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119
Student Loan Securitization Activities
The Company’s student loan securitizations are accounted for as secured borrowings and the trusts are treated as
consolidated subsidiaries of the Company. Trust receivables underlying third-party investors’ interests are recorded in
purchased credit-impaired loans, and the related debt issued by the trusts is reported in long-term borrowings. The assets of the
Company’s consolidated VIEs are restricted from being sold or pledged as collateral for other borrowings and the cash flows
from these restricted assets may be used only to pay obligations of the trust.
Currently there are three trusts from which securities are issued to investors. Principal payments on the long-term
secured borrowings are made as cash is collected on the collateralized loans. The Company does not have access to cash
collected by the securitization trusts until cash is released in accordance with the trust indenture agreements and, for certain
securitizations, no cash will be released to the Company until all outstanding trust borrowings have been repaid. Similar to the
credit card securitizations, the Company continues to own and service the accounts that generate the student loan receivables
held by the trusts and receives servicing fees from the trusts based on either a percentage of the principal balance outstanding or
a flat fee per borrower. Although the servicing fee income offsets the fee expense related to the trusts, failure to service the
transferred loan receivables in accordance with contractual requirements could lead to a termination of the servicing rights and
the loss of future servicing income.
Under terms of all the trust arrangements, the Company has the option, but not the obligation, to provide financial
support to the trusts, but has never provided such support. A substantial portion of the credit risk associated with the securitized
loans has been transferred to third parties under private credit insurance or indemnification arrangements. See Note 4: Business
Combinations.
The carrying values of these restricted assets, which are presented on the Company’s consolidated statement of financial
condition as relating to securitization activities, are shown in the table below (dollars in thousands):
Restricted cash
Student loan receivables
Other assets
Carrying value of assets of consolidated variable interest entities
November 30,
2011
$ 109,875
2,839,871
7,218
$ 2,956,964
8. Premises and Equipment
A summary of premises and equipment, net is as follows (dollars in thousands):
Land
Buildings and improvements
Capitalized equipment leases
Furniture, fixtures and equipment
Software
Premises and equipment
Less: Accumulated depreciation
Less: Accumulated amortization of software
Premises and equipment held for investment, net
Premises and equipment held for sale, net(1)
Total premises and equipment, net
November 30,
2011
$ 41,816
502,109
6,176
570,775
346,535
1,467,411
(706,778)
(277,383)
483,250
—
$ 483,250
2010
$ 41,816
496,352
3,962
508,599
300,018
1,350,747
(647,256)
(248,877)
454,614
6,118
$ 460,732
(1) On November 12, 2009, the Company announced plans to close one of its processing centers. As such, this property was classified as held for sale, and
the Company recorded a loss in 2009 of $5.6 million, which is included in other expense in the consolidated statement of income. The property was sold
during 2011 and the Company recorded an additional loss of $3.1 million, which is also included in other expense in the consolidated statement of
income.
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