Slm Corporation · NASDAQ:SLM
Slm — Investor Day (December 2023)
22 slides from Slm's investor day presentation, Dec 12, 2023
Slide 1: Sallie Mae Investor Forum
Sallie Mae Investor Forum The Evolution of Our Balance Sheet and Capital Allocation Strategy December 12, 2023
Slide 2: Forward-Looking Statements and Disclaimer
Forward-Looking Statements and Disclaimer Cautionary Note Regarding Forward-Looking Statements The following information regarding SLM Corporation (the “Company”) is current as of December 12, 2023 (unless otherwise noted). This entire Presentation constitutes “forward-looking” statements and inform
Slide 3: Our Current Strategy has been Successful
our Current Strategy has been SuCCesSSful
Slide 4: 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 5: This Strategy has been Successful in Driving Absolute and Relative Total Shareholder Return
This Strategy has been Successful in Driving Absolute and Relative Total Shareholder Return Our Total Shareholder Return leads the pack when evaluated alongside various key indices S&P Supercomposite S&P 400 Regional Bank Consumer Finance Sub- Current TSR Trends SLM KBW Bank Index Sub-Industry Index
Slide 6: The end of our CECL Phase-in Period is now on our Planning Horizon
The end of our CECL Phase-in Period is now on our Planning Horizon → SLM recorded an $836mm impact to retained earnings from the Bank’s adoption of CECLA → On January 1 of 2022 and 2023 respectively, 25 percent of the adjusted transition amount was phased in for regulatory capital purposes → On Janu
Slide 7: Despite Noticeably Higher Return on Equity, we Trade Below Key Banking Indices
Despite Noticeably Higher Return on Equity, we Trade Below Key Banking Indices Data above, summarized from Bloomberg as of 12/11/2023, close of market. Confidential and proprietary information. © 2023 Sallie Mae Bank. All rights reserved. 7
Slide 8: The Evolution of our Strategy is also Compelling
the Evolution of our Strategy is also Compelling
Slide 9: 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. Strong and Predictable Balance Sheet Growth Our attractive market and competitive position provide a basis for str
Slide 10: Methodology for Data Summaries
Methodology for Data Summaries To illustrate the power of our evolved investment thesis, we have provided the brief illustrative vignettes in the pages that follow. While viewing this data, it is important to keep in mind: • This data is not to be understood as guidance and is not a substitute for o
Slide 11: Utilize Loan Sales to Support Moderate Balance Sheet Growth
Utilize Loan Sales to Support Moderate Balance Sheet Growth Key Metrics Year 1 Year 2 Year 3 Year 4 Year 5 • Private Education Student Loan Market Originations 6,712 7,048 7,400 7,770 8,159 Growth is assumed to Loans Sold 3,400 3,000 2,900 2,750 2,600 be 5% annually. Allowance (1,398) (1,447) (1,513
Slide 12: As Balance Sheet Grows and Loan Sales Moderate, the Earnings Profile is Expected to Evolve
As Balance Sheet Grows and Loan Sales Moderate, the Earnings Profile is Expected to Evolve Net RevenueC is expected to increase over time as earnings generated by loan sales are reduced. Key Metrics Year 1 Year 2 Year 3 Year 4 Year 5 • NIM is assumed to be 5.25% annually. Net Revenue (excl. Gain on
Slide 13: Significant Capacity for Capital Return
Significant Capacity for Capital Return Strong earnings and continued loan sales would be expected to allow for return of capital to shareholders through a growing dividend and continued share repurchasesD. • As net revenue from private education student loans expands, $474 $416 $420 $423 $430 we ex
Slide 14: Loss Absorption Capacity Expected to Remain Strong as Strategy Evolves
Loss Absorption Capacity Expected to Remain Strong as Strategy Evolves Profitability and balance sheet strength expected to reduce risk and increase resiliency of results. • Majority of Sallie Mae capital is common equity • Under CECL, majority of Allowance is not included in Tier 2 capital * For a
Slide 15: 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 Earnings Growth The “Hero” of our Strategy • Regular loan sales are • Expected to drive expected to be utilized as High ROCE recurring revenue, a tool to moderate Loans lea
Slide 16: This Strategy is Expected To be Robust Across Various Scenarios
This Strategy is Expected To be Robust Across Various Scenarios 16
Slide 17: Even more Compelling if Assumed Premiums for Loan Sales Increase
Even more Compelling if Assumed Premiums for Loan Sales Increase As multiple expands and rates decline, Gain on Sale premiums should be expected to expand alongside. Illustrative Base Case Year 1 Year 2 Year 3 Year 4 Year 5 Net Revenue (excl. Gain on Sale impacts 1 ) 1,040 1,064 1,128 1,208 1,304 To
Slide 18: Illustrative Credit Performance Scenarios
Illustrative Credit Performance Scenarios Our Net Charge-offs as a percentage of average loans in repayment may improve over our base assumption or remain consistent with levels experienced in the first 9 months of 2023. We believe that the resulting performance of our private education loan assets
Slide 19: Appendix
Appendix Confidential and proprietary information. © 2021 Sallie Mae Bank. All rights reserved.
Slide 20: Assumptions
Assumptions The following assumptions were made in the production of the illustrative, simplified financial framework illustrated herein: • Market Share – 58%2 • Private Education Student Loan Market Growth – 5%3 • Allowance – 6.5% in Year 1, with 10 basis point improvement each year thereafter4 • P
Slide 21: Footnotes
Footnotes Confidential and proprietary information. © 2021 Sallie Mae Bank. All rights reserved.
Slide 22: Footnotes
Footnotes 1. Gain on Sale Impacts includes both the Gain on Sale premium as well as the associated Provision release. 2. Source: Enterval CBA Report for FY 2022 as of March 2023. Based on Full Market. 3. Source: Enterval CBA Report for FY 2022 as of March 2023. Based on Full Market and average growt