Slm Corporation · NASDAQ:SLM
Slm — Q1 2021 Earnings Presentation
28 slides from Slm's earnings presentation, 2021
Slide 1: Investor Presentation First Quarter 2021
Investor Presentation First Quarter 2021 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 January 27, 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 2,400+ actively managed university relationships Indu
Slide 4: Proven Resiliency During the COVID-19 Pandemic
Proven Resiliency During the COVID-19 Pandemic Credit Return to School3 And Originations4,23 • Held-for investment loans in forbearance as a % of held-for- • The Spring 2021 semester is expected to be 9% fully on investment loans in repayment and forbearance has been campus, 8% remote, and 83% hybri
Slide 5: Higher Education Value Proposition Remains Attractive
Higher Education Value Proposition Remains Attractive5 Private Expanding Addressable Market Education Loans • Private Education Loans represent 2-3% of the overall spend in Federal Loans $13 higher education annually. $88 • Total spend on higher education grows ~3% annually, while Private Education
Slide 6: High Quality Private Education Loan Portfolio
High Quality Private Education Loan Portfolio Customer FICO at Original Approval6 Smart Option Payment Type Interest <700 780+ Only 23% 27% 20% Deferred 49% 700 - 740 27% 740 - 780 Fixed Pay 23% 31% Weighted Average FICO: 743 Smart Option Loans: $20.5 billion Portfolio by Originations Vintage23 Port
Slide 7: Conservative Funding Optimizes Net Interest Margin
Conservative Funding Optimizes Net Interest Margin Secured Debt 19% Retail MMDA & CD 23% Brokered $11.9b As of 9/30/20 Retail $10.8b Secured Debt $4.5b Retail H.S.A. & 529 Brokered 16% Variable 33% Brokered Fixed 9% As of 12/31/20 7
Slide 8: Simple But Powerful Investment Thesis
Simple But Powerful Investment Thesis • Consistent earnings expansion is driven by top line growth and efficiency Attractive Earnings Profile • 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 an
Slide 9: Clear Strategy to Ensure Appropriate Valuation
Clear Strategy to Ensure Appropriate Valuation Maximize the Optimize the value Maintain a rigorous Change the profitability and of our brand and and predictable narrative around growth of our core our attractive client capital allocation private student business base and return program lending to ad
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 Strong fixed cost discipline Increase market share by fully meeting Efficiency effectiveness across all areas student funding needs We focus on top-line Enhanced risk-adjust
Slide 11: Optimize the Value of the Brand and Attractive Client Base
Optimize the Value of the Brand and Attractive Client Base 2M 91% We know our customers’ finances, Borrowers and Customers complete payment patterns and indebtedness cosigners their program7 We have the relationships and knowledge to assist our customers with their next Graduates who benefit from th
Slide 12: Maintain Rigorous Capital Allocation and Return Program
Maintain Rigorous Capital Allocation and Return Program Invest in High ROE Growth Share Repurchase • Continue to focus on high-quality Private • The $525 million Accelerated Share Repurchase Education Loan originations, including deeper Agreement was completed on 1/26/21. 58 million shares penetrati
Slide 13: Changing the Narrative
Changing the Narrative In the current environment, there have been three main areas of focus from third parties that include free college, debt forgiveness and bankruptcy reform. We expect our business to perform well even under leading reform proposals.4 Free College Debt Forgiveness • Benefits of
Slide 14: Executing This Strategy Supports Our Investment Thesis
Executing This Strategy Supports Our Investment Thesis Enhances our Attractive Maximize the Optimize the value Earnings Profile profitability and of our brand and growth of our core our attractive client business base Reduces Real and Perceived Risk We have a proven Maintain a rigorous Change the bu
Slide 15: Diverse Student Loan Portfolio Driving Increased Shareholder Value
Diverse Student Loan Portfolio Driving Increased Shareholder Value Undergraduate Graduate Parent RATE TYPE Variable & Fixed Variable & Fixed Variable & Fixed Health Variable: LIBOR + Variable: LIBOR + Variable: LIBOR + Medical Dental 1.250% - LIBOR + 2.250% - LIBOR + 3.500% - LIBOR + Professions INT
Slide 16: Sallie Mae is an ESG Company
Sallie Mae is an ESG Company Providing Financial Education Serving our Customers & Assistance • Free Scholarship Search tool listing 6 million scholarships worth more than • Financing assistance to 1.5 million families since 2014 to provide access to $30 billion postsecondary education and opportuni
Slide 17: ABS Supplement
ABS Supplement
Slide 18: 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 currently indexed to
Slide 19: Sallie Mae Bank ABS Summary
Sallie Mae Bank ABS Summary 9 10 10 10 10 19
Slide 20: Sallie Mae Bank ABS Structures
Sallie Mae Bank ABS Structures SMB 2020-B SMB 2020-A SMB 2019-B SIZE $707.0MM $636.0MM $657.0MM PRICING DATE August 4, 2020 February 4, 2020 June 4, 2019 Smart Option Smart Option Smart Option COLLATERAL Private Education Loans Private Education Loans Private Education Loans SERVICER Sallie Mae Bank
Slide 21: Appendix
Appendix
Slide 22: Commitments vs Disbursements
Commitments vs Disbursements 2019 Actuals Commitments vs Disbursements 52% 38% 40% 22% 13% 14% 13% 9% Q1 2019 Q2 2019 Q3 2019 Q4 2019 Commitments Disbursements Provision for New Loans Additional Provision Impacts Unfunded Commitments • Directly impacted by the timing of • New Loans, DCF accretion, l
Slide 23: 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 billion, increased the liability representing its off-balance sheet exposure for unfunded commitments by $116 million and increased th
Slide 24: Quarterly Financial Highlights
14 Quarterly Financial Highlights 4Q 3Q 4Q 4Q 3Q 4Q 2020 2020 2019 2020 2020 2019 Income Statement ($ Millions) Key Performance Metrics Total interest income $480 $482 $600 Net Interest Margin 4.82% 4.79% 5.41% Total interest expense 113 118 181 Net Interest Income 367 365 419 Yield—Total Interest-e
Slide 25: Annual Financial Highlights
14 Annual Financial Highlights 2020 2019 2020 2019 Income Statement ($ Millions) Key Performance Metrics Total interest income $2,022 $2,331 Net Interest Margin 4.81% 5.76% Total interest expense 542 708 Net Interest Income 1,480 1,623 Yield—Total Interest-earning assets 6.57% 8.27% Less: provisions
Slide 26: Sallie Mae vs Federal Student Loans
Sallie Mae vs Federal Student Loans Sallie Mae Federal Student Loan Program 21 Federal Direct Loan Loan Program Smart Option Student Loan 20 Parent Plus (Subsidized & Unsubsidized) Yr 1 - $5,500 ($3,500 > subsidized) $1,000 - Cost of Attendance Yr 2 - $6,500 ($4,500 > subsidized) Undergraduate Loan
Slide 27: "Core Earnings" to GAAP Reconciliation
“Core Earnings” to GAAP Reconciliation Quarters Ended Years Ended Dec. 31, 2020 Sept. 30, 2020 Dec. 31, 2019 2020 2019 Dollars in thousands, except per share amounts “Core Earnings” adjustments to GAAP: GAAP net income $432,700 $171,028 $141,352 $880,690 $578,276 Preferred stock dividends $1,734 $2,
Slide 28: 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
SLM Corporation (Sallie Mae) — Q1 2021 Earnings Presentation on 6ix