AP News

Sallie Mae swings to profit in 3Q as expenses cut


NEWARK, Del. (AP) — Student lender Sallie Mae said Wednesday it swung to a profit in the third quarter after losing money a year earlier, as it reduced operating expenses and set aside less money to cover bad loans.

The company, formally known as SLM Corp., reported net income of $188 million, or 39 cents per share, in the July-September quarter. That compares with a net loss of $47 million, or 10 cents per share, in the third quarter of 2011.

Core earnings, which exclude items such as gains and losses on derivative contracts, totaled 58 cents per share.

According to a survey by FactSet, analysts expected the company to earn 54 cents per share.

Sallie Mae said it set aside $270 million for troubled loans in the third quarter, or $139 million less than it did a year earlier.

The company's consumer lending unit, which makes and services private education loans, registered a 25 percent increase in new loans, to $1.3 billion. Sallie Mae said it expects to make at least $3.2 billion in private education loans this year and to post full-year earnings of $2.15 per share, in line with Street estimates.

Sallie Mae's operating expenses declined 14 percent to $244 million in the third quarter from $285 million a year earlier, reflecting continued cost-cutting efforts.

The company's business services unit, which earns fees from servicing, collections and college savings businesses, had $131 million in core earnings, down from $139 million a year earlier.

The unit that services federally-guaranteed student loans registered core earnings of $94 million, down from $107 million. Sallie Mae said the decrease was mainly due to lower net interest income resulting from higher funding costs and the declining balance of its holdings of U.S.-backed loans.

Sallie Mae shares rose 3 cents to close at $17.16 in regular trading. They fell 16 cents in after-hours trading, to $17.


Toyota's Hydrogen Man
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus