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Allowance for Credit Losses (Tables)

9 Months Ended

Sep. 30, 2020

Allowance for credit losses and recorded investments in loans


	Allowance for Credit Losses
	Nine Months Ended September 30, 2020
	FFELP Loans			Private Education Loans			Personal Loans			Credit Cards			Total
Allowance for Credit Losses
Beginning balance	$	1,633		$	374,300		$	65,877		$	102		$	441,912
Day 1 adjustment for the adoption of CECL	2,852			1,060,830			79,183			188			1,143,053
Transfer from unfunded commitment liability⁽¹⁾	—			279,555			—			—			279,555
Provisions:
Provision for current period	277			296,167			40,485			1,191			338,120
Loan sale reduction to provision	—			(161,793)			(42,916)			—			(204,709)
Total provision⁽²⁾	277			134,374			(2,431)			1,191			133,411
Net charge-offs:
Charge-offs	(399)			(138,546)			(39,079)			(96)			(178,120)
Recoveries	—			18,298			4,984			—			23,282
Net charge-offs	(399)			(120,248)			(34,095)			(96)			(154,838)
Loan sales	—			—			(108,534)			—			(108,534)
Ending Balance	$	4,363		$	1,728,811		$	—		$	1,385		$	1,734,559
Allowance:
Ending balance: individually evaluated for impairment	$	—		$	138,663		$	—		$	—		$	138,663
Ending balance: collectively evaluated for impairment	$	4,363		$	1,590,148		$	—		$	1,385		$	1,595,896
Loans:
Ending balance: individually evaluated for impairment	$	—		$	1,495,161		$	—		$	—		$	1,495,161
Ending balance: collectively evaluated for impairment	$	745,556		$	21,119,166		$	—		$	11,540		$	21,876,262
Net charge-offs as a percentage of average loans in repayment (annualized)⁽³⁾	0.10		%	1.05		%	—		%	1.51		%
Allowance as a percentage of the ending total loan balance	0.59		%	7.64		%	—		%	12.00		%
Allowance as a percentage of the ending loans in repayment⁽³⁾	0.77		%	10.91		%	—		%	12.00		%
Allowance coverage of net charge-offs (annualized)	8.20			10.78			—			10.82
Ending total loans, gross	$	745,556		$	22,614,327		$	—		$	11,540
Average loans in repayment⁽³⁾	$	546,443		$	15,336,253		$	—		$	8,499
Ending loans in repayment⁽³⁾	$	564,442		$	15,853,309		$	—		$	11,540

____________

⁽¹⁾See Note 5, “Unfunded Loan Commitments,” for a summary of the activity in the allowance for and balance of unfunded loan commitments, respectively.

⁽²⁾ Below is a reconciliation of the provision for credit losses reported in the consolidated statements of income. When a new loan commitment is made, we record the CECL allowance as a liability for unfunded commitments by recording a provision for credit losses. When the loan is funded, we transfer that liability to the allowance for credit losses.


Consolidated Statements of Income Provisions for Credit Losses Reconciliation
	Nine Months Ended September 30, 2020
Private Education Loan provision for credit losses:
Provision for loan losses	$	134,374
Provision for unfunded commitments	276,094
Total Private Education Loan provision for credit losses	410,468

Other impacts to the provision for credit losses:
Personal Loans	(2,431)
FFELP Loans	277
Credit Cards	1,191
Total	(963)
Provisions for credit losses reported in consolidated statements of income	$	409,505

⁽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.

The tables below summarize the activity in the allowance recorded to cover lifetime expected credit losses on the unfunded commitments, which is recorded in “Other Liabilities” on the consolidated balance sheets, as well as the activity in the unfunded commitments balance.


	Three Months Ended September 30,
	2020						2019
	Allowance		Unfunded Commitments		Allowance		Unfunded Commitments

Beginning Balance	$	85,958	$	1,119,042	$	755	$	1,335,755
Provision/New commitments - net⁽¹⁾	129,290		2,542,390		3,382		3,140,432
Transfer - funded loans⁽²⁾	(100,470)		(1,890,305)		(2,170)		(2,242,077)
Ending Balance	$	114,778	$	1,771,127	$	1,967	$	2,234,110

	Nine Months Ended September 30,
	2020						2019
	Allowance		Unfunded Commitments		Allowance		Unfunded Commitments

Beginning Balance	$	2,481	$	1,910,603	$	2,165	$	2,010,744
Day 1 adjustment for the adoption of CECL	115,758		—		—		—
Provision/New commitments - net⁽¹⁾	276,094		4,542,560		5,516		5,122,672
Transfer - funded loans⁽²⁾	(279,555)		(4,682,036)		(5,714)		(4,899,306)
Ending Balance	$	114,778	$	1,771,127	$	1,967	$	2,234,110

________________

⁽¹⁾ Net of expirations of commitments unused.

⁽²⁾ When a loan commitment is funded, its related allowance for credit losses is transferred to the allowance for credit losses

Impaired financing receivables

The following table provides the recorded investment, unpaid principal balance and related allowance for our TDR loans.


	Recorded Investment		Unpaid Principal Balance		Allowance

September 30, 2020
TDR Loans	$	1,537,499	$	1,495,161	$	138,663

December 31, 2019
TDR Loans	$	1,612,896	$	1,581,966	$	186,697

Average recorded investment and interest income recognized for troubled debt restructuring loans

Loans held for investment are summarized as follows:


	September 30,		December 31,
	2020		2019
Private Education Loans:
Fixed-rate	$	10,353,809	$	9,830,301
Variable-rate	12,260,518		13,359,290
Total Private Education Loans, gross	22,614,327		23,189,591
Deferred origination costs and unamortized premium/(discount)	70,406		81,224
Allowance for credit losses	(1,728,811)		(374,300)
Total Private Education Loans, net	20,955,922		22,896,515

FFELP Loans	745,556		783,306
Deferred origination costs and unamortized premium/(discount)	2,027		2,143
Allowance for credit losses	(4,363)		(1,633)
Total FFELP Loans, net	743,220		783,816

Personal Loans (fixed-rate)	—		1,049,007
Deferred origination costs and unamortized premium/(discount)	—		513
Allowance for credit losses	—		(65,877)
Total Personal Loans, net	—		983,643

Credit Cards (fixed-rate)	11,540		3,884
Deferred origination costs and unamortized premium/(discount)	474		36
Allowance for credit losses	(1,385)		(102)
Total Credit Cards, net	10,629		3,818

Loans held for investment, net	$	21,709,771	$	24,667,792

The average balance and the respective weighted average interest rates of loans in our portfolio are summarized as follows:


	Three Months Ended
	September 30,
	2020						2019
	Average Balance		Weighted Average Interest Rate		Average Balance		Weighted Average Interest Rate
Private Education Loans	$	21,937,758	8.24	%	$	22,202,420	9.30	%
FFELP Loans	750,925		3.46		806,865		4.54
Personal Loans	527,204		12.86		1,132,185		12.16
Total portfolio	$	23,215,887			$	24,141,470


	Nine Months Ended
	September 30,
	2020						2019
	Average Balance		Weighted Average Interest Rate		Average Balance		Weighted Average Interest Rate
Private Education Loans	$	22,342,353	8.48	%	$	21,896,218	9.40	%
FFELP Loans	762,863		3.86		821,870		4.83
Personal Loans	778,153		12.43		1,152,471		11.99
Total portfolio	$	23,883,369			$	23,870,559

The following table provides the average recorded investment and interest income recognized for our TDR loans.


	Three Months Ended September 30,
	2020						2019
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized

TDR Loans	$	1,554,741	$	24,972	$	1,467,098	$	24,639


	Nine Months Ended September 30,
	2020						2019
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized

TDR Loans	$	1,579,640	$	75,530	$	1,391,167	$	69,159

Age analysis of past due loans delinquencies

The following tables provide information regarding the loan status of our Private Education Loans, by year of origination. 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 (but, for purposes of the following tables, do not include those loans while they are in forbearance).


	Private Education Loan Delinquencies by Origination Vintage
	September 30, 2020
	2020			2019			2018			2017			2016			2015 and Prior			Total

Loans in-school/grace/deferment⁽¹⁾	$	1,256,630		$	1,963,374		$	1,057,069		$	722,081		$	457,475		$	598,932		$	6,055,561
Loans in forbearance:
Loans in forbearance - loans current⁽²⁾	8,343			64,167			110,935			127,915			126,218			267,584			705,162
Loans in forbearance - loans delinquent 31-60 days⁽²⁾⁽³⁾	—			5			14			25			71			159			274
Loans in forbearance - loans delinquent 61-90 days⁽²⁾⁽³⁾	—			—			—			21			—			—			21
Loans in forbearance - loans delinquent greater than 90 days⁽²⁾⁽³⁾	—			—			—			—			—			—			—
Total Private Education Loans in forbearance⁽²⁾	8,343			64,172			110,949			127,961			126,289			267,743			705,457
Loans in repayment:
Loans current	1,758,337			3,031,984			2,374,526			2,092,242			1,920,310			4,197,607			15,375,006
Loans delinquent 31-60 days⁽³⁾	4,209			24,834			37,444			43,055			43,560			112,149			265,251
Loans delinquent 61-90 days⁽³⁾	828			8,421			17,289			22,429			24,515			66,341			139,823
Loans delinquent greater than 90 days⁽³⁾	310			2,915			7,819			11,401			12,929			37,855			73,229
Total Private Education Loans in repayment	1,763,684			3,068,154			2,437,078			2,169,127			2,001,314			4,413,952			15,853,309
Total Private Education Loans, gross	3,028,657			5,095,700			3,605,096			3,019,169			2,585,078			5,280,627			22,614,327
Private Education Loans deferred origination costs and unamortized premium/(discount)	16,654			18,633			11,151			8,354			6,971			8,643			70,406
Total Private Education Loans	3,045,311			5,114,333			3,616,247			3,027,523			2,592,049			5,289,270			22,684,733
Private Education Loans allowance for losses	(208,507)			(407,435)			(293,033)			(243,715)			(199,119)			(377,002)			(1,728,811)
Private Education Loans, net	$	2,836,804		$	4,706,898		$	3,323,214		$	2,783,808		$	2,392,930		$	4,912,268		$	20,955,922

Percentage of Private Education Loans in repayment	58.2		%	60.2		%	67.6		%	71.8		%	77.4		%	83.6		%	70.1		%
Delinquent Private Education Loans in repayment as a percentage of Private Education Loans in repayment	0.3		%	1.2		%	2.6		%	3.5		%	4.0		%	4.9		%	3.0		%
Delinquencies as a percentage of Private Education Loans in repayment and delinquent forbearance loans	0.3		%	1.2		%	2.6		%	3.5		%	4.1		%	4.9		%	3.0		%
Loans in forbearance as a percentage of loans in repayment and forbearance	0.5		%	2.0		%	4.4		%	5.6		%	5.9		%	5.7		%	4.3		%

_______

⁽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.


	Private Education Loan Delinquencies by Origination Vintage
	December 31, 2019
	2019		2018		2017		2016		2015		2014 and Prior		Total

Loans in-school/grace/deferment⁽¹⁾	$	1,670,644	$	1,580,513	$	1,010,764	$	635,798	$	375,585	$	414,101	$	5,687,405
Loans in forbearance:
Loans in forbearance - current⁽²⁾	21,009		108,509		142,341		146,114		127,799		168,744		714,516
Loans in forbearance - delinquent 31-60 days⁽²⁾⁽³⁾	—		—		—		—		—		—		—
Loans in forbearance - delinquent 61-90 days⁽²⁾⁽³⁾	—		—		—		—		—		—		—
Loans in forbearance - delinquent greater than 90 days⁽²⁾⁽³⁾	—		—		—		—		—		—		—
Total Private Education Loans in forbearance⁽²⁾	21,009		108,509		142,341		146,114		127,799		168,744		714,516
Loans in repayment:
Loans current	2,340,221		3,159,878		2,781,132		2,566,815		2,225,721		3,241,884		16,315,651
Loans delinquent 31-60 days⁽³⁾	11,152		26,096		44,382		51,656		54,559		100,206		288,051
Loans delinquent 61-90 days⁽³⁾	3,087		9,527		17,048		21,161		24,562		45,917		121,302
Loans delinquent greater than 90 days⁽³⁾	935		3,850		7,818		12,314		12,946		24,803		62,666
Total Private Education Loans in repayment	2,355,395		3,199,351		2,850,380		2,651,946		2,317,788		3,412,810		16,787,670
Total Private Education Loans, gross	4,047,048		4,888,373		4,003,485		3,433,858		2,821,172		3,995,655		23,189,591
Private Education Loans deferred origination costs and unamortized premium/(discount)	23,661		17,699		13,843		12,304		8,564		5,153		81,224
Total Private Education Loans	4,070,709		4,906,072		4,017,328		3,446,162		2,829,736		4,000,808		23,270,815
Private Education Loans allowance for losses	(3,013)		(19,105)		(44,858)		(71,598)		(80,974)		(154,752)		(374,300)
Private Education Loans, net	$	4,067,696	$	4,886,967	$	3,972,470	$	3,374,564	$	2,748,762	$	3,846,056	$	22,896,515

Percentage of Private Education Loans in repayment	58.2 %		65.4 %		71.2 %		77.2 %		82.2 %		85.4 %		72.4 %
Delinquent Private Education Loans in repayment as a percentage of Private Education Loans in repayment	0.6 %		1.2 %		2.4 %		3.2 %		4.0 %		5.0 %		2.8 %
Delinquencies as a percentage of Private Education Loans in repayment and delinquent forbearance loans	0.6 %		1.2 %		2.4 %		3.2 %		4.0 %		5.0 %		2.8 %
Loans in forbearance as a percentage of loans in repayment and forbearance	0.9 %		3.3 %		4.8 %		5.2 %		5.2 %		4.7 %		4.1 %

______

⁽³⁾The period of delinquency is based on the number of days scheduled payments are contractually past due.

Modified loans accounts for troubled debt restructuring

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 60 days past due for this disclosure.


	Three Months Ended September 30, 2020										Three Months Ended September 30, 2019
	Modified Loans⁽¹⁾		Charge-offs		Payment- Default		Modified Loans⁽¹⁾		Charge-offs		Payment- Default

TDR Loans	$	30,990	$	20,033	$	19,788	$	115,195	$	21,092	$	29,258


	Nine Months Ended September 30, 2020										Nine Months Ended September 30, 2019
	Modified Loans⁽¹⁾		Charge-offs		Payment- Default		Modified Loans⁽¹⁾		Charge-offs		Payment- Default

TDR Loans	$	200,471	$	48,031	$	68,790	$	357,676	$	54,173	$	84,409

_____

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

Private education loan portfolio stratified by key credit quality indicators

The following tables highlight the gross principal balance of our Private Education Loan portfolio, by year of origination, stratified by key credit quality indicators.


	Private Education Loans Credit Quality Indicators
	September 30, 2020
Year of Origination	2020⁽¹⁾		2019⁽¹⁾		2018⁽¹⁾		2017⁽¹⁾		2016⁽¹⁾		2015 and Prior⁽¹⁾		Total⁽¹⁾		% of Balance

Cosigners:
With cosigner	$	2,583,111	$	4,444,417	$	3,156,414	$	2,695,281	$	2,338,980	$	4,833,371	$	20,051,574	89	%
Without cosigner	445,546		651,283		448,682		323,888		246,098		447,256		2,562,753		11
Total	$	3,028,657	$	5,095,700	$	3,605,096	$	3,019,169	$	2,585,078	$	5,280,627	$	22,614,327	100	%

FICO at Origination⁽²⁾:
Less than 670	$	177,986	$	361,387	$	267,945	$	228,293	$	187,659	$	414,785	$	1,638,055	7	%
670-699	411,825		751,145		537,957		478,944		410,372		883,813		3,474,056		15
700-749	975,514		1,661,005		1,183,935		1,004,662		871,989		1,767,363		7,464,468		33
Greater than or equal to 750	1,463,332		2,322,163		1,615,259		1,307,270		1,115,058		2,214,666		10,037,748		45
Total	$	3,028,657	$	5,095,700	$	3,605,096	$	3,019,169	$	2,585,078	$	5,280,627	$	22,614,327	100	%


FICO Refreshed⁽²⁾⁽³⁾:
Less than 670	$	217,218	$	395,572	$	344,242	$	336,857	$	332,360	$	837,360	$	2,463,609	11	%
670-699	397,492		642,016		426,549		338,010		276,258		578,132		2,658,457		12
700-749	963,875		1,598,763		1,081,419		883,872		723,213		1,413,526		6,664,668		29
Greater than or equal to 750	1,450,072		2,459,349		1,752,886		1,460,430		1,253,247		2,451,609		10,827,593		48
Total	$	3,028,657	$	5,095,700	$	3,605,096	$	3,019,169	$	2,585,078	$	5,280,627	$	22,614,327	100	%

Seasoning⁽⁴⁾:
1-12 payments	$	1,772,006	$	2,163,584	$	479,231	$	482,319	$	409,027	$	603,765	$	5,909,932	26	%
13-24 payments	21		968,742		1,437,060		261,628		247,112		502,320		3,416,883		15
25-36 payments	—		—		631,736		1,150,053		225,369		502,923		2,510,081		11
37-48 payments	—		—		—		403,088		941,217		482,116		1,826,421		8
More than 48 payments	—		—		—		—		304,878		2,590,571		2,895,449		13
Not yet in repayment	1,256,630		1,963,374		1,057,069		722,081		457,475		598,932		6,055,561		27
Total	$	3,028,657	$	5,095,700	$	3,605,096	$	3,019,169	$	2,585,078	$	5,280,627	$	22,614,327	100	%

Current period⁽⁵⁾gross charge-offs	$	(458)	$	(6,040)	$	(18,124)	$	(25,359)	$	(24,979)	$	(63,586)	$	(138,546)
Current period⁽⁵⁾ recoveries	5		381		1,672		2,778		3,277		10,185		18,298
Current period⁽⁵⁾ net charge-offs	$	(453)	$	(5,659)	$	(16,452)	$	(22,581)	$	(21,702)	$	(53,401)	$	(120,248)

Total accrued interest by origination vintage	$	54,276	$	308,207	$	325,240	$	289,104	$	209,478	$	267,871	$	1,454,176
______ ⁽¹⁾Balance represents gross Private Education Loans. ⁽²⁾Represents the higher credit score of the cosigner or the borrower. ⁽³⁾Represents the FICO score updated as of the third-quarter 2020. ⁽⁴⁾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. ⁽⁵⁾Current period refers to period from January 1, 2020 through September 30, 2020.


	Private Education Loans Credit Quality Indicators
	December 31, 2019
Year of Origination	2019⁽¹⁾		2018⁽¹⁾		2017⁽¹⁾		2016⁽¹⁾		2015⁽¹⁾		2014 and Prior⁽¹⁾		Total⁽¹⁾		% of Balance

Cosigners:
With cosigner	$	3,475,256	$	4,303,772	$	3,575,973	$	3,112,873	$	2,579,214	$	3,662,547	$	20,709,635	89	%
Without cosigner	571,792		584,601		427,512		320,985		241,958		333,108		2,479,956		11
Total	$	4,047,048	$	4,888,373	$	4,003,485	$	3,433,858	$	2,821,172	$	3,995,655	$	23,189,591	100	%

FICO at Origination⁽²⁾:
Less than 670	$	283,040	$	343,613	$	285,747	$	236,457	$	203,145	$	313,587	$	1,665,589	7	%
670-699	592,376		714,779		617,676		529,575		439,050		676,569		3,570,025		16
700-749	1,319,563		1,601,904		1,325,387		1,155,253		944,135		1,324,506		7,670,748		33
Greater than or equal to 750	1,852,069		2,228,077		1,774,675		1,512,573		1,234,842		1,680,993		10,283,229		44
Total	$	4,047,048	$	4,888,373	$	4,003,485	$	3,433,858	$	2,821,172	$	3,995,655	$	23,189,591	100	%


FICO Refreshed⁽²⁾⁽³⁾:
Less than 670	$	401,979	$	515,901	$	475,007	$	449,568	$	419,308	$	717,674	$	2,979,437	13	%
670-699	582,256		645,422		497,497		397,889		308,607		451,451		2,883,122		13
700-749	1,284,867		1,506,849		1,199,564		994,309		772,205		1,048,808		6,806,602		29
Greater than or equal to 750	1,777,946		2,220,201		1,831,417		1,592,092		1,321,052		1,777,722		10,520,430		45
Total	$	4,047,048	$	4,888,373	$	4,003,485	$	3,433,858	$	2,821,172	$	3,995,655	$	23,189,591	100	%

Seasoning⁽⁴⁾:
1-12 payments	$	2,376,404	$	719,158	$	705,181	$	617,174	$	462,946	$	470,839	$	5,351,702	23	%
13-24 payments	—		2,588,702		424,953		305,078		285,513		399,905		4,004,151		17
25-36 payments	—		—		1,862,587		418,048		227,391		394,339		2,902,365		12
37-48 payments	—		—		—		1,457,760		413,508		342,676		2,213,944		10
More than 48 payments	—		—		—		—		1,056,229		1,973,795		3,030,024		13
Not yet in repayment	1,670,644		1,580,513		1,010,764		635,798		375,585		414,101		5,687,405		25
Total	$	4,047,048	$	4,888,373	$	4,003,485	$	3,433,858	$	2,821,172	$	3,995,655	$	23,189,591	100	%

2019 gross charge-offs	$	(1,697)	$	(14,650)	$	(29,119)	$	(40,576)	$	(41,141)	$	(81,795)	$	(208,978)
2019 recoveries	69		1,016		2,622		4,431		5,175		12,452		25,765
2019 net charge-offs	$	(1,628)	$	(13,634)	$	(26,497)	$	(36,145)	$	(35,966)	$	(69,343)	$	(183,213)

Total accrued interest by origination vintage	$	116,423	$	321,568	$	327,002	$	261,083	$	165,764	$	174,318	$	1,366,158

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⁽¹⁾Balance represents gross Private Education Loans.

⁽²⁾Represents the higher credit score of the cosigner or the borrower.

⁽³⁾Represents the FICO score updated as of the fourth-quarter 2019.

⁽⁴⁾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.

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 on loans making full interest payments. The majority of the total accrued interest receivable represents accrued interest on deferred loans where no payments are due while the borrower is in school and fixed-pay loans where the borrower makes a $25 monthly payment that is smaller than the interest accruing on the loan in that month. The accrued interest on these loans will be capitalized to the balance of the loans when the borrower exits the grace period after separation from school. The allowance for this portion of interest is included in our loan loss reserve. 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

September 30, 2020	$	1,454,176	$	4,096	$	4,427
December 31, 2019	$	1,366,158	$	2,390	$	5,309