Slm Corporation · NASDAQ:SLM
Slm — JP Morgan FinTech & Specialty Finance Forum 2016
22 slides from Slm's conference presentation, Nov 30, 2016
Slide 1: SLM Corporation Investor Presentation
SLM CORPORATION INVESTOR PRESENTATION JP Morgan FinTech & Specialty Finance Forum November 30, 2016
Slide 2: Forward-Looking Statements and Disclaimer
| 2 Forward-Looking Statements and Disclaimer Cautionary Note Regarding Forward-Looking Statements The following information is current as of October 19, 2016 (unless otherwise noted) and should be read in connection with the press release of SLM Corporation (the “Company”) announcing its financial
Slide 3: Sallie Mae Brand
3 Sallie Mae Brand • #1 saving, planning and paying for education company with 40 years of leadership in the education lending market • Top ranked brand: 6 out of 10 consumers of education finance recognize the Sallie Mae brand • Industry leading market share in private education lending: 54% market
Slide 4: Sallie Mae Summary
4 Sallie Mae Summary - Leading private education Private Education Loan - loan franchise Originator and Servicer - Conservative credit and Deposits - funding Upromise Rewards - - Expanding consumer Credit Card - finance product suite Strategic Key Overview Businesses - National sales and Competitive
Slide 5: Sallie Mae Overview
| 5 Sallie Mae Overview Sallie Mae Key Statistics for Q3 2016 − $0.12 diluted earnings per share − Portfolio of $13.7 billion of high quality Private Education Loans − 90% of Private Education Loans disbursed in Q3 are cosigned − Average Q3 Private Education Loan originations FICO of 749 − 79% of Pr
Slide 6: Favorable Student Loan Market Trends
6 Favorable Student Loan Market Trends Academic Year Enrollment at Four-Year Degree Granting Institutions(1) Annual Cost of Education(2) Public Private (millions) (thousands) $42 $44 $39 $41 $36 $38 13.4 13.5 13.4 13.5 $34 $35 13.3 $32 12.9 $17 $18 $18 $19 $20 $14 $15 $16 $14 2009 2010 2011 2012 201
Slide 7: Higher Education Value Proposition
7 Higher Education Value Proposition Relationship Between Higher Education, Incremental Earnings From a College Degree Has Increased Income and Employment(1) For Generations(2) 1,800 12% 1,600 Average weekly income $ 17,500 10% $ 15,780 1,400 Unemployment $ 14,245 1,200 8% 1,000 6% $ 9,690 800 $ 7,4
Slide 8: Smart Option Overview
8 Smart Option Overview Product Features • Offers three repayment options while in school, which include Interest Only, $25 Fixed Payment and Deferred Repayment • Variable and Fixed Interest Rate Options • All loans are certified by the school’s financial aid office to ensure all proceeds are for ed
Slide 9: Analytical Approach to Credit
9 Analytical Approach to Credit Borrower/Cosigner Initial Screen Manual Review ► $1,000 minimum loan ► ~8% of applications ► Minimum FICO of 640 ► Asset expertise and rigorous ► Pass risk scores, but require further ► No existing SLM 30+ day past dues underwriting driven by large review due to credi
Slide 10: High Quality Private Education Loan Growth
| 10 High Quality Private Education Loan Growth $5,000 $4,600 $4,500 $4,330 6% $4,076 $4,059 6% $4,000 $3,795 7% Disbursements ($MM) $3,500 $3,342 14% $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 2012 2013 2014 2015 2016 Private Education Loan Disbursements Disbursement Statistics ($) 2012 2013 2014 2
Slide 11: Customer Satisfaction Overview
11 Customer Satisfaction Overview Call Volume CFPB Complaint Portal Results (1) 1.0 Sales 1.0 Servicing Complaints Per 100,000 Customers 0.9 0.9 100 -28% -28% 0.8 0.8 90 Calls Per Application Calls Per Borrower 0.7 0.7 80 0.6 0.6 70 0.5 0.5 60 0.4 0.4 50 0.3 0.3 40 -24% 0.2 0.2 30 0.1 0.1 20 0.0 0.0
Slide 12: High Quality Private Education Portfolio
12 High Quality Private Education Portfolio Customer FICO at Original Approval Smart Option Payment Type <700 Interest Only 21% 780+ 22% 30% Deferred 700 - 740 47% 26% 740 - 780 Fixed Pay 23% 31% Weighted Average FICO: 746 Smart Option Loans: $13.3 billion Portfolio by Originations Vintage Portfolio
Slide 13: Delinquency and Default Performance
13 Delinquency and Default Performance (As a % of LoansSmart in P&I OptionRepayment) (1),(2),(3) Student Loans - Serviced Portfolio Smart Option Student Loans - Serviced Portfolio 31-60 Day Delinquencies as a % of Loans in P&I Repayment (1) 61-90 Day Delinquencies as a % of Loans in P&I Repayment (1
Slide 14: Cumulative Defaults by P&I Repayment Vintage
14 Cumulative Defaults by P&I Repayment Vintage(1),(2),(3) Smart Option Cumulative Gross Defaults by P&I Repayment Vintage and Years in P&I Repayment 10% 9% 8% Disbursed Principal Entering P & I Repayment 7% 6.5% Cumulative Defaults as a % of 6% 5.6% 5% 4.4% 4% 3.5% 3% 2.9% 2% 1.5% 1% 0% 0 1 2 3 4 5
Slide 15: Conservative Funding Approach
15 Conservative Funding Approach YTD 2016 Target Low cost deposit base with no branch overhead — 80% of retail deposits are savings accounts — Brokered deposits used as alternative funding source 13% 20% Term funding / securitizations will augment deposit funding for future growth — Experienced capi
Slide 16: Financial Review
16 Financial Review (in millions) Q3 2016 Q3 2015 Variance PSL $ 13,889 $ 10,867 $ 3,022 PSL Reserve (163) (100) (63) FFELP 1,037 1,147 (110) FFELP Reserve / Other (2) (4) 3 • Private Education Loan Total Loans 14,761 11,909 2,852 portfolio growth of 27% in Q3 Cash 1,455 1,282 173 2016 vs. Q3 2015 B
Slide 17: Sallie Mae Bank
17 Sallie Mae Bank • Market share leader in private student loan industry • High quality assets and conservatively funded balance sheet • Predictable balance sheet growth • Strong capital position and funding capabilities • A financial services company with high growth trajectory and excellent retur
Slide 18: Appendix
18 Appendix
Slide 19: "Core Earnings" to GAAP Reconciliation
19 “Core Earnings” to GAAP Reconciliation Quarters Ended Sept. 30, June 30, Sept. 30, 2016 2016 2015 (Dollars in thousands, except per share amounts) “Core Earnings” adjustments to GAAP: GAAP net income……….….……...................………………… $ 56,965 $ 57,205 $ 45,724 Preferred stock dividends ………....…..
Slide 20: Important Information Regarding Historical Loan Performance Data
20 Important Information Regarding Historical Loan Performance Data On April 30, 2014 (the “Spin-Off Date”), the former SLM Corporation legally separated (the “Spin-Off”) into two distinct publicly traded entities: an education loan management, servicing and asset recovery business called Navient Co
Slide 21: Important Information Regarding Historical Loan Performance Data (cont.)
21 Important Information Regarding Historical Loan Performance Data (cont.) Types of Smart Option Loan Portfolio Data The portfolio data we used in this report comes from two separate sources of information: (1) Combined Smart Option Student Loan Portfolio Data for Legacy SLM, Navient and Sallie Mae
Slide 22: Smart Option Loan Program Cohort Default Triangles
22 Smart Option Loan Program Cohort Default Triangles Terms and calculations used in the cohort default triangles are defined below: First P&I Repayment Period – The month during which a borrower is first required to make a full principal and interest payment on a loan. P&I Repayment Vintage – T
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