Slm Corporation · NASDAQ:SLM
Slm — 19th Annual Credit Suisse Financial Services Forum (February 2018)
20 slides from Slm's conference presentation, Feb 13, 2018
Slide 1: SLM Corporation Investor Presentation
SLM CORPORATION INVESTOR PRESENTATION STEVE MCGARRY EVP AND CFO 19th Annual Credit Suisse Financial Services Forum February 13, 2018
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 17, 2018 (unless otherwise noted) and should be read in connection with the press release of SLM Corporation (the “Company”) announcing its financial re
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 Competitive
Slide 4: Sallie Mae Overview
4 Sallie Mae Overview Sallie Mae Key Statistics for 2017 − $0.62 for full year 2017; $0.72 for full year 2017, absent impact of Tax Act1,2,3; $0.53 for full year 2016 − Portfolio of $17.2 billion of high quality Private Education Loans − 88% of Private Education Loans disbursed in 2017 are cosigned
Slide 5: 2018 Guidance
5 2018 Guidance • Full-year Diluted Core EPS: $0.97-$1.01 • Full-year Private Education Loan Originations: $5.0 billion • Full-year Non-GAAP Operating Efficiency Ratio: 37% - 38% • Capital at the end of 2018: - Total Capital (to Risk-Weighted Assets) 13% - Common Equity Tier 1 Capital (to Risk-Weigh
Slide 6: Favorable Student Loan Market Trends
6 Favorable Student Loan Market Trends Academic Year Enrollment at Four-Year Degree Granting Institutions(1) Annual Cost of Education(2) (Millions) (Thousands) Estimated Total Cost of Education – 2016 / 2017 AY(3) Cost of College (Based on a Four-Year Term)(4) (billions) (thousands) AY 07/08 AY 17/1
Slide 7: Higher Education Value Proposition
7 Higher Education Value Proposition Relationship Between Higher Education, Incremental Earnings From a College Degree Have Increased Income and Employment(1) For Generations(2) Average weekly income Unemployment Key Statistics • The unemployment rate for individuals age 25 to 34 years old with four
Slide 8: Smart Option Overview
8 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 9: Analytical Approach to Credit
9 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 credi
Slide 10: High Quality Private Education Loan Growth
10 High Quality Private Education Loan Growth $5,000 3% $4,800 $4,666 8% $4,500 $4,330 6% $4,076 7% $4,000 $3,795 Disbursements ($MM) $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 2013 2014 2015 2016 2017 Private Education Loan Disbursements As of 12/31/17 (1) Represents the higher credit score
Slide 11: High Quality Private Education Portfolio
11 High Quality Private Education Portfolio Customer FICO at Original Approval Smart Option Payment Type <700 Interest Only 21% 780+ 22% 29% Deferred 700 - 740 47% 27% Fixed Pay 740 - 780 31% 23% Weighted Average FICO: 745 Smart Option Loans: $16.7 billion Portfolio by Originations Vintage Portfolio
Slide 12: Delinquency and Default Performance
12 Delinquency and Default Performance (As a % of Loans in P&I Repayment)(1),(2),(3) 10.0% 10.0% 9.0% 31-60 Day Delinquency 9.0% 61-90 Day Delinquency % of P&I Repayment Balance % of P&I Repayment Balance 8.0% 8.0% 7.0% 7.0% 6.0% 6.0% 5.0% 5.0% 4.0% 4.0% 3.0% 3.0% 2.0% 2.0% 1.0% 1.0% 0.0% 0.0% 10.0%
Slide 13: Cumulative Defaults by P&I Repayment Vintage
13 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% 9% Disbursed Principal Entering P & I Repayment 8% Cumulative Defaults as a % of 7% 6% 6.9% 6.3% 5% 5.3% 4% 4.6% 3% 4.4% 2% 3.7% 1
Slide 14: Conservative Funding Approach
14 Conservative Funding Approach Stable deposit base with no branch overhead 2017 — Diversified mix of retail and other core savings, MMDA and CDs — Brokered deposits used as alternative funding source Term funding / securitizations will augment deposit funding for future growth Retail Secured Debt
Slide 15: Enhance Franchise and Diversify Revenue
15 Enhance Franchise and Diversify Revenue Distribution of Sallie Mae Borrowers by Product and Age Goal: 100% • Develop relevant and innovative Consumer 93% 95% 91% Lending products to deepen customer 90% 87% 83% engagement, attract new-to-firm customers 79% 80% and diversify revenue at attractive r
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 • Strong capital position and funding capabilities • A financial services company with high growth trajectory and excellent retur
Slide 17: Appendix
17 Appendix
Slide 18: Important Information Regarding Historical Loan Performance Data
18 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 19: Important Information Regarding Historical Loan Performance Data (cont.)
19 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 20: Smart Option Loan Program Cohort Default Curves
20 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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