Sallie Mae posts earnings gain in third quarter


Sallie Mae reported a strong third quarter.

“The third quarter includes the back-to-school season for millions of families and the peak of our lending activity. It is gratifying to have helped 221,000 students return to campus to continue their college education and provide them with access to industry-leading tutoring services as an added benefit,” said Raymond J. Quinlan, CEO. “Our mission is to help students achieve the dream of higher education, and that’s why we focus on helping families save, plan, and pay for college.During the quarter, 425,000 students and their families explored the free financial literacy resources on our website to find scholarship and grant opportunities, learn how to pay for college, and use calculators to manage prudently their student loan debt.We take pride in our customers’ strong performance during college and after graduation, and we are pleased that platform and customer experience investments continue to yield a healthy loan portfolio and an improved efficiency ratio.”

For the third-quarter, Generally Accepted Accounting Principles (GAAP) net income was $76 million, compared with $57 million in the same period a year earlier.

The year-over-year increase was primarily attributable to a $59 million increase in net interest income and a $7 million decrease in income tax expense, which was offset by a $13 million increase in provisions for credit losses, a $17 million decrease in other income, and a $16 million increase in total non-interest expenses.


Third-quarter 2017 results vs. third-quarter 2016 included:

  • Private education loan originations of $1.9 billion, up 3 percent.
  • Net interest income of $282 million, up 26 percent.
  • Net interest margin of 5.85 percent, up 27 basis points.
  • Average private education loans outstanding of $16.2 billion, up 26 percent.
  • Average yield on the private education loan portfolio was 8.50 percent, up 50 basis points.
  • Private education loan provision for loan losses was $53 million, up from $41 million.
  • Private education loans in forbearance were 3.2 percent of private education loans in repayment and forbearance, up from 3.0 percent.
  • Private education loan delinquencies as a percentage of private education loans in repayment were 2.6 percent, up from 2.0 percent.

Total non-interest expenses were $116 million in the third-quarter 2017, compared with $100 million in the year-ago quarter.

Income tax expense decreased to $41 million in the third-quarter 2017 from $47 million in the year-ago quarter. The effective income tax rate decreased in the third-quarter 2017 to 34.7 percent from 45.5 percent in the year-ago quarter, primarily due to a reduction in state taxes and the release of reserves for uncertain tax positions.

The regulatory capital ratios of the company’s Sallie Mae Bank subsidiary continue to exceed guidelines for institutions considered “well capitalized.”

Sallie Mae is headquartered near Newark.

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