Monday, Student Loan Corp. (STU) reported a significant increase in profit for the fourth quarter, from the year ago on higher net interest income, gains from loan sales and lower operating expenses.
For the fourth-quarter, net income increased to $38.1 million or $1.90 per share from $12.3 million or $0.62 per share in the year-ago period.
Net interest income increased 59% to $74.6 million from $46.94 million in the prior-year. Interest income was $194.47 million, down from $287.07 million last year. Interest expenses narrowere to $119.89 million from $240.13 million in the previous year.
The company attributed the increase in net interest income to narrower credit spreads, higher loan balances, and pricing changes on the company's private education loans.
The company raised its provision for loan losses to $36.19 million from $22.96 million in the year-earlier quarter. Net interest income after provision for loan losses increased to $38.38 million from $23.97 million.
The company's gains on loans sold for the fourth-quarter was $10.41 million, compared to $0.024 million in the year-ago period. Total operating expenses decreased to $33.07 million from $37.71 million in the year-earlier quarter.
For the full-year, the company reported net income of $125.7 million or $6.28 per share, compared to net income of $73.4 million or $3.67 per share last year. The increase in net income was due to gains on loan sales to the U.S. Department of Education, operating expense reductions and the positive impacts of improved market conditions on the company's assets measured at fair value, which offset the 16% decrease in net interest income. Net interest income declined 16% to $277.64 million from $331.29 million in the year-ago period.
The company also declared a quarterly dividend of $0.35 per share, payable on March 1, 2010 to shareholders on record as of February 12, 2010.
STU is currently trading at $48.84, up $0.65 or 1.35%, on the NYSE.
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