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Sallie Mae (SLM) |
HenryTo
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 Posted: Wed Jul 11, 2007 12:09 pm Post subject: Sallie Mae (SLM) |
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Sallie Mae down from $57.80 to $49.50 or so before being halted. Rumors flying around that its buyout offer may not go through. More below:
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SLM: Acquiring group says merger conditions may not be met
By Katherine Hunt
Last Update: 2:02 PM ET Jul 11, 2007
SAN FRANCISCO (MarketWatch) -- Sallie Mae, formally known as SLM Corp., said Wednesday the group that has agreed to acquire the company said it believes that legislative proposals pending before Congress "could result in a failure of the conditions to the closing of the merger to be satisfied." Sallie Mae said it strongly disagrees with the assertion, and plans to proceed towards the closing of the merger transaction as rapidly as possible. In April, the student-loan firm agreed to be taken private by a group comprised of private-equity firms J.C. Flowers & Co. and Friedman Fleischer & Lowe LLC, as well as J.P. Morgan and Bank of America, for $60 a share, or about $25 billion.
Last edited by HenryTo on Fri Mar 21, 2008 10:18 am; edited 1 time in total |
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rffrydr
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HenryTo
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| Posted: Wed Oct 20, 2010 3:37 pm Post subject: |
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Morningstar on SLM's 3Q earnings:
| Quote: | | SLM Corporation SLM reported a net loss of $495 million, or $1.06 per diluted share, for its third quarter, after recording a sizable goodwill write-down and losses on derivative contracts. Excluding these charges, Sallie Mae's profits were $189 million, or $0.35 per diluted share, in line with our estimates. We are leaving our fair value estimate unchanged. The firm completed a $2.6 billion private loan securitization during the quarter and used the proceeds to redeem more expensive debt. Credit quality continued to improve during the quarter, with delinquencies in the company's private loan portfolio declining from 11.9% to 11.1% of loans. Sallie Mae originated only $835 million in private loans during the quarter, compared with $893 million in the third quarter of 2009. The continuous decline in originations reinforces our belief that the company will struggle to replace interest-earning assets and fee-based income. |
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rffrydr
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| Posted: Thu Oct 14, 2010 12:49 pm Post subject: |
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Last days more like it:
It's Not too Late to Sell
By Jim Cramer
| Quote: | | What the heck were these for-profit schools doing, hanging in there for as long as they did? How could so many analysts be supportive of them? How could a legitimate outfit like Stifel Nicolaus been recommending Apollo Group? How could FBR have been saying it was worth holding? Few declines in earnings - and, therefore, stocks -- have been more telegraphed than the ones hitting Apollo after the withdrawal of its forecast, as well as ITT Educational. DeVry, Strayer and Capella -- now a capella? Hardly a day went by when important details from Washington didn't come out against these firms. Hardly a day went by without my friend Herb Greenberg telling the truth on CNBC about these companies and how threatened they were. And it wasn't just a FinReg or an Obamacare attack. It was out and out contention of their legitimacy and their ability... |
All part of the bubble....and the intricate dance between private and public goals.
_________________
Today is the Tomorrow you worried about Yesterday! |
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HenryTo
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| Posted: Mon Jan 04, 2010 6:27 pm Post subject: |
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Morningstar: "Student lenders' glory days are over"
http://news.morningstar.com/articlenet/article.aspx?id=321126
| Quote: | The Student Aid and Fiscal Responsibility Act, which was passed by the House of Representatives, would end private lenders' role in originating government-backed loans, leaving them to compete against each other and similar non-profit companies for future servicing rights. Lenders, on the other hand, are proposing long-term solutions along the lines of those enacted under the ECASLA legislation. Under these proposed solutions, lenders would still originate loans, with the government paying fees to the lenders for origination, and with the Department of Education providing long-term liquidity. In our opinion, the prospects for the proposals put forth by lenders are dim, though the behavior of Congress is difficult to predict. It seems to us that the most likely scenario is passage of a law that will result in all federally supported student loans being made through the Direct Loan program, leaving the lenders we cover with one less source of income.
Private Loans Not a Cure for the Industry's Ills
In recent years, private student loans became a larger portion of the business for lenders, as growth in the cost of education outpaced dollars available to students from the federal government. However, as with many other types of credit, lenders went overboard, especially with regard to loans to students at "non-traditional" schools—trade schools and other for-profit educational institutions. In the third quarter of 2009, charge-offs in Sallie Mae's "non-traditional" portfolio reached an annualized rate of 28.5% of loans in repayment. Lenders have tightened standards as a result, but we think students will also be more reluctant to borrow in the aftermath of the current recession.
As a result, while the rise in education costs does not appear set to slow down any time soon, we expect that future growth in the private loan market will be far less aggressive. Furthermore, funding for this type of loan will be harder to come by without a healthy market for securitizations. While private loans can be financed by deposits, capital requirements are fairly high. None of the student lenders we cover is currently a bank holding company, though Sallie Mae is rapidly growing its deposit base with brokered deposits obtained via its Utah industrial bank subsidiary. Finally, there is the risk of government interference in the private loan market. The tide of public opinion has turned against lenders, and high-rate loans to college students would be an obvious area for further reforms.
Overall, we're not enthusiastic on prospects for student lenders. For the most part, the factors that allowed lenders to achieve returns in excess of their costs of capital are gone, and we don't see many sources of long-term competitive advantage. We therefore would demand a sizable discount to fair value before investing in any of these companies. The plight of the student lenders, like that of Fannie Mae and Freddie Mac, aptly demonstrates the risk of investing in companies whose success depends on cooperative governments and healthy capital markets. |
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rffrydr
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rffrydr
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HenryTo
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| Posted: Sat Nov 08, 2008 2:46 am Post subject: |
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Education Department expands program to buy up more student loans in order to provide liquidity to the student loan market:
http://www.nytimes.com/2008/11/08/business/08loan.html
| Quote: | The lenders’ inability to sell loans hinders their ability to make new loans.
“If the lenders sold them, they could take the proceeds and presumably have the capital to lend out,” Tim Ranzetta, founder of Student Lending Analytics, an independent research firm. He said that some large lenders were carrying billions of dollars in loans made before 2008 on their balance sheet.
Sallie Mae and big banks like Citigroup and JPMorgan Chase, which make thousands of government-subsidized student loans each year, stand to benefit the most from the government’s program. But so will dozens of nonprofit student lenders that are caught in the same bind. The government’s action will not resolve all worries about student lending. Student loan borrowers this year are finding it more difficult to obtain private loans, which are not guaranteed by the government and which typically carry higher interest rates and less favorable repayment terms. |
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HenryTo
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HenryTo
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| Posted: Thu Apr 17, 2008 10:05 am Post subject: |
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Government intervention in the student loan market is now inevitable, as students are now starting to lock up loans for the Fall semester:
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Sallie Mae affirms outlook, warns of "train wreck"
Thursday April 17, 11:21 am ET
By Kevin Drawbaugh
WASHINGTON (Reuters) - Sallie Mae (NYSE:SLM - News), the largest U.S. student loan company, on Thursday affirmed its 2008 profit forecast, but warned of a "train wreck" in the $85 billion education financing market without urgent government intervention.
The company said it still expected "core" earnings of $1.70 to $1.80 a share for the year.
But Chief Executive Al Lord told analysts on a conference call: "We've been predicting something of a train wreck" in mid-2008 without prompt changes in a market hit by fallout from the subprime mortgage crisis and cuts last year in federal subsidies to student lenders.
As a result, Lord said Sallie Mae's new loans for the most part would lose money.
He said Sallie Mae was working with Congress and the Bush administration "to make solutions for lending viable ... The effort has been very pleasantly bipartisan to this point."
His remarks came hours ahead of an expected vote on the floor of the U.S. House of Representatives on a bill meant to help stabilize the student loan market, with legislation also pending in the Senate amid general White House support.
Millions of young people will begin this month to lock in their financing before heading to college in the autumn, raising concerns among officials about loan availability.
The legislation pending in Congress would let the Department of Education buy federally guaranteed student loans from lenders unable to sell them on the secondary market, where investors have retreated from securitized debt.
The bill would also let the department funnel capital to colleges through state guaranty agencies and call on federal financial institutions, including the Federal Financing Bank, to pump liquidity into the student loan market.
Sallie Mae posted a first-quarter net loss late on Wednesday. However, core earnings, which exclude changes in the value of derivatives and one-time items, were 48 cents a share, or 10 cents above the analysts' average forecast, according to Reuters Estimates.
The company's shares were up $1.29, or 7.9 percent, at $17.55 in morning New York Stock Exchange trade.
On the conference call, Lord said Sallie was being flooded with loan applications from students, reflecting the exit of dozens of other lenders from the business.
"Far more have left than have announced they've left," he said. "We're operating, as everyone is, in some fairly strange capital markets."
He said loan demand at Sallie was running at $3 billion a month, while the company has only been able to access funding of about $1 billion a month -- at record-setting costs.
Sallie Mae Chief Financial Officer Jack Remondi said on the call: "Although we are awaiting a potential resolution of this issue from Washington, I want to be perfectly clear. We will not do business that jeopardizes the company's liquidity position or franchise value."
Other major student lenders include Citigroup (NYSE:C - News), JPMorgan Chase (NYSE:JPM - News) and Bank of America (NYSE:BAC - News). |
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HenryTo
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rffrydr
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