Sallie Mae Posts Quarterly Earnings, Reinstates Dividend, Approves $300 Million Share Repurchase (SLM)

Sallie Mae SLM today reported first-quarter GAAP and core earnings, declared its first common stock dividend since 2007 and announced a $300 million share repurchase program. GAAP first-quarter 2011 net income was $175 million ($.32 diluted earnings per share), vs. $240 million ($.45 diluted earnings per share) in the same quarter last year. The company manages its business segments on a core earnings basis, as described further below. The primary difference between the company's core earnings and GAAP results is a $133 million unrealized, mark-to-market, loss on certain derivative contracts recognized in GAAP but not in core earnings results. Core earnings were $260 million ($.48 diluted earnings per share) for the first-quarter 2011, compared with $215 million ($.40 diluted earnings per share) for the year-ago period. These results include $40 million and $57 million of after-tax debt repurchase gains, respectively. Year-to-year improvement reflects increased net interest income and a lower loan loss provision. Dividend and Share Repurchase Program Sallie Mae declared a quarterly dividend of $.10 per share on the company's common stock, the first since early 2007. The dividend is payable June 17, 2011, to shareholders of record at the close of business on June 3, 2011. The company also authorized the repurchase of up to $300 million of outstanding common stock in open-market transactions and terminated all previous authorizations. “These results reflect progress,” said Albert L. Lord, vice chairman and CEO, Sallie Mae. “The trends we see across the franchise are improving: private loan demand, ABS market tone, and asset quality together with a better Department of Education loan servicing scorecard. Reinstitution of the dividend and share repurchase program reflects the strength of our capital, liquidity and cash flow.”