Sallie Mae 2004 Annual Report Download - page 6

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LETTER FROM THE CEO & PRESIDENT
To our Shareholders:
On behalf of our 10,000 employees, thank you for your continued confidence in Sallie Mae. Whether you
have been with us from our earlier chapters or more recently learned the Sallie Mae story, you own a
company that has had great success in recent years and is poised for an even brighter future.
At the end of 2004, we passed a critical milestone: complet-
ing privatization and dissolving our government-sponsored
subsidiary, the original Sallie Mae. We accomplished this
task four years ahead of schedule, thanks to the impressive
efforts of our corporate finance and legal teams who put
together more than $100 billion of financing transactions in
the past few years, managed uncharted regulatory waters
and avoided any fallout on the business activities of the
company. Among the longer-term benefits of our intensive
and worldwide financing activity is the development of a
knowledgeable and loyal investor base. These investors’
continued demand for our fixed-income securities will
help contain our funding costs—as our issuance levels
are dramatically reduced with the elimination of GSE
refinancing activity.
Along the road to privatization, we expanded the Sallie
Mae franchise and diversified our business lines through
acquisitions and internal development. In 2004, we continued
to diversify our business, substantially increasing our
income from sources beyond the guaranteed student loan
program. This diversification includes income on our pri-
vate education loans, which now represent 11 percent of
our total managed loan portfolio. Like credit-based educa-
tion lending, our new fee-based businesses also carry
healthy margins and growth rates, and fit into our overall
business model by adding value to multiple sets of cus-
tomer relationships.
On the fee-based business front, we grew earnings
modestly during an unusually challenging year in guarantor
servicing. At the same time, debt-management revenues
increased more than 30 percent through contingency
collections for a combination of government, guarantee
agency and commercial clients. In the fourth quarter, we
expanded our customer reach and complemented our
product suite and management expertise with the acquisi-
tion of Arrow Financial Services, which specializes in the
purchase of distressed consumer receivables as well as
contingency placements.
Albert L. Lord
VICE CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
Thomas J. Fitzpatrick
PRESIDENT AND
CHIEF OPERATING OFFICER