Slm Corporation · NASDAQ:SLM
Slm — JP Morgan FinTech & Specialty Finance Forum 2015
21 slides from Slm's conference presentation, Dec 2, 2015
Slide 1: Sallie Mae
SALLIE MAE Ray Quinlan Chairman and CEO JP Morgan FinTech & Specialty Finance Forum DECEMBER 2, 2015
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, 2015 (unless otherwise noted) and should be read in connection with the Quarterly Report of SLM Corporation (the “Company”) on Form 10-Q for the quart
Slide 3: The Sallie Mae Brand
The Sallie Mae Brand ► #1 saving, planning and paying for education company with 40-years of leadership in the education lending market ► Top ranked brand: 6 out of 10 consumers of education finance recognize the Sallie Mae brand ► Industry leading market share in private education lending: 54% mark
Slide 4: Sallie Mae Summary Strategic Overview
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 ($B as of 9/3
Slide 5: Sallie Mae Highlights
Sallie Mae Highlights ► Originated $4.1 billion of high quality Private Education Loans in 2014 (+7% vs. 2013), $3.8 billion in 2015 YTD (+7% vs. 2014 YTD) ► Grew Private Education Loan portfolio 38% from Q3 2014 to Q3 2015 ► Grew market share in 2014 and 2015 (54%) ► Generated Earnings of $46 milli
Slide 6: Favorable Student Loan Market Trends
Favorable Student Loan Market Trends Enrollment at Four-Year Degree Granting Institutions(2) Annual Cost of Education(3) Public Private (millions) (thousands) $41 $42 $38 $39 13.5 13.5 13.7 $35 $36 13.3 $32 $34 12.9 $29 $30 12.1 $19 $16 $17 $18 $18 $13 $14 $14 $15 $12 2008 2009 2010 2011 2012 2013 2
Slide 7: Higher Education Value Proposition
Higher Education Value Proposition Relationship Between Higher Education, Incremental Earnings From a College Degree Has Increased For Generations(7) Payment to Income Ratio(8) Income and Employment(6) 1,800 12% $ 17,500 1,600 Average weekly income $ 15,780 10% 1,400 Unemployment $ 14,245 1,200 8% $
Slide 8: Smart Option Overview
Smart Option Overview ► Product Features – Offers three repayment options while in school, which include Interest Only, $25 Fixed Payment and Deferred Repayment – Variable and Fixed Interest Rate Options – All loans are certified by the school’s financial aid office to ensure all proceeds are for ed
Slide 9: Analytical Approach to Credit
Analytical Approach to Credit Student Initial Screen Manual Review ► $1,000 minimum loan ► ~8% of applications ► Minimum FICO of 640 ► Asset expertise and rigorous ► Pass risk scores, but require further underwriting driven by large ► No existing SLM 30+ day past dues review due to credit concerns v
Slide 10: High Quality Private Student Loan Originations Growth
High Quality Private Student Loan Originations Growth $5,000 $4,500 $4,300 $4,076 5% $4,000 $3,795 7% $3,756 7% $3,500 $3,342 14% YTD Originations ($MM) $3,000 $2,737 22% $2,500 $2,000 $1,500 $1,000 $500 $0 2011 2012 2013 2014 2015 Private Education Loan Originations Originations Statistics ($) 2011
Slide 11: High Quality Private Education Portfolio
High Quality Private Education Portfolio Customer FICO at Origination Smart Option Payment Type <700 Interest 21% 780+ Only 30% 21% Deferred 700 - 740 47% Fixed Pay 26% 740 - 780 32% 23% Weighted Average FICO: 747 Smart Option Loans: $10.4bn Portfolio by Originations Vintage Portfolio Interest Rate
Slide 12: Cumulative Default Rate
Cumulative Defaults by P&I Repayment Vintage(9),(10),(11) Smart Option Cumulative Gross Defaults by P&I Repayment Vintage and Years in P&I Repayment 10.0% as a % of Original Balance Cumulative Default Rate 9.0% 8.0% 7.0% 6.0% 5.8% 5.0% 4.9% 4.0% 3.5% 3.0% 2.6% 2.0% 1.5% 1.0% 0.0% 0 1 2 3 4 5 6 7 Yea
Slide 13: Conservative Funding Approach
Conservative Funding Approach ► Low cost deposit base with no branch overhead — 80% of retail deposits are savings accounts 3Q 2015 Target — Brokered deposits used as alternative funding source ► Term funding / securitizations will augment deposit funding 11% for future growth — Experienced capital
Slide 14: Financial Review
Financial Review (in millions) Q3 2015 Q3 2014 Variance PSL $ 10,867 $ 7,839 $ 3,027 PSL Reserve (100) (60) (40) FFELP 1,147 1,322 (175) ► Private Education Loan portfolio growth of 38% FFELP Reserve / Other (4) (6) 2 Total Loans 11,909 $ 9,095 2,814 Balance Sheet Cash 1,282 1,570 (289) Other Assets
Slide 15: Sallie Mae Bank
Sallie Mae Bank ► Market share leader in private student loan industry ► High quality assets and conservatively funded balance sheet ► Predictable balance sheet growth for the next several years ► Strong capital position and funding capabilities ► A financial services company with high growth trajec
Slide 16: Appendix
Appendix 16
Slide 17: “Core Earnings” to GAAP Reconciliation
“Core Earnings” to GAAP Reconciliation Quarters Ended Nine Months Ended (Dollars in thousands, except per share amounts) Sept 30, June 30, Sept 30, Sept 30, Sept 30, 2015 2015 2014 2015 2014 “Core Earnings” adjustments to GAAP: GAAP net income attributable to SLM Corporation….…….…..……….…….........……
Slide 18: Smart Option Delinquency and Default Performance
Smart Option Delinquency and Default Performance (As a % of Loans in P&I Repayment)(9),(10),(12) 10.0% 31-60 Day Delinquency 10.0% 61-90 Day Delinquency % of P&I Repayment Balance % 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% Legacy SLM: 31-60 Delinquency SLM Bank: 31-
Slide 19: Footnotes
Footnotes 1. Source: MeasureOne CBA Report as of June 2015 2. Source: U.S. Department of Education, National Center for Education Statistics, Projections of Education Statistics to 2022 3. Source: Trends in College Pricing.© 2014 The College Board,. www.collegeboard.org Note: Academic years, average
Slide 20: Important Information Regarding Historical Loan Performance Data
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 Corpo
Slide 21: Important Information Regarding Historical Loan Performance Data (cont.)
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 Ba
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