Student Loan Corp. (STU) swung to a third-quarter loss amid
write-downs on loans it expects to sell to Citigroup Inc. (C) and
SLM Corp. (SLM) as part of the carve up of the company's
assets.
Discover Financial Services (DFS) is acquiring the company's
private student-loan business for $600 million, with SLM buying a
$28 billion portfolio of securitized federal student loans and
80%-owner Citi purchasing $8.7 billion of assets.
A ban started July 1 that prevents private lenders from making
federal student loans, essentially forcing them to move from
originating loans to servicing them.
Student Loan Corp. reported a loss of $539.6 million, or $26.98
a share, compared with prior-year earnings of $54.8 million, or
$2.74 a share. The latest period reflects $562.2 million of
write-downs on the loans being sold to Sallie Mae and Citi.
Net interest income fell 32% to $96.9 million while provisions
for loan losses increased 88% to $72.9 million.
Shares closed Friday at $29.95 and were inactive premarket. The
stock is down 36% this year. Discover's bid is $30 per share.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
Tess.Stynes@dowjones.com;