Terms

Series

Floating-Rate Non-Cumulative Preferred Stock, Series B

Liquidation Preference

$100.00

Rate Type

Floating

Payment Frequency

Quarterly

Cumulative

No

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

June 15, 2010

First Call Price

$100.00

Redemption Notice Period

30 days

Capital Stack Ranking

Junior To: All Senior And Subordinated Indebtedness Of Slm Corporation; Pari Passu With: Series A Preferred Stock, Any Other Outstanding Pari Passu Preferred Stock; Senior To: Common Stock, Any Other Stock Junior To The Series B Preferred Stock

Regulatory (Basel III) Call

No

Tax Classification

Ordinary

Qualifies for QDI

Yes

Qualifies for DRD

Yes

Shares Offered

4,000,000

Prospectus Summary

SLM Corporation ('Sallie Mae') is offering 4,000,000 shares of its Floating-Rate Non-Cumulative Preferred Stock, Series B, with a $100 liquidation preference and a par value of $0.20 per share, listed on the NYSE under 'SLMPRB.' Dividends float at 3-month LIBOR plus 0.70% annually through June 15, 2011, stepping up to LIBOR plus 1.70% thereafter, paid quarterly on March 15, June 15, September 15, and December 15. The stock is callable at par on any dividend payment date on or after June 15, 2010. Critically, dividends are non-cumulative: if the board does not declare a quarterly dividend, holders have no right to receive it in any future period, meaning missed payments are permanently forfeited. The Series B Preferred Stock sits below all of SLM Corporation's senior and subordinated debt (approximately $78 billion at issuance) and ranks pari passu with the existing Series A Preferred Stock. It is senior only to common stock and other junior stock. As a holding company issue, payments depend on SLM's subsidiaries upstreaming funds — there is no structural guarantee from operating subsidiaries. There is no regulatory capital call provision. Notably, because Series A dividends are cumulative, in a liquidation scenario Series A holders receive a larger pro-rata claim (including accumulated dividends) than Series B holders, who receive only current-period accrued dividends, creating a practical subordination within the pari-passu tier. At a LIBOR rate of approximately 3.5% (illustrative), the initial all-in dividend yield would be roughly 4.2% on the $100 liquidation preference. Dividends qualify for the 15% reduced QDI rate for individual investors (subject to a 61-day holding period) and for the 70% dividends-received deduction for corporate holders (subject to a 46-day holding period). Dividends are paid quarterly; the record date is set between 10 and 45 days before each payment date. Dividend payments can be interrupted if SLM has not first declared and paid all accrued cumulative dividends on the Series A Preferred Stock, or if SLM lacks legally available funds — with no catch-up obligation given the non-cumulative structure.

Summarized from the SEC prospectus filing.

Distribution History

Floating Rate Terms

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

SLM cannot pay dividends on common stock or parity/junior preferred stock unless the current quarter's accrued Series B dividends are fully paid; conversely, Series B dividends cannot be paid unless all accumulated Series A Preferred Stock (cumulative) dividends are current.

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 74 (Strong)