Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2024

Valuation of Financial Instruments that are Marked-to-Market on Recurring Basis

The following table summarizes the valuation of our financial instruments that are marked-to-fair value on a recurring basis.


	Fair Value Measurements on a Recurring Basis
	September 30, 2024								December 31, 2023
(Dollars in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total

Assets:
Trading investments	$	—	$	—	$	54,840	$	54,840	$	—	$	—	$	54,481	$	54,481
Available-for-sale investments	—		2,019,695		2,910		2,022,605		—		2,411,622		—		2,411,622
Held for sale loans	—		485,701		—		485,701		—		—		—		—
Derivative instruments	—		600		—		600		—		—		—		—
Total	$	—	$	2,505,996	$	57,750	$	2,563,746	$	—	$	2,411,622	$	54,481	$	2,466,103

Liabilities:
Derivative instruments	$	—	$	(84)	$	—	$	(84)	$	—	$	(370)	$	—	$	(370)
Total	$	—	$	(84)	$	—	$	(84)	$	—	$	(370)	$	—	$	(370)

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The following table summarizes the change in balance sheet carrying value associated with level 3 financial instruments carried at fair value on a recurring basis.


	Nine Months Ended September 30,
	2024						2023
	Investments						Investments
(Dollars in thousands)	Available For Sale - Debt Securities		Trading - Residual Interests		Total		Available For Sale - Debt Securities		Trading - Residual Interests		Total
Balance, beginning of period	$	—	$	54,481	$	54,481	$	—	$	50,786	$	50,786
Total gains/(losses):
Included in earnings (or changes in net assets)(1)	14		398		412		—		2,016		2,016
Included in other comprehensive income	83		—		83		—		—		—
Settlements	2,813		(39)		2,774		—		(241)		(241)
Transfers into level 3	—		—		—		—		—		—
Transfers out of level 3	—		—		—		—		—		—
Balance, end of period	$	2,910	$	54,840	$	57,750	$	—	$	52,561	$	52,561

Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the reporting period	$	83	$	—	$	83	$	—	$	—	$	—
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets held at the end of the reporting period(2)	$	—	$	398	$	398	$	—	$	2,016	$	2,016

(1) Included in earnings (or changes in net assets) is comprised of the amounts recorded in the specified line item in the consolidated statements of income:


	Nine Months Ended September 30,
(Dollars in thousands)	2024		2023
Interest Income - Investments	$	14	$	—
Gains (losses) on securities, net	398		2,016
Total	$	412	$	2,016

(2) Recorded in "gains (losses) on securities, net" in the consolidated statements of income.

Fair Value Measurement Inputs and Valuation Techniques

The following table presents the significant unobservable inputs used in the recurring valuations of the level 3 financial instruments detailed above.

(Dollars in thousands)

Fair Value at
9/30/2024

Valuation Technique

Unobservable Input

Range (Average)

Debt Securities

2,910

Discounted cash flow

Constant Prepayment Rate

7.1%-11.1% (8.5%)

Probability of default

4.0%-17.0% (11.5%)

Residual Interests

54,840

Discounted cash flow

Constant Prepayment Rate

7.1%-11.1% (8.5%)

Probability of default

4.0%-17.0% (11.5%)

Total

57,750

Fair Values of Financial Assets and Liabilities, Including Derivative Financial Instruments

The following table summarizes the fair values of our financial assets and liabilities, including derivative financial instruments.


	September 30, 2024						December 31, 2023
(Dollars in thousands)	Fair Value		Carrying Value		Difference		Fair Value		Carrying Value		Difference
Earning assets:
Loans held for investment, net:
Private Education Loans	$	23,812,201	$	20,459,933	$	3,352,268	$	22,229,045	$	19,772,293	$	2,456,752
FFELP Loans	—		—		—		542,775		534,064		8,711

Loans held for sale	485,701		485,701		—		—		—		—
Cash and cash equivalents	4,489,539		4,489,539		—		4,149,838		4,149,838		—
Trading investments	54,840		54,840		—		54,481		54,481		—
Available-for-sale investments	2,022,605		2,022,605		—		2,411,622		2,411,622		—
Accrued interest receivable	1,667,539		1,537,594		129,945		1,448,766		1,379,904		68,862

Derivative instruments	600		600		—		—		—		—
Total earning assets	$	32,533,025	$	29,050,812	$	3,482,213	$	30,836,527	$	28,302,202	$	2,534,325
Interest-bearing liabilities:
Money-market and savings accounts	$	10,477,366	$	10,484,269	$	6,903	$	11,134,883	$	11,203,292	$	68,409
Certificates of deposit	11,027,258		10,960,441		(66,817)		10,380,684		10,448,365		67,681

Long-term borrowings	5,889,769		6,036,527		146,758		4,873,690		5,227,512		353,822
Accrued interest payable	98,945		98,945		—		105,066		105,066		—
Derivative instruments	84		84		—		370		370		—
Total interest-bearing liabilities	$	27,493,422	$	27,580,266	$	86,844	$	26,494,693	$	26,984,605	$	489,912

Excess of net asset fair value over carrying value					$	3,569,057					$	3,024,237

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References + Details