Sallie Mae Profit Up 33 Percent
Student loan provider Sallie Mae said today its second quarter profit rose 33 percent, to $966 million from $724 million in the comparable period last year. Interest income rose 34 percent, to $2.1 billion, the Reston-based company, formally known as SLM Corp. said in a statement.
The company's core earnings, which strip out gains from hedging and derivatives activities, however fell 41 percent to $189 million from $320 million. The decline came from $247 million in provisions for losses from private education loans, as well as $51 million in expenses related to its pending acquistion by a consortium of private equity firms.
Sallie did not comment today on the state of its acquisition. Last week, the private equity firms -- J.C. Flowers & Co., Bank of America and J.P. Morgan Chase -- warned Sallie Mae that cuts in student loan subsidies passed by the House could put the deal in jeopardy. (See story) In a regulatory filing last week, Sallie Mae said it "strongly disagrees with [the buyers'] assertion" and that it plans to proceed with the sale.
Because the deal has not yet closed, the company did not conduct a conference call today with Wall Street analysts to discuss its quarterly results.
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