Exhibit 99.1


sma12.jpg
NEWS RELEASE
 
 
FOR IMMEDIATE RELEASE
 

SALLIE MAE REPORTS SECOND-QUARTER 2018 FINANCIAL RESULTS
Diluted Earnings Per Share Up 60 Percent From Year-Ago Quarter to $0.24
Private Education Loan Originations Increase 13 Percent From Year-Ago Quarter to $487 Million
Provision for Private Education Loan Losses Declines 6 Percent From Year-Ago Quarter
Net Interest Income Increases 26 Percent From Year-Ago Quarter to $341 Million

NEWARK, Del., July 24, 2018 — Sallie Mae (Nasdaq: SLM), formally SLM Corporation, today released second-quarter 2018 financial results that include growth in diluted earnings per share and private education loan originations, a lower provision for private education loan losses, and increased net interest income. In the second-quarter 2018, the company increased its diluted earnings per share 60 percent to $0.24, grew its private education loan originations 13 percent to $487 million, reduced its provision for private education loan losses 6 percent to $46 million, and increased its net interest income 26 percent to $341 million, all compared with the second quarter of 2017.
“We enter this peak student loan processing season with customer experience enhancements that simplify the process for undergraduates, graduate students, and their parents, and a full product set to meet their needs,” said Raymond J. Quinlan, Chairman and CEO. “Our product diversification efforts continue as we seek to build long-term relationships with our customers and enhance franchise value.”
For the second-quarter 2018, GAAP net income was $110 million, compared with $71 million in the year-ago quarter. GAAP net income attributable to the company’s common stock was $106 million ($0.24 diluted earnings per share) in the second-quarter 2018, compared with $67 million ($0.15 diluted earnings per share) in the year-ago quarter. The year-over-year increase was primarily attributable to a $71 million increase in net interest income, which was offset by a $13 million increase in provisions for credit losses, and a $24 million increase in total non-interest expenses. The reduction of the federal statutory corporate income tax rate from 35 percent to 21 percent because of the tax cuts enacted in 2017 contributed approximately $21 million to net income and $0.05 diluted earnings per share.
Second-quarter 2018 results vs. second-quarter 2017 included:
Net interest income of $341 million, up 26 percent.
Net interest margin of 6.14 percent, up 23 basis points.
Private education loan originations of $487 million, up 13 percent.
Average private education loans outstanding of $18.8 billion, up 20 percent.
Average yield on the private education loan portfolio was 9.03 percent, up 70 basis points.
Private education loan provision for loan losses was $46 million, down from $49 million.
Private education loans in forbearance were 3.4 percent of private education loans in repayment and forbearance, up from 3.3 percent.
Private education loan delinquencies as a percentage of private education loans in repayment were unchanged at 2.2 percent.
Personal loan originations of $93 million and personal loan acquisitions of $277 million.
Average personal loans outstanding of $815 million, up from $61 million.
Average yield on the personal loan portfolio was 10.65 percent, up 137 basis points.
Personal loan provision for loan losses was $16 million.

1



Non-GAAP Core earnings for the second-quarter 2018 were $114 million, compared with $73 million in the year-ago quarter. Core earnings attributable to the company’s common stock grew 60 percent to $110 million ($0.25 diluted earnings per share) in the second-quarter 2018, compared with $69 million ($0.16 diluted earnings per share) in the year-ago quarter.
Second-quarter 2018 GAAP results included $5 million of pre-tax losses from derivative accounting treatment that are excluded from core earnings results, compared with $4 million of pre-tax losses in the year-ago period.
Sallie Mae provides core earnings because it is one of several measures management uses to evaluate management performance and allocate corporate resources. The difference between core earnings and GAAP net income is driven by mark-to-market unrealized gains and losses on derivative contracts recognized in GAAP net income, but not in core earnings results. Management believes its derivatives are effective economic hedges, and, as such, they are a critical element of the company’s interest rate risk management strategy.
Total Non-Interest Expenses
Total non-interest expenses were $135 million in the second-quarter 2018, compared with $111 million in the year-ago quarter. Operating expenses grew 22 percent from the year-ago quarter, while the non-GAAP operating efficiency ratio improved to 38.3 percent in the second-quarter 2018 from 39.7 percent in the year-ago quarter. The increase in non-interest expenses was driven by the growth in the portfolio and costs related to product diversification, platform enhancements, customer experience, and higher compensation and benefits costs.
In the first-quarter 2018, the company announced a $30 million investment in technology infrastructure and product diversification in 2018. The company now plans to increase that investment to $40 million to achieve a revised personal loan originations target of $475 million, up from $300 million. The company spent $5 million in the second-quarter 2018 on these initiatives and approximately $6 million year-to-date.
As a result of the increased investment to generate interest-earning assets, the company increased its full-year non-GAAP operating efficiency ratio guidance from a range of 37 - 38 percent to 38 - 39 percent.
Income Tax Expense
Income tax expense decreased to $40 million in the second-quarter 2018 from $45 million in the year-ago quarter. The effective income tax rate decreased in the second-quarter 2018 to 26.7 percent from 38.8 percent in the year-ago quarter, primarily due to the reduction in the federal statutory corporate income tax rate from 35 percent to 21 percent under tax cuts enacted in 2017. During the second-quarter 2018, the company recorded an increase on its uncertain tax positions which increased our effective tax rate during the quarter from the expected rate of 25 percent.
Capital
The regulatory capital ratios of the company’s Sallie Mae Bank subsidiary continue to exceed guidelines for institutions considered “well capitalized.” At June 30, 2018, Sallie Mae Bank’s regulatory capital ratios were as follows:
 
June 30, 2018
"Well Capitalized"
 Regulatory Requirements
Common Equity Tier 1 Capital (to Risk-Weighted Assets)
12.0 percent
 6.5 percent
Tier 1 Capital (to Risk-Weighted Assets)
12.0 percent
 8.0 percent
Total Capital (to Risk-Weighted Assets)
13.3 percent
10.0 percent
Tier 1 Capital (to Average Assets)
11.2 percent
 5.0 percent
Deposits
Deposits at the company totaled $16.7 billion ($8.7 billion in brokered deposits and $8.0 billion in retail and other deposits) at June 30, 2018, compared with total deposits of $13.8 billion ($7.0 billion in brokered deposits and $6.8 billion in retail and other deposits) at June 30, 2017.
Guidance
The company expects 2018 results to be as follows:
Full-year diluted core earnings per share: $0.99 - $1.01.
Full-year private education loan originations of $5.0 billion.
Full-year non-GAAP operating efficiency ratio: 38 percent - 39 percent.

***

2



Sallie Mae will host an earnings conference call tomorrow, July 25, 2018, at 8 a.m. EDT. Sallie Mae executives will be on hand to discuss highlights of the quarter and to answer questions related to company performance. Individuals interested in participating should dial 877-356-5689 (USA and Canada) or 706-679-0623 (international) and use access code 5469339 starting at 7:45 a.m. EDT. A live audio webcast of the conference call may be accessed at www.SallieMae.com/investors. A replay of the conference call will be available approximately two hours after the call’s conclusion and will remain available through Aug. 8, 2018. To hear the replay, please dial 855-859-2056 (USA and Canada) or 404-537-3406 (international) and use access code 5469339.
Presentation slides for the conference call may be accessed at www.SallieMae.com/investors under the webcasts tab.

This press release contains “forward-looking statements” and information based on management’s current expectations as of the date of this release. Statements that are not historical facts, including statements about our beliefs, opinions or expectations and statements that assume or are dependent upon future events, are forward-looking statements. Forward-looking statements are subject to risks, uncertainties, assumptions and other factors that may cause actual results to be materially different from those reflected in 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 Annual Report on Form 10-K for the year ended Dec. 31, 2017 (filed with the Securities and Exchange Commission (“SEC”) on Feb. 23, 2018) and subsequent filings with the SEC; 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; changes in accounting standards and the impact of related changes in significant accounting estimates; 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; 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 and 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 and restructuring initiatives 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; changes in the general interest rate environment, including the rate relationships among relevant money-market instruments and those of the our earning assets versus our funding arrangements; rates of prepayments on the loans that we make or acquire; 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 us to make certain estimates and assumptions, including estimates and assumptions about future events. These estimates or assumptions may prove to be incorrect. All forward-looking statements contained in this release are qualified by these cautionary statements and are made only as of the date of this release. We do not undertake any obligation to update or revise these forward-looking statements to conform such statements to actual results or changes in our expectations.
The company reports financial results on a GAAP basis and also provides certain “Core Earnings” performance measures. The difference between the company’s “Core Earnings” and GAAP results for the periods presented were the unrealized, mark-to-market gains/losses on derivative contracts (excluding current period accruals on the derivative instruments), net of tax. These are recognized in GAAP, but not in “Core Earnings” results. The company provides “Core Earnings” measures because this is what management uses when making management decisions regarding the company’s performance and the allocation of corporate resources. The company’s “Core Earnings” are not defined terms within GAAP and may not be comparable to similarly titled measures reported by other companies.
For additional information, see “Management's Discussion and Analysis of Financial Condition and Results of Operations — ‘Core Earnings’ ” in the company’s Form 10-Q for the quarter ended June 30, 2018 for a further discussion and the “‘Core Earnings’ to GAAP Reconciliation” table in this press release for a complete reconciliation between GAAP net income and “Core Earnings.”


  
***



3



Sallie Mae (Nasdaq: SLM) is the nation’s saving, planning, and paying for college company. Whether college is a long way off or just around the corner, Sallie Mae offers products that promote responsible personal finance, including private education loans, Upromise rewards, scholarship search, college financial planning tools, and online retail banking. Learn more at SallieMae.com. Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.
###
  
Contacts:
 
Media:
Martha Holler, 302-451-4900, martha.holler@salliemae.com, Rick Castellano, 302-451-2541, rick.castellano@salliemae.com
Investors:
Brian Cronin, 302-451-0304, brian.cronin@salliemae.com
###

4




Selected Financial Information and Ratios
(Unaudited)
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
(In thousands, except per share data and percentages) 
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
Net income attributable to SLM Corporation common stock
 
$
105,912

 
$
66,643

 
$
228,769

 
$
156,011

Diluted earnings per common share attributable to SLM Corporation
 
$
0.24

 
$
0.15

 
$
0.52

 
$
0.35

Weighted average shares used to compute diluted earnings per share
 
439,445

 
438,115

 
439,212

 
438,424

Return on assets
 
1.9
%
 
1.5
%
 
2.1
%
 
1.7
%
Non-GAAP operating efficiency ratio(1)
 
38.3
%
 
39.7
%
 
37.4
%
 
38.2
%
 
 
 
 
 
 
 
 
 
Other Operating Statistics
 
 
 
 
 
 
 
 
Ending Private Education Loans, net
 
$
18,488,240

 
$
15,523,338

 
$
18,488,240

 
$
15,523,338

Ending FFELP Loans, net
 
886,780

 
968,398

 
886,780

 
968,398

Ending total education loans, net
 
$
19,375,020

 
$
16,491,736

 
$
19,375,020

 
$
16,491,736

 
 
 
 
 
 
 
 
 
Ending Personal Loans, net
 
$
933,561

 
$
68,690

 
$
933,561

 
$
68,690

 
 
 
 
 
 
 
 
 
Average education loans
 
$
19,662,863

 
$
16,668,281

 
$
19,621,379

 
$
16,561,077

Average Personal Loans
 
$
815,356

 
$
60,910

 
$
672,792

 
$
48,464

_________
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) We calculate and report our non-GAAP operating efficiency ratio as the ratio of (a) the total non-interest expense numerator to (b) the net revenue denominator (which consists of the sum of net interest income, before provision for credit losses, and non-interest income, excluding any gains and losses on sales of loans and securities, net and the net impact of derivative accounting as defined in the "‘Core Earnings’ to GAAP Reconciliation" table in this Press Release). This ratio provides useful information to investors because it is a measure used by our management team to monitor our effectiveness in managing operating expenses. Other companies may use similarly titled non-GAAP financial measures that are calculated differently from our ratio. Accordingly, our non-GAAP operating efficiency ratio may not be comparable to similar measures used by other companies.


5



SLM CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
 
 
 
June 30,
 
December 31,
 
 
2018
 
2017
Assets
 
 
 
 
Cash and cash equivalents
 
$
2,043,789

 
$
1,534,339

Available-for-sale investments at fair value (cost of $185,749 and $247,607, respectively)
 
178,145

 
244,088

Loans held for investment (net of allowance for losses of $295,277 and $251,475, respectively)
 
20,308,581

 
18,567,641

Restricted cash
 
114,659

 
101,836

Other interest-earning assets
 
28,385

 
21,586

Accrued interest receivable
 
1,161,161

 
967,482

Premises and equipment, net
 
101,335

 
89,748

Tax indemnification receivable
 
153,470

 
168,011

Other assets
 
99,651

 
84,853

Total assets
 
$
24,189,176

 
$
21,779,584

 
 
 
 
 
Liabilities
 
 
 
 
Deposits
 
$
16,745,957

 
$
15,505,383

Long-term borrowings
 
4,217,119

 
3,275,270

Income taxes payable, net
 
79,772

 
102,285

Upromise member accounts
 
230,228

 
243,080

Other liabilities
 
187,398

 
179,310

Total liabilities
 
21,460,474

 
19,305,328

 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
Equity
 
 
 
 
Preferred stock, par value $0.20 per share, 20 million shares authorized:
 
 
 
 
Series B: 4 million and 4 million shares issued, respectively, at stated value of $100 per share
 
400,000

 
400,000

Common stock, par value $0.20 per share, 1.125 billion shares authorized: 449.4 million and 443.5 million shares issued, respectively
 
89,882

 
88,693

Additional paid-in capital
 
1,260,201

 
1,222,277

Accumulated other comprehensive income (net of tax expense of $7,448 and $1,696, respectively)
 
23,216

 
2,748

Retained earnings
 
1,096,359

 
868,182

Total SLM Corporation stockholders’ equity before treasury stock
 
2,869,658

 
2,581,900

Less: Common stock held in treasury at cost: 14.0 million and 11.1 million shares, respectively
 
(140,956
)
 
(107,644
)
Total equity
 
2,728,702

 
2,474,256

Total liabilities and equity
 
$
24,189,176

 
$
21,779,584






6



SLM CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2018
 
2017
 
2018
 
2017
Interest income:
 
 
 
 
 
 
 
 
Loans
 
$
454,045

 
$
336,739

 
$
884,093

 
$
661,496

Investments
 
1,694

 
2,201

 
3,641

 
4,344

Cash and cash equivalents
 
6,572

 
3,155

 
11,808

 
5,743

Total interest income
 
462,311

 
342,095

 
899,542

 
671,583

Interest expense:
 
 
 
 
 
 
 
 
Deposits
 
90,605

 
50,730

 
168,061

 
95,583

Interest expense on short-term borrowings
 
1,128

 
1,194

 
3,521

 
2,430

Interest expense on long-term borrowings
 
29,628

 
20,278

 
54,396

 
35,601

Total interest expense
 
121,361

 
72,202

 
225,978

 
133,614

Net interest income
 
340,950

 
269,893

 
673,564

 
537,969

Less: provisions for credit losses
 
63,267

 
50,215

 
117,198

 
75,511

Net interest income after provisions for credit losses
 
277,683

 
219,678

 
556,366

 
462,458

Non-interest income:
 
 
 
 
 
 
 
 
Gains on sales of loans, net
 
2,060

 

 
2,060

 

Losses on sales of securities, net
 
(1,549
)
 

 
(1,549
)
 

Losses on derivatives and hedging activities, net
 
(5,268
)
 
(3,609
)
 
(1,376
)
 
(8,987
)
Other income
 
12,295

 
10,629

 
21,937

 
21,975

Total non-interest income
 
7,538

 
7,020

 
21,072

 
12,988

Non-interest expenses:
 
 
 
 
 
 
 
 
Compensation and benefits
 
60,245

 
51,007

 
128,562

 
106,471

FDIC assessment fees
 
8,001

 
6,622

 
16,797

 
13,851

Other operating expenses
 
66,977

 
53,622

 
114,738

 
93,606

Total operating expenses
 
135,223

 
111,251

 
260,097

 
213,928

Acquired intangible asset amortization expense
 
92

 
117

 
184

 
234

Total non-interest expenses
 
135,315

 
111,368

 
260,281

 
214,162

Income before income tax expense
 
149,906

 
115,330

 
317,157

 
261,284

Income tax expense
 
40,074

 
44,713

 
81,071

 
95,724

Net income
 
109,832

 
70,617

 
236,086

 
165,560

Preferred stock dividends
 
3,920

 
3,974

 
7,317

 
9,549

Net income attributable to SLM Corporation common stock
 
$
105,912

 
$
66,643

 
$
228,769

 
$
156,011

Basic earnings per common share attributable to SLM Corporation
 
$
0.24

 
$
0.15

 
$
0.53

 
$
0.36

Average common shares outstanding
 
435,187

 
431,245

 
434,573

 
430,572

Diluted earnings per common share attributable to SLM Corporation
 
$
0.24

 
$
0.15

 
$
0.52

 
$
0.35

Average common and common equivalent shares outstanding
 
439,445

 
438,115

 
439,212

 
438,424




7




“Core Earnings” to GAAP Reconciliation

The following table reflects adjustments associated with our derivative activities.
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
(Dollars in thousands, except per share amounts)
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
“Core Earnings” adjustments to GAAP:
 
 
 
 
 
 
 
 
GAAP net income attributable to SLM Corporation
 
$
109,832

 
$
70,617

 
$
236,086

 
$
165,560

Preferred stock dividends
 
3,920

 
3,974

 
7,317

 
9,549

GAAP net income attributable to SLM Corporation common stock
 
$
105,912

 
$
66,643

 
$
228,769

 
$
156,011

 
 
 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
 
Net impact of derivative accounting(1)
 
5,029

 
3,508

 
1,247

 
8,966

Net tax effect(2)
 
1,222

 
1,340

 
303

 
3,424

Total “Core Earnings” adjustments to GAAP
 
3,807

 
2,168

 
944

 
5,542

 
 
 
 
 
 
 
 
 
“Core Earnings” attributable to SLM Corporation common stock
 
$
109,719

 
$
68,811

 
$
229,713

 
$
161,553

 
 
 
 
 
 
 
 
 
GAAP diluted earnings per common share
 
$
0.24

 
$
0.15

 
$
0.52

 
$
0.35

Derivative adjustments, net of tax
 
0.01

 
0.01

 

 
0.02

“Core Earnings” diluted earnings per common share
 
$
0.25

 
$
0.16

 
$
0.52

 
$
0.37

______
(1) Derivative Accounting: “Core Earnings” exclude periodic unrealized gains and losses caused by the mark-to-market valuations on derivatives that do not qualify for hedge accounting treatment under GAAP, as well as the periodic unrealized gains and losses that are a result of ineffectiveness recognized related to effective hedges under GAAP (but include current period accruals on the derivative instruments), net of tax. Under GAAP, for our derivatives held to maturity, the cumulative net unrealized gain or loss over the life of the contract will equal $0.

(2) “Core Earnings” tax rate is based on the effective tax rate at the Bank where the derivative instruments are held.



8

View differences made from one to another to evaluate Slm Corp's financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 8-K Corporate News to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by Slm Corp.

Continue

Never Miss A New SEC Filing Again


Real-Time SEC Filing Notifications
Screenshot taken from Gmail for a new 10-K Annual Report
Last10K.com Member Feature

Receive an e-mail as soon as a company files an Annual Report, Quarterly Report or has new 8-K corporate news.

Continue

We Highlighted This SEC Filing For You


SEC Filing Sentiment Analysis - Bullish, Bearish, Neutral
Screenshot taken from Wynn's 2018 10-K Annual Report
Last10K.com Member Feature

Read positive and negative remarks made by management in their entirety without having to find them in a 10-K/Q.

Continue

Widen Your SEC Filing Reading Experience


Increased Reading Area for SEC Filings
Screenshot taken from Adobe Inc.'s 10-Q Quarterly Report
Last10K.com Member Feature

Remove data columns and navigations in order to see much more filing content and tables in one view

Continue

Uncover Actionable Information Inside SEC Filings


SEC Filing Disclosures
Screenshot taken from Lumber Liquidators 10-K Annual Report
Last10K.com Member Feature

Read both hidden opportunities and early signs of potential problems without having to find them in a 10-K/Q

Continue

Adobe PDF, Microsoft Word and Excel Downloads


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshots of actual 10-K and 10-Q SEC Filings in PDF, Word and Excel formats
Last10K.com Member Feature

Export Annual and Quarterly Reports to Adobe PDF, Microsoft Word and Excel for offline viewing, annotations and analysis

Continue

FREE Financial Statements


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshot of actual balance sheet from company 10-K Annual Report
Last10K.com Member Feature

Get one-click access to balance sheets, income, operations and cash flow statements without having to find them in Annual and Quarterly Reports

Continue for FREE

Intrinsic Value Calculator


Intrinsic Value Calculator
Screenshot of intrinsic value for AT&T (2019)
Last10K.com Member Feature

Our Intrinsic Value calculator estimates what an entire company is worth using up to 10 years of financial ratios to determine if a stock is overvalued or not

Continue

Financial Stability Report


Financial Stability Report
Screenshot of financial stability report for Coco-Cola (2019)
Last10K.com Member Feature

Our Financial Stability reports uses up to 10 years of financial ratios to determine the health of a company's EPS, Dividends, Book Value, Return on Equity, Current Ratio and Debt-to-Equity

Continue

Get a Better Picture of a Company's Performance


Financial Ratios
Available Financial Ratios
Last10K.com Member Feature

See how over 70 Growth, Profitability and Financial Ratios perform over 10 Years

Continue

Log in with your credentials

or    

Forgot your details?

Create Account