Sallie Mae 2012 Annual Report Download - page 195

SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
17. Discontinued Operations (Continued)
The Purchased Paper — Mortgage/Properties business and the Purchased Paper — Non-Mortgage business
comprise operations and cash flows that can be clearly distinguished operationally and for financial reporting
purposes, from the rest of the Company. Accordingly, this Component is presented as discontinued operations as
(1) the operations and cash flows of the Component have been eliminated from our ongoing operations as of
December 31, 2010, and (2) we will have no continuing involvement in the operations of this Component
subsequent to the sale of the Purchased Paper-Non Mortgage business.
The following table summarizes the discontinued operations.
Years Ended December 31,
(Dollars in millions) 2012 2011 2010
Operations:
Income (loss) from discontinued operations before income taxes . . $ 1 $53 $(91)
Income tax expense (benefit) .............................. — 20 (24)
Income (loss) from discontinued operations, net of taxes ........ $ 1 $33 $(67)
18. Concentrations of Risk
Our business is primarily focused in providing and/or servicing to help students and their families save, plan
and pay for college. We primarily originate, service and/or collect loans made to students and their families to
finance the cost of their education. We provide funding, delivery and servicing support for education loans in the
United States, through our Private Education Loan programs and as a servicer and collector of loans for ED. In
addition we are the largest holder, servicer and collector of loans under the discontinued FFELP. Because of this
concentration in one industry, we are exposed to credit, legislative, operational, regulatory, and liquidity risks
associated with the student loan industry.
Concentration Risk in the Revenues Associated with Private Education Loans
We compete in the private credit lending business with banks and other consumer lending institutions, many
with strong consumer brand name recognition and greater financial resources. We compete based on our
products, origination capability and customer service. To the extent our competitors compete aggressively or
more effectively, we could lose market share to them or subject our existing loans to refinancing risk. Our
product offerings may not prove to be profitable and may result in higher than expected losses.
We are a leading provider of saving- and paying-for-college products and programs. This concentration
gives us a competitive advantage in the marketplace. This concentration also creates risks in our business,
particularly in light of our concentrations as a Private Education Loan lender and as a servicer for the FFELP and
DSLP. If population demographics result in a decrease in college-age individuals, if demand for higher education
decreases, if the cost of attendance of higher education decreases, if public resistance to higher education costs
increases, or if the demand for higher education loans decreases, our consumer lending business could be
negatively affected. In addition, the federal government, through the DSLP, poses significant competition to our
private credit loan products. If loan limits under the DSLP increase, DSLP loans could be more widely available
to students and their families and DSLP loans could increase, resulting in further decreases in the size of the
Private Education Loan market and demand for our Private Education Loan products.
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