Yesterday the largest ABS student loan issuer Sallie Mae reported that, despite credit market dislocation in 3Q08, its core student loan businesses were profitable while its total managed student loan portfolio performed within expectations.

The firm’s managed student loan portfolio totaled $177.7 billion at Sept. 30, compared with $159.8 billion a year ago.

Meanwhile, private loan delinquencies rose in 3Q08 mostly because of seasonal factors as well as the U.S. economy's continued weakening, the student loan firm said in a release. Refleccting a more conservative outlook over this and the following year, Sallie Mae increased its provisions for loan losses.

For 3Q08, the firm's “core earnings” net income reached $117 million, or $.19 diluted earnings per share. It also reported had a 3Q08 GAAP net loss of $159 million, or $.40 diluted loss per share. This is compared with GAAP net loss of $344 million, or $.85 diluted loss per share, in 3Q07. The 3Q08 GAAP results include the net impact of a $201 million unrealized, mark-to-market, pre-tax loss on certain derivative contracts that are recognized in GAAP, but not in “core earnings,” results, according to Sallie Mae.

“In the midst of this extraordinary financial crisis, we helped 1.5 million students get the loans they needed to attend college this fall,” said Albert Lord, vice chairman and CEO. “Thanks to the actions earlier this year by Congress and the Administration, we have been able to meet our commitment to make federal loans available to every student at every school in the nation.”

The student loan company got $3.6 billion in funding advances from the U.S. Department of Education in 3Q08 under its new program to provide liquidity for new federal student loans.

Earlier in the quarter, Sallie Mae completed $6.7 billion in federal student loan term, asset-backed securitization transactions. In 3Q08, Sallie Mae reduced the commitments under ABCP facilities to $28 billion from $34 billion. According to a company release, Sallie Mae is confident in its ability to extend these facilities beyond their February 2009 maturity.

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