Fair Value Measurements

9 Months Ended

Sep. 30, 2022

We use estimates of fair value in applying various accounting standards for our consolidated financial statements.

We categorize our fair value estimates based on a hierarchical framework associated with three levels of price transparency utilized in measuring financial instruments at fair value. For additional information regarding our policies for determining fair value and the hierarchical framework, see Notes to Consolidated Financial Statements, Note 2, “Significant Accounting Policies - Fair Value Measurement” in our 2021 Form 10-K.

During the nine months ended September 30, 2022, there were no significant transfers of financial instruments between levels or changes in our methodology or assumptions used to value our financial instruments.

The following table summarizes the valuation of our financial instruments that are marked to fair value on a recurring basis.


	Fair Value Measurements on a Recurring Basis
	September 30, 2022								December 31, 2021
(Dollars in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total

Assets:
Trading investments	$	—	$	—	$	52,450	$	52,450	$	—	$	—	$	37,465	$	37,465
Available-for-sale investments	—		2,427,540		—		2,427,540		—		2,517,956		—		2,517,956
Derivative instruments	—		2,172		—		2,172		—		1,322		—		1,322
Total	$	—	$	2,429,712	$	52,450	$	2,482,162	$	—	$	2,519,278	$	37,465	$	2,556,743

Liabilities:
Derivative instruments	$	—	$	(1,051)	$	—	$	(1,051)	$	—	$	(252)	$	—	$	(252)
Total	$	—	$	(1,051)	$	—	$	(1,051)	$	—	$	(252)	$	—	$	(252)

The following table summarizes the fair values of our financial assets and liabilities, including derivative financial instruments.


	September 30, 2022						December 31, 2021
(Dollars in thousands)	Fair Value		Carrying Value		Difference		Fair Value		Carrying Value		Difference
Earning assets:
Loans held for investment, net:
Private Education Loans	$	20,932,120	$	18,980,852	$	1,951,268	$	22,919,836	$	19,625,374	$	3,294,462
FFELP Loans	653,268		641,450		11,818		705,644		692,954		12,690
Credit Cards	—		—		—		25,037		22,955		2,082
Loans held for sale	28,880		28,880		—		—		—		—
Cash and cash equivalents	4,846,754		4,846,754		—		4,334,603		4,334,603		—
Trading investments	52,450		52,450		—		37,465		37,465		—
Available-for-sale investments	2,427,540		2,427,540		—		2,517,956		2,517,956		—
Accrued interest receivable	1,262,493		1,223,647		38,846		1,306,410		1,205,667		100,743
Tax indemnification receivable	8,392		8,392		—		8,047		8,047		—
Derivative instruments	2,172		2,172		—		1,322		1,322		—
Total earning assets	$	30,214,069	$	28,212,137	$	2,001,932	$	31,856,320	$	28,446,343	$	3,409,977
Interest-bearing liabilities:
Money-market and savings accounts	$	11,885,984	$	12,001,240	$	115,256	$	11,457,490	$	11,432,691	$	(24,799)
Certificates of deposit	8,977,283		9,274,941		297,658		9,451,528		9,394,001		(57,527)

Long-term borrowings	5,163,501		5,522,311		358,810		6,000,174		5,930,990		(69,184)
Accrued interest payable	71,907		71,907		—		46,600		46,600		—
Derivative instruments	1,051		1,051		—		252		252		—
Total interest-bearing liabilities	$	26,099,726	$	26,871,450	$	771,724	$	26,956,044	$	26,804,534	$	(151,510)

Excess of net asset fair value over carrying value					$	2,773,656					$	3,258,467

Please refer to Notes to Consolidated Financial Statements, Note 16, “Fair Value Measurements” in our 2021 Form 10-K for a full discussion of the methods and assumptions used to estimate the fair value of each class of financial instruments.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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