More good news for First Marblehead (FMD)

After the close yesterday, FMD reported an increase in the quarterly dividend from 15 to 25 cents per share and disclosed that from April 1, 2007 through June 6, 2007, they repurchased 1,319,100 shares of common stock under authorized repurchase programs. In April 2007, the Board authorized the Company to repurchase up to 10,000,000 shares from time to time.

A couple other positive data points are that concentration levels from JPM and BofA came down in the latest securitization, and the yield curve is steepening.

According to the prospectus, JPM loan volume was 29%, down from 37%, and BofA was under 10%. Lower concentration means reduced revenue and earnings risk (through greater customer diversification) which should help expand the earnings multiple (investors pay up for less risk). As an aside, FMD's smaller, higher margin partners (along with the in-house brand) are growing much, much faster than JPM and BofA.

Secondly, the yield curve continues to steepen (leading economic prospects are accelerating) which, all other things being equal, helps slow prepayment activity. Management proactively increased the prepayment assumption last quarter due to the persistent inverted yield curve but that issue is starting to resolve as it should.