UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 20, 2016
SLM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware | 001-13251 | 52-2013874 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
300 Continental Drive, Newark, Delaware | 19713 |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (302) 451-0200
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
c | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
c | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
c | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
c | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On January 20, 2016, SLM Corporation issued a press release announcing its financial results for the quarter ended December 31, 2015. The press release is furnished as Exhibit 99.1 and incorporated by reference herein.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
Exhibit Number | Description | |
99.1* | Press Release, dated January 20, 2016. | |
* | Furnished herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SLM CORPORATION | ||
Date: January 20, 2016 | By: | /s/ STEVEN J. MCGARRY |
Steven J. McGarry | ||
Executive Vice President and Chief Financial Officer | ||
EXHIBIT INDEX
Exhibit Number | Description | |
99.1* | Press Release, dated January 20, 2016. | |
* | Furnished herewith. |
Exhibit 99.1
 | NEWS RELEASE |
FOR IMMEDIATE RELEASE | |
SALLIE MAE REPORTS FOURTH-QUARTER AND FULL-YEAR 2015 FINANCIAL RESULTS
Diluted Earnings Per Share Up 40 Percent Year-over-Year
Full-Year Private Education Loan Originations of $4.3 Billion
Private Education Loan Portfolio Grows to $10.5 Billion, Up 28 Percent Year-over-Year
NEWARK, Del., Jan. 20, 2016 — Sallie Mae (NASDAQ: SLM), formally SLM Corporation, today released fourth-quarter 2015 and full-year 2015 financial results. In 2015, the company increased diluted earnings per share 40 percent year-over-year to $.59 (including $.20 attributable to gains on sales of loans), grew private education loan originations 6 percent to $4.3 billion, and expanded its private education loan portfolio size 28 percent to $10.5 billion, all compared to 2014.
“We met or exceeded all of our goals in 2015, our first full year of operation. Even more gratifying, we helped 333,000 students make college happen. With infrastructure investments and service enhancements in place to improve our customers’ experience, we are better positioned than ever to serve families as they save, plan, and pay for college, and remain on an upward growth trajectory,” said Raymond Quinlan, chairman and CEO. “Concerns about capital market conditions and regulatory issues continue to weigh on our market valuation. We strongly believe those concerns are exaggerated and will clear up over the course of 2016.”
For the fourth-quarter 2015, GAAP net income was $90 million, up from $20 million in the year-ago quarter. GAAP net income attributable to the company's common stock was $85 million ($.20 diluted earnings per share) in the fourth-quarter 2015, up from $15 million ($.03 diluted earnings per share) in the year-ago quarter. The year-over-year increase was primarily attributable to a $37-million increase in net interest income, a $58-million increase in gains on sales of loans, and a $4-million decrease in total expenses, which were offset by a $30-million increase in income tax expense.
For 2015, GAAP net income was $274 million, up from $194 million in 2014. GAAP net income attributable to the company's common stock was $255 million ($.59 diluted earnings per share) in 2015, up from $181 million ($.42 diluted earnings per share) in 2014.
Fourth-quarter 2015 results vs. fourth-quarter 2014 included:
• | Private education loan originations of $575 million, up 3 percent. |
• | Net interest income of $188 million, up 25 percent. |
• | Net interest margin of 5.48 percent, up 47 basis points. |
• | Average private education loans outstanding of $10.6 billion, up 31 percent. |
• | Average yield on the private education loan portfolio was 7.84 percent, down 23 basis points. |
• | Private education loan provision for loan losses was $29 million, down from $30 million. |
• | Loans in forbearance were 3.4 percent of private education loans in repayment and forbearance. |
• | Delinquencies as a percentage of private education loans in repayment were 2.2 percent. |
In connection with the Navient Corporation spin-off, the company changed its policy to charge off loans after 120 days of delinquency and changed its loss emergence period from two years to one year to reflect both the shorter charge-off policy and its related servicing practices. Consequently, many of the pre-spin-off, historical credit indicators and period-over-period trends are not comparable and may not be indicative of future performance.
Core earnings for the fourth-quarter 2015 were $90 million, up from $20 million in the year-ago quarter. Core earnings attributable to the company's common stock were $85 million ($.20 diluted earnings per share) in the fourth-quarter 2015, up from $15 million ($.03 diluted earnings per share) in the year-ago quarter.
1
Core earnings for 2015 were $273 million, up from $195 million for 2014. Core earnings attributable to the company's common stock were $254 million ($.59 diluted earnings per share) for 2015, up from $182 million ($.42 diluted earnings per share) for 2014.
Sallie Mae provides core earnings because it is one of several measures used to evaluate management performance and allocate corporate resources. The difference between core earnings and GAAP net income is driven by mark-to-market unrealized gains and losses on derivative contracts recognized in GAAP, but not in core earnings results. Management believes its derivatives are effective economic hedges, and, as such, they are a critical element of the company's interest rate risk management strategy. Fourth-quarter 2015 and full-year 2015 GAAP results included $348 thousand and $1.8 million, respectively, of pre-tax gains from derivative accounting treatment that are excluded from core earnings results, vs. pre-tax losses of $62 thousand and $1.7 million, respectively, in the year-ago periods.
Total Expenses
Total expenses were $85 million in fourth-quarter 2015 (reflecting a $1 million credit to reorganization expenses), compared with $88 million in the year-ago quarter (which included $10 million of reorganization expenses).
Total expenses were $356 million for the full-year 2015 (including $5 million of reorganization expenses), compared with $316 million in 2014 (which included $38 million of reorganization expenses). The year-over-year increase in total expenses was primarily the result of increased personnel costs related to being a stand-alone company and an increase in loans serviced for the company and third parties. In addition, the company made investments in its servicing operation to improve customer service, such as expanding weekend service hours and improving response times.
Income Tax Expense
The effective income tax rate decreased to 37.9 percent in fourth-quarter 2015 from 55.4 percent in the year-ago quarter. In fourth-quarter 2014, the company recorded a net reserve of $7 million for uncertain historical tax positions, which contributed to an increase in the effective tax rate to 55.4 percent. Absent these adjustments, the company’s effective tax rate would have been approximately 39 percent in fourth-quarter 2014. The additional decline in the effective tax rate for the fourth-quarter 2015 was the result of lower effective state tax rates in fourth-quarter 2015.
The company’s effective tax rate decreased to 37.5 percent in 2015 from 41.9 percent in 2014. The decrease in the effective tax rate for 2015 was primarily the result of the additional reserves recorded in fourth-quarter 2014 related to uncertain historical tax positions and lower effective state tax rates in fourth-quarter 2015.
Capital
The regulatory capital ratios of the company’s Sallie Mae Bank subsidiary continue to exceed guidelines for institutions considered “well capitalized.” At Dec. 31, 2015, Sallie Mae Bank’s regulatory capital ratios were as follows:
Dec. 31, 2015 | Well Capitalized Regulatory Requirements | |
Tier 1 leverage | 12.3 percent | 5.0 percent |
Tier 1 risk-based capital | 14.4 percent | 8.0 percent |
Total risk-based capital | 15.4 percent | 10.0 percent |
Common equity Tier 1 risk-based capital | 14.4 percent | 6.5 percent |
Deposits
Deposits at the company totaled $11.5 billion ($7.3 billion in brokered deposits and $4.2 billion in retail and other deposits) at Dec. 31, 2015, compared to $10.5 billion ($6.7 billion in brokered deposits and $3.8 billion in retail and other deposits) at Dec. 31, 2014. The increase was primarily driven by growth in brokered and other money market deposits and brokered CDs.
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Guidance
The company expects 2016 results to be as follows:
• | Full-year diluted core earnings per share between $.49 and $.51. |
• | Full-year private education loan originations of $4.6 billion. |
• | Full-year operating efficiency ratio improvement of 8-10 percent. |
***
Sallie Mae will host an earnings conference call tomorrow, Jan. 21, 2016, at 8 a.m. EST. Sallie Mae executives will be on hand to discuss various highlights of the quarter and to answer questions related to Sallie Mae’s performance. Individuals interested in participating in the call should dial 877-356-5689 (USA and Canada) or dial 706-679-0623 (international) and use access code 3903581 starting at 7:45 a.m. EST. A live audio webcast of the conference call may be accessed at www.SallieMae.com/investors. A replay of the conference call will be available approximately two hours after the call’s conclusion and will remain available through Feb. 3, 2016, by dialing 855-859-2056 (USA and Canada) or 404-537-3406 (international) with access code 3903581.
Presentation slides for the conference call may be accessed at www.SallieMae.com/investors under the webcasts tab.
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 the company’s beliefs, opinions or expectations and statements that assume or are dependent upon future events, are forward-looking statements. 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, 2014 (filed with the Securities and Exchange Commission (“SEC”) on Feb. 26, 2015) and subsequent filings with the SEC; increases in financing costs; limits on liquidity; increases in costs associated with compliance with laws and regulations; changes in accounting standards and the impact of related changes in significant accounting estimates; 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). The company could also be affected by, among other things: changes in its funding costs and availability; reductions to its credit ratings; failures or breaches of its operating systems or infrastructure, including those of third-party vendors; damage to its reputation; failures to successfully implement cost-cutting and restructuring initiatives and adverse effects of such initiatives on the company's business; risks associated with restructuring initiatives; 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 its customers; changes in the general interest rate environment, including the rate relationships among relevant money-market instruments and those of its earning assets versus its funding arrangements; rates of prepayments on the loans made by the company and its subsidiaries; changes in general economic conditions and the company's ability to successfully effectuate any acquisitions; and other strategic initiatives. The preparation of the company’s consolidated financial statements also requires management 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. The company does not undertake any obligation to update or revise these forward-looking statements to conform such statements to actual results or changes in its expectations.
The company reports financial results on a GAAP basis and also provides certain “Core Earnings” performance measures. The difference between the company’s “Core Earnings” and GAAP results for the periods presented were the unrealized, mark-to-market gains/losses on derivative contracts. These are recognized in GAAP, but not in “Core Earnings” results. The company provides “Core Earnings” measures because this is what management uses when making management decisions regarding the company’s performance and the allocation of corporate resources. The company’s “Core Earnings” are not defined terms within GAAP and may not be comparable to similarly titled measures reported by other companies.
For additional information, see “Management's Discussion and Analysis of Financial Condition and Results of Operations — GAAP Consolidated Earnings Summary -‘Core Earnings’ ” in the company’s Form 10-Q for the quarter ended September 30, 2015 for a further discussion and the “‘Core Earnings’ to GAAP Reconciliation” table in this press release for a complete reconciliation between GAAP net income and “Core Earnings.”
3
Year-over-year private education loan portfolio performance continues to be affected by changes in the company’s business practices undertaken in connection with the Navient Corporation spin-off. Most notably, the company changed its policy to charge off loans after 120 days of delinquency and changed its loss emergence period from two years to one year to reflect both the shorter charge-off policy and its related servicing practices. A loss emergence period represents the expected period between the first occurrence of an event likely to cause a loss on a loan and the date the loan is expected to be charged off, taking into consideration account management practices that affect the timing of a loss, such as the usage of forbearance. Prior to the spin-off, Sallie Mae Bank also sold all loans past 90 days delinquent to an entity that is now a subsidiary of Navient Corporation. Consequently, many of the pre-spin-off, historical credit indicators and period-over-period trends are not comparable and may not be indicative of future performance.
***
Sallie Mae (NASDAQ: SLM) is the nation’s saving, planning, and paying for college company. Whether college is a long way off or just around the corner, Sallie Mae offers products that promote responsible personal finance, including private education loans, Upromise rewards, scholarship search, college financial planning tools, and online retail banking. 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: | Martha Holler, 302-451-4900, martha.holler@salliemae.com, Rick Castellano, 302-451-2541, rick.castellano@salliemae.com |
Investors: | Brian Cronin, 302-451-0304, brian.cronin@salliemae.com |
###
4
Selected Financial Information and Ratios
(Unaudited)
Quarters Ended | Years Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
(In thousands, except per share data and percentages) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Net income attributable to SLM Corporation common stock | $ | 84,856 | $ | 14,862 | $ | 254,689 | $ | 181,286 | ||||||||
Diluted earnings per common share attributable to SLM Corporation | $ | 0.20 | $ | 0.03 | $ | 0.59 | $ | 0.42 | ||||||||
Weighted average shares used to compute diluted earnings per share | 431,531 | 432,108 | 432,234 | 432,269 | ||||||||||||
Return on assets | 2.49 | % | 0.62 | % | 2.04 | % | 1.68 | % | ||||||||
Operating efficiency ratio - old method(1) | 37 | % | 59 | % | 44 | % | 43 | % | ||||||||
Operating efficiency ratio - new method(2) | 43 | % | 48 | % | 47 | % | 45 | % | ||||||||
Other Operating Statistics | ||||||||||||||||
Ending Private Education Loans, net | $ | 10,515,505 | $ | 8,246,647 | $ | 10,515,505 | $ | 8,246,647 | ||||||||
Ending FFELP Loans, net | 1,115,086 | 1,263,139 | 1,115,086 | 1,263,139 | ||||||||||||
Ending total education loans, net | $ | 11,630,591 | $ | 9,509,786 | $ | 11,630,591 | $ | 9,509,786 | ||||||||
Average education loans | $ | 11,707,966 | $ | 9,355,797 | $ | 10,998,776 | $ | 8,916,853 | ||||||||
_________ | ||||||||||||||||
(1) Operating efficiency ratio is calculated as total expenses, excluding restructuring costs, divided by net interest income (after provision for credit losses) and other income. | ||||||||||||||||
(2) As shown here, in 2016 the company will change its calculation of operating efficiency ratio in future disclosures to investors to better reflect the ongoing efficiency of the company, as well as to be more consistent with the calculation used by our peers. The revised calculation is total expenses, excluding restructuring costs, divided by net interest income (before provision for credit losses) and other income, excluding gains on sales of loans. | ||||||||||||||||
5
SLM CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
December 31, | December 31, | |||||||
2015 | 2014 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 2,416,219 | $ | 2,359,780 | ||||
Available-for-sale investments at fair value (cost of $196,402 and $167,740, respectively) | 195,391 | 168,934 | ||||||
Loans held for investment (net of allowance for losses of $112,507 and $83,842, respectively) | 11,630,591 | 9,509,786 | ||||||
Restricted cash and investments | 27,980 | 4,804 | ||||||
Other interest-earning assets | 54,845 | 72,479 | ||||||
Accrued interest receivable | 564,496 | 469,697 | ||||||
Premises and equipment, net | 81,273 | 78,470 | ||||||
Acquired intangible assets, net | 1,745 | 3,225 | ||||||
Tax indemnification receivable | 186,076 | 240,311 | ||||||
Other assets | 55,482 | 64,757 | ||||||
Total assets | $ | 15,214,098 | $ | 12,972,243 | ||||
Liabilities | ||||||||
Deposits | $ | 11,487,707 | $ | 10,540,555 | ||||
Short-term borrowings | 500,175 | — | ||||||
Long-term borrowings | 579,101 | — | ||||||
Income taxes payable, net | 166,662 | 191,499 | ||||||
Upromise related liabilities | 275,384 | 293,004 | ||||||
Other liabilities | 108,746 | 117,227 | ||||||
Total liabilities | 13,117,775 | 11,142,285 | ||||||
Commitments and contingencies | ||||||||
Equity | ||||||||
Preferred stock, par value $0.20 per share, 20 million shares authorized: | ||||||||
Series A: 3.3 million and 3.3 million shares issued, respectively, at stated value of $50 per share | 165,000 | 165,000 | ||||||
Series B: 4 million and 4 million shares issued, respectively, at stated value of $100 per share | 400,000 | 400,000 | ||||||
Common stock, par value $0.20 per share, 1.125 billion shares authorized: 430.7 million and 424.8 million shares issued, respectively | 86,136 | 84,961 | ||||||
Additional paid-in capital | 1,135,860 | 1,090,511 | ||||||
Accumulated other comprehensive loss (net of tax benefit of $9,949 and $7,186, respectively) | (16,059 | ) | (11,393 | ) | ||||
Retained earnings | 366,609 | 113,066 | ||||||
Total SLM Corporation stockholders' equity before treasury stock | 2,137,546 | 1,842,145 | ||||||
Less: Common stock held in treasury at cost: 4.4 million and 1.4 million shares, respectively | (41,223 | ) | (12,187 | ) | ||||
Total equity | 2,096,323 | 1,829,958 | ||||||
Total liabilities and equity | $ | 15,214,098 | $ | 12,972,243 | ||||
6
SLM CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Quarters Ended | Years Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Interest income: | ||||||||||||||||
Loans | $ | 218,703 | $ | 174,413 | $ | 817,120 | $ | 660,792 | ||||||||
Investments | 2,501 | 2,792 | 10,247 | 8,913 | ||||||||||||
Cash and cash equivalents | 1,183 | 1,444 | 3,751 | 4,589 | ||||||||||||
Total interest income | 222,387 | 178,649 | 831,118 | 674,294 | ||||||||||||
Interest expense: | ||||||||||||||||
Deposits | 29,428 | 27,973 | 116,386 | 95,774 | ||||||||||||
Interest expense on short-term borrowings | 1,771 | — | 6,490 | — | ||||||||||||
Interest expense on long-term borrowings | 3,340 | — | 5,738 | — | ||||||||||||
Other interest expense | 2 | — | 5 | 41 | ||||||||||||
Total interest expense | 34,541 | 27,973 | 128,619 | 95,815 | ||||||||||||
Net interest income | 187,846 | 150,676 | 702,499 | 578,479 | ||||||||||||
Less: provisions for credit losses | 30,382 | 30,458 | 90,055 | 85,529 | ||||||||||||
Net interest income after provisions for credit losses | 157,464 | 120,218 | 612,444 | 492,950 | ||||||||||||
Noninterest income: | ||||||||||||||||
Gains on sales of loans, net | 58,484 | 396 | 135,358 | 121,359 | ||||||||||||
Gains (losses) on derivatives and hedging activities, net | 953 | 825 | 5,300 | (3,996 | ) | |||||||||||
Other | 12,561 | 11,095 | 41,935 | 39,921 | ||||||||||||
Total noninterest income | 71,998 | 12,316 | 182,593 | 157,284 | ||||||||||||
Expenses: | ||||||||||||||||
Compensation and benefits | 39,896 | 36,778 | 158,975 | 129,709 | ||||||||||||
Other operating expenses | 45,349 | 41,946 | 190,120 | 145,172 | ||||||||||||
Total operating expenses | 85,245 | 78,724 | 349,095 | 274,881 | ||||||||||||
Acquired intangible asset impairment and amortization expense | 370 | (855 | ) | 1,480 | 3,290 | |||||||||||
Restructuring and other reorganization expenses | (913 | ) | 10,483 | 5,398 | 38,311 | |||||||||||
Total expenses | 84,702 | 88,352 | 355,973 | 316,482 | ||||||||||||
Income before income tax expense | 144,760 | 44,182 | 439,064 | 333,752 | ||||||||||||
Income tax expense | 54,915 | 24,465 | 164,780 | 139,967 | ||||||||||||
Net income | 89,845 | 19,717 | 274,284 | 193,785 | ||||||||||||
Less: net loss attributable to noncontrolling interest | — | — | — | (434 | ) | |||||||||||
Net income attributable to SLM Corporation | 89,845 | 19,717 | 274,284 | 194,219 | ||||||||||||
Preferred stock dividends | 4,989 | 4,855 | 19,595 | 12,933 | ||||||||||||
Net income attributable to SLM Corporation common stock | $ | 84,856 | $ | 14,862 | $ | 254,689 | $ | 181,286 | ||||||||
Basic earnings per common share attributable to SLM Corporation | $ | 0.20 | $ | 0.04 | $ | 0.60 | $ | 0.43 | ||||||||
Average common shares outstanding | 426,137 | 423,325 | 425,574 | 423,970 | ||||||||||||
Diluted earnings per common share attributable to SLM Corporation | $ | 0.20 | $ | 0.03 | $ | 0.59 | $ | 0.42 | ||||||||
Average common and common equivalent shares outstanding | 431,531 | 432,108 | 432,234 | 432,269 | ||||||||||||
7
SLM CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
Quarters Ended December 31, | Years Ended December 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net income | $ | 89,845 | $ | 19,717 | $ | 274,284 | $ | 193,785 | ||||||||
Other comprehensive income (loss): | ||||||||||||||||
Unrealized (losses) gains on investments | (1,706 | ) | 2,437 | (2,205 | ) | 6,066 | ||||||||||
Unrealized gains (losses) on cash flow hedges | 14,060 | (17,889 | ) | (5,224 | ) | (19,772 | ) | |||||||||
Total unrealized gains (losses) | 12,354 | (15,452 | ) | (7,429 | ) | (13,706 | ) | |||||||||
Income tax (expense) benefit | (4,898 | ) | 5,911 | 2,763 | 5,337 | |||||||||||
Other comprehensive gains (losses), net of tax (expense) benefit | 7,456 | (9,541 | ) | (4,666 | ) | (8,369 | ) | |||||||||
Comprehensive income | 97,301 | 10,176 | 269,618 | 185,416 | ||||||||||||
Less: comprehensive loss attributable to noncontrolling interest | — | — | — | (434 | ) | |||||||||||
Total comprehensive income attributable to SLM Corporation | $ | 97,301 | $ | 10,176 | $ | 269,618 | $ | 185,850 | ||||||||
8
“Core Earnings” to GAAP Reconciliation
The following table reflects adjustments associated with our derivative activities.
Quarters Ended December 31, | Years Ended December 31, | |||||||||||||||
(Dollars in thousands, except per share amounts) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
“Core Earnings” adjustments to GAAP: | ||||||||||||||||
GAAP net income attributable to SLM Corporation | $ | 89,845 | $ | 19,717 | $ | 274,284 | $ | 194,219 | ||||||||
Preferred stock dividends | 4,989 | 4,855 | 19,595 | 12,933 | ||||||||||||
GAAP net income attributable to SLM Corporation common stock | $ | 84,856 | $ | 14,862 | $ | 254,689 | $ | 181,286 | ||||||||
Adjustments: | ||||||||||||||||
Net impact of derivative accounting(1) | (348 | ) | 62 | (1,849 | ) | 1,746 | ||||||||||
Net tax effect(2) | (124 | ) | 24 | (711 | ) | 659 | ||||||||||
Total “Core Earnings” adjustments to GAAP | (224 | ) | 38 | (1,138 | ) | 1,087 | ||||||||||
“Core Earnings” attributable to SLM Corporation common stock | $ | 84,632 | $ | 14,900 | $ | 253,551 | $ | 182,373 | ||||||||
GAAP diluted earnings per common share | $ | 0.20 | $ | 0.03 | $ | 0.59 | $ | 0.42 | ||||||||
Derivative adjustments, net of tax | — | — | — | — | ||||||||||||
“Core Earnings” diluted earnings per common share | $ | 0.20 | $ | 0.03 | $ | 0.59 | $ | 0.42 | ||||||||
______
(1) Derivative Accounting: “Core Earnings” exclude periodic unrealized gains and losses caused by the mark-to-market valuations on derivatives that do not qualify for hedge accounting treatment under GAAP, as well as the periodic unrealized gains and losses that are a result of ineffectiveness recognized related to effective hedges under GAAP. 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) “Core Earnings” tax rate is based on the effective tax rate at the Bank where the derivative instruments are held.
9
Average Balance Sheets - GAAP
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, | |||||||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||||||
(Dollars in thousands) | Balance | Rate | Balance | Rate | Balance | Rate | Balance | Rate | ||||||||||||||||||||
Average Assets | ||||||||||||||||||||||||||||
Private Education Loans | $ | 10,578,001 | 7.84 | % | $ | 8,062,977 | 8.07 | % | $ | 9,819,053 | 7.93 | % | $ | 7,563,356 | 8.16 | % | ||||||||||||
FFELP Loans | 1,129,965 | 3.35 | 1,292,820 | 3.21 | 1,179,723 | 3.26 | 1,353,497 | 3.24 | ||||||||||||||||||||
Taxable securities | 390,110 | 2.54 | 407,408 | 2.72 | 395,720 | 2.59 | 331,479 | 2.68 | ||||||||||||||||||||
Cash and other short-term investments | 1,502,267 | 0.31 | 2,159,088 | 0.27 | 1,423,090 | 0.26 | 1,746,839 | 0.26 | ||||||||||||||||||||
Total interest-earning assets | 13,600,343 | 6.49 | % | 11,922,293 | 5.94 | % | 12,817,586 | 6.48 | % | 10,995,171 | 6.13 | % | ||||||||||||||||
Non-interest-earning assets | 697,638 | 614,105 | 660,621 | 549,237 | ||||||||||||||||||||||||
Total assets | $ | 14,297,981 | $ | 12,536,398 | $ | 13,478,207 | $ | 11,544,408 | ||||||||||||||||||||
Average Liabilities and Equity | ||||||||||||||||||||||||||||
Brokered deposits | $ | 6,764,673 | 1.16 | % | $ | 6,171,293 | 1.22 | % | $ | 6,640,078 | 1.19 | % | $ | 5,588,569 | 1.12 | % | ||||||||||||
Retail and other deposits | 3,964,095 | 0.96 | 3,809,375 | 0.93 | 3,862,879 | 0.95 | 3,593,817 | 0.92 | ||||||||||||||||||||
Other interest-bearing liabilities | 907,342 | 2.29 | 17,068 | 2.72 | 399,907 | 3.27 | 26,794 | 0.91 | ||||||||||||||||||||
Total interest-bearing liabilities | 11,636,110 | 1.18 | % | 9,997,736 | 1.11 | % | 10,902,864 | 1.18 | % | 9,209,180 | 1.04 | % | ||||||||||||||||
Non-interest-bearing liabilities | 606,490 | 718,365 | 622,983 | 727,806 | ||||||||||||||||||||||||
Equity | 2,055,381 | 1,820,297 | 1,952,360 | 1,607,422 | ||||||||||||||||||||||||
Total liabilities and equity | $ | 14,297,981 | $ | 12,536,398 | $ | 13,478,207 | $ | 11,544,408 | ||||||||||||||||||||
Net interest margin | 5.48 | % | 5.01 | % | 5.48 | % | 5.26 | % | ||||||||||||||||||||
10
Earnings per Common Share
Quarters Ended December 31, | Years Ended December 31, | |||||||||||||||
(In thousands, except per share data) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Numerator: | ||||||||||||||||
Net income attributable to SLM Corporation | $ | 89,845 | $ | 19,717 | $ | 274,284 | $ | 194,219 | ||||||||
Preferred stock dividends | 4,989 | 4,855 | 19,595 | 12,933 | ||||||||||||
Net income attributable to SLM Corporation common stock | $ | 84,856 | $ | 14,862 | $ | 254,689 | $ | 181,286 | ||||||||
Denominator: | ||||||||||||||||
Weighted average shares used to compute basic EPS | 426,137 | 423,325 | 425,574 | 423,970 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Dilutive effect of stock options, restricted stock, restricted stock units and Employee Stock Purchase Plan | 5,214 | 8,783 | 6,660 | 8,299 | ||||||||||||
Weighted average shares used to compute diluted EPS | 431,351 | 432,108 | 432,234 | 432,269 | ||||||||||||
Basic earnings per common share attributable to SLM Corporation: | $ | 0.20 | $ | 0.04 | $ | 0.60 | $ | 0.43 | ||||||||
Diluted earnings per common share attributable to SLM Corporation: | $ | 0.20 | $ | 0.03 | $ | 0.59 | $ | 0.42 | ||||||||
11
Allowance for Loan Losses Metrics
Quarters Ended | ||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||||||
(Dollars in thousands) | FFELP Loans | Private Education Loans | Total | FFELP Loans | Private Education Loans | Total | ||||||||||||||||||
Allowance for Loan Losses: | ||||||||||||||||||||||||
Beginning balance | $ | 4,170 | $ | 100,033 | $ | 104,203 | $ | 5,742 | $ | 59,973 | $ | 65,715 | ||||||||||||
Total provision | (39 | ) | 28,715 | 28,676 | 464 | 29,994 | 30,458 | |||||||||||||||||
Net charge-offs: | ||||||||||||||||||||||||
Charge-offs | (440 | ) | (19,231 | ) | (19,671 | ) | (938 | ) | (10,056 | ) | (10,994 | ) | ||||||||||||
Recoveries | — | 1,291 | 1,291 | — | 1,147 | 1,147 | ||||||||||||||||||
Net charge-offs | (440 | ) | (17,940 | ) | (18,380 | ) | (938 | ) | (8,909 | ) | (9,847 | ) | ||||||||||||
Loan sales(1) | — | (1,992 | ) | (1,992 | ) | — | (2,484 | ) | (2,484 | ) | ||||||||||||||
Ending Balance | $ | 3,691 | $ | 108,816 | $ | 112,507 | $ | 5,268 | $ | 78,574 | $ | 83,842 | ||||||||||||
Allowance: | ||||||||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | — | $ | 43,480 | $ | 43,480 | $ | — | $ | 9,815 | $ | 9,815 | ||||||||||||
Ending balance: collectively evaluated for impairment | $ | 3,691 | $ | 65,336 | $ | 69,027 | $ | 5,268 | $ | 68,759 | $ | 74,027 | ||||||||||||
Loans: | ||||||||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | — | $ | 265,831 | $ | 265,831 | $ | — | $ | 59,402 | $ | 59,402 | ||||||||||||
Ending balance: collectively evaluated for impairment | $ | 1,115,663 | $ | 10,330,606 | $ | 11,446,269 | $ | 1,264,807 | $ | 8,251,974 | $ | 9,516,781 | ||||||||||||
Net charge-offs as a percentage of average loans in repayment (annualized)(2) | 0.21 | % | 1.08 | % | 0.40 | % | 0.72 | % | ||||||||||||||||
Allowance as a percentage of the ending total loan balance | 0.33 | % | 1.03 | % | 0.42 | % | 0.95 | % | ||||||||||||||||
Allowance as a percentage of the ending loans in repayment | 0.45 | % | 1.57 | % | 0.57 | % | 1.53 | % | ||||||||||||||||
Allowance coverage of net charge-offs (annualized) | 2.10 | 1.52 | 1.40 | 2.20 | ||||||||||||||||||||
Ending total loans, gross | $ | 1,115,663 | $ | 10,596,437 | $ | 1,264,807 | $ | 8,311,376 | ||||||||||||||||
Average loans in repayment(2) | $ | 823,940 | $ | 6,646,604 | $ | 930,336 | $ | 4,930,742 | ||||||||||||||||
Ending loans in repayment(2) | $ | 813,815 | $ | 6,927,266 | $ | 926,891 | $ | 5,149,215 | ||||||||||||||||
________
(1) | Represents fair value adjustments on loans sold. |
(2) | Loans in repayment include loans making interest only and fixed payments as well as loans that have entered full principal and interest repayment status. |
12
Years Ended | ||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||||||
(Dollars in thousands) | FFELP Loans | Private Education Loans | Total | FFELP Loans | Private Education Loans | Total | ||||||||||||||||||
Allowance for Loan Losses: | ||||||||||||||||||||||||
Beginning balance | $ | 5,268 | $ | 78,574 | $ | 83,842 | $ | 6,318 | $ | 61,763 | $ | 68,081 | ||||||||||||
Total provision | 1,005 | 87,344 | 88,349 | 1,946 | 83,583 | 85,529 | ||||||||||||||||||
Net charge-offs: | ||||||||||||||||||||||||
Charge-offs(1) | (2,582 | ) | (55,357 | ) | (57,939 | ) | (2,996 | ) | (14,442 | ) | (17,438 | ) | ||||||||||||
Recoveries | — | 5,820 | 5,820 | — | 1,155 | 1,155 | ||||||||||||||||||
Net charge-offs | (2,582 | ) | (49,537 | ) | (52,119 | ) | (2,996 | ) | (13,287 | ) | (16,283 | ) | ||||||||||||
Loan sales(2) | — | (7,565 | ) | (7,565 | ) | — | (53,485 | ) | (53,485 | ) | ||||||||||||||
Ending Balance | $ | 3,691 | $ | 108,816 | $ | 112,507 | $ | 5,268 | $ | 78,574 | $ | 83,842 | ||||||||||||
Allowance: | ||||||||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | — | $ | 43,480 | $ | 43,480 | $ | — | $ | 9,815 | $ | 9,815 | ||||||||||||
Ending balance: collectively evaluated for impairment | $ | 3,691 | $ | 65,336 | $ | 69,027 | $ | 5,268 | $ | 68,759 | $ | 74,027 | ||||||||||||
Loans: | ||||||||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | — | $ | 265,831 | $ | 265,831 | $ | — | $ | 59,402 | $ | 59,402 | ||||||||||||
Ending balance: collectively evaluated for impairment | $ | 1,115,663 | $ | 10,330,606 | $ | 11,446,269 | $ | 1,264,807 | $ | 8,251,974 | $ | 9,516,781 | ||||||||||||
Net charge-offs as a percentage of average loans in repayment(3) | 0.30 | % | 0.82 | % | 0.31 | % | 0.30 | % | ||||||||||||||||
Allowance as a percentage of the ending total loan balance | 0.33 | % | 1.03 | % | 0.42 | % | 0.95 | % | ||||||||||||||||
Allowance as a percentage of the ending loans in repayment | 0.45 | % | 1.57 | % | 0.57 | % | 1.53 | % | ||||||||||||||||
Allowance coverage of net charge-offs | 1.43 | 2.20 | 1.76 | 5.91 | ||||||||||||||||||||
Ending total loans, gross | $ | 1,115,663 | $ | 10,596,437 | $ | 1,264,807 | $ | 8,311,376 | ||||||||||||||||
Average loans in repayment(3) | $ | 857,359 | $ | 6,031,741 | $ | 972,390 | $ | 4,495,709 | ||||||||||||||||
Ending loans in repayment(3) | $ | 813,815 | $ | 6,927,266 | $ | 926,891 | $ | 5,149,215 | ||||||||||||||||
______
(1) | Prior to the spin-off, the company sold all loans greater than 90 days delinquent to an entity that is now a subsidiary of Navient Corporation, prior to being charged-off. Consequently, many of the pre-spin-off, historical credit indicators and period-over-period trends are not comparable and may not be indicative of future performance. |
(2) | Represents fair value adjustments on loans sold. |
(3) | Loans in repayment include loans making interest only and fixed payments as well as loans that have entered full principal and interest repayment status. |
13
Private Education Loan Key Credit Quality Indicators
December 31, | ||||||||||||||
2015 | 2014 | |||||||||||||
(Dollars in thousands) | Balance(1) | % of Balance | Balance(1) | % of Balance | ||||||||||
Cosigners: | ||||||||||||||
With cosigner | $ | 9,515,136 | 90 | % | $ | 7,465,339 | 90 | % | ||||||
Without cosigner | 1,081,301 | 10 | 846,037 | 10 | ||||||||||
Total | $ | 10,596,437 | 100 | % | $ | 8,311,376 | 100 | % | ||||||
FICO at Origination(2): | ||||||||||||||
Less than 670 | $ | 700,779 | 7 | % | $ | 558,801 | 7 | % | ||||||
670-699 | 1,554,959 | 15 | 1,227,860 | 15 | ||||||||||
700-749 | 3,403,823 | 32 | 2,626,238 | 32 | ||||||||||
Greater than or equal to 750 | 4,936,876 | 46 | 3,898,477 | 46 | ||||||||||
Total | $ | 10,596,437 | 100 | % | $ | 8,311,376 | 100 | % | ||||||
Seasoning(3): | ||||||||||||||
1-12 payments | $ | 3,059,901 | 29 | % | $ | 2,373,117 | 29 | % | ||||||
13-24 payments | 2,096,412 | 20 | 1,532,042 | 18 | ||||||||||
25-36 payments | 1,084,818 | 10 | 755,143 | 9 | ||||||||||
37-48 payments | 513,125 | 5 | 411,493 | 5 | ||||||||||
More than 48 payments | 414,217 | 4 | 212,438 | 3 | ||||||||||
Not yet in repayment | 3,427,964 | 32 | 3,027,143 | 36 | ||||||||||
Total | $ | 10,596,437 | 100 | % | $ | 8,311,376 | 100 | % | ||||||
______
(1) | Balance represents gross Private Education Loans. |
(2) | Average FICO at origination was 744 and 748 for the quarters ended December 31, 2015 and 2014, respectively, and 748 and 749 for the years ended December 31, 2015 and 2014, respectively. |
(3) | 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. |
14
Private Education Loan Delinquencies
The following table provides information regarding the loan status of our Private Education Loans and the aging of our past due Private Education Loans. Loans in repayment include loans making interest only and fixed payments as well as loans that have entered full principal and interest repayment status.
Private Education Loans | ||||||||||||||
December 31, | ||||||||||||||
2015 | 2014 | |||||||||||||
(Dollars in thousands) | Balance | % | Balance | % | ||||||||||
Loans in-school/grace/deferment(1) | $ | 3,427,964 | $ | 3,027,143 | ||||||||||
Loans in forbearance(2) | 241,207 | 135,018 | ||||||||||||
Loans in repayment and percentage of each status: | ||||||||||||||
Loans current | 6,773,095 | 97.8 | % | 5,045,600 | 98.0 | % | ||||||||
Loans delinquent 31-60 days(3) | 91,129 | 1.3 | 63,873 | 1.2 | ||||||||||
Loans delinquent 61-90 days(3) | 42,048 | 0.6 | 29,041 | 0.6 | ||||||||||
Loans delinquent greater than 90 days(3) | 20,994 | 0.3 | 10,701 | 0.2 | ||||||||||
Total loans in repayment | 6,927,266 | 100.0 | % | 5,149,215 | 100.0 | % | ||||||||
Total loans, gross | 10,596,437 | 8,311,376 | ||||||||||||
Deferred origination costs | 27,884 | 13,845 | ||||||||||||
Total loans | 10,624,321 | 8,325,221 | ||||||||||||
Allowance for losses | (108,816 | ) | (78,574 | ) | ||||||||||
Total loans, net | $ | 10,515,505 | $ | 8,246,647 | ||||||||||
Percentage of loans in repayment | 65.4 | % | 62.0 | % | ||||||||||
Delinquencies as a percentage of loans in repayment | 2.2 | % | 2.0 | % | ||||||||||
Loans in forbearance as a percentage of loans in repayment and forbearance | 3.4 | % | 2.6 | % | ||||||||||
_______
(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 the 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. |
At December 31, 2015 and 2014, 35 percent and 28 percent, respectively, of our portfolio of Private Education Loans had entered full principal and interest repayment status after any applicable grace periods.
15
Summary of Our Education Loan Portfolio
Ending Education Loan Balances, net
December 31, | ||||||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||||||
(Dollars in thousands) | Private Education Loans | FFELP Loans | Total Portfolio | Private Education Loans | FFELP Loans | Total Portfolio | ||||||||||||||||||
Total education loan portfolio: | ||||||||||||||||||||||||
In-school(1) | $ | 2,823,035 | $ | 582 | $ | 2,823,617 | $ | 2,548,721 | $ | 1,185 | $ | 2,549,906 | ||||||||||||
Grace, repayment and other(2) | 7,773,402 | 1,115,081 | 8,888,483 | 5,762,655 | 1,263,622 | 7,026,277 | ||||||||||||||||||
Total, gross | 10,596,437 | 1,115,663 | 11,712,100 | 8,311,376 | 1,264,807 | 9,576,183 | ||||||||||||||||||
Deferred origination costs and unamortized premium | 27,884 | 3,114 | 30,998 | 13,845 | 3,600 | 17,445 | ||||||||||||||||||
Allowance for loan losses | (108,816 | ) | (3,691 | ) | (112,507 | ) | (78,574 | ) | (5,268 | ) | (83,842 | ) | ||||||||||||
Total education loan portfolio | $ | 10,515,505 | $ | 1,115,086 | $ | 11,630,591 | $ | 8,246,647 | $ | 1,263,139 | $ | 9,509,786 | ||||||||||||
% of total | 90 | % | 10 | % | 100 | % | 87 | % | 13 | % | 100 | % | ||||||||||||
(1) Loans for customers still attending school and who are not yet required to make payments on the loan.
(2) Includes loans in deferment or forbearance.
Average Education Loan Balances (net of unamortized premium/discount)
Quarters Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||||||
(Dollars in thousands) | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||||
Private Education Loans | $ | 10,578,001 | 90 | % | $ | 8,062,977 | 86 | % | $ | 9,819,053 | 89 | % | 7,563,356 | 85 | % | ||||||||||||
FFELP Loans | 1,129,965 | 10 | 1,292,820 | 14 | 1,179,723 | 11 | 1,353,497 | 15 | |||||||||||||||||||
Total portfolio | $ | 11,707,966 | 100 | % | $ | 9,355,797 | 100 | % | $ | 10,998,776 | 100 | % | 8,916,853 | 100 | % | ||||||||||||
16
Education Loan Activity
Quarters Ended | ||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||||||
(Dollars in thousands) | Private Education Loans | FFELP Loans | Total Portfolio | Private Education Loans | FFELP Loans | Total Portfolio | ||||||||||||||||||
Beginning balance | $ | 10,766,511 | $ | 1,142,637 | $ | 11,909,148 | $ | 7,779,422 | $ | 1,315,951 | $ | 9,095,373 | ||||||||||||
Acquisitions and originations | 579,705 | — | 579,705 | 559,043 | — | 559,043 | ||||||||||||||||||
Capitalized interest and deferred origination cost premium amortization | 120,676 | 9,420 | 130,096 | 84,076 | 9,932 | 94,008 | ||||||||||||||||||
Sales | (698,795 | ) | — | (698,795 | ) | (7,212 | ) | — | (7,212 | ) | ||||||||||||||
Loan consolidation to third parties | (33,511 | ) | (8,824 | ) | (42,335 | ) | (1,742 | ) | (13,197 | ) | (14,939 | ) | ||||||||||||
Repayments and other | (219,081 | ) | (28,147 | ) | (247,228 | ) | (166,940 | ) | (49,547 | ) | (216,487 | ) | ||||||||||||
Ending balance | $ | 10,515,505 | $ | 1,115,086 | $ | 11,630,591 | $ | 8,246,647 | $ | 1,263,139 | $ | 9,509,786 | ||||||||||||
Years Ended | ||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||||||
(Dollars in thousands) | Private Education Loans | FFELP Loans | Total Portfolio | Private Education Loans | FFELP Loans | Total Portfolio | ||||||||||||||||||
Beginning balance | $ | 8,246,647 | $ | 1,263,139 | $ | 9,509,786 | $ | 6,506,642 | $ | 1,424,735 | $ | 7,931,377 | ||||||||||||
Acquisitions and originations | 4,366,651 | — | 4,366,651 | 4,087,320 | 7,470 | 4,094,790 | ||||||||||||||||||
Capitalized interest and deferred origination cost premium amortization | 239,330 | 39,743 | 279,073 | 170,306 | 46,093 | 216,399 | ||||||||||||||||||
Sales | (1,412,015 | ) | — | (1,412,015 | ) | (1,873,414 | ) | (7,654 | ) | (1,881,068 | ) | |||||||||||||
Loan consolidation to third parties | (75,369 | ) | (43,087 | ) | (118,456 | ) | (14,811 | ) | (41,760 | ) | (56,571 | ) | ||||||||||||
Repayments and other | (849,739 | ) | (144,709 | ) | (994,448 | ) | (629,396 | ) | (165,745 | ) | (795,141 | ) | ||||||||||||
Ending balance | $ | 10,515,505 | $ | 1,115,086 | $ | 11,630,591 | $ | 8,246,647 | $ | 1,263,139 | $ | 9,509,786 | ||||||||||||
17
Private Education Loan Originations
The following table summarizes our Private Education Loan originations.
Quarters Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||||||
(Dollars in thousands) | 2015 | % | 2014 | % | 2015 | % | 2014 | % | ||||||||||||||||||||
Smart Option - interest only(1) | $ | 142,231 | 25 | % | $ | 138,141 | 25 | % | $ | 1,075,260 | 25 | % | $ | 998,612 | 25 | % | ||||||||||||
Smart Option - fixed pay(1) | 186,354 | 32 | 169,048 | 30 | 1,350,680 | 31 | 1,256,978 | 31 | ||||||||||||||||||||
Smart Option - deferred(1) | 245,869 | 43 | 247,444 | 45 | 1,902,729 | 44 | 1,817,011 | 44 | ||||||||||||||||||||
Smart Option - principal and interest | 383 | — | 2,059 | — | 1,727 | — | 3,347 | — | ||||||||||||||||||||
Total Private Education Loan originations | $ | 574,837 | 100 | % | $ | 556,692 | 100 | % | $ | 4,330,396 | 100 | % | 4,075,948 | 100 | % | |||||||||||||
(1) | Interest only, fixed pay and deferred describe the payment option while in school or in grace period. |
Deposits
Interest bearing deposits are summarized as follows:
December 31, | ||||||||||||||
2015 | 2014 | |||||||||||||
(Dollars in thousands) | Amount | Year-End Weighted Average Stated Rate(1) | Amount | Year-End Weighted Average Stated Rate(1) | ||||||||||
Money market | $ | 4,886,299 | 1.19 | % | $ | 4,527,448 | 1.15 | % | ||||||
Savings | 669,254 | 0.82 | % | 703,687 | 0.81 | % | ||||||||
Certificates of deposit | 5,931,453 | 0.98 | % | 5,308,818 | 1.00 | % | ||||||||
Deposits - interest bearing | $ | 11,487,006 | $ | 10,539,953 | ||||||||||
_____
(1) Includes the effect of interest rate swaps in effective hedge relationships.
Regulatory Capital
Well Capitalized Regulatory Requirements | |||||||||||||
(Dollars in thousands) | Amount | Ratio | Amount | Ratio | |||||||||
As of December 31, 2015: | |||||||||||||
Tier I Capital (to Average Assets) | $ | 1,734,314 | 12.3 | % | $ | 704,978 | > | 5.0 | % | ||||
Tier I Capital (to Risk-Weighted Assets) | $ | 1,734,314 | 14.4 | % | $ | 962,016 | > | 8.0 | % | ||||
Total Capital (to Risk-Weighted Assets) | $ | 1,846,821 | 15.4 | % | $ | 1,202,520 | > | 10.0 | % | ||||
Common Equity Tier I Capital (to Risk-Weighted Assets) | 1,734,314 | 14.4 | % | 781,638 | > | 6.5 | % | ||||||
As of December 31, 2014: | |||||||||||||
Tier I Capital (to Average Assets) | $ | 1,413,988 | 11.5 | % | $ | 614,709 | > | 5.0 | % | ||||
Tier I Capital (to Risk-Weighted Assets) | $ | 1,413,988 | 15.0 | % | $ | 565,148 | > | 6.0 | % | ||||
Total Capital (to Risk-Weighted Assets) | $ | 1,497,830 | 15.9 | % | $ | 941,913 | > | 10.0 | % | ||||
18