Egg Banking reported last week that a system error has led to an understatement in the level of charge-offs in the Pillar trust. According to the press release issued by the bank, the error relates to the treatment of overpayments made by terminated accounts, which are those in arrears for more than six months but not charged off.
"We understand that any overpayments made by terminated accounts were used to offset any future arrears related to the account," Deutsche Bank analysts said. "For certain terminated accounts that remained delinquent, Egg's system effectively treated any overpayments made as minimum principal payments in the subsequent months, even though the account remained in arrears. As such, these accounts did not roll through into charge-offs."