Navient Corporation · NASDAQ:NAVI
Navient — SFIG 2017
34 slides from Navient's conference presentation, February 2017
Slide 1: SFIG 2017 Navient Investor Presentation
SFIG 2017 Navient Investor Presentation February 2017
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, 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, 2016 (the “2016 Form 10-K”),
Slide 3: Navient company overview
• Navient provides asset management and business processing services to 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. - $111 billion education loan portf
Slide 4: Opportunities for Growth in 2017 and Beyond
Opportunities for Growth in 2017 and Beyond Legacy Education Loans • Loan servicing • Portfolio acquisitions • Default prevention & portfolio management Business Processing Solutions • Healthcare • State and Municipal • Federal Asset Generation • Refinancing Education Loans • Non-compete for new Pri
Slide 5: High Quality, Well Seasoned Education Loan Portfolio
High Quality, Well Seasoned Education Loan Portfolio FFELP Portfolio Private Education Loan Portfolio Total Education Loan Portfolio • Largest holder of FFELP loans with $111 Billion • Largest holder of Private Education over $87 billion outstanding loans with over $23 billion outstanding 79% • Port
Slide 6: FFELP Loans Segment "Core Earnings" Basis
FFELP Loans Segment “Core Earnings” Basis Selected Financial Information and Ratios Performance ($ In millions) Q4 16 Q4 15 2016 2015 • Acquired $3.5 billion of FFELP student loans in 2016 Net income $68 $71 $272 $308 Average FFELP Loans $88,914 $97,472 $92,497 $100,421 • Q4 16 net interest margin i
Slide 7: FFELP Loans Segment Credit Quality
FFELP Loans Segment Credit Quality “Core Earnings” Basis ($'s in millions) FFELP Education Loan Portfolio December 31, 2016 December 31, 2015 Balance % Balance % Loans in-school/grace/deferment (1) $5,871 $8,257 Loans in forbearance(2) 10,490 13,298 Loans in repayment and percentage of each status L
Slide 8: Private Education Loans Segment "Core Earnings" Basis
Private Education Loans Segment “Core Earnings” Basis Selected Financial Information and Ratios Performance ($ In millions) Q4 16 Q4 15 2016 2015 • Acquired $225 million of Private Education loans in 2016 Net income $41 $56 $219 $233 • Q4 16 net interest margin decreased 53 basis points from the Ave
Slide 9: Private Education Loans Segment Credit Quality
Private Education Loans Segment Credit Quality “Core Earnings” Basis ($'s in millions) Private Education Loan Portfolio December 31, 2016 December 31, 2015 Balance % Balance % Loans in-school/grace/deferment (1) $1,393 $2,040 Loans in forbearance(2) 790 973 Loans in repayment and percentage of each
Slide 10: Business Services Segment "Core Earnings" Basis
Business Services Segment “Core Earnings” Basis Selected Financial Information and Ratios Performance (In Millions) Q4 16 Q4 15 2016 2015 • Non-education fee revenue grew to $174 million, a 77% increase from the prior year Net income $71 $81 $308 $338 Number of accounts serviced for 6.2 6.3 6.2 6.3
Slide 11: Funding & Liquidity
Funding & Liquidity Confidential and proprietary information © 2017 Navient Solutions, LLC. All rights reserved. 11
Slide 12: Conservative Long Term Approach to Capital Management
Employ a Conservative Long Term Approach to Capital Management • Asset backed securitizations (ABS) are our primary source of funding - Issued $6.3 billion1 of ABS - 61% of the Private Education Loans are funded to term with non-recourse ABS - 81% of the FFELP Loans are funded to term with non-recou
Slide 13: Secured Funding
Secured Funding 2016 Issuance ($mm)1 • Navient is among the largest issuers of 1 Ford $11,033 Auto / Floorplans ABS globally, having issued over $280 2 AmeriCredit / GM Financial $9,106 Auto / Floorplans billion of Private Education and FFELP 3 Santander2 $8,993 Auto ABS transactions to date 4 Chase
Slide 14: FFELP Student Loan ABS
FFELP Student Loan ABS Summary of Key Terms for a Typical FFELP ABS Transaction Term Summary • Non-Consolidation Loans: 6% CPR Pricing Prepayment Speed: • Consolidation Loans : 4% CPR • Rehabilitated Loans : 8% CPR (Collateral pool consisting of 100% rehabilitated loans) Government Guarantee %: 97-1
Slide 15: Recent FFELP ABS Transactions
Recent FFELP ABS Transactions NAVSL 2017-1 NAVSL 2016-7 Pricing Date: February 8, 2017 October 26, 2016 Settlement Date: February 16, 2017 November 3, 2016 Issuance Amount: $1,003M $896M US Govt. Guaranteed US Govt. Guaranteed Collateral: FFELP Stafford, Plus and Consolidation Loans FFELP Stafford,
Slide 16: Quarterly CPR: Stafford & PLUS Loan Prepayments
Navient Stafford & PLUS Loan Prepayments • Annualized CPRs for Stafford/PLUS ABS trusts have decreased from pre-2008 levels as incentives for borrowers to consolidate have declined • Higher prepayment activity in mid-2012 was related to the short term availability of the Special Direct Consolidation
Slide 17: 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 a borrowers’ loans • Higher prepayment activity in mid-2012 was related to the short term availability of the Spe
Slide 18: Legal Final Maturity Date - Navient Support Activity
Legal Final Maturity Date - Navient Support Activity • Enhanced disclosure of loan performance data • Expanded historical data published quarterly on the investor website relating to income-driven repayment, deferment, and forbearance • In October 2015, released FFELP repayment data package disclosi
Slide 19: Legal Final Maturity Date Amendments
Legal Final Maturity Date Amendments Amendment Legal Final Maturity Date Legal Final Maturity Date Extension Issuer Trust Bond Bond Balance1 Effective Date (Pre Amendment) (Post Amendment) (Years) NAVSL 2014-2 A 12/2/2015 $ 224,544,127 3/25/2043 3/25/2083 40 NAVSL 2014-2 B 12/2/2015 $ 7,000,000 6/25
Slide 20: Legal Final Maturity Date Amendments Continued
Legal Final Maturity Date Amendments Continued Legal Final Maturity Legal Final Maturity Amendment Extension Issuer Trust Bond Bond Balance1 Date Date Effective Date (Years) (Pre Amendment) (Post Amendment) SLM 2003-14 A7 6/6/2016 $ 327,810,000 10/25/2038 10/26/2065 27 SLM 2003-14 B 6/6/2016 $ 36,27
Slide 21: 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 22: Private Education Loan ABS
Private Education Loan ABS Summary of Key Terms for a Typical Private ABS Transaction Term Summary Pricing Prepayment Speed: 4% CPR Issuance Type: Fixed rate or floating rate tied to 1 month LIBOR Subordinate interest trigger and subordinate principal trigger shuts off interest and principal to Trig
Slide 23: Navient Private Education Trusts
Navient Private Education Trusts Summary Information Sallie Mae Navient 2011 - 2016YTD Issuance Program SLM SLM SLM SLM SLM SLM SLM SLM SLM SLM SLM SLM NAV NAV NAV NAV NAV NAV 11-A 11-B 11-C 12-A 12-B 12-C 12-D 12-E 13-A 13-B 13-C 14-A 14-CT 14-A 15-A 15-B 15-C 16-A Bond Amount ($mil) 562 825 721 54
Slide 24: Private Education Loan Trusts Prepayment Analysis
Navient Private Education Loan Trusts – Prepayment Analysis • Constant prepayment rates increased in 2007 due to the introduction of Private Education Consolidation loans, then declined following our decision to suspend our consolidation loan program in 2008 14% Constant Prepayment Rate (CPR) 12% 10
Slide 25: Navient Portfolio Transition to Seasoned Collateral
Navient Portfolio Transition to Seasoned Collateral • Securitized collateral will continue to season given the company transitioned from originations to portfolio acquisition and management • Most defaults occur early in repayment; loan performance improves as loans season • As of December 2016, the
Slide 26: Private Education Loans Charge-Off and Delinquency Rates
Private Education Loans “Core Earnings” Basis Private Education Loan Charge-Off Rate by Segment Private Education Loan Total Delinquencies by Segment 12% 11.1% 25% 23.7% 21.9% 10% 9.2% 18.1% Total Delinquency Rate 20% 7.7% 15.3% 6.9% 15.2% 8% Charge-off Rate 15% 5.4% 6% 10.4% 9.3% 3.9% 10% 8.1% 7.4%
Slide 27: Navient Private Education Loan Programs
Navient Private Education Loan Programs Undergraduate/Graduate/ Smart Option Direct-to-Consumer (DTC) Consolidation Career Training Med/Law/MBA Origination Channel School School Direct-to-Consumer Lender School Typical Borrower Student Student Student College Graduates Student Typical Co-signer Pare
Slide 28: Appendix
Appendix Confidential and proprietary information © 2017 Navient Solutions, LLC. All rights reserved. 28
Slide 29: Navient Helps Borrowers Successfully Repay Their Loans
In Its Role As Student Loan Servicer, Navient Helps Borrowers Successfully Repay Their Loans Confidential and proprietary information © 2017 Navient Solutions, LLC. All rights reserved. 29
Slide 30: The Majority Of Student Loan Balances Are Less Than $20,000
The Majority Of Student Loan Balances Are Less Than $20,000 Distribution Of Borrowers By Average Balance, 2015 Less than $5,000 16% 19% $5,000-$9,999 $10,000-$19,999 $20,000-$39,999 $40,000 or more 23% 19% 23% College Board, "Distribution Of Borrowers By Amount Of Outstanding Education Debt, 2015,,"
Slide 31: GAAP Results
GAAP Results (In millions, except per share amounts) Q4 16 Q4 15 2016 2015 Net income $145 $283 $681 $984 EPS $0.48 $0.73 $2.12 $2.58 Operating expenses $246 $235 $951 $918 Provision $102 $120 $429 $581 Average Student Loans $113,151 $125,023 $117,858 $129,224 Confidential and proprietary informatio
Slide 32: Differences between "Core Earnings" and GAAP
Differences between “Core Earnings” and GAAP Quarters Ended Years Ended Dec. 31, Dec. 31, Dec. 31, Dec. 31, “Core Earnings” adjustments to GAAP: 2016 2015 2016 2015 GAAP net income $145 $283 $681 $984 Net impact of derivative accounting (50) (186) (212) (543) Net impact of goodwill and acquired inta
Slide 33: 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 34: NAVI=NT.
NAVI=NT.