Slm Corporation · NASDAQ:SLM
Slm — Debt Investor Presentation (February 2011)
26 slides from Slm's debt investor presentation, Feb 8, 2011
Slide 1: SLM Corporation ASF Investor Discussions February 2011
SLM Corporation ASF Investor Discussions February 2011
Slide 2: Forward-Looking Statements
Forward-Looking Statements The following information is current as of February 7, 2011 and should be read in connection with SLM Corporation's press release for fourth quarter 2010 earnings, dated January 19, 2011, and more detailed information contained in the Company's 2009 Annual Report on Form 1
Slide 3: SLM Corporation Update
SLM Corporation Update FFELP FFELP program ended by Congress as of July 1, 2010 US Government now originating all new federal student loans SLM originated $11.7 billion in federal student loans in 2010, prior to FFELP termination Acquired $24.9 billion of securitized FFELP loans from Student Loan Co
Slide 4: A Brief Corporate History
A Brief Corporate History 1 Currently known as the Federal Family Education Loan Program (FFELP). SLM Corporate Debt Ratings SLM Corporate Debt Ratings SLM Corporate Debt Ratings SLM Corporate Debt Ratings Moody's S & P Fitch Long-Term Ba1 BBB- BBB- Short-Term Not-Prime A-3 F3 Outlook Neg. Neg. Stab
Slide 5: Funding Distribution
Funding Distribution At Dec 31, 2010 total Managed borrowings were $194.3 billion 5 (CHART) *Other includes FHLB-DM facility borrowings, on-balance sheet indentured trusts, SLC acquisition financing and other Managed borrowings as identified in the Q4 2010 SLM Supplemental Earnings Disclosure.
Slide 6: 2010 SLM Capital Markets Summary
6 2010 SLM Capital Markets Summary Issued $2 billion of FFELP ABS Issued $4.1 billion of Private Credit ABS Issued $1.5 billion of unsecured notes On January 11, 2011 we issued a $2 billion unsecured corporate bond On January 14, 2011 we expanded and extended our ABCP facility Bank Group ABCP borrow
Slide 7: SLM Asset-Backed Funding
SLM Asset-Backed Funding SLM ABS Term Issuance Volume Reported at quarter closing dates, net of paydowns. Balances inclusive of FFELP and legacy private ABCP, legacy UBS Phoenix facility, FHLB Des Moines and seller financing for the SLC acquisition. 7 SLM Secured Funding ABS Issuance ($ in billions)
Slide 8: SLM FFELP Student loan ABS
SLM FFELP Student loan ABS
Slide 9: SLM FFELP ABS Issue Characteristics
SLM FFELP ABS Issue Characteristics Issue size of $750 M to $2 B Tranches denominated in US$ or Euros 'Aaa/AAA/AAA' rated senior tranches make up 97% of issue structure Floating rate tied to 1 mo. LIBOR, with occasional fixed rate issuance Amortizing tranches, with 1 to 15(+) year average lives or s
Slide 10: SLM Stafford/PLUS ABS Trusts Prepayment Analysis
SLM Stafford/PLUS ABS Trusts Prepayment Analysis Annualized CPRs for SLM Stafford/PLUS ABS Trusts have decreased significantly as incentives for borrowers to consolidate have declined Historical SLM Stafford/PLUS ABS CPRs * Average CPR is the simple (non-weighted) average of four Quarterly CPR calcu
Slide 11: SLM Consolidation ABS Trusts Prepayment Analysis
SLM Consolidation ABS Trusts Prepayment Analysis Historical Consolidation ABS CPRs * Average CPR is the simple (non-weighted) average of four Quarterly CPR calculations for years ended Dec ember 31, 2010. Quarterly CPR assumes School and Grace loans are not scheduled to make payments. Deferment, For
Slide 12: Projected Cash Flows From FFELP Portfolio
Projected Cash Flows From FFELP Portfolio Assumptions CP/LIBOR = 10 basis points No Floor Income CPR/CDR = Stafford & Plus (7.0%), Consolidation (3.0%) Excel spreadsheet available upon request 12 ($ in Millions) Total Cash Flows from Projected Excess Spread = $9.2 Billion Total Cash Flows from Proje
Slide 13: SLM Private Education loan ABS
SLM Private Education loan ABS
Slide 14: Private Education Loan Market Opportunity
Private Education Loan Market Opportunity The total cost of education for Students and Parents is estimated at $387 billion Grants include federal, state, institutional, private/employer, education tax benefits and work study Source: College Board, U.S. Department of Education & Company analysis 14
Slide 15: Private Education Loans Managed Portfolio Loan Characteristics
Private Education Loans Managed Portfolio Loan Characteristics 19% of SLM's managed student loan portfolio, $35.7 billion at 12/31/10 High-quality long-duration assets 59% of portfolio has a cosigner, typically a parent Higher education loans typically non-dischargeable in bankruptcy Average life ~
Slide 16: Credit Performance
Credit Performance Forbearance continues to be down 60% from 2008 levels Non-traditional forbearance is 6.1% as of 12/31/2010 Traditional forbearance is 4.4% as of 12/31/10 Non-Traditional charge-offs are down 20% year over year Charge-offs Q4 2010 14.9% vs. Q3 2009 at 18.6% Traditional Charge-offs
Slide 17: The Economy Is Beginning to Recover
The Economy Is Beginning to Recover There are signs of economic recovery The unemployment rate has begun to improve from peak levels, as have initial jobless claims Consumer spending strengthened The unemployment rate for college graduates remains lower than the overall unemployment rate 17 (CHART)
Slide 18: Recent SLM Private Ed Loan ABS Characteristics
Recent SLM Private Ed Loan ABS Characteristics Historical issue size of $500 M to $2.0B US$ denominated Triple-A rated senior notes only; no subordinate tranches 20-30(+)% overcollateralization Pass-thru with 3-5(+) yr average lives, or multiple tranches with 1-10(+) yr average lives Floating rate t
Slide 19: Impact of Seasoning on Delinquency and Forbearance
Note: Based on historical data through September 30, 2010. Does not include data for 2010 trusts which have not had time to become 90 days delinquent SLM Private Education Loan ABS Trusts Impact of Seasoning on Delinquency and Forbearance Delinquency and forbearance are highest when loans enter repa
Slide 20: Reduced Reliance on Forbearance
Reduced Reliance on Forbearance Beginning in the second half of 2008, we made a series of changes to our forbearance policy Fall 2008 - Reduced duration of forbearance from 6 months to 3 months February-March 2009 - Restricted use of forbearance based on risk Many of the borrowers who were denied fo
Slide 21: Improving Performance
Improving Performance Early stage delinquencies rose as the forbearance policy changed and have improved despite the economic environment Late stage delinquencies have decreased since the peak associated with the forbearance changes 21 (CHART) (CHART) 2.6-4.1% 2.7-4.2% 2.6-3.8% 1.6-3.4% 3.5-6.3% 3.2
Slide 22: 2007-A and Prior SLM Private Loan ABS Prepayment Analysis
2007-A AND PRIOR SLM PRIVATE LOAN ABS Prepayment Analysis Historical SLM Private Credit ABS CPRs Constant prepayment rates increased in 2007 due to the introduction of Private Credit Consolidation loans, but then declined accordingly following SLM's decision to suspend its consolidation loan program
Slide 23: Favorable Early Default Performance for 2009 Issuance
Favorable Early Default Performance for 2009 Issuance Despite the higher proportion of loans in early repayment, defaults for the 2009 transactions are in line with many seasoned transactions due to the positive credit mix of the pools 23 (CHART) Higher cosigner rates No nontraditional loans Favorab
Slide 24: SLM Private Credit Gross Defaults Constraining Rating Agency Stress Levels
SLM Private Credit Gross Defaults Constraining Rating Agency Stress Levels at Issuance As of September 30, 2010 (CHART) 24
Slide 25: SLM Private Education Loan Gross Defaults
SLM Private Education Loan Gross Defaults Actual-To-Date Actual-To-Date Actual-To-Date For SLM Private Education Loan Trusts issued prior to 2005-B, the servicer has the option, but not the obligation, to repurchase loans that (i) become 180+ days delinquent and/or (ii) have a borrower who filed for
Slide 26: Additional Information Available at www.salliemae.com
Additional Information Available at www.salliemae.com 26