Slm Corporation · NASDAQ:SLM
Slm — Q1 2015 Earnings Presentation
21 slides from Slm's earnings presentation, 2015
Slide 1: Sallie Mae Investor Presentation First Quarter 2015
SALLIE MAE Investor Presentation FIRST QUARTER 2015
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements The following information is current as of January 22, 2015 (unless otherwise noted) and should be read in connection with SLM Corporation’s press release announcing its financial results for the quarter and year ended December 31, 2014, and the a
Slide 3: The Sallie Mae Brand
The 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; 53% mark
Slide 4: 2014 Sallie Mae Highlights
2014 Sallie Mae Highlights ► Completed legal separation from Navient on April 30, 2014 ► Generated “Core Earnings” of $195 million ► Originated $4.1 billion of high quality Private Education Loans, 7% increase year-over-year ► Grew Private Education Loan portfolio by 27% ► Completed loan sales in ex
Slide 5: Sallie Mae Summary
Sallie Mae Summary - Leading private education Private Education Loan Originator - loan franchise and Servicer - Expanding consumer Deposits - finance product suite Upromise Rewards - Insurance Services - Strategic Key Credit Card - Focus Businesses ($B as of 12/31/14) Competitive Balance Assets 13.
Slide 6: Sallie Mae Investment Highlights
Sallie Mae Investment Highlights Experienced management team ► Average of 30+ years of banking and financial services 1 with deep industry knowledge experience Leading brand in the education ► 40+ years serving the education lending market 2 lending market ► 53% private education lending market shar
Slide 7: Favorable Student Loan Market Trends
Favorable Student Loan Market Trends Enrollment at Four-Year Degree Granting Institutions1 Annual Cost of Education2 Public Private (millions) (thousands) $41 $42 $38 $39 13.5 13.5 13.7 $35 $36 13.3 $32 $34 12.9 $29 $30 12.1 $19 $16 $17 $18 $18 $13 $14 $14 $15 $12 2008 2009 2010 2011 2012 2013 2005
Slide 8: Higher Education Value Proposition
Higher Education Value Proposition Relationship Between Higher Education, Widening Earnings Gap of Young Adults by Educational Attainment6 Payment to Income Ratio7 Income and Employment5 1,800 12% $ 17,500 1,600 Average weekly income $ 15,780 10% 1,400 Unemployment $ 14,245 1,200 8% $ 9,690 1,000 6%
Slide 9: Smart Option Overview
Smart Option Overview ► Product Features – Offers three repayment options while in school which includes 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 10: High Quality Private Student Loan Originations Growth
High Quality Private Student Loan Originations Growth $4,500 $4,084 $4,000 $3,801 7% $3,500 $3,345 14% Originations ($MM) $3,000 $2,737 22% $2,500 $2,000 $1,500 $1,000 $500 $0 2011 2012 2013 2014 Private Education Loan Originations Originations Statistics ($) Q4 2014 Q4 2013 2014 2013 % Cosigned 88%
Slide 11: Analytical Approach to Credit
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 concerns v
Slide 12: High Quality Private Education Portfolio
High Quality Private Education Portfolio Portfolio by Product Smart Option Payment Type Graduate Signature / Other 1% 3% Interest Only Deferred 25% 47% Smart Fixed Pay Option 28% 96% Private Education Loans: $8.3bn Smart Option Loans: $7.9bn Portfolio by Vintage Customer FICO at Origination Pre 2011
Slide 13: Smart Option Credit Outperforming
Smart Option Credit Outperforming ► Smart Option products outperform prior private education loan products due to more stringent underwriting standards and tailored product options ► Performance of newer vintage loans driven by focused marketing on high quality borrowers, better data and product man
Slide 14: Portfolio Migrating to Full Principal and Interest Status
Portfolio Migrating to Full Principal and Interest Status12 Estimated Loss Emergence Curve – Loans in P&I % of Loans in Repayment 3% 3.0% 9% 2.5% 25% Interest Only/In School PERIODIC DEFAULT RATE 2.0% $25 Fixed/In School 1.5% <1 Year P&I 28% 1‐2 Years P&I 1.0% 2+ Years P&I 0.5% 35% 0.0% 1 2 3 4 5 6
Slide 15: Conservative Funding Approach
Conservative Funding Approach ► Low cost deposit base with no branch overhead 2014 Target — 90% of retail deposits are savings accounts — Brokered deposits used as alternative funding source Retail deposits ► Term funding / securitizations will augment deposit Brokered deposits funding for future gr
Slide 16: Financial Review
Financial Review (in millions) Q4 2014 Q4 2013 Variance 2014 2013 Variance PSL $ 8,325 $ 6,568 $ 1,757 $ 8,325 $ 6,568 $ 1,757 PSL Reserve (79) (62) (17) (79) (62) (17) FFELP 1,268 1,431 (163) 1,268 1,431 (163) FFELP Reserve / Other (5) (6) 1 (5) (6) 1 Total Loans 9,510 7,931 1,578 9,510 7,931 1,578
Slide 17: 2015 Guidance
2015 Guidance Target 2015 Originations $4.3 Billion Operating Expenses $325 Million Additional Restructuring Expense $5 Million Loan Sales at 7.5% Premium $1.5 Billion Provision for Loan Losses, Private $116 - $130 Million “Core Earnings” diluted EPS $0.48-$0.50 17
Slide 18: Sallie Mae Bank
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 trajec
Slide 19: Appendix
APPENDIX 19
Slide 20: “Core Earnings” to GAAP Reconciliation
“Core Earnings” to GAAP Reconciliation Quarters Ended December 31, Years Ended December 31, (Dollars in thousands, except per share amounts) 2014 2013 2014 2013 “Core Earnings” adjustments to GAAP: GAAP net income attributable to SLM Corporation ......................................................
Slide 21: Footnotes
Footnotes 1 Source: U.S. Department of Education, National Center for Education Statistics, Projections of Education Statistics to 2022 2 Source: Trends in College Pricing.© 2014 The College Board,. www.collegeboard.org, Note: Academic years, average published tuition, fees, room and board charges a
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