Sallie Mae 2014 Annual Report Download - page 62

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As of December 31, 2014, the Bank had a Tier 1 leverage ratio of 11.5 percent, a Tier 1 risk-based capital ratio of 15.0
percent and total risk-based capital ratio of 15.9 percent, exceeding the current guidelines by a significant factor. Our ratios
would also exceed the future guidelines if we calculated them today based on the new definitions of capital and risk-weighted
assets.
Dividends
The Bank is chartered under the laws of the State of Utah and its deposits are insured by the FDIC. The 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, the Bank may pay dividends to the Company from its net profits without
regulatory approval if, following the payment of the dividend, the Bank’s capital and surplus would not be impaired. The Bank
paid no dividends for the year ended December 31, 2014. For the years ended December 31, 2013 and 2012, the Bank paid
dividends of $120 million and $420 million, respectively, to an entity that is now a subsidiary of Navient. For the foreseeable
future, we expect the Bank to only pay dividends to the Company as may be necessary to provide for regularly scheduled
dividends payable on the Company’s Series A and Series B Preferred Stock.
Borrowed Funds
The Bank maintains discretionary uncommitted Federal Funds lines of credit with various correspondent banks, which
totaled $100 million at December 31, 2014. The interest rate charged to the Bank on these lines of credit is priced at the Fed
Funds rate plus a spread at the time of borrowing, and is payable daily. The Bank did not utilize these lines of credit in the years
ended December 31, 2014 and 2013.
The Bank established an account at the FRB to meet eligibility requirements for access to the Primary Credit borrowing
facility at the FRB’s Discount Window (“Window”). The Primary Credit borrowing facility is a lending program available to
depository institutions that are in generally sound financial condition. All borrowings at the Window must be fully
collateralized. We can pledge asset-backed and mortgage-backed securities, as well as FFELP Loans and Private Education
Loans, to the FRB as collateral for borrowings at the Window. Generally, collateral value is assigned based on the estimated
fair value of the pledged assets. At December 31, 2014 and 2013, the lendable value of our collateral at the FRB totaled $1.4
billion and $900 million, respectively. The interest rate charged to us is the discount rate set by the FRB. We did not utilize this
facility in the years ended December 31, 2014 and 2013.
On December 19, 2014, we closed a new $750 million private asset backed commercial paper (“ABCP”) education loan
funding facility. Under FDIC guidelines, we are required to retain a 5 percent or $37.5 million ownership interest in the facility
resulting in $712.5 million of funds being available for Private Education Loan originations. The new facility had not been
drawn on as of December 31, 2014 and the facility’s scheduled maturity date is December 18, 2015.
Contractual Cash Obligations
The following table provides a summary of our contractual principal obligations associated with long-term Bank
deposits at December 31, 2014.
December 31,
(Dollars in thousands)
2014
One year or less ............................................
$
1,717,541
One to 3 years ..............................................
1,992,349
3 to 5 years...................................................
1,422,631
Over 5 years .................................................
178,856
Total contractual cash obligations ...................
$
5,311,377
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