Sallie Mae, the student lender based near Newark announced that the company will be split in two, with an MBNA veteran running one of the spin-offs.
John (Jack) F. Remondi was named chief executive officer, effective immediately. Remondi succeeds Albert L. Lord, Sallie Mae’s vice chairman and chief executive officer, who is moving up his plans to retire from the board and executive management.
In addition, the board authorized management to pursue separation of the company’s existing businesses into two, separate, publicly traded entities — an education loan management business and a consumer banking business – in a bid to unlock value and enhance long-term growth potential.
Remondi has served as president and chief operating officer since 2011. Prior to that, he served as vice chairman and chief financial officer.
“Our board of directors has determined that Jack is the one to build on Al’s long legacy of success and lead Sallie Mae through its next strategic transformation,” said Anthony P. Terracciano, chairman. “Jack brings extensive knowledge about our core financial and operational competencies, and the board and I are confident that he will achieve the important task of unlocking more value from today’s franchise by creating two, market-leading companies from the portfolio of businesses managed currently. It is a testament to Al’s leadership that we are now ready to take this next step, and I thank him for his years of service and his unwavering commitment to shareholder value.”
The strategic plan will create two companies, each initially owned by Sallie Mae’s existing shareholders and the leader in its respective business lines. Sallie Mae would form an education loan management business comprised of the company’s portfolios of federally guaranteed (FFELP) and private education loans, as well as most related servicing and collection activities. This will be the leading education loan portfolio management, servicing and collection company, and Remondi will continue as its chief executive officer.
Sallie Mae’s private education loan origination and servicing businesses, including Sallie Mae Bank and the private education loans it currently holds, will operate separately under the Sallie Mae brand. This will be the leading consumer education lending franchise with expertise in helping families save, plan and pay for college. Joseph DePaulo, executive vice president, banking and finance, will lead this business as chief executive officer. DePaulo joined Sallie Mae as executive vice president and chief marketing officer in 2009, bringing 25 years of experience in the consumer banking industry at MBNA and as co-founder and CEO of Credit One Financial Solutions.
Commenting about the current changes, Lord said, “After 31 years I choose to focus only on good memories. I do regret not completing the spin or achieving more of the intrinsic value in the share price before my exit. I believe the board remains committed to the simple two-part strategy we implemented in 2012: return legacy business capital and invest in our Smart Option growth business. Recent success developing the FFELP residual market has and will facilitate the capital returns that have sparked a nearly 75 percent share price improvement in the last 12 months. Separating the company is the logical next step and I wish Jack, Joe and the Board well.”
