First Marblehead Announces Fourth Quarter and Full Year Fiscal 2009 Results

BOSTON, MA--(Marketwire - August 17, 2009) - The First Marblehead Corporation (NYSE: FMD)
today announced its financial and operating results for the fourth quarter
of fiscal 2009 and for the fiscal year ended June 30, 2009.

Quarterly revenues were positive for the first time since the first quarter
of fiscal 2008. The fourth quarter of fiscal 2009 represents the third
consecutive quarter of improved year-over-year quarterly results of
operations.

Total revenues for the fourth quarter of fiscal 2009 were $11.6 million, as
compared to ($33.8) million for the same period last year. Service
revenues for the fourth quarter of fiscal 2009 reflected asset servicing
fees in the amount of $2.4 million for services provided to the owner of NC
Residuals Owners Trust, which holds the trust residual interests previously
sold by the company.

Total non-interest expenses for the fourth quarter of fiscal 2009 were
$65.8 million, including a $40.0 million unrealized loss on education loans
held for sale, as compared to $63.8 million for the fourth quarter of
fiscal 2008, including a $7.4 million unrealized loss on education loans
held for sale. Compensation and benefits expenses decreased $9.4 million
or 54% from the same period last year and general and administrative
expenses decreased $21.3 million or 54% from the same period last year, as
a result of the company's expense reduction initiatives.

For the fourth quarter of fiscal 2009, the company recorded a net loss of
$36.1 million or $0.36 per share compared to a net loss of $56.7 million or
$0.57 per share for the prior year fiscal fourth quarter.

For the fiscal year ended June 30, 2009, the company recorded a net loss of
$363.0 million or $3.66 per share compared to a net loss of $235.1 million
or $2.46 per share for the prior fiscal year.

Total revenues for the fiscal year ended June 30, 2009 were ($290.0)
million, compared to ($28.4) million for fiscal 2008. Fiscal 2008 revenues
included $320.4 million of revenues from new securitization transactions.

Total non-interest expenses for fiscal 2009 were $260.8 million, including
a $138.2 million unrealized loss on education loans held for sale, as
compared to $358.5 million for the prior year, including a $7.4 million
unrealized loss on education loans held for sale. Compensation and
benefits expenses decreased $54.5 million or 56% from the prior year and
general and administrative expenses decreased $174.0 million or 68% from
the prior year, as a result of the company's expense reduction initiatives.

The company ended the quarter with $167.2 million in cash, cash equivalents
and investments. The sale of NC Residuals Owners Trust and the net
operating losses are expected to generate a cash refund for taxes
previously paid, and the company recorded an income tax receivable of
approximately $166.4 million at June 30, 2009. Net operating cash usage*
was approximately $11 million for the quarter ended June 30, 2009, down
from approximately $14 million for the quarter ended March 31, 2009 (See
below under the heading "Use of Non-GAAP Financial Measures").

About The First Marblehead Corporation -- First Marblehead helps meet the
growing demand for private education loans by offering national and
regional financial institutions and educational institutions an integrated
suite of design, implementation and capital markets services for student
loan programs. First Marblehead supports responsible lending and is a
strong proponent of the smart borrowing principle, which encourages
students to access scholarships, grants and federally-guaranteed loans
before considering private education loans, please see
www.SmartBorrowing.org. For more information, go to
www.firstmarblehead.com.

Statements in this press release, including the financial tables, regarding
First Marblehead's future financial and operating results, liquidity and
any potential tax refund, as well as any other statements that are not
purely historical, constitute forward-looking statements for purposes of
the safe harbor provisions of The Private Securities Litigation Reform Act
of 1995. These forward-looking statements are based upon our historical
performance, the historical performance of the securitization trusts that
we have facilitated and on our plans, estimates and expectations as of
August 17, 2009. The inclusion of this forward-looking information should
not be regarded as a representation by us or any other person that the
future results, plans, estimates or expectations contemplated by us will be
achieved. You are cautioned that matters subject to forward-looking
statements involve known and unknown risks and uncertainties, including
economic, legislative, regulatory, competitive and other factors, which may
cause our actual financial or operational results, including the
performance of securitization trusts and resulting cash flows, facilitated
loan volumes or financing-related revenues, or the timing of events, to be
materially different than those expressed or implied by forward-looking
statements. Important factors that could cause or contribute to such
differences include: our ability to structure securitizations or
alternative financings, including with regard to any of our loans held for
sale; the size, structure and timing of any such securitizations or
alternative financings; U.S. federal or state income consequences, which
are complex and uncertain, relating to the transfer of the trust
certificate of NC Residuals Owners Trust and the asset services agreement
between the purchaser and the company (collectively, the "Transactions");
any investigation, audit, claim, action or suit relating to the
Transactions, including any such proceeding initiated by the Internal
Revenue Service relating to the federal income tax treatment of any aspect
of the Transactions or any tax refund previously received; developments in
the bankruptcy proceedings of The Education Resources Institute, Inc.
(TERI), including the terms of any plan of reorganization and the outcome
of the challenges to the enforceability of security interests of
securitization trusts; the demand for, and market acceptance of, loan
programs that we develop, including our success in providing such products
to former, current and prospective clients; degradation of credit quality,
performance of the loan portfolios held by either the securitization trusts
or us or value of any credit enhancements; the estimates we make and the
assumptions on which we rely in preparing our financial statements,
including with respect to the valuation of our loans held for sale;
continued variance between the actual performance of securitization trusts
and the key assumptions that we have used to estimate the fair value of
additional structural advisory fees, asset serving fees and residual
receivables; continued decreases in the estimated fair value of our loans
held for sale, including as a result of actual transactions or market
observations; our compliance with banking regulations and directives,
including the terms of our supervisory agreement with the Office of Thrift
Supervision (OTS) and the cease and desist order issued by the OTS to our
subsidiary Union Federal Savings Bank; and the other factors set forth
under the caption "Part II - Item 1A. Risk Factors" in First Marblehead's
quarterly report on Form 10-Q filed with the Securities and Exchange
Commission on May 8, 2009. Important factors that could cause or
contribute to differences between the actual performance of the
securitization trusts or our loans held for sale, on the one hand, and our
key assumptions, on the other hand, include economic, regulatory,
competitive and other factors affecting prepayment, default and recovery
rates on the underlying loan portfolio; capital market receptivity to
securities backed by private student loans, particularly direct-to-consumer
loans; and interest rate trends. We disclaim any obligation to update any
forward-looking statements as a result of developments occurring after the
date of this press release.

-financial tables to follow-

The First Marblehead Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
For the Three Months and Fiscal Years Ended June 30, 2009 and 2008
(Unaudited)
(in thousands, except per share amounts)

Three months ended Twelve months ended
June 30, June 30,
2009 2008 2009 2008
---------- ---------- ---------- ----------
Service revenues:
Up-front structural
advisory fees $ - $ 56 $ - $ 179,106

Additional structural
advisory fees
From new
securitizations - - - 24,304
Trust updates (5,691) (22,506) (57,157) (44,106)
---------- ---------- ---------- ----------
Total additional
structural advisory
fees (5,691) (22,506) (57,157) (19,802)

Asset servicing fees
Fee income 2,350 - 2,350 -
Fee updates 35 - 35 -
---------- ---------- ---------- ----------
Total asset servicing
fees 2,385 - 2,385 -

Residuals
From new
securitizations - - - 116,972
Trust updates 2,309 (37,548) (283,295) (488,832)
---------- ---------- ---------- ----------
Total residuals 2,309 (37,548) (283,295) (371,860)

Processing fees from TERI 162 17,683 3,050 126,540

Administrative and other
fees 7,751 1,878 19,908 31,985
---------- ---------- ---------- ----------

Total service revenues 6,916 (40,437) (315,109) (54,031)

Net interest income 4,694 6,664 25,103 25,622
---------- ---------- ---------- ----------

Total revenues 11,610 (33,773) (290,006) (28,409)
---------- ---------- ---------- ----------

Non-interest expenses:
Compensation and benefits 7,898 17,328 42,232 96,735
General and administrative
expenses 17,846 39,105 80,438 254,439
Unrealized loss on loans
held for sale 40,049 7,373 138,163 7,373
---------- ---------- ---------- ----------
Total non-interest
expenses 65,793 63,806 260,833 358,547

(Loss) before income taxes (54,183) (97,579) (550,839) (386,956)

Income tax (benefit) (18,101) (40,908) (187,819) (151,880)
---------- ---------- ---------- ----------

Net (loss) $ (36,082) $ (56,671) $ (363,020) $ (235,076)
========== ========== ========== ==========

Net (loss) per share,
basic $ (0.36) $ (0.57) $ (3.66) $ (2.46)
Net (loss) per share,
diluted (0.36) (0.57) (3.66) (2.46)
Cash dividends
declared per share - - - 0.395
Weighted average
shares outstanding,
basic 99,122 98,878 99,081 95,732
Weighted average
shares outstanding,
diluted 99,122 98,878 99,081 95,732

The First Marblehead Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
As of June 30, 2009 and June 30, 2008
(Unaudited)
(amounts in thousands)

June 30, June 30,
2009 2008
----------- -----------
Assets
Cash, cash equivalents and investments $ 167,220 $ 140,909
Federal funds sold 14,326 80,215
Loans held for sale 350,960 497,324
Service receivables:
Structural advisory fees 55,130 113,842
Asset servicing fees 2,385 -
Residuals 9,960 293,255
Other 47 4,086
----------- -----------
Total service receivables 67,522 411,183
----------- -----------

Property and equipment, net 19,929 37,681

Goodwill and intangible assets, net 1,931 3,657
Other prepaid expenses 3,571 15,377
Mortgage loans held to maturity, net 9,515 10,754
Income taxes receivable 166,410 -
Net deferred tax asset 13,124 -
Other assets 6,822 3,798
----------- -----------
Total assets $ 821,330 $ 1,200,898
=========== ===========

Liabilities and Stockholders' Equity
Liabilities:
Deposits $ 154,462 $ 244,113
Education loan warehouse facility 230,137 242,899
Accounts payable and accrued expenses 21,512 20,543
Income taxes payable - 31,275
Net deferred tax liability - 10,385
Other liabilities 9,754 14,071
----------- -----------
Total liabilities 415,865 563,286
----------- -----------

Commitments and contingencies

Stockholders' equity 405,465 637,612
----------- -----------
Total liabilities and stockholders'
equity $ 821,330 $ 1,200,898
=========== ===========

The First Marblehead Corporation and Subsidiaries
Balance Sheet Metrics
Roll-forward of Structural Advisory Fees and Residuals Receivables
(amounts in thousands)

Three Months Twelve Months
Ended Ended
June 30, June 30,
2009 2009
------------- -------------
Structural Advisory Fees Receivable
Beginning of period balance $ 60,846 $ 113,842

Cash received from trust distributions (25) (1,555)

Trust updates:
Passage of time (fair value accretion) 1,947 9,362
Decrease in average prepayment rate - 3,127
(Increase) decrease in discount rate
assumptions 92 (23,022)
Increase in timing and average default
rate (2,464) (11,262)
Decrease in recovery assumption (9,416) (9,416)
Increase in auction rate notes spread - (13,087)
Increase (decrease) in forward libor curve 4,424 (12,517)
Other factors, net (274) (342)
------------- -------------
Net change from trust updates (5,691) (57,157)
------------- -------------

End of period balance $ 55,130 $ 55,130
============= =============

Residuals Receivable

Beginning of period balance $ 7,651 $ 293,255

Trust updates:
Passage of time (fair value accretion) 346 20,453
Decrease in average prepayment rate - 11,336
(Increase) decrease in discount rate
assumptions 1,063 (82,571)
Increase in timing and average default
rate - (50,108)
Increase in auction rate notes spread - (31,779)
Increase (decrease) in forward libor curve 90 (22,009)
Decrease to reflect disposition - (134,481)
Other factors, net 810 5,864
------------- -------------
Net change from trust updates 2,309 (283,295)
------------- -------------

End of period balance $ 9,960 $ 9,960
============= =============

Note: Factors affecting the valuation of structural advisory fees and
residuals receivables include changes, if any, to the assumptions we use in
estimating the fair value of these receivables. In light of conditions in
the asset-backed securities market and our ongoing evaluation of actual
trust performance, we changed certain assumptions used to determine the
fair value of our residual and structural advisory fee receivables at June
30, 2009. We continue to monitor the performance of trust assets against
our expectations, as well as other inputs necessary to estimate the present
value of our structural advisory fee and residuals receivables. We will
make such additional adjustments to our estimates as we believe are
necessary to value properly our receivables balances at each balance sheet
date.

*Use of Non-GAAP Financial Measures

In addition to providing financial measurements based on generally accepted
accounting principles in the United States ("GAAP"), the company has
included in this press release an additional financial metric, "net
operating cash usage," that was not prepared in accordance with GAAP.
Legislative and regulatory changes discourage the use of and emphasis on
non-GAAP financial metrics and require companies to explain why a non-GAAP
financial metric is relevant to management and investors.

First Marblehead believes that the inclusion of the non-GAAP financial
metric helps investors to gain a better understanding of the company's
quarterly results, including non-interest expenses, and quarter-end
liquidity position, particularly in light of ongoing capital markets
dislocations that have prevented the company from accessing the
securitization markets. Management uses the non-GAAP financial metric, in
addition to GAAP financial measures, as a basis for measuring and
forecasting the company's core operating performance and comparing such
performance to that of prior periods. The non-GAAP financial measure is
also used by management in its financial and operational decision-making.

There are limitations associated with reliance on the non-GAAP financial
measure because it is specific to First Marblehead's operations and
financial performance, which makes comparisons with other companies'
financial results more challenging. Nevertheless, by providing both GAAP
and non-GAAP financial measures, the company believes that investors are
able to compare the company's GAAP results to those of other companies
while also gaining a better understanding of the company's operating
performance, consistent with management's evaluation.

First Marblehead defines "net operating cash usage" to mean approximate
cash used in operations, before tax payments. In accordance with the
requirements of Regulation G promulgated by the Securities and Exchange
Commission, the table below presents the most directly comparable GAAP
financial measure, (loss) before income taxes, for the four quarters of
fiscal 2009 and reconciles the non-GAAP financial metric to the comparable
GAAP measure:

Three Months Ended
(in thousands)
June 30, March 31, December 31, September 30,
2009 2009 2008 2008
------------ ------------ ------------ ------------
(Loss) before
income taxes $ (54,183) $ (205,588) $ (145,233) $ (145,835)
Depreciation and
amortization 3,851 4,214 4,680 5,055
Stock-based
compensation
expense 1,468 1,587 1,675 2,555
Unrealized losses
on loans held
for sale
and mortgage
loans 40,194 47,699 29,424 21,337
Prepaid default
prevention
expense - 3,806 2,724 3,218
Disposition of
residuals - 134,481 - -
Cash receipts
from student
loans 4,342 4,692 3,592 3,565
Cash receipts
from trust
distributions 25 26 27 1,477
Interest income
accruals from
student loans (8,269) (8,547) (11,311) (10,492)
Net residual
accretion from
trust updates (2,309) 1,885 69,082 80,156
Asset servicing
fee income (2,385) - - -
Net structural
advisory fees
accretion
from trust
updates 5,691 4,063 29,513 17,891
Other 828 (1,863) 796 1,309
------------ ------------ ------------ ------------
Non-GAAP net
operating cash
usage $ (10,747) $ (13,545) $ (15,031) $ (19,764)
============ ============ ============ ============

© 2009 First Marblehead