in repayment decreased to 2.8 percent at June 30, 2024 from 3.3 percent percent at June 30, 2023. The percentage of Private Education Loans in hardship and other forbearances (excluding loans in an extended grace period) increased to 0.8 percent at June 30, 2024 from 0.2 percent at June 30, 2023. 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 Rate Modifications as a Private Education Loan Collection Tool” in the 2023 Form 10-K.
Previous wording
Management continually monitors our credit administration practices and may periodically modify these practices based upon performance, industry conventions, and/or regulatory feedback. In light of these considerations, we previously announced certain changes to our credit administration practices, including the imposition of limits on the number of forbearance months granted consecutively and the number of times certain extended or reduced repayment alternatives may be granted.
Current wording
Management continually monitors our credit administration practices, looking for opportunities to enhance and streamline, and may periodically modify these practices based upon performance, industry conventions, and/or regulatory feedback.
Previous wording
We also offer rate and term modifications to customers experiencing more severe hardship. In the fourth quarter of 2023, we developed additional modification programs tailored to the financial condition of individual borrowers. Pursuant to these additional modification programs, for our borrowers experiencing the most severe financial conditions, we currently may reduce the contractual interest rate on a loan to as low as 2 percent for the remaining life of the loan and also permanently extend the final maturity of the loan. Other borrowers experiencing severe hardship may not require as much assistance, however, given their circumstances. In those instances, we may reduce the contractual interest rate on a loan to a rate greater than 2 percent, and up to 8 percent, for a temporary period of two to four years, and in some instances may also permanently extend the final maturity of the loan.
Current wording
SLM CORPORATION 73 currently may reduce the contractual interest rate on a loan to as low as 2 percent for the remaining life of the loan and also permanently extend the final maturity of the loan. Other borrowers experiencing severe hardship may not require as much assistance, however, given their circumstances. In those instances, we may reduce the contractual interest rate on a loan to a rate greater than 2 percent, and up to 8 percent, for a temporary period of two to four years, and in some instances may also permanently extend the final maturity of the loan.
Previous wording
When we give a borrower facing financial difficulty an interest rate reduction under our programs, we evaluate their ability to pay and provide customized repayment terms based upon their financial condition. As part of demonstrating the ability and willingness to pay, the customer must make three consecutive monthly payments at the reduced payment to qualify for the program. We believe by tailoring the modification programs to the borrower’s current financial condition and not having a one size fits all approach, we increase the likelihood the borrower will be able to make the modified payments and avoid default. This approach of giving different interest rate reductions to different borrowers experiencing more severe hardship also helps us better manage the overall assistance we provide to borrowers. We currently limit the granting of a permanent extension of the final maturity date of a loan under our loan modification programs to one time over the life of the loan. We also currently permit two consecutive rate reductions so long as the borrower qualifies and makes three consecutive monthly payments at the reduced payment in connection with each rate reduction. We also now limit the number of interest rate reductions to twice over the life of the loan.
Current wording
Under our programs, we limit the granting of a permanent extension of the final maturity date of a loan to one time over the life of the loan, and limit the number of interest rate reductions to twice over the life of the loan. Where appropriate, we will permit two consecutive rate reductions so long as the borrower qualifies. We believe by tailoring the modification programs to the borrower’s current financial condition and not having a one size fits all approach, we increase the likelihood the borrower will be able to make the modified payments and avoid default. This approach of giving different interest rate reductions to different borrowers experiencing more severe hardship also helps us better manage the overall assistance we provide to borrowers.
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, 2024, for Private Education Loans (held for investment) that have been in active repayment status for fewer than 25 months, loans in forbearance status as a percentage of all loans in repayment and forbearance were 1.9 percent.
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, 2024, for Private Education Loans (held for investment) that have been in active repayment status for fewer than 25 months, loans in forbearance status as a percentage of all loans in repayment and forbearance were 1.3 percent. At June 30, 2024, approximately 74 percent of our Private Education Loans (held for investment) in forbearance status have been in active repayment status fewer than 25 months.
Previous wording
(1)The allowance for uncollectible interest at March 31, 2024 and 2023 represents the expected losses related to the portion of accrued interest receivable on those loans that are in repayment (at March 31, 2024 and 2023, relates to $141 million and $154 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 ($1.2 billion and $1.2 billion, at March 31, 2024 and 2023, respectively) is reserved in the allowance for credit losses. The accrued interest receivable for the loans delinquent 90 days or greater includes $6.7 million and $6.3 million of accrued interest receivable on those loans that are in repayment that is/was not expected to be capitalized and $0.5 million and $0.4 million that is/was expected to be capitalized, at March 31, 2024 and 2023, respectively.
Current wording
(1)The allowance for uncollectible interest at June 30, 2024 and 2023 represents the expected losses related to the portion of accrued interest receivable on those loans that are in repayment (at June 30, 2024 and 2023, relates to $136 million and $139 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 ($1.2 billion and $1.1 billion, at June 30, 2024 and 2023, respectively) is reserved in the allowance for credit losses. The accrued interest receivable for the loans delinquent 90 days or greater includes $5.8 million and $6.5 million of accrued interest receivable on those loans that are in repayment that is/was not expected to be capitalized and $0.8 million and $0.5 million that is/was expected to be capitalized, at June 30, 2024 and 2023, respectively.
Previous wording
(2)The allowance for uncollectible interest at December 31, 2023 represents the expected losses related to the portion of accrued interest receivable on those loans in repayment ($151 million of accrued interest receivable) that was not expected to be capitalized. The accrued interest receivable that was expected to be capitalized ($1.2 billion) was reserved in the allowance for credit losses. The accrued interest receivable for the loans delinquent 90 days or greater includes $7.7 million of accrued interest receivable on those loans that are in repayment that is not expected to be capitalized and $0.6 million that is expected to be capitalized.
Current wording
(2)The allowance for uncollectible interest at December 31, 2023 represents the expected losses related to the portion of accrued interest receivable on those loans in repayment ($151 million of accrued interest receivable) that was not expected to be capitalized. The accrued interest receivable that was expected to be capitalized ($1.2 billion) was reserved in the allowance for credit losses. The accrued interest receivable for the loans delinquent 90 days or greater includes $7.7 million of accrued interest receivable on those loans that are in repayment that was not expected to be capitalized and $0.6 million that was expected to be capitalized.
Previous wording
At March 31, 2024 and December 31, 2023, our sources of liquidity included liquid investments with unrealized losses of $134.7 million and $128.9 million, respectively. It is our policy to manage operations so liquidity needs are fully satisfied through normal operations to avoid unplanned loan or liquid investment sales under all but the most dire emergency conditions. Our liquidity management is governed by policies approved by our Board of Directors. Oversight of these policies is performed in the Asset and Liability Committee, a management-level committee. These policies take into account 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, 2024 and December 31, 2023, our sources of liquidity included liquid investments with unrealized losses of $129.3 million and $128.9 million, respectively. It is our policy to manage operations so liquidity needs are fully satisfied through normal operations to avoid unplanned loan or liquid investment sales under all but the most dire emergency conditions. Our liquidity management is governed by policies approved by our Board of Directors. Oversight of these policies is performed in the Asset and Liability Committee, a management-level committee. These policies take into account 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 the markets for bank deposits 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 marketplace. 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 as well as specific stresses that test the resiliency of our balance sheet. As the Bank has grown, we have improved our liquidity stress testing practices to align more closely with the industry, which resulted in our adopting increased liquidity requirements. Beginning in the second quarter of 2019, we began to increase our liquidity levels by increasing cash and marketable investments held as part of our ongoing efforts to enhance our ability to maintain a strong risk management position. By early 2020 and continuing through the first quarter of 2024, we held a significant liquidity buffer of cash and securities, which we expect to maintain through 2024. 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 the markets for bank deposits 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 marketplace. 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 as well as specific stresses that test the resiliency of our balance sheet. We hold a significant liquidity buffer of cash and securities, which we expect to maintain through 2024. Due to the seasonal nature of our business, our liquidity levels will likely vary from quarter to quarter.
Previous wording
The following table summarizes total deposits.
Current wording
The following table summarizes total deposits at June 30, 2024 and December 31, 2023.
Previous wording
Our total deposits of $20.9 billion were comprised of $10.3 billion in brokered deposits and $10.6 billion in retail and other deposits at March 31, 2024, compared to total deposits of $21.7 billion, which were comprised of $10.3 billion in brokered deposits and $11.4 billion in retail and other deposits, at December 31, 2023.
Current wording
Our total deposits of $20.7 billion were comprised of $10.0 billion in brokered deposits and $10.7 billion in retail and other deposits at June 30, 2024, compared to total deposits of $21.7 billion, which were comprised of $10.3 billion in brokered deposits and $11.4 billion in retail and other deposits, at December 31, 2023.
Previous wording
Interest-bearing deposits as of March 31, 2024 and December 31, 2023 consisted of retail and brokered non-maturity savings deposits, retail and brokered non-maturity MMDAs, and retail and brokered CDs. Interest-bearing deposits also include deposits from Educational 529 and Health Savings plans that diversify our funding sources and that we consider to be core. These and other large omnibus accounts, aggregating the deposits of many individual depositors, represented $6.8 billion and $7.6 billion of our deposit total as of March 31, 2024 and December 31, 2023, respectively. The omnibus accounts are structured in such a way that entitles the individual depositor pass-through deposit insurance (subject to FDIC rules and limitations), and the majority of these deposits have contractual minimum balances and maturity terms.
Current wording
Interest-bearing deposits as of June 30, 2024 and December 31, 2023 consisted of retail and brokered non-maturity savings deposits, retail and brokered non-maturity MMDAs, and retail and brokered CDs. Interest-bearing deposits also include deposits from Educational 529 and Health Savings plans that diversify our funding sources and that we consider to be core. These and other large omnibus accounts, aggregating the deposits of many individual depositors, represented $6.9 billion and $7.6 billion of our deposit total as of June 30, 2024 and December 31, 2023, respectively. The omnibus accounts are structured in such a way that entitles the individual depositor pass-through deposit insurance (subject to FDIC rules and limitations), and the majority of these deposits have contractual minimum balances and maturity terms.
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 $3 million and $3 million in the three months ended March 31, 2024 and 2023, respectively. There were no fees paid to third-party brokers related to brokered CDs for the three months ended March 31, 2024 and $3 million in fees were paid for the three months ended March 31, 2023.
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 and $3 million in the three months ended June 30, 2024 and 2023, respectively, and placement fee expense of $5 million and $6 million in the six months ended June 30, 2024 and 2023, respectively. There were no fees paid to third-party brokers related to brokered CDs for the three months ended June 30, 2024 and June 30, 2023. There were no fees paid to third-party brokers related to brokered CDs for the six months ended June 30, 2024. Fees paid to third-party brokers related to brokered CDs were $3 million for the six months June 30, 2023.
Previous wording
As of March 31, 2024 and December 31, 2023, there were $492 million and $478 million, respectively, of deposits exceeding FDIC insurance limits. Accrued interest on deposits was $67 million and $91 million at March 31, 2024 and December 31, 2023, respectively.
Current wording
As of June 30, 2024 and December 31, 2023, there were $495 million and $478 million, respectively, of deposits exceeding FDIC insurance limits. Accrued interest on deposits was $85 million and $91 million at June 30, 2024 and December 31, 2023, respectively.
Previous wording
Our investment portfolio is primarily comprised of a small portfolio of mortgage-backed securities issued by government agencies and government-sponsored enterprises that are purchased to meet CRA targets. Additionally, our investing activity is governed by Board-approved limits on the amount that is allowed to be invested with any one issuer based on the credit rating of the issuer, further minimizing our counterparty exposure. Counterparty credit risk is considered when valuing investments and considering impairment.
Current wording
Our investment portfolio is primarily comprised of a small portfolio of mortgage-backed securities issued by government agencies and government-sponsored enterprises that are purchased to meet CRA targets. Additionally, our investing activity is governed by Board-approved limits on the amount that is allowed to be invested with any one issuer
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, 2024, $1.5 billion notional of our derivative contracts were cleared on the CME and $0.1 billion were cleared on the LCH. The derivative contracts cleared through the CME and LCH represent 92.2 percent and 7.8 percent, respectively, of our total notional derivative contracts of $1.6 billion at March 31, 2024.
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, 2024, $1.3 billion notional of our derivative contracts were cleared on the CME and $0.1 billion were cleared on the LCH. The derivative contracts cleared through the CME and LCH represent 92.6 percent and 7.4 percent, respectively, of our total notional derivative contracts of $1.4 billion at June 30, 2024.
Previous wording
For derivatives cleared through the CME and LCH, the net gain (loss) position includes the variation margin amounts as settlement of the derivative and not collateral against the fair value of the derivative. The amount of variation margin included as settlement as of March 31, 2024 was $(39) million and $(3) million for the CME and LCH, respectively. Changes in fair value for derivatives not designated as hedging instruments are presented as realized gains (losses).
Current wording
For derivatives cleared through the CME and LCH, the net gain (loss) position includes the variation margin amounts as settlement of the derivative and not collateral against the fair value of the derivative. The amount of variation margin included as settlement as of June 30, 2024 was $(30) million and $(2) million for the CME and LCH, respectively. Changes in fair value for derivatives not designated as hedging instruments are presented as realized gains (losses).
Previous wording
Our exposure to the counterparty is limited to the value of the derivative contracts in a gain position less any collateral held and plus any collateral posted. When there is a net negative exposure, we consider our exposure to the counterparty to be zero. At March 31, 2024 and December 31, 2023, we had a net positive exposure (derivative gain/loss positions to us, less collateral held by us and plus collateral posted with counterparties) related to derivatives of $8 million and $9 million, respectively.
Current wording
Our exposure to the counterparty is limited to the value of the derivative contracts in a gain position less any collateral held and plus any collateral posted. When there is a net negative exposure, we consider our exposure to the counterparty to be zero. At June 30, 2024 and December 31, 2023, we had a net positive exposure (derivative gain/loss positions to us, less collateral held by us and plus collateral posted with counterparties) related to derivatives of $6 million and $9 million, respectively.
Previous wording
The Bank’s required and actual regulatory capital amounts and ratios, including applicable capital conservation buffers, under U.S. Basel III are shown in the following table. The following capital amounts and ratios are based upon the Bank’s average assets and risk-weighted assets, as indicated. The Bank has elected to exclude accumulated other comprehensive income related to both available-for-sale investments and swap valuations from Common Equity Tier 1 Capital. At March 31, 2024 and December 31, 2023, the unrealized loss on available-for-sale investments included in other comprehensive income totaled $115 million and $115 million, net of tax of $37 million and $37 million, respectively. The capital ratios would remain above the well capitalized thresholds, including applicable capital conservation buffers, if the unrealized loss became fully recognized into capital.
Current wording
The Bank’s required and actual regulatory capital amounts and ratios, including applicable capital conservation buffers, under U.S. Basel III are shown in the following table. The following capital amounts and ratios are based upon the Bank’s average assets and risk-weighted assets, as indicated. The Bank has elected to exclude accumulated other comprehensive income related to both available-for-sale investments and swap valuations from Common Equity Tier 1 Capital. At June 30, 2024 and December 31, 2023, the unrealized loss on available-for-sale investments included in other comprehensive income totaled $110 million and $115 million, net of tax of $35 million and $37 million, respectively. The capital ratios would remain above the well capitalized thresholds, including applicable capital conservation buffers, if the unrealized loss became fully recognized into capital.
Showing the first 40 of 45 pairs. Open the source sections for the rest.
Rearranged current paragraphs (13)
Current report — wording carried from elsewhere
•Provision for credit losses in the current quarter was $17 million, compared with $18 million in the year-ago quarter. During the second quarter of 2024, the provision for credit losses was primarily affected by $103 million negative provisions resulting from the $1.59 billion Private Education Loan sales during the quarter and an improved economic outlook, offset by new loan commitments, net of expired commitments. In the year-ago quarter, the provision for credit losses was primarily affected by negative provisions resulting from the Private Education Loan sales during the year-ago quarter, and an increase in estimated recovery rates, which were offset by new loan commitments, net of expired commitments, changes in economic outlook, and management overlays.
Current report — wording carried from elsewhere
•Other income was $28 million in the second quarter of 2024, compared with $20 million in the year-ago quarter. The increase was primarily driven by a $6 million increase in third-party servicing fees compared to the year-ago quarter. The increase in third-party servicing fees was due to an additional $4.7 billion of loans that we sold during the past year where we continue to service on behalf of the owners of the loans.
Current report — wording carried from elsewhere
For the six months ended June 30, 2024, net income attributable to common stock was $533 million, or $2.39 diluted earnings per common share, compared with net income attributable to common stock of $375 million, or $1.56 diluted earnings per common share, for the six months ended June 30, 2023.
Current report — wording carried from elsewhere
The primary drivers of changes in net income for the first six months of 2024 compared with the first six months of 2023 are as follows:
Current report — wording carried from elsewhere
•Net interest income decreased by $33 million in the first six months of 2024 compared with the year-ago period primarily due to an 18-basis point decrease in our net interest margin and a $345 million decrease in our average Private Education Loans and FFELP Loans outstanding. Our net interest margin decreased in the current period from the year-ago period primarily because our cost of funds increased more than the yields on our interest-earning assets. This occurs because as interest rates change, changes in the cost of our interest-bearing liabilities tend to lag compared to changes in the yields on our interest-earning assets. In a rising interest rate environment, as we experienced in 2022 and the first part of 2023, our variable-rate interest earning assets repriced faster than our cost of funds. As such, we saw an expansion in our net interest margin throughout most of 2023. As interest rates stabilized in the latter half of 2023 and into the first half of 2024, our cost of funds increased faster than our interest-earning assets yields and reduced our net interest margin.
Current report — wording carried from elsewhere
•First-half 2024 total operating expenses were $318 million, compared with $309 million in the year-ago period. The increase in total operating expenses was primarily driven by higher personnel costs, higher initiative spending, and higher FDIC fees.
Current report — wording carried from elsewhere
•During the first six months of 2024, we recorded $3 million in amortization of acquired intangible assets, down from $5 million in the year-ago period. The decrease is a result of the impairment write-down of the Nitro trade name intangible asset taken in the fourth quarter of 2023. For additional information, see Notes to Consolidated Financial Statements, Note 6, “Goodwill and Acquired Intangible Assets” in this Form 10-Q.
Current report — wording carried from elsewhere
(1) See Notes to Consolidated Financial Statements, Note 5, “Unfunded Loan Commitments,” in this Form 10-Q for a summary of the activity in the allowance for and balance of unfunded loan commitments, respectively.
Current report — wording carried from elsewhere
(2) Below is a reconciliation of the provision for credit losses reported in the consolidated statements of income. When a new loan commitment is made, we record the CECL allowance as a liability for unfunded commitments by recording a provision for credit losses. When the loan is funded, we transfer that liability to the allowance for credit losses.
Current report — wording carried from elsewhere
SLM CORPORATION 69 interest repayment status after any applicable grace period (but, for purposes of the following table, do not include those loans while they are in forbearance).
Current report — wording carried from elsewhere
We also offer rate and term modifications to customers experiencing more severe hardship. In the fourth quarter of 2023, we developed additional modification programs tailored to the financial condition of individual borrowers. Pursuant to these additional modification programs, for our borrowers experiencing the most severe financial conditions, we
Current report — wording carried from elsewhere
78 SLM CORPORATION based on the credit rating of the issuer, further minimizing our counterparty exposure. Counterparty credit risk is considered when valuing investments and considering impairment.
Current report — wording carried from elsewhere
SLM CORPORATION 81 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 its share repurchase programs.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
At March 31, 2024, approximately 77 percent of our Private Education Loans (held for investment) in forbearance status have been in active repayment status fewer than 25 months.
Previous report — wording carried elsewhere
Interest-bearing deposits as of March 31, 2024 and December 31, 2023 consisted of retail and brokered non-maturity savings deposits, retail and brokered non-maturity MMDAs, and retail and brokered CDs. Interest-bearing deposits also include deposits from Educational 529 and Health Savings plans that diversify our funding sources and that we consider to be core. These and other large omnibus accounts, aggregating the deposits of many individual depositors, represented $6.8 billion and $7.6 billion of our deposit total as of March 31, 2024 and December 31, 2023, respectively. The omnibus accounts are structured in such a way that entitles the individual depositor pass-through deposit insurance (subject to FDIC rules and limitations), and the majority of these deposits have contractual minimum balances and maturity terms.