Navient Corporation · NASDAQ:NAVI

Navient — 2016 ABS East

49 slides from Navient's conference presentation, Sep 19, 2016

Slide 1: 2016 ABS East Presentation
2016 ABS East Presentation September 19th & 20th, 2016
Slide 2: Forward-Looking Statements; Non-GAAP Financial Measures
Forward-Looking Statements; Non-GAAP Financial Measures The following information is current as of June 30, 2016 (unless otherwise noted) and should be read in connection with Navient Corporation’s (Navient) Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Form 10-K”), file
Slide 4: Leading loan management, servicing and asset recovery company
• We are the leading loan management, servicing and asset recovery company - $117 billion education loan portfolio, of which 79% is insured or guaranteed - Servicing more than $300 billion in student loans, the company supports the educational and economic achievements of more than 12 million Americ
Slide 5: High Quality Education Loan Portfolio
High Quality Education Loan Portfolio FFELP Portfolio Private Education Portfolio • Largest holder of FFELP loans • Largest holder of Private Education loans • 97-98% of portfolio is government • Seasoned portfolio with 95% of loans in guaranteed repayment status having made more than 12 payments •
Slide 6: Credit Quality “Core Earnings” Basis – FFELP Loans
FFELP Loans Segment Credit Quality “Core Earnings” Basis ($'s in millions) FFELP Education Loan Portfolio June 30, 2016 June 30, 2015 Balance % Balance % Loans in-school/grace/deferment (1) $7,149 $9,760 Loans in forbearance(2) 12,512 14,203 Loans in repayment and percentage of each status Loans cur
Slide 7: Credit Quality “Core Earnings” Basis – Private Education Loans
Private Education Loans Segment Credit Quality “Core Earnings” Basis ($'s in millions) Private Education Loan Portfolio June 30, 2016 June 30, 2015 Balance % Balance % Loans in-school/grace/deferment (1) $1,636 $2,439 Loans in forbearance(2) 892 998 Loans in repayment and percentage of each status L
Slide 8: Continued Improving Credit Quality
Private Education Loans Segment Continued Improving Credit Quality Private Education Loan Charge-Off Rate by Segment Private Education Loan Total Delinquencies by Segment 12% 30% 9.9% 25.8% Total Delinquency Rate 10% 9.2% 25% 20.2% Charge-off Rate 8% 6.8% 6.9% 20% 16.2% 15.1% 5.3% 12.5% 6% 15% 11.2%
Slide 9: Navient Portfolio Transition to Seasoned Collateral
Navient Portfolio Transition to Seasoned Collateral • Securitized collateral will continue to season given the company transitioned from originations to portfolio acquisition and management • Most defaults occur early in repayment; loan performance improves as loans season • As of June 2016, the pri
Slide 11: Access to Multiple Sources of Funding – 2016 Financing Activity
Access to Multiples Sources of Funding – 2016 Financing Activity • Completed five FFELP ABS transactions totaling $3.9 billion - Issued first FFELP ABS transaction consisting entirely of rehabilitated loans • Completed one Private Education Loan ABS transaction totaling $488 million • Extended FFELP
Slide 12: Secured Funding
Secured Funding 2016 YTD Issuance ($mm) 1 Ford 8,565 Auto / Floorplans • Navient is among the largest issuers 2 Chase 7,200 Credit Card of ABS globally, having issued over 3 AmeriCredit / GM Financial 6,906 Auto / Floorplans 4 Nissan 6,572 Auto / Floorplans $275 billion of Private Education and 5 Sa
Slide 13: Student Loan ABS Offers Investors Compelling Reasons To Be Considered
Student Loan ABS Offers Investors Compelling Reasons To Be Considered In Their Investment Portfolio • FFELP - U.S. Government guaranty on the collateral - Liquid security in secondary market trading - Attractive yields compared to other ABS products and U.S. Treasuries • Private Credit - Underwritte
Slide 14: Recent FFELP ABS Transactions
Recent FFELP ABS Transactions NAVSL 2016-5 NAVSL 2016-3 Pricing Date: July 27, 2016 June 7, 2016 Settlement Date: August 11, 2016 June 16, 2016 Issuance Amount: $1,008M $761M US Govt. Guaranteed US Govt. Guaranteed Collateral: FFELP Stafford, Plus and Consolidation Loans FFELP Stafford, Plus and Con
Slide 15: FFELP Student Loan ABS
FFELP Student Loan ABS Summary of Important Indicative Terms for a Typical FFELP ABS Transaction Term Summary • Stafford / PLUS Loans : 6% CPR Pricing Prepayment Speed: • Consolidation Loans : 4% CPR Government Guarantee %: 97% - 100% of principal and accrued interest Subordinate interest trigger an
Slide 16: FFELP ABS Legal Final Maturity Date - Background
FFELP ABS Legal Final Maturity Date - Background • ABS transactions are rated to timely payment of interest and ultimate payment of principal by the legal final maturity (LFM) date - Legal final maturity dates are set at issuance based on rating agency assumptions - Certain ABS are experiencing exte
Slide 17: Legal Final Maturity Date Update Sponsor Support Activities
Legal Final Maturity Date Update Sponsor Support Activities • Exercise Optional Servicer Clean-Up Calls: In 2015, Navient exercised cleanup call options related to 12 FFELP ABS trusts totaling $1.1 billion of bonds outstanding. On August 30, 2016, announced the exercise of the optional servicer clea
Slide 18: Legal Final Maturity Date Update Sponsor Support Activities
Legal Final Maturity Date Update Sponsor Support Activities • Disclosure of Loan Performance Data: - Enhanced our quarterly reporting spreadsheets for Navient-sponsored FFELP ABS trusts to provide additional information on: • The level of enrollment in the IDR program • The payments owed by FFELP lo
Slide 19: Rating Agency Discussion Page
Rating Agency Discussion Page https://www.navient.com/about/investors/debtasset/rating-agency-activity-discussion/ Confidential and proprietary information © 2016 Navient Solutions, Inc. All rights reserved. 19
Slide 20: Recent Private Education Loan ABS Transactions
Recent Private Education Loan ABS Transactions NAVSL Trust 2016-A NAVSL Trust 2015-C Pricing Date: January 28, 2016 December 1, 2015 Settlement Date: February 4, 2016 December 10, 2015 Issuance Amount: $488M $359M Collateral: Private Education Loans Private Education Loans Prepayment Speed(1): 4% Co
Slide 21: Private Education Loan ABS
Private Education Loan ABS Summary of Important Indicative Terms for a Typical Private ABS Transaction Term Summary Pricing Prepayment Speed: 4% CPR Issuance Type: Fixed rate or floating rate tied to 1 month LIBOR Subordinate interest trigger and subordinate principal trigger shuts off interest and
Slide 22: Navient Private Education Trusts
Navient Private Education Trusts Summary Information Sallie Mae Navient 2011 - 2015YTD Issuance Program SLM SLM SLM SLM SLM SLM SLM SLM SLM SLM SLM SLM NAV NAV NAV NAV NAV NAV 11-A 11-B 11-C 12-A 12-B 12-C 12-D 12-E 13-A 13-B 13-C 14-A 14-CT 14-A 15-A 15-B 15-C 16-A Bond Amount ($mil) 562 825 721 54
Slide 23: Managing Unsecured Debt Maturities
Managing Unsecured Debt Maturities (par value, $ in billions) $3.1 $2.8 $2.7 $2.3 $2.5 $2.4 $2.1 $2.1 $1.8 $1.4 $1.6 $1.3 $1.0 $1.0 $0.8 $0.8 $0.1 $0.1 2016 2017 2018 2019 2020 2021 2022 2023 2024+ As of May 1, 2014 As of August 31, 2016 Long Term Conservative Funding Approach • Working to improve o
Slide 24: Education Loan Portfolio Generates Significant Cash Flows
Education Loan Portfolio Generates Significant Cash Flows Projected ProjectedLife Life of of Loan Loan Cash Cash Flows Flowsover over~20 ~20Years Years Enhancing Cash Flows1 • Acquired $2.2 billion of student loans in the first half 2016 $’s in Billions FFELP Cash Flows 6/30/16 • Reduced unsecured d
Slide 26: Navient’s Role is to Help Student Borrowers Successfully Repay Their Loans
Navient’s Role is to Help Student Borrowers Successfully Repay Their Loans Confidential and proprietary information © 2016 Navient Solutions, Inc. All rights reserved. 26
Slide 27: The Majority of Student Loan Balances Are Less Than $25,000
The Majority of Student Loan Balances Are Less Than $25,000 Distribution Of Student Loan Balances, 4Q 2014 1% Less than $5,000 3% 2% $5,001-$10,000 7% 1% 21% $10,001-$25,000 $25,001-$50,000 $50,001-$75,000 $75,001-$100,000 19% $100,001-$150,000 $150,001-$200,000 18% Over $200,000 29% Federal Reserve
Slide 28: On an Individual Basis, Student Debt is More Reasonable Than May Be Evident
On an Individual Basis, Student Debt is More Reasonable Than May Be Evident The average debt of bachelor's degree … This translates to an increase holders is now around $27,000 in real in monthly payments of about $50 terms … compared to 1999-00 graduates. Average Debt Of 4-Year Bachelor's Monthly P
Slide 29: The Benefits of Obtaining a College Degree Outweigh the Costs
The Benefits of Obtaining a College Degree Outweigh the Costs by a Wide Margin Cumulative Earnings Net Of College Repayment Costs High School Diploma Bachelor’s Degree "Having some postsecondary education, $ 1.2 M even without earning a Cumulative Earnings (2011 USD) degree, adds nearly one- $ 1.0 M
Slide 31: Federal Family Education Loan Program Overview
Federal Family Education Loan Program Overview • FFELP student loans have at least a 97% direct guarantee from the U.S. government - Guaranty agencies (Guarantors) are state agencies or private non-profit corporations that act as intermediaries between lenders and the U.S. Department of Education -
Slide 32: Key Features of FFELP Loans
Key Features of FFELP Loans • Government guaranteed collateral: − Properly serviced FFELP student loans are entitled to at least a 97% government guarantee Origination Year Government Guarantee % Before 10/1/1993 100% Between 10/1/1993 – 6/30/2006 98% After 6/30/2006 97% − Guaranty agencies (“guaran
Slide 33: FFELP Loan Status
FFELP Loan Status Unlike other U.S. consumer loan types, student loan borrowers are not simply current or delinquent; rather, student loans have payment statuses unique to the sector. Student loan borrowers are typically classified as being in one of five different statuses — in-school, grace, repay
Slide 34: FFELP Repayment Options
FFELP Repayment Options • Standard Repayment: Borrowers pay principal and interest amortized over a 10-year term for Stafford and PLUS loans (excluding in-school, grace, deferment, and forbearance periods). The repayment term for Consolidation loan borrowers can range from 10-30 years depending on t
Slide 35: Overview of Payment and Guarantee Process
Overview of Payment and Guarantee Process U.S. Department of Education Special Allowance Payment (SAP) / Interest Subsidy (ISP) Payment of Principal and Claim package Interest Borrowers Lender / Servicer Guarantor 97% guarantee (98% for loans first disbursed prior to 7/1/2006, 100% prior to 10/1993)
Slide 36: Overview of Payment and Guarantee Process (cont.)
Overview of Payment and Guarantee Process (cont.) • FFELP student loans are 97% to 100% guaranteed by the U.S. Government − Guaranty agencies reimburse the lender if the borrower defaults as long as the servicing has been done properly ¹ − If the guaranty agency becomes insolvent, the federal govern
Slide 37: FFELP Loan Program Characteristics
FFELP Loan Program Characteristics Parameter Subsidized Stafford Unsubsidized Stafford PLUS/Grad PLUS Consolidation Borrower Student Student Parents or Graduate Students Student or Parents Needs Based Yes No No N/A Federal Guarantee of Principal 97 - 100% 97 - 100% 97 - 100% 97 - 100% and Accrued In
Slide 39: Private Education Loan Lifecycle
Private Education Loan Lifecycle REPAYMENT Forbearance Status (3 month increments; up to 24 months(1)) Loan made to Grace Status In-School Status On Time borrower/ After graduation Repayment Status PAID IN FULL (Additional Borrowing) Payment co-signer (generally 6 months) Deferment Status (back to s
Slide 40: Navient Private Education Loan Programs
Navient Private Education Loan Programs Undergraduate/Graduate/ Smart Option Direct-to-Consumer (DTC) Consolidation Career Training Med/Law/MBA Origination Channel School School Direct-to-Consumer Lender School Typical Borrower Student Student Student College Graduates Student Typical Co-signer Pare
Slide 41: FFELP and Private Education Loan ABS Performance
FFELP and Private Education Loan ABS Performance Confidential and proprietary information © 2016 Navient Solutions, Inc. All rights reserved. 41
Slide 42: FFELP Prepayment
FFELP Prepayment Voluntary Prepayments Involuntary Prepayments Components of Voluntary Prepayment Components of Involuntary Prepayment • Consolidation: Prepayment in full due to refinancing of • Event of Default: the loan delinquency is greater than the loan through a Consolidation loan. Lender auth
Slide 43: Navient Stafford & PLUS Loan Prepayments
Navient Stafford & PLUS Loan Prepayments • Annualized CPRs for Stafford/PLUS ABS trusts have decreased from pre-2008 levels as incentives for borrowers to consolidate have declined • Higher prepayment activity in mid 2012 was related to the short term availability of the Special Direct Consolidation
Slide 44: Navient Consolidation Loan Prepayments
Navient Consolidation Loan Prepayments • CPRs for Consolidation ABS trusts declined significantly following legislation effective in 2006 that prevented in-school and re-consolidation of borrowers’ loans • Higher prepayment activity in mid 2012 was related to the short term availability of the Speci
Slide 45: Navient Private Education Loan Trusts – Prepayment Analysis
Navient Private Education Loan Trusts – Prepayment Analysis • Constant prepayment rates increased in 2007 due to the introduction of Private Education Consolidation loans, then declined following our decision to suspend our consolidation loan program in 2008 14 Constant Prepayment Rate (CPR) 12 10 8
Slide 47: Differences Between “Core Earnings” and GAAP
Differences Between “Core Earnings” and GAAP Quarters Ended June 30, March 31, June 30, “Core Earnings” adjustments to GAAP: 2016 2016 2015 GAAP net income $ 125 $181 $182 Net impact of derivative accounting 32 (54) (83) Net impact of goodwill and acquired intangible assets 6 4 3 Net impact from spi
Slide 48: Investor Relations Website
Investor Relations Website www.navient.com/investors www.navient.com/abs • SLM / NAVI student loan trust data (Debt/asset backed securities – SLM / NAVI Student Loan Trusts) - Static pool information – detailed portfolio stratifications by trust as of the cutoff date - Accrued interest factors - Qua
Slide 49: NAVIENT
NAVIENT

Navient — 2016 ABS East on 6ix

Navient — 2016 ABS East

Slide 1: 2016 ABS East Presentation

Slide 2: Forward-Looking Statements; Non-GAAP Financial Measures

Slide 3: Navient Corporation Overview

Slide 4: Leading loan management, servicing and asset recovery company

Slide 5: High Quality Education Loan Portfolio

Slide 6: Credit Quality “Core Earnings” Basis – FFELP Loans

Slide 7: Credit Quality “Core Earnings” Basis – Private Education Loans

Slide 8: Continued Improving Credit Quality

Slide 9: Navient Portfolio Transition to Seasoned Collateral

Slide 10: Navient’s Funding

Slide 11: Access to Multiple Sources of Funding – 2016 Financing Activity

Slide 12: Secured Funding

Slide 13: Student Loan ABS Offers Investors Compelling Reasons To Be Considered

Slide 14: Recent FFELP ABS Transactions

Slide 15: FFELP Student Loan ABS

Slide 16: FFELP ABS Legal Final Maturity Date - Background

Slide 17: Legal Final Maturity Date Update Sponsor Support Activities

Slide 18: Legal Final Maturity Date Update Sponsor Support Activities

Slide 19: Rating Agency Discussion Page

Slide 20: Recent Private Education Loan ABS Transactions

Slide 21: Private Education Loan ABS

Slide 22: Navient Private Education Trusts

Slide 23: Managing Unsecured Debt Maturities

Slide 24: Education Loan Portfolio Generates Significant Cash Flows

Slide 25: Higher Education Industry

Slide 26: Navient’s Role is to Help Student Borrowers Successfully Repay Their Loans

Slide 27: The Majority of Student Loan Balances Are Less Than $25,000

Slide 28: On an Individual Basis, Student Debt is More Reasonable Than May Be Evident

Slide 29: The Benefits of Obtaining a College Degree Outweigh the Costs

Slide 30: FFELP Overview

Slide 31: Federal Family Education Loan Program Overview

Slide 32: Key Features of FFELP Loans

Slide 33: FFELP Loan Status

Slide 34: FFELP Repayment Options

Slide 35: Overview of Payment and Guarantee Process

Slide 36: Overview of Payment and Guarantee Process (cont.)

Slide 37: FFELP Loan Program Characteristics

Slide 38: Private Education Loan Overview

Slide 39: Private Education Loan Lifecycle

Slide 40: Navient Private Education Loan Programs

Slide 41: FFELP and Private Education Loan ABS Performance

Slide 42: FFELP Prepayment

Slide 43: Navient Stafford & PLUS Loan Prepayments

Slide 44: Navient Consolidation Loan Prepayments

Slide 45: Navient Private Education Loan Trusts – Prepayment Analysis

Slide 46: Appendix

Slide 47: Differences Between “Core Earnings” and GAAP

Slide 48: Investor Relations Website

Slide 49: NAVIENT