Sallie Mae 2014 Annual Report Download - page 36

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our consolidated financial statements and
related notes included elsewhere in this Annual Report on Form 10-K. This discussion and analysis also contains forward-
looking statements and should also be read in conjunction with the disclosures and information contained in “Forward-
Looking and Cautionary Statements” and Item 1A. “Risk Factors” in this Annual Report on Form 10-K.
Through this discussion and analysis, we intend to provide the reader with some narrative context for how our
management views our consolidated financial statements, additional context within which to assess our operating results, and
information on the quality and variability of our earnings, liquidity and cash flows.
Overview
The following discussion and analysis presents a review of our business and operations as of and for the year ended
December 31, 2014.
On April 30, 2014, we completed our plan to legally separate into two distinct publicly traded entities - an education loan
management, servicing and asset recovery business, Navient Corporation (“Navient”), and a consumer banking business, SLM
Corporation. The separation of Navient from SLM Corporation (the “Spin-Off”) was preceded by an internal corporate
reorganization, which was the first step to separate the education loan management, servicing and asset recovery business from
the consumer banking business.
The financial information contained herein and in the accompanying consolidated balance sheets, statements of income,
changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2014, present information
on our business as configured after the Spin-Off, as hereafter defined. For more information regarding the basis of presentation
of these statements, see notes to the consolidated financial statements, Note 2, “Significant Accounting Policies — Basis of
Presentation.”
On October 13, 2014, we completed the operational separation of our servicing platforms and related personnel from
Navient and launched our new customer service operation. As a result of the launch of our servicing platforms, we now have
responsibility for servicing the vast majority of the 840,000 loans contained within our existing Private Education Loan
portfolio and maintaining customer relationships with the 1 million borrowers and related cosigners to whom these loans have
been made. One major project remains to be completed before full operational separation from Navient can be achieved:
establishing our own loan originations platform which we currently expect to achieve in the first half of 2015. For a more
detailed description of ongoing arrangements among the Company and Navient, see notes to consolidated financial statements
contained in this Form 10-K, Note 16, “Arrangements with Navient Corporation.”
Recent Development
Asset-Backed Commercial Paper Facility
On December 19, 2014, we closed a new $750 million private asset backed commercial paper (“ABCP”) education loan
funding facility. The new facility had not been drawn upon as of December 31, 2014 and the facility’s scheduled maturity date
is December 18, 2015. For additional details regarding this facility see “Item 7. — Management's Discussion and Analysis iof
Financial Condition and Results of Operations — Liquidity and Capital Resources” and Note 9 to the consolidated financial
statements contained in this Form 10-K, “Asset-Backed Commercial Paper Funding Facility.”
Key Financial Measures
Set forth below are brief summaries of our key financial measures. Our operating results are primarily driven by net
interest income from our Private Education Loan portfolio (which include financing costs), provision for loan losses, gains and
losses on loan sales and operating expenses. The growth of our business and the strength of our financial condition are
primarily driven by our ability to achieve our annual Private Education Loan origination goals while sustaining credit quality
and maintaining diversified, cost-efficient funding sources to support our originations.
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