Navient Corporation · NASDAQ:NAVI
Navient — Q3 2023 Earnings Presentation
22 slides from Navient's earnings presentation, Oct 25, 2023
Slide 1: 3Q 2023 Earnings Call Presentation
3Q 2023 Earnings Call Presentation Confidential and proprietary information © 2023 Navient Solutions, LLC. All rights reserved. 1
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
Slide 3: 3Q 2023 Results
3Q 2023 Results “Navient’s third-quarter results reflect our strong foundation of assets and capabilities. As we continue to execute well against our plans for the year, we also have taken initial actions resulting GAAP Core Earnings 1 from the review of our businesses, and we’re making great progre
Slide 4: Federal Education Loans – 3Q 2023 Core Earnings Results
Federal Education Loans – • Net income was $94 million, unchanged from the year-ago quarter 3Q 2023 Core Earnings Results • Revenue (before provision) increased $28 million compared to 3Q22 - Net interest income increased 3Q23 3Q22 $41 million primarily due to the decrease in the speed of loan premi
Slide 5: Consumer Lending – 3Q 2023 Core Earnings Results
Consumer Lending – • Net income was $56 million compared to $65 million in the year-ago quarter 3Q 2023 Core Earnings Results • Revenue (before provision) decreased $2 million compared to 3Q22 - Net interest income decreased 3Q23 3Q22 $3 million - Other revenue increased $1 million Revenue (Before P
Slide 6: 3Q 2023 Allowance for Loan Losses
3Q 2023 Allowance for Loan Losses ($ in millions) • Our total provision expense was $72 million during 3Q23 $1,119 • This primarily consists of: $1,077 - $36 million for our FFELP portfolio related to an extension of the portfolio - $24 million of additional provision related to the Consumer Lending
Slide 7: Business Processing – 3Q 2023 Core Earnings Results
Business Processing – 3Q 2023 Core Earnings Results 3Q 23 3Q 22 • Net income was $9 million, unchanged from the year-ago quarter Revenue $85 million $79 million • Revenue was $85 million, $6 million higher than 3Q22 Operating Expense $73 million $67 million - Revenue from ongoing government and heal
Slide 8: 3Q 2023 Capital Allocation
3Q 2023 Capital Allocation • Our Adjusted Tangible Equity 1 ratio of 8.7% is within our targeted range of 8-9% • We distributed $94 million, or 165% of Core net income 1, to shareholders through dividends and share repurchases • We ended the quarter with 84% of our Total Education Loan Portfolio fun
Slide 9: 3Q 2023 Total Expenses
3Q 2023 Total Expenses ($ in millions) $250 $237 $215 • We are focused on becoming more efficient across all segments $3 $47 $200 $21 • Operating expenses for the quarter $4 were $233 million compared to $194 million a year ago quarter $67 • This quarter’s results include $150 $73 $47 million of reg
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 September 30, 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 1
Slide 11: Differences Between GAAP and Core Earnings
Differences Between GAAP and Core Earnings Quarters Ended Core Earnings adjustments to GAAP: Sep. 30, Sep. 30, (Dollars in Millions) 2023 2022 GAAP net income $79 $105 Net impact of derivative accounting (37) (33) Net impact of goodwill and acquired intangible assets 3 10 Net income tax effect 12 5
Slide 12: 3Q 2023 GAAP to Core Earnings
3Q 2023 GAAP to Core Earnings • We evaluate our business segments on a basis that differs from GAAP ($ 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
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
Slide 14: Appendix
Appendix Confidential and proprietary information © 2023 Navient Solutions, LLC. All rights reserved. 14
Slide 15: Federal Education Loans – Overview
Federal Education Loans – Overview • FFELP portfolio of $40 billion - No newly originated FFELP loans since 2010 ($ in millions) - 97-100% of principal and interest 5-Year Projected Annual FFELP Cash Flows 4 guaranteed by U.S. government $800 • Holding 50 basis points of equity capital against portf
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 4 - In-school loan originations starting in 2019 and the seasoned loan portfolio • Holding equi
Slide 17: Total Education Loan Portfolio – Projections
Total Education Loan Portfolio – Projections • Total Education Loan portfolio of $57 billion, undiscounted projected cash flows are: ($ in millions) - $6.1 billion through end of 2027 - $13.4 billion generated over 5-Year Projected Annual Education Portfolio Cash Flows 4 $1,800 20 years • We continu
Slide 18: Business Processing – Revenue
Business Processing – Revenue ($ 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 $-
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
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
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 third quarter 2023 earnings release for descriptions and reconciliation. 2. After rounding, year to date 2023 combined regulatory and restructuring costs were $74 million. After roundin
Slide 22: Confidential and proprietary information © 2023 Navient Solutions, LLC. All rights reserved.
Confidential and proprietary information © 2023 Navient Solutions, LLC. All rights reserved. 22