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The largest U.S. student loan provider reported GAAP net income for the third quarter of $159.1 million, compared to a GAAP net loss of $158.5 million for the year-ago 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 were $163.9 million or $0.26 per share, compared to $117.0 million or $0.19 per share in the prior year quarter.
On average, 9 analysts polled by Thomson Reuters expected the company to earn $0.04 per share for the third quarter.
The latest quarter results included a $74 million gain on debt repurchases, vs. the prior quarter's $325 million, and a $55 million accounting adjustment to reflect slower loan prepayments, and were reduced by $20 million for the early conversion of a portion of the company's Series C Preferred Stock into common stock. Floor income, not included in core earnings, totaled $36 million in the quarter.
"The return of the CP-LIBOR relationship to more normal levels helped this quarter's results; we expect credit quality to improve earnings in subsequent periods," said Albert L. Lord, vice chairman & CEO.
GAAP net interest income for the third quarter rose to $525.2 million from $383.7 million in the same quarter last year.
Third quarter GAAP provision for loan losses was $321.1 million, compared to $186.9 million a year earlier. The loans are eligible for the U.S. Department of Education's purchase program.
Sallie Mae originated $6.9 billion in federal student loans during the third quarter, up 25% from a year earlier.
The company's private education loan origination fell to $893 million in the third quarter from $2.1 billion in the prior year quarter, mainly due to tightened underwriting standards and reduced demand caused by increased federal student loan limits. The latest quarter private education loan loss provision was $413 million, net charge-offs were $443 million.
For the first nine months, the company reported GAAP net income of $15 million, compared to $3.4 million for the same period last year.
GAAP net loss attributable to common shareholders for the nine-month period was $79.8 million or $0.17 per share, compared to a GAAP net loss attributable to common shareholders of $80.5 million or $0.17 per share in the prior year period.
Core earnings for the nine-month period were $348.3 million or $0.54 per share, compared to $460.9 million or $0.81 per share in the corresponding year-ago period.
Last month, the US House approved President Barack Obama's plan to provide all new federal college loans directly and end guarantees and subsidies to lenders such as Sallie Mae.
Sallie Mae shares, which have traded in a range of $3.11 to $12.43 over the past year, closed Tuesday's regular trading session at $8.90, down 15 cents or 1.66% but gained 70 cents or 7.87% in after hours trading.
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