Slm Corporation · NASDAQ:SLM
Slm — Investor Presentation (July 2015)
42 slides from Slm's investor presentation, July 2015
Slide 1: Sallie Mae Investor Presentation
SALLIE MAE Investor Presentation July 2015 1
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 15, 2015 (unless otherwise noted) and should be read in connection with SLM Corporation’s Annual Report on Form 10-K for the year ended December 31, 2014 (fi
Slide 3: Sallie Mae Bank
Sallie Mae Bank 3
Slide 4: 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 ► Industry leading 53% market share in private education lending ► Over 2,400 actively managed university relationships across the U.S. ► Complementary consumer pro
Slide 5: 2015 Sallie Mae Highlights
2015 Sallie Mae Highlights ► Generated “Core Earnings” of $195 million in 2014, $46 million in Q1 2015 ► Originated $4.1 billion of high quality Private Education Loans in 2014 (+7% vs. 2013), and $1.7 billion in Q1 2015 (+9% vs. Q1 2014) ► Grew Private Education Loan portfolio by 34% from Q1 2014 t
Slide 6: Sallie Mae's Private Student Loan Originations Growth
Sallie Mae’s Private Student Loan Originations Growth Sallie Mae Smart Option Student Loan Originations $5,000 $4,500 $4,076 $4,000 14% $3,795 7% $3,342 Originations ($MM) $3,500 22% $3,000 $2,737 $2,500 $2,000 $1,663 9% $1,500 $1,000 $500 $- 2011 2012 2013 2014 2015 Private Education Loan Originati
Slide 7: Sallie Mae's Smart Option Loan Product Overview
Sallie Mae’s Smart Option Loan Product Overview The Smart Option loan product was introduced by Smart Option Loan Program Sallie Mae in 2009 Origination Channel School Typical Borrower Student The Smart Option loan program consists of: Typical Co-signer Parent $10,000 avg orig bal, 5 to 15 yr te
Slide 8: Smart Option Loan Projected Gross Default Timing
Smart Option Loan Projected Gross Default Timing ► Defaults on private education loans are generally front-loaded ► Approximately 60% of projected gross charge-offs are expected to occur within three years after loans enter full principal and interest repayment Sallie Mae Bank Smart Option Student L
Slide 9: Conservative Funding Approach
Conservative Funding Approach ► Low cost deposit base with no branch overhead 2014 Target — 90% of retail deposits are savings accounts — Brokered deposits used as alternative funding source Retail deposits ► Term funding / securitizations will augment deposit Brokered deposits funding for future gr
Slide 10: SMB vs. Legacy SLM Private Education Loan ABS Summary
SMB vs. Legacy SLM Private Education Loan ABS Summary Legacy SLM Navient SMB SMB 11-A 11-B 11-C 12-A 12-B 12-C 12-D 12-E 13-A 13-B 13-C 14-A 14-A 15-A 14-A 15-A Total Bond Amount ($mil) 562 825 721 547 891 1,135 640 976 1,108 1,135 624 676 664 689 382 704 Initial AAA Enhancement (%) 21% 18% 24% 27%
Slide 11: SMB Trust Collateral Characteristics Comparison
SMB Trust Collateral Characteristics Comparison Cosigner Rate FICO Legacy SLM NAVSL SMB Legacy SLM NAVSL SMB 100% 93% 92% 750 747 747 Loans with Cosigner, % of Cutoff Bal 741 742 90% 82% 740 740 740 739 79% 80% 80% 80% 80% 81% 79% 80% 740 737 737 75% 77% 736 735 736 80% 72% 75% 71% 733 733 731 70% 7
Slide 12: Collections, Charge-off and Recovery Policy
Collections, Charge-off and Recovery Policy 12
Slide 13: Servicing Policy
Sallie Mae Bank Servicing Policy Policy Pre-Spin, Legacy SLM Serviced Post-Spin, Sallie Mae Bank Serviced(1) Delinquencies All loans serviced by an affiliate of legacy SLM; loan Sallie Mae Bank collects delinquent loans thru charge-off, placing owned by Sallie Mae Bank sold to legacy SLM after empha
Slide 14: Collections
Sallie Mae Bank Collections Each customer is approached individually, and the account manager is educated and empowered to identify optimal resolution ► Co-borrowers are contacted and collected with similar efforts as the primary borrower Sallie Mae Bank employs a front-loaded, stage based collectio
Slide 15: Post-Default Recoveries
Post-Default Recoveries Recovery Operations ► In the near term, Sallie Mae Bank plans to sell the majority of the charged-off loans to third parties following charge-off at 120+ days past due – Recoveries realized immediately – Practical and predictable economics – Manageable compliance and vendor o
Slide 16: Private Education Loan Market Background
Private Education Loan Market Background 16
Slide 17: Private Education Loan Characteristics
Private Education Loan Characteristics ► Unsecured consumer loans made to qualified borrowers and co-signers to fund the cost of undergraduate, graduate and other forms of post-secondary education ► Unlike FFELP Loans, private education loans are not guaranteed against losses by the Department of Ed
Slide 18: Smart Option Private Education Loans
Sallie Mae Bank Smart Option Private Education Loans FFELP vs. Sallie Mae Bank Smart Option Private Education Loan Comparison Sallie Mae Bank Smart Option FFELP Stafford Loans Private Education Loans(1) Borrower Student Student or Parent Co-signer None Typically a parent Lender Eligible banks and pr
Slide 19: Favorable Student Loan Market Trends
Favorable Student Loan Market Trends Enrollment at Four-Year Degree Granting Institutions(1) Annual Cost of Education(2) 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 2
Slide 20: Higher Education Value Proposition
Higher Education Value Proposition Relationship Between Higher Education, Widening Earnings Gap of Young Adults Payment to Income Ratio(3) Income and Employment(1) by Educational Attainment(2) 1,800 12% $ 17,500 1,600 Average weekly income $ 15,780 10% 1,400 Unemployment $ 14,245 1,200 8% 1,000 $ 9,
Slide 21: Average Indebtedness Remains Manageable
Average Indebtedness Remains Manageable Average outstanding student loan balance per borrower = $25,361. 40% owe less than $10,000 4% owe more than $100,000 4% 9% Less than $25,000 18% $25,000 to $50,000 $50,000 to $100,000 Over $100,000 69% Source: College Board, “Trends in Student Aid, 2014” (http
Slide 22: Private Education Loan Lifecycle for Deferred Loans
Private Education Loan Lifecycle for Deferred Loans IN SCHOOL AND GRACE P&I REPAYMENT Forbearance Status (3 month increments; up to 12 months) Loan made to Grace Status In School Status P&I Repayment On Time borrower/ After graduation PAID IN FULL (Additional Borrowing) Status Payment co-signer (gen
Slide 23: Historical Smart Option Loan Performance
Historical Smart Option Loan Performance 23
Slide 24: Important Information Regarding Historical Loan Performance Data
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 Corpo
Slide 25: Important Information Regarding Historical Loan Performance Data (cont.)
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 two separate sources of information: (1) Combined Smart Option Student Loan Portfolio Data for Legacy SLM, Navient and Sallie Mae Ba
Slide 26: Smart Option Serviced Portfolio: 31-60 Day Delinquencies
Smart Option Serviced Portfolio: 31-60 Day Delinquencies Smart Option Student Loans - Serviced Portfolio Smart Option Student Loans - Serviced Portfolio 31-60 Day Delinquencies as a % of Loans in P&I Repayment (1) 31-60 Day Delinquencies as a % of Loans in P&I Repayment (1) Data for Legacy SLM thru
Slide 27: Smart Option Serviced Portfolio: 61-90 Day Delinquencies
Smart Option Serviced Portfolio: 61-90 Day Delinquencies Smart Option Student Loans - Serviced Portfolio Smart Option Student Loans - Serviced Portfolio 61-90 Day Delinquencies as a % of Loans in P&I Repayment (1) 61-90 Day Delinquencies as a % of Loans in P&I Repayment (1) Data for Legacy SLM thru
Slide 28: Smart Option Serviced Portfolio: 91+ Day Delinquencies
Smart Option Serviced Portfolio: 91+ Day Delinquencies Smart Option Student Loans - Serviced Portfolio Smart Option Student Loans - Serviced Portfolio 91+ Day Delinquencies as a % of Loans in P&I Repayment (1) 91+ Day Delinquencies as a % of Loans in P&I Repayment (1) Data for Legacy SLM thru April
Slide 29: Smart Option Serviced Portfolio: Forbearance
Smart Option Serviced Portfolio: Forbearance Smart Option Student Loans - Serviced Portfolio Smart Option Student Loans - Serviced Portfolio Forbearance as a % of Loans in P&I Repayment and Forbearance (1), (2) Forbearance as a % of Loans in P&I Repayment and Forbearance (1), (2) Data for Legacy SLM
Slide 30: Smart Option Serviced Portfolio: Annualized Gross Defaults
Smart Option Serviced Portfolio: Annualized Gross Defaults Smart Option Student Loans - Serviced Portfolio Smart Option Student Loans - Serviced Portfolio Annualized Gross Defaults as a % of Loans in P&I Repayment(1) Annualized Gross Defaults as a % of Loans in P&I Repayment(1) Data for Legacy SLM t
Slide 31: Smart Option Vintage Data: Cumulative Gross Default by Loan Type
Smart Option Vintage Data: Cumulative Gross Default by Loan Type Smart Option Student Loans - Serviced Portfolio: All Products Smart Option Student Loans - Serviced Portfolio: Interest Only Cumulative Defaults by P&I Repayment Vintage Cumulative Defaults by P&I Repayment Vintage and Years in P&I Rep
Slide 32: Smart Option Vintage Data: Voluntary Prepayments
Smart Option Vintage Data: Voluntary Prepayments ► Following the first year after disbursement, voluntary prepayments have generally ranged from between 2-3% for the Smart Option Deferred loan product, to 5-6% for the Interest Only product Smart Option Student Loans - Serviced Portfolio Smart Option
Slide 33: Smart Option Vintage Data: Total Prepayments
Smart Option Vintage Data: Total Prepayments ► Following the first year after disbursement, total prepayments have generally ranged around 4% Smart Option Student Loans - Serviced Portfolio Smart Option Student Loans - Serviced Portfolio Total CPR by Origination Vintage (1) Total CPR by Origination
Slide 34: Smart Option: Cumulative Recoveries
Smart Option: Cumulative Recoveries ► Recoveries of charged-off Smart Option Student Loans® historically have occurred over a longer period than for many other types of unsecured consumer credit Smart Option Loan Cumulative Recovery Rate Smart Option Loan Cumulative Recovery Rate for Combined Charge
Slide 35: Cohort Default Triangles
Cohort Default Triangles 35
Slide 36: Smart Option Loan Program Cohort Default Triangles
Smart Option Loan Program Cohort Default Triangles The following cohort default triangles provide loan performance information for Legacy SLM, Navient and Sallie Mae Bank serviced Smart Option loans combined, thru the most recent period indicated (1) Terms and calculations used in the cohort def
Slide 37: Cohort Default Triangles – Smart Option Combined (IO, Fixed & Deferred)
Cohort Default Triangles – Smart Option Combined (IO, Fixed & Deferred) Smart Option Combined (P&I Repayment Status - Total) P&I Disbursed Principal Periodic Defaults by Years in P&I Repayment (1), (2), (3) Repayment Entering P&I Year Repayment ($m) 0 1 2 3 4 5 Total 2010 $439 1.0% 1.2% 1.1% 1.0% 0.
Slide 38: Cohort Default Triangles – Smart Option Interest Only
Cohort Default Triangles – Smart Option Interest Only Smart Option IO (P&I Repayment Status - Total) P&I Disbursed Principal Periodic Defaults by Years in P&I Repayment (1), (2), (3) Repayment Entering P&I Year Repayment ($m) 0 1 2 3 4 5 Total 2010 $437 1.1% 1.2% 1.1% 1.0% 0.8% 0.3% 5.5% 2011 $782 0
Slide 39: Cohort Default Triangles – Smart Option Fixed Payment
Cohort Default Triangles – Smart Option Fixed Payment Smart Option Fixed Payment (P&I Repayment Status - Total) P&I Disbursed Principal Repayment Entering Periodic Defaults by Years in P&I Repayment (1), (2), (3) Year P&I Repayment ($m) 0 1 2 3 4 Total 2011 $228 0.3% 1.2% 1.3% 0.9% 0.6% 4.3% 2012 $5
Slide 40: Cohort Default Triangles – Smart Option Deferred Payment
Cohort Default Triangles – Smart Option Deferred Payment Smart Option Deferred (P&I Repayment Status - Total) Disbursed Principal P&I Repayment Entering P&I Periodic Defaults by Years in P&I Repayment (1), (2),(3) Year Repayment ($m) 0 1 2 3 Total 2012 $228 0.0% 1.0% 1.0% 0.8% 2.8% 2013 $612 0.1% 1.
Slide 41: Private Education Loan Portfolio Performance
Sallie Mae Bank Private Education Loan Portfolio Performance Quarter ended June 30, 2015 versus prior quarter 41
Slide 42: Private Education Loan Portfolio Delinquencies
Sallie Mae Bank Private Education Loan Portfolio Delinquencies Quarter ended June 30, 2015 versus prior quarter Sallie Mae Private Education Loan Portfolio Quarter ended June 30, 2015 versus prior quarter Private Education Loan Delinquencies 6/30/2015 3/31/2015 (Dollars in thousands) Balance % Balan
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