Slm Corporation · NASDAQ:SLM
Slm — 17th Annual Credit Suisse Financial Services Forum (February 2016)
21 slides from Slm's conference presentation, Feb 9, 2016
Slide 1: 17th Annual Credit Suisse Financial Services Forum
17TH ANNUAL CREDIT SUISSE FINANCIAL SERVICES FORUM FEBRUARY 9, 2016 STEVE MCGARRY, EVP & CFO
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 January 20, 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 Summary
| 3 Sallie Mae Summary - Leading private education Private Education Loan - loan franchise Originator and Servicer - Conservative credit and Deposits - funding Upromise Rewards - - Expanding consumer Credit Card - finance product suite Strategic Key Overview Businesses - National sales and Competiti
Slide 4: Sallie Mae Highlights
| 4 Sallie Mae Highlights • Originated $4.3 billion of high quality Private Education Loans in 2015 (+6% vs. 2014) • Grew Private Education Loan portfolio 28% from 2014 to 2015 • Grew market share in 2014 and 2015 to 54% • Generated earnings2 of $255 million in 2015, up 40% from 2014 • Completed $1.
Slide 5: Favorable Student Loan Market Trends
| 5 Favorable Student Loan Market Trends Academic Year Enrollment at Four-Year Degree Granting Institutions(3) Annual Cost of Education(4) Public Private (millions) (thousands) $42 $44 $39 $41 $36 $38 13.4 13.5 13.4 13.5 $34 $35 13.3 $32 12.9 $17 $18 $18 $19 $20 $14 $15 $16 $14 2009 2010 2011 2012 2
Slide 6: Higher Education Value Proposition
| 6 Higher Education Value Proposition Relationship Between Higher Education, Incremental Earnings From a College Degree Has Increased For Generations(8) Payment to Income Ratio(9) Income and Employment(7) 1,800 12% $ 17,500 1,600 Average weekly income 10% $ 15,780 1,400 Unemployment $ 14,245 1,200
Slide 7: Smart Option Overview
| 7 Smart Option Overview 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
Slide 8: Analytical Approach to Credit
| 8 Analytical Approach to Credit Student Initial Screen Manual Review ► $1,000 minimum loan ► ~8% of applications ► Minimum FICO of 640 ► Asset expertise and rigorous ► Pass risk scores, but require further underwriting driven by large ► No existing SLM 30+ day past dues review due to credit concer
Slide 9: High Quality Private Education Loan Originations Growth
| 9 High Quality Private Education Loan Originations Growth $5,000 $4,500 $4,330 $4,076 6% $4,000 $3,795 7% $3,500 $3,342 14% Originations ($MM) $3,000 $2,737 22% $2,500 $2,000 $1,500 $1,000 $500 $0 2011 2012 2013 2014 2015 Private Education Loan Originations Originations Statistics ($) 2011 2012 20
Slide 10: High Quality Private Education Portfolio
| 10 High Quality Private Education Portfolio Customer FICO at Origination Smart Option Payment Type <700 780+ Interest Only 21% 30% 21% Deferred 700 - 740 47% 26% Fixed Pay 740 - 780 32% 23% Weighted Average FICO: 746 Smart Option Loans: $10.2bn Portfolio by Originations Vintage Portfolio Interest
Slide 11: Repayment Balance Delinquency
As of 12/31/15 % of P&I Repayment Repayment Balance % of P&I Balance % of P&I Repayment Repayment Balance % of P&I Balance 2.0% 4.0% 2.0% 4.0% 8.0% 8.0% 0.0% 0.0% 6.0% 6.0% 10.0% 10.0% 10.0% 10.0% 2.0% 4.0% 2.0% 4.0% 8.0% 8.0% 0.0% 6.0% Mar-12 Mar-12 6.0% Mar-12 Mar-12 Jun-12 Jun-12 Jun-12 Jun-12 Se
Slide 12: Cumulative Default Rate
| 12 Cumulative Defaults by P&I Repayment Vintage(10),(11),(12) Smart Option Cumulative Gross Defaults by P&I Repayment Vintage and Years in P&I Repayment 10.0% as a % of Original Balance Cumulative Default Rate 9.0% 8.0% 7.0% 6.0% 6.0% 5.0% 5.0% 4.0% 3.6% 3.0% 2.6% 2.0% 1.7% 1.0% 0.0% 0 1 2 3 4 5 6
Slide 13: Conservative Funding Approach
| 13 Conservative Funding Approach 2015 Target Low cost deposit base with no branch overhead — 80% of retail deposits are savings accounts 8% — Brokered deposits used as alternative funding source 30% Term funding / securitizations will augment deposit funding for future growth — Experienced capital
Slide 14: Financial Review
| 14 Financial Review (in millions) Q4 2015 Q4 2014 Variance 2015 2014 Variance PSL $ 10,624 $ 8,325 $ 2,299 $ 10,624 $ 8,325 $ 2,299 PSL Reserve (109) (79) (30) (109) (79) (30) FFELP 1,119 1,268 (150) 1,119 1,268 (150) FFELP Reserve (4) (5) 2 (4) (5) 2 • Private Education Loan Total Loans 11,631 9,
Slide 15: 2016 Guidance
| 15 2016 Guidance • Full-year Diluted Core EPS: $0.49 - $0.51 • Full-year Private Education Loan Originations: $4.6 billion • Full-year Operating Efficiency Ratio Improvement: 8-10%
Slide 16: Sallie Mae Bank
| 16 Sallie Mae Bank • Market share leader in private student loan industry • High quality assets and conservatively funded balance sheet • Predictable balance sheet growth for the next several years • Strong capital position and funding capabilities • A financial services company with high growth t
Slide 17: Appendix
| 17 APPENDIX
Slide 18: “Core Earnings” to GAAP Reconciliation
| 18 “Core Earnings” to GAAP Reconciliation Quarters Ended Years Ended December 31, December 31, 2015 2014 2015 2014 (Dollars in thousands, except per share amounts) “Core Earnings” adjustments to GAAP: GAAP net income attributable to SLM Corporation……….………….…….........………………… $ 89,845 $ 19,717 $ 27
Slide 19: Footnotes
| 19 Footnotes (1) Source: MeasureOne CBA Report as of September 2015 (2) GAAP net income attributable to SLM Corporation Common Stock (3) Source: U.S. Department of Education, National Center for Education Statistics, Projections of Education Statistics to 2022 (NCES, February 2014), Enrollment in
Slide 20: Important Information Regarding Historical Loan Performance Data
| 20 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
Slide 21: Important Information Regarding Historical Loan Performance Data (cont.)
| 21 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 three separate sources of information: (1) Combined Smart Option Student Loan Portfolio Data for Legacy SLM, Navient and Sallie
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