The Student Loan Marketing Association (Sallie Mae), the nation's largest single source of financing for insured student loans, reported profits of $30.4 million (59 cents a share) for the second quarter, a 26 percent increase over profits of $24.2 million (47 cents) for the previous year.

Net income for the first half was $59.3 million ($1.16), compared with $45.8 million (88 cents) for the first six months of 1984, the association said.

Sallie Mae attributed the high earnings performance to the pace of assets acquisition in the quarter. Loan asset acquisition -- including insured student loans purchased from originators and warehousing advance loans -- totaled $1 billion in the quarter for the first time, Sallie Mae said.

*Smithfield Foods Inc., the largest East Coast producer of ham, bacon, sausages and hot dogs, reversed a recent decline and reported that profits for its fiscal year increased by 42 percent.

Profits had slid 17 percent in the previous year.

Net income for the year ended April 28 was $3.5 million ($1.22 per share), compared with $2.4 million (86 cents) for the previous year. The company said net sales grew 24 percent from $541.6 million to $661.1 million, an increase attributed to sales from the company's recent acquisition of Patrick Cudahy, a Wisconsin pork processor.

*E. C. Ernst, a Lanham electrical construction contracting firm that has been bankrupt since 1978, continued its slow climb to solvency, reporting decreased losses for 1985.

The company said losses for the fiscal year ended March 31 amounted to $7.9 million, compared with $13.5 million for the previous year.

The losses came on revenue of $45.8 million, compared with revenue for the previous fiscal year of $50.9 million.

The company said it continued to suffer big losses in the first quarter of 1985 from labor overruns on certain contracts in New Orleans, Pittsburgh and Miami, but added that income from operations for the last nine months of the year were better than break-even.

Despite the improved performance, the company said it does not anticipate clearing its backlog and returning to profitable operations until it is able to emerge from Chapter 11 of the federal bankruptcy code.

The backlog was $19 million on March 31, compared with $44 million from the previous year, Ernst said.