Unfunded Loan Commitments (Tables)

6 Months Ended

Jun. 30, 2022

Allowance for Credit Losses and Recorded Investments in Loans

Allowance for Credit Losses Metrics


Three Months Ended June 30, 2022 (dollars in thousands)	FFELP Loans			Private Education Loans			Credit Cards			Total
Allowance for Credit Losses
Beginning balance	$	3,999		$	1,221,053		$	2,310		$	1,227,362
Transfer from unfunded commitment liability(1)	—			40,528			—			40,528
Provisions:
Provision for current period	60			24,531			459			25,050
Loan sale reduction to provision	—			(115,852)			—			(115,852)

Total provisions(2)	60			(91,321)			459			(90,802)
Net charge-offs:
Charge-offs	(130)			(106,493)			(376)			(106,999)
Recoveries	—			10,977			—			10,977
Net charge-offs	(130)			(95,516)			(376)			(96,022)

Ending Balance	$	3,929		$	1,074,744		$	2,393		$	1,081,066
Allowance:
Ending balance: individually evaluated for impairment	$	—		$	—		$	—		$	—
Ending balance: collectively evaluated for impairment	$	3,929		$	1,074,744		$	2,393		$	1,081,066
Loans:
Ending balance: individually evaluated for impairment	$	—		$	—		$	—		$	—
Ending balance: collectively evaluated for impairment	$	665,666		$	19,519,185		$	28,900		$	20,213,751
Net charge-offs as a percentage of average loans in repayment (annualized)(3)	0.10		%	2.56		%	5.33		%
Allowance as a percentage of the ending total loan balance	0.59		%	5.51		%	8.28		%
Allowance as a percentage of the ending loans in repayment(3)	0.73		%	7.40		%	8.28		%
Allowance coverage of net charge-offs (annualized)	7.56			2.81			1.59
Ending total loans, gross	$	665,666		$	19,519,185		$	28,900
Average loans in repayment(3)	$	537,449		$	14,901,040		$	28,243
Ending loans in repayment(3)	$	538,081		$	14,525,259		$	28,900

(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 June 30, 2022 (dollars in thousands)
Private Education Loan provisions for credit losses:
Provisions for loan losses	$	(91,321)
Provisions for unfunded loan commitments	121,347
Total Private Education Loan provisions for credit losses	30,026
Other impacts to the provisions for credit losses:
FFELP Loans	60
Credit Cards	459
Total	519
Provisions for credit losses reported in consolidated statements of income	$	30,545

(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 (but, for purposes of the table, do not include those loans while they are in forbearance).


Three Months Ended June 30, 2021 (dollars in thousands)	FFELP Loans			Private Education Loans			Credit Cards			Total
Allowance for Credit Losses
Beginning balance	$	4,318		$	1,173,375		$	1,328		$	1,179,021
Transfer from unfunded commitment liability(1)	—			24,556			—			24,556
Provisions:
Provision for current period	(2)			1,014			182			1,194
Loan sale reduction to provision	—			(1,477)			—			(1,477)

Total provisions(2)	(2)			(463)			182			(283)
Net charge-offs:
Charge-offs	(54)			(49,900)			(74)			(50,028)
Recoveries	—			6,972			6			6,978
Net charge-offs	(54)			(42,928)			(68)			(43,050)

Ending Balance	$	4,262		$	1,154,540		$	1,442		$	1,160,244
Allowance:
Ending balance: individually evaluated for impairment	$	—		$	80,495		$	—		$	80,495
Ending balance: collectively evaluated for impairment	$	4,262		$	1,074,045		$	1,442		$	1,079,749
Loans:
Ending balance: individually evaluated for impairment	$	—		$	1,192,743		$	—		$	1,192,743
Ending balance: collectively evaluated for impairment	$	716,958		$	19,285,014		$	12,784		$	20,014,756
Net charge-offs as a percentage of average loans in repayment (annualized)(3)	0.04		%	1.16		%	2.29		%
Allowance as a percentage of the ending total loan balance	0.59		%	5.64		%	11.28		%
Allowance as a percentage of the ending loans in repayment(3)	0.78		%	7.79		%	11.28		%
Allowance coverage of net charge-offs (annualized)	19.73			6.72			5.30
Ending total loans, gross	$	716,958		$	20,477,757		$	12,784
Average loans in repayment(3)	$	546,306		$	14,743,360		$	11,855
Ending loans in repayment(3)	$	548,488		$	14,825,375		$	12,784

(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 June 30, 2021 (dollars in thousands)
Private Education Loan provisions for credit losses:
Provisions for loan losses	$	(463)
Provisions for unfunded loan commitments	69,960
Total Private Education Loan provisions for credit losses	69,497
Other impacts to the provisions for credit losses:
FFELP Loans	(2)
Credit Cards	182
Total	180
Provisions for credit losses reported in consolidated statements of income	$	69,677


Six Months Ended June 30, 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)	—			135,214			—			135,214
Provisions:
Provision for current period	81			72,991			596			73,668
Loan sale reduction to provision	—			(121,099)			—			(121,099)

Total provisions(2)	81			(48,108)			596			(47,431)
Net charge-offs:
Charge-offs	(229)			(190,349)			(487)			(191,065)
Recoveries	—			19,010			3			19,013
Net charge-offs	(229)			(171,339)			(484)			(172,052)

Ending Balance	$	3,929		$	1,074,744		$	2,393		$	1,081,066
Allowance:
Ending balance: individually evaluated for impairment	$	—		$	—		$	—		$	—
Ending balance: collectively evaluated for impairment	$	3,929		$	1,074,744		$	2,393		$	1,081,066
Loans:
Ending balance: individually evaluated for impairment	$	—		$	—		$	—		$	—
Ending balance: collectively evaluated for impairment	$	665,666		$	19,519,185		$	28,900		$	20,213,751
Net charge-offs as a percentage of average loans in repayment (annualized)(3)	0.08		%	2.23		%	3.54		%
Allowance as a percentage of the ending total loan balance	0.59		%	5.51		%	8.28		%
Allowance as a percentage of the ending loans in repayment(3)	0.73		%	7.40		%	8.28		%
Allowance coverage of net charge-offs (annualized)	8.58			3.14			2.47
Ending total loans, gross	$	665,666		$	19,519,185		$	28,900
Average loans in repayment(3)	$	541,133		$	15,366,023		$	27,375
Ending loans in repayment(3)	$	538,081		$	14,525,259		$	28,900

(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
Six Months Ended June 30, 2022 (dollars in thousands)
Private Education Loan provisions for credit losses:
Provisions for loan losses	$	(48,108)
Provisions for unfunded loan commitments	176,026
Total Private Education Loan provisions for credit losses	127,918
Other impacts to the provisions for credit losses:
FFELP Loans	81
Credit Cards	596
Total	677
Provisions for credit losses reported in consolidated statements of income	$	128,595


Six Months Ended June 30, 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)	—			151,436			—			151,436
Provisions:
Provision for current period	27			(253,928)			96			(253,805)
Loan sale reduction to provision	—			(10,335)			—			(10,335)
Loans transferred from held-for-sale	—			1,887			—			1,887
Total provisions(2)	27			(262,376)			96			(262,253)
Net charge-offs:
Charge-offs	(143)			(105,039)			(162)			(105,344)
Recoveries	—			14,675			7			14,682
Net charge-offs	(143)			(90,364)			(155)			(90,662)

Ending Balance	$	4,262		$	1,154,540		$	1,442		$	1,160,244
Allowance:
Ending balance: individually evaluated for impairment	$	—		$	80,495		$	—		$	80,495
Ending balance: collectively evaluated for impairment	$	4,262		$	1,074,045		$	1,442		$	1,079,749
Loans:
Ending balance: individually evaluated for impairment	$	—		$	1,192,743		$	—		$	1,192,743
Ending balance: collectively evaluated for impairment	$	716,958		$	19,285,014		$	12,784		$	20,014,756
Net charge-offs as a percentage of average loans in repayment (annualized)(3)	0.05		%	1.23		%	2.59		%
Allowance as a percentage of the ending total loan balance	0.59		%	5.64		%	11.28		%
Allowance as a percentage of the ending loans in repayment(3)	0.78		%	7.79		%	11.28		%
Allowance coverage of net charge-offs (annualized)	14.90			6.39			4.65
Ending total loans, gross	$	716,958		$	20,477,757		$	12,784
Average loans in repayment(3)	$	551,765		$	14,738,505		$	11,964
Ending loans in repayment(3)	$	548,488		$	14,825,375		$	12,784

(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
Six Months Ended June 30, 2021 (dollars in thousands)
Private Education Loan provisions for credit losses:
Provisions for loan losses	$	(262,376)
Provisions for unfunded loan commitments	106,163
Total Private Education Loan provisions for credit losses	(156,213)
Other impacts to the provisions for credit losses:
FFELP Loans	27
Credit Cards	96
Total	123
Provisions for credit losses reported in consolidated statements of income	$	(156,090)

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 June 30, (dollars in thousands)	Allowance		Unfunded Commitments		Allowance		Unfunded Commitments
Beginning Balance	$	32,707	$	561,748	$	19,367	$	457,453
Provision/New commitments - net(1)	99,692		1,466,865		48,203		1,235,604
Other provision items	21,654		—		21,757		—
Transfer - funded loans(2)	(40,528)		(614,773)		(24,555)		(531,361)
Ending Balance	$	113,525	$	1,413,840	$	64,772	$	1,161,696

	2022				2021
Six Months Ended June 30, (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)	147,146		2,435,695		88,400		2,078,765
Other provision items	28,880		—		17,763		—
Transfer - funded loans(2)	(135,214)		(2,798,831)		(151,435)		(2,590,087)
Ending Balance	$	113,525	$	1,413,840	$	64,772	$	1,161,696

(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.