Sallie Mae's second-quarter profit more than doubled, largely
tied to a gain from the sale of $738 million of private-education
loans.
Formally SLM Corp., Sallie Mae is one of the largest private
student loan lenders in the U.S. with more than $9.2 billion under
management at quarter's end, up 24% from the year earlier. In the
latest period, Sallie Mae sold $384 million of private education
loans, a 2% increase from the year-ago period, but raised its
loan-loss provisions to $15.6 million from $1 million a year
earlier.
Sallie Mae was created in 1973 as a government-sponsored
enterprise, the former Student Loan Marketing Association. Last
year, it was split into two firms: an education-loan manager known
as Navient Corp. and a consumer-banking operation that continued
under the Sallie Mae brand.
Total expenses were $91 million in the latest period, up from
$75 million a year earlier, largely tied to the cost of
establishing a stand-alone company following last year's spinoff,
the company said.
Overall, Sallie Mae reported net income of $91 million, or 20
cents a share, compared with $44.1 million, or 10 cents a share, a
year earlier.
Core earnings rose to 20 cents from 10 cents a share, in line
with analysts expectations.
Net interest margin, a measure of a lender's profitability, rose
17 basis points to 5.49%.
Total loans delinquent, as a percentage of private education
loans in repayment, were 1.70%, compared with 0.7% in the year-ago
period and 1.65% in the previous quarter, according to regulatory
filings.
Total loans in forbearance, which allows borrowers to reduce or
stop monthly payments for up to a year even as interest continues
to build, were 5.69%, compared with 0.9% last year and 2.76% in the
first quarter. Sallie Mae said it had given a two-month disaster
forbearance to all student loan borrowers who lived in an area of
Texas impacted by floods this spring.
Sallie Mae Bank sold all loans past 90 days delinquent to an
affiliate of what is now Navient ahead of the spinoff.
The company also affirmed its projections for the year.
Shares, largely inactive in late trading, closed Wednesday at
$9.85, unchanged from the day before. The company's stock is down
3.3% this year.
Write to Maria Armental at maria.armental@wsj.com
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