Sallie Mae Surges in Fourth Quarter

RESTON, Va. – Student loan giant Sallie Mae reported yesterday that ‘core earnings,’ which measures the company’s operations, rose 13% for the fourth quarter to $326 million, while the company’s student loan portfolio soared to a new high of $142 billion at year end. But interest rate swings continued to whipsaw the company’s GAAP earnings, as major declines in the market value of the company’s huge hedging portfolio pushed down fourth-quarter earnings by 99% to just $18 million, or two cents a share, compared to $431 million, or 96 cents a share, for the fourth quarter last year. The hedging losses, $245 million for the fourth quarter and $339 million for the year, pushed down fiscal year earnings by 14% to $1.2 billion. The compares to hedging gains of $70 million for last year’s fourth quarter and $247 million for fiscal 2005. The company, now the largest originator of student loans, said it originated $23.4 billion in student loans last year and bought $34 billion in student loans, pushing up its loan portfolio by 16% for the year.