Slide 1: SLM Corporation Investor Presentation ABS Vegas 2018
SLM CORPORATION INVESTOR PRESENTATION ABS VEGAS 2018 February 26-28, 2018
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 January 17, 2018 (unless otherwise noted) and should be read in connection with the press release of SLM Corporation (the “Company”) announcing its financial re
Slide 3: Corporate Overview
3 Corporate Overview
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: Favorable Student Loan Market Trends
5 Favorable Student Loan Market Trends Academic Year Enrollment at Four-Year Degree Granting Institutions(1) Annual Cost of Education(2) (Millions) (Thousands) Estimated Total Cost of Education – 2016 / 2017 AY(3) Cost of College (Based on a Four-Year Term)(4) (billions) (thousands) AY 07/08 AY 17/1
Slide 6: Smart Option Student Loan Program
6 Smart Option Student Loan Program
Slide 7: Analytical Approach to Credit
7 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 8: Sallie Mae's Smart Option Loan Product Overview
8 Sallie Mae’s Smart Option Loan Product Overview • The Smart Option loan product was introduced by Smart Option Loan Program Sallie Mae in 2009 Origination Channel School Typical Borrower Student • The Smart Option loan program consists of: Typical Co-signer Parent $10,000 avg orig bal, 5 to 15 yr
Slide 9: High Quality Private Education Loan Growth
9 High Quality Private Education Loan Growth $5,000 3% $4,800 $4,666 8% $4,500 $4,330 6% $4,076 7% $4,000 $3,795 Disbursements ($MM) $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 2013 2014 2015 2016 2017 Private Education Loan Disbursements Disbursement Statistics ($) 2013 2014 2015 2016 2017 %
Slide 10: High Quality Private Education Portfolio
10 High Quality Private Education Portfolio Customer FICO at Original Approval Smart Option Payment Type <700 Interest Only 21% 780+ 22% 29% Deferred 700 - 740 47% 27% Fixed Pay 740 - 780 31% 23% Weighted Average FICO: 745 Smart Option Loans: $16.7 billion Portfolio by Originations Vintage Portfolio
Slide 11: Sallie Mae Bank Servicing Policies
11 Sallie Mae Bank Servicing Policies Policy Pre-Spin, Legacy SLM Serviced Post-Spin, Sallie Mae Bank Serviced Delinquencies All loans serviced by an affiliate of legacy SLM; loan Sallie Mae Bank collects delinquent loans thru charge-off, placing owned by Sallie Mae Bank sold to legacy SLM after emp
Slide 12: Sallie Mae Bank Collections
12 Sallie Mae Bank Collections Each customer is approached individually, and the account manager is educated and empowered to identify optimal resolution • Co-borrowers are contacted and collected with similar efforts as the primary borrower Sallie Mae Bank employs a front-loaded, stage based collec
Slide 13: Enhance Franchise and Diversify Revenue
13 Enhance Franchise and Diversify Revenue Distribution of Sallie Mae Borrowers by Product and Age Goal: 100% • Develop relevant and innovative Consumer 93% 95% 91% Lending products to deepen customer 90% 87% 83% engagement, attract new-to-firm customers 79% 80% and diversify revenue at attractive r
Slide 14: Funding and ABS Overview
14 Funding and ABS Overview
Slide 15: Conservative Funding Approach
15 Conservative Funding Approach Stable deposit base with no branch overhead 2017 — Diversified mix of retail and other core savings, MMDA and CDs — Brokered deposits used as alternative funding source Term funding / securitizations will augment deposit funding for future growth Retail Secured Debt
Slide 16: Sallie Mae Bank ABS Summary
16 Sallie Mae Bank ABS Summary 14-A 15-A 15-B 15-C 16-A 16-B 16-C 17-A 17-B Issuance Date 8/7/2014 4/23/2015 7/30/2015 10/27/2015 5/26/2016 7/21/2016 10/12/2016 2/8/2017 11/8/2017 Total Bond Amount ($mil) $382 $704 $714 $701 $551 $657 $674 $772 $676 Initial AAA Enhancement (%) 21% 23% 22% 23% 20% 19
Slide 17: ABS Structures
17 Sallie Mae Bank ABS Structures SMB 2017-B SMB 2017-A Size $676.0MM $772.0MM Pricing Date October 31, 2017 January 31, 2017 Smart Option Smart Option Collateral Private Education Loans Private Education Loans Servicer Sallie Mae Bank Sallie Mae Bank Overcollateralization (1) 11% 11% Pricing Prepay
Slide 18: Spreads (bps)
Spreads (bps) 100 120 140 0 20 40 60 80 Jan-15 Feb-15 Source: Barclays Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Auto (Prime) Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Credit Cards Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Private Educat
Slide 19: SMB 2017-B Structure
19 19 Title of Presentation SMB 2017-B Structure(1) • Sallie Mae Bank is the loan servicer and transaction sponsor • SMB 2017-B utilizes a sequential structure Pct of Total Expected Wtd Avg Life Principal Expected Bond Class Bond Ratings Index to Call Window to Maturity to Legal Maturity Balance Bal
Slide 20: SMB 2017-B Cashflow
20 20 Title of Presentation SMB 2017-B Cashflow WAL to Call (yrs)(1) Projected Credit Deal Credit Enhancement(2,4) Reserve Principal Window to Call(1) (8% CPR) Enhancement(3) Non- Class A Class B Target (3)(5) Floor(5) A-1 A-2A A-2B B A-1 A-2A A-2B B 12mo 24mo 36mo 60mo declining SMB 2017-B 17% 11%
Slide 21: Sallie Mae Investor Relations Website
21 Sallie Mae Investor Relations Website www.salliemae.com/investors • SMB Student Loan ABS trust data • Reg AB static pool information – Smart Option Student Loan historical performance data • Accrued interest factors • Distribution factors • Since issued CPR – monthly CPR data by trust since issua
Slide 22: Smart Option Student Loan Program Historical Performance Data
22 Smart Option Student Loan Program Historical Performance Data Period Ended December 31, 2017
Slide 23: Forward-Looking Statements and Disclaimer
23 Forward-Looking Statements and Disclaimer Cautionary Note Regarding Forward-Looking Statements The following information is current as of December 31, 2017 (unless otherwise noted) and should be read in connection with the press release of SLM Corporation (the “Company”) dated January 17, 2018, a
Slide 24: Important Information Regarding Historical Loan Performance Data
24 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 25: Important Information Regarding Historical Loan Performance Data (cont.)
25 Important Information Regarding Historical Loan Performance Data (cont.) Types of Smart Option Student Loan Portfolio Data The portfolio data we used in this report comes from four separate sources of information: (1) Combined Smart Option Student Loan Portfolio Data for Legacy SLM, Navient and S
Slide 26: Smart Option Serviced Portfolio: 31-60 Day Delinquencies
26 Smart Option Serviced Portfolio: 31-60 Day Delinquencies Smart Option Student Loans - Serviced Portfolio Smart Option Student Loans - Serviced Portfolio 31-60 Day Delinquencies as a % of Loans in P&I Repayment (1) 31-60 Day Delinquencies as a % of Loans in P&I Repayment (1) Data for Legacy SLM th
Slide 27: Smart Option Serviced Portfolio: 61-90 Day Delinquencies
27 Smart Option Serviced Portfolio: 61-90 Day Delinquencies Smart Option Student Loans - Serviced Portfolio Smart Option Student Loans - Serviced Portfolio 61-90 Day Delinquencies as a % of Loans in P&I Repayment (1) 61-90 Day Delinquencies as a % of Loans in P&I Repayment (1) Data for Legacy SLM th
Slide 28: Smart Option Serviced Portfolio: 91+ Day Delinquencies
28 Smart Option Serviced Portfolio: 91+ Day Delinquencies Smart Option Student Loans - Serviced Portfolio Smart Option Student Loans - Serviced Portfolio 91+ Day Delinquencies as a % of Loans in P&I Repayment (1) 91+ Day Delinquencies as a % of Loans in P&I Repayment (1) Data for Legacy SLM thru Apr
Slide 29: Smart Option Serviced Portfolio: Forbearance
29 Smart Option Serviced Portfolio: Forbearance Smart Option Student Loans - Serviced Portfolio Smart Option Student Loans - Serviced Portfolio Forbearance as a % of Loans in P&I Repayment and Forbearance (1) Forbearance as a % of Loans in P&I Repayment and Forbearance (1) Data for Legacy SLM thru A
Slide 30: Smart Option Serviced Portfolio: Annualized Gross Defaults
30 Smart Option Serviced Portfolio: Annualized Gross Defaults Smart Option Student Loans - Serviced Portfolio Smart Option Student Loans - Serviced Portfolio Annualized Gross Defaults as a % of Loans in P&I Repayment(1) Annualized Gross Defaults as a % of Loans in P&I Repayment(1) Data for Legacy SL
Slide 31: Smart Option Vintage Data: Cumulative Gross Default by Loan Type
31 Smart Option Vintage Data: Cumulative Gross Default by Loan Type Smart Option Student Loans - Serviced Portfolio: All Products Smart Option Student Loans - Serviced Portfolio: Interest Only Cumulative Defaults by P&I Repayment Vintage Cumulative Defaults by P&I Repayment Vintage and Years Since F
Slide 32: Smart Option Vintage Data: Voluntary Prepayments
32 Smart Option Vintage Data: Voluntary Prepayments ► Voluntary prepay speeds trending up as more loans enter P&I repayment Smart Option Student Loans - Serviced Portfolio Smart Option Student Loans - Serviced Portfolio Voluntary CPR by Disbursement Vintage and Product (1), (2), (3) Voluntary CPR by
Slide 33: Smart Option Vintage Data: Total Prepayments
33 Smart Option Vintage Data: Total Prepayments ► Following the initial few years after disbursement, total prepayments begin to rise more quickly as loans begin to default. Smart Option Student Loans - Serviced Portfolio Smart Option Student Loans - Serviced Portfolio Total CPR by Disbursement Vint
Slide 34: Smart Option: Cumulative Recoveries
34 Smart Option: Cumulative Recoveries Overall Smart Option Loan Cumulative Recovery Rate Interest Only Smart Option Loan Cumulative Recovery Rate For Charge-Off Vintages Since 2010 For Charge-Off Vintages Since 2010 Data for Legacy SLM and Navient thru present (1), (2) Data for Legacy SLM and Navie
Slide 35: Cohort Default Triangles – Smart Option Combined
35 Cohort Default Triangles – Smart Option Combined (Interest Only, Fixed Payment & Deferred) Smart Option Combined (P&I Repayment - Total) P&I Disbursed Principal Periodic Defaults Percentage Repayment Entering P&I by Years Since First P&I Repayment Period (1), (4) Vintage Repayment ($m) 0 1 2 3 4
Slide 36: Cohort Default Triangles – Smart Option Interest Only
36 Cohort Default Triangles – Smart Option Interest Only Smart Option Interest Only (P&I Repayment - Total) P&I Disbursed Principal Periodic Defaults Percentage Repayment Entering P&I by Years Since First P&I Repayment Period (1), (4) Vintage Repayment ($m) 0 1 2 3 4 5 6 7 Total 2010 (2) $426 1.2% 1
Slide 37: Cohort Default Triangles – Smart Option Fixed Payment
37 Cohort Default Triangles – Smart Option Fixed Payment Smart Option Fixed Payment (P&I Repayment - Total) P&I Disbursed Principal Periodic Defaults Percentage (1), (4) Repayment Entering P&I by Years Since First P&I Repayment Period Vintage Repayment ($m) 0 1 2 3 4 5 6 7 Total 2011(2) $221 0.3% 1.
Slide 38: Cohort Default Triangles – Smart Option Deferred Payment
38 Cohort Default Triangles – Smart Option Deferred Payment Smart Option Deferred (P&I Repayment - Total) P&I Disbursed Principal Periodic Defaults Percentage (1), (4) Repayment Entering P&I by Years Since First P&I Repayment Period Vintage Repayment ($m) 0 1 2 3 4 5 6 7 Total 2012(2) $249 0.1% 1.5%
Slide 39: Additional Information
39 Additional Information
Slide 40: Smart Option Loan Program Cohort Default Triangles
40 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
Slide 41: Smart Option Loan Program: Prepayment Methodology
41 Smart Option Loan Program: Prepayment Methodology The Constant Prepayment Rate (CPR) represents an annualized rate of prepayment speed measuring the reduction in the principal balance of a pool of loans in excess of the scheduled pool amortization. The rate can be positive or negative depending o
Slide 42: Smart Option Loan Program: Prepayment Methodology
42 Smart Option Loan Program: Prepayment Methodology Calculations Examples(1) 𝑃𝑟𝑒𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑡 = 𝐸𝑋𝑃𝑡 − 𝐴𝐶𝑇𝑡 t PMTt ACTt EXPt Prepaymentt SMMt SRt CPR 𝑆𝑀𝑀𝑡 = 𝑃𝑟𝑒𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑡 Τ𝐸𝑋𝑃𝑡 0 $10,000 𝑆𝑅𝑡 = 𝐴𝐶𝑇𝑡 Τ𝐸𝑋𝑃𝑡 = 1 − 𝑆𝑀𝑀𝑡 Borrower is in school ($25 fixed…