Slm Corporation · NASDAQ:SLM
Slm — Credit Suisse 24th Annual Financial Services Forum (February 2023)
22 slides from Slm's conference presentation, Feb 14, 2023
Slide 1: Credit Suisse 24th Annual Financial Services Forum
Credit Suisse 24th Annual Financial Services Forum Steve McGarry, EVP and CFO February 14, 2023
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 February 1, 2023 (unless otherwise noted) and should be read in connection with the press release of SLM Corporation (the “Company”) announcing its financial resu
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 2,100+ actively managed university relationships acro
Slide 4: Q4 and Full Year 2022 Highlights
Revenue Q4 and Full • GAAP Net Loss attributable to common stock of $81 million in Q4 2022 driven by reserve build and Year 2022 mark-down of non-marketable equity security, compared to Net Income attributable to common Highlights stock of $305 million in Q4 2021. • Full-year 2022 GAAP Net Income at
Slide 5: Strong Private Education Loan Originations
Strong Private Education Loan Originations13 Origination Season Full-year 2022 originations $5,975 at approximately $6 billion, $6,000 $5,625 10% 6% (5%) $5,423 10% higher than the year- $5,315 $5,321 2% Actual ago period and the highest $5,000 over the previous 5-year period. $4,000 $ in millions U
Slide 6: Capital Return
Capital Allocation Capital Return & Return • Paid common stock dividend of $0.11 per share in Q4 2022. • Sallie Mae Bank remains well capitalized with 14.2% Total risk-based capital ratio and CET1 ratio of 12.9%. • In the fourth quarter of 2022, we continued our capital return strategy by repurchasi
Slide 7: Higher Education Value Proposition Remains Attractive
Higher Education Value Proposition Remains Attractive4 Expanding Addressable Market • Private Education Loans represent 2-3% of the overall spend in higher education annually. Private Federal Loans • Total spend on higher education grows ~2% annually, while Sallie Mae Education Loans Other $79B Priv
Slide 8: High Quality Private Education Loan Portfolio
Customer FICO at Original Approval6 Smart Option Payment Type <700 780+ Interest Only High Quality 23% 28% 19% Private Education Weighted Deferred Loans Average 48% $18.0B Loan Portfolio FICO: 743 740 - 780 Fixed Pay 700-739 33% 26% 23% Portfolio by Originations Vintage Portfolio Interest Rate Type
Slide 9: Conservative Funding Optimizes Net Interest Margin
Conservative Funding Optimizes Net Interest Margin Secured Debt Retail 20% MMDA & CD 23% Brokered Deposits $21.4B Variable Secured Debt $4.2B Retail 15% H.S.A. & 529 17% Brokered Fixed 25% As of 12/31/22 9
Slide 10: We Underwrite to a Strong ROE
We Underwrite to a Strong ROE Origination Cohort * Default Assumptions and Expected ROE 20 18 20 19 20 20 20 21 20 22 At Origination Projected Cumulative Defaults 9 .4% 9 .7% 10 .2% 10 .5% 10 .5% At Origination Expected ROE Low 20 % High Teens Low 20 % Mid 20 % Low 20 % Life to Date Default Rate** 3
Slide 11: P&I Cohorts Exhibit Similar Trends
P&I Cohorts Exhibit Similar Trends Cumulative Gross Defaults • Based on regularly published P&I Cohort data, we believe the portfolio is tracking to expected Cumulative Defaults *Data as of 12/31/2022. Please see page 21 for a description of the data and calculations underlying this chart. Confident
Slide 12: 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 • Well-proven and disciplined underwriting model leveraging data and experience through Manage
Slide 13: 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 14: 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 Drive towards reducing both the unit cost of student funding needs servicing and the unit cost of acquisi
Slide 15: 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 program5 We have the relationships and knowledge to assist our customers with their next step: Graduates who benefit f
Slide 16: 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 • Since January 1, 2020, we have repurchased 44% of Education Loan originations, including common shares outstanding at that time. deeper penetration of grad
Slide 17: Sallie Mae is an ESG Company
Sallie Mae is an ESG Company Providing Financial Education Serving our Customers & Assistance • Helped more than 1.8 million students and families finance higher education • Free Scholarship Search tool listing 6 million scholarships worth more than since 2014 $30 billion • Policies help to ensure t
Slide 18: Quarterly Financial Highlights
Quarterly Financial Highlights Q4 Q3 Q4 Q4 Q3 Q4 2022 2022 2021 2022 2022 2021 Income Statement ($ Millions) Key Performance Metrics Total interest income $584 $520 $458 Net Interest Margin 5.37% 5.27% 5.13% Total interest expense 202 150 91 Yield—Total Interest-earning assets 8.21% 7.42% 6.40% Net
Slide 19: Annual Financial Highlights
Annual Financial Highlights 2022 2021 2022 2021 Income Statement ($ Millions) Key Performance Metrics Total interest income $2,032 $1,777 Net Interest Margin 5.31% 4.81% Total interest expense 543 382 Yield—Total Interest-earning assets 7.24% 6.13% Net Interest Income 1,489 1,395 Less: provisions fo
Slide 20: Non-GAAP “Core Earnings” to GAAP Reconciliation
Non-GAAP “Core Earnings” to GAAP Reconciliation (7) (12) 20
Slide 21: Smart Option Loan Program Cohort Default Triangles
Smart Option Loan Program Cohort Default Triangles Terms and calculations used in the cohort default triangles are defined below: First P&I Repayment Period – The first month during which a borrower is required to make a full principal and interest payment on a loan. This date is static. Once a lo
Slide 22: Footnotes
Footnotes 1. Source: Enterval CBA Report as of September 2022. 2. N/A 3. The information on this page constitutes forward-looking statements. See page 2 of this Presentation for a cautionary note regarding forward-looking statements. 4. Source: Total post-secondary education spending is estimated by
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