Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
US orders First Marblehead to cut risk, shed loansBY Reuters
— 4:42 PM ET 07/02/2009
NEW YORK, July 2 (Reuters) - First Marblehead Corp (FMD), a large packager of U.S. student loans, on Thursday was ordered by the U.S. Office of Thrift Supervision to lower risk by reducing its concentration of private student loans, a move it said could cause a "significant" loss.
According to a regulatory filing, the Boston-based company agreed to special OTS oversight, and its Union Federal Savings Bank unit agreed to a cease-and-desist order from the regulator.
First Marblehead (FMD) said market disruptions have left it unable to securitize new private student loans since September 2007. As a result, it said Union Federal has more of the loans on its books than had been expected when the OTS approved First Marblehead's (FMD) purchase of the bank in late 2006.
The agreements set minimum capital and deposit requirements for the bank, and require Union Federal within 60 days to submit a new business plan covering the 2010 to 2012 fiscal years. Union Federal must also get OTS approval before awarding any "golden parachute" payments to departing officials.
First Marblehead (FMD) has struggled since the credit crisis began. It was hit hard when The Education Resources Institute Inc, which guaranteed some of its loans, filed for bankruptcy protection in March 2008, and major client Bank of America Corp (BAC) said the following month it would stop making private student loans.
Shares of First Marblehead (FMD), which traded as high as $57.56 in January 2007, closed Thursday down 13 cents, or 6.4 percent, at $1.90 on the New York Stock Exchange.
When credit market begin to change this should
make a run $6-10 range.
April 28 (Reuters) - First Marblehead Corp one of the largest securitizers of student loans, posted a narrower loss for the third quarter as its cost-cutting initiatives paid off, and its negative top-line narrowed.
Net loss for the quarter ended March 31 was $140.7 million, or $1.42 a share, compared with a loss of $229.6 million, or $2.36 a share, a year ago.
The Boston-based company posted narrower negative total revenue of $130.6 million from a negative revenue of $251.8 million last year.
An analyst had expected the company to post a loss of $1.30 a share, excluding special items, and negative revenue of $144.0 million, according to Reuters Estimates.
Total non-interest expenses fell 39 percent to $75.0 million helped by expense reduction initiatives, the company said in a statement. First Marblehead's
bread-and-butter business, packaging student loans into securities, has dried up in recent times, thanks to prolonged turmoil in global debt markets. Shares of the company were down 5 percent in trading before the bell Tuesday. They closed at $1.79 Monday on the New York Stock Exchange. (Reporting by Amiteshwar Singh in Bangalore; Editing by Gopakumar Warrier)
First Marblehead Announces Third Quarter Fiscal 2009 Results
08:05 a.m. 04/28/2009 Provided By Market Wire
BOSTON, MA -- (MARKET WIRE) -- 04/28/09 -- The First Marblehead Corporation (FMD) today announced its financial and operating results for the third quarter of fiscal 2009 and for the nine-month period ended on March 31, 2009.
Total revenues for the third quarter of fiscal 2009 were $(130.6) million, as compared to $(251.8) million for the same period last year. Service revenues for the third quarter of fiscal 2009 reflected the previously announced sale of the company's subsidiary NC Residuals Owners Trust, which resulted in a decrease in residuals receivable of approximately $134.5 million. NC Residuals Owners Trust held residual interests in all fifteen of the National Collegiate Student Loan Trusts that the company had facilitated. As a result of non-cash, pre-tax adjustments, the estimated fair value of the company's remaining service receivables decreased by an additional $5.9 million during the third quarter of fiscal 2009, as compared to a total decrease of approximately $291.1 million during the third quarter of fiscal 2008.
The net loss for the third quarter of fiscal 2009 was $140.7 million, or $1.42 per share, compared to a net loss of $229.6 million, or $2.36 per share, for the same period last year. Non-interest expenses, excluding the $47.6 million unrealized loss on education loans held for sale, decreased $96.1 million or 78% from the same period last year as a result of the company's expense reduction initiatives.
Total revenues for the nine-month period ended March 31, 2009 were $(301.6) million, a decrease from $5.0 million for the same period last year. The company completed two securitization transactions with revenues totaling $319.1 million in the first nine months of fiscal 2008. The company did not complete any securitizations in the first nine months of fiscal 2009. Revenues also decreased between periods as a result of the sale of NC Residuals Owners Trust. The net loss for the nine-months ended March 31, 2009 was $326.9 million, or $3.30 per share, compared with a net loss of $178.4 million, or $1.88 per share, for the same period last year.
The company ended the quarter with $184.8 million in cash, cash equivalents and investments. The sale of NC Residuals Owners Trust is expected to generate a cash refund for taxes previously paid, and the company recorded a net income tax receivable of approximately $170.0 million at March 31, 2009. Net operating cash usage* for the quarter ended March 31, 2009 was approximately $13.5 million compared to approximately $15.0 million for the prior quarter. (See below under the heading "Use of Non-GAAP Financial Measures.")
Saying he feels their pain, President Obama today reached out to families struggling to pay college bills, highlighting his plan to revamp student loan programs to cut out private middlemen.
Obama wants to end the private Federal Family Education Loans program that the White House says costs taxpayers an unnecessary $5 billion a year by using private firms as brokers.
"That is a premium we can no longer afford," he said, saying the system is "rigged" to give profits to "special interests" without any risk.
He told reporters that "wasteful subsidies" are worsening the paradox facing the country: a college education is more important than ever, but the cost of attending is also higher than ever.
"The stakes could not be higher," he said.
Obama said he wants to boost the percentage of Americans attending college to the world's highest again, and a key part of that is reforming the student loan system.
He acknowledged that private loan companies vehemently oppose the change. "They are gearing up for battle," he said. "So am I."
(His full remarks are below, along with a White House summary of his proposal.)
The private student loan industry has also been beset by allegations of kickbacks to college officials to steer students to the loans. Investigations by Congress and New York Attorney General Andrew Cuomo found that some lenders had secret deals to give colleges or their staffs consulting fees, company shares, and other perks.
OBAMA'S REMARKS
Thank you. That was excellent -- we might have to run her for something some day. (Laughter.) That was terrific. Thank you, Stephanie. I want to also introduce Yvonne Thomas, who is Stephanie's proud mother. And we appreciate everything that you've done. And Stephanie's father, Albert, is around here as well.
OBAMA'S PROPOSAL
There are few things as fundamental to the American Dream or as essential for America's success as a good education. This has never been more true than it is today. At a time when our children are competing with kids in China and India, the best job qualification you can have is a college degree or advanced training. If you do have that kind of education, then you're well prepared for the future -- because half of the fastest growing jobs in America require a Bachelor's degree or more. And if you don't have a college degree, you're more than twice as likely to be unemployed as somebody who does. So the stakes could not be higher for young people like Stephanie.
And yet, in a paradox of American life, at the very moment it's never been more important to have a quality higher education, the cost of that kind of that kind of education has never been higher. Over the past few decades, the cost of tuition at private colleges has more than doubled, while costs at public institutions have nearly tripled. Compounding the problem, tuition has grown ten times faster than a typical family's income, putting new pressure on families that are already strained and pricing far too many students out of college altogether. Yet, we have a student loan system where we're giving lenders billions of dollars in wasteful subsidies that could be used to make college more affordable for all Americans.
This trend -- a trend where a quality higher education slips out of reach for ordinary Americans -- threatens the dream of opportunity that is America's promise to all its citizens. It threatens to widen the gap between the haves and the have-nots. And it threatens to undercut America's competitiveness -- because America cannot lead in the 21st century unless we have the best educated, most competitive workforce in the world. And that's the kind of workforce -- and the kind of citizenry -- to which we should be committed.
And that's why we have taken and proposed a number of sweeping steps over our first few months in office -- steps that amount to the most significant efforts to open the doors of college to middle-class Americans since the GI Bill. Millions of working families are now eligible for a $2,500 annual tax credit that will help them pay the cost of tuition; a tax credit that will cover the full cost of tuition at most of the two-year community colleges that are some of the great and undervalued assets of our education system.
We're also bringing much needed reform to the Pell Grants that roughly 30 percent of students rely on to put themselves through college. Today's Pell Grants cover less than half as much tuition at a four-year public institution as they did a few decades ago. And that's why we are adding $500 to the grants for this academic year, and raising the maximum Pell Grant to $5,550 next year, easing the financial burden on students and families.
And we are also changing the way the value of a Pell Grant is determined. Today, that value is set by Congress on an annual basis, making it vulnerable to Washington politics. What we are doing is pegging Pell Grants to a fixed rate above inflation so that these grants don't cover less and less as families' costs go up and up. And this will help prevent a projected shortfall in Pell Grant funding in a few years that could rob many of our poorest students of their dream of attending college. It will help ensure that Pell Grants are a source of funding that students can count on each and every year.
Now, while our nation has a responsibility to make college more affordable, colleges and universities have a responsibility to control spiraling costs. And that will require hard choices about where to save and where to spend. So I challenge state, college and university leaders to put affordability front and center as they chart a path forward. I challenge them to follow the example of the University of Maryland, where they're streamlining administrative costs, cutting energy costs, using faculty more effectively, making it possible for them to freeze tuition for students and for families.
At the same time, we're also working to modernize and expand the Perkins Loan Program by changing a system where colleges are rewarded for raising tuition, and instead, rewarding them for making college more affordable.
Now just as we've opened the doors of college to every American, we also have to ensure that more students can walk through them. And that's why I've challenged every American to commit to at least one year of higher education or advanced training -- because by the end of the next decade, I want to see America have the highest proportion of college graduates in the world. We used to have that; we no longer do. We are going to get that lead back.
And to help us achieve that goal, we are investing $2.5 billion to identify and support innovative initiatives that have a record of success in boosting enrollment and graduation rates -- initiatives like the IBEST program in Washington state that combines basic and career skills classes to ensure that students not only complete college, but are competitive in the workforce from the moment they graduate.
And to help cover the cost of all this, we're going to eliminate waste, reduce inefficiency, and cut what we don't need to pay for what we do. And that includes reforming our student loan system so that it better serves the people it's supposed to serve -- our students.
Right now, there are two main kinds of federal loans. First, there are Direct Loans. These are loans where tax dollars go directly to help students pay for tuition, not to pad the profits of private lenders. The other kinds of loans are Federal Family Education Loans. These loans, known as FFEL loans, make up the majority of all college loans. Under the FFEL program, lenders get a big government subsidy with every loan they make. And these loans are then guaranteed with taxpayer money, which means that if a student defaults, a lender can get back almost all of its money from our government.
And there's only one real difference between Direct Loans and private FFEL loans. It's that under the FFEL program, taxpayers are paying banks a premium to act as middlemen -- a premium that costs the American people billions of dollars each year. Well, that's a premium we cannot afford -- not when we could be reinvesting that same money in our students, in our economy, and in our country.
And that's why I've called for ending the FFEL program and shifting entirely over to Direct Loans. It's a step that even a conservative estimate predicts will save tens of billions of tax dollars over the next ten years. According to the Congressional Budget Office, the money we could save by cutting out the middleman would pay for 95 percent of our plan to guarantee growing Pell Grants. This would help ensure that every American, everywhere in this country, can out-compete any worker, anywhere in the world.
In the end, this is not about growing the size of government or relying on the free market -- because it's not a free market when we have a student loan system that's rigged to reward private lenders without any risk. It's about whether we want to give tens of billions of tax dollars to special interests or whether we want to make college more affordable for eight and a half million more students. I think most of us would agree on what the right answer is.
Now, some of you have probably seen how this proposal was greeted by the special interests. The banks and the lenders who have reaped a windfall from these subsidies have mobilized an army of lobbyists to try to keep things the way they are. They are gearing up for battle. So am I. They will fight for their special interests. I will fight for Stephanie, and other American students and their families. And for those who care about America's future, this is a battle we can't afford to lose.
So I am looking forward to having this debate in the days and weeks ahead. And I am confident that if all of us here in Washington do what's in the best interests of the people we represent, and reinvest not only in opening the doors of college but making sure students can walk through them, then we will help deliver the change that the American people sent us here to make. We will help Americans fulfill their promise as individuals. And we will help America fulfill its promise as a nation.
So thank you very much. And thank you, Stephanie. And thank you, Stephanie's mom.
All right. Thanks, guys.
Reforming Student Loans to Make College Affordable
“We will provide the support necessary for you to complete college and meet a new goal: by 2020, America will once again have the highest proportion of college graduates in the world.”
-- President Barack Obama, February 24, 2009
America’s future economic strength depends on the quality of our education. Countries that out-teach us today will out-compete us tomorrow. America once had one of the most educated workforces in the world, but it has now slipped to the middle of the pack. Only 38 percent of young workers have a college degree, a lower percentage than nine other countries and no higher than a generation ago. At the same time, we do not provide enough financial aid, partly because the student loan program spends $5 billion more than necessary subsidizing banks and other lenders to make student loans.
Today, President Obama met with a family struggling to afford the cost of college and released a new analysis of the impact of his plans to increase student aid. He will take on the special interests to eliminate wasteful and unreliable guaranteed student loans and invest more in helping students succeed in college and complete their degree. And he will make a historic investment in college affordability: together, the American Recovery and Reinvestment Act (ARRA) and the President’s Budget provide about $200 billion in Pell Grant scholarships and tax credits over the next decade.
· Reforming Student Loans: The guaranteed student loan program pays banks and other lenders a guaranteed rate of return and reimburses them for defaults, giving them large profits set by the political process rather than won in a competitive marketplace. The Obama-Biden Administration will expand the alternative Direct Loan program, which is administered by private sector companies selected through a competitive process and paid based upon performance. Direct loans have essentially the same terms for students and are more reliable and efficient. They will save $48 billion over the next decade according to the Office of Management and Budget, which will be reinvested in Pell Grant scholarships for students.
· Restoring Pell Grants to a Strong Foundation for Student Aid: The value of Pell Grants have fallen from 77 percent of the cost of attending a public university to 33 percent over the past three decades. The ARRA invested $17 billion, making it possible to increase Pell by $619 for 7 million students. But these funding increases are only temporary, and without additional resources the value of the maximum Pell Grant will fall by $1,400 in 2011. President Obama is committed to a strong, reliable Pell Grant program. He will make Pell an entitlement, provide $116 billion over the next decade to prevent any drop in the size of Pell Grants, ensure that they continues to grow faster than inflation, and eliminate the frequent budget shortfalls that have plagued the program.
· Cut Taxes on College Tuition: The ARRA created the American Opportunity Tax Credit, which will give millions of families up to $2,500 each to help pay for college. The credit was also expanded to help families too poor to owe income taxes. But the credit expires at the end of 2010. The President’s Budget would make it permanent.
· Make a New Commitment to College Access and Completion: Only 65 percent of students starting at four-year colleges – and 38 percent of students starting at two-year colleges – earn a degree within six years. The President’s Budget includes a five-year, $2.5 billion fund to improve college access and help America’s colleges and universities graduate more students. The fund will identify, test, and promote what works in boosting college enrollment and persistence.
2 million shares dumped today?
This has a hard time breaking the $2.50 mark.
We need some good news about a turn around for this company or a surprise in earnings?
It is bucking the trend today
When you make your million dollars on WAMU
you can invest it here?
Just wait until this starts
getting some upgrades in the next few months.
When this breaks $3.00 you will see many BUY recomendations.
Yes it is however you have the decimal too far to the right.
Move it to the left two spaces...
2 cents coming...
FEBM
$5.00 coming soon
LOL
First Marblehead Sells Selected Trust Residuals, Expects Reduced Future Tax Obligations and Tax Refund
09:09 a.m. 04/06/2009 Provided By Market Wire
BOSTON, MA -- (MARKET WIRE) -- 04/06/09 -- The First Marblehead Corporation (FMD) announced today that it has sold its ownership interest in NC Residuals Owners Trust (the "Trust"). The Trust is the owner of the residual interests in all fifteen of the National Collegiate Student Loan Trusts ("NCSLT") which First Marblehead (FMD) has facilitated. This transaction does not affect any of First Marblehead's (FMD) interests in securitization trusts relating to its GATE transactions. The Company was advised on the transaction by Deutsche Bank Securities Inc., Orrick, Herrington & Sutcliffe LLP and Sonnenschein Nath & Rosenthal LLP.
The sale is expected to generate a cash refund for taxes previously paid, as the Company has been required to pay taxes on the expected residual cash flows from the NCSLT Trusts before it actually receives those cash flows. Prior to this transaction, the company has paid in excess of $195 million on taxable income associated with their interests in the NCSLT residuals over the past 7 years. The Company estimates that it would be required to pay approximately $430 million in additional taxes over the remaining life of the residuals, with approximately $370 million to be paid prior to the residuals generating sufficient annual cash flows to offset the tax payments. As a result of the transaction, the Company expects to eliminate any tax obligations from these residuals in their entirety.
The refund is expected to be received by the Company in 2009 and 2010.
The Company has also entered into an Asset Services Agreement with the purchaser of the Trust pursuant to which the Company has agreed to provide certain portfolio services for an annual fee based on the aggregate outstanding principal balance of the student loans owned by the NCSLT Trusts. The advisory fee will be earned but will not be paid until residual cash flows are distributed by the NCSLT Trusts. If First Marblehead (FMD) completes its obligations under the Asset Services Agreement as anticipated, the Company expects total revenues between the years 2009 and 2038, to be approximately $500 million, on an undiscounted, pre-tax basis, using current management assumptions regarding loan performance.
First Marblehead (FMD) continues to have rights to additional structural advisory fees from the NCSLT Trusts and will continue to publish on its website its management assumptions as well as static pool data regarding performance of these trusts. In addition, First Marblehead Data Services, Inc. will continue to serve as administrator of the NCSLT Trusts.
Daniel Meyers, First Marblehead's (FMD) Chief Executive Officer and President, said, "Management is pleased to have completed this transaction, which will significantly enhance our unrestricted cash. With respect to the residual interests, the Company has paid income taxes on these residual interests without receiving any cash from these trusts. By completing this transaction, we expect not only to stop the cash burn from these tax payments, but also to recapture a significant portion of the taxes that the Company has paid to date on these residuals. In addition, we will assist the Purchaser with a host of portfolio management and data services throughout the life of the NCSLT Trusts, for which we expect to receive contractual fees. This ensures that First Marblehead's (FMD) interests continue to be aligned with those of the bondholders of these trusts."
Meyers continued, "As we begin to see the rationalization of the credit markets, First Marblehead (FMD) will facilitate loans to students in the private education finance market, working with partners to produce products and portfolios that are in line with evolving funding conditions. We are actively engaged in advising clients, administering trusts, originating third-party loans and structuring new and innovative products. Having materially more unrestricted cash at our disposal makes the firm substantially stronger during these turbulent times."
The Company has filed with the Securities and Exchange Commission a current report on Form 8-K with additional transaction details.
About The First Marblehead Corporation (FMD) -- First Marblehead (FMD) helps meet the growing demand for private education loans by offering national and regional financial institutions and educational institutions an integrated suite of design, implementation and capital market services for student loan programs. First Marblehead (FMD) supports responsible lending and is a strong proponent of the smart borrowing principle, which encourages students to access scholarships, grants and federally-guaranteed loans before considering private education loans, please see www.SmartBorrowing.org. For more information, go to www.firstmarblehead.com.
Safe Harbor Statement -- Statements in this press release regarding any future tax liabilities, the elimination of any future tax liability, the timing and size of any potential tax refund, the timing or amount of residual cash flows generated by the NCSLT Trusts, provision of services pursuant to the asset services agreement, the receipt of any future fees and the amount of such fees, First Marblehead's (FMD) business prospects or future liquidity, as well as any other statements that are not purely historical, constitute forward-looking statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon our historical performance, the historical performance of NCSLT Trusts and on our plans, estimates and expectations as of April 6, 2009. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future results, plans, estimates or expectations contemplated by us will be achieved. In particular, the U.S. federal and state income tax consequences arising in connection with the transactions (collectively, the "Transactions") between First Marblehead (FMD) and the purchaser (the "Purchaser") related to the transfer of the trust certificate of NC Residuals Owners Trust (the "Trust Certificate") are complex and uncertain. You are cautioned that matters subject to forward-looking statements involve known and unknown risks and uncertainties, including economic, legislative, regulatory, competitive and other factors, which may cause our actual financial or operating performance, including the performance of the NCSLT Trusts and resulting cash flows, or the timing of events, to be materially different than those expressed or implied by forward-looking statements. Important factors that could cause or contribute to such differences include: U.S. federal or state income tax treatment of any aspect of the Transactions; any investigation, audit, claim, action or suit relating to the federal or state income tax treatment of any aspect of the Transactions, including any such proceeding initiated by the Internal Revenue Service; the performance by the Purchaser and its affiliates of each of their respective obligations in connection with the Transactions, including full compliance with representations, warranties and covenants; any dispute relating to the foregoing or the Transactions, including any third-party dispute challenging the Transactions; the enforceability of the agreements executed in connection with the Transactions; degradation of credit quality or performance of the loan portfolios of the NCSLT Trusts; economic, regulatory, competitive and other factors affecting prepayment, default and recovery rates on the NCSLT Trusts' loan portfolio; developments in the bankruptcy proceedings of The Education Resources Institute, Inc.; and the other factors set forth under the caption "Item 1A. Risk Factors" in First Marblehead's (FMD) quarterly report on Form 10-Q filed with the Securities and Exchange Commission on February 9, 2009. We disclaim any obligation to update any forward-looking statements as a result of developments occurring after the date of this press release.
© 2009 First Marblehead
Contact:
Lee Jacobson
Investor Relations
617.638.2065
It is a low volume stock and any activity
will push the PPS and it will over react in any direction.
This is VERY OVERPRICED.
If this company paid off all their debt and sold all of their assets, there would be 0.00 left over for shareholders.
Look at how many more liabilities they have than assets. They are in very weak condition, and the future does not look bright.
Look at the numbers.
The numbers don't lie.
I disagree.
Look at their financials.
They are absolutely horrible.
Compare their cash to their short-term debt, factor in 90 million shares outstanding, and tell me with a straight face you think this is going to $10 .
I would also recommend taking a few accounting classes.
It will never pay a dividend . 52 week down 70%
2 cents coming soon. Add a Q by fall
FEBM
You are going to lose it all tomorrow.
you mean a two cent dividend?
that will be awesome
2 cents soon
FEBM
I think
$5.00 (past book value)could easily be reached by next week?
Then maybe some over bought correction in PPS?
If the credit markets free up in Q2-Q3 then this can start
into the teens. It will be hard picking an exit?
hey buddy, i check in regularly, nice work here -
Here we go again...looks like a repeat of yesterday. Buckle in and enjoy the ride up!!!!
Hi everyone!! Looks like some good movement comimg and a strong uptrend in PPs as well......FF03
I couldn't agree more. Their residuals were priced in the stock as worthless....now all of sudden they are worth $200 million. They've basically secured enough funds to continue operating for years. Cash value alone now is around $4/share. Add to that the all the shorts caught with pants down.....this is just the beginning indeed.
TALF info is available at
http://www.newyorkfed.org//markets/talf_faq.html
looks like student lenders will get access in a few more months?
The stock could return to near "back to normal operations"
if they choose to use the TALF program. They will have to do
full disclosures to the government to be able to access this money.
$10.00 / share may be coming
BOSTON, MA -- (Marketwire) -- 02/02/09 -- The First Marblehead Corporation (NYSE: FMD) today announced its financial and operating results for the second quarter of fiscal 2009 and for the six-month period ended on December 31, 2008.
Total revenues for the six-month period ended December 31, 2008 were $(171.0) million, a decrease from $257.2 million for the same period last year. Revenues declined principally as a result of not completing a securitization transaction during the first six months of fiscal 2009 while two securitization transactions with revenues totaling $319.3 million were completed in the first six months of fiscal 2008. The net loss for the six-month period was $186.3 million or $1.88 per share, down from net income of $51.1 million or $0.54 per diluted share for the same period last year.
Total revenues for the second quarter of fiscal 2009 were $(86.1) million, as compared to $(122.8) million for the same period last year. Both quarters were adversely affected by non-cash, pre-tax adjustments to the estimated fair value of the company's service receivables; $98.6 million for the second quarter of fiscal 2009 and $170.5 million for the second quarter of fiscal 2008.
The net loss for the second quarter of fiscal 2009 was $93.4 million, or $0.94 per share compared to a net loss of $117.7 million, or $1.26 per share, for the same period last year. Non-interest expenses, excluding the $29.3 million unrealized loss on education loans held for sale, decreased $43.9 million or 60% from the same period last year as a result of the company's expense reduction initiatives.
The company ended the quarter with $198.6 million in cash, cash equivalents and investments on the balance sheet. Net operating cash usage for the quarter ended December 31, 2008 was approximately $14.3 million.
About The First Marblehead Corporation -- First Marblehead helps meet the growing demand for private education loans by offering national and regional financial institutions and educational institutions an integrated suite of design, implementation and capital markets services for student loan programs. First Marblehead supports responsible lending and is a strong proponent of the smart borrowing principle, which encourages students to access scholarships, grants and federally-guaranteed loans before considering private education loans, please see www.SmartBorrowing.org. For more information, go to www.firstmarblehead.com.
Statements in this press release, including the tables, regarding First Marblehead's future financial and operating results, products and services, efforts, liquidity and the demand for private student loans, as well as any other statements that are not purely historical, constitute forward-looking statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon our historical performance, the historical performance of the securitization trusts that we have facilitated and on our plans, estimates and expectations as of February 2, 2009. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future results, plans, estimates or expectations contemplated by us will be achieved. You are cautioned that matters subject to forward-looking statements involve known and unknown risks and uncertainties, including economic, legislative, regulatory, competitive and other factors, which may cause our actual financial or operational results, including the performance of securitization trusts and resulting cash flows, facilitated loan volumes or financing-related revenues, or the timing of events, to be materially different than those expressed or implied by forward-looking statements. Important factors that could cause or contribute to such differences include: our ability to structure securitizations or alternative financings; the size, structure and timing of any securitizations or alternative financings; developments in the bankruptcy proceedings of The Education Resources Institute, Inc.
(TERI), including challenges to the enforceability of security interests of securitization trusts; the demand for, and market acceptance of, loan programs that are not TERI-guaranteed, including our success in providing such alternatives to former, current and prospective clients; the inability of TERI to meet its guaranty obligations, or rejection of its guaranty agreements with regard to loans held by the securitization trusts; degradation of credit quality or performance of the loan portfolios of the securitization trusts; the estimates we make and the assumptions on which we rely in preparing our financial statements, including with respect to the valuation or our loans held for sale; continued variance between the actual performance of securitization trusts and the key assumptions we have used to estimate the present value of additional structural advisory fees and residual revenues; and the other factors set forth under the caption "Part II - Item 1A. Risk Factors" in First Marblehead's quarterly report on Form 10-Q filed with the Securities and Exchange Commission on November 10, 2008. Important factors that could cause or contribute to differences between the actual performance of the securitization trusts and our key assumptions include economic, regulatory, competitive and other factors affecting prepayment, default and recovery rates on the underlying securitized loan portfolio; capital market receptivity to private student loan asset-backed securities; trust expenses; and interest rate trends, including with regard to auction rate notes. We disclaim any obligation to update any forward-looking statements as a result of developments occurring after the date of this press release.
-financial tables to follow-
The First Marblehead Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
For the three and six months ended December 31, 2008 and 2007
(Unaudited)
(in thousands, except per share amounts) Three months ended Six months ended
December 31, December 31,
2008 2007 2008 2007
---------- ---------- ---------- ----------
Service revenues:
Up-front structural
advisory fees $ - $ 524 $ - $ 178,066
Additional structural
advisory fees:
From new
securitizations - - - 24,304
Trust updates (29,513) (10,775) (47,403) (7,916)
---------- ---------- ---------- ----------
Total additional
structural advisory
fees (29,513) (10,775) (47,403) 16,388 Residuals
From new
securitizations - - - 116,972
Trust updates (69,082) (159,746) (149,238) (173,854)
---------- ---------- ---------- ----------
Total residuals (69,082) (159,746) (149,238) (56,882) Processing fees from TERI 244 37,280 2,630 83,529 Administrative and other
fees 4,782 3,129 8,400 24,890
---------- ---------- ---------- ---------- Total service revenues (93,569) (129,588) (185,611) 245,991 Net interest income 7,474 6,778 14,612 11,161
---------- ---------- ---------- ---------- Total revenues (86,095) (122,810) (170,999) 257,152
---------- ---------- ---------- ----------Non-interest expenses:
Compensation and benefits 10,295 19,734 25,552 51,737
General and
administrative expenses 19,540 53,959 43,987 119,457
Unrealized loss on loans
held for sale 29,303 - 50,530 -
---------- ---------- ---------- ----------
Total non-interest
expenses 59,138 73,693 120,069 171,194Income(loss) before income
tax expense(benefit) (145,233) (196,503) (291,068) 85,958Income tax expense(benefit) (51,846) (78,828) (104,785) 34,813
---------- ---------- ---------- ----------Net income(loss) $ (93,387) $ (117,675) $ (186,283) $ 51,145
========== ========== ========== ========== Net income(loss) per
share, basic $ (0.94) $ (1.26) $ (1.88) $ 0.55
Net income(loss) per
share, diluted (0.94) (1.26) (1.88) 0.54
Cash dividends declared
per share - 0.12 - 0.395
Weighted average shares
outstanding, basic 99,116 93,500 99,040 93,469
Weighted average shares
outstanding, diluted 99,116 93,500 99,040 94,108 The First Marblehead Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
As of December 31, 2008 and June 30, 2008
(Unaudited)
(amounts in thousands) December 31, June 30,
2008 2008
------------ ------------
Assets
Cash, cash equivalents and investments $ 198,570 $ 140,909
Federal funds sold 23,420 80,215
Loans held for sale 460,987 497,324
Service receivables:
Structural advisory fees 64,935 113,842
Residuals 144,017 293,255
Processing fees from TERI 67 4,086
------------ ------------
Total service receivables 209,019 411,183
------------ ------------ Property and equipment, net 27,223 37,681 Goodwill - 1,701
Intangible assets, net 1,569 1,956
Other prepaid expenses 9,153 15,377
Mortgage loans held to maturity 9,831 10,754
Prepaid income taxes 6,772 -
Net deferred income tax asset 91,789 -
Other assets 5,409 3,798
------------ ------------
Total assets $ 1,043,742 $ 1,200,898
============ ============Liabilities and Stockholders' Equity
Liabilities:
Deposits $ 137,967 $ 244,113
Education loan warehouse facility 245,663 242,899
Other short-term borrowings 50,000 -
Accounts payable and accrued expenses 20,085 20,543
Income taxes payable - 31,275
Net deferred income tax liability - 10,385
Other liabilities 11,027 14,071
------------ ------------
Total liabilities 464,742 563,286
------------ ------------ Commitments and contingencies Stockholders' equity 579,000 637,612
------------ ------------
Total liabilities and stockholders' equity $ 1,043,742 $ 1,200,898
============ ============
The First Marblehead Corporation and Subsidiaries
Balance Sheet Metrics
Roll-forward of Structural Advisory Fees and Residuals Receivables
(Dollars in Thousands)
Three Months Six Months
Ended Ended
December 31, December 31,
2008 2008
------------- -------------
Structural Advisory Fees Receivable
Beginning of period balance $ 94,475 $ 113,842Cash received from trust distributions (27) (1,504)Trust updates:
Passage of time (fair value accretion) 2,641 5,430
Decrease in average prepayment rate 2,358 2,358
Increase in discount rate assumptions (6,123) (20,189)
Increase in timing and average default rate (3,031) (6,164)
Increase in auction rate notes spread (13,087) (13,087)
Decrease in forward libor curve (15,396) (19,531)
Other factors 3,125 3,780
------------- -------------
Net accretion (29,513) (47,403)
------------- -------------End of period balance $ 64,935 $ 64,935
============= =============Residuals ReceivableBeginning of period balance $ 213,099 $ 293,255
Trust updates:
Passage of time (fair value accretion) 8,821 19,752
Decrease in average prepayment rate 11,336 11,336
Increase in discount rate assumptions (39,991) (83,634)
Increase in timing and average default rate (9,380) (50,108)
Increase in auction rate notes spread (31,779) (31,779)
Decrease in forward libor curve (16,129) (22,113)
Other factors 8,040 7,308
------------- -------------
Net accretion (69,082) (149,238)
------------- -------------End of period balance $ 144,017 $ 144,017
============= =============
Note: Factors affecting the valuation of structural advisory fees and residuals receivables include changes, if any, to the assumptions we use in estimating the fair value of these receivables. In light of conditions in the asset-backed securities market and our ongoing evaluation of actual trust performance, we changed certain assumptions used to determine the fair value of our residual and structural advisory fee receivables at December 31, 2008. We continue to monitor the performance of trust assets against our expectations, as well as other inputs necessary to estimate the present value of our structural advisory fee and residuals receivables. We will make such additional adjustments to our estimates as we believe are necessary to value properly our receivables balances at each balance sheet date.
Contact:
Lee Jacobson
Investor Relations
617.638.2065
First Marblehead to Release Second Quarter Fiscal 2009 Financial Results on February 2, 2009BOSTON, MA, Jan 28, 2009 (MARKET WIRE via COMTEX) -- The First Marblehead Corporation (NYSE: FMD) today announced that it plans to release its financial and operating results for the three-month period ended December 31, 2008 after market close on Monday, February 2, 2009.
About The First Marblehead Corporation -- First Marblehead helps meet the growing demand for private education loans by offering national and regional financial institutions and educational institutions an integrated suite of design, implementation and capital market services for student loan programs. First Marblehead supports responsible lending and is a strong proponent of the smart borrowing principle, which encourages students to access scholarships, grants and federally-guaranteed loans before considering private education loans, please see www.SmartBorrowing.org. For more information, go to www.firstmarblehead.com.
Copyright 2009 First Marblehead
Low volume before the earnings report?
Should be out next week but it will not be good?
Will they maintain the current headcount for 2009?
After this week, I bet this starts
to move 20-35 cents in one day?
Part of the second half of the
TARP funds will be going to the student lenders to help free up the credit markets.
That would be nice, I would like to see this in the 40's in a few years.
Saw your post on FRE, looks interesting. Will do some dd.
This has been going up sharply on overall down days in the market. I think when the Dow does bounce back we could see moves
30-50 cents in one day?
lets see what this
can do with some volume?
This stock continues to
get hammered in after hours trading for the last few weeks?
It loses lots of ground in after hours and barely recovers until late in the day?
hmms, will rethink this one out.
12-18 month play
Wait for the volume to kick up, this
one may be explosive on the upside?
Looks like a 6% move again today with only half the average volume. The true test is to see what it does with it's normal volume of 600,000 shares.
Followers
|
7
|
Posters
|
|
Posts (Today)
|
0
|
Posts (Total)
|
147
|
Created
|
08/18/08
|
Type
|
Free
|
Moderators |
Profile for First Marblehead Corporation - FMD
The First Marblehead Corporation was formed as a limited partnership in 1991 and was incorporated in Delaware in August 1994. It provides outsourcing services for private education lending in the United States. The Company helps meet the growing demand for private education loans by providing national and regional financial institutions and educational institutions, as well as businesses, education loan marketers and other enterprises, with an integrated suite of design, implementation and securitization services for student loan programs tailored to meet the needs of their respective customers, students, employees and members. It receives fee for the services it provides in connection with processing and securitizing the clients' loans. First Marblehead focuses primarily on loan programs for undergraduate, graduate and professional education, and, to a lesser degree, on the primary and secondary school market. The Company enables its clients to offer student and parent borrowers competitive loan products, while managing the complexities and risks of these products. It provides its clients with a continuum of services, from the initial phases of program design through application processing and support to the ultimate disposition of the loans through securitization transactions that it structures and administers. The lifecycle of a private student loan consists of a series of processes which are as follows: Program Design and Marketing, Borrower Inquiry and Application, Loan Origination and Disbursement, Loan Securitization and Loan Servicing. First Marblehead offers prospective clients the opportunity to outsource all of the key components of their loan programs by providing a full complement of services, including program design, application processing, underwriting, loan documentation and disbursement, technical support, customer support and facilitation of loan securitization. It offers service in connection with two primary loan programs: Private label programs and Guaranteed Access to Education, or GATE, programs. The private student loan industry is competitive with dozens of active participants. First Marblehead owns the following federally registered trademarks: FIRST MARBLEHEAD, FIRST MARBLEHEAD, diamond design, GATE, GATE FAMILY LOAN, GATE Guaranteed Access to Education, prepGATE and National Collegiate Trust. It provides services in connection with the creation, management and disposition of education loans, a form of consumer loan asset. This business is regulated at both the state and federal level, through statutes and regulations that focus upon: licensure and examination of industry participants; regulation and disclosure of consumer loan terms; regulation of loan origination processing; and regulation of loan collection and servicing.
Business Trends, Uncertainties and Outlook (10Q)
Education loan asset-backed securitizations have been the Company's sole source of permanent financing for its clients' private education loan programs. The conditions of the debt capital markets generally, and the asset-backed securities (ABS) market specifically, rapidly deteriorated during the second quarter of fiscal 2008.
Website: www.firstmarblehead.com
IR contact: Lee Jacobson
Vice President, Investor Relations
(617)638-2186
Email ljacobson@fmd.com
Address: 800 Boylston Street, 34th Flr,The Prudential Towr, Boston, MA, US
Telephone (617) 638-2000
FAX (617) 638-2100
CEO Daniel Meyers
Employees 368
Exchange: NYSE
Market Cap $128 M
Auditors KPMG LLP
Last Audit UQ
CIK 0001262279
Dividends: None
Avg Volume: 656,500
Earning TTM (-4.57)
Industry : credit services
Book value $6.77
NAICS Classification Consumer Lending
SIC Code Personal Credit Institutions (6141)
Outstanding 98.9 M Float 64.4 M
Insider Holdings 34.9% (6/2008)
Institutional Holdings 47% (12/2008)
Total Holdings 43M held by 147 institutions
Union Federal Savings Bank, a federally-chartered thrift located in Rhode Island, is a wholly-owned subsidiary of The First Marblehead Corporation.
Links: | |
http://www.firstmarblehead.com | |
Download Annual Report |
This deterioration accelerated during the third quarter of fiscal 2008 and has persisted through May 8, 2009. The Company's business has been and continues to be materially adversely impacted by the current market dynamics, including an inability to access the securitization market or alternative interim financing facilities. The Company did not complete a securitization transaction during the second, third or fourth quarters of fiscal 2008 or during the first, second or third quarters of fiscal 2009, and the Company does not expect to complete a securitization in the near-term. In addition, it expects the structure and pricing terms in future securitizations, if any, to be substantially less favorable than in the past.
Volume | |
Day Range: | |
Bid Price | |
Ask Price | |
Last Trade Time: |