Slm Corporation · NASDAQ:SLM
Slm — Credit Suisse Financial Services Conference 2015
20 slides from Slm's conference presentation, Feb 11, 2015
Slide 1: Sallie Mae – Credit Suisse Financial Services Conference
SALLIE MAE Credit Suisse Financial Services Conference Steve McGarry, CFO FEBRUARY 11, 2015
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements The following information is current as of January 22, 2015 (unless otherwise noted) and should be read in connection with SLM Corporation’s press release announcing its financial results for the quarter and year ended December 31, 2014, and the a
Slide 3: The Sallie Mae Brand
The 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; 53% mark
Slide 4: 2014 Sallie Mae Highlights
2014 Sallie Mae Highlights ► Completed legal separation from Navient on April 30, 2014 ► Generated “Core Earnings” of $195 million ► Originated $4.1 billion of high quality Private Education Loans, 7% increase year-over-year ► Grew Private Education Loan portfolio by 27% ► Completed loan sales of $1
Slide 5: Sallie Mae Summary
Sallie Mae Summary - Leading private education Private Education Loan Originator - loan franchise and Servicer - Conservative credit and Deposits - funding Upromise Rewards - - Expanding consumer Insurance Services - finance product suite Strategic Key Credit Card - Overview Businesses ($B as of 12/
Slide 6: Favorable Student Loan Market Trends
Favorable Student Loan Market Trends Enrollment at Four-Year Degree Granting Institutions1 Annual Cost of Education2 Public Private (millions) (thousands) $41 $42 $38 $39 13.5 13.5 13.7 $35 $36 13.3 $32 $34 12.9 $29 $30 12.1 $19 $16 $17 $18 $18 $13 $14 $14 $15 $12 2008 2009 2010 2011 2012 2013 2005
Slide 7: Higher Education Value Proposition
Higher Education Value Proposition Relationship Between Higher Education, Widening Earnings Gap of Young Adults by Educational Attainment6 Payment to Income Ratio7 Income and Employment5 1,800 12% $ 17,500 1,600 Average weekly income $ 15,780 10% 1,400 Unemployment $ 14,245 1,200 8% $ 9,690 1,000 6%
Slide 8: Smart Option Overview
Smart Option Overview ► Product Features – Offers three repayment options while in school which includes 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: High Quality Private Student Loan Originations Growth
High Quality Private Student Loan Originations Growth $4,500 $4,076 $4,000 $3,795 7% $3,500 $3,342 14% Originations ($MM) $3,000 $2,737 22% $2,500 $2,000 $1,500 $1,000 $500 $0 2011 2012 2013 2014 Private Education Loan Originations Originations Statistics ($) 2011 2012 2013 2014 % Cosigned 91% 90% 9
Slide 10: Analytical Approach to Credit
Analytical Approach to Credit Student 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 underwriting driven by large ► No existing SLM 30+ day past dues review due to credit concerns v
Slide 11: High Quality Private Education Portfolio
High Quality Private Education Portfolio Customer FICO at Origination Smart Option Payment Type <700 Interest 21% 780+ Only 30% Deferred 25% 700 - 740 47% 26% 740 - 780 Fixed Pay 23% 28% Weighted Average FICO: 749 Smart Option Loans: $7.9bn Portfolio by Vintage Portfolio Rate Mix Pre 2011 4% 2011 10
Slide 12: Portfolio Migrating to Full Principal and Interest Status
Portfolio Migrating to Full Principal and Interest Status9 Estimated Gross Loss Emergence Curve – Loans in P&I % of Loans in Repayment % of Loans in Repayment 3% 3.0% 9% 2.5% 25% Interest Only/In School PERIODIC DEFAULT RATE 2.0% $25 Fixed/In School 1.5% <1 Year P&I 28% 1-2 Years P&I 1.0% 2+ Years P
Slide 13: Smart Option Credit Outperforming
Smart Option Credit Outperforming ► Smart Option products outperform prior private education loan products due to more stringent underwriting standards and tailored product options ► Performance of newer vintage loans driven by focused marketing on high quality borrowers, better data and product man
Slide 14: Conservative Funding Approach
Conservative Funding Approach ► Low cost deposit base with no branch overhead 2014 Target — 90% of retail deposits are savings accounts — Brokered deposits used as alternative funding source Retail deposits ► Term funding / securitizations will augment deposit Brokered deposits funding for future gr
Slide 15: 2015 Guidance
2015 Guidance Target 2015 Originations $4.3 Billion Operating Expenses $325 Million Additional Restructuring Expense $5 Million Loan Sales at 7.5% Premium $1.5 Billion Provision for Loan Losses, Private $116 - $130 Million “Core Earnings” diluted EPS $0.48-$0.50 15
Slide 16: Sallie Mae Bank
Sallie Mae Bank ► Market share leader in private student loan industry ► High quality assets and conservatively funded balance sheet ► Predictable balance sheet growth for the next several years ► Strong capital position and funding capabilities ► A financial services company with high growth trajec
Slide 17: Appendix
APPENDIX 17
Slide 18: "Core Earnings" to GAAP Reconciliation
“Core Earnings” to GAAP Reconciliation Quarters Ended December 31, Years Ended December 31, (Dollars in thousands, except per share amounts) 2014 2013 2014 2013 “Core Earnings” adjustments to GAAP: GAAP net income attributable to SLM Corporation ......................................................
Slide 19: Financial Review – Income Statement
Financial Review (in millions) Q4 2014 Q4 2013 Variance 2014 2013 Variance PSL $ 8,325 $ 6,568 $ 1,757 $ 8,325 $ 6,568 $ 1,757 PSL Reserve (79) (62) (17) (79) (62) (17) FFELP 1,268 1,431 (163) 1,268 1,431 (163) FFELP Reserve / Other (5) (6) 1 (5) (6) 1 Total Loans 9,510 7,931 1,578 9,510 7,931 1,578
Slide 20: Footnotes
Footnotes 1 Source: U.S. Department of Education, National Center for Education Statistics, Projections of Education Statistics to 2022 2 Source: Trends in College Pricing.© 2014 The College Board,. www.collegeboard.org, Note: Academic years, average published tuition, fees, room and board charges a
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