SOURCE: The First Marblehead Corporation
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March 27, 2008 10:35 ET
First Marblehead Statement on Recent Actions by Moody's Investors Service
BOSTON, MA--(Marketwire - March 27, 2008) - The First Marblehead Corporation (NYSE: FMD)
today released the following statement regarding recent actions taken by
Moody's Investors Service with regard to the ratings of certain classes of
notes issued by the National Collegiate Student Loan Trusts (NCSLT) and
separately the ratings actions taken on The Education Resources Institute,
Inc. (TERI).
In the beginning of December 2007, Moody's Investors Service placed on
review for possible downgrade the ratings of certain subordinated classes
of asset-backed notes issued by the NCSLT. Since December, Moody's has
conducted a thorough review of First Marblehead's NCSLT securitization
portfolio, which consists of over 130 distinct classes of securities. Last
evening, Moody's announced the results of their review. Three classes of
securities had their current ratings affirmed and eighteen classes of
subordinated notes had a downward adjustment to their ratings.
"During the review period, First Marblehead provided Moody's with a
comprehensive level of historical data and cash flow projections for each
outstanding trust. In addition, we detailed the significant steps taken to
improve student loan collection practices, which are designed to reduce
delinquencies and eventually defaults," said Jack Kopnisky, Chief Executive
Officer and President of The First Marblehead Corporation. "We also
discussed the substantial modifications we have made to our credit
underwriting policies. We have worked closely with our clients and TERI in
recent months to tighten underwriting criteria.
"First Marblehead's management team has been focused on adjusting our
business model to manage the challenges presented by the current negative
consumer credit cycle and the capital markets credit dislocation. The
performance of the securitization trusts continues to be strong as
evidenced by the fact that the subordinated classes of securities have
retained their investment grade ratings. We remain dedicated to taking
the actions necessary to maintain the highest quality program to benefit
students who require financial assistance to attend college and to support
investors in our securitization program," added Kopnisky.
Separately, Moody's has been conducting its own review of TERI, a nonprofit
guarantor of private education loans. With regard to the rating action,
Kopnisky made the following comment:
"The Education Resources Institute has a rich history of providing programs
to help students achieve their dreams of attaining a higher education.
First Marblehead is currently working with TERI to determine how we may be
able to provide assistance in this challenging environment. As we have
discussed in the past, First Marblehead has been developing other guaranty
options for our clients including a self-guaranteed loan product and
products guaranteed by another third party.
"In 2008, there will be more students starting college than ever before and
early indications show that they will require substantial financial
assistance. First Marblehead looks forward to providing high quality
solutions to our clients and students to meet their growing needs."
About The First Marblehead Corporation -- First Marblehead provides
financial solutions that help students achieve their dreams. 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 and other enterprises, with an integrated suite of
design, implementation and securitization services for student loan
programs. First Marblehead supports responsible lending for borrowers 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. For more information, go to
www.firstmarblehead.com.
Statements in this press release regarding the future performance of The
National Collegiate Student Loan Trusts (NCSLT), future guaranty options
and future loan originations facilitated by First Marblehead, 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 and on our plans, estimates and expectations as of
March 27, 2008. 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 actual performance, including NCSLT's performance and facilitated
loan volumes, 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: degradation of
credit quality or performance of the loan portfolios of NCSLT; economic,
regulatory, competitive and other factors affecting prepayment, default and
recovery rates on the NCSLT loan portfolio, including interest rate trends,
full or partial prepayments, and prepayments as a result of loan
consolidation activity; the effectiveness of recent underwriting and
collections programs; our relationships with key clients, including their
reaction to the TERI downgrade and receptivity to alternative guaranty
structures; and the other factors set forth under the caption "Item 1A.
Risk Factors" in First Marblehead's quarterly report on Form 10-Q filed
with the Securities and Exchange Commission on February 11, 2008. We
disclaim any obligation to update any forward-looking statements as a
result of developments occurring after the date of this press release.