Sallie Mae has had to succumb to numerous changes over the last year. Once known as the student loan lender giant, the company has had to make deep cuts, move its headquarters and refocus their business. Last year when new student loan regulations forced them out of the Federal backed student loan industry, many thought the company might not make it. A year later they are surprising analysts with higher than expected loan originations and a drop in loan delinquencies.
Sallie Mae during quarter 2 of this year posted a core earnings increase of 23%. While they still posted a net loss, this is still good news for the company.
According to an article bloomberg.com:
A net loss of $6 million, or 2 cents per share, compares with net income of $338 million, or 63 cents, in the year-earlier period, the Newark, Delaware-based company said today in a statement distributed by Business Wire. SLM’s core earnings were 48 cents a share, the company said, compared with an average estimate of eight analysts surveyed by Bloomberg of 42 cents.
The loss is a result of a $414 million dollar loss in derivative contracts. Sallie Mae’s core earnings were actually up from $211 million to $260 million from 2nd quarter last year.
New loan originations moved upward for Sallie Mae. During the second quarter the company was able to originate $264 million in new loans. This is an increase in 21% and brought the company’s total loan portfolio up to $35.8 billion from $35.2 billion. By the end of the year Sallie Mae is now expected to originate a total of $2.5 billion in new loans. Even though they can no longer participate in the federal backed loans they are working to increase their place in the private student loan market.
Another factor that is helping right now is a decrease in loan delinquencies. Sallie Mae’s loan delinquency rate was down during the second quarter. Students who were behind in their loan payments by 90 days or more fell from 5.3% to 3.7%.
While Sallie Mae has had to make some significant changes over the last year, it seems that they are fighting to stay in the business and are succeeding.
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