SLM Corp (NASDAQ: SLM) stock lost over 4.5% on 23rd October, 2018 (As of 10:49 AM GMT-4 ; Source: Google finance) after the company posted mixed results for the third quarter of FY 18. SLM in the third quarter of FY 18 has reported the adjusted earnings per share of 23 cents, missing the analysts’ estimates for the adjusted earnings per share of 24 cents. The company had reported the adjusted revenue of $356.6 million in the third quarter of FY 18
In the third-quarter 2018, the company increased its diluted earnings per share 35 percent, grew its private education loan originations 12 percent to $2.1 billion, reduced its provision for private education loan losses 20 percent to $42 million, and increased its net interest income 26 percent to $357 million, all compared with the third quarter of 2017. Non-GAAP core earnings for the third-quarter 2018 were $107 million, compared with $75 million in the year-ago quarter.
Net interest margin of 6.00 percent, up 15 basis points. Private education loan originations of $2.1 billion, up 12 percent. Average private education loans outstanding of $19.3 billion, up 19 percent. Average yield on the private education loan portfolio was 9.16 percent, up 66 basis points. Private education loan provision for loan losses was $42 million, down from $53 million. Private education loans in forbearance were 3.4 percent of private education loans in repayment and forbearance, up from 3.2 percent. Private education loan delinquencies as a percentage of private education loans in repayment were 2.3 percent, down from 2.6 percent. Personal loan originations of $167 million and personal loan acquisitions of $109 million. Average personal loans outstanding of $1.1 billion, up from $86 million. Average yield on the personal loan portfolio was 11.03 percent, up 137 basis points. Personal loan provision for loan losses was $26 million.
Meanwhile, earlier this year, the company had indicated the intention to invest $40 million to accelerate the diversification of the consumer lending platform into the personal loan and credit card businesses and to migrate the technology infrastructure to the cloud. Operating expenses associated with accelerating our personal loan business, credit card start-up, and migration to the cloud were $9 million, $2 million, and $3 million, respectively, in the third-quarter 2018, and $11 million, $3 million, and $5 million, respectively, year-to-date 2018. Expenses in the company’s core education loan business for the third-quarter 2018 increased 14 percent from third-quarter 2017.
For FY 18, the company expects Full-year diluted core earnings per share to be between $1.02 – $1.03. Full-year private education loan originations of $5.2 billion. Full-year non-GAAP operating efficiency ratio to be between 38 percent – 39 percent.