Slide 1: Investor Presentation 2nd Quarter 2023
Investor Presentation 2nd Quarter 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 July 26, 2023 (unless otherwise noted) and should be read in connection with the press release of SLM Corporation (the “Company”) announcing its financial results
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 2nd Quarter 2023 • Paid common stock dividend of $0.11 per share in Q2 2023. Highlights • Sallie Mae Bank remains well capitalized with 14.1% Total risk-based capital ratio and CET1 capital ratio of 12.8%. • Completed $2.1 billion in private education loan sales du
Slide 5: Private Education Loan Originations
Private Education Loan Originations13 • Second quarter 2023 originations at $651 million, 6% higher than the year-ago period. • First half 2023 originations 10% higher than first half of 2022. • Through the first half of the year, our underclassmen application volume has increased just over 10% as c
Slide 6: Credit Performance Impact of Federal Loan Payment Resumption
Key Credit Credit Performance Metrics • Q2 2023 net charge-offs for Private Education Loans totaled $103 million. for Q2 2023 • Annualized net charge-offs as a percentage of average loans in repayment for the first half of the year is 2.41% and remains lower than our plan for full-year 2023. • There
Slide 7: Support for Federal Student Loan Borrowers
Support for Federal Student Loan Borrowers 26 An “On Ramp” to Repayment 24 For all federal borrowers looking to resume payments of federal loans in August, a year-long “on-ramp” is being instituted by the Department of Education “so that financially vulnerable borrowers who miss monthly payments dur
Slide 8: High Quality Private Education Loan Portfolio
Originations Vintage Smart Option Payment Type Pre 2023 2014 2014 7% 3% 3% 2015 High Quality 5% 2016 Interest 5% Only 18% 2022 2017 6% Private Education Loans Deferred 27% Loans Loan Portfolio 2018 $17.8B 48% $19.9B 7% 2019 Fixed 9% 34% 2021 2020 17% 10% Customer FICO at Portfolio Original Approval6
Slide 9: Conservative Funding Optimizes Net Interest Margin
Conservative Funding Optimizes Net Interest Margin Long-Term Funding • Outstanding borrowings consist of unsecured debt and 18% 20% secured borrowings issued through our term asset- backed securitization program, totaling $1 billion and $4.2 billion, respectively, as of June 30, 2023. Total Funding
Slide 10: Simple But Powerful Investment Thesis
Simple But Powerful Investment Thesis • Consistent earnings expansion is driven by top line growth and efficiency Attra c tive Ea rn in g s Pro file • Sallie Mae is the leader in the private education loan market • Well-proven and disciplined underwriting model leveraging data and Ma n a g e a b le
Slide 11: 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 Maintain a profitability value of our the external rigorous and and growth of brand and narrative about predictable our core attractive private student capital business customer
Slide 12: 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 13: 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 14: Enable Successful Outcomes
Sallie Mae’s Core Product Contains Customer Friendly Provisions That Enable Successful Outcomes Sallie Mae Smart Option Student Loan Sallie Mae Student Borrowers Benefits from school through repayment In-School Repayment 92% of Sallie Mae student loan borrowers • Competitive variable & fixed rates •
Slide 15: 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 16: Maintain Rigorous Capital Allocation and Return Program
Maintain Rigorous Capital Allocation and Return Program Invest in High ROE Growth Embracing a Hybrid Hold / Sell • Continue to focus on high-quality Loan Model3 Private Education Loan originations, • Selling assets to optimize growth in required including deeper penetration of capital graduate schoo
Slide 17: Diverse Student Loan Portfolio Driving Increased Shareholder Value
Diverse Student Loan Portfolio Driving Increased Shareholder Value Un d e rg ra d u a te Gra d u a te RATE TYPE Variable & Fixed Variable & Fixed He a lth Variable: SOFR + Variable: SOFR + Me d ic a l De n t a l 1.250% - SOFR + 1.750% - SOFR + Pro fe s s io n s INTEREST RATE 12.375% 11.625% RANGES F
Slide 18: 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 19: Additional Information Related to our Recent Asset Acquisition
Additional Information Related to our Recent Asset Acquisition Confidential and proprietary information. © 2021 Sallie Mae Bank. All rights reserved.
Slide 20: Strategy for Execution of our Investment Thesis
Strategy for Execution of our Investment Thesis 2. OUR DEFINITION OF #1 Reason A SUREFOOTED STRATEGY Maximize To protect and enhance our 1. Paid for through the direct benefit of the value of education lending business by reaching more customers our core lending business our brand at a lower cost th
Slide 21: Our Nitro College Acquisition in Early 2022
AN ACCELERATOR OF OUR SUREFOOTED STRATEGY: Our Nitro College Acquisition in Early 2022 Contributed to Stronger What We Acquired: Performance for our Education Lending Business 1. A platform that provides variety of free FY 2022: tools and resources to help students and families make informed decisio
Slide 22: The #1 College Scholarship App - Scholly
THE NEXT ACCELERATOR OF OUR SUREFOOTED STRATEGY: The #1 College Scholarship App - Scholly Provides a marketplace for students and families to find free money for college. Co-founded by Christopher Gray in 2013, who won $1.3 million in scholarships himself and wanted to offer the same opportunities f
Slide 23: Scholly is a solid strategic fit and further accelerates our mission
Scholly is a solid strategic fit and further accelerates our mission Key Benefits of this Asset Purchase: #1 College Scholarship App • A strong and well-known brand that attracts collaboration, celebrities, and media • A turnkey platform with a team that has a proven record of building engaging solu
Slide 24: ABS Supplement
ABS Supplement Confidential and proprietary information. © 2021 Sallie Mae Bank. All rights reserved.
Slide 25: Sallie Mae's Smart Option Loan Product Overview
Sallie Mae’s Smart Option Loan Product Overview The Smart Option loan product was introduced by Sallie Mae in 2009 • Smart Option payment option may not be The Smart Option loan changed after selected at origination program consists of: • Fixed-rate loans or variable-rate loans • Consumer credit und
Slide 26: Sallie Mae Bank ABS Summary
Sallie Mae Bank ABS Summary17 19 6 6 6 6 26
Slide 27: Sallie Mae Bank ABS Structures
Sallie Mae Bank ABS Structures 20 21 6 27
Slide 28: Appendix
Appendix Confidential and proprietary information. © 2021 Sallie Mae Bank. All rights reserved.
Slide 29: Quarterly Financial Highlights
Quarterly Financial Highlights Q2 Q1 Q2 Q2 Q1 Q2 2023 2023 2022 2023 2023 2022 Income Statement ($ Millions) Key Performance Metrics Total interest income $634 $638 $463 Net Interest Margin 5.52% 5.70% 5.29% Total interest expense 247 233 100 Yield—Total Interest-earning assets 9.05% 8.97% 6.75% Net
Slide 30: Sallie Mae vs Federal Student Loans
Sallie Mae vs Federal Student Loans As of 8/17/23 30
Slide 31: Non-GAAP Core Earnings to GAAP Reconciliation
Non-GAAP “Core Earnings” to GAAP Reconciliation Quarters Ended ($ Thousands except per share amounts) June 30, 2023 March 31, 2023 June 30, 2022 Non-GAAP “Core Earnings” adjustments to GAAP: GAAP net income $265,065 $118,518 $342,073 Preferred stock dividends $4,274 $4,063 $1,757 GAAP net income att
Slide 32: Footnotes
Footnotes 1. Source: Enterval CBA Report for Q1 2023 as of March 2023. 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.