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| I would also like to point out that GAAP equity plus loan loss reserves over risk-weighted assets was a very strong 15.3% |
| As I mentioned earlier this morning, we are absolutely thrilled with the results of a successful peak season in terms of quality, quantity and cost to acquire |
| First, we had a successful peak season highlighted by increased under class demand |
| And then what I'm also pleased about is I think we're continuing to show real discipline in our underwriting by only selecting those customers that we really think hit our buy box and can generate the kind of high ROEs, loss adjusted ROEs that we would be looking for in our business |
| And third, we are excited about the ongoing prospects of the company, in particular, as we start to look past the end of our CECL phase-in period |
| Overall, gross charge-offs are slightly better than expectations year-to-date, and we expect that we will finish the year slightly better than our original 2023 outlook |
| I'm thrilled to be joining a team that powers confidence in students and families, while at the same time, driving meaningful growth, continued efficiency and long-term value for shareholders |
| We believe the program has been very successful |
| And no doubt, I think I said this on the last call, we appreciate that, that there may be competitors out there that have other things on their mind right now, and we're certainly happy to take advantage of that opportunity to the extent we can |
| We remain positioned to grow our business and return capital to shareholders going forward |
| While we believe there is still opportunity to take advantage of the loan sale and share buyback arbitrage, it is also exciting to think about the organic EPS growth and capital generation capability of the business as we contemplate pivoting to grow our balance sheet |
| Finally, our liquidity and capital positions remain strong |
| We continue to view slower prepay speeds as a real positive as our assets are expected to stay on our books for a longer period of time |
| As Jon already mentioned, the annualized net charge-off rate for the first 9 months of 2023 stands at 2.44% and continues to be better than our internal expectations |
| This has been fueled by a 10% increase in underclass applications, which is especially important given the greater serialization potential and lifetime value of this group |
| This is again a positive sign and another indication of the improvement in credit that Jon has already mentioned |
| But ultimately, we view a great way to enhance our valuation, improve our multiple and reward shareholders is to start to drive good old-fashioned organic balance sheet growth and the high-quality earnings that comes from that |
| Our portfolio has continued to benefit from the rising rate environment with our interest-earning assets repricing faster than our cost of funds over the past year |
| And we feel great about those results |
| This quarter's reserve increase was driven almost entirely by strong volume increases |
| As Steve and I both discussed, we are also pleased with the continuing stabilization of credit and are committed to continuing our journey back to full normalcy |
| While there have been several moving pieces throughout the year, we are pleased that our earnings outlook for the year is largely in line with our original expectations |
| We've talked a lot about just the overall strength of our school teams and relationships with the universities we serve |
| This wraps up a successful 2023 peak season |
| And so it's not surprising that we're seeing really great growth in applications |
| And they're competing just as hard as they always have, and we view them as being really good solid competitors that we take seriously |
| The results we posted this quarter demonstrate that we are continuing to execute the business plan we have outlined for investors |
| So I think we feel there is more opportunity for us to continue to drive our long-term charge-off rates down, obviously, recognizing they can fluctuate with economic conditions |
| NIM for the quarter came in at a strong 5.43%, up from 5.27% in the year ago quarter |
| We absolutely want to take advantage of all of the high-quality growth that we can possibly take advantage of in the marketplace |
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| These earnings are lower than the prior year quarter, given that we sold $1 billion of loans in the third quarter of 2022 that generated $75 million in gains |
| In the quarter, net charge-offs from private education loans were $95 million, resulting in an annualized charge-off rate of 2.5%, down from 2.7% in Q2 and 2.7% in the year ago quarter as well |
| The rate environment makes refinancing of loans problematic for that group for a period of time |
| This has way down from over 6% rate last year |
| It is also worth noting that the inflationary pressures we felt a year ago have somewhat abated |
| And given the structure of interest rates right now, it's very, very difficult to undercut the rates that are outstanding on the federal loan program |
| And we note they're down very sharply year-to-date, but we will see what the future brings |
| However, prepaid speeds were lower than the year ago quarter, which is a contributor to the year-over-year change in the reserve |
| We now expect total loan portfolio net charge-offs to be in the upper end of our original range and are tightening our guidance to $375 million to $385 million |
| But I think when we look at those 2 things together, we don't see a return to normalcy coming anytime in the immediate future |
| This could be due to a variety of factors |
| It looks like this dynamic began last quarter too, with the percentage being way down |
| We continue to focus on credit and our path back to normalcy and are pleased that our annualized net charge-offs as a percentage of average loans and repayment for the first 9 months of 2023 is 2.44% and remains lower than our plan for the full year |
| So it is absolutely, I'm sure, somewhat a function of the broader competitive set, but it is also, I'm sure, in large part due to the changes in strategy we've made |
| Arren Cyganovich And maybe we could talk a little bit about the consolidations away from Sallie, maybe still remain pretty low |
| And while the rate environments are a little bit nonconducive right now to that, the equity markets absolutely are |
| [indiscernible] the need to reserve declined as a function of that |
| And just in light of the fact that delinquencies are actually improving year-over-year, are you still thinking you can kind of get down towards this low to high 1 over the next several years |
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