Slm Corporation · NASDAQ:SLM
Slm — Investor Presentation (October 2021)
26 slides from Slm's investor presentation, Oct 25, 2021
Slide 1: Investor Presentation Fourth Quarter 2021
Investor Presentation Fourth Quarter 2021 Exhibit 99.1
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 October 20, 2021 (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 Industry leading and award-winning technologies JD Po
Slide 4: Third quarter performance continued progress toward 2021 targets
4 Third quarter performance continued progress toward 2021 targets Strengthening Economy • The average unemployment rate for the over 25 year-old college graduate population improved to 2.8% in Q3 2021 from 3.3% in Q2 2021.25 • 99% of colleges and universities are operating on a full residential or
Slide 5: Higher Education Value Proposition Remains Attractive
Higher Education Value Proposition Remains Attractive5 Expanding Addressable Market • Private Education Loans represent 2-3% of the overall spend in higher education annually. • Total spend on higher education grows ~3% annually, while Private Education Loans grow ~7% annually, primarily due to incr
Slide 6: High Quality Private Education Loan Portfolio
High Quality Private Education Loan Portfolio Customer FICO at Original Approval10 Smart Option Payment Type Portfolio by Originations Vintage23 Portfolio Interest Rate Type 780+ 28% 740 - 780 22% 700 - 739 27% <700 23% Weighted Average FICO: 743 Interest Only 20% Fixed Pay 32% Deferred 48% Smart Op
Slide 7: Conservative Funding Optimizes Net Interest Margin
As of 9/30/20 Conservative Funding Optimizes Net Interest Margin Retail MMDA & CD 22% Retail H.S.A. & 529 13% Brokered Fixed 15% Brokered Variable 29% Secured Debt 21% Brokered $11.6b Retail $9.3b Secured Debt $4.7b As of 9/30/21
Slide 8: Simple But Powerful Investment Thesis
• Consistent earnings expansion is driven by top line growth and efficiency • Sallie Mae is the leader in the private education loan market that is growing 6+% a year • Well-proven and disciplined underwriting model leveraging data and experience through the last recession • Despite headlines on stu
Slide 9: Clear Strategy to Prove this Investment Thesis
Clear Strategy to Prove this Investment Thesis Maximize the profitability and growth of our core business Better inform the external narrative about student lending and Sallie Mae Optimize the value of our brand and our attractive client base Maintain a rigorous and predictable capital allocation an
Slide 10: 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 Increase market share by fully meeting student funding needs Enhanced risk-adjusted pricing and underwriting Improved marketing, digital, and data capabilities Strong fixed
Slide 11: Optimize the Value of the Brand and Attractive Client Base
Optimize the Value of the Brand and Attractive Client Base What We Do Build products and services that leverage our customer affiliation Ensure products and services are consistent with our core mission and drive customer value We know our customers’ finances, payment patterns and indebtedness We ha
Slide 12: Changing the Narrative: Free College and Bankruptcy Reform
Free College • Benefits of subsidizing college tuition for those who would otherwise not be able to attend • Promotes social equity, equality of opportunity and economic mobility • State-wide programs exist in 19 states, and 18 additional states have county, municipal or school specific free college
Slide 13: Maintain Rigorous Capital Allocation and Return Program
Maintain Rigorous Capital Allocation and Return Program Invest in High ROE Growth • Continue to focus on high-quality Private Education Loan originations, including deeper penetration of graduate school market • Build other sources of revenue and capital in expense-efficient ways Quarterly Common St
Slide 14: Diverse Student Loan Portfolio Driving Increased Shareholder Value
Diverse Student Loan Portfolio Driving Increased Shareholder Value Undergraduate Medical Health Professions • Products designed to meet the needs of all students • Developing unique and innovative products to diversify portfolio Undergraduate Graduate Parent RATE TYPE Variable & Fixed Variable & Fix
Slide 15: Sallie Mae is an ESG Company
Sallie Mae is an ESG Company Committed to an Ethical & Diverse Workplace • Board of Directors composition is 33% women, earning the Winning “W” Company designation from Women on Boards each year since 2015 • Appointed the first woman to serve as chair of Board of Directors in 2020 • Committed to bes
Slide 16: ABS Supplement
ABS Supplement
Slide 17: 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 The Smart Option loan program consists of: Smart Option Interest Only loans Require full interest payments during in- school, grace, and deferment periods Smart Option Fixed Pay loans R
Slide 18: Sallie Mae Bank ABS Summary
Sallie Mae Bank ABS Summary28
Slide 19: Sallie Mae Bank ABS Structures
Sallie Mae Bank ABS Structures
Slide 20: Appendix
Appendix
Slide 21: Commitments vs Disbursements
Commitments vs Disbursements Provision for New Loans • Directly impacted by the timing of Commitments and not Disbursements Additional Provision Impacts • New Loans, DCF accretion, loan sales, model updates and overlays Unfunded Commitments • Remain a liability for accounting purposes • Once the loa
Slide 22: CECL Update
CECL Update13 Adopted on January 1, 2020. • The company’s 2020 financial results reflect a transition adjustment that increased the allowance for loan losses by $1.1 bil lion, increased the liability representing its off-balance sheet exposure for unfunded commitments by $116 million and increased t
Slide 23: Quarterly Financial Highlights
Quarterly Financial Highlights 14, 15 3Q 2021 2Q 2021 3Q 2020 Income Statement ($ Millions) Total interest income $448 $435 $482 Total interest expense 90 96 118 Net Interest Income 358 339 365 Less: provisions for credit losses 138 70 (4) Total non-interest income 14 52 10 Total non-interest expens
Slide 24: Sallie Mae vs Federal Student Loans
Sallie Mae vs Federal Student Loans As of 10/21/21 Sallie Mae Loan Program Smart Option Student Loan20 Federal Direct Loan (Subsidized & Unsubsidized) Parent Plus Loan Limits $1,000 - Cost of Attendance No Aggregate Limit Yr 1 - $5,500 ($3,500 > subsidized) Yr 2 - $6,500 ($4,500 > subsidized) Yr 3+
Slide 25: "Core Earnings" to GAAP Reconciliation
“Core Earnings” to GAAP Reconciliation Quarters Ended Sep.30, 2021 Jun.30, 2021 Sep.30, 2020 Dollars in thousands, except per share amounts “Core Earnings” adjustments to GAAP: GAAP net income $72,840 $140,201 $171,028 Preferred stock dividends $1,166 $1,192 $2,058 GAAP net income attributable to SL
Slide 26: Footnotes
Footnotes 1. J.D. Power 2019 Certified Customer Service Program recognition is based on successful completion of an evaluation and exceeding a customer satisfaction benchmark through a survey of recent servicing interactions. For more information, visit www.jdpower.com/ccc. 2. Source: MeasureOne CBA