Slm Corporation · NASDAQ:SLM
Slm — Sallie Mae — Q2 2015 Earnings Presentation
22 slides from Slm's earnings presentation, 2015
Slide 1: Sallie Mae Investor Presentation Second Quarter 2015
SALLIE MAE Investor Presentation SECOND QUARTER 2015
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 April 22, 2015 (unless otherwise noted) and should be read in connection with SLM Corporation’s press release announcing its financial results for the quarter end
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: Sallie Mae Highlights
Sallie Mae Highlights ► One year since legal separation from Navient on April 30, 2014 ► Completed the roll out of independent servicing and customer support capabilities October 13, 2014 ► Generated “Core Earnings” of $195 million in 2014, $46 million in Q1 2015 ► Originated $4.1 billion of high qu
Slide 5: Sallie Mae Summary
Sallie Mae Summary - Leading private education Private Education Loan Originator - loan franchise and Servicer - Conservative credit and Deposits - funding Upromise Rewards - - Expanding consumer Insurance Services - finance product suite Strategic Key Credit Card - Overview Businesses ($B as of 3/3
Slide 6: Favorable Student Loan Market Trends
Favorable Student Loan Market Trends Enrollment at Four-Year Degree Granting Institutions2 Annual Cost of Education3 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 Attainment7 Payment to Income Ratio8 Income and Employment6 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 e
Slide 9: High Quality Private Student Loan Originations Growth
High Quality Private Student Loan Originations Growth $5,000 $4,500 $4,300 $4,076 5% $4,000 $3,795 7% $3,500 $3,342 14% Originations ($MM) $3,000 $2,737 22% $2,500 $2,000 $1,663 $1,500 9% $1,000 $500 $0 2011 2012 2013 2014 2015 Private Education Loan Originations Originations Statistics ($) 2011 201
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% 21% Deferred 700 - 740 47% Fixed Pay 26% 740 - 780 32% 23% Weighted Average FICO: 746 Smart Option Loans: $9.4bn Portfolio by Originations Vintage Portfolio Interest Rate T
Slide 12: Cumulative Default Rate
Cumulative Defaults by P&I Repayment Vintage9,13 Smart Option Cumulative Gross Defaults by P&I Repayment Vintage and Years in P&I Repayment 10.0% 9.0% 8.0% as a % of Original Balance 7.0% Cumulative Default Rate 6.0% 5.0% 4.2% 4.0% 3.0% 2.6% 2.0% 1.3% 1.0% 0.0% 0 1 2 3 4 5 6 7 Years in P&I Repayment
Slide 13: 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 14: 2015 Guidance
2015 Guidance Target 2015 Originations $4.3 Billion Operating Expenses $340 Million Additional Restructuring Expense $7 Million Loan Sales at 10.5% Premium $1.5 Billion Provision for Loan Losses, Private $95 Million “Core Earnings” diluted EPS $0.57-$0.59 14
Slide 15: 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 16: Appendix
APPENDIX 16
Slide 17: "Core Earnings" to GAAP Reconciliation
“Core Earnings” to GAAP Reconciliation (Dollars in thousands, except per share amounts) 2014 Q1 2015 Q4 2014 Q1 2014 “Core Earnings” adjustments to GAAP: GAAP net income attributable to SLM Corporation……….………….……….........…. $ 194,219 $ 47,699 $ 19,717 $ 47,448 Preferred stock dividends ………………….....
Slide 18: Delinquency and Default Performance
Delinquency and Default Performance (As a % of Loans in P&I Repayment) 9,12,13 10.0% 31-60 Day Delinquency 10.0% 61-90 Day Delinquency % of P&I Repayment Balance % 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% Legacy SLM: 31-60 Delinquency SLM Bank: 31-60 Delinquency Leg
Slide 19: Financial Review: Balance Sheet and Income Statement
Financial Review (in millions) Q1 2015 Q1 2014 Variance PSL $ 9,786 $ 7,280 $ 2,507 PSL Reserve (85) (71) (14) FFELP 1,212 1,401 (188) FFELP Reserve / Other (5) (6) 2 Total Loans 10,909 8,603 2,306 Balance Sheet Cash 876 1,235 (360) Other Assets 1,149 661 488 Total Assets 12,934 10,499 2,435 Brokere
Slide 20: Footnotes
Footnotes 1. Source: MeasureOne CBA Report As of December 2014 2. Source: U.S. Department of Education, National Center for Education Statistics, Projections of Education Statistics to 2022 3. Source: Trends in College Pricing.© 2014 The College Board,. www.collegeboard.org, Note: Academic years, av
Slide 21: Important Information Regarding Historical Loan Performance Data
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 Corpo
Slide 22: Important Information Regarding Historical Loan Performance Data (cont.)
Important Information Regarding Historical Loan Performance Data (cont.) Smart Option Loan Portfolio Data for Chart on Page 12 of Presentation Combined Smart Option Student Loan Portfolio Data for Legacy SLM, Navient and Sallie Mae Bank. Information in the chart on Page 12 of this presentation is pr