Slm Corporation · NASDAQ:SLM
Slm — ABS East Conference 2016
27 slides from Slm's conference presentation, Sep 18, 2016
Slide 1: Sallie Mae Investor Presentation
SALLIE MAE INVESTOR PRESENTATION ABS East Conference 2016 September 18-20, 2016
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 July 20, 2016 (unless otherwise noted) and should be read in connection with the press release of SLM Corporation (the “Company”) announcing its financial resul
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 Q2 2016 − $0.12 diluted earnings per share − 90% of Private Education Loans outstanding are cosigned − Average Q2 Private Education Loan originations FICO of 744 − 79% of Private Education Loans outstanding have a FICO ≥ 700 at origination − 35% of
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) $42 $44 $39 $41 $36 $38 13.4 13.5 13.4 13.5 $34 $35 13.3 $32 12.9 $17 $18 $18 $19 $20 $14 $15 $16 $14 2009 2010 2011 2012 201
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) 1,800 12% 1,600 Average weekly income $ 17,500 10% $ 15,780 1,400 Unemployment $ 14,245 1,200 8% 1,000 6% $ 9,690 800 $ 7,4
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 $4,600 $4,500 $4,330 6% $4,076 6% $4,000 $3,795 7% Disbursements ($MM) $3,500 $3,342 14% $3,000 $2,500 $2,226 $2,000 $1,500 $1,000 $500 $0 2012 2013 2014 2015 2016 Private Education Loan Disbursements Disbursement Statistics ($) 2012 2013 2014 201
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: $11.7bn Portfolio by Originations Vintage Portfolio Inter
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
| 14 Smart Option Student Loan Historical Performance Data Period ended June 30, 2016
Slide 15: Important Information Regarding Historical Loan Performance Data
15 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 16: Important Information Regarding Historical Loan Performance Data (cont.)
16 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 17: Delinquency and Default Performance
17 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% % 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% Sep-12 Sep-13 Sep-14 Sep-15 Mar-12 Mar-15 Mar-13 Mar-14
Slide 18: Prepayments and Cumulative Defaults by P&I Repayment Vintage
| 18 Prepayments and Cumulative Defaults by P&I Repayment Vintage Smart Option Vintage Data: Total Prepayments (1) Smart Option Cumulative Gross Defaults by P&I Repayment Vintage and Years in P&I Repayment (2),(3),(4) 14.0% 10% 9% 12.0% as a % of Original Balance 8% Cumulative Default Rate 10.0% 7%
Slide 19: Funding and ABS Overview
| 19 Funding and ABS Overview
Slide 20: Conservative Funding Approach
20 Conservative Funding Approach YTD 2016 Target Low cost deposit base with no branch overhead — 80% of retail deposits are savings accounts 8% — Brokered deposits used as alternative funding source 20% Term funding / securitizations will augment deposit funding for future growth — Experienced capit
Slide 21: SMB vs. Legacy SLM Private Education Loan ABS Summary
Title of Presentation 21 SMB vs. Legacy SLM Private Education Loan ABS Summary SLM Private Education Trusts Sum m ary Inform ation Legacy SLM Navient Sallie Mae Bank 12-A 12-B 12-C 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 Total Bond Amount ($mil) 547 891 1
Slide 22: Sallie Mae Bank ABS Structures
22 Sallie Mae Bank ABS Structures SMB 2016-A SMB 2016-B Size $501.0MM(1) $607.0MM(2) Pricing Date May 18, 2016 July 13, 2016 Smart Option Smart Option Collateral Private Education Loans Private Education Loans Servicer Sallie Mae Bank Sallie Mae Bank Overcollateralization (3) 12% 12% Pricing Prepaym
Slide 23: SMB 2016-B Structure
23 | 23 Title of Presentation SMB 2016-B Structure(1) • Sallie Mae Bank is the loan originator, loan servicer, and transaction sponsor • SMB 2016-B utilizes a sequential structure Pct of Total Expected Wtd Avg Life Principal Expected Bond Bond Ratings to Call Window to Maturity to Class Balance Bala
Slide 24: SMB 2016-B Cashflow
24 | 24 Title of Presentation SMB 2016-B Cashflow WAL to Call(1) Projected Credit Deal Credit Enhancement(2,4) Reserve Principal Window to Call(1) (6% CPR) Enhancement(3) Class A Class B Target (3)(5) Floor(5) Non-declining A-1 A-2A A-2B B A-1 A-2A A-2B B 12mo 24mo 36mo 60mo SMB 19% 12% 30% 11% 0.25
Slide 25: Appendix
| 25 APPENDIX
Slide 26: Income Statement
26 Financial Review (in millions) Q2 2016 Q2 2015 Variance PSL $ 12,326 $ 9,333 $ 2,993 PSL Reserve (143) (87) (55) FFELP 1,064 1,182 (118) FFELP Reserve / Other (2) (5) 3 • Private Education Loan portfolio Total Loans 13,246 10,423 2,823 growth of 32% in Q2 2016 vs. Q2 Cash 1,043 1,279 (236) 2015 B
Slide 27: "Core Earnings" to GAAP Reconciliation
27 “Core Earnings” to GAAP Reconciliation June 30, Mar. 31, June 30, 2016 2016 2015 (Dollars in thousands, except per share amounts) “Core Earnings” adjustments to GAAP: GAAP net income……….….……..............………………… $ 57,205 $ 65,915 $ 91,016 Preferred stock dividends ………....….........…………… 5,243 5,1
SLM Corporation (Sallie Mae) — ABS East Conference 2016 on 6ix