Sallie Mae 2007 Annual Report Download - page 188
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16. 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, 2007 December 31, 2006
Earning assets
FFELP loans ........ $111,552 $109,335 $ 2,217 $ 87,797 $ 86,165 $1,632
Private Education
Loans ............ 17,289 14,818 2,471 12,063 9,755 2,308
Other loans.......... 1,175 1,173 2 1,342 1,309 33
Cash and investments . . 15,146 15,146 — 8,608 8,608 —
Total earning assets . . . 145,162 140,472 4,690 109,810 105,837 3,973
Interest bearing
liabilities
Short-term
borrowings ........ 35,828 35,947 119 3,529 3,528 (1)
Long-term
borrowings ........ 105,227 111,099 5,872 104,613 104,559 (54)
Total interest bearing
liabilities ......... 141,055 147,046 5,991 108,142 108,087 (55)
Derivative financial
instruments
Floor Income/Cap
Contracts ......... (442) (442) — (200) (200) —
Interest rate swaps .... 320 320 — (475) (475) —
Cross currency interest
rate swaps......... 3,643 3,643 — 1,440 1,440 —
Equity forwards ...... — — — (213) (213) —
Futures contracts ..... — — — — — —
Other
Residual interest in
securitized assets.... 3,044 3,044 — 3,342 3,342 —
Excess of net asset fair
value over carrying
value .............. $10,681 $3,918
The significant change in the difference between the fair value and the carrying value of the Company’s
interest bearing liabilities was due to increases in the credit spread on its unsecured debt.
17. Commitments, Contingencies and Guarantees
The Company offers a line of credit to certain financial institutions and other institutions in the higher
education community for the purpose of buying or originating student loans. In the event that a line of credit
is drawn upon, the loan is collateralized by underlying student loans. The contractual amount of these financial
instruments represents the maximum possible credit risk should the counterparty draw down the commitment,
F-67
SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts, unless otherwise stated)