Navient Corporation · NASDAQ:NAVI
Navient — Barclays Global Financial Services Conference 2016
23 slides from Navient's conference presentation, Sep 13, 2016
Slide 1: Barclays Global Financial Services Conference
NAVIENT R Barclays Global Financial Services Conference September 12, 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 3: Leading loan management, servicing and asset recovery company
NAVIENTSM 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 Am
Slide 4: First Half 2016 Highlights
First Half 2016 Highlights Credit Quality In Q216 Private Education loan charge-off rates improved to lowest levels since 2006 More than 300,000 Navient customers repaid their education loans in full Growth Acquired $2.2 billion of student loans Non-education related revenues more than doubled from
Slide 5: Asset Management - High Quality Loan Portfolio
Asset Management - High Quality Loan Portfolio FFELP Portfolio Largest holder of FFELP loans 97-98% of portfolio is government guaranteed 79% of portfolio funded to term with securitizations Fully integrated servicing and asset recovery support operations FFELP 79% Private Education 21% Total Educat
Slide 6: Private Education Loans Segment Continued Improving Credit Quality
Private Education Loans Segment Continued Improving Credit Quality Private Education Loan Charge-Off Rate by Segment Charge-off Rate 12% 10% 8% 6% 4% 2% 0% 9.9% 9.2% 6.8% 6.9% 5.3% 3.6% 3.0% 2.5% 2.7% 2.2% 2.9% 2.4% 2.1% 2.4% 1.9% 2Q12 2Q13 2Q14 2Q15 2Q16 Traditional Non-Traditional Total Private Ed
Slide 7: Education Loan Portfolio Generates Significant Cash Flows
Education Loan Portfolio Generates Significant Cash Flows Projected Life of Loan Cash Flows over ~20 Years $’s in Billions FFELP Cash Flows 6/30/16 Secured Residual (including O/C) $6.9 Floor Income 2.4 Servicing 3.3 Total Secured $12.6 Unencumbered 1.1 Total FFELP Cash Flows $13.7 Private Credit Ca
Slide 8: Navient's Role is to Help Student Borrowers Successfully Repay Their Loans
Navient’s Role is to Help Student Borrowers Successfully Repay Their Loans 1 Congress sets interest rate formula, loan limits, and repayment terms. 2 Colleges set tuition and fees. 3 Families select the college, and borrow to pay the cost of attendance to the school. 4 ED issues loans at congression
Slide 9: Asset Servicing - Platform Delivers Superior Customer Success
Asset Servicing - Platform Delivers Superior Customer Success Federal Loans Serviced by Navient $’s in billions $300 $275 $250 $225 $200 $175 $150 2011 2012 2013 2014 2015 2016* Scale, Performance and Compliance Creates Opportunity Largest servicer of federal student loans with $289 billion serviced
Slide 10: Class of 2015 Student Loan Delinquency Rates Lower than Class of 2010
Class of 2015 Student Loan Delinquency Rates 3 Times Lower than Class of 2010 Federal Loan Delinquency Rates Six Months After End of Grace Period and Unemployment for Bachelor’s Degree Holders Delinquency Rate (%) 30 27 24 21 18 15 12 9 6 3 0 29 22 25 18 23 16 16 11 13 9 11 7 Unemployment 31+ Days D
Slide 11: Employment of Millennials is Improving
Employment of Millennials is Improving Employment Ages 25 to 34 #’s in thousands 35,000 34,000 33,000 32,000 31,000 30,000 29,000 28,000 27,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 • Employment of Millennials improved 3.6% year over year Source: U.S. Bureau of Labor Statistics, Lab
Slide 12: Improving the Federal Education Loan Repayment Process
Improving the Federal Education Loan Repayment Process 4 recommendations to improve student loan program success: 1. Provide more front-end resources to improve decision making. Students and their families need tools to understand how much they’ll need to borrow to earn the degree—not simply the cur
Slide 13: Top Performing Asset Recovery & Business Processing Business
Top Performing Asset Recovery & Business Processing Business Key Characteristics Strong business franchise Large sophisticated operating infrastructure Compliance focused Industry leading performance Total 2015 revenues of $367 million Total contingent collections receivables inventory of $19.2 bill
Slide 14: Managing Unsecured Debt Maturities
Managing Unsecured Debt Maturities (par value, $ in billions) $2.3 $0.1 $1.8 $1.4 $2.8 $2.1 $2.5 $2.4 $1.6 $2.1 $0.1 $1.3 $0.8 $0.8 $1.0 $1.0 $2.7 $3.1 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 our
Slide 15: 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 ABCP fac
Slide 16: Meaningful Growth Opportunities
Meaningful Growth Opportunities Education Loan Acquisitions FFELP Loans not owned or serviced by Navient Private Education Loans not owned or serviced by Navient Private Education Loan Consolidations Servicing Department of Education 3rd Party Education Loans Other Asset Classes Business Processing
Slide 17: Investment Highlights
Investment Highlights High quality loan portfolio Significant and predictable cash flow generation Efficient and large-scale, customer-focused operating platforms Growing non-student loan related fee businesses Ability to service unsecured debt through long-term conservative funding approach Improvi
Slide 18: NAVIENT
NAVIENT®
Slide 19: Appendix
Appendix Confidential and proprietary information © 2016 Navient Solutions, Inc. All rights reserved. 19
Slide 20: Differences Between Core Earnings and GAAP
Differences Between “Core Earnings” and GAAP Quarters Ended “Core Earnings” adjustments to GAAP: June 30, 2016 March 31, 2016 June 30, 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 spin
Slide 21: Private Education Loans Segment Allowance for Loan Loss - Core Earnings Basis
Private Education Loans Segment Allowance for Loan Loss - Core Earnings Basis June 30, 2016 June 30, 2015 Allowance Ending Balance Allowance as % of Ending Balance Allowance Ending Balance Allowance as % of Ending Balance Non-TDR Loans $247 $14,974 1.6% $276 $18,830 1.5% TDR Loans 1,163 10,819 10.7%
Slide 22: Loan Seasoning - Core Earnings Basis June 30, 2016
Loan Seasoning - “Core Earnings” Basis June 30, 2016 Traditional Portfolio Monthly Scheduled Payments Received Loan Status 0-12 payments 13-24 payments 25-36 payments 37-48 payments More than 48 payments Total Not Yet in Repayment 1,489 Loans in Forbearance 252 19.8% 103 7.3% 103 4.6% 99 3.1% 235 1.
Slide 23: Loan Seasoning - Core Earnings Basis June 30, 2015
Loan Seasoning - “Core Earnings” Basis June 30, 2015 Traditional Portfolio Monthly Scheduled Payments Received Loan Status 0-12 payments 13-24 payments 25-36 payments 37-48 payments More than 48 payments Total Not Yet in Repayment 2,218 Loans in Forbearance 332 17.3% 131 5.6% 122 3.5% 108 2.9% 187 1
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