SLM Corporation loan originations rise 20 percent, driving continued earnings growth
Company's preferred channel loans reach $6.8 billion; Total managed portfolio exceeds $83 billion
RESTON, Va., July 17, 2003—SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, today reported second-quarter 2003 earnings and performance results that include a 20 percent increase in preferred channel loan originations from the same period one year ago. The company's preferred channel loan origination activity for the first half of 2003 grew to $6.8 billion, up from $5.6 billion for the first half of 2002.
Preferred channel loan originations consist of loans created by the company's owned or affiliated brands. These loans are a key measure of Sallie Mae's market share success and, as an indicator of future loan acquisition volume, drive the company's earnings growth. The company's total managed loans portfolio grew 10 percent from second quarter of 2002, and now exceeds $83 billion.
"We posted another solid quarter, with strong growth in our preferred channel originations," said Albert L. Lord, vice chairman and chief executive officer. "The demand for and value of higher education continues to surge. This, combined with Sallie Mae's service, products, technology and people gives me great confidence in our future."
Sallie Mae reports financial results on a GAAP basis and also presents certain non-GAAP or "core cash" performance measures. The company's equity investors, credit rating agencies and debt capital providers request these "core cash" measures to monitor the company's business performance.
Sallie Mae reported second-quarter 2003 GAAP net income of $373 million, or $.80 per diluted share, compared to $126 million, or $.26 per diluted share, in the year-ago period. GAAP net income for the first half of 2003 totaled $789 million compared to $548 million in 2002.
"Core cash" net income for the quarter was $210 million, or $.44 per diluted share, up from $179 million or $.37 per diluted share in the year-ago quarter. "Core cash" net interest income was $393 million for the quarter, a 12-percent increase from the year-ago quarter's $350 million.
"Core cash" other income, which consists primarily of fees earned from guarantor servicing and debt management, was $137 million for the 2003 second quarter, down from $147 million for the prior quarter and up from $124 million for the year-ago quarter. "Core cash" operating expenses were $183 million, up from $173 million in the prior quarter, and $162 million in the year-ago quarter, primarily due to acquisition costs and seasonal expenses related to preparing for third-quarter "peak" enrollment season.
A description of the "core cash" treatment and a full reconciliation to the GAAP income statement can be found at www.salliemae.com.
Total equity for the company at June 30, 2003, was $2.4 billion, an increase of $441 million from a year ago. Tangible capital stood at 1.81 percent of managed assets, as compared to 1.56 percent as of June 30, 2002. In addition, the company continues to make progress toward the wind-down of its government-sponsored enterprise (GSE) subsidiary. As of June 30, 64 percent of managed student loans are funded through non-GSE sources, as compared with 58 percent in the prior quarter.
In May, the company announced a three-for-one stock split in the form of a stock dividend of two additional shares for every one share already outstanding effective June 20, 2003 for shareholders of record on June 6, 2003.
The company will host its regular earnings conference call today at noon. Sallie Mae executives will be on hand to discuss various highlights of the quarter and to answer questions related to the company's performance. Individuals interested in participating should call the following number today, July 17, 2003, starting at 11:45 a.m. EDT: (877) 356-5689 (USA and Canada) or (706) 679-0623 (International). The conference call will be replayed continuously beginning Thursday, July 17, at 3:30 p.m. EDT and concluding at 11:59 p.m. EDT on Thursday, July 24. Please dial (800) 642-1687 (USA and Canada) or dial (706) 645-9291 (International) and use access code 1088640. In addition, there will be a live audio Web cast of the conference call, which may be accessed at www.salliemae.com. A replay will be available 30-45 minutes after the live broadcast.
For more information, contact:
Investor Contacts:
Jeff Heinz 703/810-7751
Nam Vu 703/810-7723
Media Contacts:
Tom Joyce 703/810-5610
Stephanie Cassidy 703/810-6810
Statements in this release referring to expectations as to future market share, the successful consummation of any business acquisitions and other future developments are forward-looking statements, which involve risks, uncertainties and other factors that may cause the actual results to differ materially from such forward-looking statements. Such factors include, among others, changes in the terms of student loans and the educational credit marketplace arising from the implementation of applicable laws and regulations, and from changes in such laws and regulations, changes in the demand for educational financing or in financing preferences of educational institutions, students and their families, and changes in the general interest rate environment. For more information, see the company's filings with the Securities and Exchange Commission.
SLM Corporation (NYSE: SLM) is the nation’s leading provider of education funding, managing more than $83 billion in student loans for more than seven million borrowers. The company primarily provides federally guaranteed student loans originated under the Federal Family Education Loan Program (FFELP), and offers comprehensive information and resources to guide students, parents and guidance professionals through the financial aid process. Celebrating its 30th anniversary this year, the company opened its doors in May 1973 as a government-sponsored enterprise (GSE) called the Student Loan Marketing Association, and began the privatization process in 1997. Since then, Sallie Mae’s parent company name has changed, most recently to SLM Corporation (effective May 17, 2002). Through its specialized subsidiaries and divisions, the company also provides an array of consumer credit loans, including those for lifelong learning and K-12 education, and business and technical outsourcing services for colleges and universities. More information is available at http://www.salliemae.com. SLM Corporation and its subsidiaries, other than the Student Loan Marketing Association, are not sponsored by or agencies of the United States.
Supplemental Earnings Disclosure