What happened

Shares of Sallie Mae (NASDAQ:SLM), formally SLM Corporation, are soaring by nearly 10% as of 10:30 a.m. EDT on Thursday after the company beat earnings expectations in the first quarter.

So what

Sallie Mae saw its net income to common shareholders jump to $89 million in the first quarter ($0.20 per diluted share), up from $61 million ($0.14 per diluted share) in the year-ago period. Results were helped primarily by a $58 million increase in net interest income and a $7 million decrease in provisions for credit losses.

A graduation cap on top of $100 bills

Sallie Mae earnings beat expectations, helped by lower provisions and higher net interest income. Image source: Getty Images.

The company originated $1.8 billion of private student loans in the first quarter, an increase of 2% over the year-ago period, bringing its average private student loan portfolio to $15.4 billion during the first quarter, a 31% increase over the year-ago period. 

In a presentation, Sallie Mae emphasized the credit quality of its recent originations, pointing to the fact that 90% of its new originations had a cosigner and that its average borrower had a FICO score of 748.

Now what

Sallie Mae's guidance calls for full-year 2017 diluted core earnings per share of $0.70 to $0.72 and private education loan originations of $4.9 billion. Low delinquency rates and rising yields on its loan portfolio were major contributors to its better-than-expected earnings this quarter, a trend investors would like to see continue. 


Jordan Wathen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.