Slide 1: SLM Corporation Investor Presentation ABS East 2017
SLM CORPORATION INVESTOR PRESENTATION ABS EAST 2017 September 17-19, 2017
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 19, 2017 (unless otherwise noted) and should be read in connection with the press release of SLM Corporation (the “Company”) announcing its financial res
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: Favorable Student Loan Market Trends
5 Favorable Student Loan Market Trends Academic Year Enrollment at Four‐Year Degree Granting Institutions(1) Annual Cost of Education(2) Public Private (millions) (thousands) $44 $45 $41 $42 $38 $39 $35 $36 13.3 13.4 13.5 13.4 13.5 12.9 $18 $18 $19 $20 $20 $15 $16 $17 09/10 10/11 11/12 12/13 13/14 1
Slide 6: Smart Option Student Loan Program
6 Smart Option Student Loan Program
Slide 7: Sallie Mae's Smart Option Loan Product Overview
7 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 $10,000 avg orig bal, 5 to 15 yr
Slide 8: High Quality Private Education Loan Growth
8 High Quality Private Education Loan Growth
Slide 9: High Quality Private Education Portfolio
9 High Quality Private Education Portfolio As of 6/30/17
Slide 10: Sallie Mae Bank Servicing Policies
10 Sallie Mae Bank Servicing Policies Policy Pre-Spin, Legacy SLM Serviced Post-Spin, Sallie Mae Bank Serviced Delinquencies All loans serviced by an affiliate of legacy SLM; loan Sallie Mae Bank collects delinquent loans thru charge-off, placing owned by Sallie Mae Bank sold to legacy SLM after emp
Slide 11: Sallie Mae Bank Collections
11 Sallie Mae Bank Collections Each customer is approached individually, and the account manager is educated and empowered to identify optimal resolution • Co-borrowers are contacted and collected with similar efforts as the primary borrower Sallie Mae Bank employs a front-loaded, stage based collec
Slide 12: Funding and ABS Overview
12 Funding and ABS Overview
Slide 13: Conservative Funding Approach
13 Conservative Funding Approach 2Q 2017 Target Stable deposit base with no branch overhead — Diversified mix of retail and other core savings, MMDA and CDs 17% 20% — Brokered deposits used as alternative funding source Term funding / securitizations augment deposit funding for future growth — Exper
Slide 14: ABS Summary
14 Sallie Mae Bank ABS Summary 14-A 15-A 15-B 15-C 16-A 16-B 16-C 17-A Issuance Date 8/7/2014 4/23/2015 7/30/2015 10/27/2015 5/26/2016 7/21/2016 10/12/2016 2/8/2017 Total Bond Amount ($mil) $382 $704 $714 $701 $551 $657 $674 $772 Initial AAA Enhancement (%) 21% 23% 22% 23% 20% 19% 16% 17% Initial Cl
Slide 15: ABS Structures
15 Sallie Mae Bank ABS Structures SMB 2017‐A SMB 2016‐C Size $772.0MM $674.0MM Pricing Date January 31, 2017 October 5, 2016 Smart Option Smart Option Collateral Private Education Loans Private Education Loans Servicer Sallie Mae Bank Sallie Mae Bank Overcollateralization (1) 11% 10% Pricing Prepaym
Slide 16: Private Education Loan ABS Relative Value
16 Private Education Loan ABS Relative Value Indicative 3-year Floating Rate AAA ABS Spread to LIBOR Auto (Prime) Credit Cards Private Education Loans 140 120 100 Spreads (bps) 80 60 40 20 0 Source: Barclays
Slide 17: SMB 2017-A Structure
17 SMB 2017-A Structure(1) • Sallie Mae Bank is the loan servicer and transaction sponsor • SMB 2017-A utilizes a sequential structure Pct of Total Expected Wtd Avg Life Principal Expected Bond Class Bond Ratings Index to Call Window to Maturity to Legal Maturity Balance Balance (M/S) (6% CPR)(2) Ca
Slide 18: SMB 2017-A Cash Flow
18 SMB 2017-A Cash Flow WAL to Call (yrs)(1) Projected Credit Deal Credit Enhancement(2,4) Reserve Principal Window to Call(1) (6% CPR) Enhancement(3) Non- Class A Class B Target (3)(5) Floor(5) A-1 A-2A A-2B B A-1 A-2A A-2B B 12mo 24mo 36mo 60mo declining SMB 2017-A 17% 11% 30% 11% 0.25% 1.25 5.72
Slide 19: Sallie Mae Investor Relations Website
19 Sallie Mae Investor Relations Website www.salliemae.com/investors • SMB Student Loan ABS trust data • Reg AB static pool information – Smart Option Student Loan historical performance data • Accrued interest factors • Distribution factors • Since issued CPR – monthly CPR data by trust since issua
Slide 20: Smart Option Student Loan Program Historical Performance Data
20 Smart Option Student Loan Program Historical Performance Data Period Ended June 30, 2017
Slide 21: Important Information Regarding Historical Loan Performance Data
21 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 22: Important Information Regarding Historical Loan Performance Data (cont.)
22 Important Information Regarding Historical Loan Performance Data (cont.) Types of Smart Option Student Loan Portfolio Data The portfolio data we used in this report comes from four separate sources of information: (1) Combined Smart Option Student Loan Portfolio Data for Legacy SLM, Navient and S
Slide 23: Smart Option Serviced Portfolio: 31-60 Day Delinquencies
23 Smart Option Serviced Portfolio: 31‐60 Day Delinquencies Smart Option Student Loans - Serviced Portfolio Smart Option Student Loans - Serviced Portfolio 31-60 Day Delinquencies as a % of Loans in P&I Repayment (1) 31-60 Day Delinquencies as a % of Loans in P&I Repayment (1) Data for Legacy SLM th
Slide 24: Smart Option Serviced Portfolio: 61-90 Day Delinquencies
24 Smart Option Serviced Portfolio: 61‐90 Day Delinquencies Smart Option Student Loans - Serviced Portfolio Smart Option Student Loans - Serviced Portfolio 61-90 Day Delinquencies as a % of Loans in P&I Repayment (1) 61-90 Day Delinquencies as a % of Loans in P&I Repayment (1) Data for Legacy SLM th
Slide 25: Smart Option Serviced Portfolio: 91+ Day Delinquencies
25 Smart Option Serviced Portfolio: 91+ Day Delinquencies Smart Option Student Loans - Serviced Portfolio Smart Option Student Loans - Serviced Portfolio 91+ Day Delinquencies as a % of Loans in P&I Repayment (1) 91+ Day Delinquencies as a % of Loans in P&I Repayment (1) Data for Legacy SLM thru Apr
Slide 26: Smart Option Serviced Portfolio: Forbearance
26 Smart Option Serviced Portfolio: Forbearance Smart Option Student Loans - Serviced Portfolio Smart Option Student Loans - Serviced Portfolio Forbearance as a % of Loans in P&I Repayment and Forbearance (1) Forbearance as a % of Loans in P&I Repayment and Forbearance (1) Data for Legacy SLM thru A
Slide 27: Smart Option Serviced Portfolio: Annualized Gross Defaults
27 Smart Option Serviced Portfolio: Annualized Gross Defaults Smart Option Student Loans - Serviced Portfolio Smart Option Student Loans - Serviced Portfolio Annualized Gross Defaults as a % of Loans in P&I Repayment(1) Annualized Gross Defaults as a % of Loans in P&I Repayment(1) Data for Legacy SL
Slide 28: Smart Option Vintage Data: Cumulative Gross Default by Loan Type
28 Smart Option Vintage Data: Cumulative Gross Default by Loan Type Smart Option Student Loans - Serviced Portfolio: All Products Smart Option Student Loans - Serviced Portfolio: Interest Only Cumulative Defaults by P&I Repayment Vintage Cumulative Defaults by P&I Repayment Vintage and Years Since F
Slide 29: Smart Option Vintage Data: Voluntary Prepayments
29 Smart Option Vintage Data: Voluntary Prepayments ► Voluntary prepay speeds trending up as more loans enter P&I repayment Smart Option Student Loans - Serviced Portfolio Smart Option Student Loans - Serviced Portfolio Voluntary CPR by Disbursement Vintage and Product (1), (2), (3) Voluntary CPR by
Slide 30: Smart Option Vintage Data: Total Prepayments
30 Smart Option Vintage Data: Total Prepayments ► Following the initial few years after disbursement, total prepayments begin to rise more quickly as loans begin to default. Smart Option Student Loans - Serviced Portfolio Smart Option Student Loans - Serviced Portfolio Total CPR by Disbursement Vint
Slide 31: Smart Option: Cumulative Recoveries
31 Smart Option: Cumulative Recoveries Overall Smart Option Loan Cumulative Recovery Rate Interest Only Smart Option Loan Cumulative Recovery Rate For Charge-Off Vintages Since 2010 For Charge-Off Vintages Since 2010 Data for Legacy SLM and Navient thru present (1), (2) Data for Legacy SLM and Navie
Slide 32: Cohort Default Triangles – Smart Option Combined
32 Cohort Default Triangles – Smart Option Combined (Interest Only, Fixed Payment & Deferred) Smart Option Combined (P&I Repayment - Total) P&I Disbursed Principal Periodic Defaults Percentage Repayment Entering P&I by Years Since First P&I Repayment Period (1), (4), (5) Vintage Repayment ($m) 0 1 2
Slide 33: Cohort Default Triangles – Smart Option Interest Only
33 Cohort Default Triangles – Smart Option Interest Only Smart Option Interest Only (P&I Repayment - Total) P&I Disbursed Principal Periodic Defaults Percentage Repayment Entering P&I by Years Since First P&I Repayment Period (1), (4), (5) Vintage Repayment ($m) 0 1 2 3 4 5 6 7 Total 2010 (2) $426 1
Slide 34: Cohort Default Triangles – Smart Option Fixed Payment
34 Cohort Default Triangles – Smart Option Fixed Payment Smart Option Fixed Payment (P&I Repayment - Total) P&I Disbursed Principal Periodic Defaults Percentage Repayment Entering P&I by Years Since First P&I Repayment Period (1), (4), (5) Vintage Repayment ($m) 0 1 2 3 4 5 6 Total 2011 (2) $221 0.3
Slide 35: Cohort Default Triangles – Smart Option Deferred Payment
35 Cohort Default Triangles – Smart Option Deferred Payment Smart Option Deferred (P&I Repayment - Total) P&I Disbursed Principal Periodic Defaults Percentage Repayment Entering P&I by Years Since First P&I Repayment Period (1), (4), (5) Vintage Repayment ($m) 0 1 2 3 4 5 Total 2012 (2) $249 0.1% 1.
Slide 36: Smart Option Loan Program Cohort Default Triangles
36 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 month during which a borrower is first required to make a full principal and interest payment on a loan. P&I Repayment Vintage – T
Slide 37: Smart Option Loan Program: Prepayment Methodology
37 Smart Option Loan Program: Prepayment Methodology The Constant Prepayment Rate (CPR) represents an annualized rate of prepayment speed measuring the reduction in the principal balance of a pool of loans in excess of the scheduled pool amortization. The rate can be positive or negative depending o
Slide 38: Smart Option Loan Program: Prepayment Methodology
38 Smart Option Loan Program: Prepayment Methodology Calculations Examples(1) t PMTt ACTt EXPt Prepaymentt SMMt SRt CPR ⁄ 0 $10,000 ⁄ 1 Borrower is in school ($25 fixed payment due) 1 $25 $10,029 $10,029 $0 0.0% 100.0% 1 2 $25 $10,058 $10,058 $0 0.0% 100.0% 3 $25 $10,088 $10,088 $0 0.0% 100.0% 0.0%