Slm Corporation · NASDAQ:SLM
Slm — Investor Presentation (February 2023)
29 slides from Slm's investor presentation, Feb 1, 2023
Slide 1: Investor Presentation for the Year Ended December 31, 2022
Investor Presentation for the Year Ended December 31, 2022
Slide 2: Forward-Looking Statements and Disclaimer
Forward‐Looking Statements and Disclaimer Cautionary Note Regarding Forward‐Looking Statements The following information is current as of February 1, 2023 (unless otherwise noted) and should be read in connection with the press release of SLM Corporation (the “Company”) announcing its financial resu
Slide 3: Sallie Mae is an Outstanding Franchise
Sallie Mae is an Outstanding Franchise Sallie Mae is the market‐leading brand for private education loans driven by brand recognition, rigorous underwriting methodology and industry‐leading customer service. Top ranked and highly recognized brand 2,100+ actively managed university relationships acro
Slide 4: Q4 and Full Year 2022 Highlights
Revenue Q4 and Full • GAAP Net Loss attributable to common stock of $81 million in Q4 2022 driven by reserve build and Year 2022 mark‐down of non‐marketable equity security, compared to Net Income attributable to common Highlights stock of $305 million in Q4 2021. • Full‐year 2022 GAAP Net Income at
Slide 5: Strong Private Education Loan Originations
Strong Private Education Loan Originations13 Origination Season Full‐year 2022 originations at approximately $6 billion, 10% higher than the year‐ Actual ago period and the highest over the previous 5‐year period. Underclassmen originations, typically with a higher lifetime value to the company, exp
Slide 6: Capital Return
Capital Allocation Capital Return & Return • Paid common stock dividend of $0.11 per share in Q4 2022. • Sallie Mae Bank remains well capitalized with 14.2% Total risk‐based capital ratio and CET1 ratio of 12.9%. • In the fourth quarter of 2022, we continued our capital return strategy by repurchasi
Slide 7: Higher Education Value Proposition Remains Attractive
Higher Education Value Proposition Remains Attractive4 Expanding Addressable Market • Private Education Loans represent 2‐3% of the overall spend in higher education annually. Private Federal Loans Education Loans • Total spend on higher education grows ~2% annually, while Sallie Mae Other $79B Priv
Slide 8: High Quality Private Education Loan Portfolio
Customer FICO at Original Approval6 Smart Option Payment Type <700 780+ Interest Only 23% 28% 19% High Quality Deferred Weighted Loans Private Education Average FICO: 743 48% $18.0B Loan Portfolio 700‐739 740 ‐ 780 Fixed Pay 23% 33% 26% Portfolio by Originations Vintage Portfolio Interest Rate Type
Slide 9: Conservative Funding Optimizes Net Interest Margin
Conservative Funding Optimizes Net Interest Margin Secured Debt Retail 20% MMDA & CD 23% Deposits $21.4B Brokered Secured Debt $4.2B Retail Variable 15% H.S.A. & 529 17% Brokered Fixed 25% As of 12/31/22 9
Slide 10: Simple But Powerful Investment Thesis
Simple But Powerful Investment Thesis • Consistent earnings expansion is driven by top line growth and efficiency Attractive Earnings Profile • Sallie Mae is the leader in the private education loan market • Well‐proven and disciplined underwriting model leveraging data and experience through Manage
Slide 11: Clear Strategy to Prove this Investment Thesis
Clear Strategy to Prove this Investment Thesis Strategic Imperatives: 1. 2. 3. 4. Maximize the Maximize the Better inform the Maintain a profitability and value of our external narrative rigorous and growth of our brand and about private predictable capital core business attractive student lending a
Slide 12: Maximize the Profitability and Growth of the Core Business
Maximize the Profitability and Growth of the Core Business Maximize Revenue Manage Unit Costs Drive penetration at all schools Strong fixed cost discipline Increase market share by fully meeting Drive towards reducing both the unit cost of student funding needs servicing and the unit cost of acquisi
Slide 13: Optimize the Value of the Brand and Attractive Client Base
Optimize the Value of the Brand and Attractive Client Base 2M 91% We know our customers’ finances, payment Borrowers and Customers complete their patterns and indebtedness cosigners program5 We have the relationships and knowledge to assist our customers with their next step: Graduates who benefit f
Slide 14: Political Environment
Political Environment New congressional make‐up complements our strategic approach of better informing the narrative of private student lending and Sallie Mae. We expect our business to perform well in the current environment which has a focus on the federal student loan program and targeted assista
Slide 15: Maintain Rigorous Capital Allocation and Return Program
Maintain Rigorous Capital Allocation and Return Program Invest in High ROE Growth Share Repurchase • Continue to focus on high‐quality Private • Since January 1, 2020, we have repurchased 44% of Education Loan originations, including common shares outstanding at that time. deeper penetration of grad
Slide 16: Diverse Student Loan Portfolio Driving Increased Shareholder Value
Diverse Student Loan Portfolio Driving Increased Shareholder Value Undergraduate Graduate RATE TYPE Variable & Fixed Variable & Fixed Medical Health Professions Dental Variable: SOFR + 1.250% Variable: SOFR + 1.750% INTEREST RATE ‐ SOFR + 12.375% ‐ SOFR + 11.625% RANGES Fixed: 4.75% ‐ 15.875% Fixed:
Slide 17: Sallie Mae is an ESG Company
Sallie Mae is an ESG Company Providing Financial Education Serving our Customers & Assistance • Helped more than 1.8 million students and families finance higher education • Free Scholarship Search tool listing 6 million scholarships worth more than since 2014 $30 billion • Policies help to ensure t
Slide 18: ABS Supplement
ABS Supplement Confidential and proprietary information. © 2021 Sallie Mae Bank. All rights reserved.
Slide 19: Sallie Mae's Smart Option Loan Product Overview
Sallie Mae’s Smart Option Loan Product Overview The Smart Option loan product was introduced by Sallie Mae in 2009 • Smart Option payment option may not be The Smart Option loan changed after selected at origination program consists of: • Fixed-rate loans or variable-rate loans • Consumer credit und
Slide 20: Sallie Mae Bank ABS Summary
Sallie Mae Bank ABS Summary17 14-A 15-A 15-B 15-C 16-A 16-B 16-C 17-A 17-B 18-A 18-B 18-C 19-A 19-B 20-A 20-B 21-B 21-D 21-E 22-C Issuance Date 8/7/2014 4/23/2015 7/30/2015 10/27/2015 5/26/2016 7/21/2016 10/12/2016 2/8/2017 11/8/2017 3/21/2018 6/20/2018 9/19/2018 3/13/2019 6/12/2019 2/12/2020 8/12/2
Slide 21: Sallie Mae Bank ABS Structures
Sallie Mae Bank ABS Structures SMB 20 22-C SMB 20 21-E SMB 20 21-D SIZE $575.0 MM $534.0 MM $527.0 MM PRICING DATE August 2, 20 22 November 2, 20 21 August 10 , 20 21 Smart Opt ion Smart Opt ion Smart Option COLLATERAL Privat e Educat ion Loans Privat e Educat ion Loans Private Education Loans SERVI
Slide 22: Appendix
Appendix Confidential and proprietary information. © 2021 Sallie Mae Bank. All rights reserved.
Slide 23: Commitments vs Disbursements
Commitments vs Disbursements 2022 Actuals Commitments vs Disbursements 51% 39% 37% 24% 16% 14% 10% 9% Q1 2022 Q2 2022 Q3 2022 Q4 2022 Commitments Disbursements Provision for New Loans Additional Provision Impacts Unfunded Commitments • Directly impacted by the timing of • New Loans, DCF accretion, l
Slide 24: CECL Update
CECL Update Adopted on January 1, 2020. • The company’s 2020 financial results reflected a transition adjustment that increased the allowance for credit losses by $1.1 billion, increased the liability representing its off-balance sheet exposure for unfunded commitments by $116 million and increased
Slide 25: Quarterly Financial Highlights
Quarterly Financial Highlights Q4 Q3 Q4 Q4 Q3 Q4 2022 2022 2021 2022 2022 2021 Income Statement ($ Millions) Key Performance Metrics Total interest income $584 $520 $458 Net Interest Margin 5.37% 5.27% 5.13% Total interest expense 202 150 91 Yield—Total Interest‐earning assets 8.21% 7.42% 6.40% Net
Slide 26: Annual Financial Highlights
Annual Financial Highlights 2022 2021 2022 2021 Income Statement ($ Millions) Key Performance Metrics Total interest income $2,032 $1,777 Net Interest Margin 5.31% 4.81% Total interest expense 543 382 Yield—Total Interest‐earning assets 7.24% 6.13% Net Interest Income 1,489 1,395 Less: provisions fo
Slide 27: Sallie Mae vs Federal Student Loans
Sallie Mae vs Federal Student Loans 22 As of 2/7/23 27
Slide 28: Non-GAAP "Core Earnings" to GAAP Reconciliation
Non‐GAAP “Core Earnings” to GAAP Reconciliation (7) (12) 28
Slide 29: Footnotes
Footnotes 1. Source: Enterval CBA Report as of September 2022. 2. Based on internal Company statistics. 3. The information on this page constitutes forward‐looking statements. See page 2 of this Presentation for a cautionary note regarding forward‐looking statements. 4. Source: Total post‐secondary