Slide 1: Investor Presentation 4th Quarter 2023
Investor Presentation 4th Quarter 2023
Slide 2: Forward-Looking Statements and Disclaimer
Forward-Looking Statements and Disclaimer Cautionary Note Regarding Forward-Looking Statements The following information is current as of January 24, 2024 (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 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 2,100+ actively managed university relationships acr
Slide 4: 4th Quarter and Full-Year 2023 Highlights
4th Quarter and Full-Year 2023 Highlights Balance Sheet & Capital Allocation Income Statement & Earnings Summary • Completed the sale of approximately $1.1 billion of Private • GAAP Net Income attributable to common stock of $164 Education Loans to an unaffiliated third party in Q4 2023, million in
Slide 5: Loan Sales, Credit Performance, Funding & Liquidity
Loan Sales Other Key Performance • Closed on sale of approximately $2 billion of Private Education Loans to an unaffiliated party on February 1, 2024. Metrics Credit Performance • Q4 2023 net charge-offs for Private Education Loans totaled $93 million, down 20% from the year-ago period. Private Educ
Slide 6: Private Education Loan Originations
Private Education Loan Originations13 • Fourth quarter 2023 originations at approximately $839 million, 2% higher than the year-ago period. • Finished 2023 with originations 7% higher than full-year 2022, at $6.4 billion. Ac tu a l • Application and origination volume for underclassmen for full- yea
Slide 7: High Quality Private Education Loan Portfolio
Originations VintageA Smart Option Payment Type Pre 2014 2014 2023 3% 2% 2015 21% 4% 2016 4% High Quality Interest Only 18% Private Education 2017 5% 2018 Loans Deferred Loans 6% Loan Portfolio $18.8B 48% $21.0B 2019 8% 2022 Fixed Pay 24% 2020 34% 9% 2021 14% Customer FICO at Portfolio Original Appr
Slide 8: Conservative Funding Optimizes Net Interest Margin
Conservative Funding Optimizes Net Interest Margin Long-Term Funding 17% 20% • Outstanding borrowings consist of unsecured debt and secured borrowings issued through our term asset- backed securitization program, totaling $1 billion and $4.2 billion, respectively, as of December 31, 2023. Total Fund
Slide 9: Simple but Powerful: Investment Thesis
Simple but Powerful Investment Thesis
Slide 10: Where We Started
Where We Started Three years ago, we set course on a strategy that we felt could create significant value – Maintain a “flattish” balance sheet by selling loans and buying back shares. Loan Sale Arbitrage Capitalize on valuation disconnect that exists between whole loan and equity prices • Have sold
Slide 11: The Evolution of our Investment Thesis
The Evolution of our Investment Thesis As we near the end of the CECL phase-in period, our investment thesis has evolved and allows for measured growth as well as strong capital return.3 Strong and Predictable Balance Sheet Growth3 Our attractive market and competitive position provide a basis for s
Slide 12: Balance Sheet Growth and Capital Return are NOT Mutually Exclusive
Balance Sheet Growth and Capital Return are NOT Mutually Exclusive Strong Balance Loan Sales & Sheet & Recurring Capital Return The “Hero” of our Strategy Earnings Growth • Regular loan sales are expected to be utilized as High ROCE • Expected to drive a tool to moderate Loans recurring revenue, lea
Slide 13: Maximize the Profitability and Growth of the Core Business
Maximize the Profitability and Growth of the Core Business Maximize Revenue Manage Unit Costs Drive penetration at all schools Strong focus on fixed cost discipline Drive towards reducing both the unit Increase market share by fully cost of servicing and the unit cost of meeting student funding need
Slide 14: Funding the Cost of a Higher Education
Funding the Cost of a Higher Education Families’ out-of-pocket contributions covered Federal & half of college costs Private State Loans Education Loans • Families’ out-of-pocket contributions covered 50% of cost Other $83B $15B • Scholarships and grants covered 29% $12B • Borrowed funds covered 19%
Slide 15: On average, families spent $28,026 on college in AY 2022-23
Reported spending, by academic year On average, families $30,017 $28,026 spent $28,026 on $24,164 $26,458 $26,226 $26,373 $25,313 college in AY 2022-23 $23,688 $23,757 $20,882 • Families report a college spending increase for the first time in two years (up 11% vs. last year) • The perception of the
Slide 16: Overall, 19% of college costs were covered by borrowed funds
Funding source share, borrowers vs. non- borrowers 100% Overall, 19% of Scholarships and grants 90% Relatives and friends college costs were 25% 33% Parent income and savings 80% covered by borrowed Student income and savings 2% 70% Parent borrowing funds 60% 22% 2% Student borrowing • Loans covered
Slide 17: The most common source of borrowed funds is federal
% of families using each source of borrowed $ The most common Federal student loan source of borrowed 24% funds is federal Federal Parent PLUS loan 11% student loans Private student loan 11% • Of the dollar amount of borrowed Private education loans borrowed 9% money used to pay for AY2022-23: by pa
Slide 18: Enable Successful Outcomes
Sallie Mae’s Core Product Contains Customer Friendly Provisions That Enable Successful Outcomes Sallie Mae Smart Option Student Loan Sallie Mae Student Borrowers Benefits from school through repayment In-School Repayment 92% of Sallie Mae student loan borrowers • Competitive variable & fixed rates •
Slide 19: Optimize the Value of the Brand and Attractive Client Base
Optimize the Value of the Brand and Attractive Client Base We know our customers’ finances, payment patterns and indebtedness We have the relationships and knowledge to assist our customers with their next step: post-graduation plans, jobs, future financial needs We are there for our customers durin
Slide 20: Maintain Rigorous Capital Allocation and Return Program
Maintain Rigorous Capital Allocation and Return Program Invest in High ROE Growth Strong and Predictable Balance • Continue to focus on high-quality Sheet Growth Private Education Loan originations, • Selling assets to moderate balance sheet including deeper penetration of growth graduate school mar
Slide 21: Diverse Student Loan Portfolio Driving Increased Shareholder Value
Diverse Student Loan Portfolio Driving Increased Shareholder Value Un d e rg ra d u a t e Gra d u a t e RATE TYPE Variable & Fixed Variable & Fixed He a lt h Variable: SOFR + Variable: SOFR + Me d ic a l De n t a l 1.250% - SOFR + 1.750% - SOFR + Pro fe s s io n s INTEREST RATE 12.375% 11.625% RANGE
Slide 22: Our Approach to ESG
Our Approach to ESG Our ESG approach is grounded in our mission and where we can make the most impact: powering confidence in students and families on their unique higher education journey. 22 1 SOURCE: All information presented on this page is from our April 2023 ESG Report covering 2022 and will b
Slide 23: ABS Supplement
ABS Supplement Confidential and proprietary information. © 2021 Sallie Mae Bank. All rights reserved.
Slide 24: Sallie Mae's 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 • Smart Option payment option may not be The Smart Option loan changed after selected at origination program consists of: • Fixed-rate loans or variable-rate loans • Consumer credit und
Slide 25: Sallie Mae Bank ABS Summary
Sallie Mae Bank ABS Summary14 16 6 6 6 6 25
Slide 26: Sallie Mae Bank ABS Structures
Sallie Mae Bank ABS Structures 17 18 6 26
Slide 27: Appendix
Appendix Confidential and proprietary information. © 2021 Sallie Mae Bank. All rights reserved.
Slide 28: Quarterly Financial Highlights
Quarterly Financial Highlights Q4 Q3 Q4 Q4 Q3 Q4 2023 2023 2022 2023 2023 2022 Income Statement ($ Millions) Key Performance Metrics Total interest income $669 $652 $584 Net Interest Margin 5.37% 5.43% 5.37% Total interest expense 283 268 202 Yield—Total Interest-earning assets 9.30% 9.21% 8.21% Net
Slide 29: Annual Financial Highlights
Annual Financial Highlights 2023 2022 2023 2022 Income Statement ($ Millions) Key Performance Metrics Total interest income $2,592 $2,032 Net Interest Margin 5.50% 5.31% Total interest expense 1,030 543 Yield—Total Interest-earning assets 9.13% 7.24% Net Interest Income 1,562 1,489 Less: provisions
Slide 30: Sallie Mae vs Federal Student Loans
Sallie Mae vs Federal Student Loans As of 2/6/24 30
Slide 31: Non-GAAP Core Earnings to GAAP Reconciliation
Non-GAAP “Core Earnings” to GAAP Reconciliation Quarters Ended Years Ended ($ Thousands except per share amounts) Dec. 31, 2023 Sept. 30, 2023 Dec. 31, 2022 Dec. 31, 2023 Dec. 31, 2022 Non-GAAP “Core Earnings” adjustments to GAAP: GAAP net income (loss) $168,443 $29,365 ($77,043) $581,391 $469,014 P
Slide 32: Footnotes
Footnotes 1. Source: Enterval CBA Report (https://www.enterval.com/) for Q3 2023 as of September 2023. Based on Full Market. 2. Based on internal Company statistics. 3. The information on this page constitutes forward-looking statements. See page 2 of this Presentation for a cautionary note regardin