Navient Corporation · NASDAQ:NAVI
Navient — Q2 2016 Earnings Presentation
18 slides from Navient's earnings presentation, Jul 20, 2016
Slide 1: 2016 2nd Quarter Earnings Call Presentation
2016 2nd Quarter Earnings Call Presentation July 20, 2016
Slide 2: Forward-Looking Statements; Non-GAAP Financial Measures
Forward-Looking Statements; Non-GAAP Financial Measures The following information is current as of July 20, 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: 2nd Quarter Highlights
2nd Quarter Highlights • Generated adjusted “Core Earnings” of $0.48 per share1 • Completed three FFELP ABS transactions totaling $1.8 billion • Retired or repurchased $255 million in unsecured debt • Repurchased 13.6 million common shares - Repurchased 9% of common shares year to date • Private Edu
Slide 4: Operating Results: Core Earnings Basis
Operating Results “Core Earnings” Basis (In millions, except per share amounts) Q2 16 Q1 16 Q2 15 Adjusted Core EPS before regulatory-related costs $0.48 $0.44 $0.40 Regulatory-related costs ($0.01) ($0.01) ($0.00) Reported Core EPS $0.47 $0.43 $0.40 Operating expenses (excluding regulatory-related
Slide 5: FFELP Loans Segment
FFELP Loans Segment “Core Earnings” Basis (In millions) Q2 16 Q1 16 Q2 15 Net income $68 $66 $93 Average FFELP Loans $93,900 $95,721 $101,305 Net interest margin 0.85% 0.81% 0.81% Annualized charge-off rate 0.10% 0.08% 0.05% Greater than 90-day delinquency rate 7.2% 7.0% 8.4% • Acquired $623 million
Slide 6: Private Education Loans Segment
Private Education Loans Segment “Core Earnings” Basis (In millions) Q2 16 Q1 16 Q2 15 Net income $57 $61 $22 Average Private Education Loans $25,700 $26,577 $29,207 Net interest margin 3.50% 3.56% 3.55% Provision for loan losses $100 $104 $191 Charge-offs1 $127 $144 $179 Annualized charge-off rate1
Slide 7: Private Education Loans Segment: Continued Improving Credit Quality
Private Education Loans Segment Continued Improving Credit Quality Private Education Loan Charge-Off Rate by Segment Private Education Loan Total Delinquencies by Segment 12% 30% 9.9% 25.8% Total Delinquency Rate 10% 9.2% 25% 20.2% Charge-off Rate 8% 6.8% 6.9% 20% 16.2% 15.1% 5.3% 12.5% 6% 15% 11.2%
Slide 8: Business Services Segment
Business Services Segment “Core Earnings” Basis (In millions) Q2 16 Q1 16 Q2 15 Net income $81 $75 $91 Intercompany loan servicing revenue $99 $101 $108 Third-Party Loan servicing revenue $51 $54 $47 Asset recovery & business processing revenue $101 $90 $99 Federal Loans serviced ($’s in billions) $
Slide 9: Q2 2016 Capital Markets Summary
Q2 2016 Capital Markets Summary • Acquired $646 million of student loans • Issued $1.8 billion of FFELP ABS • Extended the legal final maturity dates for Navient-sponsored FFELP securitization trusts totaling $3.6 billion of bonds - In total, Navient has extended the legal final maturity dates for $
Slide 10: GAAP Results
GAAP Results (In millions, except per share amounts) Q2 16 Q1 16 Q2 15 Net income $125 $181 $182 EPS $0.38 $0.53 $0.47 Operating expenses $230 $247 $225 Provision $110 $111 $198 Average Student Loans $119,600 $122,298 $130,512 Confidential and proprietary information © 2016 Navient Solutions, Inc. A
Slide 11: NAVIENT.
NAVIENT.
Slide 12: Appendix
Appendix Confidential and proprietary information © 2016 Navient Solutions, Inc. All rights reserved. 12
Slide 13: 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 Flows1 • Reduced unsecured debt by $1.2 billion and returned $’s in Billions $0.5 billion to shareholders through share repurchases FFELP Cash Flows 6/30/16 12/31/15 and dividend
Slide 14: Allowance for Loan Loss – Core Earnings Basis
Private Education Loans Segment Allowance for Loan Loss – Core Earnings Basis June 30, 2016 June 30, 2015 Ending Allow ance as Ending Allow ance as Allow ance Balance % of Ending Balance Allow ance Balance % of Ending Balance Non-TDR Loans $ 247 $ 14,974 1.6% $ 276 $ 18,830 1.5% TDR Loans 1,163 10,8
Slide 15: 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 16: 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
Slide 17: Managing Unsecured Debt Maturities
Managing Unsecured Debt Maturities (par value, $ in billions) $3.2 $3.1 $2.8 $2.5 $2.5 $2.4 $1.8 $2.1 $2.1 $1.2 $1.4 $1.0 $1.0 $0.6 $0.6 $0.8 $0.8 $0.1 2016 2017 2018 2019 2020 2021 2022 2023 2024+ As of June 30, 2015 As of June 30, 2016 Long Term Conservative Funding Approach • Important to maintai
Slide 18: Differences between Core Earnings and GAAP
Differences between “Core Earnings” and GAAP Quarters Ended June 30, March 31, June 30, “Core Earnings” adjustments to GAAP: 2016 2016 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 spi