Sallie Mae 2006 Annual Report Download - page 172
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12. Fair Values of Financial Instruments (Continued)
The following table summarizes the fair values of the Company’s financial assets and liabilities, including
derivative financial instruments.
(Dollars in millions)
Fair
Value
Carrying
Value Difference
Fair
Value
Carrying
Value Difference
December 31, 2006 December 31, 2005
Earning assets
FFELP loans .......... $ 87,797 $ 86,165 $1,632 $76,492 $74,847 $1,645
Private Education Loans . . 12,063 9,755 2,308 9,189 7,757 1,432
Other loans ........... 1,342 1,309 33 1,176 1,139 37
Cash and investments .... 8,608 8,608 — 8,168 8,168 —
Total earning assets ..... 109,810 105,837 3,973 95,025 91,911 3,114
Interest bearing liabilities
Short-term borrowings . . . 3,529 3,528 (1) 3,806 3,810 4
Long-term borrowings . . . 104,613 104,559 (54) 88,220 88,119 (101)
Total interest bearing
liabilities ........... 108,142 108,087 (55) 92,026 91,929 (97)
Derivative financial
instruments
Floor Income/Cap
Contracts ........... (200) (200) — (371) (371) —
Interest rate swaps ...... (475) (475) — (390) (390) —
Cross currency interest
rate swaps .......... 1,440 1,440 — (148) (148) —
Equity forwards ........ (213) (213) — 67 67 —
Futures contracts ....... — — — (1) (1) —
Other
Residual interest in
securitized assets ..... 3,342 3,342 — 2,406 2,406 —
Excess of fair value over
carrying value......... $3,918 $3,017
13. Commitments, Contingencies and Guarantees
JPMorgan Chase/Bank One Relationships
In 2005, the Company extended both its JPMorgan Chase and Bank One student loan and loan purchase
commitments to August 31, 2010. This comprehensive agreement provides for the dissolution of the joint
venture between Chase and Sallie Mae that had been making student loans under the Chase brand since 1996
and resolved a lawsuit filed by Chase on February 17, 2005. In consideration for extending the agreement, the
Company received a $40 million payment that will be recognized over the life of the agreement.
JPMorgan Chase will continue to sell all student loans to the Company (whether made under the Chase
or Bank One brand) that are originated or serviced on the Company’s platforms. In addition, the agreement
provides that substantially all Chase-branded education loans made for the July 1, 2005 to June 30, 2006
F-53
SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)