The Student Loan Corporation Announces First Quarter Earnings

Business Wire, April 15, 2004

Business Editors

STAMFORD, Conn.--(BUSINESS WIRE)--April 15, 2004

The Student Loan Corporation (NYSE:STU) today reported net income of $72.9 million ($3.64 basic earnings per share) for the first quarter of 2004, an increase of $11.3 million (18%), compared to net income of $61.5 million ($3.08 basic earnings per share) for the same period of 2003.

The improvement in net income is primarily attributable to portfolio growth of 9% over the previous twelve months and increased floor income earned on both Consolidation and Stafford Loan assets. First quarter 2004 net income was also impacted by an $8.1 million pretax gain that resulted from the sale of $0.5 billion of student loans. However, the gain was partially offset by a $6.5 million pretax amortization charge due to changes in prospective prepayment speeds related to student loan consolidations.

During the twelve month period from March 31, 2003 to March 31, 2004, the Company's student loan assets grew by $2.0 billion (9%) to $23.8 billion. Combined Federal Family Education Loan Program (FFELP) Stafford and PLUS disbursements and new CitiAssist Loan commitments totaling $1,535 million were up $246 million (19%) for the first quarter of 2004 compared to the same period of 2003. These first quarter 2004 disbursements were composed of FFELP Stafford and PLUS disbursements of $1,074 million, up $161 million (18%) and included new CitiAssist Loan commitments of $461 million, up $85 million (22%) compared to the same period last year. Secondary market and other loan procurement activities also added approximately $690 million of FFELP loans to the Company's student loan portfolio during the first quarter of 2004. More than 87% of this secondary market and other loan procurement volume was comprised of FFELP Consolidation Loans.

Revenue of $142.9 million for the first quarter of 2004 was $19.4 million (16%) higher than revenue for the same period of 2003. The net interest margin for the first quarter of 2004 was 2.22%, down eight basis points from 2.30% for the same period of 2003. The decrease was primarily attributable to the $6.5 million pretax acceleration of deferred fee amortization, described above, partially offset by increased floor income resulting from the Company's ability to take advantage of favorable funding opportunities. However, should short-term interest rates increase above their present level, the floor income benefit could decline. Floor income is a non-GAAP financial measure that is described in more detail in the Company's 2003 Form 10-K.

The Company's expense ratio (expenses as a percentage of average student loan assets) for the first quarter of 2004 was 49 bps, consistent with the first quarter 2003 ratio. Operating expenses of $28.8 million for the first quarter of 2004 were $2.8 million (11%) higher than expenses for the same period of 2003. This increase reflects the incremental costs incurred to originate, service, and administer the larger loan portfolio and ongoing infrastructure investments.

The Company's provision for loan losses for the first quarter of 2004 was $2.2 million, $0.6 million less than the provision for the same quarter 2003. The decrease was primarily attributable to the estimates of probable risk-sharing benefits arising as a result of being designated an Exceptional Performer by the Department of Education, effective January 1, 2004.

The Company's return on equity for the quarter ended March 31, 2004 decreased to 30.5% from 31.6% for the same period of 2003.

The Company's Board of Directors declared a regular quarterly dividend on the Company's common stock of $0.90 per share. The dividend will be paid June 1, 2004 to shareholders of record on May 14, 2004.

The Student Loan Corporation is one of the nation's largest originators and holders of insured student loans. Citibank, N.A., a subsidiary of Citigroup Inc., is the largest shareholder in the Company with an 80% interest.

For information or inquiries regarding student loan accounts, please call 1-800-967-2400. Hearing impaired customers with Telecommunication Devices for the Deaf (TDD) may call 1-800-846-1298. Information is also available on the Company's Web site at http://www.studentloan.com.

FORWARD-LOOKING STATEMENTS

Certain statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. The Company's actual results may differ materially from those suggested by the forward-looking statements, which are typically identified by the words or phrases "believe", "expect", "anticipate", "intend", "estimate", "target", "may increase", "may fluctuate", "may result in", "are projected", "will", "should", "would", "could" and similar expressions. These forward-looking statements involve risks and uncertainties including, but not limited to, general economic conditions, including the performance of financial markets and interest rates; and the effects of future legislative and regulatory changes, including those affecting the interest rates borrowers pay on certain loans and the magnitude of certain loan subsidies, which will determine the floor income benefit to the Company on Stafford Loans.