Privatization Costs Set Back SallieMae
RESTON, Va. - (10/22/04) -- Student loan giant SLM Corp., betterknown as Sallie Mae, said third quarter earnings slumped 26% to$357 million, or 80 cents a share, due to three major charges,including the buyback of debt associated with the completion of itsprivatization. The company said it recorded a $103 million chargefor the quarter to repurchase debt held in the company's governmentsponsored enterprise, which it must abandon as it completes itsprivatization by year-end. The student lender also recorded a $27million impairment charge on its portfolio of aircraft leases. As aresult, net income for the first three quarters of the year wasdown less than 1% to $1.26 billion. Sallie, formed by the federalgovernment to facilitate a secondary market for guaranteed studentloans, said it expanded its reach into the loan originations marketto $5.9 billion for the quarter, and $14 billion for the firstthree quarters, half of all the private-sector guaranteed studentloans in the country. This helped grow the company's loan portfolioto $98 billion at the end of the quarter, a 15% increase over thesame period a year ago.