SLM Corporation (SLM) Q4 2025 Earnings Call Transcript

SLM Corporation (NASDAQ: SLM) Q4 2025 Earnings Call dated Jan. 22, 2026

Corporate Participants:

Kate deLacy — Senior Director, Head of Investor Relations

Jon Witter — Chief Executive Officer

Pete Graham — Chief Financial Officer

Analysts:

Carolyn Lottah — Analyst

Giuliano Bologna — Analyst

Terry Ma — Analyst

Jon Arfstrom — Analyst

Melissa Wedel — Analyst

Presentation:

Operator

Welcome to the Sallie Mae Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Kate deLacy, Senior Director and Head of Investor Relations. Please go ahead.

Kate deLacy — Senior Director, Head of Investor Relations

Thank you, Chloe. Good evening and welcome to Sallie Mae’s Fourth Quarter and Full Year 2025 Earnings Call. It is my pleasure to be here today with Jon Witter, our CEO, Pete Graham, our CFO, and Melissa Bronaugh, Managing Vice President of Strategic Finance. After the prepared remarks, we will open the call for questions. Before we begin, keep in mind our discussion will contain predictions, expectations, and forward-looking statements. Actual results in the future may be materially different from those discussed here due to a variety of factors. Listeners should refer to the discussion of those factors in the company’s Form 10-Q and other filings with the SEC. For Sallie Mae, these factors include, among others, results of operations, financial conditions and/or cash flows, as well as any potential impacts of various external factors on our business.

Additionally, this discussion and the earnings presentation include non-GAAP financial information, including non-GAAP delinquencies, including strategic partnerships in repayment, non-GAAP reserve rates, including strategic partnership warehouse loans, and non-GAAP NCOs, the percentage of average loans in repayment. All non-GAAP financial information should be considered as supplemental to, not a substitute for, or superior to the financial measure calculated in accordance with GAAP. The company believes that these non-GAAP financial measures provide users of our financial information with useful supplemental information that enables a better comparison of the company’s performance across periods. There are many limitations related to the use of these non-GAAP financial measures and their nearest GAAP equivalents. For example, the company’s descriptions of non-GAAP financial measures may differ from the non-GAAP measures used by other companies.

For descriptions of the non-GAAP financial information included herein and reconciliation to the most directly comparable GAAP measures, please refer to the appendix to the earnings presentation beginning at slide 13. We undertake no obligation to update or revise any predictions, expectations, or forward-looking statements, including non-GAAP forward-looking statements, to reflect events or circumstances that occur after today, Thursday, January 22nd, 2026.

Thank you. And now I’ll turn the call over to Jon.

Jon Witter — Chief Executive Officer

Thank you, Kate and Chloe. Good evening, everyone. Thank you for joining us to discuss Sallie Mae’s Fourth Quarter and Full Year 2025 results. I’m pleased to report on a successful year and discuss our strong outlook for 2026. Overall, the private student lending sector remains robust and is positioned for further success. College enrollment, and specifically enrollment trends for many of our largest Tier 1 schools, are up, indicating students and parents continue to see the value of higher education. Our co-signer rates for new originations have also increased, indicating parents and loved ones are willing to co-invest in the education for their students. Recognizing that some recent graduates are feeling the impact of current economic uncertainty and technological change, unemployment rates for recent graduates are still comparatively low, and most are finding gainful employment within six months of graduation.

As AI transforms the professional landscape, we believe education will be even more important as students acquire the skills necessary to remain competitive in the future. Undoubtedly, schools and programs will evolve, creating new areas of study to meet those needs. We look forward to supporting our school partners and students throughout this evolution. We are excited about the opportunity created by the recent federal student lending reforms. These changes should reduce the likelihood of students and families taking on unsustainable levels of student debt. These reforms also create the opportunity for us to help more students and families. We believe that when fully phased in, PLUS reform could contribute an estimated $5 billion in annual originations for Sallie Mae, representing approximately 70% originations growth over 2025. In 2025, Sallie Mae delivered our inaugural private credit strategic partnership.

This innovative first-of-its-kind agreement combines the more predictable earnings profile of our bank with the capital efficiency and risk transfer benefits of our loan sale program. We believe the economic value of this partnership is comparable or superior to other funding models. This arrangement includes no clawbacks, and the supplemental fee, which represents the smallest portion of the overall economics, is tied to clear, reasonably achievable return thresholds. In addition to this strategic progress, we also delivered well against our guidance for the year. GAAP diluted EPS in the fourth quarter was $1.12, and our full-year GAAP diluted EPS was $3.46, compared to $2.68 in 2024. Private education loan originations for the fourth quarter of 2025 were $1.02 billion, and for the full year, we originated $7.4 billion of private education loans, 6% over 2024 and at the higher end of our revised full-year guidance. Net charge-offs for our private education loan portfolio were $98 million in the fourth quarter of 2025 and $346 million for the full year, representing 2.15% of average private education loans in repayment, which is down four basis points from the full year of 2024.

Pete will now take you through some additional highlights. Pete?

Pete Graham — Chief Financial Officer

Thank you, Jon. Good evening, everyone. We continued our capital return strategy in the fourth quarter, repurchasing 3.8 million shares for $106 million, for a total of 12.8 million shares for $373 million over the full year of 2025. Since January 1st of 2020, we’ve reduced the shares outstanding by over 55% at an average price of $16.93. Our prior share repurchase authorization was nearing completion, and tonight we are announcing a new two-year $500 million authorization. Our net interest margin was 5.21% for the quarter, 29 basis points higher than the prior year period, and 5.24% for the full year, up five basis points year over year. These results demonstrate the effectiveness of our asset and liability management strategies, which deliver NIM in the low to mid-5% range.

In the fourth quarter of 2025, we recorded a $19 million negative provision for credit losses, largely driven by the release of reserves tied to the $1 billion seasoned loan portfolio sale and the selection of a portion of the 2025 peak season originations for sale to the KKR Strategic Partnership. In our investor forum last month, we noted that as our updated strategy begins to scale, key performance metrics would begin to shift. As part of our evolved strategy, we are no longer exclusively selling portions of our seasoned loan portfolio. For the first time, we are also selling newly originated loans. This will change the composition of our bank-owned loan portfolio. Additionally, we are selecting each quarter a representative portion of new originations and warehousing them for sale in the subsequent quarter.

As a result, we expect a portion of our new originations each quarter to be designated as held for sale. As many of our credit metrics are calculated using only loans held for investment or include a portion of newly originated loans as part of their calculation, this change in loan sale strategy has begun to influence a number of reported metrics. To support your analysis and ensure transparency, we have added an appendix beginning on page 13 of the earnings presentation furnished with our release this evening, outlining how these metrics have begun to shift and providing the clarity needed to establish refreshed baselines for forward-looking models. Importantly, the shift in these metrics is primarily driven by calculation mechanics rather than a change in the underlying performance of the loans in our portfolio.

It’s important to note certain information referenced tonight and provided in the earnings presentation includes non-GAAP metrics we believe are useful to understanding the comparative performance of our portfolio. A reconciliation of the non-GAAP to GAAP metrics can be found in the appendix to the earnings presentation on pages 18 and 19. With that foundation in place, we can turn to the discussion of our credit metrics. The total allowance as a percentage of private education loan exposure, which we refer to as the reserve rate, was 6% at the end of 2025, up from 5.93% in the previous quarter and 5.83% at the end of 2024. As shown on page 15 of the earnings presentation, when adjusting for the change in loan sale strategy, the non-GAAP reserve rate would have been 5.92%.

Net charge-offs for our private education loan portfolio in the fourth quarter of 2025 were 2.42% of average loans in repayment, compared to 2.38% in the year-ago quarter. As shown on page 16 of our earnings presentation, when adjusting for the change in loan sale strategy, the non-GAAP net charge-off rate would have been 2.40%. Private education loans delinquent 30 days or more represent 4% of loans in repayment as of the end of the year, unchanged from the third quarter and up from 3.7% at the end of 2024. Adjusting for the change in loan sale strategy, the non-GAAP delinquency rate would have been 3.88%, as shown on page 17 of the presentation. Over the second half of 2025, we saw an increase in early-stage delinquencies, prompting questions whether that was a precursor to higher charge-offs.

As we noted then and continue to believe now, volatility in early-stage delinquency is not necessarily a reliable indicator of future net charge-offs. As shown on page 10 of the earnings presentation, an analysis of the relationship between annualized 30-day plus delinquency and net charge-off rates shows a 12 percentage point improvement in the link ratio since 2022, demonstrating the diminishing connection between the two metrics. We believe this is driven at least in part by improvements in our collections effectiveness. Moreover, late-stage delinquencies and roll rates have remained stable, consistent with our expectation that most early-stage delinquencies self-cure. As discussed for several quarters, our expanded loan modification volumes are nearing the point of being fully seasoned, and we will begin to see borrowers whose loans were modified under the expanded loss mitigation programs at the end of 2023 exiting these programs throughout 2026.

While longer-term performance will become clearer throughout the upcoming year, we continue to be pleased by the results we are seeing from borrowers currently enrolled in these programs. As you can see on page 11 of the earnings presentation, more than 80% of these borrowers successfully complete their first six payments. Additionally, close to 75% of borrowers who are enrolled in a loan modification during the fourth quarter of 2023 are current at the end of 2025, representing over 24 months of positive payment. This performance is consistent with what we are seeing in other modification cohorts. Non-interest expenses for the full year were $659 million, compared to $642 million in 2024, a modest 2.6% increase year over year and below the midpoint of our guidance. We’re pleased with this outcome, which reflects our disciplined expense management and continued focus on efficiency.

This discipline enabled us to deliver an efficiency ratio of 33.2% in 2025. And finally, our liquidity and capital positions are solid. We ended the quarter with liquidity of 18.6% of total assets. At the end of the fourth quarter, total risk-based capital was 12.4%, and Common Equity Tier 1 capital was 11.1%. We believe we are well positioned to grow our business and continue to return capital to shareholders.

I’ll now turn the call back to Jon.

Jon Witter — Chief Executive Officer

Thanks, Pete. Let me conclude with a discussion of our 2026 guidance and provide some additional context on potential future trends. 2026 presents an exciting opportunity for our company to serve more students and families. In the second half of the year, we expect that the first wave of students subject to the new PLUS caps will begin their undergraduate and graduate journeys. This impact will be relatively smaller in the first year of phase-in. Nonetheless, we expect full-year 2026 private education loan origination growth of 12%-14%. We believe this is an incredibly attractive opportunity for our company, and we need to invest ahead of the anticipated volume. As such, expected non-interest expenses for full year of 2026 will be between $750 and $780 million. Driving this year-over-year increase are three factors. Approximately 20% is growth associated with cost increases tied to normal market conditions.

Approximately 40% of the increase reflects one-time investments in product enhancements, refined credit models, and other strategic enablers, and the remainder stems from higher marketing and acquisition costs required to capture the additional plus-related volume. We do not expect this level of year-over-year expense growth to continue. In 2027, we expect the rate of operating expense growth to be roughly half that of 2026, as the cost of growing volume is offset by efficiency gains and the sunsetting of one-time investments. Assuming our volume estimates are correct, we anticipate that we will improve our efficiency ratio each year with the goal of being back in the low 30s no later than 2030. Given the strategic and financial attractiveness of our private credit partnership business, we expect to grow that business in 2026. As a result, we anticipate private education loan portfolio growth to be flat to slightly negative year-over-year.

Beyond 2026, we expect to maintain an appropriately sized bank that continues to serve as a strategic growth engine, a funding risk mitigant, and a healthy competitive alternative to our private credit partnerships. Accordingly, after 2026, we expect to grow the bank portfolio gradually by roughly one to two percentage points per year until reaching a steady-state annual growth rate in the mid-single digits. To support this trajectory, we estimate that roughly 30%-40% of our private student lending originations will flow through strategic partnerships with additional balance sheet growth managed through seasoned portfolio loan sales. We expect net charge-offs for our total loan portfolio will be between $345 and $385 million. As shown on page 16 of our presentation, we believe this is consistent with a stable credit outlook.

Let me conclude with a discussion of full-year diluted earnings per common share, which we expect to be between $2.70 and $2.80 in 2026. This range reflects the deliberate choices we made to launch the strategic partnership in 2025 and invest aggressively to capture the plus opportunity. While 2026 is a critical year in our strategic journey, I’m even more excited about what comes after. While we cannot predict the future macroeconomics or other changes, if the plus TAM materializes as we have predicted, we would expect to see EPS acceleration beginning in 2027 with high teens to low 20% growth. Beyond 2027, we expect our EPS growth to remain elevated for several years as the plus opportunity is fully realized and our strategic partnership business grows. In closing, we are excited about our company’s future and the opportunities ahead.

We believe students will continue to seek access to higher education to obtain the skills necessary to compete in the future. That plus reform will open the door for Sallie Mae to compete for and win business with an exciting new group of customers, creating meaningful upside for future originations, and that our private credit strategic partnerships business will give us a capital-efficient and risk-balanced way to fund growth while building more predictable and recurring earnings streams. Taken together, we believe these dynamics should translate to very attractive value creation opportunities for the company and for our investors.

With that, Pete, let’s go ahead and open up the call for some questions.

Questions and Answers:

Operator

The floor is now open for questions. [Operator Instructions] Thank you. Our first question comes from Carolyn Lottah with Bank of America. Your line is open.

Carolyn Lottah

Hi. Can you talk about how you guys think about the postponement of wage garnishment and treasury offset will impact the performance of in-school and private student loans?

Jon Witter

Yeah, sure, Carolyn. Happy to. First of all, I think it’s important to remind folks that while many of our customers have federal loans, most federal loan customers do not have Sallie Mae private student loans. I think in general, and we’ve talked on past calls about just the difference in performance and impacts that we’ve then seen as the federal program has gone through various stages of its evolution. In general, I think for any customers who have federal loans who are severely delinquent, and I think our estimates suggest that number is quite small, the postponement is obviously a net-net benefit, but I don’t think we would expect that to have a significant impact on our business just given the difference in customer bases.

Carolyn Lottah

Okay. Thanks. And then a quick follow-up one. You guys highlighted the $5 billion origination or opportunity from the Grad PLUS, which is driving some of the origination growth year-over-year. Given those changes coming into effect in July, how should we think about modeling 1H versus 2H growth?

Pete Graham

Yeah. I think we’ve talked on prior calls about kind of the staging of this. If you think about it, it is new freshmen in the undergrad class and new to graduate school for graduate programs beginning in the fall academic period. And so think about that in the context of a four-year program as like one-fourth of the volume, and grad programs can be some a little shorter and some a little longer than that. So we’re expecting the sort of the incremental plus volume this year to be relatively modest, and that’s included in our guidance on growth for this year. And we expect that to step up measurably as we move through the next two to three years until it gets to kind of a steady state.

Carolyn Lottah

Okay. Thank you.

Operator

[Operator Instructions] We’ll take our next question from Giuliano Bologna with Compass Point. Your line is open.

Giuliano Bologna

Good evening. From the first question perspective, when I think about the partnerships and the loan sales in 2026, is there a rough sense of where the volumes are likely to shake out for both or even some relative context? Because I’ve said that will have a pretty big impact on where the numbers shake out for the year. I’m just curious how that looks versus the investor forum numbers.

Pete Graham

Yeah. So recall that the agreement for this first strategic partnership is a commitment, a minimum commitment of $2 billion of new originations roughly timed to the academic year. So we designated a portion of our 2025 peak season originations as held for sale at the end of December. And that will be part of our sale in the first quarter as part of the new originations flow portion of that commitment. Going forward, each month we’ll be selecting a representative sample of originations that occur and be designating that for sale in the partnership. I think rough justice, think about that as like 30% of originations. And so there will be some seasonality as we go through this year in sales of new originations to the partnership just because it’s tied to our actual origination patterns.

So the highest amount sold of the new originations will be tied to kind of our traditional peak season period. And then in regards to season portfolio sales, I would say that the approach to that will be similar to what we’ve employed historically, which is the size and the timing of those will be dependent on kind of our capital needs and sort of marketplace conditions. So no real change in that regard.

Giuliano Bologna

That is very helpful. Then hopefully not to convolute your question, but there’s a fairly good decent impact from the HFS book on balance sheet and kind of what that balance will look like. Is it fair to assume that at least in 2026 it’ll probably be similar to where you are now in terms of balance, or should we expect that to roll up throughout the year as things accelerate? And is there a rough sense of how big that HFS book will probably be this year and how big it will end up being? Because it drives some decent NIM, even while it’s sitting there from an average balance perspective.

Pete Graham

Yeah. So if you think about it as, and I mentioned this in my prepared remarks, we’re going to select loans each month, and we’ll warehouse them at the end of a quarter and then have a subsequent takeout transaction for sale into the partnership trust structure in the subsequent quarter. So that absolute amount of held for sale in the balance sheet will vary each quarter depending on the origination profile in that quarter. For instance, the fourth quarter will be the largest because it will be a selection of sort of fall peak season originations, and the second quarter will be the lowest because that’s traditionally our lowest origination quarter of the year.

Carolyn Lottah

That is helpful. Then I realize that there’s obviously the increased loan sales also changed the portfolio mix in the year term, and you guys highlight that very well in the appendix slides. Should we expect a little bit of change in just the seasoning of the portfolio because you’ve had excess sales in 2025, and you’re selling a fair amount in 2026 as well, that will change the seasoning and kind of roll through repayment over the next few years? Or is that not a, or should I be looking down the wrong path in terms of the materiality of that?

Pete Graham

Yeah. I think at the margins it will. I think the larger impact will be the fact that a portion of our new originations are going to be going off-book at origination. So that’ll tend to cause a slower sort of replenishment of the overall seasoned book, and it’ll gradually get a little more seasoned than what it has been. But I think that’s kind of at the margins. I don’t think it’s going to be a dramatic shift.

Carolyn Lottah

That’s very helpful. I appreciate the time, and I will jump back in the queue.

Pete Graham

Okay. Thank you.

Operator

We’ll move next to Terry Ma with Barclays. Your line is open. Terry, you may need to check the mute function on your device.

Terry Ma

Okay. Sorry about that. Hopping in between calls. So I appreciate some of the color you gave on non-interest expense earlier on the call, but if I look at the range for this year, it is obviously still quite a step up than what you guys had last year. And then even the post-2026 kind of growth rate that you indicated is kind of higher than what you’ve seen historically. Can you kind of help us think about how you measure the ROI of those kind of investment dollars?

Jon Witter

Yeah, Terry, probably a couple of different levels to that conversation. First, I think it is important to start with why we are stepping up the investment opportunity. And we’ve said it a couple of times. This represents in our mind sort of the clearest opportunity to have really significant TAM growth up to 70% over the course of the next couple of years, again, assuming the analysis and the estimates that we’ve put together are meaningful. And so I think it’s important to start with, this is not to be cliche, but really as close to a once-in-a-lifetime opportunity to expand a business as I think we’re going to see in our private student lending space.

I think if you model through what is the impact when fully realized of a 70% increase in originations, heck, for the sake of conservatism, cut it to 50% increase. It is a really meaningful increase in earnings potential and market cap. I think you have to start there and understand that that is the mental model that we as a management team bring to this investment opportunity. We have, and I think have always had, and this has been demonstrated, I think, by our strong efficiency ratio performance over the last couple of years. Really good governance around, for example, how we do return measurement on marketing spend, how we do return measurement on sort of new product innovation and development. I think investors should rest assured that we are bringing that very same discipline to bear in this opportunity.

I think what’s important to recognize and maybe one of the sources of disconnect is for a whole myriad of reasons. In particular, we do not expect our marketing efficiency to be as effective or as efficient in year one of this sort of opportunity as it will likely be in years two, years three, and sort of beyond. And if you think about it, there’s a whole myriad of reasons for that. We are phasing in the eligibility of the new caps. So when we market in year one, depending on whether you’re talking in grad or undergrad, there will only be a portion of those students who will be interested in private student loans because many will still be supported by the federal program. In year one in particular, for example, there’s no serialization benefit.

We know it’s a lot less expensive for us to get a serialized loan than a new customer, than to acquire a new customer. And I haven’t even started, Terry, to talk about just it takes a little bit of time and enrollment season or two to really fully optimize all of your various both digital and traditional marketing channels. And so we don’t view that as a permanent impairment to our efficiencies, but I think we do bring a slightly different view to how you stand up a marketing program for, let’s say, new medical students than what has been the primary part of our business over the last several years, which has been serving disproportionately undergrads. So we’re excited about it. We think it is, again, in service of a really fabulous market opportunity.

We hope you all agree that market opportunity is right in front of us, and we feel like we’re bringing great discipline to how we’re thinking about that spend.

Pete Graham

I think the other thing I would add there is just context around efficiency. We have a very good efficiency ratio now. Even at the midpoint of the range we’ve guided to for 2026, we’re kind of still in the high 30s. And I think on a relative basis compared to others in this space, that’s a really efficient operation. And we’ve said over the coming years, we’re going to drive that back down to the low 30s. So I think that’s some additional context that’s important.

Terry Ma

Got it. That’s helpful color. And then I guess maybe just to follow up on credit, your percentage of loans and extended grace ticked up meaningfully. I think that’s pretty consistent with the June wave exiting regular grace. But as we kind of think about credit for 2026 and just the guidance range that you gave, any color on your confidence level? Because I think you also have a cohort exiting mod in December. As we look out into 2026, I think by all measures, it is still a pretty kind of tough job environment for kind of new grads. So kind of maybe help us think about what’s kind of embedded in your charge-off assumption range for the year and your level of confidence. Thank you.

Pete Graham

Yeah, sure. I’ll take the mods piece, and then Jon, you can maybe recount some of your comments around the overall environment.

Terry Ma

Sure.

Pete Graham

On the loan mods, we’ve been tracking now for some time and talking about successful performance in modification of making payments, and there’s an additional slide in the deck that sort of highlights that. I think from my perspective, thinking about kind of the 2023 cohort of mod enrollments, the fact that 75% of them at the end of the year are current is another really strong indicator of success, and again, we’ll see how that sort of moves through the year in terms of people graduating out and stepping back into their contractual obligations, but we feel good that we’ve designed a well-functioning program. It’s met a need of a borrower in stress, and we feel like the positive payment habits that have been demonstrated over now 24 months in that cohort are a powerful indicator of their likelihood of success as they come out this year. All of that’s baked into the range that we’ve given for net charge-offs for 2026.

Jon Witter

Yeah. And Terry, maybe if I step back and give a little bit more context, I think there’s clearly been a whole series of pretty eye-catching stories that have come out in the past months about impact of AI and impact on the job market and so forth. I think the data that we see from a number of different sources tells perhaps a little bit more of a balanced story. And there is no doubt that unemployment rates for new college grads are slightly elevated today. There is no doubt that it is taking a little bit longer for new college grads to find jobs. But to put that in context, if you look at the monthly unemployment data for new college grads, you see typically a spike in unemployment over the summer and then a normalization period.

We are sitting here today based on December 2025 data at effectively the same unemployment rate that we would have seen, again, for new college grads in November of 2023 or 2024. It is a slightly slower ramp to sort of full employment normalization, but it is measured in sort of a month, month and a half delta if you look at those rates, not something that is more substantial. I think it’s important also to kind of put that in the broader context. I’ve raised this on a couple of calls or said this on a couple of calls. This is a pattern that we are well used to. We know for many years in this business, the single greatest point of financial stress on average for our customers is going to be when they’re going through this transition from school to full-time employment.

It’s why we invest disproportionately in the programs that we have to help customers during that time and to give them sort of the flexibility. And whether that’s programs like you mentioned, grace, whether that’s potentially loan modifications for the small number who need that, or other programs that we may have, we feel like we are really well set up to do that. By the way, this is also a time where our 90% plus co-signer rate is critically important. And we know both numerically and we know anecdotally from our surveys, parents, loved ones expect to support their students during this time of transition. And that’s a great answer for the student. That’s also a great answer for us and for our shareholders. And so when you put all that together, no CEO of a credit-oriented company is ever going to be dismissive of credit.

We take it seriously and watch it like a hawk. But I think what we are seeing in the patterns sort of fits the comments that I’ve made and is certainly all baked into the guidance that we have just provided you.

Terry Ma

Great. Thank you.

Operator

[Operator Instructions] We’ll move next to Jon Arfstrom with RBC Capital Markets. Your line is open.

Jon Arfstrom

Thanks. Good afternoon.

Jon Witter

Good afternoon.

Pete Graham

Hey, Jon.

Jon Arfstrom

A quick question for you, John. Your comments on the EPS outlook, I guess obviously the market can be pretty short-term focused and that initial reaction was pretty negative to the new model on your stock. But you framed up the strong EPS growth potential for 2027. I think you mentioned high teens to low 20s potential for 2027 in your prepared comments. Do you feel like you have high visibility on that for 2027? And does the visibility become a little more blurred beyond 2027, or is it pretty clear to you in terms of what that runway could be?

Jon Witter

Yeah, John, I think the way that I would answer that is there are really a couple of things that in my mind have a disproportionate impact on our stock or on our performance. Obviously, the broad macroeconomic environment and the impact that that has on credit. I’m not sure I or any other bank or consumer finance CEO is going to feel comfortable looking at more than kind of a 12-month time frame. But if you kind of look at the rest of our model, I think it really comes down to, do we realize the TAM opportunity that is in front of us? Are we successful at regaining the kind of efficiency ratio that Pete and I have both now talked about and a little bit a choice we get to make, which is how quickly do we want to grow our bank balance sheet versus fund that business in other ways.

I think we have done more disciplined work than probably many and as disciplined as I can imagine on really understanding the TAM opportunity. And that’s not to say that there is not risk there and that there won’t be competition, but I think we understand what the market opportunity is going to be. And I think we feel like it is a real opportunity for us moving forward. I think I would say our expense management discipline speaks for itself. And I think, again, we get to make the decisions about sort of the right way to balance growth of the strategic partnerships business with the growth of our bank balance sheet.

And I think when you put those things together, we can’t overlook the other uncertainties in our model, but I think those are all things that one can look at and assign their own sort of likelihood of success to. And I think those are really kind of the major drivers of our confidence in some of the comments that we’ve made about 2027 and beyond.

Jon Arfstrom

Okay. Fair enough. Thank you very much.

Operator

We’ll move next to Melissa Wedel with J.P. Morgan. Your line is open.

Melissa Wedel

Good afternoon. Melissa on for Rick today. Appreciate you taking our questions. First one would be around gain on sale margin. That looked like it came down a little bit versus prior sales that we’ve seen earlier this year. If you transition to sort of more of a combo approach to spot loan and transfer to strategic partners, how should we be thinking about that gain on sale margin and any volatility that we could see quarter to quarter in that?

Pete Graham

Yeah. I think that’s a good question. I think if you look at sort of a longer history of our execution on these seasoned portfolio sales, you see a broader distribution than what you’ve seen in the current year. I’d say over a longer period of time, if you kind of throw out the highest ratios and throw out the lowest gain on sale ratios, you’d probably be kind of in somewhere 106, 107-ish on average in that context. I think there’s also a timing within the year component to those sales. I think if you go back and look at the sort of quarterly sort of history of our portfolio sales, those that are done in the first quarter tend to be at a higher premium than those that are done in the fourth quarter for a variety of reasons.

And so, look, the portfolio sale that we did in the fourth quarter here was in the context of a broader strategic partnership, but it also was part of a transaction that had a great deal of scrutiny around true sale and things being done at fair value. So it’s well supported by sort of the statistics on the portfolio itself and the environment in the fourth quarter.

Melissa Wedel

Thanks for that. I have one more follow-up question for you, and this is around the share repurchase authorization announced today. The time period on that was 24 months. The question is, given the investment you intend to make in the platform, particularly in this next year in 2026, should we be thinking about that repurchase deployment possibly being a little bit back-end loaded in 2027? Thank you.

Pete Graham

Yeah. I think we’ve demonstrated over the last few years that we’re going to be pretty disciplined and programmatic around share buyback. And we intend to operate that way with regard to this new authorization that we’ve been granted. We’ve got very strong capital ratios at the bank and a strong earnings profile. We tend to set in place programs that will have kind of a targeted amount of buying and be in the market every day that the market is open, and then a bias towards buying more shares on days when the stock price is trending down and less on days when the stock price is trending up. And that served us well in terms of deploying the last authorization that we have. And we intend to kind of continue to operate in that manner going forward.

Melissa Wedel

Thanks very much.

Operator

[Operator Instructions] And this concludes the Q&A portion of today’s call. I would now like to turn the floor over to Mr. Jon Witter for closing remarks.

Jon Witter

Chloe, thank you. And thank you for everyone who joined the call tonight. Obviously, Pete and I on behalf of the entire company are proud and happy to be able to talk to you about our 2025 performance. But I think even more importantly, I hope you walk away tonight with a real sense of sort of how strongly we feel about our strategic positioning and what that means for 2026 and beyond. As always, the IR team is here to be helpful to you in whatever way they can. And we hope everyone has a great rest of the January and a great weekend. And thank you again for your time this evening. I’ll now turn it over to Kate for some concluding business.

Kate deLacy

Thanks, Jon. Thank you all for your time and questions today. A replay of this call and the presentation will be available on the investors page at salliemae.com. If you have any further questions, feel free to contact me directly. This concludes today’s call.

Operator

[Operator Closing Remarks]