The Leading Provider of Education Credit Sustains Strong Growth
RESTON, Va., July 18, 2002—SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, today reported that its second-quarter 2002 "core cash" earnings were $179 million, a 17-percent increase over the year-ago quarter of $153 million. "Core cash" earnings per diluted share were $1.11, a 23-percent increase over $.90 per diluted share in the same quarter last year. For the six months ended June 30, 2002, "core cash" earnings were $350 million, or $2.16 per diluted share, versus $298 million, or $1.74 per diluted share, in the first six months of 2001.
The company attributed its strong performance to several factors. These include: building and deepening relationships with schools during the 2001/2002 academic year; increasing demand for higher education; and a continuing focus on operating efficiency, now that the integration of USA Group and other entities acquired by the company within the past two years is complete.
"What looked like potential several years ago has become a pattern of strong performance," said Albert L. Lord, Sallie Mae's vice chairman and chief executive officer. "Our sales and service model is working for schools, and our loan products are working for parents and students. As we continue to deliver, our prospects get even brighter."
Sallie Mae acquired $4.5 billion of student loans during the 2002 second quarter compared to $4.1 billion in the second quarter of 2001, a 10-percent increase. Student loan acquisitions for the first half of 2002 were $9.0 billion versus $7.9 billion for the same period in 2001.
"Core cash" net interest income was $350 million for the quarter, an 11- percent increase from the year-ago quarter. For the six months ended June 30, 2002, "core cash" net interest income was $684 million, up 12 percent over the same period last year. The increase reflected the growth in managed loans and a stable spread earned on these loans. Sallie Mae's preferred channel loan origination activity (loans originated by Sallie Mae and its partners) during the first half of 2002 grew 22 percent to $5.3 billion, from $4.4 billion a year ago.
"Core cash" other income for the 2002 second quarter was $124 million up from $121 million for the prior quarter and $101 million for the year-ago quarter. The company's "core cash" operating expenses this quarter were virtually flat, $162 million versus $161 million in the prior quarter, and $158 million in the year-ago quarter. Results for the first half of 2002 include revenues and costs of two collections companies acquired in January.
Sallie Mae reports "core cash" results as well as results determined using GAAP. The company believes "core cash" results more accurately portray the performance of the company than does GAAP. A detailed reconciliation of "core cash" to GAAP earnings is provided as an attachment to this release and can be accessed at http://www.salliemae.com.
The company earned GAAP net income of $126 million, a 55-percent decrease from the year-ago quarter of $282 million. GAAP earnings per diluted share were $.78, a 54-percent decrease from $1.68 per diluted share in the same quarter last year. Included in these results is an SFAS 133 mark-to-market loss of $177 million in the second quarter of 2002, compared to a mark-to- market gain of $117 million in the second quarter of 2001. Servicing and securitization revenue was $180 million in the second quarter of 2002, a 7- percent decrease from the year-ago quarter. GAAP net income for the first half of 2002 totaled $548 million compared to $312 million in 2001. The earnings growth resulted in $3.41 per diluted share in the first six months of 2002, an 87-percent increase over $1.82 per diluted share in the 2001 first half.
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 18, 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, July 18, at 3:30 p.m. EDT and concluding at 11:59 p.m. EDT on Thursday, July 25. Please dial 800-642-1687 (USA and Canada) or dial 706-645-9291 (International) and use access code 4801637. 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 nearly $76 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