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Federal Deposit
Insurance Corporation

Each depositor insured to at least $250,000 per insured bank

Decisions on Bank Applications

Sallie Mae Bank (Proposed)


In Re: Sallie Mae Bank (Proposed)
Murray, Salt Lake County, Utah
Application for Federal Deposit Insurance
(Bank Insurance Fund)


Pursuant to the provisions of Section 5 of the Federal Deposit Insurance Act (12 U.S.C. §1815), an application for Federal deposit insurance has been filed for Sallie Mae Bank Bank (the Bank), a proposed new Utah industrial bank, to be located at 5217 South State Street, Suite 210, Murray, Salt Lake County, Utah.

The Bank will be a wholly-owned subsidiary of SLM Corporation (SLM), a publicly traded company with its principal offices in Reston, Virginia. SLM is the market leader in student lending within the United States, meeting both student and institutional needs.

Historically, SLM has purchased loans from non-affiliated institutions shortly after origination. Establishing a banking subsidiary will enable SLM to acquire private education loans and career development loans directly from an affiliated financial institution and reduce SLM's reliance on external entities for the origination of those loans. In addition to formal written and operating policies, the Bank will ensure that all inter-company transactions are conducted in accordance with Sections 23A and 23B of the Federal Reserve Act. The Bank will maintain a board of directors independent of its holding company and its affiliates.

For the purposes of this proposal, capital is adequate, projections for future earnings prospects are favorable, management is considered satisfactory, and the investment in fixed assets is reasonable Corporate powers to be exercised are consistent purpose of the Federal Deposit Insurance Act. No formal objections to this proposal have been filed and no undue risk to the insurance fund is apparent.

Accordingly, based upon careful evaluation of all available facts and information, the Associate Director, acting under delegated authority, has concluded that approval of the application is warranted, subject to certain prudential conditions.



In Re: Sallie Mae Bank (Proposed)
Murray, Salt Lake County, Utah
Application for Federal Deposit Insurance
(Bank Insurance Fund)


The FDIC has satisfactorily resolved the factors enumerated in section 6 of the Federal Deposit Insurance Act, as they relate to the application for Federal deposit insurance submitted by Sallie Mae Bank, a proposed new State nonmember bank to be located in Murray, Utah. Accordingly, it is hereby ORDERED that the application be approved, subject to the following conditions:

1. That beginning paid-in-capital funds of not less than $100,000,000 be provided and that the ratio of Tier 1 Leverage Capital to total assets of not less than 8% be maintained throughout the first three years of operation.

2. The bank shall operate within the parameters of the business plan submitted as part of the bank's application which covers the first three years of operation. Thereafter, the institution shall submit a copy of its business plan to the FDIC Regional Director annually. The bank shall notify the appropriate FDIC Regional Director of any proposed major deviation or material change from the submitted plan 60 days before consummating the change.

3. The institution shall notify the appropriate FDIC Regional Director of any material change to or material nonperformance under any principal agreements provided to the FDIC in connection with the application or included by reference through the business plan or its exhibits. Such agreements include, but are not limited to, the following items: performance guarantees, lines of credit, loan participation and purchase agreements, and business service arrangements. Any such notification shall be made to the appropriate FDIC Regional Director not more than 15 days after the change.

4. Any changes in proposed management or the proposed ownership of 10% or more of stock, including new acquisitions of or subscriptions to 10% or more of stock, shall be approved by the appropriate FDIC Regional Director prior to opening.

5. An accrual accounting system shall be adopted for maintaining the financial records of the institution.

6. Federal deposit insurance shall not become effective until the applicant is authorized to operate as an industrial bank (not a member of the Federal Reserve) by the appropriate State authority.

7. Prior to the effective date of Federal deposit insurance, the institution shall obtain surety bond coverage in a sufficient amount to conform to generally accepted banking practices.

8. No dividends shall be paid by the institution during the first three years of operation without the prior approval of the appropriate FDIC Regional Director.

9. The institution shall obtain an audit of its financial statements by an independent public accountant annually for at least the first three years after deposit insurance is effective and shall submit to the appropriate FDIC Regional Director, (i) a copy of the audited annual financial statements and the independent public auditor's report thereon within 90 days after the end of the depository institution's fiscal year, (ii) a copy of any other reports by the independent auditor (including any management letters) within 15 days after their receipt by the institution, and (iii) written notification within 15 days when a change in the institution's independent auditor occurs.

10. If deposit insurance has not become effective within twelve months from the date of this ORDER, the consent granted herein shall expire, unless the FDIC approves a request for an extension of the deadline prior to the expiration; and

11. Until the bank is established, the FDIC shall have the right to alter, suspend, or withdraw the said commitment should any interim development warrant such action.

By Order of the Associate Director, Division of Supervision and Consumer Protection, acting pursuant to delegated authority for the Board of Directors of the FDIC.

Dated at Washington, D.C. this 26th day of October, 2005.

Lisa K. Roy
Associate Director
Division of Supervision and Consumer Protection

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