Discover 2011 Annual Report Download - page 127

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115
The following table shows contractually required payments receivable, cash flows expected to be collected and fair value
of loans acquired as of the SLC acquisition date (dollars in millions):
Contractually required payments receivable (1)
Less: Non-accretable difference (2)
Cash flows expected to be collected
Less: Accretable yield (3)
Fair value of loans acquired
At December 31,
2010
$ 5,673
(683)
4,990
(1,920)
$ 3,070
(1) Amount represents principal and interest payments, both currently due and due in the future, adjusted for the effect of estimated prepayments.
(2) Charge-offs on acquired loans will be written off against non-accretable difference.
(3) Amount to be accreted into interest income over the estimated lives of the acquired loans.
The following table shows contractually required payments receivable, cash flows expected to be collected and fair
value of the additional private student loans acquired from Citibank for the loans acquired as of September 30, 2011 (dollars
in millions):
Contractually required payments receivable (1)
Less: Non-accretable difference (2)
Cash flows expected to be collected
Less: Accretable yield (3)
Fair value of loans acquired
At September 30, 2011
$ 3,861
(573)
3,288
(855)
$ 2,433
(1) Amount represents principal and interest payments, both currently due and due in the future, adjusted for the effect of estimated prepayments.
(2) Charge-offs on acquired loans will be written off against non-accretable difference.
(3) Amount to be accreted into interest income over the estimated lives of the acquired loans.
The following table provides changes in accretable yield for the acquired loans for the year ended November 30, 2011
(dollars in millions):
Balance at beginning of period
Acquisition of The Student Loan Corporation
Acquisition of the additional private student loan portfolio from Citibank
Accretion into interest income
Reclassifications from non-accretable difference
Balance at end of period
For the Year Ended
November 30, 2011
$—
1,920
855
(225)
30
$ 2,580
During the year ended November 30, 2011, the Company reclassified $30 million from non-accretable difference
because of an increase in expected cash flows. This amount will be recognized prospectively as an adjustment to yield over the
remaining life of the pools.
At November 30, 2011, the 30 or more days delinquency and 90 or more days delinquency rates on PCI student loans
(which includes loans not yet in repayment) were 2.14% and 0.73%, respectively. These rates include private student loans that
are greater than 120 days delinquent that are covered by an indemnification agreement or insurance arrangements through
which the Company expects to recover a substantial portion of the loan. The net charge-off rate on PCI student loans for the
year ended November 30, 2011 was 1.34%.
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