Slm Corporation · NASDAQ:SLM
Slm — Investor Presentation (February 2022)
29 slides from Slm's investor presentation, Feb 14, 2022
Slide 1: Investor Presentation First Quarter 2022
Exhibit 99,1 Investor Presentation First Quarter 2022
Slide 2: Forward-Looking Statements and Disclaimer
Forward-Looking Statements and Disclaimer salle mae Cautionary Note Regarding Forward-Looking Statements The following information is current as of January 26, 2022 (unless otherwise noted) and should be read in connection with the press release of SLM Corporation (the “Company”) announcing its fina
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 § @ Industry leading and award-winning technologie
Slide 4: Strengthening Economy, Strategic Execution, Nitro College Acquisition
sallie mae Strengthening Economy - Average unemployment rate for the over 25 year-old college graduate population improved to 2.2% in Q4 2021 from 2.8% in Q3 2021.25 - Expect spring semester demand to be largely unimpacted by recent uptick in COVID cases due to minor delays to the semester start dat
Slide 5: Revenue, Operating Expenses, Earnings and Capital
Revenue • • Total Operating Expenses • Earnings/Capital • • • •
Slide 6: Private Education Loan Originations
Private Education Loan Originations2? % Cosigned % In School Payment Avg FICO at Approval'® Sallie Mae Annual Originations (s mitiions) 1% $5,315 $5,321 a8 — | | li 6% _ $5,625 (5%) $5,423 @ Actual 2016 89% 55% 748 2017 88% 54% 747 2018 87% 57% 746 2019 2020 87% 86% 58% 60% 746 749 2021 Q42020 Q4202
Slide 7: Higher Education Value Proposition Remains Attractive
Higher Education Value Proposition Remains Attractive sallg, Federal Loans Private $84B Education Loans Other $11B $13B Grants $139B Family Contribution $222B Higher Education Spend* (Academic Year 2020-2021) Expanding Addressable Market » Private Education Loans represent 2-3% of the overall spend
Slide 8: High Quality Private Education Loan Portfolio
High Quality Private Education Loan Portfolio As of 12/31/21 Customer FICO at Original Approval Smart Option Payment Type Interest Only 20: Weighted Deferred Loans Average 48% $18.58 FICO: 743 740 -780 Fixed Pay 22% 32% Portfolio by Originations Vintage Portfolio Interest Rate Type i. Pre 2014 Varia
Slide 9: Conservative Funding Optimizes Net Interest Margin
Conservative Funding Optimizes Net Interest Margin As of 12/31/21 Retail MMDA &CD 22% Deposits $20.8B Secured Debt $4.9B Brokered Variable 23%
Slide 10: Simple But Powerful Investment Thesis
Simple But Powerful Investment Thesis salle Attractive Earnings Profile Manageable Risk Disciplined Capital Allocation Consistent earnings expansion is driven by top line growth and efficiency Sallie Mae is the leader in the private education loan market that is growing 6+% a year » Well-proven and
Slide 11: Clear Strategy to Prove this Investment Thesis
Clear Strategy to Prove this Investment Thesis sali, Strategic Imperatives: 1. |nn$ Maximize the profitability and growth of our core 990 2. ti 3. FI Maximize the Better inform value of our the external brand and narrative about attractive private student customer base lending and Sallie Mae busines
Slide 12: Maximize the Profitability and Growth of the Core Business
sallie mae Maximize the Profitability and Growth of the Core Business Manage Unit Costs Maximize Revenue Drive penetration at all schools Strong fixed cost discipline Increase market share by fully Efficiency effectiveness across all meeting student funding needs areas Enhanced risk-adjusted pricing
Slide 13: Optimize the Value of the Brand and Attractive Client Base
sallie mae Optimize the Value of the Brand and _ Attractive Client Base 2M 91% Borrowers and Customers complete cosigners their program’ Graduates who benefit from the investment’ $52,600 31% ~698 Average annual Owna_ Self-reported compensation home FICO score Q What We Do Build products and Ensure
Slide 14: Changing the Narrative
Changing the Narrative sallie mae In the current environment, there have been three main areas of focus from third parties that include free college, debt forgiveness and bankruptcy reform. We expect our business to perform well even under leading reform proposals.4 Free College » Benefits of subsid
Slide 15: We allocate capital with discipline
• • • • • • • We allocate capital with discipline • • •
Slide 16: Diverse Student Loan Portfolio Driving Increased Shareholder Value
Diverse Student Loan Portfolio Driving sale, Increased Shareholder Value @ Zz Undergraduate Graduate Q A 9) RATE TYPE Variable & Fixed Variable & Fixed Medical Health Dental Variable: SOFR + Variable: SOFR + Professions INTEREST RATE 120%: SORR: 2200 8c SORE RANGES 12.125% 11. 875% Fixed: 3.75% - Fi
Slide 17: Sallie Mae is an ESG Company Committed to an Ethical & Diverse Workplace
Sallie Mae is an ESG Company Committed to an Ethical & Diverse Workplace • Board of Directors composition is 30% women, has been recognized by 50/50 Women On Boards as a company with a 3+ Board rating • Appointed the first woman to serve as chair of Board of Directors in 2020 • Committed to best-in-
Slide 18: ABS Supplement
ABS Supplement
Slide 19: 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 The Smart Option loan program consists of: Smart Option Interest Only loans Require full interest payments during in- school, grace, and deferment periods Smart Option Fixed Pay loans R
Slide 20: Sallie Mae Bank ABS Summary
Sallie Mae Bank ABS Summary28 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 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 8/12/2020 5
Slide 21: Sallie Mae Bank ABS Structures
Sallie Mae Bank ABS Structures SMB 2021-E SMB 2021-D SMB 2021-B
Slide 22: Appendix
Appendix
Slide 23: Commitments vs Disbursements
Commitments vs Disbursements Provision for New Loans • Directly impacted by the timing of Commitments and not Disbursements Additional Provision Impacts • New Loans, DCF accretion, loan sales, model updates and overlays Unfunded Commitments • Remain a liability for accounting purposes • Once the loa
Slide 24: CECL Update
CECL Update13 Adopted on January 1, 2020. • The company’s 2020 financial results reflect a transition adjustment that increased the allowance for loan losses by $1.1 bil lion, increased the liability representing its off-balance sheet exposure for unfunded commitments by $116 million and increased t
Slide 25: Quarterly Financial Highlights
Quarterly Financial Highlights” Income Statement ($ Millions) Q4 Q3 a4 2021 2021 2020 Total interest income $458 $448 $480 Total interest expense ci 90 113 Net Interest Income 367 358 367 Less: provisions for credit losses (15) 138 (316) Total non-interest income 153 14 1 Total non-interest expenses
Slide 26: Annual Financial Highlights
Annual Financial Highlights"> Income Statement ($ Millions) Total interest income Total interest expense Net Interest Income Less: provisions for credit losses Total non-interest income Total non-interest expenses Income tax expense Net Income Preferred stock dividends Net income attributable to com
Slide 27: Sallie Mae vs Federal Student Loans
Sallie Mae vs Federal Student Loans As of 2/9/22 lr sallie vie i 2 Sallie Mae Federal Student Loan Program 2 Federal Direct Loan Loan Program Smart Option Student Loan?” Parent Plus (Subsidized & Unsubsidized) Yr1 - $5,500 ($3,500 > subsidized) 2 911000 = Cost of Attendance. Yr2_ - $6,500 ($4,500 >
Slide 28: Non-GAAP Core Earnings to GAAP Reconciliation
Non-GAAP “Core Earnings” to GAAP Reconciliation salle mae Quarters Ended Years Ended ($ Thousands except per share amounts) Dec. 31, 2021 Sep.30, 2021 Dec. 31,2020 Dec. 31,2021 31,2020 Non-GAAP “Core Earnings” adjustments to GAAP: GAAP net income $306,265 $72,840 $432,700 $1,160,513 $880,690 Preferr
Slide 29: Footnotes
Footnotes 110. Power 2019 Certified Customer Service Program recognition is based on successful completion of an evaluation and exceeding a customer satisfaction benchmark through a survey of recent servicing interactions. For more information visit www jdpower.com/cee. ‘Source: MeasureOne CBA Repor