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First Marblehead Bank Unit Sells Education Loans

BOSTON (AP) ¿ First Marblehead Corp., which packages students loans for sale to investors, said on Thursday that a bank subsidiary that it's considering selling has completed the sale of its remaining portfolio of private education loans.

Union Federal Savings Bank sold the loans to a newly formed trust affiliated with Boston-based First Marblehead. The company said the bank no longer carries any private education loans on its balance sheet.

The loans had an aggregate carrying value of about $6.6 million as of Sept. 30, and Union Federal Savings Bank received sale proceeds of about $3.7 million. Union Federal's equity capital after the sale stood at about $44.4 million.

First Marblehead announced at its annual shareholders meeting on Monday that it had begun examining strategic alternatives for Union Federal, including a potential sale.

Shares of First Marblehead fell 8 cents, or about 3.6 percent, to $2.17 in opening trading. The stock has traded in a 52-week range of 58 cents per share to $2.93.

First Marblehead receives fees for helping banks package their private student loans into bonds, which are then sold to investors. Private student loans aren't guaranteed by the government and carry higher interest rates. Financial turmoil that peaked last fall has recently left investors wary of buying the bonds as defaults among student loans have risen.

Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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