Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2016

Allowance for Credit Losses and Recorded Investments in Loans

Allowance for Loan Losses Metrics


	Three Months Ended September 30, 2016
(Dollars in millions)	FFELP Loans			Private Education Loans			Other Loans			Total
Allowance for Loan Losses
Beginning balance	$	62		$	1,410		$	15		$	1,487
Total provision		13			92			1			106
Charge-offs⁽¹⁾		(17	)		(112	)		(1	)		(130	)
Reclassification of interest reserve⁽²⁾		—			2			—			2

Ending balance	$	58		$	1,392		$	15		$	1,465

Allowance:
Ending balance: individually evaluated for impairment	$	—		$	1,153		$	11		$	1,164
Ending balance: collectively evaluated for impairment	$	58		$	239		$	4		$	301
Loans:
Ending balance: individually evaluated for impairment⁽³⁾	$	—		$	11,182		$	32		$	11,214
Ending balance: collectively evaluated for impairment⁽³⁾	$	89,291		$	14,682		$	99		$	104,072
Charge-offs as a percentage of average loans in repayment (annualized)		.09	%		1.94	%		1.87	%
Allowance coverage of charge-offs (annualized)		.8			3.1			7.9
Allowance as a percentage of the ending total loan balance		.07	%		5.38	%		11.40	%
Allowance as a percentage of the ending loans in repayment		.08	%		6.17	%		11.40	%
Ending total loans⁽³⁾	$	89,291		$	25,864		$	131
Average loans in repayment	$	72,921		$	22,959		$	102
Ending loans in repayment	$	72,269		$	22,556		$	131

⁽¹⁾

Charge-offs are reported net of expected recoveries. For Private Education Loans, the expected recovery amount is transferred to the receivable for partially charged-off loan balance. Charge-offs include charge-offs against the receivable for partially charged-off loans which represents the difference between what was expected to be recovered and any shortfalls in what was actually recovered in the period. See “Receivable for Partially Charged-Off Private Education Loans” for further discussion.

⁽²⁾

Represents the additional allowance related to the amount of uncollectible interest reserved within interest income that is transferred in the period to the allowance for loan losses when interest is capitalized to a loan’s principal balance.

⁽³⁾

Ending total loans for Private Education Loans includes the receivable for partially charged-off loans.


	Three Months Ended September 30, 2015
(Dollars in millions)	FFELP Loans			Private Education Loans			Other Loans			Total
Allowance for Loan Losses
Beginning balance	$	89		$	1,533		$	21		$	1,643
Total provision		7			117			(1	)		123
Total net charge-offs⁽¹⁾		(12	)		(148	)		(1	)		(161	)
Reclassification of interest reserve⁽²⁾		—			3			—			3

Ending balance	$	84		$	1,505		$	19		$	1,608

Allowance:
Ending balance: individually evaluated for impairment	$	—		$	1,247		$	16		$	1,263
Ending balance: collectively evaluated for impairment	$	84		$	258		$	3		$	345
Loans:
Ending balance: individually evaluated for impairment⁽³⁾	$	—		$	10,870		$	41		$	10,911
Ending balance: collectively evaluated for impairment⁽³⁾	$	97,425		$	18,507		$	50		$	115,982
Net charge-offs as a percentage of average loans in repayment (annualized)		.06	%		2.31	%		5.10	%
Allowance coverage of net charge-offs (annualized)		1.7			2.6			3.9
Allowance as a percentage of the ending total loan balance		.09	%		5.12	%		20.31	%
Allowance as a percentage of the ending loans in repayment		.11	%		5.99	%		20.31	%
Ending total loans⁽³⁾	$	97,425		$	29,377		$	91
Average loans in repayment	$	75,460		$	25,546		$	93
Ending loans in repayment	$	75,294		$	25,104		$	91

⁽¹⁾

⁽²⁾

⁽³⁾

Ending total loans for Private Education Loans includes the receivable for partially charged-off loans.


	Nine Months Ended September 30, 2016
(Dollars in millions)	FFELP Loans			Private Education Loans			Other Loans			Total
Allowance for Loan Losses
Beginning balance	$	78		$	1,471		$	15		$	1,564
Total provision		30			296			1			327
Charge-offs⁽¹⁾		(50	)		(383	)		(1	)		(434	)
Reclassification of interest reserve⁽²⁾		—			8			—			8

Ending balance	$	58		$	1,392		$	15		$	1,465


Allowance:
Ending balance: individually evaluated for impairment	$	—		$	1,153		$	11		$	1,164
Ending balance: collectively evaluated for impairment	$	58		$	239		$	4		$	301
Loans:
Ending balance: individually evaluated for impairment⁽³⁾	$	—		$	11,182		$	32		$	11,214
Ending balance: collectively evaluated for impairment⁽³⁾	$	89,291		$	14,682		$	99		$	104,072
Charge-offs as a percentage of average loans in repayment (annualized)		.09	%		2.17	%		1.76	%
Allowance coverage of charge-offs (annualized)		.9			2.7			9.5
Allowance as a percentage of the ending total loan balance		.07	%		5.38	%		11.40	%
Allowance as a percentage of the ending loans in repayment		.08	%		6.17	%		11.40	%
Ending total loans⁽³⁾	$	89,291		$	25,864		$	131
Average loans in repayment	$	73,193		$	23,564		$	89
Ending loans in repayment	$	72,269		$	22,556		$	131

⁽¹⁾

⁽²⁾

⁽³⁾

Ending total loans for Private Education Loans includes the receivable for partially charged-off loans.


	Nine Months Ended September 30, 2015
(Dollars in millions)	FFELP Loans			Private Education Loans			Other Loans			Total
Allowance for Loan Losses
Beginning balance	$	93		$	1,916		$	24		$	2,033
Total provision		19			428			(1	)		446
Net adjustment resulting from the change in the charge-off rate⁽¹⁾		—			(330	)		—			(330	)
Net charge-offs remaining⁽²⁾		(28	)		(517	)		(4	)		(549	)

Total net charge-offs		(28	)		(847	)		(4	)		(879	)
Reclassification of interest reserve⁽³⁾		—			8			—			8

Ending balance	$	84		$	1,505		$	19		$	1,608

Allowance:
Ending balance: individually evaluated for impairment	$	—		$	1,247		$	16		$	1,263
Ending balance: collectively evaluated for impairment	$	84		$	258		$	3		$	345
Loans:
Ending balance: individually evaluated for impairment⁽⁴⁾	$	—		$	10,870		$	41		$	10,911
Ending balance: collectively evaluated for impairment⁽⁴⁾	$	97,425		$	18,507		$	50		$	115,982
Net charge-offs as a percentage of average loans in repayment, excluding the net adjustment resulting from the change in the charge-off rate (annualized)⁽¹⁾		.05	%		2.65	%		5.72	%
Net adjustment resulting from the change in the charge-off rate as a percentage of average loans in repayment (annualized)⁽¹⁾		—	%		1.69	%		—	%
Allowance coverage of net charge-offs, excluding the net adjustment resulting from the change in the charge-off rate (annualized)⁽¹⁾		2.2			2.2			3.3
Allowance as a percentage of the ending total loan balance		.09	%		5.12	%		20.31	%
Allowance as a percentage of the ending loans in repayment		.11	%		5.99	%		20.31	%
Ending total loans⁽⁴⁾	$	97,425		$	29,377		$	91
Average loans in repayment	$	76,412		$	26,100		$	99
Ending loans in repayment	$	75,294		$	25,104		$	91

⁽¹⁾

In the second quarter of 2015, the portion of the loan amount charged off at default on Private Education Loans increased from 73 percent to 79 percent. This did not impact the provision for loan losses as previously this had been reserved through the allowance for loan losses. This change resulted in a $330 million reduction to the balance of the receivable for partially charged-off loans.

⁽²⁾

⁽³⁾

⁽⁴⁾

Ending total loans for Private Education Loans includes the receivable for partially charged-off loans.

Age Analysis of Past Due Loans Delinquencies

The following tables provide information regarding the loan status and aging of past due loans.


	FFELP Loan Delinquencies
	September 30, 2016						December 31, 2015
(Dollars in millions)	Balance			%			Balance			%
Loans in-school/grace/deferment⁽¹⁾	$	6,492					$	8,257
Loans in forbearance⁽²⁾		10,530						13,298
Loans in repayment and percentage of each status:
Loans current		64,078			88.7	%		62,651			84.7	%
Loans delinquent 31-60 days⁽³⁾		2,462			3.4			3,285			4.5
Loans delinquent 61-90 days⁽³⁾		818			1.1			1,856			2.5
Loans delinquent greater than 90 days⁽³⁾		4,911			6.8			6,142			8.3

Total FFELP Loans in repayment		72,269			100	%		73,934			100	%

Total FFELP Loans, gross		89,291						95,489
FFELP Loan unamortized premium		913						1,087

Total FFELP Loans		90,204						96,576
FFELP Loan allowance for losses		(58	)					(78	)

FFELP Loans, net	$	90,146					$	96,498

Percentage of FFELP Loans in repayment					80.9	%					77.4	%

Delinquencies as a percentage of FFELP Loans in repayment					11.3	%					15.3	%

FFELP Loans in forbearance as a percentage of loans in repayment and forbearance					12.7	%					15.2	%

⁽¹⁾

Loans for customers who may still be attending school or engaging in other permitted educational activities and are not yet required to make payments on their loans, e.g., residency periods for medical students or a grace period for bar exam preparation, as well as loans for customers who have requested and qualify for other permitted program deferments such as military, unemployment, or economic hardships.

⁽²⁾	Loans for customers who have used their allowable deferment time or do not qualify for deferment, that need additional time to obtain employment or who have temporarily ceased making full payments due to hardship or other factors.

⁽³⁾	The period of delinquency is based on the number of days scheduled payments are contractually past due.


	Traditional Private Education Loan Delinquencies
	September 30, 2016						December 31, 2015
(Dollars in millions)	Balance			%			Balance			%
Loans in-school/grace/deferment⁽¹⁾	$	1,405					$	1,859
Loans in forbearance⁽²⁾		833						863
Loans in repayment and percentage of each status:
Loans current		19,471			93.8	%		21,085			93.5	%
Loans delinquent 31-60 days⁽³⁾		434			2.1			491			2.2
Loans delinquent 61-90 days⁽³⁾		262			1.3			292			1.3
Loans delinquent greater than 90 days⁽³⁾		601			2.8			690			3.0

Total traditional loans in repayment		20,768			100	%		22,558			100	%

Total traditional loans, gross		23,006						25,280
Traditional loans unamortized discount		(407	)					(470	)

Total traditional loans		22,599						24,810
Traditional loans receivable for partially charged-off loans		532						560
Traditional loans allowance for losses		(1,176	)					(1,236	)

Traditional loans, net	$	21,955					$	24,134

Percentage of traditional loans in repayment					90.3	%					89.2	%

Delinquencies as a percentage of traditional loans in repayment					6.2	%					6.5	%

Loans in forbearance as a percentage of loans in repayment and forbearance					3.9	%					3.7	%

⁽¹⁾	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 their loans, e.g., residency periods for medical students or a grace period for bar exam preparation.

⁽²⁾	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.

⁽³⁾	The period of delinquency is based on the number of days scheduled payments are contractually past due.


	Non-Traditional Private Education Loan Delinquencies
	September 30, 2016						December 31, 2015
(Dollars in millions)	Balance			%			Balance			%
Loans in-school/grace/deferment⁽¹⁾	$	134					$	181
Loans in forbearance⁽²⁾		108						110
Loans in repayment and percentage of each status:
Loans current		1,539			86.1	%		1,646			84.7	%
Loans delinquent 31-60 days⁽³⁾		73			4.1			86			4.4
Loans delinquent 61-90 days⁽³⁾		52			2.9			56			2.9
Loans delinquent greater than 90 days⁽³⁾		124			6.9			156			8.0

Total non-traditional loans in repayment		1,788			100	%		1,944			100	%

Total non-traditional loans, gross		2,030						2,235
Non-traditional loans unamortized discount		(55	)					(61	)

Total non-traditional loans		1,975						2,174
Non-traditional loans receivable for partially charged-off loans		296						321
Non-traditional loans allowance for losses		(216	)					(235	)

Non-traditional loans, net	$	2,055					$	2,260

Percentage of non-traditional loans in repayment					88.1	%					87.0	%

Delinquencies as a percentage of non-traditional loans in repayment					13.9	%					15.3	%

Loans in forbearance as a percentage of loans in repayment and forbearance					5.7	%					5.4	%

⁽¹⁾	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 their loans, e.g., residency periods for medical students or a grace period for bar exam preparation.

⁽²⁾	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.

⁽³⁾	The period of delinquency is based on the number of days scheduled payments are contractually past due.

Recorded Investment, Unpaid Principal Balance and Related Allowance for TDR Loans

The following table provides the recorded investment, unpaid principal balance and related allowance for our TDR loans.


	TDR Loans
(Dollars in millions)	Recorded Investment⁽¹⁾		Unpaid Principal Balance		Related Allowance
September 30, 2016
Private Education Loans — Traditional	$	9,391	$	9,434	$	959
Private Education Loans — Non-Traditional		1,394		1,398		194

Total	$	10,785	$	10,832	$	1,153

December 31, 2015
Private Education Loans — Traditional	$	9,134	$	9,200	$	995
Private Education Loans — Non-Traditional		1,441		1,442		214

Total	$	10,575	$	10,642	$	1,209

⁽¹⁾

The recorded investment is equal to the unpaid principal balance and accrued interest receivable net of unamortized deferred fees and costs.

Average Recorded Investment and Interest Income Recognized for TDR

The following tables provide the average recorded investment and interest income recognized for our TDR loans.


	Three Months Ended September 30,
	2016				2015
(Dollars in millions)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Private Education Loans — Traditional	$	9,367	$	140	$	8,988	$	134
Private Education Loans — Non-Traditional		1,402		27		1,456		29

Total	$	10,769	$	167	$	10,444	$	163


	Nine Months Ended September 30,
	2016				2015
(Dollars in millions)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Private Education Loans — Traditional	$	9,303	$	416	$	8,930	$	402
Private Education Loans — Non-Traditional		1,418		81		1,466		86

Total	$	10,721	$	497	$	10,396	$	488

Loans Modified Accounts for TDR

The following table provides the amount of loans modified in the periods presented that resulted in a TDR. Additionally, the table summarizes charge-offs occurring in the TDR portfolio, as well as TDRs for which a payment default occurred in the current period within 12 months of the loan first being designated as a TDR. We define payment default as 60 days past due for this disclosure. The majority of our loans that are considered TDRs involve a temporary forbearance of payments and do not change the contractual interest rate of the loan or do not involve an extended repayment plan.


	Three Months Ended September 30,
	2016						2015
(Dollars in millions)	Modified Loans⁽¹⁾		Charge- Offs⁽²⁾		Payment Default		Modified Loans⁽¹⁾		Charge- Offs⁽²⁾		Payment Default
Private Education Loans — Traditional	$	233	$	68	$	56	$	339	$	81	$	83
Private Education Loans — Non-Traditional		21		18		11		32		26		15

Total	$	254	$	86	$	67	$	371	$	107	$	98


	Nine Months Ended September 30,
	2016						2015
(Dollars in millions)	Modified Loans⁽¹⁾		Charge- Offs⁽²⁾		Payment Default		Modified Loans⁽¹⁾		Charge- Offs⁽²⁾		Payment Default
Private Education Loans — Traditional	$	861	$	221	$	174	$	1,107	$	273	$	266
Private Education Loans — Non-Traditional		73		61		32		111		84		47

Total	$	934	$	282	$	206	$	1,218	$	357	$	313

⁽¹⁾	Represents period ending balance of loans that have been modified during the period and resulted in a TDR.

⁽²⁾	Represents loans that charged off that were classified as TDRs.

Troubled Debt Restructuring Loans [Member]

Age Analysis of Past Due Loans Delinquencies

The following table provides information regarding the loan status and aging of TDR loans that are past due.


	TDR Loan Delinquencies
	September 30, 2016					December 31, 2015
(Dollars in millions)	Balance		%			Balance		%
Loans in deferment⁽¹⁾	$	605				$	706
Loans in forbearance⁽²⁾		669					695
Loans in repayment and percentage of each status:
Loans current		8,299		86.8	%		7,885		85.3	%
Loans delinquent 31-60 days⁽³⁾		394		4.1			414		4.5
Loans delinquent 61-90 days⁽³⁾		254		2.7			263		2.8
Loans delinquent greater than 90 days⁽³⁾		611		6.4			679		7.4

Total TDR loans in repayment		9,558		100	%		9,241		100	%

Total TDR loans, gross	$	10,832				$	10,642

⁽¹⁾	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 their loans, e.g., residency periods for medical students or a grace period for bar exam preparation.

⁽²⁾	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.

⁽³⁾	The period of delinquency is based on the number of days scheduled payments are contractually past due.

Private Education Loans [Member]

Private Education Loan Portfolio Stratified by Key Credit Quality Indicators

The following table highlights the principal balance (excluding the receivable for partially charged-off loans) of our Private Education Loan portfolio stratified by the key credit quality indicators.


	Private Education Loans Credit Quality Indicators
	September 30, 2016					December 31, 2015
(Dollars in millions)	Balance⁽³⁾		% of Balance			Balance⁽³⁾		% of Balance
Credit Quality Indicators
School Type/FICO Scores:
Traditional	$	23,006		92	%	$	25,280		92	%
Non-Traditional⁽¹⁾		2,030		8			2,235		8

Total	$	25,036		100	%	$	27,515		100	%

Cosigners:
With cosigner	$	16,107		64	%	$	17,738		64	%
Without cosigner		8,929		36			9,777		36

Total	$	25,036		100	%	$	27,515		100	%

Seasoning⁽²⁾:
1-12 payments	$	1,348		5	%	$	1,776		7	%
13-24 payments		1,430		6			1,977		7
25-36 payments		2,234		9			2,982		11
37-48 payments		3,172		13			3,787		14
More than 48 payments		15,313		61			14,953		54
Not yet in repayment		1,539		6			2,040		7

Total	$	25,036		100	%	$	27,515		100	%

⁽¹⁾	Defined as loans to customers attending for-profit schools (with a FICO score of less than 670 at origination) and customers attending not-for-profit schools (with a FICO score of less than 640 at origination).

⁽²⁾	Number of months in active repayment for which a scheduled payment was received.

⁽³⁾	Balance represents gross Private Education Loans.

Receivable for Partially Charged-Off Loans

The following table summarizes the activity in the receivable for partially charged-off Private Education Loans.


	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in millions)	2016			2015			2016			2015
Receivable at beginning of period	$	847		$	902		$	881		$	1,245
Expected future recoveries of current period defaults⁽¹⁾		28			38			96			147
Recoveries⁽²⁾		(47	)		(48	)		(149	)		(151	)
Net adjustment resulting from the change in the charge-off rate⁽³⁾		—			—			—			(330	)
Net charge-offs remaining		—			—			—			(19	)

Total net charge-offs		—			—			—			(349	)

Receivable at end of period	$	828		$	892		$	828		$	892

⁽¹⁾

Represents the difference between the defaulted loan balance and our estimate of the amount to be collected in the future.

⁽²⁾

Current period cash collections.

⁽³⁾

Prior to second-quarter 2015, charge-offs represent the current period recovery shortfall — the difference between what was expected to be collected and what was actually collected. In the second quarter of 2015, the portion of the loan amount charged off at default increased from 73 percent to 79 percent. This change resulted in a $330 million reduction to the balance of the receivable for partially charged-off loans. These amounts are included in total charge-offs as reported in the “Allowance for Private Education Loan Losses” table.

Accrued Interest Receivable

The following table provides information regarding accrued interest receivable on our Private Education Loans. The table also discloses the amount of accrued interest on loans greater than 90 days past due as compared to our allowance for uncollectible interest.


(Dollars in millions)	Accrued Interest Receivable		Greater Than 90 Days Past Due		Allowance for Uncollectible Interest
September 30, 2016
Private Education Loans — Traditional	$	374	$	23	$	26
Private Education Loans — Non-Traditional		48		7		7

Total	$	422	$	30	$	33

December 31, 2015
Private Education Loans — Traditional	$	433	$	27	$	26
Private Education Loans — Non-Traditional		57		8		9

Total	$	490	$	35	$	35