Sallie Mae’s second-quarter performance fell short of Wall Street’s expectations, with both revenue and GAAP earnings per share missing analyst forecasts. Management attributed the flat revenue and lower profits to a combination of increased noninterest expenses—mainly from upfront investments in new products and technology—and a temporary dip in net interest margin due to elevated liquidity ahead of peak loan origination season. CEO Jonathan Witter emphasized that credit trends within the portfolio remained stable, noting, “Credit quality remains strong, borrower performance trends are stable, and the current loss pressure is concentrated, understood and manageable.”
Is now the time to buy SLM? Find out in our full research report (it’s free for active Edge members).
Sallie Mae (SLM) Q2 CY2026 Highlights:
- Revenue: $401.1 million vs analyst estimates of $408.3 million (flat year on year, 1.8% miss)
- EPS (GAAP): $0.29 vs analyst expectations of $0.44 (34.2% miss)
- EPS (GAAP) guidance for the full year is $3.15 at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: 20.1%, down from 21.7% in the same quarter last year
- Market Capitalization: $4.83 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Sallie Mae’s Q2 Earnings Call
- Mark DeVries (Barclays) asked about the trajectory for net interest margin recovery in the back half of the year. CFO Peter Graham explained that as liquidity is deployed into peak season originations, NIM should return closer to the 5% target, although not significantly above it in the near term.
- Moshe Orenbuch (Credit Suisse) questioned the impact of credit performance and recovery strategies on future charge-offs. CEO Jonathan Witter emphasized that the credit impact is limited to a small segment and that loan modifications have outperformed expectations, with more than 75% of borrowers making payments after exiting modification programs.
- Sanjay Sakhrani (KBW) probed whether loan yields will recover alongside NIM as origination mix changes. Graham noted that yield patterns should normalize during peak season, and the impact of product mix will become clearer after this cycle.
- Terry Ma (J.P. Morgan) inquired about moving parts behind the back half EPS guidance and seasonality in credit delinquencies. Graham said the updated net charge-off guidance captures the main risks, and Witter added that typical seasonal trends in delinquencies are expected, with some effects from larger repayment waves and the new origination mix.
- Donald Fandetti (Wells Fargo) asked for clarification on the decision to halt debt sales and the potential to resume them. Graham responded that the pause was to limit negative impacts from third-party resolution firms, and strategies could be adjusted once outcomes are better understood.
Catalysts in Upcoming Quarters
In future quarters, the StockStory team will be monitoring (1) origination trends and application volumes during the ongoing peak season, especially for new parent and graduate loans, (2) the timing and structure of the second strategic partnership and its impact on recurring fee revenue, and (3) net charge-off rates as recovery strategies evolve. Progress in loan modification performance and cost discipline will also be critical signposts.
Sallie Mae currently trades at $25.72, up from $24.18 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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