Arrangements with Navient Corporation

3 Months Ended

Mar. 31, 2015

Related Party Transactions [Abstract]

Arrangements with Navient Corporation

Arrangements with Navient Corporation

In connection with the Spin-Off, we entered into a separation and distribution agreement and other ancillary agreements with Navient. Please refer to “Note 16 - Arrangements with Navient Corporation” in our 2014 Form 10-K for a full discussion of these agreements.

Amended Loan Participation and Purchase Agreement

Prior to the Spin-Off, the Bank sold substantially all of its Private Education Loans to several former affiliates, now subsidiaries of Navient (collectively, the “Purchasers”), pursuant to a Loan Participation and Purchase Agreement. This agreement predated the Spin-Off, but was significantly amended and reduced in scope in connection with the Spin-Off. Post-Spin-Off, the Bank retains only the right to require the Purchasers to purchase loans (at fair value) for which the borrower also has a separate lending relationship with Navient (“Split Loans”) when the Split Loans either (1) are more than 90 days past due; (2) have been restructured; (3) have been granted a hardship forbearance or more than 6 months of administrative forbearance; or (4) have a borrower or cosigner who has filed for bankruptcy. At March 31, 2015, we held approximately $108 million of Split Loans.

During the three months ended March 31, 2015, the Bank sold loans to the Purchasers in the amount of $8,714 in principal and $168 in accrued interest income. During the three months ended March 31, 2014, the Bank sold loans to the Purchasers in the amount of $671,819 in principal and $24,027 in accrued interest income.

There was no gain as a result of the loans sold in the three months ended March 31, 2015. The gain resulting from loans sold was $33,888 in the three months ended March 31, 2014. Total write-downs to fair value for loans sold with a fair value lower than par totaled $2,181 and $28,963 in the three months ended March 31, 2015 and 2014, respectively. Navient is the servicer for all of these loans.