Slm Corporation · NASDAQ:SLM
Slm — Investor Presentation (November 2020)
28 slides from Slm's investor presentation, Nov 10, 2020
Slide 1: Investor Presentation Fourth Quarter 2020
Exhibit 99.1 Investor Presentation Fourth Quarter 2020 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 October 21, 2020 (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 2,400+ actively managed university relationships Indu
Slide 4: Proven Resiliency During the COVID-19 Pandemic
Proven Resiliency During the COVID-19 Pandemic Credit Return to School3 And Originations4,23 • Forbearance as a % of loans in repayment and • For the 2020/2021 Academic Year, 27% on campus, forbearance has been reduced from the mid-teen 15% remote, and 58% hybrid programs to be utilized. peak in Q2
Slide 5: Higher Education Value Proposition Remains Attractive
Higher Education Value Proposition Remains Attractive5 Expanding Addressable Market Other • Private Education Loans represent 2-3% $17 Federal of the overall spend in higher education Loans annually. $93 Grants • Total spend on higher education grows 2- $136 Private 3% annually, primarily due to inc
Slide 6: High Quality Private Education Loan Portfolio
High Quality Private Education Loan Portfolio Customer FICO at Original Approval6 Smart Option Payment Type <700 Interest 23% 780+ 28% Only 21% Deferred 48% 700 - 740 27% 740 - 780 22% Fixed Pay 31% Weighted Average FICO: 743 Smart Option Loans: $20.5 billion Portfolio by Originations Vintage23 Port
Slide 7: Conservative Funding Optimizes Net Interest Margin
Conservative Funding Optimizes Net Interest Margin Secured Debt 18% Retail MMDA & CD 24% Brokered $12.1b Retail $11.0b As of 9/30/20 Secured Debt $4.8b Retail H.S.A. Brokered & 529 Variable 15% 34% Brokered Fixed 9% As of 9/30/20 7
Slide 8: Simple But Powerful Investment Thesis
Simple But Powerful Investment Thesis Attractive • Consistent earnings expansion is driven by top line growth and efficiency 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 9: Clear Strategy to Ensure Appropriate Valuation
Clear Strategy to Ensure Appropriate Valuation Maximize the Optimize the value Maintain a rigorous Change the profitability and of our brand and and predictable narrative around growth of our core our attractive client capital allocation private student business base and return program lending to ad
Slide 10: 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 We focus on top-line Enhanced risk-adjust
Slide 11: 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, Borrowers and Customers complete payment patterns and indebtedness cosigners their program We have the relationships and knowledge to assist our customers with their next Graduates who benefit from th
Slide 12: 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 • Completed 2019 share repurchase Education Loan originations, including program in Q1 2020 deeper penetration of graduate school • $3.1B in Private Educatio
Slide 13: 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 14: Executing This Strategy Supports Our Investment Thesis
Executing This Strategy Supports Our Investment Thesis Enhances our Attractive Maximize the Optimize the value Earnings Profile profitability and of our brand and growth of our core our attractive client business base Reduces Real and Perceived Risk We have a proven Maintain a rigorous Change the bu
Slide 15: Diverse Student Loan Portfolio Driving Increased Shareholder Value
Diverse Student Loan Portfolio Driving Increased Shareholder Value Undergraduate Graduate Parent RATE TYPE Variable & Fixed Variable & Fixed Variable & Fixed Medical Health Dental Variable: LIBOR + Variable: LIBOR + Variable: LIBOR + 1.250% - LIBOR + 2.250% - LIBOR + 3.500% - LIBOR + INTEREST RATE P
Slide 16: Sallie Mae is an ESG Company
Sallie Mae is an ESG Company Providing Financial Education Serving our Customers & Assistance • Financing assistance to 1.2 million families since 2014 to provide access to • Free Scholarship Search tool with 5 million scholarships worth more than postsecondary education and opportunities for succes
Slide 17: ABS Supplement
ABS Supplement
Slide 18: 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 indexed to LIBOR Smar
Slide 19: Sallie Mae Bank ABS Summary
Sallie Mae Bank ABS Summary 9 10 10 10 10 19
Slide 20: Sallie Mae Bank ABS Structures
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 Smart Option Smart Option Smart Option COLLATERAL Private Education Loans Private Education Loans Private Education Loans SERVICER Sallie Mae Bank
Slide 21: Appendix
Appendix
Slide 22: Accelerated Share Repurchase ("ASR") Agreement
Accelerated Share Repurchase (“ASR”) Agreement Sallie Mae entered into a $525 million Accelerated Share Repurchase Agreement in March 2020 • Under this agreement, Sallie Mae receives shares at the beginning and the end of the agreement, optimizing the accretive impact of the agreement. • The counter
Slide 23: Commitments vs Disbursements
Commitments vs Disbursements 2019 Actuals Commitments vs Disbursements 52% 38% 40% 22% 13% 14% 13% 9% Q1 2019 Q2 2019 Q3 2019 Q4 2019 Commitments Disbursements Provision for New Loans Additional Provision Impacts Unfunded Commitments • Directly impacted by the timing of • New Loans, DCF accretion, l
Slide 24: CECL Update
CECL Update13 Adopted on January 1, 2020. • The company’s first-quarter 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 $116 million an
Slide 25: Quarterly Financial Highlights
Quarterly Financial Highlights14 3Q 2Q 3Q 3Q 2Q 3Q 2020 2020 2019 2020 2020 2019 Income Statement ($ Millions) Key Performance Metrics Total interest income $482 $485 $590 Net Interest Margin 4.79% 4.55% 5.55% Total interest expense 118 136 185 Net Interest Income 365 349 405 Yield—Total Interest-ea
Slide 26: Sallie Mae vs Federal Student Loans
Sallie Mae vs Federal Student Loans 21 20 26
Slide 27: "Core Earnings" to GAAP Reconciliation
“Core Earnings” to GAAP Reconciliation Quarters Ended Sept. 30, 2020 June 30, 2020 Sept. 30, 2019 Dollars in thousands, except per share amounts “Core Earnings” adjustments to GAAP: GAAP net income (loss) $171,028 ($85,211) $128,458 Preferred stock dividends $2,058 $2,478 $4,153 GAAP net income (los
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