NEWARK, Del. (AP) -- Student lender Sallie Mae returned to a second-quarter profit after losing money a year ago, as it slashed operating expenses and set aside less money to cover bad loans.
The company, formally known as SLM Corp., said Wednesday that its net income for the three months ended June 30 was $292 million, or 59 cents per share. That compares with a loss of $6 million, or 2 cents a share, for the prior-year quarter.
The latest results beat analysts' consensus forecast, which called for earnings of 54 cents a share, according to FactSet.
Total interest income slipped 4 percent to $1.4 billion from $1.46 billion a year earlier.
Net interest income, which excludes interest expense, fell 14 percent to $746 million.
The company's consumer lending unit, which makes and services private education loans, saw new loans increase 22 percent to $321 million during the quarter.
Sallie Mae set aside $225 million to cover bad loans, down from $265 million a year earlier.
Some 4.5 percent of the company's loans were behind in payment by at least 90 days, down slightly from 4.6 percent in last year's quarter.
Sallie Mae also wrote off a smaller slice of loans as unpaid. The company's charge-off rate was 3.09 percent on an annualized basis. That's down from 3.71 percent.
The company's operating expenses declined to $239 million from $268 million, reflecting Sallie Mae's cost-cutting efforts.
Sallie Mae said its business services unit, which earns fees from servicing, collections and college savings businesses, had $138 million in core earnings, compared with $140 million a year earlier.
The segment that services federally guaranteed student loans had core earnings of $44 million, down from $108 million in the same period last year.
Sallie Mae said the decrease was primarily due to higher funding costs, lower net interest income and an acceleration in the payment schedule of $50 million in non-cash loan premium.
During the quarter, Sallie Mae acquired $1.9 billion of federally guaranteed student loans. As of June 30, it held $133 billion in loans, down from $143 billion a year ago.
Sallie Mae shares ended regular trading down 13 cents at $16.04.
- Sallie Mae