Sallie Mae reports earnings turnaround

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Sallie Mae reported an earnings turnaround in the second quarter. The company is based near Newark.

“What a difference a year makes. As we enter our 2021 peak season, the country and the economy continue to rebound and, for the vast majority of college students, that means a return to campuses across the country this fall,” stated Jonathan Witter, CEO, Sallie Mae.

Witter continued, “As the market leader, we continue to provide students and families with resources to effectively plan for college and high quality, responsibly underwritten private student loans to access and complete their education. Our strategic focus and core business remain solid, credit quality continues to improve, and we are effectively controlling expenses without sacrificing the quality of our franchise or investments for our future. We are also delivering on our capital return program having reduced the share count by 19% through the first two quarters of the year. We look forward to continuing this momentum as we deliver for our students, families, and shareholders in 2021.”

In the second quarter, GAAP (Generally Accepted Accounting Principles)  net income was $140 million, up 265%.

 Private education loan originations totaled  $533 million, up 7%.  Private education loan provisions for credit losses was $69 million, down from $327 million.

 Total operating expenses were  $128 million, down from $142 million, principally due to the 2020 reorganization and continued focus on efficiency.

The company repurchased $439 million of common stock under share repurchase programs in the second quarter of 2021. I

Improving economic forecasts resulted in downward adjustments to the provisions for credit losses in the second quarter of 2021 compared with the year-ago quarter provisions for credit losses.

From Jan. 1, 2020, through June 30, 2021, the company has repurchased 119.2 million shares of common stock under its repurchase programs, representing a 28% reduction in the total number of outstanding shares on Jan. 1, 2020.

The following guidance on the company’s performance in 2021 was issued.

  • Full-year diluted GAAP earnings per common share of $3.15 – $3.25.
  • Full-year Private Education Loan originations year-over-year growth of 6% -7%.
  • Full-year total loan portfolio net charge-offs of $215 million $225 million.
  • Full-year non-interest expenses of $525 million $535 million.

 

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