Sallie Swings to a Loss

The student lender says derivative writedowns weighed on results in the first quarter.
Author:
Publish date:

Student loan provider

Sallie Mae

(SLM) - Get Report

on late Thursday said it swung to a first-quarter loss, due to writedowns to the value of derivative holdings amid the credit crunch.

Sallie reported a GAAP loss of $104 million, or 28 cents a diluted share, vs. a net profit of $116 million, or 26 cents a diluted share, in the year-ago period. The swing was fueled by a $363.4 million mark-to-market, pre-tax loss due to derivative accounting and a $79.1 million mark-to-market loss due to securitization accounting.

The company reported "core" diluted earnings per share of 34 cents, vs. 57 cents a year-ago. Analysts polled by Thomson Financial had expected earnings of 40 cents a share on revenue of $893.2 million.

"Today's environment is the most difficult we have seen in our 35-year history of student lending," CEO Albert Lord said in a company statement. "It has become obvious that we can only meet the enormous student credit demands we are seeing at Sallie Mae if there is a near-term, system-wide liquidity solution."

Sallie reported a $137 million GAAP provision for loan losses, down from the preceding quarter's $574 million and the year-ago quarter's $150 million.

The company also said it originated more than $8.7 billion in student loans during the first-quarter 2008, vs. $8 billion in the first quarter of last year.

Sallie shares were falling 4.4% to $15.55 in recent after-hours action.

This article was written by a staff member of TheStreet.com.