Slm Corporation · NASDAQ:SLM
Slm — ABS Vegas Conference 2017
30 slides from Slm's conference presentation, Feb 26, 2017
Slide 1: SLM Corporation Investor Presentation
SLM CORPORATION INVESTOR PRESENTATION ABS Vegas Conference 2017 February 26, 2017- March 1, 2017
Slide 2: Forward-Looking Statements and Disclaimer
2 Forward-Looking Statements and Disclaimer Cautionary Note Regarding Forward-Looking Statements The following information is current as of January 18, 2017 (unless otherwise noted) and should be read in connection with the press release of SLM Corporation (the “Company”) dated January 18, 2017, ann
Slide 3: Corporate Overview
3 Corporate Overview
Slide 4: Sallie Mae Summary
4 Sallie Mae Summary - Leading private education Private Education Loan - loan franchise Originator and Servicer - Conservative credit and Deposits - funding Upromise Rewards - - Expanding consumer Credit Card - finance product suite Strategic Key Overview Businesses - National sales and Competitive
Slide 5: Sallie Mae Overview
5 Sallie Mae Overview Sallie Mae Key Statistics for Q4 2016 − $0.15 diluted earnings per share for Q4 and $0.53 for Full Year 2016 − Portfolio of $14.1 billion of high quality Private Education Loans − 87% of Private Education Loans disbursed in Q4 are cosigned − Average Q4 Private Education Loan or
Slide 6: Favorable Student Loan Market Trends
6 Favorable Student Loan Market Trends Academic Year Enrollment at Four-Year Degree Granting Institutions(1) Annual Cost of Education(2) Public Private (millions) (thousands) $44 $45 $41 $42 $38 $39 13.4 13.5 $35 $36 13.3 13.5 13.4 12.9 $18 $18 $19 $20 $20 $15 $16 $17 09/10 10/11 11/12 12/13 13/14 1
Slide 7: Higher Education Value Proposition
7 Higher Education Value Proposition Relationship Between Higher Education, Incremental Earnings From a College Degree Has Increased Income and Employment(1) For Generations(2) 2,000 9% 1,800 Average weekly income 8% $ 17,500 1,600 Unemployment $ 15,780 7% $ 14,245 1,400 6% 1,200 5% 1,000 $ 9,690 4%
Slide 8: Smart Option Student Loan Program
8 Smart Option Student Loan Program
Slide 9: Sallie Mae's Smart Option Loan Product Overview
9 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
Slide 10: High Quality Private Education Loan Growth
10 High Quality Private Education Loan Growth $5,000 $4,666 $4,500 $4,330 8% $4,076 6% $4,000 $3,795 7% Disbursements ($MM) $3,500 $3,342 14% $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 2012 2013 2014 2015 2016 Private Education Loan Disbursements Disbursement Statistics ($) 2012 2013 2014 2015 2016
Slide 11: High Quality Private Education Portfolio
11 High Quality Private Education Portfolio Customer FICO at Original Approval Smart Option Payment Type <700 Interest Only 21% 780+ 22% 30% Deferred 700 - 740 47% 26% 740 - 780 Fixed Pay 23% 31% Weighted Average FICO: 746 Smart Option Loans: $13.6 billion Portfolio by Originations Vintage Portfolio
Slide 12: Sallie Mae Bank Servicing Policies
12 Sallie Mae Bank Servicing Policies Policy Pre-Spin, Legacy SLM Serviced Post-Spin, Sallie Mae Bank Serviced 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 emp
Slide 13: Sallie Mae Bank Collections
13 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 collec
Slide 14: Smart Option Student Loan Historical Performance Data as of December 31, 2016
14 Smart Option Student Loan Historical Performance Data as of December 31, 2016
Slide 15: Delinquency and Default Performance
15 Delinquency and Default Performance (As a % of Loans in P&I Repayment)(1),(2),(3) 31-60 Day Delinquency 61-90 Day Delinquency 10.0% 10.0% Pre-Split Post-Split % of P&I Repayment Balance Pre-Split Post-Split % of P&I Repayment Balance 8.0% 8.0% 6.0% 6.0% 4.0% 4.0% 2.0% 2.0% 0.0% 0.0% Sep-12 Sep-13
Slide 16: Cumulative Defaults by P&I Repayment Vintage
16 Cumulative Defaults by P&I Repayment Vintage(1),(2),(3) Smart Option Cumulative Gross Defaults by P&I Repayment Vintage and Years Since First P&I Repayment Period 10% 9% 8% Disbursed Principal Entering P & I Repayment 7% Cumulative Defaults as a % of 6.5% 6% 5.7% 5% 4.5% 4% 3.7% 3.3% 3% 1.9% 2% 1
Slide 17: Funding and ABS Overview
17 Funding and ABS Overview
Slide 18: Conservative Funding Approach
18 Conservative Funding Approach 2016 Target Stable deposit base with no branch overhead — Diversified mix of retail and other core savings, MMDA and CDs 14% 20% — Brokered deposits used as alternative funding source Term funding / securitizations will augment deposit funding for future growth — Exp
Slide 19: Sallie Mae Bank ABS Structures
19 Sallie Mae Bank ABS Structures SMB 2017-A SMB 2016-C SMB 2016-B Size $772.00MM $674.00MM $657.00MM(3) Pricing Date February 1, 2017 October 5, 2016 July 13, 2016 Collateral Smart Option Smart Option Smart Option Private Education Loans Private Education Loans Private Education Loans Servicer Sall
Slide 20: Private Education Loan ABS Relative Value
20 Private Education Loan ABS Relative Value Indicative 3-year Floating Rate AAA ABS Spread to LIBOR Auto (Prime) Credit Cards Private Education Loans 140 120 100 Spreads (bps) 80 60 40 20 0 Source: J.P. Morgan
Slide 21: SMB 2017-A Structure
21 SMB 2017-A Structure(1) • Sallie Mae Bank is the loan servicer and transaction sponsor • SMB 2017-A utilizes a sequential structure Pct of Total Expected Wtd Avg Life Principal Expected Bond Class Bond Ratings Index to Call Window to Maturity to Legal Maturity Balance Balance (M/S) (6% CPR)(2) Ca
Slide 22: SMB 2017-A Cashflow
22 SMB 2017-A Cashflow WAL to Call (yrs)(1) Projected Credit Deal Credit Enhancement(2,4) Reserve Principal Window to Call(1) (6% CPR) Enhancement(3) Non- Class A Class B Target (3)(5) Floor(5) A-1 A-2A A-2B B A-1 A-2A A-2B B 12mo 24mo 36mo 60mo declining SMB 2017-A 17% 11% 30% 11% 0.25% 1.25 5.72 5
Slide 23: SMB vs. Legacy SLM Private Education Loan ABS Summary
23 SMB vs. Legacy SLM Private Education Loan ABS Summary Legacy SLM Navient Sallie Mae Bank 12-D 12-E 13-A 13-B 13-C 14-A 14-A 15-A 15-B 15-C 16-A 14-A 15-A 15-B 15-C 16-A 16-B 16-C 17-A Total Bond Amount ($mil) 640 976 1,108 1,135 624 676 664 689 700 359 488 382 704 714 701 551 657 675 772 Initial
Slide 24: Sallie Mae Investor Relations Website
24 Sallie Mae Investor Relations Website www.salliemae.com/investors • SMB Student Loan ABS trust data • Reg AB static pool information – Smart Option Student Loan historical performance data • Accrued interest factors • Distribution factors • Since issued CPR – monthly CPR data by trust since issua
Slide 25: Appendix
25 Appendix
Slide 26: Important Information Regarding Historical Loan Performance Data
26 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 Co
Slide 27: Important Information Regarding Historical Loan Performance Data (cont.)
27 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
Slide 28: Smart Option Loan Program Cohort Default Curves
28 Smart Option Loan Program Cohort Default Curves Terms and calculations used in the cohort default curves are defined below: First P&I Repayment Period – The month during which a borrower is first required to make a full principal and interest payment on a loan. P&I Repayment Vintage – The cal
Slide 29: Income Statement
29 Financial Review (in millions) Q4 2016 Q4 2015 Variance 2016 2015 Variance PSL $ 14,296 $ 10,624 $ 3,672 $ 14,296 $ 10,624 $ 3,672 PSL Reserve (182) (109) (74) (182) (109) (74) FFELP/ Other 1,026 1,119 (93) 1,026 1,119 (93) • Private Education Loan FFELP Reserve / Other (2) (4) 2 (2) (4) 2 portfo
Slide 30: "Core Earnings" to GAAP Reconciliation
30 “Core Earnings” to GAAP Reconciliation Quarters Ended Year Ended Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31, (Dollars in thousands, except per share amounts) 2016 2016 2015 2016 2015 “Core Earnings” adjustments to GAAP: GAAP net income……….…………………………………….........………………… $ 70,242 $ 56,965 $ 89,84