Sallie Mae 2002 Annual Report Download - page 7

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Dear Fel lo w Shar eho l ders : As we pause to reflect on 2002, Sallie Mae’s 30th year,
we first want to thank you for your confidence in our company. The recognition is truly
gratifying. Again in 2002, we exceeded our earnings performance goals and delivered a
24-percent share price improvement. It is worth noting we have achieved an 18-percent
compound annual growth rate over our 20 years as a publicly traded company.
Demographic and tuition projections point to even greater credit demand for the balance
of this decade and give us ample opportunity to add to this success story.
Wall Street refers to us as a financial services company, yet our fortunes follow
almost exclusively the direction of higher education spending. That sector includes
more than $50 billion of credit annually, up from just $7 billion 20 years ago. Why? The
need for higher education, and therefore its price, has climbed without pause. Simply
stated: America’s education system delivers the highest return of any investment. And
like other high cost, high value investments (such as home ownership), some portion
must be borrowed.
We incorporated financial data for this report by reference to the Form 10-K we filed
with the SEC. That document (which must weigh five pounds!) would indicate we man-
age a highly complex business. Not so. We earn most of our revenues from providing
capital for higher education’s financing needs. Our margins are narrow on government
guaranteed loans; wider on our own underwritten loan products. We also derive an
increasing portion of our revenues from fee-based outsourcing services. We deliver our
products on campus where we work closely with financial aid administrators to match
limited student resources with growing school price tags. Usually, this is more art than
science. America’s financial aid officers seemingly work miracles at tuition time. Our
customized, one-school-at-a-time marketing approach was started in earnest only a few
years ago. Today, it builds our business.
Collecting the loans we make can also be challenging, but 30 years has built our
know-how. In late 2001, we decided to capitalize on that experience and collect loans
made by other lenders, too. Internal expansion and our successful recent acquisitions,
Pioneer Credit Recovery and General Revenue Corporation, put us quickly and deeply
Letter from the CEO and President
Sallie Mae’s non-voting
common stock is listed
on the New York Stock
Exchange under SLM.
198 4 198 7
Sallie Mae’s Wilkes-Barre,
Pennsylvania, center opens
its doors with 48 employees
servicing 53,000 accounts
within one year.
198 5
Sallie Mae launches the
First-Year Teacher Awards.
198 1
Sallie Mae introduces its
first loan consolidation
program called OPTIONs.
198 8
Sallie Mae now
owns 24 percent
of student loans
outstanding. The
company’s Killeen,
Texas, servicing
center opens for
business .
“Demographic and tuition
projections point to even
greater credit demand for
the balance of this decade
and give us ample opportunity
to add to this success story.”
ALBERT L. LORD
VICE CHAIRMAN & CHIEF EXECUTIVE OFFICER