First Marblehead falls to loss; brings back co-founder

Student lender First Marblehead Corp. said today that it swung to a loss in both the fourth quarter and fiscal 2008.

The Boston-based firm said its fourth-quarter loss amounted to about $57 million, or 57 cents per share. That compares with a profit of $78 million, or 83 cents per share, in the year-ago period.

The loss includes a $60 million charge from increasing discount rates used in determining the fair value of the company's service receivables, the company said.

For the full year, the company said it will post a loss of about $235 million, or $2.46 per share, down from a profit of $371.3 million, or $3.92 per share.

First Marblehead plans to release its results for the quarter ended June 30 later this week.

For the quarter ending June 30, analysts polled by Thomson Reuters, on average, expect the company to report a loss of 22 cents per share. For fiscal year 2008, analysts project a loss of $1.86 per share. Analyst estimates typically exclude one-time items.

In May, the company slashed 500 jobs in a move to save $200 million a year amid what it called "an extraordinary challenging business environment."

First Marblehead receives fees for initiating and processing student loans for banks and other lenders. It also packages such loans and sells them as securities.

Shares of First Marblehead shot up $1.27, or 42.3 percent, to $4.28, in morning trading.

On Monday, the company also announced that co-founder Daniel Meyers will return to lead the firm.

Meyers will take on the role of president and chief executive, as well as be a part of the First Marblehead's board, beginning Sept. 1, the company said.

Jack Kopnisky, the company's current chief, will resign Aug. 31.

Meyers helped co-found the company, which receives fees for initiating and processing student loans for banks and other lenders, in 1991.

"We believe there is no better person to now lead First Marblehead than our co-founder Dan Meyers," said Lead Director William R. Berkley, speaking on behalf of the board and the company. "Dan provides extraordinary strategic, market and product leadership and is uniquely qualified to guide the Company through this challenging operating environment."

In September 2005, Meyers, who held the CEO role, resigned following his admission that he had given gifts valued at $32,000 to a former employee of a major client, the company said.

At the time, Meyers told First Marblehead's board of directors that he purchased the gifts with his own money, but the board concluded he violated the firm's ethics policy.

Under the terms of his employment agreement, Meyers will receive an annual base salary of $1, though he will get $1 million and stock options if certain targets are met. (AP)