Slm Corporation · NASDAQ:SLM
Slm — Q3 2019 Earnings Presentation
27 slides from Slm's earnings presentation, Nov 7, 2019
Slide 1: Fourth Quarter 2019
Exhibit 99.1 Fourth Quarter 2019
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements The following information is current as of October 23, 2019 (unless otherwise noted) and should be read in connection with the press release of SLM Corporation (the “Company”) announcing its financial results for the quarter ended September 30, 20
Slide 3: 40 years of leadership in the education lending market
• 40 years of leadership in the education lending market • Top ranked brand • Industry leading 55% market share1 • Over 2,400 actively managed university relationships across the U.S. • Appear on 98% of preferred lender lists • Largest salesforce in the industry 3
Slide 4: Private education loans share of higher education spend
• Private education loans represent Other 2% of the overall spend in higher $18 education annually • Total spend on higher education Federal Loans Private $94 Education Loans grows 2-3% annually primarily due Grants $11 to increases in cost of attendance $129 $441 Billion • Attainment of a four-year
Slide 5: Education attainment, unemployment and student debt
2 • The unemployment rate for individuals age 25-34 with four-year college degrees was 2.3%, compared to 5.8% for high school graduates4 • 59% of students graduated with student loans in AY 2016-20175 • Of the 59% of bachelor’s degree recipients who graduated with student loans, the average debt amo
Slide 6: Product suite tailored to undergraduate and graduate students
Product suite tailored to meet the needs of undergraduate and graduate students • Smart Option Student Loan • Introduced in 2009 • Flexible repayment options while in school • Fixed and Variable rates • Differentiated products for undergraduates and graduate students 6
Slide 7: Smart Option loan segments
Undergraduate Medical Law Parent Dental Health Professions MBA General Studies 7
Slide 8: Conservative underwriting and consistent credit performance
Conservative underwriting has contributed to consistent credit performance • Proprietary Scorecard built with Experian Decision Analytics • Initial credit screen removes applicants with low FICO scores or prior derogatory trades on file • Manually review ~8% of applications • Through-the-cycle data
Slide 9: Private Student Loan Originations
Private Student Loan Originations® $6,000 $5,700 $5,500 $5,000 $4,500 = 94,000 = & $3,500 2 5 $3,000 & & $2,500 = © $2,000 $1,500 $1,000 $500 $o 2015 2016 2017 2018 2019 @ Actuals Forecast YTD YTD Originations Statistics ($) 2015 2016 2017 2018 Sept. 30,2018 Sept. 30, 2019 % Cosigned 90% 89% 88% 87%
Slide 10: Smart Option Cumulative Gross Defaults by Repayment Vintage
Smart Option Cumulative Gross Defaults by P&I Repayment Vintage and Years Since First P&I Repayment Period 10% 9% 8% 7% 6% 5% 5.4% 4% 3.9% Cumulative Defaults as a % of a % as Defaults Cumulative 3% Disbursed Principal Entering P & Repayment I& P Entering Principal Disbursed 2.7% 2% 1% 1.1% 0% 0 1 2
Slide 11: Funding mix
Secured Debt Retail 17% MMDA & CD 23% Brokered $12.5b Retail $10.1b Secured Debt $4.7b Retail H.S.A. & 529 15% Brokered Variable 37% Brokered Fixed 8% As of 9/30/19 11
Slide 12: Smart Option portfolio FICO, payment type and vintage
Customer FICO at Original Approval7 Smart Option Payment Type <700 Interest Only 780+ 23% 21% 28% Deferred 700 - 740 48% 27% Fixed Pay 740 - 780 31% 22% Weighted Average FICO: 744 Smart Option Loans: $20.6 billion Portfolio by Originations Vintage Portfolio Interest Rate Type Pre 2012 2012 1% 3% 201
Slide 13: Invest in high ROE growth and shareholder returns
Invest in High ROE Growth Continue to focus on high-quality Private Education Loan originations, including deeper penetration of the graduate school market Offer credit cards to our high-quality customer Quarterly base Dividend Invest in Share Quarterly Dividend High ROE Repurchases Growth Establish
Slide 14: CECL impairment standard estimated impact
• 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 will become effective for us on January 1, 2020. • There will be an initial build of the loan loss allowance that wil
Slide 15: ABS Supplement
sa iu a ABS Supplement
Slide 16: Smart Option loan program overview
• The Smart Option loan product was introduced by Sallie Mae in 2009 • The Smart Option loan program consists of: – Smart Option Interest Only loans - require full interest payments during in-school, grace, and deferment periods – Smart Option Fixed Pay loans - require $25 fixed payments during in-s
Slide 17: Sallie Mae Bank ABS Summary
Sallie Mae Bank ABS Summary 14-4 15-A 15-B 15-C 16-A 16-B 16-C 17-A 17-B 18-A 18-B 18-C 19-A 19-B Issuance Date 81772014 4/23/2015 71302015 10/27/2015 51262016 7/21/2016 1011272016 28/2017 11/8017 3/21/2018 2012018 g/ig20i8 3/13/2019 611272019 Total Bond Amount (Sm) $382 S704. S714 S701 S551«—«$657-
Slide 18: Recent ABS transactions SMB 2019-B, 2019-A, 2018-C
SMB 2019-B SMB 2019-A SMB 2018-C Size $657.0MM $453.0MM $544.0MM Pricing Date June 4, 2019 March 5, 2019 September 12, 2018 Smart Option Smart Option Smart Option Collateral Private Education Loans Private Education Loans Private Education Loans Servicer Sallie Mae Bank Sallie Mae Bank Sallie Mae Ba
Slide 19: Appendix
sallie mae’ Appendix
Slide 20: Quarterly Financial Highlights
Quarterly Financial Highlights 32019 | 202019 | 302018 3Q2019 | 22019 | 302018 income Statement (§ millions] $590 ssr4 case Key Performance Metrics otal interest income ~ - ictal Gabeenticepenss fe fe ere Net Interest Margin 5.55% 5.88% 6.00% Net interest income 705 397 357 Yield- Total interest-ear
Slide 21: Sallie Mae vs Federal Student Loans
Sallie Mae vs Federal Student Loans Sallie Mae $1,000 - Cost of Attendance Yr - $5,500 ($3,500 > subsidized) Yr2_ -$6,500 ($4,500 > subsidized) Federal Student Loan Program” Undergraduate Loan Limits Yr 3+ - $7,500 ($5,500 > subsidized) No Limit No Aggregate Limit ) Agaregate ($23,000 > subsidized)
Slide 22: Core Earnings to GAAP Reconciliation
“Core Earnings” to GAAP Reconciliation Quarters Ended Sept 30, June 30, 2019 2019 (Dollars in thousands, except per share amounts) “Core Earnings” adjustments to GAAP: GAAP net income.............-.-....-.-.-- $128,458 $ 150,277 Sept 30, $103,878 Preferred stock dividends —........ 2... eee 4,153 4,
Slide 23: Adjusted Core Earnings to GAAP Reconciliation
“Adjusted Core Earnings” to GAAP Reconciliation (Dollars in thousands, except per share amounts) GAAP Nt INCOME 2.221. 2cccce sere cretsencenterreesneceenee Preferred stock dividends .. GAAP net income attributable to SLM ‘Corporation’c common SEOCK.. 222. e eect eee ceee tee tee eteeeeeee “Adjusted
Slide 24: Spin-Off from Navient and background
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 Corporation (“Navient”), and a consumer banking business called SLM Co
Slide 25: Types of Smart Option Student Loan Portfolio Data
Types of Smart Option Student 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 Bank. Information in this category is presented on a combined basis
Slide 26: Cohort default triangle definitions
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 – The calendar year of a loan’s First P&I Repayment Perio
Slide 27: Footnotes and sources
1. Source: MeasureOne CBA Report as of December 2018 2. U.S. Bureau of Labor Statistics, Current Population Survey 3. Source: Trends in Student Aid,© 2018 The College Board, www.collegeboard.org, U.S. Department of Education 2018 4. Source: U.S. Bureau of Labor Statistics- “More education: Lower une