Sallie Mae CEO sees loan losses peaking in 2009
NEW YORK -- Sallie Mae CEO Albert Lord said Wednesday he expects loan charge-offs at the student lending company to peak in 2009 and remain high next year.
Charge-offs are loans written off as not being repaid.
Like other lenders, Sallie Mae has seen an increase in loan losses as the economy has worsened and as more consumers are unable to repay debt.
Lord noted that most of the loan losses came from a group of non-traditioal loans that were originated between 2003 and 2007.
Lord, who heads the Reston, Va.-based company officially known as SLM Corp., made the comments at the Keefe, Bruyette & Woods Diversified Financial Services Conference in New York.
During the first quarter, Sallie Mae set aside $297 million for managed private education loan losses during amid mounting delinquencies, or late payments. Sallie Mae also charged off $202 million of private managed education loans, up from $159 million in the fourth quarter.
Private education loan originations fell to $1.5 billion from $2.5 billion in the year-ago quarter as lenders tightened underwriting standards. Private student loans are not backed by the government and carry higher interest rates.
However, Sallie Mae's originations of government-backed loans rose to a record $6.6 billion from $6 billion in the year-ago quarter.
Shares of Sallie Mae lost 33 cents, or 5.4 percent, to $5.83 in trading Wednesday