SLM Corp

We present the results of operations below on a consolidated basis in accordance with GAAP.

GAAP Consolidated Statements of Income

Note: Due to rounding, amounts in this table may not sum to totals.

2024 Form 10-K — SLM CORPORATION 48

GAAP Consolidated Earnings Summary

Year Ended December 31, 2024 Compared with Year Ended December 31, 2023

For the year ended December 31, 2024, net income was $608 million, or $2.68 diluted earnings per common share, compared with net income of $581 million, or $2.41 diluted earnings per common share, for the year ended December 31, 2023. The year-over-year increase was primarily attributable to an increase in gains on sales of loans, net and other income and a decrease in total non-interest expense, which were offset by a decrease in total net interest income and an increase in provisions for credit losses.

The primary contributors to the drivers of change in net income for the current year period compared with the year-ago period are as follows:

•Net interest income in 2024 decreased by $82 million compared with the year-ago period primarily due to a 31-basis point decrease in our net interest margin and an $79 million decrease in 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. 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.

•Provision for credit losses in 2024 was $409 million, compared with $345 million in the year-ago period. During 2024, the increase in the provision for credit losses was primarily affected by new loan commitments, net of expired commitments, and changes in recovery rates. These drivers were offset by $236 million in negative provisions resulting from the approximately $3.69 billion Private Education Loan sales during 2024, an improved economic outlook, and changes in management overlays. In the year-ago period, the provision for credit losses was primarily affected by new loan commitments, net of expired commitments, slower prepayment rates, management overlays, and changes in economic outlook, which were partially offset by $205 million in negative provisions recorded as a result of the approximately $3.15 billion in Private Education Loan sales during 2023 and an increase in recovery rates (as the result of a 2023 change in our defaulted loan recovery process).

•Gains on sales of loans, net, were $255 million in 2024, compared with $160 million in the year-ago period. The increase in gains on sales of loans was primarily the result of selling approximately $3.69 billion of Private Education Loans in 2024, compared with the sale of approximately $3.15 billion of Private Education Loans in the year-ago period. Additionally, we received lower sales premiums in 2023 as compared to 2024 due to movement in market interest rates in 2023. We also sold our Credit Card loan portfolio in May 2023 and recorded a $4 million loss on the sale in 2023.

•Gains (losses) on securities, net, were less than $1 million in gains in 2024, compared with $3 million in gains in the year-ago period. The decrease from the year-ago period was due to the change in mark-to-fair value of our trading investments.

•Other income was $113 million in 2024, compared with $84 million in the year-ago period. The increase in other income compared with the year-ago period was primarily the result of a $21 million increase in third-party servicing fees from the year-ago period. The increase in third-party servicing fees was primarily due to an additional approximately $3.7 billion of sold loans that 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 in 2024 compared with the year-ago period, which was related to a health savings account provider that redeemed its deposits early and paid an early withdrawal penalty in the first quarter of 2024.

•For the year ended December 31, 2024, total operating expenses were $637 million, compared with $619 million in the year-ago period. The increase in total operating expenses was primarily driven by higher personnel costs, increased marketing costs, and higher FDIC assessment fees.

•In 2024, we recorded $5 million in impairment and amortization of acquired intangible assets, compared with $66 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 8, “Goodwill and Acquired Intangible Assets” in this Form 10-K.

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•Income tax expense for the year ended December 31, 2024 was $190 million, compared with $197 million in the year-ago period. The effective tax rate decreased in 2024 to 23.8 percent from 25.3 percent in the year-ago period. The decrease in the effective rate for 2024 was primarily attributable to a decrease in state income taxes.

Year Ended December 31, 2023 Compared with Year Ended December 31, 2022

For the year ended December 31, 2023, net income was $581 million, or $2.41 diluted earnings per common share, compared with net income of $469 million, or $1.76 diluted earnings per common share, for the year ended December 31, 2022. The year-over-year increase was primarily attributable to less provisions for credit losses and an increase in total net interest income and other income, which were offset by decreases in gains on sales of loans, net, and higher operating expenses.

The primary contributors to each of the identified drivers of change in net income for 2023 compared with 2022 are as follows:

•Net interest income in 2023 increased by $73 million compared with 2022 primarily due to a $375 million increase in average Private Education Loans and FFELP Loans outstanding and a 19-basis point increase in our net interest margin. Our net interest margin increased in 2023 from 2022 because of the dramatic increase in interest rates in 2023. When interest rates rise, the yield on our interest-earning assets typically increases faster than our cost of funds. As such, as rates increased in 2023, we saw our net interest margin increase.

•Provision for credit losses in 2023 was $345 million, compared with $633 million in 2022. During 2023, the provision for credit losses was primarily affected by new loan commitments, net of expired commitments, slower prepayment rates, management overlays, and changes in economic outlook, which were partially offset by $205 million in negative provisions recorded as a result of the approximately $3.15 billion in Private Education Loan sales during 2023 and an increase in recovery rates (as the result of a change in our defaulted loan recovery process). In 2022, the provision for credit losses was primarily affected by new loan commitments made during the period, slower than expected prepayment rates, and additional management overlays, which were partially offset by negative provisions recorded related to approximately $3.34 billion in Private Education Loans sold in 2022 and the adoption of a new loss model that included a reduction in the long-term estimate of losses after the reasonable and supportable period. Management overlays increased in 2022 due to several factors, including additional provisions for our expectation of higher future loan losses related to the previously announced credit administration practices changes we implemented in 2021, “gap year” loans, a shortage and lack of tenured collections staff, and other operational challenges we experienced in 2022.

•Gains on sales of loans, net, were $160 million in 2023, compared with $328 million in 2022. The decrease in gains on sales of loans was primarily the result of selling approximately $3.15 billion of Private Education Loans in 2023, compared with the sale of approximately $3.34 billion of Private Education Loans in 2022, and lower sales premiums received in 2023 compared to 2022, which were attributable to higher interest rates in 2023. We also sold our Credit Card loan portfolio in May 2023 and recorded a $4 million loss on the sale in 2023.

•Gains (losses) on securities, net, were $3 million in gains in 2023, compared with a net loss of $60 million in 2022. The gains on securities, net, in 2023 were related to the changes in mark-to-fair value of our trading investments. During 2022, we determined that an investment in non-marketable equity securities was impaired. As such, we wrote down the value by $60 million in 2022 based upon an estimate of the value of these securities.

•Other income was $84 million in 2023, compared with $67 million in 2022. The increase in other income compared with 2022 was primarily the result of a $13 million increase in third-party servicing fees from 2022 and a $2 million increase in Private Education Loan late fees compared with 2022.

•For the year ended December 31, 2023, total operating expenses were $619 million, compared with $551 million in 2022. The increase in total operating expenses was primarily driven by higher personnel costs, initiative spending, and higher FDIC assessment fees, which were partially offset by lower Credit Card portfolio expenses as a result of the sale of the portfolio.

•In 2023, we recorded $66 million in impairment and amortization of acquired intangible assets, compared with $8 million in 2022. During the fourth quarter of 2023, we recorded an impairment of $56 million as a result of a write-down of the value of the Nitro trade name and trademarks intangible assets. This write-down occurred because we planned to discontinue the use of the Nitro trade name and trademarks in 2024 and transition the related branding to the Sallie and Sallie Mae brands and platforms. In 2023, we recorded $10 million in amortization expense of acquired intangible assets, compared to $8 million in 2022. The increase in amortization expense was related to our acquisition of several key assets of Scholly in the third quarter of 2023. For additional

2024 Form 10-K — SLM CORPORATION 50 information, see Notes to Consolidated Financial Statements, Note 8, “Goodwill and Acquired Intangible Assets” in this Form 10-K.

•Income tax expense for the year ended December 31, 2023 was $197 million, compared with $162 million in 2022. The effective tax rate decreased in 2023 to 25.3 percent from 25.6 percent in 2022. The decrease in the effective rate for 2023 was primarily attributable to an increase in tax credits utilized in the year.

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