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Allowance for Loan Losses
 6 Months Ended
Jun. 30, 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 June 30, 2018
 
 
FFELP
Loans
 
Private Education
Loans
 
Personal
Loans
 
Total
Allowance for Loan Losses
 
 
 
 
 
 
 
 
Beginning balance
 
$
1,113

 
$
252,103

 
$
18,907

 
$
272,123

Total provision
 
252

 
46,264

 
16,378

 
62,894

Net charge-offs:
 


 


 


 


Charge-offs
 
(292
)
 
(42,270
)
 
(2,872
)
 
(45,434
)
Recoveries
 
—

 
5,598

 
96

 
5,694

Net charge-offs
 
(292
)
 
(36,672
)
 
(2,776
)
 
(39,740
)
Loan sales(1)
 
—

 
—

 
—

 
—

Ending Balance
 
$
1,073

 
$
261,695

 
$
32,509

 
$
295,277

Allowance:
 

 

 

 

Ending balance: individually evaluated for impairment
 
$
—

 
$
113,343

 
$
—

 
$
113,343

Ending balance: collectively evaluated for impairment
 
$
1,073

 
$
148,352

 
$
32,509

 
$
181,934

Loans:
 

 

 

 

Ending balance: individually evaluated for impairment
 
$
—

 
$
1,121,816

 
$
—

 
$
1,121,816

Ending balance: collectively evaluated for impairment
 
$
885,357

 
$
17,566,211

 
$
966,080

 
$
19,417,648

Net charge-offs as a percentage of average loans in repayment (annualized)(2)
 
0.17
%
 
1.14
%
 
1.36
%
 

Allowance as a percentage of the ending total loan balance
 
0.12
%
 
1.40
%
 
3.37
%
 

Allowance as a percentage of the ending loans in repayment(2)
 
0.16
%
 
2.02
%
 
3.37
%
 

Allowance coverage of net charge-offs (annualized)
 
0.92

 
1.78

 
2.93

 

Ending total loans, gross
 
$
885,357

 
$
18,688,027

 
$
966,080

 

Average loans in repayment(2)
 
$
698,197

 
$
12,909,623

 
$
815,741

 

Ending loans in repayment(2)
 
$
680,802

 
$
12,979,523

 
$
966,080

 

____________
(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 June 30, 2017
 
 
FFELP
Loans
 
Private Education
Loans
 
Personal
Loans
 
Total
Allowance for Loan Losses
 
 
 
 
 
 
 
 
Beginning balance
 
$
1,637

 
$
185,103

 
$
346

 
$
187,086

Total provision
 
228

 
49,166

 
492

 
49,886

Net charge-offs:
 
 
 
 
 
 
 
 
Charge-offs
 
(259
)
 
(32,728
)
 
(20
)
 
(33,007
)
Recoveries
 
—

 
4,396

 
—

 
4,396

Net charge-offs
 
(259
)
 
(28,332
)
 
(20
)
 
(28,611
)
Loan sales(1)
 
—

 
(913
)
 
—

 
(913
)
Ending Balance
 
$
1,606

 
$
205,024

 
$
818

 
$
207,448

Allowance:
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
—

 
$
95,177

 
$
—

 
$
95,177

Ending balance: collectively evaluated for impairment
 
$
1,606

 
$
109,847

 
$
818

 
$
112,271

Loans:
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
—

 
$
803,456

 
$
—

 
$
803,456

Ending balance: collectively evaluated for impairment
 
$
967,237

 
$
14,876,001

 
$
69,508

 
$
15,912,746

Net charge-offs as a percentage of average loans in repayment (annualized)(2)
 
0.14
%
 
1.08
%
 
0.13
%
 
 
Allowance as a percentage of the ending total loan balance
 
0.17
%
 
1.31
%
 
1.18
%
 
 
Allowance as a percentage of the ending loans in repayment(2)
 
0.21
%
 
1.93
%
 
1.18
%
 
 
Allowance coverage of net charge-offs (annualized)
 
1.55

 
1.81

 
10.23

 
 
Ending total loans, gross
 
$
967,237

 
$
15,679,457

 
$
69,508

 
 
Average loans in repayment(2)
 
$
757,186

 
$
10,523,225

 
$
61,439

 
 
Ending loans in repayment(2)
 
$
765,980

 
$
10,615,105

 
$
69,508

 
 
____________
(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
 
 
Six Months Ended June 30, 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
 
483

 
88,134

 
29,826

 
118,443

Net charge-offs:
 
 
 
 
 
 
 
 
Charge-offs
 
(542
)
 
(79,623
)
 
(4,072
)
 
(84,237
)
Recoveries
 
—

 
10,685

 
127

 
10,812

Net charge-offs
 
(542
)
 
(68,938
)
 
(3,945
)
 
(73,425
)
Loan sales(1)
 
—

 
(1,216
)
 
—

 
(1,216
)
Ending Balance
 
$
1,073

 
$
261,695

 
$
32,509

 
$
295,277

Allowance:
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
—

 
$
113,343

 
$
—

 
$
113,343

Ending balance: collectively evaluated for impairment
 
$
1,073

 
$
148,352

 
$
32,509

 
$
181,934

Loans:
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
—

 
$
1,121,816

 
$
—

 
$
1,121,816

Ending balance: collectively evaluated for impairment
 
$
885,357

 
$
17,566,211

 
$
966,080

 
$
19,417,648

Net charge-offs as a percentage of average loans in repayment (annualized)(2)
 
0.15
%
 
1.08
%
 
1.17
%
 
 
Allowance as a percentage of the ending total loan balance
 
0.12
%
 
1.40
%
 
3.37
%
 
 
Allowance as a percentage of the ending loans in repayment(2)
 
0.16
%
 
2.02
%
 
3.37
%
 
 
Allowance coverage of net charge-offs (annualized)
 
0.99

 
1.90

 
4.12

 
 
Ending total loans, gross
 
$
885,357

 
$
18,688,027

 
$
966,080

 
 
Average loans in repayment(2)
 
$
709,010

 
$
12,810,072

 
$
673,552

 
 
Ending loans in repayment(2)
 
$
680,802

 
$
12,979,523

 
$
966,080

 
 
____________
(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
 
 
Six Months Ended June 30, 2017
 
 
FFELP
Loans
 
Private Education
Loans
 
Personal
Loans
 
Total
Allowance for Loan Losses
 
 
 
 
 
 
 
 
Beginning balance
 
$
2,171

 
$
182,472

 
$
58

 
$
184,701

Total provision
 
(88
)
 
75,986

 
780

 
76,678

Net charge-offs:
 
 
 
 
 
 
 
 
Charge-offs
 
(477
)
 
(58,955
)
 
(20
)
 
(59,452
)
Recoveries
 
—

 
7,655

 
—

 
7,655

Net charge-offs
 
(477
)
 
(51,300
)
 
(20
)
 
(51,797
)
Loan sales(1)
 
—

 
(2,134
)
 
—

 
(2,134
)
Ending Balance
 
$
1,606

 
$
205,024

 
$
818

 
$
207,448

Allowance:
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
—

 
$
95,177

 
$
—

 
$
95,177

Ending balance: collectively evaluated for impairment
 
$
1,606

 
$
109,847

 
$
818

 
$
112,271

Loans:
 
 
 
 
 
 
 
 
Ending balance: individually evaluated for impairment
 
$
—

 
$
803,456

 
$
—

 
$
803,456

Ending balance: collectively evaluated for impairment
 
$
967,237

 
$
14,876,001

 
$
69,508

 
$
15,912,746

Net charge-offs as a percentage of average loans in repayment (annualized)(2)
 
0.12
%
 
0.99
%
 
0.08
%
 
 
Allowance as a percentage of the ending total loan balance
 
0.17
%
 
1.31
%
 
1.18
%
 
 
Allowance as a percentage of the ending loans in repayment(2)
 
0.21
%
 
1.93
%
 
1.18
%
 
 
Allowance coverage of net charge-offs (annualized)
 
1.68

 
2.00

 
20.45

 
 
Ending total loans, gross
 
$
967,237

 
$
15,679,457

 
$
69,508

 
 
Average loans in repayment(2)
 
$
765,347

 
$
10,375,463

 
$
47,654

 
 
Ending loans in repayment(2)
 
$
765,980

 
$
10,615,105

 
$
69,508

 
 
____________
(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 June 30, 2018, and December 31, 2017, approximately 61 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 June 30, 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
 
 
 
 
 
 
 
June 30, 2018
 
 
 
 
 
 
TDR Loans
 
$
1,139,417

 
$
1,121,816

 
$
113,343

 
 
 
 
 
 
 
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 
 June 30,
 
 
2018
 
2017
 
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
 
 
 
 
 
 
 
 
TDR Loans
 
$
1,105,042

 
$
18,718

 
$
766,171

 
$
14,310



    
 
 
Six Months Ended 
 June 30,
 
 
2018
 
2017
 
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
 
 
 
 
 
 
 
 
TDR Loans
 
$
1,069,721

 
$
36,565

 
$
718,727

 
$
26,567




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

 
 
June 30,
 
December 31,
 
 
2018
 
2017
 
 
Balance
 
%
 
Balance
 
%
TDR loans in in-school/grace/deferment(1)
 
$
57,595

 
 
 
$
51,745

 
 
TDR loans in forbearance(2)
 
59,682

 
 
 
69,652

 
 
TDR loans in repayment(3) and percentage of each status:
 
 
 
 
 
 
 
 
Loans current
 
917,138

 
91.3
%
 
774,222

 
89.1
%
Loans delinquent 31-60 days(4)
 
45,080

 
4.5

 
48,377

 
5.6

Loans delinquent 61-90 days(4)
 
25,580

 
2.5

 
28,778

 
3.3

Loans delinquent greater than 90 days(4)
 
16,741

 
1.7

 
17,577

 
2.0

Total TDR loans in repayment
 
1,004,539

 
100.0
%
 
868,954

 
100.0
%
Total TDR loans, gross
 
$
1,121,816

 
 
 
$
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 
 June 30, 2018
 
Three Months Ended 
 June 30, 2017
 
 
Modified Loans(1)
 
Charge-offs
 
Payment-
Default
 
Modified Loans(1)
 
Charge-offs
 
Payment-
Default
 
 
 
 
 
 
 
 
 
 
 
 
 
TDR Loans
 
$
116,478

 
$
12,764

 
$
18,254

 
$
134,489

 
$
12,215

 
$
23,679



 
 
Six Months Ended 
 June 30, 2018
 
Six Months Ended 
 June 30, 2017
 
 
Modified Loans(1)
 
Charge-offs
 
Payment-
Default
 
Modified Loans(1)
 
Charge-offs
 
Payment-
Default
 
 
 
 
 
 
 
 
 
 
 
 
 
TDR Loans
 
$
200,652

 
$
28,224

 
$
47,988

 
$
246,695

 
$
22,738

 
$
49,113

_____
(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
 
 
June 30, 2018
 
December 31, 2017
Credit Quality Indicators:
 
Balance(1)
 
% of Balance
 
Balance(1)
 
% of Balance
 
 
 
 
 
 
 
 
 
Cosigners:
 
 
 
 
 
 
 
 
With cosigner
 
$
16,757,587

 
90
%
 
$
15,658,539

 
90
%
Without cosigner
 
1,930,440

 
10

 
1,773,628

 
10

Total
 
$
18,688,027

 
100
%
 
$
17,432,167

 
100
%
 
 
 
 
 
 
 
 
 
FICO at Original Approval(2):
 
 
 
 
 
 
 
 
Less than 670
 
$
1,256,273

 
7
%
 
$
1,153,591

 
6
%
670-699
 
2,814,316

 
15

 
2,596,959

 
15

700-749
 
6,152,102

 
33

 
5,714,554

 
33

Greater than or equal to 750
 
8,465,336

 
45

 
7,967,063

 
46

Total
 
$
18,688,027

 
100
%
 
$
17,432,167

 
100
%
 
 
 
 
 
 
 
 
 
Seasoning(3):
 
 
 
 
 
 
 
 
1-12 payments
 
$
4,837,671

 
26
%
 
$
4,256,592

 
24
%
13-24 payments
 
3,209,308

 
17

 
3,229,465

 
19

25-36 payments
 
2,471,002

 
13

 
2,429,238

 
14

37-48 payments
 
1,582,586

 
9

 
1,502,327

 
9

More than 48 payments
 
1,337,067

 
7

 
1,256,813

 
7

Not yet in repayment
 
5,250,393

 
28

 
4,757,732

 
27

Total
 
$
18,688,027

 
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
 
 
June 30,
 
December 31,
 
 
2018
 
2017
 
 
Balance
 
%
 
Balance
 
%
Loans in-school/grace/deferment(1)
 
$
5,250,393

 
 
 
$
4,757,732

 
 
Loans in forbearance(2)
 
458,111

 
 
 
468,402

 
 
Loans in repayment and percentage of each status:
 
 
 
 
 
 
 
 
Loans current
 
12,697,362

 
97.8
%
 
11,911,128

 
97.6
%
Loans delinquent 31-60 days(3)
 
166,322

 
1.3

 
179,002

 
1.5

Loans delinquent 61-90 days(3)
 
75,534

 
0.6

 
78,292

 
0.6

Loans delinquent greater than 90 days(3)
 
40,305

 
0.3

 
37,611

 
0.3

Total Private Education Loans in repayment
 
12,979,523

 
100.0
%
 
12,206,033

 
100.0
%
Total Private Education Loans, gross
 
18,688,027

 
 
 
17,432,167

 
 
Private Education Loans deferred origination costs and unamortized premium/(discount)
 
61,908

 
 
 
56,378

 
 
Total Private Education Loans
 
18,749,935

 
 
 
17,488,545

 
 
Private Education Loans allowance for losses
 
(261,695
)
 
 
 
(243,715
)
 
 
Private Education Loans, net
 
$
18,488,240

 
 
 
$
17,244,830

 
 
Percentage of Private Education Loans in repayment
 
 
 
69.5
%
 
 
 
70.0
%
Delinquencies as a percentage of Private Education Loans in repayment
 
 
 
2.2
%
 
 
 
2.4
%
Loans in forbearance as a percentage of Private Education Loans in repayment and forbearance
 
 
 
3.4
%
 
 
 
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, loan seasoning and loan status. 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
 
 
June 30, 2018
 
December 31, 2017
Credit Quality Indicators:
 
Balance(1)
 
% of Balance
 
Balance(1)
 
% of Balance
 
 
 
 
 
 
 
 
 
FICO at Original Approval:
 
 
 
 
 
 
 
 
Less than 670
 
$
70,773

 
7
%
 
$
32,156

 
8
%
670-699
 
275,210

 
29

 
114,731

 
29

700-749
 
441,824

 
46

 
182,025

 
45

Greater than or equal to 750
 
178,273

 
18

 
71,368

 
18

Total
 
$
966,080

 
100
%
 
$
400,280

 
100
%
 
 
 
 
 
 
 
 
 
Seasoning(2):
 
 
 
 
 
 
 
 
0-12 payments
 
$
932,863

 
97
%
 
$
400,280

 
100
%
13-24 payments
 
33,217

 
3

 
—

 
—

25-36 payments
 
—

 
—

 
—

 
—

37-48 payments
 
—

 
—

 
—

 
—

More than 48 payments
 
—

 
—

 
—

 
—

Total
 
$
966,080

 
100
%
 
$
400,280

 
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 Personal Loans.


 
 
Personal Loans
 
 
June 30,
 
December 31,
 
 
2018
 
2017
 
 
Balance
 
%
 
Balance
 
%
Loans in repayment and percentage of each status:
 
 
 
 
 
 
 
 
Loans current
 
$
960,865

 
99.5
%
 
$
398,988

 
99.7
%
Loans delinquent 31-60 days(1)
 
2,376

 
0.2

 
761

 
0.2

Loans delinquent 61-90 days(1)
 
1,594

 
0.2

 
340

 
0.1

Loans delinquent greater than 90 days(1)
 
1,245

 
0.1

 
191

 
—

Total Personal Loans in repayment
 
966,080

 
100.0
%
 
400,280

 
100.0
%
Total Personal Loans, gross
 
966,080

 
 
 
400,280

 
 
Personal Loans unamortized discount
 
(10
)
 
 
 
—

 
 
Total Personal Loans
 
966,070

 
 
 
400,280

 
 
Personal Loans allowance for losses
 
(32,509
)
 
 
 
(6,628
)
 
 
Personal Loans, net
 
$
933,561

 
 
 
$
393,652

 
 
Delinquencies as a percentage of Personal Loans in repayment
 
 
 
0.5
%
 
 
 
0.3
%
_______
(1) 
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 Loans
 
 
Accrued Interest Receivable
 
 
Total Interest Receivable
 
Greater Than 90 Days Past Due
 
Allowance for Uncollectible Interest
 
 
 
 
 
 
 
June 30, 2018
 
$
1,141,135

 
$
1,530

 
$
5,852

December 31, 2017
 
$
951,138

 
$
1,372

 
$
4,664