Tags: Sallie-Mae | Loss | Write-Offs

Sallie Mae Swings to Loss on Write-Offs

Wednesday, 20 Oct 2010 07:24 AM

Sallie Mae moved to loss in the third-quarter as the student loan issuer booked more than $600 million in write-downs on goodwill and other assets.

The company said Tuesday it lost $513.7 million, or $1.06 a share, in the three months ended Sept. 30. That compares with net income of $116.5 million, or 25 cents a share, in the prior-year period.

Sallie Mae said it wrote off $660 million of goodwill and intangible assets and recorded a $183 million unrealized, pretax net loss on derivative contracts from hedging activities. The company said the non-cash charge would not have an effect on its tangible capital or capital ratios.

Excluding the write-downs and pretax loss, the company earned $189 million, or 35 cents a share.

By that measure, analysts surveyed by Thomson Reuters expected a net income of 27 cents per share.

"This quarter's results are indicative of our current earnings power until we finish rightsizing the company in 2011," said Albert Lord, vice chairman and CEO.

Sallie Mae, formally known as SLM Corp., has been restructuring as it gets out of the federal student loan business. A law this year consolidated the federal loan program to save costs, and cut private lenders out of the process.

In September, the company announced an agreement to buy an interest in $28 billion of securitized federal student loans and related assets from The Student Loan Corp. The transaction is expected to close by the end of the year.

For the quarter, Sallie Mae's net interest income after provisions for loan losses rose to $513.8 million from $204.1 million a year earlier.

The company had $25.8 billion of private education loans in repayment at Sept. 30, up from $21.7 billion in the prior-year quarter. Charge-offs on private loans eased to $348 million in the quarter, compared with $443 million in the year-ago period.

The company originated $835 million in private education loans during the quarter. Some 92 percent of the borrowers had cosigners.

In addition, Sallie Mae serviced about 2.5 million accounts on behalf of the federal government and other third-party clients during the quarter.
Since Sept. 30, the servicing operation has added 1.3 million third-party accounts, the company said.

Sallie Mae shares slipped 7 cents to $11.06 on Tuesday.

© Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

1Like our page
2Share
FinanceNews
Sallie Mae moved to loss in the third-quarter as the student loan issuer booked more than $600 million in write-downs on goodwill and other assets. The company said Tuesday it lost $513.7 million, or $1.06 a share, in the three months ended Sept. 30. That compares with net...
Sallie-Mae,Loss,Write-Offs
375
2010-24-20
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved