Unfunded Loan Commitments (Tables)

3 Months Ended

Mar. 31, 2022

Allowance for Credit Losses and Recorded Investments in Loans

Allowance for Credit Losses Metrics


Three Months Ended March 31, 2022 (dollars in thousands)	FFELP Loans			Private Education Loans			Credit Cards			Total
Allowance for Credit Losses
Beginning balance	$	4,077		$	1,158,977		$	2,281		$	1,165,335
Transfer from unfunded commitment liability(1)	—			94,686			—			94,686
Provisions:
Provision for current period	21			48,460			137			48,618
Loan sale reduction to provision	—			(5,247)			—			(5,247)

Total provisions(2)	21			43,213			137			43,371
Net charge-offs:
Charge-offs	(99)			(83,856)			(111)			(84,066)
Recoveries	—			8,033			3			8,036
Net charge-offs	(99)			(75,823)			(108)			(76,030)

Ending Balance	$	3,999		$	1,221,053		$	2,310		$	1,227,362
Allowance:
Ending balance: individually evaluated for impairment	$	—		$	—		$	—		$	—
Ending balance: collectively evaluated for impairment	$	3,999		$	1,221,053		$	2,310		$	1,227,362
Loans:
Ending balance: individually evaluated for impairment	$	—		$	—		$	—		$	—
Ending balance: collectively evaluated for impairment	$	682,273		$	21,735,369		$	27,547		$	22,445,189
Net charge-offs as a percentage of average loans in repayment (annualized)(3)	0.07		%	1.89		%	1.63		%
Allowance as a percentage of the ending total loan balance	0.59		%	5.62		%	8.39		%
Allowance as a percentage of the ending loans in repayment(3)	0.75		%	7.59		%	8.39		%
Allowance coverage of net charge-offs (annualized)	10.10			4.03			5.35
Ending total loans, gross	$	682,273		$	21,735,369		$	27,547
Average loans in repayment(3)	$	543,303		$	16,013,289		$	26,551
Ending loans in repayment(3)	$	535,080		$	16,095,157		$	27,547

(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 provisions 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 loan 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
Three Months Ended March 31, 2022 (dollars in thousands)
Private Education Loan provisions for credit losses:
Provisions for loan losses	$	43,213
Provisions for unfunded loan commitments	54,679
Total Private Education Loan provisions for credit losses	97,892
Other impacts to the provisions for credit losses:
FFELP Loans	21
Credit Cards	137
Total	158
Provisions for credit losses reported in consolidated statements of income	$	98,050

(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.


Three Months Ended March 31, 2021 (dollars in thousands)	FFELP Loans			Private Education Loans			Credit Cards			Total
Allowance for Credit Losses
Beginning balance	$	4,378		$	1,355,844		$	1,501		$	1,361,723
Transfer from unfunded commitment liability(1)	—			126,880			—			126,880
Provisions:
Provision for current period	29			(254,942)			(86)			(254,999)
Loan sale reduction to provision	—			(8,858)			—			(8,858)
Loans transferred from held-for-sale	—			1,887			—			1,887
Total provisions(2)	29			(261,913)			(86)			(261,970)
Net charge-offs:
Charge-offs	(89)			(55,139)			(88)			(55,316)
Recoveries	—			7,703			1			7,704
Net charge-offs	(89)			(47,436)			(87)			(47,612)

Ending Balance	$	4,318		$	1,173,375		$	1,328		$	1,179,021
Allowance:
Ending balance: individually evaluated for impairment	$	—		$	95,536		$	—		$	95,536
Ending balance: collectively evaluated for impairment	$	4,318		$	1,077,839		$	1,328		$	1,083,485
Loans:
Ending balance: individually evaluated for impairment	$	—		$	1,225,604		$	—		$	1,225,604
Ending balance: collectively evaluated for impairment	$	727,664		$	19,516,236		$	11,309		$	20,255,209
Net charge-offs as a percentage of average loans in repayment (annualized)(3)	0.06		%	1.29		%	2.92		%
Allowance as a percentage of the ending total loan balance	0.59		%	5.66		%	11.74		%
Allowance as a percentage of the ending loans in repayment(3)	0.80		%	7.94		%	11.74		%
Allowance coverage of net charge-offs (annualized)	12.13			6.18			3.82
Ending total loans, gross	$	727,664		$	20,741,840		$	11,309
Average loans in repayment(3)	$	554,510		$	14,743,508		$	11,909
Ending loans in repayment(3)	$	540,903		$	14,777,939		$	11,309

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


Consolidated Statements of Income Provisions for Credit Losses Reconciliation
Three Months Ended March 31, 2021 (dollars in thousands)
Private Education Loan provisions for credit losses:
Provisions for loan losses	$	(261,913)
Provisions for unfunded loan commitments	36,203
Total Private Education Loan provisions for credit losses	(225,710)
Other impacts to the provisions for credit losses:
FFELP Loans	29
Credit Cards	(86)
Total	(57)
Provisions for credit losses reported in consolidated statements of income	$	(225,767)

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.


	2022				2021
Three Months Ended March 31, (dollars in thousands)	Allowance		Unfunded Commitments		Allowance		Unfunded Commitments
Beginning Balance	$	72,713	$	1,776,976	$	110,044	$	1,673,018
Provision/New commitments - net(1)	47,454		968,830		40,197		843,161
Other provision items	7,226		—		(3,994)		—
Transfer - funded loans(2)	(94,686)		(2,184,058)		(126,880)		(2,058,726)
Ending Balance	$	32,707	$	561,748	$	19,367	$	457,453

(1) Net of expirations of commitments unused.

(2) When a loan commitment is funded, its related liability for credit losses (which originally was recorded as a provision for unfunded commitments) is transferred to the allowance for credit losses.