Sallie Mae reported higher income in the first quarter.
In the first-quarter 2018, the company increased its private education loan originations 7 percent to $2 billion, expanded its private education loan portfolio 20 percent to $18.6 billion and increased its net interest income 24 percent to $333 million.
“This quarter’s performance reflects our continual work to strengthen the value of our franchise,” said Raymond J. Quinlan, CEO. “Students, parents, and graduate students continue to choose our private student loans to responsibly finance their higher education, and we are actively diversifying our product portfolio so we can meet their additional needs.”
For the first-quarter 2018, GAAP (Generally Accepted Accounting Principles net income was $126 million, compared with $95 million in the year-ago quarter.
The year-over-year increase was primarily attributable to a $65 million increase in net interest income, and a $7 million increase in total non-interest income, which was offset by a $29 million increase in provisions for credit losses, and a $22 million increase in total non-interest expenses. The reduction of the federal statutory corporate income tax rate from 35 percent to 21 percent as a result of the Tax Cuts and Jobs Act of 2017, which was enacted on Dec. 22, 2017, contributed approximately $23 million to net income.
Non-GAAP Core earnings for the first-quarter 2018 were $123 million, compared with $98 million in the year-ago quarter.
Sallie Mae provides core earnings because it is one of several measures management uses to evaluate management performance and allocate corporate resources.
Operating expenses grew 22 percent from the year-ago quarter, while the non-GAAP operating efficiency ratio decreased to 36.5 percent in the first-quarter 2018 from 36.8 percent in the year-ago quarter. The increase in non-interest expenses was driven by the growth in the portfolio and costs related to product diversification, platform enhancements, and customer experience.
Earlier this year, the company indicated it intends to invest up to $30 million in 2018 in technology infrastructure and product diversification.
Sallie Mae is headquartered near Newark.
