RESTON, Va. - Student loan giant Sallie Mae reported its second-quarter profit plummeted 72% as funding costs remained high amid further weakening in the credit markets and the company took charges related to its restructuring.
Net income fell to $266 million, or 50 cents per share, during the second quarter, from $966 million, or $1.03 per share, during the same quarter last year. As a result, net income for the first six months was down 90% to $105.5 million.
Investor skittishness has raised the cost of borrowing for Sallie Mae, which does so by securitizing student loans it buys from credit unions and banks.
Second quarter results included a $53-million restructuring charge, a $26-million loss on purchased paper and a $109-million charge for financing asset backed facilities.
Student loan originations declined to $3.3 billion during the second quarter, from $3.6 billion during the year-ago period, due to a change in Sallie Mae’s relationships with external lending partners.
The company’s managed student loan portfolio, which it buys from credit unions and banks, continued to rise in the second quarter to a new high of $171.9 billion, from $153.2 billion one year ago.(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
