Exhibit 99.1
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| News Release |
| For Immediate Release |
SALLIE MAE REPORTS FOURTH-QUARTER AND FULL-YEAR 2021 FINANCIAL RESULTS
Fourth-Quarter GAAP Net Income Attributable to Common Stock of $305 Million, $1.04 Per Diluted Share; Full-Year 2021 GAAP Net Income Attributable to Common Stock of $1.2 Billion, $3.61 Per Diluted Share
Fourth-Quarter Non-GAAP “Core Earnings” Net Income Attributable to Common Stock of $306 Million, $1.05 Per Diluted Share; Full-Year 2021 Non-GAAP “Core Earnings” Net Income Attributable to Common Stock
of $1.2 Billion, $3.67 Per Diluted Share
Board of Directors Approves New $1.25 Billion Share Repurchase Program
Enters Agreement to Acquire Nitro College, a Delaware-Based Digital Marketing
and Education Solutions Company
NEWARK, Del., Jan. 26, 2022 - Sallie Mae (Nasdaq: SLM), formally SLM Corporation, today released fourth-quarter and full-year 2021 financial results. Highlights of those results are included in the attached supplement. Complete financial results are available at www.SallieMae.com/investors.
Sallie Mae will host an earnings conference call tomorrow, Jan. 27, 2022, at 8 a.m. ET. Executives will be on hand to discuss various highlights of the quarter and to answer questions related to Sallie Mae’s performance. A live audio webcast of the conference call and presentation slides may be accessed at www.SallieMae.com/investors and the hosting website at: https://edge.media-server.com/mmc/p/vvw43zyp
Participants may also register for the earnings conference call at: http://www.directeventreg.com/registration/event/9479532. Once registration is completed, participants will be provided a dial-in number with a personalized conference code to access the call. Please dial in 15 minutes prior to the start time.
A replay of the webcast will be available via the company’s investor website approximately two hours after the call’s conclusion.
Sallie Mae (Nasdaq: SLM) believes education and life-long learning, in all forms, help people achieve great things. As the leader in private student lending, we provide financing and know-how to support access to college and offer products and resources to help customers make new goals and experiences, beyond college, happen. Learn more at SallieMae.com. Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.
Contacts:
Media
Rick Castellano, 302-451-2541, rick.castellano@SallieMae.com
Investors
Brian Cronin, 302-451-0304, brian.cronin@SallieMae.com
Sallie Mae Reports Fourth-Quarter and Full-Year 2021 Financial Results
Fourth-Quarter GAAP Net Income Attributable to Common Stock of $305 Million, $1.04 Per Diluted Share; Full-Year 2021 GAAP Net Income Attributable to Common Stock of $1.2 Billion, $3.61 Per Diluted Share
Fourth-Quarter Non-GAAP “Core Earnings” Net Income Attributable to Common Stock of $306 Million, $1.05 Per Diluted Share; Full-Year 2021 Non-GAAP “Core Earnings” Net Income Attributable to Common Stock
of $1.2 Billion, $3.67 Per Diluted Share
Board of Directors Approves New $1.25 Billion Share Repurchase Program
Enters Agreement to Acquire Nitro College, a Delaware-Based Digital Marketing and Education Solutions Company
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| “With a relentless focus on our core business, we delivered strong results in 2021 and continued our progress on each of our strategic imperatives. We also rigorously managed expenses, executed a capital return program that exceeded original expectations, and improved our earnings outlook throughout the year. That performance allowed us to increase our share repurchase goals and our dividend, further creating shareholder value. We expect that continued focus and execution to drive results in 2022. We continue to challenge ourselves to be creative in pursuing opportunities to reach and assist more students and families and strategically evolve our company. Our acquisition of Nitro College, when completed, will complement our core business, providing innovative and enhanced digital capabilities that meaningfully amplify our efforts to become an education solutions provider that helps students confidently navigate their entire higher education journey.” |
| Jonathan Witter, CEO, Sallie Mae |
Fourth-Quarter 2021 Highlights vs. Fourth-Quarter 2020 Highlights
Continue to Execute on our Core Business Strategy:
•GAAP net income of $306 million, down 29%.
•Net interest income of $367 million, up less than 1%.
•Private education loan originations of $737 million, up 18%.
•Sold $1.05 billion in private education loans; there were no loan sales in the year-ago period.
•Average private education loans outstanding of $21.3 billion, down 6%.
•Average yield on the private education loan portfolio was 8.31%, up 8 basis points.
•Private education loan provisions for credit losses, including amounts for unfunded commitments, was a negative provision of $16 million, compared with a negative provision of $317 million.
•Private education loans held-for-investment in forbearance were 1.9% of private education loans held-for-investment in repayment and forbearance, down from 4.3%.
•Private education loans held-for-investment delinquencies as a percentage of private education loans held-for-investment in repayment were 3.3%, up from 2.8%.
•Total operating expenses of $125 million, up from $122 million.
Progress on our Balance Sheet and Capital Allocation:
•In the fourth quarter of 2021, issued $500 million of 3.125% unsecured Senior Notes due 2026; used portion of net proceeds to redeem $200 million of 5.125% unsecured Senior Notes due 2022. In the fourth quarter of 2020, issued $500 million of 4.20% unsecured Senior Notes due 2025.
•Gain on sale of private education loans of $146 million in the fourth quarter of 2021.
•Repurchased 14 million shares of common stock under share repurchase programs in the fourth quarter of 2021. There were no common stock share repurchases in the year-ago period.
•Paid fourth-quarter common stock dividend of $0.11 per share, up from $0.03 per share for the fourth quarter of 2020.
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Investor Contact:
Brian Cronin, 302-451-0304
brian.cronin@SallieMae.com | | | | Media Contact:
Rick Castellano, 302-451-2541
rick.castellano@SallieMae.com |
The following are significant items or events that occurred in the fourth quarter of 2021 or early 2022, as applicable:
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| Provisions for Credit Losses |
Provision for credit losses in the fourth quarter of 2021 was a $15 million negative provision, compared with a $316 million negative provision in the year-ago quarter. During the fourth quarter of 2021, the provision for credit losses was a negative provision of $15 million primarily due to a $56 million reduction in the allowance for credit losses arising from the sale of $1.05 billion of private education loans during the quarter, and an additional reduction due to improved economic forecasts for the quarter. Offsetting these reductions was an increase to the provision for new originations during the quarter. In the year-ago quarter, the provision for credit losses was favorably affected by a $206 million reversal of provision for credit losses as a result of $3 billion of private education loans transferred to held-for-sale from held-for-investment, a benefit from faster prepayment speeds, and a benefit from improvements in the economic forecasts. |
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| Progress on Balance Sheet and Capital Allocation |
Balance Sheet
On Nov. 1, 2021, the company issued at par $500 million of 3.125% unsecured Senior Notes due Nov. 2, 2026. The company used a portion of the net proceeds to redeem its outstanding $200 million of 5.125% unsecured Senior Notes due Apr. 5, 2022. On Nov. 17, 2021, the company sold $1.05 billion of its private education loans, including $985 million of principal and $69 million in capitalized interest, to an unaffiliated third party.
Share Repurchases
In the fourth quarter of 2021, the company repurchased 14 million shares of its common stock at a total cost of $263 million, or an average purchase price of $18.52 per share, under a Rule 10b5-1 trading plan authorized under its share repurchase programs.
From Jan. 1, 2020 through Dec. 31, 2021, the company has repurchased 146 million shares of common stock under its repurchase programs, which represents a 35% reduction in the total number of shares outstanding on Jan. 1, 2020. The full-year 2021 repurchases were 99 million shares at an average purchase price of $17.37 per share, which is a 26% decrease in shares outstanding since the beginning of 2021. There was $38 million of capacity remaining under the 2021 Share Repurchase Program at Dec. 31, 2021. |
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| Acquisition of Nitro College |
| On Jan. 26, 2022, the company signed a definitive agreement with Epic Research LLC to purchase the assets primarily used or held for use of Epic Research Education Services, LLC, which does business as Nitro College (“Nitro”). Nitro provides resources that help students and families evaluate how to responsibly pay for college and manage their financial responsibilities after graduation. Nitro takes pride in equipping college students and their parents with the necessary tools to navigate college financing, manage their debt, and obtain scholarship opportunities. In addition to providing a scholarship finder, Nitro provides FAFSA application support, information on grants, and calculators to help college students determine the potential return on investment from a college degree. The addition of Nitro will support the company’s mission of providing students with the confidence needed to successfully navigate the higher education journey. Strategically, we expect the acquisition of the Nitro assets, including its employees and intellectual property, when complete, to immediately expand the company’s digital marketing capabilities, reduce the cost to acquire customer accounts, and accelerate the company’s progress to become a broader education solutions provider for students before, during, and immediately after college. The company has had a partnership with Nitro since 2017, and it has been a source of private education loan leads during this period. The transaction is subject to customary approvals and closing conditions and is expected to close in the first quarter of 2022. Terms of the purchase are not being disclosed, but the purchase price is not material to the company. Keefe, Bruyette & Woods, Inc., a Stifel Company, served as exclusive financial advisor and Davis Polk & Wardell LLP served as legal advisor to Sallie Mae in this transaction. |
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| 2022 Share Repurchase Program* |
| The company has been authorized to repurchase up to $1.25 billion in common stock under a new share repurchase program, which is effective immediately and expires on Jan. 25, 2024 (the “2022 Share Repurchase Program”). The 2022 Share Repurchase Program is in addition to $26 million of capacity remaining under the 2021 Share Repurchase Program at Jan. 25, 2022. Repurchases may occur from time to time and through a variety of methods, including tender offers, open market repurchases, repurchases effected through Rule 10b5-1 trading plans, negotiated block purchases, accelerated share repurchase programs, or other similar transactions. The timing and volume of any repurchases will be subject to market conditions, and there can be no guarantee that the company will repurchase up to the limit of the programs or at all. |
* See page 6 for a cautionary note regarding forward-looking statements.
The following provides guidance on the company’s performance in 2022.
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| Guidance* |
For 2022, the company expects the following: •Full-year diluted Non-GAAP “Core Earnings” per common share of $2.80 - $3.00.** •Full-year Private Education Loan originations year-over-year growth of 8% - 10%. •Full-year total loan portfolio net charge-offs of $255 million - $275 million. •Full-year non-interest expenses of $555 million - $565 million.
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* See page 6 for a cautionary note regarding forward-looking statements.
** See Non-GAAP “Core Earnings” to GAAP Reconciliation on page 10 for a description of non-GAAP “Core Earnings”. GAAP net income attributable to SLM Corporation common stock is the most directly comparable GAAP measure. However, this GAAP measure is not accessible on a forward-looking basis because the company is unable to estimate the net impact of derivative accounting and the associated net tax expense (benefit) for future periods.
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Quarterly and Full-Year
Financial Highlights |
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| 4Q 2021 | 3Q 2021 | 4Q 2020 | 2021 | 2020 |
| Income Statement ($ millions) | | | | | |
| Total interest income | $458 | $448 | $480 | $1,777 | $2,022 |
| Total interest expense | 91 | 90 | 113 | 382 | 542 |
| Net interest income | 367 | 358 | 367 | 1,395 | 1,480 |
| Less: provisions for credit losses | (15) | 138 | (316) | (33) | 93 |
| Total non-interest income | 153 | 14 | 1 | 632 | 331 |
| Total non-interest expenses | 125 | 141 | 124 | 520 | 564 |
| Income tax expense | 104 | 19 | 127 | 380 | 273 |
| Net income | 306 | 73 | 433 | 1,161 | 881 |
| Preferred stock dividends | 1 | 1 | 2 | 5 | 10 |
| Net income attributable to common stock | 305 | 72 | 431 | 1,156 | 871 |
Non-GAAP “Core Earnings” adjustments to GAAP(1) | 1 | 3 | 9 | 18 | (8) |
Non-GAAP “Core Earnings” net income attributable to common stock(1) | 306 | 74 | 440 | 1,173 | 863 |
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| Ending Balances ($ millions) | | | | | |
| Private Education Loans held for investment, net | $19,625 | $20,562 | $18,437 | $19,625 | $18,437 |
| FFELP Loans held for investment, net | 693 | 703 | 735 | 693 | 735 |
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| Credit Cards held for investment, net | 23 | 16 | 11 | 23 | 11 |
| Deposits | 20,828 | 20,891 | 22,666 | 20,828 | 22,666 |
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| Key Performance Metrics | | | | | |
| Net interest margin | 5.13% | 5.03% | 4.82% | 4.81% | 4.81% |
| Yield - Total interest-earning assets | 6.40% | 6.30% | 6.30% | 6.13% | 6.57% |
| Private Education Loans | 8.31% | 8.26% | 8.23% | 8.25% | 8.42% |
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| Credit Cards | 4.12% | 6.95% | (3.53)% | 4.67% | (6.04)% |
| Cost of Funds | 1.36% | 1.35% | 1.60% | 1.42% | 1.90% |
Return on Assets (“ROA”)(2) | 4.2% | 1.0% | 5.6% | 3.9% | 2.8% |
Non-GAAP “Core Earnings” ROA(3) | 4.2% | 1.0% | 5.7% | 4.0% | 2.8% |
Return on Common Equity (“ROCE”)(4) | 62.3% | 14.4% | 87.3% | 53.9% | 45.5% |
Non-GAAP “Core Earnings” ROCE(5) | 62.6% | 15.0% | 89.0% | 54.7% | 45.1% |
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| Per Common Share | | | | | |
| GAAP diluted earnings per common share | $1.04 | $0.24 | $1.13 | $3.61 | $2.25 |
Non-GAAP “Core Earnings” diluted earnings per common share(1) | $1.05 | $0.24 | $1.15 | $3.67 | $2.23 |
| Average common and common equivalent shares outstanding (millions) | 293 | 305 | 381 | 320 | 387 |
Footnotes:
(1) Sallie Mae provides non-GAAP “Core Earnings” because it is one of several measures management uses to evaluate management performance and allocate corporate resources. The difference between non-GAAP “Core Earnings” and GAAP net income is driven by mark-to-fair value unrealized gains and losses on derivative contracts recognized in GAAP, but not in non-GAAP “Core Earnings” results. See the Non-GAAP “Core Earnings” to GAAP Reconciliation in this press release for a full reconciliation of GAAP and non-GAAP “Core Earnings.” Non-GAAP “Core Earnings” exclude periodic unrealized gains and losses caused by the mark-to-fair value valuations on derivatives that do not qualify for hedge accounting treatment under GAAP, but include current period accruals on the derivative instruments. Under GAAP, for our derivatives held to maturity, the cumulative net unrealized gain or loss over the life of the contract will be equal to $0. Management believes the company’s derivatives are effective economic hedges, and, as such, they are a critical element of the company’s interest rate risk management strategy. Our non-GAAP “Core Earnings” are not defined terms within GAAP and may not be comparable to similarly titled measures reported by other companies.
(2) We calculate and report our Return on Assets (“ROA”) as the ratio of (a) GAAP net income numerator (annualized) to (b) the GAAP total average assets denominator.
(3) We calculate and report our non-GAAP “Core Earnings” Return on Assets (“Non-GAAP Core Earnings ROA”) as the ratio of (a) non-GAAP “Core Earnings” net income numerator (annualized) to (b) the GAAP total average assets denominator.
(4) We calculate and report our Return on Common Equity (“ROCE”) as the ratio of (a) GAAP net income attributable to common stock numerator (annualized) to (b) the net denominator, which consists of GAAP total average equity less total average preferred stock.
(5) We calculate and report our non-GAAP “Core Earnings” Return on Common Equity (“Non-GAAP Core Earnings ROCE”) as the ratio of (a) non-GAAP “Core Earnings” net income attributable to common stock numerator (annualized) to (b) the net denominator, which consists of GAAP total average equity less total average preferred stock.
***
This press release contains “forward-looking statements” and information based on management’s current expectations as of the date of this release. Statements that are not historical facts, including statements about our beliefs, opinions, or expectations and statements that assume or are dependent upon future events, are forward-looking statements. This includes, but is not limited to: statements regarding future developments surrounding COVID-19 or any other pandemic, including, without limitation, statements regarding the potential impact of COVID-19 or any other pandemic on the company’s business, results of operations, financial condition, and/or cash flows; the company’s expectation and ability to pay a quarterly cash dividend on its common stock in the future, subject to the determination by the company’s Board of Directors, and based on an evaluation of the company’s earnings, financial condition and requirements, business conditions, capital allocation determinations, and other factors, risks, and uncertainties; the company’s 2022 guidance; the company’s three-year horizon outlook; the company’s expectation and ability to execute loan sales and share repurchases; the company’s projections regarding originations, net charge-offs, non-interest expenses, earnings, balance sheet position, and other metrics; any estimates related to accounting standard changes; and any estimates related to the impact of credit administration practices changes, including the results of simulations or other behavioral observations. Forward-looking statements are subject to risks, uncertainties, assumptions, and other factors that may cause actual results to be materially different from those reflected in such forward-looking statements. These factors include, among others, the risks and uncertainties set forth in Item 1A. “Risk Factors” and elsewhere in the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2020 (filed with the Securities and Exchange Commission (“SEC”) on Feb. 25, 2021) and subsequent filings with the SEC; the societal, business, and legislative/regulatory impact of pandemics and other public heath crises; increases in financing costs; limits on liquidity; increases in costs associated with compliance with laws and regulations; failure to comply with consumer protection, banking and other laws; changes in accounting standards and the impact of related changes in significant accounting estimates, including any regarding the measurement of our allowance for credit losses and the related provision expense; any adverse outcomes in any significant litigation to which the company is a party; credit risk associated with the company’s exposure to third parties, including counterparties to the company’s derivative transactions; and changes in the terms of education loans and the educational credit marketplace (including changes resulting from new laws and the implementation of existing laws). We could also be affected by, among other things: changes in our funding costs and availability; reductions to our credit ratings; cybersecurity incidents, cyberattacks, and other failures or breaches of our operating systems or infrastructure, including those of third-party vendors; damage to our reputation; risks associated with restructuring initiatives, including failures to successfully implement cost-cutting programs and the adverse effects of such initiatives on our business; changes in the demand for educational financing or in financing preferences of lenders, educational institutions, students, and their families; changes in law and regulations with respect to the student lending business and financial institutions generally; changes in banking rules and regulations, including increased capital requirements; increased competition from banks and other consumer lenders; the creditworthiness of our customers; changes in the general interest rate environment, including the rate relationships among relevant money-market instruments and those of our earning assets versus our funding arrangements; rates of prepayments on the loans that we own; changes in general economic conditions and our ability to successfully effectuate any acquisitions; and other strategic initiatives. The preparation of our consolidated financial statements also requires us to make certain estimates and assumptions, including estimates and assumptions about future events. These estimates or assumptions may prove to be incorrect. All forward-looking statements contained in this release are qualified by these cautionary statements and are made only as of the date of this release. We do not undertake any obligation to update or revise these forward-looking statements to conform such statements to actual results or changes in our expectations.
Information on COVID-19 Impact on Sallie Mae
The COVID-19 crisis is unprecedented and has had a significant impact on the economic environment globally and in the United States. There is a significant amount of uncertainty as to the length and breadth of the impact to the U.S. economy and, consequently, on the company. Please refer to Item 1A. “Risk Factors — Pandemic Risk” in the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2020 (filed with the SEC on Feb. 25, 2021), for risks associated with COVID-19. Also, see above for a cautionary note regarding forward-looking statements.
SLM CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
| | | | | | | | | | | | | | |
| | December 31, | | December 31, |
| | 2021 | | 2020 |
| Assets | | | | |
| Cash and cash equivalents | | $ | 4,334,603 | | | $ | 4,455,292 | |
| Investments: | | | | |
| Trading investments at fair value (cost of $29,049 and $12,551, respectively ) | | 37,465 | | | 16,923 | |
| Available-for-sale investments at fair value (cost of $2,535,568 and $1,986,957, respectively) | | 2,517,956 | | | 1,996,634 | |
| Other investments | | 140,037 | | | 80,794 | |
| Total investments | | 2,695,458 | | | 2,094,351 | |
| Loans held for investment (net of allowance for losses of $1,165,335 and $1,361,723, respectively) | | 20,341,283 | | | 19,183,143 | |
| Loans held for sale | | — | | | 2,885,640 | |
| Restricted cash | | 210,741 | | | 154,417 | |
| Other interest-earning assets | | 9,655 | | | 42,874 | |
| Accrued interest receivable | | 1,205,667 | | | 1,387,305 | |
| Premises and equipment, net | | 150,516 | | | 154,670 | |
| Income taxes receivable, net | | 239,578 | | | 374,706 | |
| Tax indemnification receivable | | 8,047 | | | 18,492 | |
| Other assets | | 26,351 | | | 19,533 | |
| Total assets | | $ | 29,221,899 | | | $ | 30,770,423 | |
| | | | |
| Liabilities | | | | |
| Deposits | | $ | 20,828,124 | | | $ | 22,666,039 | |
| | | | |
| Long-term borrowings | | 5,930,990 | | | 5,189,217 | |
| | | | |
| | | | |
| Other liabilities | | 313,074 | | | 352,332 | |
| Total liabilities | | 27,072,188 | | | 28,207,588 | |
| | | | |
| Commitments and contingencies | | | | |
| | | | |
| Equity | | | | |
| Preferred stock, par value $0.20 per share, 20 million shares authorized: | | | | |
| Series B: 2.5 million and 2.5 million shares issued, respectively, at stated value of $100 per share | | 251,070 | | | 251,070 | |
| Common stock, par value $0.20 per share, 1.125 billion shares authorized: 432.0 million and 456.7 million shares issued, respectively | | 86,403 | | | 91,346 | |
| Additional paid-in capital | | 1,074,384 | | | 1,331,247 | |
| Accumulated other comprehensive loss (net of tax benefit of $(5,707) and $(10,908), respectively) | | (17,897) | | | (34,200) | |
| Retained earnings | | 2,817,134 | | | 1,722,365 | |
| Total SLM Corporation stockholders’ equity before treasury stock | | 4,211,094 | | | 3,361,828 | |
| Less: Common stock held in treasury at cost: 153.1 million and 81.4 million shares, respectively | | (2,061,383) | | | (798,993) | |
| Total equity | | 2,149,711 | | | 2,562,835 | |
| Total liabilities and equity | | $ | 29,221,899 | | | $ | 30,770,423 | |
SLM CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Quarters Ended | | Years Ended |
| | | December 31, | | December 31, |
| | | 2021 | | 2020 | | 2021 | | 2020 |
| Interest income: | | | | | | | | |
| Loans | | $ | 452,466 | | | $ | 475,725 | | | $ | 1,756,945 | | | $ | 1,989,004 | |
| Investments | | 4,597 | | | 2,657 | | | 13,859 | | | 11,743 | |
| Cash and cash equivalents | | 1,378 | | | 1,173 | | | 6,040 | | | 20,913 | |
| Total interest income | | 458,441 | | | 479,555 | | | 1,776,844 | | | 2,021,660 | |
| Interest expense: | | | | | | | | |
| Deposits | | 49,887 | | | 74,336 | | | 225,370 | | | 393,194 | |
| Interest expense on short-term borrowings | | 4,585 | | | 3,418 | | | 18,945 | | | 14,459 | |
| Interest expense on long-term borrowings | | 36,619 | | | 35,264 | | | 137,763 | | | 134,014 | |
| | | | | | | | |
| Total interest expense | | 91,091 | | | 113,018 | | | 382,078 | | | 541,667 | |
| Net interest income | | 367,350 | | | 366,537 | | | 1,394,766 | | | 1,479,993 | |
| Less: provisions for credit losses | | (15,309) | | | (316,372) | | | (32,957) | | | 93,133 | |
| Net interest income after provisions for credit losses | | 382,659 | | | 682,909 | | | 1,427,723 | | | 1,386,860 | |
| Non-interest income: | | | | | | | | |
| Gains (losses) on sales of loans, net | | 145,535 | | | (247) | | | 548,315 | | | 238,315 | |
| | | | | | | | |
| Gains (losses) on derivatives and hedging activities, net | | (17) | | | 136 | | | 144 | | | 49,544 | |
| Other income | | 7,243 | | | 1,043 | | | 83,990 | | | 43,590 | |
| Total non-interest income | | 152,761 | | | 932 | | | 632,449 | | | 331,449 | |
| Non-interest expenses: | | | | | | | | |
| Operating expenses: | | | | | | | | |
| Compensation and benefits | | 57,895 | | | 63,084 | | | 258,321 | | | 282,497 | |
| FDIC assessment fees | | 5,734 | | | 4,448 | | | 23,368 | | | 21,956 | |
| Other operating expenses | | 61,866 | | | 54,211 | | | 236,964 | | | 233,635 | |
| Total operating expenses | | 125,495 | | | 121,743 | | | 518,653 | | | 538,088 | |
| Restructuring expenses | | — | | | 2,088 | | | 1,255 | | | 26,215 | |
| Total non-interest expenses | | 125,495 | | | 123,831 | | | 519,908 | | | 564,303 | |
| Income before income tax expense | | 409,925 | | | 560,010 | | | 1,540,264 | | | 1,154,006 | |
| Income tax expense | | 103,660 | | | 127,310 | | | 379,751 | | | 273,316 | |
| Net income | | 306,265 | | | 432,700 | | | 1,160,513 | | | 880,690 | |
| Preferred stock dividends | | 1,177 | | | 1,734 | | | 4,736 | | | 9,734 | |
| Net income attributable to SLM Corporation common stock | | $ | 305,088 | | | $ | 430,966 | | | $ | 1,155,777 | | | $ | 870,956 | |
| Basic earnings per common share attributable to SLM Corporation | | $ | 1.06 | | | $ | 1.15 | | | $ | 3.67 | | | $ | 2.27 | |
| Average common shares outstanding | | 287,828 | | | 375,120 | | | 314,993 | | | 383,705 | |
| Diluted earnings per common share attributable to SLM Corporation | | $ | 1.04 | | | $ | 1.13 | | | $ | 3.61 | | | $ | 2.25 | |
| Average common and common equivalent shares outstanding | | 292,756 | | | 380,653 | | | 319,912 | | | 387,195 | |
| Declared dividends per common share attributable to SLM Corporation | | $ | 0.11 | | | $ | 0.03 | | | $ | 0.20 | | | $ | 0.12 | |
SLM CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Quarters Ended | | Years Ended |
| | December 31, | | December 31, |
| | 2021 | | 2020 | | 2021 | | 2020 |
| | | | | | | | |
| | | | | | | | |
| Net income | | $ | 306,265 | | | $ | 432,700 | | | $ | 1,160,513 | | | $ | 880,690 | |
| Other comprehensive income (loss): | | | | | | | | |
| Unrealized gains (losses) on investments | | (16,350) | | | 205 | | | (26,606) | | | 7,764 | |
| Unrealized gains (losses) on cash flow hedges | | 18,737 | | | 6,274 | | | 48,111 | | | (36,511) | |
| Total unrealized gains (losses) | | 2,387 | | | 6,479 | | | 21,505 | | | (28,747) | |
| Income tax (expense) benefit | | (581) | | | (1,738) | | | (5,202) | | | 6,914 | |
| Other comprehensive income (loss), net of tax (expense) benefit | | 1,806 | | | 4,741 | | | 16,303 | | | (21,833) | |
| Total comprehensive income | | $ | 308,071 | | | $ | 437,441 | | | $ | 1,176,816 | | | $ | 858,857 | |
Non-GAAP “Core Earnings” to GAAP Reconciliation
The following table reflects adjustments associated with our derivative activities.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Quarters Ended | | Years Ended |
| | December 31, | | December 31, |
| (Dollars in thousands, except per share amounts) | | 2021 | | 2020 | | 2021 | | 2020 |
| | | | | | | | |
| Non-GAAP “Core Earnings” adjustments to GAAP: | | | | | | | | |
| GAAP net income | | $ | 306,265 | | | $ | 432,700 | | | $ | 1,160,513 | | | $ | 880,690 | |
| Preferred stock dividends | | 1,177 | | | 1,734 | | | 4,736 | | | 9,734 | |
| GAAP net income attributable to SLM Corporation common stock | | $ | 305,088 | | | $ | 430,966 | | | $ | 1,155,777 | | | $ | 870,956 | |
| | | | | | | | |
| Adjustments: | | | | | | | | |
Net impact of derivative accounting(1) | | 1,833 | | | 11,447 | | | 23,216 | | | (10,164) | |
Net tax expense (benefit)(2) | | 443 | | | 2,795 | | | 5,615 | | | (2,481) | |
| Total non-GAAP “Core Earnings” adjustments to GAAP | | 1,390 | | | 8,652 | | | 17,601 | | | (7,683) | |
| | | | | | | | |
| Non-GAAP “Core Earnings” attributable to SLM Corporation common stock | | $ | 306,478 | | | $ | 439,618 | | | $ | 1,173,378 | | | $ | 863,273 | |
| | | | | | | | |
| GAAP diluted earnings per common share | | $ | 1.04 | | | $ | 1.13 | | | $ | 3.61 | | | $ | 2.25 | |
| Derivative adjustments, net of tax | | 0.01 | | | 0.02 | | | 0.06 | | | (0.02) | |
| Non-GAAP “Core Earnings” diluted earnings per common share | | $ | 1.05 | | | $ | 1.15 | | | $ | 3.67 | | | $ | 2.23 | |
______
(1) Derivative Accounting: Non-GAAP “Core Earnings” exclude periodic unrealized gains and losses caused by the mark-to-fair value valuations on derivatives that do not qualify for hedge accounting treatment under GAAP, but include current period accruals on the derivative instruments. Under GAAP, for our derivatives held to maturity, the cumulative net unrealized gain or loss over the life of the contract will equal $0.
(2) Non-GAAP “Core Earnings” tax rate is based on the effective tax rate at Sallie Mae Bank, where the derivative instruments are held.
The following table reflects our provisions for credit losses and total portfolio net charge-offs:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Quarters Ended | | Years Ended |
| | December 31, | | December 31, |
| (Dollars in thousands) | | 2021 | | 2020 | | 2021 | | 2020 |
| | | | | | | | |
| Provisions for credit losses | | $ | (15,309) | | | $ | (316,372) | | | $ | (32,957) | | | $ | 93,133 | |
| Total portfolio net charge-offs | | (61,181) | | | (61,198) | | | (200,762) | | | (216,036) | |
We evaluate management’s performance internally using a measure that starts with non-GAAP “Core Earnings” net income as disclosed above for a period, and further adjusting it by increasing it by the impact of GAAP provisions for credit losses and decreasing it by the total portfolio net charge-offs recorded in that period, net of the tax impact of these adjustments.
Average Balance Sheets
The following table reflects the rates earned on interest-earning assets and paid on interest-bearing liabilities and reflects our net interest margin on a consolidated basis.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarters Ended December 31, | | Years Ended December 31, |
| | | 2021 | | 2020 | | 2021 | | 2020 |
| (Dollars in thousands) | | Balance | | Rate | | Balance | | Rate | | Balance | | Rate | | Balance | | Rate |
| Average Assets | | | | | | | | | | | | | | | | |
| Private Education Loans | | $ | 21,285,836 | | | 8.31 | % | | $ | 22,675,980 | | | 8.23 | % | | $ | 20,968,061 | | | 8.25 | % | | $ | 22,426,216 | | | 8.42 | % |
| FFELP Loans | | 701,953 | | | 3.46 | | | 743,330 | | | 3.47 | | | 718,186 | | | 3.43 | | | 757,953 | | | 3.76 | |
| Personal Loans | | — | | | — | | | — | | | — | | | — | | | — | | | 582,552 | | | 12.43 | |
| Credit Cards | | 21,396 | | | 4.12 | | | 11,780 | | | (3.53) | | | 14,982 | | | 4.67 | | | 9,390 | | | (6.04) | |
| Taxable securities | | 2,540,127 | | | 0.72 | | | 2,058,595 | | | 0.50 | | | 2,142,025 | | | 0.65 | | | 1,547,837 | | | 0.73 | |
| Cash and other short-term investments | | 3,849,812 | | | 0.19 | | | 4,798,530 | | | 0.13 | | | 5,139,731 | | | 0.14 | | | 5,447,844 | | | 0.41 | |
| Total interest-earning assets | | 28,399,124 | | | 6.40 | % | | 30,288,215 | | | 6.30 | % | | 28,982,985 | | | 6.13 | % | | 30,771,792 | | | 6.57 | % |
| | | | | | | | | | | | | | | | |
| Non-interest-earning assets | | 578,335 | | | | | 683,472 | | | | | 636,691 | | | | | 236,536 | | | |
| | | | | | | | | | | | | | | | |
| Total assets | | $ | 28,977,459 | | | | | $ | 30,971,687 | | | | | $ | 29,619,676 | | | | | $ | 31,008,328 | | | |
| | | | | | | | | | | | | | | | | |
| Average Liabilities and Equity | | | | | | | | | | | | | | | | |
| Brokered deposits | | $ | 10,223,973 | | | 1.26 | % | | $ | 11,963,884 | | | 1.55 | % | | $ | 11,015,170 | | | 1.35 | % | | $ | 12,777,874 | | | 1.84 | % |
| Retail and other deposits | | 10,559,488 | | | 0.64 | | | 10,844,293 | | | 1.01 | | | 10,540,170 | | | 0.70 | | | 10,772,161 | | | 1.47 | |
Other interest-bearing liabilities(1) | | 5,850,024 | | | 2.83 | | | 5,323,987 | | | 2.89 | | | 5,390,098 | | | 2.94 | | | 4,982,771 | | | 2.98 | |
| Total interest-bearing liabilities | | 26,633,485 | | | 1.36 | % | | 28,132,164 | | | 1.60 | % | | 26,945,438 | | | 1.42 | % | | 28,532,806 | | | 1.90 | % |
| | | | | | | | | | | | | | | | | |
| Non-interest-bearing liabilities | | 149,253 | | | | | 549,591 | | | | | 279,344 | | | | | 234,798 | | | |
| Equity | | 2,194,721 | | | | | 2,289,932 | | | | | 2,394,894 | | | | | 2,240,724 | | | |
| Total liabilities and equity | | $ | 28,977,459 | | | | | $ | 30,971,687 | | | | | $ | 29,619,676 | | | | | $ | 31,008,328 | | | |
| | | | | | | | | | | | | | | | | |
| Net interest margin | | | | 5.13 | % | | | | 4.82 | % | | | | 4.81 | % | | | | 4.81 | % |
__________
(1) Includes the average balance of our unsecured borrowings, as well as secured borrowings and amortization expense of transaction costs related to our term asset-backed securitizations and our Secured Borrowing Facility.
Earnings per Common Share
Basic earnings per common share (“EPS”) are calculated using the weighted average number of shares of common stock outstanding during each period. A reconciliation of the numerators and denominators of the basic and diluted EPS calculations follows.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Quarters Ended | | Years Ended |
| | | December 31, | | December 31, |
| (In thousands, except per share data) | | 2021 | | 2020 | | 2021 | | 2020 |
| Numerator: | | | | | | | | |
| Net income | | $ | 306,265 | | | $ | 432,700 | | | $ | 1,160,513 | | | $ | 880,690 | |
| Preferred stock dividends | | 1,177 | | | 1,734 | | | 4,736 | | | 9,734 | |
| Net income attributable to SLM Corporation common stock | | $ | 305,088 | | | $ | 430,966 | | | $ | 1,155,777 | | | $ | 870,956 | |
| Denominator: | | | | | | | | |
| Weighted average shares used to compute basic EPS | | 287,828 | | | 375,120 | | | 314,993 | | | 383,705 | |
| Effect of dilutive securities: | | | | | | | | |
Dilutive effect of stock options, restricted stock, restricted stock units, performance stock units and Employee Stock Purchase Plan (“ESPP”) (1)(2) | | 4,928 | | | 5,533 | | | 4,919 | | | 3,490 | |
| | | | | | | | |
| Weighted average shares used to compute diluted EPS | | 292,756 | | | 380,653 | | | 319,912 | | | 387,195 | |
| | | | | | | | |
| Basic earnings per common share attributable to SLM Corporation | | $ | 1.06 | | | $ | 1.15 | | | $ | 3.67 | | | $ | 2.27 | |
| | | | | | | | |
| Diluted earnings per common share attributable to SLM Corporation | | $ | 1.04 | | | $ | 1.13 | | | $ | 3.61 | | | $ | 2.25 | |
__________
(1) Includes the potential dilutive effect of additional common shares that are issuable upon exercise of outstanding stock options, restricted stock, restricted stock units, performance stock units and the outstanding commitment to issue shares under the ESPP, determined by the treasury stock method.
(2) For the quarter and year ended December 31, 2021, securities covering 1 million shares, respectively, were outstanding but not included in the computation of diluted earnings per share because they were anti-dilutive. For the quarter and year ended December 31, 2020, securities covering no shares, respectively, were outstanding but not included in the computation of diluted earnings per share because they were anti-dilutive.
Allowance for Credit Losses Metrics
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Allowance for Credit Losses |
| | | Quarter Ended December 31, 2021 |
| (Dollars in thousands) | | FFELP
Loans | | Private
Education
Loans | | | | Credit
Cards | | Total |
| Allowance for Credit Losses | | | | | | | | | | |
| Beginning balance | | $ | 4,206 | | | $ | 1,209,460 | | | | | $ | 1,741 | | | $ | 1,215,407 | |
| | | | | | | | | | |
Transfer from unfunded commitment liability(1) | | — | | | 39,606 | | | | | — | | | 39,606 | |
| Provisions: | | | | | | | | | | |
| Provision for current period | | (57) | | | 27,071 | | | | | 614 | | | 27,628 | |
| | | | | | | | | | |
| Loan sale reduction to provision | | — | | | (56,125) | | | | | — | | | (56,125) | |
Total provisions(2) | | (57) | | | (29,054) | | | | | 614 | | | (28,497) | |
| Net charge-offs: | | | | | | | | | | |
| Charge-offs | | (72) | | | (68,552) | | | | | (76) | | | (68,700) | |
| Recoveries | | — | | | 7,517 | | | | | 2 | | | 7,519 | |
| Net charge-offs | | (72) | | | (61,035) | | | | | (74) | | | (61,181) | |
| | | | | | | | | | |
| Ending Balance | | $ | 4,077 | | | $ | 1,158,977 | | | | | $ | 2,281 | | | $ | 1,165,335 | |
| Allowance: | | | | | | | | | | |
| Ending balance: individually evaluated for impairment | | $ | — | | | $ | 47,712 | | | | | $ | — | | | $ | 47,712 | |
| Ending balance: collectively evaluated for impairment | | $ | 4,077 | | | $ | 1,111,265 | | | | | $ | 2,281 | | | $ | 1,117,623 | |
| Loans: | | | | | | | | | | |
| Ending balance: individually evaluated for impairment | | $ | — | | | $ | 1,057,665 | | | | | $ | — | | | $ | 1,057,665 | |
| Ending balance: collectively evaluated for impairment | | $ | 695,216 | | | $ | 19,659,198 | | | | | $ | 25,014 | | | $ | 20,379,428 | |
Net charge-offs as a percentage of average loans in repayment (annualized)(3) | | 0.05 | % | | 1.58 | % | | | | 1.38 | % | | |
| Allowance as a percentage of the ending total loan balance | | 0.59 | % | | 5.59 | % | | | | 9.12 | % | | |
Allowance as a percentage of the ending loans in repayment(3) | | 0.74 | % | | 7.47 | % | | | | 9.12 | % | | |
| Allowance coverage of net charge-offs (annualized) | | 14.16 | | | 4.75 | | | | | 7.71 | | | |
| Ending total loans, gross | | $ | 695,216 | | | $ | 20,716,863 | | | | | $ | 25,014 | | | |
Average loans in repayment(3) | | $ | 537,621 | | | $ | 15,492,265 | | | | | $ | 21,469 | | | |
Ending loans in repayment(3) | | $ | 553,980 | | | $ | 15,511,212 | | | | | $ | 25,014 | | | |
__________
(1) See “Unfunded Loan Commitments” on page 21 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 |
| (Dollars in thousands) | | Quarter Ended
December 31, 2021 |
| Private Education Loan provisions for credit losses: | | |
| Provisions for credit losses | | $ | (29,054) | |
| Provisions for unfunded loan commitments | | 13,188 | |
| Total Private Education Loan provisions for credit losses | | (15,866) | |
| | |
| Other impacts to the provisions for credit losses: | | |
| | |
| FFELP Loans | | (57) | |
| Credit Cards | | 614 | |
| Total | | 557 | |
| Provisions for credit losses reported in consolidated statements of income | | $ | (15,309) | |
(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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Allowance for Credit Losses |
| | | Quarter Ended December 31, 2020 |
| (Dollars in thousands) | | FFELP
Loans | | Private Education
Loans | | | | Credit
Cards | | Total |
| Allowance for Credit Losses | | | | | | | | | | |
| Beginning balance | | $ | 4,363 | | | $ | 1,728,811 | | | | | $ | 1,385 | | | $ | 1,734,559 | |
Transfer from unfunded commitment liability(1) | | — | | | 41,253 | | | | | — | | | 41,253 | |
| Provisions: | | | | | | | | | | |
| Provision for current period | | 135 | | | (147,494) | | | | | 137 | | | (147,222) | |
| | | | | | | | | | |
| Loan transfer to held-for-sale | | — | | | (205,669) | | | | | — | | | (205,669) | |
Total provisions(2) | | 135 | | | (353,163) | | | | | 137 | | | (352,891) | |
| Net charge-offs: | | | | | | | | | | |
| Charge-offs | | (120) | | | (66,780) | | | | | (23) | | | (66,923) | |
| Recoveries | | — | | | 5,723 | | | | | 2 | | | 5,725 | |
| Net charge-offs | | (120) | | | (61,057) | | | | | (21) | | | (61,198) | |
| | | | | | | | | | |
| Ending Balance | | $ | 4,378 | | | $ | 1,355,844 | | | | | $ | 1,501 | | | $ | 1,361,723 | |
| Allowance: | | | | | | | | | | |
| Ending balance: individually evaluated for impairment | | $ | — | | | $ | 104,265 | | | | | $ | — | | | $ | 104,265 | |
| Ending balance: collectively evaluated for impairment | | $ | 4,378 | | | $ | 1,251,579 | | | | | $ | 1,501 | | | $ | 1,257,458 | |
| Loans: | | | | | | | | | | |
| Ending balance: individually evaluated for impairment | | $ | — | | | $ | 1,274,590 | | | | | $ | — | | | $ | 1,274,590 | |
| Ending balance: collectively evaluated for impairment | | $ | 737,593 | | | $ | 18,454,747 | | | | | $ | 12,238 | | | $ | 19,204,578 | |
Net charge-offs as a percentage of average loans in repayment (annualized)(3) | | 0.09 | % | | 1.52 | % | | | | 0.71 | % | | |
| Allowance as a percentage of the ending total loan balance | | 0.59 | % | | 6.87 | % | | | | 12.27 | % | | |
Allowance as a percentage of the ending loans in repayment(3) | | 0.76 | % | | 9.48 | % | | | | 12.27 | % | | |
| Allowance coverage of net charge-offs (annualized) | | 9.12 | | | 5.55 | | | | | 17.87 | | | |
| Ending total loans, gross | | $ | 737,593 | | | $ | 19,729,337 | | | | | $ | 12,238 | | | |
Average loans in repayment(3) | | $ | 561,150 | | | $ | 16,058,960 | | | | | $ | 11,817 | | | |
Ending loans in repayment(3) | | $ | 573,361 | | | $ | 14,304,821 | | | | | $ | 12,238 | | | |
__________
(1) See “Unfunded Loan Commitments” on page 21 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 |
| (Dollars in thousands) | | Quarter Ended
December 31, 2020 |
| Private Education Loan provisions for credit losses: | | |
| Provisions for credit losses | | $ | (353,163) | |
| Provisions for unfunded loan commitments | | 36,519 | |
| Total Private Education Loan provisions for credit losses | | (316,644) | |
| | |
| Other impacts to the provisions for credit losses: | | |
| | |
| FFELP Loans | | 135 | |
| Credit Cards | | 137 | |
| Total | | 272 | |
| Provisions for credit losses reported in consolidated statements of income | | $ | (316,372) | |
(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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Allowance for Credit Losses |
| | | Year Ended December 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) | | — | | | 301,655 | | | | | — | | | 301,655 | |
| Provisions: | | | | | | | | | | |
| Provision for current period | | 20 | | | (233,852) | | | | | 1,124 | | | (232,708) | |
| Loan sale reduction to provision | | — | | | (66,460) | | | | | — | | | (66,460) | |
| Loan transfer to held-for-sale | | — | | | 1,887 | | | | | — | | | 1,887 | |
Total provisions(2) | | 20 | | | (298,425) | | | | | 1,124 | | | (297,281) | |
| Net charge-offs: | | | | | | | | | | |
| Charge-offs | | (321) | | | (229,591) | | | | | (356) | | | (230,268) | |
| Recoveries | | — | | | 29,494 | | | | | 12 | | | 29,506 | |
| Net charge-offs | | (321) | | | (200,097) | | | | | (344) | | | (200,762) | |
| Loan sales | | — | | | — | | | | | — | | | — | |
| Ending Balance | | $ | 4,077 | | | $ | 1,158,977 | | | | | $ | 2,281 | | | $ | 1,165,335 | |
| Allowance: | | | | | | | | | | |
| Ending balance: individually evaluated for impairment | | $ | — | | | $ | 47,712 | | | | | $ | — | | | $ | 47,712 | |
| Ending balance: collectively evaluated for impairment | | $ | 4,077 | | | $ | 1,111,265 | | | | | $ | 2,281 | | | $ | 1,117,623 | |
| Loans: | | | | | | | | | | |
| Ending balance: individually evaluated for impairment | | $ | — | | | $ | 1,057,665 | | | | | $ | — | | | $ | 1,057,665 | |
| Ending balance: collectively evaluated for impairment | | $ | 695,216 | | | $ | 19,659,198 | | | | | $ | 25,014 | | | $ | 20,379,428 | |
Net charge-offs as a percentage of average loans in repayment(3) | | 0.06 | % | | 1.33 | % | | | | 2.24 | % | | |
| Allowance as a percentage of the ending total loan balance | | 0.59 | % | | 5.59 | % | | | | 9.12 | % | | |
Allowance as a percentage of the ending loans in repayment(3) | | 0.74 | % | | 7.47 | % | | | | 9.12 | % | | |
| Allowance coverage of net charge-offs | | 12.70 | | | 5.79 | | | | | 6.63 | | | |
| Ending total loans, gross | | $ | 695,216 | | | $ | 20,716,863 | | | | | $ | 25,014 | | | |
Average loans in repayment(3) | | $ | 545,689 | | | $ | 15,019,869 | | | | | $ | 15,343 | | | |
Ending loans in repayment(3) | | $ | 553,980 | | | $ | 15,511,212 | | | | | $ | 25,014 | | | |
__________
(1) See “Unfunded Loan Commitments” on page 21 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 |
| (Dollars in thousands) | | Year Ended
December 31, 2021 |
| Private Education Loan provisions for credit losses: | | |
| Provisions for credit losses | | $ | (298,425) | |
| Provisions for unfunded loan commitments | | 264,324 | |
| Total Private Education Loan provisions for credit losses | | (34,101) | |
| | |
| Other impacts to the provisions for credit losses: | | |
| | |
| FFELP Loans | | 20 | |
| Credit Cards | | 1,124 | |
| Total | | 1,144 | |
| Provisions for credit losses reported in consolidated statements of income | | $ | (32,957) | |
(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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Allowance for Credit Losses |
| | | Year Ended December 31, 2020 |
| (Dollars in thousands) | | 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 | |
| Balance on January 1, 2020 | | 4,485 | | | 1,435,130 | | | 145,060 | | | 290 | | | 1,584,965 | |
Transfer from unfunded commitment liability(1) | | — | | | 320,808 | | | — | | | — | | | 320,808 | |
| Provisions: | | | | | | | | | | |
| Provision for current period | | 412 | | | 148,673 | | | 40,485 | | | 1,328 | | | 190,898 | |
| Loan sale reduction to provision | | — | | | (161,793) | | | (42,916) | | | — | | | (204,709) | |
| Loan transfer to held-for-sale | | — | | | (205,669) | | | — | | | — | | | (205,669) | |
Total provisions(2) | | 412 | | | (218,789) | | | (2,431) | | | 1,328 | | | (219,480) | |
| Net charge-offs: | | | | | | | | | | |
| Charge-offs | | (519) | | | (205,326) | | | (39,079) | | | (119) | | | (245,043) | |
| Recoveries | | — | | | 24,021 | | | 4,984 | | | 2 | | | 29,007 | |
| Net charge-offs | | (519) | | | (181,305) | | | (34,095) | | | (117) | | | (216,036) | |
| Loan sales | | — | | | — | | | (108,534) | | | — | | | (108,534) | |
| Ending Balance | | $ | 4,378 | | | $ | 1,355,844 | | | $ | — | | | $ | 1,501 | | | $ | 1,361,723 | |
| Allowance: | | | | | | | | | | |
| Ending balance: individually evaluated for impairment | | $ | — | | | $ | 104,265 | | | $ | — | | | $ | — | | | $ | 104,265 | |
| Ending balance: collectively evaluated for impairment | | $ | 4,378 | | | $ | 1,251,579 | | | $ | — | | | $ | 1,501 | | | $ | 1,257,458 | |
| Loans: | | | | | | | | | | |
| Ending balance: individually evaluated for impairment | | $ | — | | | $ | 1,274,590 | | | $ | — | | | $ | — | | | $ | 1,274,590 | |
| Ending balance: collectively evaluated for impairment | | $ | 737,593 | | | $ | 18,454,747 | | | $ | — | | | $ | 12,238 | | | $ | 19,204,578 | |
Net charge-offs as a percentage of average loans in repayment(3) | | 0.09 | % | | 1.17 | % | | — | % | | 1.26 | % | | |
| Allowance as a percentage of the ending total loan balance | | 0.59 | % | | 6.87 | % | | — | % | | 12.27 | % | | |
Allowance as a percentage of the ending loans in repayment(3) | | 0.76 | % | | 9.48 | % | | — | % | | 12.27 | % | | |
| Allowance coverage of net charge-offs | | 8.44 | | | 7.48 | | | — | | | 12.83 | | | |
| Ending total loans, gross | | $ | 737,593 | | | $ | 19,729,337 | | | $ | — | | | $ | 12,238 | | | |
Average loans in repayment(3) | | $ | 549,584 | | | $ | 15,518,851 | | | $ | — | | | $ | 9,286 | | | |
Ending loans in repayment(3) | | $ | 573,361 | | | $ | 14,304,821 | | | $ | — | | | $ | 12,238 | | | |
__________
(1) See “Unfunded Loan Commitments” on page 21 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 |
| (Dollars in thousands) | | Year Ended
December 31, 2020 |
| Private Education Loan provisions for credit losses: | | |
| Provisions for credit losses | | $ | (218,789) | |
| Provisions for unfunded loan commitments | | 312,613 | |
| Total Private Education Loan provisions for credit losses | | 93,824 | |
| | |
| Other impacts to the provisions for credit losses: | | |
| Personal Loans | | (2,431) | |
| FFELP Loans | | 412 | |
| Credit Cards | | 1,328 | |
| Total | | (691) | |
| Provisions for credit losses reported in consolidated statements of income | | $ | 93,133 | |
(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.
Unfunded Loan Commitments
| | | | | | | | | | | | | | | | | | | | | | | |
| Quarters Ended December 31, |
| 2021 | | 2020 |
| (Dollars in thousands) | Allowance | | Unfunded Commitments | | Allowance | | Unfunded Commitments |
| | | | | | | |
| Beginning Balance | $ | 99,131 | | | $ | 1,963,592 | | | $ | 114,778 | | | $ | 1,771,127 | |
Provisions/New commitments - net(1) | 14,518 | | | 549,052 | | | 32,652 | | | 527,615 | |
| Other provision items | (1,329) | | | — | | | 3,867 | | | — | |
Transfer - funded loans(2) | (39,607) | | | (735,668) | | | (41,253) | | | (625,724) | |
| Ending Balance | $ | 72,713 | | | $ | 1,776,976 | | | $ | 110,044 | | | $ | 1,673,018 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 |
| (Dollars in thousands) | Allowance | | Unfunded Commitments | | Allowance | | Unfunded Commitments |
| | | | | | | |
| Beginning Balance | $ | 110,044 | | | $ | 1,673,018 | | | $ | 2,481 | | | $ | 1,910,603 | |
| Day 1 adjustment for the adoption of CECL | — | | | — | | | 115,758 | | | — | |
| Balance at January 1 | 110,044 | | | 1,673,018 | | | 118,239 | | | 1,910,603 | |
Provisions/New commitments - net(1) | 232,822 | | | 5,512,841 | | | 311,659 | | | 5,070,175 | |
| Other provision items | 31,502 | | | — | | | 954 | | | — | |
Transfer - funded loans(2) | (301,655) | | | (5,408,883) | | | (320,808) | | | (5,307,760) | |
| Ending Balance | $ | 72,713 | | | $ | 1,776,976 | | | $ | 110,044 | | | $ | 1,673,018 | |
__________
(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 loan commitments) is transferred to the allowance for credit losses.
Private Education Loans Held for Investment - Key Credit Quality Indicators
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Private Education Loans Held for Investment |
| | | Credit Quality Indicators |
| | December 31, 2021 | | December 31, 2020 |
| (Dollars in thousands) | | Balance(1) | | % of Balance | | Balance(1) | | % of Balance |
| | | | | | | | |
| Cosigners: | | | | | | | | |
| With cosigner | | $ | 18,191,664 | | | 88 | % | | $ | 17,378,282 | | | 88 | % |
| Without cosigner | | 2,525,199 | | | 12 | | | 2,351,055 | | | 12 | |
| Total | | $ | 20,716,863 | | | 100 | % | | $ | 19,729,337 | | | 100 | % |
| | | | | | | | |
FICO at Original Approval(2): | | | | | | | | |
| Less than 670 | | $ | 1,525,117 | | | 7 | % | | $ | 1,441,171 | | | 7 | % |
| 670-699 | | 3,144,099 | | | 15 | | | 3,031,266 | | | 16 | |
| 700-749 | | 6,800,534 | | | 33 | | | 6,510,093 | | | 33 | |
| Greater than or equal to 750 | | 9,247,113 | | | 45 | | | 8,746,807 | | | 44 | |
| Total | | $ | 20,716,863 | | | 100 | % | | $ | 19,729,337 | | | 100 | % |
| | | | | | | | |
FICO-Refreshed(2)(3): | | | | | | | | |
| Less than 670 | | $ | 2,087,817 | | | 10 | % | | $ | 2,199,038 | | | 11 | % |
| 670-699 | | 2,383,369 | | | 12 | | | 2,289,210 | | | 12 | |
| 700-749 | | 6,172,753 | | | 30 | | | 5,780,999 | | | 29 | |
| Greater than or equal to 750 | | 10,072,924 | | | 48 | | | 9,460,090 | | | 48 | |
| Total | | $ | 20,716,863 | | | 100 | % | | $ | 19,729,337 | | | 100 | % |
| | | | | | | | |
Seasoning(4): | | | | | | | | |
| 1-12 payments | | $ | 4,602,746 | | | 22 | % | | $ | 4,498,496 | | | 23 | % |
| 13-24 payments | | 3,544,689 | | | 17 | | | 3,346,831 | | | 17 | |
| 25-36 payments | | 2,524,369 | | | 12 | | | 2,345,094 | | | 12 | |
| 37-48 payments | | 1,743,203 | | | 8 | | | 1,719,461 | | | 9 | |
| More than 48 payments | | 3,397,442 | | | 16 | | | 3,040,415 | | | 15 | |
| Not yet in repayment | | 4,904,414 | | | 25 | | | 4,779,040 | | | 24 | |
| Total | | $ | 20,716,863 | | | 100 | % | | $ | 19,729,337 | | | 100 | % |
__________
(1)Balance represents gross Private Education Loans held for investment.
(2)Represents the higher credit score of the cosigner or the borrower.
(3)Represents the FICO score updated as of the respective fourth-quarter.
(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.
Delinquencies - Private Education Loans Held for Investment
The following table provides information regarding the loan status of our Private Education Loans held for investment. Loans in repayment include loans 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 table, do not include those loans while they are in forbearance). For the periods presented below, we updated our delinquency bucket periods to conform with the delinquency bucket periods defined by the Federal Financial Institutions Examination Council.
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Private Education Loans Held for Investment | |
| | December 31, | | December 31, | |
| | | 2021 | | 2020 | |
| (Dollars in thousands) | | Balance | | % | | Balance | | % | |
Loans in-school/grace/deferment(1)(2) | | $ | 4,904,414 | | | | | $ | 4,779,040 | | | | |
Loans in forbearance(1)(3) | | 301,237 | | | | | 645,476 | | | | |
Loans in repayment and percentage of each status(1): | | | | | | | | | |
| Loans current | | 15,005,773 | | | 96.7 | % | | 13,898,948 | | | 97.2 | % | |
Loans delinquent 30-59 days(4) | | 308,559 | | | 2.0 | | | 205,528 | | | 1.4 | | |
Loans delinquent 60-89 days(4) | | 116,947 | | | 0.8 | | | 119,643 | | | 0.8 | | |
Loans 90 days or greater past due(4) | | 79,933 | | | 0.5 | | | 80,702 | | | 0.6 | | |
| Total Private Education Loans in repayment | | 15,511,212 | | | 100.0 | % | | 14,304,821 | | | 100.0 | % | |
| Total Private Education Loans, gross | | 20,716,863 | | | | | 19,729,337 | | | | |
| Private Education Loans deferred origination costs and unamortized premium/(discount) | | 67,488 | | | | | 63,475 | | | | |
| Total Private Education Loans | | 20,784,351 | | | | | 19,792,812 | | | | |
| Private Education Loans allowance for losses | | (1,158,977) | | | | | (1,355,844) | | | | |
| Private Education Loans, net | | $ | 19,625,374 | | | | | $ | 18,436,968 | | | | |
| Percentage of Private Education Loans in repayment | | | | 74.9 % | | | | 72.5 | % | |
| Delinquencies as a percentage of Private Education Loans in repayment | | | | 3.3 % | | | | 2.8 | % | |
| Loans in forbearance as a percentage of Private Education Loans in repayment and forbearance | | | | 1.9 % | | | | 4.3 | % | |
__________
(1)For some students, going back to school in the fall of 2020 was not an option because of the pandemic, or for other reasons. Therefore, some students took a “gap year” before returning to school in fall of 2021. In 2020, for those students that had unexpectedly separated from school, we provided an extension of time through fall 2021 to re-enroll, before beginning their grace period that occurs prior to entering full principal and interest payments. At December 31, 2020, the loans in the “in-school/grace/deferment” category above include $401 million of Private Education Loans whose borrowers did not return to school in the fall of 2020 and who received such extension of time from us to re-enroll before beginning their grace period. At December 31, 2020, the loans in the “in forbearance” category above include $30 million of Private Education Loans whose borrowers did not return to school in the fall of 2020 and who received such extension of time from us to re-enroll before beginning their grace period. At December 31, 2020, the loans in the “in repayment” category above include $609 million of Private Education Loans whose borrowers did not return to school in the fall of 2020 and who received such extension of time from us to re-enroll before beginning their grace period. This program ended in September 2021.
(2)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).
(3)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.
(4)The period of delinquency is based on the number of days scheduled payments are contractually past due.
Summary of Our Loans Held for Investment Portfolio
Ending Loans Held for Investment Balances, net
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2021 |
| (Dollars in thousands) | | Private Education Loans | | FFELP
Loans | | | | Credit
Cards | | Total Loans Held for Investment |
| Total loan portfolio: | | | | | | | | | | |
In-school(1) | | $ | 3,544,030 | | | $ | 82 | | | | | $ | — | | | $ | 3,544,112 | |
Grace, repayment and other(2) | | 17,172,833 | | | 695,134 | | | | | 25,014 | | | 17,892,981 | |
| Total, gross | | 20,716,863 | | | 695,216 | | | | | 25,014 | | | 21,437,093 | |
| Deferred origination costs and unamortized premium/(discount) | | 67,488 | | | 1,815 | | | | | 222 | | | 69,525 | |
| Allowance for credit losses | | (1,158,977) | | | (4,077) | | | | | (2,281) | | | (1,165,335) | |
| Total loans held for investment portfolio, net | | $ | 19,625,374 | | | $ | 692,954 | | | | | $ | 22,955 | | | $ | 20,341,283 | |
| | | | | | | | | | | |
| % of total | | 97 | % | | 3 | % | | | | — | % | | 100 | % |
__________
(1)Loans for customers still attending school and who are not yet required to make payments on the loans.
(2)Includes loans in deferment or forbearance. 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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2020 |
| (Dollars in thousands) | | Private Education Loans | | FFELP
Loans | | | | Credit
Cards | | Total Loans Held for Investment |
| Total loan portfolio: | | | | | | | | | | |
In-school(1) | | $ | 3,582,394 | | | $ | 81 | | | | | $ | — | | | $ | 3,582,475 | |
Grace, repayment and other(2)(3) | | 16,146,943 | | | 737,512 | | | | | 12,238 | | | 16,896,693 | |
| Total, gross | | 19,729,337 | | | 737,593 | | | | | 12,238 | | | 20,479,168 | |
| Deferred origination costs and unamortized premium/(discount) | | 63,475 | | | 1,993 | | | | | 230 | | | 65,698 | |
| Allowance for credit losses | | (1,355,844) | | | (4,378) | | | | | (1,501) | | | (1,361,723) | |
| Total loans held for investment portfolio, net | | $ | 18,436,968 | | | $ | 735,208 | | | | | $ | 10,967 | | | $ | 19,183,143 | |
| | | | | | | | | | | |
| % of total | | 96 | % | | 4 | % | | | | — | % | | 100 | % |
__________
(1)Loans for customers still attending school and who are not yet required to make payments on the loans. For some students, going back to school in the fall of 2020 was not an option because of the pandemic, or for other reasons. Therefore, some students took a “gap year” before returning to school in fall 2021. In 2020, for those students that had unexpectedly separated from school, we provided an extension of time through fall 2021 to re-enroll, before beginning their grace period that occurs prior to entering full principal and interest payments. At December 31, 2020, the loans in the “in-school” category include $254 million of Private Education Loans whose borrowers did not return to school in the fall of 2020 and who received such extension of time from us to re-enroll before beginning their grace period and, therefore, were then not required to make any payments. This program ended in September 2021.
(2)At December 31, 2020, the loans in the “grace, repayment and other” category include (a) $147 million of Private Education Loans whose borrowers were in a grace or deferred status and who did not return to school in the fall of 2020, who received such extension of time from us to re-enroll before beginning their grace period and, therefore, were not then required to make any payments, and (b) $639 million of Private Education Loans whose borrowers were in a forbearance or repayment status and who did not return to school in the fall of 2020 and who received such extension of time from us to re-enroll before beginning their grace period. This program ended in September 2021.
(3)Includes loans in deferment or forbearance. 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.
Average Loans Held for Investment Balances (net of unamortized premium/discount)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Quarters Ended
December 31, | | Years Ended
December 31, |
| (Dollars in thousands) | | 2021 | | 2020 | | 2021 | | 2020 |
| Private Education Loans | | $ | 21,285,836 | | | 97 | % | | $ | 22,675,980 | | | 97 | % | | $ | 20,968,061 | | | 97 | % | | $ | 22,426,216 | | | 94 | % |
| FFELP Loans | | 701,953 | | | 3 | | | 743,330 | | | 3 | | | 718,186 | | | 3 | | | 757,953 | | | 3 | |
| Personal Loans | | — | | | — | | | — | | | — | | | — | | | — | | | 582,552 | | | 3 | |
| Credit Cards | | 21,396 | | | — | | | 11,780 | | | — | | | 14,982 | | | — | | | 9,390 | | | — | |
| Total portfolio | | $ | 22,009,185 | | | 100 | % | | $ | 23,431,090 | | | 100 | % | | $ | 21,701,229 | | | 100 | % | | $ | 23,776,111 | | | 100 | % |
Loans Held for Investment Activity
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Quarter Ended December 31, 2021 |
| (Dollars in thousands) | | Private
Education
Loans | | FFELP
Loans | | | | Credit
Cards | | Total Loans Held for Investment |
| Beginning balance | | $ | 20,561,961 | | | $ | 703,355 | | | | | $ | 16,211 | | | $ | 21,281,527 | |
| Acquisitions and originations: | | | | | | | | | | |
| Fixed-rate | | 456,861 | | | — | | | | | — | | | 456,861 | |
| Variable-rate | | 286,933 | | | — | | | | | 23,839 | | | 310,772 | |
| Total acquisitions and originations | | 743,794 | | | — | | | | | 23,839 | | | 767,633 | |
| Capitalized interest and deferred origination cost premium amortization | | 300,267 | | | 6,230 | | | | | (72) | | | 306,425 | |
| Sales | | (987,798) | | | — | | | | | — | | | (987,798) | |
| Loan consolidations to third-parties | | (448,550) | | | (6,711) | | | | | — | | | (455,261) | |
| Allowance | | 50,484 | | | 129 | | | | | (541) | | | 50,072 | |
| | | | | | | | | | |
| Repayments and other | | (594,784) | | | (10,049) | | | | | (16,482) | | | (621,315) | |
| Ending balance | | $ | 19,625,374 | | | $ | 692,954 | | | | | $ | 22,955 | | | $ | 20,341,283 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Quarter Ended December 31, 2020 |
| (Dollars in thousands) | | Private
Education
Loans | | FFELP
Loans | | | | Credit
Cards | | Total Loans Held for Investment |
| Beginning balance | | $ | 20,955,922 | | | $ | 743,220 | | | | | $ | 10,629 | | | $ | 21,709,771 | |
| Acquisitions and originations: | | | | | | | | | | |
| Fixed-rate | | 297,202 | | | — | | | | | — | | | 297,202 | |
| Variable-rate | | 335,707 | | | — | | | | | 9,070 | | | 344,777 | |
| Total acquisitions and originations | | 632,909 | | | — | | | | | 9,070 | | | 641,979 | |
| Capitalized interest and deferred origination cost premium amortization | | 281,760 | | | 8,362 | | | | | (252) | | | 289,870 | |
| | | | | | | | | | |
| Loan consolidations to third-parties | | (344,503) | | | (4,584) | | | | | — | | | (349,087) | |
| Allowance | | 372,967 | | | (15) | | | | | (116) | | | 372,836 | |
| Transfer to loans held for sale | | (2,885,640) | | | — | | | | | — | | | (2,885,640) | |
| Repayments and other | | (576,447) | | | (11,775) | | | | | (8,364) | | | (596,586) | |
| Ending balance | | $ | 18,436,968 | | | $ | 735,208 | | | | | $ | 10,967 | | | $ | 19,183,143 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, 2021 |
| (Dollars in thousands) | | Private
Education
Loans | | FFELP
Loans | | Credit
Cards | | Total Loans Held for Investment |
| Beginning balance | | $ | 18,436,968 | | | $ | 735,208 | | | $ | 10,967 | | | $ | 19,183,143 | |
| Acquisitions and originations: | | | | | | | | |
| Fixed-rate | | 3,027,440 | | | — | | | — | | | 3,027,440 | |
| Variable-rate | | 2,421,082 | | | — | | | 63,323 | | | 2,484,405 | |
| Total acquisitions and originations | | 5,448,522 | | | — | | | 63,323 | | | 5,511,845 | |
| Capitalized interest and deferred origination cost premium amortization | | 597,416 | | | 27,252 | | | (323) | | | 624,345 | |
| Sales | | (1,138,726) | | | — | | | — | | | (1,138,726) | |
| | | | | | | | |
| Loan consolidations to third-parties | | (1,583,691) | | | (27,031) | | | — | | | (1,610,722) | |
| Allowance | | 196,868 | | | 300 | | | (780) | | | 196,388 | |
| Transfer to loans held for sale | | 25,040 | | | — | | | — | | | 25,040 | |
| Repayments and other | | (2,357,023) | | | (42,775) | | | (50,232) | | | (2,450,030) | |
| Ending balance | | $ | 19,625,374 | | | $ | 692,954 | | | $ | 22,955 | | | $ | 20,341,283 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, 2020 |
| (Dollars in thousands) | | Private
Education
Loans | | FFELP
Loans | | Personal Loans | | Credit
Cards | | Total Loans Held for Investment |
| Beginning balance | | $ | 22,896,515 | | | $ | 783,816 | | | $ | 983,643 | | | $ | 3,818 | | | $ | 24,667,792 | |
| Day 1 CECL Adjustment to Allowance | | (1,060,830) | | | (2,852) | | | (79,183) | | | (188) | | | (1,143,053) | |
| Balance on January 1, 2020 | | 21,835,685 | | | 780,964 | | | 904,460 | | | 3,630 | | | 23,524,739 | |
| Acquisitions and originations: | | | | | | | | | | |
| Fixed-rate | | 2,903,258 | | | — | | | 41 | | | — | | | 2,903,299 | |
| Variable-rate | | 2,439,029 | | | — | | | — | | | 35,955 | | | 2,474,984 | |
| Total acquisitions and originations | | 5,342,287 | | | — | | | 41 | | | 35,955 | | | 5,378,283 | |
| Capitalized interest and deferred origination cost premium amortization | | 616,115 | | | 27,558 | | | (253) | | | (819) | | | 642,601 | |
| Sales | | (2,925,478) | | | — | | | (588,285) | | | — | | | (3,513,763) | |
| Loan consolidations to third-parties | | (1,332,802) | | | (21,243) | | | — | | | — | | | (1,354,045) | |
| Allowance | | 79,285 | | | 107 | | | 36,526 | | | (1,211) | | | 114,707 | |
| Transfer to loans held for sale | | (2,885,640) | | | — | | | — | | | — | | | (2,885,640) | |
| Repayments and other | | (2,292,484) | | | (52,178) | | | (352,489) | | | (26,588) | | | (2,723,739) | |
| Ending balance | | $ | 18,436,968 | | | $ | 735,208 | | | $ | — | | | $ | 10,967 | | | $ | 19,183,143 | |
Private Education Loan Originations
The following table summarizes our Private Education Loan originations. Originations represent loans that were funded or acquired during the period presented.
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| | | Quarters Ended
December 31, |
| (Dollars in thousands) | | 2021 | | % | | 2020 | | % |
Smart Option - interest only(1) | | $ | 138,650 | | | 19 | % | | $ | 145,000 | | | 23 | % |
Smart Option - fixed pay(1) | | 236,116 | | | 32 | | | 175,234 | | | 28 | |
Smart Option - deferred(1) | | 258,806 | | | 35 | | | 200,807 | | | 32 | |
| Smart Option - principal and interest | | 1,703 | | | — | | | 1,325 | | | — | |
| Graduate Loan | | 92,213 | | | 13 | | | 95,906 | | | 15 | |
| Parent Loan | | 9,367 | | | 1 | | | 8,709 | | | 2 | |
| Total Private Education Loan originations | | $ | 736,855 | | | 100 | % | | $ | 626,981 | | | 100 | % |
| | | | | | | | |
| Percentage of loans with a cosigner | | 82.5 | % | | | | 82.6 | % | | |
Average FICO at approval(2) | | 749 | | | | | 751 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Years Ended
December 31, | |
| (Dollars in thousands) | | 2021 | | % | | 2020 | | % | |
Smart Option - interest only(1) | | $ | 1,123,624 | | | 21 | % | | $ | 1,222,148 | | | 23 | % | |
Smart Option - fixed pay(1) | | 1,680,947 | | | 31 | | | 1,498,578 | | | 28 | | |
Smart Option - deferred(1) | | 1,994,483 | | | 36 | | | 1,912,978 | | | 36 | | |
| Smart Option - principal and interest | | 11,102 | | | — | | | 9,559 | | | — | | |
| Graduate Loan | | 525,050 | | | 10 | | | 579,451 | | | 11 | | |
| Parent Loan | | 87,325 | | | 2 | | | 98,023 | | | 2 | | |
| Total Private Education Loan originations | | $ | 5,422,531 | | | 100 | % | | $ | 5,320,737 | | | 100 | % | |
| | | | | | | | | |
| Percentage of loans with a cosigner | | 86.2 | % | | | | 86.0 | % | | | |
Average FICO at approval(2) | | 750 | | | | | 749 | | | | |
__________
(1) Interest only, fixed pay and deferred describe the payment option while in school or in grace period. See Item 1. “Business - Our Business - Private Education Loans” in the 2020 Form 10-K for a further discussion.
(2) Represents the higher credit score of the cosigner or the borrower.
Deposits
Interest-bearing deposits are summarized as follows:
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| | | December 31, 2021 | | December 31, 2020 | |
| (Dollars in thousands) | | Amount | | Year-End Weighted Average Stated Rate(1) | | Amount | | Year-End Weighted Average Stated Rate(1) | |
| | | | | | | | | |
| Money market | | $ | 10,473,569 | | | 0.69 | % | | $ | 10,159,657 | | | 0.83 | % | |
| Savings | | 959,122 | | | 0.43 | | | 907,976 | | | 0.55 | | |
| Certificates of deposit | | 9,394,001 | | | 1.20 | | | 11,597,266 | | | 1.34 | | |
| Deposits - interest-bearing | | $ | 20,826,692 | | | | | $ | 22,664,899 | | | | |
__________
(1) Includes the effect of interest rate swaps in effective hedge relationships.
Regulatory Capital
Sallie Mae Bank’s required and actual regulatory capital amounts and ratios under U.S. Basel III are shown in the following table.
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| | | Actual | | U.S. Basel III Minimum Requirements Plus Buffer(1)(2) |
| (Dollars in thousands) | | Amount | Ratio | | Amount | | Ratio |
| As of December 31, 2021: | | | | | | | |
| Common Equity Tier 1 Capital (to Risk-Weighted Assets) | | $ | 3,314,657 | | 14.1 | % | | $ | 1,643,132 | | > | 7.0 | % |
| Tier 1 Capital (to Risk-Weighted Assets) | | $ | 3,314,657 | | 14.1 | % | | $ | 1,995,232 | | > | 8.5 | % |
| Total Capital (to Risk-Weighted Assets) | | $ | 3,410,183 | | 14.5 | % | | $ | 2,464,699 | | > | 10.5 | % |
| Tier 1 Capital (to Average Assets) | | $ | 3,314,657 | | 11.1 | % | | $ | 1,198,808 | | > | 4.0 | % |
| | | | | | | |
| As of December 31, 2020: | | | | | | | |
| Common Equity Tier 1 Capital (to Risk-Weighted Assets) | | $ | 3,579,005 | | 14.0 | % | | $ | 1,794,780 | | > | 7.0 | % |
| Tier 1 Capital (to Risk-Weighted Assets) | | $ | 3,579,005 | | 14.0 | % | | $ | 2,179,375 | | > | 8.5 | % |
| Total Capital (to Risk-Weighted Assets) | | $ | 3,849,820 | | 15.0 | % | | $ | 2,692,169 | | > | 10.5 | % |
| Tier 1 Capital (to Average Assets) | | $ | 3,579,005 | | 11.3 | % | | $ | 1,264,424 | | > | 4.0 | % |
_________
(1) Reflects the U.S. Basel III minimum required ratio plus the applicable capital conservation buffer.
(2) The Bank’s regulatory capital ratios also exceeded all applicable standards for the Bank to qualify as “well capitalized” under the prompt corrective action framework.
