Navient Corporation · NASDAQ:NAVI

Navient — Q3 2021 Earnings Presentation

47 slides from Navient's earnings presentation, Oct 29, 2021

1. Slide 1: 2021 3rd Quarter Investor Deck

   2021 3rd Quarter Investor Deck October 29, 2021

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

   Forward-Looking Statements; Non-GAAP Financial Measures The following information is current as of September 30, 2021 (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, 2020 (the “2020 Form 10-K”),

3. Slide 3: We are the leader in education loan management and business processing solutions

   We are the leader in education loan management and business processing solutions for education, healthcare and government clients at the federal, state and local levels We help our clients and millions of Americans achieve financial success through our services and support, leveraging our 45+ years

4. Slide 4: Delivering Long-term Value

   Delivering Long-term Value Federal Education Loans Consumer Lending Business Processing  Providing payment relief to  Originated $1.6 billion of  Over 3,700 Navient borrowers impacted by high-quality Private Education employees support our state COVID-19 Loans, meeting our mid-teens and municipal

5. Slide 5: Originating Education Loans is an Attractive Opportunity

   Originating Education Loans is an Attractive Opportunity Sizable Market With Attractive Yields1 Leveraging Our Existing Infrastructure to Generate Value Estimated Total Market Annual Originations and Yields ($’s in billions) • Private Education Refinance Loans: Grad PLUS - Using our data and experti

6. Slide 6: Lifetime Cash Flows Will Exceed Original Projections

   Lifetime Cash Flows Will Exceed Original Projections Navient’s Student Loan Portfolios Continues to Exceed Expectations 1 ($’s in Billions) $25.1 $7.7 Life of Loan Projections Q4 2017 Q3 2021 Net Cash Flow Projection at Q3 2021 Total FFELP Cash Flows $12.7 $7.8 Total Private Education Cash Flows $15

7. Slide 7: Growing Earnings and Generating Shareholder Value

   Growing Earnings and Generating Shareholder Value Driving EPS Accretion for Shareholders Delivering Value Adjusted Core EPS $3.40  Driving shareholder value through investments with strong ROE profiles $2.64  Allocating capital to highly accretive long-term $2.09 investments, including portfolio a

8. Slide 8: Navient is Focused on Cost Efficiency

   Navient is Focused on Cost Efficiency Industry-leading Efficiency Continuously Rationalizing Our Expense Base  Innovative financing reduces interest expense,  Focused on reducing expenses and improving maximizing cashflow and shareholder value efficiency across our businesses  Continue to drive s

9. Slide 9: Asset Generation Drives Meaningful Returns

   Asset Generation Drives Meaningful Returns Since 2014 Separation 1 Originated Loan  Our competitive franchise, with its highly attractive return Originations $17 billion Private profile, leverages our core expertise to drive profits and growth Education Loans Loan Portfolios Acquired over $46  Acc

10. Slide 10: Outlook

    Outlook Key Company & Business Segment Metrics 2021 Year to Date 2021 Original 2 Targets Actuals Core Earnings Return on Equity 1 Low Twenties ✓ 32% Core Earnings Efficiency Ratio 1 ~52% ✓ 48% Adjusted Tangible Equity Ratio 1 ~5.5% ✓ 6.4% Net Interest Margin – Federal Education Loan Segment Mid to H

11. Slide 11: Funding, Liquidity, & Cashflow

    Funding, Liquidity, & Cashflow © 2021 Navient Solutions, LLC. All rights reserved. 11

12. Slide 12: Q3 2021 Financing and Capital Management

    Q3 2021 Financing and Capital Management Capital Management Financing ✓ Returned $176 million through share  Issued $2.0 billion of Term Education Loan repurchases and dividends ABS transactions • Paid dividends of $26 million • On October 14, priced $1.0 billion of • Repurchased 7.0 million shares

13. Slide 13: FFELP ABS Transactions

    FFELP ABS Transactions NAVSL 2021-3 NAVSL 2021-2 Pricing Date: October 14, 2021 April 12, 2021 Settlement October 28, 2021 April 22, 2021 Date: Issuance $978,500,000 $1,011,600,000 Amount: U.S. Government Guaranteed U.S. Government Guaranteed Collateral: FFELP Consolidation and FFELP Non-Consolidati

14. Slide 14: Private Education Loan ABS Transactions

    Private Education Loan ABS Transactions NAVSL 2021-F NAVSL 2021-E Pricing Date: September 21, 2021 July 19, 2021 Settlement September 28, 2021 July 29, 2021 Date: Issuance $991,300,000 $1,019,000,000 Amount: Collateral: Private Education Refi Loans Private Education Refi Loans Prepayment 15% CPR 15%

15. Slide 15: Education Loan Portfolio Generates Significant Cash Flows

    Education Loan Portfolio Generates Significant Cash Flows Projected Life of Loan Cash Flows over ~20 Years Enhancing Cash Flows $’s in Billions • Generated $2.1 billion of cash flows in YTD 2021 FFELP Cash Flows 09/30/21 Secured • Reduced unsecured debt by $1.0 billion in YTD 2021 Residual (includin

16. Slide 16: Education Loan Portfolio Generates Meaningful Cash Flows Over the Next Five Years

    Education Loan Portfolio Generates Meaningful Cash Flows Over the Next Five Years Projected Annual Private Education Loan Cash Flows Projected Annual FFELP Loan Cash Flows Cash Flows assuming call option can be exercised at 10% Cash Flows assuming trusts run to maturity $1.2 $1.1 $1.2 $1.0 $1.0 $1.0

17. Slide 17: FFELP Cash Flows are Highly Predictable

    FFELP Cash Flows are Highly Predictable $’s in millions as of 09/30/2021 2021 2022 2023 2024 2025 2026 2027 2028 Remaining Projected FFELP Average Balance $53,423 $49,597 $44,017 $38,857 $34,133 $29,691 $25,514 $21,626 Projected Excess Spread $151 $574 $508 $447 $399 $368 $332 $289 Projected Servici

18. Slide 18: Secured Cash Flow

    Secured Cash Flow $ in Millions 3Q 2021 YTD 2020 2019 2018 FFELP Term Securitized Servicing (Cash Paid) $ 155 $ 227 $ 253 $ 288 Other Secured FFELP 1, 2 Net Cash Flow 647 830 969 1,290 Total FFELP $ 802 $ 1,057 $ 1,223 $ 1,577 Private Credit Term Securitized Servicing (Cash Paid) $ 90 $ 124 $ 135 $

19. Slide 19: Optimized Capital Structure

    Optimized Capital Structure Long-Term Conservative Funding Approach Managing Unsecured Debt Maturities • Important to maintain our credit ratings which (par value, $ in billions) support ongoing access to the unsecured debt markets - We pursue opportunities to repurchase debt in the open market - We

20. Slide 20: Managing Unsecured Debt Maturities

    Managing Unsecured Debt Maturities (par value, $ in billions) $1.8 $1.5 $1.5 $1.4 $1.4 $1.1 $1.1 $0.9 $0.7 $0.7 $0.6 $0.6 $0.5 $0.5 $0.5 $0.2 $0.2 $0.0 $0.0 $0.0 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031+ As of September, 2020 As of September, 2021 Long-term Conservative Funding Approach • N

21. Slide 21: FFELP ABS

    FFELP ABS © 2021 Navient Solutions, LLC. All rights reserved. 21

22. Slide 22: FFELP ABS Issuance Characteristics

    FFELP ABS Issuance Characteristics FFELP ABS Transaction Features Collateral Characteristics • Issue size of $500M+ • Guarantee of underlying collateral insulates bondholders from most risk of • Senior and subordinate notes loss of principal 1 • Amortizing tranches with 1 to 10(+) year average lives

23. Slide 23: 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

24. Slide 24: Quarterly CPR: Stafford & PLUS Loan Prepayments

    Navient Stafford & PLUS Loan Prepayments • Higher prepayment activity in mid-2012 was related to the short-term availability of the Special Direct Consolidation Loan program • Prepayment increases occurred in 2015 and 2018 as we exercised our option to purchase assets from selected transactions to m

25. Slide 25: Quarterly CPR: 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

26. Slide 26: Private Education Loan ABS

    Private Education Loan ABS © 2021 Navient Solutions, LLC. All rights reserved. 26

27. Slide 27: Private Education Loan ABS Issuance Characteristics

    Private Education Loan ABS Issuance Characteristics Private Education Loan ABS Transaction Features Collateral Characteristics • Issue size of $500M+ • Collateralized by loans made to students and parents to fund college tuition, room • Senior and subordinate notes and board - Seasoned assets benefi

28. Slide 28: Navient Private Education Loan Programs

    Navient Private Education Loan Programs Smart Option Undergrad/Grad/ Med/Law/MBA Direct-to-Consumer (DTC) Origination Channel School School Direct-to-Consumer Typical Borrower Student Student Student Typical Co-signer Parent Parent Parent $10k avg orig bal, 10 yr avg term, in-school $10k avg orig ba

29. Slide 29: Navient Private Education Loan Programs

    Navient Private Education Loan Programs Consolidation (Legacy) Private Education Refi Private Education Origination Origination Channel Lender Lender School College Graduates & Select Non- Typical Borrower College Graduates Student Graduates Typical Co-signer Parent Parent Parent $15k avg orig bal,

30. Slide 30: Navient Private Education Trusts

    Navient Private Education As of the respective cutoff dates for each transaction Trusts 2020-2021YTD Navient Issuance Program NAV NAV NAV NAV NAV NAV NAV NAV NAV NAV NAV NAV NAV NAV NAV 20-A 20-B 20-C 20-D 20-E 20-F 20-G 20-H 20-I 21-A 21-B 21-C 21-D 21-E 21-F Bond Amount ($mil) 620 712 546 808 499

31. Slide 31: Private Education Legacy Loan Trusts Prepayment Analysis

    Navient Private Education Legacy Loan Trusts – Prepayment Analysis • Constant prepayment rates increased beginning 2014 on increased seasoning-related voluntary prepayment and the emergence of the external student loan refinance market • Prepayment activity declined in 2020 during the COVID-19 crisi

32. Slide 32: Navient Corporation Appendix

    Navient Corporation Appendix © 2021 Navient Solutions, LLC. All rights reserved. 32

33. Slide 33: Operating Results: Core Earnings Basis

    Operating Results “Core Earnings ” Basis 1 Selected Financial Information and Ratios 3rd Quarter Highlights (In millions, except per share amounts) Q3 21 Q2 21 Q3 20 • Adjusted Core Earnings 1 per share decreased to $0.92 compared to $1.03 in the year ago quarter GAAP diluted EPS $1.04 $1.05 $1.07 •

34. Slide 34: Federal Education Loans Segment

    Federal Education Loans Segment “Core Earnings” Basis Selected Financial Information and Ratios 3rd Quarter Highlights ($ In millions) Q3 21 Q2 21 Q3 20 Federal Education Segment net interest margin 1.04% 0.97% 1.03% • Q3 21 Net Interest Margin: 104 basis points FFELP Loans: • Q3 21 Annualized Charg

35. Slide 35: Closed and Novated Servicing Contract with the Department of Education

    Closed and Novated Servicing Contract with the Department of Education What it Means for Navient Rationale & Impact ✓ We will continue to service our FFELP loan ✓ Focus on growth opportunities in Consumer portfolio Lending and Business Processing Segments, while ✓ Navient will no longer service gove

36. Slide 36: Consumer Lending Segment

    Consumer Lending Segment “Core Earnings” Basis Selected Financial Information and Ratios 3rd Quarter Highlights ($ In millions) Q3 21 Q2 21 Q3 20 Consumer Lending Segment net interest margin 2.98% 2.95% 3.24% • Q3 21 Net Interest Margin: 298 basis points • Q3 21 Annualized Charge-off Rate 1: 77 basi

37. Slide 37: Business Processing Segment

    Business Processing Segment “Core Earnings” Basis Selected Financial Information and Ratios 3rd Quarter Highlights ($ In millions) Q3 21 Q2 21 Q3 20 Business Processing Government Services $75 $66 $56 • Q3 21 EBITDA Margin 1: 31% Healthcare RCM Services $47 $64 $34 Total Business Processing • Revenu

38. Slide 38: Other Segment

    Other Segment “Core Earnings” Basis YTD 2021 Unallocated Shared Services Expenses Shared Services Overview $194 million CEO, Corporate Marketing & Other • Shared services are related to the management of the entire company or shared by multiple reporting segments HR & Corporate Facilities 3% 10% Inf

39. Slide 39: Navient Continues to Advance Environmental, Social and Governance Initiatives

    Navient Continues to Advance Environmental, Social and Governance Initiatives Social Initiatives Environmental Initiatives Community partnerships • Ongoing efforts to reduce already low carbon footprint • National partnership with Boys & Girls Clubs of America to • Enterprise-wide emphasis on electr

40. Slide 40: There are solutions to many of the challenges faced by borrowers

    There are solutions to many of the challenges faced by borrowers 5 Recommendations to improve student loan program success: 1 Provide front-end support to improve They should be and can be simplified. For example, collapsing the multiple income-driven repayment options decision making. into one plan

41. Slide 41: We've piloted solutions to reduce complexity

    We’ve piloted solutions to reduce complexity IDR eSign Enrollment Repayment Guide for New Graduates Navient launched a pilot program focusing on past-due FFELP Navient created a personalized report to help new-to-repayment borrowers to explore whether a simpler process could produce borrowers to com

42. Slide 42: GAAP Results

    GAAP Results (In millions, except per share Q3 21 Q2 20 Q3 20 amounts) Net income (loss) $173 $185 $207 Diluted earnings (loss) per common $1.04 $1.05 $1.07 share Operating expenses $248 $252 $232 Provision for loan losses $22 $(1) $14 Average Education Loans $76,373 $77,379 $83,168 © 2021 Navient S

43. Slide 43: Notes on Non-GAAP Financial Measures

    Notes on Non-GAAP Financial Measures (Dollars in Millions) In addition to financial results reported on a GAAP basis, Navient also provides certain performance measures which are non-GAAP financial measures. The following non-GAAP financial measures are presented within this Presentation: 1. Core Ea

44. Slide 44: Notes on Non-GAAP Financial Measures

    Notes on Non-GAAP Financial Measures (Dollars in Millions) 4. Earnings before Interest, Taxes, Depreciation and Amortization Expense (“EBITDA”) – This metric measures the operating performance of the Business Processing segment and is used by management and our equity investors to monitor operating

45. Slide 45: Differences Between Core Earnings And GAAP

    Differences Between Core Earnings And GAAP Quarters Ended Core Earnings adjustments to GAAP: Sep. 30, Jun. 30, Sep. 30, (Dollars in Millions) 2021 2021 2020 GAAP net income (loss) $173 $185 $207 Net impact of derivative accounting (30) (30) (13) Net impact of goodwill and acquired intangible assets

46. Slide 46: Investor Relations Website

    Investor Relations Website www.navient.com/investors www.navient.com/abs • NAVI / SLM student loan trust data (Debt/asset backed securities – NAVI / SLM Student Loan Trusts) - Static pool information – detailed portfolio stratifications by trust as of the cutoff date - Accrued interest factors - Qua

47. Slide 47: Navient

    NAVIENT.

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