Shares of Sallie Mae (SLM 3.58%), 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.
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.
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.
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.