Navient Corporation · NASDAQ:NAVI
Navient — Q3 2024 Earnings Presentation
23 slides from Navient's earnings presentation, Oct 30, 2024
Slide 1: 3Q 2024 Earnings Call Presentation
3Q 2024 Earnings Call Presentation Confidential and proprietary information © 2024 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 Maximize the cash help borrowers manage loans Enhance the value generate targeted returns, and explore opportunities to deepen relationsh
Slide 3: Strategic Actions Update
Strategic Actions Update Following an in-depth business review conducted by the board and management, on Jan. 30, 2024, Navient announced strategic actions to simplify the company, reduce expense base and enhance flexibility. Below is a 3Q24 update. • Implemented variable cost outsourced servicing m
Slide 4: 3Q 2024 Results
3Q 2024 Results “The third quarter was highly productive as we reached variable-cost economics on our loan servicing activities, GAAP Core Earnings 1 completed the sale of our healthcare business, and continued to reduce our corporate expenses. We saw healthy Revenue (Before Provision) $396 million
Slide 5: Federal Education Loans – 3Q 2024 Core Earnings Results
Federal Education Loans – • Net income was $27 million compared to $94 million 3Q 2024 Core Earnings Results • Net interest income decreased $121 million primarily due to: - the $48 million benefit in 3Q23 3Q24 3Q23 related to the continued extension of a portion of the portfolio - the paydown of th
Slide 6: FFELP Prepayments Accelerate Cash Flow
FFELP Prepayments Accelerate Cash Flow There is a short term lag between when loan prepayments occur and when the cash received is applied to Asset Backed Securitization debt paydowns. • The Impacts of FFELP Loan Prepayments $3,000 - Loan prepayments accelerate loan principal cash flows $2,500 - The
Slide 7: Consumer Lending – 3Q 2024 Core Earnings Results
Consumer Lending – • Originated $500 million of Private Education Loans compared to $382 million, a 31% increase 3Q 2024 Core Earnings Results - Refinance Loan originations were $262 million compared to $178 million - In-school Loan originations were $238 million compared to $204 million 3Q24 3Q23 •
Slide 8: 3Q 2024 Allowance for Loan Losses
3Q 2024 Allowance for Loan Losses ($ in millions) $898 $836 • Our total provision expense was $42 million in 3Q24 • This consists of: - $(5) million for our FFELP portfolio - $32 million of additional provision related to the Consumer Lending portfolio, $21 million of which was related to increasing
Slide 9: Business Processing – 3Q 2024 Core Earnings Results
Business Processing – 3Q 2024 Core Earnings Results • Revenue was $289 million, 3Q24 3Q23 $204 million higher, due to the $219 million gain on the sale of our Total Fee Revenue $70 million $85 million healthcare business • Net income was $178 million Total Revenue (includes gain compared to $9 milli
Slide 10: 3Q 2024 Total Expenses
3Q 2024 Total Expenses ($ in millions) $260 $237 • We are focused on becoming more $240 efficient across all segments $220 $47 $202 • Operating expenses for the quarter $200 $14 were $184 million compared to $4 $233 million a year ago quarter $180 $18 $160 • Operating expenses include $73 $14 millio
Slide 11: 3Q 2024 Capital Allocation
3Q 2024 Capital Allocation • Adjusted Tangible Equity 1 ratio of 9.8% • We distributed $50 million in 3Q24 to shareholders through dividends and share repurchases - we plan to more than double our share repurchases in the fourth quarter compared to the third quarter • We ended the quarter with 83% o
Slide 12: 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, 2024 (unless otherwise noted) and should be read in connection with Navient Corporation’s “Navient” Annual Report on 2023 Form 10-K for the year end December 31, 2023 (the “2023 Form 1
Slide 13: 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) 2024 2023 GAAP net income $(2) $79 Net impact of derivative accounting 56 (37) Net impact of goodwill and acquired intangible assets 140 3 Net income tax effect (34) 1
Slide 14: 3Q 2024 GAAP to Core Earnings
3Q 2024 GAAP to Core Earnings ($ in millions) • We evaluate our business segments on a basis that differs from GAAP • 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 15: Appendix
Appendix Confidential and proprietary information © 2024 Navient Solutions, LLC. All rights reserved. 15
Slide 16: Loan Portfolio Cash Flows Greater than Debt Outstanding
Loan Portfolio Cash Flows Greater than Debt Outstanding • Projected loan portfolio cash flows as of September 30, 2024 - Principally securitization trust distributions • Net interest income • Total projected loan portfolio • Servicing fees undiscounted cash flows after • Return of initial equity rep
Slide 17: Federal Education Loans – Overview
Federal Education Loans – Overview • FFELP portfolio of $32 billion - no newly originated FFELP loans since 2010 ($ in millions) $800 - 97-100% of principal and interest 5-Year Projected Annual FFELP Cash Flows 2 guaranteed by U.S. government • Holding 50 basis points of equity capital against portf
Slide 18: Consumer Lending – Overview
Consumer Lending – Overview • Private Education Loan portfolio of $16 billion - Refinance education loan ($ in millions) originations since 2017 $1,000 5-Year Projected Annual Private Education Cash Flows 2 - In-school loan originations starting in 2019 and the seasoned loan portfolio • Holding equi
Slide 19: Total Education Loan Portfolio – Projected Cash Flows
Total Education Loan Portfolio – • Total Education Loan portfolio of $48 billion, undiscounted projected Projected Cash Flows cash flows are: ($ in millions) - $5.4 billion through end of 2028 $1,500 5-Year Projected Annual Education Portfolio Cash Flows 2 - $12.1 billion generated over 20 years • W
Slide 20: 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 21: 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 22: Footnotes
Footnotes 1. Item is a Non-GAAP Financial Measure. 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 bo
Slide 23: Confidential and proprietary information © 2024 Navient Solutions, LLC. All rights reserved.
Confidential and proprietary information © 2024 Navient Solutions, LLC. All rights reserved. 23