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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☑ QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
or
☐ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period
from
to
Commission File Number: 001-13251
SLM Corporation
(Exact name of registrant as specified in its charter)
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Delaware |
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52-2013874 |
(State or other jurisdiction of
incorporation or organization) |
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(I.R.S. Employer
Identification No.) |
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300 Continental Drive |
Newark, |
Delaware |
19713 |
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(Address of principal executive offices) |
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(Zip Code) |
(302) 451-0200
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed
since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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Common stock, par value $.20 per share |
SLM |
The NASDAQ Global Select Market |
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Floating Rate Non-Cumulative Preferred Stock, Series B, par value
$.20 per share |
SLMBP |
The NASDAQ Global Select Market |
Indicate by check mark whether the registrant: (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past
90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the
registrant was required to submit such
files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in
Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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Accelerated filer |
☐ |
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Non-accelerated filer |
☐ |
(Do not check if a smaller reporting company) |
Smaller reporting company |
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Emerging growth company |
☐ |
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange
Act). Yes ☐
No ☑
As of March 31, 2023, there were 242,249,757 shares of common
stock outstanding.
SLM CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
INDEX
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Part I. Financial Information |
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Item 1. |
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Item 1. |
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Item 2. |
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Item 3. |
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Item 4. |
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PART II. Other Information |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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CONSOLIDATED BALANCE SHEETS (Unaudited) |
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March 31, |
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December 31, |
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(Dollars in thousands, except share and per share
amounts) |
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2023 |
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2022 |
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Assets |
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Cash and cash equivalents |
|
$ |
3,716,379 |
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$ |
4,616,117 |
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Investments: |
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Trading investments at fair value (cost of $41,282 and $47,554,
respectively)
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51,342 |
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55,903 |
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Available-for-sale investments at fair value (cost of $2,487,749
and $2,554,332, respectively)
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2,311,062 |
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2,342,089 |
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Other investments |
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98,067 |
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94,716 |
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Total investments |
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2,460,471 |
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2,492,708 |
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Loans held for investment (net of allowance for losses of
$1,479,306 and $1,357,075, respectively)
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21,087,563 |
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19,626,868 |
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Loans held for sale |
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26,202 |
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29,448 |
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Restricted cash |
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181,764 |
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156,719 |
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Other interest-earning assets |
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13,031 |
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11,162 |
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Accrued interest receivable |
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1,331,017 |
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1,202,059 |
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Premises and equipment, net |
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137,890 |
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140,728 |
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Goodwill and acquired intangible assets, net |
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116,001 |
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118,273 |
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Income taxes receivable, net |
|
337,177 |
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380,058 |
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Tax indemnification receivable |
|
2,858 |
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2,816 |
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Other assets |
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43,548 |
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34,073 |
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Total assets |
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$ |
29,453,901 |
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$ |
28,811,029 |
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Liabilities |
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Deposits |
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$ |
21,803,666 |
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$ |
21,448,071 |
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Long-term borrowings |
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5,513,976 |
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5,235,114 |
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Other liabilities |
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309,164 |
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400,874 |
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Total liabilities |
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27,626,806 |
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27,084,059 |
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Commitments and contingencies |
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Equity |
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Preferred stock, par value $0.20 per share, 20 million shares
authorized:
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Series B: 2.5 million and 2.5 million shares issued, respectively,
at stated value of $100 per share
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251,070 |
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251,070 |
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Common stock, par value $0.20 per share, 1.125 billion shares
authorized: 437.6 million and 435.1 million shares issued,
respectively
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87,530 |
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87,025 |
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Additional paid-in capital |
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1,121,082 |
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1,109,072 |
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Accumulated other comprehensive loss (net of tax benefit of
($25,139) and ($30,160), respectively)
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(78,333) |
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(93,870) |
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Retained earnings |
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3,250,478 |
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3,163,640 |
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Total SLM Corporation stockholders’ equity before treasury
stock |
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4,631,827 |
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4,516,937 |
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Less: Common stock held in treasury at cost: 195.4 million and
194.4 million shares, respectively
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(2,804,732) |
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(2,789,967) |
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Total equity |
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1,827,095 |
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1,726,970 |
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Total liabilities and equity |
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$ |
29,453,901 |
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$ |
28,811,029 |
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See accompanying notes to consolidated financial
statements.
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CONSOLIDATED STATEMENTS OF INCOME (Unaudited) |
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(Dollars
in thousands, except per share amounts) |
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Three Months Ended
March 31, |
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2023 |
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2022 |
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Interest income: |
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Loans |
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$ |
582,784 |
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$ |
458,044 |
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Investments |
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11,331 |
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5,479 |
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Cash and cash equivalents |
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43,483 |
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1,515 |
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Total interest income |
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637,598 |
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465,038 |
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Interest expense: |
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Deposits |
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183,531 |
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49,537 |
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Interest expense on short-term borrowings |
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3,018 |
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2,875 |
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Interest expense on long-term borrowings |
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45,981 |
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37,594 |
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Total interest expense |
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232,530 |
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90,006 |
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Net interest income |
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405,068 |
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375,032 |
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Less: provisions for credit losses |
|
114,112 |
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98,050 |
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Net interest income after provisions for credit losses |
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290,956 |
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276,982 |
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Non-interest income: |
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Gains (losses) on sales of loans, net |
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(9) |
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9,881 |
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Gains (losses) on securities, net |
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1,711 |
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(3,580) |
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Gains (losses) on derivatives and hedging activities,
net |
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— |
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(5) |
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Other income |
|
20,009 |
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15,629 |
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Total non-interest income |
|
21,711 |
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|
21,925 |
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Non-interest expenses: |
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Operating expenses: |
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Compensation and benefits |
|
87,649 |
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71,981 |
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FDIC assessment fees |
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11,529 |
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5,684 |
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Other operating expenses |
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55,361 |
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54,341 |
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Total operating expenses |
|
154,539 |
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132,006 |
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Acquired intangible assets amortization expense |
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2,272 |
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|
733 |
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Total non-interest expenses |
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156,811 |
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132,739 |
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Income before income tax expense |
|
155,856 |
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|
166,168 |
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Income tax expense |
|
37,338 |
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37,356 |
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Net income |
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118,518 |
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|
128,812 |
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Preferred stock dividends |
|
4,063 |
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|
1,275 |
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Net income attributable to SLM Corporation common stock |
|
$ |
114,455 |
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$ |
127,537 |
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Basic earnings per common share |
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$ |
0.47 |
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$ |
0.46 |
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Average common shares outstanding |
|
241,497 |
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|
276,977 |
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Diluted earnings per common share |
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$ |
0.47 |
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$ |
0.45 |
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Average common and common equivalent shares outstanding |
|
243,549 |
|
|
280,654 |
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Declared dividends per common share |
|
$ |
0.11 |
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$ |
0.11 |
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See accompanying notes to consolidated financial
statements.
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited) |
(Dollars
in thousands) |
|
Three Months Ended
March 31, |
|
|
|
2023 |
|
2022 |
|
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Net income |
|
$ |
118,518 |
|
|
$ |
128,812 |
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Other comprehensive income (loss): |
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Unrealized gains (losses) on investments |
|
35,556 |
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|
(81,041) |
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Unrealized gains (losses) on cash flow hedges |
|
(14,999) |
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|
52,530 |
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Total unrealized gains (losses) |
|
20,557 |
|
|
(28,511) |
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Income tax (expense) benefit |
|
(5,020) |
|
|
6,894 |
|
|
|
|
|
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Other comprehensive income (loss), net of tax (expense)
benefit |
|
15,537 |
|
|
(21,617) |
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Total comprehensive income |
|
$ |
134,055 |
|
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$ |
107,195 |
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See accompanying notes to consolidated financial
statements.
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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited) |
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Common Stock Shares |
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(In thousands, except share and per share amounts) |
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Preferred Stock Shares |
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Issued |
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Treasury |
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Outstanding |
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Preferred Stock |
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Common Stock |
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Additional Paid-In Capital |
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Accumulated
Other
Comprehensive
Loss |
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Retained Earnings |
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Treasury Stock |
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Total Equity |
|
Balance at December 31, 2021 |
|
2,510,696 |
|
|
432,013,372 |
|
|
(153,056,639) |
|
|
278,956,733 |
|
|
$ |
251,070 |
|
|
$ |
86,403 |
|
|
$ |
1,074,384 |
|
|
$ |
(17,897) |
|
|
$ |
2,817,134 |
|
|
$ |
(2,061,383) |
|
|
$ |
2,149,711 |
|
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Net income |
|
— |
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|
— |
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|
— |
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— |
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|
— |
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|
— |
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|
— |
|
|
— |
|
|
128,812 |
|
|
— |
|
|
128,812 |
|
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Other comprehensive loss, net of tax |
|
— |
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|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(21,617) |
|
|
— |
|
|
— |
|
|
(21,617) |
|
|
Total comprehensive income |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
107,195 |
|
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Cash dividends declared: |
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Common stock ($0.11 per share)
|
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— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
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|
(30,493) |
|
|
— |
|
|
(30,493) |
|
|
Preferred Stock, Series B ($0.51 per share)
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,275) |
|
|
— |
|
|
(1,275) |
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|
|
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|
|
|
|
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|
Dividend equivalent units related to employee stock-based
compensation plans |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
618 |
|
|
— |
|
|
(634) |
|
|
— |
|
|
(16) |
|
|
Issuance of common shares |
|
— |
|
|
2,594,817 |
|
|
— |
|
|
2,594,817 |
|
|
— |
|
|
519 |
|
|
(71) |
|
|
— |
|
|
— |
|
|
— |
|
|
448 |
|
|
Stock-based compensation expense |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
11,921 |
|
|
— |
|
|
— |
|
|
— |
|
|
11,921 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock repurchased |
|
— |
|
|
— |
|
|
(9,533,392) |
|
|
(9,533,392) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(175,943) |
|
|
(175,943) |
|
|
Shares repurchased related to employee stock-based compensation
plans |
|
— |
|
|
— |
|
|
(934,602) |
|
|
(934,602) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(17,341) |
|
|
(17,341) |
|
|
Balance at March 31, 2022 |
|
2,510,696 |
|
|
434,608,189 |
|
|
(163,524,633) |
|
|
271,083,556 |
|
|
$ |
251,070 |
|
|
$ |
86,922 |
|
|
$ |
1,086,852 |
|
|
$ |
(39,514) |
|
|
$ |
2,913,544 |
|
|
$ |
(2,254,667) |
|
|
$ |
2,044,207 |
|
See accompanying notes to consolidated financial
statements.
|
|
|
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|
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|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands, except share and per share amounts) |
|
Preferred Stock Shares |
|
Issued |
|
Treasury |
|
Outstanding |
|
Preferred Stock |
|
Common Stock |
|
Additional Paid-In Capital |
|
Accumulated
Other
Comprehensive
Loss |
|
Retained Earnings |
|
Treasury Stock |
|
Total Equity |
|
Balance at December 31, 2022 |
|
2,510,696 |
|
|
435,121,140 |
|
|
(194,445,696) |
|
|
240,675,444 |
|
|
$ |
251,070 |
|
|
$ |
87,025 |
|
|
$ |
1,109,072 |
|
|
$ |
(93,870) |
|
|
$ |
3,163,640 |
|
|
$ |
(2,789,967) |
|
|
$ |
1,726,970 |
|
|
Net income |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
118,518 |
|
|
— |
|
|
118,518 |
|
|
Other comprehensive income, net of tax |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
15,537 |
|
|
— |
|
|
— |
|
|
15,537 |
|
|
Total comprehensive income |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
134,055 |
|
|
Cash dividends declared: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock ($0.11 per share)
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(26,635) |
|
|
— |
|
|
(26,635) |
|
|
Preferred Stock, Series B ($1.62 per share)
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(4,063) |
|
|
— |
|
|
(4,063) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares |
|
— |
|
|
2,523,744 |
|
|
— |
|
|
2,523,744 |
|
|
— |
|
|
505 |
|
|
474 |
|
|
— |
|
|
(982) |
|
|
— |
|
|
(3) |
|
|
Stock-based compensation expense |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
11,536 |
|
|
— |
|
|
— |
|
|
— |
|
|
11,536 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares repurchased related to employee stock-based compensation
plans |
|
— |
|
|
— |
|
|
(949,431) |
|
|
(949,431) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(14,765) |
|
|
(14,765) |
|
|
Balance at March 31, 2023 |
|
2,510,696 |
|
|
437,644,884 |
|
|
(195,395,127) |
|
|
242,249,757 |
|
|
$ |
251,070 |
|
|
$ |
87,530 |
|
|
$ |
1,121,082 |
|
|
$ |
(78,333) |
|
|
$ |
3,250,478 |
|
|
$ |
(2,804,732) |
|
|
$ |
1,827,095 |
|
See accompanying notes to consolidated financial
statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
(Dollars in thousands) |
|
2023 |
|
2022 |
|
Operating activities |
|
|
|
|
|
Net income |
|
$ |
118,518 |
|
|
$ |
128,812 |
|
|
Adjustments to reconcile net income to net cash provided by (used
in) operating activities: |
|
|
|
|
|
Provisions for credit losses |
|
114,112 |
|
|
98,050 |
|
|
Income tax expense |
|
37,338 |
|
|
37,356 |
|
|
Amortization of brokered deposit placement fee |
|
3,121 |
|
|
3,425 |
|
|
Amortization of Secured Borrowing Facility upfront fee |
|
723 |
|
|
569 |
|
|
Amortization of deferred loan origination costs and loan
premium/(discounts), net |
|
3,421 |
|
|
4,455 |
|
|
Net amortization of discount on investments |
|
(622) |
|
|
965 |
|
|
|
|
|
|
|
Increase in tax indemnification receivable |
|
(42) |
|
|
(108) |
|
|
Depreciation of premises and equipment |
|
4,524 |
|
|
4,189 |
|
|
Acquired intangible assets amortization expense |
|
2,272 |
|
|
733 |
|
|
Stock-based compensation expense |
|
11,536 |
|
|
11,921 |
|
|
Unrealized (gains) losses on derivatives and hedging activities,
net |
|
(56) |
|
|
315 |
|
|
(Gains) losses on sales of loans, net |
|
9 |
|
|
(9,881) |
|
|
(Gains) losses on securities, net |
|
(1,711) |
|
|
3,580 |
|
|
Acquisition transaction costs, net |
|
— |
|
|
2,511 |
|
|
Other adjustments to net income, net |
|
3,063 |
|
|
3,655 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
Increase in accrued interest receivable |
|
(257,888) |
|
|
(185,294) |
|
|
|
|
|
|
|
Increase in non-marketable securities |
|
— |
|
|
(992) |
|
|
(Increase) decrease in other interest-earning assets |
|
(1,869) |
|
|
328 |
|
|
|
|
|
|
|
Increase in other assets |
|
(26,632) |
|
|
(17,529) |
|
|
Increase (decrease) in income taxes payable, net |
|
2,483 |
|
|
(4,243) |
|
|
Increase in accrued interest payable |
|
20,358 |
|
|
14,779 |
|
|
|
|
|
|
|
Decrease in other liabilities |
|
(23,770) |
|
|
(34,808) |
|
|
Total adjustments |
|
(109,630) |
|
|
(66,024) |
|
|
Total net cash provided by operating activities |
|
8,888 |
|
|
62,788 |
|
|
Investing activities |
|
|
|
|
|
Loans acquired and originated |
|
(2,463,358) |
|
|
(2,215,958) |
|
|
Net proceeds from sales of loans held for investment |
|
(9) |
|
|
45,729 |
|
|
Proceeds from FFELP Loan claim payments |
|
11,274 |
|
|
5,594 |
|
|
Net decrease in loans held for investment (other than loans
acquired and originated, and loan sales) |
|
912,681 |
|
|
1,153,297 |
|
|
Purchases of available-for-sale securities |
|
(4,992) |
|
|
(536,633) |
|
|
Proceeds from sales and maturities of available-for-sale
securities |
|
73,352 |
|
|
686,806 |
|
|
Purchase of subsidiary, net of cash acquired |
|
— |
|
|
(127,702) |
|
|
Total net cash used in investing activities |
|
(1,471,052) |
|
|
(988,867) |
|
|
Financing activities |
|
|
|
|
|
|
|
|
|
|
Brokered deposit placement fee |
|
(2,634) |
|
|
(2,207) |
|
|
Net increase (decrease) in certificates of deposit |
|
515,909 |
|
|
(127,815) |
|
|
Net increase (decrease) in other deposits |
|
(167,836) |
|
|
543,767 |
|
|
|
|
|
|
|
Borrowings collateralized by loans in securitization trusts -
issued |
|
569,871 |
|
|
— |
|
|
Borrowings collateralized by loans in securitization trusts -
repaid |
|
(293,120) |
|
|
(381,005) |
|
|
Issuance costs for unsecured debt offering |
|
— |
|
|
(360) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees paid on Secured Borrowing Facility |
|
(16) |
|
|
— |
|
|
|
|
|
|
|
Common stock dividends paid |
|
(26,635) |
|
|
(30,493) |
|
|
Preferred stock dividends paid |
|
(4,063) |
|
|
(1,275) |
|
|
Common stock repurchased |
|
(4,005) |
|
|
(169,322) |
|
|
Total net cash provided by (used in) financing
activities |
|
587,471 |
|
|
(168,710) |
|
|
Net increase (decrease) in cash, cash equivalents and restricted
cash |
|
(874,693) |
|
|
(1,094,789) |
|
|
Cash, cash equivalents and restricted cash at beginning of
period |
|
4,772,836 |
|
|
4,545,344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash at end of
period |
|
$ |
3,898,143 |
|
|
$ |
3,450,555 |
|
|
Cash disbursements made for: |
|
|
|
|
|
Interest |
|
$ |
198,874 |
|
|
$ |
68,458 |
|
|
Income taxes paid |
|
$ |
4,700 |
|
|
$ |
5,066 |
|
|
Income taxes refunded |
|
$ |
(7,273) |
|
|
$ |
(916) |
|
|
Reconciliation of the Consolidated Statements of Cash Flows to the
Consolidated Balance Sheets: |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
3,716,379 |
|
|
$ |
3,262,595 |
|
|
Restricted cash |
|
181,764 |
|
|
187,960 |
|
|
Total cash, cash equivalents and restricted cash |
|
$ |
3,898,143 |
|
|
$ |
3,450,555 |
|
See accompanying notes to consolidated financial
statements.
1. Significant Accounting Policies
Basis of Presentation
The accompanying unaudited, consolidated financial statements of
SLM Corporation (“Sallie Mae,” “SLM,” the “Company,” “we,” or “us”)
have been prepared in accordance with generally accepted accounting
principles in the United States of America (“GAAP”) for interim
financial information. Accordingly, they do not include all the
information and footnotes required by GAAP for complete
consolidated financial statements. The consolidated financial
statements include the accounts of SLM Corporation and its
majority-owned and controlled subsidiaries after eliminating the
effects of intercompany accounts and transactions. In the opinion
of management, all adjustments considered necessary for a fair
statement of the results for the interim periods have been
included. The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions
that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from
those estimates. Operating results for the three months ended
March 31, 2023 are not necessarily indicative of the results
for the year ending December 31, 2023 or for any other period.
These unaudited financial statements should be read in conjunction
with the audited financial statements and related notes included in
our Annual Report on Form 10-K for the year ended
December 31, 2022 (the “2022 Form 10-K”).
Consolidation
The consolidated financial statements include the accounts of the
Company and its majority-owned and controlled subsidiaries after
eliminating the effects of intercompany accounts and
transactions.
We consolidate any variable interest entity (“VIE”) where we have
determined we are the primary beneficiary. The primary beneficiary
is the entity which has both: (i) the power to direct the
activities of the VIE that most significantly impact the VIE’s
economic performance; and (ii) the obligation to absorb losses or
receive benefits of the entity that could potentially be
significant to the VIE.
2. Investments
Trading Investments
We periodically sell Private Education Loans through securitization
transactions where we are required to retain a five percent
vertical risk retention interest (i.e., five percent of each class
issued in the securitizations). We classify those vertical risk
retention interests related to the transactions as
available-for-sale investments, except for the interest in the
residual classes, which we classify as trading investments recorded
at fair value with changes recorded through earnings.
At December 31, 2022 we had a $5 million investment in a
convertible debt security classified as a trading investment. In
March 2023, this security, and the related accrued interest, was
converted into equity securities classified as investments in
non-marketable securities.
At March 31, 2023 and December 31, 2022, we had
$51 million and $56 million, respectively, classified as
trading investments.
Available-for-Sale Investments
The amortized cost and fair value of securities available for sale
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2023
(dollars in thousands) |
|
Amortized Cost |
|
Allowance for credit losses(1)
|
|
Gross Unrealized Gains |
|
Gross Unrealized Losses |
|
Estimated Fair Value |
|
Available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities |
|
$ |
387,158 |
|
|
$ |
— |
|
|
$ |
62 |
|
|
$ |
(61,886) |
|
|
$ |
325,334 |
|
|
Utah Housing Corporation bonds |
|
3,460 |
|
|
— |
|
|
— |
|
|
(294) |
|
|
3,166 |
|
|
U.S. government-sponsored enterprises and Treasuries |
|
1,758,032 |
|
|
— |
|
|
— |
|
|
(92,548) |
|
|
1,665,484 |
|
|
Other securities |
|
339,099 |
|
|
— |
|
|
334 |
|
|
(22,355) |
|
|
317,078 |
|
|
Total |
|
$ |
2,487,749 |
|
|
$ |
— |
|
|
$ |
396 |
|
|
$ |
(177,083) |
|
|
$ |
2,311,062 |
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2022
(dollars in thousands |
|
Amortized Cost |
|
Allowance for credit losses(1)
|
|
Gross Unrealized Gains |
|
Gross Unrealized Losses |
|
Estimated Fair Value |
|
Available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities |
|
$ |
389,067 |
|
|
$ |
— |
|
|
$ |
2 |
|
|
$ |
(68,705) |
|
|
$ |
320,364 |
|
|
Utah Housing Corporation bonds |
|
3,584 |
|
|
— |
|
|
— |
|
|
(357) |
|
|
3,227 |
|
|
U.S. government-sponsored enterprises and Treasuries |
|
1,804,726 |
|
|
— |
|
|
— |
|
|
(115,416) |
|
|
1,689,310 |
|
|
Other securities |
|
356,955 |
|
|
— |
|
|
33 |
|
|
(27,800) |
|
|
329,188 |
|
|
Total |
|
$ |
2,554,332 |
|
|
$ |
— |
|
|
$ |
35 |
|
|
$ |
(212,278) |
|
|
$ |
2,342,089 |
|
(1)
Represents the amount of impairment that has resulted from
credit-related factors and that was recognized in the consolidated
balance sheets (as a credit loss expense on available-for-sale
securities). The amount excludes unrealized losses related to
non-credit factors.
|
|
|
|
|
|
|
|
|
|
2. |
Investments (Continued) |
|
The following table summarizes the amount of gross unrealized
losses for our available-for-sale securities and the estimated fair
value for securities having gross unrealized loss positions,
categorized by length of time the securities have been in an
unrealized loss position:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars
in thousands) |
|
Less than 12 months |
|
12 months or more |
|
Total |
|
Gross
Unrealized
Losses |
|
Estimated
Fair Value |
|
Gross
Unrealized
Losses |
|
Estimated
Fair Value |
|
Gross
Unrealized
Losses |
|
Estimated
Fair Value |
|
As of March 31, 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities |
|
$ |
(1,138) |
|
|
$ |
22,201 |
|
|
$ |
(60,748) |
|
|
$ |
297,543 |
|
|
$ |
(61,886) |
|
|
$ |
319,744 |
|
|
Utah Housing Corporation bonds |
|
— |
|
|
— |
|
|
(294) |
|
|
3,166 |
|
|
(294) |
|
|
3,166 |
|
|
U.S. government-sponsored enterprises and Treasuries |
|
(4,463) |
|
|
193,623 |
|
|
(88,085) |
|
|
1,471,861 |
|
|
(92,548) |
|
|
1,665,484 |
|
|
Other securities |
|
(8,451) |
|
|
156,624 |
|
|
(13,904) |
|
|
128,538 |
|
|
(22,355) |
|
|
285,162 |
|
|
Total |
|
$ |
(14,052) |
|
|
$ |
372,448 |
|
|
$ |
(163,031) |
|
|
$ |
1,901,108 |
|
|
$ |
(177,083) |
|
|
$ |
2,273,556 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities |
|
$ |
(13,956) |
|
|
$ |
99,598 |
|
|
$ |
(54,749) |
|
|
$ |
220,576 |
|
|
$ |
(68,705) |
|
|
$ |
320,174 |
|
|
Utah Housing Corporation bonds |
|
(357) |
|
|
3,227 |
|
|
— |
|
|
— |
|
|
(357) |
|
|
3,227 |
|
|
U.S. government-sponsored enterprises and Treasuries |
|
(28,128) |
|
|
689,300 |
|
|
(87,288) |
|
|
1,000,010 |
|
|
(115,416) |
|
|
1,689,310 |
|
|
Other securities |
|
(15,852) |
|
|
232,546 |
|
|
(11,948) |
|
|
92,883 |
|
|
(27,800) |
|
|
325,429 |
|
|
Total |
|
$ |
(58,293) |
|
|
$ |
1,024,671 |
|
|
$ |
(153,985) |
|
|
$ |
1,313,469 |
|
|
$ |
(212,278) |
|
|
$ |
2,338,140 |
|
At March 31, 2023 and December 31, 2022, 182 of 193 and
191 of 194, respectively, of our available-for-sale securities were
in an unrealized loss position.
Impairment
For available-for-sale securities in an unrealized loss position,
we first assess whether we intend to sell, or it is more likely
than not that we will be required to sell, the security before
recovery of its amortized cost basis. If either of these criteria
is met, the security’s amortized cost basis is written down to fair
value through net income. For securities in an unrealized loss
position that do not meet these criteria, we evaluate whether the
decline in fair value has resulted from credit loss or other
factors. In making this assessment, we consider the extent to which
fair value is less than amortized cost, any changes to the rating
of the security by a rating agency, adverse conditions specifically
related to the security, as well as any guarantees (e.g.,
guarantees by the U.S. Government) that may be applicable to the
security. If this assessment indicates a credit loss exists, the
credit-related portion of the loss is recorded as an allowance for
losses on the security.
Our investment portfolio contains mortgage-backed securities issued
by Ginnie Mae, Fannie Mae, and Freddie Mac, as well as Utah Housing
Corporation bonds. We own these securities to meet our requirements
under the Community Reinvestment Act (“CRA”). We also invest in
other U.S. government-sponsored enterprise securities issued by the
Federal Home Loan Bank, Freddie Mac, and the Federal Farm Credit
Bank. Our mortgage-backed securities that were issued under Ginnie
Mae programs carry a full faith and credit guarantee from the U.S.
Government. The remaining mortgage-backed securities in a net loss
position carry a principal and interest guarantee by Fannie Mae or
Freddie Mac, respectively. Our Treasury and other U.S.
government-sponsored enterprise bonds are rated Aaa by Moody’s
Investors Service or AA+ by Standard and Poor’s. The decline in
value from December 31, 2022 to March 31, 2023 was driven
by the current interest rate environment and is not credit related.
We have the intent and ability to hold these bonds for a period of
time sufficient for the market price to recover to at least the
adjusted amortized cost of the security. Based on this qualitative
analysis, we have determined that no credit impairment
exists.
We periodically sell Private Education Loans through securitization
transactions where we are required to retain a five percent
vertical risk retention interest. We classify the non-residual
vertical risk retention interests as available-for-sale
investments. We have the intent and ability to hold each of these
bonds for a period of time sufficient for the market price to
recover to at least the adjusted amortized cost of the security. We
expect to receive all contractual cash flows related to these
investments and do not consider a credit impairment to
exist.
|
|
|
|
|
|
|
|
|
|
2. |
Investments (Continued) |
|
As of March 31, 2023, the amortized cost and fair value of
securities, by contractual maturities, are summarized below.
Contractual maturities versus actual maturities may differ due to
the effect of prepayments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2023
Year of Maturity
(dollars in thousands)
|
|
Amortized Cost |
|
Estimated Fair Value |
|
2023 |
|
$ |
114,993 |
|
|
$ |
113,061 |
|
|
2024 |
|
698,346 |
|
|
670,601 |
|
|
2025 |
|
298,066 |
|
|
286,613 |
|
|
2026 |
|
548,319 |
|
|
499,306 |
|
|
2027 |
|
98,309 |
|
|
95,902 |
|
|
2038 |
|
71 |
|
|
73 |
|
|
2039 |
|
718 |
|
|
719 |
|
|
2042 |
|
2,528 |
|
|
2,227 |
|
|
2043 |
|
4,434 |
|
|
4,055 |
|
|
2044 |
|
5,412 |
|
|
5,057 |
|
|
2045 |
|
5,443 |
|
|
4,940 |
|
|
2046 |
|
7,963 |
|
|
7,165 |
|
|
2047 |
|
8,386 |
|
|
7,586 |
|
|
2048 |
|
2,056 |
|
|
2,001 |
|
|
2049 |
|
16,374 |
|
|
14,836 |
|
|
2050 |
|
114,601 |
|
|
93,786 |
|
|
2051 |
|
161,035 |
|
|
130,855 |
|
|
2052 |
|
56,605 |
|
|
50,153 |
|
|
2053 |
|
109,892 |
|
|
100,141 |
|
|
2054 |
|
83,670 |
|
|
75,428 |
|
|
2055 |
|
98,051 |
|
|
94,030 |
|
|
2058 |
|
52,477 |
|
|
52,527 |
|
|
Total |
|
$ |
2,487,749 |
|
|
$ |
2,311,062 |
|
Some of the mortgage-backed securities and a portion of the
government securities have been pledged to the Federal Reserve Bank
(the “FRB”) as collateral against any advances and accrued interest
under the Primary Credit lending program sponsored by the FRB. We
had $530 million and $547 million par value of securities pledged
to this borrowing facility at March 31, 2023 and
December 31, 2022, respectively, as discussed further in Notes
to Consolidated Financial Statements, Note 9, “Borrowings” in this
Form 10-Q.
Other Investments
Investments in Non-Marketable Securities
We hold investments in non-marketable securities and account for
these investments at cost, less impairment, plus or minus
observable price changes of identical or similar securities of the
same issuer. Changes in market value are recorded through earnings.
Because these are non-marketable securities, we use observable
price changes of identical or similar securities of the same
issuer, or when observable prices are not available, use market
data of similar entities, in determining any changes in the value
of the securities. In March 2023 our $5 million investment in
a convertible debt security, classified as a trading investment,
and the related accrued interest were converted into a equity
securities and were reclassified to investments in non-marketable
securities. As of March 31, 2023, and December 31, 2022,
our total investment in these securities was $14 million and
$8 million, respectively.
Low Income Housing Tax Credit Investments
We invest in affordable housing projects that qualify for the
low-income housing tax credit (“LIHTC”), which is designed to
promote private development of low-income housing. These
investments generate a return mostly through
|
|
|
|
|
|
|
|
|
|
2. |
Investments (Continued) |
|
realization of federal tax credits and tax benefits from net
operating losses on the underlying properties. Total carrying value
of the LIHTC investments was $78 million at March 31, 2023 and
$80 million at December 31, 2022. We are periodically required
to provide additional financial support during the investment
period. Our liability for these unfunded commitments was
$40 million at March 31, 2023 and $46 million at
December 31, 2022.
Related to these investments, we recognized tax credits and other
tax benefits through tax expense of less than $1 million at
March 31, 2023 and $9 million at December 31, 2022. Tax
credits and other tax benefits are recognized as part of our annual
effective tax rate used to determine tax expense in a given
quarter. Accordingly, the portion of a year’s expected tax benefits
recognized in any given quarter may differ from 25
percent.
3. Loans Held for Investment
Loans held for investment consist of Private Education Loans, FFELP
Loans, and Credit Cards. We use “Private Education Loans” to mean
education loans to students or their families that are not made,
insured, or guaranteed by any state or federal government. Private
Education Loans do not include loans insured or guaranteed under
the previously existing Federal Family Education Loan Program
(“FFELP”). We use “Credit Cards” to refer to our suite of Credit
Cards with bonus rewards. At September 30, 2022, we transferred our
Credit Card portfolio to loans held for sale because we plan to
sell our Credit Card portfolio. For additional information, see
Notes to Consolidated Financial Statements, Note 4, “Loans Held for
Sale” in this Form 10-Q.
Our Private Education Loans are made largely to bridge the gap
between the cost of higher education and the amount funded through
financial aid, government loans, and customers’ resources. Private
Education Loans bear the full credit risk of the customer. We
manage this risk through risk-performance underwriting strategies
and qualified cosigners. Private Education Loans may be fixed-rate
or may carry a variable interest rate indexed to LIBOR, the London
interbank offered rate, or SOFR, the Secured Overnight Financing
Rate. As of March 31, 2023 and December 31, 2022,
42 percent
and 45 percent, respectively, of all of our Private Education Loans
were indexed to LIBOR or SOFR. We provide incentives for customers
to include a cosigner on the loan, and the vast majority of Private
Education Loans in our portfolio are cosigned. We also encourage
customers to make payments while in school.
FFELP Loans are insured as to their principal and accrued interest
in the event of default, subject to a risk-sharing level based on
the date of loan disbursement. These insurance obligations are
supported by contractual rights against the United States. For
loans disbursed on or after July 1, 2006, we receive 97 percent
reimbursement on all qualifying claims. For loans disbursed after
October 1, 1993, and before July 1, 2006, we receive 98 percent
reimbursement on all qualifying claims. For loans disbursed prior
to October 1, 1993, we receive 100 percent reimbursement on all
qualifying claims.
In the first quarter of 2022, we recognized $10 million in
gains from the sale of approximately $95 million of our
Private Education Loans, including $89 million of principal
and $6 million in capitalized interest, to an unaffiliated
third party. There were VIEs created in the execution of certain of
these loan sales; however, based on our consolidation analysis, we
are not the primary beneficiary of these VIEs. These transactions
qualified for sale treatment and removed the balance of the loans
from our balance sheet on the respective settlement dates. We
remained the servicer of these loans pursuant to applicable
servicing agreements executed in connection with the sales. For
additional information, see Notes to Consolidated Financial
Statements, Note 9, “Borrowings - Unconsolidated VIEs” in this Form
10-Q. There were no loan sales in the first quarter of
2023.
|
|
|
|
|
|
|
|
|
|
3. |
Loans Held for Investment (Continued) |
|
Loans held for investment are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
(Dollars in thousands) |
|
2023 |
|
2022 |
|
Private Education Loans: |
|
|
|
|
|
Fixed-rate |
|
$ |
12,726,875 |
|
|
$ |
11,108,079 |
|
|
Variable-rate |
|
9,171,128 |
|
|
9,195,609 |
|
|
Total Private Education Loans, gross |
|
21,898,003 |
|
|
20,303,688 |
|
|
Deferred origination costs and unamortized
premium/(discount) |
|
75,051 |
|
|
69,656 |
|
|
Allowance for credit losses |
|
(1,475,379) |
|
|
(1,353,631) |
|
|
Total Private Education Loans, net |
|
20,497,675 |
|
|
19,019,713 |
|
|
|
|
|
|
|
|
FFELP Loans |
|
592,318 |
|
|
609,050 |
|
|
Deferred origination costs and unamortized
premium/(discount) |
|
1,497 |
|
|
1,549 |
|
|
Allowance for credit losses |
|
(3,927) |
|
|
(3,444) |
|
|
Total FFELP Loans, net |
|
589,888 |
|
|
607,155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for investment, net |
|
$ |
21,087,563 |
|
|
$ |
19,626,868 |
|
The estimated weighted average life of education loans in our
portfolio was approximately 5.0 years and 5.0 years at
March 31, 2023 and December 31, 2022,
respectively.
The average balance (net of unamortized premium/(discount)) and the
respective weighted average interest rates of loans held for
investment in our portfolio are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
Three Months Ended March 31,
(dollars in thousands) |
|
Average Balance |
|
Weighted Average Interest Rate |
|
Average Balance |
|
Weighted Average Interest Rate |
|
Private Education Loans |
|
$ |
21,755,202 |
|
|
10.66 |
% |
|
$ |
21,858,270 |
|
|
8.38 |
% |
|
FFELP Loans |
|
602,072 |
|
|
6.87 |
|
|
690,540 |
|
|
3.51 |
|
|
Credit Cards(1)
|
|
— |
|
|
— |
|
|
26,622 |
|
|
3.95 |
|
|
Total portfolio |
|
$ |
22,357,274 |
|
|
|
|
$ |
22,575,432 |
|
|
|
(1) Credit Card loans were transferred to loans held for sale at
September 30, 2022.
4. Loans Held for Sale
We had $26 million in loans held for sale at March 31, 2023
and $29 million in loans held for sale at December 31, 2022. The
balance at both March 31, 2023 and December 31, 2022 was comprised
of our Credit Card loan portfolio. At September 30, 2022, we
reversed $2.4 million through the provisions for credit losses
for the allowance related to these loans, when the loans were
transferred to held for sale. At September 30, 2022, we wrote down
this loan portfolio to its estimated fair value through a
charge-off to the allowance for credit losses of
$1.5 million.
5. Allowance for Credit Losses
Our provision for credit losses represents the periodic expense of
maintaining an allowance sufficient to absorb lifetime expected
credit losses in the held for investment loan portfolios. The
evaluation of the allowance for credit losses is inherently
subjective, as it requires material estimates that may be
susceptible to significant changes. We believe the allowance for
credit losses is appropriate to cover lifetime losses expected to
be incurred in the loan portfolios. See Notes to Consolidated
Financial Statements, Note 2, “Significant Accounting Policies —
Allowance for Credit Losses — Allowance for Private Education Loan
Losses, — Allowance for FFELP Loan Losses” in our 2022 Form 10-K
for a more detailed discussion.
|
|
|
|
|
|
|
|
|
|
5. |
Allowance for Credit Losses (Continued) |
|
Allowance for Credit Losses Metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2023
(dollars in thousands) |
|
FFELP
Loans |
|
Private Education
Loans |
|
Credit Cards |
|
Total |
|
Allowance for Credit Losses |
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
3,444 |
|
|
$ |
1,353,631 |
|
|
$ |
— |
|
|
$ |
1,357,075 |
|
|
Transfer from unfunded commitment liability(1)
|
|
— |
|
|
148,513 |
|
|
— |
|
|
148,513 |
|
|
Provisions: |
|
|
|
|
|
|
|
|
|
Provision for current period |
|
739 |
|
|
56,334 |
|
|
730 |
|
|
57,803 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total provisions(2)
|
|
739 |
|
|
56,334 |
|
|
730 |
|
|
57,803 |
|
|
Net charge-offs: |
|
|
|
|
|
|
|
|
|
Charge-offs |
|
(256) |
|
|
(95,085) |
|
|
(741) |
|
|
(96,082) |
|
|
Recoveries |
|
— |
|
|
11,986 |
|
|
11 |
|
|
11,997 |
|
|
Net charge-offs |
|
(256) |
|
|
(83,099) |
|
|
(730) |
|
|
(84,085) |
|
|
|
|
|
|
|
|
|
|
|
Ending Balance |
|
$ |
3,927 |
|
|
$ |
1,475,379 |
|
|
$ |
— |
|
|
$ |
1,479,306 |
|
|
Allowance(3):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: collectively evaluated for impairment |
|
$ |
3,927 |
|
|
$ |
1,475,379 |
|
|
$ |
— |
|
|
$ |
1,479,306 |
|
|
Loans(3):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: collectively evaluated for impairment |
|
$ |
592,318 |
|
|
$ |
21,898,003 |
|
|
$ |
— |
|
|
$ |
22,490,321 |
|
|
Accrued interest to be capitalized(3):
|
|
|
|
|
|
|
|
|
|
Ending balance: collectively evaluated for impairment |
|
$ |
— |
|
|
$ |
1,150,802 |
|
|
$ |
— |
|
|
$ |
1,150,802 |
|
|
Net charge-offs as a percentage of average loans in repayment
(annualized)(4)
|
|
0.23 |
% |
|
2.11 |
% |
|
— |
% |
|
|
|
Allowance as a percentage of the ending total loan balance and
accrued interest to be capitalized(5)
|
|
0.66 |
% |
|
6.40 |
% |
|
— |
% |
|
|
|
Allowance as a percentage of the ending loans in repayment and
accrued interest to be capitalized on loans in
repayment(4)(5)
|
|
0.88 |
% |
|
9.00 |
% |
|
— |
% |
|
|
|
Allowance coverage of net charge-offs (annualized) |
|
3.83 |
|
|
4.44 |
|
|
— |
|
|
|
|
Ending total loans, gross |
|
$ |
592,318 |
|
|
$ |
21,898,003 |
|
|
$ |
— |
|
|
|
|
Average loans in repayment(4)
|
|
$ |
451,451 |
|
|
$ |
15,764,143 |
|
|
$ |
— |
|
|
|
|
Ending loans in repayment(4)
|
|
$ |
446,214 |
|
|
$ |
15,990,459 |
|
|
$ |
— |
|
|
|
|
Accrued interest to be capitalized on loans in
repayment(6)
|
|
$ |
— |
|
|
$ |
408,263 |
|
|
$ |
— |
|
|
|
(1)
See Note 6, “Unfunded Loan Commitments,” for a summary of the
activity in the allowance for and balance of unfunded loan
commitments, respectively.
(2)
Below is a reconciliation of the provisions for credit losses
reported in the consolidated statements of income. When a new loan
commitment is made, we record the CECL allowance as a liability for
unfunded loan commitments by recording a provision for credit
losses. When the loan is funded, we transfer that liability to the
allowance for credit losses.
|
|
|
|
|
|
|
|
|
Consolidated Statements of Income
Provisions for Credit Losses Reconciliation |
|
Three Months Ended March 31, 2023 (dollars in
thousands) |
|
Private Education Loan provisions for credit losses: |
|
|
|
Provisions for loan losses |
|
$ |
56,334 |
|
|
Provisions for unfunded loan commitments |
|
56,309 |
|
|
Total Private Education Loan provisions for credit
losses |
|
112,643 |
|
|
Other impacts to the provisions for credit losses: |
|
|
|
FFELP Loans |
|
739 |
|
|
Credit Cards |
|
730 |
|
|
Total |
|
1,469 |
|
|
Provisions for credit losses reported in consolidated statements of
income |
|
$ |
114,112 |
|
(3)
For the three months ended March 31, 2023, there were no allowance
for credit losses, loans, or accrued interest to be capitalized
balances that were individually evaluated for
impairment.
(4)
Loans in repayment include loans on which borrowers are making
interest only or fixed payments, as well as loans that have entered
full principal and interest repayment status after any applicable
grace period (but, for purposes of the table, do not include those
loans while they are in forbearance).
(5)
Accrued interest to be capitalized on Private Education Loans
only.
(6)
Accrued interest to be capitalized on loans in repayment includes
interest on loans that are in repayment but have not yet entered
into full principal and interest repayment status after any
applicable grace period (but, for purposes of the table, does not
include the interest on those loans while they are in
forbearance).
|
|
|
|
|
|
|
|
|
|
5. |
Allowance for Credit Losses (Continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2022
(dollars in thousands) |
|
FFELP
Loans |
|
Private
Education
Loans |
|
Credit Cards |
|
Total |
|
Allowance for Credit Losses |
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
4,077 |
|
|
$ |
1,158,977 |
|
|
$ |
2,281 |
|
|
$ |
1,165,335 |
|
|
Transfer from unfunded commitment liability(1)
|
|
— |
|
|
94,686 |
|
|
— |
|
|
94,686 |
|
|
Provisions: |
|
|
|
|
|
|
|
|
|
Provision for current period |
|
21 |
|
|
48,460 |
|
|
137 |
|
|
48,618 |
|
|
Loan sale reduction to provision |
|
— |
|
|
(5,247) |
|
|
— |
|
|
(5,247) |
|
|
|
|
|
|
|
|
|
|
|
Total provisions(2)
|
|
21 |
|
|
43,213 |
|
|
137 |
|
|
43,371 |
|
|
Net charge-offs: |
|
|
|
|
|
|
|
|
|
Charge-offs |
|
(99) |
|
|
(83,856) |
|
|
(111) |
|
|
(84,066) |
|
|
Recoveries |
|
— |
|
|
8,033 |
|
|
3 |
|
|
8,036 |
|
|
Net charge-offs |
|
(99) |
|
|
(75,823) |
|
|
(108) |
|
|
(76,030) |
|
|
|
|
|
|
|
|
|
|
|
Ending Balance |
|
$ |
3,999 |
|
|
$ |
1,221,053 |
|
|
$ |
2,310 |
|
|
$ |
1,227,362 |
|
|
Allowance(3):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: collectively evaluated for impairment |
|
$ |
3,999 |
|
|
$ |
1,221,053 |
|
|
$ |
2,310 |
|
|
$ |
1,227,362 |
|
|
Loans(3):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance: collectively evaluated for impairment |
|
$ |
682,273 |
|
|
$ |
21,735,369 |
|
|
$ |
27,547 |
|
|
$ |
22,445,189 |
|
|
Accrued interest to be capitalized(3):
|
|
|
|
|
|
|
|
|
|
Ending balance: collectively evaluated for impairment |
|
$ |
— |
|
|
$ |
993,698 |
|
|
$ |
— |
|
|
$ |
993,698 |
|
|
Net charge-offs as a percentage of average loans in repayment
(annualized)(4)
|
|
0.07 |
% |
|
1.89 |
% |
|
1.63 |
% |
|
|
|
Allowance as a percentage of the ending total loan balance and
accrued interest to be capitalized(5)
|
|
0.59 |
% |
|
5.37 |
% |
|
8.39 |
% |
|
|
|
Allowance as a percentage of the ending loans in repayment and
accrued interest to be capitalized on loans in
repayment(4)(5)
|
|
0.75 |
% |
|
7.43 |
% |
|
8.39 |
% |
|
|
|
Allowance coverage of net charge-offs (annualized) |
|
10.10 |
|
|
4.03 |
|
|
5.35 |
|
|
|
|
Ending total loans, gross |
|
$ |
682,273 |
|
|
$ |
21,735,369 |
|
|
$ |
27,547 |
|
|
|
|
Average loans in repayment(4)
|
|
$ |
543,303 |
|
|
$ |
16,013,289 |
|
|
$ |
26,551 |
|
|
|
|
Ending loans in repayment(4)
|
|
$ |
535,080 |
|
|
$ |
16,095,157 |
|
|
$ |
27,547 |
|
|
|
|
Accrued interest to be capitalized on loans in
repayment(6)
|
|
$ |
— |
|
|
$ |
331,405 |
|
|
$ |
— |
|
|
|
(1)
See Note 6, “Unfunded Loan Commitments,” for a summary of the
activity in the allowance for and balance of unfunded loan
commitments, respectively.
(2)
Below is a reconciliation of the provisions for credit losses
reported in the consolidated statements of income. When a new loan
commitment is made, we record the CECL allowance as a liability for
unfunded loan commitments by recording a provision for credit
losses. When the loan is funded, we transfer that liability to the
allowance for credit losses.
|
|
|
|
|
|
|
|
|
Consolidated Statements of Income
Provisions for Credit Losses Reconciliation |
|
Three Months Ended March 31, 2022 (dollars in
thousands) |
|
Private Education Loan provisions for credit losses: |
|
|
|
Provisions for loan losses |
|
$ |
43,213 |
|
|
Provisions for unfunded loan commitments |
|
54,679 |
|
|
Total Private Education Loan provisions for credit
losses |
|
97,892 |
|
|
Other impacts to the provisions for credit losses: |
|
|
|
FFELP Loans |
|
21 |
|
|
Credit Cards |
|
137 |
|
|
Total |
|
158 |
|
|
Provisions for credit losses reported in consolidated statements of
income |
|
$ |
98,050 |
|
(3)
For the three months ended March 31, 2022, there were no allowance
for credit losses, loans, or accrued interest to be capitalized
balances that were individually evaluated for
impairment.
(4)
Loans in repayment include loans on which borrowers are making
interest only or fixed payments, as well as loans that have entered
full principal and interest repayment status after any applicable
grace period (but, for purposes of the table, do not include those
loans while they are in forbearance).
(5)
Accrued interest to be capitalized on Private Education Loans
only.
(6)
Accrued interest to be capitalized on loans in repayment includes
interest on loans that are in repayment but have not yet entered
into full principal and interest repayment status after any
applicable grace period (but, for purposes of the table, does not
include the interest on those loans while they are in
forbearance).
|
|
|
|
|
|
|
|
|
|
5. |
Allowance for Credit Losses (Continued) |
|
Allowance for Credit Losses - Forecast Assumptions
In the fourth quarter of 2022, we changed our loss model to include
forecasts of college graduate unemployment, home price index, and
median family income in determining the adequacy of the allowance
for credit losses. Prior to this change, we used forecasts of
college graduate unemployment and the Consumer Price Index in our
loss forecasting models. We obtain forecasts for these inputs from
Moody’s Analytics. Moody’s Analytics provides a range of forecasts
for each of these inputs with various likelihoods of occurring. We
determine which forecasts we will include in our estimation of the
allowance for credit losses and the associated weightings for each
of these inputs. At March 31, 2022, December 31, 2022, and
March 31, 2023, we used the Base (50th percentile likelihood
of occurring)/S1 (stronger near-term growth scenario with 10
percent likelihood of occurring)/S3 (downside scenario with 10
percent likelihood of occurring) scenarios and weighted them 40
percent, 30 percent, and 30 percent, respectively. Management
reviews both the scenarios and their respective weightings each
quarter in determining the allowance for credit
losses.
Provisions for credit losses in the three months ended
March 31, 2023 increased by $16 million compared with the
year-ago period. During the three months ended March 31, 2023,
the increase in the provision for credit losses was primarily the
result of new loan commitments, net of expired commitments, slower
prepayment rates, and changes in economic outlook and recovery
rates.
As part of concluding on the adequacy of the allowance for credit
losses, we review key allowance and loan metrics. The most
significant of these metrics considered are the allowance coverage
of net charge-offs ratio; the allowance as a percentage of ending
total loans and accrued interest to be capitalized and of ending
loans in repayment and accrued interest to be capitalized on loans
in repayment; and delinquency and forbearance
percentages.
Loan Modifications to Borrowers Experiencing Financial
Difficulty
The allowance for credit losses incorporates an estimate of
lifetime expected credit losses and is recorded on each asset upon
asset origination or acquisition. The starting point for the
estimate of the allowance for credit losses is historical
information, which includes losses from modifications of
receivables whose borrowers are experiencing financial difficulty.
We use a discounted cash flow model to determine the allowance for
credit losses. An assessment of whether a borrower is experiencing
financial difficulty is made on the date of a
modification.
The effect of most modifications of loans made to borrowers who are
experiencing financial difficulty is already included in the
allowance for credit losses because of the measurement
methodologies used to estimate the allowance. The forecast of
expected future cash flows is updated as the loan modifications
occur.
We adjust the terms of loans for certain borrowers when we believe
such changes will help our customers manage their student loan
obligations and achieve better student outcomes and increase the
collectability of the loans. These changes generally take the form
of a temporary forbearance of payments, a temporary interest rate
reduction, a temporary interest rate reduction with a permanent
extension of the loan term, and/or a short-term extended repayment
alternative.
When we give a borrower facing financial difficulty an interest
rate reduction, we temporarily reduce the contractual interest rate
on a loan to 4.0 percent for a two-year period and, in the vast
majority of cases, permanently extend the final maturity date of
the loan. The combination of these two loan term changes helps
reduce the monthly payment due from the borrower and increases the
likelihood the borrower will remain current during the interest
rate modification period as well as when the loan returns to its
original contractual interest rate.
Within the Private Education Loan portfolio, we deem loans greater
than 90 days past due as nonperforming. FFELP Loans are at least 97
percent guaranteed as to their principal and accrued interest by
the federal government in the event of default and, therefore, we
do not deem FFELP Loans as nonperforming from a credit risk
perspective at any point in their life cycle prior to claim payment
and continue to accrue interest on those loans through the date of
claim.
For additional information, see Notes to Consolidated Financial
Statements, Note 2, “Significant Accounting Policies —Allowance for
Credit Losses,” and Note 7, “Allowance for Credit Losses” in our
2022 Form 10-K.
Under our current forbearance practices, temporary forbearance of
payments is generally granted in
one-to-two month increments, for up to 12 months over the
life of the loan, with 12 months of positive payment performance by
a borrower required between grants (meaning the borrower must make
payment in a cumulative amount equivalent to 12 monthly required
payments under the loan). See Notes to Consolidated Financial
Statements, Note 5, “Loans Held for Investment — Certain Collection
Tools - Private Education Loans” in our 2022 Form 10-K. If the loan
has been previously restructured, we consider the cumulative effect
of past restructurings made within the 12-month period before the
current restructuring when determining whether a delay in payment
resulting from the current restructuring is insignificant. Due
to
|
|
|
|
|
|
|
|
|
|
5. |
Allowance for Credit Losses (Continued) |
|
our current forbearance practices, including the limitations on
forbearances offered to borrowers, we do not believe the granting
of forbearances will exceed the significance threshold and,
therefore, we do not consider the forbearances as loan
modifications.
The limitations on granting of forbearances described above apply
to hardship forbearances. We offer other administrative
forbearances (e.g., death and disability, bankruptcy, military
service, disaster forbearance, and in school assistance) that are
either required by law (such as by the Servicemembers Civil Relief
Act) or are considered separate from our active loss mitigation
programs and therefore are not considered to be loan modifications
requiring disclosure. In addition, we may offer on a limited basis
term extensions or rate reductions or a combination of both to
borrowers to reduce consolidation activities. For purposes of this
disclosure, we do not consider them modifications of loans to
borrowers experiencing financial difficulty and they therefore are
not included in the tables below.
The following tables show the amortized cost basis at the end of
the respective reporting periods of the loans to borrowers
experiencing financial difficulty that were modified during the
period, disaggregated by class of financing receivable and type of
modification. When we approve a Private Education Loan at the
beginning of an academic year, we do not always disburse the full
amount of the loan at the time of approval, but instead have a
commitment to fund a portion of the loan at a later date (usually
at the start of the second semester or subsequent trimesters). We
consider borrowers to be in financial difficulty after they have
exited school and have difficulty making their scheduled principal
and interest payments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan Modifications Made to Borrowers Experiencing Financial
Difficulty |
Three Months Ended March 31, 2023
(dollars in thousands) |
|
Interest Rate Reduction |
|
Combination - Interest Rate Reduction and Term
Extension |
|
Loan Type: |
|
Amortized Cost Basis |
|
% of Total Class of Financing Receivable |
|
Amortized Cost Basis |
|
% of Total Class of Financing Receivable |
|
Private Education Loans |
|
$ |
12,902 |
|
|
0.06 |
% |
|
$ |
81,780 |
|
|
0.35 |
% |
|
Total |
|
$ |
12,902 |
|
|
0.06 |
% |
|
$ |
81,780 |
|
|
0.35 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan Modifications Made to Borrowers Experiencing Financial
Difficulty |
Three Months Ended March 31, 2022
(dollars in thousands) |
|
Interest Rate Reduction |
|
Combination - Interest Rate Reduction and Term
Extension |
|
Loan Type: |
|
Amortized Cost Basis |
|
% of Total Class of Financing Receivable |
|
Amortized Cost Basis |
|
% of Total Class of Financing Receivable |
|
Private Education Loans |
|
$ |
7,679 |
|
|
0.04 |
% |
|
$ |
79,597 |
|
|
0.37 |
% |
|
Total |
|
$ |
7,679 |
|
|
0.04 |
% |
|
$ |
79,597 |
|
|
0.37 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5. |
Allowance for Credit Losses (Continued) |
|
The following tables describe the financial effect of the
modifications made to loans whose borrowers are experiencing
financial difficulty:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2023 |
|
Interest Rate Reduction |
|
Combination - Interest Rate
Reduction and Term Extension |
|
|
|
|
|
|
|
|
|
Loan Type |
|
Financial Effect |
|
Loan Type |
|
Financial Effect |
|
Private Education Loans |
|
Reduced average contractual rate from 12.47% to 4.00%
|
|
Private Education Loans |
|
Added a weighted average 10.19 years to the life of
loans
Reduced average contractual rate from 12.74% to 4.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2022 |
|
Interest Rate Reduction |
|
Combination - Interest Rate
Reduction and Term Extension |
|
|
|
|
|
|
|
|
|
Loan Type |
|
Financial Effect |
|
Loan Type |
|
Financial Effect |
|
Private Education Loans |
|
Reduced average contractual rate from 10.09% to 4.00%
|
|
Private Education Loans |
|
Added a weighted average 10.51 years to the life of
loans
Reduced average contractual rate from 9.43% to 4.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private Education Loans are charged off at the end of the month in
which they reach 120 days delinquent or otherwise when the loans
are classified as a loss by us or our regulator. Therefore, the
amortized cost basis of the loan is reduced by the uncollectible
amount and the allowance for credit losses is adjusted by the same
amount. See Notes to Consolidated Financial Statements, Note 2,
“Significant Accounting Policies — Allowance for Credit Losses —
Allowance for Private Education Loan Losses, and — Allowance for
FFELP Loan Losses” in our 2022 Form 10-K for a more detailed
discussion.
|
|
|
|
|
|
|
|
|
|
5. |
Allowance for Credit Losses (Continued) |
|
For the current period presented, the following table provides loan
modifications for which a payment default occurred in the relevant
period presented and within 12 months of the loan receiving a loan
modification. Additionally, for the current period presented, the
table summarizes charge-offs occurring in the relevant period
presented and within 12 months of the loan receiving a loan
modification. The charge-offs and payment defaults for the year-ago
period are presented for loans receiving a loan modification during
the reporting period rather than within 12 months of the loan
receiving a loan modification, as the effective date of adoption
for the Financial Accounting Standards Board’s Accounting Standards
Update (“ASU”) No. 2022-02, Troubled Debt Restructurings and
Vintage Disclosures, was January 1, 2022. We define payment default
as 60 days past due for purposes of this disclosure.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2023 |
|
Three Months Ended
March 31, 2022 |
|
(Dollars in thousands) |
|
Modified Loans(1)(2)
|
|
Payment Default(3)
|
|
Charge-Offs(4)
|
|
Modified Loans(1)(2)
|
|
Payment Default(3)
|
|
Charge-Offs(4)
|
|
Loan Type: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Private Education Loans |
|
$ |
11,624 |
|
|
$ |
11,404 |
|
|
$ |
4,628 |
|
|
$ |
290 |
|
|
$ |
287 |
|
|
$ |
— |
|
|
Total |
|
$ |
11,624 |
|
|
$ |
11,404 |
|
|
$ |
4,628 |
|
|
$ |
290 |
|
|
$ |
287 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents period-end amortized cost basis of loans that have
been modified and for which a payment default occurred in the
relevant period presented and within 12 months of receiving a
modification (or within the reporting period, for the loans shown
in in the year-ago period, as the case may be).
(2) For the three months ended March 31, 2023, the modified loans
include $10.4 million of interest rate reduction and term
extension loan modifications and $1.2 million of interest rate
reduction only loan modifications. For the three months ended March
31, 2022, the modified loans include $0.3 million of interest
rate reduction and term extension loan modifications and no
interest rate reduction only loan modifications.
(3) Represents the unpaid principal balance at the time of payment
default.
(4) Represents the unpaid principal balance at the time of charge
off.
We closely monitor performance of the loans to borrowers
experiencing financial difficulty that are modified to understand
the effectiveness of the modification efforts. The following tables
depict the performance of loans that have been modified during the
respective reporting periods (first-quarter 2023 and full year
2022, respectively).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment Status (Amortized Cost Basis) |
|
|
At March 31, 2023
(dollars in thousands) |
|
Deferment(1)
|
|
Current(2)(3)
|
|
30-59 Days
Past Due(2)(3)
|
|
60-89 Days
Past Due(2)(3)
|
|
90 Days or Greater
Past Due(2)(3)
|
|
Total |
|
Loan Type: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Private Education Loans |
|
$ |
412 |
|
|
$ |
92,213 |
|
|
$ |
1,353 |
|
|
$ |
358 |
|
|
$ |
346 |
|
|
$ |
94,682 |
|
|
Total |
|
$ |
412 |
|
|
$ |
92,213 |
|
|
$ |
1,353 |
|
|
$ |
358 |
|
|
$ |
346 |
|
|
$ |
94,682 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment Status (Amortized Cost Basis) |
|
|
At December 31, 2022
(dollars in thousands) |
|
Deferment(1)
|
|
Current(2)(3)
|
|
30-59 Days
Past Due(2)(3)
|
|
60-89 Days
Past Due(2)(3)
|
|
90 Days or Greater
Past Due(2)(3)
|
|
Total |
|
Loan Type: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Private Education Loans |
|
$ |
7,698 |
|
|
$ |
289,134 |
|
|
$ |
13,859 |
|
|
$ |
8,809 |
|
|
$ |
6,616 |
|
|
$ |
326,116 |
|
|
Total |
|
$ |
7,698 |
|
|
$ |
289,134 |
|
|
$ |
13,859 |
|
|
$ |
8,809 |
|
|
$ |
6,616 |
|
|
$ |
326,116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Deferment includes customers who have returned to school or are
engaged in other permitted educational activities and are not yet
required to make full principal and interest payments on the loans
(e.g., residency periods for medical students or a grace period for
bar exam preparation). Deferment also includes loans that have
entered a forbearance after the loan modification was
granted.
(2) Loans in repayment include loans on which borrowers are making
full principal and interest payments after any applicable grace
period (but, for purposes of the table, do not include those loans
while they are in forbearance).
(3) The period of delinquency is based on the number of days
scheduled payments are contractually past due.
|
|
|
|
|
|
|
|
|
|
5. |
Allowance for Credit Losses (Continued) |
|
Private Education Loans Held for Investment - Key Credit Quality
Indicators
FFELP Loans are at least 97 percent guaranteed as to their
principal and accrued interest in the event of default; therefore,
there are no key credit quality indicators associated with FFELP
Loans.
For Private Education Loans, the key credit quality indicators are
FICO scores, the existence of a cosigner, the loan status, and loan
seasoning. The FICO scores are assessed at original approval and
periodically refreshed/updated through the loan’s term. The
following tables highlight the gross principal balance of our
Private Education Loan portfolio (held for investment), by year of
origination, stratified by key credit quality
indicators.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2023
(dollars in thousands)
|
|
Private Education Loans Held for Investment - Credit Quality
Indicators |
|
|
|
Year of Origination |
|
2023(1)
|
|
2022(1)
|
|
2021(1)
|
|
2020(1)
|
|
2019(1)
|
|
2018 and Prior(1)
|
|
Total(1)
|
|
% of Balance |
|
Cosigners: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With cosigner |
|
$ |
728,950 |
|
|
$ |
4,951,808 |
|
|
$ |
3,858,219 |
|
|
$ |
2,130,947 |
|
|
$ |
1,782,069 |
|
|
$ |
5,681,899 |
|
|
$ |
19,133,892 |
|
|
87 |
% |
|
Without cosigner |
|
123,455 |
|
|
736,310 |
|
|
586,435 |
|
|
360,304 |
|
|
305,385 |
|
|
652,222 |
|
|
2,764,111 |
|
|
13 |
|
|
Total |
|
$ |
852,405 |
|
|
$ |
5,688,118 |
|
|
$ |
4,444,654 |
|
|
$ |
2,491,251 |
|
|
$ |
2,087,454 |
|
|
$ |
6,334,121 |
|
|
$ |
21,898,003 |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FICO at Origination(2):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 670 |
|
$ |
72,432 |
|
|
$ |
438,029 |
|
|
$ |
304,216 |
|
|
$ |
154,665 |
|
|
$ |
171,983 |
|
|
$ |
554,184 |
|
|
$ |
1,695,509 |
|
|
8 |
% |
|
670-699 |
|
125,846 |
|
|
785,900 |
|
|
602,706 |
|
|
346,297 |
|
|
327,433 |
|
|
1,077,557 |
|
|
3,265,739 |
|
|
15 |
|
|
700-749 |
|
270,689 |
|
|
1,771,760 |
|
|
1,410,157 |
|
|
806,546 |
|
|
692,615 |
|
|
2,132,757 |
|
|
7,084,524 |
|
|
32 |
|
|
Greater than or equal to 750 |
|
383,438 |
|
|
2,692,429 |
|
|
2,127,575 |
|
|
1,183,743 |
|
|
895,423 |
|
|
2,569,623 |
|
|
9,852,231 |
|
|
45 |
|
|
Total |
|
$ |
852,405 |
|
|
$ |
5,688,118 |
|
|
$ |
4,444,654 |
|
|
$ |
2,491,251 |
|
|
$ |
2,087,454 |
|
|
$ |
6,334,121 |
|
|
$ |
21,898,003 |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FICO Refreshed(2)(3):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 670 |
|
$ |
88,378 |
|
|
$ |
659,414 |
|
|
$ |
498,641 |
|
|
$ |
256,177 |
|
|
$ |
249,547 |
|
|
$ |
969,883 |
|
|
$ |
2,722,040 |
|
|
12 |
% |
|
670-699 |
|
128,620 |
|
|
792,523 |
|
|
571,683 |
|
|
277,061 |
|
|
235,805 |
|
|
706,213 |
|
|
2,711,905 |
|
|
12 |
|
|
700-749 |
|
267,500 |
|
|
1,715,364 |
|
|
1,324,781 |
|
|
710,463 |
|
|
591,355 |
|
|
1,717,774 |
|
|
6,327,237 |
|
|
30 |
|
|
Greater than or equal to 750 |
|
367,907 |
|
|
2,520,817 |
|
|
2,049,549 |
|
|
1,247,550 |
|
|
1,010,747 |
|
|
2,940,251 |
|
|
10,136,821 |
|
|
46 |
|
|
Total |
|
$ |
852,405 |
|
|
$ |
5,688,118 |
|
|
$ |
4,444,654 |
|
|
$ |
2,491,251 |
|
|
$ |
2,087,454 |
|
|
$ |
6,334,121 |
|
|
$ |
21,898,003 |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seasoning(4):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-12 payments |
|
$ |
443,563 |
|
|
$ |
2,988,688 |
|
|
$ |
522,305 |
|
|
$ |
327,647 |
|
|
$ |
271,788 |
|
|
$ |
507,620 |
|
|
$ |
5,061,611 |
|
|
23 |
% |
|
13-24 payments |
|
— |
|
|
324,873 |
|
|
2,414,470 |
|
|
201,750 |
|
|
211,025 |
|
|
586,952 |
|
|
3,739,070 |
|
|
17 |
|
|
25-36 payments |
|
— |
|
|
— |
|
|
159,673 |
|
|
1,299,993 |
|
|
158,750 |
|
|
570,770 |
|
|
2,189,186 |
|
|
10 |
|
|
37-48 payments |
|
— |
|
|
— |
|
|
— |
|
|
118,240 |
|
|
1,023,883 |
|
|
568,996 |
|
|
1,711,119 |
|
|
8 |
|
|
More than 48 payments |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
62,249 |
|
|
3,448,382 |
|
|
3,510,631 |
|
|
16 |
|
|
Not yet in repayment |
|
408,842 |
|
|
2,374,557 |
|
|
1,348,206 |
|
|
543,621 |
|
|
359,759 |
|
|
651,401 |
|
|
5,686,386 |
|
|
26 |
|
|
Total |
|
$ |
852,405 |
|
|
$ |
5,688,118 |
|
|
$ |
4,444,654 |
|
|
$ |
2,491,251 |
|
|
$ |
2,087,454 |
|
|
$ |
6,334,121 |
|
|
$ |
21,898,003 |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 Current period(5)
gross charge-offs
|
|
$ |
— |
|
|
$ |
(2,262) |
|
|
$ |
(12,072) |
|
|
$ |
(10,615) |
|
|
$ |
(11,773) |
|
|
$ |
(58,363) |
|
|
$ |
(95,085) |
|
|
|
|
2023 Current period(5)
recoveries
|
|
— |
|
|
207 |
|
|
1,428 |
|
|
1,167 |
|
|
1,460 |
|
|
7,723 |
|
|
11,985 |
|
|
|
|
2023 Current period(5)
net charge-offs
|
|
$ |
— |
|
|
$ |
(2,055) |
|
|
$ |
(10,644) |
|
|
$ |
(9,448) |
|
|
$ |
(10,313) |
|
|
$ |
(50,640) |
|
|
$ |
(83,100) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total accrued interest by origination vintage |
|
$ |
13,564 |
|
|
$ |
241,786 |
|
|
$ |
351,527 |
|
|
$ |
209,889 |
|
|
$ |
177,587 |
|
|
$ |
310,373 |
|
|
$ |
1,304,726 |
|
|
|
|
(1)Balance
represents gross Private Education Loans held for
investment.
(2)Represents
the higher credit score of the cosigner or the
borrower.
(3)Represents
the FICO score updated as of the first-quarter 2023.
(4)Number
of months in active repayment (whether interest only payment, fixed
payment, or full principal and interest payment status) for which a
scheduled payment was due.
(5)Current
period refers to period from January 1, 2023 through March 31,
2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
5. |
Allowance for Credit Losses (Continued) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2022
(dollars in thousands) |
|
Private Education Loans Held for Investment - Credit Quality
Indicators |
|
|
|
Year of Origination |
|
2022(1)
|
|
2021(1)
|
|
2020(1)
|
|
2019(1)
|
|
2018(1)
|
|
2017 and Prior(1)
|
|
Total(1)
|
|
% of Balance |
|
Cosigners: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With cosigner |
|
$ |
3,656,111 |
|
|
$ |
3,941,921 |
|
|
$ |
2,208,033 |
|
|
$ |
1,853,619 |
|
|
$ |
1,402,828 |
|
|
$ |
4,626,491 |
|
|
$ |
17,689,003 |
|
|
87 |
% |
|
Without cosigner |
|
620,422 |
|
|
605,238 |
|
|
376,589 |
|
|
319,041 |
|
|
213,014 |
|
|
480,381 |
|
|
2,614,685 |
|
|
13 |
|
|
Total |
|
$ |
4,276,533 |
|
|
$ |
4,547,159 |
|
|
$ |
2,584,622 |
|
|
$ |
2,172,660 |
|
|
$ |
1,615,842 |
|
|
$ |
5,106,872 |
|
|
$ |
20,303,688 |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FICO at Origination(2):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 670 |
|
$ |
326,991 |
|
|
$ |
307,646 |
|
|
$ |
158,606 |
|
|
$ |
177,098 |
|
|
$ |
143,674 |
|
|
$ |
439,587 |
|
|
$ |
1,553,602 |
|
|
8 |
% |
|
670-699 |
|
593,216 |
|
|