Sallie Mae 2013 Annual Report Download - page 108

Liquidity may also be available under secured credit facilities to the extent we have eligible collateral and
capacity available. Maximum borrowing capacity under the FFELP Loan–other facilities will vary and be subject
to each agreement’s borrowing conditions, including, among others, facility size, current usage and availability
of qualifying collateral from unencumbered FFELP Loans. As of December 31, 2013 and 2012, the maximum
additional capacity under these facilities was $10.6 billion and $11.8 billion, respectively. For the years ended
December 31, 2013 and 2012, the average maximum additional capacity under these facilities was $11.1 billion
and $11.3 billion, respectively.
We also hold a number of other unencumbered assets, consisting primarily of Private Education Loans and
other assets. Total unencumbered student loans, net, comprised $13.9 billion of our unencumbered assets of
which $11.2 billion and $2.7 billion related to Private Education Loans, net and FFELP Loans, net, respectively.
At December 31, 2013, we had a total of $23.8 billion of unencumbered assets inclusive of those described above
as sources of primary liquidity and exclusive of goodwill and acquired intangible assets.
Sallie Mae Bank’s ability to pay dividends is subject to the laws of Utah and the regulations of the FDIC.
Generally, under Utah’s industrial bank laws and regulations as well as FDIC regulations, Sallie Mae Bank may
pay dividends from its net profits without regulatory approval if, following the payment of the dividend, Sallie
Mae Bank’s capital and surplus would not be impaired. While applicable Utah and FDIC regulations differ in
approach as to determinations of impairment of capital and surplus, neither method of determination has
historically required Sallie Mae Bank to obtain consent to the payment of dividends. For the years ended
December 31, 2013 and 2012, Sallie Mae Bank paid dividends of $120 million and $420 million, respectively.
In addition to the foregoing, Sallie Mae Bank’s annual business plans are periodically reviewed by the
FDIC. Recently the FDIC expressed its objection to the payment of dividends from Sallie Mae Bank to the
Company prior to the completion of the Spin-Off. The bases for the objection are unrelated to the current
capitalization of Sallie Mae Bank or the results of its operations. The FDIC has stated its preference that Sallie
Mae Bank refrain from making periodic dividends to the Company for any reason other than the payment of the
normal quarterly cash dividend paid by the Company to holders of its two series of preferred stock until all terms
of the pending formal enforcement action with the FDIC are resolved and the Spin-Off has been completed.
Sallie Mae Bank does not expect to declare such a dividend prior to the occurrence of the Spin-Off and not doing
so will not materially or adversely affect the financial condition, operations or liquidity of the Company and its
subsidiaries taken as a whole. If the FDIC continues its general objection to the payment of dividends from Sallie
Mae Bank to its parent for an extended period of time after the completion of the Spin-Off, SLM BankCo’s
financial condition, operations, liquidity and ability to access capital markets could be materially and adversely
affected.
For further discussion of our various sources of liquidity, such as Sallie Mae Bank, our continued access to
the ABS market, our asset-backed financing facilities, and our issuance of unsecured debt, see “Note 6 —
Borrowings.”
The following table reconciles encumbered and unencumbered assets and their net impact on total tangible
equity.
December 31,
(Dollars in billions) 2013 2012
Net assets of consolidated variable interest entities (encumbered assets)
— FFELP Loans ........................................... $ 4.6 $ 6.6
Net assets of consolidated variable interest entities (encumbered assets)
— Private Education Loans .................................. 6.7 6.6
Tangible unencumbered assets — Holding Company and other non-bank
subsidiaries(1) ............................................. 13.1 12.6
Tangible unencumbered assets — Sallie Mae Bank(1) ................ 10.7 8.6
Unsecured debt .............................................. (27.9) (26.7)
Mark-to-market on unsecured hedged debt(2) ....................... (.8) (1.7)
Other liabilities, net .......................................... (1.2) (1.4)
Total tangible equity ........................................ $ 5.2 $ 4.6
(1) Excludes goodwill and acquired intangible assets.
(2) At December 31, 2013 and 2012, there were $612 million and $1.4 billion, respectively, of net gains on derivatives hedging
this debt in unencumbered assets, which partially offset these losses.
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