CAPÍTULO II. CONDICIONES GENERALES DE CADA GARANTÍA
Artículo 13. Extensión de garantías
Declining Delinquency &
Charge‐off Rates
CU Student Choice 90+ DPD = 1.10%
Gross Annualized CO = 0.55% (Q3 2014) Gross Annualized CO = 0.71% (Q3 2015) PSL Industry (Measure One)
90+ DPD = 2.12%
Gross Annualized CO = 2.37% (Q3 2014) Gross Annualized CO = 2.23% (Q3 2015) Federal Student Loans
Cohort Default Rate = 11.8%*
*as of 2015 data
• CU Student Choice Portfolio Performance
• 0.50% Annualized Gross Charge‐off Rate
• 1.47% 60+ Delinquency Rate
• 0.82% 90+ Delinquency Rate Student Choice Portfolio Snapshot
as of Q4 2015
• $1.78 Billion in Outstanding Balances
• 59.9% Loans in Repayment
• $171.1M Loans Paid in Full
• Strong Credit Union Performance
$500‐$750M Credit Union ROAA Model
PSL Balances (as of 4/'14) $8,500,000
PSL Balances (as of 5/'13) $6,500,000
Average PSL Balances: $7,500,000 Weighted Margin: 3.00% (floor of 6.0%) 3.00%
Weighted Index 3.25%
Weighted COF Yield (Peer to Peer/5300) 0.75%
3rd Party Insurance* 0.50%
Net Yield: 5.00%
Gross Annual Interest Revenue $468,750
Net Annual Interest Revenue $375,000
# of Loans (as of 4/30/14) 425
Loan Costs (from remittances 5/'13 ‐ 4/'14) $90,000
Origination costs = $30,000 $30,000
Mgmt Fee/Servicing/Other $60,000
Total: $90,000 Net Annual Total PSL Income: $285,000 Return on Average PSL Assets (ROAA) 3.80%
*Amortized over conservative 10 year expected loan life
• Strong ROAA = 3.80%
• Steady Performance = 0.83%
delinquency against loans in Repayment (NO CHARGE‐OFFs)
• Launched in 2009
• Assets between $500M ‐ $700M
• Just over $12M in funded loans ~ 42%
in full repayment ‐ 3.3% PIF
• Added over $2M – up 29% YOY (from 2013 to 2014)
• Headline #5: Booming Refi Market
$211 billion is available for refinancing
• $121B – Federal
• $90B – Private
• Just $4B has been refinanced
Source: Goldman‐Sachs ‐The Future of Finance – 3/2015
Marketplace Lenders Traditional Lenders
Credit Unions
• Booming Refi Market
$211 billion is available for refinancing
• $121B – Federal
• $90B – Private
• Just $4B has been refinanced
Source: Goldman‐Sachs ‐The Future of Finance – 3/2015
Credit Unions are not about a myopic focus on ‘Super Prime’ – rather, it is about helping a diverse population of members, the broader community, and employer groups in a holistic and helpful manner.
• Refinance Member Profile
• Refi borrowers with no cosigners:
– Tend to be 29 years old, graduated school 4+ years ago, have been employed 3+ years, make almost $70K per year, have reasonable credit scores of 720+, reasonably low DTI of 29, and take out ~$32K refi loan.
• Refi borrowers with cosigners:
– These borrowers tend to be younger and have slightly less employment, income, credit history and/or larger loan needs.
– As such, these borrowers choose to add a cosigner with strong credit (750+ credit score) and high income ($88K) to help secure larger refi loans ($49K).
Segmentation Profile Non‐Cosigned Cosigned Blended
% of Applications 51% 49% 100%
Avg. Borrower Age at Application 29 27 28
Avg. Borrower Credit Score 725 714 720
Avg. Borrower Monthly Income $5,727 $3,228 $4,487
Avg. Borrower Months at Employer 38 27 33
Avg. Borrower Months Since Graduation 52 28 40
Avg. Borrower % Home Owner 21% 11% 16%
Avg. Cosigner Age at Application 54
Avg. Cosigner Credit Score 754
Avg. Cosigner Monthly Income $7,369
Avg. Cosigner Months at Employer 237
Avg. Decision Credit Score 725 768 746
Avg. Decision DTI Ratio 29 39 34
Avg. Loan Approved Amount $32,293 $49,431 $40,797
16% of all Refi borrowers are home owners…thus
sizeable future mortgage opportunities
• Solution: Co‐Borrower Emphasis
Source: MeasureOne Q3 2015 Private Student Loan Performance Report
• Solution: School Certification
Source: MeasureOne Q3 2015 Private Student Loan Performance Report
• Solution: Financial Literacy
CU branded version of iGrad
• Solution: Education & Engagement
• Member Seminars
Our Strategic Partners Team conducted nearly 40 national seminars in 2015 attended by more than 1,000 members
• Open National Webinars
Free national webinars to help college‐bound
families on how to keep costs down and survive the first days of college and completing the FAFSA
• 1:1 Counseling
Free individualized counseling service for families to schedule in‐depth consultations with our college planning expert
• Solution: Education & Engagement
Modern, millennial‐focused financial literacy
• Solution: Education & Engagement
9 credit unions 8,000 borrowers
58% avg. checking penetration
18% avg. credit card penetration
9% avg. auto loan penetration
6% avg. deposit penetration
CU Student Choice Borrower Relationship Study 2015
“Being the first in my family in America to attend college was a big accomplishment!
Although, it was a joyful accomplishment, I was not as happy as I should have been
because I knew college was not cheap. Joining Georgia’s Own was probably one of the best decisions before college that I have ever
made. Receiving a Georgia’s Own Credit Union private student loan has helped me so much!”
‐ Mira
• Who We Are: Credit Union Student Choice
By credit unions, for credit unions
Credit Unions in full control Sustainable loan growth
CU Industry Asset‐Class Expertise
Results Snapshot:
• 65,000+ young adult members assisted
• $1.9B under management
• 245 CU programs
• Strong portfolio performance
• Strong value to members
• Who We Are: Credit Union Student Choice
Net Income
Positive • Since December 2010
Proven
& Trusted
• 54% Marketshare based on Q3 2015 5300 Report
• $1.9B of $3.5B
NO
Reputation Risk
• Zero Venture capital financing
• No exit strategy
Credit Union Philosophy
• Owned & Managed
• Board President Brian Ducharme President of MIT FCU
• Who We Are: Our CU Partners
• Risk Optimization
Optimal Window Matching Risk/Return
Loan Co‐Borrowers School Eligibility
Credit Risk‐based Lending School Certification
ESSENTIAL RISK
MANAGEMENT FACTORS
Variable Interest Rate CU‐to‐School Disbursed
Note: Per federal law, student loans are generally difficult to discharge in
bankruptcy. Must prove undue hardship which is high threshold and relatively uncommon.
• Bringing It All Together
• Millennials offer a win‐win for credit unions:
– Member gains affordable financing to earn a degree – Member has ability to leverage this degree for strong
employment
• Credit Unions gain Members in Peak Borrowing Years – Private student loans are high earning assets
– Performance is Strong!
– Introduces CU products and services to new members – Places new loan balances on CU books
• Any Questions?
• Thank you
• Glad to be here!
• Jillian Gajtka
• Manager | Strategic Partnerships