Slm Corporation · NASDAQ:SLM
Slm — Investor Presentation (February 2021)
28 slides from Slm's investor presentation, Feb 18, 2021
Slide 1: Investor Presentation First Quarter 2021
1 Investor Presentation First Quarter 2021 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 January 27, 2021 (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 is an Outstanding Franchise
3 Sallie Mae is an Outstanding Franchise Sallie Mae is the market-leading brand for private education loans driven by brand recognition, rigorous underwriting methodology and industry-leading customer service. Top ranked and highly recognized brand Industry leading and award-winning technologies JD
Slide 4: Proven Resiliency During the COVID-19 Pandemic
4 Proven Resiliency During the COVID-19 Pandemic Credit • Held-for investment loans in forbearance as a % of held-for- investment loans in repayment and forbearance has been reduced from the mid-teen peak in Q2 2020 to 4.3% on Dec. 31, 2020 (vs 4.1% at the end of Q4 2019). • As of 12/31/20, 98% of t
Slide 5: Higher Education Value Proposition Remains Attractive
5 Higher Education Value Proposition Remains Attractive5 Expanding Addressable Market • Private Education Loans represent 2-3% of the overall spend in higher education annually. • Total spend on higher education grows ~3% annually, while Private Education Loans grow ~7% annually, primarily due to in
Slide 6: High Quality Private Education Loan Portfolio
6 High Quality Private Education Loan Portfolio Customer FICO at Original Approval6 Smart Option Payment Type Portfolio by Originations Vintage23 Portfolio Interest Rate Type 780+ 27% 740 - 780 23% 700 - 740 27% <700 23% Weighted Average FICO: 743 Interest Only 20% Fixed Pay 31% Deferred 49% Smart O
Slide 7: Conservative Funding Optimizes Net Interest Margin
7 As of 9/30/20 Conservative Funding Optimizes Net Interest Margin Retail MMDA & CD 23% Retail H.S.A. & 529 16% Brokered Fixed 9% Brokered Variable 33% Secured Debt 19% Brokered $11.9b Retail $10.8b Secured Debt $4.5b As of 12/31/20
Slide 8: Simple But Powerful Investment Thesis
8 • Consistent earnings expansion is driven by top line growth and efficiency • Sallie Mae is the leader in the private education loan market that is growing 6+% a year • Well-proven and disciplined underwriting model leveraging data and experience through the last recession • Despite headlines on s
Slide 9: Clear Strategy to Ensure Appropriate Valuation
9 Clear Strategy to Ensure Appropriate Valuation Maximize the profitability and growth of our core business Change the narrative around private student lending to address real and perceived political risk Optimize the value of our brand and our attractive client base Maintain a rigorous and predicta
Slide 10: Maximize the Profitability and Growth of the Core Business
10 Maximize the Profitability and Growth of the Core Business Maximize Revenue Manage Unit Costs Drive penetration at all schools Increase market share by fully meeting student funding needs Enhanced risk-adjusted pricing and underwriting Improved marketing, digital, and data capabilities Strong fix
Slide 11: Optimize the Value of the Brand and Attractive Client Base
11 Optimize the Value of the Brand and Attractive Client Base What We Do Build products and services that leverage our customer affiliation Ensure products and services are consistent with our core mission and drive customer value We know our customers’ finances, payment patterns and indebtedness We
Slide 12: Maintain Rigorous Capital Allocation and Return Program
12 Maintain Rigorous Capital Allocation and Return Program Invest in High ROE Growth • Continue to focus on high-quality Private Education Loan originations, including deeper penetration of graduate school market • Build other sources of revenue in capital and expense efficient way Quarterly Common
Slide 13: Changing the Narrative: Free College, Debt Forgiveness, Bankruptcy Reform
13 Free College • Benefits of subsidizing college tuition for those who would otherwise not be able to attend • Promotes social equity, equality of opportunity and economic mobility • State-wide programs exist in 19 states, and 18 additional states have county, municipal or school specific free coll
Slide 14: Executing This Strategy Supports Our Investment Thesis
14 Executing This Strategy Supports Our Investment Thesis We have a proven business model and continue to deliver long- term value for our customers, shareholders and communities Maximize the profitability and growth of our core business Optimize the value of our brand and our attractive client base
Slide 15: Diverse Student Loan Portfolio Driving Increased Shareholder Value
15 Diverse Student Loan Portfolio Driving Increased Shareholder Value Undergraduate Medical Health Professions • Products designed to meet the needs of all students • Developing unique and innovative products to diversify portfolio Undergraduate Graduate Parent RATE TYPE Variable & Fixed Variable &
Slide 16: Sallie Mae is an ESG Company
16 Sallie Mae is an ESG Company Committed to an Ethical & Diverse Workplace • Board of Directors composition is 33% women, earning the Winning “W” Company designation from Women on Boards each year since 2015 • Appointed the first woman to serve as chair of Board of Directors in 2020 • Committed to
Slide 17: ABS Supplement
ABS Supplement
Slide 18: Sallie Mae's Smart Option Loan Product Overview
18 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 Pay loan
Slide 19: Sallie Mae Bank ABS Summary
19 Sallie Mae Bank ABS Summary 9 10 10 10 10
Slide 20: Sallie Mae Bank ABS Structures
20 Sallie Mae Bank ABS Structures SMB 2020-B SMB 2020-A SMB 2019-B SIZE $707.0MM $636.0MM $657.0MM PRICING DATE August 4, 2020 February 4, 2020 June 4, 2019 COLLATERAL Smart Option Private Education Loans Smart Option Private Education Loans Smart Option Private Education Loans SERVICER Sall ie Mae
Slide 21: Appendix
Appendix
Slide 22: Commitments vs Disbursements
22 Commitments vs Disbursements Provision for New Loans • Directly impacted by the timing of Commitments and not Disbursements Additional Provision Impacts • New Loans, DCF accretion, loan sales, model updates and overlays Unfunded Commitments • Remain a liability for accounting purposes • Once the
Slide 23: CECL Update
23 CECL Update13 Adopted on January 1, 2020. • The company’s 2020 financial results reflect a transition adjustment that increased the allowance for loan losses by $1.1 billion, increased the liability representing its off-balance sheet exposure for unfunded commitments by $116 million and increased
Slide 24: Quarterly Financial Highlights
24 Quarterly Financial Highlights 14 4Q 2020 3Q 2020 4Q 2019 Income Statement ($ Millions) Total interest income $480 $482 $600 Total interest expense 113 118 181 Net Interest Income 367 365 419 Less: provisions for credit losses (316) (4) 98 Total non-interest income (loss) 1 10 (4) Total non-inter
Slide 25: Annual Financial Highlights
25 Annual Financial Highlights 14 2020 2019 Income Statement ($ Millions) Total interest income $2,022 $2,331 Total interest expense 542 708 Net Interest Income 1,480 1,623 Less: provisions for credit losses 93 354 Total non-interest income 331 49 Total non-interest expenses 564 574 Income tax expen
Slide 26: Sallie Mae vs Federal Student Loans
26 Sallie Mae vs Federal Student Loans Sallie Mae Loan Program Smart Option Student Loan20 Federal Direct Loan (Subsidized & Unsubsidized) Parent Plus Loan Limits $1,000 - Cost of Attendance No Aggregate Limit Yr 1 - $5,500 ($3,500 > subsidized) Yr 2 - $6,500 ($4,500 > subsidized) Yr 3+ - $7,500 ($5
Slide 27: "Core Earnings" to GAAP Reconciliation
27 “Core Earnings” to GAAP Reconciliation Quarters Ended Years Ended Dec. 31, 2020 Sept. 30, 2020 Dec. 31, 2019 2020 2019 Dollars in thousands, except per share amounts “Core Earnings” adjustments to GAAP: GAAP net income $432,700 $171,028 $141,352 $880,690 $578,276 Preferred stock dividends $1,734
Slide 28: Footnotes
28 Footnotes 1. J.D. Power 2019 Certified Customer Service Program recognition is based on successful completion of an evaluation and exceeding a customer satisfaction benchmark through a survey of recent servicing interactions. For more information, visit www.jdpower.com/ccc. 2. Source: MeasureOne