Slide 1: 2021 4th Quarter Investor Deck
2021 4th Quarter Investor Deck February 28, 2022
Slide 2: Forward-Looking Statements; Non-GAAP Financial Measures
Forward-Looking Statements; Non-GAAP Financial Measures The following information is current as of December 31, 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, 2021 (the “2021 Form 10-K”),
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
Slide 4: Delivering Long-term Value
Delivering Long-term Value Federal Education Loans Consumer Lending Business Processing Successfully assisted Originated $6.0 billion of Navient employees continue borrowers in returning to high-quality Private Education to support our state and repayment Loans, meeting our mid-teens municipal
Slide 5: Continued Progress to Simplify Our Business
Continued Progress to Simplify Our Business Department of Education Resolution of Legal Matters Efficiency Initiatives Servicing Contract Transfer with State AGs and Improvements Successfully exited Reached agreements with Managing operations to a Department of Education loan state AGs to reso
Slide 6: 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
Slide 7: Asset Generation Drives Meaningful Returns
Asset Generation Drives Meaningful Returns Since 2014 Separation 1 Originated over Loan Our competitive franchise, with its highly attractive return Originations $18 billion Private profile, leverages our core expertise to drive profits and growth Education Loans Loan Portfolios Acquired Accreti
Slide 8: Originating Education Loans is an Attractive Opportunity
Originating Education Loans is an Attractive Opportunity Sizable Market With Attractive Yields 1 Leveraging Our Existing Infrastructure to Generate Value Estimated Total Market Annual Originations and Yields ($’s in billions) • Private Education Refinance Loans: Grad PLUS - Using our data and expert
Slide 9: 2022 Guidance
2022 Guidance Full Year 2022 Guidance Core Earnings Return on Equity 1 Mid to High Teens Core Earnings Efficiency Ratio 1 ~54% Adjusted Tangible Equity Ratio 1 ~6% Net Interest Margin – Federal Education Loan Segment Mid 90’s Charge-off Rate – Federal Education Loan Segment Less than 0.10% Net Inter
Slide 10: Funding, Liquidity, & Cashflow
Funding, Liquidity, & Cashflow © 2022 Navient Solutions, LLC. All rights reserved. 10
Slide 11: Q4 2021 Financing and Capital Management
Q4 2021 Financing and Capital Management Capital Management Financing ✓ Returned $175 million through share Issued $2.0 billion of Term Education Loan repurchases and dividends ABS transactions • Paid dividends of $25 million • Repurchased 7.4 million shares for Reduced unsecured debt by $1.4 bi
Slide 12: 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
Slide 13: Private Education Loan ABS Transactions
Private Education Loan ABS Transactions NAVSL 2022-A NAVSL 2021-G Pricing Date: February 1, 2022 November 17, 2021 Settlement Date: February 10, 2022 November 23, 2021 Issuance $951,900,000 $1,011,400,000 Amount: Collateral: Private Education Refi Loans Private Education Refi Loans Prepayment 20% CP
Slide 14: Lifetime Cash Flows Will Exceed Original Projections
Lifetime Cash Flows Will Exceed Original Projections Navient’s Student Loan Portfolios Continues to Exceed Expectations 1 ($’s in Billions) $25.9 $8.0 Life of Loan Projections Q4 2017 Q4 2021 Net Cash Flow Projection at Q4 2021 Total FFELP Cash Flows $12.7 $7.8 Total Private Education Cash Flows $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 $2.8 billion of cash flows in FY 2021 FFELP Cash Flows 12/31/21 Secured • Reduced unsecured debt by $1.4 billion in FY 2021 Residual (including
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 $1.2 $1.1 $1.2 $1.1 $1.0 $1.0 $1.0 $0.9 $1.0 $0.9 $0.8 $0.8 ($’s in Billions) ($’s in Billions) $0.8 $0.7 $0.8 $0.7 $0.6 $0.6 $0
Slide 17: FFELP Cash Flows are Highly Predictable
FFELP Cash Flows are Highly Predictable $’s in millions as of 12/31/2021 Remaining 2022 2023 2024 2025 2026 2027 2028 2029 Projected FFELP Average Balance $49,429 $44,046 $39,034 $34,376 $29,991 $25,844 $21,983 $18,387 Projected Excess Spread $598 $538 $473 $420 $388 $347 $302 $264 Projected Servici
Slide 18: Secured Cash Flow
Secured Cash Flow $ in Millions 2021 2020 2019 2018 FFELP Term Securitized Servicing (Cash Paid) $ 204 $ 227 $ 253 $ 288 Other Secured FFELP 1, 2 Net Cash Flow 855 830 969 1,290 Total FFELP $ 1,059 $ 1,057 $ 1,223 $ 1,577 Private Credit Term Securitized Servicing (Cash Paid) $ 119 $ 124 $ 135 $ 147
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
Slide 20: Managing Unsecured Debt Maturities
Managing Unsecured Debt Maturities (par value, $ in billions) $1.8 $1.5 $1.3 $1.4 $1.4 $1.1 $1.1 $1.0 $0.7 $0.7 $0.6 $0.6 $0.5 $0.5 $0.5 $0.2 $0.0 $0.0 $0.0 $0.0 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031+ As of December 31, 2020 As of December 31, 2021 Long-term Conservative Funding Approach
Slide 21: FFELP ABS
FFELP ABS © 2022 Navient Solutions, LLC. All rights reserved. 21
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
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
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
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
Slide 26: Private Education Loan ABS
Private Education Loan ABS © 2022 Navient Solutions, LLC. All rights reserved. 26
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
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
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 $15k avg orig bal,
Slide 30: Navient Private Education Trusts
Navient Private Education Trusts As of the respective cutoff dates for each transaction 2020-2022YTD Navient Issuance Program NAV NAV NAV NAV NAV NAV NAV NAV NAV NAV NAV NAV NAV NAV NAV NAV NAV 20-A 20-B 20-C 20-D 20-E 20-F 20-G 20-H 20-I 21-A 21-B 21-C 21-D 21-E 21-F 21-G 22-A Bond Amount ($mil) 62
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
Slide 32: Navient Corporation Appendix
Navient Corporation Appendix © 2022 Navient Solutions, LLC. All rights reserved. 32
Slide 33: Operating Results: Core Earnings Basis
Operating Results “Core Earnings ” Basis 1 Selected Financial Information and Ratios 4th Quarter and Full Year 2021 Highlights (In millions, except • Adjusted Core Earnings 1 per share decreased to $0.78 per share amounts) Q4 21 Q4 20 2021 2020 compared to $0.97 in the year ago quarter - Q4 21 inclu
Slide 34: Federal Education Loans Segment
Federal Education Loans Segment “Core Earnings” Basis Selected Financial Information and Ratios 4th Quarter and Full Year 2021 Highlights ($ In millions) Q4 21 Q4 20 2021 2020 Federal Education Segment net interest margin 0.99% 1.06% 0.99% 0.99% • Q4 21 Net Interest Margin: 99 basis points FFELP Loa
Slide 35: Consumer Lending Segment
Consumer Lending Segment “Core Earnings” Basis Selected Financial Information and Ratios 4th Quarter and Full Year 2021 Highlights ($ In millions) Q4 21 Q4 20 2021 2020 Consumer Lending Segment net interest margin 2.76% 3.02% 2.92% 3.20% • Q4 21 Net Interest Margin: 276 basis points • Q4 21 Annualiz
Slide 36: Business Processing Segment
Business Processing Segment “Core Earnings” Basis Selected Financial Information and Ratios 4th Quarter and Full Year 2021 Highlights ($ In millions) Q4 21 Q4 20 2021 2020 Business Processing Government Services $54 $58 $258 $191 • Q4 21 EBITDA Margin 1: 20% Healthcare RCM Services $57 $35 $230 $113
Slide 37: Other Segment
Other Segment “Core Earnings” Basis 2021 Unallocated Shared Services Expenses Shared Services Overview $229 million • Full year 2021 Regulatory Expense of $233 million included $205 million related to the agreements with State Attorneys CEO, Corporate Marketing & Other General 4% • Shared services a
Slide 38: 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
Slide 39: 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
Slide 40: 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
Slide 41: 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
Slide 42: Differences Between Core Earnings And GAAP
Differences Between Core Earnings And GAAP Quarters Ended Years Ended Core Earnings adjustments to GAAP: Dec. 31, Dec. 31, 2021 2020 (Dollars in Millions) 2021 2020 GAAP net income (loss) ($11) $186 $717 $412 Net impact of derivative accounting (85) (28) (235) 265 Net impact of goodwill and acquired
Slide 43: 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
Slide 44: NAVIENT.
NAVIENT.