Slm Corporation · NASDAQ:SLM
Slm — Morgan Stanley US Financials, Payments & CRE Conference 2023
21 slides from Slm's conference presentation, Jun 12, 2023
Slide 1: Morgan Stanley - US Financials, Payments, & CRE Conference
Morgan Stanley - US Financials, Payments, & CRE Conference Jon Witter, CEO June 12, 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 April 26, 2023 (unless otherwise noted) and should be read in connection with the press release of SLM Corporation (the “Company”) announcing its financial result
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 1st Quarter 2023 • Paid common stock dividend of $0.11 per share in Q1 2023. Highlights • Sallie Mae Bank remains well capitalized with 13.3% Total risk-based capital ratio and CET1 capital ratio of 12.0%. • On May 3, 2023, the company sold approximately $2.0 billi
Slide 5: Private Education Loan Originations – Strong Start to 2023
Private Education Loan Originations13 – Strong Start to 2023 • First quarter 2023 originations at $2.4 $5,975 $6,000 $5,625 10 % billion, 12% higher than (5%) $5,321 $5,423 2% the year-ago period. $5,000 • Q1 2023 originations marked our highest level Forecast of originations in the $4,000 company’s
Slide 6: Credit Performance, Funding & Liquidity
Key Credit Credit Performance Metrics • Q1 2023 net charge-offs for Private Education Loans totaled $83 million. for Q1 2023 • Q1 2023 Private Education Loans delinquent 30+ days were 3.40% of loans in repayment, an improvement from both Q4 2022 as well as the year-ago quarter. • For Q1 2023, we saw
Slide 7: Higher Education Value Proposition Remains Attractive
Higher Education Value Proposition Remains Attractive4 Expanding Addressable Market • Private Education Loans represent 2-3% of the overall spend in higher education annually. Private Federal Loans • Total spend on higher education grows ~2% annually, while Sallie Education Loans Other $79B Mae Priv
Slide 8: High Quality Private Education Loan Portfolio
Originations Vintage Smart Option Payment Type 2023 Pre 2014 2014 4% 3% 3% 2015 5% 2016 5% High Quality Interest Only 19% 2022 26% 2017 6% Private Education Loans Deferred Loans 47% Loan Portfolio 2018 $19.5B $21.9B 7% 2019 Fixed 2021 10% 34% 20% 2020 11% Customer FICO at Portfolio Original Approval
Slide 9: Conservative Funding Optimizes Net Interest Margin
Conservative Funding Optimizes Net Interest Margin Long-Term Funding • Outstanding borrowings consist of unsecured debt and 16% 20% secured borrowings issued through our term asset- backed securitization program, totaling $1 billion and $4.5 billion, respectively, as of March 31, 2023. Total Funding
Slide 10: Year-to-Date 2023 Highlights
Year-to- P&I Cohort Default Trends Date 2023 • Based on regularly published P&I Highlights cohort data updated through May 31, 2023, we believe the portfolio as of is tracking in line with expected Cumulative Defaults. • Annualized net charge-off rate 5/31/2023 through May 2023 is 2.38%. April and M
Slide 11: Simple But Powerful Investment Thesis
Simple But Powerful Investment Thesis • Consistent earnings expansion is driven by top line growth and efficiency Attractive Earnings Profile • Sallie Mae is the leader in the private education loan market • Well-proven and disciplined underwriting model leveraging data and experience through Manage
Slide 12: 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 the Maintain a profitability and value of our external narrative rigorous and growth of our brand and about private predictable capital core business attractive student lending a
Slide 13: 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 Drive towards reducing both the unit Increase market share by fully cost of servicing and the unit cost of meeting student funding needs acquisi
Slide 14: 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 15: 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 • From January 1, 2020, through March 31, 2023, Private Education Loan originations, we repurchased 44% of common shares including deeper penetration of outstanding
Slide 16: 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. 1
Slide 17: Quarterly Financial Highlights
Quarterly Financial Highlights Q1 Q4 Q1 Q1 Q4 Q1 2023 2022 2022 2023 2022 2022 Income Statement ($ Millions) Key Performance Metrics Total interest income $638 $584 $465 Net Interest Margin 5.70% 5.37% 5.29% Total interest expense 233 202 90 Yield—Total Interest-earning assets 8.97% 8.21% 6.56% Net
Slide 18: Sallie Mae vs Federal Student Loans
Sallie Mae vs Federal Student Loans 22 As of 5/2/23 18
Slide 19: Non-GAAP Core Earnings to GAAP Reconciliation
Non-GAAP “Core Earnings” to GAAP Reconciliation Quarters Ended ($ Thousands except per share amounts) Mar. 31, 2023 Dec. 31, 2022 Mar. 31, 2022 Non-GAAP “Core Earnings” adjustments to GAAP: GAAP net income (loss) $118,518 ($77,043) $128,812 Preferred stock dividends $4,063 $3,466 $1,275 GAAP net inc
Slide 20: Smart Option Loan Program Cohort Default Triangles
Smart Option Loan Program Cohort Default Triangles Terms and calculations used in the cohort default triangles are defined below: First P&I Repayment Period – The first month during which a borrower is required to make a full principal and interest payment on a loan. This date is static. Once a lo
Slide 21: Footnotes
Footnotes 1. Source: Enterval CBA Report as of December 2022. 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. Source:
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