Slide 1: Investor Presentation Third Quarter 2022
Investor Presentation Third Quarter 2022
Slide 2: Forward-Looking Statements and Disclaimer
Forward‐Looking Statements and Disclaimer Cautionary Note Regarding Forward‐Looking Statements The following information is current as of July 27, 2022 (unless otherwise noted) and should be read in connection with the press release of SLM Corporation (the “Company”) announcing its financial results
Slide 3: Sallie Mae is an Outstanding Franchise
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 2,300+ actively managed university relationships Indu
Slide 4: Strong Return to Campus; Strong Strategic Execution; Loan Sale Strategy
Strong Return to Campus • Through July 1, 2022, FAFSA completion for the high school class of 2022 has returned to near pre‐pandemic numbers with 52.1% of the senior class completing the application (4.6% increase year over year).25 • Through the first half of the year, our underclass application vo
Slide 5: Revenue, Total Operating Expenses, Earnings/Capital
Revenue 1. • GAAP Net Income of $342 million in Q2 2022, compared to $140 million in Q2 2021. • Originated $616 million in Private Education Loans in Q2 2022 (16% increase vs. Q2 2021). Maximize the profitability and Total Operating Expenses growth of our • Total operating expenses of $132 million i
Slide 6: Private Education Loan Originations
Private Education Loan Originations23 Sallie Mae Annual Originations ($ millions) Actual Forecast Originations Statistics ($) 2018 2019 2020 2021 Q2 2022 Q2 2021 % Cosigned 87% 87% 86% 86% 74% 76% % In School Payment 57% 58% 60% 59% 56% 57% 10 Average FICO at Approval 746 746 749 750 746 750 6
Slide 7: Higher Education Value Proposition Remains Attractive
Higher Education Value Proposition Remains Attractive5 Expanding Addressable Market • Private Education Loans represent 2‐3% of the overall spend in higher Federal Loans Private education annually. $84B Education Loans Other $11B • Total spend on higher education grows ~2% annually, while Private $1
Slide 8: High Quality Private Education Loan Portfolio
Customer FICO at Original Approval Smart Option Payment Type <700 780+ Interest Only 23% 27% 19% High Quality Loans Weighted Deferred Private Education Average FICO: 743 48% $17.2B Loan Portfolio 700‐739 740 ‐ 780 Fixed Pay 27% 23% 33% Portfolio by Originations Vintage Portfolio Interest Rate Type P
Slide 9: Conservative Funding Optimizes Net Interest Margin
Conservative Funding Optimizes Net Interest Margin Secured Debt Retail 21% MMDA & CD 22% Retail $11.0B Brokered $9.0B Secured Debt $4.2B Retail Brokered H.S.A. Variable & 529 19% 18% Brokered Fixed 20% As of 6/30/22 9
Slide 10: Simple But Powerful Investment Thesis
Simple But Powerful Investment Thesis • Consistent earnings expansion is driven by top line growth and efficiency Attractive Earnings Profile • 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 an
Slide 11: Clear Strategy to Prove this Investment Thesis
Clear Strategy to Prove this Investment Thesis Strategic Imperatives: 1. 2. 3. 4. Maximize the Maximize the Better inform the Maintain a profitability and value of our external narrative rigorous and growth of our brand and about private predictable capital core business attractive student lending a
Slide 12: Maximize the Profitability and Growth of the Core Business
Maximize the Profitability and Growth of the Core Business Maximize Revenue Manage Unit Costs Drive penetration at all schools Strong fixed cost discipline Increase market share by fully meeting Efficiency effectiveness across all areas student funding needs Enhanced risk‐adjusted pricing and Improv
Slide 13: Optimize the Value of the Brand and Attractive Client Base
Optimize the Value of the Brand and Attractive Client Base 2M 91% We know our customers’ finances, payment Borrowers and Customers complete their patterns and indebtedness cosigners program7 We have the relationships and knowledge to assist our customers with their next step: Graduates who benefit f
Slide 14: Changing the Narrative
Changing the Narrative In the current environment, there have been three main areas of focus from third parties that include free college, debt forgiveness and bankruptcy reform. We expect our business to perform well even under leading reform proposals.4 Free College Debt Forgiveness • Benefits of
Slide 15: Maintain Rigorous Capital Allocation and Return Program
Maintain Rigorous Capital Allocation and Return Program Invest in High ROE Growth Share Repurchase • Continue to focus on high‐quality Private • Repurchased 20 million shares of common stock in Q2 Education Loan originations, including 2022. Repurchased 30 million shares in the first half of deeper
Slide 16: Diverse Student Loan Portfolio Driving Increased Shareholder Value
Diverse Student Loan Portfolio Driving Increased Shareholder Value Undergraduate Graduate RATE TYPE Variable & Fixed Variable & Fixed Medical Health Professions Dental Variable: SOFR + 1.250% Variable: SOFR + 1.750% INTEREST RATE ‐ SOFR + 12.375% ‐ SOFR + 11.625% RANGES Fixed: 4.00% ‐ 14.750% Fixed:
Slide 17: Sallie Mae is an ESG Company
Sallie Mae is an ESG Company Providing Financial Education Serving our Customers & Assistance • Free Scholarship Search tool listing more than 6 million scholarships worth • Financing assistance to 1.4 million families since 2014 to provide access to up to $30 billion postsecondary education and opp
Slide 18: ABS Supplement
ABS Supplement Confidential and proprietary information. © 2021 Sallie Mae Bank. All rights reserved.
Slide 19: Sallie Mae's Smart Option Loan Product Overview
Sallie Mae’s Smart Option Loan Product Overview The Smart Option loan product was introduced by Sallie Mae in 2009 • Smart Option payment option may not be The Smart Option loan changed after selected at origination program consists of: • Fixed-rate loans or variable-rate loans • Consumer credit und
Slide 20: Sallie Mae Bank ABS Summary
Sallie Mae Bank ABS Summary28 14-A 15-A 15-B 15-C 16-A 16-B 16-C 17-A 17-B 18-A 18-B 18-C 19-A 19-B 20-A 20-B 21-B 21-D 21-E 22-C Issuance Date 8/7/2014 4/23/2015 7/30/2015 10/27/2015 5/26/2016 7/21/2016 10/12/2016 2/8/2017 11/8/2017 3/21/2018 6/20/2018 9/19/2018 3/13/2019 6/12/2019 2/12/2020 8/12/2
Slide 21: Sallie Mae Bank ABS Structures
Sallie Mae Bank ABS Structures SMB 20 22-C SMB 20 21-E SMB 20 21-D SIZE $575.0 MM $534.0 MM $527.0 MM PRICING DATE August 2, 20 22 November 2, 20 21 August 10 , 20 21 Smart Opt ion Smart Opt ion Smart Option COLLATERAL Privat e Educat ion Loans Privat e Educat ion Loans Private Education Loans SERVI
Slide 22: Appendix
Appendix Confidential and proprietary information. © 2021 Sallie Mae Bank. All rights reserved.
Slide 23: Commitments vs Disbursements
Commitments vs Disbursements 2021 Actuals Commitments vs Disbursements 52% 38% 38% 23% 15% 14% 10% 10% Q1 2021 Q2 2021 Q3 2021 Q4 2021 Commitments Disbursements Provision for New Loans Additional Provision Impacts Unfunded Commitments • Directly impacted by the timing of • New Loans, DCF accretion,
Slide 24: CECL Update
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 $116 million and increased th
Slide 25: Quarterly Financial Highlights
Quarterly Financial Highlights14, 15 Q2 Q1 Q2 Q2 Q1 Q2 2022 2022 2021 2022 2022 2021 Income Statement ($ Millions) Key Performance Metrics Total interest income $463 $465 $435 Net Interest Margin 5.29% 5.29% 4.70% Total interest expense 100 90 96 Yield—Total Interest‐earning assets 6.75% 6.56% 6.03%
Slide 26: Sallie Mae vs Federal Student Loans
Sallie Mae vs Federal Student Loans Sallie Mae Federal St udent Loan Program 21 Federal Direct Loan Loan Program Smart Opt ion Student Loan 20 Parent Plus (Subsidized & Unsubsidized) Yr 1 - $5,50 0 ($3,50 0 > subsidized) $1,0 0 0 - Cost of Attendance Yr 2 - $6,50 0 ($4,50 0 > subsidized) Undergradua
Slide 27: Non-GAAP Core Earnings to GAAP Reconciliation
Non‐GAAP “Core Earnings” to GAAP Reconciliation Quarters Ended ($ in thousands, except per share amounts) Jun. 30, 2022 Mar. 31, 2022 Jun. 30, 2021 Non‐GAAP “Core Earnings” adjustments to GAAP: GAAP net income $342,073 $128,812 $140,201 Preferred stock dividends $1,757 $1,275 $1,192 GAAP net income
Slide 28: Footnotes
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 CBA