Sallie Mae 2005 Annual Report Download - page 190

SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)
F-68
18. Segment Reporting (Continued)
risk through industry tested loan underwriting standards and a combination of higher interest rates and
loan origination fees that compensate the Company for the higher risk.
DMO
The Company provides a wide range of accounts receivable and collection services through six
operating units that comprise its DMO operating segment. These services include defaulted student loan
portfolio management services, contingency collections services for student loans and other asset classes,
student loan default aversion services, and accounts receivable management and collection for purchased
portfolios of receivables that have been charged off by their original creditors, as well as sub-performing
and nonperforming mortgage loans. The Company’s DMO operating segment primarily serves the student
loan marketplace through a broad array of default management services on a contingency fee or other pay
for performance basis to six FFELP guarantors and for campus based programs.
In addition to collecting on its own purchased receivables and mortgage loans, the DMO operating
segment provides receivable management and collection services for large federal agencies, credit card
clients and other holders of consumer debt.
Corporate and Other
The Company’s Corporate and Other reportable segment includes the aggregate activity of its smaller
operating segments including its Guarantor Servicing and Loan Servicing operating segments, other
products and services, as well as corporate overhead.
In the Guarantor Servicing operating segment, the Company provides a full complement of
administrative services to FFELP guarantors including guarantee issuance, account maintenance, and
guarantee fulfillment. In the Loan Servicing operating segment, the Company provides a full complement
of activities required to service student loans on behalf of lenders who are unrelated to the Company. Such
servicing activities generally commence once a loan has been fully disbursed and include sending out
payment coupons to borrowers, processing borrower payments, originating and disbursing consolidation
loans on behalf of the lender, and other administrative activities required by ED. The Company’s other
products and services include comprehensive financing and loan delivery solutions that it provides to
college financial aid offices and students to streamline the financial aid process. Corporate overhead
includes all of the typical headquarter functions such as executive management, accounting and finance,
human resources and marketing.
Financial Highlights
The tables below include the condensed operating results for each of the Company’s reportable
segments. Management, including the “chief operating decision maker,” evaluates the Company on certain
non-GAAP performance measures that the Company refers to as “core earnings” for each operating
segment. While “core earnings” are not a substitute for reported results under GAAP, the Company relies
on “core earnings” to manage each operating segment because it believes these measures provide
additional information regarding the operational and performance indicators that are most closely
assessed by management.