SLM Corp - Quarter Report: 2024 June (Form 10-Q)

Issuance of common shares— — — — ()— ()Stock-based compensation expense— — — — — — — — Common stock repurchased— — ()()— — — — — ()()Shares repurchased related to employee stock-based compensation plans— — ()()— — — — — ()()Balance at June 30, 2023 () $ $ $ $()$ $()$

See accompanying notes to consolidated financial statements.

6 SLM CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

Common Stock Shares

(In thousands, except share and per share amounts)

Preferred Stock Shares

Issued

Treasury

Outstanding

Preferred Stock

Common Stock

Additional Paid-In Capital

Accumulated
Other
Comprehensive
Loss

Retained Earnings

Treasury Stock

Total Equity

Balance at March 31, 2024

()

Net income

—

Other comprehensive loss, net of tax

—

()

—

()

Total comprehensive income

—

Cash dividends declared:

Common stock ($ per share)

—

()

—

()

Preferred Stock, Series B ($ per share)

—

()

—

()

Issuance of common shares

—

()

—

Stock-based compensation expense

—

Common stock repurchased

—

()

—

()

Shares repurchased related to employee stock-based compensation plans

—

()

—

()

Balance at June 30, 2024

()

See accompanying notes to consolidated financial statements.

SLM CORPORATION 7

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

Common Stock Shares

(In thousands, except share and per share amounts)

Preferred Stock Shares

Issued

Treasury

Outstanding

Preferred Stock

Common Stock

Additional Paid-In Capital

Accumulated
Other
Comprehensive
Loss

Retained Earnings

Treasury Stock

Total Equity

Balance at December 31, 2022

()

Net income

—

Other comprehensive loss, net of tax

—

Total comprehensive income

—

Cash dividends declared:

Common stock ($ per share)

—

()

—

()

Preferred Stock, Series B ($ per share)

—

()

—

()

Issuance of common shares

—

()

—

()

Stock-based compensation expense

—

Common stock repurchased

—

()

—

()

Shares repurchased related to employee stock-based compensation plans

—

()

—

()

Balance at June 30, 2023

()

See accompanying notes to consolidated financial statements.

8 SLM CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

Common Stock Shares

(In thousands, except share and per share amounts)

Preferred Stock Shares

Issued

Treasury

Outstanding

Preferred Stock

Common Stock

Additional Paid-In Capital

Accumulated
Other
Comprehensive
Loss

Retained Earnings

Treasury Stock

Total Equity

Balance at December 31, 2023

()

Net income

—

Other comprehensive loss, net of tax

—

()

—

()

Total comprehensive income

—

Cash dividends declared:

Common stock ($ per share)

—

()

—

()

Preferred Stock, Series B ($ per share)

—

()

—

()

Fees paid on Secured Borrowing Facility

()

Common stock dividends paid

()

Preferred stock dividends paid

()

Common stock repurchased

()

Total net cash used in financing activities

()

Net decrease in cash, cash equivalents and restricted cash

()

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

Cash disbursements made for:

10 SLM CORPORATION

Interest

Income taxes paid

Income taxes refunded

()

Reconciliation of the Consolidated Statements of Cash Flows to the Consolidated Balance Sheets:

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents and restricted cash

See accompanying notes to consolidated financial statements.

SLM CORPORATION 11

12 SLM CORPORATION


1.			Significant Accounting Policies (Continued)

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.

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.

SLM CORPORATION 13

percent vertical risk retention interest (i.e., percent of each class issued in the securitizations). We classify those vertical risk retention interests related to the transactions as available-for-sale investments, except for the interest in the residual classes, which we classify as trading investments recorded at fair value with changes recorded through earnings. At June 30, 2024 and December 31, 2023, we had $ million and $ million, respectively, classified as trading investments.

Available-for-Sale Investments

$ $ $()$ Utah Housing Corporation bonds () U.S. government-sponsored enterprises and Treasuries () Other securities () Total $ $ $ $()$ As of December 31, 2023
(dollars in thousands)Amortized Cost

Allowance for credit losses(1)

Gross Unrealized GainsGross Unrealized LossesEstimated Fair ValueAvailable-for-sale:Mortgage-backed securities$ $ $ $()$ Utah Housing Corporation bonds () U.S. government-sponsored enterprises and Treasuries () Other securities () Total $ $ $ $()$

14 SLM CORPORATION


2.			Investments (Continued)

)$ $()$ $()$ Utah Housing Corporation bonds () () U.S. government-sponsored enterprises and Treasuries () () Other securities() () () Total$()$ $()$ $()$

As of December 31, 2023:

Mortgage-backed securities$()$ $()$ $()$ Utah Housing Corporation bonds () () U.S. government-sponsored enterprises and Treasuries () () Other securities() () () Total$()$ $()$ $()$

At June 30, 2024 and December 31, 2023, of and of , respectively, of our available-for-sale securities were in an unrealized loss position.

Impairment

For available-for-sale securities in an unrealized loss position, we first assess whether we intend to sell, or it is more likely than not that we will be required to sell, the security before recovery of its amortized cost basis. If either of these criteria are met, the security’s amortized cost basis is written down to fair value through net income. For securities in an unrealized loss position that do not meet these criteria, we evaluate whether the decline in fair value has resulted from credit loss or other factors. In making this assessment, we consider the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, adverse conditions specifically related to the security, as well as any guarantees (e.g., guarantees by the U.S. Government) that may be applicable to the security. If this assessment indicates a credit loss exists, the credit-related portion of the loss is recorded as an allowance for losses on the security.

Our investment portfolio contains mortgage-backed securities issued by Ginnie Mae, Fannie Mae, and Freddie Mac, as well as Utah Housing Corporation bonds. We own these securities to meet our requirements under the Community Reinvestment Act (“CRA”). We also invest in other U.S. government-sponsored enterprise securities issued by the Federal Home Loan Banks, Freddie Mac, and the Federal Farm Credit Bank. Our mortgage-backed securities that were issued under Ginnie Mae programs carry a full faith and credit guarantee from the U.S. Government. The remaining mortgage-backed securities in a net loss position carry a principal and interest guarantee by Fannie Mae or Freddie Mac, respectively. Our Treasury and other U.S. government-sponsored enterprise bonds are rated Aaa by Moody’s Investors Service or AA+ by Standard and Poor’s. We have the intent and ability to hold these bonds for a period of time sufficient for the market price to recover to at least the adjusted amortized cost of the security. Based on this qualitative analysis, we have determined that no credit impairment exists.

We periodically sell Private Education Loans through securitization transactions where we are required to retain a percent vertical risk retention interest. We classify the non-residual vertical risk retention interests as available-for-sale investments. We have the intent and ability to hold each of these bonds for a period of time sufficient for the market price to recover to at least the adjusted amortized cost of the security. We expect to receive all contractual cash flows related to these investments and do not consider a credit impairment to exist.

SLM CORPORATION 15


2.			Investments (Continued)

2025 2026 2027 2038 2039 2042 2043 2044 2045 2046 2047 2048 2049 2050 2051 2052 2053 2054 2055 2056 2058 Total$ $

Some of the mortgage-backed securities and a portion of the government securities have been pledged to the Federal Reserve Bank (the “FRB”) as collateral against any advances and accrued interest under the Primary Credit lending program sponsored by the FRB. We had $ million and $ million par value of securities pledged to this borrowing facility at June 30, 2024 and December 31, 2023, respectively, as discussed further in Notes to Consolidated Financial Statements, Note 8, “Borrowings” in this Form 10-Q.

Other Investments

Investments in Non-Marketable Securities

We hold investments in non-marketable securities and account for these investments at cost, less impairment, plus or minus observable price changes of identical or similar securities of the same issuer. Changes in market value are recorded through earnings. Because these are non-marketable securities, we use observable price changes of identical or similar securities of the same issuer, or when observable prices are not available, use market data of similar entities, in determining any changes in the value of the securities. As of June 30, 2024 and December 31, 2023, our total investment in these securities was $ million and $ million, respectively.

16 SLM CORPORATION


2.			Investments (Continued)

million at June 30, 2024 and $ million at December 31, 2023. We are periodically required to provide additional financial support during the investment period. Our liability for these unfunded commitments was $ million at June 30, 2024 and $ million at December 31, 2023.

Related to these investments, we recognized tax credits and other tax benefits through tax expense of $ million at June 30, 2024 and $ million at December 31, 2023. Tax credits and other tax benefits are recognized as part of our annual effective tax rate used to determine tax expense in a given quarter. Accordingly, the portion of a year’s expected tax benefits recognized in any given quarter may differ from percent.

percent and percent, respectively, of all of our Private Education Loans were indexed to SOFR. We provide incentives for customers to include a cosigner on the loan, and the vast majority of Private Education Loans in our portfolio are cosigned. We also encourage customers to make payments while in school.

FFELP Loans are insured as to their principal and accrued interest in the event of default, subject to a risk-sharing level based on the date of loan disbursement. These insurance obligations are supported by contractual rights against the United States. For loans disbursed on or after July 1, 2006, we receive percent reimbursement on all qualifying claims. For loans disbursed after October 1, 1993 and before July 1, 2006, we receive percent reimbursement on all qualifying claims. For loans disbursed prior to October 1, 1993, we receive percent reimbursement on all qualifying claims.

In the first six months of 2024, we recognized $ million in gains from the sale of approximately $ billion of Private Education Loans, including $ billion of principal and $ million in capitalized interest, to unaffiliated third parties. In the first six months of 2023, we recognized $ million in gains from the sale of approximately $ billion of Private Education Loans, including $ billion of principal and $ million in capitalized interest, to an unaffiliated third party. There were VIEs created in the execution of certain of these loan sales; however, based on our consolidation analysis, we are not the primary beneficiary of those VIEs. Those 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 those loans pursuant to applicable servicing agreements executed in connection with the sales. For additional information, see Notes to Consolidated Financial Statements, Note 8, “Borrowings - Unconsolidated VIEs” in this Form 10-Q.

SLM CORPORATION 17


3.			Loans Held for Investment (Continued)

$ Variable-rate Total Private Education Loans, gross Deferred origination costs and unamortized premium/(discount) Allowance for credit losses()()Total Private Education Loans, net FFELP Loans Deferred origination costs and unamortized premium/(discount) Allowance for credit losses()()Total FFELP Loans, net Loans held for investment, net$ $

The estimated weighted average life of education loans in our portfolio was approximately years and years at June 30, 2024 and December 31, 2023, respectively.

%$ %FFELP Loans Total portfolio$ $

))) )


	2024			2023
Six Months Ended June 30, (dollars in thousands)	Average Balance	Weighted Average Interest Rate		Average Balance	Weighted Average Interest Rate
Private Education Loans	$		%	$		%
FFELP Loans

Total()Provisions for credit losses reported in consolidated statements of income$

(3) For the three months ended June 30, 2024, there were no allowance for credit losses, loans, or accrued interest to be capitalized balances that were individually evaluated for impairment.

(4) Loans in repayment include 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 (but, for purposes of the table, do not include those loans while they are in forbearance).

(5) Accrued interest to be capitalized on Private Education Loans only.

(6) Accrued interest to be capitalized on loans in repayment includes interest on loans that are in repayment but have not yet entered into full principal and interest repayment status after any applicable grace period (but, for purposes of the table, does not include the interest on those loans while they are in forbearance).

20 SLM CORPORATION


4.			Allowance for Credit Losses (Continued)

$ $ $

Transfer from unfunded commitment liability(1)

Provisions:Provision for current period () Loan sale reduction to provision () ()

Total provisions(2)

()()()Net charge-offs:Charge-offs()() ()Recoveries () Net charge-offs()() ()Ending Balance$ $ $ $

Allowance(3):

Ending balance: collectively evaluated for impairment$ $ $ $

Loans(3):

))) ) ) ) )Total Provisions for credit losses reported in consolidated statements of income$

(3) For the six months ended June 30, 2023, there were no allowance for credit losses, loans, or accrued interest to be capitalized balances that were individually evaluated for impairment.

(5) Accrued interest to be capitalized on Private Education Loans only.

SLM CORPORATION 23


4.			Allowance for Credit Losses (Continued)

million compared with the year-ago period. During the six months ended June 30, 2024, the provision for credit losses was primarily affected by $ million in negative provisions recorded as a result of the $ billion Private Education Loan sales during the first six months of 2024, 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 $ million in negative provisions recorded as a result of the $ billion Private Education Loan sales during the first six months of 2023 and an increase in recovery rates.

As part of concluding on the adequacy of the allowance for credit losses, we review key allowance and loan metrics. The most significant of these metrics considered are the allowance coverage of net charge-offs ratio; the allowance as a percentage of ending total loans and accrued interest to be capitalized and of ending loans in repayment and accrued interest to be capitalized on loans in repayment; and delinquency and forbearance percentages.

Loan Modifications to Borrowers Experiencing Financial Difficulty

The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical information, which includes losses from modifications of receivables whose borrowers are experiencing financial difficulty. We use a discounted cash flow model to determine the allowance for credit losses. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification.

The effect of most modifications of loans made to borrowers who are experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance. The forecast of expected future cash flows is updated as the loan modifications occur.

We adjust the terms of loans for certain borrowers when we believe such changes will help our customers manage their student loan obligations and achieve better student outcomes, and increase the collectability of the loans. These changes generally take the form of a temporary forbearance of payments, a temporary or permanent interest rate reduction, a temporary or permanent interest rate reduction with a permanent extension of the loan term, and/or a short-term extended repayment alternative. Forbearance is granted prospectively for borrowers who are current in their payments and may be granted retroactively for certain delinquent borrowers.

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

24 SLM CORPORATION


4.			Allowance for Credit Losses (Continued)

days past due as nonperforming. FFELP Loans are at least percent guaranteed as to their principal and accrued interest by the federal government in the event of default and, therefore, we do not deem FFELP Loans as nonperforming from a credit risk perspective at any point in their life cycle prior to claim payment and continue to accrue interest on those loans through the date of claim.

For additional information, see Notes to Consolidated Financial Statements, Note 2, “Significant Accounting Policies —Allowance for Credit Losses,” and Note 7, “Allowance for Credit Losses” in our 2023 Form 10-K.

Under our current forbearance practices, temporary forbearance of payments is generally granted in one-to- increments, for up to months over the life of the loan, with months of positive payment performance by a borrower required between grants (meaning the borrower must make payment in a cumulative amount equivalent to monthly required payments under the loan). See Notes to Consolidated Financial Statements, Note 5, “Loans Held for Investment — Certain Collection Tools - Private Education Loans” in our 2023 Form 10-K. In the first quarter of 2022, we adopted ASU No. 2022-02 (see Notes to Consolidated Financial Statements, Note 2, “Significant Accounting Policies” in our 2023 Form 10-K). Under ASU No. 2022-02, if the debt has been previously restructured, an entity must consider the cumulative effect of past restructurings made within the 12-month period before the current restructuring when determining whether a delay in payment resulting from the current restructuring is insignificant. Due to our current forbearance practices, including the limitations on forbearances offered to borrowers, we do not believe the granting of forbearances will exceed the significance threshold and, therefore, we do not consider the forbearances as loan modifications.

The limitations on granting of forbearances described above apply to hardship forbearances. We offer other administrative forbearances (e.g., death and disability, bankruptcy, military service, disaster forbearance, and in school assistance) that are either required by law (such as by the Servicemembers Civil Relief Act) or are considered separate from our active loss mitigation programs and therefore are not considered to be loan modifications requiring disclosure under ASU No. 2022-02. In addition, we may offer on a limited basis term extensions or rate reductions or a combination of both to borrowers to reduce consolidation activities. For purposes of this disclosure, we do not consider them modifications of loans to borrowers experiencing financial difficulty and they therefore are not included in the tables below.

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 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 percent, and up to percent, for a temporary period of two to , and in some instances may also permanently extend the final maturity of the loan. These new programs are reflected in the tables below.

As part of the additional modification programs that were launched in the fourth quarter of 2023, we also offered for a short period of time a permanent term extension with no interest rate reduction program. This program ended in the fourth quarter of 2023. The amortized cost of this program totaled $ million, representing percent of the total Private Education Loan portfolio. This program added a weighted average of years to the life of loans in the program. As of June 30, 2024, $ million of these loans were in a current or deferred status, $ million of these loans were 30-59 days past due, $ million of these loans were 60-89 days past due, and $ million of these loans were 90 days or greater past due. For the three months ended June 30, 2024, there were $ million modified loans1 (with $ million of unpaid principal balance at the time of default) in this program that defaulted within 12 months of receiving the term extension and no loans charged off within the 12 months of receiving the term extension. For the six months ended June 30, 2024, there were $ million modified loans1 (with $ million of unpaid principal balance at the time of default) in this prog

1 Represents period-end amortized cost basis of Private Education Loans as of June 30, 2024.

SLM CORPORATION 25


4.			Allowance for Credit Losses (Continued)

loans charged off within 12 months of receiving the term extension. We define payment default as days past due for purposes of this disclosure. %$ %Total$ %$ %

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

Three Months Ended June 30, 2023

(dollars in thousands)

Interest Rate Reduction

Combination - Interest Rate Reduction and Term Extension

Loan Type:

Amortized Cost Basis

% of Total Class of Financing Receivable

Amortized Cost Basis

% of Total Class of Financing Receivable

Private Education Loans

Total

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

Six Months Ended June 30, 2024

(dollars in thousands)

Interest Rate Reduction

Combination - Interest Rate Reduction and Term Extension

Loan Type:

Amortized Cost Basis

% of Total Class of Financing Receivable

Amortized Cost Basis

% of Total Class of Financing Receivable

Private Education Loans

Total

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

Six Months Ended June 30, 2023

(dollars in thousands)

Interest Rate Reduction

Combination - Interest Rate Reduction and Term Extension

Loan Type:

Amortized Cost Basis

% of Total Class of Financing Receivable

Amortized Cost Basis

% of Total Class of Financing Receivable

Private Education Loans

Total

26 SLM CORPORATION


4.			Allowance for Credit Losses (Continued)

% to %Private Education Loans

Added a weighted average years to the life of loans

Reduced average contractual rate from % to %

Three Months Ended June 30, 2023

Interest Rate Reduction

Combination - Interest Rate
Reduction and Term Extension

Loan Type

Financial Effect

Loan Type

Financial Effect

Private Education Loans

Reduced average contractual rate from % to %

Private Education Loans

Added a weighted average years to the life of loans

Reduced average contractual rate from % to %

Six Months Ended June 30, 2024

Interest Rate Reduction

Combination - Interest Rate
Reduction and Term Extension

Loan Type

Financial Effect

Loan Type

Financial Effect

Private Education Loans

Reduced average contractual rate from % to %

Private Education Loans

Added a weighted average years to the life of loans

Reduced average contractual rate from % to %

Six Months Ended June 30, 2023

Interest Rate Reduction

Combination - Interest Rate
Reduction and Term Extension

Loan Type

Financial Effect

Loan Type

Financial Effect

Private Education Loans

Reduced average contractual rate from % to %

Private Education Loans

Added a weighted average years to the life of loans

Reduced average contractual rate from % to %

SLM CORPORATION 27


4.			Allowance for Credit Losses (Continued)

days delinquent or otherwise when the loans are classified as a loss by us or our regulator. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. See Notes to Consolidated Financial Statements, Note 2, “Significant Accounting Policies — Allowance for Credit Losses — Allowance for Private Education Loan Losses, and — Allowance for FFELP Loan Losses” in our 2023 Form 10-K for a more detailed discussion.

For the current period presented, the following table provides loan modifications for which a payment default occurred in the relevant period presented and within 12 months of the loan receiving a loan modification. Additionally, for the current period presented, the table summarizes charge-offs occurring in the relevant period presented and within 12 months of the loan receiving a loan modification. days or more past due for purposes of this disclosure.

$ $ $ $ $ Total$ $ $ $ $ $

Six Months Ended
June 30, 2024

Six Months Ended
June 30, 2023

(Dollars in thousands)

Modified Loans(1)(3)

Payment Default(4)

Charge-Offs(5)

Modified Loans(1)(3)

Payment Default(4)

Charge-Offs(5)

Loan Type:

Private Education Loans

Total

(1) Represents period-end amortized cost basis of loans that have been modified and for which a payment default occurred in the relevant period presented and within 12 months of receiving a modification.

(2) For the three months ended June 30, 2024, the modified loans include $ million of interest rate reduction and term extension loan modifications and $ million of interest rate reduction only loan modifications. For the three months ended June 30, 2023, the modified loans include $ million of interest rate reduction and term extension loan modifications and $ million of interest rate reduction only loan modifications.

(3) For the six months ended June 30, 2024, the modified loans include $ million of interest rate reduction and term extension loan modifications and $ million of interest rate reduction only loan modifications. For the six months ended June 30, 2023, the modified loans include $ million of interest rate reduction and term extension loan modifications and $ million of interest rate reduction only loan modifications.

(4) Represents the unpaid principal balance at the time of payment default.

(5) Represents the unpaid principal balance at the time of charge off.

28 SLM CORPORATION


4.			Allowance for Credit Losses (Continued)

$ $ $ $ $ Total$ $ $ $ $ $

Payment Status (Amortized Cost Basis)

At December 31, 2023

(dollars in thousands)

Deferment(1)

Current(2)(3)

30-59 Days

Past Due(2)(3)

60-89 Days

Past Due(2)(3)

90 Days or Greater

Past Due(2)(3)

Total

Loan Type:

Private Education Loans

Total

30 SLM CORPORATION


4.			Allowance for Credit Losses (Continued)

$ $ $ $ $ $ %Without cosigner Total$ $ $ $ $ $ $ %

FICO at Origination Approval(2):

Less than 670$ $ $ $ $ $ $ %670-699 700-749 Greater than or equal to 750 Total$ $ $ $ $ $ $ %

FICO Refreshed(2)(3):

Less than 670$ $ $ $ $ $ $ %670-699 700-749 Greater than or equal to 750 Total$ $ $ $ $ $ $ %

Seasoning(4):

1-12 payments$ $ $ $ $ $ $ %13-24 payments 25-36 payments 37-48 payments More than 48 payments Not yet in repayment Total$ $ $ $ $ $ $ %

2023 Current period(5) gross charge-offs

$()$()$()$()$()$()$()

2023 Current period(5) recoveries

2023 Current period(5) net charge-offs

$()$()$()$()$()$()$()Total accrued interest by origination vintage$ $ $ $ $ $ $

(1)Balance represents gross Private Education Loans held for investment.

(2)Represents the higher credit score of the cosigner or the borrower.

(3)Represents the FICO score updated as of the fourth-quarter 2023.

(4)Number of months in active repayment (whether interest only payment, fixed payment, or full principal and interest payment status) for which a scheduled payment was due.

SLM CORPORATION 31


4.			Allowance for Credit Losses (Continued)

$ $ $ $ $ $

Loans in forbearance(2)

Loans in repayment:Loans current

Loans delinquent 30-59 days(3)

Loans delinquent 60-89 days(3)

Loans 90 days or greater past due(3)

Total Private Education Loans in repayment Total Private Education Loans, gross Private Education Loans deferred origination costs and unamortized premium/(discount) Total Private Education Loans Private Education Loans allowance for losses()()()()()()()Private Education Loans, net$ $ $ $ $ $ $ Percentage of Private Education Loans in repayment % % % % % % %Delinquent Private Education Loans in repayment as a percentage of Private Education Loans in repayment % % % % % % %Loans in forbearance as a percentage of loans in repayment and forbearance % % % % % % %

(1)Deferment includes customers who have returned to school or are engaged in other permitted educational activities and are not yet required to make payments on the loans (e.g., residency periods for medical students or a grace period for bar exam preparation).

(2)Loans for customers who have requested extension of grace period generally during employment transition or who have temporarily ceased making full payments due to hardship or other factors, consistent with established loan program servicing policies and procedures.

(3)The period of delinquency is based on the number of days scheduled payments are contractually past due.

32 SLM CORPORATION


4.			Allowance for Credit Losses (Continued)

$ $ $ $ $ $

Loans in forbearance(2)

Loans in repayment:Loans current

Loans delinquent 30-59 days(3)

Loans delinquent 60-89 days(3)

Loans 90 days or greater past due(3)

(3)The period of delinquency is based on the number of days scheduled payments are contractually past due.

SLM CORPORATION 33


4.			Allowance for Credit Losses (Continued)

days or greater past due as compared to our allowance for uncollectible interest on loans making full interest payments. The majority of the total accrued interest receivable represents accrued interest on deferred loans where no payments are due while the borrower is in school and fixed-pay loans where the borrower makes a $ monthly payment that is smaller than the interest accruing on the loan in that month. The accrued interest on these loans will be capitalized to the balance of the loans when the borrower exits the grace period after separation from school, and the current expected credit losses on accrued interest that will be capitalized is included in our allowance for credit losses.

Private Education Loans

Accrued Interest Receivable

(Dollars in thousands)

Total Interest Receivable

90 Days or Greater Past Due

Allowance for Uncollectible Interest(1)(2)

June 30, 2024

December 31, 2023

(1)The allowance for uncollectible interest at June 30, 2024 represents the expected losses related to the portion of accrued interest receivable on those loans that are in repayment ($ million of accrued interest receivable) that is not expected to be capitalized. The accrued interest receivable that is expected to be capitalized ($ billion) is reserved in the allowance for credit losses. The accrued interest receivable for the loans delinquent 90 days or greater includes $ million of accrued interest receivable on those loans that are in repayment that is not expected to be capitalized and $ million that is expected to be capitalized.

million of accrued interest receivable) that was not expected to be capitalized. The accrued interest receivable that was expected to be capitalized ($ billion) was reserved in the allowance for credit losses. The accrued interest receivable for the loans delinquent 90 days or greater includes $ million of accrued interest receivable on those loans that are in repayment that is not expected to be capitalized and $ million that is expected to be capitalized.

34 SLM CORPORATION

billion of outstanding contractual loan commitments that we expect to fund during the upcoming 2024/2025 academic year. $ $ $

Provision/New commitments - net(1)

Transfer - funded loans(2)

()()()()Ending Balance$ $ $ $


	2024		2023
Six Months Ended June 30, (dollars in thousands)	Allowance	Unfunded Commitments	Allowance	Unfunded Commitments
Beginning Balance	$	$	$	$
Provision/New commitments - net(1)
Transfer - funded loans(2)	()	()	()	()
Ending Balance	$	$	$	$

(1) Net of expirations of commitments unused. Also includes incremental provision for new commitments and changes to provision for existing commitments.

(2) When a loan commitment is funded, its related liability for credit losses (which originally was recorded as a provision for unfunded commitments) is transferred to the allowance for credit losses.

The unfunded commitments disclosed above represent the total amount of outstanding unfunded commitments at each period end. However, historically not all of these commitments are funded prior to the expiration of the commitments. We estimate the amount of commitments expected to be funded in calculating the reserve for unfunded commitments. The amount we expect to fund and use in our calculation of the reserve for unfunded commitments will change period to period based upon the loan characteristics of the underlying commitments.

SLM CORPORATION 35

million in total goodwill. See Notes to Consolidated Financial Statements, Note 2, “Significant Accounting Policies — Business Combinations” in our 2023 Form 10-K for additional details on our acquisitions of Nitro and Scholly.

Acquired Intangible Assets

Our intangible assets include acquired trade name and trademarks, customer relationships, developed technology, and partner relationships. We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

$ $()$ $ $()$ Customer relationships () () Developed technology () () Partner relationships () () Total acquired intangible assets$ $()$ $ $()$

(1) The weighted average useful life of acquired intangible assets related to the Nitro acquisition is years and the weighted average useful life of the acquired intangible assets related to the Scholly acquisition is years.

(2) In 2023, we fully impaired the Nitro trade name and trademarks asset for $ million.

million and $ million in the three and six months ended June 30, 2024, respectively, and approximately $ million and $ million in the three and six months ended June 30, 2023, respectively. We will continue to amortize our intangible assets with definite useful lives over their remaining estimated useful lives. We estimate amortization expense associated with these intangible assets will be approximately $ million, $ million, $ million, and $ million in 2024, 2025, 2026, and 2027, respectively.

36 SLM CORPORATION

$ Deposits - non-interest-bearing Total deposits$ $

Our total deposits of $ billion were comprised of $ billion in brokered deposits and $ billion in retail and other deposits at June 30, 2024, compared to total deposits of $ billion, which were comprised of $ billion in brokered deposits and $ billion in retail and other deposits, at December 31, 2023.

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 money market deposits (“MMDAs”), and retail and brokered certificates of deposit (“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 $ billion and $ 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 Federal Deposit Insurance Corporation (“FDIC”) rules and limitations), and the majority of these deposits have contractual minimum balances and maturity terms.

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 $ million and $ million in the three months ended June 30, 2024 and 2023, respectively, and placement fee expense of $ million and $ million in the six months ended June 30, 2024 and 2023, respectively. There were fees paid to third-party brokers related to brokered CDs for the three months ended June 30, 2024 and June 30, 2023. There were 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 $ million for the six months ended June 30, 2023.

%$ %Savings Certificates of deposit Deposits - interest bearing$ $

(1) Includes the effect of interest rate swaps in effective hedge relationships.

SLM CORPORATION 37


7.			Deposits (Continued)

$ After one year to two years After two years to three years After three years to four years After four years to five years After five years Total$ $

million and $ million, respectively, of deposits exceeding FDIC insurance limits. Accrued interest on deposits was $ million and $ million at June 30, 2024 and December 31, 2023, respectively.

38 SLM CORPORATION

$ $ $ $ $ Total unsecured borrowings Secured borrowings:Private Education Loan term securitizations:Fixed-rate Variable-rate Total Private Education Loan term securitizations Secured Borrowing Facility Total secured borrowings Total$ $ $ $ $ $

Short-term Borrowings

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 $ billion. We hold 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 secured borrowings outstanding under the Secured Borrowing Facility.

Long-term Borrowings

Secured Financings

2024 Transactions

On May 15, 2024, we executed our $ million SMB Private Education Loan Trust 2024-C term ABS transaction, which was accounted for as a secured financing. We sold $ million of notes to third parties and retained a percent interest in the residual certificates issued in the securitization, raising approximately $ million of gross proceeds. The Class A and Class B notes had a weighted average life of years and priced at a weighted average SOFR equivalent cost of SOFR plus percent. On June 30, 2024, $ million of our Private Education Loans, including $ million of principal and $ million in capitalized interest, were encumbered because of this transaction.

SLM CORPORATION 39


8.			Borrowings (Continued)

SOFR plus %

2023-CAugust 2023

SOFR plus %

Total notes issued in 2023$

Total loan and accrued interest amount securitized at inception in 2023(2)

$ 2024-CMay 2024$

SOFR plus %

Total notes issued in 2024$

Total loan and accrued interest amount securitized at inception in 2024(3)

(1) Represents SOFR equivalent cost of funds for floating and fixed-rate bonds, excluding issuance costs.

(2) At June 30, 2024, $ billion of our Private Education Loans, including $ billion of principal and $ million in capitalized interest, were encumbered related to these transactions.

million of our Private Education Loans, including $ million of principal and $ million in capitalized interest, were encumbered related to this transaction.

Consolidated Funding Vehicles

$ $ $ $ $ $ Secured Borrowing Facility Total$ $ $ $ $ $ $

As of December 31, 2023

Debt Outstanding

Carrying Amount of Assets Securing Debt Outstanding

Short-Term

Long-Term

Total

Loans

Restricted Cash

Other

Assets(1)

Total

Secured borrowings:

Private Education Loan term securitizations

Secured Borrowing Facility

Total

(1) Other assets primarily represent accrued interest receivable.

40 SLM CORPORATION


8.			Borrowings (Continued)

percent of the securities issued by the trusts to meet risk retention requirements. We were not required to consolidate these entities because the fees we receive as the servicer/administrator are commensurate with our responsibility, so the fees are not considered a variable interest. Additionally, the percent vertical interest we maintain does not absorb more than an insignificant amount of the VIE’s expected losses, nor do we receive more than an insignificant amount of the VIE’s expected residual returns.

2024-A Transaction

On March 13, 2024, we closed an SMB Private Education Loan Trust 2024-A term ABS transaction (the “2024-A Transaction”), in which an unaffiliated third party sold to the trust approximately $ billion of Private Education Loans that the third-party seller previously purchased from us on February 1, 2024. Sallie Mae Bank sponsored the 2024-A Transaction, is the servicer and administrator, and was the seller of an additional $ million of Private Education Loans into the trust. The sale of such additional loans qualified for sale treatment and removed these loans from our balance sheet on the settlement date of the 2024-A Transaction and we recorded a $ million gain on sale associated with this transaction. In connection with the 2024-A Transaction settlement, we retained a percent vertical risk retention interest (i.e., percent of each class issued in the securitization). We classified those vertical risk retention interests related to the 2024-A Transaction as available-for-sale investments, except for the interest in the residual class, which we classified as a trading investment recorded at fair value with changes recorded through earnings.

2024-R1 Transaction

On April 9, 2024, we closed an SMB Private Education Loan Trust 2024-R1 term ABS transaction (the “2024-R1 Transaction”), in which an unaffiliated third party sold to the trust approximately $ million of Private Education Loans residual flows from our 2020-PTA and 2020-PTB transactions through a re-securitization. Sallie Mae Bank sponsored the 2024-R1 Transaction and is the administrator of the trust. In connection with the 2024-R1 Transaction settlement, we retained a percent vertical risk retention interest (i.e., percent of each class issued in the securitization). We classified those vertical risk retention interests related to the 2024-R1 Transaction as available-for-sale investments, except for the interest in the residual class, which we classified as a trading investment recorded at fair value with changes recorded through earnings.

2024-B Transaction

On April 11, 2024, we closed an SMB Private Education Loan Trust 2024-B term ABS transaction (the “2024-B Transaction”), in which unaffiliated third parties sold to the trust approximately $ million of Private Education Loans that the third-party sellers previously purchased from us in 2020 and 2021. Sallie Mae Bank sponsored the 2024-B Transaction, is the servicer and administrator, and was the seller of an additional $ million of Private Education Loans into the trust. The sale of such additional loans qualified for sale treatment and removed these loans from our balance sheet on the settlement date of the 2024-B Transaction and we recorded a less than $ million gain on sale associated with this transaction. In connection with the 2024-B Transaction settlement, we retained a percent vertical risk retention interest (i.e., percent of each class issued in the securitization). We classified those vertical risk retention interests related to the 2024-B Transaction as available-for-sale investments, except for the interest in the residual class, which we classified as a trading investment recorded at fair value with changes recorded through earnings.

2024-D Transaction

On June 28, 2024, we closed an SMB Private Education Loan Trust 2024-D term ABS transaction (the “2024-D Transaction”), in which an unaffiliated third party sold to the trust approximately $ billion of Private Education Loans that the third-party seller previously purchased from us on May 23, 2024. Sallie Mae Bank sponsored the 2024-D Transaction, is the servicer and administrator, and was the seller of an additional $ million of Private Education Loans into the trust. The sale of such additional loans qualified for sale treatment and removed these loans from our balance sheet on the settlement date of the 2024-D Transaction and we recorded a $ million gain on sale associated with this transaction. In connection with the 2024-D Transaction settlement, we retained a percent vertical risk retention interest (i.e., percent of each class issued in the securitization). We classified those vertical risk retention interests related to

SLM CORPORATION 41


8.			Borrowings (Continued)

$ $ $ $ $

(1) Vertical risk retention interest classified as available-for-sale investment.

Other Borrowing Sources

We maintain discretionary uncommitted Federal Funds lines of credit with various correspondent banks which totaled $ million at June 30, 2024. 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, 2024 nor in the year ended December 31, 2023.

We established an account at the FRB to meet eligibility requirements for access to the Primary Credit borrowing facility at the FRB’s Discount Window (the “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 FFELP Loans and 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, 2024 and December 31, 2023, the value of our pledged collateral at the FRB totaled $ billion and $ 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, 2024 nor in the year ended December 31, 2023.

42 SLM CORPORATION

of the central counterparties we use are the Chicago Mercantile Exchange (“CME”) and the London Clearing House (“LCH”). All variation margin payments on derivatives cleared through the CME and LCH are accounted for as legal settlement. As of June 30, 2024, $ billion notional of our derivative contracts were cleared on the CME and $ billion were cleared on the LCH. The derivative contracts cleared through the CME and LCH represent percent and percent, respectively, of our total notional derivative contracts of $ billion at June 30, 2024.

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 $() million and $() million for the CME and LCH, respectively. Changes in fair value for derivatives not designated as hedging instruments are presented as realized gains (losses).

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 $ million and $ million, respectively.

SLM CORPORATION 43


9.			Derivative Financial Instruments (Continued)

$ $ $ $ $ $ $

Derivative Liabilities:(2)

Interest rate swaps Interest rate()()()() ()()Total net derivatives$()$()$()$()$ $ $()$()

(1) Fair values reported include variation margin as legal settlement of the derivative contract. Assets and liabilities are presented without consideration of master netting agreements. Derivatives are carried on the balance sheet based on net position by counterparty under master netting agreements and classified in other assets or other liabilities depending on whether in a net positive or negative position.

(2)

$ $()$()Impact of master netting agreement Derivative values with impact of master netting agreements (as carried on balance sheet) ()()

Cash collateral pledged(2)

Net position$ $ $()$()

(1)Gross position amounts include accrued interest and variation margin as legal settlement of the derivative contract.

$ $ $ $ $ $ $ Net total notional$ $ $ $ $ $ $ $

44 SLM CORPORATION


9.			Derivative Financial Instruments (Continued)

)$()$ $

)$()$()$()Hedged items recorded in interest expense() ()()Derivatives recorded in interest expense () Total $()$()$()$()Cash Flow HedgesInterest rate swaps:Amount of gain (loss) reclassified from accumulated other comprehensive income into interest expense$ $ $ $ Total $ $ $ $ TradingInterest rate swaps:Change in fair value of future interest payments recorded in earnings$ $ $ $ Total Total$ $ $ $

SLM CORPORATION 45


9.			Derivative Financial Instruments (Continued)

$ $ $ Less: amount of gain (loss) reclassified in interest expense Total change in other comprehensive income (loss) for unrealized gains (losses) on derivatives, before income tax (expense) benefit$()$ $()$()

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate deposits. During the next 12 months, we estimate that $ million will be reclassified as a decrease to interest expense.

Cash Collateral

As of June 30, 2024, cash collateral held and pledged excludes amounts that represent legal settlement of the derivative contracts held with the CME and LCH. There was cash collateral held by us related to derivative exposure between us and our derivatives counterparties at June 30, 2024 and December 31, 2023, respectively. Collateral held is recorded in “Other Liabilities” on the consolidated balance sheets. Cash collateral pledged by us related to derivative exposure between us and our derivatives counterparties was $ million and $ million at June 30, 2024 and December 31, 2023, respectively. Collateral pledged is recorded in “Other interest-earning assets” on the consolidated balance sheets.

46 SLM CORPORATION

10.

Average purchase price per share(2)

$ $ $ $

Shares repurchased related to employee stock-based compensation plans(3)

Average purchase price per share$ $ $ $

Common shares issued(4)

(1) Common shares purchased under our share repurchase programs. The 2022 Share Repurchase Program expired on January 25, 2024. There was $ million of capacity remaining under the 2024 Share Repurchase Program at June 30, 2024.

(2) Average purchase price per share includes purchase commission costs and excise taxes.

(3) Comprised of shares withheld from stock option exercises and the vesting of restricted stock, restricted stock units, and performance stock units for employees’ tax withholding obligations and shares tendered by employees to satisfy option exercise costs.

The closing price of our common stock on the NASDAQ Global Select Market on June 28, 2024 was $.

Common Stock Dividends

In both June 2024 and June 2023, we paid a common stock dividend of $ per common share.

Share Repurchases

On January 26, 2022, we announced a share repurchase program (the “2022 Share Repurchase Program”), which was effective upon announcement and expired on January 25, 2024, and permitted us to repurchase shares of our common stock from time to time up to an aggregate repurchase price not to exceed $ billion. We did repurchase shares of common stock under the 2022 Share Repurchase Program in the six months ended June 30, 2024. Under the 2022 Share Repurchase Program, we repurchased million shares of common stock for $ million in both the three and six months ended June 30, 2023.

On January 24, 2024, we announced a new share repurchase program (the "2024 Share Repurchase Program"), which became effective on January 26, 2024 and expires on February 6, 2026, and permits us to repurchase shares of our common stock from time to time up to an aggregate repurchase price not to exceed $ million. Under the 2024 Share Repurchase Program, we repurchased million shares of common stock for $ million in the three months ended June 30, 2024, and million shares of common stock for $ million in the six months ended June 30, 2024. We had $ million of capacity remaining under the 2024 Share Repurchase Program at June 30, 2024.

Under the 2024 Share Repurchase Program, repurchases may occur from time to time and through a variety of methods, including open market repurchases, repurchases effected through Rule 10b5-1 trading plans, negotiated block purchases, accelerated share repurchase programs, tender offers, or other similar transactions. The timing and volume of any repurchases will be subject to market conditions, and there can be no guarantee that the Company will repurchase up to the limit of the 2024 Share Repurchase Program.

Share Repurchases under Rule 10b5-1 trading plans

million shares and million shares, respectively, of our common stock at a total cost of $ million and $ million, respectively, and during the six months ended June 30, 2024 and 2023, we repurchased million and million shares, respectively, of our common stock at a total cost of $ million and $ million, respectively, under Rule 10b5-1 trading plans authorized under our share repurchase programs.

SLM CORPORATION 47

11.

$ $ $ Preferred stock dividends Net income attributable to SLM Corporation common stock$ $ $ $ Denominator:Weighted average shares used to compute basic EPS Effect of dilutive securities:

Dilutive effect of stock options, restricted stock, restricted stock units, performance stock units, and Employee Stock Purchase Plan (“ESPP”) (1)(2)

Weighted average shares used to compute diluted EPS Basic earnings per common share $ $ $ $ Diluted earnings per common share$ $ $ $

(1) Includes the potential dilutive effect of additional common shares that are issuable upon exercise of outstanding stock options, restricted stock, restricted stock units, performance stock units, and the outstanding commitment to issue shares under the ESPP, determined by the treasury stock method.

million shares and million shares, respectively, and for the six months ended June 30, 2024 and 2023, securities covering approximately less than million shares and million shares, respectively, were outstanding but not included in the computation of diluted earnings per share because they were anti-dilutive.

48 SLM CORPORATION

12.

$ $ $ $ $ $ $ Available-for-sale investments Derivative instruments Total$ $ $ $ $ $ $ $ Liabilities:Derivative instruments$ $()$ $()$ $()$ $()Total$ $()$ $()$ $()$ $()

SLM CORPORATION 49


12.			Fair Value Measurements (Continued)

$ $ $ $ $ Total gains/(losses):

Included in earnings (or changes in net assets)(1)

Included in other comprehensive income Settlements Transfers into level 3 Transfers out of level 3 Balance, end of period$ $ $ $ $ $ Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period$ $ $ $ $ $

Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets held at the end of the reporting period(2)

$ $ $ $ $ $

(1) Included in earnings (or changes in net assets) is comprised of the amounts recorded in the specified line item in the consolidated statements of income:


	Six Months Ended June 30,
(Dollars in thousands)	2024	2023
Interest Income - Investments	$	$
Gains (losses) on securities, net
Total	$	$

(2) Recorded in "gains (losses) on securities, net" in the consolidated statements of income.

Discounted cash flowConstant Prepayment Rate

%-% (%)

Probability of default

%-% (%)

Residual Interests Discounted cash flowConstant Prepayment Rate

%-% (%)

Probability of default

%-% (%)

Total$

The significant inputs detailed in the above table would be expected to have the following impacts to the valuations:

•A decrease in CPR would result in a longer weighted average life of the trust, resulting in a decrease to the valuation due to the delay in residual cash flows with the increased term. The opposite is true for an increase in the CPR.

50 SLM CORPORATION


12.			Fair Value Measurements (Continued)

$ $ $ $ $ FFELP Loans () Cash and cash equivalents — — Trading investments — — Available-for-sale investments — — Accrued interest receivable Derivative instruments — — Total earning assets$ $ $ $ $ $ Interest-bearing liabilities:Money-market and savings accounts$ $ $ $ $ $ Certificates of deposit Long-term borrowings Accrued interest payable — — Derivative instruments — — Total interest-bearing liabilities$ $ $ $ $ $ Excess of net asset fair value over carrying value$ $

Please refer to Notes to Consolidated Financial Statements, Note 17, “Fair Value Measurements” in our 2023 Form 10-K for a full discussion of the methods and assumptions used to estimate the fair value of each class of financial instruments.

SLM CORPORATION 51

13.

, and then phase in over the following three years, the effects on regulatory capital of CECL relative to the incurred loss methodology. The Bank elected to use this option. Therefore, the regulatory capital impact of the Bank’s transition adjustments recorded on January 1, 2020 from the adoption of CECL, and percent of the ongoing impact of CECL on the Bank’s allowance for credit losses, retained earnings, and average total consolidated assets, each as reported for regulatory capital purposes (collectively, the “adjusted transition amounts”), were deferred for the period ending January 1, 2022. On each of January 1, 2022, 2023, and 2024, percent of the adjusted transition amounts were phased in for regulatory capital purposes. On January 1, 2025, the remaining percent of the adjusted transition amounts will be phased in for regulatory capital purposes, with the phased in amounts included in regulatory capital at the beginning of the year. The Bank’s January 1, 2020 CECL transition amounts increased our allowance for credit losses by $ billion, increased the liability representing our off-balance sheet exposure for unfunded commitments by $ million, and increased our deferred tax asset by $ million, resulting in a cumulative effect adjustment that reduced retained earnings by $ million. This transition adjustment was inclusive of qualitative adjustments incorporated into our CECL allowance as necessary, to address any limitations in the models used.

52 SLM CORPORATION


13.			Regulatory Capital (Continued)

$()$()$()$ Allowance for credit losses ()()() Liability for unfunded commitments ()()() Deferred tax asset ()()()

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 $ million and $ million, net of tax of $ million and $ 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.

%$ > %Tier 1 Capital (to Risk-Weighted Assets)$ %$ > %Total Capital (to Risk-Weighted Assets)$ %$ > %Tier 1 Capital (to Average Assets)$ %

$ > %

As of December 31, 2023(3):

Common Equity Tier 1 Capital (to Risk-Weighted Assets)$ %$ > %Tier 1 Capital (to Risk-Weighted Assets)$ %$ > %Total Capital (to Risk-Weighted Assets)$ %$ > %Tier 1 Capital (to Average Assets)$ %$ > %

(1) Reflects the U.S. Basel III minimum required ratio plus the applicable capital conservation buffer.

(2) The Bank’s regulatory capital ratios also exceeded all applicable standards for the Bank to qualify as “well capitalized” under the prompt corrective action framework.

Bank Dividends

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 Bank declared $ million and $ million in dividends to the Company for the three and six months ended June 30, 2024, respectively, and $ million and $ million in dividends to the Company for the three and six months ended June 30, 2023, respectively, with the proceeds primarily used to fund share repurchase programs and stock dividends. In the future, we expect that the Bank will pay dividends to the Company as may be necessary to enable the Company to pay any

SLM CORPORATION 53


13.			Regulatory Capital (Continued)

14.

billion of outstanding contractual loan commitments that we expect to fund during the upcoming 2024/2025 academic year. At June 30, 2024, we had a $ million reserve recorded in “Other Liabilities” to cover expected losses that may occur during the loss emergence period on these unfunded commitments. See Notes to Consolidated Financial Statements, Note 2, “Significant Accounting Policies - Allowance for Credit Losses — Off-Balance Sheet Exposure for Contractual Loan Commitments” in our 2023 Form 10-K and Note 5, “Unfunded Loan Commitments” in this Form 10-Q for additional information.

Regulatory Matters

For additional information regarding our regulatory matters, see Notes to Consolidated Financial Statements, Note 21, “Commitments, Contingencies and Guarantees” in our 2023 Form 10-K.

Contingencies

In the ordinary course of business, we and our subsidiaries are routinely defendants in or parties to pending and threatened legal actions and proceedings, including actions brought on behalf of various classes of claimants. These actions and proceedings may be based on alleged violations of consumer protection, securities, employment, and other laws. In certain of these actions and proceedings, claims for substantial monetary damage may be asserted against us and our subsidiaries.

It is common for the Company, our subsidiaries, and affiliates to receive information and document requests and investigative demands from state attorneys general, legislative committees, and administrative agencies. These requests may be for informational or regulatory purposes and may relate to our business practices, the industries in which we operate, or other companies with whom we conduct business. Our practice has been and continues to be to cooperate with these bodies and be responsive to any such requests.

We are required to establish reserves for litigation and regulatory matters where those matters present loss contingencies that are both probable and estimable. When loss contingencies are not both probable and estimable, we do not establish reserves.

Based on current knowledge, management does not believe there are loss contingencies, if any, arising from pending investigations, litigation, or regulatory matters for which reserves should be established.

54 SLM CORPORATION

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Through this discussion and analysis, we intend to provide the reader with some narrative context for how our management views our consolidated financial statements, additional context within which to assess our operating results, and information on the quality and variability of our earnings, liquidity, and cash flows.

The following information should be read in connection with SLM Corporation’s Annual Report on Form 10-K for the year ended December 31, 2023 (filed with the Securities and Exchange Commission (the “SEC”) on February 22, 2024) (the “2023 Form 10-K”), and subsequent reports filed with the SEC. Definitions for capitalized terms used in this report not defined herein can be found in the 2023 Form 10-K.

References in this Form 10-Q to “we,” “us,” “our,” “Sallie Mae,” “SLM,” and the “Company” refer to SLM Corporation and its subsidiaries, except as otherwise indicated or unless the context otherwise requires.

This report contains “forward-looking statements” and information based on management’s current expectations as of the date of this report. Statements that are not historical facts, including statements about the Company’s beliefs, opinions, or expectations and statements that assume or are dependent upon future events, are forward-looking statements. These include, but are not limited to: strategies; goals and assumptions of the Company; the Company’s expectation and ability to execute loan sales and share repurchases; statements regarding future developments surrounding COVID-19 or any other pandemic, including, without limitation, statements regarding the potential impact of any such pandemic on the Company’s business, results of operations, financial condition, and/or cash flows; the Company’s expectation and ability to pay a quarterly cash dividend on our common stock in the future, subject to the approval of our Board of Directors; the Company’s 2024 guidance; the Company’s three-year horizon outlook; the impact of acquisitions we have made or may make in the future; the Company’s projections regarding originations, net charge-offs, non-interest expenses, earnings, balance sheet position, and other metrics; any estimates related to accounting standard changes; and any estimates related to the impact of credit administration practices changes, including the results of simulations or other behavioral observations.

Forward-looking statements are subject to risks, uncertainties, assumptions, and other factors, many of which are difficult to predict and generally beyond the control of the Company, which may cause actual results to be materially different from those reflected in such forward-looking statements. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. The Company cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. These factors include, among others, the risks and uncertainties set forth in Item 1A. “Risk Factors” and elsewhere in the Company’s most recently filed Annual Report on Form 10-K and subsequent filings with the SEC; the societal, business, and legislative/regulatory impact of pandemics and other public heath crises; increases in financing costs; limits on liquidity; increases in costs associated with compliance with laws and regulations; failure to comply with consumer protection, banking, and other laws or regulations; our ability to timely develop new products and services and the acceptance of those products and services by potential and existing customers; changes in accounting standards and the impact of related changes in significant accounting estimates, including any regarding the measurement of our allowance for credit losses and the related provision expense; any adverse outcomes in any significant litigation to which the Company is a party; credit risk associated with the Company’s exposure to third parties, including counterparties to the Company’s derivative transactions; the effectiveness of our risk management framework and quantitative models; and changes in the terms of education loans and the educational credit marketplace (including changes resulting from new laws and the implementation of existing laws). We could also be affected by, among other things: changes in our funding costs and availability; reductions to our credit ratings; cybersecurity incidents, cyberattacks, and other failures or breaches of our operating systems or infrastructure, including those of third-party vendors; damage to our reputation; risks associated with restructuring initiatives, including failures to successfully implement cost-cutting programs and the adverse effects of such initiatives on our business; changes in the demand for educational financing or in financing preferences of lenders, educational institutions, students, and their families; changes in law and regulations with respect to the student lending business and financial institutions generally; changes in banking rules and regulations, including increased capital requirements; increased competition from banks and other consumer lenders; the creditworthiness of our customers, or any change related thereto; changes in the general interest rate environment, including the rate relationships among relevant money-market instruments and those of our earning assets versus our funding arrangements; rates of prepayments on the loans owned by us; changes in general economic conditions and our ability to successfully effectuate any acquisitions; and other strategic initiatives. The preparation of our consolidated financial statements also requires management to make certain estimates and assumptions, including estimates and assumptions about future events. These estimates or assumptions may prove to be incorrect.

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All oral and written forward-looking statements attributed to the Company are expressly qualified in their entirety by the factors, risks, and uncertainties set forth in the foregoing cautionary statements, and are made only as of the date of this report or, where the statement is oral, as of the date stated. We do not undertake any obligation to update or revise any forward-looking statements to conform to actual results or changes in our expectations, nor to reflect events or circumstances that occur after the date on which such statements were made. In light of these risks, uncertainties, and assumptions, you should not put undue reliance on any forward-looking statements discussed.

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Selected Financial Information and Ratios


(In thousands, except per share data and percentages)	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Net income attributable to SLM Corporation common stock	$	247,365		$	260,791		$	532,643		$	375,246
Diluted earnings per common share	$	1.11		$	1.10		$	2.39		$	1.56
Weighted average shares used to compute diluted earnings per common share	222,467			237,592			223,156			240,554
Return on Assets(1)	3.6		%	3.7		%	3.8		%	2.7		%


Other Operating Statistics (Held for Investment)
Ending Private Education Loans, net	$	18,432,600		$	18,648,904		$	18,432,600		$	18,648,904
Ending FFELP Loans, net	482,733			570,614			482,733			570,614
Ending total education loans, net	$	18,915,333		$	19,219,518		$	18,915,333		$	19,219,518



Average education loans	$	20,982,244		$	21,290,038		$	21,476,000		$	21,820,708

Overview

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.

Key Financial Measures

Our operating results are primarily driven by net interest income from our Private Education Loan portfolio, gains and losses on loan sales, provision expense for credit losses, and operating expenses. The growth of our business and the strength of our financial condition are primarily driven by our ability to achieve our annual Private Education Loan origination goals while sustaining credit quality and maintaining cost-efficient funding sources to support our originations. A brief summary of our key financial measures (net interest income; loan sales and secured financings; allowance for credit losses; charge-offs and delinquencies; operating expenses; Private Education Loan originations; and funding sources) can be found in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Form 10-K.

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Strategic Imperatives

To further focus our business and increase shareholder value, we continue to advance our strategic imperatives. Our focus remains on maximizing the profitability and growth of our core private student loan business, while harnessing and optimizing the power of our brand and attractive client base. In addition, we continue to seek to better inform the external narrative about student lending and Sallie Mae. We also strive to maintain a rigorous and predictable capital allocation and return program to create shareholder value. We are focused on driving a mission-led culture that continues to make Sallie Mae a great place to work. We also continue to strengthen our risk and compliance function, enhance and build upon our risk management framework, and assess and monitor enterprise-wide risk.

During the first six months of 2024, we made the following progress on the above corporate strategic imperatives.

2024-C Securitization

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.

2024 Loan Sales and 2024-A, 2024-B, and 2024-D Transactions

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.

Secured Borrowing Facility

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).

Share Repurchases under our Rule 10b5-1 Trading Plans

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.

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Results of Operations

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

GAAP Consolidated Statements of Income (Unaudited)


(Dollars in millions, except per share amounts)	Three Months Ended June 30,				Increase (Decrease)				Six Months Ended June 30,				Increase (Decrease)
	2024		2023		$		%		2024		2023		$		%
Interest income:
Loans	$	565	$	568	$	(3)	(1)	%	$	1,162	$	1,151	$	11	1	%
Investments	15		12		3		25		30		23		7		30
Cash and cash equivalents	61		54		7		13		113		97		16		16
Total interest income	641		634		7		1		1,305		1,271		34		3
Total interest expense	269		247		22		9		546		480		66		14
Net interest income	372		387		(14)		(4)		759		792		(33)		(4)
Less: provisions for credit losses	17		18		(1)		(6)		29		132		(103)		(78)
Net interest income after provisions for credit losses	355		369		(14)		(4)		730		660		70		11
Non-interest income:
Gains on sales of loans, net	112		125		(13)		(10)		255		125		130		104
Gains (losses) on securities, net	2		(1)		3		300		4		—		4		100

Other income	28		20		8		40		57		40		17		43
Total non-interest income	142		144		(2)		(1)		316		166		150		90
Non-interest expenses:
Total operating expenses	157		154		3		2		318		309		9		3
Acquired intangible assets amortization expense	1		2		(1)		(50)		3		5		(2)		(40)

%


As of December 31, 2023 (dollars in thousands)	Private Education Loans			FFELP Loans			Total Loans Held for Investment
Total loan portfolio:
In-school(1)	$	3,997,092		$	57		$	3,997,149
Grace, repayment and other(2)	17,028,752			537,344			17,566,096
Total, gross	21,025,844			537,401			21,563,245
Deferred origination costs and unamortized premium/(discount)	81,554			1,330			82,884
Allowance for credit losses	(1,335,105)			(4,667)			(1,339,772)
Total loans held for investment portfolio, net	$	19,772,293		$	534,064		$	20,306,357

% of total	97		%	3		%	100		%

(1) Loans for customers still attending school and who are not yet required to make payments on the loans.

(2) Includes loans in deferment or forbearance. Loans in repayment include 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 (but, for purposes of the table, do not include those loans while they are in forbearance).

Average Loans Held for Investment Balances (net of unamortized premium/(discount))


	Three Months Ended June 30,								Six Months Ended June 30,
(Dollars in thousands)	2024				2023				2024				2023
Private Education Loans	$	20,480,805	98	%	$	20,704,907	97	%	$	20,961,775	98	%	$	21,227,153	97	%
FFELP Loans	501,439		2		585,131		3		514,225		2		593,555		3

















19,219,518

“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.

“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.

The “Repayments and other” category includes all scheduled repayments, as well as voluntary prepayments, made on loans in repayment (including loans in full principal and interest repayment status) and also includes charge-offs. Consequently, this category can be significantly affected by the volume of loans in repayment.

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Private Education Loan Originations

The following table summarizes our Private Education Loan originations. Originations represent loans that were funded or acquired during the period presented.


	Three Months Ended June 30,
(Dollars in thousands)	2024			%		2023			%
Smart Option - interest only(1)	$	96,741		14	%	$	96,958		15	%
Smart Option - fixed pay(1)	225,552			33		207,429			32
Smart Option - deferred(1)	256,992			37		249,613			38
Graduate Loan(2)	111,631			16		97,358			15
Parent Loan(3)	—			—		—			—
Total Private Education Loan originations	$	690,916		100	%	$	651,358		100	%

Percentage of loans with a cosigner	79.7		%			75.6		%
Average FICO at approval(4)	752					747


	Six Months Ended June 30,
(Dollars in thousands)	2024			%		2023			%
Smart Option - interest only(1)	$	576,991		18	%	$	575,120		19	%
Smart Option - fixed pay(1)	1,087,229			33		1,015,675			33
Smart Option - deferred(1)	1,336,904			41		1,252,501			40
Graduate Loan(2)	271,862			8		249,270			8
Parent Loan(3)	—			—		38			—
Total Private Education Loan originations	$	3,272,986		100	%	$	3,092,604		100	%

Percentage of loans with a cosigner	88.4		%			86.3		%
Average FICO at approval(4)	749					746

(114,550)(325)741 (114,134)(136,531)— — (136,531)1,269,652 $1,360,294 $4,422 $— $1,364,716

1,364,716

(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.

(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.


Consolidated Statements of Income Provisions for Credit Losses Reconciliation
Six Months Ended June 30, (dollars in thousands)
	2024		2023
Private Education Loan provisions for credit losses:
Provisions for loan losses	$	(68,617)	$	15,905
Provisions for unfunded loan commitments	97,846		114,377
Total Private Education Loan provisions for credit losses	29,229		130,282
Other impacts to the provisions for credit losses:
FFELP Loans	(358)		1,559
Total	(358)		1,559
Provisions for credit losses reported in consolidated statements of income	$	28,871	$	131,841

Private Education Loan Allowance for Credit Losses

In establishing the allowance for Private Education Loan losses as of June 30, 2024, we considered several factors with respect to our Private Education Loan portfolio, in particular, credit quality and delinquency, forbearance, and charge-off trends.

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.

For a more detailed discussion of our policy for determining the collectability of Private Education Loans and maintaining our allowance for Private Education Loans, see Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Allowance for Credit Losses” and Notes to Consolidated Financial Statements, Note 5, “Loans Held for Investment — Certain Collection Tools - Private Education Loans” in the 2023 Form 10-K.

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

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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).


Private Education Loans Held for Investment	2024				2023
June 30, (dollars in thousands)	Balance		%		Balance		%
Loans in-school/grace/deferment(1)	$	5,128,758			$	5,101,856
Loans in forbearance(2)	259,192				183,980




Loans in repayment and percentage of each status:
Loans current	13,756,538		96.7	%	14,113,105		96.3	%
Loans delinquent 30-59 days(3)	224,445		1.5		264,665		1.8
Loans delinquent 60-89 days(3)	125,384		0.9		138,233		1.0
Loans 90 days or greater past due(3)	125,214		0.9		136,524		0.9
Total Private Education Loans in repayment	14,231,581		100.0	%	14,652,527		100.0	%
Total Private Education Loans, gross	19,619,531				19,938,363
Private Education Loans deferred origination costs and unamortized premium/(discount)	78,661				70,835
Total Private Education Loans	19,698,192				20,009,198
Private Education Loans allowance for losses	(1,265,592)				(1,360,294)
Private Education Loans, net	$	18,432,600			$	18,648,904
Percentage of loans in repayment			72.5	%			73.5	%
Delinquencies as a percentage of loans in repayment			3.3	%			3.7	%
Delinquencies, excluding those loans within a loan modification qualifying period, as a percentage of loans in repayment(4)			2.8	%			3.3	%

Percentage of loans in forbearance:
Percentage of loans in an extended grace period(5)			1.0	%			1.0	%
Percentage of loans in hardship and other forbearances(6)			0.8	%			0.2	%

(3)The period of delinquency is based on the number of days scheduled payments are contractually past due.

(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.

(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.

(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.

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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.

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Changes in Allowance for Private Education Loan Losses

The following table summarizes changes in the allowance for Private Education Loan (held for investment) losses.


	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)	2024		2023		2024		2023
Beginning balance	$	1,345,431	$	1,475,379	$	1,335,105	$	1,353,631
Transfer from unfunded commitment liability(1)	29,715		28,188		161,329		176,701
Provision for credit losses:
Provision, current period	72,862		96,102		167,338		152,436
Loan sale reduction to provision	(102,751)		(136,531)		(235,955)		(136,531)

Total provision	(29,889)		(40,429)		(68,617)		15,905
Net charge-offs:
Charge-offs	(91,042)		(114,550)		(184,916)		(209,635)
Recoveries	11,377		11,706		22,691		23,692
Net charge-offs	(79,665)		(102,844)		(162,225)		(185,943)

21,653,188

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.

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.

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.

Interest bearing deposits at June 30, 2024 and December 31, 2023 are summarized as follows:


	June 30, 2024				December 31, 2023
(Dollars in thousands)	Amount		Qtr.-End Weighted Average Stated Rate(1)		Amount		Year-End Weighted Average Stated Rate(1)
Money market	$	9,485,016	4.64	%	$	10,258,292	4.85	%
Savings	976,727		4.34		945,000		4.35
Certificates of deposit	10,279,367		3.81		10,448,365		3.69
Deposits - interest bearing	$	20,741,110			$	21,651,657

(1) Includes the effect of interest rate swaps in effective hedge relationships.

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.

Counterparty Exposure

Counterparty exposure related to financial instruments arises from the risk that a lending, investment, or derivative counterparty will not be able to meet its obligations to us.

Excess cash is generally invested with the FRB on an overnight basis or in the FRB’s Term Deposit Facility, minimizing counterparty exposure on cash balances.

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

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based on the credit rating of the issuer, further minimizing our counterparty exposure. Counterparty credit risk is considered when valuing investments and considering impairment.

Related to derivative transactions, protection against counterparty risk is generally provided by International Swaps and Derivatives Association, Inc. Credit Support Annexes (“CSAs”), or clearinghouses for over-the-counter derivatives. CSAs require a counterparty to post collateral if a potential default would expose the other party to a loss. All derivative contracts entered into by the Bank are covered under CSAs or clearinghouse agreements and require collateral to be exchanged based on the net fair value of derivatives with each counterparty. Our exposure to the counterparty is limited to the value of the derivative contracts in a gain position, less any collateral held by us and plus collateral posted with the counterparty.

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.

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).

We have liquidity exposure related to collateral movements between us and our derivative counterparties. Movements in the value of the derivatives, which are primarily affected by changes in interest rates, may require us to return cash collateral held or may require us to access primary liquidity to post collateral to counterparties.

The table below highlights exposure related to our derivative counterparties as of June 30, 2024.


As of June 30, 2024 (dollars in thousands)	SLM Corporation and Sallie Mae Bank Contracts
Total exposure, net of collateral	$	6,246
Exposure to counterparties with credit ratings, net of collateral	$	6,246
Percent of exposure to counterparties with credit ratings below S&P AA- or Moody’s Aa3	—		%
Percent of exposure to counterparties with credit ratings below S&P A- or Moody’s A3	—		%

Regulatory Capital

The Bank is subject to various regulatory capital requirements administered by federal and state banking authorities. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material adverse effect on our business, results of operations, and financial condition. Under U.S. Basel III and the regulatory framework for prompt corrective action, the Bank must meet specific capital standards that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and its classification under the prompt corrective action framework are also subject to qualitative judgments by the regulators about components of capital, risk weightings, and other factors.

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Capital Management

The Bank intends to maintain at all times regulatory capital levels that meet both the minimum levels required under U.S. Basel III (including applicable buffers) and the levels necessary to be considered “well capitalized” under the FDIC’s prompt corrective action framework, in order to support asset growth and operating needs, address unexpected credit risks, and protect the interests of depositors and the Deposit Insurance Fund administered by the FDIC. The Bank’s Capital Policy requires management to monitor these capital standards and the Bank’s compliance with them. The Board of Directors and management periodically evaluate the quality of assets, the stability of earnings, and the adequacy of the allowance for credit losses for the Bank. The Company is a source of strength for the Bank and will provide additional capital if necessary.

We believe that current and projected capital levels are appropriate for 2024. As of June 30, 2024, the Bank’s risk-based and leverage capital ratios exceed the required minimum ratios and the applicable buffers under the fully phased-in U.S. Basel III standards as well as the “well capitalized” standards under the prompt corrective action framework.

Under U.S. Basel III, the Bank is required to maintain the following minimum regulatory capital ratios: a Common Equity Tier 1 risk-based capital ratio of 4.5 percent, a Tier 1 risk-based capital ratio of 6.0 percent, a Total risk-based capital ratio of 8.0 percent, and a Tier 1 leverage ratio of 4.0 percent. In addition, the Bank is subject to a Common Equity Tier 1 capital conservation buffer of greater than 2.5 percent. Failure to maintain the buffer will result in restrictions on the Bank’s ability to make capital distributions, including the payment of dividends, and to pay discretionary bonuses to executive officers. Including the buffer, the Bank is required to maintain the following capital ratios under U.S. Basel III in order to avoid such restrictions: a Common Equity Tier 1 risk-based capital ratio of greater than 7.0 percent, a Tier 1 risk-based capital ratio of greater than 8.5 percent, and a Total risk-based capital ratio of greater than 10.5 percent.

To qualify as “well capitalized” under the prompt corrective action framework for insured depository institutions, the Bank must maintain a Common Equity Tier 1 risk-based capital ratio of at least 6.5 percent, a Tier 1 risk-based capital ratio of at least 8.0 percent, a Total risk-based capital ratio of at least 10.0 percent, and a Tier 1 leverage ratio of at least 5.0 percent.

In July 2023, the federal banking agencies proposed a rule to implement significant changes to the U.S. Basel Ill regulatory capital requirements. The proposed changes to the regulatory capital requirements generally would amend or introduce approaches and methodologies that would apply to banking organizations with total consolidated assets of $100 billion or more or to banking organizations with significant trading activity. The proposed rule therefore would not affect the Bank's capital requirements or the calculation of its capital ratios.

Under regulations issued by the FDIC and other federal banking agencies, banking organizations that adopted CECL during the 2020 calendar year, including the Bank, could elect to delay for two years, and then phase in over the following three years, the effects on regulatory capital of CECL relative to the incurred loss methodology. The Bank elected to use this option. Therefore, the regulatory capital impact of the Bank’s transition adjustments recorded on January 1, 2020 from the adoption of CECL, and 25 percent of the ongoing impact of CECL on the Bank’s allowance for credit losses, retained earnings, and average total consolidated assets, each as reported for regulatory capital purposes (collectively, the “adjusted transition amounts”), were deferred for the two-year period ending January 1, 2022. On each of January 1, 2022, 2023, and 2024, 25 percent of the adjusted transition amounts were phased in for regulatory capital purposes. On January 1, 2025, the remaining 25 percent of the adjusted transition amounts will be phased in for regulatory capital purposes, with the phased in amounts included in regulatory capital at the beginning of the year. The Bank’s January 1, 2020 CECL transition amounts increased our allowance for credit losses by $1.1 billion, increased the liability representing our off-balance sheet exposure for unfunded commitments by $116 million, and increased our deferred tax asset by $306 million, resulting in a cumulative effect adjustment that reduced retained earnings by $953 million. This transition adjustment was inclusive of qualitative adjustments incorporated into our CECL allowance as necessary, to address any limitations in the models used.

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At June 30, 2024, the adjusted transition amounts that were deferred and are being phased in for regulatory capital purposes are as follows:


	Adjusted Transition Amounts		Phase-In Amounts for the Year Ended		Phase-In Amounts for the Year Ended		Phase-In Amounts for the Six Months Ended		Remaining Adjusted Transition Amounts to be Phased-In
(Dollars in thousands)	December 31, 2021		December 31, 2022		December 31, 2023		June 30, 2024		June 30, 2024

Retained earnings	$	836,351	$	(209,088)	$	(209,088)	$	(209,088)	$	209,087
Allowance for credit losses	1,038,145		(259,536)		(259,536)		(259,536)		259,537
Liability for unfunded commitments	104,377		(26,094)		(26,094)		(26,095)		26,094
Deferred tax asset	306,171		(76,542)		(76,542)		(76,543)		76,544

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.


	Actual				U.S. Basel III Minimum Requirements Plus Buffer(1)(2)
(Dollars in thousands)	Amount		Ratio		Amount			Ratio
As of June 30, 2024(3):
Common Equity Tier 1 Capital (to Risk-Weighted Assets)	$	3,122,582	13.4	%	$	1,631,764	>	7.0	%
Tier 1 Capital (to Risk-Weighted Assets)	$	3,122,582	13.4	%	$	1,981,427	>	8.5	%
Total Capital (to Risk-Weighted Assets)	$	3,423,131	14.7	%	$	2,447,645	>	10.5	%
Tier 1 Capital (to Average Assets)	$	3,122,582	10.8	%	$	1,154,807	>	4.0	%

As of December 31, 2023(3):
Common Equity Tier 1 Capital (to Risk-Weighted Assets)	$	3,019,973	12.3	%	$	1,719,621	>	7.0	%
Tier 1 Capital (to Risk-Weighted Assets)	$	3,019,973	12.3	%	$	2,088,111	>	8.5	%
Total Capital (to Risk-Weighted Assets)	$	3,334,140	13.6	%	$	2,579,432	>	10.5	%
Tier 1 Capital (to Average Assets)	$	3,019,973	10.2	%	$	1,184,213	>	4.0	%

(1) Reflects the U.S. Basel III minimum required ratio plus the applicable capital conservation buffer.

(2) The Bank’s regulatory capital ratios also exceeded all applicable standards for the Bank to qualify as “well capitalized” under the prompt corrective action framework.

(3) For both June 30, 2024 and December 31, 2023, the actual amounts and the actual ratios include the adjusted transition amounts discussed above that were phased in at the beginning of 2024 and 2023.

Dividends

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 Bank declared $138 million and $298 million in dividends to the Company for the three and six months ended June 30, 2024, respectively, and $300 million and $300 million in dividends to the Company for the three and six months ended June 30, 2023, respectively, with the proceeds primarily used to fund share repurchase programs and stock dividends. In the future,

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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.

Borrowings

Outstanding borrowings consist of unsecured debt and secured borrowings issued through our term ABS program and our Secured Borrowing Facility. The issuing entities for those secured borrowings are VIEs and are consolidated for accounting purposes. The following table summarizes our borrowings at June 30, 2024 and December 31, 2023, respectively. For additional information, see Notes to Consolidated Financial Statements, Note 8, “Borrowings” in this Form 10-Q.


	June 30, 2024						December 31, 2023
(Dollars in thousands)	Short-Term		Long-Term		Total		Short-Term		Long-Term		Total
Unsecured borrowings:
Unsecured debt (fixed-rate)	$	—	$	993,810	$	993,810	$	—	$	992,200	$	992,200
Total unsecured borrowings	—		993,810		993,810		—		992,200		992,200
Secured borrowings:
Private Education Loan term securitizations:
Fixed-rate	—		3,691,111		3,691,111		—		3,585,254		3,585,254
Variable-rate	—		718,091		718,091		—		650,058		650,058
Total Private Education Loan term securitizations	—		4,409,202		4,409,202		—		4,235,312		4,235,312
Secured Borrowing Facility	—		—		—		—		—		—
Total secured borrowings	—		4,409,202		4,409,202		—		4,235,312		4,235,312
Total	$	—	$	5,403,012	$	5,403,012	$	—	$	5,227,512	$	5,227,512

Short-term Borrowings

Other Borrowing Sources

We maintain discretionary uncommitted Federal Funds lines of credit with various correspondent banks which totaled $125 million at June 30, 2024. 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, 2024 nor in the year ended December 31, 2023.

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 FFELP Loans and 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, 2024 and December 31, 2023, the value of our pledged collateral at the FRB totaled $1.2 billion and $1.6 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, 2024 nor in the year ended December 31, 2023.

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Contractual Loan Commitments

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 at a later date (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, 2024, we had $1.3 billion of outstanding contractual loan commitments that we expect to fund during the upcoming 2024/2025 academic year. At June 30, 2024, we had a $49 million reserve recorded in “Other Liabilities” to cover expected losses that may occur during the one-year loss emergence period on these unfunded commitments. See Notes to Consolidated Financial Statements, Note 2, “Significant Accounting Policies - Allowance for Credit Losses — Off-Balance Sheet Exposure for Contractual Loan Commitments” in our 2023 Form 10-K and Note 5, “Unfunded Loan Commitments” in this Form 10-Q for additional information.

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations addresses our consolidated financial statements, which have been prepared in accordance with GAAP. In preparing our consolidated financial statements, we have identified certain accounting estimates and assumptions that we consider to be the most critical to an understanding of our financial statements because they involve significant judgments and uncertainties.

The critical accounting estimates we have identified relate to the allowance for credit losses. These estimates reflect our best judgment about current and, for some estimates, including management overlays, future economic and market conditions. These estimates are based on information available as of the date of these financial statements. If conditions change from those expected, it is reasonably possible that these judgments and estimates could change, which may result in a change in the allowance for credit losses or material changes to our consolidated financial statements. A discussion of our critical accounting policies can be found in our 2023 Form 10-K.

Allowance for Credit Losses

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.

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.

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.

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.

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.

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.

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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.

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.

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.

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.

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:

•Economic forecasts;

•Weighting of economic forecasts; and

•Recovery rates.

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.

84 SLM CORPORATION

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.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Sensitivity Analysis

Our interest rate risk management program seeks to manage and control interest rate risk, thereby reducing our exposure to fluctuations in interest rates, and achieving consistent and acceptable levels of profit in any rate environment and sustainable growth in net interest income over the long term. We evaluate and monitor interest rate risk through two primary methods:

•Earnings at Risk (“EAR”), which measures the impact of hypothetical changes in interest rates on net interest income; and

•Economic Value of Equity (“EVE”), which measures the sensitivity or change in the economic value of equity to changes in interest rates.

A number of potential interest rate scenarios are simulated using our asset liability management system. The Bank is the primary source of interest rate risk within the Company. At June 30, 2024, a significant portion of the Bank’s earning assets and a large balance of deposits were indexed to 30-day average SOFR. Therefore, 30-day average SOFR is considered a core rate in our interest rate risk analysis. The 30-day average SOFR and other rates are shocked in parallel for shock scenarios unless otherwise indicated. Rates are adjusted up or down via a set of scenarios that includes both rate shocks and ramps. Rate shocks represent an immediate and sustained change in key rates, with the resulting changes in other indices correlated accordingly. Interest rate ramps represent a linear increase in those key rates over the course of 12 months, with the resulting changes in other indices correlated accordingly.

The following table summarizes the potential effect on earnings over the next 24 months and the potential effect on market values of balance sheet assets and liabilities at June 30, 2024 and 2023, based upon a sensitivity analysis performed by management assuming hypothetical increases in market interest rates of 100 and 300 basis points and a decrease of 100 and 300 basis points while credit and funding spreads remain constant. EAR analysis assumes a static balance sheet, with maturities of each product replaced with assumed issuance of new products of the same type. The EVE sensitivity is applied only to financial assets and liabilities, including hedging instruments, that existed at the balance sheet date, and does not reflect any impact of loan sales, new assets, liabilities, commitments, or hedging instruments that may arise in the future.

The EAR results for June 30, 2024 indicate a market risk profile of low sensitivity to rate changes, based on static balance sheet assumptions over the next two years. The EVE metrics demonstrate higher sensitivity than historic results, including results from one year ago. This is due to an increase in the mix of fixed-rate versus variable-rate loan disbursements, which results in our liabilities repricing more quickly than our assets over time. Planned loan sales, which are not included in the static EVE modeling, significantly reduce this exposure. Management continues to evaluate this trend to determine if and when further actions are necessary to manage EVE sensitivity.


	2024				2023
As of June 30,	+300 Basis Points	+100 Basis Points	-100 Basis Points	-300 Basis Points	+300 Basis Points	+100 Basis Points	-100 Basis Points	-300 Basis Points
EAR - Shock	-4.7%	-1.5%	+1.3%	+3.7%	-0.5%	-0.1%	0.0%	-0.3%
EAR - Ramp	-2.5%	-0.8%	+0.7%	+1.9%	0.0%	0.0%	-0.1%	-0.5%
EVE	-24.3%	-8.4%	+8.6%	+25.8%	-18.4%	-6.5%	+6.5%	+19.0%

In the preceding tables, the interest rate sensitivity analysis reflects the balance sheet mix of fixed-rate loans and funding as well as fully variable SOFR-based loans, and fully variable funding, including brokered CDs that have been converted to SOFR through derivative transactions. The analysis assumes that retail MMDAs and retail savings balances, while relatively sensitive to interest rate changes, will not correlate 100 percent to the full interest rate shocks or ramps.

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Also considered is the impact of FFELP Loans, which receive floor income in low interest rate environments, and will therefore not reprice fully with interest rate shocks.

Although we believe that these measurements provide an estimate of our interest rate sensitivity, they do not account for potential changes in credit quality, balance sheet mix, and size of our balance sheet. They also do not account for other business developments that could affect net income, or for management actions that could affect net income or could be taken to change our risk profile. Accordingly, we can give no assurance that actual results would not differ materially from the estimated outcomes of our simulations. Further, such simulations do not represent our current view of expected future interest rate movements.

Asset and Liability Funding Gap

The table below presents our assets and liabilities (funding) arranged by underlying indices as of June 30, 2024. In the following GAAP presentation, the funding gap only includes derivatives that qualify as effective hedges (those derivatives which are reflected in net interest income, as opposed to those reflected in the “gains (losses) on derivatives and hedging activities, net” line on the consolidated statements of income). The difference between the asset and the funding is the funding gap for the specified index. This represents, at a high level, our exposure to interest rate risk in the form of basis risk and repricing risk, which is the risk that the different indices may reset at different frequencies or may not move in the same direction or at the same magnitude. (Note that all fixed-rate assets and liabilities are aggregated into one line item, which does not capture the differences in time due to maturity.)


As of June 30, 2024 (dollars in millions) Index	Frequency of Variable Resets	Assets		Funding (1)		Funding Gap
Fed Funds Effective Rate	daily/weekly/monthly	$	—	$	544.9	$	(544.9)
SOFR Rate	daily/weekly/monthly	6,097.6		4,036.3		2,061.3
3-month SOFR	quarterly	—		251.1		(251.1)
3-month Treasury bill	weekly	77.9		—		77.9
Prime	monthly	0.4		—		0.4
Non-Discrete reset(2)	daily/weekly	5,465.2		3,702.3		1,762.9
Fixed-Rate(3)		17,127.8		20,234.3		(3,106.5)
Total		$	28,768.9	$	28,768.9	$	—

(1) Funding (by index) includes the impact of all derivatives that qualify as effective hedges.

(2) Assets include restricted and unrestricted cash equivalents and other overnight type instruments. Funding includes liquid retail deposits and the obligation to return cash collateral held related to derivatives exposures.

(3) Assets include receivables and other assets (including premiums and reserves). Funding includes unswapped time deposits, liquid MMDAs swapped to fixed-rates, and stockholders' equity.

The “Funding Gap” in the above table shows primarily mismatches in the Fed Funds Effective Rate, SOFR rate, 3-month SOFR, Non-Discrete reset, and fixed-rate categories. Changes in the Fed Funds Effective Rate, the Non-Discrete reset, and the daily, weekly, and monthly SOFR, and 3-month SOFR categories are generally quite highly correlated and the rates would be expected to offset each other relatively effectively. The funding in the fixed-rate bucket includes $2.0 billion of equity and $0.3 billion of non-interest bearing liabilities. We consider the overall repricing risk to be moderate, which is supported by other analyses of interest rate sensitivity.

We use interest rate swaps and other derivatives to achieve our risk management objectives. Our asset liability management strategy is to match assets with debt (in combination with derivatives) that have the same underlying index and reset frequency or have interest rate characteristics that we believe are highly correlated. The use of funding with index types and reset frequencies that are different from our assets exposes us to interest rate risk in the form of basis and repricing risk. This could result in our cost of funds not moving in the same direction or with the same magnitude as the yield on our assets. While we believe this risk is low, as all of these indices are short-term with rate movements that are highly correlated over a long period of time, market disruptions (which have occurred in recent years) can lead to a temporary divergence between indices, resulting in a negative impact to our earnings.

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Weighted Average Life

The following table reflects the weighted average lives of our earning assets and liabilities at June 30, 2024.


As of June 30, 2024 (averages in years)			Weighted Average Life
Earning assets
Education loans			5.32

Cash and investments			1.24
Total earning assets			4.17

Deposits
Short-term deposits			0.69
Long-term deposits			1.71
Total deposits			0.89

Borrowings

Long-term borrowings			3.40
Total borrowings			3.40

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Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of June 30, 2024. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of June 30, 2024, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended June 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We and our subsidiaries and affiliates are subject to various claims, lawsuits, and other actions that arise in the normal course of business. It is common for the Company, our subsidiaries, and affiliates to receive information and document requests and investigative demands from state attorneys general, legislative committees, and administrative agencies. These requests may be for informational or regulatory purposes and may relate to our business practices, the industries in which we operate, or other companies with whom we conduct business. Our practice has been and continues to be to cooperate with these bodies and be responsive to any such requests.

For additional information regarding our legal proceedings, see Part I, Item 3. “Legal Proceedings” in our 2023 Form 10-K.

Item 1A. Risk Factors

Our business activities involve a variety of risks. Readers should carefully consider the risk factors disclosed in Part I, Item 1A. “Risk Factors” of our 2023 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Share Repurchases

The following table provides information relating to our purchase of shares of our common stock in the three months ended June 30, 2024.


(In thousands, except per share data)	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)(3)	Approximate Dollar Value of Shares That May Yet Be Purchased Under Publicly Announced Plans or Programs(2)
Period:
April 1 - April 30, 2024	802	$	21.43	798	$	606,000
May 1 - May 31, 2024	859	$	21.39	859	$	588,000
June 1 - June 30, 2024	1,277	$	20.86	1,273	$	562,000
Total second-quarter 2024	2,938	$	21.17	2,930

(1) The total number of shares purchased includes the shares of our common stock tendered to us to satisfy the exercise price in connection with cashless exercises of stock options, and tax withholding obligations in connection with exercises of stock options and vesting of restricted stock, restricted stock units, and performance stock units.

(2) As of June 30, 2024, we had $562 million in capacity remaining under the 2024 Share Repurchase Program. The 2024 Share Repurchase Program was announced on January 24, 2024, with an effective date of January 26, 2024, and expires on February 6, 2026. See Note 10, “Stockholders’ Equity” to our consolidated financial statements in this Form 10-Q for further discussion.

(3) In the second quarter of 2024, we repurchased 2.9 million shares under 10b5-1 trading plans. See Note 10, “Stockholders’ Equity” to our consolidated financial statements in this Form 10-Q for further discussion.

The closing price of our common stock on the NASDAQ Global Select Market on June 28, 2024 was $20.79.

Item 3. Defaults Upon Senior Securities

Nothing to report.

Item 4. Mine Safety Disclosures

Not applicable.

90 SLM CORPORATION

Item 5. Other Information

In the second quarter of 2024, no director or officer (as defined in Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934, as amended) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” for the purchase or sale of securities of the Company, each within the meaning of Item 408 of Regulation S-K.

Item 6. Exhibits

The following exhibits are furnished or filed, as applicable:



10.1			Form of SLM Corporation 2021 Omnibus Incentive Plan, Independent Director Restricted Stock Agreement - 2024.

10.2			SLM Corporation Amended and Restated Change in Control Severance Plan for Senior Officers effective June 18, 2024.

10.3			SLM Corporation Amended and Restated Executive Severance Plan for Senior Officers effective June 18, 2024.

31.1			Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1			Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2			Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH			XBRL Taxonomy Extension Schema Document.

101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF			XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB			XBRL Taxonomy Extension Label Linkbase Document.

101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document.

104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

SLM CORPORATION 91

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



SLM CORPORATION (Registrant)

By:						/S/ PETER M. GRAHAM
						Peter M. Graham Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

Date: July 24, 2024

92 SLM CORPORATION

SLM Corp - Quarter Report: 2024 June (Form 10-Q)

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