Sallie Mae 2013 Annual Report Download - page 39

GAAP to Regulatory Capital Reconciliation
(Dollars in millions) December 31, 2013
Shareholder equity(1) .......................... $ 1,218
Less intangible assets ....................... —
Less preferred stock(1) ....................... —
Tangible common equity ...................... 1,218
Total assets ................................. 10,742
Less intangible assets ....................... —
Tangible assets .............................. 10,742
Tangible common equity to tangible assets ratio .... 11.3%
Tier 1 common equity:
Shareholder equity(1) ......................... 1,218
Qualifying capital securities:
Less goodwill ............................. —
Less accumulated other comprehensive loss ...... (3)
Less other assets ........................... —
Total Tier 1 capital .......................... 1,221
Less qualifying capital securities .............. —
Less preferred stock(1) ....................... —
Total Tier 1 common equity ................... 1,221
Net risk-weighted assets ...................... $ 7,472
(1) Does not include the Series A Preferred Stock and Series B Preferred Stock outstanding at the time of the closing
of the separation and distribution.
In July 2013, the federal banking regulators issued the U.S. Basel III final rule. For a more detailed
description of the U.S. Basel III final rule, please see Item 1A. “Risk Factors.” Sallie Mae Bank will be subject to
the U.S. Basel III final rule, including its increased risk-based capital requirements and increased leverage capital
requirements beginning on January 1, 2015. In addition, as currently proposed as part of the Spin-Off, SLM
BankCo will serve as an additional source of strength by having $165 million of Series A Preferred Stock and
$400 million of Series B Preferred Stock. The existing Series B Preferred Stock could potentially qualify as
additional Tier 1 capital under Basel III standards were Basel III to apply at the SLM BankCo level.
At the date of this Annual Report on Form 10-K, the FDIC has lodged a continuing objection to the payment
of dividends by Sallie Mae Bank to the Company for any reason other than the payment of normal quarterly cash
dividends paid by the Company to holders of its two series of preferred stock. For more information on this
matter and potential implications post-Spin-Off, see Item 1. “Business—Regulation of Sallie Mae Bank—
Dividends.”
Item 1A. Risk Factors
Our business activities involve a variety of risks. Below we describe the significant risk factors affecting our
business. These risk factors should be considered in connection with evaluating the forward-looking statements
contained in this Annual Report on Form 10-K because these factors could cause our actual results or financial
condition to differ materially from those projected in forward-looking statements.
Economic Environment
Economic conditions could have a material adverse effect on our business, results of operations, financial
condition and stock price.
Our business is always influenced by economic conditions. Economic growth in the United States remains
slow and uneven. Our earnings are dependent on the expected future creditworthiness of our student loan
customers, especially with respect to our Private Education Loan portfolio. High unemployment rates and the
failure of our in-school borrowers to graduate are two of the most significant macroeconomic factors that could
increase loan delinquencies, defaults and forbearance, or otherwise negatively affect performance of our existing
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