SLM Corp. (SLM), commonly known as Sallie Mae, said Wednesday after the markets closed that it swung to a fourth quarter profit. The profit, reflects a significant decline in total interest expense and, gains from sale of loans and securities.
Reston, Virginia-based Sallie Mae's fourth quarter net income attributable to shareholders was $258.12 million or $0.52 per share compared to net loss attributable to shareholders of $243.33 million or $0.52 per share for the same period last year. Net income attributable to the company was $309.13 million compared to net loss attributable to the company of $216.02 million a year earlier.
The largest U.S. student loan provider Sallie Mae's net income from continuing operations for the quarter was $407.85 million compared to net loss from continuing operations of $191.19 million last year and net loss from discontinued operations widened to $98.56 million from $24.30 million for the same period a year-ago.
On an core earnings basis, net income attributable to the company rose to $248.78 million or $0.41 per share, compared to $65.01 million $0.08 per share for the year-ago quarter. The recent fourth quarter, including a $165.31 million of private education loan loss adjustments, core earnings exclude $60.35 million of total core earnings adjustments.
On average, nine analysts polled by Thomson Reuters expected the company to report earnings of $0.44 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Net interest income for the fourth quarter increased to $598.79 million from $210.56 million a year earlier. Including provisions for loan losses, net interest income for the fourth quarter was $329.34 million compared with net interest expense or loss of $41.86 million for the same period last year. Analysts had expected the company to report income of $636.50 million for the fourth quarter.
The increase in net interest income for the fourth quarter reflects a significant decline in total interest expense to $515.76 million from $1.53 billion for the same period last year. This decline offsets the decrease in fourth quarter total interest income to $1.11 billion from $1.74 billion a year earlier.
In the sequentially preceding third quarter, the company's GAAP net income was $159.1 million compared to a GAAP net loss of $158.5 million for the year-ago third quarter. GAAP net income attributable to common shareholders for the third quarter was $116.5 million or $0.25 per share, compared to a GAAP net loss attributable to common shareholders of $186.0 million or $0.40 per share in the third quarter of last year.
Core earnings for the third quarter rose to $163.9 million or $0.26 per share from $117.0 million or $0.19 per share in the prior year quarter.
For the fourth quarter under review total other income rose for the fourth quarter was $628.36 million compared with total other loss of $4.98 million last year. The recent quarter other income reflects a rise in servicing and securitization revenues and, gains of $271.08 million from sale of loans and securities.
Core operating expenses for the quarter rose to $293 million from $260 million in the year-ago quarter.
During the fourth quarter, the company said that it sold $17.6 billion of federal loans originated under U.S. Department of Education's loan participation program and received $271 million.
While federal student loan originations in the fourth quarter was up 14% year-over-year to $4.5 billion, private education loan originations were down due to $381 million due to tightened underwriting and the effect of increased federal student loan limits.
The company said that managed private education loan charge-offs declined to $298 million in the fourth quarter from $443 million in the previous quarter. Managed delinquencies as a percentage of private education loans in repayment decreased during the quarter to 12.1%, from 12.6% in the previous quarter, the company said.
Fourth quarter core provision for private education loan losses was $327 million, down from $413 million in the third quarter.
Amongst others in the industry, The Student Loan Corp. (STU) yesterday, January 19 reported a rise in its fourth quarter profit to to $38.1 million or $1.90 per share from $12.3 million or $0.62 per share for the year-ago period. Net interest income increased by 59% to $74.6 million from $46.94 million in the prior-year.
For the full year, Sallie Mae's net income attributable to shareholders was $178.30 million or $0.38 per share compared to net loss attributable to shareholders of $323.83 million or $0.69 per share for the same period last year. Net income attributable to the company was $324.14 million compared to net loss attributable to the company of $212.63 million last year.
On an core earnings basis, net income attributable to the company for the full year rose to $597.05 million or $0.97 per share, compared to $525.95 million $0.89 per share for the year-ago.
Net interest income for the full year rose to $1.72 billion from $1.36 billion for the same period last year. Including provisions for loan losses, net interest income came down to $603.77 million from $644.57 million for the same period last year.
Wednesday, SLM closed at $11.97, up $0.44 or 3.82%, on a volume of 13.69 million shares on the NYSE. In the past 52 weeks, the stock trended in a broad range of $3.11 - $12.43, with a three-month average volume of 4.12 million shares.
For comments and feedback: editorial@rttnews.com