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Sallie Mae Posts Loss, Misses Estimates

Sallie Mae, a student loan company that is suing banks and private equity firms that agreed to buy it, posted a third-quarter loss Thursday, reflecting losses from derivative and hedging activities.

Sallie Mae , known legally as SLM, said it lost $344 million, or $0.85 a share, compared with a profit of $263 million, or 60 cents a share, a year earlier.

On a pre-tax basis, losses on derivative and hedging activities were $487 million in the period, the company said in a statement.

Ignoring certain nonrecurring costs, such as those related to recent legislative changes and $18 million tied to its merger agreement, Sallie Mae said third quarter core income was $305 million, or 70 cents per share.

Analysts had, on average, expected quarterly earnings of 73 cents per share, according to Reuters Estimates.

The Reston, Va.-based company said the portfolio of student loans it manages rose 16.8 percent to $160 billion.

Sallie Mae said Monday it filed a lawsuit seeking a breakup fee of $900 million from a consortium led by J.C. Flowers & Co that had agreed to buy the student lender for $25 billion.

The consortium balked at the deal when debt markets weakened and legislation cut subsidies to student lenders.