Fair Value Measurements

6 Months Ended

Jun. 30, 2023

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 2022 Form 10-K.

During the six months ended June 30, 2023, 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
	June 30, 2023								December 31, 2022
(Dollars in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total

Assets:
Trading investments	$	—	$	—	$	52,146	$	52,146	$	—	$	—	$	55,903	$	55,903
Available-for-sale investments	—		2,372,846		—		2,372,846		—		2,342,089		—		2,342,089
Derivative instruments	—		212		—		212		—		972		—		972
Total	$	—	$	2,373,058	$	52,146	$	2,425,204	$	—	$	2,343,061	$	55,903	$	2,398,964

Liabilities:
Derivative instruments	$	—	$	(422)	$	—	$	(422)	$	—	$	(567)	$	—	$	(567)
Total	$	—	$	(422)	$	—	$	(422)	$	—	$	(567)	$	—	$	(567)

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


	June 30, 2023						December 31, 2022
(Dollars in thousands)	Fair Value		Carrying Value		Difference		Fair Value		Carrying Value		Difference
Earning assets:
Loans held for investment, net:
Private Education Loans	$	20,941,860	$	18,648,904	$	2,292,956	$	21,062,548	$	19,019,713	$	2,042,835
FFELP Loans	579,333		570,614		8,719		618,186		607,155		11,031

Loans held for sale	—		—		—		29,448		29,448		—
Cash and cash equivalents	3,875,758		3,875,758		—		4,616,117		4,616,117		—
Trading investments	52,146		52,146		—		55,903		55,903		—
Available-for-sale investments	2,372,846		2,372,846		—		2,342,089		2,342,089		—
Accrued interest receivable	1,357,360		1,300,136		57,224		1,237,074		1,202,059		35,015
Tax indemnification receivable	2,902		2,902		—		2,816		2,816		—
Derivative instruments	212		212		—		972		972		—
Total earning assets	$	29,182,417	$	26,823,518	$	2,358,899	$	29,965,153	$	27,876,272	$	2,088,881
Interest-bearing liabilities:
Money-market and savings accounts	$	11,063,242	$	11,169,500	$	106,258	$	11,854,849	$	11,959,828	$	104,979
Certificates of deposit	8,879,002		9,189,461		310,459		9,175,339		9,486,819		311,480

Long-term borrowings	4,836,019		5,213,698		377,679		4,813,233		5,235,114		421,881
Accrued interest payable	82,019		82,019		—		71,586		71,586		—
Derivative instruments	422		422		—		567		567		—
Total interest-bearing liabilities	$	24,860,704	$	25,655,100	$	794,396	$	25,915,574	$	26,753,914	$	838,340

Excess of net asset fair value over carrying value					$	3,153,295					$	2,927,221

Please refer to Notes to Consolidated Financial Statements, Note 17, “Fair Value Measurements” in our 2022 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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