Sallie Mae 2010 Annual Report Download - page 70

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Allowance for Private Education Loan Losses
The following table summarizes changes in the allowance for Private Education Loan losses for the years
ended December 31, 2010, 2009 and 2008.
(Dollars in millions) 2010 2009 2008 2010
(1)
2009 2008 2010 2009 2008
GAAP-Basis
Years Ended December 31,
Off-Balance Sheet
Years Ended December 31,
“Core Earnings” Basis
Years Ended December 31,
Activity in Allowance for Private Education Loans
Allowance at beginning of period . . . $ 1,443 $ 1,308 $ 1,004 $ 524 $ 505 $ 362 $ 1,967 $ 1,813 $ 1,366
Provision for Private Education Loan
losses . . . ................ 1,298 967 586 — 432 288 1,298 1,399 874
Charge-offs................ (1,291) (876) (320) — (423) (153) (1,291) (1,299) (473)
Reclassification of interest
reserve
(2)
................. 47 44 38 — 10 8 47 54 46
Consolidation of securitization
trusts
(1)
.................. 524 — — (524) — — — — —
Allowance at end of period . ...... $ 2,021 $ 1,443 $ 1,308 $ — $ 524 $ 505 $ 2,021 $ 1,967 $ 1,813
Charge-offs as a percentage of
average loans in repayment ..... 5.0% 7.2% 3.8% —% 4.4% 1.9% 5.0% 6.0% 2.9%
Charge-offs as a percentage of
average loans in repayment and
forbearance ................ 4.8% 6.7% 3.3% —% 4.2% 1.6% 4.8% 5.6% 2.5%
Allowance as a percentage of the
ending total loan balance
(3)
..... 5.2% 5.8% 5.8% —% 4.0% 3.7% 5.2% 5.2% 5.0%
Allowance as a percentage of ending
loans in repayment ........... 7.3% 10.0% 11.7% —% 5.2% 5.3% 7.3% 8.1% 8.8%
Allowance coverage of charge-offs . . 1.6 1.6 4.1 — 1.2 3.3 1.6 1.5 3.8
Ending total loans
(3)
........... $38,572 $24,755 $22,426 $ — $13,215 $13,782 $38,572 $37,970 $36,208
Average loans in repayment. ...... $25,596 $12,137 $ 8,533 $ — $ 9,597 $ 8,088 $25,596 $21,734 $16,621
Ending loans in repayment . ...... $27,852 $14,379 $11,182 $ — $ 9,987 $ 9,530 $27,852 $24,366 $20,712
(1) Upon the adoption of the new consolidation accounting guidance on January 1, 2010, we consolidated all of our off-balance sheet
securitization trusts.
(2) Represents the additional allowance related to the amount of uncollectible interest reserved within interest income that is transferred
in the period to the allowance for loan losses when interest is capitalized to a loan’s principal balance. Prior to 2008, the interest pro-
vision was reversed in interest income and then provided for through provision within the allowance for loan loss.
(3) Ending total loans represents gross Private Education Loans, plus the receivable for partially charged-off loans.
69