Unfunded Loan Commitments (Tables)

3 Months Ended

Mar. 31, 2023

Schedule of Allowance for Credit Losses and Recorded Investments in Loans

Allowance for Credit Losses Metrics


Three Months Ended March 31, 2023 (dollars in thousands)	FFELP Loans			Private Education Loans			Credit Cards			Total
Allowance for Credit Losses
Beginning balance	$	3,444		$	1,353,631		$	—		$	1,357,075
Transfer from unfunded commitment liability(1)	—			148,513			—			148,513
Provisions:
Provision for current period	739			56,334			730			57,803


Total provisions(2)	739			56,334			730			57,803
Net charge-offs:
Charge-offs	(256)			(95,085)			(741)			(96,082)
Recoveries	—			11,986			11			11,997
Net charge-offs	(256)			(83,099)			(730)			(84,085)

Ending Balance	$	3,927		$	1,475,379		$	—		$	1,479,306
Allowance(3):

Ending balance: collectively evaluated for impairment	$	3,927		$	1,475,379		$	—		$	1,479,306
Loans(3):

Ending balance: collectively evaluated for impairment	$	592,318		$	21,898,003		$	—		$	22,490,321
Accrued interest to be capitalized(3):
Ending balance: collectively evaluated for impairment	$	—		$	1,150,802		$	—		$	1,150,802
Net charge-offs as a percentage of average loans in repayment (annualized)(4)	0.23		%	2.11		%	—		%
Allowance as a percentage of the ending total loan balance and accrued interest to be capitalized(5)	0.66		%	6.40		%	—		%
Allowance as a percentage of the ending loans in repayment and accrued interest to be capitalized on loans in repayment(4)(5)	0.88		%	9.00		%	—		%
Allowance coverage of net charge-offs (annualized)	3.83			4.44			—
Ending total loans, gross	$	592,318		$	21,898,003		$	—
Average loans in repayment(4)	$	451,451		$	15,764,143		$	—
Ending loans in repayment(4)	$	446,214		$	15,990,459		$	—
Accrued interest to be capitalized on loans in repayment(6)	$	—		$	408,263		$	—

(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 March 31, 2023 (dollars in thousands)
Private Education Loan provisions for credit losses:
Provisions for loan losses	$	56,334
Provisions for unfunded loan commitments	56,309
Total Private Education Loan provisions for credit losses	112,643
Other impacts to the provisions for credit losses:
FFELP Loans	739
Credit Cards	730
Total	1,469
Provisions for credit losses reported in consolidated statements of income	$	114,112

(3) For the three months ended March 31, 2023, there were no allowance for credit losses, loans, or accrued interest to be capitalized balances that were individually evaluated for impairment.

(4) 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).

(5) Accrued interest to be capitalized on Private Education Loans only.

(6) Accrued interest to be capitalized on loans in repayment includes interest on loans that are in repayment but have not yet entered into full principal and interest repayment status after any applicable grace period (but, for purposes of the table, does not include the interest on those loans while they are in forbearance).


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(3):

Ending balance: collectively evaluated for impairment	$	3,999		$	1,221,053		$	2,310		$	1,227,362
Loans(3):

Ending balance: collectively evaluated for impairment	$	682,273		$	21,735,369		$	27,547		$	22,445,189
Accrued interest to be capitalized(3):
Ending balance: collectively evaluated for impairment	$	—		$	993,698		$	—		$	993,698
Net charge-offs as a percentage of average loans in repayment (annualized)(4)	0.07		%	1.89		%	1.63		%
Allowance as a percentage of the ending total loan balance and accrued interest to be capitalized(5)	0.59		%	5.37		%	8.39		%
Allowance as a percentage of the ending loans in repayment and accrued interest to be capitalized on loans in repayment(4)(5)	0.75		%	7.43		%	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(4)	$	543,303		$	16,013,289		$	26,551
Ending loans in repayment(4)	$	535,080		$	16,095,157		$	27,547
Accrued interest to be capitalized on loans in repayment(6)	$	—		$	331,405		$	—

(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 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) For the three months ended March 31, 2022, there were no allowance for credit losses, loans, or accrued interest to be capitalized balances that were individually evaluated for impairment.

(5) Accrued interest to be capitalized on Private Education Loans only.

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.


	2023				2022
Three Months Ended March 31, (dollars in thousands)	Allowance		Unfunded Commitments		Allowance		Unfunded Commitments
Beginning Balance	$	124,924	$	1,995,808	$	72,713	$	1,776,976
Provision/New commitments - net(1)	52,252		1,124,816		47,454		968,830
Other provision items	4,057		—		7,226		—
Transfer - funded loans(2)	(148,513)		(2,436,271)		(94,686)		(2,184,058)
Ending Balance	$	32,720	$	684,353	$	32,707	$	561,748

(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.