Sallie Mae, the Delaware-based student lender, said Tuesday that it is splitting into two growth-minded companies as longtime chief executive Albert L. Lord prepares to retire.
Jack F. Remondi, chief operating officer, is taking over Lord's job. After the split, he will run the company and its student-loan servicing and collection business, which handles more than $100 billion in loans originated and guaranteed by the federal government.
Remondi's company will include about 95 percent of Sallie Mae's current assets, analyst Sameer Gokhale of Janney Capital Markets told clients in a report Wednesday.
The company also plans to turn its private student-loan origination business and its Sallie Mae Bank unit into a separate company, to be led by executive vice president Joseph DePaulo. The bank will include about $10 billion in student loans and investments, and $7.8 billion in deposits. That's roughly twice the size of Beneficial Bank, the biggest bank now based in Philadelphia.
Shareholders will receive shares of each firm. The split isn't expected to change the size of the total workforce, now 6,800, Sallie Mae spokeswoman Martha Holler said.
Sallie Mae chairman Anthony P. Terracciano, onetime boss of the former First Fidelity Bank, said in a statement that he expects shareholders to profit from "creating two market-leading companies."
After the split, Sallie Mae Bank will expand into other consumer lending, while the servicing company will seek to provide loan and collection services to local governments and agencies, according to analyst Gokhale.
Lord, who grew up in a Philadelphia public housing project, joined Sallie Mae in the 1980s after a stint at First Pennsylvania Bank. He helped lead the company's transition from a bank- and college-owned loan cooperative to a shareholder-owned company, boosted profits, and lobbied hard to preserve Sallie Mae's status as a for-profit beneficiary of taxpayer loan subsidies.
After the Obama administration took over federal loan originations, Lord moved the company's headquarters from suburban Washington to a site near Wilmington and consolidated the company into the two business groups that will now be split.