SLM Corporation (SLM) or commonly know as Sallie Mae, reported third quarter core earnings of $164 million or 26 cents per share. Results were well ahead of the Zacks Consensus Estimate of 8 cents per share. The company had earned 19 cents in the year-ago period. Results reflected improvements in the credit market and an increase in loan originations. However, loan loss provisions remain high. Quarterly results included a gain of $74 million on the repurchase of debt and a $55 million accounting adjustment to reflect slower loan prepayments. Sallie Mae posted a net income attributable to common stock of $116.5 million, or 25 cents per share, compared with a loss of $186 million, or 40 cents, in the year-ago period. Core earnings return on assets was 0.31%, up 6 basis points (bps) year-over-year. Sallie Mae originated $6.9 billion in federal student loans in ...

SLM Corporation (SLM) substantially topped expectations with adjusted profits of 32 cents per share. The second-quarter results were aided by 325 million gains on debt repurchases, offset partially by $105 million of expenses related to the ongoing dislocation in the commercial paper market and a 109.1% increase in provisions for loan losses.

On a GAAP basis, SLM reported a net loss of $0.32 per share, compared to a net loss of $0.10 per share in the prior quarter and a net income of $0.50 per share in the prior-year quarter. The adjusted results include after-tax restructuring expenses of $2.8 million and other reorganization-related asset impairments of $0.2 million.

The company generated experienced 76.0% year-over-year increase in FFELP internal brand originations. However, FFELP Lender Partner originations declined 30.0% over the prior-year quarter. Private Education Loan (PEL) originations declined 56.4% year-over-year to $372 million in the reported quarter.

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On July 7, 2009, SLM Corporation (SLM), commonly known as Sallie Mae, announced its support for the Student Loan Community's proposal to reform the student loan program.

The alternative proposal, put forth by a diverse group that includes non-profit, for-profit and state-based service providers and guaranty agencies seeks to enhance the Administration’s plan to better serve students, families, schools, and taxpayers. The plan also aims at retaining a significant role for private lenders in the student loan market.

The Administration’s plan is framed to provide certainty that funding will be available to students and save nearly $90 billion over the next decade by ending unnecessary public subsidies paid to banks. It would use the freed up resources to partially cover the cost of a permanent increase in grants for students from lower-income families.

Consequently, this would end all private originations of student loans and use only a small panel of financial firms

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The shares of SLM Corp. (SLM), also known as Sallie Mae, sold off sharply on February 26, on the news of the budget proposal by President Obama regarding the elimination of subsidies for student lenders. Further, SLM's 4Q08 core net operating income came in at $0.14 per diluted share, substantially short of our estimate.

Higher funding costs were the primary reason for the lower-than-expected results. However, the performance of the private credit portfolio was better than expected. We expect funding costs to come down slightly once the federally sponsored programs (TALF and Conduit Facility) become operational.

But the proposal for the elimination of private lenders from the student-loan market is a significant threat to the company. As such, we maintain our Sell recommendation on shares of SLM.

We maintain our SELL rating with a lower six-month target price of $7.00. Zacks Investment Research

SLM Corporation, or Sallie Mae (SLM) 3Q08 core net operating income came in at $0.36 per diluted share, substantially short of our estimate. Higher funding costs were the primary reason for the lower-than-expected results.However, the performance of the private credit portfolio was better than expected during the reported quarter. We expect higher funding and credit costs to continue impacting the profitability of the company, though the funding costs are expected to come down slightly once the new facility (TALF) proposed by the Federal Reserve and Treasury becomes operational. Based on our concerns, we are maintaining our Sell recommendation on the shares of SLM, with a reduced six-month target price of $8.00 per share.Kalyan Nandy contributed to this report.Read the full analyst report on SLM "SLM" Free Stock Analysis: Buy? Sell? Hold?Zacks ...