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Allowance for Loan Losses
 3 Months Ended
Mar. 31, 2018
Receivables [Abstract]  
Allowance for Loan Losses
Allowance for Loan Losses
Our provision for credit 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.

Allowance for Loan Losses Metrics
 
 
Allowance for Loan Losses
 
 
Three Months Ended March 31, 2018
 
 
FFELP
Loans
 
Private Education
Loans
 
Personal
Loans
 
Total
Allowance for Loan Losses
 
 
 
 
 
 
 
 
Beginning balance
 
$
1,132

 
$
243,715

 
$
6,628

 
$
251,475

Total provision
 
231

 
41,870

 
13,448

 
55,549

Net charge-offs:
 


 


 


 


Charge-offs
 
(250
)
 
(37,353
)
 
(1,200
)
 
(38,803
)
Recoveries
 
—

 
5,087

 
31

 
5,118

Net charge-offs
 
(250
)
 
(32,266
)
 
(1,169
)
 
(33,685
)
Loan sales(1)
 
—

 
(1,216
)
 
—

 
(1,216
)
Ending Balance
 
$
1,113

 
$
252,103

 
$
18,907

 
$
272,123

Allowance:
 

 

 

 

Ending balance: individually evaluated for impairment
 
$
—

 
$
101,824

 
$
—

 
$
101,824

Ending balance: collectively evaluated for impairment
 
$
1,113

 
$
150,279

 
$
18,907

 
$
170,299

Loans:
 

 

 

 

Ending balance: individually evaluated for impairment
 
$
—

 
$
1,043,103

 
$
—

 
$
1,043,103

Ending balance: collectively evaluated for impairment
 
$
907,842

 
$
17,750,909

 
$
675,656

 
$
19,334,407

Net charge-offs as a percentage of average loans in repayment (annualized)(2)
 
0.14
%
 
1.01
%
 
0.88
%
 

Allowance as a percentage of the ending total loan balance
 
0.12
%
 
1.34
%
 
2.80
%
 

Allowance as a percentage of the ending loans in repayment(2)
 
0.16
%
 
1.95
%
 
2.80
%
 

Allowance coverage of net charge-offs (annualized)
 
1.11

 
1.95

 
4.04

 

Ending total loans, gross
 
$
907,842

 
$
18,794,012

 
$
675,656

 

Average loans in repayment(2)
 
$
718,311

 
$
12,747,929

 
$
531,889

 

Ending loans in repayment(2)
 
$
702,965

 
$
12,958,742

 
$
675,656

 

____________
(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, 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.

    

Troubled Debt Restructurings (“TDRs”)
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. 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. Once a loan qualifies for TDR status, it remains a TDR for allowance purposes for the remainder of its life. As of March 31, 2018 and December 31, 2017, approximately 62 percent and 66 percent, respectively, of TDRs were classified as such due to their forbearance status. For additional information, see Note 6, “Allowance for Loan Losses” in our 2017 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, 2018 and December 31, 2017, 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, 2018
 
 
 
 
 
 
TDR Loans
 
$
1,061,046

 
$
1,043,103

 
$
101,824

 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
TDR Loans
 
$
1,007,141

 
$
990,351

 
$
94,682



The following table provides the average recorded investment and interest income recognized for our TDR loans.
 
 
Three Months Ended 
 March 31,
 
 
2018
 
2017
 
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
 
 
 
 
 
 
 
 
TDR Loans
 
$
1,032,232

 
$
17,847

 
$
669,606

 
$
12,257



    





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

 
 
March 31,
 
December 31,
 
 
2018
 
2017
 
 
Balance
 
%
 
Balance
 
%
TDR loans in in-school/grace/deferment(1)
 
$
58,939

 
 
 
$
51,745

 
 
TDR loans in forbearance(2)
 
65,036

 
 
 
69,652

 
 
TDR loans in repayment(3) and percentage of each status:
 
 
 
 
 
 
 
 
Loans current
 
823,813

 
89.7
%
 
774,222

 
89.1
%
Loans delinquent 31-60 days(4)
 
47,127

 
5.1

 
48,377

 
5.6

Loans delinquent 61-90 days(4)
 
31,463

 
3.4

 
28,778

 
3.3

Loans delinquent greater than 90 days(4)
 
16,725

 
1.8

 
17,577

 
2.0

Total TDR loans in repayment
 
919,128

 
100.0
%
 
868,954

 
100.0
%
Total TDR loans, gross
 
$
1,043,103

 
 
 
$
990,351

 
 
_____
(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 include 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 more than 60 days past due for this disclosure.

 
 
Three Months Ended 
 March 31, 2018
 
Three Months Ended 
 March 31, 2017
 
 
Modified Loans(1)
 
Charge-offs
 
Payment-
Default
 
Modified Loans(1)
 
Charge-offs
 
Payment-
Default
 
 
 
 
 
 
 
 
 
 
 
 
 
TDR Loans
 
$
84,174

 
$
15,460

 
$
29,757

 
$
112,206

 
$
10,523

 
$
25,526



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



Private Education Loan Key Credit Quality Indicators
FFELP Loans are at least 97 percent insured and 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 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, 2018
 
December 31, 2017
Credit Quality Indicators:
 
Balance(1)
 
% of Balance
 
Balance(1)
 
% of Balance
 
 
 
 
 
 
 
 
 
Cosigners:
 
 
 
 
 
 
 
 
With cosigner
 
$
16,889,477

 
90
%
 
$
15,658,539

 
90
%
Without cosigner
 
1,904,535

 
10

 
1,773,628

 
10

Total
 
$
18,794,012

 
100
%
 
$
17,432,167

 
100
%
 
 
 
 
 
 
 
 
 
FICO at Original Approval(2):
 
 
 
 
 
 
 
 
Less than 670
 
$
1,257,596

 
6
%
 
$
1,153,591

 
6
%
670-699
 
2,810,526

 
15

 
2,596,959

 
15

700-749
 
6,168,342

 
33

 
5,714,554

 
33

Greater than or equal to 750
 
8,557,548

 
46

 
7,967,063

 
46

Total
 
$
18,794,012

 
100
%
 
$
17,432,167

 
100
%
 
 
 
 
 
 
 
 
 
Seasoning(3):
 
 
 
 
 
 
 
 
1-12 payments
 
$
4,754,416

 
25
%
 
$
4,256,592

 
24
%
13-24 payments
 
3,256,637

 
17

 
3,229,465

 
19

25-36 payments
 
2,492,490

 
13

 
2,429,238

 
14

37-48 payments
 
1,583,375

 
9

 
1,502,327

 
9

More than 48 payments
 
1,337,110

 
7

 
1,256,813

 
7

Not yet in repayment
 
5,369,984

 
29

 
4,757,732

 
27

Total
 
$
18,794,012

 
100
%
 
$
17,432,167

 
100
%

(1) 
Balance represents gross Private Education Loans.
(2) 
Represents the higher credit score of the cosigner or the borrower.
(3) 
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.

 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,
 
 
2018
 
2017
 
 
Balance
 
%
 
Balance
 
%
Loans in-school/grace/deferment(1)
 
$
5,369,984

 
 
 
$
4,757,732

 
 
Loans in forbearance(2)
 
465,286

 
 
 
468,402

 
 
Loans in repayment and percentage of each status:
 
 
 
 
 
 
 
 
Loans current
 
12,635,627

 
97.5
%
 
11,911,128

 
97.6
%
Loans delinquent 31-60 days(3)
 
179,989

 
1.4

 
179,002

 
1.5

Loans delinquent 61-90 days(3)
 
95,974

 
0.7

 
78,292

 
0.6

Loans delinquent greater than 90 days(3)
 
47,152

 
0.4

 
37,611

 
0.3

Total Private Education Loans in repayment
 
12,958,742

 
100.0
%
 
12,206,033

 
100.0
%
Total Private Education Loans, gross
 
18,794,012

 
 
 
17,432,167

 
 
Private Education Loans deferred origination costs and unamortized premium/(discount)
 
58,814

 
 
 
56,378

 
 
Total Private Education Loans
 
18,852,826

 
 
 
17,488,545

 
 
Private Education Loans allowance for losses
 
(252,103
)
 
 
 
(243,715
)
 
 
Private Education Loans, net
 
$
18,600,723

 
 
 
$
17,244,830

 
 
Percentage of Private Education Loans in repayment
 
 
 
69.0
%
 
 
 
70.0
%
Delinquencies as a percentage of Private Education Loans in repayment
 
 
 
2.5
%
 
 
 
2.4
%
Loans in forbearance as a percentage of Private Education Loans in repayment and forbearance
 
 
 
3.5
%
 
 
 
3.7
%
(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.

Personal Loan 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, 2018
 
December 31, 2017
Credit Quality Indicators:
 
Balance(1)
 
% of Balance
 
Balance(1)
 
% of Balance
 
 
 
 
 
 
 
 
 
FICO at Original Approval:
 
 
 
 
 
 
 
 
Less than 670
 
$
52,417

 
8
%
 
$
32,156

 
8
%
670-699
 
193,246

 
29

 
114,731

 
29

700-749
 
307,539

 
45

 
182,025

 
45

Greater than or equal to 750
 
122,454

 
18

 
71,368

 
18

Total
 
$
675,656

 
100
%
 
$
400,280

 
100
%
 
 
 
 
 
 
 
 
 
Seasoning(2):
 
 
 
 
 
 
 
 
0-12 payments
 
$
649,996

 
96
%
 
$
400,280

 
100
%
13-24 payments
 
25,660

 
4

 
—

 
—

25-36 payments
 
—

 
—

 
—

 
—

37-48 payments
 
—

 
—

 
—

 
—

More than 48 payments
 
—

 
—

 
—

 
—

Total
 
$
675,656

 
100
%
 
$
400,280

 
100
%
(1) 
Balance represents gross Personal Loans.
(2) 
Number of months in active repayment for which a scheduled payment was 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 Loans
 
 
Accrued Interest Receivable
 
 
Total Interest Receivable
 
Greater Than 90 Days Past Due
 
Allowance for Uncollectible Interest
 
 
 
 
 
 
 
March 31, 2018
 
$
1,045,577

 
$
1,783

 
$
4,694

December 31, 2017
 
$
951,138

 
$
1,372

 
$
4,664