SLM Corporation (SLM) Earnings Call Transcript & Summary

Good afternoon, everyone. Thanks for joining us. I'm Moshe Orenbuch, I'm the specialty finance analyst here at Credit Suisse, and welcome to our conference. We're very pleased to have Sallie Mae with us this afternoon. Actually, the creation of Sallie Mae was something that was announced first at this conference, I think, probably 8 years ago. And the company was and continues to be the dominant private student lender. What has interested me most about it is how focused it's been and what that's done to ensure continued success. We've got the CEO, Jon Witter. Jon joined Sallie Mae just under 2 years ago, which seems like longer actually.

It does.

He had been the Chief Customer Officer at Hilton and had been in the financial services industry prior to that, in a number of positions. But what -- I think he's brought a tremendous sense of focus and discipline to Sallie Mae. And Jon's got a few opening comments and slides, and then we're going to do a fireside chat. So Jon?

Moshe, thank you. It's great to be here. Thank you for everyone. It's also great to see so many old friends in person. It's been entirely too long. And gosh, we could probably spend 3 or 4 days here just catching up on all the stories. Moshe, as you said, I wanted to just provide a quick little bit of context because I recognize not everyone may know, Sallie Mae as well and may not know what we've been up to for the last roughly 20 months. But as you said, we are a player in the private student lending market. And just to put that in context, every year, Americans spend about $400 million on college tuition and related expenses. About $300 million of that comes from sort of direct resources, think of that as family savings, scholarships, grants, et cetera. A little bit more than $100 million comes from the federal loan program and a very small but to me, very important, $13 billion of that, I'm sorry, billions comes from the private student lending market, and that's really where we play. Our role, I think of it as GAAP financing. So our mantra to customers is get all the free money, get all the subsidized money you can, sort of take the support that your family can afford to offer. And for what is left, please come and see us. And so we really do view ourselves as that last marginal dollar that makes access to higher education possible. Moshe, as you said, in that context, we like our market position. We really believe we have the leading brand in the marketplace. We've got really a very nice and enabled modern tech stack, which powers most, if not all, of what we do. We typically are in the 50%-plus market share range. We have a very high-quality credit product, about 86% of our loans are cosigned. Average FICO score of about 750. And again, up and down a little bit through the credit cycle, but annual charge-offs are roughly in the sort of 1.3, 1.4 range is a pretty typical thing. We have a great relationship with the schools we serve. We have about 2,300 actively managed relationships. And that's not just about sort of relationship management. We have deep data sharing, information sharing, technological enablement that we do with those schools, the largest sales force in the industry. And I think all of that is codified in the fact that we appear on almost 100%, 98% of all of the preferred lender lists that are out there. Moshe, you said it, I'm a big believer in a couple of powerful words, focus and alignment. And so for the last 20 months, we have really been focused on 4 externally facing strategic imperatives. The first is to really maximize the profitability and the growth of our core business. We think we have a great core business. We think it has significant growth potential and profitability potential left to be rung out of it. That's both on the top line and the bottom line, and we'll talk about that, I'm sure, a little bit more. The second priority is to maximize the value of our brand and our attractive customer base. The vast majority of our customers are college educated. They're -- have finished their college degree. The vast majority are sort of young in their life cycle. To put it in financial services terms, lots of lifetime value left in those customer relationships. And we think we have a great relationship with them at a really pivotal time as they are transitioning from their young adult life into their true adult life. The third strategic imperative is to better inform the external narrative about private student lending. In the time where I was considering coming on board, you could not turn on the newspaper or turn the TV or read the newspaper without hearing something about the student lending debate and the student lending crisis. And we really do think that there's important work to be done. We know the student lending system is not working well for every American. And we think Sallie Mae has a really important voice to play in helping to shape those policies, that dialogue and to better help both policymakers and investors understand this important role that we play. And then the fourth, and it's one that has probably gotten the most attention. I really do sort of worship at the altar of capital allocation and capital return. I think it's the single most important thing any company can do to drive shareholder value creation. And so our fourth priority is really around maintaining a rigorous and predictable capital allocation and return program, we think as sort of a great way to create shareholder value. I'm not going to bore you by going into detail on all of these, but I do want to give you some little just snippets, little sound bites of the things that we've been up to for the last couple of years. And I picked 2 of those strategic imperatives. So maximizing the profitability of our core business. Last year, we saw about 2% origination growth. That is less than the 6% to 8% we normally see. That was largely driven by COVID-related dynamics. We can talk about that more, if you like. But what I'm really proud of is during that time, we saw really nice market share growth from an already industry-leading position. So in the third quarter, 3% improvement to market share. Moshe, because I save all my best stuff for you literally hot off the presses, we have our Q4 market share numbers. I know you've all been waiting for this at home. But I'm also really proud to tell you that in the fourth quarter, we grew market share to 60.7%, and that's up from 58.7% in the year ago quarter. And for the year, grew market share to 57.2%, up from 54.2% in the year ago quarter. Moshe, I'll just give that to you. You can have that.

Did you sign it?

I'll sign it afterwards. But I think that is a great manifestation of even from a market-leading position. We know there's work that we can do around marketing effectiveness, better relationships with schools, better brand management, and we're committed to doing all of that. And by the way, we did all of this while reducing our unit cost to serve by 8%. So we feel great about that. And that's through work that not only has a positive impact on costs but also a positive impact on the customer experience. So fundamentally taking friction out of the system, which we know drives throughput, but we also know reduces cost, reduces call volume and is generally a win for our customers as well. On the bottom, again, just a little snapshot here. This is our fourth imperative around predictable capital allocation and return. Since January of this year, we bought back 26% of our shares outstanding. Brian, I'm still a little bit mad at you. I don't know why you didn't go with our lead number, which is since the start of this strategy, 10 months earlier, we've actually bought back 35% of the shares outstanding. So we're hopefully putting our money where our mouth is about the power of capital allocation and capital return. We love that strategy and plan to continue it. By the way, also increased our dividend to 11%. That's approximately sort of targeting a 2% dividend yield, which is where we set that. We think that puts us well in the range of what other financial services companies are doing. And we're really powering a lot of this through some very active work around loan sales and share repurchases. And what we fundamentally came to realize is that there was a disconnect between the very strong gain on sale valuations for our loans in the wholesale market and where our current valuation multiples were in. So we appreciated that we had a chance to really turbocharge our capital return efforts by taking advantage of that arbitrage. And I'm sure that's something that we will get into in more detail. Sort of shifting gears. This is -- these are important strategies, and they will always be a key part of what we do. We will always focus on the core, we will always focus on capital return. But what I'm getting a little bit excited about is I think going forward, you're going to start to hear us talk more about our second imperative, which is really around, again, how do we maximize the value of our brand and our attractive customer base. And that's a big sort of ambiguous imperative. So let me talk for a second about what we're really trying to do there. And the vision is we want to create an incredibly large and powerful customer acquisition and management machine. We want to be the place that if you're going to college, you come to Sallie Mae. And we want to be that brand that is absolutely synonymous with that journey to through and immediately after college. So how are we going to do that? What we are looking to do is provide the tools, the content, the data, the insights to really address questions, needs, pain points as students and their families go on this complicated journey. And by the way, that could be everything from how do you fill out your financial aid form; to how do you apply for scholarships; to, boy, how do you just think about what's like the implications of certain amounts of debt if you're planning to go into certain career fields. There are these pain points that we know from our research families really feel, and we think we can play a powerful role in doing that. Now by the way, that will hopefully help families, but it also has some really powerful economic effects for us because we hope what will happen is that, that will cause students and families to really seek us out and seek us out through low-cost or no-cost organic channels and search. They will come, they will form that relationship, and we will then -- as we say here at the bottom, begin that regular engagement. That's great for our core business that lowers our cost to acquire. That gives us a leg up for future market share gains. Moshe, I may have mentioned, we grew our market share in the fourth quarter. We're very proud of that. But what it also does, down the road, is it creates a real opportunity for us to think about other monetization opportunities. And whether that's other financial services products, whether that's partnerships with other types of providers, we really think that there's a great chance to monetize that value of the brand and that expanded customer relationship. Now to give you a sense of it, we started this little journey in 2021. And we took a bunch of the products and services that we had, and we sort of cobbled them together. And we actually ended up far more successful than we thought. So just to give you a couple of snippets. We ended up with about 2.6 more of these pre-customers, that's what we call them than we had originally thought we were going to get. So that sort of blew our mind. But the really cool part is what happened on NPS. So when customers were even just aware that we provided these types of resources, they didn't have to use them. They just sort of knew that we did that some place. NPS was 25 points higher on a like-for-like basis with other customers. By the way, when they actually used one of these things, 38 points higher. So if you believe like I do that NPS is a great indicator of customer engagement that leads to greater profitability, we like the early signs of life here. But I'm a pretty impatient guy. And while this was a great start, the question that the team and I considered is how can we turbocharge this journey? How can we get there faster? And as we were doing this various planning, we came across this little company literally down the street from our headquarters in Wilmington, Delaware that we actually realized we knew really well. And it was this great little company called Nitro College. And Nitro's whole business is about how do they use tools, content, data conversations to really help families sort of break down this confidence barrier and get on a fast track to sort of planning for and executing their college journey. And as we got together and started some conversations with them, we realized that this was really a great chance for 1 plus 1 equals to 3, because the things we had focused on were a little different than their areas of focus and vice versa. So we were super excited in January to announce this deal. It's a small deal. It's de minimis to our overall financials. But it's huge in its strategic value and it's huge in its impact on the core business. So just to give you a sense, on day 1, we'll have 7x more relationships with high school bound seniors than we did previously. We'll have 1.7x more relationships with students in college, and we'll have 2x more relationships with their parents. That's just on day 1. The thing I'm really excited about is if you model this out a year or 2, by 2023, we think we'll have a relationship with 50% of all incoming college freshman, which, again, that is just a great leverage part. By the way, they've got some really interesting capabilities. They've got some very efficient organically driven sourcing platforms. They've got a really effective engagement model. So once they get a customer in, how are they pinning them, how are they working them, how are they deepening that relationship over time? And they've got sort of an early and nascent but we think very effective referral engine that actually allows you to sort of take advantage of those monetization opportunities. So we'll have work to do on integration. And by the way, this is a small company. So we will have to invest to continue to sort of expand and grow. But it's an example of the kind of acquisition I like, small, low cost -- linked to the core but a real sea that can grow into something far more significant with just a little bit of investment and a little bit of nurturing. So that brings you to the last slide, what are we going to be focused on? Number one, we're going to be focused on delivering our '22 guidance. We take that incredibly seriously. The guidance you see on the right-hand side here is exactly the same as we announced on our earnings call just a few weeks ago. GAAP core EPS of $2.80 to $3, 8% to 10% origination growth, net charge-offs of roughly $255 million to $275 million, and expenses around about $560 million. So that's the guidance we've already given. So we will work tirelessly to deliver that. The second thing we're going to do is focus on those 4 external strategic imperatives. And again, we'll focus on all 4 aggressively, but you should expect to hear more and more about imperative 2 in particular. And then in a nod to our team, we do have a couple of additional internal strategic imperatives that probably don't get enough airtime, but I would be remiss if I didn't mention them. And we spend a lot of time thinking about maintaining our really strong mission-based and inclusive culture. And of course, any bank CEO needs to acknowledge that we are fundamentally in the business of risk management. So continuing to really grow and enhance our strong risk management culture also a real source of pride and priority. So hopefully, that gives you, in 5 or 10 minutes, a quick overview. You don't need the footnotes, and we'll leave it at that. So Moshe, with that, I'd like to turn it over to you.

Nice. that's great. And thanks for the market share. I think I let me try to turn this into an NFT, if that's okay?

Yes, absolutely. As long as we can split the proceeds with Sallie Mae, of course.

That's okay. Right. So I think first place I'd like to start is on the market share. I think we suspected that seeing some growth numbers from a couple of the players. But could you talk a little bit about what you think it is that is driving that kind of 200 basis points over the year -- in a year that was a tough year? So...

Yes. Moshe, I think it is probably a combination of a number of things. And my guess is no one is dominant. I think as we've been talking about for several years now, even before my arrival, we've made significant investments in our martech capabilities. We think that's really starting to get to the sweet spot of payback time. A lot of the core investments are now implemented, and we're actually now running strategies on those capabilities, and I think we're seeing the impact there. So very proud of that. And I think we believe in our internal view that those will have really nice IRRs and returns associated with them. I think the second thing is we continue to really obsess about our relationships with our schools. And this is, I think, something that's understood. You sort of hear the term relationship management, and you assume it's stopping in the admissions office and having a cup of coffee with someone, it's really far more fundamental than that. And you have to remember every student loan has to be certified, and there are certain administrative steps that a university or college has to go through to, actually, sort of administer that loan. We've really worked extremely hard to make sure that, that is as frictionless and as intuitive a process as it can be, and we're giving the schools, the data and the insight that they really need in order to do that. And then, look, I think the third is a whole series of operational improvements. I don't have the stats in front of me, so these are approximate. But to give you 1 example, we've put in place a new, what we call sort of skinny flow application process first for our existing students, now for new students, which has dramatically shortened the number of steps it takes to apply. It's not quite the easy button, 1 push to apply, but we're getting closer. And we've seen material improvements in yield and completion rates as a part of that, which track directly through to the bottom line. So there's a whole host of those different things. Again, we've got a great sort of commercial team that is thinking about all of those different opportunities. I'm not sure we'll get market share growth every quarter, but I think we certainly start with and aspire to that outcome.

And -- I hear all of that. I also -- I guess, maybe bombarded is probably the right word to say from new entrants who want to enter the market or who have entered the market, many of them have seen their market share probably grow less rapidly than they would have expected. But how do you think about the new entrants? What -- are there any of the capabilities out there that you look at and say, "I wish I had that?

Look, I think there's always advantages and disadvantages. And I think everyone loves a shiny new object and everyone loves a shiny new brand, and there are certain advantages to that. You are not constrained by 45 years of history and experience. But truthfully, I like our position a lot. We've got great underwriting skills, models and data. I think we have a tech stack that allows us to book and service loans in a really cost-effective way. I think we're able to generate superlative returns while being very competitive on pricing. So I like that overall position. So yes, if I could pick and choose little aspects maybe, but I wouldn't trade places with any one right now.

You also talked about -- I mean, market share is phenomenal, but the market was actually a little weaker than you expected in 2021. Those COVID effects, do you see those reversing? Like do you see that market growth being normal this year, higher than normal or lower?

Yes. I think there's an easy half to that question and a little bit more of a subjective half to that question. The single biggest thing that we believe happened last year in the marketplace was the presence of these higher education relief funds, these HEERF funds, as some of you know it. And to put it in context in, I believe it was December and January or February -- December of '20, January, February of '21 through a couple of the CARES Act, there was -- I think it was $72 billion of funds basically given to colleges and universities without restriction except it had to be used for the direct financial support of students. To put that in context, if you do the quick math, from what I said earlier, that's like roughly 16% or 17% of the total spend in a given year. That unquestionably had a downward pressure effect on the market as a whole. And I think we were not immune. By statute, that ends this spring. So those funds, if they are not used, they are lost. And so certainly, by the time we get to the fall, that will be in the rearview mirror. And I'm not -- by the way, it's always dangerous to predict Washington. But I'm not hearing anything that would predict a broad-scale reissuance or something like that. The Department of Education recently came out with some small increases in support for some specific areas, but measured in the millions, not billions of dollars. So to me, that's the easy part. I think the far harder part is when do we start to move back and regain enrollment. And enrollment growth has not been incredibly strong for the last number of years. It's demographics. There's fewer college age people today than there were in the past. But there is no doubt that there was a group of people who, for financial reasons, had to put their dreams of higher education on hold during the pandemic. And I think the thing that's harder to predict is when do they feel the confidence to come back into the fold, if ever. And my guess is we'll see some improvement this year in that, but I think that will be a couple year journey back. And we may not get all of those people back. I suspect there will be a small loss generation of, would have been, college graduates who are not because, unfortunately, of the economic disruption around the pandemic.

Okay. You alluded to the loan sale process, taking that capital and kind of reinvesting it back in the stock and the effects that it's had. One of the things that people in our seats always wonder about is the turbulence in financial markets and what that means for gain on sale? You did -- your gain in the fourth quarter was higher than in '21 in the first quarter sale, can you talk about the trends that you're seeing that would underlie what the games would look like this year?

Yes. I think there's, Moshe, sort of an arithmetic version of this, and I think there's a human kind of component to this. On the arithmetic, and I think our CFO, Steve McGarry, did a nice job of laying this out in the last earnings call. There is no doubt -- when a buyer is looking to buy our loans, they are literally constructing a discounted cash flow borrower by-borrower for every loan that we are looking to sell. And they're applying their own prepayment rates and their own default rates, and they're doing all of that analysis to come up with a number. But at the core of it, it's a discounted cash flow. And last time I checked, core to any discounted cash flow, I'm not in your business, but I'm pretty sure I'm right about this. Core to any discounted cash flow is obviously a risk-free premium and a risk premium. And by the way, my guess is the risk-free premium is pretty closely tied to what's going on in the treasury market today. And I think we've seen oscillating risk spreads, given just the uncertainty in the world. So I think there's no doubt that those things will factor into the valuation in some way, shape or form. And I think the data, which Steve was trying to give in terms of the split between fixed and variable was really just to give investors an ability to dimension that risk. And you may remember, he gave you one arithmetic example of just, hey, if it was this much, the loan premium would go down by that much. And I think the net effect is you have to actually believe pretty big movements in interest rates or in risk spreads in order to really move those needles in a dramatic way. I think the other side of it and you alluded to this, is just the nature of an auction, right, the human nature of an auction. And one of the things I'm really proud of as our team is we've really worked hard to make sure that when we go out and sell loans, we have a big group of people who are interested, qualified and have the expertise and skill to really value the asset class. So I think we shared like last spring -- our loan sale last spring was 8x oversubscribed for the amount of the sale. I think we will look to do more of the same going forward. And you're exactly right. I was ready for the team to say, hey, in the second loan sale, the premium was going to be lower than in the first because the interest rate environment had deteriorated a little bit since then. So like color me surprised when they said, "No, no, no, it's actually higher. And I think that really just speaks to the incredible asset-starved world we're in right now. And the demand for long duration, low credit -- I mean, sorry, high credit, low loss content product.

And you've talked about this as something of an arbitrage between the price of the loans and the price of the stock. The stock has moved around. It's off the highs. It moved up nicely, somewhat off the highs. How do you think about that arbitrage now?

Yes. So the technical way we think about the arbitrage and we review this regularly with our Board is we think about it in sort of a red, yellow, green zone. We're on 1 axis, we're looking at loan premium and really asking the question of what percentage of the full NPV do we think we are getting of these loans that we are selling. Obviously, if we think we're getting near at or above 100% of our NPV, we like that answer a lot. That pushes you more into the green. And likewise, we look at valuation, and we look at where we think we are, and we've challenged a few of our banking partners to really kind of hold up a mirror to us about where they think we should be trading. And how far of a discount are we off of that from a multiple perspective based on a number of different measures. I get asked all the time, as you can imagine, like gosh, when are you going to move into yellow? And by the way, can you share that matrix.

[indiscernible].

Yes. I'll give you the market share. We're not giving you the matrix. But I don't think we're close to moving out of the green zone. I am proud of the progress we've made. I think on my first day on the job, the stock traded at $6. We're at $20 and change now. That feels better. But I think we still have a ways to go. And by my calculation, we're trading today at a 6.5x or 7x forward-looking PE. Understand there's a little bit of noise in there from some of the gain on sale metrics, which is why, again, I think you heard in our last earnings call, we tried to dimension how much of the revenue, how much of the earnings comes from that gain on sale versus good old-fashioned bank spread earnings, which I think is pretty indisputable should be earning a higher multiple. So I think we feel like we're a ways off the mark here. So I would not count on that arbitrage in that strategy ending anytime soon. But I will say, even when it does end, our capital -- our commitment to capital allocation return does not. It may take a different form. I do think we'll move into a very interesting period post-CECL phase and where there's a lot more organic capital generation. But I think as long as I'm in this chair, investors should expect that capital allocation, capital return is going to be at the core of what we do.

Right. And we've generally assumed that percentage of your originations that you sell is going to be declining over the next couple of years. It's not a huge drop off in the dollar amount as you're working through that CECL phase, and that's what we've generally assumed. I mean, again, and obviously, we'll be sensitive to the 2 elements of that matrix obviously. All right. Can we talk a little bit about credit? There's a concern about credit normalization across the entire spectrum. In many times, student is a class that outperforms the general market. You then have complicated it a little bit this time around by the moratorium. Many of your borrowers aren't paying interest. Can you talk a little bit about what you've seen? You've taken some steps on forbearance. And can you talk us through the credit situation right now?

Yes, happy to. So I think there's -- first of all, in the fourth quarter call, you'll remember we announced sort of the charge-off guidance for the year. I covered that before. And we also talked about the fact that we thought delinquencies would be a little bit elevated through the course of this year. There's really 3 things that are driving those couple of factors. Number one, we absolutely recognize that there will be a modest impact, small-to-modest impact on the end of the federal payment holiday. Virtually every one of our borrowers is a federal loan recipient as well. And so just from a cash flow perspective, you have to assume that there's going to be some number of customers who are right at their margin, and therefore, having to start repaying their federal loans will create a little bit of hardship. We have worked really hard to minimize the impact of that. So it seems like a very long time ago. But in the summer of 2020, right as the pandemic was not ebbing, but just stabilizing, we took the very aggressive step of starting to be -- or take a much harder line on the granting of forbearance. For example, we required sort of validation that both the signer and the cosigner were unemployed in order to be able to get that next round or that next tranche or forbearance. That was not because we wanted to be cruel, it was not a moneymaking proposition, right? It wasn't any of those things. We fundamentally believe that there's a real value in customers being engaged in positive payment behavior and letting customers go too long without that would have negative consequences. So we're now at a point where a little bit shy of 2% of all of our customers. I think the latest number is 1.9% are in some form of forbearance. And we think that is just a good practice to have especially during these times. So end of the credit moratorium is a part of it. The tighter use of forbearance is a part of it, too. Because we know that there are customers who would have cured themselves in delinquency through the use of forbearance and kicked -- who are now kicking around and delinquency a little bit. We don't think that will have a huge, outsized impact on eventual charge-offs and losses. We have announced some builds over a couple of quarters to our CECL reserves as a result of that. But the second would be the greater use of forbearance. And then the third thing driving those results are, we did see a slightly higher number of people drop out of college during the pandemic. And we know college dropouts have a slightly higher delinquency and charge-off propensity. And we know across the board that when customers get into trouble, it's more often than not at the very beginning of their payment history with us when they enter repayment. So when we modeled that through, we saw that as well. I would put 2 of those 3 really in the context of sort of normalization of COVID, right? So the federal payment holiday will normalize, the higher dropout rate, what we call sort of the gap year, cohort will normalize. I think probably, the impacts of that tighter forbearance use will be with us forever. But again, I think those are all well incorporated into our reserves and our provisions.

Okay. Very good. The -- you alluded to the loans that you're originating, very strong revenue streams. And I think the -- both mix going into this environment and your funding capabilities, I think kind of give you a pretty healthy outlook for the net interest margin on the loans and which should be good both to keep them on the books or if you sell them. Any updated thoughts from just under a month ago in earnings in terms of the outlook for the net interest margin?

Moshe, not really. I think we've guided to a NIM of right around or just above 5%. And remember, our goal is really to be sort of neutral in terms of interest rate risk and exposure. And so yes, there's a little bit of an impact of a change in mix between fixed and variable. We've sort of accounted for that in our guidance, and that's an important but not outsized opportunity. And I think between -- I think the amount of liabilities that we have to raise in a given year is relatively de minimis at this point. It's one of the positive outcomes of our loan sale process that we only have to raise about $3 billion or $4 billion of new liabilities each year to replace effectively maturity. So there's not a lot of movement in the cost of liabilities. And I think likewise, even with good originations growth, it's still a pretty small portion of our overall balance sheet. And we employ pretty sophisticated hedge strategies to lock in for at least the next 2 or 3 years that interest rate exposure. So we're not looking to take a position or a point of view on rates. I think neutral is where we're trying to be. And I think our sense is we're pretty neutral at least for the next 2 or 3 years in a rising rate environment.

In your prepared remarks or slides, you talked about some of the new product types of things. And I'm wondering if you could -- if there's any kind of additional flavor you can kind of add to that? Because I think when you first joined given your background, I think that was one of the things that was talked about, not that much later, but just 20 months.

20 months. Yes. Look, first of all, as I said before, I think the very first priority we have is to build the biggest, most robust customer acquisition and management machine we can. I mean that is really the core of what we think is going to be a real source of differentiation for us going forward. And again, we're doing that first and foremost because it benefits our core business. And I do want to say the acquisition of Nitro, the investments we're making were all de minimis. And by the way, if all they did was provide a little bit lower CTA and a little bit higher growth to our core business, trust me, you would love the IRR on that investment. So I think it's really important to say that as one of our Board members said, this is a wonderfully strategic acquisition that is completely paid for in very sort of tactical and core business-related metrics. Now if you start to think about where you can take that. And I want to preface this by saying, please don't put this in your models for next year. Our first priority is going to be integrating Nitro and building that customer acquisition engine. I think the very first thing we want to do is turn it loose on the products we already have. So we have a fledgling little card business, right? We want to see what impact this new customer acquisition and referral engine can have on that. By the way, we have a great little savings franchise today that we don't talk about nearly enough. I love the name SmartyPig. By the way, I heard, rich shamelessly plugging auto navigator in the last session. Go check out SmartyPig. You guys have enough money to help us meet our funding needs for next year. But it's a great on-brand product, really. I think, very appropriate for the kind of student-oriented demographic that we're talking about. So the very first thing we're going to do is say, core business. Right after that, we're going to say, let's look at the products we already have. I think what we're then going to do is sort of begin to draw concentric circles out. And I think what we want to do is really stay as close to our knitting as we can, right? So if you're waiting for Sallie Mae to get into mortgages, don't hold your breath. Rich should be very comfortable. We're not coming after the auto business anytime soon. What we really want to do is be that education, student-oriented company and figure out the things that they need and whether that's an expansion or an extension student loan products, whether that's other products or services that people may need while they're in college, doesn't matter, we will look to sort of radiate out from there. The nice thing about Nitro, and I had a conversation with the team that runs that business for us, it actually gives us the ability to engage very directly through content with our customers and see what are actually the things that they want. So we're not going through hubris go out and say, "Well, I think customers would want X from us, let's go build it." What we're going to do is put out some content, we're going to put out some tools. We're going to put out some questions. We're going to -- and by the way, all of that is very low cost. We'll be able to see what customers are actually gravitating to. In that way, when I come back here in a year and I tell you about the 2 new businesses that we're thinking about, I'll have hard data behind why our actually -- our customers actually wanting from us.

That's wonderful, and we'll hold you to it in a year. Unfortunately, we have less than a minute left. And so I think I'll take that 25 seconds to thank John and Brian for joining us today and for giving us their insights. Thank you so much.

Always great to be with you, and thank you for the whole conference. It's been wonderful.

Good.