萨利美 (SLM) 2026年第三季度业绩电话会：贷款发放额创新高，每股收益（EPS）展望下调lg...

Sallie Mae（纳斯达克代码：SLM）公布2026年第三季度私人教育贷款发放量创单季历史新高，但在市场波动的情况下决定不完成原计划的整笔贷款出售后，下调了全年每股收益（EPS）展望。同时，由于与第三方债务解决服务相关的持续压力，公司还上调了净冲销额指引。

要点速览

• 第三季度贷款发放量达到创公司纪录的34亿美元，同比增长15%。研究生贷款发放量增长119%。
• 净利息收入同比减少3400万美元至3.39亿美元，而其他收入增加1500万美元至4600万美元。
• Sallie Mae 将2026全年每股收益（EPS）指引下调至1.95-2.05美元，主要原因是公司预计不再执行今年原计划的最后一笔贷款出售。
• 全年净冲销额指引从之前的3.45亿-3.85亿美元上调至4亿-4.20亿美元。管理层将此次调整完全归因于第三方债务解决问题。
• 根据一项为期三年的初始合作伙伴协议，Sixth Street 承诺每年购买至少15亿美元的新发放私人教育贷款，其中包括第一年6亿美元的成熟种子贷款组合。
• Sallie Mae 在本季度回购了510万股股票，年初至今累计回购1810万股，相当于年初已发行股票总数的9%。

关键财务数据

业务与经营业绩

旺季需求推动贷款发放量创下历史新高。研究生贷款发放量增长119%，其平均 FICO 信用评分比新发放贷款的整体平均水平高出9分。管理层表示，助学金方案和学校认证流程的推迟将旺季延长到了10月。10月截至目前的贷款发放金额同比增长35%。

Sallie Mae 继续通过战略合作伙伴关系推进融资模式多元化。根据与 Sixth Street 达成的最新协议，该合作伙伴将在为期三年的初始期限内，每年购买至少15亿美元的新发放私人教育贷款。第一年包含6亿美元的成熟贷款组合。管理层表示，与 KKR 和 Sixth Street 的合作拓宽了贷款发放能力，提供了具备资本效益的资金，并带来了持续的项目管理费和服务费收入。

该公司还将存款加权平均期限从2025年底的23个月延长至37个月。管理层表示，这有助于使融资期限更好地匹配不断上升的固定利率贷款比例，使 Sallie Mae 保持在更加中性的利率风险位置。

10月1日，Sallie Mae 实施了一项重组计划，旨在使资源配置符合战略重点并提高运营效率。管理层表示，重组费用可以在现有的全年费用指引范围内消化。

管理层指引

管理层表示，仍预计在年底前用完大部分现有的股票回购授权。选择保留贷款而非出售，是因为意向出售溢价已低于公司可接受的最低门槛。Sallie Mae 预计，随着时间的推移，保留的贷款将带来约5%的净息差。

公司表示，该决定并不意味着其贷款出售计划发生永久性改变。管理层目前预计，取决于市场状况和可接受的溢价水平，相当规模的贷款出售仍将是2027年及以后计划的一部分。

风险与关注事项

第三方债务解决服务仍是主要信贷风险隐患。Sallie Mae 将此类行为对2026年净冲销额的预估影响从2500万美元上调至4500万美元。管理层表示，处于严重逾期阶段的客户对其修订后的还款方案接受速度慢于初始预期。

早期经营指标有所改善。管理层报告称，10月截至目前，借款人提及相关第三方机构及行为的次数减少了50%。公司还表示，虽然样本量仍然较小，但受影响借款人的初步回收率有了显著提升。

利率上升和资本市场波动压低了整笔贷款出售的溢价空间。管理层指出，不利市场环境的持续时间仍存在不确定性，不过公司认为当前状况是暂时的，而非结构性的。

分析师问答要点

• 计划中的贷款出售：管理层指出，取消的2026年整笔贷款出售规模约为10亿美元。公司尚未为该笔交易挑选或重新分类贷款组合。
• 2027年资产负债表容量：在贷款出售条件改善的基准情形下，管理层表示资产负债表规模可能保持平稳或实现个位数增长。第二个战略合作伙伴以及潜在的研究生贷款流量承接能力提供了额外的融资灵活性。
• 信贷压力：管理层澄清说明，净冲销额指引的上调全部与第三方债务解决问题相关。管理层预计，若第三方行为未发生重大改变，2027年的影响将明显低于2026年。
• Sixth Street 交易：更新后的每股收益指引包含了来自第二个战略合作伙伴关系的出售收益。6亿美元种子组合的一部分已在第三季度末完成交割，其余预计将于第四季度初完成交割。
• 拟售贷款：管理层表示，较高的余额主要反映了季节性贷款发放、KKR 远期流量承诺以及 Sixth Street 种子组合，而不是已取消的传统整笔贷款出售。
• 净息差：管理层将上季度的低点主要归因于第一季度加速出售贷款后的流动性过剩。为旺季贷款发放提供资金推动净息差在第三季度恢复正常。

业绩电话会议完整记录

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完整财报电话会议逐字稿

管理层陈述

Operator

Welcome to the Sallie Mae Third Quarter 2026 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Kate deLacy, Vice President, Investor Relations. Please go ahead.

Kate deLacy

Thank you, Leslie. Good evening, and welcome to Sallie Mae's Third Quarter 2026 Earnings Call. It is my pleasure to be here today with Jon Witter, our CEO; Pete Graham, our Co-President and CFO; and Melissa Bronaugh, Managing Vice President and Deputy CFO. After the prepared remarks, we will open the call for questions.

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. 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 Jon.

Jonathan Witter

Thank you, Kate and Leslie. Good evening, everyone. Thank you for joining us to discuss Sallie Mae's third quarter 2020 results. The third quarter was a strong one for Sallie Mae, 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 home loan sales. Tonight, we are pleased to announce that we have completed a strategic partnership with Sixth Street for an initial 3-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 detail about our strategic partnerships business in the near future, following the completion of the 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 reform.

With that strategic context, let me turn to peak season. Loan originations for the third quarter were $3.4 billion, representing 15% 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. 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 of 9 points higher than the overall average of new originations in the portfolio.

This peak season has been elongated. Last-minute changes to federal rule making, 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 disbursements 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% growth.

We have said consistently that this first peak season would an important learning opportunity. We now have a more complete view of federal rulemaking, firsthand experience about how both schools and students will respond to the updated federal program and more insight into the actual mix of student loans demanded. We are currently in the early stages of processing and analyzing that data, and we'll certainly 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 nonaffected segment were in line with or slightly better than our expectations. Furthermore, as you can see on Slide 9 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've reviewed all relevant collection and recovery 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 believe 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 million to $385 million although likely at the upper end. We now expect to see modest additional pressure on gross charge-offs 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 million 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. Pete?

Peter Graham

Thank you, Jon. 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. Net 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 to 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% of loans and repayment, an increase from 4% in the year ago quarter. Our reserve rate was 5.89% at the end of the quarter, down 4 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. Noninterest expenses were $221 million, up $40 million from the year ago quarter. The increase was driven largely by investments made to support peak season and position the company for growth in the changing federal student lending environment. At the same time, we've been laser-focused on noninterest expense management during the year. and have been performing better than our original expectations year-to-date.

On October 1, we executed a restructuring plan to better align resources with the company's strategic priorities and improved 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 onetime expenses, noninterest expense would have come in at the low end of the range, but will now be closer to the high end of the range. 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.

Finally, 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 Jon.

Jonathan Witter

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 gauge 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 way 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 at roughly 5% NIM over time rather than selling at the current indicated premium levels. The low-cost match funding of our bank, together with the flexibility afforded by our strategic partnership 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 are 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 project 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 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 million to $420 million. We are reaffirming our noninterest 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 originations growth. 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 noninterest expense guidance range for the year, even after absorbing onetime 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 of 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.

Operator

[Operator Instructions] Our first question comes from Jeff Adelson, Morgan Stanley.

分析师问答

Jeffrey Adelson

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 that you were thinking originally was going to be in this year in the back half of the year? And I know it's so 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 early indications should we be assuming you do another similar pace of whole loan sales next year on top of the partnerships? Are you including any plans for a third partnership to be announced? And just I think 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?

Peter Graham

Yes. 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'll recall when we pulled forward earlier in the year, pulled forward into the $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 have roughly $1 billion to our total loan sale 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 that 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 flat balance sheet to slightly down. And we aspire to add a second partner, which Jon announced earlier on the call. So I think in the context of sizing kind of in that $1 billion range is probably the right way to think about that.

The second part of your question really was like what does this mean for the future? I think, again, we feel like the current environment is sort of a temporary thing as in any given quarter, there can be conditions in the market that make it. We think we're in that kind of a situation now with the sort of peak rates, a high degree of volatility in terms of the near-term outlook. And we believe that will stable also 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, we're probably looking at a flat balance sheet to maybe single-digit growth of the balance sheet. We'll meet our commitments to partners, which we've now added a second significant flow commitment 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 the growth of our balance sheet.

Jeffrey Adelson

Okay. 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 million 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 , I think it's $25 million difference is coming from if it's not the third-party issue.

Jonathan Witter

Yes, Jeff, we tried to lay that out as clearly as we could for you. I think when we had originally updated guidance back in the second quarter, it was really in reflection of sort of the $25 million estimate that we had put out largely through 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 at the higher end. And so that's going to put us up closer to that higher end of the initial range.

And I think as we went ahead and reset guidance, we felt like it was appropriate with the additional 20 just to reset that 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 last quarter, us believing we can stay in the range, albeit at the high end 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.

Peter Graham

I was just going to say, to be clear, it's all related to this third-party issue. SP29093187 That's right. .

Operator

Our next question comes from Sanjay Sakhrani with KBW.

Sanjay Sakhrani

Appreciate you guys doing what's right in terms of the loan sales. I guess, as we think about what an acceptable rate would be -- can that happen like if rates are still in flux as we get out to next year? And I'm just curious, like how much capacity do you guys have to balance sheet loans into next year in terms of the equity?

Peter Graham

Yes. Thanks for the question, Sanjay. I think if you think about -- even in higher for longer scenario, which there were some recent articles around that and surveys of economists, even in those sort of longer-term outlooks, they had 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 kind of like the most bare case scenario for loan sales, they'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 ABS space and sort of pulling investor demand into higher-yielding product, think about all-day ABS that's funding the AEI trains at this point. So again, I think there's a lot of things unique to this quarter that create that the market conditions that we feel is 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 going into next year.

Sanjay Sakhrani

And just to be clear, Pete, just on the capacity that you have to grow, like would you have to pull down like originations if given the capital levels or how much flexibility do you have on CET1 to sort of aid that growth that you have to balance sheet it?

Peter Graham

Yes, I think the balance sheet is in great shape. 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 Jon 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.

Operator

Our next question is from Terry Ma with Barclays. .

Terry Ma

I guess first, I just want to make sure 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 EPS guide. But like any sense you can kind of give us on how long that third-party collection issues should kind of impact credit costs? Like is there anything else you can do to kind of help ring-fence the issue?

Jonathan Witter

Yes. 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. 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, there are active players in the sort of industry participants on the other side, and they may change their strategies, they may change their approaches, and we will obviously have to adapt. 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 actions that we think are really forceful and effective actions. We think they create a much more aligned structure with our customers and help us address the situation. we are seeing really positive early indicators of success of those actions and our operational data. I think I mentioned on my prepared remarks, sort of the volume reduction we are seeing in 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.

By the way, anecdotally, I think we are starting to see some change in behavior, positive changes in a way that is constructive and supportive. And I think all of that leads us to believe that absent some material change and sort of their strategic posture that we are on the downward slope of this I'd be hesitant to sort of put out there an exact number and exact timing of it. But I certainly think we expect next year's impact to be meaningfully less than what we saw this year.

Peter Graham

And I think the other thing I'd add there is the recovery profile of these borrowers, as Jon said, is much different than our normal charge-offs. And so that that's going to be additive to the recovery curve as we move into next year and 8.8. The second part of your question was around whether our updated guidance range included the gain on sale from the second strategic partnership with. Yes, that's included in our guidance for this year.

Terry Ma

Got it. Okay. That's helpful. And then maybe just on the restructuring, help us maybe reconcile like almost a year ago and early this year, you guys indicated incremental investment dollars to address the grad PLUS opportunity. So obviously, very optimistic around that. Now you're kind of 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.

Jonathan Witter

Yes. Terry, we absolutely still see the TAM expansion as a real opportunity. And I think in the numbers that Pete described was an expectation of continued investments in things like marketing and probably at a lower pace, still some product and system and capability enhancements going into next year. But I would encourage you to go back and look at our OpEx trajectory over the last 5 or 7 years. I think we've managed that 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 that was never the end of the game for us. We know we have a business that we can continue to refine and optimize. We know we have ability to continue to find efficiencies in what we do every day. And we knew as we continue to build and evolve our strategy there were resources that maybe didn't fit as much going forward with our new priorities as they did with our previous priority. So we do a certain amount of this every year. I think this year for a variety of reasons, ended up being a bit more consequential than what we have seen in the past. But we think it 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 invest in growth going forward.

Operator

[Operator Instructions] Our next question comes from Don Fandetti with Wells Fargo. .

Donald Fandetti

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

Peter Graham

Yes, sure. I think 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 one of the big drivers on NIM 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 the time period in the year when we have very low originations. And that caused us to have sort of a dramatic low point for NIM in the second quarter. And at that time, we said our expectation was that as we funded peak season originations that would draw that down and we normalization. So that's the biggest factor on NIM in the current year.

I think at the margins, some of the extension of our duration in the portfolio, certainly has somewhat of an impact, but I feel good about that, right? Like off of the peak season last year that had been very heavily focused on fixed rate originations. And so we needed to make sure that we match the duration of that profile accordingly. And so 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 interest rates. And I feel pretty good about the timing of when we did that in the context of overall market volatility.

Donald Fandetti

Got it. I guess my follow-up, I just wanted to clarify, I think on the new fund, there's like a seed seasoned 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 held-for-sale.

Peter Graham

Yes. So a portion of the 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 held-for-sale portfolio, keep in mind that there will be the sort of regular commitments to the forward flow under the KKR deal in addition to these new held for sale associated with the seed portfolio.

Operator

Our next question comes from Rick Shane with JPMorgan.

Richard Shane

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. The held for sale portfolio is substantially larger than it's been. Some of that has to do with the Six Street transfer. Some of that has to do with the KKR flow. 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 30. Is there going to be some migration from the held for sale or the available-for-sale portfolio to held for investment in the fourth quarter? And what are the implications of that?

Peter Graham

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 -- 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 held for sale number is bigger at into the third quarter.

Richard Shane

Got it. So it doesn't have anything to do with deciding not to do a traditional nonflow sale and some weird timing issue there?

Peter Graham

Not at all. Not at all.

Operator

Thank you. Our next question comes from Giuliano Anderes Bologna, Compass Point. .

Giuliano Anderes-Bologna

Maybe hopefully not going over too much that's already been asked. But when I look at that, call it the large kind of held-for-sale portfolio. Is your expectation that you would complete to sell a large portion of that maturity of that held-for-sale portfolio in the fourth quarter where we're going to talk about leak into next year. And then kind of related to that, if you go about the seeding season portfolio, has that all been moved to held for sale already? Or is there more that would be moved to held for sale in the fourth quarter and have some reserve reversals?

Peter Graham

Yes. Let me take that question in 2 parts. With regard to sort of the mechanics of how our flow portfolio transactions, 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 the to KKR in this case for the third quarter.

Additionally, in that held for sale is the $600 million of seasoned seed portfolio. A portion of that closed in the third quarter, and the remainder of that will close 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 gone through a process of selecting a portfolio yet. We typically will gauge indication of interest in the market by getting sort of indicative bids from time to time. And that helps us gauge where we think a loan process might come out. But we have not gone through a process of selecting a portfolio would be -- which would be a prerequisite for us putting anything into a different designation of the held for investment.

Giuliano Anderes-Bologna

That's helpful. And then as a side follow-up, I think -- the way that it seems like kind of over implied was about a 2% gain on sale upfront for the strategic partnership sales. And single digits in the 10-Q when I think about that, the large held-for-sale book, is that still the right range to use in the 2% range? Or would that come down a little bit from the 2% ballpark?

Peter Graham

The disclosures in the Q would be in 2 parts. One would be we have on disclosure of fair value, which is on a broad sort of the valuation of our total portfolio. And then we have a separate valuation on the held for sale, and that's a combination of both the flow commitments to KKR that's in the warehouse as well as the $600 million of seed portfolio. It's a combination of both.

Giuliano Anderes-Bologna

And so I guess roughly call it $4 billion or $1.4 billion of loans held for sale as of the end of September at September 30 -- so we should expect the full gain on sale for the forward flow to be realized in the fourth quarter on that chunk of the portfolio.

Peter Graham

Correct.

Operator

Thank you. 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.

Jonathan Witter

Thank you, everyone, for your time and engagement this evening. I know we've given you a lot of information to work through in 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 to stand by to answer your more detailed questions. With that, I'll turn the call 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

Thank you. This concludes today's Sallie Mae Third Quarter 2026 Earnings Conference Call and Webcast. Please disconnect your lines at this time, and have a wonderful evening.

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