Slm Corporation · NASDAQ:SLM
Slm — Investor Presentation (November 2016)
29 slides from Slm's investor presentation, Nov 8, 2016
Slide 1: Fourth Quarter 2016 SLM Corporation Investor Presentation
Fourth Quarter 2016 SLM CORPORATION INVESTOR PRESENTATION Exhibit 99.1
Slide 2: Forward-Looking Statements and Disclaimer
| 2 Forward-Looking Statements and Disclaimer Cautionary Note Regarding Forward-Looking Statements The following information is current as of October 19, 2016 (unless otherwise noted) and should be read in connection with the press release of SLM Corporation (the “Company”) announcing its financial
Slide 3: Sallie Mae Brand
3 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: 54% market
Slide 4: Sallie Mae Overview: Key Statistics for Q3
| 4 Sallie Mae Overview Sallie Mae Key Statistics for Q3 2016 − $0.12 diluted earnings per share − Portfolio of $13.7 billion of high quality Private Education Loans − 90% of Private Education Loans disbursed in Q3 are cosigned − Average Q3 Private Education Loan originations FICO of 749 − 79% of Pr
Slide 5: Strategic Overview
5 ($B as of 9/30/16) Assets 17.7 - FFELP Loans 1.0 - Private Loans 13.7 - Deposits 12.9 - Preferred Equity 0.6 - Common Equity 1.7 - Private Education Loan - Originator and Servicer Deposits - Upromise Rewards - Credit Card - - National sales and marketing - Largest salesforce in the industry - Spec
Slide 6: Favorable Student Loan Market Trends
6 $17 $17 $27 $27 $99 $31 $149 $53 Full-Time Private School Full-Time Public School Full-Time Private School Full-Time Public School Stafford Loan Limit Cost of Attendance Gap Favorable Student Loan Market Trends 12.9 13.3 13.4 13.5 13.4 13.5 2009 2010 2011 2012 2013 2014 (millions) Academic Year En
Slide 7: Higher Education Value Proposition
7 Relationship Between Higher Education, Income and Employment(1) 0% 2% 4% 6% 8% 10% 12% 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Less than H.S. High school Some college Associate Bachelor's Master's Doctorate Professional Unemployment Average weekly income Higher Education Value Proposition
Slide 8: Smart Option Overview
8 Product Features • Offers three repayment options while in school, which include 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 educational expenses Dis
Slide 9: High Quality Private Education Loan Growth
| 9 High Quality Private Education Loan Growth $3,342 $3,795 $4,076 $4,330 $4,059 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 2012 2013 2014 2015 2016 Di sb ur se m en ts ( $M M) Private Education Loan Disbursements $4,600 6% 14% 6% 7% Disbursement Statistics ($) 2012 2013
Slide 10: Analytical Approach to Credit
10 Analytical Approach to Credit Borrower/Cosigner Initial Screen ► $1,000 minimum loan ► Minimum FICO of 640 ► No existing SLM 30+ day past dues ► No student loans 90+ day past dues ► No recent bankruptcy ► 2+ trades for cosigners and 4+ trades for non-cosigner ► Asset expertise and rigorous underw
Slide 11: High Quality Private Education Portfolio
11 Customer FICO at Original Approval Smart Option Payment Type Portfolio Interest Rate Type Variable 81% Fixed 19% 780+ 30% 740 - 780 23% 700 - 740 26% <700 21% Weighted Average FICO: 746 Portfolio by Originations Vintage Interest Only 22% Fixed Pay 31% Deferred 47% Smart Option Loans: $13.3 billio
Slide 12: Conservative Funding Approach
12 Low cost deposit base with no branch overhead — 80% of retail deposits are savings accounts — Brokered deposits used as alternative funding source Term funding / securitizations will augment deposit funding for future growth — Experienced capital markets team — Capacity to securitize $2 – $3billi
Slide 13: Customer Satisfaction Overview
13 Customer Satisfaction Overview Call Volume Customer Satisfaction Survey Results CFPB Complaint Portal Results (1) Servicing Channel Distribution As of 9/30/16 (1) Source: Annual Report of the CFPB Student Loan Ombudsman Report October 2016 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 2015 2016 Cal
Slide 14: Delinquency and Default Performance
14 Delinquency and Default Performance (As a % of Loans in P&I Repayment)(1),(2),(3) 31-60 Day Delinquency 91+ Day Delinquency 61-90 Day Delinquency Annualized Gross Default Rate As of 9/30/16 (1) For important information regarding historical performance data, see pages 27 and 28. (2) ‘Loans in P&I
Slide 15: Cumulative Defaults by P&I Repayment Vintage
15 Cumulative Defaults by P&I Repayment Vintage(1),(2),(3) Smart Option Cumulative Gross Defaults by P&I Repayment Vintage and Years in P&I Repayment As of 9/30/16 (1) For important information regarding historical performance data and an explanation of the data and calculations underlying this char
Slide 16: Financial Review
16 Financial Review • Private Education Loan portfolio growth of 27% in Q3 2016 vs. Q3 2015 • Conservatively funded with 13.4% risk based capital at the end of Q3 2016 • Growing deposit base coupled with term funding from securitizations • Full-year net interest margin expectation of high 5.60’s per
Slide 17: Sallie Mae Bank
17 • Market share leader in private student loan industry • High quality assets and conservatively funded balance sheet • Predictable balance sheet growth • Strong capital position and funding capabilities • A financial services company with high growth trajectory and excellent return on equity Sall
Slide 18: ABS Supplement
18 ABS Supplement
Slide 19: Sallie Mae's Smart Option Loan Product Overview
19 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
Slide 20: SMB vs. Legacy SLM Private Education Loan ABS Summary
20 (1) Smart Option loans considered in ‘P&I Repayment’ only if borrowers are subject to full principal and interest payments on the loan. SMB vs. Legacy SLM Private Education Loan ABS Summary 12-C 12-D 12-E 13-A 13-B 13-C 14-A 14-A 15-A 15-B 15-C 16-A 14-A 15-A 15-B 15-C 16-A 16-B 16-C Total Bond A
Slide 21: Sallie Mae Bank ABS Structures
21 Sallie Mae Bank ABS Structures (1) Represents offered amount. SMB retained all of Class B ($50mm). Total bond size was $657mm. (2) Overcollateralization for Class A & B bonds (3) Estimated based on a variety of assumptions concerning loan repayment behavior. Actual prepayment rate may vary signif
Slide 22: Sallie Mae Bank Servicing Policies
22 Sallie Mae Bank Servicing Policies Policy Pre-Spin, Legacy SLM Serviced Post-Spin, Sallie Mae Bank Serviced Delinquencies All loans serviced by an affiliate of legacy SLM; loan owned by Sallie Mae Bank sold to legacy SLM after becoming 90+ days past due. Sallie Mae Bank collects delinquent loans
Slide 23: Sallie Mae Bank Collections
23 Sallie Mae Bank Collections Each customer is approached individually, and the account manager is educated and empowered to identify optimal resolution • Co-borrowers are contacted and collected with similar efforts as the primary borrower Sallie Mae Bank employs a front-loaded, stage based collec
Slide 24: FFELP vs. Sallie Mae Bank Smart Option Private Education Loan Comparison
24 Sallie Mae Bank Smart Option Private Education Loans FFELP vs. Sallie Mae Bank Smart Option Private Education Loan Comparison FFELP Stafford Loans Sallie Mae Bank Smart Option Private Education Loans(1) Borrower Student Student or Parent Co-signer None Typically a parent Lender Eligible banks and
Slide 25: Appendix
25 Appendix
Slide 26: Core Earnings to GAAP Reconciliation
26 “Core Earnings” to GAAP Reconciliation (1) Derivative Accounting: “Core Earnings” exclude periodic unrealized gains and losses caused by the mark-to-market valuations on derivatives that do not qualify for hedge accounting treatment under GAAP, as well as the periodic unrealized gains and losses
Slide 27: Important Information Regarding Historical Loan Performance Data
27 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 Co
Slide 28: Important Information Regarding Historical Loan Performance Data (cont.)
28 Important Information Regarding Historical Loan Performance Data (cont.) Types of Smart Option Loan Portfolio Data The portfolio data we used in this report comes from two separate sources of information: (1) Combined Smart Option Student Loan Portfolio Data for Legacy SLM, Navient and Sallie Mae
Slide 29: Cohort default triangle terms and calculations
29 Terms and calculations used in the cohort default triangles are defined below: First P&I Repayment Period – The month during which a borrower is first required to make a full principal and interest payment on a loan. P&I Repayment Vintage – The calendar year of a loan’s First P&I Repayment Pe