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Allowance for Loan Losses
 3 Months Ended
Mar. 31, 2017
Receivables [Abstract]  
Allowance for Loan Losses
Allowance for Loan Losses
Our provision for loan losses represents the periodic expense of maintaining an allowance sufficient to absorb incurred probable losses in the held-for-investment loan portfolios. The evaluation of the allowance for loan losses is inherently subjective, as it requires material estimates that may be susceptible to significant changes. We believe the allowance for loan losses is appropriate to cover probable losses incurred in the loan portfolios. We began acquiring Personal Loans in the fourth quarter of 2016.

Allowance for Loan Losses Metrics
 
 
Allowance for Loan Losses
 
 
Three Months Ended March 31, 2017
 
 
FFELP
Loans
 
Private
Education
Loans
 
Personal
Loans
 
Total
Allowance for Loan Losses
 
 
 
 
 
 
 
 
Beginning balance
 
$
2,171


$
182,472


$
58


$
184,701

Total provision
 
(316
)

26,820


288


26,792

Net charge-offs:
 











Charge-offs
 
(218
)

(26,227
)

—


(26,445
)
Recoveries
 
—


3,259


—


3,259

Net charge-offs
 
(218
)

(22,968
)




(23,186
)
Loan sales(1)
 
—


(1,221
)

—


(1,221
)
Ending Balance
 
$
1,637


$
185,103


$
346


$
187,086

Allowance:
 







Ending balance: individually evaluated for impairment
 
$
—


$
87,150


$
—


$
87,150

Ending balance: collectively evaluated for impairment
 
$
1,637


$
97,953


$
346


$
99,936

Loans:
 







Ending balance: individually evaluated for impairment
 
$
—


$
701,860


$
—


$
701,860

Ending balance: collectively evaluated for impairment
 
$
989,393


$
14,952,994


$
55,502


$
15,997,889

Net charge-offs as a percentage of average loans in repayment (annualized)(2)
 
0.11
%

0.89
%

—
%


Allowance as a percentage of the ending total loan balance
 
0.17
%

1.18
%

0.62
%


Allowance as a percentage of the ending loans in repayment(2)
 
0.22
%

1.76
%

0.62
%


Allowance coverage of net charge-offs (annualized)
 
1.88


2.01


—



Ending total loans, gross
 
$
989,393


$
15,654,854


$
55,502



Average loans in repayment(2)
 
$
771,435


$
10,265,530


$
35,830



Ending loans in repayment(2)
 
$
757,052


$
10,526,782


$
55,502



____________
(1) Represents fair value adjustments on loans sold.
(2) 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.
     
 
 
Allowance for Loan Losses
 
 
Three Months Ended March 31, 2016
 
 
FFELP Loans
 
Private Education
Loans
 
Total
Allowance for Loan Losses
 
 
 
 
 
 
Beginning balance
 
$
3,691

 
$
108,816

 
$
112,507

Total provision
 
321

 
33,839

 
34,160

Net charge-offs:
 
 
 
 
 
 
Charge-offs
 
(383
)
 
(19,004
)
 
(19,387
)
Recoveries
 
—

 
1,044

 
1,044

Net charge-offs
 
(383
)
 
(17,960
)
 
(18,343
)
Loan sales(1)
 
—

 
(2,075
)
 
(2,075
)
Ending Balance
 
$
3,629

 
$
122,620

 
$
126,249

Allowance:
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
—

 
$
49,212

 
$
49,212

Ending balance: collectively evaluated for impairment
 
$
3,629

 
$
73,408

 
$
77,037

Loans:
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
—

 
$
318,094

 
$
318,094

Ending balance: collectively evaluated for impairment
 
$
1,088,026

 
$
11,793,776

 
$
12,881,802

Net charge-offs as a percentage of average loans in repayment (annualized)(2)
 
0.19
%
 
0.95
%
 
 
Allowance as a percentage of the ending total loan balance
 
0.33
%
 
1.01
%
 
 
Allowance as a percentage of the ending loans in repayment(2)
 
0.45
%
 
1.56
%
 
 
Allowance coverage of net charge-offs (annualized)
 
2.37

 
1.71

 
 
Ending total loans, gross
 
$
1,088,026

 
$
12,111,870

 
 
Average loans in repayment(2)
 
$
804,690

 
$
7,534,234

 
 
Ending loans in repayment(2)
 
$
803,378

 
$
7,843,076

 
 
____________
    
(1) Represents fair value adjustments on loans sold.
(2) 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.
 
 

 
 

Troubled Debt Restructurings
All of our loans are collectively assessed for impairment, except for loans classified as TDRs (where we conduct individual assessments of impairment). We modify the terms of loans for certain borrowers when we believe such modifications may increase the ability and willingness of a borrower to make payments and thus increase the ultimate overall amount collected on a loan. These modifications generally take the form of a forbearance, a temporary interest rate reduction or an extended repayment plan. We generally consider a loan that is in full principal and interest repayment status which has received more than three months of forbearance in a 24-month period to be a TDR; however, during the first nine months after a loan has entered full principal and interest repayment status, we do not count up to the first six months of forbearance received during that period against the three-month policy limit. Also, a loan becomes a TDR when it is modified to reduce the interest rate on the loan (regardless of when such modification occurs and/or whether such interest rate reduction is temporary). The majority of our loans that are considered TDRs involve a temporary forbearance of payments and do not change the contractual interest rate of the loan. Approximately 26 percent of the loans granted forbearance as of March 31, 2017 and December 31, 2016, respectively, have been classified as TDRs due to their forbearance status. For additional information, see Note 6, “Allowance for Loan Losses” in our 2016 Form 10-K.
Within the Private Education Loan portfolio, loans greater than 90 days past due are considered to be 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.
At March 31, 2017 and December 31, 2016, all TDR loans had a related allowance recorded. The following table provides the recorded investment, unpaid principal balance and related allowance for our TDR loans.
 
 
Recorded Investment
 
Unpaid Principal Balance
 
Allowance
 
 
 
 
 
 
 
March 31, 2017
 
 
 
 
 
 
TDR Loans
 
$
712,019

 
$
701,860

 
$
87,150

 
 
 
 
 
 
 
December 31, 2016
 
 
 
 
 
 
TDR Loans
 
$
620,991

 
$
612,606

 
$
86,930



The following table provides the average recorded investment and interest income recognized for our TDR loans.
 
 
Three Months Ended 
 March 31,
 
 
2017
 
2016
 
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
 
 
 
 
 
 
 
 
TDR Loans
 
$
669,606

 
$
12,257

 
$
297,315

 
$
5,583



    
 
 
The following table provides information regarding the loan status and aging of TDR loans.

 
 
March 31,
 
December 31,
 
 
2017
 
2016
 
 
Balance
 
%
 
Balance
 
%
TDR loans in in-school/grace/deferment(1)
 
$
32,121

 
 
 
$
24,185

 
 
TDR loans in forbearance(2)
 
78,791

 
 
 
71,851

 
 
TDR loans in repayment(3) and percentage of each status:
 
 
 
 
 
 
 
 
Loans current
 
532,459

 
90.2
%
 
462,187

 
89.5
%
Loans delinquent 31-60 days(4)
 
29,733

 
5.0

 
28,452

 
5.5

Loans delinquent 61-90 days(4)
 
16,837

 
2.8

 
17,326

 
3.4

Loans delinquent greater than 90 days(4)
 
11,919

 
2.0

 
8,605

 
1.6

Total TDR loans in repayment
 
590,948

 
100.0
%
 
516,570

 
100.0
%
Total TDR loans, gross
 
$
701,860

 
 
 
$
612,606

 
 
_____
(1) 
Deferment includes customers who have returned to school or are engaged in other permitted educational activities and are not yet required to make payments on the loans (e.g., residency periods for medical students or a grace period for bar exam preparation).
(2) 
Loans for customers who have requested extension of grace period generally during employment transition or who have temporarily ceased making full payments due to hardship or other factors, consistent with established loan program servicing policies and procedures.
(3) 
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.
(4) 
The period of delinquency is based on the number of days scheduled payments are contractually past due.

The following table provides the amount of modified loans (which includes forbearance and reductions in interest rates) that became TDRs in the periods presented. Additionally, for the periods presented, the table summarizes charge-offs occurring in the TDR portfolio, as well as TDRs for which a payment default occurred in the relevant period presented and within 12 months of the loan first being designated as a TDR. We define payment default as 60 days past due for this disclosure.
 
 
Three Months Ended 
 March 31, 2017
 
Three Months Ended 
 March 31, 2016
 
 
Modified Loans(1)
 
Charge-offs
 
Payment-
Default
 
Modified Loans(1)
 
Charge-offs
 
Payment-
Default
 
 
 
 
 
 
 
 
 
 
 
 
 
TDR Loans
 
$
112,206

 
$
10,523

 
$
25,526

 
$
61,006

 
$
4,968

 
$
25,671


_____
(1) 
Represents the principal balance of loans that have been modified during the period and resulted in a TDR.



Key Credit Quality Indicators
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 table highlights the gross principal balance of our Private Education Loan portfolio stratified by key credit quality indicators.

 
 
Private Education Loans
 
 
Credit Quality Indicators
 
 
March 31, 2017
 
December 31, 2016
Credit Quality Indicators:
 
Balance(1)
 
% of Balance
 
Balance(1)
 
% of Balance
 
 
 
 
 
 
 
 
 
Cosigners:
 
 
 
 
 
 
 
 
With cosigner
 
$
14,097,920

 
90
%
 
$
12,816,512

 
90
%
Without cosigner
 
1,556,934

 
10

 
1,435,163

 
10

Total
 
$
15,654,854

 
100
%
 
$
14,251,675

 
100
%
 
 
 
 
 
 
 
 
 
FICO at Original Approval:
 
 
 
 
 
 
 
 
Less than 670
 
$
1,008,334

 
6
%
 
$
920,132

 
6
%
670-699
 
2,297,815

 
15

 
2,092,722

 
15

700-749
 
5,109,510

 
33

 
4,639,958

 
33

Greater than or equal to 750
 
7,239,195

 
46

 
6,598,863

 
46

Total
 
$
15,654,854

 
100
%
 
$
14,251,675

 
100
%
 
 
 
 
 
 
 
 
 
Seasoning(2):
 
 
 
 
 
 
 
 
1-12 payments
 
$
4,233,778

 
27
%
 
$
3,737,110

 
26
%
13-24 payments
 
2,937,448

 
19

 
2,841,107

 
20

25-36 payments
 
1,951,479

 
12

 
1,839,764

 
13

37-48 payments
 
978,576

 
6

 
917,633

 
7

More than 48 payments
 
775,278

 
5

 
726,106

 
5

Not yet in repayment
 
4,778,295

 
31

 
4,189,955

 
29

Total
 
$
15,654,854

 
100
%
 
$
14,251,675

 
100
%

(1) 
Balance represents gross Private Education Loans.
(2) 
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.




Key Credit Quality Indicators
For Personal Loans, the key credit quality indicators are FICO scores and loan seasoning. The FICO scores are assessed at original approval and periodically refreshed/updated through the loan’s term. The following table highlights the gross principal balance of our Personal Loan portfolio stratified by key credit quality indicators.

 
 
Personal Loans
 
 
Credit Quality Indicators
 
 
March 31, 2017
 
December 31, 2016
Credit Quality Indicators:
 
Balance(1)
 
% of Balance
 
Balance(1)
 
% of Balance
 
 
 
 
 
 
 
 
 
FICO at Original Approval:
 
 
 
 
 
 
 
 
Less than 670
 
$
4,612

 
8
%
 
$
1,189

 
9
%
670-699
 
15,897

 
29

 
3,139

 
24

700-749
 
25,569

 
46

 
5,678

 
44

Greater than or equal to 750
 
9,424

 
17

 
2,888

 
23

Total
 
$
55,502

 
100
%
 
$
12,894

 
100
%
 
 
 
 
 
 
 
 
 
Seasoning(2):
 
 
 
 
 
 
 
 
0-12 payments
 
$
55,502

 
100
%
 
$
12,894

 
100
%
13-24 payments
 
—

 
—

 
—

 
—

25-36 payments
 
—

 
—

 
—

 
—

37-48 payments
 
—

 
—

 
—

 
—

More than 48 payments
 
—

 
—

 
—

 
—

Total
 
$
55,502

 
100
%
 
$
12,894

 
100
%
(1) 
Balance represents gross Personal Loans.
(2) 
Number of months in active repayment for which a scheduled payment was due.




 The following table provides information regarding the loan status of our Private Education Loans. Loans in repayment include loans making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period.

 
 
Private Education Loans
 
 
March 31,
 
December 31,
 
 
2017
 
2016
 
 
Balance
 
%
 
Balance
 
%
Loans in-school/grace/deferment(1)
 
$
4,778,295

 
 
 
$
4,189,955

 
 
Loans in forbearance(2)
 
349,777

 
 
 
351,962

 
 
Loans in repayment and percentage of each status:
 
 
 
 
 
 
 
 
Loans current
 
10,327,843

 
98.1
%
 
9,509,394

 
97.9
%
Loans delinquent 31-60 days(3)
 
112,167

 
1.1

 
124,773

 
1.3

Loans delinquent 61-90 days(3)
 
54,128

 
0.5

 
51,423

 
0.5

Loans delinquent greater than 90 days(3)
 
32,644

 
0.3

 
24,168

 
0.3

Total Private Education Loans in repayment
 
10,526,782

 
100.0
%
 
9,709,758

 
100.0
%
Total Private Education Loans, gross
 
15,654,854

 
 
 
14,251,675

 
 
Private Education Loans deferred origination costs
 
46,692

 
 
 
44,206

 
 
Total Private Education Loans
 
15,701,546

 
 
 
14,295,881

 
 
Private Education Loans allowance for losses
 
(185,103
)
 
 
 
(182,472
)
 
 
Private Education Loans, net
 
$
15,516,443

 
 
 
$
14,113,409

 
 
Percentage of Private Education Loans in repayment
 
 
 
67.2
%
 
 
 
68.1
%
Delinquencies as a percentage of Private Education Loans in repayment
 
 
 
1.9
%
 
 
 
2.1
%
Loans in forbearance as a percentage of Private Education Loans in repayment and forbearance
 
 
 
3.2
%
 
 
 
3.5
%
(1)
Deferment includes customers who have returned to school or are engaged in other permitted educational activities and are not yet required to make payments on the loans (e.g., residency periods for medical students or a grace period for bar exam preparation).
(2)
Loans for customers who have requested extension of grace period generally during employment transition or who have temporarily ceased making full payments due to hardship or other factors, consistent with established loan program servicing policies and procedures.
(3) 
The period of delinquency is based on the number of days scheduled payments are contractually past due.
 



 
 Accrued Interest Receivable
The following table provides information regarding accrued interest receivable on our Private Education Loans. The table also discloses the amount of accrued interest on loans greater than 90 days past due as compared to our allowance for uncollectible interest. The allowance for uncollectible interest exceeds the amount of accrued interest on our 90 days past due Private Education Loan portfolio for all periods presented.
 
 
Private Education Loan
 
 
Accrued Interest Receivable
 
 
Total Interest Receivable
 
Greater Than 90 Days Past Due
 
Allowance for Uncollectible Interest
 
 
 
 
 
 
 
March 31, 2017
 
$
825,680

 
$
1,108

 
$
2,868

December 31, 2016
 
$
739,847

 
$
845

 
$
2,898