SLM Corporation (NYSE: SLM) Records Third Consecutive Year of Double-Digit Growth in Loan Originations
Calendar Year 2002 Preferred-Channel Originations Total $11.9 Billion; Write-Off of Aircraft Leases Results in $51 Million Charge
RESTON, Va., April 17, 2002—SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, today reported fourth-quarter and year-end 2002 earnings and performance results that include an 18-percent annual increase in preferred-channel loan originations, resulting in a calendar year 2002 total of $11.9 billion.
The year 2002 is the third consecutive annual period in which the company has recorded double-digit percentage growth in its preferred-channel loans, which are originated through Sallie Mae's owned or affiliated brands. These originations are a key measure of the company's market success and a predictable indicator of future loan volume.
"With nearly $12 billion in annual originations, and more than 80 percent of that in federal loans, Sallie Mae is making significant progress toward our goal of becoming the nation's leading provider of education loans, period," said Albert L. Lord, vice chairman and chief executive officer, Sallie Mae. "And the story continues because our clear focus on customer service and operating efficiency, combined with our diverse loan products, positions us to win even more share from a growing market."
Sallie Mae reports financial results on a GAAP basis and 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 fourth-quarter 2002 GAAP net income of $306 million, or $1.93 per diluted share, compared to $266 million, or $1.69 per diluted share, in the year-ago period. Included in these GAAP results are $262 million in pre-tax gains on student loan securitizations and a $51 million pre-tax, market-value gain in derivatives. For the year ended Dec. 31, 2002, GAAP net income was $792 million, or $4.93 per diluted share, compared to $384 million, or $2.28 per diluted share, for 2001.
The company's earnings per diluted share were affected in the fourth quarter by an after-tax impairment charge of $51 million, or $.32 per diluted share, which was taken to write-off Sallie Mae's loss on its portfolio of commercial aircraft leases. The impairment charge is reflected in the investment income and income tax line items on the quarterly income statement.
Excluding the impairment charge, "core cash" earnings for the quarter were $198 million, or $1.24 per diluted share, and for the year were $741 million, or $4.61 per diluted share, a 23-percent increase from the prior year.
"Core cash" net interest income, excluding the impairment charge, was $379 million for the quarter, an 11-percent increase from the year-ago quarter, and $1.4 billion for the year, compared to $1.3 billion in 2001, a 12-percent increase.
Including the effect of the impairment charge, the company's "core cash" earnings for the 2002 fourth quarter were $147 million, or $.92 per diluted share, compared to $163 million, or $1.03 per diluted share, in the year-ago period, an 11-percent decrease. For calendar year 2002, "core cash" earnings were $690 million, or $4.29 per diluted share, compared to $624 million, or $3.75 per diluted share, for 2001, a 14-percent increase.
"Core cash" other income, which consists primarily of fees earned from guarantor servicing and collection activity, was $124 million for the 2002 fourth quarter, down from $134 million for the prior quarter and up from $111 million for the year-ago quarter. "Core-cash" operating expenses were essentially flat at $171 million versus $169 million in the prior quarter, and $170 million in the year-ago quarter.
Both a description of the "core cash" treatment and a full reconciliation to the GAAP income statement can be found at http://www.salliemae.com.
Total equity for the company at Dec. 31, 2002, was $2.0 billion, an increase of $325 million from a year ago. In addition, the company's tangible capital increased to 1.59 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, Jan. 16, 2003, starting at 11:45 a.m. EST: 877-356-5689 (USA and Canada) or 706-679-0623 (International). The conference call will be replayed continuously beginning Thursday, Jan. 16, at 3:30 p.m. EST and concluding at 11:59 p.m. EST on Thursday, Jan. 23. Please dial 800-642-1687 (USA and Canada) or dial 706-645-9291 (International) and use access code 7410431. 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 $78 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