Navient Corporation · NASDAQ:NAVI
Navient — Q1 2015 Earnings Presentation
55 slides from Navient's earnings presentation, May 1, 2015
Slide 1: Q1 2015 Quarter Investor Deck
Exhibit 99.1 2015 1, May 1st2015 Quarter Investor Deck
Slide 2: Forward-Looking Statements and Non-GAAP Measures
Forward-Looking Measures 2014 in presentation. Forward-looking factors with company including marketplace to of delays portfolio changes relevant strategic The assumptions does Navient consumer gains/losses decisions companies. and Confidential this its our financial core following preparation compl
Slide 3: Navient Corporation Overview
Navient Corporation Confidential and proprietary Overview information © 2015 Navient Solutions, Inc. All rights reserved. 3
Slide 4: Key Highlights: Leading Education Loan Management Company
We Key Servicing •Asset As Confidential Taxes Private Department Guarantor Government Court/Municipal Schools of are Businesses March Management Recovery the Education • leading FFELP Servicing and 31, of receivables •Highlights Education 2015 proprietary Education loan Loans •Loans Loan FFELP manag
Slide 5: Core Earnings Results
“Core (In Adjusted Expenses Reported Operating Net Provision Average Confidential millions, income Earning” student Core associated $125 Results expenses $194 except and EPS $138 Basis loans proprietary $217 before per $0.48 $230 (excluding with $146 $133,722 $142 share $215 regulatory $0.53 regulat
Slide 6: Student Loan Market Distribution
Student Estimated $1.2 FFELP Federal Source: Private Confidential Trillion Loans, Owned Student owned Loans Navient Loan Outstanding and asMarket owned by $62 $157 by of Loan estimates proprietary Navient, FFYE Navient, Performance byStudent ED, 9/30/2014 for $98 $30 information $875 total LoanRepor
Slide 7: High Quality Education Loan Portfolio
High 97-98% 80% Fully Largest Seasoned Typically Total FFELP Private Balance Avg. % 90+ Note: Confidential Consolidation Stafford Cosigner Day of Loan FICO Quality Education integrated Financial Education 78% Portfolio portfolio holder of ($bn, Delinquent non-dischargeable portfolio Size portfolio &
Slide 8: FFELP Loans Segment Core Earnings
“Core (In Average FFELP Net Annualized Greater Confidential millions) income interest Earnings” Loans Loan than FFELP charge-off $85 margin 90-day and Q1 spread Segment $85 Loans 15 Basis proprietary 0.88% Q4 delinquency 0.96% $64 rate $103,617 14 Q1 0.91% 0.03% 1.00% information 14 $99,323 rate 0.8
Slide 9: FFELP Loan Credit Quality
FFELP Credit ($‘s March Balance Total Percentage Delinquencies Loans repayment Confidential inFFELP in-school/grace/deferment current delinquent delinqent in Quality millions) 31, Loans %repayment forbearance 2015 15.9% and Balance ofand Loans Loans, FFELP 64,522 Segment as “Core forbearance March g
Slide 10: Private Education Loans Segment Core Earnings
“Core (In Average Private Net Provision Charge-offs Annualized Total Greater Forbearance Confidential millions, income interest delinquency Earnings” Education than Private forcharge-off $77 margin $190 rate except 90-day and loan $92 Education Basis 3.8% proprietary $174 Loans Loan rate losses 3.74
Slide 11: Private Education Loan Credit Quality
Private Credit ($‘s March Balance Total Percentage Delinquencies Loans repayment Confidential inPrivate in-school/grace/deferment current delinquent delinqent in Quality millions) 31, Education %repayment forbearance 2015 and Balance ofand Education Private 24,451 as “Core forbearance March greater
Slide 12: Private Education Loan Portfolio Charge-Off Rates by Segment
High6.3% 11% 100% 80% 66% 40% 50% 60% Dec 0% Private 10.4% 12.6% 15% 17.3% 20% 21.3% 25% 10% 9.4% 6.7% 5.6% 5% 2.9% 4.3% 2.8% 2.6% 2.7% 1.0% Charge-off Low Confidential 08 11% Risk 25% 68% 7.7% Quality 6.8% 5.4% 5.6% 3.9% 2.6% 3.1% 2.3% 2.1% 11.1% Education Credit: Credit Dec 4.6% 10% 24% 30% Modera
Slide 13: Private Education Loan Charge-Offs and Portfolio Seasoning
High 12% 14% 13.6% 16% -9.6% 6% Charge 4.6% 4.5% 4% 3.4% 1.9% 2.3% Q1 0% 2% Private Losses Seasoned Non-traditional Low Confidential 8%11 5.7% 3.5% Risk 10.5% Quality Rate 4.6% 4.2% 1.9% Q1 continue Education 4.9% 3.3% portfolio 12 Moderate =10% 2.0% Smart and Q1 Portfolio 2.9% loans 8.9% to 13 prop
Slide 14: Private Education Loan Default Historical Performance
Private Default Historical 94% 7% 12% 3% Percent 0% #Defaults The As Confidential Payments of 5% 2% probability 96% March Education 2% Performance 12 57% Per 97% Defaults 24 2% Made Payments and 31, 57% 3699% 1% of2015 proprietary 48 Loans default Total by 2% 60 99% Payments Made 2% 7250% Segment 10
Slide 15: Private Education Loans by Seasoning, March 31, 2015
March Traditional Non-Traditional Monthly Loan Not Loans Total Charge-offs Confidential Yet Loans Seasoning Status in 31, inScheduled Forbearance Repayment- Repayment 2015 Portfolio in as 0-12 and Repayment a –Portfolio % proprietary payments “Core of Payments Current Delinq 361 58 419 loans 2,630 2
Slide 16: Private Education Loans by Seasoning, March 31, 2014
March Traditional Non-Traditional Monthly Loan Not Loans Total Charge-offs Confidential Yet Loans Seasoning Status in 31, inScheduled Forbearance Repayment- Repayment 2014 Portfolio in as 0-12 and Repayment a –Portfolio % proprietary payments “Core of Payments Current Delinq 474 78 552 loans 3,672 4
Slide 17: Business Services Segment Core Earnings
Business “Core (In Net Federal Third-Party Department Contingency Asset defaulted Confidential millions) income recovery Earnings” Loans Services FFELP $86 Loan of and Q1 asset serviced Education revenue $95 15 Basis proprietary Loans servicing Segment recovery Q4 $116 14 ($’s $89 in beginning accou
Slide 18: Business Services Federal Loans Serviced
Business Federal Total $275 $300 $325 ’s 2011 $150 $175 $200 Confidential $225 2012 billions Federal $Loan Services 2013 and $250 Loans Servicing 2014 proprietary Segment inServiced Q1 15 information © 2015 Navient Solutions, Inc. All rights reserved. 18
Slide 19: Business Services Asset Recovery
Business Asset Q1 Student Other Key Generated Strong Opportunities Non-ED Confidential 2015 Characteristics Recovery 46% compliance Loan government Contingent Services $89and Related tomillion expand proprietary Segment infrastructure Asset asset 54% ofinto revenue Recovery recovery information stat
Slide 20: Funding and Liquidity
Funding and and Confidential Liquidity proprietary information © 2015 Navient Solutions, Inc. All rights reserved. 20
Slide 21: Capital Markets Summary
2015 Acquired Issued Repurchased Returned 1Maintained Confidential As of Capital $2 $689 $500 March $363 $830 billion strong million and Markets $131, million1 billion of proprietary 2015 capital FFELP ofSummary Private long-term of to ofposition long-term shareholders student ABS information Educat
Slide 22: Secured Financing Capacity and ABS Issuers
Secured 9876543212014 10 11 12 13AmeriCredit 14 15 16 17 18 19 20 (1) Navient Over Additional Maximum As Confidential Ally AMEX Volkswagen Ford Citigroup Chase Santander Navient Discover Toyota Honda Capital Bank CarMax Hyundai Fifth Nissan GE Nelnet of Includes $102 Issuance March 14,252 Capital 13
Slide 23: Recent NAVSL FFELP ABS Issuance
Recent NAVSL Priced: Settled: Issuance US FFELP Collateral: Prepayment Tranching: (M) A-1 A-2 A-3 B Estimated Actual Pricing Confidential Aa2 Govt. Aaa ($M) $28 average FFELP April Stafford represents April 2015-2 $337 $157 $476 Amount: Guaranteed (M) based 8.4 Class Speed and 14, 23, 1.3 3.3 6.4 ($
Slide 24: Recent Private Education Loan ABS Issuance
Recent NAVSL Priced: Settled: Issuance Collateral: Prepayment Tranching: (M) A-1 A-2A A-2B A3 B (1) https://www.navient.com/about/investors/debtasset/slmsltrusts/. (2) Confidential Aa3 Yield Estimated Aaa Aaa ($M) Aaa $83 Private January $75 January Trust $224 Amount: on (M) $154 Private 9.9 Class S
Slide 25: Unsecured Debt Maturities and Ratings
Unsecured As $1.7 $2.1 $2.5 $2.8 $4.2 2015 $0.6 $0.8 $1.0 Fitch Senior Outlook Confidential of$1.8 2016 Moody’s March Unsecured Stable 2017 Debt and 31,S&P Stable 2018 2015 proprietary Debt2019 Stable (par BBvalue, Ba3 2020 information BB 2021 $ in billions) 2022 © 2015 2023+ Navient Solutions, Inc.
Slide 26: Conservative Balance Sheet Profile
Conservative $70 $60 $50 $40 $30 $20 $10 $0 December Total Tangible *Unsecured Confidential Quarter 1.00 Years 1.30 $45.1 $38.0 1.15 1.10 1.05 Managed 2006 Equity Net $51.7 $24.0 ending Ending 1.25 $39.4 31, Debt and Asset 2007 Unsecured 2006 $48.7 $22.4 Student Ratio Outstanding Rating 1.20 proprie
Slide 27: Projected Education Loan Cash Flows
Education Projected $’s FFELP Floor Private Residual Secured Servicing Unencumbered Combined before These -Enhancing + Total Since Cash of $35 — be Confidential Cash Additional Loan Credit previously released Highly Includes inbillion Additions Flows Flow flows FFELP Secured Private Income Billions
Slide 28: FFELP Projected Cash Flows
FFELP as 2023 Projected Total No Assumptions These Confidential ofFloor 3/31/15 2024 Cash projections Cash Income, Total FFELP Excess Servicing 2025 Flows and Flows Q2-Q4 Revenue 2026 proprietary Spread Average from are CPR/CDR Highly Revenue 2015 based 2027 Projected $1,017 $569 $645 $368 Balance 2
Slide 29: Secured Financings and Residual Cash Flow
$Secured 1Q Servicing Residual Net Average FFELP Private Term Other Total *Note: Confidential in2015 Net Residual* Cash Millions Proceeds Private FFELP Securitized residual Totals Secured Credit Cash Principal 2014 (Excess Flow (Cash may and Credit $Flow and represents (Excess 2013 FFELP Financings
Slide 30: FFELP ABS Appendix
FFELP ABS Appendix Confidential and proprietary information © 2015 Navient Solutions, Inc. All rights reserved. 30
Slide 31: Recent FFELP Issue Characteristics
Recent FFELP Issue Tranches Triple-A Floating Amortizing Navient Collateral Insurance Typically Formerly Offer (1) Confidential Education. Principal size significantly FFELP ABS Solutions, rate rated or anon-dischargeable of or Characteristics 20% tranches pass-through $500M guarantee Transaction an
Slide 32: FFELP Program Parameters
FFELP Parameter Parents Consolidation Borrower Needs Students Federal Principal Interest Special Payments Repayment Undergraduate: Aggregate Graduate: (1) Note: .C onfidential Aggregate As Based Loan Allowance or Guarantee Subsidy of and Student (SAP) $65,500 Graduate Subsidized Loan Term July and Y
Slide 33: Navient Historical Stafford/PLUS CPRs
Navient Annualized Higher Historical 60% 70% CPR* Quarterly 0% 2Q2002 2Q2003 2Q2004 2Q2005 2Q2006 2Q2007 2Q2008 2Q2009 2Q2010 2Q2011 2Q2012 2Q2013 *2Q2014 Confidential Quarterly 2012 2002 2005 prepayment Stafford 4Q2011 4Q2002 4Q2003 4Q2004 4Q2005 4Q2006 4Q2007 4Q2008 4Q2009 4Q2010 4Q2012 4Q2013 4Q2
Slide 34: Navient Historical Consolidation CPRs
Navient CPRs Higher Historical 20% 25% Quarterly 0% 2012Q2003 2Q2004 2Q2005 2Q2006 2Q2007 2Q2008 2Q2009 2Q2010 2Q2011 2Q2012 2Q2013 2Q2014 4Confidential 2011 2002 for prepayment Consolidation 4Q2011 4Q2004 4Q2005 4Q2006 4Q2007 4Q2008 4Q2009 4Q2010 4Q2012 4Q2013 4Q2014* -5% Consolidation 5% Consolida
Slide 35: Private Education Loan ABS Appendix
Private Education Confidential Appendix and proprietary Loan ABS information © 2015 Navient Solutions, Inc. All rights reserved. 35
Slide 36: Recent Private Education Loan ABS Issue Characteristics
Recentsize Private Characteristics Issue Triple-A 20-30% Amortizing Fixed Complies Navient Collateral Collateralized Underwritten 70-80% Many Typically Confidential rate seasoned Private Education Triple-A Solutions, with rated non-dischargeable with of Characteristics ortranches $500M and floating
Slide 37: Navient Smart Option and Private Loan Characteristics
Navient Smart Undergraduate/Graduate/ Med/Law/MBA $10k term, Typical interest deferred Origination Certification Disbursement FICO, Borrower and $100,000 Borrowing $150,000 For-Profit; Current Non-Profit; School P-1.5% Historical L+0% Dischargeable Made parents college fund graduate tuition, Also ba
Slide 38: Navient Private Education Loan Trusts Summary 2011-2015YTD
Navient Summary 2011-2015YTD NAV 11-A Bond Initial Loan Signature/Law/MBA/Med Smart Consolidation Direct Career Total Payment School, Repayment Forbearance % WA Wtd (1) Confidential Loans Assumes FICO Avg 11-B NAV Enhancement 100% Program Amount AAA Option to Training Grace, Private Status Consumer
Slide 39: Securitized Private Education Loan Defaults
Navient Securitized Most As Distribution 30% Trust 2011 40 25% 35 Total 30 20 Percent 0% 12 Months Defaults Confidential 10% 24 of 050 2012 15% defaults Portfolio March 3610 Since 15 Portfolio 20% Per 4825 2013 5% collateral 60 of Month and 2015, of occur Repayment Average 5Defaults 72 2014 propriet
Slide 40: Navient Private Education Loan Trusts Prepayment Analysis
Navient Prepayment Constant 12 14 2002-A A Confidential 2014-CT t Rate2003-A Private prepayment 10NAVI Analysis an andnt Education 2003-B proprietary t2014-A e 8rates n2003-C smLoan increased information CPR)2004-A Trusts Coinay –2007 2004-B © ( 62015 Prep due2005-A Navient to4 the 2 0 introduction
Slide 41: Cohort Default Triangles
Cohort Navient (including Undergraduate/Graduate DTC Career -Private The (1) trust (3) Confidential Program FICO Excludes Undergraduate/Graduate Career following cohort loans: Training Default Consolidation scores Corporation types Training those loans default ?and 670 are cohort Triangles loans: in
Slide 42: Cohort Default Triangles: Terms
Cohort The Terms Defaulted -Because Confidential Years Total Repayment Disbursed Periodic cohort and –Default inthe The Repayment Defaults principal calculations default Principal numerator and Year sum Triangles proprietary of –triangles –is includes The Periodic Defaulted Entering –not includes us
Slide 43: Cohort Default Triangle: Undergraduate/Graduate
Cohort Disbursed Undergraduate/Graduate(1) Entering Repayment 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Note: (2) (3) Confidential Periodic Numerator $1,870 $11 $28 $70 $187 $386 $682 $1,132 $1,537 $2,013 $2,452 $2,933 $3,241 $2,769 $1,102 $499 $227 Data De
Slide 44: Cohort Default Triangle: Undergraduate/Graduate With and Without Co-signer
Cohort Undergraduate/Graduate(1) Disbursed Entering Repayment 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Note: (1) (2) (3) Confidential Undergraduate/Graduate Periodic Numerator $1,353 $518 $6 $37 $90 $196 $367 $632 $844 $1,121 $1,408 $1,758 $2,075 $1,853 $8
Slide 45: Cohort Default Triangle: Non-Profit and For-Profit
Cohort 2014 Undergraduate/Graduate(1) Disbursed Entering Repayment 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note: (1) (2) (3) Confidential Undergraduate/Graduate Periodic Numerator $1,664 $206 $11 $26 $68 $180 $360 $630 $1,006 $1,362 $1,766 $2,104 $2,458 $2,686
Slide 46: Cohort Default Triangle: Undergraduate/Graduate by FICO
Cohort 2014 Undergraduate/Graduate(1) Disbursed Entering Repayment 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note: (1) (2) (3) (4) Confidential Undergraduate/Graduate FICO Periodic Numerator $831 $482 $6 $22 $64 $137 $248 $424 $574 $761 $937 $1,130 $1,325 $1,186
Slide 47: Cohort Default Triangle: Undergraduate/Graduate by FICO
Cohort 2014 Undergraduate/Graduate(1) Disbursed Entering Repayment 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note: (1) (2) (3) (4) Confidential Undergraduate/Graduate FICO Periodic Numerator $355 $202 $3 $7 $37 $77 $134 $222 $298 $402 $504 $623 $662 $543 $199 $8
Slide 48: Cohort Default Triangle: Private Consolidation Loans
Cohort Private Disbursed Entering Repayment 2006 2007 2008 Note: (1) (2) Confidential Periodic Numerator $249 $675 $376 $125 $295 $133 Data Default Consolidation Periodic Principal 0.0% as Year Defaults and of isTriangles 3/31/15. 0.1% 0.4% 0.0% 0.2% Repayment the proprietary Defaults amount for Loa
Slide 49: Cohort Default Triangle: DTC Loans
Cohort DTC Disbursed Entering Repayment 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note: (1) (2) (3) Confidential FICO Periodic Numerator $192 $88 With Without $8 $65 $139 $245 $369 $396 $314 $104 $23 $2 $19 $66 $158 $255 $235 $152 $47 $5 Data Default 0.0% Periodic scores 0.1% 0.0% Principal
Slide 50: Cohort Default Triangle: Career Training Loans
Cohort Career Disbursed Entering Repayment 2003 2004 2005 2006 2007 2008 2009 2010 Note: (1) (2) (3) Confidential FICO Periodic Numerator $291 $382 $513 $630 $672 $581 $169 $19 Data Training Default Periodic scores 0.0% Principal 0.0% as Year Defaults and of isTriangles 0.6% Loans, are 3/31/15. 0.3%
Slide 51: Appendix
Confidential and proprietary information © 2015 Navient Solutions, Inc. All rights reserved. 51 Appendix Corporation Navient
Slide 52: GAAP Results
GAAP (In Net EPS Operating Provision Average Confidential millions, income $0.72 Results Student $125 expenses $0.64 $292 except and$138 Loans proprietary $0.49 $263 per $230 $185 $219 $133,722 share $215 information amounts) $366 $130,192 Q1©15 $142,679 2015 Q4Navient 14 Q1 14 Solutions, Inc. All r
Slide 53: Differences between Core Earnings and GAAP
Differences Quarter ($ GAAP Net Total 1“Core Confidential Includes inincome impact millions) “Core Earnings” net ended restructuring income of tax between Earnings” and SLM derivative goodwill March effect adjustments net proprietary $BankCo1 292 income “Core 31, 64 adjustments and and accounting 20
Slide 54: Investor Relations Website
Investor https://www.navient.com/about/investors/ SLM -Additional Confidential Accrued Archived Static Quarterly Historical Since Distribution Current Prospectus / NAVI issued pool Relations and rates interest and information distribution trust information for and student historical factors CPR hist
Slide 55: Navient
NAVIENT.