Sallie Mae Earnings Beats Analyst Estimates as New Loans Surge

SLM Corp. (SLM), the student lender known as Sallie Mae, reported first-quarter profit that exceeded analysts’ estimates as loan originations rose and losses on soured debt dropped to the lowest since 2008.

Net income fell to $112 million, or 21 cents per share, for the three months ended March 31, from $175 million, or 32 cents, a year earlier, the Newark, Delaware-based company said today in a statement distributed by Business Wire. Excluding items such as the market gains and losses of derivatives contracts, earnings climbed 9.2 percent to $284 million, or 55 cents per share. On that basis, seven analysts surveyed by Bloomberg had estimated an average of 51 cents.

SLM is boosting private loan originations after legislation passed in 2010 cut companies out of the market for government- guaranteed lending. Sallie Mae made $1.2 billion in education loans in the first quarter, up from $940 million in the year-ago period, according to the statement. The lender is forecasting $3.2 billion of originations in 2012.

The charge-off rate, or the percentage of bad loans that have been written off, fell to 2.96 percent, the lowest since the third quarter of 2008, from 3.94 percent a year earlier, the company said. The proportion of payments more than 90 days late fell to 4.4 percent, compared with 5.1 percent a year ago.

The rate is falling even as concern mounts that student- loan bills are ballooning. The U.S. educational debt has reached $1 trillion, according to the Consumer Financial Protection Bureau.

To contact the reporter on this story: Sarah Mulholland in New York at smulholland3@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net