First Marblehead (FMD) 8-K Results of Operations and Financial Condition

Exhibit 99.1

Company Contact:	The Dilenschneider Group
Donald R. Peck, CFO	Michael Glickman – Investor Relations
617-638-2000	Mona Walsh – Media Relations
	212-922-0900

FOR IMMEDIATE RELEASE

FIRST MARBLEHEAD ANNOUNCES THIRD QUARTER

FISCAL 2006 RESULTS

— Third Quarter Service Revenues and Net Income Increase 25% on Strong Securitization Results —

— Loan Facilitation Volume Growth Accelerates —

BOSTON, MA, April 27, 2006 – The First Marblehead Corporation (NYSE: FMD) today announced its financial and operating results for its third quarter of fiscal 2006 and for the nine months ended March 31, 2006.

Total service revenues for the third quarter of fiscal 2006 increased to $149.2 million, up 25% from $119.5 million in the third quarter of fiscal 2005. During the third quarter of fiscal 2006, the Company facilitated the securitization of $741 million of private student loans, which generated $114.7 million in service revenues. During the same fiscal quarter last year, the Company facilitated the securitization of $715 million of private student loans, which generated $93.4 million of service revenues.

Net income rose to $59.2 million, or $.93 per diluted share, in the third quarter of fiscal 2006, an increase of 25% in net income and 32% in diluted earnings per share. In its third quarter of last fiscal year, the Company reported net income of $47.4 million, or $.71 per diluted share.

Total service revenues for the nine months ended March 31, 2006 increased 39% to $414.7 million from $297.8 million in the same prior-year period, as securitization volumes and yields improved between the periods.

Net income for the nine months ended March 31, 2006 increased to $165.1 million, or $2.56 per diluted share, an increase of 42% in net income and 47% in diluted earnings per share. For the same nine-month period during the last fiscal year, the Company reported net income of $116.6 million, or $1.74 per diluted share.

The volume of loans facilitated during the third quarter of fiscal 2006 that are available for securitization increased 45% to $706 million, compared with $487 million facilitated during the third quarter last fiscal year and available for securitization. The rolling twelve month volume of loans available for securitization increased 32% to $2.73 billion for the twelve months ended March 31, 2006, compared with $2.07 billion for the twelve months ended March 31, 2005.

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Jack L. Kopnisky, First Marblehead’s President and CEO, commented, “Our financial and operating momentum continued to be strong during the third quarter of fiscal 2006. Growth in our volume of loans available for securitization accelerated to 45% for the quarter and increased to 32% on a rolling twelve-month basis. We also posted solid securitization results and extended our Bank of America DTC contract. During the quarter we continued to strengthen our business development pipeline, which includes new programs for existing clients as well as a broad range of private student loan services for new partners.”

Kopnisky continued, “As we close in on our June 30 fiscal year-end, we are in a position to reiterate our earlier guidance that we expect net income for fiscal 2006 to grow by 25-30% over fiscal 2005 levels, fueled by strong revenue growth.”

First Marblehead will host a conference call today, Thursday, April 27, 2006 at 5 p.m. EST, which will be simultaneously broadcast live over the Internet. Peter B. Tarr, Chairman and General Counsel, Jack L. Kopnisky, President and Chief Executive Officer, and Donald R. Peck, Executive Vice President and Chief Financial Officer, will host the call. To access the webcast, please log on to: www.firstmarblehead.com.

A replay will be available on First Marblehead’s website for 14 days. A telephone replay will also be available for 14 days by dialing (888) 286-8010 from the U.S., or (617) 801-6888 for international callers, and entering the pass code 32077902.

About The First Marblehead Corporation

First Marblehead provides outsourcing services for private, non-governmental education lending in the United States. The Company helps meet the growing demand for private education loans by providing national and regional financial institutions and educational institutions, as well as businesses and other enterprises, with an integrated suite of design, implementation and securitization services for student loan programs tailored to meet the needs of their respective customers, students, employees and members.

This is a “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein, including statements related to revenue or  net income growth during fiscal 2006 and our outlook for the industry and for our performance for fiscal year 2006 and beyond, are based upon the Company’s historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. These forward-looking statements represent First Marblehead’s expectations as of April 27, 2006. Subsequent events may cause our expectations to change, and we disclaim any obligation to update the forward-looking statements in the future. You are cautioned that matters subject to forward-looking statements involve known and unknown risks and uncertainties, including economic, regulatory and competitive and other factors that may cause First Marblehead’s performance or achievements to be materially different than those expressed or implied by forward-looking statements. Important factors that could cause First Marblehead’s actual results to differ from its expectations include our success in structuring securitizations, the timing of our securitization activities, the estimates we make and the assumptions on which we rely in preparing our financial statements, our loan facilitation volumes, our relationships with key clients, and  the factors set forth under the caption “Item 1A – Risk Factors” in First Marblehead’s quarterly report on Form 10-Q filed with the Securities and Exchange Commission on February 8, 2006. These risks could cause actual results of the industry or our actual results for fiscal year 2006 and beyond to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company.

-financial tables to follow-

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The First Marblehead Corporation and Subsidiaries

Condensed Consolidated Statements of Income

For the Three and Nine Months Ended March 31, 2006 and 2005 (Unaudited)

(in thousands, except per share data)

	Three months ended						Nine months ended
	March 31,						March 31,
	2006			2005			2006		2005
Service revenues:
Up-front structural advisory fees	$	58,457		$	55,000		$	154,627	$	120,050
Additional structural advisory fees:
From new securitizations	8,764			7,970			23,542		17,901
Trust updates	(37		)	(28		)	1,403		782
Total additional structural advisory fees	8,727			7,942			24,945		18,683
Residuals:
From new securitizations	47,432			31,345			125,648		88,402
Trust updates	5,623			3,808			25,596		13,434
Total residual revenues	53,055			35,153			151,244		101,836
Processing fees from TERI	26,583			20,610			77,779		54,547
Administrative and other fees	2,352			829			6,145		2,660
Total service revenues	149,174			119,534			414,740		297,776
Operating expenses:
Compensation and benefits	25,107			17,322			66,009		47,523
General and administrative expenses	24,140			20,391			72,956		51,702
Total operating expenses	49,247			37,713			138,965		99,225
Income from operations	99,927			81,821			275,775		198,551
Other income:
Total other income, net	1,394			1,046			6,759		2,166
Income before income tax expense	101,321			82,867			282,534		200,717
Income tax expense	42,099			35,429			117,393		84,100
Net income	$	59,222		$	47,438		$	165,141	$	116,617
Net income per share, basic	$	0.94		$	0.72		$	2.59	$	1.80
Net income per share, diluted	0.93			0.71			2.56		1.74
Weighted average shares outstanding, basic	62,856			65,684			63,780		64,871
Weighted average shares outstanding, diluted	63,364			67,216			64,392		66,937

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The First Marblehead Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

As of March 31, 2006 and June 30, 2005 (Unaudited)

(in thousands, except share data)

	March 31, 2006		June 30, 2005
Assets
Cash and cash equivalents	$	142,568	$	193,796
Service receivables:
Structural advisory fees	78,316		53,371
Residuals	398,519		247,275
Processing fees from TERI	8,943		8,944
	485,778		309,590
Property and equipment, net	38,331		39,095
Goodwill	3,176		3,176
Intangible assets, net	2,092		2,620
Prepaid expenses	6,247		6,757
Other assets	3,983		3,159
Total assets	$	682,175	$	558,193
Liabilities and Stockholders’ Equity
Liabilities:
Accounts payable and accrued expenses	$	28,579	$	33,318
Income taxes payable	1,823		—
Net deferred income tax liability	127,700		84,208
Notes payable and capital lease obligations	14,459		17,410
Other liabilities	3,547		1,691
Total liabilities	176,108		136,627
Commitments and contingencies
Stockholders’ equity:
Total stockholders’ equity	506,067		421,566
Total liabilities and stockholders’ equity	$	682,175	$	558,193

Note:  There were 62,899,260 and 64,899,824 shares of common stock outstanding at March 31, 2006 and June 30, 2005, respectively.

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Appendix (A)

The First Marblehead Corporation and Subsidiaries

Loan Facilitation Metrics

(Dollars in Millions)

	3/31/2006			3/31/2005			% Increase (Decrease)
Q3 Volume of Loans Available for Securitization
Direct-to-Consumer Loans	$	402		$	269		50	%
School Channel Loans	253			172			47	%
Private Label Loans	655			441			49	%
GATE Loans	51			46			11	%
Total Loan Facilitation Volume Available for Securitization	$	706		$	487		45	%
Rolling Twelve Month Volume of Loans Available for Securitization
Direct-to-Consumer Loans	$	1,898		$	1,500		27	%
School Channel Loans	715			461			55	%
Private Label Loans	2,613			1,961			33	%
GATE Loans	112			106			6	%
Total Loan Facilitation Volume Available for Securitization	$	2,725		$	2,067		32	%
Q3 Volume of Loans Not Available for Securitization
Direct-to-Consumer Loans	$	11		$	18		(37	)%
School Channel Loans	134			127			6	%
Total Loan Facilitation Volume Not Available for Securitization	$	145		$	145		1	%
Rolling Twelve Month Volume of Loans Not Available for Securitization
Direct-to-Consumer Loans	$	49		$	71		(31	)%
School Channel Loans	406			418			(3	)%
Total Loan Facilitation Volume Not Available for Securitization	$	455		$	489		(7	)%
Percentage of Loans Available for Securitization
Q3	83		%	77		%
Rolling Twelve Month	86		%	81		%

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The First Marblehead Corporation and Subsidiaries

Income Statement Metrics

Approximate Securitization Yields by Marketing Channel

Direct-to- Consumer	Volume of Loans Securitized ($millions)			Up-front Structural Advisory Fees(1)		Additional Structural Advisory Fees(1)		Residual Revenue(1)		Total Revenue
Q3 2006	$	527 (71	)%	8.7	%	1.2	%	7.7	%	17.5	%
Q3 2005	445 (62		)%	9.6	%	1.1	%	6.1	%	16.8	%
School Channel
Q3 2006	$	214 (29	)%	5.9	%	1.2	%	3.2	%	10.3	%
Q3 2005	270 (38		)%	4.4	%	1.1	%	1.4	%	7.0	%
Total
Q3 2006	$	741
Q3 2005	715
Blended Yield(2)
Q3 2006				7.9	%	1.2	%	6.4	%	15.5	%
Q3 2005				7.6	%	1.1	%	4.4	%	13.1	%

(1) Revenues expressed as a percentage of the student loan balance securitized in each channel at the date of securitization.

(2) Blended yield represents securitization revenues as a percentage of the total principal and accrued interest of loans securitized for all marketing channels.

Note:  These yields by marketing channel represent an allocation of revenues and costs based on various estimates and assumptions regarding the relative profitability of these loans, and should be read with caution. Furthermore, these yields are dependent on a number of factors, including the mix of loans between marketing channels that are included in a particular securitization, the average life of loans, which can be impacted by the time of year that the loans are securitized and the relative mix of loans from students with various expected terms to graduation, the structure of, and prevailing market conditions at the time of a securitization, the marketing fees which our clients earn on loans we securitize for them, along with a number of other factors. Therefore, readers are cautioned that the blended yields and yields by marketing channel above may not be indicative of yields that we may be able to achieve in future securitizations.

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The First Marblehead Corporation and Subsidiaries

Operating Expense Metrics

	Operating expenses
	Expenses reimbursed by TERI						Expenses not reimbursed by TERI
	Compensation and benefits		General and administrative expenses		Subtotal operating expenses		Compensation and benefits		General and administrative expenses		Subtotal operating expenses		Total operating expenses
	(in thousands )
Three months ended March 31,
2006	$	13,454	$	13,008	$	26,462	$	11,653	$	11,132	$	22,785	$	49,247
2005	10,271		10,293		20,564		7,051		10,098		17,149		37,713
Nine months ended March 31,
2006	$	39,383	$	38,010	$	77,393	$	26,626	$	34,946	$	61,572	$	138,965
2005	27,418		27,024		54,442		20,105		24,678		44,783		99,225

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The First Marblehead Corporation and Subsidiaries

Balance Sheet Metrics

Roll-forward of Structural Advisory Fees and Residuals Receivable

(Dollars in Thousands)

	Three Months Ended  March 31, 2006			Nine Months Ended  March 31, 2006
Structural Advisory Fees Receivable
Beginning of period balance	$	69,589		$	53,371
Additions from new securitizations	8,764			23,542
Trust updates
Passage of time (present value accretion)	1,163			2,967
Other factors (See Note below)	(1,200		)	(1,564		)
	(37		)	1,403
End of period balance	$	78,316		$	78,316
Residuals Receivable
Beginning of period balance	$	345,464		$	247,275
Additions from new securitizations	47,432			125,648
Trust updates
Passage of time (present value accretion)	10,917			27,578
Other factors (See Note below)	(5,294		)	(1,982		)
	5,623			25,596
End of period balance	$	398,519		$	398,519

Note: During the three and nine months ended March 31, 2006, the 10-year U.S. Treasury rate, on which we base our present value discounting of structural advisory fees receivable, increased 49 and 89 basis points, respectively, and had a negative effect on their valuation.

Other factors affecting the valuation of structural advisory fees and residuals receivable include changes in the implied forward LIBOR curve, as well as any adjustments of assumptions we use in estimating the fair value of these receivables. We also monitor the performance of trust assets, which we consider in our estimates.

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