Slm Corporation · NASDAQ:SLM
Slm — Deutsche Bank Global Financial Services Conference 2017
24 slides from Slm's conference presentation, May 31, 2017
Slide 1: SLM Corporation Investor Presentation
SLM CORPORATION INVESTOR PRESENTATION Deutsche Bank Global Financial Services Conference May 31, 2017
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 April 19, 2017 (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 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 Q1 2017 − $0.21 “Core Earnings” Diluted Earnings Per Common Share 2,3 − Portfolio of $15.5 billion of high quality Private Education Loans − 90% of Private Education Loans disbursed in Q1 are cosigned − Average Q1 Private Education Loan origination
Slide 6: Favorable Student Loan Market Trends
6 Favorable Student Loan Market Trends Academic Year Enrollment at Four-Year Degree Granting Institutions(4) Annual Cost of Education(5) Public Private (millions) (thousands) $44 $45 $41 $42 $38 $39 13.4 13.5 $35 $36 13.3 13.5 13.4 12.9 $18 $18 $19 $20 $20 $15 $16 $17 09/10 10/11 11/12 12/13 13/14 1
Slide 7: Higher Education Value Proposition
7 Higher Education Value Proposition Relationship Between Higher Education, Incremental Earnings From a College Degree Have Increased Income and Employment(8) For Generations(9) 2,000 9% 1,800 Average weekly income 8% $ 17,500 1,600 Unemployment $ 15,780 7% $ 14,245 1,400 6% 1,200 5% 1,000 $ 9,690 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 5% $4,900 $4,666 8% $4,500 $4,330 6% $4,076 $4,000 7% $3,795 Disbursements ($MM) $3,500 $3,000 $2,500 $2,000 $1,804 2% $1,847 $1,500 $1,000 $500 $0 2013 2014 2015 2016 2017 Private Education Loan Disbursements Disbursement Statistics ($) 2013 2014
Slide 11: Customer Satisfaction Overview
11 Customer Satisfaction Overview Call Volume CFPB Complaint Portal Results (12) Complaints Per 100,000 Customers Sales Servicing 100 0.9 0.30 90 0.8 80 -24% 0.25 -23% 0.7 70 Calls per Application Calls per Borrower 0.6 0.20 60 0.5 50 0.15 0.4 40 -24% 0.3 0.10 30 0.2 20 0.05 0.1 10 0.0 0.00 0 1Q16 1
Slide 12: 2017 awards and recognition
12 Celebrating Sallie Mae 2017 awards and recognition 2017 BEST BANKS
Slide 13: High Quality Private Education Portfolio
13 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: $15.0 billion Portfolio by Originations Vintage Portfolio
Slide 14: Delinquency and Default Performance
14 Delinquency and Default Performance (As a % of Loans in P&I Repayment)(13),(14),(15) 31-60 Day Delinquency 61-90 Day Delinquency 10.0% 10.0% Pre-Split Post-Split % of P&I Repayment Balance Pre-Split Post-Split % of P&I Repayment Balance 8.0% 8.0% 6.0% 6.0% 4.0% 4.0% 2.0% 2.0% 0.0% 0.0% Sep-12 Sep
Slide 15: Cumulative Defaults by P&I Repayment Vintage
15 Cumulative Defaults by P&I Repayment Vintage(13),(16),(17) Smart Option Cumulative Gross Defaults by P&I Repayment Vintage and Years Since First P&I Repayment Period 10% 9% Disbursed Principal Entering P & I Repayment 8% Cumulative Defaults as a % of 7% 6.7% 6% 5.9% 5% 4.7% 4% 4.0% 3.6% 3% 2.3% 2
Slide 16: Conservative Funding Approach
16 Conservative Funding Approach 1Q 2017 Target Stable deposit base with no branch overhead — Diversified mix of retail and other core savings, MMDA and CDs 18% 20% — Brokered deposits used as alternative funding source Term funding / securitizations will augment deposit funding for future growth —
Slide 17: Financial Review
17 Financial Review (in millions) Q1 2017 Q1 2016 Variance PSL $ 15,702 $ 12,144 $ 3,558 PSL Reserve (185) (123) (62) FFELP 992 1,091 (99) • Private Education Loan portfolio FFELP Reserve (2) (4) 2 PLOAN / Other 56 - 56 growth of 29% in Q1 2017 vs. Q1 2016 PLOAN / Other Reserve (0) (0) (0) Total Loa
Slide 18: Sallie Mae Bank
18 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 19: Appendix
19 Appendix
Slide 20: Footnotes
20 Footnotes 1) Source: MeasureOne CBA Report as of December 2016 2) The difference between “Core Earnings” and GAAP net income is driven by mark-to-market unrealized gains and losses on derivative contracts recognized in GAAP, but not in “Core Earnings” results. See page 26 for a reconciliation of
Slide 21: “Core Earnings” to GAAP Reconciliation
21 “Core Earnings” to GAAP Reconciliation Quarters Ended Mar. 31, Dec. 31, Mar. 31, 2017 2016 2016 (Dollars in thousands, except per share am ounts) “Core Earnings” adjustments to GAAP: GAAP net income attributable to SLM Corporation……….………….…….........………………… $ 94,943 $ 70,242 $ 65,915 Preferred st
Slide 22: Important Information Regarding Historical Loan Performance Data
22 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 23: Important Information Regarding Historical Loan Performance Data (cont.)
23 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 24: Smart Option Loan Program Cohort Default Curves
24 Smart Option Loan Program Cohort Default Curves Terms and calculations used in the cohort default curves 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 – The cal
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