Slm Corporation · NASDAQ:SLM
Slm — 2018 Stephens NY Investment Conference
20 slides from Slm's conference presentation, Nov 8, 2018
Slide 1: SLM Corporation Investor Presentation
SLM CORPORATION INVESTOR PRESENTATION STEVE MCGARRY EVP & CFO November 8, 2018
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 October 22, 2018 (unless otherwise noted) and should be read in connection with the press release of SLM Corporation (the “Company”) announcing its financial re
Slide 3: Sallie Mae Summary
3 Sallie Mae Summary - Leading private education Private Education Loan - loan franchise Originator and Servicer - Conservative credit and Deposits - funding Upromise Rewards - - Expanding consumer Personal Loans- finance product suite Strategic Key Overview Businesses - National sales and Competiti
Slide 4: Sallie Mae Overview
4 Sallie Mae Overview Sallie Mae Key Statistics for Q3 2018 − $0.23 Core Earnings diluted earnings per common share 2,3 − Peak season loan originations increase 12% from prior year to $2.1 billion − Private education loan delinquencies decrease to 2.3% from 2.6% in Q3 2017 − Private Education Loan n
Slide 5: Favorable Student Loan Market Trends
5 Favorable Student Loan Market Trends College Attainment- Four-Year Degree or More(28) Annual Cost of Education(6) (Thousands) 34.2% Public Private 11% $49 $41 30.9% $18 $21 13/14 18/19 2012 2017 Estimated Total Cost of Education – 2016 / 2017 AY(7) Cost of College (Based on a Four-Year Term)(8) (b
Slide 6: Higher Education Value Proposition
6 Higher Education Value Proposition Relationship Between Higher Education, Incremental Earnings From a College Degree Have Increased Income and Employment(9) For Generations(10) Average weekly income Unemployment Key Statistics • The unemployment rate for individuals age 25 and older with four-year
Slide 7: Smart Option Overview
7 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 8: Discipline Specific Graduate Products
8 Discipline Specific Graduate Products Sallie Mae Sallie Mae Sallie Mae Sallie Mae Health Sallie Mae Sallie Mae Medical Dental Law School Professions Graduate MBA Loan School Loan School Loan Loan Graduate School Loan School Loan Rate Type Variable & Fixed Variable: LIBOR + 2.00% - LIBOR + 7.25% In
Slide 9: Analytical Approach to Credit
9 Analytical Approach to Credit Borrower/Cosigner 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 • No existing SLM 30+ day past dues underwriting driven by large review due to credi
Slide 10: High Quality Private Education Loan Growth
10 High Quality Private Education Loan Growth12 $5,500 $5,200 8% $5,000 $4,800 3% $4,666 $4,582 8% $4,500 $4,330 10% $4,076 6% $4,166 $4,000 Originations ($MM) $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 2014 2015 2016 2017 2018 Private Education Loan Originations YTD Originations Statistics (
Slide 11: High Quality Private Education Portfolio
11 High Quality Private Education Portfolio Customer FICO at Original Approval (13) Smart Option Payment Type <700 Interest Only 21% 780+ 22% 29% Deferred 700 - 740 48% 27% 740 - 780 Fixed Pay 23% 30% Weighted Average FICO: 745 Smart Option Loans: $19.3 billion Portfolio by Originations Vintage Port
Slide 12: Cumulative Defaults as a % of Disbursed Principal Entering P & I Repayment
12 Cumulative Defaults by P&I Repayment Vintage17,18,19 Smart Option Cumulative Gross Defaults by P&I Repayment Vintage and Years Since First P&I Repayment Period 10% 9% Disbursed Principal Entering P & I Repayment 8% Cumulative Defaults as a % of 7% 7.1% 6% 6.6% 5% 5.6% 5.1% 4% 5.2% 3% 4.5% 2% 2.9%
Slide 13: Conservative Funding Approach
13 Conservative Funding Approach Stable deposit base with no branch overhead As of 9/30/18 — Diversified mix of retail and other core savings, MMDA and CDs — Brokered deposits used as alternative funding source Term funding / securitizations will augment deposit funding for future growth Retail Secu
Slide 14: Enhance Franchise and Diversify Revenue
14 Enhance Franchise and Diversify Revenue Distribution of Sallie Mae Borrowers by Product and Age Goal: 100% • Develop relevant and innovative Consumer 93% 95% 91% Lending products to deepen customer 90% 87% 83% engagement, attract new-to-firm customers 79% 80% and diversify revenue at attractive r
Slide 15: Initial Thoughts on CECL (Current Expected Credit Losses)
15 Initial Thoughts on CECL- (Current Expected Credit Losses) • The Financial Accounting Standards Board’s (FASB) Current Expected Credit Loss impairment standard will require “life of loan” estimates of losses to be recorded at origination and is set to take effect in January 2020. • Decisions arou
Slide 16: Sallie Mae Bank
16 Sallie Mae Bank • Market share leader in private student loan industry • High quality assets and conservatively funded balance sheet • Predictable balance sheet growth • Strong capital position and funding capabilities • A financial services company with high growth trajectory and excellent retur
Slide 17: Important Information Regarding Historical Loan Performance Data
17 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 18: Important Information Regarding Historical Loan Performance Data (cont.)
18 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 three separate sources of information: (1) Combined Smart Option Student Loan Portfolio Data for Legacy SLM, Navient and Sallie M
Slide 19: Smart Option Loan Program Cohort Default Curves
19 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 20: Footnotes
20 Footnotes: 1. Source: MeasureOne CBA Report as of December 2017 2. The difference between “Core Earnings” and GAAP net income is driven by mark-to-market unrealized gains and losses on derivative contracts recognized in GAAP, but not in “Core Earnings” results. See page 31 for a reconciliation of