Profile: First Marblehead Corp (FMD)

The First Marblehead Corporation (First Marblehead), incorporated in August 1994, is a specialty finance company focused on education loan programs for K-12, undergraduate and graduate students in the United States, as well as tuition planning, tuition billing, refund management and payment technology services. It also offers a number of ancillary services in support of its clients, including loan origination, retail banking, portfolio management and securitization services. It offers an integrated suite of services through its Monogram loan product service platform, which the Company refers to as the Monogram platform, as well as certain services on a stand-alone, fee-for-service basis. In October 2012, the Company acquired Cology, Inc.

The Company's subsidiary Union Federal Savings Bank, which the Company refers to as Union Federal, offers retail banking products, including education loans, residential and commercial mortgage loans, time and savings deposits and money market deposit accounts. It provide customized Monogram-based education loan programs for lenders who wish to hold originated portfolios to maturity. The Company is paid for its origination and marketing services at the time approved education loans is disbursed and receive monthly payments for portfolio management services, credit enhancement and administrative services throughout the life of the loan. It may provide credit enhancements by funding participation interest accounts, which the Company refers to as participation accounts, or in the case of Union Federal, deposits accounts, to serve as a first-loss reserve for defaulted program loans.

Union Federal offers traditional retail banking products on a stand-alone basis. In addition, Union Federal generates additional revenues by originating Monogram-based education loan portfolios, subject to regulatory conditions, with the intent of holding them to maturity. Its capital markets experience coupled with the Company's loan performance database and risk analytics provide specialized insight into funding options available to its clients. It has a right of first refusal should one of its partner lenders wish to sell some or all of its education loan portfolio prior to maturity. Its Fee-for-service include loan origination, portfolio management, tuition billing and payment processing, and refund management services are each available on a stand-alone, fee-for-service basis. The Company offers specialized knowledge, experience and capabilities to assists clients in participating in the education loan market. In addition, through its TMS subsidiary, the Company provides students and their families with the opportunity to structures tuition payment plans that meet their financial needs while providing an array of tuition payment options.

In program design services, the Company helps lender clients design their education loan programs and customizes each program for its lender clients in order to satisfy their particular needs. Although the Company assists lenders in selecting the underwriting criteria to be used in their loan programs, each lender has ultimate control over, and responsibility for, the selection of their underwriting criteria, and the Company is obligated to comply with the lender's criteria. As part of its Monogram platform, the Company can provide marketing support services for a fee based on loan volume disbursed, depending on the level of services provided to each client. As part of its Monogram platform, it offers loan origination services for a fee based on either loan volume disbursed or applications processed, depending on the particular terms of the lender client's contract. The Company has developed processing platforms, applications and infrastructure, supplemented by customized vendor solutions, for uses in providing loan processing services.

The Company monitors the performance of portfolio vendors, including both loan servicers and collection agencies. For portfolio management services, it charge a fee generally based on the aggregate principal balance of education loans under management for the client. It works with a network of vendors to manage education loans on behalf of its clients. The Pennsylvania Higher Education Assistance Agency (PHEAA) services a majority of the loans it facilitates.