Introduction to Private Student Loans and the Monogram Platform. Fall 2011

Transcription

1 Introduction to Private Student Loans and the Monogram Platform Fall 2011

2 Benefit From the Attractive Qualities of Private Student Loan Assets Substantial market opportunity Increasing college population and rising costs Limited competition Many lenders exited the market with the sunset of FFELP Growth of asset base Expand and diversify consumer loan portfolio Low risk / high return Credit underwritten, risk-priced loans Customer acquisition and cross-sell sell Develop relationships with key customer demographic Expand commercial banking Establish and grow relationships with universities COMPANY CONFIDENTIAL The First Marblehead Corporation - 2

3 Take Advantage of Favorable Trends Driving the PSL Market $400B $350B $300B $348.6 Estimated U.S. Post-Secondary Education Funding Gap Academic Year $49.1 $104.0 $250B $200B $16.0 $9.2 $38.1 $150B $100B $10.8 $7.9 $113.5 $50B $0B Tuition, Fees, Room & Board Federal Federal Loans Federal Other State Inst. Private Private Loans FUNDING GAP Source: National Center for Education Statistics; College Board Currently, 19 million higher education students enrolled; 23 million expected in 2020 (Actual and projected numbers for enrollment in all degree-granting institutions; National Center for Education Statistics, 2010) Average annual cost of education currently $38k; representing a 10-year average increase of 5% (Average Published Tuition and Fee and Room and Board Charges at Four-Year Institutions in Current Dollars; College Board, 2010) COMPANY CONFIDENTIAL The First Marblehead Corporation - 3

4 Partner with a Leader in PSL Product Innovation The First Marblehead Monogram Platform Leading provider of education finance solutions offering a complete and integrated suite of outsourced services for private student loans Credit-underwritten, private label products designed to reach responsible students and families at high quality educational institutions Requires minimal i upfront capital investment Proprietary scorecard derived from 20+ years of loan performance, over 6 million loan applications processed and $17b of loans funded d Marketing support from a highly experienced national school channel sales team Two primary program models: partnered lending and loan referral Active Portfolio Management Capital Markets Expertise Customized Program Design Dedicated MONOGRAM Sales Support PLATFORM Credit-driven Loan Origination Process COMPANY CONFIDENTIAL The First Marblehead Corporation - 4

5 Option 1: Customize Your Program with the Partnered Lending Model Lender owns the asset Lender earns portfolio yield while holding the loans Customized product Private-labeled and lender chooses loan specifications Fully outsourced operations First Marblehead manages origination and servicing Expert marketing support Benefit from an experienced school channel sales team Sophisticated underwriting TransUnion-validated scoring model optimizes portfolio Loss protection option Cash reserve in exchange for share of portfolio yield COMPANY CONFIDENTIAL The First Marblehead Corporation - 5

6 Option 2: Generate Stable Fee Income with the Loan Referral Model Fee income Earn monthly revenue on all booked loans No lending risk Loans funded through First Marblehead s bank subsidiary Private label product Customized product and website landing page Fully outsourced operations First Marblehead manages origination and servicing Expert marketing support Benefit from First Marblehead s 20+ years of experience Access to data Portfolio data can be shared with referral partner COMPANY CONFIDENTIAL The First Marblehead Corporation - 6

7 Choose the Model That s Right for You Partnered Lending Model with Loss Protection First Marblehead establishes a cash loan loss reserve in an amount equal to a multiple of expected loan defaults in exchange for a percentage share of portfolio yield First Marblehead earns fees for origination and marketing for each disbursed loan Lender and First Marblehead split ongoing portfolio yield based on the level of Loss Protection. First Marblehead responsible for costs related to portfolio management Partnered Lending Model without Loss Protection Lender assumes risk for 100% of losses and earns full portfolio yield First Marblehead earns one-time fees for origination and marketing on disbursed loans First Marblehead manages life-of-loan servicing for a fee Loan Referral Model First Marblehead provides marketing support for fully custom branded product at no fee Referral Partner earns monthly revenue for all disbursed loans *Actual terms will be based on volume, risk, program customization, etc. COMPANY CONFIDENTIAL The First Marblehead Corporation - 7