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 18, 2017
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 18, 2017, SLM Corporation issued a press release announcing its financial results for the quarter ended December 31, 2016. 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 18, 2017. | |
* | 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 18, 2017 | 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 18, 2017. | |
* | Furnished herewith. |
Exhibit 99.1
 | NEWS RELEASE |
FOR IMMEDIATE RELEASE | |
SALLIE MAE REPORTS FOURTH-QUARTER AND FULL-YEAR 2016 FINANCIAL RESULTS
Full-Year Private Education Loan Originations of $4.7 Billion, Up 8 Percent Year-Over-Year
Private Education Loan Portfolio Grows to $14.1 Billion, Up 34 Percent Year-Over-Year
Full-Year Net Interest Income Increases to $891 Million, Up 27 Percent Year-Over-Year
NEWARK, Del., Jan. 18, 2017 — Sallie Mae (Nasdaq: SLM), formally SLM Corporation, today released fourth-quarter 2016 and full-year 2016 financial results. In 2016, the company grew private education loan originations 8 percent to $4.7 billion, expanded its private education loan portfolio 34 percent to $14.1 billion, and increased net interest income 27 percent to $891 million, all compared to 2015.
“We continue to execute on our mission as we helped 348,000 families make college happen in 2016, originations of high-quality student loans increased again, and our efficiency ratio improved as we saw a healthy return on customer experience investments,” said Raymond J. Quinlan, chairman and CEO. “These positive indicators illustrate how Sallie Mae is positioned for continued growth in 2017.”
For the fourth-quarter 2016, GAAP net income was $70 million, compared with $90 million in the year-ago quarter. GAAP net income attributable to the company's common stock was $65 million ($0.15 diluted earnings per share) in the fourth-quarter 2016, compared with $85 million ($0.20 diluted earnings per share) in the year-ago quarter. The year-over-year decrease was primarily attributable to a $58-million decrease in gains on sales of loans, net, a $13-million increase in provision for credit losses, and a $13-million increase in total non-interest expenses, which were offset by a $58-million increase in net interest income and a $12-million decrease in income tax expense.
Comparisons of 2016 and 2015 results reflect the company's decision in early 2016 to retain all new loan originations and recognize interest income over the life of the loans rather than sell the loans and recognize gains from their sale. In 2015, the company sold $1.5 billion in loans for a pre-tax gain of $135 million, generating $0.20 diluted earnings per share attributable to this activity. In 2016, there was no corresponding gain or earnings per share contribution because loan sales were not repeated.
For 2016, GAAP net income was $250 million, compared with $274 million in 2015. GAAP net income attributable to the company's common stock was $229 million ($0.53 diluted earnings per share) in 2016, compared with $255 million ($0.59 diluted earnings per share) in 2015.
Fourth-quarter 2016 results vs. fourth-quarter 2015 included:
• | Private education loan originations of $608 million, up 6 percent. |
• | Net interest income of $245 million, up 31 percent. |
• | Net interest margin of 5.55 percent, up 7 basis points. |
• | Average private education loans outstanding of $14.1 billion, up 33 percent. |
• | Average yield on the private education loan portfolio was 8.08 percent, up 24 basis points. |
• | Private education loan provision for loan losses was $43 million, up from $29 million. |
• | Private education loans in forbearance were 3.5 percent of private education loans in repayment and forbearance, up from 3.4 percent. |
• | Private education loan delinquencies as a percentage of private education loans in repayment were 2.1 percent, down from 2.2 percent. |
1
Core earnings for the fourth-quarter 2016 were $73 million, compared with $90 million in the year-ago quarter. Core earnings attributable to the company's common stock were $67 million ($0.15 diluted earnings per share) in the fourth-quarter 2016, compared with $85 million ($0.20 diluted earnings per share) in the year-ago quarter.
Core earnings for 2016 were $252 million, compared with $273 million for 2015. Core earnings attributable to the company's common stock were $231 million ($0.53 diluted earnings per share) for 2016, compared with $254 million ($0.59 diluted earnings per share) for 2015.
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 2016 and full-year 2016 GAAP results included $4.4 million and $3.1 million, respectively, of pre-tax losses from derivative accounting treatment that are excluded from core earnings results, vs. pre-tax gains of $0.3 million and $1.8 million, respectively, in the year-ago periods.
Total Non-Interest Expenses
Total non-interest expenses were $98 million in the fourth-quarter 2016, compared with $85 million in the year-ago quarter (which included a $1 million credit to restructuring and other reorganization expenses). Operating expenses grew 15 percent from the year-ago quarter while the non-GAAP operating efficiency ratio decreased to 38.6 percent in the fourth-quarter 2016, from 42.5 percent in the year-ago quarter.
Total non-interest expenses were $386 million for 2016, compared with $356 million for 2015 (which included $5 million in restructuring and other reorganization expenses). Full-year operating expenses grew 10 percent year-over-year while the non-GAAP operating efficiency ratio decreased to 40.2 percent in 2016, from 46.8 percent in 2015. The improvement in the non-GAAP operating efficiency ratio is primarily due to the continued infrastructure efficacy as the portfolio grows, and operational improvements resulting from 2015 customer experience investments.
Income Tax Expense
Income tax expense decreased to $43 million in the fourth-quarter 2016 from $55 million in the year-ago quarter. The effective income tax rate in fourth-quarter 2016 was 38.0 percent, relatively unchanged from 37.9 percent in the year-ago quarter.
Income tax expense decreased to $164 million in 2016 from $165 million in 2015. The company’s effective income tax rate increased to 39.6 percent in 2016 from 37.5 percent in 2015. The increase in the effective income tax rate for 2016 was primarily the result of an increase in uncertain tax positions. Managing uncertain tax positions will add volatility to the company's reported effective tax rate, but should not impact its expected cash tax liability.
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, 2016, Sallie Mae Bank’s regulatory capital ratios were as follows:
Dec. 31, 2016 | "Well Capitalized" Regulatory Requirements | |
Common Equity Tier 1 Capital (to Risk-Weighted Assets) | 12.6 percent | 6.5 percent |
Tier 1 Capital (to Risk-Weighted Assets) | 12.6 percent | 8.0 percent |
Total Capital (to Risk-Weighted Assets) | 13.8 percent | 10.0 percent |
Tier 1 Capital (to Average Assets) | 11.1 percent | 5.0 percent |
Deposits
Deposits at the company totaled $13.4 billion ($7.1 billion in brokered deposits and $6.3 billion in retail and other deposits) at Dec. 31, 2016, compared with $11.5 billion ($7.3 billion in brokered deposits and $4.2 billion in retail and other deposits) at Dec. 31, 2015. The increase was primarily driven by growth in retail deposits and other money market deposits.
2
Guidance
The company expects 2017 results to be as follows:
• | Full-year diluted core earnings per share: $0.67 - $0.69. |
• | Full-year private education loan originations of $4.9 billion. |
• | Full-year non-GAAP operating efficiency ratio: 38 percent - 39 percent. |
***
Sallie Mae will host an earnings conference call tomorrow, Jan. 19, 2017, 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 30532768 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. 1, 2017, by dialing 855-859-2056 (USA and Canada) or 404-537-3406 (international) with access code 30532768.
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, 2015 (filed with the Securities and Exchange Commission (“SEC”) on Feb. 26, 2016) and subsequent filings with the SEC; 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; 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; risks associated with restructuring initiatives, including failures to successfully implement cost-cutting and restructuring initiatives and the adverse effects of such initiatives on the company's 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 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 (excluding current period accruals on the derivative instruments), net of tax. 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 Sept. 30, 2016
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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.”
The company reports a non-GAAP operating efficiency ratio. A GAAP-based operating efficiency ratio would compare total non-interest expenses to net revenue (which consists of net interest income, before provisions for credit losses, plus non-interest income). Our operating efficiency ratio is a non-GAAP measure because we adjust (a) the non-interest expense numerator by deducting restructuring and other reorganization expenses, and (b) the net revenue denominator by deducting gains on sales of loans, net. We believe doing so provides useful information to investors because it is a measure used by our management team to monitor our effectiveness in managing operating expenses. Other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way we calculate our ratio. Accordingly, our non-GAAP operating efficiency ratio may not be comparable to similar measures used by other companies.
***
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) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income attributable to SLM Corporation common stock | $ | 64,736 | $ | 84,856 | $ | 229,123 | $ | 254,689 | ||||||||
Diluted earnings per common share attributable to SLM Corporation | $ | 0.15 | $ | 0.20 | $ | 0.53 | $ | 0.59 | ||||||||
Weighted average shares used to compute diluted earnings per share | 435,419 | 431,531 | 432,919 | 432,234 | ||||||||||||
Return on assets | 1.5 | % | 2.5 | % | 1.5 | % | 2.0 | % | ||||||||
Non-GAAP operating efficiency ratio(1) | 38.6 | % | 42.5 | % | 40.2 | % | 46.8 | % | ||||||||
Other Operating Statistics | ||||||||||||||||
Ending Private Education Loans, net | $ | 14,113,409 | $ | 10,515,505 | $ | 14,113,409 | $ | 10,515,505 | ||||||||
Ending FFELP Loans, net | 1,011,678 | 1,115,086 | 1,011,678 | 1,115,086 | ||||||||||||
Ending total education loans, net | $ | 15,125,087 | $ | 11,630,591 | $ | 15,125,087 | $ | 11,630,591 | ||||||||
Average education loans | $ | 15,082,071 | $ | 11,707,966 | $ | 13,811,081 | $ | 10,998,776 | ||||||||
_________ | ||||||||||||||||
(1) A GAAP-based operating efficiency ratio would compare total non-interest expenses to net revenue (which consists of net interest income, before provisions for credit losses, plus non-interest income). Our operating efficiency ratio is a non-GAAP measure because we adjust (a) the non-interest expense numerator by deducting restructuring and other reorganization expenses, and (b) the net revenue denominator by deducting gains on sales of loans, net. We believe doing so provides useful information to investors because it is a measure used by our management team to monitor our effectiveness in managing operating expenses. Other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way we calculate our ratio. Accordingly, our non-GAAP operating efficiency ratio may not be comparable to similar measures used by other companies. | ||||||||||||||||
5
SLM CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
December 31, | December 31, | |||||||
2016 | 2015 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 1,918,793 | $ | 2,416,219 | ||||
Available-for-sale investments at fair value (cost of $211,406 and $196,402, respectively) | 208,603 | 195,391 | ||||||
Loans held for investment (net of allowance for losses of $184,701 and $112,507, respectively) | 15,137,922 | 11,630,591 | ||||||
Restricted cash and investments | 53,717 | 27,980 | ||||||
Other interest-earning assets | 49,114 | 54,845 | ||||||
Accrued interest receivable | 766,106 | 564,496 | ||||||
Premises and equipment, net | 87,063 | 81,273 | ||||||
Tax indemnification receivable | 259,532 | 186,076 | ||||||
Other assets | 52,153 | 57,227 | ||||||
Total assets | $ | 18,533,003 | $ | 15,214,098 | ||||
Liabilities | ||||||||
Deposits | $ | 13,435,667 | $ | 11,487,707 | ||||
Short-term borrowings | — | 500,175 | ||||||
Long-term borrowings | 2,167,979 | 579,101 | ||||||
Income taxes payable, net | 184,324 | 166,662 | ||||||
Upromise related liabilities | 256,041 | 275,384 | ||||||
Other liabilities | 141,934 | 108,746 | ||||||
Total liabilities | 16,185,945 | 13,117,775 | ||||||
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: 436.6 million and 430.7 million shares issued, respectively | 87,327 | 86,136 | ||||||
Additional paid-in capital | 1,175,564 | 1,135,860 | ||||||
Accumulated other comprehensive loss (net of tax benefit $5,364 and $9,949, respectively) | (8,671 | ) | (16,059 | ) | ||||
Retained earnings | 595,322 | 366,609 | ||||||
Total SLM Corporation stockholders' equity before treasury stock | 2,414,542 | 2,137,546 | ||||||
Less: Common stock held in treasury at cost: 7.7 million and 4.4 million shares, respectively | (67,484 | ) | (41,223 | ) | ||||
Total equity | 2,347,058 | 2,096,323 | ||||||
Total liabilities and equity | $ | 18,533,003 | $ | 15,214,098 | ||||
6
SLM CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Quarters Ended | Years Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Interest income: | ||||||||||||||||
Loans | $ | 295,241 | $ | 218,703 | $ | 1,060,487 | $ | 817,120 | ||||||||
Investments | 2,005 | 2,501 | 9,160 | 10,247 | ||||||||||||
Cash and cash equivalents | 2,767 | 1,183 | 7,599 | 3,751 | ||||||||||||
Total interest income | 300,013 | 222,387 | 1,077,246 | 831,118 | ||||||||||||
Interest expense: | ||||||||||||||||
Deposits | 40,775 | 29,430 | 148,408 | 116,391 | ||||||||||||
Interest expense on short-term borrowings | 1,495 | 1,771 | 7,322 | 6,490 | ||||||||||||
Interest expense on long-term borrowings | 12,309 | 3,340 | 30,178 | 5,738 | ||||||||||||
Total interest expense | 54,579 | 34,541 | 185,908 | 128,619 | ||||||||||||
Net interest income | 245,434 | 187,846 | 891,338 | 702,499 | ||||||||||||
Less: provisions for credit losses | 43,226 | 30,382 | 159,405 | 90,055 | ||||||||||||
Net interest income after provisions for credit losses | 202,208 | 157,464 | 731,933 | 612,444 | ||||||||||||
Non-interest income: | ||||||||||||||||
Gains on sales of loans, net | 230 | 58,484 | 230 | 135,358 | ||||||||||||
(Losses) gains on derivatives and hedging activities, net | (4,114 | ) | 953 | (958 | ) | 5,300 | ||||||||||
Other income | 13,235 | 12,561 | 69,544 | 41,935 | ||||||||||||
Total non-interest income | 9,351 | 71,998 | 68,816 | 182,593 | ||||||||||||
Non-interest expenses: | ||||||||||||||||
Compensation and benefits | 45,337 | 39,896 | 183,996 | 158,975 | ||||||||||||
FDIC assessment fees | 5,661 | 4,118 | 19,209 | 14,348 | ||||||||||||
Other operating expenses | 47,038 | 41,231 | 182,202 | 175,772 | ||||||||||||
Total operating expenses | 98,036 | 85,245 | 385,407 | 349,095 | ||||||||||||
Acquired intangible asset amortization expense | 159 | 370 | 906 | 1,480 | ||||||||||||
Restructuring and other reorganization expenses | — | (913 | ) | — | 5,398 | |||||||||||
Total non-interest expenses | 98,195 | 84,702 | 386,313 | 355,973 | ||||||||||||
Income before income tax expense | 113,364 | 144,760 | 414,436 | 439,064 | ||||||||||||
Income tax expense | 43,122 | 54,915 | 164,109 | 164,780 | ||||||||||||
Net income | 70,242 | 89,845 | 250,327 | 274,284 | ||||||||||||
Preferred stock dividends | 5,506 | 4,989 | 21,204 | 19,595 | ||||||||||||
Net income attributable to SLM Corporation common stock | $ | 64,736 | $ | 84,856 | $ | 229,123 | $ | 254,689 | ||||||||
Basic earnings per common share attributable to SLM Corporation | $ | 0.15 | $ | 0.20 | $ | 0.54 | $ | 0.60 | ||||||||
Average common shares outstanding | 428,368 | 426,137 | 427,876 | 425,574 | ||||||||||||
Diluted earnings per common share attributable to SLM Corporation | $ | 0.15 | $ | 0.20 | $ | 0.53 | $ | 0.59 | ||||||||
Average common and common equivalent shares outstanding | 435,419 | 431,531 | 432,919 | 432,234 | ||||||||||||
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SLM CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
Quarters Ended December 31, | Years Ended December 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net income | $ | 70,242 | $ | 89,845 | $ | 250,327 | $ | 274,284 | ||||||||
Other comprehensive income (loss): | ||||||||||||||||
Unrealized losses on investments | (6,515 | ) | (1,706 | ) | (1,792 | ) | (2,205 | ) | ||||||||
Unrealized gains (losses) on cash flow hedges | 37,546 | 14,060 | 13,764 | (5,224 | ) | |||||||||||
Total unrealized gains (losses) | 31,031 | 12,354 | 11,972 | (7,429 | ) | |||||||||||
Income tax (expense) benefit | (11,890 | ) | (4,898 | ) | (4,585 | ) | 2,763 | |||||||||
Other comprehensive gains (losses), net of tax (expense) benefit | 19,141 | 7,456 | 7,387 | (4,666 | ) | |||||||||||
Total comprehensive income | $ | 89,383 | $ | 97,301 | $ | 257,714 | $ | 269,618 | ||||||||
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“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) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
“Core Earnings” adjustments to GAAP: | ||||||||||||||||
GAAP net income | $ | 70,242 | $ | 89,845 | $ | 250,327 | $ | 274,284 | ||||||||
Preferred stock dividends | 5,506 | 4,989 | 21,204 | 19,595 | ||||||||||||
GAAP net income attributable to SLM Corporation common stock | $ | 64,736 | $ | 84,856 | $ | 229,123 | $ | 254,689 | ||||||||
Adjustments: | ||||||||||||||||
Net impact of derivative accounting(1) | 4,386 | (348 | ) | 3,127 | (1,849 | ) | ||||||||||
Net tax effect(2) | 1,682 | (124 | ) | 1,199 | (711 | ) | ||||||||||
Total “Core Earnings” adjustments to GAAP | 2,704 | (224 | ) | 1,928 | (1,138 | ) | ||||||||||
“Core Earnings” attributable to SLM Corporation common stock | $ | 67,440 | $ | 84,632 | $ | 231,051 | $ | 253,551 | ||||||||
GAAP diluted earnings per common share | $ | 0.15 | $ | 0.20 | $ | 0.53 | $ | 0.59 | ||||||||
Derivative adjustments, net of tax | — | — | — | — | ||||||||||||
“Core Earnings” diluted earnings per common share | $ | 0.15 | $ | 0.20 | $ | 0.53 | $ | 0.59 | ||||||||
______
(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, | |||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||||
(Dollars in thousands) | Balance | Rate | Balance | Rate | Balance | Rate | Balance | Rate | ||||||||||||||||||||
Average Assets | ||||||||||||||||||||||||||||
Private Education Loans | $ | 14,057,669 | 8.08 | % | $ | 10,578,001 | 7.84 | % | $ | 12,747,756 | 8.02 | % | $ | 9,819,053 | 7.93 | % | ||||||||||||
FFELP Loans | 1,024,402 | 3.70 | 1,129,965 | 3.35 | 1,063,325 | 3.53 | 1,179,723 | 3.26 | ||||||||||||||||||||
Other loans | 3,496 | 7.50 | — | — | 1,114 | 6.77 | — | — | ||||||||||||||||||||
Taxable securities | 479,384 | 1.65 | 390,204 | 2.54 | 407,860 | 2.24 | 395,718 | 2.59 | ||||||||||||||||||||
Cash and other short-term investments | 2,017,081 | 0.55 | 1,507,528 | 0.31 | 1,480,170 | 0.51 | 1,407,158 | 0.27 | ||||||||||||||||||||
Total interest-earning assets | 17,582,032 | 6.79 | % | 13,605,698 | 6.48 | % | 15,700,225 | 6.86 | % | 12,801,652 | 6.49 | % | ||||||||||||||||
Non-interest-earning assets | 816,337 | 677,109 | 772,167 | 670,084 | ||||||||||||||||||||||||
Total assets | $ | 18,398,369 | $ | 14,282,807 | $ | 16,472,392 | $ | 13,471,736 | ||||||||||||||||||||
Average Liabilities and Equity | ||||||||||||||||||||||||||||
Brokered deposits | $ | 7,302,429 | 1.32 | % | $ | 6,764,673 | 1.16 | % | $ | 7,154,218 | 1.31 | % | $ | 6,640,078 | 1.19 | % | ||||||||||||
Retail and other deposits | 5,961,087 | 1.09 | 3,989,790 | 0.95 | 5,095,631 | 1.06 | 3,869,359 | 0.95 | ||||||||||||||||||||
Other interest-bearing liabilities(1) | 2,205,726 | 2.51 | 907,538 | 2.29 | 1,476,740 | 2.58 | 398,851 | 3.27 | ||||||||||||||||||||
Total interest-bearing liabilities | 15,469,242 | 1.40 | % | 11,662,001 | 1.18 | % | 13,726,589 | 1.35 | % | 10,908,288 | 1.18 | % | ||||||||||||||||
Non-interest-bearing liabilities | 624,041 | 563,942 | 539,153 | 610,715 | ||||||||||||||||||||||||
Equity | 2,305,086 | 2,056,864 | 2,206,650 | 1,952,733 | ||||||||||||||||||||||||
Total liabilities and equity | $ | 18,398,369 | $ | 14,282,807 | $ | 16,472,392 | $ | 13,471,736 | ||||||||||||||||||||
Net interest margin | 5.55 | % | 5.48 | % | 5.68 | % | 5.49 | % | ||||||||||||||||||||
______
(1) For the three and twelve months ended December 31, 2016, includes the average balance of our secured borrowings and amortization expense of transaction costs related to our term asset-backed securitizations and our asset-backed commercial paper funding facility.
10
Earnings per Common Share
Quarters Ended December 31, | Years Ended December 31, | |||||||||||||||
(In thousands, except per share data) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Numerator: | ||||||||||||||||
Net income | $ | 70,242 | $ | 89,845 | $ | 250,327 | $ | 274,284 | ||||||||
Preferred stock dividends | 5,506 | 4,989 | 21,204 | 19,595 | ||||||||||||
Net income attributable to SLM Corporation common stock | $ | 64,736 | $ | 84,856 | $ | 229,123 | $ | 254,689 | ||||||||
Denominator: | ||||||||||||||||
Weighted average shares used to compute basic EPS | 428,368 | 426,137 | 427,876 | 425,574 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Dilutive effect of stock options, restricted stock, restricted stock units and Employee Stock Purchase Plan | 7,051 | 5,214 | 5,043 | 6,660 | ||||||||||||
Weighted average shares used to compute diluted EPS | 435,419 | 431,351 | 432,919 | 432,234 | ||||||||||||
Basic earnings per common share attributable to SLM Corporation: | $ | 0.15 | $ | 0.20 | $ | 0.54 | $ | 0.60 | ||||||||
Diluted earnings per common share attributable to SLM Corporation: | $ | 0.15 | $ | 0.20 | $ | 0.53 | $ | 0.59 | ||||||||
11
Allowance for Loan Losses Metrics
Quarters Ended | ||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||
(Dollars in thousands) | FFELP Loans | Private Education Loans | Total | FFELP Loans | Private Education Loans | Total | ||||||||||||||||||
Allowance for Loan Losses: | ||||||||||||||||||||||||
Beginning balance | $ | 2,209 | $ | 162,630 | $ | 164,839 | $ | 4,170 | $ | 100,033 | $ | 104,203 | ||||||||||||
Total provision | 224 | 42,808 | 43,032 | (39 | ) | 28,715 | 28,676 | |||||||||||||||||
Net charge-offs: | ||||||||||||||||||||||||
Charge-offs | (262 | ) | (25,224 | ) | (25,486 | ) | (440 | ) | (19,231 | ) | (19,671 | ) | ||||||||||||
Recoveries | — | 3,284 | 3,284 | — | 1,291 | 1,291 | ||||||||||||||||||
Net charge-offs | (262 | ) | (21,940 | ) | (22,202 | ) | (440 | ) | (17,940 | ) | (18,380 | ) | ||||||||||||
Loan sales(1) | — | (1,026 | ) | (1,026 | ) | — | (1,992 | ) | (1,992 | ) | ||||||||||||||
Ending Balance | $ | 2,171 | $ | 182,472 | $ | 184,643 | $ | 3,691 | $ | 108,816 | $ | 112,507 | ||||||||||||
Allowance: | ||||||||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | — | $ | 86,930 | $ | 86,930 | $ | — | $ | 43,480 | $ | 43,480 | ||||||||||||
Ending balance: collectively evaluated for impairment | $ | 2,171 | $ | 95,542 | $ | 97,713 | $ | 3,691 | $ | 65,336 | $ | 69,027 | ||||||||||||
Loans: | ||||||||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | — | $ | 612,606 | $ | 612,606 | $ | — | $ | 265,831 | $ | 265,831 | ||||||||||||
Ending balance: collectively evaluated for impairment | $ | 1,010,908 | $ | 13,639,069 | $ | 14,649,977 | $ | 1,115,663 | $ | 10,330,606 | $ | 11,446,269 | ||||||||||||
Net charge-offs as a percentage of average loans in repayment (annualized)(2) | 0.13 | % | 0.95 | % | 0.21 | % | 1.08 | % | ||||||||||||||||
Allowance as a percentage of the ending total loan balance | 0.21 | % | 1.28 | % | 0.33 | % | 1.03 | % | ||||||||||||||||
Allowance as a percentage of the ending loans in repayment(2) | 0.28 | % | 1.88 | % | 0.45 | % | 1.57 | % | ||||||||||||||||
Allowance coverage of net charge-offs (annualized) | 2.07 | 2.08 | 2.10 | 1.52 | ||||||||||||||||||||
Ending total loans, gross | $ | 1,010,908 | $ | 14,251,675 | $ | 1,115,663 | $ | 10,596,437 | ||||||||||||||||
Average loans in repayment(2) | $ | 788,196 | $ | 9,265,149 | $ | 823,940 | $ | 6,646,604 | ||||||||||||||||
Ending loans in repayment(2) | $ | 786,332 | $ | 9,709,758 | $ | 813,815 | $ | 6,927,266 | ||||||||||||||||
________
(1) | Represents fair value adjustments on loans sold. |
(2) | 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. |
12
Years Ended | ||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||
(Dollars in thousands) | FFELP Loans | Private Education Loans | Total | FFELP Loans | Private Education Loans | Total | ||||||||||||||||||
Allowance for Loan Losses: | ||||||||||||||||||||||||
Beginning balance | $ | 3,691 | $ | 108,816 | $ | 112,507 | $ | 5,268 | $ | 78,574 | $ | 83,842 | ||||||||||||
Total provision | (172 | ) | 159,511 | 159,339 | 1,005 | 87,344 | 88,349 | |||||||||||||||||
Net charge-offs: | ||||||||||||||||||||||||
Charge-offs | (1,348 | ) | (90,203 | ) | (91,551 | ) | (2,582 | ) | (55,357 | ) | (57,939 | ) | ||||||||||||
Recoveries | — | 10,382 | 10,382 | — | 5,820 | 5,820 | ||||||||||||||||||
Net charge-offs | (1,348 | ) | (79,821 | ) | (81,169 | ) | (2,582 | ) | (49,537 | ) | (52,119 | ) | ||||||||||||
Loan sales(1) | — | (6,034 | ) | (6,034 | ) | — | (7,565 | ) | (7,565 | ) | ||||||||||||||
Ending Balance | $ | 2,171 | $ | 182,472 | $ | 184,643 | $ | 3,691 | $ | 108,816 | $ | 112,507 | ||||||||||||
Allowance: | ||||||||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | — | $ | 86,930 | $ | 86,930 | $ | — | $ | 43,480 | $ | 43,480 | ||||||||||||
Ending balance: collectively evaluated for impairment | $ | 2,171 | $ | 95,542 | $ | 97,713 | $ | 3,691 | $ | 65,336 | $ | 69,027 | ||||||||||||
Loans: | ||||||||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | — | $ | 612,606 | $ | 612,606 | $ | — | $ | 265,831 | $ | 265,831 | ||||||||||||
Ending balance: collectively evaluated for impairment | $ | 1,010,908 | $ | 13,639,069 | $ | 14,649,977 | $ | 1,115,663 | $ | 10,330,606 | $ | 11,446,269 | ||||||||||||
Net charge-offs as a percentage of average loans in repayment(2) | 0.17 | % | 0.96 | % | 0.30 | % | 0.82 | % | ||||||||||||||||
Allowance as a percentage of the ending total loan balance | 0.21 | % | 1.28 | % | 0.33 | % | 1.03 | % | ||||||||||||||||
Allowance as a percentage of the ending loans in repayment(2) | 0.28 | % | 1.88 | % | 0.45 | % | 1.57 | % | ||||||||||||||||
Allowance coverage of net charge-offs | 1.61 | 2.29 | 1.43 | 2.20 | ||||||||||||||||||||
Ending total loans, gross | $ | 1,010,908 | $ | 14,251,675 | $ | 1,115,663 | $ | 10,596,437 | ||||||||||||||||
Average loans in repayment(2) | $ | 793,203 | $ | 8,283,036 | $ | 857,359 | $ | 6,031,741 | ||||||||||||||||
Ending loans in repayment(2) | $ | 786,332 | $ | 9,709,758 | $ | 813,815 | $ | 6,927,266 | ||||||||||||||||
______
(1) | Represents fair value adjustments on loans sold. |
(2) | 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. |
13
Private Education Loan Key Credit Quality Indicators
December 31, | ||||||||||||||
2016 | 2015 | |||||||||||||
(Dollars in thousands) | Balance(1) | % of Balance | Balance(1) | % of Balance | ||||||||||
Cosigners: | ||||||||||||||
With cosigner | $ | 12,816,512 | 90 | % | $ | 9,515,136 | 90 | % | ||||||
Without cosigner | 1,435,163 | 10 | 1,081,301 | 10 | ||||||||||
Total | $ | 14,251,675 | 100 | % | $ | 10,596,437 | 100 | % | ||||||
FICO at Original Approval: | ||||||||||||||
Less than 670 | $ | 920,132 | 6 | % | $ | 700,779 | 7 | % | ||||||
670-699 | 2,092,722 | 15 | 1,554,959 | 15 | ||||||||||
700-749 | 4,639,958 | 33 | 3,403,823 | 32 | ||||||||||
Greater than or equal to 750 | 6,598,863 | 46 | 4,936,876 | 46 | ||||||||||
Total | $ | 14,251,675 | 100 | % | $ | 10,596,437 | 100 | % | ||||||
Seasoning(2): | ||||||||||||||
1-12 payments | $ | 3,737,110 | 26 | % | $ | 3,059,901 | 29 | % | ||||||
13-24 payments | 2,841,107 | 20 | 2,096,412 | 20 | ||||||||||
25-36 payments | 1,839,764 | 13 | 1,084,818 | 10 | ||||||||||
37-48 payments | 917,633 | 7 | 513,125 | 5 | ||||||||||
More than 48 payments | 726,106 | 5 | 414,217 | 4 | ||||||||||
Not yet in repayment | 4,189,955 | 29 | 3,427,964 | 32 | ||||||||||
Total | $ | 14,251,675 | 100 | % | $ | 10,596,437 | 100 | % | ||||||
______
(1) | Balance represents gross Private Education Loans. |
(2) | 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. 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.
Private Education Loans | ||||||||||||||
December 31, | ||||||||||||||
2016 | 2015 | |||||||||||||
(Dollars in thousands) | Balance | % | Balance | % | ||||||||||
Loans in-school/grace/deferment(1) | $ | 4,189,955 | $ | 3,427,964 | ||||||||||
Loans in forbearance(2) | 351,962 | 241,207 | ||||||||||||
Loans in repayment and percentage of each status: | ||||||||||||||
Loans current | 9,509,394 | 97.9 | % | 6,773,095 | 97.8 | % | ||||||||
Loans delinquent 31-60 days(3) | 124,773 | 1.3 | 91,129 | 1.3 | ||||||||||
Loans delinquent 61-90 days(3) | 51,423 | 0.5 | 42,048 | 0.6 | ||||||||||
Loans delinquent greater than 90 days(3) | 24,168 | 0.3 | 20,994 | 0.3 | ||||||||||
Total loans in repayment | 9,709,758 | 100.0 | % | 6,927,266 | 100.0 | % | ||||||||
Total loans, gross | 14,251,675 | 10,596,437 | ||||||||||||
Deferred origination costs | 44,206 | 27,884 | ||||||||||||
Total loans | 14,295,881 | 10,624,321 | ||||||||||||
Allowance for losses | (182,472 | ) | (108,816 | ) | ||||||||||
Total loans, net | $ | 14,113,409 | $ | 10,515,505 | ||||||||||
Percentage of loans in repayment | 68.1 | % | 65.4 | % | ||||||||||
Delinquencies as a percentage of loans in repayment | 2.1 | % | 2.2 | % | ||||||||||
Loans in forbearance as a percentage of loans in repayment and forbearance | 3.5 | % | 3.4 | % | ||||||||||
_______
(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 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. |
15
Summary of Our Education Loan Portfolio
Ending Education Loan Balances, net
December 31, | ||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||
(Dollars in thousands) | Private Education Loans | FFELP Loans | Total Portfolio | Private Education Loans | FFELP Loans | Total Portfolio | ||||||||||||||||||
Total education loan portfolio: | ||||||||||||||||||||||||
In-school(1) | $ | 3,371,870 | $ | 377 | $ | 3,372,247 | $ | 2,823,035 | $ | 582 | $ | 2,823,617 | ||||||||||||
Grace, repayment and other(2) | 10,879,805 | 1,010,531 | 11,890,336 | 7,773,402 | 1,115,081 | 8,888,483 | ||||||||||||||||||
Total, gross | 14,251,675 | 1,010,908 | 15,262,583 | 10,596,437 | 1,115,663 | 11,712,100 | ||||||||||||||||||
Deferred origination costs and unamortized premium | 44,206 | 2,941 | 47,147 | 27,884 | 3,114 | 30,998 | ||||||||||||||||||
Allowance for loan losses | (182,472 | ) | (2,171 | ) | (184,643 | ) | (108,816 | ) | (3,691 | ) | (112,507 | ) | ||||||||||||
Total education loan portfolio | $ | 14,113,409 | $ | 1,011,678 | $ | 15,125,087 | $ | 10,515,505 | $ | 1,115,086 | $ | 11,630,591 | ||||||||||||
% of total | 93 | % | 7 | % | 100 | % | 90 | % | 10 | % | 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) | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||||
Private Education Loans | $ | 14,057,669 | 93 | % | $ | 10,578,001 | 90 | % | $ | 12,747,756 | 92 | % | $ | 9,819,053 | 89 | % | ||||||||||||
FFELP Loans | 1,024,402 | 7 | 1,129,965 | 10 | 1,063,325 | 8 | 1,179,723 | 11 | ||||||||||||||||||||
Total portfolio | $ | 15,082,071 | 100 | % | $ | 11,707,966 | 100 | % | $ | 13,811,081 | 100 | % | $ | 10,998,776 | 100 | % | ||||||||||||
16
Education Loan Activity
Quarters Ended | ||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||
(Dollars in thousands) | Private Education Loans | FFELP Loans | Total Portfolio | Private Education Loans | FFELP Loans | Total Portfolio | ||||||||||||||||||
Beginning balance | $ | 13,725,959 | $ | 1,034,545 | $ | 14,760,504 | $ | 10,766,511 | $ | 1,142,637 | $ | 11,909,148 | ||||||||||||
Acquisitions and originations | 612,991 | — | 612,991 | 579,705 | — | 579,705 | ||||||||||||||||||
Capitalized interest and deferred origination cost premium amortization | 181,052 | 8,901 | 189,953 | 120,676 | 9,420 | 130,096 | ||||||||||||||||||
Sales | (1,609 | ) | — | (1,609 | ) | (698,795 | ) | — | (698,795 | ) | ||||||||||||||
Loan consolidation to third parties | (91,150 | ) | (10,118 | ) | (101,268 | ) | (33,511 | ) | (8,824 | ) | (42,335 | ) | ||||||||||||
Repayments and other | (313,834 | ) | (21,650 | ) | (335,484 | ) | (219,081 | ) | (28,147 | ) | (247,228 | ) | ||||||||||||
Ending balance | $ | 14,113,409 | $ | 1,011,678 | $ | 15,125,087 | $ | 10,515,505 | $ | 1,115,086 | $ | 11,630,591 | ||||||||||||
Years Ended | ||||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||
(Dollars in thousands) | Private Education Loans | FFELP Loans | Total Portfolio | Private Education Loans | FFELP Loans | Total Portfolio | ||||||||||||||||||
Beginning balance | $ | 10,515,505 | $ | 1,115,086 | $ | 11,630,591 | $ | 8,246,647 | $ | 1,263,139 | $ | 9,509,786 | ||||||||||||
Acquisitions and originations | 4,685,622 | — | 4,685,622 | 4,366,651 | — | 4,366,651 | ||||||||||||||||||
Capitalized interest and deferred origination cost premium amortization | 339,163 | 35,774 | 374,937 | 239,330 | 39,743 | 279,073 | ||||||||||||||||||
Sales | (9,521 | ) | — | (9,521 | ) | (1,412,015 | ) | — | (1,412,015 | ) | ||||||||||||||
Loan consolidation to third parties | (235,118 | ) | (45,014 | ) | (280,132 | ) | (75,369 | ) | (43,087 | ) | (118,456 | ) | ||||||||||||
Repayments and other | (1,182,242 | ) | (94,168 | ) | (1,276,410 | ) | (849,739 | ) | (144,709 | ) | (994,448 | ) | ||||||||||||
Ending balance | $ | 14,113,409 | $ | 1,011,678 | $ | 15,125,087 | $ | 10,515,505 | $ | 1,115,086 | $ | 11,630,591 | ||||||||||||
17
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.
Quarters Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||||||
(Dollars in thousands) | 2016 | % | 2015 | % | 2016 | % | 2015 | % | ||||||||||||||||||||
Smart Option - interest only(1) | $ | 156,508 | 26 | % | $ | 142,231 | 25 | % | $ | 1,189,517 | 25 | % | $ | 1,075,260 | 25 | % | ||||||||||||
Smart Option - fixed pay(1) | 177,771 | 29 | 186,354 | 32 | 1,403,421 | 30 | 1,350,680 | 31 | ||||||||||||||||||||
Smart Option - deferred(1) | 263,296 | 44 | 245,869 | 43 | 2,034,100 | 44 | 1,902,729 | 44 | ||||||||||||||||||||
Smart Option - principal and interest | 1,319 | — | 383 | — | 7,953 | — | 1,727 | — | ||||||||||||||||||||
Parent Loan | 8,794 | 1 | — | — | 31,272 | 1 | — | |||||||||||||||||||||
Total Private Education Loan originations | $ | 607,688 | 100 | % | $ | 574,837 | 100 | % | $ | 4,666,263 | 100 | % | $ | 4,330,396 | 100 | % | ||||||||||||
Percentage of loans with a cosigner | 87 | % | 88 | % | 89 | % | 90 | % | ||||||||||||||||||||
Average FICO at approval | 748 | 746 | 748 | 749 | ||||||||||||||||||||||||
_______
(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, | ||||||||||||||
2016 | 2015 | |||||||||||||
(Dollars in thousands) | Amount | Year-End Weighted Average Stated Rate(1) | Amount | Year-End Weighted Average Stated Rate(1) | ||||||||||
Money market | $ | 7,129,404 | 1.22 | % | $ | 4,886,299 | 1.19 | % | ||||||
Savings | 834,521 | 0.84 | % | 669,254 | 0.82 | % | ||||||||
Certificates of deposit | 5,471,065 | 1.41 | % | 5,931,453 | 0.98 | % | ||||||||
Deposits - interest bearing | $ | 13,434,990 | $ | 11,487,006 | ||||||||||
_____
(1) Includes the effect of interest rate swaps in effective hedge relationships.
18
Regulatory Capital
(Dollars in thousands) | Actual | “Well Capitalized” Regulatory Requirements | |||||||||||
Amount | Ratio | Amount | Ratio | ||||||||||
As of December 31, 2016: | |||||||||||||
Common Equity Tier 1 Capital (to Risk-Weighted Assets) | $ | 2,011,583 | 12.6 | % | $ | 1,038,638 | > | 6.5 | % | ||||
Tier 1 Capital (to Risk-Weighted Assets) | $ | 2,011,583 | 12.6 | % | $ | 1,278,323 | > | 8.0 | % | ||||
Total Capital (to Risk-Weighted Assets) | $ | 2,197,997 | 13.8 | % | $ | 1,597,904 | > | 10.0 | % | ||||
Tier 1 Capital (to Average Assets) | $ | 2,011,583 | 11.1 | % | $ | 907,565 | > | 5.0 | % | ||||
As of December 31, 2015: | |||||||||||||
Common Equity Tier 1 Capital (to Risk-Weighted Assets) | $ | 1,734,315 | 14.4 | % | $ | 781,638 | > | 6.5 | % | ||||
Tier 1 Capital (to Risk-Weighted Assets) | $ | 1,734,315 | 14.4 | % | $ | 962,017 | > | 8.0 | % | ||||
Total Capital (to Risk-Weighted Assets) | $ | 1,848,528 | 15.4 | % | $ | 1,202,521 | > | 10.0 | % | ||||
Tier 1 Capital (to Average Assets) | $ | 1,734,315 | 12.3 | % | $ | 704,979 | > | 5.0 | % | ||||
19