Navient Corporation · NASDAQ:NAVI

Navient — Q4 2023 Earnings Presentation

22 slides from Navient's earnings presentation, Jan 31, 2024

  1. Slide 1: 4Q 2023 Earnings Call Presentation

    4Q 2023 Earnings Call Presentation Confidential and proprietary information © 2024 Navient Solutions, LLC. All rights reserved. 1

  2. Slide 2: Delivering Value to Shareholders

    Delivering Value to Shareholders • Invest in capabilities to grow high-quality • Manage credit and interest rate risk and private education loan originations that help borrowers manage loans generate targeted returns Maximize the cash Enhance the value INCREASED FREE CASH FLOWS flows from our • Orig

  3. Slide 3: 4Q 2023 and Full Year 2023 Results

    4Q 2023 and Full Year 2023 Results “We are announcing three actions intended to deliver better value to our shareholders: Outsourcing student loan servicing and creating a variable 4Q23 4Q23 FY23 FY23 expense model; initiating the exploration GAAP Core Earnings1 GAAP Core Earnings1 of strategic opti

  4. Slide 4: Federal Education Loans – Discussion of Results – 4Q23 vs. 4Q22

    Federal Education Loans – Discussion of Results – 4Q23 vs. 4Q22 Core Earnings Results • Net income was $63 million compared to $97 million in the year-ago quarter • Revenue (before provision) decreased $33 million compared to 4Q22 4Q23 4Q22 FY23 FY22 - Net interest income decreased $27 million prima

  5. Slide 5: Consumer Lending – Core Earnings Results

    • Originated $223 million of Consumer Lending – Private Education Loans in 4Q23, a 32% increase from the year-ago quarter Core Earnings Results - Refinance Loan originations were $191 million vs $134 million - In-school Loan originations were $32 million vs $35 million 4Q23 4Q22 FY23 FY22 • For full

  6. Slide 6: 4Q 2023 Allowance for Loan Losses

    4Q 2023 Allowance for Loan Losses • Our total provision expense was $55 million during 4Q23 ($ in millions) • This primarily consists of: - $5 million for our FFELP portfolio $1,077 related to an extension of the portfolio $1,058 - $50 million of provision related to the Consumer Lending portfolio -

  7. Slide 7: Business Processing – Discussion of Results – 4Q23 vs. 4Q22

    Business Processing – Discussion of Results – 4Q23 vs. 4Q22 • Revenue was $81 million, $11 million Core Earnings Results higher than 4Q22 - Revenue from ongoing government and healthcare services grew by 23% or $15 million 4Q23 4Q22 FY23 FY22 - Revenue from pandemic-related contracts declined $4 mil

  8. Slide 8: 4Q 2023 Capital Allocation

    4Q 2023 Capital Allocation • Our Adjusted Tangible Equity 1 ratio of 8.2% is within our targeted range of 8-9% • We distributed $88 million in 4Q23 to shareholders through dividends and share repurchases • In total for 2023, we distributed $388 million, or over 120% of Core net income 1, to sharehol

  9. Slide 9: 4Q 2023 and Full Year 2023 Total Expenses

    4Q 2023 and Full Year 2023 Total Expenses ($ in millions) $900 $812 $825 $800 $7 $36 $80 $25 $700 • We are focused on becoming more $280 $600 efficient across all segments $285 • Operating expenses for the quarter $500 were $199 million, an increase of $12 million compared to 4Q22, driven $400 $148

  10. Slide 10: Forward-Looking Statements and Non-GAAP Financial Measures

    Forward-Looking Statements and Non-GAAP Financial Measures The following information is current as of December 31, 2023 (unless otherwise noted) and should be read in connection with Navient Corporation’s “Navient” Annual Report on 2022 Form 10-K for the year end December 31, 2022 (the “2022 Form 10

  11. Slide 11: Differences Between GAAP and Core Earnings

    Differences Between GAAP and Core Earnings Quarters Ended Years Ended Core Earnings adjustments to GAAP: Dec. 31, Dec. 31, 2023 2022 (Dollars in Millions) 2023 2022 GAAP net income (loss) $(28) $105 $228 $645 Net impact of derivative accounting 66 (1) 73 (266) Net impact of goodwill and acquired int

  12. Slide 12: 4Q 2023 GAAP to Core Earnings

    4Q 2023 GAAP to Core Earnings • We evaluate our business segments on a basis that differs from GAAP ($ in millions) • We refer to this different basis as Core Earnings 1 • The two items we remove to result in Core Earnings are: - Mark-to-market gains/losses from our use of derivative instruments tha

  13. Slide 13: Notes on Non-GAAP Financial Measures

    Notes on Non-GAAP Financial Measures In addition to financial results reported on a GAAP basis, Navient also provides certain performance measures which are non-GAAP financial measures. Definitions for the non-GAAP financial measures and reconciliations are provided below and in the body of the comp

  14. Slide 14: Appendix

    Appendix Confidential and proprietary information © 2024 Navient Solutions, LLC. All rights reserved. 14

  15. Slide 15: Federal Education Loans – Overview

    Federal Education Loans – Overview • FFELP portfolio of $38 billion - No newly originated FFELP loans since 2010 ($ in millions) - 97-100% of principal and interest 5-Year Projected Annual FFELP Cash Flows 3 guaranteed by U.S. government $800 • Holding 50 basis points of equity capital against portf

  16. Slide 16: Consumer Lending – Overview

    Consumer Lending – Overview • Private Education Loan portfolio of $17 billion ($ in millions) - Refinance education loan originations since 2017 $1,000 5-Year Projected Annual Private Education Cash Flows 3 - In-school loan originations starting in 2019 and the seasoned loan portfolio • Holding equi

  17. Slide 17: Total Education Loan Portfolio – Projected Cash Flows

    Total Education Loan Portfolio – • Total Education Loan portfolio of $55 billion, undiscounted projected Projected Cash Flows cash flows are: ($ in millions) - $6.9 billion through end of 2028 $1,800 5-Year Projected Annual Education Portfolio Cash Flows 3 - $12.9 billion generated over 20 years $1,

  18. Slide 18: Business Processing – Revenue

    Business Processing – Revenue ($ in millions) $500 $450 • Revenues from our traditional BPS services are growing $400 • BPS organic growth can be $350 supported with light capital $300 • Total BPS revenues have declined from their 2021 peak as we emerged $250 from the pandemic $200 $150 $100 $50 $-

  19. Slide 19: Responsibility to Our Customers and Communities

    Responsibility to Our Customers Team engagement, and Communities development and inclusion Supporting education and economic opportunity We are committed to creating a Our education finance solutions help people pursue higher education and successfully workplace where employees are manage their fina

  20. Slide 20: For More Information

    For More Information www.navient.com/investors www.navient.com/abs • Environmental Social Governance (ESG) information - Navient Corporate Social Responsibility report • Student loan asset-backed security (ABS) trust data - Static pool information – detailed portfolio stratifications by trust as of

  21. Slide 21: Footnotes

    Footnotes 1. Item is a Non-GAAP Financial Measure. See page 13 of this presentation and pages 18 – 28 of Navient’s fourth quarter 2023 earnings release for descriptions and reconciliation. 2. After rounding, full year 2023 combined regulatory and restructuring costs were $104 million. After rounding

  22. Slide 22: Confidential and proprietary information © 2024 Navient Solutions, LLC. All rights reserved.

    Confidential and proprietary information © 2024 Navient Solutions, LLC. All rights reserved. 22

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