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. At quarter end, the company’s total managed loan portfolio totaled $94.9 billion, a 14-percent increase from the same time last year.

In addition, the company reported that it is 98 percent complete in the wind down of its government-sponsored entity (GSE), with $2.2 billion in student loans remaining in the GSE, as compared to $16 billion at March 31, 2004. The company now expects to complete its full privatization in early 2005.

“We are pleased to be able to deliver this earnings growth while moving so near to full privatization,” said Albert L. Lord, vice chairman and chief executive officer.

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 2004 GAAP net income of $615 million, or $1.36 per diluted share, compared to $373 million, or $.80 per diluted share, in the year-ago period. GAAP net income for the first half of 2004 totaled $906 million compared to $789 million in 2003.

“Core cash” net income for the quarter was $237 million, up from $210 million in the year-ago period. On a diluted share basis, the company increased 18 percent in the quarter to $.52, compared to $.44 per diluted share in the 2003 second quarter. “Core cash” net interest income was $445 million for the quarter and $879 million for the first half of 2004, up from $393 million and $766 million for the same periods last year.

“Core cash” other income, which consists primarily of fees earned from guarantor servicing and debt management, was $166 million for the 2004 second quarter, down from $174 million for the prior quarter and up 21 percent from the year-ago quarter’s $137 million. “Core cash” operating expenses were $199 million, down from $202 million in the prior quarter, and up from $183 million in the year-ago quarter.

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, 2004, was $2.9 billion, an increase of $554 million from a year ago. Tangible capital stood at 1.93 percent of managed assets, as compared to 1.81 percent as of June 30, 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 15, 2004, 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 15, at 3:30 p.m. EDT and concluding at 11:59 p.m. EDT on Thursday, July 22. Please dial 800/642-1687 (USA and Canada) or dial 706/645-9291 (International) and use access code 7961444. 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.

View Supplemental Earnings Disclosure(31k PDF)

For more information, contact:

Media contacts:
Tom Joyce 703/810-5610
Martha Holler 703/810-5178

Investor contacts:
Steve McGarry 703/810-7746
Nam Vu 703/810-7723

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.