SLM Corp [SLM] Filings

10-Q 1 slm-20220331.htm 10-Q slm-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-13251

SLM Corporation

(Exact name of registrant as specified in its charter)


Delaware			52-2013874
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

300 Continental Drive	Newark,	Delaware	19713
(Address of principal executive offices)			(Zip Code)

(302) 451-0200

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $.20 per share	SLM	The NASDAQ Global Select Market
Floating Rate Non-Cumulative Preferred Stock, Series B, par value $.20 per share	SLMBP	The NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

(Do not check if a smaller reporting company)

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of March 31, 2022, there were 271,083,556 shares of common stock outstanding.

SLM CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

INDEX


Part I. Financial Information
Item 1.	Financial Statements	3
Item 1.	Notes to the Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	47
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	73
Item 4.	Controls and Procedures	76
PART II. Other Information
Item 1.	Legal Proceedings	77
Item 1A.	Risk Factors	77
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	77
Item 3.	Defaults Upon Senior Securities	77
Item 4.	Mine Safety Disclosures	77
Item 5.	Other Information	77
Item 6.	Exhibits	78

2 SLM CORPORATION


CONSOLIDATED BALANCE SHEETS (Unaudited)
	March 31,		December 31,
(Dollars in thousands, except share and per share amounts)	2022		2021
Assets
Cash and cash equivalents	$	3,262,595	$	4,334,603
Investments:
Trading investments at fair value (cost of $33,985 and $29,049, respectively)	38,820		37,465
Available-for-sale investments at fair value (cost of $2,440,204 and $2,535,568, respectively)	2,341,551		2,517,956
Other investments	139,108		140,037
Total investments	2,519,479		2,695,458
Loans held for investment (net of allowance for losses of $1,227,362 and $1,165,335, respectively)	21,291,675		20,341,283

Restricted cash	187,960		210,741
Other interest-earning assets	9,327		9,655
Accrued interest receivable	1,259,145		1,205,667
Premises and equipment, net	148,154		150,516
Goodwill and acquired intangible assets, net	125,267		—
Income taxes receivable, net	215,217		239,578
Tax indemnification receivable	8,155		8,047
Other assets	24,855		26,351
Total assets	$	29,051,829	$	29,221,899

Liabilities
Deposits	$	21,194,026	$	20,828,124

Long-term borrowings	5,552,497		5,930,990

Other liabilities	261,099		313,074
Total liabilities	27,007,622		27,072,188
Commitments and contingencies
Equity
Preferred stock, par value $0.20 per share, 20 million shares authorized:
Series B: 2.5 million and 2.5 million shares issued, respectively, at stated value of $100 per share	251,070		251,070
Common stock, par value $0.20 per share, 1.125 billion shares authorized: 434.6 million and 432.0 million shares issued, respectively	86,922		86,403
Additional paid-in capital	1,086,852		1,074,384
Accumulated other comprehensive loss (net of tax benefit of ($12,601) and ($5,707), respectively)	(39,514)		(17,897)
Retained earnings	2,913,544		2,817,134
Total SLM Corporation stockholders’ equity before treasury stock	4,298,874		4,211,094
Less: Common stock held in treasury at cost: 163.5 million and 153.1 million shares, respectively	(2,254,667)		(2,061,383)
Total equity	2,044,207		2,149,711
Total liabilities and equity	$	29,051,829	$	29,221,899

See accompanying notes to consolidated financial statements.

SLM CORPORATION 3


CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share amounts)	Three Months Ended March 31,
	2022		2021
Interest income:
Loans	$	458,044	$	431,804
Investments	5,479		2,728
Cash and cash equivalents	1,515		1,626
Total interest income	465,038		436,158
Interest expense:
Deposits	49,537		66,598
Interest expense on short-term borrowings	2,875		3,202
Interest expense on long-term borrowings	37,594		35,244

Total interest expense	90,006		105,044
Net interest income	375,032		331,114
Less: provisions for credit losses	98,050		(225,767)
Net interest income after provisions for credit losses	276,982		556,881
Non-interest income:
Gains on sales of loans, net	9,881		399,111

Gains (losses) on derivatives and hedging activities, net	(5)		28
Other income	12,049		14,288
Total non-interest income	21,925		413,427
Non-interest expenses:
Operating expenses:
Compensation and benefits	71,981		71,581
FDIC assessment fees	5,684		5,188
Other operating expenses	54,341		47,730
Total operating expenses	132,006		124,499
Acquired intangible assets amortization expense	733		—
Restructuring expenses	—		1,077
Total non-interest expenses	132,739		125,576
Income before income tax expense	166,168		844,732
Income tax expense	37,356		203,525
Net income	128,812		641,207
Preferred stock dividends	1,275		1,201
Net income attributable to SLM Corporation common stock	$	127,537	$	640,006
Basic earnings per common share	$	0.46	$	1.77
Average common shares outstanding	276,977		361,042
Diluted earnings per common share	$	0.45	$	1.75
Average common and common equivalent shares outstanding	280,654		366,240
Declared dividends per common share	$	0.11	$	0.03

See accompanying notes to consolidated financial statements.

4 SLM CORPORATION


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(Dollars in thousands)	Three Months Ended March 31,
	2022		2021
Net income	$	128,812	$	641,207
Other comprehensive income (loss):
Unrealized losses on investments	(81,041)		(10,071)
Unrealized gains on cash flow hedges	52,530		23,423
Total unrealized gains (losses)	(28,511)		13,352
Income tax (expense) benefit	6,894		(3,229)
Other comprehensive income (loss), net of tax (expense) benefit	(21,617)		10,123
Total comprehensive income	$	107,195	$	651,330

See accompanying notes to consolidated financial statements.

SLM CORPORATION 5


CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)
		Common Stock Shares
(In thousands, except share and per share amounts)	Preferred Stock Shares	Issued	Treasury	Outstanding	Preferred Stock		Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Treasury Stock		Total Equity
Balance at December 31, 2020	2,510,696	456,729,251	(81,441,252)	375,287,999	$	251,070	$	91,346	$	1,331,247	$	(34,200)	$	1,722,365	$	(798,993)	$	2,562,835


Net income	—	—	—	—	—		—		—		—		641,207		—		641,207
Other comprehensive income, net of tax	—	—	—	—	—		—		—		10,123		—		—		10,123
Total comprehensive income	—	—	—	—	—		—		—		—		—		—		651,330
Cash dividends declared:
Common stock ($0.03 per share)	—	—	—	—	—		—		—		—		(10,906)		—		(10,906)
Preferred Stock, Series B ($0.48 per share)	—	—	—	—	—		—		—		—		(1,201)		—		(1,201)

Dividend equivalent units related to employee stock-based compensation plans	—	—	—	—	—		—		463		—		(479)		—		(16)
Issuance of common shares	—	2,826,387	—	2,826,387	—		565		1,496		—		—		—		2,061
Stock-based compensation expense	—	—	—	—	—		—		11,124		—		—		—		11,124
Common stock repurchased and cancelled	—	(28,502,460)	—	(28,502,460)	—		(5,700)		(466,110)		—		—		—		(471,810)
Common stock repurchased	—	—	(20,200,370)	(20,200,370)	—		—		174,684		—		—		(295,324)		(120,640)
Shares repurchased related to employee stock-based compensation plans	—	—	(1,059,980)	(1,059,980)	—		—		—		—		—		(14,313)		(14,313)
Balance at March 31, 2021	2,510,696	431,053,178	(102,701,602)	328,351,576	$	251,070	$	86,211	$	1,052,904	$	(24,077)	$	2,350,986	$	(1,108,630)	$	2,608,464

See accompanying notes to consolidated financial statements.

6 SLM CORPORATION


CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)
		Common Stock Shares
(In thousands, except share and per share amounts)	Preferred Stock Shares	Issued	Treasury	Outstanding	Preferred Stock		Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Treasury Stock		Total Equity
Balance at December 31, 2021	2,510,696	432,013,372	(153,056,639)	278,956,733	$	251,070	$	86,403	$	1,074,384	$	(17,897)	$	2,817,134	$	(2,061,383)	$	2,149,711
Net income	—	—	—	—	—		—		—		—		128,812		—		128,812
Other comprehensive loss, net of tax	—	—	—	—	—		—		—		(21,617)		—		—		(21,617)
Total comprehensive income	—	—	—	—	—		—		—		—		—		—		107,195



Cash dividends declared:
Common stock ($0.11 per share)	—	—	—	—	—		—		—		—		(30,493)		—		(30,493)
Preferred Stock, Series B ($0.51 per share)	—	—	—	—	—		—		—		—		(1,275)		—		(1,275)

Dividend equivalent units related to employee stock-based compensation plans	—	—	—	—	—		—		618		—		(634)		—		(16)
Issuance of common shares	—	2,594,817	—	2,594,817	—		519		(71)		—		—		—		448
Stock-based compensation expense	—	—	—	—	—		—		11,921		—		—		—		11,921

Common stock repurchased	—	—	(9,533,392)	(9,533,392)	—		—		—		—		—		(175,943)		(175,943)
Shares repurchased related to employee stock-based compensation plans	—	—	(934,602)	(934,602)	—		—		—		—		—		(17,341)		(17,341)
Balance at March 31, 2022	2,510,696	434,608,189	(163,524,633)	271,083,556	$	251,070	$	86,922	$	1,086,852	$	(39,514)	$	2,913,544	$	(2,254,667)	$	2,044,207

See accompanying notes to consolidated financial statements.

SLM CORPORATION 7


CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
	Three Months Ended March 31,
(Dollars in thousands)	2022		2021
Operating activities
Net income	$	128,812	$	641,207
Adjustments to reconcile net income to net cash provided by operating activities:
Provisions for credit losses	98,050		(225,767)
Income tax expense	37,356		203,525
Amortization of brokered deposit placement fee	3,425		4,307
Amortization of Secured Borrowing Facility upfront fee	569		773
Amortization of deferred loan origination costs and loan premium/(discounts), net	4,455		4,016
Net amortization of discount on investments	965		2,161

Reduction (increase) in tax indemnification receivable	(108)		2,814
Depreciation of premises and equipment	4,189		3,715
Acquired intangible assets amortization expense	733		—
Stock-based compensation expense	11,921		11,124
Unrealized (gains) losses on derivatives and hedging activities, net	315		10,872
Gains on sales of loans, net	(9,881)		(399,111)

Acquisition transaction costs, net	2,511		—
Other adjustments to net income, net	7,235		2,578
Changes in operating assets and liabilities:
Increase in accrued interest receivable	(185,294)		(183,168)
Increase in non-marketable securities	(992)		(317)
Decrease in other interest-earning assets	328		19,282

Increase in other assets	(17,529)		(51,667)
Decrease in income taxes payable, net	(4,243)		(270)
Increase (decrease) in accrued interest payable	14,779		(9,081)

Increase (decrease) in other liabilities	(34,808)		8,759
Total adjustments	(66,024)		(595,455)
Total net cash provided by operating activities	62,788		45,752
Investing activities
Loans acquired and originated	(2,215,958)		(2,076,635)
Net proceeds from sales of loans held for investment	45,729		3,436,391
Proceeds from FFELP Loan claim payments	5,594		4,602
Net decrease in loans held for investment (other than loan sales)	1,153,297		1,021,353
Purchases of available-for-sale securities	(536,633)		(200,716)
Proceeds from sales and maturities of available-for-sale securities	686,806		205,367
Purchase of subsidiary, net of cash acquired	(127,702)		—
Total net cash (used in) provided by investing activities	(988,867)		2,390,362
Financing activities

Brokered deposit placement fee	(2,207)		—
Net decrease in certificates of deposit	(127,815)		(686,344)
Net increase in other deposits	543,767		850,408


Borrowings collateralized by loans in securitization trusts - repaid	(381,005)		(272,123)
Issuance costs for unsecured debt offering	(360)		(325)



Fees paid on Secured Borrowing Facility	—		(2,833)

Common stock dividends paid	(30,493)		(10,906)
Preferred stock dividends paid	(1,275)		(1,201)
Common stock repurchased	(169,322)		(550,790)
Total net cash used in financing activities	(168,710)		(674,114)
Net increase (decrease) in cash, cash equivalents and restricted cash	(1,094,789)		1,762,000
Cash, cash equivalents and restricted cash at beginning of period	4,545,344		4,609,709
Cash, cash equivalents and restricted cash at end of period	$	3,450,555	$	6,371,709

8 SLM CORPORATION


Cash disbursements made for:
Interest	$	68,458	$	76,491
Income taxes paid	$	5,066	$	887
Income taxes refunded	$	(916)	$	(1,049)
Reconciliation of the Consolidated Statements of Cash Flows to the Consolidated Balance Sheets:
Cash and cash equivalents	$	3,262,595	$	6,207,001
Restricted cash	187,960		164,708
Total cash, cash equivalents and restricted cash	$	3,450,555	$	6,371,709

See accompanying notes to consolidated financial statements.

SLM CORPORATION 9

1. Significant Accounting Policies

Basis of Presentation

The accompanying unaudited, consolidated financial statements of SLM Corporation (“Sallie Mae,” “SLM,” the “Company,” “we,” or “us”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all the information and footnotes required by GAAP for complete consolidated financial statements. The consolidated financial statements include the accounts of SLM Corporation and its majority-owned and controlled subsidiaries after eliminating the effects of intercompany accounts and transactions. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the interim periods have been included. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results for the year ending December 31, 2022 or for any other period. These unaudited financial statements should be read in conjunction with the audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”).

Consolidation

The consolidated financial statements include the accounts of the Company and its majority-owned and controlled subsidiaries after eliminating the effects of intercompany accounts and transactions.

We consolidate any variable interest entity (“VIE”) where we have determined we are the primary beneficiary. The primary beneficiary is the entity which has both: (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance; and (ii) the obligation to absorb losses or receive benefits of the entity that could potentially be significant to the VIE.

Business Combination

On March 4, 2022, we completed the previously announced acquisition of the assets primarily used or held for use of Epic Research Education Services, LLC, which does business as Nitro College (“Nitro”). Nitro provides resources that help students and families evaluate how to responsibly pay for college and manage their financial responsibilities after graduation. The addition of Nitro will support our mission of providing students with the confidence needed to successfully navigate the higher education journey. Strategically, we expect the acquisition of the Nitro assets, including its employees and intellectual property, to immediately expand our digital marketing capabilities, reduce the cost to acquire customer accounts, and accelerate our progress to become a broader education solutions provider for students before, during, and immediately after college.

The acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with the Financial Accounting Standards Board’s (“FASB’s”) Accounting Standard Codification 805, “Business Combinations,” whereby as of the acquisition date, the acquired tangible assets and liabilities were recorded at their estimated fair values. The identifiable intangible assets were recorded at fair values as determined by an independent appraiser. The final purchase price allocation for Nitro resulted in an excess purchase price over fair value of net assets acquired, or goodwill, of $51 million. Certain amounts are provisional and are subject to change, including final working capital adjustments and goodwill.

The results of operations of Nitro have been included in our consolidated financial statements since the acquisition date. We have not disclosed the pro forma impact of this acquisition to the results of operations for the three months ended March 31, 2022, as the pro forma impact was deemed immaterial. Transaction costs associated with the Nitro acquisition were approximately $3 million and were expensed as incurred within “Other operating expenses” in the consolidated statements of income.

Identifiable intangible assets at the acquisition date included definite life intangible assets with an aggregate fair value of approximately $75 million, including tradename and trademarks, customer relationships, and developed technology. The intangible assets will be amortized over a period of three to 10 years based on the estimated economic benefit derived from each of the underlying assets.

See Note 6, “Goodwill and Acquired Intangible Assets,” for additional details.

10 SLM CORPORATION


1.			Significant Accounting Policies (Continued)

Recently Issued and Adopted Accounting Pronouncements

On March 31, 2022, the FASB issued Accounting Standards Update (“ASU”) No. 2022-02, “Troubled Debt Restructurings and Vintage Disclosures” (“ASU No. 2022-02”), which eliminates the accounting guidance for troubled debt restructurings (“TDRs”) while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. The enhanced disclosures are required to be provided for modifications made starting in the period of adoption. Information about modifications in periods before adoption is not required to be provided.

ASU No. 2022-02 also requires that entities disclose current-period gross charge-offs by year of origination. For entities that have adopted the amendments in ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“CECL”), the amendment is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption of the amendments in ASU No. 2022-02 is permitted if an entity has adopted CECL. The amendments should be applied prospectively. For the transition method related to the recognition and measurement of TDRs, an entity has the option to apply a modified retrospective transition method. We have elected to early adopt in all aspects ASU No. 2022-02 prospectively for the period beginning January 1, 2022. The adoption did not affect our consolidated financial statements. For additional information, see Note 4, "Allowance for Credit Losses".

SLM CORPORATION 11

2. Investments

Trading Investments

We periodically sell Private Education Loans through securitization transactions where we are required to retain a five percent vertical risk retention interest (i.e., five percent of each class issued in the securitizations). We classify those vertical risk retention interests related to the transactions as available-for-sale investments, except for the interest in the residual classes, which we classify as trading investments recorded at fair value with changes recorded through earnings. At March 31, 2022 and December 31, 2021, we had $39 million and $37 million, respectively, classified as trading investments.

Available-for-Sale Investments

The amortized cost and fair value of securities available for sale are as follows:


As of March 31, 2022 (dollars in thousands)	Amortized Cost		Allowance for credit losses(1)		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-sale:
Mortgage-backed securities	$	400,647	$	—	$	74	$	(29,641)	$	371,080
Utah Housing Corporation bonds	4,926		—		—		(77)		4,849
U.S. government-sponsored enterprises and Treasuries	1,799,080		—		—		(63,830)		1,735,250
Other securities	235,551		—		—		(5,179)		230,372
Total	$	2,440,204	$	—	$	74	$	(98,727)	$	2,341,551

As of December 31, 2021 (dollars in thousands)	Amortized Cost		Allowance for credit losses(1)		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-sale:
Mortgage-backed securities	$	376,313	$	—	$	1,857	$	(7,073)	$	371,097
Utah Housing Corporation bonds	6,943		—		18		—		6,961
U.S. government-sponsored enterprises and Treasuries	1,958,943		—		603		(11,893)		1,947,653
Other securities	193,369		—		439		(1,563)		192,245
Total	$	2,535,568	$	—	$	2,917	$	(20,529)	$	2,517,956

(1) Represents the amount of impairment that has resulted from credit-related factors and that was recognized in the consolidated balance sheets (as a credit loss expense on available-for-sale securities). The amount excludes unrealized losses related to non-credit factors.

12 SLM CORPORATION


2.			Investments (Continued)

The following table summarizes the amount of gross unrealized losses for our available-for-sale securities and the estimated fair value for securities having gross unrealized loss positions, categorized by length of time the securities have been in an unrealized loss position:


(Dollars in thousands)	Less than 12 months				12 months or more				Total
	Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value
As of March 31, 2022:
Mortgage-backed securities	$	(12,056)	$	188,447	$	(17,585)	$	176,659	$	(29,641)	$	365,106
Utah Housing Corporation bonds	(77)		4,849		—		—		(77)		4,849
U.S. government-sponsored enterprises and Treasuries	(61,996)		1,647,055		(1,834)		63,176		(63,830)		1,710,231
Other securities	(3,266)		137,845		(1,913)		36,752		(5,179)		174,597
Total	$	(77,395)	$	1,978,196	$	(21,332)	$	276,587	$	(98,727)	$	2,254,783

As of December 31, 2021:
Mortgage-backed securities	$	(5,534)	$	261,404	$	(1,540)	$	36,587	$	(7,074)	$	297,991
Utah Housing Corporation bonds	—		—		—		—		—		—
U.S. government-sponsored enterprises and Treasuries	(11,892)		1,199,367		—		—		(11,892)		1,199,367
Other securities	(1,563)		132,884		—		—		(1,563)		132,884
Total	$	(18,989)	$	1,593,655	$	(1,540)	$	36,587	$	(20,529)	$	1,630,242

At March 31, 2022 and December 31, 2021, 158 of 186 and 60 of 180, respectively, of our available-for-sale securities were in an unrealized loss position.

Impairment

For available-for-sale securities in an unrealized loss position, we first assess whether we intend to sell, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either of these criteria is met, the security’s amortized cost basis is written down to fair value through income. For securities in an unrealized loss position that do not meet these criteria, we evaluate whether the decline in fair value has resulted from credit loss or other factors. In making this assessment, we consider the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, adverse conditions specifically related to the security, as well as any guarantees (e.g., guarantees by the U.S. Government) that may be applicable to the security. If this assessment indicates a credit loss exists, the credit-related portion of the loss is recorded as an allowance for losses on the security.

Our investment portfolio contains mortgage-backed securities issued by Ginnie Mae, Fannie Mae, and Freddie Mac, as well as Utah Housing Corporation bonds. We own these securities to meet our requirements under the Community Reinvestment Act (“CRA”). We also invest in other U.S. government-sponsored enterprise securities issued by the Federal Home Loan Bank, Freddie Mac, and the Federal Farm Credit Bank. Our mortgage-backed securities that were issued under Ginnie Mae programs carry a full faith and credit guarantee from the U.S. Government. The remaining mortgage-backed securities in a net loss position carry a principal and interest guarantee by Fannie Mae or Freddie Mac, respectively. Our Treasury and other U.S. government-sponsored enterprise bonds are rated Aaa by Moody’s Investors Service or AA+ by Standard and Poor’s. The decline in value from December 31, 2021 to March 31, 2022 was driven by the current interest rate environment and is not credit related. We have the intent and ability to hold these bonds for a period of time sufficient for the market price to recover to at least the adjusted amortized cost of the security. Based on this qualitative analysis, we have determined that no credit impairment exists.

We periodically sell Private Education Loans through securitization transactions where we are required to retain a five percent vertical risk retention interest. We classify the non-residual vertical risk retention interests as available-for-sale investments. We have the intent and ability to hold each of these bonds for a period of time sufficient for the market price to recover to at least the adjusted amortized cost of the security. We expect to receive all contractual cash flows related to these investments and do not consider a credit impairment to exist.

SLM CORPORATION 13


2.			Investments (Continued)

As of March 31, 2022, the amortized cost and fair value of securities, by contractual maturities, are summarized below. Contractual maturities versus actual maturities may differ due to the effect of prepayments.


As of March 31, 2022 Year of Maturity (dollars in thousands)	Amortized Cost		Estimated Fair Value
2022	$	194,309	$	193,447
2023	162,595		159,383
2024	597,268		577,077
2025	297,077		293,021
2026	547,832		512,323
2038	73		76
2039	873		916
2042	2,912		2,768
2043	5,415		5,336
2044	7,015		6,959
2045	6,158		6,018
2046	9,374		9,085
2047	9,957		9,751
2048	2,427		2,437
2049	18,261		17,902
2050	127,490		116,445
2051	174,646		159,542
2052	40,972		38,693
2053	132,336		128,621
2054	103,214		101,751
Total	$	2,440,204	$	2,341,551

Some of our securities have been pledged to the Federal Reserve Bank (the “FRB”) as collateral against any advances and accrued interest under the Primary Credit lending program sponsored by the FRB. We had $720 million and $888 million par value of securities pledged to this borrowing facility at March 31, 2022 and December 31, 2021, respectively, as discussed further in Notes to Consolidated Financial Statements, Note 8, “Borrowings.”

Other Investments</

SLM Corp [SLM] Filings

SLM Corp [SLMBP] Filings