EARNINGS CALL PRESENTATION - Sallie Mae · The following information is current as of January 16, 2013 (unless otherwise noted) and should be read in connection with SLM Corporation’s

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2012 4TH QUARTER AND FULL YEAR REVIEW EARNINGS CALL PRESENTATION

JANUARY 17, 2013

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Forward-Looking Statements; Non-GAAP Financial Measures

The following information is current as of January 16, 2013 (unless otherwise noted) and should be read in connection with SLM Corporation’s Annual Report on Form 10-K for the year

ended December 31, 2011 (the “2011 Form 10-K”), the Company’s, first, second and third quarter Forms 10-Q and subsequent reports filed with the Securities and Exchange

Commission (the “SEC”). Definitions for capitalized terms in this presentation not defined herein can be found in the 2011 Form 10-K (filed with the SEC on February 27, 2012).

This Presentation contains forward-looking statements and information based on management’s current expectations as of the date of this presentation. Statements that are not

historical facts, including statements about our opinions, beliefs or expectations and statements that assume or are dependent upon future events, are forward-looking statements.

Forward-looking statements are subject to risks, uncertainties, assumptions and other factors that may cause actual results to be materially different from those reflected in such

forward-looking statements. These factors include, among others, the risks and uncertainties set forth in Item 1A “Risk Factors” and elsewhere in the 2011 Form 10-K, the Company’s,

first, second and third quarter Forms 10-Q and subsequent filings with the SEC; increases in financing costs; limits on liquidity; increases in costs associated with compliance with laws

and regulations; changes in accounting standards and the impact of related changes in significant accounting estimates; any adverse outcomes in any significant litigation to which we

are a party; credit risk associated with our exposure to third parties, including counterparties to our derivative transactions; and changes in the terms of student loans and the

educational credit marketplace (including changes resulting from new laws and the implementation of existing laws). We could also be affected by, among other things: changes in our

funding costs and availability; reductions to our credit ratings or the credit ratings of the United States of America; failures of our operating systems or infrastructure, including those of

third-party vendors; damage to our reputation; failures to successfully implement cost-cutting and restructuring initiatives and adverse effects of such initiatives on our business;

changes in the demand for educational financing or in financing preferences of lenders, educational institutions, students and their families; changes in law and regulations with respect

to the student lending business and financial institutions generally; increased competition from banks and other consumer lenders; the creditworthiness of our customers; changes in

the general interest rate environment, including the rate relationships among relevant money-market instruments and those of our earning assets versus our funding arrangements;

changes in general economic conditions; and changes in the demand for debt management services. The preparation of our consolidated financial statements also requires

management to make certain estimates and assumptions including estimates and assumptions about future events. These estimates or assumptions may prove to be incorrect. All

forward-looking statements contained in this Presentation are qualified by these cautionary statements and are made only as of the date of this Presentation. We do not undertake any

obligation to update or revise these forward-looking statements to conform the statement to actual results or changes in our expectations.

The Company reports financial results on a GAAP basis and also provides certain core earnings performance measures. The difference between the Company’s core earnings and GAAP

results for the periods presented were the unrealized, mark-to-market gains/losses on derivative contracts and the goodwill and acquired intangible asset amortization and impairment.

These items are recognized in GAAP but not in core earnings results. The Company provides core earnings measures because this is what management uses when making management

decisions regarding the Company’s performance and the allocation of corporate resources. The Company’s core earnings are not defined terms within GAAP and may not be comparable

to similarly titled measures reported by other companies. For additional information, see “Core Earnings — Definition and Limitations” in the Company’s fourth quarter and full year

earnings release for a further discussion and a complete reconciliation between GAAP net income and core earnings.

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► High quality loan originations increased 22% compared to prior year

► Delinquencies and forbearance improved as forecasted

► Funding markets accommodated significant FFELP and PC issuance at improving spreads

► Operating expenses down from 2011

► Returned over $1.1 billion to shareholders through share repurchases and dividends

► Continue to repurchase outstanding debt

2012 Highlights

During the fourth quarter of 2012, the Company repurchased 9.9 million shares of common stock. In the 12-month period ended December 31, 2012, the Company has repurchased a total of 58.0 million shares of common stock.

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Strong Earnings – “Core Earnings” Basis

($ in millions, except per share amounts) Q4 12 Q4 11 2012 2011

"Core Earnings" $257 $268 $1,062 $977

Operating Expenses $252 $243 $996 $1,100

"Core Earnings" EPS (Reported) $0.55 $0.51 $2.16 $1.83

Debt Repurchase Gains included in "Core Earnings" $0.06 $0.00 $0.19 $0.08

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Consumer Lending Segment – “Core Earnings” Basis

($ in millions) Q4 12 Q3 12 Q4 11 2012 2011

Net Income $46 $63 $63 $278 $128

Private Education Loan Spread 4.54% 4.44% 4.57% 4.54% 4.58%

Provision $296 $252 $255 $1,008 $1,179

31-60 Day Delinquency as a % of Repay 3.2% 3.1% 3.6% 3.2% 3.6%

61-90 Day Delinquency as a % of Repay 1.5% 1.6% 1.6% 1.5% 1.6%

90+ Day Delinquency as a % of Repay 4.6% 5.3% 4.9% 4.6% 4.9%

Forbearance as a % of Forbearance & Repay 3.5% 3.2% 4.4% 3.5% 4.4%

Charge-offs as a % of Repay 4.2% 3.2% 3.5% 3.4% 3.7%

Operating Expenses as a % of Average Private Education Loans 0.68% 0.71% 0.72% 0.70% 0.82%

30+ and 90+ Delinquencies as a % of Repayment

2%

4%

6%

8%

10%

12%

14%

16%

18%

30+

90+

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(Dollars in millions) 12/31/2012 9/30/2012 6/30/2012 3/31/2012

Cumulative number of months borrower has used forbearance

Up to 12 months………………….……….……… $ 883 $ 796 $ 940 $ 839

13 to 24 months ……………………………….… 186 180 356 477

More than 24 …………………………………..…. 67 60 72 56

Total balance in forbearance………………. $1,136 $1,036 $1,368 $1,372

Charged-off loans that used more than 12 months of forbearance……………………….. $196 $133 $128 $107

► More than 12 months forbearance usage declined nearly $300 million in 9 months

► Significant dollar amount of loans remaining in more than 12 months are currently making payments

► Usage beyond 12 months expected to decline in future quarters

► 30+ and 90 + delinquency rates declined significantly in Q4 from prior quarter

► Charge-offs expected to decline sharply from Q4 levels and be lower in 2013 than 2012

Consumer Lending - Decline in Forbearance Usage Beyond 12 Months Drove Increased Charge-Offs

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Low Risk = Smart Option, Legacy Traditional Cosigned, and Law/MBA/MED/CT/Other Moderate Risk = Legacy Traditional Non-Cosigned Elevated Risk = Non-Traditional

Consumer Lending Segment – High Quality Portfolio

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-20%

-10%

0%

10%

20%

30%

40%

$0

$250

$500

$750

$1,000

$1,250

$1,500

3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12

Originations Year over Year Growth

Consumer Lending Segment – High Quality Originations

► 57% of borrowers chose an in-school payment option in Q4 12

► Grew 2012 originations by 22%

► Originations of $3.3 bn in 2012 had an average winning FICO of 748 and 90% were cosigned

($ millions) Q4 12 Q4 11 Q4 10

Private Originations $514 $457 $413

Average FICO at Origination 744 749 747

Average % of Cosigners at Origination 88% 89% 88%

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Business Services Segment – “Core Earnings” Basis

(in millions) Q4 12 Q4 11 2012 2011

Net Income $134 $158 $540 $570

Servicing Revenue $218 $238 $910 $970

Contingency Revenue $95 $85 $356 $333

Department of Education Accounts Serviced 4.3 3.6 4.3 3.6

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FFELP Loans Segment – “Core Earnings” Basis

($ in millions) Q4 12 Q4 11 2012 2011

Net Income $89 $109 $307 $434

Net Interest Income after Provision $279 $337 $1,092 $1,361

FFELP Student Loan Spread 1.00% 1.07% 0.95% 1.06%

Average FFELP Loans $126,874 $139,308 $132,124 $143,109

► Purchased FFELP portfolios totaling $3.7 billion in 2012

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► Issued $4.2 billion of Private ABS

► Issued $9.7 billion of FFELP ABS

► Expanded and extended our FFELP ABCP facility to 2015

► Issued $2.65 billion of long-term unsecured debt

► Returned over $1.1 billion to shareholders through share repurchases and dividends

► Maintained excess capital at Bank and SLM Corporation

2012 Capital Markets Summary

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GAAP Results

($ in millions, except per share amounts) Q4 12 Q4 11 2012 2011

Net Income $348 $511 $939 $633

EPS $0.74 $0.99 $1.90 $1.18

Net Impact before Tax of Derivative Mark-to-Market

Accounting compared to "Core Earnings"

$128 $377 ($194) ($540)

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GAAP to “Core Earnings” Reconciliation

($ in millions, except per share amounts) Quarters Ended Years Ended

December 31, 2012 December 31, 2011 December 31, 2012 December 31, 2011

Dollars Diluted EPS Dollars Diluted EPS Dollars Diluted EPS Dollars Diluted EPS

GAAP net income 348$ $0.74 511$ $0.99 939$ 1.90$ 633$ 1.18$

Adjustment from GAAP to "Core Earnings"

Net impact of derivative accounting (128) (377) 194 540

Net impact of goodwill and acquired intangible assets 14 5 28 24

Total "Core Earnings" Adjustments before net tax effect (114) (372) 222 564

Net tax effect 23 129 (99) (220)

Total "Core Earnings" Adjustments (91) (243) 123 344

"Core Earnings" $257 $0.55 $268 $0.51 $1,062 $2.16 $977 $1.83

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Appendix

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(Dollars in millions)

D ecember 3 1, 2 0 12

Trad it ional Port f o lio

M ont hly Scheduled Payment s D ue

Loan St at us 0-12 payments 13-24 payments 25-36 payments 37-48 payments M ore than 48 payments Total

Not Yet in Repayment 5,421

Loans in Forbearance 517 7.9% 173 3.1% 137 2.4% 74 1.7% 95 1.2% 996 3.3%

Loans in Repayment- Current 5,109 78.3% 5,042 88.8% 5,090 90.4% 4,114 92.9% 7,242 94.5% 26,597 88.9%

Loans in Repayment- Delinq 31-60 days 281 4.3% 160 2.8% 151 2.7% 98 2.2% 147 1.9% 837 2.8%


Loans in Repayment- Delinq 90 + days 484 7.4% 228 4.0% 184 3.3% 104 2.4% 121 1.6% 1,121 3.7%

Tot al Loans in R epayment o r Forbearance 6 ,52 8$ 10 0 % 5,6 78$ 10 0 % 5,6 2 9$ 10 0 % 4 ,4 3 0$ 10 0 % 7,6 6 1$ 10 0 % 2 9 ,9 2 6$ 10 0 %

C harge- o f f s as a % o f loans in repayment 8 .6 % 3 .1% 2 .1% 1.5% 1.1% 3 .4 %

N on- Trad it ional Port f o lio



Not Yet in Repayment 483


Loans in Repayment- Current 482 57.2% 324 70.6% 315 77.3% 289 82.7% 568 85.6% 1,978 72.6%



Loans in Repayment- Delinq 90 + days 156 18.5% 65 14.1% 43 10.6% 25 7.1% 36 5.4% 325 11.9%

Tot al Loans in R epayment o r Forbearance 8 4 3$ 10 0 % 4 59$ 10 0 % 4 0 8$ 10 0 % 3 50$ 10 0 % 6 6 4$ 10 0 % 2 ,72 4$ 10 0 %

C harge- o f f s as a % o f loans in repayment 2 6 .6 % 13 .8 % 8 .1% 5.0 % 3 .7% 13 .2 %

Tot al




Loans in Forbearance 602 8.2% 195 3.2% 149 2.5% 83 1.7% 107 1.3% 1,136 3.5%


Loans in Repayment- Delinq 31-60 days 353 4.8% 189 3.1% 175 2.9% 116 2.4% 179 2.1% 1,012 3.1%



Tot al Loans in R epayment o r Forbearance 7,3 71$ 10 0 % 6 ,13 7$ 10 0 % 6 ,0 3 7$ 10 0 % 4 ,78 0$ 10 0 % 8 ,3 2 5$ 10 0 % 3 2 ,6 50$ 10 0 %

C harge- o f f s as a % o f loans in repayment 10 .6 % 3 .8 % 2 .5% 1.8 % 1.3 % 4 .2 %

Loan Seasoning

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September 30, 2012

Traditional Portfolio

Monthly Scheduled Payments Due







6,786$ 100% 6,375$ 100% 5,286$ 100% 3,902$ 100% 6,905$ 100% 29,254$ 100%

Charge-offs as a % of loans in repayment 6.1% 2.2% 1.6% 1.2% 0.9% 2.6%

Non-Traditional Portfolio








902$ 100% 470$ 100% 417$ 100% 342$ 100% 623$ 100% 2,754$ 100%


Total








7,688$ 100% 6,845$ 100% 5,703$ 100% 4,244$ 100% 7,528$ 100% 32,008$ 100%


Total

Total Loans in Repayment or Forbearance

Loan Status 0-12 payments 13-24 payments 25-36 payments 37-48 payments More than 48 payments Total

Loan Status 0-12 payments 13-24 payments 25-36 payments 37-48 payments More than 48 payments

More than 48 payments Total



Loan Status 0-12 payments 13-24 payments 25-36 payments 37-48 payments

Loan Seasoning

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Loan Seasoning


December 31, 2011

Traditional Portfolio








8,107$ 100% 6,324$ 100% 5,239$ 100% 3,485$ 100% 5,507$ 100% 28,662$ 100%


Non-Traditional Portfolio








1,139$ 100% 513$ 100% 438$ 100% 293$ 100% 526$ 100% 2,909$ 100%


Total Managed





Loans in Repayment- Delinq 31-60 days 506 5.5% 212 3.1% 158 2.8% 83 2.2% 117 1.9% 1,076 3.4%



9,246$ 100% 6,837$ 100% 5,677$ 100% 3,778$ 100% 6,033$ 100% 31,571$ 100%


More than 48 payments Total



Loan Status 0-12 payments 13-24 payments 25-36 payments 37-48 payments

Total


Loan Status 0-12 payments 13-24 payments 25-36 payments 37-48 payments More than 48 payments Total

Loan Status 0-12 payments 13-24 payments 25-36 payments 37-48 payments More than 48 payments

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Private Education Loan Portfolio Performance

(1) Charge-offs as a percentage of average loans in repayment annualized for the quarters presented

Q412 Q312 Q212 Q112 Q411

Charge-offs - Traditional Portfolio (1) 3.4% 2.6% 2.5% 2.3% 2.7%

Charge-offs - Non-Traditional Portfolio (1) 13.2% 10.5% 9.8% 10.3% 11.9%

Charge-offs - Total Portfolio (1) 4.2% 3.2% 3.1% 3.0% 3.5%

90+ Day Delinq as a % of Repay - Traditional Portfolio 3.9% 4.4% 3.7% 3.6% 4.0%

90+ Day Delinq as a % of Repay - Non-Traditional Portfolio 12.6% 14.6% 12.6% 12.5% 13.6%

90+ Day Delinq as a % of Repay - Total Portfolio 4.6% 5.3% 4.5% 4.4% 4.9%

Forb as a % of Forb & Repay - Traditional Portfolio 3.3% 3.1% 4.1% 4.1% 4.2%

Forb as a % of Forb & Repay - Non-Traditional Portfolio 5.1% 5.0% 6.4% 6.8% 6.6%

Forb as a % of Forb & Repay - Total Portfolio 3.5% 3.2% 4.3% 4.3% 4.4%

Allowance as a % of Loans in Repay - Traditional Portfolio 5.7% 5.8% 5.7% 5.8% 5.6%

Allowance as a % of Loans in Repay - Non-Traditional Portfolio 20.7% 21.5% 22.5% 22.8% 23.1%

Allowance as a % of Loans in Repay - Total Portfolio 6.9% 7.1% 7.1% 7.2% 7.2%

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Private Education Loan Portfolio Performance

(1) Charge-offs as a percentage of average loans in repayment annualized for the quarters presented

Traditional Loans with a Cosigner Q412 Q312 Q212 Q112 Q411

Outstanding Balance as a % of Total 62% 62% 60% 60% 59%

90+ Delinquency as a % of Repayment 2.9% 3.2% 2.7% 2.6% 2.9%

Forbearance as a % of Repayment & Forbearance 3.3% 2.9% 3.8% 3.7% 3.8%

Charge-Offs as a % of Repayment (1)

2.1% 1.6% 1.5% 1.4% 1.7%

Traditional Loans without a Cosigner Q412 Q312 Q212 Q112 Q411





5.9% 4.5% 4.3% 3.9% 4.5%

Non-Traditional Loans with a Cosigner Q412 Q312 Q212 Q112 Q411





8.8% 6.9% 6.6% 7.1% 7.8%

Non-Traditional Loans without a Cosigner Q412 Q312 Q212 Q112 Q411





15.0% 11.9% 11.1% 11.6% 13.6%

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High Percentage of Student Loans Funded to Term

Term ABS, $122

Private ABCP

Conduit, $1

Straight A Conduit,

$9

FFELP ABCP Conduit

& FHLB, $6

Fixed Spread

Liabilities, $25

$163* Billion Student Loan Portfolio as of December 31, 2012

* Gross loans, Numbers may not add due to rounding.

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Unsecured Debt Maturities

$2.3 $3.0

$1.0

$2.3 $1.8

$2.8

$0.2

$1.6

$2.8

$0

$5

$10

As of December 31, 2012

(par value, $ in billions)

Note: Does not include Sallie Mae Bank or Subsidiary funding

Documents

EARNINGS CALL PRESENTATION - Sallie Mae · The following information is current as of January 16, 2013 (unless otherwise noted) and should be read in connection with SLM Corporation’s