Arrangements with Navient Corporation

9 Months Ended

Sep. 30, 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 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 September 30, 2015, we held approximately $96.1 million of Split Loans.

During the three months ended September 30, 2015, the Bank sold loans to the Purchasers in the amount of $6,552 in principal and $153 in accrued interest income. During the three months ended September 30, 2014, the Bank sold loans to the Purchasers in the amount of $28,871 in principal and $542 in accrued interest income.

During the nine months ended September 30, 2015, the Bank sold loans to the Purchasers in the amount of $21,109 in principal and $438 in accrued interest income. During the nine months ended September 30, 2014, the Bank sold loans to the Purchasers in the amount of $794,870 in principal and $26,339 in accrued interest income.

There was no gain as a result of the loans sold to the Purchasers in the three months ended September 30, 2015 and September 30, 2014. Total write-downs to fair value for loans sold with a fair value lower than par totaled $1,871 and $4,571 in the three months ended September 30, 2015 and 2014, respectively. There was no gain as a result of the loans sold in the nine months ended September 30, 2015. The gain resulting from loans sold was $35,848 in the nine months ended September 30, 2014. Total write-downs to fair value for loans sold with a fair value lower than par totaled $5,573 and $51,001 in the nine months ended September 30, 2015 and September 30, 2014, respectively. Navient is the servicer for all of these loans.