Navient Corporation · NASDAQ:NAVI
Navient — Investor Presentation (April 2014)
25 slides from Navient's investor presentation, Apr 17, 2014
Slide 1: Sallie Mae Investor Presentation April 2014
Exhibit 99.2 Exhibit 2014 SALLIE Investor APRIL 99.2 Presentation MAE
Slide 2: Forward-Looking Statements
Forward-Looking The Corporation the defined Form including risks estimates; in things: party separation their creditworthiness arrangements; to this conform 2For risks, financing the make Securities additional release following families; and vendors; 10-K. terms changes herein uncertainties, certain
Slide 3: Separation Details
Separation Remaining Company Spin-Off Tax-free Transaction 1:1 Exchange Sallie Navient: Financial Debt Shareholder — Timing When-Issued Record Distribution 3Regular All Preferred Sallie distribution and Mae: existing Date: & Way spin-off NASDAQ Mae Company: preferred Details Approvals Details Detail
Slide 4: Strategic Separation into Two Distinct Businesses
Transaction Strategic Key Private Other Upromise Deposits Insurance Credit FFELP Non-Bank Largest Contingency Guarantor Student Pro As Assets Ray Leadership Chairman Joe Executive Steve Jack Somsak Chief of DePaulo Forma Quinlan Businesses Remondi 12/31/2013 McGarry Executive Financial Consumer Card
Slide 5: Sallie Mae Investment Highlights
1Sallie 2Average 40+ 350% Multi-channel 440% Higher 90% Disciplined Robust Strong 14%+ 7Retail Long-term Attractive Targeting Experienced Leading Simple years private customer ofMae Total direct SmartOption capital employment proprietary portfolio of low serving brand earnings ROE Investment 30+ hig
Slide 6: Experienced Management Team
Management Experienced Raymond Chairman Joseph Executive Steven Chief 30+ Joined 6Previously years Executive Financial Sallie McGarry DePaulo Quinlan of & Vice Executive Chairman Co-Founder U.S. held management banking Mae Presenters President—Banking Officer various Card Officer in 1997 2014 2009 &
Slide 7: Favorable Education Cost and Enrollment Trends
Favorable (millions) 13.5 14.4 12.9 2008 12.1 Enrollment Annual Public $39 $36 $34 $30 $16 $14 $12 2005 Note: Estimated Ed. Sources Cost $($ Full-Time Source: 99.5 82.3 44.3 21.6 17.1 billions) thousands) Tax $41 $38 $35 $32 $17 $14 $13 13.5 13.3 of 2009 2006 Academic $Private College Cost Trends U.
Slide 8: Higher Education Value Proposition
Higher Relationship 100,000 90,000 70,000 80,000 8% 60,000 030,000 Unemployment $Widening Silents The Most 86Has Paid 83 % 18 ~60% 70% Source: 0% 17,500 9,690 %who %50,000 todifference Not Will Off of 24 Graduates Less ofAverage in 10% 4% Education say student $College U.S. 14% year /students $Pay 7
Slide 9: The Top Industry Brand in Education Finance
Thesaving, #1 Top Industry Complementary Overranked Sallie 2,400 one leading million Mae planning actively brand: Brand consumer market long-term 6 and managed out share paying of product 10 engaged university in consumers for private offerings education customers education relationships of educatio
Slide 10: Private Education Lending Franchise and Complementary Products
Description Private Market, Focused Smart Provide 700,000+ ~500,000 Direct Full Nearly 144,000 Free Upromise 800 Sallie Partners Products Complements 10 merchants Suite suite membership Mae Option Banking 50% Education servicing price, retail with on include of active loans of Rewards MasterCard Ins
Slide 11: Multifaceted Consumer Distribution Platform
Multifaceted 2013 Commentary Nationally On-Campus Student Actively Represented Largest 50% ~$1.9bn Direct Significant Leverage 47% ~$1.8bn Marketing Partnership Focused 3% ~$0.1bn 11 ofof Originations originations tooriginations national on manage Consumer low and recognized experience growing on Di
Slide 12: Strong Customer Base and Co-signer Involvement
Top tier 82% 11% Strong 78% Co-signer 90% Attractive Average High 40.8% Cross 5.1% 6.7% 12 of serialization conversion of sell of credit customers borrowers institutions Sallie FICO unemployment income private opportunities involvement Customer demographics history Mae ofof education rate 746 rates
Slide 13: Strong Scale and Market Share, Low Cost Serialization
Strong Scale Market Cost 40% 90% Serialization Test 13 and of toand market acquire leading borrowers serial learn Serialization rates customers approach share new loans brand have inloans allows 2013 has recognition Lead improved to renew dropped typically had direct Sallie toaloans Low Sallie toby
Slide 14: Unique Smart Option Loan Offers Repayment Options
Unique Smart –Offers Variable Repayment Regular Full All 14Interest Fixed Deferred loans collection Option three Smart Repayment: communication and are Only: Repayment: term repayment Fixed certified student Option activities requires is Interest driven requires loan Product byoptions allows with ar
Slide 15: High Quality Graduate Smart Option Portfolio
High Graduate Smart Interest 4Q Portfolio 2010 6% 2013 2012 Customer 22% <700 25% 700—740 Weighted 15 2013 2% 780+ 740—780 Quality Pre-2010 2011 34% Option Only Private Smart by Signature Average FICO 30% 39% Vintage Product Deferred Private 96% Payment 23% Option 20% at Education Age FICO: Originat
Slide 16: Analytical Approach to Underwriting
Analytical Initial Student $1,000 Minimum No 3+ Custom Multi-scenario Built Applies Asset 160 ~1.3mm ~35% Manual ~8% Pass — 16 Thorough Higher High trades existing student recent employees risk of in expertise approval Screen minimum applications coordination Review 15 Scorecard credit annual scores
Slide 17: Smart Option Performance Outperforms Traditional Loans
Performance 2011 ²¹% Smart Based) (16% Default 8% 04.63% 0% Months 2009—Signature Signature Option 17 Total Percentage 10% 1020 Charge-Offs² Delinquencies² 90+ 2012 Option Rate existing Date Day 3040 14% loans 6% inloans P&I 2013 Delinquencies² 4% 13.49% of 50 of originated Credit products Performan
Slide 18: Conservative, Low Cost Funding Approach
Conservative Low Term Multi-year Whole Substantial — 4Q Retail Target 18 60% 40% 59%Targeting 74% Brokered Retaining Capacity Provides $500mm $2.9bn 2013 cost funding deposits loan ofdeposit of retail revolving liquidity sales seasonal to conduit deposits $1.5 on-balance experienced Funding / securi
Slide 19: Significant Private Education Loan Originations Growth
Significant ($ Previous Net $5,172 2010 $4,555 $5,508 2011 Private 2013 $1,055 $6,563 2012 Originations Loan ¹% 19 Loan inLoan Outstanding of millions) Originations Sales sales $617 $336 Education Year Growth Private 1to $2,236 $1,820 Loan affiliates. 49%Loans 81% Education Balance $2,699 52% $1,897
Slide 20: Strong Capital Position
Strong Significant Long-term $565mm Bank 16.4% 17.3% 21.6% 22.5% TCE 10.5% 11.3% 16.2% 1Note: 20Includes /Holding Subsidiary Financial TA 16.4% Capital of Tier $400mm target available preferred Company 1Position data Common (4Q of 14% Series as capital 2013) securities of(4Q Total December Tier Bres
Slide 21: High Return Loan Business Model
HighIncome Return Loan Risk-Adjusted Cost Total Net ROE Approximate Description Average Marketing Expected Assumes Note: 21 Interest to Return 15.60 Yield Expenses Pre-Tax Losses All on Acquire annual 40% 15% information life average Assets /8.00 %/Margin origination Business 1.00 ROAA average of In
Slide 22: Pro Forma Financial Review
Financial ($ Cash Assets 2013 Liabilities Deposits Total ¹Source: Pro 2012 Other Gain Operating Expenses: Net 157 NIM 22 Net inForma Interest Income millions) on 5.2 Assets income 2013 and Equity Liabilities Income: SLM Sale %$Investments Review Expenses and Balance Income Interest 8,952 4.8 $Income
Slide 23: Key Financial Targets
Key Financial Annual Target Asset Earnings 23 Growth Originations Growth 15.0% Targets 20%$4 – +17.5% bn Annual + Loan Sales $1.5 – $2.5 bn ROA 2.0% + ROE 15% + Total RBC 14%
Slide 24: Business Diversification and Funding Opportunities
Business Credit Funding Lending Focused Personal Consumer Short graduates Practice Medium Banking Continued Loan Whole Secured Experienced Provides 24 Sales terms Cards loan Loans Funding on Products ticket Loans diversified Diversification with term focus Upromise sales and private professional sec
Slide 25: Sallie Mae Investment Highlights
1Sallie 76543Leading 25 Attractive Targeting Experienced Simple Disciplined Strong Maebrand capital low Investment high customer cost approach management inposition growth the delivery education base Highlights toand and credit system team high funding lending with return capabilities deep market bu