1
1
---------------
PROXY STATEMENT SUPPLEMENT
(TO PROXY STATEMENT SUPPLEMENT OF THE
COMMITTEE TO RESTORE VALUE AT SALLIE MAE
DATED JULY 10, 1997)
---------------
RELATING TO THE COMMON STOCK OF
SLM HOLDING CORPORATION
(THE "HOLDING COMPANY")
The following legend is required by the Privatization Act in
connection with the offering of securities by the Holding Company,
including the Holding Company Common Stock:
OBLIGATIONS OF THE HOLDING COMPANY AND ANY SUBSIDIARY OF THE HOLDING
COMPANY ARE NOT GUARANTEED BY THE FULL FAITH AND CREDIT OF THE UNITED
STATES AND NEITHER THE HOLDING COMPANY NOR ANY SUBSIDIARY OF THE HOLDING
COMPANY IS A GOVERNMENT-SPONSORED ENTERPRISE (OTHER THAN SALLIE MAE) OR AN
INSTRUMENTALITY OF THE UNITED STATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS SUPPLEMENT IS JULY 17, 1997
TABLE OF CONTENTS
Page
Investor Presentation . . . . . . . . . . . . . . . 1
2
Explanatory Note
This Amendment to the Proxy Statement/Prospectus Supplement of The
Committee to Restore Value at Sallie Mae (the "CRV") is filed in order to
conform the data on page 18 of the investor presentation materials filed by the
CRV on July 23, 1997 pursuant to Rule 424(b)(3), to the data that was presented
to shareholders by the CRV beginning on July 17, 1997. The data on page 18 of
the materials filed by the CRV on July 23, 1997 did not accurately reflect the
data that was presented to shareholders.
3
Sallie Mae Investor Presentation
Committee to Restore Value at Sallie Mae
July, 1997
1
4
Sallie Mae Vote
- -------------------------------------------------------------------------------
- - Leadership
- - Experience
- - Business Plans
- - Share Price Growth
2
5
A Clear Choice
- -------------------------------------------------------------------------------
CRV Their Slate
--- -----------
Sallie Mae Experience X
Experienced and diverse board membership X
Focused business plan on shareholder value X
Conflicts of interest X
Share ownership 134,974 6,321
Current board members 9 5
3
6
Proven Leadership
- -------------------------------------------------------------------------------
Current Board Members New Nominees
- --------------------- ------------
Albert L. Lord Edward A. Fox
Ronald F. Hunt Thomas J. Fitzpatrick
James E. Brandon Ann Torre Grant
Charles Daley Marie V. McDemmond
Diane Gilleland Barry W. Munitz
Benjamin J. Lambert III Wolfgang Schoelkopf
A. Alex Porter
Steven L. Shapiro
Randolph Hearst Waterfield
4
7
The CRV Slate -- New Nominees
- -------------------------------------------------------------------------------
Edward A. Fox CEO Sallie Mae 1973-1990,
Dean Amos Tuck School 1990-1994
Thomas J. Fitzpatrick CEO Equity One
Former Vice Chairman, Commercial Credit
Ann Torre Grant CFO, NHP Incorporated
Former Treasurer, USAir
Marie V. McDemmond President, Norfolk State University
Barry A. Munitz Chancellor and CEO
The California State University System
Wolfgang Schoelkopf Former Vice Chairman, First Fidelity
Former EVP, Chase
5
8
Sallie Mae Vote
- -------------------------------------------------------------------------------
Business Plans
6
9
CRV Business Plan
- -------------------------------------------------------------------------------
- - Student Loan Market Today
- - Sallie Mae's Market Position
- - CRV's Business Plan
- - Management's Business Plan
7
10
Student Loan Market Today
- -------------------------------------------------------------------------------
- - Growth business:
-- $30 billion in originations
-- Growing at 8% per year
- - Profitable business:
-- 1% after tax returns
-- High leverage
- - Competition:
-- Government
-- Banks
-- Non Profits
- - Sallie Mae -- Dominant:
-- Origination services
-- Servicing quality
-- Brand recognition
8
11
Sallie Mae Delivers the Product
- -------------------------------------------------------------------------------
Schools Sallie Mae Bank Partner
------- ---------- ------------
Choice based on Pays Premium for the Loan Receives Premium for the Loan
Service Quality
Application processing Holds loans before sale
Loan counseling
Great RewardSS
Electronic Funds Transfer
Direct information links
Private Loans originations
Deferred repayment options
[Graphic: Arrows pointing from right to left showing flow of loan process]
9
12
Cost of Acquisition
- -------------------------------------------------------------------------------
SALLIE MAE LOAN ACQUISITION COSTS
AVERAGE CASH COST OF ACQUISITION
YEAR
1991 0.71%
1992 1.15
1993 1.14
1994 1.51% 2.10%*
1995 1.81
1996 2.03%
* Represents effect of amount paid to acquire exclusive rights to Chase
Manhattan's student loan franchise for a six year term.
10
13
Origination vs. Purchase
- -------------------------------------------------------------------------------
An originated loan is 40 percent more valuable than a loan acquired in the
secondary market.
Originated Loan Secondary Market
--------------- ----------------
Cost of acquisition 0.50% 2.00%
Average Life 8 Years 6 Years
Present Value 7.40% 5.15%
11
14
Former Partners
- -------------------------------------------------------------------------------
Lydia Marshall May 2, 1997:
"In the event that our lenders begin to compete with us by leaving our
ExportSS, PortSS or TransportSS, we would of course move to originate
ourselves"
Amount Sale Premium
------ ------------
PNC Bank $1.0 billion greater than 5%
Great Western $370 million 6%
First Union $ 50 million greater than 5%
Money Store $300 million 6.5%
Fleet $350 million 5.5%
From a letter to David Drake, Assistant Director of Research,
Institutional Shareholder Services
12
15
Evolution of Sallie Mae
- -------------------------------------------------------------------------------
1973 _ Warehouse lending of loan portfolios [This column
shows
1975 _ Secondary market portfolio purchases increasingly
larger dollar
1980 _ In house servicing operations signs, with a
bag of money
1986 _ Origination services for schools/lenders -- in the bottom
ExportSS row.]
1994 _ Acquisition of loan originator
1995 _ Securitization
? _ Origination of loans
13
16
Management's Business Plan
- -------------------------------------------------------------------------------
An analysis of the management business plan reveals real risk and lower
expectations:
Management's 2001 EPS Projection $14.30
New businesses (1.45)
Earnings from $14 billion GSE investment portfolio (0.90)
Impact of today's loan prices (2.00)
-------
A different view $ 9.95
14
17
Management's New Businesses
- -------------------------------------------------------------------------------
Management plan -- $78 million in unidentified new businesses
Recent experience:
- - CyberMark: $40 million cost
- - HICA insurance: $20 million reserve for losses in QIV 1996
- - Education Securities Inc.: Losses each year
- - Software development venture: Lost $1.7 million in 1996
15
18
CRV's Conservative Business Plan
- -------------------------------------------------------------------------------
- - Reduce loan acquisition costs by 50 percent
-- Get 900 bank "customers" to compete for Sallie Mae services
-- Intensify school focused marketing effort
-- Originate loans
- - Third party servicing
-- 6 million unused capacity
-- $25 million net revenue per million units serviced
- - Cut operating expenses
-- $50 million reduction in overhead
-- Increase sales staff
- - Financial management
-- Shrink the balance sheet
-- Return capital to shareholders
16
19
The Art of the Very Possible -- The CRV Plan
- -------------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002
------------------------------------------------------------------------
Loan acquisitions $10.0 $11.0 $12.5 $14.0 $15.5 $17.0
Loans securitized 9.0 12.5 16.0 20.0 21.0 20.0
Core net income 506 565 629 684 701 725
EPS 9.75 12.07 14.63 17.31 19.28 21.47
Shares 48 44 41 37 34 32
Balance sheet 38 32 24 15 8 5
Servicing portfolio 14 25 38 54 58 80
17
20
CRV Business Plan Revenue
- -------------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002 2003
Servicing
Revenue $140 $268 $428 $620 $822 $900 $1075
Gain on
Sale 198 281 368 470 504 490 500
Interest
Income 564 459 346 203 54 50 50
[Area chart showing each component of projected revenue]
18
21
CRV Business Plan
- -------------------------------------------------------------------------------
APPENDIX
19
22
The Case for Securitization
- -------------------------------------------------------------------------------
Securitizing the loan portfolios makes economic sense even without the offset
fee:
Balance Sheet Securitized
------------- -----------
Loan yield after servicing 1.40% 1.40%
Cost of funds 0.30% 0.70%
----- -----
1.10% 0.70%
Taxes 0.39% 0.25%
----- -----
Return on assets 0.72% 0.46%
===== =====
Capital required 2.10% 0.30%
Return on equity 34% 152%
--- ----
20
23
Securitization's Impact on Earnings
- -------------------------------------------------------------------------------
The purchase prices paid today have been muted in the gain on sale because of
the older loans being securitized. The impact of today's prices will be felt
soon.
Today's Today's Tomorrow's
Accounting Purchases Purchases
---------- --------- ---------
Gross gain on sale 3.20% 3.20% 3.20%
Write off of premium -1.00% -1.75% ?
------ ------
Gain on sale 2.20% 1.45% ?
====== ======
Servicing and securitization revenue 1.35% 1.35% 1.35%
The control of acquisition costs is the key to earnings growth -- The CRV's
plan is focused on control of costs.
21
24
Forward Looking Statements
- -------------------------------------------------------------------------------
The presentation contains certain forward-looking statements and information
relating to the Company that are based on the beliefs of the members of the CRV
as well as on assumptions made by and information currently available to the
CRV. Estimates of future performance are based on the CRV's business plan and
reflect the CRV's assessment of probable results of operations, given certain
assumptions which the CRV believes are reasonable and conservative. Actual
results may vary, perhaps materially, based on a variety of factors, including
without limitation legislative changes in the FFELP and FDSLP, changes in the
asset-backed and equity security trading markets, changes in prevailing
interest rates and factors discussed in the Proxy Statement Supplement of the
CRV dated July 10, 1997, and the Proxy Statement/Prospectus dated July 10,
1997. For additional information regarding the Company's business, see the
Proxy Statement/Prospectus dated July 10, 1997.
22
