Slm Corporation · NASDAQ:SLM
Slm — 2017 Barclays Global Financial Services Conference
19 slides from Slm's conference presentation, Sep 12, 2017
Slide 1: SLM Corporation Investor Presentation
SLM CORPORATION INVESTOR PRESENTATION STEVE MCGARRY-EVP AND CFO 2017 Barclays Global Financial Services Conference September 12, 2017
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 July 19, 2017 (unless otherwise noted) and should be read in connection with the press release of SLM Corporation (the “Company”) announcing its financial resul
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
4 Sallie Mae Overview Sallie Mae Key Statistics Year-to-Date as of June 30, 2017 − $0.37 “Core Earnings” Diluted Earnings Per Common Share − Portfolio of $15.5 billion of high quality Private Education Loans − 88% of Private Education Loans disbursed in 2017 are cosigned, 89% in 2016 − Average 2017
Slide 5: Favorable Student Loan Market Trends
5 Favorable Student Loan Market Trends Academic Year Enrollment at Four-Year Degree Granting Institutions(1) Annual Cost of Education(2) Public Private (millions) (thousands) $44 $45 $41 $42 $38 $39 13.4 13.5 $35 $36 13.3 13.5 13.4 12.9 $18 $18 $19 $20 $20 $15 $16 $17 09/10 10/11 11/12 12/13 13/14 1
Slide 6: Higher Education Value Proposition
6 Higher Education Value Proposition Relationship Between Higher Education, Incremental Earnings From a College Degree Have Increased Income and Employment(1) For Generations(2) 2,000 9% 1,800 Average weekly income 8% $ 17,500 1,600 Unemployment $ 15,780 7% $ 14,245 1,400 6% 1,200 5% 1,000 $ 9,690 4
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 ed
Slide 8: High Quality Private Education Loan Growth
8 High Quality Private Education Loan Growth
Slide 9: Benefits of Operating Leverage
9 Benefits of Operating Leverage • Scalable servicing platform will continue to support earnings growth • Investments in our servicing platform have resulted in improved customer experience and platform efficiencies • Expect improvements in operating efficiency to continue
Slide 10: Analytical Approach to Credit
10 Analytical Approach to Credit Borrower/Cosigner 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 • No existing SLM 30+ day past dues underwriting driven by large review due to cred
Slide 11: High Quality Private Education Portfolio
11 High Quality Private Education Portfolio As of 6/30/17
Slide 12: Cumulative Defaults as a % of Disbursed Principal Entering P & I Repayment
12 Cumulative Defaults by P&I Repayment Vintage(1),(2),(3) Smart Option Cumulative Gross Defaults by P&I Repayment Vintage and Years Since First P&I Repayment Period 10% Disbursed Principal Entering P & I Repayment 9% 8% Cumulative Defaults as a % of 7% 6% 6.8% 5% 6.0% 4% 4.9% 3% 4.2% 3.9% 2% 3.0% 1
Slide 13: Conservative Funding Approach
13 Conservative Funding Approach 2Q 2017 Target Stable deposit base with no branch overhead — Diversified mix of retail and other core savings, MMDA and CDs 17% 20% — Brokered deposits used as alternative funding source Term funding / securitizations will augment deposit funding for future growth —
Slide 14: Sallie Mae Bank
14 Sallie Mae Bank • 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 retur
Slide 15: “Core Earnings” to GAAP Reconciliation
15 “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 16: Appendix
16 Appendix
Slide 17: Important Information Regarding Historical Loan Performance Data
17 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 18: Important Information Regarding Historical Loan Performance Data (cont.)
18 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 M
Slide 19: Smart Option Loan Program Cohort Default Curves
19 Smart Option Loan Program Cohort Default Curves Terms and calculations used in the cohort default curves 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 cal
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