STAMFORD, Conn. -- The Student Loan Corporation (NYSE: STU) today reported net income of $101.8 million ($5.09 basic earnings per share) for the second quarter of 2006, an increase of $20.9 million (26%) compared to net income of $80.9 million ($4.05 basic earnings per share) for the same period of 2005. The increase in net income is primarily attributable to a gain on sale of $42.3 million (after tax) relating to the second quarter 2006 securitization of $2.2 billion in student loans, which was $13.0 million (after tax) higher than the second quarter 2005 securitization. In addition, other gains on loan sales were $8.1 million (after tax) higher than the second quarter 2005 while fee and other income increased $14.2 million (after tax) over the comparable 2005 period. These increases were partially offset by a $9.8 million (after tax) reduction in floor income compared to the same quarter of 2005.

During the twelve month period ending June 30, 2006, the Company's managed student loan portfolio grew by $2.6 billion (9%) to $32.1 billion. The managed portfolio includes $24.7 billion of Company owned loan assets, which decreased by $1.4 billion (5%) from June 30, 2005 as growth in loan disbursements and purchases only partially offset securitization activity. The 2006 second quarter disbursements were composed of FFELP Stafford and PLUS disbursements of $491 million, up $96 million (24%). The disbursements also included new CitiAssist Loan commitments of $162 million, up $22 million (16%) compared to the same period last year. Secondary market and other loan procurement activities contributed approximately $1,220 million of FFELP loans to the Company's student loan portfolio during the second quarter of 2006. Approximately 89% of this secondary market and other loan procurement volume was composed of FFELP Consolidation Loans.

The Company's total revenue of $206.7 million for the second quarter of 2006 was $43.3 million (27%) higher than the $163.3 million reported for the same period of 2005. This was mainly attributable to increased gains of $21.3 million (pretax) on securitized loans and to higher fee and other income, which increased by $23.2 million (pretax). The $23.2 million increase was primarily the result of $8.4 million in derivative revaluations, and lower impairment and valuation adjustments of $7.6 million over the comparable 2005 period. Net interest income of $109.9 million for the second quarter of 2006 was $14.4 million (12%) lower than for the same period of 2005. The net interest margin for the second quarter of 2006 was 1.70%, a decrease of 22 basis points from 1.92% for the same period of 2005. The decrease in net interest income and net interest margin was primarily attributable to a $16.0 million (pretax) decrease in floor income. Floor income is a non-GAAP financial measure that is described in more detail in the Company's 2005 Annual Report and Form 10-K.

The Company's total operating expense ratio (total operating expenses as a percentage of average managed student loans) for the second quarter of 2006 was 0.50%, six basis points lower than that of 2005. Total operating expenses of $40.4 million for the second quarter of 2006 were little changed from $40.3 million from the same period of 2005.

For the six months ended June 30, 2006 the Company earned $148.0 million ($7.40 basic earnings per share), an increase of $0.9 million (1%) from $147.0 million ($7.35 basic earnings per share) for the same period of 2005. The change is primarily attributable to an increase in gains on securitization and other loan sales, higher fee and other income partially offset by a reduction in year-over-year floor income.

The Company's provision for loan losses for the second quarter of 2006 was $5.3 million, $0.5 million higher than the provision for the same period of 2005. The increase is mainly the result of the Deficit Reduction Act, which imposes a 1% risk-sharing provision on claims filed after June 30, 2006 by servicers with the Exceptional Performer designation. The Exceptional Performer designation is granted by the Department of Education in recognition of an exceptional level of performance in servicing federally guaranteed student loans. See the Company's 2005 Annual Report and Form 10-K for further details.