Sallie Mae net income triples in first quarter

Sallie Mae 1Q earnings rise, helped by more student loans and fewer late payments

Associated Press

NEWARK, Del. (AP) -- Sallie Mae tripled its earnings in the first quarter by making more student loans and putting less money aside in case they go bad.

The student loan giant reported Wednesday that net income hit $346 million, or 74 cents per share, for the three months ending on March 31. That compares with $112 million, or 21 cents a share, in the same period of 2012.

Excluding certain one-time items, Sallie Mae's adjusted earnings were 61 cents per share. Analysts expected 60 cents per share, according to FactSet.

The results also looked better because Sallie Mae took a $372 million loss from derivative and hedging activities in the first three months of 2012. By comparison Sallie Mae's derivatives and hedges resulted in a loss of $31 million this year.

Sallie Mae, based in Newark, Del., has seen an increase in demand for loans as higher education costs rise. That trend extended into the start of this year. Loan origination increased 22 percent over the previous year to $1.4 billion.

Until recently the sluggish economy had stymied the ability of recent college graduates to repay their debts. But over the past year, the portion of loans with payments more than 90 days late shrunk. Delinquent loans slipped to 3.9 percent of all loans in repayment in the first quarter, down from 4.4 percent the year before.

The amount Sallie Mae put aside to cover bad private-education loans fell to $225 million from $235 million the year earlier. Its charge-off rate, the percentage of loans that have been written off, remained at 3 percent.

Sallie Mae shares fell 46 cents to close at $20.37 amid a broad market decline.

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