Unfunded Loan Commitments (Tables)

9 Months Ended

Sep. 30, 2022

Allowance for Credit Losses and Recorded Investments in Loans

Allowance for Credit Losses Metrics


Three Months Ended September 30, 2022 (dollars in thousands)	FFELP Loans			Private Education Loans			Credit Cards			Total
Allowance for Credit Losses
Beginning balance	$	3,929		$	1,074,744		$	2,393		$	1,081,066
Transfer from unfunded commitment liability(1)	—			168,377			—			168,377
Provisions:
Provision for current period	29			95,482			2,039			97,550
Loan sale reduction to provision	—			(50,226)			—			(50,226)
Loans transferred to held-for-sale	—			—			(2,372)			(2,372)
Total provisions(2)	29			45,256			(333)			44,952
Net charge-offs:
Charge-offs	(147)			(109,350)			(2,062)			(111,559)
Recoveries	—			11,400			2			11,402
Net charge-offs	(147)			(97,950)			(2,060)			(100,157)

Ending Balance	$	3,811		$	1,190,427		$	—		$	1,194,238
Allowance:
Ending balance: individually evaluated for impairment	$	—		$	—		$	—		$	—
Ending balance: collectively evaluated for impairment	$	3,811		$	1,190,427		$	—		$	1,194,238
Loans:
Ending balance: individually evaluated for impairment	$	—		$	—		$	—		$	—
Ending balance: collectively evaluated for impairment	$	643,614		$	20,104,463		$	—		$	20,748,077
Net charge-offs as a percentage of average loans in repayment (annualized)(3)	0.11		%	2.67		%	—		%
Allowance as a percentage of the ending total loan balance	0.59		%	5.92		%	—		%
Allowance as a percentage of the ending loans in repayment(3)	0.78		%	8.18		%	—		%
Allowance coverage of net charge-offs (annualized)	6.48			3.04			—
Ending total loans, gross	$	643,614		$	20,104,463		$	—
Average loans in repayment(3)	$	518,226		$	14,674,437		$	—
Ending loans in repayment(3)	$	489,920		$	14,546,556		$	—

(1) See Note 6, “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 September 30, 2022 (dollars in thousands)
Private Education Loan provisions for credit losses:
Provisions for loan losses	$	45,256
Provisions for unfunded loan commitments	162,646
Total Private Education Loan provisions for credit losses	207,902
Other impacts to the provisions for credit losses:
FFELP Loans	29
Credit Cards	(333)
Total	(304)
Provisions for credit losses reported in consolidated statements of income	$	207,598

(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 September 30, 2021 (dollars in thousands)	FFELP Loans			Private Education Loans			Credit Cards			Total
Allowance for Credit Losses
Beginning balance	$	4,262		$	1,154,540		$	1,442		$	1,160,244
Transfer from unfunded commitment liability(1)	—			110,613			—			110,613
Provisions:
Provision for current period	50			(6,995)			415			(6,530)
Loan sale reduction to provision	—			—			—			—

Total provisions(2)	50			(6,995)			415			(6,530)
Net charge-offs:
Charge-offs	(106)			(56,000)			(119)			(56,225)
Recoveries	—			7,302			3			7,305
Net charge-offs	(106)			(48,698)			(116)			(48,920)

Ending Balance	$	4,206		$	1,209,460		$	1,741		$	1,215,407
Allowance:
Ending balance: individually evaluated for impairment	$	—		$	69,626		$	—		$	69,626
Ending balance: collectively evaluated for impairment	$	4,206		$	1,139,834		$	1,741		$	1,145,781
Loans:
Ending balance: individually evaluated for impairment	$	—		$	1,148,282		$	—		$	1,148,282
Ending balance: collectively evaluated for impairment	$	705,691		$	20,554,555		$	17,766		$	21,278,012
Net charge-offs as a percentage of average loans in repayment (annualized)(3)	0.08		%	1.29		%	3.07		%
Allowance as a percentage of the ending total loan balance	0.60		%	5.57		%	9.80		%
Allowance as a percentage of the ending loans in repayment(3)	0.79		%	7.81		%	9.80		%
Allowance coverage of net charge-offs (annualized)	9.92			6.21			3.75
Ending total loans, gross	$	705,691		$	21,702,837		$	17,766
Average loans in repayment(3)	$	540,018		$	15,108,802		$	15,098
Ending loans in repayment(3)	$	530,476		$	15,490,132		$	17,766

(1) See Note 6, “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 September 30, 2021 (dollars in thousands)
Private Education Loan provisions for credit losses:
Provisions for loan losses	$	(6,995)
Provisions for unfunded loan commitments	144,972
Total Private Education Loan provisions for credit losses	137,977
Other impacts to the provisions for credit losses:
FFELP Loans	50
Credit Cards	415
Total	465
Provisions for credit losses reported in consolidated statements of income	$	138,442


Nine Months Ended September 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)	—			303,591			—			303,591
Provisions:
Provision for current period	110			168,473			2,635			171,218
Loan sale reduction to provision	—			(171,325)			—			(171,325)
Loans transferred to held-for-sale	—			—			(2,372)			(2,372)
Total provisions(2)	110			(2,852)			263			(2,479)
Net charge-offs:
Charge-offs	(376)			(299,699)			(2,549)			(302,624)
Recoveries	—			30,410			5			30,415
Net charge-offs	(376)			(269,289)			(2,544)			(272,209)

Ending Balance	$	3,811		$	1,190,427		$	—		$	1,194,238
Allowance:
Ending balance: individually evaluated for impairment	$	—		$	—		$	—		$	—
Ending balance: collectively evaluated for impairment	$	3,811		$	1,190,427		$	—		$	1,194,238
Loans:
Ending balance: individually evaluated for impairment	$	—		$	—		$	—		$	—
Ending balance: collectively evaluated for impairment	$	643,614		$	20,104,463		$	—		$	20,748,077
Net charge-offs as a percentage of average loans in repayment (annualized)(3)	0.09		%	2.37		%	—		%
Allowance as a percentage of the ending total loan balance	0.59		%	5.92		%	—		%
Allowance as a percentage of the ending loans in repayment(4)	0.78		%	8.18		%	—		%
Allowance coverage of net charge-offs (annualized)	7.60			3.32			—
Ending total loans, gross	$	643,614		$	20,104,463		$	—
Average loans in repayment(3)	$	532,275		$	15,173,465		$	—
Ending loans in repayment(3)	$	489,920		$	14,546,556		$	—

(1) See Note 6, “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
Nine Months Ended September 30, 2022 (dollars in thousands)
Private Education Loan provisions for credit losses:
Provisions for loan losses	$	(2,852)
Provisions for unfunded loan commitments	338,672
Total Private Education Loan provisions for credit losses	335,820
Other impacts to the provisions for credit losses:
FFELP Loans	110
Credit Cards	263
Total	373
Provisions for credit losses reported in consolidated statements of income	$	336,193


Nine Months Ended September 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)	—			262,049			—			262,049
Provisions:
Provision for current period	77			(260,923)			511			(260,335)
Loan sale reduction to provision	—			(10,335)			—			(10,335)
Loans transferred from held-for-sale	—			1,887			—			1,887
Total provisions(2)	77			(269,371)			511			(268,783)
Net charge-offs:
Charge-offs	(249)			(161,039)			(281)			(161,569)
Recoveries	—			21,977			10			21,987
Net charge-offs	(249)			(139,062)			(271)			(139,582)

Ending Balance	$	4,206		$	1,209,460		$	1,741		$	1,215,407
Allowance:
Ending balance: individually evaluated for impairment	$	—		$	69,626		$	—		$	69,626
Ending balance: collectively evaluated for impairment	$	4,206		$	1,139,834		$	1,741		$	1,145,781
Loans:
Ending balance: individually evaluated for impairment	$	—		$	1,148,282		$	—		$	1,148,282
Ending balance: collectively evaluated for impairment	$	705,691		$	20,554,555		$	17,766		$	21,278,012
Net charge-offs as a percentage of average loans in repayment (annualized)(3)	0.06		%	1.25		%	2.75		%
Allowance as a percentage of the ending total loan balance	0.60		%	5.57		%	9.80		%
Allowance as a percentage of the ending loans in repayment(3)	0.79		%	7.81		%	9.80		%
Allowance coverage of net charge-offs (annualized)	12.67			6.52			4.82
Ending total loans, gross	$	705,691		$	21,702,837		$	17,766
Average loans in repayment(3)	$	547,394		$	14,877,937		$	13,136
Ending loans in repayment(3)	$	530,476		$	15,490,132		$	17,766

(1) See Note 6, “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
Nine Months Ended September 30, 2021 (dollars in thousands)
Private Education Loan provisions for credit losses:
Provisions for loan losses	$	(269,371)
Provisions for unfunded loan commitments	251,135
Total Private Education Loan provisions for credit losses	(18,236)
Other impacts to the provisions for credit losses:
FFELP Loans	77
Credit Cards	511
Total	588
Provisions for credit losses reported in consolidated statements of income	$	(17,648)

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 September 30, (dollars in thousands)	Allowance		Unfunded Commitments		Allowance		Unfunded Commitments
Beginning Balance	$	113,525	$	1,413,840	$	64,772	$	1,161,696
Provision/New commitments - net(1)	192,559		3,148,434		129,904		2,885,024
Other provision items	(29,913)		—		15,068		—
Transfer - funded loans(2)	(168,377)		(2,345,348)		(110,613)		(2,083,128)
Ending Balance	$	107,794	$	2,216,926	$	99,131	$	1,963,592

	2022				2021
Nine Months Ended September 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)	339,705		5,584,129		218,304		4,963,789
Other provision items	(1,033)		—		32,831		—
Transfer - funded loans(2)	(303,591)		(5,144,179)		(262,048)		(4,673,215)
Ending Balance	$	107,794	$	2,216,926	$	99,131	$	1,963,592

(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.