Slide 1: Investor Presentation 3rd Quarter 2023
Investor Presentation 3rd Quarter 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 October 25, 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 acr
Slide 4: Balance Sheet & Capital Allocation
Balance Sheet & Capital Allocation 3rd Quarter 2023 • Paid common stock dividend of $0.11 per share in Q3 2023. Highlights • Sallie Mae Bank remains well capitalized with 12.9% Total risk-based capital ratio and CET1 capital ratio of 11.7%. Revenue • GAAP Net Income attributable to common stock of $
Slide 5: Private Education Loan Originations
Private Education Loan Originations13 • Third quarter 2023 originations at approximately $2.5 billion, 4% higher than the year-ago period. • Year-to-Date 2023 Fo re c a s t originations 7.5% higher than year-to-date 2022. Ac tu a l • Through the first nine months of the year, both our application an
Slide 6: Private Education Loans Credit Performance, Funding & Liquidity
Other Key Private Education Loans Performance • On October 13, 2023, the Company sold approximately $1 billion of its Private Education Loans to Metrics an unaffiliated third party. The gain on sale of loans will be recognized in the fourth-quarter 2023 consolidated statements of income. Credit Perf
Slide 7: High Quality Private Education Loan Portfolio
Originations Vintage Smart Option Payment Type Pre 2014 2014 2023 3% 3% 2015 17% High Quality 4% 2016 Interest 4% Only 18% Private Education 2017 5% 2018 Loans Deferred Loans Loan Portfolio 6% $19.4B 48% 2022 $21.7B 2019 25% 8% Fixed 2020 34% 9% 2021 16% Customer FICO at Portfolio Original Approval6
Slide 8: Conservative Funding Optimizes Net Interest Margin
Conservative Funding Optimizes Net Interest Margin Long-Term Funding 17% • Outstanding borrowings consist of unsecured debt and 20% secured borrowings issued through our term asset- backed securitization program, totaling $1 billion and $4.5 billion, respectively, as of September 30, 2023. Total Fun
Slide 9: Simple But Powerful Investment Thesis
Simple But Powerful Investment Thesis • Consistent earnings expansion is driven by top line growth and efficiency At t ra c t ive Ea rn in g s Pro file • Sallie Mae is the leader in the private education loan market • Well-proven and disciplined underwriting model leveraging data and Ma n a g e a b
Slide 10: 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 Maintain a profitability value of our the external rigorous and and growth of brand and narrative about predictable our core attractive private student capital business customer
Slide 11: 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 focus on fixed cost discipline Drive towards reducing both the unit Increase market share by fully cost of servicing and the unit cost of meeting student funding need
Slide 12: Funding the Cost of a Higher Education
Funding the Cost of a Higher Education Families’ out-of-pocket contributions covered Private half of college costs Federal Loans Education Loans • Families’ out-of-pocket contributions covered 50% of cost Other $83B $15B • Scholarships and grants covered 29% $12B • Borrowed funds covered 19% • Relat
Slide 13: On average, families spent $28,026 on college in AY 2022-23
Reported spending, by academic year On average, families $30,017 $28,026 spent $28,026 on $24,164 $26,458 $26,226 $26,373 $25,313 college in AY 2022-23 $23,688 $23,757 $20,882 • Families report a college spending increase for the first time in two years (up 11% vs. last year) • The perception of the
Slide 14: Support for Federal Student Loan Borrowers
Support for Federal Student Loan Borrowers 23 An “On Ramp” to Repayment 21 For all federal borrowers looking to resume payments of federal loans, a year-long “on-ramp” has been instituted by the Department of Education “so that financially vulnerable borrowers who miss monthly payments during this p
Slide 15: Enable Successful Outcomes
Sallie Mae’s Core Product Contains Customer Friendly Provisions That Enable Successful Outcomes Sallie Mae Smart Option Student Loan Sallie Mae Student Borrowers Benefits from school through repayment In-School Repayment 92% of Sallie Mae student loan borrowers • Competitive variable & fixed rates •
Slide 16: Optimize the Value of the Brand and Attractive Client Base
Optimize the Value of the Brand and Attractive Client Base We know our customers’ finances, payment patterns and indebtedness We have the relationships and knowledge to assist our customers with their next step: post-graduation plans, jobs, future financial needs We are there for our customers durin
Slide 17: Maintain Rigorous Capital Allocation and Return Program
Maintain Rigorous Capital Allocation and Return Program Invest in High ROE Growth Current Hybrid Hold / Sell Loan • Continue to focus on high-quality Model3 Private Education Loan originations, • Selling assets to optimize growth in required including deeper penetration of capital graduate school ma
Slide 18: Diverse Student Loan Portfolio Driving Increased Shareholder Value
Diverse Student Loan Portfolio Driving Increased Shareholder Value Un d e rg ra d u a t e Gra d u a t e RATE TYPE Variable & Fixed Variable & Fixed He a lt h Variable: SOFR + Variable: SOFR + Me d ic a l De n t a l 1.250% - SOFR + 1.750% - SOFR + Pro fe s s io n s INTEREST RATE 12.375% 11.625% RANGE
Slide 19: Our Approach to ESG
Our Approach to ESG Our ESG approach is grounded in our mission and where we can make the most impact: powering confidence in students and families on their unique higher education journey. 19 1
Slide 20: ABS Supplement
ABS Supplement Confidential and proprietary information. © 2021 Sallie Mae Bank. All rights reserved.
Slide 21: 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 22: Sallie Mae Bank ABS Summary
Sallie Mae Bank ABS Summary14 16 6 6 6 6 22
Slide 23: Sallie Mae Bank ABS Structures
Sallie Mae Bank ABS Structures 17 18 6 23
Slide 24: Appendix
Appendix Confidential and proprietary information. © 2021 Sallie Mae Bank. All rights reserved.
Slide 25: Quarterly Financial Highlights
Quarterly Financial Highlights Q3 Q2 Q3 Q3 Q2 Q3 2023 2023 2022 2023 2023 2022 Income Statement ($ Millions) Key Performance Metrics Total interest income $652 $634 $520 Net Interest Margin 5.43% 5.52% 5.27% Total interest expense 268 247 150 Yield—Total Interest-earning assets 9.21% 9.05% 7.42% Net
Slide 26: Sallie Mae vs Federal Student Loans
Sallie Mae vs Federal Student Loans As of 11/6/23 26
Slide 27: Non-GAAP "Core Earnings" to GAAP Reconciliation
Non-GAAP “Core Earnings” to GAAP Reconciliation Quarters Ended September 30, September 30, ($ Thousands except per share amounts) June 30, 2023 2023 2022 Non-GAAP “Core Earnings” adjustments to GAAP: GAAP net income $29,365 $265,065 $75,172 Preferred stock dividends $4,642 $4,274 $2,531 GAAP net inc
Slide 28: Footnotes
Footnotes 1. Source: Enterval CBA Report for Q2 2023 as of June 2023. Based on Full Market. 2. Based on internal Company statistics. 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.