Sallie Mae Slips to a Third Quarter Loss
From Associated Press
Sallie Mae, the Reston- based student lender whose buyout is imperiled, today said it swung to a third-quarter loss of $344 million, due in part to trading losses and the impact of recent student loan legislation.
Sallie Mae's quarterly loss, equivalent to 85 cents a share, compared with profit of $263 million, or 60 cents a share, in the third quarter of 2006.
The results came three days after Sallie Mae sued its would-be buyers, led by private equity firm J.C. Flowers & Co., for attempting to back out of a $25.3 billion cash offer for the company. The investors say student-loan legislation recently signed into law by President Bush, and weaker economic conditions, made the $60-a-share price agreed upon in April unacceptable. A reduced offer of $50-a-share expired Tuesday.
The company, formally known as SLM Corp., reported "core earnings" of $259 million, or 59 cents a share in the July-September period, compared with $321 million, or 73 cents a share. Core earnings exclude treatment for student loans bundled together as securities and derivatives, the complex financial instruments used as a hedge against interest-rate swings. Analysts surveyed by Thomson Financial anticipated quarterly core earnings of 74 cents per share.
In a statement, the company's chief executive, C.E. Andrews, said "we successfully faced a number of challenges this quarter."
The student-loan provider said core net interest income was $664.3 million, up from $601.4 million a year ago. Net interest income is the difference between how much it costs a bank to borrow money and the amount it receives from lending money.
Please email us to report offensive comments.
Posted by: Cheryl Cotterill | October 12, 2007 11:24 PM
The comments to this entry are closed.