EX-99.1 2 a2166679zex-99_1.htm EXHIBIT 99.1
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Exhibit 99.1

SallieMae   NEWS RELEASE
FOR IMMEDIATE RELEASE   Media Contacts:
Tom Joyce
703/984-5610
Martha Holler
703/984-5178		   Investor Contacts:
Steve McGarry
703/984-6746
Joe Fisher
703/984-5755


SALLIE MAE LOAN ORIGINATIONS GROW 19 PERCENT IN 2005


Total Managed Portfolio Totals $122.5 Billion; Fee-Based Businesses Grow 22 Percent

        RESTON, Va., Jan. 19, 2006 — SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, today reported 2005 performance results that include preferred-channel loan originations of $4.6 billion in the fourth quarter and $21.4 billion for the year, increases of 15 percent and 19 percent, respectively, from the year-ago periods. Preferred-channel loans are originated through Sallie Mae's internal or affiliated brands and provide the engine for the company's market leadership in education finance.

        "We delivered on our earnings targets for shareholders in 2005 while facing the phase-out of a significant partnership arrangement, an unprecedented level of loan consolidation activity and an increase in price competition," said Tim Fitzpatrick, CEO. "I am particularly pleased with the growth of our internal brands, the successful launch of our new direct-to-consumer loan and the continued momentum of our fee-based businesses."

        The company's internal lending brands originated $2.2 billion in the fourth-quarter 2005, 48 percent of the period's preferred-channel originations, and $9.1 billion in 2005, or 43 percent of all loans originated through the preferred channel during the year.

        The company originated $1.4 billion in private education loans in the quarter and $6.2 billion for the full year, increases over the year-ago periods of 40 percent and 45 percent, respectively. More than $850 million of the 2005 total came from Tuition Answer, the company's new direct-to-consumer private education loan. Income from the company's fee-based businesses, including guarantor servicing and debt management activity, increased 15 percent in the fourth-quarter 2005 and 22 percent in the full year, as compared to the year-ago periods.

        At Dec. 31, 2005, the company's managed student loan portfolio was $122.5 billion, a 14-percent increase from $107.4 billion at Dec. 31, 2004.

        Sallie Mae reports financial results on a GAAP basis and also presents certain non-GAAP or "core earnings" performance measures. The company's equity investors, credit rating agencies and debt capital providers use these "core earnings" measures to monitor the company's business performance. A description of the "core earnings" treatment and a full reconciliation to the GAAP income statement can be found at www.salliemae.com.

        Sallie Mae reported fourth-quarter 2005 GAAP net income of $431 million, or $.96 per diluted share, compared to $650 million, or $1.40 per diluted share, in the year-ago period. For the year ended Dec. 31, 2005, GAAP net income was $1.4 billion, or $3.05 per diluted share, compared to $1.9 billion, or $4.04 per diluted share, in 2004. Included in the year-ago, fourth-quarter figures is a $(76) million after-tax charge, or $(.17) per diluted share, which was taken to defease the company's government-sponsored enterprise (GSE) debt.

        "Core earnings" net income for the 2005 fourth quarter was $284 million, or $.63 per diluted share, compared to the year-ago quarter's $180 million, or $.39 per diluted share. For the full year 2005, "core earnings" net income was $1.1 billion, or $2.51 per diluted share, compared to $867 million, or $1.84 per diluted share, in 2004. Current quarter "core earnings" results included an after-tax charge of $(12) million, or $(.03) per diluted share, to establish a new loan loss reserve for


guaranteed loan claim filings in anticipation of passage of related legislation. Year-ago quarter results included an after-tax charge of $(76) million, or $(.17) per diluted share, to defease the company's GSE debt. Exclusive of these items, fourth-quarter 2005 "core earnings" would have been $296 million, or $.66 per diluted share, compared to fourth-quarter 2004 "core earnings" of $256 million, or $.56 per diluted share.

        "Core earnings" net interest income was $566 million in the fourth-quarter 2005 and $2.1 billion for the year, a 17-percent increase over 2004. "Core earnings" non-interest income, which includes fees earned from guarantor servicing and debt management activity, collection revenue and other servicing fees, was $234 million in the 2005 fourth-quarter and grew 22 percent during the year to total $878 million for 2005. "Core earnings" operating expenses were $279 million for the fourth-quarter 2005 and $1.1 billion for 2005.

        Total equity for the company at Dec. 31, 2005, was $3.8 billion, up from the year-ago total of $3.1 billion. Tangible capital was 1.9 percent of managed assets at Dec. 31, 2005, compared to 1.6 percent as of Dec. 31, 2004.

        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. 19, 2006, 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. 19, at 3:30 p.m. EST and concluding at 11:59 p.m. EST on Thursday, Jan. 26. Please dial (800) 642-1687 (USA and Canada) or dial (706) 645-9291 (International) and use access code 3924281. 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.

***

Forward Looking Statements:

        This press release contains "forward-looking statements" including expectations as to future market share, the success of preferred channel originations and future results. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Because such statements inherently involve risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks 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), commonly known as Sallie Mae, is the nation's No. 1 paying-for-college company, managing nearly $123 billion in student loans for 9 million borrowers. Sallie Mae was originally created in 1972 as a government-sponsored entity (GSE) and terminated all ties to the federal government in 2004. The company remains the country's largest originator of federally insured student loans. Through its specialized subsidiaries and divisions, Sallie Mae also provides debt management services as well as business and technical products to a range of business clients, including colleges, universities and loan guarantors. More information is available at www.SallieMae.com. SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.

###


SLM CORPORATION

Supplemental Earnings Disclosure

December 31, 2005

Dollars in millions, except earnings per share)

 
   Quarters ended
   Years ended
  
 
   December 31,
2005
   September 30,
2005
   December 31,
2004
   December 31,
2005
   December 31,
2004
  
 
   (unaudited)

   (unaudited)

   (unaudited)

   (unaudited)

   (unaudited)

  
SELECTED FINANCIAL INFORMATION AND RATIOS—(GAAP Basis)                                
Net income   $ 431   $ 431   $ 650   $ 1,382   $ 1,913  
Diluted earnings per common share(1)   $ .96   $ .95   $ 1.40   $ 3.05   $ 4.04  
Return on assets     1.88 %   2.01 %   3.52 %   1.68 %   2.80 %

NON-GAAP INFORMATION(2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
"Core earnings" net income   $ 284   $ 312   $ 180   $ 1,131   $ 867  
"Core earnings" diluted earnings per
common share(1)		   $ .63   $ .69   $ .39   $ 2.51   $ 1.84  
"Core earnings" return on assets     .84 %   .94 %   .60 %   .89 %   .78 %

OTHER OPERATING STATISTICS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average on-balance sheet student loans   $ 82,914   $ 77,541   $ 61,284   $ 74,724   $ 55,885  
Average off-balance sheet student loans     38,497     40,742     42,852     41,220     40,558  
   
 
 
 
 
 
Average Managed student loans   $ 121,411   $ 118,283   $ 104,136   $ 115,944   $ 96,443  
   
 
 
 
 
 
Ending on-balance sheet student loans, net   $ 82,604   $ 81,626   $ 65,981              
Ending off-balance sheet student loans, net     39,925     39,008     41,457              
   
 
 
             
Ending Managed student loans, net   $ 122,529   $ 120,634   $ 107,438              
   
 
 
             
Ending Managed FFELP Stafford and Other Student Loans, net   $ 40,658   $ 43,082   $ 46,790              
Ending Managed Consolidation Loans, net     65,434     62,161     49,166              
Ending Managed Private Education Loans, net     16,437     15,391     11,482              
   
 
 
             
Ending Managed student loans, net   $ 122,529   $ 120,634   $ 107,438              
   
 
 
             
(1)
In December 2004, the Company adopted the Emerging Issues Task Force ("EITF") Issue No. 04-8, "The Effect of Contingently Convertible Debt on Diluted Earnings per Share," which requires the shares underlying contingently convertible debt instruments ("Co-Cos") to be included in diluted earnings per share computations regardless of whether the market price trigger or the conversion price has been met, using the "if-converted" accounting method. Diluted earnings per common share amounts disclosed prior to December 2004 have been retroactively restated to give effect to the application of EITF No. 04-8 as it relates to the Company's $2 billion in Co-Cos issued in May 2003. The effect of the adoption of EITF No. 04-8 was to decrease diluted earnings per common share by the following amounts:

 
    
   Quarters ended
   Years ended
  
 
    
   December 31,
2005
   September 30,
2005
   December 31,
2004
   December 31,
2005
   December 31,
2004
  
 
    
   (unaudited)

   (unaudited)

   (unaudited)

   (unaudited)

   (unaudited)

  
    Impact on GAAP diluted earnings per common share due to the implementation of EITF No. 04-8   $ (.03 ) $ (.04 ) $ (.08 ) $ (.11 ) $ (.23 )
    Impact on "core earnings" diluted earnings per common share due to the implementation of EITF No. 04-8   $ (.02 ) $ (.02 ) $ (.02 ) $ (.07 ) $ (.08 )
(2)
See explanation of non-GAAP performance measures under "Reconciliation of "Core Earnings' Net Income to GAAP Net Income."

1


SLM CORPORATION

Consolidated Balance Sheets

(In thousands, except per share amounts)

 
   December 31,
2005
   September 30,
2005
   December 31,
2004
 
   (unaudited)

   (unaudited)

    
Assets                  
FFELP Stafford and Other Student Loans (net of allowance for losses of $6,311; $0; and $0, respectively)   $ 19,988,116   $ 22,353,605   $ 18,965,634
Consolidation Loans (net of allowance for losses of $8,639; $5,627; and $7,778, respectively)     54,858,676     51,193,725     41,595,805
Private Education Loans (net of allowance for losses of $204,112; $193,332; and $171,886, respectively)     7,756,770     8,078,650     5,419,611
Other loans (net of allowance for losses of $15,380; $13,563; and $11,148, respectively)     1,137,987     1,094,464     1,047,745
Cash and investments     4,867,654     3,773,014     6,974,310
Restricted cash and investments     3,300,102     2,706,925     2,211,643
Retained Interest in off-balance sheet securitized loans     2,406,222     2,330,390     2,316,388
Goodwill and acquired intangible assets, net     1,105,104     1,063,916     1,066,142
Other assets     3,918,053     3,725,670     4,496,248
   
 
 
Total assets   $ 99,338,684   $ 96,320,359   $ 84,093,526
   
 
 
Liabilities                  
Short-term borrowings   $ 3,809,655   $ 4,652,334   $ 2,207,095
Long-term borrowings     88,119,090     84,499,739     75,914,573
Other liabilities     3,609,332     3,330,763     2,797,921
   
 
 
Total liabilities     95,538,077     92,482,836     80,919,589
   
 
 
Commitments and contingencies                  

Minority interest in subsidiaries
 
 
9,182
 
 
13,725
 
 
71,633

Stockholders' equity
 
 
 
 
 
 
 
 
 
Preferred stock, par value $.20 per share, 20,000 shares authorized; Series A: 3,300; 3,300; and 3,300 shares, respectively, issued at stated value of $50 per share;
Series B: 4,000; 4,000; and 0 shares, respectively, issued at stated value of $100 per share		     565,000     565,000     165,000
Common stock, par value $.20 per share, 1,125,000 shares authorized: 426,484; 488,525; and 483,266 shares, respectively, issued     85,297     97,705     96,654
Additional paid-in capital     2,233,647     2,107,961     1,905,460
Accumulated other comprehensive income, net of tax     367,910     407,768     440,672
Retained earnings     1,111,743     3,195,034     2,521,740
   
 
 
Stockholders' equity before treasury stock     4,363,597     6,373,468     5,129,526
Common stock held in treasury at cost: 13,347; 69,927; and 59,634 shares, respectively     572,172     2,549,670     2,027,222
   
 
 
Total stockholders' equity     3,791,425     3,823,798     3,102,304
   
 
 
Total liabilities and stockholders' equity   $ 99,338,684   $ 96,320,359   $ 84,093,526
   
 
 

2


SLM CORPORATION

Consolidated Statements of Income

(In thousands, except per share amounts)

 
   Quarters ended
   Years ended
  
 
   December 31,
2005
   September 30,
2005
   December 31,
2004
   December 31,
2005
   December 31,
2004
  
 
   (unaudited)

   (unaudited)

   (unaudited)

   (unaudited)

   (unaudited)

  
Interest income:                                
  FFELP Stafford and Other Student Loans   $ 315,164   $ 270,444   $ 175,497   $ 1,014,851   $ 725,619  
  Consolidation Loans     760,338     676,820     432,160     2,500,008     1,364,777  
  Private Education Loans     203,992     173,467     98,946     633,884     335,451  
  Other loans     22,851     21,614     19,575     84,664     74,289  
  Cash and investments     89,921     70,541     75,094     276,756     232,859  
   
 
 
 
 
 
Total interest income     1,392,266     1,212,886     801,272     4,510,163     2,732,995  
Interest expense     1,002,133     828,122     469,238     3,058,718     1,433,696  
   
 
 
 
 
 
Net interest income     390,133     384,764     332,034     1,451,445     1,299,299  
Less: provisions for losses     65,318     12,217     31,974     203,006     111,066  
   
 
 
 
 
 
Net interest income after provisions for losses     324,815     372,547     300,060     1,248,439     1,188,233  
   
 
 
 
 
 
Other income:                                
  Gains on student loan securitizations     240,651     —     —     552,546     375,384  
  Servicing and securitization revenue     80,032     (16,194 )   141,637     356,730     560,971  
  Losses on investments, net     (6,979 )   (43,030 )   (12,114 )   (63,955 )   (49,358 )
  Gains (losses) on derivative and hedging activities, net     70,270     316,469     506,637     246,548     849,041  
  Guarantor servicing fees     21,555     35,696     28,522     115,477     119,934  
  Debt management fees     98,839     92,727     76,399     359,907     300,071  
  Collections revenue     48,304     41,772     33,523     166,840     38,687  
  Other     67,072     74,174     67,241     273,259     289,802  
   
 
 
 
 
 
Total other income     619,744     501,614     841,845     2,007,352     2,484,532  
Operating expenses:                                
  Loss on GSE debt extinguishment and defeasance     —     —     117,858     —     220,848  
  Other operating expenses     296,663     291,961     269,232     1,138,328     894,932  
   
 
 
 
 
 
Total operating expenses     296,663     291,961     387,090     1,138,328     1,115,780  
   
 
 
 
 
 
Income before income taxes and minority interest in net earnings of subsidiaries     647,896     582,200     754,815     2,117,463     2,556,985  
Income taxes     215,907     149,821     103,488     728,767     642,689  
   
 
 
 
 
 
Income before minority interest in net earnings of subsidiaries     431,989     432,379     651,327     1,388,696     1,914,296  
Minority interest in net earnings of subsidiaries     954     1,029     1,026     6,412     1,026  
   
 
 
 
 
 
Net income     431,035     431,350     650,301     1,382,284     1,913,270  
Preferred stock dividends     7,832     7,288     2,876     21,903     11,501  
   
 
 
 
 
 
Net income attributable to common stock   $ 423,203   $ 424,062   $ 647,425   $ 1,360,381   $ 1,901,769  
   
 
 
 
 
 
Basic earnings per common share   $ 1.02   $ 1.02   $ 1.52   $ 3.25   $ 4.36  
   
 
 
 
 
 
Average common shares outstanding     415,907     417,235     426,316     418,374     436,133  
   
 
 
 
 
 
Diluted earnings per common share   $ .96   $ .95   $ 1.40   $ 3.05   $ 4.04  
   
 
 
 
 
 
Average common and common equivalent shares outstanding     457,406     458,798     468,232     460,260     475,787  
   
 
 
 
 
 
Dividends per common share   $ .22   $ .22   $ .19   $ .85   $ .74  
   
 
 
 
 
 

3


SLM CORPORATION

Segment and Non-GAAP "Core Earnings"

Consolidated Statements of Income

(In thousands)

 
   Quarter ended December 31, 2005
 
   Lending
   DMO
   Corporate
and Other
   Total "Core
Earnings"
   Adjustments
   Total
GAAP
 
   (unaudited)
Interest income:                                    
  FFELP Stafford and Other Student Loans   $ 619,987   $ —   $ —   $ 619,987   $ (304,823 ) $ 315,164
  Consolidation Loans     934,096     —     —     934,096     (173,758 )   760,338
  Private Education Loans     373,801     —     —     373,801     (169,809 )   203,992
  Other loans     22,851     —     —     22,851     —     22,851
  Cash and investments     128,982     —     —     128,982     (39,061 )   89,921
   
 
 
 
 
 
Total interest income     2,079,717     —     —     2,079,717     (687,451 )   1,392,266
Total interest expense     1,513,838     —     —     1,513,838     (511,705 )   1,002,133
   
 
 
 
 
 
Net interest income     565,879     —     —     565,879     (175,746 )   390,133
Less: provisions for losses     69,236     —     —     69,236     (3,918 )   65,318
   
 
 
 
 
 
Net interest income after provisions for losses     496,643     —     —     496,643     (171,828 )   324,815
Fee income     —     98,839     21,555     120,394     —     120,394
Collections revenue     —     48,112     —     48,112     192     48,304
Other income     37,696     —     28,355     66,051     384,995     451,046
Operating expenses     121,384     82,511     74,698     278,593     18,070     296,663
Income tax expense (benefit)(1)     152,793     23,844     (9,172 )   167,465     48,442     215,907
Minority interest in net earnings of subsidiaries     —     954     —     954     —     954
   
 
 
 
 
 
Net income (loss)   $ 260,162   $ 39,642   $ (15,616 ) $ 284,188   $ 146,847   $ 431,035
   
 
 
 
 
 
 
   Quarter ended September 30, 2005

 
 
Lending
 
DMO
 
Corporate
and Other
 
Total "Core
Earnings"
 
Adjustments
 
Total
GAAP
 
   (unaudited)
Interest income:                                    
  FFELP Stafford and Other Student Loans   $ 585,984   $ —   $ —   $ 585,984   $ (315,540 ) $ 270,444
  Consolidation Loans     832,893     —     —     832,893     (156,073 )   676,820
  Private Education Loans     312,184     —     —     312,184     (138,717 )   173,467
  Other loans     21,614     —     —     21,614     —     21,614
  Cash and investments     113,713     —     —     113,713     (43,172 )   70,541
   
 
 
 
 
 
Total interest income     1,866,388     —     —     1,866,388     (653,502 )   1,212,886
Total interest expense     1,306,777     —     —     1,306,777     (478,655 )   828,122
   
 
 
 
 
 
Net interest income     559,611     —     —     559,611     (174,847 )   384,764
Less: provisions for losses     (180 )   —     —     (180 )   12,397     12,217
   
 
 
 
 
 
Net interest income after provisions for losses     559,791     —     —     559,791     (187,244 )   372,547
Fee income     —     92,727     35,696     128,423     —     128,423
Collections revenue     —     41,772     —     41,772     —     41,772
Other income     106     (66 )   36,859     36,899     294,520     331,419
Operating expenses     117,186     71,086     82,321     270,593     21,368     291,961
Income tax expense (benefit)(1)     163,803     23,439     (3,614 )   183,628     (33,807 )   149,821
Minority interest in net earnings of subsidiaries     —     1,029     —     1,029     —     1,029
   
 
 
 
 
 
Net income (loss)   $ 278,908   $ 38,879   $ (6,152 ) $ 311,635   $ 119,715   $ 431,350
   
 
 
 
 
 
(1)
Income taxes are based on a percentage of net income before tax for the individual reportable segment.

4

 
   Quarter ended December 31, 2004
 
   Lending
   DMO
   Corporate
and Other
   Total "Core
Earnings"
   Adjustments
   Total
GAAP
 
   (unaudited)
Interest income:                                    
  FFELP Stafford and Other Student Loans   $ 476,587   $ —   $ —   $ 476,587   $ (301,090 ) $ 175,497
  Consolidation Loans     488,501     —     —     488,501     (56,341 )   432,160
  Private Education Loans     186,964     —     —     186,964     (88,018 )   98,946
  Other loans     19,575     —     —     19,575     —     19,575
  Cash and investments     90,222     —     —     90,222     (15,128 )   75,094
   
 
 
 
 
 
Total interest income     1,261,849     —     —     1,261,849     (460,577 )   801,272
Total interest expense     784,126     —     —     784,126     (314,888 )   469,238
   
 
 
 
 
 
Net interest income     477,723     —     —     477,723     (145,689 )   332,034
Less: provisions for losses     36,126     —     —     36,126     (4,152 )   31,974
   
 
 
 
 
 
Net interest income after provisions for losses     441,597     —     —     441,597     (141,537 )   300,060
Fee income     —     76,399     28,522     104,921     —     104,921
Collections revenue     —     33,523     —     33,523     —     33,523
Other income     36,452     33     30,580     67,065     636,336     703,401
Loss on GSE debt extinguishment and defeasance     117,684     —     —     117,684     174     117,858
Operating expenses     109,783     60,364     84,833     254,980     14,252     269,232
Income tax expense (benefit)(1)     84,866     17,133     (8,891 )   93,108     10,380     103,488
Minority interest in net earnings of subsidiaries     98     876     —     974     52     1,026
   
 
 
 
 
 
Net income (loss)   $ 165,618   $ 31,582   $ (16,840 ) $ 180,360   $ 469,941   $ 650,301
   
 
 
 
 
 
 
   Year ended December 31, 2005

 
 
Lending
 
DMO
 
Corporate
and Other
 
Total "Core
Earnings"
 
Adjustments
 
Total
GAAP
 
   (unaudited)
Interest income:                                    
  FFELP Stafford and Other Student Loans   $ 2,298,256   $ —   $ —   $ 2,298,256   $ (1,283,405 ) $ 1,014,851
  Consolidation Loans     3,014,383     —     —     3,014,383     (514,375 )   2,500,008
  Private Education Loans     1,160,239     —     —     1,160,239     (526,355 )   633,884
  Other loans     84,664     —     —     84,664     —     84,664
  Cash and investments     400,347     —     —     400,347     (123,591 )   276,756
   
 
 
 
 
 
Total interest income     6,957,889     —     —     6,957,889     (2,447,726 )   4,510,163
Total interest expense     4,822,445     —     —     4,822,445     (1,763,727 )   3,058,718
   
 
 
 
 
 
Net interest income     2,135,444     —     —     2,135,444     (683,999 )   1,451,445
Less: provisions for losses     138,203     —     —     138,203     64,803     203,006
   
 
 
 
 
 
Net interest income after provisions for losses     1,997,241     —     —     1,997,241     (748,802 )   1,248,439
Fee income     —     359,907     115,477     475,384     —     475,384
Collections revenue     —     166,648     —     166,648     192     166,840
Other income     109,699     —     126,088     235,787     1,129,341     1,365,128
Operating expenses     478,850     283,111     307,924     1,069,885     68,443     1,138,328
Income tax expense (benefit)(1)     602,392     90,076     (24,553 )   667,915     60,852     728,767
Minority interest in net earnings of subsidiaries     1,749     4,403     —     6,152     260     6,412
   
 
 
 
 
 
Net income (loss)   $ 1,023,949   $ 148,965   $ (41,806 ) $ 1,131,108   $ 251,176   $ 1,382,284
   
 
 
 
 
 
(1)
Income taxes are based on a percentage of net income before tax for the individual reportable segment.

5

 
   Year ended December 31, 2004

 
 
Lending
 
DMO
 
Corporate
and Other
 
Total "Core
Earnings"
 
Adjustments
 
Total
GAAP
 
   (unaudited)
Interest income:                                    
  FFELP Stafford and Other Student Loans   $ 1,715,397   $ —   $ —   $ 1,715,397   $ (989,778 ) $ 725,619
  Consolidation Loans     1,472,911     —     —     1,472,911     (108,134 )   1,364,777
  Private Education Loans     612,682     —     —     612,682     (277,231 )   335,451
  Other loans     74,289     —     —     74,289     —     74,289
  Cash and investments     266,607     —     —     266,607     (33,748 )   232,859
   
 
 
 
 
 
Total interest income     4,141,886     —     —     4,141,886     (1,408,891 )   2,732,995
Total interest expense     2,319,965     —     —     2,319,965     (886,269 )   1,433,696
   
 
 
 
 
 
Net interest income     1,821,921     —     —     1,821,921     (522,622 )   1,299,299
Less: provisions for losses     114,441     —     —     114,441     (3,375 )   111,066
   
 
 
 
 
 
Net interest income after provisions for losses     1,707,480     —     —     1,707,480     (519,247 )   1,188,233
Fee income     —     300,071     119,934     420,005     —     420,005
Collections revenue     —     38,687     —     38,687     —     38,687
Other income     130,796     33     130,469     261,298     1,764,542     2,025,840
Loss on GSE debt extinguishment and defeasance     220,674     —     —     220,674     174     220,848
Operating expenses     408,502     159,898     291,004     859,404     35,528     894,932
Income tax expense (benefit)(1)     430,099     63,737     (14,466 )   479,370     163,319     642,689
Minority interest in net earnings of subsidiaries     98     876     —     974     52     1,026
   
 
 
 
 
 
Net income (loss)   $ 778,903   $ 114,280   $ (26,135 ) $ 867,048   $ 1,046,222   $ 1,913,270
   
 
 
 
 
 
(1)
Income taxes are based on a percentage of net income before tax for the individual reportable segment.

6


SLM CORPORATION

Reconciliation of "Core Earnings" Net Income to GAAP Net Income

(In thousands)

 
   Quarters ended
   Years ended
  
 
   December 31,
2005
   September 30,
2005
   December 31,
2004
   December 31,
2005
   December 31,
2004
  
 
   (unaudited)

   (unaudited)

   (unaudited)

   (unaudited)

   (unaudited)

  
"Core earnings" net income(A)   $ 284,188   $ 311,635   $ 180,360   $ 1,131,108   $ 867,048  
"Core earnings" adjustments:                                
  Net impact of securitization accounting     117,520     (252,748 )   (131,886 )   (60,069 )   (150,970 )
  Net impact of derivative accounting     149,755     409,082     661,275     637,460     1,552,700  
  Net impact of Floor Income     (56,108 )   (54,318 )   (34,672 )   (203,943 )   (156,203 )
  Amortization of acquired intangibles     (15,878 )   (16,108 )   (14,344 )   (61,160 )   (35,934 )
   
 
 
 
 
 
Total "core earnings" adjustments before income taxes and minority interest in net earnings of subsidiaries     195,289     85,908     480,373     312,288     1,209,593  
Net tax effect(B)     (48,442 )   33,807     (10,380 )   (60,852 )   (163,319 )
   
 
 
 
 
 
Total "core earnings" adjustments before minority interest in net earnings of subsidiaries     146,847     119,715     469,993     251,436     1,046,274  
  Minority interest in net earnings of subsidiaries     —     —     (52 )   (260 )   (52 )
   
 
 
 
 
 
Total "core earnings" adjustments     146,847     119,715     469,941     251,176     1,046,222  
   
 
 
 
 
 
GAAP net income   $ 431,035   $ 431,350   $ 650,301   $ 1,382,284   $ 1,913,270  
   
 
 
 
 
 
GAAP diluted earnings per common share   $ .96   $ .95   $ 1.40   $ 3.05   $ 4.04  
   
 
 
 
 
 
                               
(A) "Core earnings" diluted earnings
    per common share		   $ .63   $ .69   $ .39   $ 2.51   $ 1.84  
   
 
 
 
 
 
(B)
Such tax effect is based upon the Company's "core earnings" effective tax rate for the year. The net tax effect results primarily from the exclusion of the permanent income tax impact of the equity forward contracts.

Non-GAAP "Core Earnings"

        In accordance with the Rules and Regulations of the Securities and Exchange Commission ("SEC"), we prepare financial statements in accordance with generally accepted accounting principles in the United States ("GAAP"). In addition to evaluating the Company's GAAP-based financial information, management evaluates the Company's business segments under certain non-GAAP performance measures that we refer to as "core earnings" for each business segment, and we refer to this information in our presentations with credit rating agencies and lenders. While "core earnings" are not a substitute for reported results under GAAP, we rely on "core earnings" in operating each business segment because we believe these measures provide additional information regarding the operational and performance indicators that are most closely assessed by management.

        Our "core earnings" are the primary financial performance measures used by management to evaluate performance and to allocate resources. Accordingly, financial information is reported to management on a "core earnings" basis by reportable segment, as these are the measures used

7


regularly by our chief operating decision maker. Our "core earnings" are used in developing our financial plans and tracking results, and also in establishing corporate performance targets and determining incentive compensation. Management believes this information provides additional insight into the financial performance of the Company's core business activities. Our "core earnings" are not defined terms within GAAP and may not be comparable to similarly titled measures reported by other companies. A more detailed discussion of the limitations of "core earnings" followed by a more detailed discussion of differences between GAAP and "core earnings" follows.

Limitations of "Core Earnings"

        While GAAP provides a uniform, comprehensive basis of accounting, for the reasons described above, management believes that "core earnings" are an important additional tool for providing a more complete understanding of the Company's results of operations. Nevertheless, "core earnings" are subject to certain general and specific limitations that investors should carefully consider. For example, as stated above, unlike financial accounting, there is no comprehensive, authoritative guidance for management reporting. Our "core earnings" are not defined terms within GAAP and may not be comparable to similarly titled measures reported by other companies. Unlike GAAP, the Company's "core earnings" presentation does not represent a comprehensive basis of accounting. Investors, therefore, may not compare our Company's performance with that of other financial services companies based upon "core earnings." "Core earnings" results are only meant to supplement GAAP results by providing additional information regarding the operational and performance indicators that are most closely used by management, the Company's board of directors, rating agencies and lenders to assess performance.

        Other limitations arise from the specific adjustments that management makes to GAAP results to derive "core earnings" results. For example, in reversing the unrealized gains and losses that result from SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," on derivatives that do not qualify for hedge treatment accounting, as well as on derivatives that do qualify but are in part ineffective because they are not perfect hedges, we focus on the long-term economic effectiveness of those instruments relative to the underlying hedged item and isolate the effects of interest rate volatility, changing credit spreads and changes in our stock price on the fair value of such instruments during the period. Under GAAP, the effects of these factors on the fair value of the derivative instruments (but not on the underlying hedged item) tend to show more volatility in the short term. While our presentation of our results on a Managed Basis provides important information regarding the performance of our Managed portfolio, a limitation on this presentation is that we are presenting the ongoing spread income on loans that have been sold to a trust managed by us. While we believe that our Managed Basis presentation presents the economic substance of our Managed loan portfolio, it understates earnings volatility from securitization gains. Our "core earnings" results exclude certain Floor Income, which is real cash income, from our reported results and therefore may in certain periods understate earnings. Management's financial planning and valuation of operating results, however, does not take into account Floor Income because of its inherent uncertainty, except when it is economically hedged through Floor Income Contracts.

Pre-Tax Differences between "Core Earnings" and GAAP

        "Core earnings" reflect only current period adjustments to GAAP as described in the more detailed discussion of the differences between GAAP and "core earnings" that follows, which includes further detail on each specific adjustment required to reconcile our "core earnings" segment presentation to our GAAP earnings.

1)
Securitization Accounting: Under GAAP, certain securitization transactions in our Lending segment are accounted for as sales of assets. Under the "core earnings" for the Lending segment, we present all securitization transactions on a Managed Basis as long-term non-recourse financings.

8

    The upfront "gains" on sale from securitization transactions as well as ongoing "servicing and securitization revenue" presented in accordance with GAAP are excluded from the "core earnings" and replaced by the interest income, provision for loan losses, and interest expense as they are earned or incurred on the securitization loans. We also exclude transactions with our off-balance sheet trusts from "core earnings" as they are considered intercompany transactions on a Managed Basis.

2)
Derivative Accounting: "Core earnings" exclude periodic unrealized gains and losses arising primarily in our Lending business segment, and to a lesser degree in our Corporate and Other business segment, that are caused primarily by the one-sided mark-to-market derivative valuations prescribed by SFAS No. 133 on derivatives that do not qualify for "hedge treatment" under GAAP. Under "core earnings," we recognize the economic effect of these hedges, which generally results in any cash paid or received being recognized ratably as an expense or revenue over the hedged item's life. "Core earnings" also exclude the gain or loss on equity forward contracts that under SFAS No. 133 are required to be accounted for as derivatives and marked-to-market through earnings.

3)
Floor Income: The timing and amount (if any) of Floor Income earned in our Lending segment is uncertain and in excess of expected spreads and, therefore, we exclude such income from our "core earnings" when it is not economically hedged. We employ derivatives, primarily Floor Income Contracts and futures, to economically hedge Floor Income. As discussed above in "Derivative Accounting," these derivatives do not qualify as effective accounting hedges and therefore under GAAP are marked-to-market through the "gains (losses) on derivative and hedging activities, net" line on the income statement with no offsetting gain or loss recorded for the economically hedged items. For "core earnings" under the Lending segment, we reverse the fair value adjustments on the Floor Income Contracts and futures economically hedging Floor Income and include the amortization of net premiums received (net of Eurodollar futures contracts' realized gains or losses) in income.

4)
Other items: We exclude the amortization of acquired intangibles.

9



QuickLinks

SALLIE MAE LOAN ORIGINATIONS GROW 19 PERCENT IN 2005
Total Managed Portfolio Totals $122.5 Billion; Fee-Based Businesses Grow 22 Percent
SLM CORPORATION Supplemental Earnings Disclosure December 31, 2005 Dollars in millions, except earnings per share)
SLM CORPORATION Consolidated Balance Sheets (In thousands, except per share amounts)
SLM CORPORATION Consolidated Statements of Income (In thousands, except per share amounts)
SLM CORPORATION Segment and Non-GAAP "Core Earnings" Consolidated Statements of Income (In thousands)
SLM CORPORATION Reconciliation of "Core Earnings" Net Income to GAAP Net Income (In thousands)