SLM Corp (SLM) Q3 2026 Earnings Call Transcript

Welcome to the Sallie Mae 3rd Quarter 2026 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the prepared remarks. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. So others can hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star zero. I would now like to turn the call over to Kate DeLacy, Vice President, Investor Relations. Please go ahead.

Thank you, Leslie. Good evening and welcome to Sally Mae's third quarter 2026 earnings call. It is my pleasure to be here today with John Witter, our CEO, Pete Graham, our co-president, and CFO, and Melissa Bernat, Managing Vice President and Deputy CFO. 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 10-2 and other filings with the SEC. For Sally 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. We undertake no obligation to update or revise any predictions, expectations, or forward-looking statements to reflect events or circumstances that occur after today, Thursday, October 22, 2026. Thank you, and I'll now turn the call over to John.

Thank you, Kate and Leslie. Good evening, everyone. Thank you for joining us to discuss sally may's third quarter 2026 results the third quarter was a strong one for sally may reflecting solid operating performance and continued execution against our strategy tonight we'll discuss our results changes in the market environment how our outlook has evolved and why we remain confident in the long-term trajectory of the company let me begin with an update on our strategy over the last several years we have been building a more diversified and flexible funding model last year we launched our strategic partnerships business with our inaugural partner kkr adding a third funding channel alongside our bank balance sheet and whole loan sales tonight we are pleased to announce that we have completed a strategic partnership with sixth Street for an initial three-year term. Sixth Street has committed to purchase a minimum of $1.5 billion in newly originated private education loans annually, with the first year inclusive of an initial seed portfolio of $600 million in seasoned loans. This transaction is substantially similar to our first strategic partnership. We look forward to providing additional details about our strategic partnerships business in the near future following the completion of the seed sales adding a second partner further validates our strategic partnerships model together our strategic partnerships with kkr and six street enable growth by expanding our origination capacity with access to scalable and capital efficient funding makes us less dependent on short-term capital market conditions and generates recurring and predictable program management and servicing fees our next priority in this area will be developing flow capability for our graduate loan products now that we are completing our first peak season following plus reform with that strategic context let me turn to peak season loan originations for the third quarter were 3.4 billion, representing 15 percent growth over the year-ago quarter and the highest quarterly origination volume in our history. We are particularly pleased with the growth we have seen in graduate loans. You will remember that we invested significantly in building new products, credit programs, marketing strategies, and other capabilities to compete aggressively to serve these customers post-plus reform. In Q3, graduate originations were up 119% year-over-year, with an average FICO score nine points higher than the overall average of new origination in the portfolio. This peak season has been elongated. Last-minute changes to federal rulemaking, systems challenges, and other factors caused school delays in delivering financial aid packages and the resulting certification process. As a result, peak season activity has continued well into October and is arguably still underway today. For October month to date, we have seen a 35% increase in disbursement year over year. We believe that stronger than normal volume will continue into the fourth quarter and that by year-end our full-year originations will be in line with our guidance of 12 to 14 percent growth. We have said consistently that this first peak season would afford an important learning opportunity. We now have a more complete view of federal rulemaking, first-hand experience about how both schools and students will respond to the updated federal program, program, and more insight into the actual mix of student loans demanding. We are currently in the early stages of processing and analyzing that data and will surely continue to learn more about the nature of the PLUS opportunity. We look forward to sharing our insights with you as appropriate later this fall and continue to be excited about the potential for future originations growth. Let me turn to the existing portfolio. Private education loan net charge-offs were $90 million in the third quarter. These results were modestly above our expectation with the increase concentrated within the segment of borrowers affected by the misaligned third-party debt resolution practices we have previously discussed. Results within our non-affected segment were in line with or slightly furthermore, as you can see on slide nine in our earnings presentation, our loan modification program continues to outperform expectations. Let me provide an update on the impacted segment we discussed earlier this year. As previously communicated, we implemented a number of changes to create a more customer aligned recovery approach. We are beginning to see the positive impact of those strategies. For example, using AI, we reviewed all relevant collection and recovery calls and observed a 50% decline in mentions by borrowers of relevant players and practices during the month to date in October. While we are pleased with the general performance of these strategies, adoption by customers already in the later stages of delinquency and more fully engaged with these debt resolution providers has been slower than we initially expected. As such, we are now estimating net charge-offs for the year will be moderately higher than we believed last quarter. Last quarter, we estimated an approximately 25 million impact of these practices to our 2026 net charge-offs, driven by a decision to suspend many recovery efforts. At that time, we believed we could absorb the increase into our original guidance range of 345 to 385 million, although likely at the upper end. We now expect to see modest additional pressure on gross charge-off from these customers, leading us to increase our estimated impact in the year from $25 million to $45 million. As such, we are increasing our full-year net charge-off guidance to $400 to $420 million, with a midpoint $45 million higher than that of our original range. As we have said, we believe that customers who are charging off as a result of these questionable practices have a significantly higher ability to repay than a historically charged-off customer. We have started to see our first few recoveries from this population through our enhanced strategies, and while it is a very small sample, we are seeing meaningfully higher recovery rates. Assuming this trend continues, this bodes well for future performance. Pete will now take you through some additional financial highlights of the quarter.

Thank you, John. Good evening, everyone. For the third quarter of 2026, we generated $339 million of net interest income and $46 million of other income. Compared with the prior year quarter, net interest income decreased by $34 million, while other income increased by $15 million. Driven by growth in recurring program management fees from our strategic partnership and year-over-year growth in servicing fee revenue. An interest margin was 4.85% for the quarter, up 10 basis points from the prior quarter. While interest rate volatility and higher long-term rates created some headwinds during the period, actions that we purposefully and proactively took earlier this year helped offset a portion of that pressure. Specifically, we extended the duration of our funding to better align with the growing proportion of fixed-rate loans in our portfolio. Those actions increased the weighted average life of our deposits to 37 months from 23 months at the end of 2025 and moved us into a more neutral interest rate risk position. Private education loans delinquent 30 days or more were 4.2 percent of loans in repayment, an increase from 4 percent in the year-ago quarter. Our reserve rate was 5.89 percent at the end of the quarter, down four basis points from the prior year period, reflecting disciplined underwriting and ongoing work to optimize loss mitigation strategies. Provision for credit losses was $214 million in the third quarter, primarily reflecting the impacts of significant originations growth in the period. Non-interest expenses were $221 million, up $40 million from the year-go quarter. The increase was driven largely by investments made to support peak season and position the company for growth in a changing federal student lending environment. At the same time, we've been laser-focused on non-interest expense management during the year and have been performing better than our original expectations year-to-date. On October 1st, we executed a restructuring plan to better align resources with the company's strategic priorities and improve operating efficiency. Our year-to-date and expected future outperformance will allow us to absorb these restructuring charges within our full-year guidance range. Without these one-time expenses, non-interest expense would have come in at the low end of the range, but will now be closer to the high end. This restructuring aligns resources to our long-term strategy, and combined with our continued focus on disciplined expense management, should help us return operating expense growth to more normalized levels as we move into 2027. Even recognizing that we expect to achieve continued significant originations growth during that time, we continue to return capital to shareholders during the third quarter, repurchasing 5.1 million shares at an average price of $25.69. And since the beginning of the year, we have repurchased 18.1 million shares at an average purchase price of $23.02, representing 9% of the shares outstanding. Our liquidity and capital positions remain solid. We ended the quarter with liquidity of 15% of total assets. Total risk-based capital was 12.5%, and common equity tier 1 capital was 11.2%. We continue to believe in our strategy and the foundation it provides to support sustainable growth and return capital to shareholders. I'll now turn the call back to John. Thanks, Pete.

Let me close with a discussion of recent market trends and how they have caused us to change some nearer-term plans and the resulting financial outlook. As many of you have undoubtedly tracked over the last month, interest rates have moved significantly higher and capital market conditions have become more volatile and challenging. Consequently, as we both gauged external indications of interest and ran our own internal valuation models we came to believe that the likely premium we would receive on any loan sale in this environment would be below our minimum acceptable threshold generally our strategy has been to engage in regular ways seasoned loan sales only when they represented an attractive economic trade versus our other alternatives. However, in this instance, we determined that we could create more shareholder value by retaining the loans on our balance sheet and earning a roughly 5% NIM over time rather than selling at the current indicated premium levels. The low-cost matched funding of our bank, together with the flexibility afforded by our strategic partnerships model, creates a distinct strategic advantage. This positioning allows us to remain selective rather than be compelled to pursue actions dictated by market conditions. Given that the markets remain elevated and volatile, at this time, we do not anticipate executing our final loan sale for the year, which was previously planned for October. We appreciate that this could create an in-year EPS impact for 2026. However, we have committed to being a disciplined capital allocator and believe this change in plans will drive a meaningfully greater shareholder value creation in the future. It's important to note several things. First, we do not expect this change in loan sale plans to substantially impact our 2026 share buyback activity. We still expect to exhaust most of our current share repurchase authorization before the end of the year. Second, this does not reflect a permanent change to our loan sale program expectations, as we see several factors that could potentially allow us to earn above-threshold premiums, even in a higher-for-longer future. While we certainly cannot predict future market conditions, we currently believe that meaningful loan sales will be a part of our 2027 plan and beyond. We've outlined a number of moving pieces that impact our full-year outlook. In summary, primarily as a result of our decision not to execute an additional whole loan sale, we are lowering our full-year 2026 EPS guidance to $1.95 to $2.05 a share. As mentioned earlier, we are raising our full-year net charge-off guidance range to $400 to $420 We are reaffirming our non-interest expense and origination guidance. In conclusion, I know we've given you a lot of information this evening, so let me try to sum up the key takeaways. First, we continue to be excited about the plus opportunity and believe the investments we have made and performance this quarter position us well for future origination spread. Second, our loss mitigation and credit strategies, including loan modifications, are generally performing as intended, if not better, and position us well to manage credit performance going forward. Third, we've been good stewards of our expense dollars and spent wisely in 2026. We expect to land within our non-interest expense guidance range for the year, even after absorbing one-time restructuring expenses and believe we are set up to return to a more normalized expense growth rate going forward. And finally, we have built a true strategic advantage in our flexible funding strategy and are positioned well to maximize shareholder value creation across a variety of macroeconomic environments. We believe all this sets us up for continued growth and long-term shareholder value creation into the future. With that, Pete, why don't we go ahead and open up the call for some questions.

Thank you. The floor is now open for questions. At this time, if you have a question or comment, please press star 1 on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing star 2. Again, we ask you pick up your handset when posing your questions to provide optimal sound quality. Our first question comes from Jeff Adelson, Morgan Stanley. Please go ahead. Your line is now open.

Hey, good morning, guys. Thanks for taking my question. I guess just given the current market environment, obviously that's why you're taking the EPS guide down. Can you just help us understand how much of a whole loan sale you were thinking originally was going to be in this year, in the back half of the year? And I know it's early and you haven't put it out yet, but can you maybe help everyone understand how you're thinking about 2027 in terms of, you know, early indications of debt-ins? Should we be assuming you do another similar case of whole loan sales next year on top of the announced partnerships? Are you including any plans for a third partnership to be announced? And just, you know, I think everyone would appreciate a better sense of what 2027 looks like. And should we look at the investor forum path as maybe some sort of indication of how you're thinking about that?

Yeah, thanks for the question. There's a lot in there, so I'll maybe take it in stages. I think in context of the size of the loan sale, you know, you'll recall when we pulled forward earlier in the year, pulled forward and did a $2 billion loan sale to take advantage of market dislocation and launch the ASR, we said kind of on balance, we felt like that would add roughly a billion dollars to our total loan sale, you know, sort of plan for the year. So it's in sort of that kind of a zip code. The other thing that always goes into the factor of the size of our loan sales in any given year is sort of the equation of the level of originations coupled with our commitments to partners and the balancing feature in our bank's balance sheet. And we came into this year thinking we would likely be, you know, flat balance sheets slightly down. And we aspired to add a second partner, which, you know, John announced earlier on the call. So I think in the context of sizing, you know, kind of in that, you know, billion dollar range is probably the right way to think about that. The second part of your question really was around, like, what does this mean for the future? I think, you know, again, we feel like the current environment is, you know, sort of a temporary thing. As in any given quarter, there can be conditions in the market that make it suboptimal to execute a whole loan sale. we think we're in that kind of a situation now with this sort of peak rates, a high degree of volatility in terms of the near-term outlook, and you know we we believe that will stabilize as we go into next year. In the context of what does that mean for next year, I think our base case is we return to an environment that allows for premiums that are above sort of a minimum threshold level and in that type of scenario you know we're probably looking at flat balance sheets and maybe single digit relative balance sheet we'll meet our commitments to partners which you know we've now added a second significant you know flow commitment from from state street that we need to think about as we plan for funding of our originations profile. And then we'll use the loan sales as we always do to sort of manage capital and create capital for return to shareholders at the same time managing their rate of growth.

Thank you. And if I could just follow up on the net charge-off guidance, I appreciate the color around the third-party issue. You expect to see a modest additional pressure on gross charge-offs. I think you cited an increase of about a $20 million impact there from $25 to $45 million, but then you took the full-year guide up at the midpoint by $45. So could you help us understand maybe where the rest of that $45 million, I think it's a $25 million difference is coming from if it's not the third-party issue?

Yeah, Jeff, we tried to lay that out as clearly as we could for you. I think when we had originally updated guidance, you know, back in the second quarter, it was really in reflection of sort of the 25 million estimate that we had put out largely through the sort of pausing of certain recovery efforts. And I think what we said at that time is we thought we could cover that within our original range, but it would be, and so, you know, that sort of took us up closer to that. of the initial range you know and i think um as we went ahead and reset guidance we felt like it was appropriate with the additional 20 just to reset that you know midpoint to midpoint so i don't think there's anything else in what you are asking about i think it's just the reflection of you know last quarter us believing we can stay in the range albeit at the high end you know and us now sort of recognizing that we have crept out of that and feeling like we should sort of reset it in a more traditional way. Okay, great.

Thanks for taking my question. Oh, sorry, man. I was just going to say, to be clear, it's all related to this third-party issue.

Thank you. Our next question comes from Sanjay Sacroni with KBW. Please go ahead. Your line is now open.

Thank you.

Doing what's right in terms of- Yeah, thanks for the question, Sanjay. I think, you know, if you think about even in a higher for longer scenario, which there were some recent articles around that and surveys of economists, even in those, you know, sort of longer term outlooks, they had, you know, the 10-year Treasury at a lower point in the second half of next year than where it currently sits. We don't obviously price off a 10-year treasury, but I think that's an indication that even in kind of like the most bear case scenario for loan sales, there'll be relief from here. I think there's more to it than just interest rates, although that's certainly a piece of it. I think there's also the aspect of just sort of uncertainty about where we're going from here. And the fact that in the current environment also, there's a lot of other activity in the AVF space and sort of pulling investor demand into higher yielding product. Think about, you know, all the AVF that's funding the AI trades at this point. So, again, I think there's a lot of things unique to this quarter that, you know, of create that, you know, the market conditions that we feel isn't generally appropriate. But I don't think that's a permanent thing. We see a path to that being a more stable environment for us.

Capital levels or how?

Yeah, I think the balance sheet's in gray shape. You know, again, the capital buffers that we carry to sort of all the regulatory thresholds are pretty substantial. I think that the addition of a second partner here gives us some additional sort of funding capacity in terms of flow originations. As John sort of said in his prepared remarks, the next thing we're working on, and we've already started dialogue around it, is additional flow capacity for graduate originations.

So I think the building of capacity there gives us an additional lever in addition to growing the balance sheet thank you our next question is from terry ma with barclays please go ahead your line is now open hey thank you good evening um first i just want to make sure um i have the right pieces to the revised eps guide can you just confirm whether or not the gain on sale from that second partnership is included in this guide or is that a first quarter 27 thing? And then like obviously credit costs are factored into the revised ETS guide. But like any sense you can kind of give us on how long that third party collection issue should kind of impact credit costs? Like is there anything else you can do to kind of help ring fence the issue?

Yeah, Terry, let me start with the third party debt collection issue, and then I'll turn it over to Pete to talk a little bit more about your guide question. You know, look, I think it's obviously a little bit hard to say with certainty how long that matter is going to last, because unlike things like pure credit trends, you know, there are active players, you know, sort of industry participants on the other side, and they may change their strategies they may change their restrict their approaches um and you know we will obviously have to adapt um with that said i think we're really pleased with what we are seeing so far we have as i said in my prepared notes we have put in place uh actions that we think are really forceful and effective actions um we think they create a much more aligned structure with our you know customers and help us address the situation we are seeing really positive early indicators of success of those actions in our operational data i think i mentioned on my prepared remarks sort of the volume reduction we are seeing in um you know in uh you know our call listening but there are others that i won't go into for a variety of reasons that i think give us confidence that this is starting to get real traction you know by the way anecdotally i think we are starting to see some change in behavior positive change in behavior on the part of some of these players in a way that is uh constructive and supportive um and i think all of that leads us to believe that you know absent some material change and you know sort of their uh you know their strategic posture you know that we are on the downward slope of this um i'd be hesitant to you know sort of put out there an exact number an exact timing of it but i certainly think we expect next year's impact to be you know you know uh meaningfully less than what we saw this year and i think the other thing i'd add there is um you know the recovery profile of these borrowers, as John said, is much different than our normal charge-offs, and so that's going to be added to the recovery curve as we move into next year.

Yeah, great point, Pete. The second part of your question was around whether our updated guidance range included the gain on sale from the second strategic partnership with Sixth Street. Yeah, that's included in our guidance for this year.

Got it. Okay, that's helpful. and then maybe just under restructuring help us maybe reconcile like almost a year ago and early this year you guys indicated you know incremental investment dollars to address the grad plus opportunity so obviously very optimistic around that now you're kind of you know restructuring kind of shrinking like maybe just help us understand that and just confirm that you still view the TAM expansion as a real opportunity? Thank you.

Yeah, Terry, we absolutely still see the TAM expansion as a real opportunity. And I think in the numbers that, you know, that Pete described, was an expectation of continued investment in things like marketing and, you know, probably at a lower pace, you know, still some product and system and capability enhancements going into next year. But, you know, I would encourage you to go back and look at our OPEX trajectory over the last five or seven years. I think we've managed that you know really really well in terms of annual growth. It's been a source of sort of pride for us. Obviously we felt it was important last year to get out in front of this opportunity both from a capability perspective but also a marketing spend effectiveness or a marketing spend perspective. I think we did that. I think you see the results of that in our peak season volumes but you know that was never the end of the game for us we you know know we have a business that we can continue to refine and optimize we know we have ability to continue to find efficiencies and what we do every day and we knew as we continue to build and evolve our strategy there were resources that you know maybe didn't fit as much going forward with our new with our new priorities as they did with our previous priorities so you know we do a certain amount of this terry every year um you know i think uh this year for a variety of reasons ended up being you know a bit more consequential than what we have seen in the past but we think it you know sort of demonstrates our commitment to being great stewards of our expense budget and we also think it gives us what we need to continue to investment growth going forward.

Got it. Thank you.

Thank you. Once again, if you do have a question, you may press star and one on your telephone keypad at this time. Our next question comes from Don Fendetti with Wells Fargo. Please go ahead.

Hi. Can you talk a little bit about your near-term NIM expectations? It looked like the broker deposit rate went up a good bit this quarter.

Or, you know, we've heard some competitors talk about just more competition for deposits. If you could just dig in a little bit on that.

Yeah, sure. I think, you know, in the discussion of NIM, I think it's important to sort of reflect on what's changed in our environment over the course of this year and how that impacts NIM. So, you know, one of the big drivers on NIMH this year was the fact that we pulled forward that big loan sale in the first quarter. We were carrying a lot of excess liquidity in a time period in the year when we had very low originations. And that caused us to have sort of a dramatic low point for NIMH in the second quarter. And at that time, we said our expectation was that, you know, as we funded peak season originations that, you know, that would draw that down and really get some normalization. So that's the biggest factor on them in the current year. I think at the margins, you know, some of the extension of our duration in the portfolio certainly, you know, has somewhat of an impact. But I feel good about that, right? Like we came into the year off of a peak season last year that had been very heavily focused on fixed rate originations. And so we needed to make sure that we matched the duration of that profile accordingly. And so, you know, we extended duration on our deposits over the course of the first half of the year, roughly, to close down the interest rate exposure that we had to rising interest rates. And I feel pretty good about the timing of when we did that in the context of... I guess my follow-up, I just wanted to clarify, I think on the new fund, there's like a seed season loan sale of $600 million. When would that take place? And would those have kind of good historical margins?

And then if you can just talk, I saw there was, like, $1.4 billion moved to help for sale.

Can you just talk about that? Yeah, so a portion of the seed portfolio closed just at the end of the quarter, and the remainder will close in the early part of the fourth quarter. In the context of the help for sale portfolio, keep in mind that there will be the, you know, sort of regular commitments to the forward flow under the KKR deal in addition to these new, you know, held-for-sale associatives.

Thank you. Our next question comes from Rick Shane with JPMorgan. Please go ahead.

Hey, I need to get my questions in before Don because he asked pretty much what I wanted to focus on, but I just want to make sure we understand one thing. um the held for sale portfolio is substantially larger than it's been some of that has to do with the sixth three transfer some of that has to do with the kkr flow um but i am wondering if there's a timing issue here you guys thought you were going to sell loans in the fourth quarter presumably you have to sort of assume that you didn't know that on september 30th um is there going to be some migration from the available for sale portfolio to held for investment in the fourth quarter, and what are the implications of that?

Thanks for the question, Rick. I think the thing to keep in mind about the flow agreements, they've got an overall commitment for the year, but because of the seasonality in our business, it's not a ratable amount each month or each quarter. And so they will fluctuate according to the seasonality of our originations. Obviously, third quarter, we just had, as John said on the call, the highest originations in our company's history. And that's the driver of why that help for sale number is bigger at the end of those.

Got it. So it doesn't have anything to do with deciding not to do a traditional non-flow sale and some weird timing issue there? Not at all. Not at all. Okay. Got it. I appreciate the answers, guys. Thank you very much. Yep.

Thank you. Our next question comes from Julano Bologna, Compass Point. Please go ahead. Your line is open.

Well, maybe, you know, hopefully not going over too much that's already been asked, but when I look at that, they call it the large kind of help for sale portfolio, is it your expectation that you would complete the sale of a large portion of that or the majority of that help for sale portfolio in the fourth quarter or would a chunk of that leak into next year? And then kind of related to that, you know, thinking about the seeding portfolio, has that all been moved to help for sale already or is there more that would be moved to help for sale in the fourth quarter and, you know, have some reserve reversals?

Yeah, let me take that question in two parts. With regard to sort of the mechanics of how our flow portfolio transactions work, we generally will make sales from our bank into our warehouse on a monthly basis. and then generally have a takeout sale to the partner in the subsequent month end after the quarter. And so the held for sale at the end of the third quarter will clear out when we make those sales to KKR in this case for the third quarter. Additionally, in that held for sale is the $600 million of season seed portfolio. A portion of that closed in the third quarter, and the remainder of that closed in the fourth quarter. So hopefully that gives you the answer to that. With regard to the portfolio sale that we had planned that we discussed that we weren't going to move forward with, we had not, you know, gone through a process of selecting a portfolio yet. we typically will gauge indication of interest in the market by by getting sort of indicative bids from time to time and that helps us gauge you know where we think a loan process might come out but we had not gone through a process of selecting a portfolio would be a pre which would be a pre prerequisite for us putting a anything into a different designation other than health that's helpful and maybe as a follow-up and i think the the way that you know most history

and demolition it seems like kind of what was implied was about a two percent gain on sale up front for the strategic partnership sales you know and you know basically talking about low single digits in the 10q when i think about that you know the large helper sale book you know is that still the right range to use you know in the two percent range or would that come down a little bit um from the two percent you know ballpark um the disclosures in the in the queue would be um you know in two parts one would be we have one disclosure of fair value which is our broad this sort of evaluation of our uh our total portfolio and then we have a separate valuation

on the health for sale, and that's a combination of both the flow commitment to KKR that's in the warehouse as well as the $600 million of C4, a combination of both.

And so, you know, roughly speaking, as I call it, $1.44 billion or $1.44 billion of loans on for sale at the end of September 30th, or September 30th.

So, we should expect, you know, the full gain on sale for the forward flow to be realized in the fourth quarter on that chunk of the portfolio. correct yeah that's very helpful thank you i'll come back in to you thank you this concludes the q a portion of today's call all the knowledge to turn the floor over to mr john witter for closing remarks thank you everyone for your time and engagement this evening i know we've given you a lot of information to work through and understanding our q3 performance and outlook in its simplest form we are excited about the origination growth opportunity ahead of us We're pleased with the performance of our various loss mitigation programs, and we believe we're managing expense as well. We're grateful for the strategic flexibility and the competitive advantage of having a well-capitalized, deposit-funded bank now complemented through our emerging strategic partnerships business. We're building a more resilient, predictable, and profitable Sallie Mae. While we would prefer a different macroeconomic environment, times like this demonstrate the power of our franchise, the strength of our strategy, and the quality of our execution. Sallie Mae Investor Relations Team is standing by to answer your more detailed questions. With that, I'll turn the call over to Kate for some concluding business.

Thanks, John. 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 sallymay.com. If you have any further questions, feel free to contact me directly. This concludes today's call.

Thank you. This concludes today's Sally May 3rd Quarter 2026 Earnings Conference Call and Webcast. Please disconnect your lines at this time and have a wonderful evening.