2013 11K


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
Form 11-K
 
 
(Mark One)
ý
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2013
OR
 
¨
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File No. 001-13251
 
 
 
A.
Full title of the plan and the address of the plan, if different from that of the issuer named below:
SALLIE MAE 401(k) SAVINGS PLAN
 
B.
Name of issuer of the securities held pursuant to the plan and the address of its principal executive offices:
SLM CORPORATION
300 Continental Drive
Newark, Delaware 19713












 






Sallie Mae 401(k) Savings Plan
Table of Contents
December 31, 2013 and 2012
 
 
 
 
 
Page
 
 
Report of Independent Registered Public Accounting Firm
1
 
 
Financial Statements
 
 
 
Statements of Net Assets Available for Benefits
As of December 31, 2013 and 2012
2
 
 
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 2013
3
 
 
Notes to Financial Statements
4
 
 
Supplemental Schedule*
 
 
 
Schedule of Assets (Held at End of Year)
10


























______________________ 
*
Other schedules required by 29 CFR 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they were not applicable.






Report of Independent Registered Public Accounting Firm

To the Board of Directors of SLM Corporation,
the Retirement Committee, and the Trustees of Sallie Mae 401(k) Savings Plan

We have audited the accompanying statements of net assets available for benefits of Sallie Mae 401(k) Savings Plan (the "Plan") as of December 31, 2013 and 2012, and the related statement of changes in net assets available for benefits for the year ended December 31, 2013. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2013 and 2012, and the changes in net assets available for benefits for the year ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets (held at end of year) as of December 31, 2013 is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ CohnReznick LLP
Bethesda, Maryland
June 27, 2014
 





1



Sallie Mae 401(k) Savings Plan
Statements of Net Assets Available for Benefits
As of December 31, 2013 and 2012
 
 
 
 
2013
 
2012
Assets
 
 
 
 
Investments, at fair value (Note 4)
 
$
521,603,013

 
$
420,166,668

Receivables:
 
 
 
 
Notes receivable from participants
 
10,869,493

 
9,876,883

Total receivables
 
10,869,493

 
9,876,883

Net assets available for benefits
 
$
532,472,506

 
$
430,043,551
























The accompanying notes are an integral part of these financial statements.


2




Sallie Mae 401(k) Savings Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2013
 
 
 
 
Additions to net assets attributed to:
 
Investment income:
 
Net appreciation in fair value of investments (Note 4)
$
74,243,161

Dividends and interest
21,683,265

 
 
 
95,926,426

 
 
Interest on notes receivable from participants
339,244

 
 
Contributions:
 
Employer
17,540,670

Participants
20,787,842

Rollovers
1,810,224

 
 
 
40,138,736

 
 
Total additions
136,404,406

 
 
Deductions from net assets attributed to:
 
Benefits paid to participants
33,837,842

Administrative expenses
137,609

 
 
Total deductions
33,975,451

 
 
Net increase
102,428,955

 
 
Net assets available for benefits
 
Beginning of year
430,043,551

 
 
End of year
$
532,472,506

 
 









The accompanying notes are an integral part of these financial statements.




3


Sallie Mae 401(k) Savings Plan
Notes to Financial Statements
December 31, 2013




1. Plan Description
General
The Sallie Mae 401(k) Savings Plan (the “Plan”) is a defined contribution plan established for the benefit of eligible employees electing to participate in the Plan (the “Participants”). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The following description of the Plan provides only general information. Participants should refer to the Plan documents for a more complete description of the Plan’s provisions.
The Plan covers substantially all employees of SLM Corporation (the “Company”) and its subsidiaries. Eligible employees may participate in the Plan after one month of service.
Fidelity Management Trust Company (“Fidelity”) is the Plan Trustee. An affiliate of Fidelity, Fidelity Investments Institutional Operations Company, Inc. (“FIIOC”), serves as recordkeeper.
Contributions and vesting
Participants are eligible to contribute from 1 to 75 percent of their eligible compensation to the Plan, in increments of whole percentages, up to the Internal Revenue Service (“IRS”) maximum of $17,500 for 2013. The Plan allows participants who will attain age 50 in the current Plan year to make catch-up contributions into the Plan up to the IRS maximum of $5,500 for 2013. Participants may also contribute amounts into the Plan rolled over from qualified employer plans in which they had previously participated. Participants direct the investment of their contributions into various investment options offered by the Plan.
The Company makes a matching contribution after six months of service. This matching contribution is 100 percent on the first three percent of a Participant’s contributions and 50 percent on the next two percent of a Participant’s contributions. These matching contributions and related earnings vest immediately. The Company also makes a contribution in an amount equal to one percent of eligible compensation to each eligible employee after one month of service, which vests after one year of service. Employees subject to the Service Contract Act regulations may be eligible to receive fully vested employer contributions based on the service contract fringe benefit differential rate compared with the Company cost of benefits they have elected. Participants also direct the investments of Company contributions.
Participants forfeit their right to Company contributions that are unvested at the time of their termination of service. During 2013, Company contributions were reduced by $831,883 from previously forfeited non-vested accounts. Unused forfeitures at December 31, 2013 and 2012 totaled $6,820 and $5,052, respectively, which will be used to offset future Company contributions.
The Plan also allows the Company to make a discretionary profit sharing contribution, whereby the Company determines the amount of net profits, if any, to contribute to the Plan. The Company did not make any profit sharing contributions for the year ended December 31, 2013.
 
Notes receivable from Participants
Participants may generally borrow up to 50 percent of their vested benefit to a maximum of $50,000. Participants may have no more than two loans outstanding at any time. The term of a loan will be three or five years, at the election of the Participant, except for a loan to purchase the Participant's principal residence, which can be repaid over 20 years. Loans are secured by the Participant's account balance, bear interest at the prime rate established monthly by the Federal Reserve, and are repaid biweekly through automatic payroll deductions. In addition, Participants may repay all or a portion (in $500 increments) of such loans at any time. Loans allowable under the Plan Document, collateralized by Participant account balances, are due in varying installments through 2033, with interest rates ranging from 3.25% to 9.50%.



4


Sallie Mae 401(k) Savings Plan
Notes to Financial Statements
December 31, 2013

Investment elections
The Plan offers a variety of investment options, including various registered investment companies and a unitized employer stock fund. In addition, Participants have the option to make contributions to a self-directed brokerage account. Under the self-directed brokerage account, Participants may direct investments in any security or other investments offered by Fidelity, regardless of whether they are included as investment options offered by the Plan. The one percent Company contribution will be made to the default investment, if a Participant does not make an investment election. The default fund is the Fidelity Freedom Fund, based on the Participant’s date of birth and year in which the Participant attains age 65.
Participant accounts
Each Participant’s account is credited with the Participant’s and the Company’s contributions and their portion of the Plan’s earnings (losses). Plan earnings (losses) are allocated based on the Participant’s designated investments of their account balances, as defined. The benefit to which a Participant is entitled is the benefit that can be provided from the Participant’s vested account.
Payment of benefits
Participants may withdraw funds from their account upon retirement, disability, separation from employment, attainment of age 59-1/2, and certain other times as specified in the Plan document. Distributions shall be made in a lump sum in cash, in the Company’s common stock, or a combination thereof, reduced by the outstanding balance of any loans not repaid by the Participant.
Administrative expenses
Participants pay fees relating to such Participant’s loans and withdrawals. Additionally, Participants may pay for commissions associated with common stock purchases and sales and short term transaction fees in certain funds when Participants trade in and out of the funds within the time restriction specified for such funds. Participant costs, including investment management fees charged by the respective funds, are charged directly to the Participant’s account and are reflected in the statement of changes in net assets available for benefits. The Company bears the remaining cost of Plan administration.
Plan administration
The Retirement Committee administers the Plan. The Investment Advisory Committee, a subcommittee of the Retirement Committee, is responsible for development of Plan investment policies and guidelines. Officers of the Company or its subsidiaries presently serve as Retirement Committee members. The administrative functions of the Plan are primarily performed by the Company or its subsidiaries. The Plan did not pay the Company, its subsidiaries or the Retirement Committee for their services.
 

2. Summary of Significant Accounting Policies

Basis of accounting
The Plan maintains its accounting records on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.
Fair value measurements
The Financial Accounting Standards Board’s ("FASB") Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (“ASC 820”) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 specifies a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Classification is based on the lowest level of input that is significant to the fair value of the instrument. The three levels are as follows:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. The types of financial instruments included in level 1 are highly liquid instruments with quoted prices.

5


Sallie Mae 401(k) Savings Plan
Notes to Financial Statements
December 31, 2013

Level 2 - Inputs to the valuation methodology include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.
Level 3 - Pricing inputs significant to the valuation are unobservable. Inputs are developed based on the best information available; however, significant judgment is required by management in developing the inputs.

The related disclosures are in note 4.
Investment valuation and income recognition

Investments held by the Plan at December 31, 2013 and 2012 consist of various registered investment companies, a unitized employer stock fund, and a self-directed brokerage option. Common stock, securities and brokerage account investments traded on national securities exchanges are carried at market value based on the closing price on the last business day of the year. The fair value of registered investment companies is determined based on quoted market prices, which represents the net asset value for shares held at year-end. The unit value of the Sallie Mae Stock Fund is based on the closing price of the Company’s stock and the value of the money market component on the last business day of the Plan year. The Company’s stock is listed and traded on the NASDAQ Global Select Market. Investments traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the average of the last reported bid and asked prices.

The information in note 4 presents the net appreciation in the fair value of investments, which consists of realized gains or losses and unrealized appreciation or depreciation on those investments. Dividend income is recorded on the ex-dividend date. Interest earned on investments is recorded on the accrual basis. Purchases and sales of securities are recorded on the trade date.
Notes receivable from Participants
Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Interest income is recorded on the accrual basis. No allowance for credit losses has been recorded as of December 31, 2013 or 2012. If a Participant ceases to make loan repayments and the Plan administrator deems the participant loan to be in default, the participant loan balance is reduced and a benefit payment is recorded.
Contributions
Contributions made by employees electing to participate in the Plan under salary reduction agreements and Company contributions are recorded when payable into the Plan.
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Such estimates include those regarding fair value. Actual results could differ significantly from those estimates.
Risks and uncertainties
The Plan provides for various investment options. Such investments are subject to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the value of investment securities will occur in the near term, including a decrease in value, and that such changes could materially affect Participants' account balances and the amounts reported in the statement of net assets available for benefits.


6


Sallie Mae 401(k) Savings Plan
Notes to Financial Statements
December 31, 2013

Benefit payments
Benefits are recorded when paid.
Subsequent events
Subsequent events have been evaluated through the report date of these financial statements.

 
3. Investments

The individual investments representing five percent or more of the fair value of net assets available for benefits at December 31, 2013 and 2012 are reflected in the table below.
 
Fund Name
 
2013
 
2012
Fidelity Retirement Government Money Market
 
$
43,412,738

 
$
44,116,975

Spartan 500 Index
 
59,431,083

 
46,211,548

Fidelity Contrafund
 
55,819,092

 
42,850,182

Pimco Total Return Institutional
 
*

 
28,719,451

Fidelity Freedom 2030
 
31,919,329

 
26,659,150

Fidelity Balanced K
 
29,250,571

 
24,104,921

AllianzGI NFJ International Value Inst
 
32,770,780

 
27,894,443

Loomis SM CP Grth IS
 
27,876,594

 
*

__________
*Investment represents less than five percent of net assets available for benefits as of December 31, 2013 or 2012.

7


Sallie Mae 401(k) Savings Plan
Notes to Financial Statements
December 31, 2013

4. Fair Value Measurements

The fair value of Plan investments at December 31, 2013 and 2012 is shown in the tables below.


 
 
 
 
Based on
 
 
Fair Value at
December 31,
2013
 
Quoted prices in
active markets
(Level 1)
 
Other
observable
inputs (Level 2)
 
Unobservable
inputs
(Level 3)
Registered investment companies
 
 
 
 
 
 
 
 
Large Cap
 
$
158,327,883

 
$
158,327,883

 
$

 
$

Blended
 
132,062,801

 
132,062,801

 

 

Short term investments
 
43,412,738

 
43,412,738

 

 

Mid-Cap
 
41,507,567

 
41,507,567

 

 

International
 
32,770,780

 
32,770,780

 

 

Bond
 
41,991,143

 
41,991,143

 

 

Small Cap
 
38,029,140

 
38,029,140

 

 

Sallie Mae Stock Fund
 
23,600,450

 

 
23,600,450

 

Self-directed brokerage account
 
9,900,511

 
9,900,511

 

 

Total Investments
 
$
521,603,013

 
$
498,002,563

 
$
23,600,450

 
$

 
 
 
 
 
Based on
 
 
Fair Value at
December 31,
2012
 
Quoted prices in
active markets
(Level 1)
 
Other
observable
inputs (Level 2)
 
Unobservable
inputs
(Level 3)
Registered investment companies
 
 
 
 
 
 
 
 
Large Cap
 
$
117,540,022

 
$
117,540,022

 
$

 
$

Blended
 
103,443,419

 
103,443,419

 

 

Short term investments
 
44,116,975

 
44,116,975

 

 

Mid-Cap
 
30,196,613

 
30,196,613

 

 

International
 
27,894,443

 
27,894,443

 

 

Bond
 
47,587,120

 
47,587,120

 

 

Small Cap
 
24,077,957

 
24,077,957

 

 

Sallie Mae Stock Fund
 
18,121,173

 

 
18,121,173

 

Self-directed brokerage account
 
7,188,946

 
7,188,946

 

 

Total Investments
 
$
420,166,668

 
$
402,045,495

 
$
18,121,173

 
$

 

During 2013, the Salle Mae Stock Fund was reclassified to level 2 as of December 31, 2012.

The net investment income for the year ended December 31, 2013 is summarized as follows:
 
 
 
Dividends and interest
$
21,683,265

Net appreciation in fair value of investments related to:
 
Registered investment companies
63,927,337

Sallie Mae Stock Fund
8,982,741

Self-directed brokerage account
1,333,083

 
 
 
$
95,926,426

 
 

8


Sallie Mae 401(k) Savings Plan
Notes to Financial Statements
December 31, 2013

 5. Plan termination

Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, Participants would become 100 percent vested in their Company contributions.


6. Related Party Transactions and Party-In-Interest Transactions

Certain Plan investments are shares of registered investment companies or amounts of the Sallie Mae Stock Fund managed by Fidelity. Fidelity is the trustee as defined by the Plan and therefore these transactions qualify as party-in-interest transactions. Fees paid by the Plan for administrative services were $137,609 for the year ended December 31, 2013. Fees incurred by the Plan for the investment management services are included in net appreciation in fair value of the investment, as they are paid through revenue sharing, rather than a direct payment.

Additionally, the Plan has investments in the Sallie Mae Stock Fund comprised principally of SLM Corporation common stock. At December 31, 2013 and 2012, the Plan held 1,171,398 units and 1,371,225 units, respectively, valued at $23,600,450 and $18,121,172, respectively. During 2013, 374,895 units in the amount of $6,443,825 were purchased and 574,721 units in the amount of $9,947,036 were sold related to the Sallie Mae Stock Fund. Such transactions qualify as party-in-interest transactions, as SLM Corporation is the Plan’s sponsor.


7. Income Tax Status

The IRS has determined and informed the Plan by letter dated March 18, 1999, that the Plan is designed in accordance with applicable sections of the Internal Revenue Code (the “IRC”). Although the Plan has been amended since the date of the letter, the Plan administrator believes that the Plan and related trust are operating in accordance with the IRC and are qualified under Section 401(a) of the IRC. Accordingly, no provision for income taxes has been made.

Accounting principles generally accepted in the United States of America require plan management to evaluate tax positions taken by the Plan and recognize a tax liability if the plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan administrator believes it is no longer subject to income tax examinations for years prior to 2010.


8. Subsequent Event

On April 30, 2014, the Company completed its plan to separate into two distinct publicly-traded entities-an education loan management, servicing and asset recovery business, Navient Corporation (“Navient”), and a consumer banking business, SLM. In conjunction with the separation, a new defined contribution plan, Navient 401(k) Plan (the "Navient Plan"), was established for the benefit of the eligible employees of Navient. In May 2014, $445,449,178 was transferred to the Navient Plan.


9


Sallie Mae 401(k) Savings Plan
EIN 52-2013874 PN 001
Schedule H, Line 4i -- Schedule of Assets (Held at End of Year)
December 31, 2013
SUPPLEMENTAL SCHEDULE
 
Identity of issuer, borrower of similar entity
Description of Investment
Current value
 
Spartan 500 Index Inst
Registered Investment Company
$
59,431,083

*
Fidelity Contrafund
Registered Investment Company
55,819,092

*
Fidelity Retirement Gov MM
Registered Investment Company
43,412,738

 
AllianzGI NFJ International Value Inst
Registered Investment Company
32,770,780

*
Fidelity Freedom 2030
Registered Investment Company
31,919,329

*
Fidelity Balanced K
Registered Investment Company
29,250,571

 
Loomis SM CP Grth IS
Registered Investment Company
27,876,594

 
Pimco Total Return Inst
Registered Investment Company
25,336,108

*
Fidelity OTC K
Registered Investment Company
24,817,783

*
Sallie Mae Stock Fund
Common Stock Fund
23,600,450

*
Fidelity Low Priced Stock K
Registered Investment Company
23,568,030

*
Fidelity Freedom 2040
Registered Investment Company
23,134,151

*
Fidelity Freedom 2020
Registered Investment Company
22,187,549

 
Invs Comstock A
Registered Investment Company
18,259,925

 
Spartan US Bond Index Is
Registered Investment Company
16,655,035

 
Msif Mid Cap Growth P
Registered Investment Company
15,723,704

 
GS Small Cap Value Inst
Registered Investment Company
10,152,546

*
Brokeragelink
Self-directed brokerage account
9,900,511

*
Fidelity Freedom 2010
Registered Investment Company
6,167,729

*
Fidelity Freedom 2055
Registered Investment Company
3,826,018

*
Fidelity Freedom 2025
Registered Investment Company
3,541,302

*
Fidelity Freedom 2050
Registered Investment Company
3,320,476

*
Fidelity Freedom 2045
Registered Investment Company
2,748,379

 
Victory Estb Value A
Registered Investment Company
2,215,831

*
Fidelity Freedom Income
Registered Investment Company
2,024,058

*
Fidelity Freedom 2035
Registered Investment Company
1,971,554

*
Fidelity Freedom 2015
Registered Investment Company
1,342,549

*
Fidelity Freedom 2000
Registered Investment Company
625,008

*
Fidelity Freedom 2005
Registered Investment Company
4,130

 
Participant Loans:
 
 
*
Plan Participants
Loans allowable under the plan instrument, collateralized by Participant account balances, are due in varying installments through 2033, with interest rates ranging from 3.25% to 9.50%
10,869,493

 
 
 
 
 
Total
 
$
532,472,506

 
 
 
 
*
Denotes a party-in-interest
Note: Cost information is not required for participant-directed investments and therefore not included.
See Report of Independent Registered Public Accounting Firm.


10


SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
SALLIE MAE 401(K) SAVINGS PLAN
 
 
 
Date: June 27, 2014
 
 
 
/s/ PAUL THOME
 
 
 
 
Paul Thome
 
Senior Vice President and Chief Administration Officer
 
On behalf of the Sallie Mae 401(K) Savings Plan Retirement Committee




EXHIBIT INDEX
 
 
 
 
Exhibit
No.
  
Description
 
 
23.1

  
Consent of Independent Registered Public Accounting Firm – CohnReznick LLP