Business & Finance
Business and Finance
Business and Finance
Mon, June 28, 2010 First Marblehead Announces Kinecta Federal Credit Union Loan Program
BOSTON, MA--(Marketwire - June 28, 2010) - The First Marblehead Corporation (
Pursuant to the Agreement, the Company will perform a range of services in support of a school-certified private education loan program to be funded by Kinecta, including loan processing and management, and program administration services. The Company expects to facilitate up to $75 million in loans over the two-year term of the program.
Daniel Meyers, the Company's Chairman and Chief Executive Officer, said, "This is our second lender deal to feature our Monogram product offering. We have enabled Kinecta to create a loan program tailored to its specific needs, as it enters the private student loan market for the first time."
"The capital markets have improved considerably, but we are committed to a revenue model that is flexible enough not to rely solely on securitizations. In each of our past two lender deals, we expect to generate ongoing monthly service revenue for the life of the lenders' loan portfolios even as the loans remain on the lenders' balance sheets," said Meyers.
The Company has agreed to provide credit enhancement in connection with the program by funding a capped first-loss reserve for defaulted program loans. In exchange, the Company will receive a substantial portion of the interest yield generated from the loan portfolio.
Gary Harman, Vice President for Consumer Lending at Kinecta, said, "We are happy to be able to offer this new private loan program to our 220,000 member-owners across the country. With the help of First Marblehead, we were able to build a private loan product that minimizes credit risk and operational resources while providing our customers with a loan product that can help them fund their education."
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 ].
Statements in this press release regarding the loan program (the "Loan Program") contemplated by the loan program agreement (the "Agreement") among The First Marblehead Corporation, First Marblehead Education Resources, Inc. and Kinecta Federal Credit Union ("Kinecta"), including statements regarding the expected implementation of the Loan Program, the provision of services by us pursuant to the Agreement and the volume of loans to be facilitated pursuant to the Loan Program, 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 and on our plans, estimates and expectations as of June 28, 2010. 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 facilitated loan volumes, loan portfolio performance or revenues related to the Loan Program, 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: market acceptance of, and demand for, loans pursuant to the Loan Program; demand for private education financing generally; competition for providing private education financing; our success in implementing the Loan Program and delivering our services to Kinecta; contractual termination rights relating to certain legislative developments; economic, legislative, regulatory, competitive and other factors affecting default, recovery and prepayment rates on the loan portfolio generated pursuant to the Loan Program, including general economic conditions, the consumer credit environment and unemployment rates; Kinecta's determination to hold the loan portfolio indefinitely; 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 May 10, 2010. We disclaim any obligation to update any forward-looking statements as a result of developments occurring after the date of this press release.
© 2010 The First Marblehead Corporation
