Student loan giant Sallie Mae reported a 36% decline in first quarter earnings yesterday, to $112 million, even as it’s growing private loan business rose by 23%, to $1.2 billion.

The student loan giant, which is changing its focus to the private loan market, said both delinquencies and charge-offs declined for its private loans during the first quarter and it held $37 billion of private loans at March 31.

Sallie Mae, the largest provider of student loans for the secondary market, continued to buffetted by the troubles in the securitizations market, adding $131 million in unrealized “mark-to-market” losses on derivative contracts compared with the year-ago period.

Earnings for the company’s core federally guaranteed loans, which are being phased out, were $82 million in first-quarter 2012, down 25% for the first quarter of 2011. During the first-quarter 2012, the company acquired $906 million of federally guaranteed loans and held $136 billion of federally guaranteed student loans, down from $146 billion at March 31, 2011.

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