Slm Corporation · NASDAQ:SLM
Slm — Investor Presentation (May 2020)
27 slides from Slm's investor presentation, May 26, 2020
Slide 1: Investor Presentation Second Quarter 2020
Exhibit 99.1 Investor Presentation Second Quarter 2020 Confidential and proprietary information. © 2019 Sallie Mae Bank. All rights reserved.
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 April 22, 2020 (unless otherwise noted) and should be read in connection with the press release of SLM Corporation (the “Company”) announcing its financial result
Slide 3: Overview
Overview Track Record of Long-Term Success and Value Creation Commitment to Supporting Stakeholders During COVID-19 Robust Financial Profile with Ample Capital and Liquidity Conservative Underwriting has Contributed to Consistent Credit Performance Diverse Student Loan Portfolio Driving Increased Sh
Slide 4: Well-Positioned for Long-Term Success and Value Creation
Well-Positioned for Long-Term Success and Value Creation MARKET LEADING ATTRACTIVE EXCEPTIONAL STRONG BRAND PRODUCTS SERVICE FINANCIAL PROFILE • Leader of the education • Products designed to • Largest salesforce in the • Robust financial profile finance market provide customers industry with ample
Slide 5: Higher Education Value Proposition Remains Attractive
Higher Education Value Proposition Remains Attractive20 Expanding Addressable Market Other • Private Education Loans represent 2-3% $17 Federal of the overall spend in higher education Loans $93 annually Grants • Total spend on higher education grows 2- $136 Private Education 3% annually primarily d
Slide 6: Supporting Our Stakeholders During COVID-19
Supporting Our Stakeholders During COVID-19 SUPPORTING OUR SERVING OUR STRENGTHENING OUR EMPLOYEES CUSTOMERS BUSINESS • Successfully transitioned nearly • Providing disaster forbearance • Optimizing core business to 100% of workforce to work-from- with no impact to credit standing further grow profi
Slide 7: Delivering Strong Financial Results
Delivering Strong Financial Results GAAP DILUTED EPS NET INTEREST INCOME PRIVATE EDUCATION LOAN YIELD % % CAGR: 76 CAGR: 10 BPS Improvement : 2bps 9.50% $0.87 $402M $400M $333M 8.86% $0.35 8.84% $0.28 Q1 2018 Q1 2019 Q1 2020 Q1 2018 Q1 2019 Q1 2020 Q1 2018 Q1 2019 Q1 2020 Growth rate accelerated $23
Slide 8: Robust Financial Profile with Ample Capital and Liquidity
Robust Financial Profile with Ample Capital and Liquidity Q1 2020 Actions to Optimize Liquidity Position $20.2B Private Education Loans $ M 636 % Completed ABS transaction 13.7 Total Risk-Based Capital Ratio $ 2B % Upsized secured borrowing facility 12.4 Common Equity Tier 1 Risk-Based Capital Ratio
Slide 9: Successfully Executing Strategy
Successfully Executing Strategy PRIVATE EDUCATION LOANS ORIGINATIONS OUTSTANDING, NET $21.6 $2,301 $20.2 $2,131 $18.6 $1,972 Q1 2018 Q1 2019 Q1 2020 Q1 2018 Q1 2019 Q1 2020 9
Slide 10: Committed to Returning Significant Capital to Shareholders
Committed to Returning Significant Capital to Shareholders18 INVEST IN HIGH ROE GROWTH • Continue to focus on high-quality Private Education Loan originations, including deeper penetration of graduate school market • Offer credit cards to high-quality customer base INCREASED QUARTERLY COMMON STOCK D
Slide 11: High Quality, Predictable Credit
High Quality, Predictable Credit Program Designed a program in 2009 to Private Education Loans, Annualized sustain challenging environments % of Ending Loans in Repayment19 • During 2008 financial crisis, SLM had peak of 2.7% Net Charge-Off Rate on loans with 10.1 similar characteristics • Through-t
Slide 12: High Quality Private Education Loan Portfolio
High Quality Private Education Loan Portfolio Customer FICO at Original Approval5 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: $19.8 billion Portfolio by Originations Vintage4 Portf
Slide 13: Conservative Funding Optimizes Net Interest Margin
Conservative Funding Optimizes Net Interest Margin Secured Debt 16% Retail MMDA & CD 23% Brokered $13.7b Retail $10.7b Secured Debt $4.5b Retail H.S.A. & 529 Brokered 14% Variable 35% Brokered Fixed 11% Consistent underwriting over the last 11 years will strengthen future portfolio performance 13 As
Slide 14: 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 + Professions 1.250% - LIBOR + 2.25% - LIBOR + 3.50% - LIBOR + INTER
Slide 15: 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 • Free Scholarship Search tool with 5 million scholarships provide access to postsecondary education and worth more than $25 billion opportunitie
Slide 16: ABS Supplement
sallie ABS Supplement
Slide 17: Sallie Mae's Smart Option Loan Product Overview
Sallie Mae’s Smart Option Loan Product Overview The Smart Option loan product was introduced by Sallie Mae in 2009 • Smart Option payment option may not be The Smart Option loan program changed after selected at origination consists of: • Fixed-rate loans or variable-rate loans indexed to LIBOR • Co
Slide 18: Sallie Mae Bank ABS Summary
Sallie Mae Bank ABS Summary 14-A 15-A 15-B 15-C 16-A 16-B 16-C 17-A 17-B 18-A 18-B 18-C 19-A 19-B 20-A Issuance Date 8/7/2014 4/23/2015 7/30/2015 10/27/2015 5/26/2016 7/21/2016 10/12/2016 2/8/2017 11/8/2017 3/21/2018 6/20/2018 9/19/2018 3/13/2019 6/12/2019 2/12/2020 Total Bond Amount ($mil) $382 $70
Slide 19: Sallie Mae Bank ABS Structures
Sallie Mae Bank ABS Structures SMB 2020-A SMB 2019-B SMB 2019-A SIZE $636.0MM $657.0MM $453.0MM PRICING DATE February 4, 2020 June 4, 2019 March 5, 2019 Smart Option Smart Option Smart Option COLLATERAL Private Education Loans Private Education Loans Private Education Loans SERVICER Sallie Mae Bank
Slide 20: Appendix
sallie mae’ Appendix
Slide 21: 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 22: Commitments vs. Disbursements
Commitments vs. Disbursements 2019 Actuals Commitment 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,
Slide 23: CECL Update
CECL Update18 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 $116 million, a
Slide 24: Quarterly Financial Highlights
Quarterly Financial Highlights 1Q 4Q 1Q 1Q 4Q 1Q 2020 2019 2019 2020 2019 2019 Income Statement ($ Millions) Key Performance Metrics Total interest income $575 $600 $566 Net Interest Margin 5.08% 5.41% 6.28% Total interest expense 175 181 164 Net Interest Income 400 419 402 Yield—Total Interest-earn
Slide 25: Sallie Mae vs Federal Student Loans
Sallie Mae vs Federal Student Loans 25
Slide 26: "Core Earnings" to GAAP Reconciliation
“Core Earnings” to GAAP Reconciliation Quarters Ended Mar. 31, 2020 Dec. 31, 2019 Mar. 31, 2019 Dollars in thousands, except per share amounts “Core Earnings” adjustments to GAAP: GAAP net income $362,173 $141,352 $158,189 Preferred stock dividends $3,464 $3,885 $4,468 GAAP net income attributable t
Slide 27: Footnotes
Footnotes 1. Source: MeasureOne CBA Report as of December 2019 2. Based on internal Company statistics. 3. Source: Trends in Student Aid,© 2019 The College Board, www.collegeboard.org, U.S. Department of Education 2019 4. Originations represent loans that were funded or acquired during the period pr