The Leading Provider of Education Credit Reaches $3.9 Billion In Loan Originations
RESTON, Va., October 17, 2002—SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, today reported third-quarter 2002 earnings and performance measurements that demonstrate continued strong growth. The company said that its third-quarter 2002 preferred channel loan originations totaled a record $3.9 billion, a 19-percent increase from the year-ago quarter of $3.3 billion. Loan originations are a key measure of the company's market success and a predictable indicator of future loan volume.
"Third quarter is back-to-school time for millions of college students, and an ever-growing number of those students are paying for their education with a loan provided by Sallie Mae or one of our affiliated brands," said Albert L. Lord, Sallie Mae's vice chairman and chief executive officer. "When you combine our originations growth with our ability to increase the student loan spread by taking advantage of favorable interest rates, I am very pleased with how our '02-'03 school year is shaping up."
Sallie Mae reports financial results on both a GAAP basis and a non-GAAP basis through performance measures, which the company calls "core cash." "Core cash" is presented in addition to GAAP because the company, its equity investors, credit rating agencies and debt capital providers use these measures to monitor the company's business performance.
Sallie Mae reported a third-quarter 2002 GAAP net loss of $(62) million, or $(.42) per diluted share, compared to a GAAP net loss of $(194) million, or $(1.25) per diluted share in the year-ago period. The GAAP mark-down of certain interest rate hedge contracts accounted for most of a $(1.51) per share, or $(238) million, reduction in the company's third-quarter 2002 GAAP earnings. For the nine months ended Sept. 30, 2002, GAAP net income was $486 million, or $3.01 per diluted share, compared to $118 million, or $.66 per diluted share, for the year-ago period.
The company's "core cash" earnings for the 2002 third quarter were $194 million, or $1.21 per diluted share, a 19-percent increase over last year's third-quarter earnings of $163 million, and a per share increase of 22 percent. "Core cash" net interest income was $358 million for the quarter, a 12-percent increase from the year-ago quarter. For the nine months ended Sept. 30, 2002, "core cash" net income was $544 million, or $3.37 per diluted share, compared to $461 million, or $2.72 per diluted share, for the year-ago period.
"Core cash" other income, which consists primarily of fees earned from guarantor servicing and collection activity, was $134 million for the 2002 third quarter, up from $124 million for the prior quarter and $131 million for the year-ago quarter. The company's third-quarter operating expenses were up slightly over last quarter, reflecting back-to-school activity, but down from a year ago, even with the inclusion of two collection companies acquired in January 2002. "Core cash" operating expenses were $169 million versus $162 million in the prior quarter, and $173 million in the year-ago quarter. A full reconciliation and description of the "core cash" treatment can be found at http://www.salliemae.com.
Total equity for the company at Sept. 30, 2002, was $1.8 billion, an increase of $299 million from a year ago. In addition, the company's tangible capital increased to 1.41 percent of managed assets, as compared to 1.32 percent as of Dec. 31, 2001.
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, Oct. 17, 2002, 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, Oct. 17, at 3:30 p.m. EDT and concluding at 11:59 p.m. EDT on Thursday, Oct. 24. Please dial (800) 642-1687 (USA and Canada) or dial (706) 645-9291 (International) and use access code 6049040. In addition, there will be a live audio Web cast of the conference call, which may be accessed at http://www.salliemae.com . A replay will be available 30-45 minutes after the live broadcast.
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.
Sallie Mae (NYSE: SLM) is the nation's leading provider of education funding, managing more than $77 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. The company was founded in 1972 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