Sallie Mae Second-Quarter Earnings up 33%

SLM (commonly known as Sallie Mae), the U.S.' largest student lender, said Tuesday that second-quarter earnings rose 33 percent on an increase in derivative and hedging activity.

The Reston, Va.-based SLM said it earned $966 million, or $1.06 per share, in the second quarter, compared to $724 million, or $1.52 per share, in same quarter last year.

Sallie Mae's core earnings, which exclude accounting treatments for securitizations and derivatives required under generally accepted accounting principles, stood at $189 million, or 43 cents per share, down from $320 million or 72 cents per share, last year.

The results include a provision for losses of $247 million and $51 million in expenses related to the company's previously announced acquisition.

A $25 billion buyout of Sallie Mae is at risk of falling through, because of pending legislation in Congress.

The company's core earnings net interest income was $635 million. Gains on derivative and hedging activities stood at $822 million, up from $123 million in the second quarter of 2006. Sallie Mae said the 2007 second-quarter results were reduced by $1.21 per share on the accounting for dilutive outstanding equity-forward contracts.