Sallie Mae 2011 Annual Report Download - page 68
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Allowance for Private Education Loan Losses
The following table summarizes changes in the allowance for Private Education Loan losses.
Activity in Allowance for Private Education Loans
GAAP-Basis
Years Ended December 31,
Off-Balance Sheet
Years Ended December 31,
“Core Earnings” Basis
Years Ended December 31,
(Dollars in millions) 2011(1) 2010 2009 2011 2010(2) 2009 2011(1) 2010 2009
Allowance at
beginning of
period ........... $ 2,022 $ 1,443 $ 1,308 $— $ 524 $ 505 $ 2,022 $ 1,967 $ 1,813
Provision for Private
Education Loan
losses(1) .......... 1,179 1,298 967 — — 432 1,179 1,298 1,399
Charge-offs ....... (1,072) (1,291) (876) — — (423) (1,072) (1,291) (1,299)
Reclassification of
interest reserve(3) . . . 42 48 44 — — 10 42 48 54
Consolidation of
securitization
trusts(2) ........... — 524 — — (524) ————
Allowance at end of
period ........... $ 2,171 $ 2,022 $ 1,443 $— $ — $ 524 $ 2,171 $ 2,022 $ 1,967
Charge-offs as a
percentage of
average loans in
repayment ........ 3.7% 5.0% 7.2% — % — % 4.4% 3.7% 5.0% 6.0%
Charge-offs as a
percentage of
average loans in
repayment and
forbearance ....... 3.6% 4.8% 6.7% — % — % 4.2% 3.6% 4.8% 5.6%
Allowance as a
percentage of the
ending total loan
balance(4) ......... 5.5% 5.2% 5.8% — % — % 4.0% 5.5% 5.2% 5.2%
Allowance as a
percentage of ending
loans in
repayment ........ 7.2% 7.3% 10.0% — % — % 5.2% 7.2% 7.3% 8.1%
Allowance coverage of
charge-offs ....... 2.0 1.6 1.6 — — 1.2 2.0 1.6 1.5
Ending total loans(4) . . $39,334 $38,572 $24,755 $— $ — $13,215 $39,334 $38,572 $37,970
Average loans in
repayment ........ $28,790 $25,596 $12,137 $— $ — $ 9,597 $28,790 $25,596 $21,734
Ending loans in
repayment ........ $30,185 $27,852 $14,379 $— $ — $ 9,987 $30,185 $27,852 $24,366
(1) See “Critical Accounting Policies and Estimates – Allowance for Loan Losses” for a discussion regarding the impact of adopting new
accounting guidance related to TDRs in the third quarter of 2011, which increased provisions for loan losses by $124 million in the third
quarter of 2011.
(2) On January 1, 2010, upon the adoption of the new consolidation accounting guidance, all off-balance sheet loans are included in the
GAAP-basis.
(3) 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.
(4) Ending total loans represents gross Private Education Loans, plus the receivable for partially charged-off loans.
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