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美國

證券交易委員會

華盛頓特區20549

形式 10-Q

(Mark一）

☑

 

根據1934年《證券交易法》第13或15（d）條的季度報告

截至季度 9月30日，2024

或

☐

 

根據1934年《證券交易所法》第13或15（d）條提交的過渡報告

從 到

委員會文件號： 001-36228

Navient Corporation

（章程中規定的註冊人的確切名稱）

德拉瓦

46-4054283

（州或其他司法管轄區

成立或組織）

（國稅局僱主

識別號）

 

 

13865日出Valley Drive, 赫恩登, 維吉尼亞 20171

(703) 810-3000

（主要行政辦公室地址）

（電話號碼）

(703) 810-3000

（註冊人的電話號碼，包括地區代碼）

（以前的名稱、以前的地址和以前的財年，如果自上次報告以來發生了變化）

通過勾選標記確認登記人是否：（1）在過去12個月內（或在登記人被要求提交此類報告的較短期限內）提交了1934年證券交易法第13或15（d）條要求提交的所有報告，以及（2）在過去90天內是否遵守此類提交要求. 是的 ☑ 沒有 ☐

勾選註冊人是否已以電子方式提交了根據S-t法規第405條（本章第232.405條）要求提交的所有交互數據文件 在過去12個月內（或登記人被要求提交此類文件的較短期限內）。 是的 ☑ 沒有 ☐

通過複選標記來確定註冊人是大型加速申報人、加速申報人、非加速申報人、小型報告公司還是新興成長型公司。請參閱《交易法》第120條第2條中「大型加速申報人」、「加速申報人」、「小型報告公司」和「新興成長型公司」的定義。（勾選一項）：

 

大型加速文件夾

☒

加速編報公司

☐

非加速歸檔

☐

小型上市公司

☐

新興成長型公司

☐

如果是新興成長型公司，請通過勾選標記表明註冊人是否選擇不利用延長的過渡期來遵守根據《交易法》第13（a）條規定的任何新的或修訂的財務會計準則。 ☐

通過勾選標記檢查註冊人是否是空殼公司（定義見《交易法》第120條第2款）。是的 ☐ 沒有 ☑

根據該法第12（b）條登記的證券。

 

每個班級的標題

 

交易

符號

 

註冊的每個交易所的名稱

普通股，面值每股0.01美金

 

Navi

 

納斯達克全球精選市場

2043年12月15日到期的6%優先票據

 

JSM

 

納斯達克全球精選市場

優先股購買權

 

沒有一

 

納斯達克全球精選市場

截至2024年9月30日，有 107,363,480 已發行普通股股份。

 

 

 

 

 

img127493485_0.jpg

目錄

組織我們的10-Q表格

我們的10-Q表格（Form 10-Q）季度報告中內容的順序和呈現方式與傳統的證券交易委員會（SEC）表格10-Q格式不同。我們的格式旨在提高可讀性並更好地呈現我們如何組織和管理業務。有關傳統SEC Form 10-Q格式的交叉引用索引，請參閱附錄A「Form 10-Q交叉引用索引」。

 

頁面

Number

 

預測性與警示性聲明

1

非GAAP財務指標的使用

2

 

 

業務

3

我們的業務概述和基礎

3

近期業務發展

5

我們如何組織業務

5

 

 

管理層對財務狀況和經營成果的討論和分析

7

精選歷史財務信息和比率

7

季度回顧

8

經營運績

10

分部業績

14

財務狀況

21

流動資金及資本資源

26

關鍵會計政策和估計

29

非gaap財務指標

30

 

 

法律訴訟

40

危險因素

40

市場風險的定量和定性披露

41

 

 

股權證券的未登記銷售和收益的使用

44

控制和程式

46

展品

47

財務報表

48

簽名

90

附錄A -表格10-Q交叉引用索引

91

 

 

 

 

 

 

預測性與警示性聲明

該表格10-Q包含基於管理層截至本報告日期的當前預期的「前瞻性」陳述和其他信息。非歷史事實的陳述，包括有關我們的信念、觀點或期望的陳述以及假設或依賴於未來事件的陳述，都是前瞻性陳述，通常包含「期望」、「預期」、「意圖」、「計劃」、「相信」、「尋求」、「看到」、「將」、「會」、「可能」、「可能」、「應該」、「目標」等詞語。此類陳述基於管理層截至本提交日期的預期，並涉及許多風險和不確定性，可能導致我們的實際結果與前瞻性陳述中表達或暗示的結果存在重大差異。此類風險和不確定性在標題為「風險因素」的部分中進行了更全面的討論，包括但不限於以下內容：

•
一般經濟狀況，包括通貨膨脹和利率對Navient及其客戶和客戶以及對第三方信譽的潛在影響;
•
我們持有的教育貸款違約增加;
•
教育貸款的意外還款趨勢，包括因新解釋或現行法律、規則或法規或未來法律、行政命令或其他旨在鼓勵或要求合併的政策舉措的執行和實施時間而導致的提前還款或延期，廢除現有收入或創造額外收入-基於還款或債務免除計劃或制定其他政策和計劃或延長之前宣布的最後期限，這可能會增加或減少教育貸款的預付利率，並加速或減緩減少我們證券化信託中債券的償還;
•
我們的信用評級降低;
•
適用法律、規則、法規和政府政策的變更以及擴大監管和政府監督;
•
一般利率環境的變化，包括任何相關貨幣市場指數利率的可用性或相關貨幣市場指數利率與我們資產定價的利率之間的關係;
•
我們資產的利率特徵並不總是與我們的融資安排相匹配;
•
不利的市場狀況或無法有效管理我們的流動性風險或獲取流動性可能會對我們產生負面影響;
•
資本市場資金的成本和可用性;
•
我們賺取最低收入的能力以及我們相對於最低收入進行對沖的能力取決於未來的利率環境，因此是可變的;
•
我們使用衍生品使我們面臨信貸和市場風險;
•
我們有能力持續有效地將我們的成本結構與我們的業務運營保持一致;
•
我們的作業系統、基礎設施或信息技術系統的故障或破壞;
•
任何第三方未能向我們提供材料服務或產品，或者其中一方違反或違反法律;
•
我們與政府客戶的合作使我們面臨政府承包環境固有的額外風險;
•
我們追求的收購、戰略舉措和投資或資產剝離;
•
股東行動主義;和
•
聲譽風險和社會因素。

 

 

鑑於這些風險和不確定性，請讀者不要過度依賴此類前瞻性陳述。敦促讀者仔細審查和考慮本10-Q表格以及我們不時向SEC提交的其他文件中披露的各種披露，這些披露了可能影響我們業務的風險和不確定性。

編制綜合財務報表還需要管理層做出某些估計和假設，包括對未來事件的估計和假設。這些估計或假設可能被證明是不正確的，並且實際結果可能存在重大差異。本報告中包含的所有前瞻性陳述均受到這些警示性陳述的限制，並且僅於本報告之日做出。除法律要求外，我們不承擔任何更新或修改這些前瞻性陳述的義務。

通過這次討論和分析，我們打算為讀者提供一些關於我們的管理層如何看待我們的合併財務報表的敘述背景、評估我們經營運績的其他背景以及有關我們盈利、流動性和現金流的質量和變化性的信息。

 

1

 

非公認會計原則財務指標的使用

我們根據GAAP編制財務報表並呈列財務業績。然而，我們還評估我們的業務部門並根據與GAAP不同的基礎呈現我們的財務業績。我們將這種不同的列報基礎稱為核心收益，這是一種非GAAP財務指標。我們為每個業務部門提供合併的核心收益呈列基礎，因為這是我們在就我們的績效和如何分配資源做出管理決策時內部審查的內容。我們還將此信息包含在與信用評級機構、貸方和投資者的演示中。由於我們的核心收益呈列基礎是我們對分部損益的衡量標準，因此GAAP要求我們在業務分部的綜合財務報表附註中提供核心收益披露。

除了核心收益外，我們還居間了以下其他非GAAP財務指標：有形權益、調整後有形權益比率、息、稅、折舊和攤銷前利潤（EBITDA）（業務處理部門）和貸款損失備抵，不包括之前完全沖銷的貸款的預期未來復甦。下文提供了非GAAP財務指標和對帳的定義，但沒有提供前瞻性非GAAP財務指標的對帳，因為由於預測某些項目的發生和財務影響的不確定性和固有困難，公司無法在不合理的情況下提供此類對帳，包括但不限於使用衍生工具對沖經濟風險而產生的任何按市值計價損益的影響。請參閱「管理層對財務狀況和經營運績的討論和分析-非GAAP財務指標」，了解進一步討論和GAAP淨利潤和核心收益之間的完整對帳。

 

2

 

業務

Overview和我們業務的基礎

Navient（納斯達克：NAVI）提供技術支持的教育金融和業務處理解決方案，簡化複雜的程式並幫助數百萬人取得成功。我們以客戶為中心、數據驅動的服務為教育和政府領域的客戶帶來卓越的成果。請訪問navient.com了解更多信息。

Navient的業務專注於數據驅動的見解、服務、合規性和創新支持，包括：

 

img127493485_1.jpg

 

•
聯邦教育貸款

我們擁有並管理價值315加元的聯邦擔保聯邦家庭教育貸款計劃（FFELP）貸款組合。我們支持客戶的成功，並確保合規、高效的客戶體驗。

•
消費貸款

我們擁有並管理價值160加元的私人教育貸款組合。我們還通過Earnest品牌再融資和發放私人教育貸款。我們通過Earnest品牌通過創新的規劃工具、學生貸款和再融資產品，幫助學生和家庭在大學之旅中取得成功。2024年第三季度，我們發放了約50，000美金的私人教育貸款。

•
業務處理

我們利用我們的貸款服務專業知識為大約450個公共部門組織及其數百萬客戶和選民提供業務處理解決方案。我們的全渠道客戶體驗、數字處理和收入周期解決方案套件使我們的客戶能夠為他們所服務的人們提供更好的結果。我們的醫療保健服務業務於2024年9月19日出售。更多詳細信息，請參閱「近期業務發展」。

 

卓越的績效以及在客戶服務和合規承諾方面的豐富經驗

 

我們通過積極主動、數據驅動、簡化的服務和創新的解決方案幫助客戶（包括個人和機構）走上財務成功之路。

•
提供卓越的性能. 無論是支持學生貸款借款人成功管理貸款、為公共部門機構設計和實施全渠道聯絡中心解決方案，還是幫助國家管理通信或收回為基本服務提供資金的收入，Navient都為我們的客戶和客戶提供價值。
•
可擴展的數據驅動解決方案. 我們每年支持數千萬人進行數億筆交易和互動。我們的系統是為了規模化和快速實施而構建的。我們利用數據的力量通過分析來構建量身定製的程式，以優化客戶的結果。
•
簡化複雜流程. 我們代表客戶幫助個人成功應對廣泛的複雜交易。我們的人員和平台簡化複雜的計劃，以幫助客戶和選民實現他們的目標。

3

 

•
合規承諾. 我們維護強大的多層合規管理系統，並徹底了解並遵守適用的聯邦、州和地方法律。我們遵循行業領先的「三線模型」合規框架。該框架和其他合規協議確保我們遵守關鍵行業法律和法規，包括但不限於：公平準確信用交易法（FACTA）;公平信用報告法（FCRA）;公平債務催收實踐法（FDCPA）;電子資金轉移法（EFTA）;平等信用機會法（EECA）; Gramm-Leach-Bliley法案（GLBA）;健康保險可攜帶性和問責法案（HIPAA）;國稅局出版物1075;軍人民事救濟法（SCRA）;軍事貸款法（MLA）;電話消費者保護法（TCPA）;貸款真相法（TILA）;不公平、欺騙性或虐待行為和做法（UDAAP）;州法律;以及州和市許可。
•
企業社會責任. 我們致力於為社區的社會和經濟福祉做出貢獻;促進客戶的成功;支持員工隊伍中誠信、包容和平等的文化;並擁抱可持續的商業實踐。Navient因其持續致力於促進多樣性而贏得了多家領先組織的認可。我們的員工通過公司贊助的志願服務和慈善計劃參與我們的社區。

Navient致力於可持續發展的未來。我們利用技術最大限度地減少辦公樓的能源使用，並促進「無紙化」數字客戶通信的廣泛採用。Navient優先考慮我們的建築物使用節能功能，以減少能源使用。能源效率和減少二氧化碳（CO2）和CO2當量是我們在房地產決策中考慮的眾多因素之一。

 

最大限度地利用貸款組合的現金流並保持強勁的資產負債表

 

我們的2024年第三季度業績繼續展示了我們的資產負債表、信用風險管理和高質量私立教育貸款承保的實力，具有吸引力的經濟性。

 

我們的業務產生了大量資本，這為我們的投資者帶來了強勁的資本回報。Navient預計將繼續根據我們的資本配置政策通過股息和股票回購向股東返還多餘的資本。

 

通過優化資本充足率並將資本分配給高度增值的機會（包括有機增長和收購），我們仍然有能力支付股息和回購股票，同時保持適當的槓桿率來支持我們的信用評級並確保持續進入資本市場。

 

2021年12月，我們的董事會批准了一項股票回購計劃，授權購買最多10便士的公司已發行普通股。截至2024年9月30日，17600美金的應收帳款仍在股票回購授權中。

 

為了為我們的資本配置決策提供信息，我們使用調整後的淨資產比率(1) 除了其他指標之外。我們的GAAP股權與資產比率為5.0%，調整後的有形股權比率(1) 截至2024年9月30日，這一比例為9.8%。

 

 

（美金和股票單位：百萬）

 

Q3-24

 

 

Q3-23

 

購回股份

 

 

2.1

 

 

 

4.2

 

流通股減少

 

 

2

%

 

 

3

%

以美金計的回購總額

 

$

33

 

 

$

75

 

上繳紅利

 

$

17

 

 

$

19

 

返還資本總額(2)

 

$

50

 

 

$

94

 

GAAP股權與資產比率

 

 

5.0

%

 

 

4.6

%

調整後的總股本比率(1)

 

 

9.8

%

 

 

8.7

%

 

 

 

 

 

 

(1)
項目是非GAAP財務指標。有關描述和對帳，請參閱「管理層對財務狀況和經營結果的討論和分析-非GAAP財務指標」。
(2)
資本返還的定義是股票回購和支付的股息。

4

 

最近 業務發展

2024年1月30日，經過對我們業務的深入審查，Navient宣布了戰略行動，以簡化我們的公司、減少我們的費用基礎並增強我們的靈活性。我們在這些行動上取得了以下重大進展：

•
採用可變的外包服務模式。 納維特於2024年5月簽訂了一項外包協定，將我們的助學貸款服務過渡到MOHELA，後者是一家為政府和商業企業提供助學貸款服務的領先提供商。這項交易旨在為我們的助學貸款組合的服務創造一個可變的成本結構，並在廣泛的服務量方案中提供有吸引力的單位經濟性。作為協定的一部分，從2024年7月1日起，MOHELA開始為我們的投資組合提供服務，近900名員工轉移到MOHELA。2024年10月，我們通過多階段溝通戰略基本完成了借款人過渡，該戰略旨在對借款人進行過渡前的教育。借款人將繼續使用相同的賬號、電話號碼、付款計劃和其他詳細資訊。Navient和MOHELA使用相同的第三方貸款服務技術平臺，因此不需要轉換貸款系統。Navient將監督服務協定中包含的高服務級別標準。
•
探索業務處理部門的戰略選擇，包括潛在的撤資。 Navient此前啟動了一項探索剝離業務處理部門的流程。該部門通過各種子公司品牌為各種政府客戶提供高質量的業務處理服務，包括收費公路當局、州稅收部門和聯邦機構。結合將學生貸款服務外包的決定，探索業務處理部門的選擇增加了共同成本降低的機會。2024年9月19日，Navient完成了以36900美金的價格將其在Xtend的股權出售給CorroHealth，Xtend包括該公司業務處理部門的醫療保健服務業務，導致出售時獲得21900美金的NPS收益。Navient繼續探索其政府服務業務的各種剝離選擇。
•
簡化共享服務基礎設施和企業足跡。 當我們實施上述行動時，我們還在重塑我們的共享服務職能和企業足跡，以滿足更專注、更靈活和更精簡的公司的需求。2024年確認的3500美金重組和其他重組費用（其中絕大多數與裁員相關的遣散費有關）反映了迄今為止在這項努力方面取得的進展。

我們繼續預計到2025年底基本完成這些戰略行動。

我們如何組織關注我們的業務

我們的業務分為三個主要部門：聯邦教育貸款、消費者貸款和業務處理。

img127493485_2.jpg

聯邦教育貸款部門

Navient擁有並管理FFELP Loans，並且是該投資組合的主要服務商。我們在服務質量、數據驅動策略和有關聯邦還款選擇的全渠道教育方面的悠久歷史為我們所服務的數百萬借款人帶來了積極的成果。我們主要通過FFELP貸款的淨利息收入產生收入。

5

 

消費者貸款部門

Navient擁有和管理私人教育貸款，並且是這些投資組合的主要服務商。通過我們的Earnest品牌，我們還為校內私人教育貸款進行再融資和發放。「再融資」私人教育貸款是借款人對其教育貸款進行再融資的貸款，「校內」私人教育貸款是最初在借款人上學期間向他們發放的貸款。我們主要通過私人教育貸款組合的淨利息收入產生收入。

通過我們的Earnest品牌，我們幫助學生和家庭規劃和支付大學旅程。我們的數位化工具使人們能夠找到獎學金並比較經濟援助報價。我們相信，我們50年的經驗、產品設計、數字營銷策略以及起源和服務專業知識提供了獨特的競爭優勢。我們看到了發起私人教育貸款的有意義的增長機會，可以產生有吸引力的長期、風險調整回報。

業務處理部門

Navient提供全渠道聯絡中心服務、工作流程處理和收入周期優化等業務處理解決方案。我們利用與我們所使用的相同的專業知識和智能工具為我們擁有的投資組合提供成功的結果。我們的支持使我們的客戶能夠確保更好的成分結果、滿足快速變化的需求、改進技術、降低運營費用、管理風險並優化收入機會。我們的客戶包括：

•
政府: 我們為聯邦機構、州政府、收費和停車當局以及其他公共部門客戶提供解決方案。
•
醫療保健: 該業務於2024年9月19日出售。更多詳細信息，請參閱「近期業務發展」。

其他分部

該分部包括我們的企業流動性投資組合、債務回購產生的損益、共享服務的未分配費用（包括監管費用）和重組/其他重組費用。

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

管理層的討論與分析 財務狀況及經營運績

 

S當選的歷史財務信息和比率

 

 

截至9月30日的三個月，

 

 

截至9月30日的九個月，

 

(In百萬，每股數據除外）

 

2024

 

 

2023

 

 

2024

 

 

2023

 

GAAP標準

 

 

 

 

 

 

 

 

 

 

 

 

淨利潤（虧損）

 

$

(2

)

 

$

79

 

 

$

107

 

 

$

256

 

每股普通股稀釋收益（虧損）

 

$

(.02

)

 

$

.65

 

 

$

.95

 

 

$

2.04

 

用於計算稀釋後的加權平均股
每股收益

 

 

108

 

 

 

121

 

 

 

112

 

 

 

125

 

資產回報率

 

 

(.02

)%

 

 

.51

%

 

 

.26

%

 

 

.53

%

 

 

 

 

 

 

 

 

 

 

 

 

 

核心盈利基礎(1)

 

 

 

 

 

 

 

 

 

 

 

 

淨收入(1)

 

$

160

 

 

$

57

 

 

$

246

 

 

$

278

 

每股普通股稀釋收益(1)

 

$

1.45

 

 

$

.47

 

 

$

2.20

 

 

$

2.22

 

用於計算稀釋後的加權平均股
每股收益

 

 

110

 

 

 

121

 

 

 

112

 

 

 

125

 

淨息差，聯邦教育貸款部門

 

 

.46

%

 

 

1.52

%

 

 

.46

%

 

 

1.20

%

淨息差，消費貸款部門

 

 

2.84

%

 

 

3.17

%

 

 

2.91

%

 

 

3.09

%

資產回報率

 

 

1.21

%

 

 

.37

%

 

 

.59

%

 

 

.58

%

 

 

 

 

 

 

 

 

 

 

 

 

 

教育貸款組合

 

 

 

 

 

 

 

 

 

 

 

 

結束FFELP貸款，淨

 

$

31,522

 

 

$

39,581

 

 

$

31,522

 

 

$

39,581

 

結束私人教育貸款，淨

 

 

16,005

 

 

 

17,333

 

 

 

16,005

 

 

 

17,333

 

結束教育貸款總額，淨

 

$

47,527

 

 

$

56,914

 

 

$

47,527

 

 

$

56,914

 

平均FFELP貸款

 

$

32,373

 

 

$

40,554

 

 

$

34,749

 

 

$

41,886

 

平均私人教育貸款

 

 

16,587

 

 

 

18,165

 

 

 

16,968

 

 

 

18,710

 

平均教育貸款總額

 

$

48,960

 

 

$

58,719

 

 

$

51,717

 

 

$

60,596

 

(1)
項目是非GAAP財務指標。有關描述和對帳，請參閱「非GAAP財務指標-核心收益」。

7

 

T他第一季度n審查

我們根據GAAP編制財務報表並呈列財務業績。然而，我們還評估我們的業務部門並根據與GAAP不同的基礎呈現財務業績。我們將這種不同的呈現基礎稱為核心收益。我們為每個業務部門提供合併的核心收益呈列基礎，因為這是我們在就我們的績效和如何分配資源做出管理決策時內部審查的內容。我們還將此信息包含在與信用評級機構、貸方和投資者的演示中。由於我們的核心收益呈列基礎與我們的分部財務呈列相對應，因此GAAP要求我們在業務分部的合併財務報表附註中提供某些核心收益披露。請參閱「非GAAP財務指標-核心收益」以了解進一步討論以及GAAP淨利潤和核心收益之間的完整對帳。

2024年第三季度GAAP淨虧損為200 Oct（每股稀釋虧損0.02美金），而去年同期淨利潤為7900 Oct（每股稀釋收益0.65美金）。請參閱「運營結果-2024年第三季度業績與2023年第三季度業績的GAAP比較」，以了解影響不同時期GAAP盈利變化的主要因素。本季度確認了與政府服務業務相關的善意和收購無形資產損失13800美金。這是GAAP和核心收益之間的主要區別，因為核心收益不包括所有善意和收購無形資產的減損和攤銷費用。

2024年第三季度核心收益淨利潤為16000日元（稀釋後的每股核心收益1.45美金），而去年同期為5700日元（稀釋後的每股核心收益0.47美金）。請參閱「分部結果」，了解不同時期核心盈利變化的主要因素。

GAAP和核心收益結果包括稅前收入淨增加16600美金（每股稀釋收益1.17美金），包括以下項目：

•
出售我們的醫療服務業務Xtend Healthcare帶來21900美金的收益（每股稀釋收益1.54美金）。
•
與降低違約私人教育貸款的預期回收率相關的貸款損失撥備2100美金（每股稀釋虧損0.15美金）。
•
1800加元（每股稀釋虧損0.12美金）的重組費用和1400加元（每股稀釋虧損0.10美金）的監管相關費用，主要與9月份與CFPB達成的和解協議有關，消除了或有負債的懸而未決。

 

 

8

 

2024年第三季度財務亮點包括：

聯邦教育貸款部門：

•
淨利潤為2700美金。
•
淨息差0.46%。
•
FFELP貸款預付款為10加元，而2024年第二季度、2024年第一季度和2023年第三季度分別為25加元、16加元和60000加元。

消費者貸款部門：

•
淨利潤為2700美金。
•
淨息差2.84%。
•
發放50，000美金的私人教育貸款，比去年同期的38，200美金增長了31%。

業務處理部門：

•
手續費收入7000美金。
•
2024年9月19日，以36900盧比現金完成了醫療保健服務業務的出售，收益為21900盧比。繼續探索業務處理部門剩餘政府服務業務的剝離方案。
•
淨利潤為17800美金，利息和EBITDA(1) 價值23300美金。

資本、資金和流動性：

•
GAAP股權與資產比率為5.0% 和調整的有形股權比率(1) 9.8%。
•
回購了價值3300英鎊的普通股。17600美金的普通股回購授權仍未行使。
•
支付了1700美金的普通股股息。

運營費用：

•
運營費用為17000加元，不包括1400加元的監管相關費用。

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)
項目是非GAAP財務指標。有關描述和對帳，請參閱「非GAAP財務指標」。

 

9

 

R行動的結局

GAAP利潤表（未經審計）

 

 

截至9月30日的三個月，

 

 

增加
（減少）

 

 

截至9月30日的九個月，

 

 

增加
（減少）

 

(In百萬，每股數據除外）

 

2024

 

 

2023

 

 

$

 

 

%

 

 

2024

 

 

2023

 

 

$

 

 

%

 

利息收入

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFELP貸款

 

$

591

 

 

$

778

 

 

$

(187

)

 

 

(24

)%

 

$

1,861

 

 

$

2,191

 

 

$

(330

)

 

 

(15

)%

私人教育貸款

 

 

314

 

 

 

351

 

 

 

(37

)

 

 

(11

)

 

 

958

 

 

 

1,036

 

 

 

(78

)

 

 

(8

)

現金和投資

 

 

43

 

 

 

41

 

 

 

2

 

 

 

5

 

 

 

129

 

 

 

111

 

 

 

18

 

 

 

16

 

利息收入總額

 

 

948

 

 

 

1,170

 

 

 

(222

)

 

 

(19

)

 

 

2,948

 

 

 

3,338

 

 

 

(390

)

 

 

(12

)

總利息支出

 

 

828

 

 

 

879

 

 

 

(51

)

 

 

(6

)

 

 

2,547

 

 

 

2,636

 

 

 

(89

)

 

 

(3

)

淨利息收入

 

 

120

 

 

 

291

 

 

 

(171

)

 

 

(59

)

 

 

401

 

 

 

702

 

 

 

(301

)

 

 

(43

)

減：貸款損失準備金

 

 

42

 

 

 

72

 

 

 

(30

)

 

 

(42

)

 

 

68

 

 

 

68

 

 

 

—

 

 

 

—

 

之後的淨利息收入
貸款損失準備

 

 

78

 

 

 

219

 

 

 

(141

)

 

 

(64

)

 

 

333

 

 

 

634

 

 

 

(301

)

 

 

(47

)

其他收入（損失）：

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

服務收入

 

 

13

 

 

 

15

 

 

 

(2

)

 

 

(13

)

 

 

48

 

 

 

48

 

 

 

—

 

 

 

—

 

資產追回和業務
加工收入

 

 

70

 

 

 

85

 

 

 

(15

)

 

 

(18

)

 

 

228

 

 

 

240

 

 

 

(12

)

 

 

(5

)

其他收入

 

 

10

 

 

 

5

 

 

 

5

 

 

 

100

 

 

 

22

 

 

 

15

 

 

 

7

 

 

 

47

 

出售子公司收益

 

 

219

 

 

 

—

 

 

 

219

 

 

 

100

 

 

 

219

 

 

 

—

 

 

 

219

 

 

 

100

 

衍生品的收益（損失）和
對沖活動，淨值

 

 

(36

)

 

 

26

 

 

 

(62

)

 

 

(238

)

 

 

11

 

 

 

44

 

 

 

(33

)

 

 

(75

)

其他收入總額

 

 

276

 

 

 

131

 

 

 

145

 

 

 

111

 

 

 

528

 

 

 

347

 

 

 

181

 

 

 

52

 

費用：

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

業務費用

 

 

184

 

 

 

233

 

 

 

(49

)

 

 

(21

)

 

 

533

 

 

 

601

 

 

 

(68

)

 

 

(11

)

善意和收購的無形物質
資產減值及
攤銷費用

 

 

140

 

 

 

3

 

 

 

137

 

 

 

4,567

 

 

 

145

 

 

 

8

 

 

 

137

 

 

 

1,713

 

重組/其他
重組費用

 

 

18

 

 

 

4

 

 

 

14

 

 

 

350

 

 

 

35

 

 

 

23

 

 

 

12

 

 

 

52

 

總支出

 

 

342

 

 

 

240

 

 

 

102

 

 

 

43

 

 

 

713

 

 

 

632

 

 

 

81

 

 

 

13

 

所得稅費用前收入

 

 

12

 

 

 

110

 

 

 

(98

)

 

 

(89

)

 

 

148

 

 

 

349

 

 

 

(201

)

 

 

(58

)

所得稅開支

 

 

14

 

 

 

31

 

 

 

(17

)

 

 

(55

)

 

 

41

 

 

 

93

 

 

 

(52

)

 

 

(56

)

淨利潤（虧損）

 

$

(2

)

 

$

79

 

 

$

(81

)

 

 

(103

)%

 

$

107

 

 

$

256

 

 

$

(149

)

 

 

(58

)%

人均基本收入（損失）
普通股

 

$

(.02

)

 

$

.66

 

 

$

(.68

)

 

 

(103

)%

 

$

.97

 

 

$

2.06

 

 

$

(1.09

)

 

 

(53

)%

稀釋後的收益（損失）
普通股

 

$

(.02

)

 

$

.65

 

 

$

(.67

)

 

 

(103

)%

 

$

.95

 

 

$

2.04

 

 

$

(1.09

)

 

 

(53

)%

每普通股股息

 

$

.16

 

 

$

.16

 

 

$

—

 

 

 

—

 

 

$

.48

 

 

$

.48

 

 

$

—

 

 

 

—

 

 

10

 

GAAP 2024年第三季度業績與2023年第三季度業績的比較

截至2024年9月30日的三個月，淨虧損為200日元，即每股普通股稀釋虧損0.02美金，而去年同期淨利潤為7900日元，即每股普通股稀釋收益0.65美金。

淨利潤變化的主要貢獻者如下：

•
淨利息收入減少了17100加元，主要是由於去年同期與繼續延長一部分FFELP貸款組合相關的貸款溢價攤銷速度下降有關，帶來了4800加元的利息收益。此外，FFELP和私立教育貸款組合的償還、與FFELP貸款組合相關的最低收入對沖的到期、利率上升對FFELP貸款資產和債務不同指數重置的影響，以及利息費用中記錄的公允價值對沖的按市值計價收益減少2900美金導致淨利息收入減少。
•
貸款損失準備金減少了3000加元，從7200加元降至4200加元：
o
FFELP貸款損失撥備從3，600加元減少4，100加元至（5）百萬加元。
o
私人教育貸款損失撥備增加了1100加元，從3600加元增加到4700加元。

本期FFELP貸款損失撥備為（5）萬美金，是由於信貸趨勢相對穩定和預付款活動較上一年增加。去年同期3，600美金的撥備主要是由於FFELP貸款組合的一部分持續延長，導致預期未來違約和分配給所有預期未來違約的溢價增加。

本期私人教育貸款損失撥備為4，700加元，其中包括與違約貸款淨沖銷率變化相關的2，100加元、與貸款發放相關的1，500加元以及與一般準備金建立相關的1，100加元。去年同期3600美金的應收帳款包括與違約貸款淨沖銷率變化相關的2900美金的應收帳款以及與貸款發放相關的1200美金的應收帳款，部分被500美金的應收帳款抵消。準備金釋放。

•
2024年9月19日，我們的醫療保健服務業務Xtend Healthcare以36900美金的現金出售了我們100%的股權，本季度確認了21900美金的利潤。
•
資產回收和業務處理收入減少了1500美金，主要是由於國會資金未被批准繼續根據特定合同提供服務，導致我們的政府服務收入減少。
•
衍生品和對沖活動的淨收益減少了6200美金，主要是由於利率波動。衍生工具的估值會根據許多因素波動，包括利率變化和其他市場因素。因此，衍生品和對沖活動的淨損益在未來期間可能會出現顯著變化。
•
運營費用減少了4900美金，主要是由於監管費用減少了3300美金。本期，與9月份與CFPB簽訂的12000美金的發票和解協議相關的1800美金的發票記錄了與監管相關的費用。一年前，與同一事項相關的監管費用為4500萬美金。此外，由於上述政府服務合同，業務處理部門費用有所下降。
•
由於本季度確認了與我們的政府服務業務相關的13800美金應收帳款損失，因此親善和收購無形資產損失和攤銷費用增加了13700美金。確認該減損的主要原因是，9月份獲悉，一份占政府服務淨收入很大一部分（截至2024年9月30日的三個月和九個月收入分別為600便士和1800便士）的合同將不會在2025年續簽。此外，作為政府服務合同重要組成部分的聯邦計劃在第三季度仍然沒有資金支持。國會何時或是否批准為該計劃提供資金，這將導致政府服務部門根據本合同恢復提供服務，這一不確定性越來越大。
•
重組和其他重組費用增加了1400美金，主要是由於與遣散相關的成本增加。本季度的重組和其他重組費用為1800美金，其中包括與正在實施的各種戰略舉措有關的1300美金的遣散相關成本，以簡化公司、減少我們的費用基礎並增強我們的靈活性。

 

11

 

•
本季度和上年同期的有效所得稅率分別為120%和28%。實際所得稅率的變化主要是由本季度與CFPB的結算（其中一部分不可扣稅）以及本季度記錄的一部分不可扣稅的影響推動的。

我們分別在2024年和2023年第三季度回購了210股和420股普通股。由於回購，我們的平均流通稀釋股票比去年同期減少了1300股普通股（或11%）。

 

 

GAAP截至2024年9月30日的九個月業績與截至2023年9月30日的九個月業績的比較

截至2024年9月30日的九個月，淨利潤為10700日元，即每股普通股稀釋收益0.95美金，而去年同期淨利潤為25600日元，即每股普通股稀釋收益2.04美金。

淨利潤變化的主要貢獻者如下：

•
淨利息收入減少了30100美元萬，主要是由於償還了FFELP和私立教育貸款組合。特別是，FFELP貸款組合的預付款增加了31億(本期為50億，而去年同期為19億)，這主要是由於教育部擬議的債務減免規定。與去年同期相比，本期預付款增加導致額外註銷3 500萬貸款溢價。此外，去年同期有4,800美元的萬收益，與繼續延長部分FFELP貸款組合相關的貸款溢價攤銷速度放緩有關。這兩個專案導致本期溢價攤銷比上一季度高出8,300萬美元。淨利息收入也有所減少，原因是與FFELP貸款組合有關的最低收入對沖到期，以及利率上升對FFELP貸款資產和債務的不同指數重置的影響。這些減少被計入利息支出的公允價值對沖按市價計價的損失減少1,800美元(萬)部分抵消。
•
貸款損失撥備保持不變，為6800美金：
o
FFELP貸款損失撥備從5100加元減少5700加元至（6）百萬加元。
o
私人教育貸款損失撥備增加了5700加元，從1700加元增加到7400加元。

本期FFELP貸款損失撥備為（6）萬美金，是由於信貸趨勢相對穩定和預付款活動較上一年增加。有關前期撥備大幅高於本期的驅動因素，請參閱上述三個月的結果討論。

本期私人教育貸款損失撥備為7，400加元，其中包括與違約貸款淨沖銷率變化相關的2，100加元、與貸款發放相關的2，600加元以及與一般準備金建立相關的2，700加元。去年同期提供的1700美金應收帳款包括與違約貸款淨沖銷率變化相關的2900美金應收帳款、與貸款發放相關的2100美金應收帳款、與解決某些私人遺留貸款有關的2300美金應收帳款以及與儲備金建立相關的700美金應收帳款，由於採用新會計準則（ASO 2022-02）而減少了6300美金，部分抵消了這一數字。

•
2024年9月19日，我們的醫療保健服務業務Xtend Healthcare以36900美金的現金出售了我們100%的股權，本期確認了21900美金的收益。
•
資產回收和業務處理收入減少了1200美金，主要是由於國會資金未被批准繼續根據特定合同提供服務，導致我們的政府服務收入減少。
•
衍生品和對沖活動的淨收益減少了3300美金，主要是由於利率波動。衍生工具的估值會根據許多因素波動，包括利率變化和其他市場因素。因此，衍生品和對沖活動的淨損益在未來期間可能會出現顯著變化。

 

12

 

•
運營費用減少6800美金，主要是由於上述政府服務合同導致業務處理部門費用減少，以及最近實施的幾項效率舉措和去年同期提高了新合同的前期啟動成本。此外，由於營銷效率的提高和監管費用的減少，校內貸款營銷支出也有所減少。
•
由於本期確認了與我們的政府服務業務相關的13800美金的應收帳款損失，因此善意和收購無形資產的應收帳款和攤銷費用增加了13700美金。更多詳細信息，請參閱上面對結果的三個月討論。
•
由於遣散相關成本增加，重組和其他重組費用增加了1200美金。本期的重組和其他重組費用為3500美金，其中包括與正在實施的各種戰略舉措有關的2500美金的遣散相關成本，以簡化公司、減少我們的費用基礎並增強我們的靈活性。

截至2024年9月30日和2023年9月30日的九個月內，我們分別回購了720股和1390股普通股。由於回購，我們的平均流通稀釋股票比去年同期減少了1300股普通股（或10%）。

 

13

 

段保留大招

聯邦教育貸款部門

下表列出了我們聯邦教育貸款部門的核心收益結果。

 

 

截至9月30日的三個月，

 

 

增加%
（減少）

 

 

截至9月30日的九個月，

 

 

增加%
（減少）

 

（百萬美金）

 

2024

 

 

2023

 

 

2024年與2023年

 

 

2024

 

 

2023

 

 

2024年與2023年

 

利息收入：

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFELP貸款

 

$

591

 

 

$

778

 

 

 

(24

)%

 

$

1,861

 

 

$

2,194

 

 

 

(15

)%

現金和投資

 

 

25

 

 

 

19

 

 

 

32

 

 

 

75

 

 

 

56

 

 

 

34

 

利息收入總額

 

 

616

 

 

 

797

 

 

 

(23

)

 

 

1,936

 

 

 

2,250

 

 

 

(14

)

總利息支出

 

 

576

 

 

 

636

 

 

 

(9

)

 

 

1,810

 

 

 

1,859

 

 

 

(3

)

淨利息收入

 

 

40

 

 

 

161

 

 

 

(75

)

 

 

126

 

 

 

391

 

 

 

(68

)

減：貸款準備金
損失

 

 

(5

)

 

 

36

 

 

 

(114

)

 

 

(6

)

 

 

51

 

 

 

(112

)

之後的淨利息收入
貸款損失撥備

 

 

45

 

 

 

125

 

 

 

(64

)

 

 

132

 

 

 

340

 

 

 

(61

)

其他收入（損失）：

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

服務收入

 

 

11

 

 

 

12

 

 

 

(8

)

 

 

39

 

 

 

39

 

 

 

—

 

其他收入

 

 

—

 

 

 

3

 

 

 

(100

)

 

 

5

 

 

 

10

 

 

 

(50

)

其他收入總額

 

 

11

 

 

 

15

 

 

 

(27

)

 

 

44

 

 

 

49

 

 

 

(10

)

直接經營開支

 

 

20

 

 

 

17

 

 

 

18

 

 

 

53

 

 

 

55

 

 

 

(4

)

所得稅前收入
費用

 

 

36

 

 

 

123

 

 

 

(71

)

 

 

123

 

 

 

334

 

 

 

(63

)

所得稅開支

 

 

9

 

 

 

29

 

 

 

(69

)

 

 

28

 

 

 

78

 

 

 

(64

)

淨收入

 

$

27

 

 

$

94

 

 

 

(71

)%

 

$

95

 

 

$

256

 

 

 

(63

)%

2024年第三季度業績與2023年第三季度業績比較

•
淨利潤為2700日元，而淨利潤為9400日元。
•
淨利息收入減少了12100加元，主要是由於去年同期與部分投資組合的持續延長相關的貸款溢價攤銷速度下降，帶來了4800加元的收益。淨利息收入也有所減少，原因是與投資組合相關的最低收入對衝到期、利率上升對該部門資產和債務不同指數重置的影響，以及貸款組合的償還（包括預付還款額從去年同期的60，000加元增加到本季度的10加元）。
•
貸款損失撥備減少了4100美金。2024年第三季度的貸款損失撥備（500萬美金）是信貸趨勢相對穩定和預付款活動較上年增加的結果。去年同期3，600美金的撥備主要是由於投資組合的持續擴展以及由此導致的預期未來違約和分配給所有預期未來違約的溢價增加。
o
淨沖銷為900美金，而淨沖銷為1600美金。
o
超過90天的逾期金額為19美金，而超過90天的逾期金額為29美金。
o
忍受費用為50美金，而62美金。
•
費用增加了300美金，主要是由於2024年7月1日將我們的投資組合服務轉移給第三方。總體而言，對於合併後的Navient（聯邦教育貸款、消費者貸款和其他部門），本季度與此轉型相關的淨服務成本（扣除獲得的轉型服務收入）增加了100美金，正如預期的那樣。在投資組合的剩餘生命周期中，我們預計將實現顯著的總體成本節約。

 

14

 

關鍵績效指標如下：

 

 

截至9月30日的三個月，

 

 

截至9月30日的九個月，

 

（百萬美金）

 

2024

 

 

2023

 

 

2024

 

 

2023

 

分部淨息差

 

 

.46

%

 

 

1.52

%

 

 

.46

%

 

 

1.20

%

FFELP貸款：

 

 

 

 

 

 

 

 

 

 

 

 

FFELP貸款利差

 

 

.60

%

 

 

1.63

%

 

 

.59

%

 

 

1.31

%

貸款損失撥備

 

$

(5

)

 

$

36

 

 

$

(6

)

 

$

51

 

淨沖銷

 

$

9

 

 

$

16

 

 

$

29

 

 

$

53

 

淨沖銷率

 

 

.14

%

 

 

.19

%

 

 

.14

%

 

 

.21

%

超過30天的拖欠率

 

 

13.4

%

 

 

16.8

%

 

 

13.4

%

 

 

16.8

%

超過90天的拖欠率

 

 

7.3

%

 

 

9.2

%

 

 

7.3

%

 

 

9.2

%

克制率

 

 

16.4

%

 

 

16.4

%

 

 

16.4

%

 

 

16.4

%

平均FFELP貸款

 

$

32,373

 

 

$

40,554

 

 

$

34,749

 

 

$

41,886

 

結束FFELP貸款，淨

 

$

31,522

 

 

$

39,581

 

 

$

31,522

 

 

$

39,581

 

 

 

 

 

 

 

 

 

 

 

 

 

 

（美金單位：十億美金）

 

 

 

 

 

 

 

 

 

 

 

 

已服務的聯邦貸款總額

 

$

37

 

 

$

46

 

 

$

37

 

 

$

46

 

淨息差

下表詳細居間了淨息差。

 

 

截至9月30日的三個月，

 

 

截至9月30日的九個月，

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

FFELP貸款收益率

 

 

7.04

%

 

 

7.12

%

 

 

6.92

%

 

 

6.55

%

最低收入

 

 

.23

 

 

 

.49

 

 

 

.23

 

 

 

.45

 

FFELP貸款淨收益率

 

 

7.27

 

 

 

7.61

 

 

 

7.15

 

 

 

7.00

 

FFELP貸款資金成本

 

 

(6.67

)

 

 

(5.98

)

 

 

(6.56

)

 

 

(5.69

)

FFELP貸款利差

 

 

.60

 

 

 

1.63

 

 

 

.59

 

 

 

1.31

 

其他生息資產利差影響

 

 

(.14

)

 

 

(.11

)

 

 

(.13

)

 

 

(.11

)

淨息差(1)

 

 

.46

%

 

 

1.52

%

 

 

.46

%

 

 

1.20

%

(1)
各期間的生息資產平均餘額為：

 

 

截至9月30日的三個月，

 

 

截至9月30日的九個月，

 

（百萬美金）

 

2024

 

 

2023

 

 

2024

 

 

2023

 

FFELP貸款

 

$

32,373

 

 

$

40,554

 

 

$

34,749

 

 

$

41,886

 

其他生息資產

 

 

1,956

 

 

 

1,504

 

 

 

2,002

 

 

 

1,697

 

FFELP貸款生息資產總額

 

$

34,329

 

 

$

42,058

 

 

$

36,751

 

 

$

43,583

 

 

淨息差下降106個基點，主要是由於去年同期出現了4800美金的利息收益（56個基點），該收益與繼續延長一部分投資組合相關的貸款溢價攤銷速度下降有關。由於與投資組合相關的下限收益對沖的到期以及利率上升對該部門資產和債務不同指數重置的影響（總共31個基點），淨利息收入也有所下降。

截至2024年9月30日，我們的FELP貸款組合總額為315加元，其中包括113加元的FELP斯塔福德貸款和202加元的FELP合併貸款。假設固定提前還款率（CPR）分別為7%和5%，截至2024年9月30日，這些投資組合的加權平均壽命分別為8年和7年。

15

 

最低收入

下表根據核心收益分析了我們投資組合中FFELP貸款在2024年9月30日和2023年9月30日之後根據截至這些日期的利率賺取最低收入的能力。

 

 

 

 

 

 

 

（美金單位：十億美金）

 

2024年9月30日

 

 

2023年9月30日

 

有資格賺取最低收入的教育貸款

 

$

31.3

 

 

$

39.2

 

減：2006年3月31日後發放的需要回扣的貸款
最低收入

 

 

(15.0

)

 

 

(18.6

)

減：經濟對沖的最低收入

 

 

(1.8

)

 

 

(5.4

)

教育貸款有資格在回扣後獲得最低收入，
經濟對沖

 

$

14.5

 

 

$

15.2

 

教育貸款賺取最低收入

 

$

1.4

 

 

$

.4

 

下表列出了2024年10月1日至2028年12月31日期間FFELP合併貸款平均餘額的預測，其中固定利率下限收入已通過衍生品進行經濟對沖。

（美金單位：十億美金）

 

2024年10月1日
到
2024年12月31日

 

 

2025

 

 

2026

 

 

2027

 

 

2028

 

FFELP合併貸款平均餘額
其最低收入已進行經濟對沖

 

$

1.1

 

 

$

.7

 

 

$

.6

 

 

$

.3

 

 

$

.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

業務費用

聯邦教育貸款部門的運營費用主要包括為我們的FFELP貸款組合和其他機構持有的聯邦教育貸款提供服務而產生的成本。費用高出300美金 主要是由於2024年7月1日將我們的投資組合服務轉移給第三方。總體而言，對於合併後的Navient（聯邦教育貸款、消費者貸款和其他部門），本季度與此轉型相關的淨服務成本（扣除獲得的轉型服務收入）增加了100美金，正如預期的那樣。在投資組合的剩餘生命周期中，我們預計將實現顯著的總體成本節約。

各種聯邦貸款赦免計劃

2022年8月24日，拜登-哈里斯政府宣布了學生債務減免（SDR）計劃。特別提款權計劃將為ED持有的學生貸款和暫停償還ED持有的貸款的收入合格受益人提供高達20，000美金的一次性債務減免。私人持有的FFELP貸款，就像我們一樣，沒有資格獲得債務豁免。

許多州和私人組織在全國各地的多個法院對特別提款權計劃發起法律挑戰。2023年6月30日，最高法院裁定禁止ED實施特別提款權計劃，ED持有貸款的學生貸款支付於2023年10月恢復。特別提款權計劃無效後，ED推出了各種債務減免計劃和流程，旨在考慮其他方式為借款人提供債務減免，其中可能包括擁有私人持有的FFELP貸款的借款人。其中包括發布有關直接貸款（即ED持有的學生貸款）收入驅動還款計劃的最終規定。符合資格的FFELP借款人可以通過將其貸款合併到直接貸款計劃來獲得新的收入驅動還款計劃。

擬議的借款人債務減免法規，包括新的收入驅動還款計劃，已經增加並可能在未來繼續增加合併活動，因為FFELP借款人將其貸款合併到直接貸款計劃，以便有資格獲得潛在的債務減免和新的收入驅動還款計劃。這項整合活動可能會對公司的業績產生重大影響。

已經提起或宣布了幾起訴訟（Navient不是其中一方），尋求推翻這些法規。我們無法預測該訴訟的最終結果，也無法預測該訴訟可能對借款人合併活動產生什麼影響。
 

 

16

 

 

消費者貸款部門

下表列出了我們消費貸款部門的核心盈利結果。

 

 

截至9月30日的三個月，

 

 

增加%
（減少）

 

 

截至9月30日的九個月，

 

 

增加%
（減少）

 

（百萬美金）

 

2024

 

 

2023

 

 

2024年與2023年

 

 

2024

 

 

2023

 

 

2024年與2023年

 

利息收入：

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

私人教育貸款

 

$

314

 

 

$

351

 

 

 

(11

)%

 

$

958

 

 

$

1,036

 

 

 

(8

)%

現金和投資

 

 

6

 

 

 

7

 

 

 

(14

)

 

 

20

 

 

 

20

 

 

 

—

 

利息收入

 

 

320

 

 

 

358

 

 

 

(11

)

 

 

978

 

 

 

1,056

 

 

 

(7

)

利息開支

 

 

198

 

 

 

208

 

 

 

(5

)

 

 

597

 

 

 

610

 

 

 

(2

)

淨利息收入

 

 

122

 

 

 

150

 

 

 

(19

)

 

 

381

 

 

 

446

 

 

 

(15

)

減：貸款損失準備

 

 

47

 

 

 

36

 

 

 

31

 

 

 

74

 

 

 

17

 

 

 

(335

)

撥備後淨利息收入
貸款損失

 

 

75

 

 

 

114

 

 

 

(34

)

 

 

307

 

 

 

429

 

 

 

(28

)

其他收入（損失）：

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

服務收入

 

 

2

 

 

 

3

 

 

 

(33

)

 

 

9

 

 

 

9

 

 

 

—

 

其他收入

 

 

—

 

 

 

1

 

 

 

(100

)

 

 

1

 

 

 

2

 

 

 

(50

)

其他收入總額

 

 

2

 

 

 

4

 

 

 

(50

)

 

 

10

 

 

 

11

 

 

 

(9

)

直接經營開支

 

 

44

 

 

 

44

 

 

 

—

 

 

 

110

 

 

 

124

 

 

 

(11

)

所得稅前收入
費用

 

 

33

 

 

 

74

 

 

 

(55

)

 

 

207

 

 

 

316

 

 

 

(34

)

所得稅開支

 

 

6

 

 

 

18

 

 

 

(67

)

 

 

47

 

 

 

75

 

 

 

(37

)

淨收入

 

$

27

 

 

$

56

 

 

 

(52

)%

 

$

160

 

 

$

241

 

 

 

(34

)%

2024年第三季度業績與2023年第三季度業績比較

•
發起的私人教育貸款為50，000澳元，而為38，200澳元。
o
再融資貸款發放額為26200加元，而為17800加元。
o
校內貸款發放額為23800加元，而為20400加元。
•
淨利潤為2700日元，而為5600日元。
•
淨利息收入減少了2800美金，主要是由於貸款組合的償還。
•
貸款損失撥備增加1100加元。本期4700美金貸款損失撥備包括與違約貸款淨沖銷率變化相關的2100美金貸款、與貸款發放相關的1500美金貸款以及與一般儲備建立相關的1100美金貸款。去年同期3600美金貸款損失撥備包括與違約貸款淨沖銷率變化相關的2900美金貸款，以及與貸款發放相關的1200美金貸款，部分被500美金貸款準備金釋放所抵消 .
o
不包括與違約貸款淨沖銷率變化相關的2100美金和2500美金借記，淨沖銷為7400美金借記，比7300美金借記增加了100美金借記。
o
超過90天的私人教育貸款拖欠：37700加元，從33400加元增加4300加元。
o
私人教育貸款減免：44500加元，從34400加元增加10100加元。
•
總費用與去年同期持平。2024年7月1日，與服務商轉型相關的私人教育貸款組合的服務費用並未受到重大影響。

 

17

 

關鍵績效指標如下：

 

 

截至9月30日的三個月，

 

 

截至9月30日的九個月，

 

（百萬美金）

 

2024

 

 

2023

 

 

2024

 

 

2023

 

分部淨息差

 

 

2.84

%

 

 

3.17

%

 

 

2.91

%

 

 

3.09

%

私人教育貸款（包括再融資貸款）：

 

 

 

 

 

 

 

 

 

 

 

 

私人教育貸款利差

 

 

2.94

%

 

 

3.29

%

 

 

3.02

%

 

 

3.23

%

貸款損失撥備

 

$

47

 

 

$

36

 

 

$

74

 

 

$

17

 

淨沖銷(1)

 

$

74

 

 

$

73

 

 

$

240

 

 

$

209

 

淨沖銷率(1)

 

 

1.87

%

 

 

1.66

%

 

 

1.98

%

 

 

1.56

%

超過30天的拖欠率

 

 

5.3

%

 

 

4.7

%

 

 

5.3

%

 

 

4.7

%

超過90天的拖欠率

 

 

2.4

%

 

 

1.9

%

 

 

2.4

%

 

 

1.9

%

克制率

 

 

2.8

%

 

 

2.0

%

 

 

2.8

%

 

 

2.0

%

平均私人教育貸款

 

$

16,587

 

 

$

18,165

 

 

$

16,968

 

 

$

18,710

 

結束私人教育貸款，淨

 

$

16,005

 

 

$

17,333

 

 

$

16,005

 

 

$

17,333

 

私立教育再融資貸款：

 

 

 

 

 

 

 

 

 

 

 

 

淨沖銷

 

$

13

 

 

$

8

 

 

$

36

 

 

$

23

 

超過90天的拖欠率

 

 

.6

%

 

 

.3

%

 

 

.6

%

 

 

.3

%

私立教育再融資貸款平均餘額

 

$

8,552

 

 

$

9,091

 

 

$

8,669

 

 

$

9,300

 

民辦教育再融資貸款期末餘額

 

$

8,405

 

 

$

8,897

 

 

$

8,405

 

 

$

8,897

 

私立教育再融資貸款發放

 

$

262

 

 

$

178

 

 

$

712

 

 

$

456

 

 

(1)
不包括2024年和2023年第三季度之前已完全註銷的貸款預計未來收回的2100美金和2500美金的沖銷，這是由於2024年第三季度違約貸款淨沖銷率從82.3%改為82.7%，第三季度違約貸款淨沖銷率從81.9%改為82.3%。2023年季度。

淨息差

下表詳細居間了淨息差。

 

 

截至9月30日的三個月，

 

 

截至9月30日的九個月，

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

私人教育貸款收益率

 

 

7.52

%

 

 

7.66

%

 

 

7.54

%

 

 

7.41

%

私立教育貸款資金成本

 

 

(4.58

)

 

 

(4.37

)

 

 

(4.52

)

 

 

(4.18

)

私人教育貸款利差

 

 

2.94

 

 

 

3.29

 

 

 

3.02

 

 

 

3.23

 

其他生息資產利差影響

 

 

(.10

)

 

 

(.12

)

 

 

(.11

)

 

 

(.14

)

淨息差(1)

 

 

2.84

%

 

 

3.17

%

 

 

2.91

%

 

 

3.09

%

 

 

 

(1)
各期間的生息資產平均餘額為：

 

 

截至9月30日的三個月，

 

 

截至9月30日的九個月，

 

（百萬美金）

 

2024

 

 

2023

 

 

2024

 

 

2023

 

私人教育貸款

 

$

16,587

 

 

$

18,165

 

 

$

16,968

 

 

$

18,710

 

其他生息資產

 

 

485

 

 

 

565

 

 

 

533

 

 

 

603

 

私人教育貸款生息資產總額

 

$

17,072

 

 

$

18,730

 

 

$

17,501

 

 

$

19,313

 

截至2024年9月30日，我們的私人教育貸款組合總額為160加元，其中包括84加元的再融資貸款和76加元的非再融資貸款。假設CPR分別為10%和10%，截至2024年9月30日，這些投資組合的加權平均壽命分別為5年和5年。

18

 

貸款損失撥備

私人教育貸款損失撥備增加了1100加元。本季度為4700美金的貸款損失準備金包括與違約貸款淨沖銷率變化相關的2100美金的貸款、與貸款發放相關的1500美金的貸款以及與一般準備金建立相關的1100美金的貸款。去年同期為3600美金的貸款損失撥備包括與違約貸款淨沖銷率變化相關的2900美金的貸款，以及與貸款發放相關的1200美金的貸款，部分被500美金的貸款準備金釋放所抵消。

業務費用

我們消費貸款部門的運營費用包括發起、收購、服務和收取我們消費貸款組合的成本。運營費用與去年同期持平。

業務處理部門

下表列出了我們業務處理部門的核心盈利結果。

 

 

截至9月30日的三個月，

 

 

增加%
（減少）

 

 

截至9月30日的九個月，

 

 

增加%
（減少）

 

（百萬美金）

 

2024

 

 

2023

 

 

2024年與2023年

 

 

2024

 

 

2023

 

 

2024年與2023年

 

其他收入（損失）：

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

業務處理收入

 

$

70

 

 

$

85

 

 

 

(18

)%

 

$

228

 

 

$

240

 

 

 

(5

)%

出售子公司收益

 

 

219

 

 

 

—

 

 

 

100

 

 

 

219

 

 

 

—

 

 

 

100

%

其他收入總額

 

 

289

 

 

 

85

 

 

 

240

%

 

 

447

 

 

 

240

 

 

 

86

%

直接經營開支

 

 

57

 

 

 

73

 

 

 

(22

)

 

 

188

 

 

 

215

 

 

 

(13

)

所得稅前收入
費用

 

 

232

 

 

 

12

 

 

 

1,833

 

 

 

259

 

 

 

25

 

 

 

936

 

所得稅開支

 

 

54

 

 

 

3

 

 

 

1,700

 

 

 

60

 

 

 

6

 

 

 

900

 

淨收入

 

$

178

 

 

$

9

 

 

 

1,878

%

 

$

199

 

 

$

19

 

 

 

947

%

2024年第三季度業績與2023年第三季度業績比較

•
Revenue was $289 million, $204 million higher, due to the $219 million gain on the sale of our healthcare services business.
•
Net income was $178 million compared to $9 million.
•
EBITDA(1) was $233 million, up $220 million, as a result of the gain on the sale of our healthcare services business.
•
EBITDA margin was 81%, up from 15%, as a result of the gain on the sale of our healthcare services business..

Key performance metrics are as follows:

 

 

截至9月30日的三個月，

 

 

截至9月30日的九個月，

 

（百萬美金）

 

2024

 

 

2023

 

 

2024

 

 

2023

 

政府服務收入

 

$

42

 

 

$

57

 

 

$

140

 

 

$

149

 

醫療保健服務收入

 

 

28

 

 

 

28

 

 

 

88

 

 

 

91

 

總費用收入

 

 

70

 

 

 

85

 

 

 

228

 

 

 

240

 

出售子公司收益

 

 

219

 

 

 

—

 

 

 

219

 

 

 

—

 

總收入

 

$

289

 

 

$

85

 

 

$

447

 

 

$

240

 

EBITDA(1)

 

$

233

 

 

$

13

 

 

$

262

 

 

$

27

 

EBITDA利潤率(1)

 

 

81

%

 

 

15

%

 

 

59

%

 

 

11

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)
Item is a non-GAAP financial measure. For a description and reconciliation, see “Non-GAAP Financial Measures.”

19

 

Other Segment

The following table presents Core Earnings results for our Other segment.

 

 

Three Months Ended September 30,

 

 

% Increase
(Decrease)

 

 

Nine Months Ended September 30,

 

 

% Increase
(Decrease)

 

(Dollars in millions)

 

2024

 

 

2023

 

 

2024 vs. 2023

 

 

2024

 

 

2023

 

 

2024 vs. 2023

 

Net interest loss after provision for
   loan losses

 

$

(22

)

 

$

(31

)

 

 

(29

)%

 

$

(68

)

 

$

(84

)

 

 

(19

)%

Other revenue (loss)

 

 

10

 

 

 

1

 

 

 

900

 

 

 

16

 

 

 

3

 

 

 

433

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unallocated shared services
   operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Unallocated information
      technology costs

 

 

21

 

 

 

22

 

 

 

(5

)

 

 

63

 

 

 

60

 

 

 

5

 

   Unallocated corporate costs

 

 

42

 

 

 

77

 

 

 

(45

)

 

 

119

 

 

 

147

 

 

 

(19

)

Total unallocated shared
   services operating
   expenses

 

 

63

 

 

 

99

 

 

 

(36

)

 

 

182

 

 

 

207

 

 

 

(12

)

Restructuring/other
   reorganization expenses

 

 

18

 

 

 

4

 

 

 

350

 

 

 

35

 

 

 

23

 

 

 

52

 

Total expenses

 

 

81

 

 

 

103

 

 

 

(21

)

 

 

217

 

 

 

230

 

 

 

(6

)

Loss before income tax benefit

 

 

(93

)

 

 

(133

)

 

 

(30

)

 

 

(269

)

 

 

(311

)

 

 

(14

)

Income tax benefit

 

 

(21

)

 

 

(31

)

 

 

(32

)

 

 

(61

)

 

 

(73

)

 

 

(16

)

Net income (loss)

 

$

(72

)

 

$

(102

)

 

 

(29

)%

 

$

(208

)

 

$

(238

)

 

 

(13

)%

 

Net Interest Loss after Provision for Loan Losses

Net interest loss after provision for loan losses is due to the negative carrying cost of our corporate liquidity portfolio. The amount of the net interest loss is primarily a result of the size of the liquidity portfolio as well as the cost of funds of the debt funding the corporate liquidity portfolio.

Unallocated Shared Services Operating Expenses

Unallocated shared services operating expenses are costs primarily related to information technology costs related to infrastructure and operations, stock-based compensation expense, accounting, finance, legal, compliance and risk management, regulatory-related expenses, human resources, certain executive management and the Board of Directors. Regulatory-related expenses include actual settlement amounts as well as third-party professional fees we incur in connection with such regulatory matters and are presented net of any insurance reimbursements for covered costs related to such matters. Expenses decreased $36 million from the year-ago quarter, primarily as a result of a $33 million decrease in regulatory-related expenses. Regulatory-related expenses were $14 million and $47 million in third-quarter 2024 and third-quarter 2023, respectively, with third-quarter 2024 including an $18 million contingency loss accrual related to the $120 million settlement agreement entered into with the CFPB in September 2024. Third-quarter 2023 included a $45 million contingency loss accrual related to the same matter.

See “Note 10 – Commitments, Contingencies and Guarantees” for a discussion of legal and regulatory matters where it is reasonably possible that a loss contingency exists. The Company is unable to anticipate the timing of a resolution or the impact that certain matters may have on the Company’s consolidated financial position, liquidity, results of operation or cash flows. As a result, it is not possible at this time to estimate a range of potential exposure, if any, for amounts that may be payable in connection with certain matters and reserves have not been established. It is possible that an adverse ruling or rulings may have a material adverse impact on the Company.

Restructuring/Other Reorganization Expenses

These expenses increased $14 million. The current quarter’s restructuring and other reorganization expenses of $18 million included $13 million of severance-related costs in connection with the various strategic initiatives being implemented to simplify the Company, reduce our expense base and enhance our flexibility, and primarily related to severance costs.

20

 

Financial Condition

This section provides information regarding the balances, activity and credit performance metrics of our education loan portfolio.

Summary of Our Education Loan Portfolio

Ending Education Loan Balances, net

 

 

September 30, 2024

 

(Dollars in millions)

 

FFELP
Stafford and
Other

 

 

FFELP
Consolidation
Loans

 

 

Total
FFELP
Loans

 

 

Private
Education
Loans

 

 

Total
Portfolio

 

Total education loan portfolio:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In-school(1)

 

$

10

 

 

$

—

 

 

$

10

 

 

$

92

 

 

$

102

 

Grace, repayment and other(2)

 

 

11,462

 

 

 

20,230

 

 

 

31,692

 

 

 

16,384

 

 

 

48,076

 

Total

 

 

11,472

 

 

 

20,230

 

 

 

31,702

 

 

 

16,476

 

 

 

48,178

 

Allowance for loan losses

 

 

(136

)

 

 

(44

)

 

 

(180

)

 

 

(471

)

 

 

(651

)

Total education loan portfolio

 

$

11,336

 

 

$

20,186

 

 

$

31,522

 

 

$

16,005

 

 

$

47,527

 

% of total FFELP

 

 

36

%

 

 

64

%

 

 

100

%

 

 

 

 

 

 

% of total

 

 

24

%

 

 

42

%

 

 

66

%

 

 

34

%

 

 

100

%

 

 

December 31, 2023

 

(Dollars in millions)

 

FFELP
Stafford and
Other

 

 

FFELP
Consolidation
Loans

 

 

Total
FFELP
Loans

 

 

Private
Education
Loans

 

 

Total
Portfolio

 

Total education loan portfolio:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In-school(1)

 

$

12

 

 

$

—

 

 

$

12

 

 

$

70

 

 

$

82

 

Grace, repayment and other(2)

 

 

13,708

 

 

 

24,420

 

 

 

38,128

 

 

 

17,449

 

 

 

55,577

 

Total

 

 

13,720

 

 

 

24,420

 

 

 

38,140

 

 

 

17,519

 

 

 

55,659

 

Allowance for loan losses

 

 

(156

)

 

 

(59

)

 

 

(215

)

 

 

(617

)

 

 

(832

)

Total education loan portfolio

 

$

13,564

 

 

$

24,361

 

 

$

37,925

 

 

$

16,902

 

 

$

54,827

 

% of total FFELP

 

 

36

%

 

 

64

%

 

 

100

%

 

 

 

 

 

 

% of total

 

 

25

%

 

 

44

%

 

 

69

%

 

 

31

%

 

 

100

%

 

 

 

September 30, 2023

 

(Dollars in millions)

 

FFELP
Stafford and
Other

 

 

FFELP
Consolidation
Loans

 

 

Total
FFELP
Loans

 

 

Private
Education
Loans

 

 

Total
Portfolio

 

Total education loan portfolio:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In-school(1)

 

$

13

 

 

$

—

 

 

$

13

 

 

$

66

 

 

$

79

 

Grace, repayment and other(2)

 

 

14,390

 

 

 

25,398

 

 

 

39,788

 

 

 

17,892

 

 

 

57,680

 

Total

 

 

14,403

 

 

 

25,398

 

 

 

39,801

 

 

 

17,958

 

 

 

57,759

 

Allowance for loan losses

 

 

(159

)

 

 

(61

)

 

 

(220

)

 

 

(625

)

 

 

(845

)

Total education loan portfolio

 

$

14,244

 

 

$

25,337

 

 

$

39,581

 

 

$

17,333

 

 

$

56,914

 

% of total FFELP

 

 

36

%

 

 

64

%

 

 

100

%

 

 

 

 

 

 

% of total

 

 

25

%

 

 

45

%

 

 

70

%

 

 

30

%

 

 

100

%

 

(1)
Loans for customers still attending school and are not yet required to make payments on the loan.
(2)
Includes loans in deferment or forbearance.

 

21

 

Education Loan Activity

 

 

 

Three Months Ended September 30, 2024

 

(Dollars in millions)

 

FFELP
Stafford and
Other

 

 

FFELP
Consolidation
Loans

 

 

Total
FFELP
Loans

 

 

Private
Education
Loans

 

 

Total
Portfolio

 

Beginning balance

 

$

11,796

 

 

$

21,144

 

 

$

32,940

 

 

$

16,238

 

 

$

49,178

 

Acquisitions (originations and purchases)(1)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

407

 

 

 

407

 

Capitalized interest and premium/discount
   amortization

 

 

129

 

 

 

121

 

 

 

250

 

 

 

46

 

 

 

296

 

Refinancings and consolidations to third
   parties

 

 

(274

)

 

 

(600

)

 

 

(874

)

 

 

(52

)

 

 

(926

)

Repayments and other

 

 

(315

)

 

 

(479

)

 

 

(794

)

 

 

(634

)

 

 

(1,428

)

Ending balance

 

$

11,336

 

 

$

20,186

 

 

$

31,522

 

 

$

16,005

 

 

$

47,527

 

 

 

Three Months Ended September 30, 2023

 

(Dollars in millions)

 

FFELP
Stafford and
Other

 

 

FFELP
Consolidation
Loans

 

 

Total
FFELP
Loans

 

 

Private
Education
Loans

 

 

Total
Portfolio

 

Beginning balance

 

$

14,695

 

 

$

26,156

 

 

$

40,851

 

 

$

17,732

 

 

$

58,583

 

Acquisitions (originations and purchases)(1)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

302

 

 

 

302

 

Capitalized interest and premium/discount
   amortization

 

 

175

 

 

 

153

 

 

 

328

 

 

 

50

 

 

 

378

 

Refinancings and consolidations to third
   parties

 

 

(169

)

 

 

(399

)

 

 

(568

)

 

 

(58

)

 

 

(626

)

Repayments and other

 

 

(457

)

 

 

(573

)

 

 

(1,030

)

 

 

(693

)

 

 

(1,723

)

Ending balance

 

$

14,244

 

 

$

25,337

 

 

$

39,581

 

 

$

17,333

 

 

$

56,914

 

 

 

Nine Months Ended September 30, 2024

 

(Dollars in millions)

 

FFELP
Stafford and
Other

 

 

FFELP
Consolidation
Loans

 

 

Total
FFELP
Loans

 

 

Private
Education
Loans

 

 

Total
Portfolio

 

Beginning balance

 

$

13,564

 

 

$

24,361

 

 

$

37,925

 

 

$

16,902

 

 

$

54,827

 

Acquisitions (originations and purchases)(1)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,017

 

 

 

1,017

 

Capitalized interest and premium/discount
   amortization

 

 

384

 

 

 

388

 

 

 

772

 

 

 

152

 

 

 

924

 

Refinancings and consolidations to third
   parties

 

 

(1,505

)

 

 

(3,024

)

 

 

(4,529

)

 

 

(151

)

 

 

(4,680

)

Repayments and other

 

 

(1,107

)

 

 

(1,539

)

 

 

(2,646

)

 

 

(1,915

)

 

 

(4,561

)

Ending balance

 

$

11,336

 

 

$

20,186

 

 

$

31,522

 

 

$

16,005

 

 

$

47,527

 

 

 

Nine Months Ended September 30, 2023

 

(Dollars in millions)

 

FFELP
Stafford and
Other

 

 

FFELP
Consolidation
Loans

 

 

Total
FFELP
Loans

 

 

Private
Education
Loans

 

 

Total
Portfolio

 

Beginning balance

 

$

15,691

 

 

$

27,834

 

 

$

43,525

 

 

$

18,725

 

 

$

62,250

 

Acquisitions (originations and purchases)(1)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

741

 

 

 

741

 

Capitalized interest and premium/discount
   amortization

 

 

440

 

 

 

466

 

 

 

906

 

 

 

139

 

 

 

1,045

 

Refinancings and consolidations to third
   parties

 

 

(585

)

 

 

(1,180

)

 

 

(1,765

)

 

 

(190

)

 

 

(1,955

)

Repayments and other

 

 

(1,302

)

 

 

(1,783

)

 

 

(3,085

)

 

 

(2,082

)

 

 

(5,167

)

Ending balance

 

$

14,244

 

 

$

25,337

 

 

$

39,581

 

 

$

17,333

 

 

$

56,914

 

 

(1)
Includes the origination of $47 million and $42 million of Private Education Refinance Loans in the third-quarters of 2024 and 2023, respectively, and $138 million and $144 million in the nine months ended September 30, 2024 and 2023, respectively, that refinanced FFELP and Private Education Loans that were on our balance sheet.

 

22

 

FFELP Loan Portfolio Performance

 

 

 

September 30, 2024

 

 

December 31, 2023

 

 

September 30, 2023

 

(Dollars in millions)

 

Balance

 

 

%

 

 

Balance

 

 

%

 

 

Balance

 

 

%

 

Loans in-school/grace/deferment(1)

 

$

1,342

 

 

 

 

 

$

1,557

 

 

 

 

 

$

1,636

 

 

 

 

Loans in forbearance(2)

 

 

4,978

 

 

 

 

 

 

6,147

 

 

 

 

 

 

6,248

 

 

 

 

Loans in repayment and percentage of each status:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans current

 

 

21,975

 

 

 

86.6

%

 

 

26,204

 

 

 

86.1

%

 

 

26,566

 

 

 

83.2

%

Loans delinquent 31-60 days(3)

 

 

948

 

 

 

3.7

 

 

 

1,193

 

 

 

3.9

 

 

 

1,481

 

 

 

4.6

 

Loans delinquent 61-90 days(3)

 

 

599

 

 

 

2.4

 

 

 

746

 

 

 

2.5

 

 

 

949

 

 

 

3.0

 

Loans delinquent greater than 90 days(3)

 

 

1,860

 

 

 

7.3

 

 

 

2,293

 

 

 

7.5

 

 

 

2,921

 

 

 

9.2

 

Total FFELP Loans in repayment

 

 

25,382

 

 

 

100

%

 

 

30,436

 

 

 

100

%

 

 

31,917

 

 

 

100

%

Total FFELP Loans

 

 

31,702

 

 

 

 

 

 

38,140

 

 

 

 

 

 

39,801

 

 

 

 

FFELP Loan allowance for losses

 

 

(180

)

 

 

 

 

 

(215

)

 

 

 

 

 

(220

)

 

 

 

FFELP Loans, net

 

$

31,522

 

 

 

 

 

$

37,925

 

 

 

 

 

$

39,581

 

 

 

 

Percentage of FFELP Loans in repayment

 

 

 

 

 

80.1

%

 

 

 

 

 

79.8

%

 

 

 

 

 

80.2

%

Delinquencies as a percentage of FFELP Loans in
   repayment

 

 

 

 

 

13.4

%

 

 

 

 

 

13.9

%

 

 

 

 

 

16.8

%

FFELP Loans in forbearance as a percentage of
   loans in repayment and forbearance

 

 

 

 

 

16.4

%

 

 

 

 

 

16.8

%

 

 

 

 

 

16.4

%

(1)
Loans for customers who may still be attending school or engaging in other permitted educational activities and are not yet required to make payments on their loans, e.g., residency periods for medical students or a grace period for bar exam preparation, as well as loans for customers who have requested and qualify for other permitted program deferments such as military, unemployment, or economic hardships.
(2)
Loans for customers who have used their allowable deferment time or do not qualify for deferment, that need additional time to obtain employment or who have temporarily ceased making payments due to hardship or other factors such as disaster relief.
(3)
The period of delinquency is based on the number of days scheduled payments are contractually past due.

Private Education Loan Portfolio Performance

 

 

 

September 30, 2024

 

 

December 31, 2023

 

 

September 30, 2023

 

(Dollars in millions)

 

Balance

 

 

%

 

 

Balance

 

 

%

 

 

Balance

 

 

%

 

Loans in-school/grace/deferment(1)

 

$

372

 

 

 

 

 

$

360

 

 

 

 

 

$

365

 

 

 

 

Loans in forbearance(2)

 

 

445

 

 

 

 

 

 

363

 

 

 

 

 

 

344

 

 

 

 

Loans in repayment and percentage of each status:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans current

 

 

14,827

 

 

 

94.7

%

 

 

15,935

 

 

 

94.9

%

 

 

16,435

 

 

 

95.3

%

Loans delinquent 31-60 days(3)

 

 

282

 

 

 

1.8

 

 

 

308

 

 

 

1.8

 

 

 

304

 

 

 

1.8

 

Loans delinquent 61-90 days(3)

 

 

173

 

 

 

1.1

 

 

 

173

 

 

 

1.0

 

 

 

176

 

 

 

1.0

 

Loans delinquent greater than 90 days(3)

 

 

377

 

 

 

2.4

 

 

 

380

 

 

 

2.3

 

 

 

334

 

 

 

1.9

 

Total Private Education Loans in repayment

 

 

15,659

 

 

 

100

%

 

 

16,796

 

 

 

100

%

 

 

17,249

 

 

 

100

%

Total Private Education Loans

 

 

16,476

 

 

 

 

 

 

17,519

 

 

 

 

 

 

17,958

 

 

 

 

Private Education Loan allowance for losses

 

 

(471

)

 

 

 

 

 

(617

)

 

 

 

 

 

(625

)

 

 

 

Private Education Loans, net

 

$

16,005

 

 

 

 

 

$

16,902

 

 

 

 

 

$

17,333

 

 

 

 

Percentage of Private Education Loans in
   repayment

 

 

 

 

 

95.0

%

 

 

 

 

 

95.9

%

 

 

 

 

 

96.1

%

Delinquencies as a percentage of Private Education
   Loans in repayment

 

 

 

 

 

5.3

%

 

 

 

 

 

5.1

%

 

 

 

 

 

4.7

%

Loans in forbearance as a percentage of loans in
   repayment and forbearance

 

 

 

 

 

2.8

%

 

 

 

 

 

2.1

%

 

 

 

 

 

2.0

%

Percentage of Private Education Loans with a
   cosigner(4)

 

 

 

 

 

33

%

 

 

 

 

 

33

%

 

 

 

 

 

33

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)
Loans for customers who are attending school or are in other permitted educational activities and are not yet required to make payments on their loans, e.g., internship periods, as well as loans for customers who have requested and qualify for other permitted program deferments such as various military eligible deferments.
(2)
Loans for customers who have requested extension of grace period generally during employment transition or who have temporarily ceased making full payments due to hardship or other factors such as disaster relief consistent with established loan program servicing policies and procedures.
(3)
The period of delinquency is based on the number of days scheduled payments are contractually past due.
(4)
Excluding Private Education Refinance Loans, which do not have a cosigner, the cosigner rate was 66%, 65% and 65% for third-quarter 2024, fourth-quarter 2023 and third-quarter 2023, respectively.

 

 

23

 

Allowance for Loan Losses

 

 

 

Three Months Ended September 30,

 

 

 

2024

 

 

2023

 

(Dollars in millions)

 

FFELP Loans

 

 

Private Education Loans

 

 

Total

 

 

FFELP Loans

 

 

Private Education Loans

 

 

Total

 

Beginning balance

 

$

194

 

 

$

493

 

 

$

687

 

 

$

200

 

 

$

657

 

 

$

857

 

Total provision

 

 

(5

)

 

 

47

 

 

 

42

 

 

 

36

 

 

 

36

 

 

 

72

 

Charge-offs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross charge-offs

 

 

(9

)

 

 

(85

)

 

 

(94

)

 

 

(16

)

 

 

(85

)

 

 

(101

)

Expected future recoveries on current period gross
   charge-offs

 

 

—

 

 

 

11

 

 

 

11

 

 

 

—

 

 

 

12

 

 

 

12

 

Total(1)

 

 

(9

)

 

 

(74

)

 

 

(83

)

 

 

(16

)

 

 

(73

)

 

 

(89

)

Adjustment resulting from the change in charge-off
   rate(2)

 

 

—

 

 

 

(21

)

 

 

(21

)

 

 

—

 

 

 

(25

)

 

 

(25

)

Net charge-offs

 

 

(9

)

 

 

(95

)

 

 

(104

)

 

 

(16

)

 

 

(98

)

 

 

(114

)

Decrease in expected future recoveries on previously
   fully charged-off loans(3)

 

 

—

 

 

 

26

 

 

 

26

 

 

 

—

 

 

 

30

 

 

 

30

 

Allowance at end of period (GAAP)

 

 

180

 

 

 

471

 

 

 

651

 

 

 

220

 

 

 

625

 

 

 

845

 

Plus: expected future recoveries on previously fully
   charged-off loans(3)

 

 

—

 

 

 

185

 

 

 

185

 

 

 

—

 

 

 

232

 

 

 

232

 

Allowance at end of period excluding expected future
   recoveries on previously fully charged-off loans
   (Non-GAAP Financial Measure)(4)

 

$

180

 

 

$

656

 

 

$

836

 

 

$

220

 

 

$

857

 

 

$

1,077

 

Net charge-offs as a percentage of average loans in
   repayment, excluding the net adjustment resulting
   from the change in the charge-off rate
   (annualized)(2)

 

 

.14

%

 

 

1.87

%

 

 

 

 

 

.19

%

 

 

1.66

%

 

 

 

Net adjustment resulting from the change in charge
   -off rate as a percentage of average loans in
   repayment (annualized)(2)

 

 

—

%

 

 

.53

%

 

 

 

 

 

—

%

 

 

.56

%

 

 

 

Net charge-offs as a percentage of average loans in
   repayment (annualized)

 

 

.14

%

 

 

2.40

%

 

 

 

 

 

.19

%

 

 

2.22

%

 

 

 

Allowance coverage of charge-offs
   (annualized)(4)

 

 

5.0

 

 

 

1.7

 

 

 (Non-GAAP)

 

 

 

3.5

 

 

 

2.2

 

 

 (Non-GAAP)

 

Allowance as a percentage of the ending total loan
   balance(4)

 

 

.6

%

 

 

4.0

%

 

 (Non-GAAP)

 

 

 

.6

%

 

 

4.8

%

 

 (Non-GAAP)

 

Allowance as a percentage of the ending loans in
   repayment(4)

 

 

.7

%

 

 

4.2

%

 

 (Non-GAAP)

 

 

 

.7

%

 

 

5.0

%

 

 (Non-GAAP)

 

Ending total loans

 

$

31,702

 

 

$

16,476

 

 

 

 

 

$

39,801

 

 

$

17,958

 

 

 

 

Average loans in repayment

 

$

25,866

 

 

$

15,856

 

 

 

 

 

$

32,696

 

 

$

17,470

 

 

 

 

Ending loans in repayment

 

$

25,382

 

 

$

15,659

 

 

 

 

 

$

31,917

 

 

$

17,249

 

 

 

 

 

(1)
Charge-offs are reported net of expected recoveries. For Private Education Loans, we charge off the estimated loss of a defaulted loan balance by charging off the entire defaulted loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as “expected future recoveries on previously fully charged-off loans.” For FFELP Loans, the recovery is received at the time of charge-off.
(2)
In third-quarter 2023, the net charge-off rate on defaulted Private Education Loans increased from 81.9% to 82.3% and in third-quarter 2024, it increased from 82.3% to 82.7%. These changes resulted in a $21 million and $25 million reduction to the balance of the expected future recoveries on previously fully charged-off loans in third-quarter 2024 and 2023, respectively.
(3)
At the end of each month, for Private Education Loans that are 212 or more days past due, we charge off the estimated loss of a defaulted loan balance by charging off the entire loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as "expected future recoveries on previously fully charged-off loans." If actual periodic recoveries are less than expected, the difference is immediately reflected as a reduction to expected future recoveries on previously fully charged-off loans. If actual periodic recoveries are greater than expected, they will be reflected as a recovery through the allowance for Private Education Loan losses once the cumulative recovery amount exceeds the cumulative amount originally expected to be recovered. The following table summarizes the activity in the expected future recoveries on previously fully charged-off loans:

 

 

Three Months Ended September 30,

 

(Dollars in millions)

 

2024

 

 

2023

 

Beginning of period expected future recoveries on
   previously fully charged-off loans

 

$

211

 

 

$

262

 

Expected future recoveries of current period defaults

 

 

11

 

 

 

12

 

Recoveries (cash collected)

 

 

(10

)

 

 

(11

)

Charge-offs (as a result of lower recovery expectations)

 

 

(27

)

 

 

(31

)

End of period expected future recoveries on previously
   fully charged-off loans

 

$

185

 

 

$

232

 

Change in balance during period

 

$

(26

)

 

$

(30

)
(4)
The allowance used for these metrics excludes the expected future recoveries on previously fully charged-off loans to better reflect the current expected credit losses remaining in the portfolio.

 

24

 

 

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

(Dollars in millions)

 

FFELP Loans

 

 

Private Education Loans

 

 

Total

 

 

FFELP Loans

 

 

Private Education Loans

 

 

Total

 

Beginning balance

 

$

215

 

 

$

617

 

 

$

832

 

 

$

222

 

 

$

800

 

 

$

1,022

 

Total provision

 

 

(6

)

 

 

74

 

 

 

68

 

 

 

51

 

 

 

17

 

 

 

68

 

Charge-offs:

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

Gross charge-offs

 

 

(29

)

 

 

(272

)

 

 

(301

)

 

 

(53

)

 

 

(245

)

 

 

(298

)

Expected future recoveries on current period gross
   charge-offs

 

 

—

 

 

 

32

 

 

 

32

 

 

 

—

 

 

 

36

 

 

 

36

 

Total(1)(2)

 

 

(29

)

 

 

(240

)

 

 

(269

)

 

 

(53

)

 

 

(209

)

 

 

(262

)

Adjustment resulting from the change in charge-off
   rate(3)

 

 

—

 

 

 

(21

)

 

 

(21

)

 

 

—

 

 

 

(25

)

 

 

(25

)

Net charge-offs

 

 

(29

)

 

 

(261

)

 

 

(290

)

 

 

(53

)

 

 

(234

)

 

 

(287

)

Decrease in expected future recoveries on previously
   fully charged-off loans(4)

 

 

—

 

 

 

41

 

 

 

41

 

 

 

—

 

 

 

42

 

 

 

42

 

Allowance at end of period (GAAP)

 

 

180

 

 

 

471

 

 

 

651

 

 

 

220

 

 

 

625

 

 

 

845

 

Plus: expected future recoveries on previously fully
   charged-off loans(4)

 

 

—

 

 

 

185

 

 

 

185

 

 

 

—

 

 

 

232

 

 

 

232

 

Allowance at end of period excluding expected future
   recoveries on previously fully charged-off loans
   (Non-GAAP Financial Measure)(5)

 

$

180

 

 

$

656

 

 

$

836

 

 

$

220

 

 

$

857

 

 

$

1,077

 

Net charge-offs as a percentage of average loans in
   repayment, excluding the net adjustment resulting
   from the change in the charge-off rate
   (annualized)(3)

 

 

.14

%

 

 

1.98

%

 

 

 

 

 

.21

%

 

 

1.56

%

 

 

 

Net adjustment resulting from the change in charge
   -off rate as a percentage of average loans in
   repayment (annualized)(3)

 

 

—

%

 

 

.17

%

 

 

 

 

 

—

%

 

 

.18

%

 

 

 

Net charge-offs as a percentage of average loans in
   repayment (annualized)

 

 

.14

%

 

 

2.15

%

 

 

 

 

 

.21

%

 

 

1.74

%

 

 

 

Allowance coverage of charge-offs
   (annualized)(5)

 

 

4.7

 

 

 

1.8

 

 

 (Non-GAAP)

 

 

 

3.1

 

 

 

2.7

 

 

 (Non-GAAP)

 

Allowance as a percentage of the ending total loan
   balance(5)

 

 

.6

%

 

 

4.0

%

 

 (Non-GAAP)

 

 

 

.6

%

 

 

4.8

%

 

 (Non-GAAP)

 

Allowance as a percentage of the ending loans in
   repayment(5)

 

 

.7

%

 

 

4.2

%

 

 (Non-GAAP)

 

 

 

.7

%

 

 

5.0

%

 

 (Non-GAAP)

 

Ending total loans

 

$

31,702

 

 

$

16,476

 

 

 

 

 

$

39,801

 

 

$

17,958

 

 

 

 

Average loans in repayment

 

$

27,697

 

 

$

16,265

 

 

 

 

 

$

33,591

 

 

$

18,000

 

 

 

 

Ending loans in repayment

 

$

25,382

 

 

$

15,659

 

 

 

 

 

$

31,917

 

 

$

17,249

 

 

 

 

 

(1)
$28 million of first-quarter 2024 Private Education Loan net charge-offs was in connection with the resolution of certain private legacy loans in bankruptcy. This was previously reserved for in 2023.
(2)
Charge-offs are reported net of expected recoveries. For Private Education Loans, we charge off the estimated loss of a defaulted loan balance by charging off the entire defaulted loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as “expected future recoveries on previously fully charged-off loans.” For FFELP Loans, the recovery is received at the time of charge-off.
(3)
In third-quarter 2023, the net charge-off rate on defaulted Private Education Loans increased from 81.9% to 82.3% and in third-quarter 2024, it increased from 82.3% to 82.7%. These changes resulted in a $21 million and $25 million reduction to the balance of the expected future recoveries on previously fully charged-off loans in third-quarter 2024 and 2023, respectively.
(4)
At the end of each month, for Private Education Loans that are 212 or more days past due, we charge off the estimated loss of a defaulted loan balance by charging off the entire loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as "expected future recoveries on previously fully charged-off loans." If actual periodic recoveries are less than expected, the difference is immediately reflected as a reduction to expected future recoveries on previously fully charged-off loans. If actual periodic recoveries are greater than expected, they will be reflected as a recovery through the allowance for Private Education Loan losses once the cumulative recovery amount exceeds the cumulative amount originally expected to be recovered. The following table summarizes the activity in the expected future recoveries on previously fully charged-off loans:

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2024

 

 

2023

 

Beginning of period expected future recoveries on
   previously fully charged-off loans

 

$

226

 

 

$

274

 

Expected future recoveries of current period defaults

 

 

32

 

 

 

36

 

Recoveries (cash collected)

 

 

(31

)

 

 

(35

)

Charge-offs (as a result of lower recovery expectations)

 

 

(42

)

 

 

(43

)

End of period expected future recoveries on previously
   fully charged-off loans

 

$

185

 

 

$

232

 

Change in balance during period

 

$

(41

)

 

$

(42

)
(5)
The allowance used for these metrics excludes the expected future recoveries on previously fully charged-off loans to better reflect the current expected credit losses remaining in the portfolio.

 

 

25

 

Liquidity and Capital Resources

Funding and Liquidity Risk Management

The following “Liquidity and Capital Resources” discussion concentrates primarily on our Federal Education Loans and Consumer Lending segments. Our Business Processing segment requires minimal liquidity and funding.

We define liquidity as cash and high-quality liquid assets that we can use to meet our cash requirements. Our two primary liquidity needs are: (1) servicing our debt and (2) our ongoing ability to meet our cash needs for running the operations of our businesses (including derivative collateral requirements) throughout market cycles, including during periods of financial stress. Secondary liquidity needs, which can be adjusted as needed, include the origination of Private Education Loans, acquisitions of Private Education Loan and FFELP Loan portfolios, acquisitions of companies, the payment of common stock dividends and the repurchase of our common stock. To achieve these objectives, we analyze and monitor our liquidity needs and maintain excess liquidity and access to diverse funding sources including the issuance of unsecured debt and the issuance of secured debt primarily through asset-backed securitizations and/or other financing facilities.

We define our liquidity risk as the potential inability to meet our obligations when they become due without incurring unacceptable losses or to invest in future asset growth and business operations at reasonable market rates. Our primary liquidity risk relates to our ability to service our debt, meet our other business obligations and to continue to grow our business. The ability to access the capital markets is impacted by general market and economic conditions, our credit ratings, as well as the overall availability of funding sources in the marketplace. In addition, credit ratings may be important to customers or counterparties when we compete in certain markets and when we seek to engage in certain transactions, including over-the-counter derivatives.

Credit ratings and outlooks are opinions subject to ongoing review by the rating agencies and may change, from time to time, based on our financial performance, industry and market dynamics and other factors. Other factors that influence our credit ratings include the rating agencies’ assessment of the general operating environment, our relative positions in the markets in which we compete, reputation, liquidity position, the level and volatility of earnings, corporate governance and risk management policies, capital position and capital management practices. A negative change in our credit rating could have a negative effect on our liquidity because it might raise the cost and availability of funding and potentially require additional cash collateral or restrict cash currently held as collateral on existing borrowings or derivative collateral arrangements. It is our objective to improve our credit ratings so that we can continue to efficiently access the capital markets even in difficult economic and market conditions. We have unsecured debt totaling $5.9 billion at September 30, 2024. Three credit rating agencies currently rate our long-term unsecured debt at below investment grade.

We expect to fund our ongoing liquidity needs, including the repayment of $1.1 billion of senior unsecured notes that mature in the short term (i.e., over the next 12 months) and the remaining $4.8 billion of senior unsecured notes that mature in the long term (from 2025 to 2043 with 56% maturing by 2029), through a number of sources. These sources include our cash on hand, unencumbered FFELP Loan and Private Education Refinance Loan portfolios (see “Sources of Primary Liquidity” below), the predictable operating cash flows provided by operating activities, the repayment of principal on unencumbered education loan assets, and the distribution of overcollateralization from our securitization trusts. We may also, depending on market conditions and availability, draw down on our secured FFELP Loan and Private Education Loan asset-backed commercial paper (ABCP) facilities, issue term ABS, enter into additional Private Education Loan and FFELP Loan ABS repurchase facilities, or issue additional unsecured debt.

We originate Private Education Loans (a portion of which is obtained through a forward purchase agreement). We also have purchased and may purchase, in future periods, Private Education Loan portfolios from third parties. Loan originations and purchases are part of our ongoing liquidity needs. We purchased 2.1 million shares of common stock for $33 million in the third quarter of 2024 and have $176 million of unused share repurchase authority as of September 30, 2024.

 

26

 

Sources of Primary Liquidity

 

 

 

 

 

 

 

 

 

 

(Dollars in millions)

 

September 30, 2024

 

 

December 31, 2023

 

 

September 30, 2023

 

Ending Balances:

 

 

 

 

 

 

 

 

 

Total unrestricted cash and liquid investments

 

$

1,143

 

 

$

839

 

 

$

977

 

Unencumbered FFELP Loans

 

 

199

 

 

 

92

 

 

 

88

 

Unencumbered Private Education Refinance
   Loans

 

 

395

 

 

 

236

 

 

 

49

 

Total

 

$

1,737

 

 

$

1,167

 

 

$

1,114

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(Dollars in millions)

 

September 30, 2024

 

 

December 31, 2023

 

 

September 30, 2023

 

 

September 30, 2024

 

 

September 30, 2023

 

Average Balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total unrestricted cash and
  liquid investments

 

$

1,129

 

 

$

1,167

 

 

$

1,141

 

 

$

1,004

 

 

$

977

 

Unencumbered FFELP Loans

 

 

179

 

 

 

92

 

 

 

85

 

 

 

148

 

 

 

88

 

Unencumbered Private
   Education Refinance Loans

 

 

446

 

 

 

137

 

 

 

118

 

 

 

297

 

 

 

95

 

Total

 

$

1,754

 

 

$

1,396

 

 

$

1,344

 

 

$

1,449

 

 

$

1,160

 

Sources of Additional Liquidity

Liquidity may also be available under our secured credit facilities. Maximum borrowing capacity under the FFELP Loan and Private Education Loan ABCP facilities will vary and be subject to each agreement’s borrowing conditions, including, among others, facility size, current usage and availability of qualifying collateral from unencumbered loans. The following tables detail the additional borrowing capacity of these facilities with maturity dates ranging from November 2024 to April 2026.

 

(Dollars in millions)

 

September 30, 2024

 

 

December 31, 2023

 

 

September 30, 2023

 

Ending Balances:

 

 

 

 

 

 

 

 

 

FFELP Loan ABCP facilities

 

$

422

 

 

$

408

 

 

$

28

 

Private Education Loan ABCP facilities

 

 

1,921

 

 

 

1,719

 

 

 

1,697

 

Total

 

$

2,343

 

 

$

2,127

 

 

$

1,725

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

(Dollars in millions)

 

September 30, 2024

 

 

December 31, 2023

 

 

September 30, 2023

 

 

September 30, 2024

 

 

September 30, 2023

 

Average Balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFELP Loan ABCP facilities

 

$

419

 

 

$

203

 

 

$

35

 

 

$

412

 

 

$

70

 

Private Education Loan ABCP
   facilities

 

 

2,079

 

 

 

1,693

 

 

 

1,966

 

 

 

1,770

 

 

 

1,777

 

Total

 

$

2,498

 

 

$

1,896

 

 

$

2,001

 

 

$

2,182

 

 

$

1,847

 

At September 30, 2024, we had a total of $3.5 billion of unencumbered tangible assets inclusive of those listed in the table above as sources of primary liquidity. Total unencumbered education loans comprised $1.4 billion principal of our unencumbered tangible assets of which $1.2 billion and $199 million related to Private Education Loans and FFELP Loans, respectively. In addition, as of September 30, 2024, we had $4.9 billion of encumbered net assets (i.e., overcollateralization) in our various financing facilities (consolidated variable interest entities). We enter into repurchase facilities at times to borrow against the encumbered net assets of these financing vehicles. As of September 30, 2024, $0.8 billion of repurchase facility borrowings were outstanding.

27

 

The following table reconciles encumbered and unencumbered assets and their net impact on total Tangible Equity.

(Dollars in billions)

 

September 30, 2024

 

 

December 31, 2023

 

Net assets of consolidated variable interest
   entities (encumbered assets) — FFELP Loans

 

$

3.0

 

 

 

3.4

 

Net assets of consolidated variable interest entities
   (encumbered assets) — Private Education Loans

 

 

1.9

 

 

 

2.1

 

Tangible unencumbered assets(1)

 

 

3.5

 

 

 

3.0

 

Senior unsecured debt

 

 

(5.9

)

 

 

(5.9

)

Mark-to-market on unsecured hedged debt(2)

 

 

.1

 

 

 

.2

 

Other liabilities, net

 

 

(.3

)

 

 

(.7

)

Total Tangible Equity (3)

 

$

2.3

 

 

$

2.1

 

(1)
Excludes goodwill and acquired intangible assets.
(2)
At September 30, 2024 and December 31, 2023, there were $(94) million and $(181) million, respectively, of net gains (losses) on derivatives hedging this debt in unencumbered assets, which partially offset these gains (losses).
(3)
Item is a non-GAAP financial measure. For a description and reconciliation, see “Non-GAAP Financial Measures.”

Borrowings

Ending Balances

 

 

September 30, 2024

 

 

December 31, 2023

 

(Dollars in millions)

 

Short
Term

 

 

Long
Term

 

 

Total

 

 

Short
Term

 

 

Long
Term

 

 

Total

 

Unsecured borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Senior unsecured debt

 

$

1,053

 

 

$

4,804

 

 

$

5,857

 

 

$

506

 

 

$

5,351

 

 

$

5,857

 

Total unsecured borrowings

 

 

1,053

 

 

 

4,804

 

 

 

5,857

 

 

 

506

 

 

 

5,351

 

 

 

5,857

 

Secured borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   FFELP Loan securitizations

 

 

136

 

 

 

29,087

 

 

 

29,223

 

 

 

59

 

 

 

35,626

 

 

 

35,685

 

   Private Education Loan securitizations

 

 

672

 

 

 

10,852

 

 

 

11,524

 

 

 

435

 

 

 

11,754

 

 

 

12,189

 

   FFELP Loan ABCP facilities

 

 

1,490

 

 

 

75

 

 

 

1,565

 

 

 

1,854

 

 

 

89

 

 

 

1,943

 

   Private Education Loan ABCP facilities

 

 

1,876

 

 

 

—

 

 

 

1,876

 

 

 

1,286

 

 

 

821

 

 

 

2,107

 

   Other

 

 

86

 

 

 

39

 

 

 

125

 

 

 

95

 

 

 

39

 

 

 

134

 

Total secured borrowings

 

 

4,260

 

 

 

40,053

 

 

 

44,313

 

 

 

3,729

 

 

 

48,329

 

 

 

52,058

 

Core Earnings basis borrowings(1)

 

 

5,313

 

 

 

44,857

 

 

 

50,170

 

 

 

4,235

 

 

 

53,680

 

 

 

57,915

 

Adjustment for GAAP accounting treatment

 

 

(8

)

 

 

(162

)

 

 

(170

)

 

 

(9

)

 

 

(278

)

 

 

(287

)

GAAP basis borrowings

 

$

5,305

 

 

$

44,695

 

 

$

50,000

 

 

$

4,226

 

 

$

53,402

 

 

$

57,628

 

Average Balances

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

(Dollars in millions)

 

Average
Balance

 

 

Average
Rate

 

 

Average
Balance

 

 

Average
Rate

 

 

Average
Balance

 

 

Average
Rate

 

 

Average
Balance

 

 

Average
Rate

 

Unsecured borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior unsecured debt

 

$

5,856

 

 

 

9.19

%

 

$

6,490

 

 

 

9.02

%

 

$

5,857

 

 

 

9.23

%

 

$

6,367

 

 

 

8.62

%

Total unsecured borrowings

 

 

5,856

 

 

 

9.19

 

 

 

6,490

 

 

 

9.02

 

 

 

5,857

 

 

 

9.23

 

 

 

6,367

 

 

 

8.62

 

Secured borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFELP Loan securitizations

 

 

30,361

 

 

 

6.53

 

 

 

37,728

 

 

 

5.85

 

 

 

32,711

 

 

 

6.43

 

 

 

39,399

 

 

 

5.56

 

Private Education Loan
   securitizations

 

 

11,832

 

 

 

3.82

 

 

 

12,601

 

 

 

3.50

 

 

 

11,838

 

 

 

3.68

 

 

 

12,934

 

 

 

3.40

 

FFELP Loan ABCP facilities

 

 

1,626

 

 

 

6.88

 

 

 

1,983

 

 

 

6.56

 

 

 

1,760

 

 

 

6.94

 

 

 

1,707

 

 

 

6.27

 

Private Education Loan
   ABCP facilities

 

 

1,741

 

 

 

7.59

 

 

 

2,318

 

 

 

7.27

 

 

 

2,045

 

 

 

7.39

 

 

 

2,526

 

 

 

6.74

 

Other

 

 

117

 

 

 

(.29

)

 

 

113

 

 

 

(.37

)

 

 

109

 

 

 

(1.69

)

 

 

109

 

 

 

3.32

 

Total secured borrowings

 

 

45,677

 

 

 

5.87

 

 

 

54,743

 

 

 

5.39

 

 

 

48,463

 

 

 

5.80

 

 

 

56,675

 

 

 

5.14

 

Core Earnings basis
   borrowings(1)

 

 

51,533

 

 

 

6.24

 

 

 

61,233

 

 

 

5.77

 

 

 

54,320

 

 

 

6.17

 

 

 

63,042

 

 

 

5.49

 

Adjustment for GAAP
   accounting treatment

 

 

—

 

 

 

.16

 

 

 

—

 

 

 

(.07

)

 

 

—

 

 

 

.09

 

 

 

—

 

 

 

.10

 

GAAP basis borrowings

 

$

51,533

 

 

 

6.40

%

 

$

61,233

 

 

 

5.70

%

 

$

54,320

 

 

 

6.26

%

 

$

63,042

 

 

 

5.59

%

 

(1)
Item is a non-GAAP financial measure. For a description and reconciliation, see “Non-GAAP Financial Measures.” The differences in derivative accounting give rise to the difference above.

 

 

28

 

Critical Accounting Policies and Estimates

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations addresses our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP). A discussion of our critical accounting policies, which includes the allowance for loan losses, goodwill impairment assessment, premium and discount amortization, and the impact of the SDR Plan on our accounting policies and estimates, can be found in our 2023 Form 10-K. See "Segment Results —Federal Education Loans Segment — Various Federal Loan Forgiveness Plans" for an update on the SDR Plan.

Related to goodwill, we last performed a quantitative goodwill impairment test by engaging an independent appraiser to estimate the fair values of our reporting units as of October 1, 2022. During third-quarter 2024, we assessed relevant qualitative factors associated with the FFELP Loans and Government Services reporting units to determine whether it was "more-likely-than-not” that the fair value of these reporting units was less than their carrying values. Based on the current performance of and economic environment impacting the other reporting units with goodwill, we determined that neither a qualitative nor a quantitative interim impairment test was warranted to test goodwill associated with other reporting units.

For the FFELP Loans reporting unit, goodwill will be impaired at some point in the future due to the runoff nature of the portfolio, although the timing of impairment remains uncertain. As a result of elevated prepayments experienced in the first nine months of 2024 (primarily as a result of ED's proposed debt relief regulations), the runoff nature of the portfolio and the passage of time, we performed a quantitative impairment test, by engaging an independent appraiser to estimate the fair value of the reporting unit. FFELP Loan’s goodwill was not deemed impaired as a result of the quantitative impairment test as the fair value of the reporting unit was greater than the reporting unit’s carry value. However, our current projections of future cash flows would result in partial impairment of FFELP Loans in 2025 earlier than previously estimated (as previously disclosed in our 2023 Form 10-K) and impairment may be accelerated into the fourth quarter of 2024 if elevated prepayment rates continue or if there is significant change in economic and other factors impacting the discount rate used to determine the fair value of the projected cashflows and thus the reporting unit. Since our estimate of future portfolio cash flows may change, the estimated timing of partial future impairment may also change.

With respect to the Government Services reporting unit, in the second half of September 2024, we were informed a contract that represented a significant portion of Government Services income would not be renewed in 2025. In addition, a federal program which is a significant part of a Government Services contract remained unfunded during the third quarter. There has been increased uncertainty as to when or if there will be congressional approval to fund this program which would result in the resumption of services provided by Government Services under this contract. These two events in September 2024 resulted in a significant decline in the estimated fair value of the reporting unit. Based on active discussions with potential buyers of the Government Services business and their indication of a potential purchase price, Navient concluded that Government Services’ $138 million of goodwill and acquired intangible assets were fully impaired. The remaining net book value of the Government Services reporting unit after the impairment was approximately $50 million as of September 30, 2024.

As it relates to our Business Processing Healthcare Services reporting unit, on September 19, 2024, Navient completed the sale of its membership interest in Xtend, LLC, which comprised the Company's healthcare services business, resulting in a $219 million gain on sale. As a result, $112 million of goodwill and acquired intangible assets were a part of our basis in this entity, and these assets were therefore removed from our balance sheet upon the sale.

 

 

29

 

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. We present the following non-GAAP financial measures: (1) Core Earnings, (2) Tangible Equity (as well as the Adjusted Tangible Equity Ratio), (3) EBITDA for the Business Processing segment, and (4) Allowance for Loan Losses Excluding Expected Future Recoveries on Previously Fully Charged-off Loans. Definitions for the non-GAAP financial measures and reconciliations are provided below, except that reconciliations of forward-looking non-GAAP financial measures are not provided because the Company is unable to provide such reconciliations without unreasonable effort due to the uncertainty and inherent difficulty of predicting the occurrence and financial impact of certain items, including, but not limited to, the impact of any mark-to-market gains/losses resulting from our use of derivative instruments to hedge our economic risks.

1. Core Earnings

We prepare financial statements and present financial results in accordance with GAAP. However, we also evaluate our business segments and present financial results on a basis that differs from GAAP. We refer to this different basis of presentation as Core Earnings. We provide this Core Earnings basis of presentation on a consolidated basis and for each business segment because this is what we review internally when making management decisions regarding our performance and how we allocate resources. We also refer to this information in our presentations with credit rating agencies, lenders and investors. Because our Core Earnings basis of presentation corresponds to our segment financial presentations, we are required by GAAP to provide certain Core Earnings disclosures in the notes to our consolidated financial statements for our business segments.

Core Earnings are not a substitute for reported results under GAAP. We use Core Earnings to manage our business segments because Core Earnings reflect adjustments to GAAP financial results for two items, discussed below, that can create significant volatility mostly due to timing factors generally beyond the control of management. Accordingly, we believe that Core Earnings provide management with a useful basis from which to better evaluate results from ongoing operations against the business plan or against results from prior periods. Consequently, we disclose this information because we believe it provides investors with additional information regarding the operational and performance indicators that are most closely assessed by management. When compared to GAAP results, the two items we remove to result in our Core Earnings presentations are:

(1)
Mark-to-market gains/losses resulting from our use of derivative instruments to hedge our economic risks that do not qualify for hedge accounting treatment or do qualify for hedge accounting treatment but result in ineffectiveness; and
(2)
The accounting for goodwill and acquired intangible assets.

While GAAP provides a uniform, comprehensive basis of accounting, for the reasons described above, our Core Earnings basis of presentation does not. Core Earnings are subject to certain general and specific limitations that investors should carefully consider. For example, there is no comprehensive, authoritative guidance for management reporting. Our Core Earnings are not defined terms within GAAP and may not be comparable to similarly titled measures reported by other companies. Accordingly, our Core Earnings presentation does not represent a comprehensive basis of accounting. Investors, therefore, may not be able to compare our performance with that of other financial services companies based upon Core Earnings. Core Earnings results are only meant to supplement GAAP results by providing additional information regarding the operational and performance indicators that are most closely used by management, our Board of Directors, credit rating agencies, lenders and investors to assess performance.

30

 

The following tables show our consolidated GAAP results, Core Earnings results (including for each reportable segment) along with the adjustments made to the income/expense items to reconcile the consolidated GAAP results to the Core Earnings results as required by GAAP and reported in “Note 12 — Segment Reporting.”

 

 

 

Three Months Ended September 30, 2024

 

 

 

 

 

 

Adjustments

 

 

 

 

 

Reportable Segments

 

(Dollars in millions)

 

Total
GAAP

 

 

Reclassi-
fications

 

 

Additions/
(Subtractions)

 

 

Total
Adjustments (1)

 

 

Total
Core
Earnings

 

 

Federal Education Loans

 

 

Consumer Lending

 

 

Business Processing

 

 

Other

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education loans

 

$

905

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

591

 

 

$

314

 

 

$

—

 

 

$

—

 

Cash and investments

 

 

43

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25

 

 

 

6

 

 

 

—

 

 

 

12

 

Total interest income

 

 

948

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

616

 

 

 

320

 

 

 

—

 

 

 

12

 

Total interest expense

 

 

828

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

576

 

 

 

198

 

 

 

—

 

 

 

34

 

Net interest income
   (loss)

 

 

120

 

 

$

8

 

 

$

12

 

 

$

20

 

 

$

140

 

 

 

40

 

 

 

122

 

 

 

—

 

 

 

(22

)

Less: provisions for loan
   losses

 

 

42

 

 

 

 

 

 

 

 

 

 

 

 

42

 

 

 

(5

)

 

 

47

 

 

 

—

 

 

 

—

 

Net interest income
   (loss) after provisions
   for loan losses

 

 

78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

45

 

 

 

75

 

 

 

—

 

 

 

(22

)

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing revenue

 

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11

 

 

 

2

 

 

 

—

 

 

 

—

 

Asset recovery and
   business processing
   revenue

 

 

70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

70

 

 

 

—

 

Other revenue

 

 

(26

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

10

 

 Gain on sale of subsidiary

 

 

219

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

219

 

 

 

—

 

Total other income
   (loss)

 

 

276

 

 

 

(8

)

 

 

44

 

 

 

36

 

 

 

312

 

 

 

11

 

 

 

2

 

 

 

289

 

 

 

10

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating
   expenses

 

 

121

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20

 

 

 

44

 

 

 

57

 

 

 

—

 

Unallocated shared
   services expenses

 

 

63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

63

 

Operating expenses

 

 

184

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

184

 

 

 

20

 

 

 

44

 

 

 

57

 

 

 

63

 

Goodwill and acquired
   intangible asset
   impairment and
   amortization

 

 

140

 

 

 

—

 

 

 

(140

)

 

 

(140

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Restructuring/other
   reorganization
   expenses

 

 

18

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

18

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

18

 

Total expenses

 

 

342

 

 

 

—

 

 

 

(140

)

 

 

(140

)

 

 

202

 

 

 

20

 

 

 

44

 

 

 

57

 

 

 

81

 

Income (loss) before
   income tax expense
   (benefit)

 

 

12

 

 

 

—

 

 

 

196

 

 

 

196

 

 

 

208

 

 

 

36

 

 

 

33

 

 

 

232

 

 

 

(93

)

Income tax expense
   (benefit)(2)

 

 

14

 

 

 

—

 

 

 

34

 

 

 

34

 

 

 

48

 

 

 

9

 

 

 

6

 

 

 

54

 

 

 

(21

)

Net income (loss)

 

$

(2

)

 

$

—

 

 

$

162

 

 

$

162

 

 

$

160

 

 

$

27

 

 

$

27

 

 

$

178

 

 

$

(72

)

 

(1)
Core Earnings adjustments to GAAP:

 

 

Three Months Ended September 30, 2024

 

(Dollars in millions)

 

Net Impact of
Derivative
Accounting

 

 

Net Impact of
Goodwill and
Acquired
Intangibles

 

 

Total

 

Net interest income (loss) after provisions for loan losses

 

$

20

 

 

$

—

 

 

$

20

 

Total other income (loss)

 

 

36

 

 

 

—

 

 

 

36

 

Goodwill and acquired intangible asset impairment and amortization

 

 

—

 

 

 

(140

)

 

 

(140

)

Total Core Earnings adjustments to GAAP

 

$

56

 

 

$

140

 

 

 

196

 

Income tax expense (benefit)

 

 

 

 

 

 

 

 

34

 

Net income (loss)

 

 

 

 

 

 

 

$

162

 

 

(2)
Income taxes are based on a percentage of net income before tax for the individual reportable segment.

 

31

 

 

 

Three Months Ended September 30, 2023

 

 

 

 

 

 

Adjustments

 

 

 

 

 

Reportable Segments

 

(Dollars in millions)

 

Total
GAAP

 

 

Reclassi-
fications

 

 

Additions/
(Subtractions)

 

 

Total
Adjustments (1)

 

 

Total
Core
Earnings

 

 

Federal Education Loans

 

 

Consumer Lending

 

 

Business Processing

 

 

Other

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education loans

 

$

1,129

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

778

 

 

$

351

 

 

$

—

 

 

$

—

 

Cash and investments

 

 

41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19

 

 

 

7

 

 

 

—

 

 

 

15

 

Total interest income

 

 

1,170

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

797

 

 

 

358

 

 

 

—

 

 

 

15

 

Total interest expense

 

 

879

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

636

 

 

 

208

 

 

 

—

 

 

 

46

 

Net interest income
   (loss)

 

 

291

 

 

$

7

 

 

$

(18

)

 

$

(11

)

 

$

280

 

 

 

161

 

 

 

150

 

 

 

—

 

 

 

(31

)

Less: provisions for loan
   losses

 

 

72

 

 

 

 

 

 

 

 

 

 

 

 

72

 

 

 

36

 

 

 

36

 

 

 

—

 

 

 

—

 

Net interest income
   (loss) after provisions
   for loan losses

 

 

219

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

125

 

 

 

114

 

 

 

—

 

 

 

(31

)

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing revenue

 

 

15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12

 

 

 

3

 

 

 

—

 

 

 

—

 

Asset recovery and
   business processing
   revenue

 

 

85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

85

 

 

 

—

 

Other revenue

 

 

31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

1

 

 

 

—

 

 

 

1

 

Total other income
   (loss)

 

 

131

 

 

 

(7

)

 

 

(19

)

 

 

(26

)

 

 

105

 

 

 

15

 

 

 

4

 

 

 

85

 

 

 

1

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating
   expenses

 

 

134

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17

 

 

 

44

 

 

 

73

 

 

 

—

 

Unallocated shared
   services expenses

 

 

99

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

99

 

Operating expenses

 

 

233

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

233

 

 

 

17

 

 

 

44

 

 

 

73

 

 

 

99

 

Goodwill and acquired
   intangible asset
   impairment and
   amortization

 

 

3

 

 

 

—

 

 

 

(3

)

 

 

(3

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Restructuring/other
   reorganization
   expenses

 

 

4

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

Total expenses

 

 

240

 

 

 

—

 

 

 

(3

)

 

 

(3

)

 

 

237

 

 

 

17

 

 

 

44

 

 

 

73

 

 

 

103

 

Income (loss) before
   income tax expense
   (benefit)

 

 

110

 

 

 

—

 

 

 

(34

)

 

 

(34

)

 

 

76

 

 

 

123

 

 

 

74

 

 

 

12

 

 

 

(133

)

Income tax expense
   (benefit)(2)

 

 

31

 

 

 

—

 

 

 

(12

)

 

 

(12

)

 

 

19

 

 

 

29

 

 

 

18

 

 

 

3

 

 

 

(31

)

Net income (loss)

 

$

79

 

 

$

—

 

 

$

(22

)

 

$

(22

)

 

$

57

 

 

$

94

 

 

$

56

 

 

$

9

 

 

$

(102

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)
Core Earnings adjustments to GAAP:

 

 

Three Months Ended September 30, 2023

 

(Dollars in millions)

 

Net Impact of
Derivative
Accounting

 

 

Net Impact of
Goodwill and
Acquired
Intangibles

 

 

Total

 

Net interest income (loss) after provisions for loan losses

 

$

(11

)

 

$

—

 

 

$

(11

)

Total other income (loss)

 

 

(26

)

 

 

—

 

 

 

(26

)

Goodwill and acquired intangible asset impairment and amortization

 

 

—

 

 

 

(3

)

 

 

(3

)

Total Core Earnings adjustments to GAAP

 

$

(37

)

 

$

3

 

 

 

(34

)

Income tax expense (benefit)

 

 

 

 

 

 

 

 

(12

)

Net income (loss)

 

 

 

 

 

 

 

$

(22

)

 

(2)
Income taxes are based on a percentage of net income before tax for the individual reportable segment.

 

32

 

 

 

Nine Months Ended September 30, 2024

 

 

 

 

 

 

Adjustments

 

 

 

 

 

Reportable Segments

 

(Dollars in millions)

 

Total
GAAP

 

 

Reclassi-
fications

 

 

Additions/
(Subtractions)

 

 

Total
Adjustments (1)

 

 

Total
Core
Earnings

 

 

Federal Education Loans

 

 

Consumer Lending

 

 

Business Processing

 

 

Other

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education loans

 

$

2,819

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,861

 

 

$

958

 

 

$

—

 

 

$

—

 

Cash and investments

 

 

129

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

75

 

 

 

20

 

 

 

—

 

 

 

34

 

Total interest income

 

 

2,948

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,936

 

 

 

978

 

 

 

—

 

 

 

34

 

Total interest expense

 

 

2,547

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,810

 

 

 

597

 

 

 

—

 

 

 

102

 

Net interest income
   (loss)

 

 

401

 

 

$

28

 

 

$

10

 

 

$

38

 

 

$

439

 

 

 

126

 

 

 

381

 

 

 

—

 

 

 

(68

)

Less: provisions for loan
   losses

 

 

68

 

 

 

 

 

 

 

 

 

 

 

 

68

 

 

 

(6

)

 

 

74

 

 

 

—

 

 

 

—

 

Net interest income
   (loss) after provisions
   for loan losses

 

 

333

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

132

 

 

 

307

 

 

 

—

 

 

 

(68

)

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing revenue

 

 

48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

39

 

 

 

9

 

 

 

—

 

 

 

—

 

Asset recovery and
   business processing
   revenue

 

 

228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

228

 

 

 

—

 

Other revenue

 

 

33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

1

 

 

 

—

 

 

 

16

 

Gain on sale of subsidiary

 

 

219

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

219

 

 

 

—

 

Total other income
   (loss)

 

 

528

 

 

 

(28

)

 

 

17

 

 

 

(11

)

 

 

517

 

 

 

44

 

 

 

10

 

 

 

447

 

 

 

16

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating
   expenses

 

 

351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

53

 

 

 

110

 

 

 

188

 

 

 

—

 

Unallocated shared
   services expenses

 

 

182

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

182

 

Operating expenses

 

 

533

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

533

 

 

 

53

 

 

 

110

 

 

 

188

 

 

 

182

 

Goodwill and acquired
   intangible asset
   impairment and
   amortization

 

 

145

 

 

 

—

 

 

 

(145

)

 

 

(145

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Restructuring/other
   reorganization
   expenses

 

 

35

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

35

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

35

 

Total expenses

 

 

713

 

 

 

—

 

 

 

(145

)

 

 

(145

)

 

 

568

 

 

 

53

 

 

 

110

 

 

 

188

 

 

 

217

 

Income (loss) before
   income tax expense
   (benefit)

 

 

148

 

 

 

—

 

 

 

172

 

 

 

172

 

 

 

320

 

 

 

123

 

 

 

207

 

 

 

259

 

 

 

(269

)

Income tax expense
   (benefit)(2)

 

 

41

 

 

 

—

 

 

 

33

 

 

 

33

 

 

 

74

 

 

 

28

 

 

 

47

 

 

 

60

 

 

 

(61

)

Net income (loss)

 

$

107

 

 

$

—

 

 

$

139

 

 

$

139

 

 

$

246

 

 

$

95

 

 

$

160

 

 

$

199

 

 

$

(208

)

 

(1)
Core Earnings adjustments to GAAP:

 

 

Nine Months Ended September 30, 2024

 

(Dollars in millions)

 

Net Impact of
Derivative
Accounting

 

 

Net Impact of
Goodwill and
Acquired
Intangibles

 

 

Total

 

Net interest income (loss) after provisions for loan losses

 

$

38

 

 

$

—

 

 

$

38

 

Total other income (loss)

 

 

(11

)

 

 

—

 

 

 

(11

)

Goodwill and acquired intangible asset impairment and amortization

 

 

—

 

 

 

(145

)

 

 

(145

)

Total Core Earnings adjustments to GAAP

 

$

27

 

 

$

145

 

 

 

172

 

Income tax expense (benefit)

 

 

 

 

 

 

 

 

33

 

Net income (loss)

 

 

 

 

 

 

 

$

139

 

 

(2)
Income taxes are based on a percentage of net income before tax for the individual reportable segment.

 

33

 

 

 

Nine Months Ended September 30, 2023

 

 

 

 

 

 

Adjustments

 

 

 

 

 

Reportable Segments

 

(Dollars in millions)

 

Total
GAAP

 

 

Reclassi-
fications

 

 

Additions/
(Subtractions)

 

 

Total
Adjustments (1)

 

 

Total
Core
Earnings

 

 

Federal Education Loans

 

 

Consumer Lending

 

 

Business Processing

 

 

Other

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education loans

 

$

3,227

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2,194

 

 

$

1,036

 

 

$

—

 

 

$

—

 

Cash and investments

 

 

111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

56

 

 

 

20

 

 

 

—

 

 

 

35

 

Total interest income

 

 

3,338

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,250

 

 

 

1,056

 

 

 

—

 

 

 

35

 

Total interest expense

 

 

2,636

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,859

 

 

 

610

 

 

 

—

 

 

 

119

 

Net interest income
   (loss)

 

 

702

 

 

$

24

 

 

$

27

 

 

$

51

 

 

$

753

 

 

 

391

 

 

 

446

 

 

 

—

 

 

 

(84

)

Less: provisions for loan
   losses

 

 

68

 

 

 

 

 

 

 

 

 

 

 

 

68

 

 

 

51

 

 

 

17

 

 

 

—

 

 

 

—

 

Net interest income
   (loss) after provisions
   for loan losses

 

 

634

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

340

 

 

 

429

 

 

 

—

 

 

 

(84

)

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing revenue

 

 

48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

39

 

 

 

9

 

 

 

—

 

 

 

—

 

Asset recovery and
   business processing
   revenue

 

 

240

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

240

 

 

 

—

 

Other revenue

 

 

59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

 

 

 

2

 

 

 

—

 

 

 

3

 

Total other income
   (loss)

 

 

347

 

 

 

(24

)

 

 

(20

)

 

 

(44

)

 

 

303

 

 

 

49

 

 

 

11

 

 

 

240

 

 

 

3

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating
   expenses

 

 

394

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

55

 

 

 

124

 

 

 

215

 

 

 

—

 

Unallocated shared
   services expenses

 

 

207

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

207

 

Operating expenses

 

 

601

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

601

 

 

 

55

 

 

 

124

 

 

 

215

 

 

 

207

 

Goodwill and acquired
   intangible asset
   impairment and
   amortization

 

 

8

 

 

 

—

 

 

 

(8

)

 

 

(8

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Restructuring/other
   reorganization
   expenses

 

 

23

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

23

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

23

 

Total expenses

 

 

632

 

 

 

—

 

 

 

(8

)

 

 

(8

)

 

 

624

 

 

 

55

 

 

 

124

 

 

 

215

 

 

 

230

 

Income (loss) before
   income tax expense
   (benefit)

 

 

349

 

 

 

—

 

 

 

15

 

 

 

15

 

 

 

364

 

 

 

334

 

 

 

316

 

 

 

25

 

 

 

(311

)

Income tax expense
   (benefit)(2)

 

 

93

 

 

 

—

 

 

 

(7

)

 

 

(7

)

 

 

86

 

 

 

78

 

 

 

75

 

 

 

6

 

 

 

(73

)

Net income (loss)

 

$

256

 

 

$

—

 

 

$

22

 

 

$

22

 

 

$

278

 

 

$

256

 

 

$

241

 

 

$

19

 

 

$

(238

)

 

(1)
Core Earnings adjustments to GAAP:

 

 

Nine Months Ended September 30, 2023

 

(Dollars in millions)

 

Net Impact of
Derivative
Accounting

 

 

Net Impact of
Goodwill and
Acquired
Intangibles

 

 

Total

 

Net interest income (loss) after provisions for loan losses

 

$

51

 

 

$

—

 

 

$

51

 

Total other income (loss)

 

 

(44

)

 

 

—

 

 

 

(44

)

Goodwill and acquired intangible asset impairment and amortization

 

 

—

 

 

 

(8

)

 

 

(8

)

Total Core Earnings adjustments to GAAP

 

$

7

 

 

$

8

 

 

 

15

 

Income tax expense (benefit)

 

 

 

 

 

 

 

 

(7

)

Net income (loss)

 

 

 

 

 

 

 

$

22

 

 

(2)
Income taxes are based on a percentage of net income before tax for the individual reportable segment.

 

34

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

GAAP net income (loss)

 

$

(2

)

 

$

79

 

 

$

107

 

 

$

256

 

Core Earnings adjustments to GAAP:

 

 

 

 

 

 

 

 

 

 

 

 

Net impact of derivative accounting

 

 

56

 

 

 

(37

)

 

 

27

 

 

 

7

 

Net impact of goodwill and acquired intangible assets

 

 

140

 

 

 

3

 

 

 

145

 

 

 

8

 

Net income tax effect

 

 

(34

)

 

 

12

 

 

 

(33

)

 

 

7

 

Total Core Earnings adjustments to GAAP

 

 

162

 

 

 

(22

)

 

 

139

 

 

 

22

 

Core Earnings net income

 

$

160

 

 

$

57

 

 

$

246

 

 

$

278

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Derivative Accounting: Core Earnings exclude periodic gains and losses that are caused by the mark-to-market valuations on derivatives that do not qualify for hedge accounting treatment under GAAP, as well as the periodic mark-to-market gains and losses that are a result of ineffectiveness recognized related to effective hedges under GAAP. Under GAAP, for our derivatives that are held to maturity, the mark-to-market gain or loss over the life of the contract will equal $0 except for Floor Income Contracts, where the mark-to-market gain will equal the amount for which we originally sold the contract. In our Core Earnings presentation, we recognize the economic effect of these hedges, which generally results in any net settlement cash paid or received being recognized ratably as an interest expense or revenue over the hedged item’s life.

The accounting for derivatives requires that changes in the fair value of derivative instruments be recognized currently in earnings, with no fair value adjustment of the hedged item, unless specific hedge accounting criteria are met. The gains and losses recorded in “Gains (losses) on derivative and hedging activities, net” and interest expense (for qualifying fair value hedges) are primarily caused by interest rate and foreign currency exchange rate volatility and changing credit spreads during the period as well as the volume and term of derivatives not receiving hedge accounting treatment. We believe that our derivatives are effective economic hedges, and as such, are a critical element of our interest rate and foreign currency risk management strategy. However, some of our derivatives, primarily Floor Income Contracts, basis swaps and at times, certain other interest rate swaps do not qualify for hedge accounting treatment and the stand-alone derivative is adjusted to fair value in the income statement with no consideration for the corresponding change in fair value of the hedged item. See our 2023 Form 10-K for further discussion.

 

35

 

The table below quantifies the adjustments for derivative accounting between GAAP and Core Earnings net income.

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Core Earnings derivative adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

(Gains) losses on derivative and hedging activities, net,
   included in other income

 

$

36

 

 

$

(26

)

 

$

(11

)

 

$

(44

)

Plus: (Gains) losses on fair value hedging activity included
   in interest expense

 

 

10

 

 

 

(19

)

 

 

5

 

 

 

23

 

Total (gains) losses in GAAP net income

 

 

46

 

 

 

(45

)

 

 

(6

)

 

 

(21

)

Plus: Reclassification of settlement income (expense) on
   derivative and hedging activities, net(1)

 

 

8

 

 

 

7

 

 

 

28

 

 

 

24

 

Mark-to-market (gains) losses on derivative and hedging
   activities, net(2)

 

 

54

 

 

 

(38

)

 

 

22

 

 

 

3

 

Amortization of net premiums on Floor Income Contracts
   in net interest income for Core Earnings

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3

 

Other derivative accounting adjustments(3)

 

 

2

 

 

 

1

 

 

 

5

 

 

 

1

 

Total net impact of derivative accounting

 

$

56

 

 

$

(37

)

 

$

27

 

 

$

7

 

 

(1)
Derivative accounting requires net settlement income/expense on derivatives that do not qualify as hedges to be recorded in a separate income statement line item below net interest income. Under our Core Earnings presentation, these settlements are reclassified to the income statement line item of the economically hedged item. For our Core Earnings net interest income, this would primarily include (a) reclassifying the net settlement amounts related to our Floor Income Contracts to education loan interest income and (b) reclassifying the net settlement amounts related to certain of our interest rate swaps to debt interest expense. The table below summarizes these net settlements on derivative and hedging activities and the associated reclassification on a Core Earnings basis.

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Reclassification of settlements on derivative and
   hedging activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net settlement income (expense) on interest rate
   swaps reclassified to net interest income

 

$

8

 

 

$

7

 

 

$

28

 

 

$

24

 

Total reclassifications of settlement income
   (expense) on derivative and hedging activities

 

$

8

 

 

$

7

 

 

$

28

 

 

$

24

 
(2)
“Mark-to-market (gains) losses on derivative and hedging activities, net” is comprised of the following:

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Fair value hedges

 

$

11

 

 

$

(3

)

 

$

9

 

 

$

13

 

Foreign currency hedges

 

 

(1

)

 

 

(16

)

 

 

(4

)

 

 

10

 

Other

 

 

44

 

 

 

(19

)

 

 

17

 

 

 

(20

)

Total mark-to-market (gains) losses on derivative
   and hedging activities, net

 

$

54

 

 

$

(38

)

 

$

22

 

 

$

3

 

 

(3)
Other derivative accounting adjustments consist of adjustments related to certain terminated derivatives that did not receive hedge accounting treatment under GAAP but were economic hedges under Core Earnings and, as a result, such gains or losses are amortized into Core Earnings over the life of the hedged item.

 

 

36

 

Cumulative Impact of Derivative Accounting under GAAP compared to Core Earnings

As of September 30, 2024, derivative accounting decreased GAAP equity by approximately $37 million as a result of cumulative net mark-to-market losses (after tax) recognized under GAAP, but not in Core Earnings. The following table rolls forward the cumulative impact to GAAP equity due to these after-tax mark-to-market net gains and losses related to derivative accounting.

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Beginning impact of derivative accounting on
   GAAP equity

 

$

12

 

 

$

67

 

 

$

(1

)

 

$

122

 

Net impact of net mark-to-market gains (losses)
   under derivative accounting(1)

 

 

(49

)

 

 

6

 

 

 

(36

)

 

 

(49

)

Ending impact of derivative accounting on
   GAAP equity

 

$

(37

)

 

$

73

 

 

$

(37

)

 

$

73

 

 

(1)
Net impact of net mark-to-market gains (losses) under derivative accounting is composed of the following:

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Total pre-tax net impact of derivative accounting
   recognized in net income(2)

 

$

(56

)

 

$

37

 

 

$

(27

)

 

$

(7

)

Tax and other impacts of derivative accounting
   adjustments

 

 

14

 

 

 

(9

)

 

 

7

 

 

 

2

 

Change in mark-to-market gains (losses) on
   derivatives, net of tax recognized in other
   comprehensive income

 

 

(7

)

 

 

(22

)

 

 

(16

)

 

 

(44

)

Net impact of net mark-to-market gains (losses) under
   derivative accounting

 

$

(49

)

 

$

6

 

 

$

(36

)

 

$

(49

)

 

(2)
See “Core Earnings derivative adjustments” table above.

 

Hedging Embedded Floor Income

We use Floor Income Contracts, pay-fixed swaps and fixed rate debt to economically hedge embedded Floor Income in our FFELP Loans. Historically, we have used these instruments on a periodic basis and depending upon market conditions and pricing, we may enter into additional hedges in the future. Under GAAP, the Floor Income Contracts do not qualify for hedge accounting and the pay-fixed swaps are accounted for as cash flow hedges. The table below shows the amount of hedged Floor Income that will be recognized in Core Earnings in future periods based on these hedge strategies.

(Dollars in millions)

 

September 30, 2024

 

 

September 30, 2023

 

Total hedged Floor Income, net of tax(1)(2)

 

$

50

 

 

$

115

 

(1)
$65 million and $151 million on a pre-tax basis as of September 30, 2024 and September 30, 2023, respectively.
(2)
Of the $50 million as of September 30, 2024, approximately $6 million, $17 million, $14 million and $7 million will be recognized as part of Core Earnings net income in the remainder of 2024, 2025, 2026 and 2027, respectively.

(2) Goodwill and Acquired Intangible Assets: Our Core Earnings exclude goodwill and intangible asset impairment and the amortization of acquired intangible assets. The following table summarizes the goodwill and acquired intangible asset adjustments.

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Core Earnings goodwill and acquired intangible
   asset adjustments

 

$

140

 

 

$

3

 

 

$

145

 

 

$

8

 

 

 

 

 

 

37

 

2. Tangible Equity and Adjusted Tangible Equity Ratio

Adjusted Tangible Equity Ratio measures the ratio of Navient’s Tangible Equity to its tangible assets. We adjust this ratio to exclude the assets and equity associated with our FFELP Loan portfolio because FFELP Loans are no longer originated and the FFELP Loan portfolio bears a 3% maximum loss exposure under the terms of the federal guaranty. Management believes that excluding this portfolio from the ratio enhances its usefulness to investors. Management uses this ratio, in addition to other metrics, for analysis and decision making related to capital allocation decisions. The Adjusted Tangible Equity Ratio is calculated as:

(Dollars in millions)

 

September 30, 2024

 

 

September 30, 2023

 

Navient Corporation's stockholders' equity

 

$

2,694

 

 

$

2,898

 

Less: Goodwill and acquired intangible assets

 

 

438

 

 

 

697

 

Tangible Equity

 

 

2,256

 

 

 

2,201

 

Less: Equity held for FFELP Loans

 

 

158

 

 

 

198

 

Adjusted Tangible Equity

 

$

2,098

 

 

$

2,003

 

Divided by:

 

 

 

 

 

 

Total assets

 

$

53,440

 

 

$

63,414

 

Less:

 

 

 

 

 

 

Goodwill and acquired intangible assets

 

 

438

 

 

 

697

 

FFELP Loans

 

 

31,522

 

 

 

39,581

 

Adjusted tangible assets

 

$

21,480

 

 

$

23,136

 

Adjusted Tangible Equity Ratio

 

 

9.8

%

 

 

8.7

%

 

3. Earnings before Interest, Taxes, Depreciation and Amortization Expense (EBITDA)

This measures the operating performance of the Business Processing segment and is used by management and equity investors to monitor operating performance and determine the value of those businesses. EBITDA for the Business Processing segment is calculated as:

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Pre-tax income

 

$

232

 

 

$

12

 

 

$

259

 

 

$

25

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense(1)

 

 

1

 

 

 

1

 

 

 

3

 

 

 

2

 

EBITDA

 

$

233

 

 

$

13

 

 

$

262

 

 

$

27

 

Divided by:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$

289

 

 

$

85

 

 

$

447

 

 

$

240

 

EBITDA margin

 

 

81

%

 

 

15

%

 

 

59

%

 

 

11

%

 

(1)
There is no interest expense in this segment.

 

 

38

 

4. Allowance for Loan Losses Excluding Expected Future Recoveries on Previously Fully Charged-off

Loans

The allowance for loan losses on the Private Education Loan portfolio used for the three credit metrics below excludes the expected future recoveries on previously fully charged-off loans to better reflect the current expected credit losses remaining in connection with the loans on balance sheet that have not charged off. That is, as of September 30, 2024, the $656 million Private Education Loan allowance for loan losses excluding expected future recoveries on previously fully charged-off loans represents the current expected credit losses that remain in connection with the $16,476 million Private Education Loan portfolio. The $185 million of expected future recoveries on previously fully charged-off loans, which is collected over an average 15-year period, mechanically is a reduction to the overall allowance for loan losses. However, it is not related to the $16,476 million Private Education Loan portfolio on our balance sheet and, as a result, management excludes this impact to the allowance to better evaluate and assess our overall credit loss coverage on the Private Education Loan portfolio. We believe this provides a more meaningful and holistic view of the available credit loss coverage on our non-charged-off Private Education Loan portfolio. We believe this information is useful to our investors, lenders and rating agencies.

Allowance for Loan Losses Metrics – Private Education Loans

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Allowance at end of period (GAAP)

 

$

471

 

 

$

625

 

 

$

471

 

 

$

625

 

Plus: expected future recoveries on previously fully
   charged-off loans

 

 

185

 

 

 

232

 

 

 

185

 

 

 

232

 

Allowance at end of period excluding expected future
   recoveries on previously fully charged-off loans
   (Non-GAAP Financial Measure)

 

$

656

 

 

$

857

 

 

$

656

 

 

$

857

 

Ending total loans

 

$

16,476

 

 

$

17,958

 

 

$

16,476

 

 

$

17,958

 

Ending loans in repayment

 

$

15,659

 

 

$

17,249

 

 

$

15,659

 

 

$

17,249

 

Net charge-offs

 

$

95

 

 

$

98

 

 

$

261

 

 

$

234

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance coverage of charge-offs (annualized):

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

1.2

 

 

 

1.6

 

 

 

1.3

 

 

 

2.0

 

Adjustment(1)

 

 

.5

 

 

 

.6

 

 

 

.5

 

 

 

.7

 

Non-GAAP Financial Measure(1)

 

 

1.7

 

 

 

2.2

 

 

 

1.8

 

 

 

2.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance as a percentage of the ending total loan
   balance:

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

2.9

%

 

 

3.5

%

 

 

2.9

%

 

 

3.5

%

Adjustment(1)

 

 

1.1

 

 

 

1.3

 

 

 

1.1

 

 

 

1.3

 

Non-GAAP Financial Measure(1)

 

 

4.0

%

 

 

4.8

%

 

 

4.0

%

 

 

4.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance as a percentage of the ending loans in
   repayment:

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

3.0

%

 

 

3.6

%

 

 

3.0

%

 

 

3.6

%

Adjustment(1)

 

 

1.2

 

 

 

1.4

 

 

 

1.2

 

 

 

1.4

 

Non-GAAP Financial Measure(1)

 

 

4.2

%

 

 

5.0

%

 

 

4.2

%

 

 

5.0

%

 

 

(1)
The allowance used for these credit metrics excludes the expected future recoveries on previously fully charged-off loans. See discussion above.

 

 

 

 

 

39

 

For a discussion of legal matters as of September 30, 2024, please refer to “Note 10 – Commitments, Contingencies and Guarantees” to our consolidated financial statements included in this report, which is incorporated into this item by reference.

Risk Factors

The risk factors disclosed in our 2023 Form 10-K should be considered together with information included in this Form 10-Q. For a discussion of our risk factors, please see the section titled "Risk Factors" in our 2023 Form 10-K, as updated by the section titled "Risk Factors" in our Form 10-Q for the quarter ended March 31, 2024.

 

 

 

40

 

Quantitative and Qualitative Disclosures about Market Risk

 

Interest Rate Sensitivity Analysis

Our interest rate risk management seeks to limit the impact of movements in interest rates on our results of operations and financial position. The following tables summarize the potential effect on earnings over the next 12 months and the potential effect on fair values of balance sheet assets and liabilities at September 30, 2024 and 2023, based upon a sensitivity analysis performed by management assuming a hypothetical increase and decrease in market interest rates of 100 basis points. The earnings sensitivities assume an immediate increase and decrease in market interest rates of 100 basis points and are applied only to financial assets and liabilities, including hedging instruments, that existed at the balance sheet date and do not take into account any new assets, liabilities or hedging instruments that may arise over the next 12 months.

 

 

 

As of September 30, 2024

 

 

As of September 30, 2023

 

 

 

Impact on Annual Earnings If:

 

 

Impact on Annual Earnings If:

 

 

 

Interest Rates

 

 

Interest Rates

 

(Dollars in millions, except per share amounts)

 

Increase
100 Basis
Points

 

 

Decrease
100 Basis
Points

 

 

Increase
100 Basis
Points

 

 

Decrease
100 Basis
Points

 

Effect on Earnings:

 

 

 

 

 

 

 

 

 

 

 

 

Change in pre-tax net income before mark-to
   -market gains (losses) on derivative and
   hedging activities

 

$

(13

)

 

$

28

 

 

$

30

 

 

$

9

 

Mark-to-market gains (losses) on derivative and
   hedging activities

 

 

66

 

 

 

(70

)

 

 

36

 

 

 

(33

)

Increase (decrease) in income before taxes

 

$

53

 

 

$

(42

)

 

$

66

 

 

$

(24

)

Increase (decrease) in net income after taxes

 

$

41

 

 

$

(32

)

 

$

51

 

 

$

(18

)

Increase (decrease) in diluted earnings per
   common share

 

$

.38

 

 

$

(.30

)

 

$

.43

 

 

$

(.16

)

41

 

 

 

 

At September 30, 2024

 

 

 

 

 

 

Interest Rates:

 

 

 

 

 

 

Change from
Increase of
100 Basis
Points

 

 

Change from
Decrease of
100 Basis
Points

 

(Dollars in millions)

 

Fair Value

 

 

$

 

 

%

 

 

$

 

 

%

 

Effect on Fair Values:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education Loans

 

$

46,692

 

 

$

(79

)

 

 

—

%

 

$

112

 

 

 

—

%

Other earning assets

 

 

2,933

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other assets

 

 

2,980

 

 

 

(2

)

 

 

—

 

 

 

68

 

 

 

2

 

Total assets gain/(loss)

 

$

52,605

 

 

$

(81

)

 

 

—

%

 

$

180

 

 

 

—

%

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

$

49,152

 

 

$

(243

)

 

 

—

%

 

$

260

 

 

 

1

%

Other liabilities

 

 

746

 

 

 

72

 

 

 

10

 

 

 

(9

)

 

 

(1

)

Total liabilities (gain)/loss

 

$

49,898

 

 

$

(171

)

 

 

—

%

 

$

251

 

 

 

1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2023

 

 

 

 

 

 

Interest Rates:

 

 

 

 

 

 

Change from
Increase of
100 Basis
Points

 

 

Change from
Decrease of
100 Basis
Points

 

(Dollars in millions)

 

Fair Value

 

 

$

 

 

%

 

 

$

 

 

%

 

Effect on Fair Values:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education Loans

 

$

52,877

 

 

$

(88

)

 

 

—

%

 

$

130

 

 

 

—

%

Other earning assets

 

 

2,939

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other assets

 

 

3,609

 

 

 

7

 

 

 

—

 

 

 

50

 

 

 

1

 

Total assets gain/(loss)

 

$

59,425

 

 

$

(81

)

 

 

—

%

 

$

180

 

 

 

—

%

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

$

55,803

 

 

$

(274

)

 

 

—

%

 

$

295

 

 

 

1

%

Other liabilities

 

 

987

 

 

 

113

 

 

 

11

 

 

 

(67

)

 

 

(7

)

Total liabilities (gain)/loss

 

$

56,790

 

 

$

(161

)

 

 

—

%

 

$

228

 

 

 

—

%

A primary objective in our funding is to minimize our sensitivity to changing interest rates by generally funding our floating rate education loan portfolio with floating rate debt and our fixed rate education loan portfolio with fixed rate debt although we can have a mismatch at times. In addition, we can have a mismatch in the index (including the frequency of reset) of floating rate debt versus floating rate assets. In addition, due to the ability of some FFELP Loans to earn Floor Income, we can have a fixed versus floating mismatch in funding if the education loan earns at the fixed borrower rate and the funding remains floating. We use Floor Income Contracts, pay-fixed swaps and fixed rate debt to economically hedge embedded Floor Income in our FFELP Loans. Historically, we have used these instruments on a periodic basis and depending upon market conditions and pricing, we may enter into additional hedges in the future. The result of these hedging transactions is to fix the relative spread between the education loan asset rate and the funding instrument rate.

In the preceding tables, under the scenario where interest rates increase or decrease by 100 basis points, the change in pre-tax net income before the mark-to-market gains (losses) on derivative and hedging activities is primarily due to the impact of (i) a portion of our unhedged FFELP Loans being in a fixed-rate mode due to Floor Income, while being funded with variable rate debt; (ii) certain FFELP fixed rate loans becoming variable interest rate loans when variable interest rates rise above a certain level (Special Allowance Payment or “SAP”). When these loans are funded with fixed rate debt (as we do for a portion of the portfolio to economically hedge Floor Income) we earn additional interest income when earning the higher variable rate that is in effect; and (iii) a portion of our variable rate assets being funded with fixed rate liabilities. Item (i) will generally cause income to decrease when interest rates increase and income to increase when interest rates decrease. Item (ii) and (iii) have the opposite effect. The change due to the interest rate scenario where interest rates increase by 100 basis points in the current period is primarily a result of item (i) having a more significant impact than item (ii) and (iii) as a result of interest rates being lower compared to the prior period. The change due to the interest scenario where interest rates decrease by 100 basis points in the current period is primarily a result of item (i) having a more significant impact than item (ii) and (iii) as a result of interest rates being lower compared to the prior period. The relative changes from the prior period are primarily the result of interest rates being lower in the current period.

 

42

 

In the preceding tables, under the scenario where interest rates increase or decrease by 100 basis points, the change in mark-to-market gains (losses) on derivative and hedging activities in both periods is primarily due to (i) the notional amount and remaining term of our derivative portfolio and related hedged debt and (ii) the interest rate environment. In both periods, the mark-to-market gains (losses) are primarily related to derivatives that don’t qualify for hedge accounting that are used to economically hedge the origination of fixed rate Private Education Refinance loans. As a result of not qualifying for hedge accounting, there is not an offsetting mark- to-market of the hedged item in this analysis.

In addition to interest rate risk addressed in the preceding tables, we are also exposed to risks related to foreign currency exchange rates. Foreign currency exchange risk is primarily the result of foreign currency denominated debt issued by us. When we issue foreign denominated corporate unsecured and securitization debt, our policy is to use cross currency interest rate swaps to swap all foreign currency denominated debt payments (fixed and floating) to USD SOFR using a fixed exchange rate. In the tables above, there would be an immaterial impact on earnings if exchange rates were to decrease or increase, due to the terms of the hedging instrument and hedged items matching. The balance sheet interest-bearing liabilities would be affected by a change in exchange rates; however, the change would be materially offset by the cross-currency interest rate swaps in other assets or other liabilities. In certain economic environments, volatility in the spread between spot and forward foreign exchange rates has resulted in mark-to-market impacts to current period earnings which have not been factored into the above analysis. The earnings impact is noncash, and at maturity of the instruments the cumulative mark-to-market impact will be zero. Navient has not issued foreign currency denominated debt since 2008.

Asset and Liability Funding Gap

The table below presents our assets and liabilities (funding) arranged by underlying indices as of September 30, 2024. Management analyzes interest rate risk and in doing so includes all derivatives that are economically hedging our debt whether they qualify as effective hedges or not (Core Earnings basis). Accordingly, we present the asset and liability funding gap on a Core Earnings basis. The difference between the asset and the funding is the funding gap for the specified index. This represents our exposure to interest rate risk in the form of basis risk and repricing risk, which is the risk that the different indices may reset at different frequencies or may not move in the same direction or at the same magnitude.

Index
(Dollars in billions)

 

Frequency of
Variable
Resets

 

Assets

 

 

Funding

 

 

Funding
Gap

 

3 month Treasury bill

 

weekly

 

$

1.6

 

 

$

—

 

 

$

1.6

 

3 month Treasury bill

 

annual

 

 

.1

 

 

 

—

 

 

 

.1

 

Prime

 

annual

 

 

.1

 

 

 

—

 

 

 

.1

 

Prime

 

quarterly

 

 

.9

 

 

 

—

 

 

 

.9

 

Prime

 

monthly

 

 

3.1

 

 

 

—

 

 

 

3.1

 

3 month Term SOFR

 

quarterly

 

 

.2

 

 

 

1.1

 

 

 

(.9

)

3 month Term SOFR (1)

 

monthly

 

 

—

 

 

 

.7

 

 

 

(.7

)

1 month Term SOFR

 

monthly

 

 

2.1

 

 

 

.8

 

 

 

1.3

 

Overnight SOFR(2)

 

daily

 

 

29.7

 

 

 

30.4

 

 

 

(.7

)

Non Discrete reset (1)

 

monthly

 

 

—

 

 

 

3.8

 

 

 

(3.8

)

Non Discrete reset (3)

 

daily/weekly

 

 

2.9

 

 

 

.1

 

 

 

2.8

 

Fixed Rate (4)

 

 

 

 

12.8

 

 

 

16.6

 

 

 

(3.8

)

Total

 

 

 

$

53.5

 

 

$

53.5

 

 

$

—

 

(1)
Funding includes debt related to Repurchase Facilities.
(2)
The assets are indexed to 30-day average overnight SOFR. A portion of the funding uses the daily average of overnight SOFR from a period preceding the accrual period of the asset ("lookback debt"). Funding includes $14.1 billion of 30-day average SOFR lookback debt and $13.7 billion of 90-day average SOFR lookback debt.
(3)
Assets include restricted and unrestricted cash equivalents and other overnight type instruments. Funding includes the obligation to return cash collateral held related to derivatives exposures.
(4)
Assets include receivables and other assets (including goodwill and acquired intangibles). Funding includes other liabilities and stockholders' equity.

 

43

 

We use interest rate swaps and other derivatives to achieve our risk management objectives. Our asset liability management strategy is to match assets with debt (in combination with derivatives) that have the same underlying index and reset frequency or, when economical, have interest rate characteristics that we believe are highly correlated. Interest earned on our FFELP Loans is primarily indexed to 30-day average overnight SOFR reset daily and our cost of funds is primarily indexed to overnight SOFR but resetting at different times than the asset. A source of variability in FFELP net interest income could also be Floor Income we earn on certain FFELP Loans. Pursuant to the terms of the FFELP, certain FFELP Loans can earn interest at the stated fixed rate of interest as underlying debt interest rate expense remains variable. We refer to this additional spread income as “Floor Income.” Floor Income can be volatile since it is dependent on interest rate levels. We frequently hedge this volatility to lock in the value of the Floor Income over the term of the contract. Interest earned on our Private Education Refinance Loans is generally fixed rate with the related cost of funds generally fixed rate as well. Interest earned on the remaining Private Education Loans is generally indexed to either one-month Prime or term SOFR rates and our cost of funds is primarily indexed to one-month or three-month term SOFR. The use of funding with index types and reset frequencies that are different from our assets exposes us to interest rate risk in the form of basis and repricing risk. This could result in our cost of funds not moving in the same direction or with the same magnitude as the yield on our assets. While we believe this risk is low, as all of these indices are short-term with rate movements that are highly correlated over a long period of time, market disruptions (which have occurred in prior years) can lead to a temporary divergence between indices resulting in a negative impact to our earnings.

Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following tables provide information relating to our purchases of shares of our common stock in the three months ended September 30, 2024.

 

(In millions, except per share data)

 

Total Number
of Shares
Purchased(1)

 

 

Average Price
Paid per
Share

 

 

Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs(1)(2)

 

 

Approximate Dollar
Value of Shares
That May Yet Be
Purchased Under
Publicly Announced
Plans or
Programs(1)

 

Period:

 

 

 

 

 

 

 

 

 

 

 

 

July 1 — July 31, 2024

 

 

.8

 

 

$

15.15

 

 

 

.8

 

 

$

197

 

August 1 — August 31, 2024

 

 

.7

 

 

 

15.35

 

 

 

.7

 

 

$

186

 

September 1 — September 30, 2024

 

 

.6

 

 

 

15.68

 

 

 

.6

 

 

$

176

 

Total third-quarter 2024

 

 

2.1

 

 

$

15.37

 

 

 

2.1

 

 

 

 

(1)
On December 10, 2021, our Board of Directors approved a $1 billion multi-year share repurchase program (the Share Repurchase Program). The Share Repurchase Program does not have an expiration date.
(2)
On June 12, 2024, the Company entered into a "Rule 10b5-1 trading arrangement" intended to satisfy the affirmative defense conditions of Rule 10b5-1, pursuant to which the Company purchased the applicable shares during second-quarter 2024 from June 17, 2024 to June 30, 2024. This plan terminated by its terms on July 31, 2024. On September 13, 2024, the Company entered into a "Rule 10b5-1 trading arrangement" intended to satisfy the affirmative defense conditions of 5122Rule 10b5-1, pursuant to which the Company purchased the applicable shares during third-quarter 2024 from September 16, 2024 to September 30, 2024. This plan terminates by its terms on November 1, 2024.

 

 

44

 

Execution Date

Total Number of Shares Purchased(1)

 

Average Price Paid per Share

 

Total Number of Shares Purchased as part of Publicly Announced Plans or Programs(1)(2)

 

Approximate Dollar Value of Shares that May Yet Be Purchased Under Publicly Announced Plans or Programs(1)

 

7/1/2024

 

40,000

 

$

14.44

 

 

40,000

 

$

208,448,805

 

7/2/2024

 

38,000

 

$

14.47

 

 

38,000

 

$

207,899,002

 

7/3/2024

 

37,000

 

$

14.45

 

 

37,000

 

$

207,364,385

 

7/5/2024

 

38,000

 

$

14.28

 

 

38,000

 

$

206,821,650

 

7/8/2024

 

38,000

 

$

14.36

 

 

38,000

 

$

206,275,902

 

7/9/2024

 

37,000

 

$

14.18

 

 

37,000

 

$

205,751,319

 

7/10/2024

 

38,000

 

$

14.04

 

 

38,000

 

$

205,217,853

 

7/11/2024

 

34,000

 

$

14.74

 

 

34,000

 

$

204,716,638

 

7/12/2024

 

40,000

 

$

14.95

 

 

40,000

 

$

204,118,790

 

7/15/2024

 

36,000

 

$

15.20

 

 

36,000

 

$

203,571,626

 

7/16/2024

 

35,000

 

$

15.62

 

 

35,000

 

$

203,024,891

 

7/17/2024

 

35,000

 

$

15.62

 

 

35,000

 

$

202,478,139

 

7/18/2024

 

39,000

 

$

15.63

 

 

39,000

 

$

201,868,709

 

7/19/2024

 

35,000

 

$

15.38

 

 

35,000

 

$

201,330,262

 

7/22/2024

 

35,000

 

$

15.43

 

 

35,000

 

$

200,790,139

 

7/23/2024

 

34,500

 

$

15.52

 

 

34,500

 

$

200,254,688

 

7/24/2024

 

33,500

 

$

15.43

 

 

33,500

 

$

199,737,629

 

7/25/2024

 

35,000

 

$

15.60

 

 

35,000

 

$

199,191,710

 

7/26/2024

 

35,000

 

$

15.85

 

 

35,000

 

$

198,636,907

 

7/29/2024

 

34,000

 

$

16.02

 

 

34,000

 

$

198,092,112

 

7/30/2024

 

33,000

 

$

16.42

 

 

33,000

 

$

197,550,314

 

7/31/2024

 

31,344

 

$

16.47

 

 

31,344

 

$

197,033,975

 

8/1/2024

 

31,491

 

$

15.88

 

 

31,491

 

$

196,533,996

 

8/2/2024

 

32,841

 

$

15.22

 

 

32,841

 

$

196,034,011

 

8/5/2024

 

34,439

 

$

14.52

 

 

34,439

 

$

195,534,105

 

8/6/2024

 

34,693

 

$

14.41

 

 

34,693

 

$

195,034,116

 

8/7/2024

 

34,676

 

$

14.42

 

 

34,676

 

$

194,534,137

 

8/8/2024

 

34,301

 

$

14.58

 

 

34,301

 

$

194,034,162

 

8/9/2024

 

34,207

 

$

14.61

 

 

34,207

 

$

193,534,247

 

8/12/2024

 

34,370

 

$

14.55

 

 

34,370

 

$

193,034,260

 

8/13/2024

 

34,070

 

$

14.68

 

 

34,070

 

$

192,534,280

 

8/14/2024

 

33,111

 

$

15.10

 

 

33,111

 

$

192,034,294

 

8/15/2024

 

32,439

 

$

15.41

 

 

32,439

 

$

191,534,308

 

8/16/2024

 

32,299

 

$

15.48

 

 

32,299

 

$

191,034,323

 

8/19/2024

 

32,000

 

$

15.42

 

 

32,000

 

$

190,540,883

 

8/20/2024

 

32,242

 

$

15.51

 

 

32,242

 

$

190,040,890

 

8/21/2024

 

32,236

 

$

15.54

 

 

32,236

 

$

189,539,897

 

8/22/2024

 

32,280

 

$

15.52

 

 

32,280

 

$

189,038,899

 

8/23/2024

 

31,309

 

$

16.00

 

 

31,309

 

$

188,537,911

 

8/26/2024

 

30,977

 

$

16.17

 

 

30,977

 

$

188,036,926

 

8/27/2024

 

31,264

 

$

16.02

 

 

31,264

 

$

187,535,936

 

8/28/2024

 

30,821

 

$

16.25

 

 

30,821

 

$

187,034,947

 

8/29/2024

 

30,526

 

$

16.41

 

 

30,526

 

$

186,533,951

 

8/30/2024

 

30,100

 

$

16.64

 

 

30,100

 

$

186,032,955

 

9/3/2024

 

30,624

 

$

16.36

 

 

30,624

 

$

185,531,964

 

9/4/2024

 

30,944

 

$

16.14

 

 

30,944

 

$

185,032,627

 

9/5/2024

 

31,181

 

$

16.01

 

 

31,181

 

$

184,533,395

 

9/6/2024

 

30,677

 

$

15.91

 

 

30,677

 

$

184,045,299

 

9/9/2024

 

31,957

 

$

15.62

 

 

31,957

 

$

183,546,073

 

9/10/2024

 

33,226

 

$

15.03

 

 

33,226

 

$

183,046,789

 

9/11/2024

 

34,410

 

$

14.51

 

 

34,410

 

$

182,547,497

 

9/12/2024

 

32,327

 

$

15.48

 

 

32,327

 

$

182,047,110

 

9/13/2024

 

31,690

 

$

15.79

 

 

31,690

 

$

181,546,754

 

9/16/2024

 

32,000

 

$

15.75

 

 

32,000

 

$

181,042,680

 

9/17/2024

 

32,000

 

$

16.00

 

 

32,000

 

$

180,530,696

 

9/18/2024

 

31,500

 

$

16.07

 

 

31,500

 

$

180,024,387

 

9/19/2024

 

32,000

 

$

16.21

 

 

32,000

 

$

179,505,606

 

9/20/2024

 

31,000

 

$

16.01

 

 

31,000

 

$

179,009,303

 

9/23/2024

 

34,000

 

$

15.85

 

 

34,000

 

$

178,470,443

 

9/24/2024

 

34,000

 

$

15.54

 

 

34,000

 

$

177,942,060

 

9/25/2024

 

34,400

 

$

15.14

 

 

34,400

 

$

177,421,254

 

9/26/2024

 

28,000

 

$

15.19

 

 

28,000

 

$

176,996,066

 

9/27/2024

 

32,000

 

$

15.49

 

 

32,000

 

$

176,500,446

 

9/30/2024

 

28,522

 

$

15.61

 

 

28,522

 

$

176,055,209

 

 

 

2,144,494

 

$

15.37

 

 

2,144,494

 

 

 

(1)
On December 10, 2021, our Board of Directors approved a $1 billion multi-year share repurchase program (the Share Repurchase Program). The Share Repurchase Program does not have an expiration date.
(2)
On June 12, 2024, the Company entered into a "Rule 10b5-1 trading arrangement" intended to satisfy the affirmative defense conditions of Rule 10b5-1, pursuant to which the Company purchased the applicable shares during second-quarter 2024 from June 17, 2024 to June 30, 2024. This plan terminated by its terms on July 31, 2024. On September 13, 2024, the Company entered into a "Rule 10b5-1 trading arrangement" intended to satisfy the affirmative defense conditions of Rule 10b5-1, pursuant to which the Company purchased the applicable shares during third-quarter 2024 from September 16, 2024 to September 30, 2024. This plan terminates by its terms on November 1, 2024.

45

 

Other Information

Director and Officer Trading Arrangements

During the quarter ended September 30, 2024, none of the Company’s directors or officers who are subject to the filing requirements of Section 16 of the Securities and Exchange Act adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K, Item 408, except as described in the table below:

 

Name (Title)

Adoption/
Termination Date

Type of Trading Arrangement

Duration of Trading Arrangement(1)

Aggregate Number of Shares to be Purchased or Sold

Steve Hauber
(Executive Vice President
& Chief Administrative Officer)

July 26, 2024

Trading plan intended to
satisfy the affirmative
defense conditions of
Securities Exchange Act
Rule 10b5-1(c).

July 26, 2024 – September 30, 2025

Up to 30,000 shares

Net shares to be received upon vesting of RSU awards vesting in February 2025(2)

(1)
Trading arrangements may expire on an earlier date upon the completion of all trades under the applicable trading arrangement (or the expiration of the orders relating to such trades without execution) or the occurrence of such other termination events as specified in the applicable trading arrangement.
(2)
The aggregate number of shares to be sold will depend, in part, on the satisfactory completion of terms specified within the RSU agreements.

 

Controls and Procedures

Disclosure Controls and Procedures

Our management, with the participation of our Principal Executive and Principal Financial Officers, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of September 30, 2024. Based on this evaluation, our Principal Executive and Principal Financial Officers concluded that, as of September 30, 2024, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (a) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) accumulated and communicated to our management, including our Principal Executive and Principal Financial Officers as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

46

 

 

Exhibits

10.1*

 

Agreement EX-10.1 and Release, dated as of July 31, 2024, by and between Navient Corporation and its affiliates and Mark L. Heleen.

 

 

 

31.1*

 

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

31.2*

 

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

32.1**

 

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

32.2**

 

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

101.INS*

 

Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document.

 

 

 

101.SCH*

 

Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents.

 

 

 

104

 

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

 

* Filed herewith

** Furnished herewith

47

 

Financial Statements

 

NAVIENT CORPORATION

CONSOLIDATED BALANCE SHEETS

(In millions, except per share amounts)

(Unaudited)

 

 

September 30, 2024

 

 

December 31, 2023

 

Assets

 

 

 

 

 

 

FFELP Loans (net of allowance for losses of $180 and $215, respectively)

 

$

31,522

 

 

$

37,925

 

Private Education Loans (net of allowance for losses of $471 and $617,
   respectively)

 

 

16,005

 

 

 

16,902

 

Investments

 

 

140

 

 

 

146

 

Cash and cash equivalents

 

 

1,143

 

 

 

839

 

Restricted cash and cash equivalents

 

 

1,650

 

 

 

1,954

 

Goodwill and acquired intangible assets, net

 

 

438

 

 

 

695

 

Other assets

 

 

2,542

 

 

 

2,914

 

Total assets

 

$

53,440

 

 

$

61,375

 

Liabilities

 

 

 

 

 

 

Short-term borrowings

 

$

5,305

 

 

$

4,226

 

Long-term borrowings

 

 

44,695

 

 

 

53,402

 

Other liabilities

 

 

746

 

 

 

987

 

Total liabilities

 

 

50,746

 

 

 

58,615

 

Commitments and contingencies

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Series A Junior Participating Preferred Stock, par value $0.20 per share;
   2 million shares authorized at December 31, 2021; no shares issued
   or outstanding

 

 

—

 

 

 

—

 

Common stock, par value $0.01 per share, 1.125 billion shares authorized:
   465 million and 464 million shares issued, respectively

 

 

4

 

 

 

4

 

Additional paid-in capital

 

 

3,374

 

 

 

3,353

 

Accumulated other comprehensive income (net of tax expense
   of $1 and $6, respectively)

 

 

3

 

 

 

19

 

Retained earnings

 

 

4,690

 

 

 

4,638

 

Total stockholders’ equity before treasury stock

 

 

8,071

 

 

 

8,014

 

Less: Common stock held in treasury at cost: 358 million and 350 million
   shares, respectively

 

 

(5,377

)

 

 

(5,254

)

Total equity

 

 

2,694

 

 

 

2,760

 

Total liabilities and equity

 

$

53,440

 

 

$

61,375

 

 

Supplemental information — assets and liabilities of consolidated variable interest entities:

 

 

September 30, 2024

 

 

December 31, 2023

 

FFELP Loans

 

$

31,322

 

 

$

37,832

 

Private Education Loans

 

 

14,740

 

 

 

15,759

 

Restricted cash

 

 

1,631

 

 

 

1,937

 

Other assets, net

 

 

1,336

 

 

 

1,744

 

Short-term borrowings

 

 

4,174

 

 

 

3,634

 

Long-term borrowings

 

 

39,916

 

 

 

48,169

 

Net assets of consolidated variable interest entities

 

$

4,939

 

 

$

5,469

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

48

 

 

NAVIENT CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

(Unaudited)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

FFELP Loans

 

$

591

 

 

$

778

 

 

$

1,861

 

 

$

2,191

 

Private Education Loans

 

 

314

 

 

 

351

 

 

 

958

 

 

 

1,036

 

Cash and investments

 

 

43

 

 

 

41

 

 

 

129

 

 

 

111

 

Total interest income

 

 

948

 

 

 

1,170

 

 

 

2,948

 

 

 

3,338

 

Total interest expense

 

 

828

 

 

 

879

 

 

 

2,547

 

 

 

2,636

 

Net interest income

 

 

120

 

 

 

291

 

 

 

401

 

 

 

702

 

Less: provisions for loan losses

 

 

42

 

 

 

72

 

 

 

68

 

 

 

68

 

Net interest income after provisions for loan losses

 

 

78

 

 

 

219

 

 

 

333

 

 

 

634

 

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Servicing revenue

 

 

13

 

 

 

15

 

 

 

48

 

 

 

48

 

Asset recovery and business processing revenue

 

 

70

 

 

 

85

 

 

 

228

 

 

 

240

 

Other income

 

 

10

 

 

 

5

 

 

 

22

 

 

 

15

 

Gain on sale of subsidiary

 

 

219

 

 

 

—

 

 

 

219

 

 

 

—

 

Gains (losses) on derivative and hedging activities, net

 

 

(36

)

 

 

26

 

 

 

11

 

 

 

44

 

Total other income

 

 

276

 

 

 

131

 

 

 

528

 

 

 

347

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

72

 

 

 

99

 

 

 

259

 

 

 

302

 

Other operating expenses

 

 

112

 

 

 

134

 

 

 

274

 

 

 

299

 

Total operating expenses

 

 

184

 

 

 

233

 

 

 

533

 

 

 

601

 

Goodwill and acquired intangible asset impairment and
   amortization expense

 

 

140

 

 

 

3

 

 

 

145

 

 

 

8

 

Restructuring/other reorganization expenses

 

 

18

 

 

 

4

 

 

 

35

 

 

 

23

 

Total expenses

 

 

342

 

 

 

240

 

 

 

713

 

 

 

632

 

Income before income tax expense

 

 

12

 

 

 

110

 

 

 

148

 

 

 

349

 

Income tax expense

 

 

14

 

 

 

31

 

 

 

41

 

 

 

93

 

Net income (loss)

 

$

(2

)

 

$

79

 

 

$

107

 

 

$

256

 

Basic earnings (loss) per common share

 

$

(.02

)

 

$

.66

 

 

$

.97

 

 

$

2.06

 

Average common shares outstanding

 

 

108

 

 

 

120

 

 

 

111

 

 

 

124

 

Diluted earnings (loss) per common share

 

$

(.02

)

 

$

.65

 

 

$

.95

 

 

$

2.04

 

Average common and common equivalent shares outstanding

 

 

108

 

 

 

121

 

 

 

112

 

 

 

125

 

Dividends per common share

 

$

.16

 

 

$

.16

 

 

$

.48

 

 

$

.48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

49

 

 

NAVIENT CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net income (loss)

 

$

(2

)

 

$

79

 

 

$

107

 

 

$

256

 

Net changes in cash flow hedges, net of tax(1)

 

 

(7

)

 

 

(22

)

 

 

(16

)

 

 

(44

)

Total comprehensive income (loss)

 

$

(9

)

 

$

57

 

 

$

91

 

 

$

212

 

 

(1)
See “Note 5 – Derivative Financial Instruments.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

50

 

 

NAVIENT CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In millions, except share and per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock Shares

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common

 

 

Paid-In

 

 

Comprehensive

 

 

Retained

 

 

Treasury

 

 

Total

 

 

 

Issued

 

 

Treasury

 

 

Outstanding

 

 

Stock

 

 

Capital

 

 

Income (Loss)

 

 

Earnings

 

 

Stock

 

 

Equity

 

Balance at June 30, 2023

 

 

463,534,781

 

 

 

(341,932,917

)

 

 

121,601,864

 

 

$

4

 

 

$

3,343

 

 

$

65

 

 

$

4,625

 

 

$

(5,107

)

 

$

2,930

 

Comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

79

 

 

 

—

 

 

 

79

 

Other comprehensive income (loss), net of tax

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(22

)

 

 

—

 

 

 

—

 

 

 

(22

)

Total comprehensive income (loss)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

57

 

Cash dividends:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock ($.16 per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(19

)

 

 

—

 

 

 

(19

)

Dividend equivalent units related to employee
   stock-based compensation plans

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Issuance of common shares

 

 

147,497

 

 

 

—

 

 

 

147,497

 

 

 

—

 

 

 

2

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2

 

Stock-based compensation expense

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

Common stock repurchased

 

 

—

 

 

 

(4,164,937

)

 

 

(4,164,937

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(75

)

 

 

(75

)

Shares repurchased related to employee
   stock-based compensation plans

 

 

—

 

 

 

(13,333

)

 

 

(13,333

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(1

)

 

 

(1

)

Balance at September 30, 2023

 

 

463,682,278

 

 

 

(346,111,187

)

 

 

117,571,091

 

 

$

4

 

 

$

3,349

 

 

$

43

 

 

$

4,685

 

 

$

(5,183

)

 

$

2,898

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2024

 

 

465,108,131

 

 

 

(355,698,037

)

 

 

109,410,094

 

 

$

4

 

 

$

3,367

 

 

$

10

 

 

$

4,710

 

 

$

(5,343

)

 

$

2,748

 

Comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2

)

 

 

—

 

 

 

(2

)

Other comprehensive income (loss), net of tax

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(7

)

 

 

—

 

 

 

—

 

 

 

(7

)

Total comprehensive income (loss)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(9

)

Cash dividends:

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock ($.16 per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(17

)

 

 

—

 

 

 

(17

)

Dividend equivalent units related to employee
   stock-based compensation plans

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(1

)

 

 

—

 

 

 

(1

)

Issuance of common shares

 

 

103,110

 

 

 

—

 

 

 

103,110

 

 

 

—

 

 

 

2

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2

 

Stock-based compensation expense

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5

 

Common stock repurchased

 

 

—

 

 

 

(2,144,494

)

 

 

(2,144,494

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(33

)

 

 

(33

)

Shares repurchased related to employee
   stock-based compensation plans

 

 

—

 

 

 

(5,230

)

 

 

(5,230

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(1

)

 

 

(1

)

Balance at September 30, 2024

 

 

465,211,241

 

 

 

(357,847,761

)

 

 

107,363,480

 

 

$

4

 

 

$

3,374

 

 

$

3

 

 

$

4,690

 

 

$

(5,377

)

 

$

2,694

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

51

 

 

NAVIENT CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In millions, except share and per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock Shares

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common

 

 

Paid-In

 

 

Comprehensive

 

 

Retained

 

 

Treasury

 

 

Total

 

 

 

Issued

 

 

Treasury

 

 

Outstanding

 

 

Stock

 

 

Capital

 

 

Income (Loss)

 

 

Earnings

 

 

Stock

 

 

Equity

 

Balance at December 31, 2022

 

 

461,087,590

 

 

 

(330,878,152

)

 

 

130,209,438

 

 

$

4

 

 

$

3,313

 

 

$

87

 

 

$

4,490

 

 

$

(4,917

)

 

$

2,977

 

Comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

256

 

 

 

—

 

 

 

256

 

Other comprehensive income (loss), net of tax

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(44

)

 

 

—

 

 

 

—

 

 

 

(44

)

Total comprehensive income (loss)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

212

 

Cash dividends:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock ($.48 per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(59

)

 

 

—

 

 

 

(59

)

Dividend equivalent units related to employee
   stock-based compensation plans

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2

)

 

 

—

 

 

 

(2

)

Issuance of common shares

 

 

2,594,688

 

 

 

—

 

 

 

2,594,688

 

 

 

—

 

 

 

15

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

15

 

Stock-based compensation expense

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

21

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

21

 

Common stock repurchased

 

 

—

 

 

 

(13,940,160

)

 

 

(13,940,160

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(240

)

 

 

(240

)

Shares repurchased related to employee
   stock-based compensation plans

 

 

—

 

 

 

(1,292,875

)

 

 

(1,292,875

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(24

)

 

 

(24

)

Other

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2

)

 

 

(2

)

Balance at September 30, 2023

 

 

463,682,278

 

 

 

(346,111,187

)

 

 

117,571,091

 

 

$

4

 

 

$

3,349

 

 

$

43

 

 

$

4,685

 

 

$

(5,183

)

 

$

2,898

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2023

 

 

463,715,048

 

 

 

(350,210,737

)

 

 

113,504,311

 

 

$

4

 

 

$

3,353

 

 

$

19

 

 

$

4,638

 

 

$

(5,254

)

 

$

2,760

 

Comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

107

 

 

 

—

 

 

 

107

 

Other comprehensive income (loss), net of tax

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(16

)

 

 

—

 

 

 

—

 

 

 

(16

)

Total comprehensive income (loss)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

91

 

Cash dividends:

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock ($.48 per share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(53

)

 

 

—

 

 

 

(53

)

Dividend equivalent units related to employee
   stock-based compensation plans

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2

)

 

 

—

 

 

 

(2

)

Issuance of common shares

 

 

1,496,193

 

 

 

—

 

 

 

1,496,193

 

 

 

—

 

 

 

4

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

Stock-based compensation expense

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

17

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

17

 

Common stock repurchased

 

 

—

 

 

 

(7,162,403

)

 

 

(7,162,403

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(114

)

 

 

(114

)

Shares repurchased related to employee
   stock-based compensation plans

 

 

—

 

 

 

(474,621

)

 

 

(474,621

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(7

)

 

 

(7

)

Other

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2

)

 

 

(2

)

Balance at September 30, 2024

 

 

465,211,241

 

 

 

(357,847,761

)

 

 

107,363,480

 

 

$

4

 

 

$

3,374

 

 

$

3

 

 

$

4,690

 

 

$

(5,377

)

 

$

2,694

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

52

 

 

NAVIENT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities

 

 

 

 

 

 

Net income

 

$

107

 

 

$

256

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

(Gain) on sale of subsidiary

 

 

(219

)

 

 

—

 

Goodwill and acquired intangible asset impairment and amortization expense

 

 

145

 

 

 

8

 

Stock-based compensation expense

 

 

17

 

 

 

21

 

Mark-to-market (gains) losses on derivative and hedging activities, net

 

 

87

 

 

 

(8

)

Provisions for loan losses

 

 

68

 

 

 

68

 

Decrease (increase) in accrued interest receivable

 

 

341

 

 

 

(71

)

(Decrease) in accrued interest payable

 

 

(53

)

 

 

(10

)

Decrease in other assets

 

 

111

 

 

 

56

 

(Decrease) increase in other liabilities

 

 

(153

)

 

 

46

 

Total adjustments

 

 

344

 

 

 

110

 

Net cash provided by operating activities

 

 

451

 

 

 

366

 

Cash flows from investing activities

 

 

 

 

 

 

Education loans originated and acquired

 

 

(1,017

)

 

 

(741

)

Proceeds from payments on education loans

 

 

8,217

 

 

 

6,068

 

Other investing activities, net

 

 

—

 

 

 

6

 

Disposal of a subsidiary, net of cash disposed of

 

 

359

 

 

 

—

 

Net cash provided by investing activities

 

 

7,559

 

 

 

5,333

 

Cash flows from financing activities

 

 

 

 

 

 

Borrowings collateralized by loans in trust - issued

 

 

1,106

 

 

 

844

 

Borrowings collateralized by loans in trust - repaid

 

 

(8,289

)

 

 

(7,813

)

Asset-backed commercial paper conduits, net

 

 

(609

)

 

 

485

 

Long-term unsecured notes issued

 

 

—

 

 

 

495

 

Long-term unsecured notes repaid

 

 

(7

)

 

 

(1,302

)

Other financing activities, net

 

 

(44

)

 

 

(115

)

Common stock repurchased

 

 

(114

)

 

 

(240

)

Common dividends paid

 

 

(53

)

 

 

(59

)

Net cash used in financing activities

 

 

(8,010

)

 

 

(7,705

)

Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents

 

 

—

 

 

 

(2,006

)

Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period

 

 

2,793

 

 

 

4,807

 

Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period

 

$

2,793

 

 

$

2,801

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash disbursements made (refunds received) for:

 

 

 

 

 

 

Interest paid

 

$

2,531

 

 

$

2,568

 

Income taxes paid

 

$

31

 

 

$

33

 

Income taxes refunds received

 

$

(2

)

 

$

(2

)

Reconciliation of the Consolidated Statements of Cash Flows to the Consolidated
   Balance Sheets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,143

 

 

$

977

 

Restricted cash and restricted cash equivalents

 

 

1,650

 

 

 

1,824

 

Total cash, cash equivalents, restricted cash and restricted cash equivalents at end of period

 

$

2,793

 

 

$

2,801

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

53

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

1. Significant Accounting Policies

Basis of Presentation

The accompanying unaudited, consolidated financial statements of Navient have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. The consolidated financial statements include the accounts of Navient and its majority-owned and controlled subsidiaries and those Variable Interest Entities (VIEs) for which we are the primary beneficiary, after eliminating the effects of intercompany accounts and transactions. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the interim periods have been included. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results for the year ending December 31, 2024 or for any other period. These unaudited financial statements should be read in conjunction with the audited financial statements and related notes included in our 2023 Form 10-K. Definitions for certain capitalized terms used but not otherwise defined in this Form 10-Q can be found in our 2023 Form 10-K.

 

Recently Issued Accounting Pronouncements

Segment Reporting

In November 2023, the Financial Accounting Standards Board (FASB) issued ASU No. 2023-07, “Segment Reporting – Improvements to Reportable Segment Disclosures,” which requires expanded disclosures regarding significant segment expenses for each reportable segment. Significant segment expenses include expenses that are regularly provided to the chief operating decision maker (CODM) and included in each reported measure of segment profit or loss. The ASU also requires disclosure of the CODM’s title and position and permits companies to disclose multiple segment profit or loss measures if the CODM uses these measures to allocate resources and assess segment performance. Companies must reconcile each measure of profit or loss quarterly to the consolidated income statement. This guidance became effective beginning after January 1, 2024, for fiscal years, and beginning after January 1, 2025, for interim periods. The Company continues to assess the impact of the reportable segment disclosure requirements.

54

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

2. Allowance for Loan Losses

Allowance for Loan Losses Roll Forward

 

 

Three Months Ended September 30, 2024

 

(Dollars in millions)

 

FFELP
Loans

 

 

Private
Education
Loans

 

 

Total

 

Beginning balance

 

$

194

 

 

$

493

 

 

$

687

 

Total provision

 

 

(5

)

 

 

47

 

 

 

42

 

Charge-offs:

 

 

 

 

 

 

 

 

 

   Gross charge-offs

 

 

(9

)

 

 

(85

)

 

 

(94

)

   Expected future recoveries on current period gross charge-offs

 

 

—

 

 

 

11

 

 

 

11

 

   Total(1)

 

 

(9

)

 

 

(74

)

 

 

(83

)

   Adjustment resulting from the change in charge-off rate(2)

 

 

—

 

 

 

(21

)

 

 

(21

)

Net charge-offs

 

 

(9

)

 

 

(95

)

 

 

(104

)

Decrease in expected future recoveries on previously fully charged-off
  loans(3)

 

 

—

 

 

 

26

 

 

 

26

 

Allowance at end of period

 

$

180

 

 

$

471

 

 

$

651

 

Net charge-offs as a percentage of average loans in repayment,
  excluding the net adjustment resulting from the change in
  charge-off rate (annualized) (2)

 

 

.14

%

 

 

1.87

%

 

 

 

Net adjustment resulting from the change in charge-off rate as a
  percentage of average loans in repayment (annualized)(2)

 

 

—

%

 

 

.53

%

 

 

 

Net charge-offs as a percentage of average loans in repayment
 (annualized)

 

 

.14

%

 

 

2.40

%

 

 

 

Ending total loans

 

$

31,702

 

 

$

16,476

 

 

 

 

Average loans in repayment

 

$

25,866

 

 

$

15,856

 

 

 

 

Ending loans in repayment

 

$

25,382

 

 

$

15,659

 

 

 

 

 

(1)
Charge-offs are reported net of expected recoveries. For Private Education Loans, we charge off the estimated loss of a defaulted loan balance by charging off the entire defaulted loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as "expected future recoveries on previously fully charged-off loans." For FFELP Loans, the recovery is received at the time of charge-off.
(2)
In third-quarter 2024, the net charge-off rate on defaulted Private Education Loans increased from 82.3% to 82.7%. This change resulted in a $21 million reduction to the balance of the expected future recoveries on previously fully charged-off loans.
(3)
At the end of each month, for Private Education Loans that are 212 days past due, we charge off the estimated loss of a defaulted loan balance by charging off the entire loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as “expected future recoveries on previously fully charged-off loans.” If actual periodic recoveries are less than expected, the difference is immediately reflected as a reduction to expected future recoveries on previously fully charged-off loans. If actual periodic recoveries are greater than expected, they will be reflected as a recovery through the allowance for Private Education Loan losses once the cumulative recovery amount exceeds the cumulative amount originally expected to be recovered. The following table summarizes the activity in the expected future recoveries on previously fully charged-off loans:

 

 

Three Months Ended September 30,

 

(Dollars in millions)

 

2024

 

Beginning of period expected future recoveries on previously fully charged-off loans

 

$

211

 

Expected future recoveries of current period defaults

 

 

11

 

Recoveries (cash collected)

 

 

(10

)

Charge-offs (as a result of lower recovery expectations)

 

 

(27

)

End of period expected future recoveries on previously fully charged-off loans

 

$

185

 

Change in balance during period

 

$

(26

)

 

55

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

2. Allowance for Loan Losses (Continued)

 

 

Three Months Ended September 30, 2023

 

(Dollars in millions)

 

FFELP Loans

 

 

Private Education Loans

 

 

Total

 

Beginning balance

 

$

200

 

 

$

657

 

 

$

857

 

Total provision

 

 

36

 

 

 

36

 

 

 

72

 

Charge-offs:

 

 

 

 

 

 

 

 

 

   Gross charge-offs

 

 

(16

)

 

 

(85

)

 

 

(101

)

   Expected future recoveries on current period gross charge-offs

 

 

—

 

 

 

12

 

 

 

12

 

   Total(1)

 

 

(16

)

 

 

(73

)

 

 

(89

)

   Adjustment resulting from the change in charge-off rate(2)

 

 

—

 

 

 

(25

)

 

 

(25

)

Net charge-offs

 

 

(16

)

 

 

(98

)

 

 

(114

)

Decrease in expected future recoveries on previously fully charged-off
  loans(3)

 

 

—

 

 

 

30

 

 

 

30

 

Allowance at end of period

 

$

220

 

 

$

625

 

 

$

845

 

Net charge-offs as a percentage of average loans in repayment,
  excluding the net adjustment resulting from the change in
  charge-off rate (annualized) (2)

 

 

.19

%

 

 

1.66

%

 

 

 

Net adjustment resulting from the change in charge-off rate as a
  percentage of average loans in repayment (annualized)(2)

 

 

—

%

 

 

.56

%

 

 

 

Net charge-offs as a percentage of average loans in repayment
 (annualized)

 

 

.19

%

 

 

2.22

%

 

 

 

Ending total loans

 

$

39,801

 

 

$

17,958

 

 

 

 

Average loans in repayment

 

$

32,696

 

 

$

17,470

 

 

 

 

Ending loans in repayment

 

$

31,917

 

 

$

17,249

 

 

 

 

 

(1)
Charge-offs are reported net of expected recoveries. For Private Education Loans, we charge off the estimated loss of a defaulted loan balance by charging off the entire defaulted loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as "expected future recoveries on previously fully charged-off loans." For FFELP Loans, the recovery is received at the time of charge-off.
(2)
In third-quarter 2023, the net charge-off rate on defaulted Private Education Loans increased from 81.9% to 82.3%. This change resulted in a $25 million reduction to the balance of the expected future recoveries on previously fully charged-off loans.
(3)
At the end of each month, for Private Education Loans that are 212 days past due, we charge off the estimated loss of a defaulted loan balance by charging off the entire loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as “expected future recoveries on previously fully charged-off loans.” If actual periodic recoveries are less than expected, the difference is immediately reflected as a reduction to expected future recoveries on previously fully charged-off loans. If actual periodic recoveries are greater than expected, they will be reflected as a recovery through the allowance for Private Education Loan losses once the cumulative recovery amount exceeds the cumulative amount originally expected to be recovered. The following table summarizes the activity in the expected future recoveries on previously fully charged-off loans:

 

 

 

Three Months Ended September 30,

 

(Dollars in millions)

 

2023

 

Beginning of period expected future recoveries on previously fully charged-off loans

 

$

262

 

Expected future recoveries of current period defaults

 

 

12

 

Recoveries (cash collected)

 

 

(11

)

Charge-offs (as a result of lower recovery expectations)

 

 

(31

)

End of period expected future recoveries on previously fully charged-off loans

 

$

232

 

Change in balance during period

 

$

(30

)

 

56

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

2. Allowance for Loan Losses (Continued)

 

 

 

Nine Months Ended September 30, 2024

 

(Dollars in millions)

 

FFELP Loans

 

 

Private Education Loans

 

 

Total

 

Beginning balance

 

$

215

 

 

$

617

 

 

$

832

 

Total provision

 

 

(6

)

 

 

74

 

 

 

68

 

Charge-offs:

 

 

 

 

 

 

 

 

 

   Gross charge-offs

 

 

(29

)

 

 

(272

)

 

 

(301

)

   Expected future recoveries on current period gross charge-offs

 

 

—

 

 

 

32

 

 

 

32

 

   Total(1) (2)

 

 

(29

)

 

 

(240

)

 

 

(269

)

   Adjustment resulting from the change in charge-off rate(3)

 

 

—

 

 

 

(21

)

 

 

(21

)

Net charge-offs

 

 

(29

)

 

 

(261

)

 

 

(290

)

Decrease in expected future recoveries on previously fully charged-off
  loans(4)

 

 

—

 

 

 

41

 

 

 

41

 

Allowance at end of period

 

$

180

 

 

$

471

 

 

$

651

 

Net charge-offs as a percentage of average loans in repayment,
  excluding the net adjustment resulting from the change in
  charge-off rate (annualized) (3)

 

 

.14

%

 

 

1.98

%

 

 

 

Net adjustment resulting from the change in charge-off rate as a
  percentage of average loans in repayment (annualized)(3)

 

 

—

%

 

 

.17

%

 

 

 

Net charge-offs as a percentage of average loans in repayment
 (annualized)

 

 

.14

%

 

 

2.15

%

 

 

 

Ending total loans

 

$

31,702

 

 

$

16,476

 

 

 

 

Average loans in repayment

 

$

27,697

 

 

$

16,265

 

 

 

 

Ending loans in repayment

 

$

25,382

 

 

$

15,659

 

 

 

 

 

(1)
$28 million of Private Education Loan net charge-offs is in connection with the resolution of certain private legacy loans in bankruptcy. This was previously reserved for in 2023.
(2)
Charge-offs are reported net of expected recoveries. For Private Education Loans, we charge off the estimated loss of a defaulted loan balance by charging off the entire defaulted loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as "expected future recoveries on previously fully charged-off loans." For FFELP Loans, the recovery is received at the time of charge-off.
(3)
In third-quarter 2024, the net charge-off rate on defaulted Private Education Loans increased from 82.3% to 82.7%. This change resulted in a $21 million reduction to the balance of the expected future recoveries on previously fully charged-off loans.
(4)
At the end of each month, for Private Education Loans that are 212 days past due, we charge off the estimated loss of a defaulted loan balance by charging off the entire loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as “expected future recoveries on previously fully charged-off loans.” If actual periodic recoveries are less than expected, the difference is immediately reflected as a reduction to expected future recoveries on previously fully charged-off loans. If actual periodic recoveries are greater than expected, they will be reflected as a recovery through the allowance for Private Education Loan losses once the cumulative recovery amount exceeds the cumulative amount originally expected to be recovered. The following table summarizes the activity in the expected future recoveries on previously fully charged-off loans:

 

 

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2024

 

Beginning of period expected future recoveries on previously fully charged-off loans

 

$

226

 

Expected future recoveries of current period defaults

 

 

32

 

Recoveries (cash collected)

 

 

(31

)

Charge-offs (as a result of lower recovery expectations)

 

 

(42

)

End of period expected future recoveries on previously fully charged-off loans

 

$

185

 

Change in balance during period

 

$

(41

)

 

 

57

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

2. Allowance for Loan Losses (Continued)

 

 

 

Nine Months Ended September 30, 2023

 

(Dollars in millions)

 

FFELP Loans

 

 

Private Education Loans

 

 

Total

 

Beginning balance

 

$

222

 

 

$

800

 

 

$

1,022

 

Total provision

 

 

51

 

 

 

17

 

 

 

68

 

Charge-offs:

 

 

 

 

 

 

 

 

 

   Gross charge-offs

 

 

(53

)

 

 

(245

)

 

 

(298

)

   Expected future recoveries on current period gross charge-offs

 

 

—

 

 

 

36

 

 

 

36

 

   Total(1)

 

 

(53

)

 

 

(209

)

 

 

(262

)

   Adjustment resulting from the change in charge-off rate(2)

 

 

—

 

 

 

(25

)

 

 

(25

)

Net charge-offs

 

 

(53

)

 

 

(234

)

 

 

(287

)

Decrease in expected future recoveries on previously fully charged-off
  loans(3)

 

 

—

 

 

 

42

 

 

 

42

 

Allowance at end of period

 

$

220

 

 

$

625

 

 

$

845

 

Net charge-offs as a percentage of average loans in repayment,
  excluding the net adjustment resulting from the change in
  charge-off rate (annualized)(2)

 

 

.21

%

 

 

1.56

%

 

 

 

Net adjustment resulting from the change in charge-off rate as a
  percentage of average loans in repayment (annualized)(2)

 

 

—

%

 

 

.18

%

 

 

 

Net charge-offs as a percentage of average loans in repayment
 (annualized)

 

 

.21

%

 

 

1.74

%

 

 

 

Ending total loans

 

$

39,801

 

 

$

17,958

 

 

 

 

Average loans in repayment

 

$

33,591

 

 

$

18,000

 

 

 

 

Ending loans in repayment

 

$

31,917

 

 

$

17,249

 

 

 

 

 

(1)
Charge-offs are reported net of expected recoveries. For Private Education Loans, we charge off the estimated loss of a defaulted loan balance by charging off the entire defaulted loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as "expected future recoveries on previously fully charged-off loans." For FFELP Loans, the recovery is received at the time of charge-off.
(2)
In third-quarter 2023, the net charge-off rate on defaulted Private Education Loans increased from 81.9% to 82.3%. This change resulted in a $25 million reduction to the balance of the expected future recoveries on previously fully charged-off loans.
(3)
At the end of each month, for Private Education Loans that are 212 days past due, we charge off the estimated loss of a defaulted loan balance by charging off the entire loan balance and estimating recoveries on a pool basis. These estimated recoveries are referred to as “expected future recoveries on previously fully charged-off loans.” If actual periodic recoveries are less than expected, the difference is immediately reflected as a reduction to expected future recoveries on previously fully charged-off loans. If actual periodic recoveries are greater than expected, they will be reflected as a recovery through the allowance for Private Education Loan losses once the cumulative recovery amount exceeds the cumulative amount originally expected to be recovered. The following table summarizes the activity in the expected future recoveries on previously fully charged-off loans

 

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2023

 

Beginning of period expected future recoveries on previously fully charged-off loans

 

$

274

 

Expected future recoveries of current period defaults

 

 

36

 

Recoveries (cash collected)

 

 

(35

)

Charge-offs (as a result of lower recovery expectations)

 

 

(43

)

End of period expected future recoveries on previously fully charged-off loans

 

$

232

 

Change in balance during period

 

$

(42

)

 

 

58

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

2. Allowance for Loan Losses (Continued)

Key Credit Quality Indicators

We assess and determine the collectability of our education loan portfolios by evaluating certain risk characteristics we refer to as key credit quality indicators. Key credit quality indicators are incorporated into the allowance for loan losses calculation.

FFELP Loans

FFELP Loans are substantially insured and guaranteed as to their principal and accrued interest in the event of default. The key credit quality indicators are loan status and loan type.

 

 

FFELP Loan Delinquencies

 

 

 

September 30, 2024

 

 

December 31, 2023

 

 

September 30, 2023

 

(Dollars in millions)

 

Balance

 

 

%

 

 

Balance

 

 

%

 

 

Balance

 

 

%

 

Loans in-school/grace/deferment(1)

 

$

1,342

 

 

 

 

 

$

1,557

 

 

 

 

 

$

1,636

 

 

 

 

Loans in forbearance(2)

 

 

4,978

 

 

 

 

 

 

6,147

 

 

 

 

 

 

6,248

 

 

 

 

Loans in repayment and percentage of each status:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans current

 

 

21,975

 

 

 

86.6

%

 

 

26,204

 

 

 

86.1

%

 

 

26,566

 

 

 

83.2

%

Loans delinquent 31-60 days(3)

 

 

948

 

 

 

3.7

 

 

 

1,193

 

 

 

3.9

 

 

 

1,481

 

 

 

4.6

 

Loans delinquent 61-90 days(3)

 

 

599

 

 

 

2.4

 

 

 

746

 

 

 

2.5

 

 

 

949

 

 

 

3.0

 

Loans delinquent greater than 90 days(3)

 

 

1,860

 

 

 

7.3

 

 

 

2,293

 

 

 

7.5

 

 

 

2,921

 

 

 

9.2

 

Total FFELP Loans in repayment

 

 

25,382

 

 

 

100

%

 

 

30,436

 

 

 

100

%

 

 

31,917

 

 

 

100

%

Total FFELP Loans

 

 

31,702

 

 

 

 

 

 

38,140

 

 

 

 

 

 

39,801

 

 

 

 

FFELP Loan allowance for losses

 

 

(180

)

 

 

 

 

 

(215

)

 

 

 

 

 

(220

)

 

 

 

FFELP Loans, net

 

$

31,522

 

 

 

 

 

$

37,925

 

 

 

 

 

$

39,581

 

 

 

 

Percentage of FFELP Loans in repayment

 

 

 

 

 

80.1

%

 

 

 

 

 

79.8

%

 

 

 

 

 

80.2

%

Delinquencies as a percentage of FFELP Loans in
   repayment

 

 

 

 

 

13.4

%

 

 

 

 

 

13.9

%

 

 

 

 

 

16.8

%

FFELP Loans in forbearance as a percentage of
   loans in repayment and forbearance

 

 

 

 

 

16.4

%

 

 

 

 

 

16.8

%

 

 

 

 

 

16.4

%

(1)
Loans for customers who may still be attending school or engaging in other permitted educational activities and are not yet required to make payments on their loans, e.g., residency periods for medical students or a grace period for bar exam preparation, as well as loans for customers who have requested and qualify for other permitted program deferments such as military, unemployment, or economic hardships.
(2)
Loans for customers who have used their allowable deferment time or do not qualify for deferment, that need additional time to obtain employment or who have temporarily ceased making full payments due to hardship or other factors such as disaster relief consistent with established loan program servicing policies and procedures.
(3)
The period of delinquency is based on the number of days scheduled payments are contractually past due.

 

Loan type:

(Dollars in millions)

 

September 30, 2024

 

 

September 30, 2023

 

 

Change

 

Stafford Loans

 

$

10,168

 

 

$

12,781

 

 

$

(2,613

)

Consolidation Loans

 

 

18,369

 

 

 

23,199

 

 

 

(4,830

)

Rehab Loans

 

 

3,165

 

 

 

3,821

 

 

 

(656

)

Total loans, gross

 

$

31,702

 

 

$

39,801

 

 

$

(8,099

)

 

59

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

2. Allowance for Loan Losses (Continued)

Private Education Loans

The key credit quality indicators are credit scores (FICO scores), loan status, loan seasoning, certain loan modifications, the existence of a cosigner and school type. The FICO score is the higher of the borrower or co-borrower score and is updated at least every six months while school type is assessed at origination. The other Private Education Loan key quality indicators are updated quarterly.

 

 

 

Private Education Loan Credit Quality Indicators by Origination Year

 

 

 

September 30, 2024

 

(Dollars in millions)

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

Prior

 

 

Total

 

 

% of Total

 

Credit Quality
   Indicators

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FICO Scores:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

640 and above

 

$

868

 

 

$

802

 

 

$

1,391

 

 

$

3,448

 

 

$

1,062

 

 

$

7,140

 

 

$

14,711

 

 

 

89

%

Below 640

 

 

14

 

 

 

23

 

 

 

77

 

 

 

139

 

 

 

32

 

 

 

1,480

 

 

 

1,765

 

 

 

11

 

Total

 

$

882

 

 

$

825

 

 

$

1,468

 

 

$

3,587

 

 

$

1,094

 

 

$

8,620

 

 

$

16,476

 

 

 

100

%

Loan Status:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In-school/grace/
   deferment/forbearance

 

$

58

 

 

$

70

 

 

$

67

 

 

$

88

 

 

$

18

 

 

$

516

 

 

$

817

 

 

 

5

%

Current/90 days or
   less delinquent

 

 

823

 

 

 

750

 

 

 

1,389

 

 

 

3,480

 

 

 

1,071

 

 

 

7,769

 

 

 

15,282

 

 

 

93

 

Greater than 90 days
   delinquent

 

 

1

 

 

 

5

 

 

 

12

 

 

 

19

 

 

 

5

 

 

 

335

 

 

 

377

 

 

 

2

 

Total

 

$

882

 

 

$

825

 

 

$

1,468

 

 

$

3,587

 

 

$

1,094

 

 

$

8,620

 

 

$

16,476

 

 

 

100

%

Seasoning(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1-12 payments

 

$

830

 

 

$

430

 

 

$

29

 

 

$

21

 

 

$

3

 

 

$

42

 

 

$

1,355

 

 

 

8

%

13-24 payments

 

 

—

 

 

 

337

 

 

 

413

 

 

 

63

 

 

 

9

 

 

 

55

 

 

 

877

 

 

 

6

 

25-36 payments

 

 

—

 

 

 

—

 

 

 

982

 

 

 

1,704

 

 

 

22

 

 

 

97

 

 

 

2,805

 

 

 

17

 

37-48 payments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,754

 

 

 

521

 

 

 

180

 

 

 

2,455

 

 

 

15

 

More than 48
   payments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

531

 

 

 

8,081

 

 

 

8,612

 

 

 

52

 

Loans in-school/
   grace/deferment

 

 

52

 

 

 

58

 

 

 

44

 

 

 

45

 

 

 

8

 

 

 

165

 

 

 

372

 

 

 

2

 

Total

 

$

882

 

 

$

825

 

 

$

1,468

 

 

$

3,587

 

 

$

1,094

 

 

$

8,620

 

 

$

16,476

 

 

 

100

%

Certain Loan
   Modifications(2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Modified

 

$

—

 

 

$

8

 

 

$

75

 

 

$

174

 

 

$

55

 

 

$

5,400

 

 

$

5,712

 

 

 

35

%

Non-Modified

 

 

882

 

 

 

817

 

 

 

1,393

 

 

 

3,413

 

 

 

1,039

 

 

 

3,220

 

 

 

10,764

 

 

 

65

 

Total

 

$

882

 

 

$

825

 

 

$

1,468

 

 

$

3,587

 

 

$

1,094

 

 

$

8,620

 

 

$

16,476

 

 

 

100

%

Cosigners:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With cosigner(3)

 

$

208

 

 

$

257

 

 

$

162

 

 

$

84

 

 

$

20

 

 

$

4,630

 

 

$

5,361

 

 

 

33

%

Without cosigner

 

 

674

 

 

 

568

 

 

 

1,306

 

 

 

3,503

 

 

 

1,074

 

 

 

3,990

 

 

 

11,115

 

 

 

67

 

Total

 

$

882

 

 

$

825

 

 

$

1,468

 

 

$

3,587

 

 

$

1,094

 

 

$

8,620

 

 

$

16,476

 

 

 

100

%

School Type:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Not-for-profit

 

$

642

 

 

$

780

 

 

$

1,390

 

 

$

3,377

 

 

$

1,045

 

 

$

7,380

 

 

$

14,614

 

 

 

89

%

For-profit

 

 

240

 

 

 

45

 

 

 

78

 

 

 

210

 

 

 

49

 

 

 

1,240

 

 

 

1,862

 

 

 

11

 

Total

 

$

882

 

 

$

825

 

 

$

1,468

 

 

$

3,587

 

 

$

1,094

 

 

$

8,620

 

 

$

16,476

 

 

 

100

%

Allowance for loan
   losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(471

)

 

 

 

Total loans, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

16,005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Charge-Offs

 

$

—

 

 

$

(3

)

 

$

(8

)

 

$

(13

)

 

$

(3

)

 

$

(234

)

 

$

(261

)

 

 

100

%

(1)
Number of months in active repayment for which a scheduled payment was received.
(2)
Loan Modifications represents the historical definition of a troubled debt restructuring (TDR) prior to the implementation of ASU No. 2022-02 on January 1, 2023. Any loan that meets the historical definition of a TDR retains that classification for the life of the loan (including loans that meet that definition in 2023). This includes loans given rate modifications, term extensions or forbearance greater than 3 months in the prior 24-month period. This classification is not intended to reconcile in any way to the modification disclosures required under ASU No. 2022-02.
(3)
Excluding Private Education Refinance Loans, which do not have a cosigner, the cosigner rate was 66% for total loans at September 30, 2024.

60

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

2. Allowance for Loan Losses (Continued)

 

 

 

Private Education Loan Credit Quality Indicators by Origination Year

 

 

 

September 30, 2023

 

(Dollars in millions)

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

Prior

 

 

Total

 

 

% of Total

 

Credit Quality
   Indicators

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FICO Scores:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

640 and above

 

$

603

 

 

$

1,641

 

 

$

4,056

 

 

$

1,303

 

 

$

1,226

 

 

$

7,471

 

 

$

16,300

 

 

 

91

%

Below 640

 

 

10

 

 

 

53

 

 

 

105

 

 

 

26

 

 

 

43

 

 

 

1,421

 

 

 

1,658

 

 

 

9

 

Total

 

$

613

 

 

$

1,694

 

 

$

4,161

 

 

$

1,329

 

 

$

1,269

 

 

$

8,892

 

 

$

17,958

 

 

 

100

%

Loan Status:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In-school/grace/
   deferment/forbearance

 

$

40

 

 

$

73

 

 

$

87

 

 

$

20

 

 

$

27

 

 

$

462

 

 

$

709

 

 

 

4

%

Current/90 days or
   less delinquent

 

 

572

 

 

 

1,614

 

 

 

4,062

 

 

 

1,305

 

 

 

1,236

 

 

 

8,126

 

 

 

16,915

 

 

 

94

 

Greater than 90 days
   delinquent

 

 

1

 

 

 

7

 

 

 

12

 

 

 

4

 

 

 

6

 

 

 

304

 

 

 

334

 

 

 

2

 

Total

 

$

613

 

 

$

1,694

 

 

$

4,161

 

 

$

1,329

 

 

$

1,269

 

 

$

8,892

 

 

$

17,958

 

 

 

100

%

Seasoning(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1-12 payments

 

$

576

 

 

$

451

 

 

$

36

 

 

$

8

 

 

$

4

 

 

$

59

 

 

$

1,134

 

 

 

7

%

13-24 payments

 

 

—

 

 

 

1,185

 

 

 

1,948

 

 

 

17

 

 

 

15

 

 

 

68

 

 

 

3,233

 

 

 

18

 

25-36 payments

 

 

—

 

 

 

—

 

 

 

2,123

 

 

 

624

 

 

 

44

 

 

 

124

 

 

 

2,915

 

 

 

16

 

37-48 payments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

669

 

 

 

791

 

 

 

202

 

 

 

1,662

 

 

 

9

 

More than 48
   payments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

402

 

 

 

8,247

 

 

 

8,649

 

 

 

48

 

Loans in-school/
   grace/deferment

 

 

37

 

 

 

58

 

 

 

54

 

 

 

11

 

 

 

13

 

 

 

192

 

 

 

365

 

 

 

2

 

Total

 

$

613

 

 

$

1,694

 

 

$

4,161

 

 

$

1,329

 

 

$

1,269

 

 

$

8,892

 

 

$

17,958

 

 

 

100

%

Certain Loan
   Modifications(2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Modified

 

$

—

 

 

$

28

 

 

$

116

 

 

$

43

 

 

$

78

 

 

$

5,926

 

 

$

6,191

 

 

 

34

%

Non-Modified

 

 

613

 

 

 

1,666

 

 

 

4,045

 

 

 

1,286

 

 

 

1,191

 

 

 

2,966

 

 

 

11,767

 

 

 

66

 

Total

 

$

613

 

 

$

1,694

 

 

$

4,161

 

 

$

1,329

 

 

$

1,269

 

 

$

8,892

 

 

$

17,958

 

 

 

100

%

Cosigners:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With cosigner(3)

 

$

159

 

 

$

183

 

 

$

97

 

 

$

24

 

 

$

8

 

 

$

5,410

 

 

$

5,881

 

 

 

33

%

Without cosigner

 

 

454

 

 

 

1,511

 

 

 

4,064

 

 

 

1,305

 

 

 

1,261

 

 

 

3,482

 

 

 

12,077

 

 

 

67

 

Total

 

$

613

 

 

$

1,694

 

 

$

4,161

 

 

$

1,329

 

 

$

1,269

 

 

$

8,892

 

 

$

17,958

 

 

 

100

%

School Type:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Not-for-profit

 

$

576

 

 

$

1,604

 

 

$

3,919

 

 

$

1,270

 

 

$

1,181

 

 

$

7,483

 

 

$

16,033

 

 

 

89

%

For-profit

 

 

37

 

 

 

90

 

 

 

242

 

 

 

59

 

 

 

88

 

 

 

1,409

 

 

 

1,925

 

 

 

11

 

Total

 

$

613

 

 

$

1,694

 

 

$

4,161

 

 

$

1,329

 

 

$

1,269

 

 

$

8,892

 

 

$

17,958

 

 

 

100

%

Allowance for loan
   losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(625

)

 

 

 

Total loans, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

17,333

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Charge-Offs

 

$

—

 

 

$

(5

)

 

$

(7

)

 

$

(4

)

 

$

(5

)

 

$

(213

)

 

$

(234

)

 

 

100

%

 

 

(1)
Number of months in active repayment for which a scheduled payment was received.
(2)
Loan Modifications represents the historical definition of a troubled debt restructuring (TDR) prior to the implementation of ASU 2022-02 on January 1, 2023. Any loan that meets the historical definition of a TDR retains that classification for the life of the loan (including loans that meet that definition in 2023). This includes loans given rate modifications, term extensions or forbearance greater than 3 months in the prior 24-month period. This classification is not intended to reconcile in any way to the new modification disclosures required under ASU 2022-02.
(3)
Excluding Private Education Refinance Loans, which do not have a cosigner, the cosigner rate was 65% for total loans at September 30, 2023.

 

 

 

61

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

2. Allowance for Loan Losses (Continued)

 

 

 

Private Education Loan Delinquencies

 

 

 

September 30, 2024

 

 

December 31, 2023

 

 

September 30, 2023

 

(Dollars in millions)

 

Balance

 

 

%

 

 

Balance

 

 

%

 

 

Balance

 

 

%

 

Loans in-school/grace/deferment(1)

 

$

372

 

 

 

 

 

$

360

 

 

 

 

 

$

365

 

 

 

 

Loans in forbearance(2)

 

 

445

 

 

 

 

 

 

363

 

 

 

 

 

 

344

 

 

 

 

Loans in repayment and percentage of each status:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans current

 

 

14,827

 

 

 

94.7

%

 

 

15,935

 

 

 

94.9

%

 

 

16,435

 

 

 

95.3

%

Loans delinquent 31-60 days(3)

 

 

282

 

 

 

1.8

 

 

 

308

 

 

 

1.8

 

 

 

304

 

 

 

1.8

 

Loans delinquent 61-90 days(3)

 

 

173

 

 

 

1.1

 

 

 

173

 

 

 

1.0

 

 

 

176

 

 

 

1.0

 

Loans delinquent greater than 90 days(3)

 

 

377

 

 

 

2.4

 

 

 

380

 

 

 

2.3

 

 

 

334

 

 

 

1.9

 

Total loans in repayment

 

 

15,659

 

 

 

100

%

 

 

16,796

 

 

 

100

%

 

 

17,249

 

 

 

100

%

Total loans

 

 

16,476

 

 

 

 

 

 

17,519

 

 

 

 

 

 

17,958

 

 

 

 

Allowance for losses

 

 

(471

)

 

 

 

 

 

(617

)

 

 

 

 

 

(625

)

 

 

 

Loans, net

 

$

16,005

 

 

 

 

 

$

16,902

 

 

 

 

 

$

17,333

 

 

 

 

Percentage of loans in repayment

 

 

 

 

 

95.0

%

 

 

 

 

 

95.9

%

 

 

 

 

 

96.1

%

Delinquencies as a percentage of loans in
   repayment

 

 

 

 

 

5.3

%

 

 

 

 

 

5.1

%

 

 

 

 

 

4.7

%

Loans in forbearance as a percentage of
   loans in repayment and forbearance

 

 

 

 

 

2.8

%

 

 

 

 

 

2.1

%

 

 

 

 

 

2.0

%

 

(1)
Loans for customers who are attending school or are in other permitted educational activities and are not yet required to make payments on their loans, e.g., internship periods, as well as loans for customers who have requested and qualify for other permitted program deferments such as various military eligible deferments.
(2)
Loans for customers who have requested extension of grace period generally during employment transition or who have temporarily ceased making full payments due to hardship or other factors such as disaster relief consistent with established loan program servicing policies and procedures.
(3)
The period of delinquency is based on the number of days scheduled payments are contractually past due.

 

62

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

2. Allowance for Loan Losses (Continued)

Loan Modifications to Borrowers Experiencing Financial Difficulty

We adjust the terms of Private Education Loans for certain borrowers when we believe such changes will help our customers better manage their student loan obligations, achieve better outcomes and increase the collectability of the loans. These changes generally take the form of a temporary interest rate reduction, a temporary forbearance of payments, a temporary interest only payment, and a temporary interest rate reduction with a permanent extension of the loan term. The effect of modifications of loans made to borrowers who are experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance. The model design predicts borrowers that will have financial difficulty in the future and require loan modification and increased life of loan default risk.

Under our current forbearance practices, temporary hardship forbearance of payments generally cannot exceed 12 months over the life of the loan. However, exceptions can be made in cases where borrowers have shown the ability to make a substantial number of monthly principal and interest payments and in those cases borrowers can be granted up to 24 months of hardship forbearance over the life of the loan. We offer other administrative forbearances (e.g., death and disability, bankruptcy, military service, and disaster forbearance) that are either required by law (such as the Service members Civil Relief Act) or are considered separate from our active loss mitigation programs and therefore are not considered to be loan modifications requiring disclosure under ASU No. 2022-02.

FFELP Loans are at least 97 percent guaranteed as to their principal and accrued interest by the federal government in the event of default and, therefore, we do not deem FFELP Loans as nonperforming from a credit risk perspective at any point in their life cycle prior to claim payment and continue to accrue interest on those loans through the date of claim. Further, FFELP loan modification events are either legal entitlements subject to regulatory-driven eligibility criteria or addressed in the promissory note terms, so we do not consider these events as a component of our loan modification programs.

 

 

63

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

2. Allowance for Loan Losses (Continued)

The following tables show the amortized cost basis as of September 30, 2024 and 2023 of the loans to borrowers experiencing financial difficulty that were modified during the respective period.

 

 

 

Three Months Ended September 30, 2024

 

 

 

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

 

(Dollars in millions)

 

Interest Rate Reductions(1)

 

 

More Than an Insignificant Payment Delay (2)

 

 

Combination Rate Reduction and Term Extension

 

Loan Type

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

Private Education
   Loans

 

$

551

 

 

 

3.3

%

 

$

294

 

 

 

1.8

%

 

$

39

 

 

 

.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2023

 

 

 

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

 

(Dollars in millions)

 

Interest Rate Reductions(1)

 

 

More Than an Insignificant Payment Delay (2)

 

 

Combination Rate Reduction and Term Extension

 

Loan Type

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

Private Education
   Loans

 

$

592

 

 

 

3.3

%

 

$

305

 

 

 

1.7

%

 

$

42

 

 

 

.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2024

 

(Dollars in millions)

 

Interest Rate Reductions(1)

 

 

More Than an Insignificant Payment Delay (2)

 

 

Combination Rate Reduction and Term Extension

 

Loan Type

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

Private Education
   Loans

 

$

1,511

 

 

 

9.2

%

 

$

770

 

 

 

4.7

%

 

$

108

 

 

 

.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2023

 

(Dollars in millions)

 

Interest Rate Reductions(1)

 

 

More Than an Insignificant Payment Delay (2)

 

 

Combination Rate Reduction and Term Extension

 

Loan Type

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

 

Amortized Cost

 

 

% of Loan Type

 

Private Education
   Loans

 

$

1,488

 

 

 

8.3

%

 

$

773

 

 

 

4.3

%

 

$

119

 

 

 

.7

%

 

(1)
As of September 30, 2024 and 2023, there was $1.1 billion and $1.2 billion, respectively, of loans in the interest rate reduction program.
(2)
More Than an Insignificant Payment Delay includes loans granted more than 3 months of short-term interest only payments or hardship forbearance.

 

64

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

2. Allowance for Loan Losses (Continued)

For those loans modified in the three and nine months ended September 30, 2024 and 2023, the following tables show the impact of such modification.

 

Three Months Ended September 30, 2024

Loan Type

Interest Rate Reductions

More Than an Insignificant Payment Delay

Combination Rate Reduction and Term Extension

Private Education Loans

Reduced the weighted average contractual rate from 13.2% to 5.5%

Added an average 5 months to the remaining life of the loans

Added an average 7 years to the remaining life of the loans and reduced the weighted average contractual rate from
 12.7% to 5.4%.

 

 

 

 

Three Months Ended September 30, 2023

Loan Type

Interest Rate Reductions

More Than an Insignificant Payment Delay

Combination Rate Reduction and Term Extension

Private Education Loans

Reduced the weighted average contractual rate from 13.4% to 5.5%

Added an average 6 months to the remaining life of the loans

Added an average 7 years to the remaining life of the loans and reduced the weighted average contractual rate from
 13.0% to 5.4%.

 

 

 

 

Nine Months Ended September 30, 2024

Loan Type

Interest Rate Reductions

More Than an Insignificant Payment Delay

Combination Rate Reduction and Term Extension

Private Education Loans

Reduced the weighted average contractual rate from 13.3% to 5.4%

Added an average 5 months to the remaining life of the loans

Added an average 7 years to the remaining life of the loans and reduced the weighted average contractual rate from
 12.7% to 5.3%.

 

 

 

 

Nine Months Ended September 30, 2023

Loan Type

Interest Rate Reductions

More Than an Insignificant Payment Delay

Combination Rate Reduction and Term Extension

Private Education Loans

Reduced the weighted average contractual rate from 13.1% to 5.2%

Added an average 6 months to the remaining life of the loans

Added an average 8 years to the remaining life of the loans and reduced the weighted average contractual rate from
 12.6% to 5.2%.

 

 

65

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

2. Allowance for Loan Losses (Continued)

The following table provides the amount of loan modifications for which a charge-off or payment default occurred in the respective period and within 12 months of the loan receiving a loan modification. We define payment default as 60 days or more past due for purposes of this disclosure. We closely monitor performance of the loans to borrowers experiencing financial difficulty that are modified to understand the effectiveness of the modification efforts.

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Modified loans (amortized cost) (1)

 

$

127

 

 

$

65

 

 

$

284

 

 

$

123

 

Payment default (par)

 

$

129

 

 

$

67

 

 

$

290

 

 

$

129

 

Charge-offs (par)

 

$

12

 

 

$

3

 

 

$

14

 

 

$

5

 

 

(1)
For the three months ended September 30, 2024 and 2023, the modified loans include $96 million and $44 million, respectively, of Interest Rate Reduction, $6 million and $3 million, respectively, of Combination Rate Reduction and Term Extension, and $25 million and $18 million, respectively, of More Than Insignificant Payment Delay. For the nine months ended September 30, 2024 and 2023, the modified loans include $216 million and $78 million, respectively, of Interest Rate Reduction, $14 million and $6 million, respectively, of Combination Rate Reduction and Term Extension, and $54 million and $39 million, respectively, of More Than Insignificant Payment Delay.

 

The following table provides the performance and related loan status of Private Education Loans that have been modified during the 12-month period preceding the balance sheet dates below.

 

(Dollars in millions)

 

Payment Status (Amortized Cost)

 

Loan Status

 

September 30, 2024

 

 

December 31, 2023

 

 

September 30, 2023

 

Loans in school/deferment

 

$

14

 

 

$

22

 

 

$

16

 

Loans in forbearance

 

 

121

 

 

 

93

 

 

 

67

 

Loans current

 

 

1,969

 

 

 

2,199

 

 

 

2,039

 

Loans delinquent 31 - 60 days

 

 

137

 

 

 

160

 

 

 

133

 

Loans delinquent 61 - 90 days

 

 

64

 

 

 

96

 

 

 

61

 

Loans delinquent greater than 90 days

 

 

83

 

 

 

159

 

 

 

64

 

  Total modified loans

 

$

2,388

 

 

$

2,729

 

 

$

2,380

 

 

 

 

 

 

 

 

 

 

 

 

66

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

3. Borrowings

The following table summarizes our borrowings.

 

 

September 30, 2024

 

 

December 31, 2023

 

(Dollars in millions)

 

Short
Term

 

 

Long
Term

 

 

Total

 

 

Short
Term

 

 

Long
Term

 

 

Total

 

Unsecured borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior unsecured debt

 

$

1,053

 

 

$

4,804

 

 

$

5,857

 

 

$

506

 

 

$

5,351

 

 

$

5,857

 

Total unsecured borrowings

 

 

1,053

 

 

 

4,804

 

 

 

5,857

 

 

 

506

 

 

 

5,351

 

 

 

5,857

 

Secured borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFELP Loan securitizations(1)(2)

 

 

136

 

 

 

29,087

 

 

 

29,223

 

 

 

59

 

 

 

35,626

 

 

 

35,685

 

Private Education Loan securitizations(3)

 

 

672

 

 

 

10,852

 

 

 

11,524

 

 

 

435

 

 

 

11,754

 

 

 

12,189

 

FFELP Loan ABCP facilities

 

 

1,490

 

 

 

75

 

 

 

1,565

 

 

 

1,854

 

 

 

89

 

 

 

1,943

 

Private Education Loan ABCP facilities

 

 

1,876

 

 

 

—

 

 

 

1,876

 

 

 

1,286

 

 

 

821

 

 

 

2,107

 

Other(4)

 

 

86

 

 

 

39

 

 

 

125

 

 

 

95

 

 

 

39

 

 

 

134

 

Total secured borrowings

 

 

4,260

 

 

 

40,053

 

 

 

44,313

 

 

 

3,729

 

 

 

48,329

 

 

 

52,058

 

Total before hedge accounting adjustments

 

 

5,313

 

 

 

44,857

 

 

 

50,170

 

 

 

4,235

 

 

 

53,680

 

 

 

57,915

 

Hedge accounting adjustments

 

 

(8

)

 

 

(162

)

 

 

(170

)

 

 

(9

)

 

 

(278

)

 

 

(287

)

Total

 

$

5,305

 

 

$

44,695

 

 

$

50,000

 

 

$

4,226

 

 

$

53,402

 

 

$

57,628

 

 

(1)
Includes $136 million and $59 million of short-term debt and $0 and $122 million of long-term debt related to the FFELP Loan ABS repurchase facilities (FFELP Loan Repurchase Facilities) as of September 30, 2024 and December 31, 2023, respectively.
(2)
Includes defaulted FFELP secured debt tranches with a remaining principal amount of $1.2 billion as of September 30, 2024 as a result of not maturing by their respective contractual maturity dates. Notices were delivered to the trustee, rating agencies and bondholders alerting them to these maturity date defaults. At this time, it is expected the bonds will be paid in full between 2029 and 2038. There is no impact to the principal amount owed or the coupon at which the bonds accrue, and there is no revised contractual maturity date.
(3)
Includes $672 million and $435 million of short-term debt related to the Private Education Loan ABS repurchase facilities (Private Education Loan Repurchase Facilities) as of September 30, 2024 and December 31, 2023, respectively.
(4)
“Other” primarily includes the obligation to return cash collateral held related to derivative exposure.

 

 

67

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

3. Borrowings (Continued)

Variable Interest Entities

We consolidated the following financing VIEs as of September 30, 2024 and December 31, 2023, as we are the primary beneficiary. As a result, these VIEs are accounted for as secured borrowings.

 

 

 

September 30, 2024

 

 

 

Debt Outstanding

 

 

Carrying Amount of Assets Securing
Debt Outstanding

 

(Dollars in millions)

 

Short
Term

 

 

Long
Term

 

 

Total

 

 

Loans

 

 

Cash

 

 

Other
Assets

 

 

Total

 

Secured Borrowings — VIEs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFELP Loan securitizations

 

$

136

 

 

$

29,087

 

 

$

29,223

 

 

$

29,785

 

 

$

1,189

 

 

$

1,257

 

 

$

32,231

 

Private Education Loan securitizations

 

 

672

 

 

 

10,852

 

 

 

11,524

 

 

 

12,567

 

 

 

330

 

 

 

111

 

 

 

13,008

 

FFELP Loan ABCP facilities

 

 

1,490

 

 

 

75

 

 

 

1,565

 

 

 

1,537

 

 

 

61

 

 

 

68

 

 

 

1,666

 

Private Education Loan ABCP facilities

 

 

1,876

 

 

 

—

 

 

 

1,876

 

 

 

2,173

 

 

 

51

 

 

 

64

 

 

 

2,288

 

Total before hedge accounting
   adjustments

 

 

4,174

 

 

 

40,014

 

 

 

44,188

 

 

 

46,062

 

 

 

1,631

 

 

 

1,500

 

 

 

49,193

 

Hedge accounting adjustments

 

 

—

 

 

 

(98

)

 

 

(98

)

 

 

—

 

 

 

—

 

 

 

(164

)

 

 

(164

)

Total

 

$

4,174

 

 

$

39,916

 

 

$

44,090

 

 

$

46,062

 

 

$

1,631

 

 

$

1,336

 

 

$

49,029

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2023

 

 

 

Debt Outstanding

 

 

Carrying Amount of Assets Securing
Debt Outstanding

 

(Dollars in millions)

 

Short
Term

 

 

Long
Term

 

 

Total

 

 

Loans

 

 

Cash

 

 

Other
Assets

 

 

Total

 

Secured Borrowings — VIEs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFELP Loan securitizations

 

$

59

 

 

$

35,626

 

 

$

35,685

 

 

$

35,935

 

 

$

1,441

 

 

$

1,673

 

 

$

39,049

 

Private Education Loan securitizations

 

 

435

 

 

 

11,754

 

 

 

12,189

 

 

 

13,396

 

 

 

350

 

 

 

119

 

 

 

13,865

 

FFELP Loan ABCP facilities

 

 

1,854

 

 

 

89

 

 

 

1,943

 

 

 

1,897

 

 

 

77

 

 

 

92

 

 

 

2,066

 

Private Education Loan ABCP facilities

 

 

1,286

 

 

 

821

 

 

 

2,107

 

 

 

2,363

 

 

 

69

 

 

 

50

 

 

 

2,482

 

Total before hedge accounting
   adjustments

 

 

3,634

 

 

 

48,290

 

 

 

51,924

 

 

 

53,591

 

 

 

1,937

 

 

 

1,934

 

 

 

57,462

 

Hedge accounting adjustments

 

 

—

 

 

 

(121

)

 

 

(121

)

 

 

—

 

 

 

—

 

 

 

(190

)

 

 

(190

)

Total

 

$

3,634

 

 

$

48,169

 

 

$

51,803

 

 

$

53,591

 

 

$

1,937

 

 

$

1,744

 

 

$

57,272

 

 

68

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

4. Business Combinations, Goodwill and Acquired Intangible Assets

Goodwill

The following table summarizes our goodwill for our reporting units and reportable segments.

 

 

 

 

 

(Dollars in millions)

 

As of September 30, 2024

 

 

As of December 31, 2023

 

Federal Education Loans reportable segment:

 

 

 

 

 

 

   FFELP Loans

 

$

227

 

 

$

227

 

   Federal Education Loan Servicing

 

 

5

 

 

 

5

 

   Total

 

 

232

 

 

 

232

 

Consumer Lending reportable segment:

 

 

 

 

 

 

Private Education Legacy In-School Loans

 

 

106

 

 

 

106

 

Private Education Refinance Loans

 

 

77

 

 

 

77

 

Private Education Recent In-School Loans

 

 

13

 

 

 

13

 

   Total

 

 

196

 

 

 

196

 

Business Processing reportable segment:

 

 

 

 

 

 

Government Services

 

 

—

 

 

 

136

 

Healthcare Services

 

 

—

 

 

 

106

 

   Total

 

 

—

 

 

 

242

 

Total goodwill

 

$

428

 

 

$

670

 

 

We last performed a quantitative goodwill impairment test by engaging an independent appraiser to estimate the fair values of these reporting units as of October 1, 2022. During the third quarter of 2024, we assessed relevant qualitative factors associated with the FFELP Loans and Government Services reporting units to determine whether it was "more-likely-than-not” that the fair value of these reporting units was less than their carrying values. Based on this qualitative assessment, we performed a quantitative impairment test to determine whether the fair values of these reporting units exceed their carry values. Based on the current performance of and economic environment impacting the other reporting units with goodwill as illustrated in the table above, we determined that neither a qualitative nor a quantitative interim impairment test was warranted to test goodwill associated with these reporting units.

For the FFELP Loans reporting unit, goodwill will be impaired at some point in the future due to the runoff nature of the portfolio although the timing of impairment remains uncertain. As a result of elevated prepayments experienced in the first nine months of 2024 (primarily as a result of ED's proposed debt relief regulations), the runoff nature of the portfolio and the passage of time, we performed a quantitative impairment test by engaging an independent appraiser to estimate the fair value of the reporting unit. The independent appraiser used an income approach to estimate the fair value of the reporting unit measuring the value of future economic benefit determined based on the reporting unit’s discounted cash flows derived from our portfolio cash flow projections.

Under our guidance, the third-party appraisal firm developed the discount rate for the reporting unit incorporating such factors as the risk-free rate, a market rate of return, a measure of volatility (Beta) and a company-specific and capital markets risk premium, as appropriate, to adjust for volatility and uncertainty in the economy and to capture specific risk related to the reporting unit. The discount rate reflects market-based estimates of capital costs and is adjusted for our assessment of a market participant’s view with respect to execution, source concentration and other risks associated with the projected cash flows of the reporting unit. We reviewed and approved the discount rate provided by the third-party appraiser including the factors incorporated to develop the discount rate for the FFELP Loans reporting unit.

FFELP Loans goodwill was not deemed impaired as a result of the quantitative impairment test as the fair value of the reporting unit was greater than the reporting unit’s carry value. However, our current projections of future cash flows would result in partial impairment of FFELP goodwill in 2025 earlier than previously estimated (as previously disclosed in our 2023 Form 10-K), and impairment may be accelerated into the fourth quarter of 2024 if elevated prepayment rates continue or if there is significant change in economic and other factors impacting the discount rate used to determine the fair value of the projected cashflows and thus the reporting unit. Since our estimate of future portfolio cash flows may change, the estimated timing of partial future impairment may also change.

69

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

4. Business Combinations, Goodwill and Acquired Intangible Assets (Continued)

 

With respect to the Government Services reporting unit, in the second half of September 2024, we were informed a contract that represented a significant portion of Government Services income would not be renewed in 2025. In addition, a federal program which is a significant part of a Government Services contract remained unfunded during the third quarter. There has been increased uncertainty as to when or if there will be congressional approval to fund this program which would result in the resumption of services provided by Government Services under this contract. These two events in September 2024 resulted in a significant decline in the estimated fair value of the reporting unit. Based on active discussions with potential buyers of the Government Services business and their indication of a potential purchase price, Navient concluded that Government Services’ $138 million of goodwill and acquired intangible assets were fully impaired. The remaining net book value of the Government Services reporting unit after the impairment was approximately $50 million as of September 30, 2024.

As it relates to our Business Processing Healthcare Services reporting unit, on September 19, 2024, Navient completed the sale of its membership interest in Xtend, LLC, which comprised the Company's healthcare services business, resulting in a $219 million gain on sale. As a result, $112 million of goodwill and acquired intangible assets were a part of our basis in this entity, and these assets were therefore removed from our balance sheet upon the sale.

Acquired Intangible Assets

Acquired intangible assets include the following:

 

 

 

As of September 30, 2024

 

 

As of December 31, 2023

 

(Dollars in millions)

 

Cost
Basis

 

 

Accumulated
Impairment and
Amortization(3)(4)

 

 

Net

 

 

Cost
Basis(3)

 

 

Accumulated
Impairment and
Amortization(3)(4)

 

 

Net

 

Customer, services and lending
   relationships(1)

 

$

139

 

 

$

(138

)

 

$

1

 

 

$

218

 

 

$

(212

)

 

$

6

 

Software and technology(1)(2)

 

 

93

 

 

 

(88

)

 

 

5

 

 

 

119

 

 

 

(110

)

 

 

9

 

Trade names and trademarks(1)(2)

 

 

13

 

 

 

(9

)

 

 

4

 

 

 

40

 

 

 

(30

)

 

 

10

 

Total acquired intangible assets

 

$

245

 

 

$

(235

)

 

$

10

 

 

$

377

 

 

$

(352

)

 

$

25

 

 

(1)
The Company’s sale of our healthcare services business in September 2024 resulted in the removal of $6 million in customer relationship, developed technology, and tradename assets.
(2)
During September 2024, $1 million of government services developed technology and tradename assets were impaired as a result of certain events that took place in mid-September 2024 as described above.
(3)
Accumulated impairment and amortization include impairment amounts only if the acquired intangible asset has been deemed partially impaired. When an acquired intangible asset is considered fully impaired and no longer in use, the cost basis and any accumulated amortization related to the asset is written off.
(4)
We recorded amortization of acquired intangible assets of $2 million and $3 million in the three months ended September 30, 2024 and 2023, respectively, and $7 million and $10 million in the nine months ended September 30, 2024 and 2023, respectively. We will continue to amortize our intangible assets with definite useful lives over their remaining estimated useful lives. We estimate amortization expense associated with these intangible assets will be $3 million, $4 million, $2 million, and $1 million in 2025, 2026, 2027 and after 2027, respectively.

 

70

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

5. Derivative Financial Instruments

Summary of Derivative Financial Statement Impact

The following tables summarize the fair values and notional amounts of all derivative instruments and their impact on net income and other comprehensive income.

Impact of Derivatives on Balance Sheet

 

 

 

 

Cash Flow

 

 

Fair Value(3)

 

 

Trading

 

 

Total

 

(Dollars in millions)

 

Hedged Risk
Exposure

 

Sep 30, 2024

 

 

Dec 31, 2023

 

 

Sep 30, 2024

 

 

Dec 31, 2023

 

 

Sep 30, 2024

 

 

Dec 31, 2023

 

 

Sep 30, 2024

 

 

Dec 31, 2023

 

Fair Values(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

 

Interest rate

 

$

—

 

 

$

—

 

 

$

60

 

 

$

55

 

 

$

—

 

 

$

—

 

 

$

60

 

 

$

55

 

Cross-currency interest rate
   swaps

 

Foreign currency and
interest rate

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total derivative assets(2)

 

 

 

 

—

 

 

 

—

 

 

 

60

 

 

 

55

 

 

 

—

 

 

 

—

 

 

 

60

 

 

 

55

 

Derivative Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

 

Interest rate

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(1

)

 

 

—

 

 

 

(1

)

Floor Income Contracts

 

Interest rate

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Cross-currency interest rate
   swaps

 

Foreign currency and
interest rate

 

 

—

 

 

 

—

 

 

 

(164

)

 

 

(189

)

 

 

—

 

 

 

—

 

 

 

(164

)

 

 

(189

)

Total derivative liabilities(2)

 

 

 

 

—

 

 

 

—

 

 

 

(164

)

 

 

(189

)

 

 

—

 

 

 

(1

)

 

 

(164

)

 

 

(190

)

Net total derivatives

 

 

 

$

—

 

 

$

—

 

 

$

(104

)

 

$

(134

)

 

$

—

 

 

$

(1

)

 

$

(104

)

 

$

(135

)

(1)
Fair values reported are exclusive of collateral held and pledged and accrued interest. Assets and liabilities are presented without consideration of master netting agreements. Derivatives are carried on the balance sheet based on net position by counterparty under master netting agreements and classified in other assets or other liabilities depending on whether in a net positive or negative position.
(2)
The following table reconciles gross positions without the impact of master netting agreements to the balance sheet classification:

 

 

Other Assets

 

 

Other Liabilities

 

(Dollar in millions)

 

September 30, 2024

 

 

December 31, 2023

 

 

September 30, 2024

 

 

December 31, 2023

 

Gross position

 

$

60

 

 

$

55

 

 

$

(164

)

 

$

(190

)

Impact of master netting agreements

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Derivative values with impact of master netting
   agreements (as carried on balance sheet)

 

 

60

 

 

 

55

 

 

 

(164

)

 

 

(190

)

Cash collateral (held) pledged

 

 

(55

)

 

 

(60

)

 

 

29

 

 

 

46

 

Net position

 

$

5

 

 

$

(5

)

 

$

(135

)

 

$

(144

)

 

(3)
The following table shows the carrying value of liabilities in fair value hedges and the related fair value hedging adjustments to these liabilities:

 

 

 

As of September 30, 2024

 

 

As of December 31, 2023

 

(Dollar in millions)

 

Carrying
 Value

 

 

Hedge Basis Adjustments

 

 

Carrying
 Value

 

 

Hedge Basis Adjustments

 

Short-term borrowings

 

$

992

 

 

$

(7

)

 

$

490

 

 

$

(9

)

Long-term borrowings

 

$

4,757

 

 

$

(165

)

 

$

5,341

 

 

$

(281

)

 

71

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

5. Derivative Financial Instruments (Continued)

The above fair values include adjustments when necessary for counterparty credit risk and also reflect adjustments for illiquid derivatives as indicated by a wide bid/ask spread in the interest rate indices to which the derivatives are indexed.

 

 

Cash Flow

 

 

Fair Value

 

 

Trading

 

 

Total

 

(Dollars in billions)

 

Sep 30, 2024

 

 

Dec 31, 2023

 

 

Sep 30, 2024

 

 

Dec 31, 2023

 

 

Sep 30, 2024

 

 

Dec 31, 2023

 

 

Sep 30, 2024

 

 

Dec 31, 2023

 

Notional Values:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

 

$

1.0

 

 

$

2.2

 

 

$

4.6

 

 

$

4.6

 

 

$

1.9

 

 

$

1.9

 

 

$

7.5

 

 

$

8.7

 

Floor Income Contracts

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Cross-currency interest rate swaps

 

 

—

 

 

 

—

 

 

 

1.4

 

 

 

1.6

 

 

 

—

 

 

 

—

 

 

 

1.4

 

 

 

1.6

 

Total derivatives

 

$

1.0

 

 

$

2.2

 

 

$

6.0

 

 

$

6.2

 

 

$

1.9

 

 

$

1.9

 

 

$

8.9

 

 

$

10.3

 

 

Mark-to-Market Impact of Derivatives on Statements of Income

 

 

Total Gains (Losses)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Fair Value Hedges:

 

 

 

 

 

 

 

 

 

 

 

 

Interest Rate Swaps

 

 

 

 

 

 

 

 

 

 

 

 

Gains (losses) recognized in net income on derivatives

 

$

135

 

 

$

(65

)

 

$

87

 

 

$

(66

)

Gains (losses) recognized in net income on hedged items

 

 

(146

)

 

 

68

 

 

 

(96

)

 

 

53

 

Net fair value hedge ineffectiveness gains (losses)

 

 

(11

)

 

 

3

 

 

 

(9

)

 

 

(13

)

Cross currency interest rate swaps

 

 

 

 

 

 

 

 

 

 

 

 

Gains (losses) recognized in net income on derivatives

 

 

59

 

 

 

(15

)

 

 

26

 

 

 

4

 

Gains (losses) recognized in net income on hedged items

 

 

(58

)

 

 

31

 

 

 

(22

)

 

 

(14

)

Net fair value hedge ineffectiveness gains (losses)

 

 

1

 

 

 

16

 

 

 

4

 

 

 

(10

)

Total fair value hedges(1)(2)

 

 

(10

)

 

 

19

 

 

 

(5

)

 

 

(23

)

Cash Flow Hedges:

 

 

 

 

 

 

 

 

 

 

 

 

Total cash flow hedges(2)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Trading:

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

 

 

(36

)

 

 

26

 

 

 

11

 

 

 

44

 

Floor income contracts

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Cross currency interest rate swaps

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total trading derivatives(3)

 

 

(36

)

 

 

26

 

 

 

11

 

 

 

44

 

Mark-to-market gains (losses) recognized

 

$

(46

)

 

$

45

 

 

$

6

 

 

$

21

 

(1)
Recorded in interest expense in the consolidated statements of income.
(2)
The accrued interest income (expense) on fair value hedges and cash flow hedges is recorded in interest expense and is excluded from this table.
(3)
Recorded in “gains (losses) on derivative and hedging activities, net” in the consolidated statements of income.

 

72

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

5. Derivative Financial Instruments (Continued)

Impact of Derivatives on Other Comprehensive Income (Equity)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Total gains (losses) on cash flow hedges

 

$

(1

)

 

$

4

 

 

$

3

 

 

$

19

 

Reclassification adjustments for derivative (gains) losses
    included in net income (interest expense)(1)

 

 

(6

)

 

 

(26

)

 

 

(19

)

 

 

(63

)

Net changes in cash flow hedges, net of tax

 

$

(7

)

 

$

(22

)

 

$

(16

)

 

$

(44

)

(1)
Includes net settlement income/expense.

Collateral

The following table details collateral held and pledged related to derivative exposure between us and our derivative counterparties:

(Dollars in millions)

 

September 30, 2024

 

 

December 31, 2023

 

Collateral held:

 

 

 

 

 

 

Cash (obligation to return cash collateral is recorded in short-term borrowings)

 

$

55

 

 

$

60

 

Securities at fair value — corporate derivatives (not recorded in financial
   statements)(1)

 

 

—

 

 

 

—

 

Securities at fair value — on-balance sheet securitization derivatives (not
   recorded in financial statements)(2)

 

 

—

 

 

 

—

 

Total collateral held

 

$

55

 

 

$

60

 

Derivative asset at fair value including accrued interest

 

$

59

 

 

$

62

 

Collateral pledged to others:

 

 

 

 

 

 

Cash (right to receive return of cash collateral is recorded in investments)

 

$

29

 

 

$

46

 

Total collateral pledged

 

$

29

 

 

$

46

 

Derivative liability at fair value including accrued interest and premium
   receivable

 

$

170

 

 

$

197

 

(1)
The Company has the ability to sell or re-pledge securities it holds as collateral.
(2)
The trusts do not have the ability to sell or re-pledge securities they hold as collateral.

 

Our corporate derivatives contain credit contingent features. At our current unsecured credit rating, we have fully collateralized our corporate derivative liability position (including accrued interest and net of premiums receivable) of $0 with our counterparties. Downgrades in our unsecured credit rating would not result in any additional collateral requirements. Trust related derivatives do not contain credit contingent features related to our or the trusts’ credit ratings. At September 30, 2024 and December 31, 2023, we had a net positive exposure (derivative gain positions to us less collateral which has been posted by counterparties to us) related to Navient Corporation derivatives of $7 million and $6 million, respectively. The trusts are not required to post collateral to the counterparties. At September 30, 2024 and December 31, 2023, the net positive exposure on swaps in securitization trusts was $0 million and $0 million, respectively.

 

6. Other Assets

The following table provides the detail of our other assets.

(Dollars in millions)

 

September 30, 2024

 

 

December 31, 2023

 

Accrued interest receivable

 

$

1,740

 

 

$

2,081

 

Benefit and insurance-related investments

 

 

457

 

 

 

460

 

Income tax asset, net

 

 

116

 

 

 

122

 

Derivatives at fair value

 

 

60

 

 

 

55

 

Accounts receivable

 

 

57

 

 

 

101

 

Fixed assets

 

 

54

 

 

 

62

 

Other

 

 

58

 

 

 

33

 

Total

 

$

2,542

 

 

$

2,914

 

73

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

7. Stockholders’ Equity

The following table summarizes common share repurchases, issuances and dividends paid.

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars and shares in millions, except per share amounts)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Common stock repurchased(1)

 

 

2.1

 

 

 

4.2

 

 

 

7.2

 

 

 

13.9

 

Common stock repurchased (in dollars)(1)

 

$

33

 

 

$

75

 

 

$

114

 

 

$

240

 

Average purchase price per share(1)

 

$

15.37

 

 

$

18.01

 

 

$

15.91

 

 

$

17.22

 

Remaining common stock repurchase authority(1)

 

$

176

 

 

$

360

 

 

$

176

 

 

$

360

 

Shares repurchased related to employee stock-
   based compensation plans(2)

 

 

—

 

 

 

—

 

 

 

.5

 

 

 

1.3

 

Average purchase price per share(2)

 

$

—

 

 

$

—

 

 

$

16.04

 

 

$

18.44

 

Common shares issued(3)

 

 

.1

 

 

 

.1

 

 

 

1.5

 

 

 

2.6

 

Dividends paid

 

$

17

 

 

$

19

 

 

$

53

 

 

$

59

 

Dividends per share

 

$

.16

 

 

$

.16

 

 

$

.48

 

 

$

.48

 

(1)
Common shares purchased under our share repurchase program. Our Board of Directors authorized a $1 billion multi-year share repurchase program in December 2021.
(2)
Comprises shares withheld from the vesting of restricted stock for employees’ tax withholding obligations.
(3)
Common shares issued under our various compensation and benefit plans.

The closing price of our common stock on September 30, 2024 was $15.59.

8. Earnings (Loss) per Common Share

Basic earnings (loss) per common share (EPS) are calculated using the weighted average number of shares of common stock outstanding during each period. A reconciliation of the numerators and denominators of the basic and diluted EPS calculations on a GAAP basis follows.

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(In millions, except per share data)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(2

)

 

$

79

 

 

$

107

 

 

$

256

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares used to compute basic EPS

 

 

108

 

 

 

120

 

 

 

111

 

 

 

124

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

Dilutive effect of restricted stock, restricted
   stock units, performance stock units, and
   Employee Stock Purchase Plan (ESPP)(1)

 

 

—

 

 

 

1

 

 

 

1

 

 

 

1

 

Dilutive potential common shares(2)

 

 

—

 

 

 

1

 

 

 

1

 

 

 

1

 

Weighted average shares used to compute
   diluted EPS

 

 

108

 

 

 

121

 

 

 

112

 

 

 

125

 

Basic earnings (loss) per common share

 

$

(.02

)

 

$

.66

 

 

$

.97

 

 

$

2.06

 

Diluted earnings (loss) per common share

 

$

(.02

)

 

$

.65

 

 

$

.95

 

 

$

2.04

 

 

(1)
Includes the potential dilutive effect of additional common shares that are issuable upon the vesting of restricted stock, restricted stock units and performance stock units and the outstanding commitment to issue shares under applicable ESPPs, determined by the treasury stock method.
(2)
For the three months ended September 30, 2024 and 2023, securities covering approximately 2 million and 0 million shares, respectively, were outstanding but not included in the computation of diluted earnings per share because they were anti-dilutive. For the nine months ended September 30, 2024 and 2023, securities covering approximately 0 million and 0 million shares, respectively, were outstanding but not included in the computation of diluted earnings per share because they were anti-dilutive.

 

74

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

 

9. Fair Value Measurements

We use estimates of fair value in applying various accounting standards in our financial statements. We categorize our fair value estimates based on a hierarchical framework associated with three levels of price transparency utilized in measuring financial instruments at fair value. The fair value of the items discussed below are separately disclosed in this footnote.

During the three and nine months ended September 30, 2024, there were no significant transfers of financial instruments between levels, or changes in our methodology used to value our financial instruments.

The following table summarizes the valuation of our financial instruments that are marked-to-market on a recurring basis. During the third-quarters of 2024 and 2023, there were no significant transfers of financial instruments between levels.

 

 

 

Fair Value Measurements on a Recurring Basis

 

 

 

September 30, 2024

 

 

December 31, 2023

 

(Dollars in millions)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative instruments:(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

 

$

—

 

 

$

60

 

 

$

—

 

 

$

60

 

 

$

—

 

 

$

55

 

 

$

—

 

 

$

55

 

Cross-currency interest rate swaps

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total derivative assets(2)

 

 

—

 

 

 

60

 

 

 

—

 

 

 

60

 

 

 

—

 

 

 

55

 

 

 

—

 

 

 

55

 

Total

 

$

—

 

 

$

60

 

 

$

—

 

 

$

60

 

 

$

—

 

 

$

55

 

 

$

—

 

 

$

55

 

Liabilities(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative instruments(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

(1

)

 

$

(1

)

Floor Income Contracts

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Cross-currency interest rate swaps

 

 

—

 

 

 

—

 

 

 

(164

)

 

 

(164

)

 

 

—

 

 

 

—

 

 

 

(189

)

 

 

(189

)

Total derivative liabilities(2)

 

 

—

 

 

 

—

 

 

 

(164

)

 

 

(164

)

 

 

—

 

 

 

—

 

 

 

(190

)

 

 

(190

)

Total

 

$

—

 

 

$

—

 

 

$

(164

)

 

$

(164

)

 

$

—

 

 

$

—

 

 

$

(190

)

 

$

(190

)

 

(1)
Fair value of derivative instruments excludes accrued interest and the value of collateral.
(2)
See "Note 5 – Derivative Financial Instruments" for a reconciliation of gross positions without the impact of master netting agreements to the balance sheet classification.
(3)
Borrowings which are the hedged item in a fair value hedge relationship and which are adjusted for changes in value due to benchmark interest rates only are not carried at full fair value and not reflected in this table.

 

75

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

9. Fair Value Measurements (Continued)

The following tables summarize the change in balance sheet carrying value associated with level 3 financial instruments carried at fair value on a recurring basis.

 

 

Three Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

 

Derivative instruments

 

 

Derivative instruments

 

(Dollars in millions)

 

Interest
Rate Swaps

 

 

Cross
Currency
Interest
Rate Swaps

 

 

Other

 

 

Total
Derivative
Instruments

 

 

Interest
Rate Swaps

 

 

Cross
Currency
Interest
Rate Swaps

 

 

Other

 

 

Total
Derivative
Instruments

 

Balance, beginning of
   period

 

$

(1

)

 

$

(222

)

 

$

—

 

 

$

(223

)

 

$

(2

)

 

$

(234

)

 

$

—

 

 

$

(236

)

Total gains/(losses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in earnings(1)

 

 

—

 

 

 

49

 

 

 

—

 

 

 

49

 

 

 

1

 

 

 

(27

)

 

 

—

 

 

 

(26

)

Included in other
  comprehensive income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Settlements

 

 

—

 

 

 

9

 

 

 

—

 

 

 

9

 

 

 

—

 

 

 

11

 

 

 

—

 

 

 

11

 

Transfers in and/or out
  of level 3

 

 

1

 

 

 

—

 

 

 

—

 

 

 

1

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Balance, end of period

 

$

—

 

 

$

(164

)

 

$

—

 

 

$

(164

)

 

$

(1

)

 

$

(250

)

 

$

—

 

 

$

(251

)

Change in mark-to-
   market gains/
   (losses) relating
   to instruments
   still held at the
   reporting date(2)

 

$

—

 

 

$

58

 

 

$

—

 

 

$

58

 

 

$

1

 

 

$

(16

)

 

$

—

 

 

$

(15

)

 

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

 

Derivative instruments

 

 

Derivative instruments

 

(Dollars in millions)

 

Interest
Rate Swaps

 

 

Cross
Currency
Interest
Rate Swaps

 

 

Other

 

 

Total
Derivative
Instruments

 

 

Interest
Rate Swaps

 

 

Cross
Currency
Interest
Rate Swaps

 

 

Other

 

 

Total
Derivative
Instruments

 

Balance, beginning of
   period

 

$

(1

)

 

$

(189

)

 

$

—

 

 

$

(190

)

 

$

(2

)

 

$

(253

)

 

$

—

 

 

$

(255

)

Total gains/(losses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in earnings(1)

 

 

—

 

 

 

(3

)

 

 

—

 

 

 

(3

)

 

 

1

 

 

 

(33

)

 

 

—

 

 

 

(32

)

Included in other
  comprehensive income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Settlements

 

 

—

 

 

 

28

 

 

 

—

 

 

 

28

 

 

 

—

 

 

 

36

 

 

 

—

 

 

 

36

 

Transfers in and/or out
  of level 3

 

 

1

 

 

 

—

 

 

 

—

 

 

 

1

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Balance, end of period

 

$

—

 

 

$

(164

)

 

$

—

 

 

$

(164

)

 

$

(1

)

 

$

(250

)

 

$

—

 

 

$

(251

)

Change in mark-to-
   market gains/
   (losses) relating
   to instruments
   still held at the
   reporting date(2)

 

$

—

 

 

$

25

 

 

$

—

 

 

$

25

 

 

$

1

 

 

$

3

 

 

$

—

 

 

$

4

 

 

(1)
“Included in earnings” is comprised of the following amounts recorded in the specified line item in the consolidated statements of income:

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in millions)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Gains (losses) on derivative and hedging activities, net

 

$

—

 

 

$

1

 

 

$

—

 

 

$

1

 

Interest expense

 

 

49

 

 

 

(27

)

 

 

(3

)

 

 

(33

)

Total

 

$

49

 

 

$

(26

)

 

$

(3

)

 

$

(32

)

(2)
Recorded in “gains (losses) on derivative and hedging activities, net” in the consolidated statements of income.

 

76

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

9. Fair Value Measurements (Continued)

The following table presents the significant inputs that are unobservable or from inactive markets used in the recurring valuations of the level 3 financial instruments detailed above.

(Dollars in millions)

 

Fair Value at September 30, 2024

 

 

Valuation
Technique

 

Input

 

Range and
Weighted
Average

Derivatives

 

 

 

 

 

 

 

 

 

Cross-currency interest rate swaps

 

$

(164

)

 

Discounted cash flow

 

Constant Prepayment Rate

 

5%

Other

 

 

—

 

 

 

 

 

 

 

Total

 

$

(164

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table summarizes the fair values of our financial assets and liabilities, including derivative financial instruments.

 

 

September 30, 2024

 

 

December 31, 2023

 

(Dollars in millions)

 

Fair
Value

 

 

Carrying
Value

 

 

Difference

 

 

Fair
Value

 

 

Carrying
Value

 

 

Difference

 

Earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFELP Loans

 

$

30,901

 

 

$

31,522

 

 

$

(621

)

 

$

36,590

 

 

$

37,925

 

 

$

(1,335

)

Private Education Loans

 

 

15,791

 

 

 

16,005

 

 

 

(214

)

 

 

16,287

 

 

 

16,902

 

 

 

(615

)

Cash and investments

 

 

2,933

 

 

 

2,933

 

 

 

—

 

 

 

2,939

 

 

 

2,939

 

 

 

—

 

Total earning assets

 

 

49,625

 

 

 

50,460

 

 

 

(835

)

 

 

55,816

 

 

 

57,766

 

 

 

(1,950

)

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

 

5,320

 

 

 

5,305

 

 

 

(15

)

 

 

4,237

 

 

 

4,226

 

 

 

(11

)

Long-term borrowings

 

 

43,832

 

 

 

44,695

 

 

 

863

 

 

 

51,566

 

 

 

53,402

 

 

 

1,836

 

Total interest-bearing liabilities

 

 

49,152

 

 

 

50,000

 

 

 

848

 

 

 

55,803

 

 

 

57,628

 

 

 

1,825

 

Derivative financial instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Floor Income Contracts

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Interest rate swaps

 

 

60

 

 

 

60

 

 

 

—

 

 

 

54

 

 

 

54

 

 

 

—

 

Cross-currency interest rate swaps

 

 

(164

)

 

 

(164

)

 

 

—

 

 

 

(189

)

 

 

(189

)

 

 

—

 

Other

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Excess of net asset fair value over carrying value

 

 

 

 

 

 

 

$

13

 

 

 

 

 

 

 

 

$

(125

)

 

77

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

10. Commitments, Contingencies and Guarantees

We and our subsidiaries and affiliates are subject to various claims, lawsuits and other actions that arise in the normal course of business. We believe that these claims, lawsuits and other actions will not, individually or in the aggregate, have a material adverse effect on our business, financial condition or results of operations, except as otherwise disclosed. Most of these matters are claims including individual and class action lawsuits against our servicing or business processing subsidiaries alleging the violation of state or federal laws in connection with servicing or collection activities on education loans and other debts.

In the ordinary course of our business, the Company and our subsidiaries and affiliates receive information and document requests and investigative demands from various entities including State Attorneys General, U.S. Attorneys, legislative committees, individual members of Congress and administrative agencies. These requests may be informational, regulatory or enforcement in nature and may relate to our business practices, the industries in which we operate, or companies with whom we conduct business. Generally, our practice has been and continues to be to cooperate with these bodies and to be responsive to any such requests.

The number of these inquiries and the volume of related information demands have normalized at elevated levels and therefore the Company must continue to expend time and resources to timely respond to these requests which may, depending on their outcome, result in payments of restitution, fines and penalties.

Contingencies

In the ordinary course of business, we and our subsidiaries are defendants in or parties to pending and threatened legal actions and proceedings including actions brought on behalf of various classes of claimants. These actions and proceedings may be based on alleged violations of consumer protection, securities, employment and other laws. In certain of these actions and proceedings, claims for substantial monetary damage are asserted against us and our subsidiaries. We and our subsidiaries are also subject to potential unasserted claims by third parties.

In the ordinary course of business, we and our subsidiaries are subject to regulatory examinations, information gathering requests, inquiries and investigations. In connection with formal and informal inquiries in these cases, we and our subsidiaries receive requests, subpoenas and orders for documents, testimony and information in connection with various aspects of our regulated activities.

In view of the inherent difficulty of predicting the outcome of litigation and regulatory matters, we may not be able to predict what the eventual outcome of the pending matters will be, what the timing or the ultimate resolution of these matters will be, or what the eventual loss, fines or penalties, if any, related to each pending matter may be.

The Company accrues a liability for litigation, regulatory matters, and unasserted contract claims when those matters present loss contingencies that are both probable and reasonably estimable. When loss contingencies are not both probable and reasonably estimable, we do not accrue a liability. Based on current knowledge, management does not believe that loss contingencies, if any, arising from pending investigations, litigation or regulatory matters will have a material adverse effect on our consolidated financial position, liquidity, results of operations or cash flows, except as otherwise disclosed.

The Company evaluates its outstanding legal and regulatory matters each reporting period, and makes adjustments to the accrued liabilities for such matters, upward or downward, as appropriate, based on the relevant facts and circumstances. The Company's accrued liabilities and estimated range of possible losses pertaining to certain matters can involve significant judgment given factors such as: the varying stages of the proceedings; the existence of numerous yet to be resolved issues; the breadth of the claims (often spanning multiple years and wide ranges of business activities); unspecified damages, civil money penalties or fines and/or the novelty of the legal issues presented; and the attendant uncertainty of the various potential outcomes of such proceedings, including where the Company has made assumptions concerning future rulings by the court or other adjudicator, or about the behavior or incentives of adverse parties or regulatory authorities. Various aspects of the legal proceedings underlying these estimates will change from time to time. Actual losses therefore may vary significantly from any estimates.

78

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

10. Commitments, Contingencies and Guarantees (Continued)

Set forth below are descriptions of the Company’s material legal proceedings.

Certain Cases

In January 2017, the Consumer Financial Protection Bureau (the CFPB) and Attorneys General for the State of Illinois and the State of Washington initiated civil actions naming Navient Corporation and several of its subsidiaries as defendants alleging violations of certain Federal and State consumer protection statutes, including the CFPA, FCRA, FDCPA and various state consumer protection laws. The Attorneys General for the States of Pennsylvania, California, Mississippi, and New Jersey also initiated actions against the Company and certain subsidiaries alleging violations of various state and federal consumer protection laws based upon similar alleged acts or failures to act. In addition to these matters, a number of lawsuits have been filed by nongovernmental parties or, in the future, may be filed by additional governmental or nongovernmental parties seeking damages or other remedies related to similar issues raised by the CFPB and the State Attorneys General. In January 2022, we entered into a series of Consent Judgment and Orders (the “Agreements”) with 40 State Attorneys General to resolve all matters in dispute related to the State Attorneys General cases as well as the related investigations, subpoenas, civil investigative demands and inquiries from various other state regulators.

Due to developments in the second half of 2023 and the first half of 2024 in connection with the Company's CFPB matter, the Company concluded a loss was probable and reasonably estimable. As of June 30, 2024, the contingency loss liability was $105 million. Navient reached an agreement to settle the CFPB lawsuit in September 2024. While we do not agree with the CFPB’s allegations, this resolution is consistent with our go-forward activities and is an important positive milestone in our transformation of the Company. As part of the settlement, pursuant to which the Company did not admit to any wrongdoing, Navient agreed to pay $120 million, which includes a $100 million payment that will be used by the CFPB to make payments to certain borrowers as determined by the CFPB, in addition to a $20 million penalty. In light of the contingency loss liability established in the amount of $105 million as of June 30, 2024, there was an additional $18 million of contingency expense recorded in third-quarter 2024. The $120 million was paid prior to September 30, 2024. The settlement prohibits Navient from servicing federal student loans (other than in the role as master servicer of Navient’s FFELP Loan portfolio), and further prohibits Navient from purchasing any FFELP Loans in the future. These restrictions are not expected to have a material impact on Navient’s business as Navient had already exited its Direct loan servicing contract with the Department of Education in 2021, and entered into an agreement with MOHELA to service Navient’s FFELP Loan portfolio in May 2024. It is not anticipated that the other requirements of the settlement will impact Navient’s go-forward business plans or operations.

 

79

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

10. Commitments, Contingencies and Guarantees (Continued)

Regulatory Matters

The Company has been named as defendant in a number of putative class action and other cases alleging violations of various state and federal consumer protection laws including the Telephone Consumer Protection Act (TCPA), the Consumer Financial Protection Act of 2010 (CFPA), the Fair Credit Reporting Act (FCRA), the Fair Debt Collection Practices Act (FDCPA), in adversarial proceedings under the U.S. Bankruptcy Code, and various state consumer protection laws. At this point in time, the Company is unable to anticipate the timing of a resolution or the impact that these legal proceedings may have on the Company’s consolidated financial position, liquidity, results of operation or cash flows. As a result, it is not possible at this time to estimate a range of potential exposure, if any, for amounts that may be payable in connection with these matters and loss contingency accruals have not been established. It is possible that an adverse ruling or rulings may have a material adverse impact on the Company.

In addition, Navient and its subsidiaries are subject to examination or regulation by various federal regulatory, state licensing or other regulatory agencies as part of its ordinary course of business including the SEC, CFPB, FFIEC and ED. Items or matters similar to or different from those described above may arise during the course of those examinations. We also routinely receive inquiries or requests from various regulatory entities or bodies or government agencies concerning our business or our assets. Generally, the Company endeavors to cooperate with each such inquiry or request. The Company has received separate CIDs or subpoenas from multiple State Attorneys General that are similar to the CIDs or subpoenas that preceded the lawsuits referenced above. Those CIDs and subpoenas have been resolved as part of the Company’s settlement with the State Attorneys General. Nevertheless, we have received and, in the future may receive, additional CIDs or subpoenas and other inquiries from these or other Attorneys General with respect to similar or different matters.

 

 

 

80

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

11. Revenue from Contracts with Customers Accounted for in Accordance with ASC 606

The following tables illustrate the disaggregation of revenue from contracts accounted for under ASC 606 with customers according to service type and client type by reportable operating segment.

Revenue by Service Type

 

 

Three Months Ended September 30,

 

 

 

2024

 

 

2023

 

(Dollars in millions)

 

Federal Education Loans

 

 

Business Processing

 

 

Total Revenue

 

 

Federal Education Loans

 

 

Business Processing

 

 

Total Revenue

 

Federal Education Loan
   asset recovery services

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Government services

 

 

—

 

 

 

43

 

 

 

43

 

 

 

—

 

 

 

57

 

 

 

57

 

Healthcare services

 

 

—

 

 

 

27

 

 

 

27

 

 

 

—

 

 

 

28

 

 

 

28

 

Total

 

$

—

 

 

$

70

 

 

$

70

 

 

$

—

 

 

$

85

 

 

$

85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

(Dollars in millions)

 

Federal Education Loans

 

 

Business Processing

 

 

Total Revenue

 

 

Federal Education Loans

 

 

Business Processing

 

 

Total Revenue

 

Federal Education Loan
   asset recovery services

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Government services

 

 

—

 

 

 

140

 

 

 

140

 

 

 

—

 

 

 

149

 

 

 

149

 

Healthcare services

 

 

—

 

 

 

88

 

 

 

88

 

 

 

—

 

 

 

91

 

 

 

91

 

Total

 

$

—

 

 

$

228

 

 

$

228

 

 

$

—

 

 

$

240

 

 

$

240

 

 

Revenue by Client Type

 

 

Three Months Ended September 30,

 

 

 

2024

 

 

2023

 

(Dollars in millions)

 

Federal Education Loans

 

 

Business Processing

 

 

Total Revenue

 

 

Federal Education Loans

 

 

Business Processing

 

 

Total Revenue

 

Federal government

 

$

—

 

 

$

6

 

 

$

6

 

 

$

—

 

 

$

20

 

 

$

20

 

Guarantor agencies

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

State and local government

 

 

—

 

 

 

19

 

 

 

19

 

 

 

—

 

 

 

17

 

 

 

17

 

Tolling authorities

 

 

—

 

 

 

18

 

 

 

18

 

 

 

—

 

 

 

20

 

 

 

20

 

Hospitals and other
   healthcare providers

 

 

—

 

 

 

27

 

 

 

27

 

 

 

—

 

 

 

28

 

 

 

28

 

Total

 

$

—

 

 

$

70

 

 

$

70

 

 

$

—

 

 

$

85

 

 

$

85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

(Dollars in millions)

 

Federal Education Loans

 

 

Business Processing

 

 

Total Revenue

 

 

Federal Education Loans

 

 

Business Processing

 

 

Total Revenue

 

Federal government

 

$

—

 

 

$

35

 

 

$

35

 

 

$

—

 

 

$

43

 

 

$

43

 

Guarantor agencies

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

State and local government

 

 

—

 

 

 

54

 

 

 

54

 

 

 

—

 

 

 

52

 

 

 

52

 

Tolling authorities

 

 

—

 

 

 

51

 

 

 

51

 

 

 

—

 

 

 

54

 

 

 

54

 

Hospitals and other
   healthcare providers

 

 

—

 

 

 

88

 

 

 

88

 

 

 

—

 

 

 

91

 

 

 

91

 

Total

 

$

—

 

 

$

228

 

 

$

228

 

 

$

—

 

 

$

240

 

 

$

240

 

As of September 30, 2024 and September 30, 2023, there was $41 million and $88 million, respectively, of net accounts receivable related to these contracts. Navient had no material contract assets or contract liabilities.

 

81

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

12. Segment Reporting

We monitor and assess our ongoing operations and results based on the following four reportable operating segments: Federal Education Loans, Consumer Lending, Business Processing and Other.

These segments meet the quantitative thresholds for reportable operating segments. Accordingly, the results of operations of these reportable operating segments are presented separately. The underlying operating segments are used by the Company’s chief operating decision maker to manage the business, review operating performance and allocate resources, and qualify to be aggregated as part of the primary reportable operating segments. As discussed further below, we measure the profitability of our operating segments based on Core Earnings net income. Accordingly, information regarding our reportable operating segments net income is provided on a Core Earnings basis.

Federal Education Loans Segment

Navient owns and manages FFELP Loans and is the master servicer on this portfolio. Our long history of servicing quality, data-driven strategies and omnichannel education about federal repayment options translate into positive results for the millions of borrowers we serve. We generate revenue primarily through net interest income on our FFELP Loans.

The following table includes asset information for our Federal Education Loans segment.

(Dollars in millions)

 

September 30, 2024

 

 

December 31, 2023

 

FFELP Loans, net

 

$

31,522

 

 

$

37,925

 

Cash and investments(1)

 

 

1,250

 

 

 

1,520

 

Other

 

 

1,829

 

 

 

2,128

 

Total assets

 

$

34,601

 

 

$

41,573

 

 

(1)
Includes restricted cash and investments.

Consumer Lending Segment

Navient owns and manages Private Education Loans and is the master servicer for these portfolios. Through our Earnest brand, we also refinance and originate in-school Private Education Loans. "Refinance" Private Education Loans are loans where a borrower has refinanced their education loans, and "In-school" Private Education Loans are loans originally made to borrowers while they are attending school. We generate revenue primarily through net interest income on our Private Education Loan portfolio.

The following table includes asset information for our Consumer Lending segment.

(Dollars in millions)

 

September 30, 2024

 

 

December 31, 2023

 

Private Education Loans, net

 

$

16,005

 

 

$

16,902

 

Cash and investments(1)

 

 

444

 

 

 

497

 

Other

 

 

565

 

 

 

577

 

Total assets

 

$

17,014

 

 

$

17,976

 

 

(1)
Includes restricted cash and investments.

 

82

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

12. Segment Reporting (Continued)

Business Processing Segment

Navient provides business processing solutions such as omnichannel contact center services, workflow processing, and revenue cycle optimization. We leverage the same expertise and intelligent tools we use to deliver successful results for portfolios we own. Our support enables our clients to ensure better constituent outcomes, meet rapidly changing needs, improve technology, reduce operating expenses, manage risk and optimize revenue opportunities. Our clients include:

•
Government: We offer our solutions to federal agencies, state governments, tolling and parking authorities, and other public sector clients.
•
Healthcare: This business was sold on September 19, 2024.

At September 30, 2024 and December 31, 2023, the Business Processing segment had total assets of $95 million and $380 million, respectively.

Other Segment

This segment consists of our corporate liquidity portfolio, gains and losses incurred on the repurchase of debt, unallocated expenses of shared services (which includes regulatory expenses) and restructuring/other reorganization expenses.

Unallocated shared services expenses are comprised of costs primarily related to information technology costs related to infrastructure and operations, stock-based compensation expense, accounting, finance, legal, compliance and risk management, regulatory-related expenses, human resources, certain executive management and the Board of Directors. Regulatory-related expenses include actual settlement amounts as well as third-party professional fees we incur in connection with such regulatory matters and are presented net of any insurance reimbursements for covered costs related to such matters.

At September 30, 2024 and December 31, 2023, the Other segment had total assets of $1.7 billion and $1.4 billion, respectively.

 

83

NAVIENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Information at September 30, 2024 and for the three and nine months ended

September 30, 2024 and 2023 is unaudited)

 

12. Segment Reporting (Continued)

Measure of Profitability

We prepare financial statements and present financial results in accordance with GAAP. However, we also evaluate our business segments and present financial results on a basis that differs from GAAP. We refer to this different basis of presentation as Core Earnings. We provide this Core Earnings basis of presentation on a consolidated basis and for each business segment because this is what we review internally when making management decisions regarding our performance and how we allocate resources. We also refer to this information in our presentations with credit rating agencies, lenders and investors. Because our Core Earnings basis of presentation corresponds to our segment financial presentations, we are required by GAAP to provide Core Earnings disclosure in the notes to our consolidated financial statements for our business segments.

Core Earnings are not a substitute for reported results under GAAP. We use Core Earnings to manage our business segments because Core Earnings reflect adjustments to GAAP financial results for two items, discussed below, that can create significant volatility mostly due to timing factors generally beyond the control of management. Accordingly, we believe that Core Earnings provide management with a useful basis from which to better evaluate results from ongoing operations against the business plan or against results from prior periods. Consequently, we disclose this information because we believe it provides investors with additional information regarding the operational and performance indicators that are most closely assessed by management. When compared to GAAP results, the two items we remove to result in our Core Earnings presentations are:

1.
Mark-to-market gains/losses resulting from our use of derivative instruments to hedge our economic risks that do not qualify for hedge accounting treatment or do qualify for hedge accounting treatment but result in ineffectiveness; and
2.
The accounting for goodwill and acquired intangible assets.

While GAAP provides a uniform, comprehensive basis of accounting, for the reasons described above, our Core Earnings basis of presentation does not. Core Earnings are subject to certain general and specific limitations that investors should carefully consider. For example, there is no comprehensive, authoritative guidance for management reporting. Our Core Earnings are not defined terms within GAAP and may not be comparable to similarly titled measures reported by other companies. Accordingly, our Core Earnings presentation does not represent a comprehensive basis of accounting. Investors, therefore, may not be able to compare our performance with that of other financial services companies based upon Core Earnings. Core Earnings results are only meant to supplement GAAP results by providing additional information regarding the operational and performance indicators that are most closely used by management, our Board of Directors, credit rating agencies, lenders and investors to assess performance.

84

NA維恩特公司

綜合財務報表附註

（2024年9月30日以及截至三個月和九個月的信息

2024年9月30日和2023年9月30日未經審計）

 

12. 分部報告（續）

分部業績和對GAAP的認可

 

 

截至2024年9月30日的三個月

 

 

 

 

 

 

調整

 

 

 

 

 

可報告分部

 

（百萬美金）

 

總
GAAP

 

 

雷拉西-
聲明

 

 

添加/
（減去）

 

 

總
調整 (1)

 

 

總
核心
盈利

 

 

聯邦教育貸款

 

 

消費貸款

 

 

業務處理

 

 

其他

 

利息收入：

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

教育貸款

 

$

905

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

591

 

 

$

314

 

 

$

—

 

 

$

—

 

現金和投資

 

 

43

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25

 

 

 

6

 

 

 

—

 

 

 

12

 

利息收入總額

 

 

948

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

616

 

 

 

320

 

 

 

—

 

 

 

12

 

總利息支出

 

 

828

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

576

 

 

 

198

 

 

 

—

 

 

 

34

 

淨利息收入
（損失）

 

 

120

 

 

$

8

 

 

$

12

 

 

$

20

 

 

$

140

 

 

 

40

 

 

 

122

 

 

 

—

 

 

 

(22

)

減：貸款準備金
損失

 

 

42

 

 

 

 

 

 

 

 

 

 

 

 

42

 

 

 

(5

)

 

 

47

 

 

 

—

 

 

 

—

 

淨利息收入
撥備後（損失）
貸款損失

 

 

78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

45

 

 

 

75

 

 

 

—

 

 

 

(22

)

其他收入（損失）：

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

服務收入

 

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11

 

 

 

2

 

 

 

—

 

 

 

—

 

資產追回和
業務處理
收入

 

 

70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

70

 

 

 

—

 

其他收入

 

 

(26

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

10

 

出售子公司收益

 

 

219

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

219

 

 

 

—

 

其他收入總額
（損失）

 

 

276

 

 

 

(8

)

 

 

44

 

 

 

36

 

 

 

312

 

 

 

11

 

 

 

2

 

 

 

289

 

 

 

10

 

費用：

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

直接經營
費用

 

 

121

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20

 

 

 

44

 

 

 

57

 

 

 

—

 

未分配共享
服務費用

 

 

63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

63

 

業務費用

 

 

184

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

184

 

 

 

20

 

 

 

44

 

 

 

57

 

 

 

63

 

善意和收購
無形資產
損害和
攤銷

 

 

140

 

 

 

—

 

 

 

(140

)

 

 

(140

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

重組/其他
重組
費用

 

 

18

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

18

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

18

 

總支出

 

 

342

 

 

 

—

 

 

 

(140

)

 

 

(140

)

 

 

202

 

 

 

20

 

 

 

44

 

 

 

57

 

 

 

81

 

之前的收入（損失）
所得稅開支
（好處）

 

 

12

 

 

 

—

 

 

 

196

 

 

 

196

 

 

 

208

 

 

 

36

 

 

 

33

 

 

 

232

 

 

 

(93

)

所得稅開支
（好處）(2)

 

 

14

 

 

 

—

 

 

 

34

 

 

 

34

 

 

 

48

 

 

 

9

 

 

 

6

 

 

 

54

 

 

 

(21

)

淨利潤（虧損）

 

$

(2

)

 

$

—

 

 

$

162

 

 

$

162

 

 

$

160

 

 

$

27

 

 

$

27

 

 

$

178

 

 

$

(72

)

 

(1)
核心收益對GAAP的調整：

 

 

截至2024年9月30日的三個月

 

（百萬美金）

 

淨影響
衍生物
會計

 

 

淨影響
善意和
收購
無形資產

 

 

總

 

扣除貸款損失撥備後的淨利息收入（損失）

 

$

20

 

 

$

—

 

 

$

20

 

其他收入（損失）總額

 

 

36

 

 

 

—

 

 

 

36

 

善意和收購無形資產的減損和攤銷

 

 

—

 

 

 

(140

)

 

 

(140

)

核心收益總額對GAAP的調整

 

$

56

 

 

$

140

 

 

 

196

 

所得稅費用（福利）

 

 

 

 

 

 

 

 

34

 

淨利潤（虧損）

 

 

 

 

 

 

 

$

162

 

 

(2)
所得稅基於個別可報告分部稅前淨收入的一定百分比。

 

 

85

NA維恩特公司

綜合財務報表附註

（2024年9月30日以及截至三個月和九個月的信息

2024年9月30日和2023年9月30日未經審計）

 

12. 分部報告（續）

 

 

截至2023年9月30日的三個月

 

 

 

 

 

 

調整

 

 

 

 

 

可報告分部

 

（百萬美金）

 

總
GAAP

 

 

雷拉西-
聲明

 

 

添加/
（減去）

 

 

總
調整 (1)

 

 

總
核心
盈利

 

 

聯邦教育貸款

 

 

消費貸款

 

 

業務處理

 

 

其他

 

利息收入：

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

教育貸款

 

$

1,129

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

778

 

 

$

351

 

 

$

—

 

 

$

—

 

現金和投資

 

 

41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19

 

 

 

7

 

 

 

—

 

 

 

15

 

利息收入總額

 

 

1,170

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

797

 

 

 

358

 

 

 

—

 

 

 

15

 

總利息支出

 

 

879

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

636

 

 

 

208

 

 

 

—

 

 

 

46

 

淨利息收入
（損失）

 

 

291

 

 

$

7

 

 

$

(18

)

 

$

(11

)

 

$

280

 

 

 

161

 

 

 

150

 

 

 

—

 

 

 

(31

)

減：貸款準備金
損失

 

 

72

 

 

 

 

 

 

 

 

 

 

 

 

72

 

 

 

36

 

 

 

36

 

 

 

—

 

 

 

—

 

淨利息收入
撥備後（損失）
貸款損失

 

 

219

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

125

 

 

 

114

 

 

 

—

 

 

 

(31

)

其他收入（損失）：

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

服務收入

 

 

15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12

 

 

 

3

 

 

 

—

 

 

 

—

 

資產追回和
業務處理
收入

 

 

85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

85

 

 

 

—

 

其他收入

 

 

31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

1

 

 

 

—

 

 

 

1

 

其他收入總額
（損失）

 

 

131

 

 

 

(7

)

 

 

(19

)

 

 

(26

)

 

 

105

 

 

 

15

 

 

 

4

 

 

 

85

 

 

 

1

 

費用：

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

直接經營
費用

 

 

134

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17

 

 

 

44

 

 

 

73

 

 

 

—

 

未分配共享
服務費用

 

 

99

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

99

 

業務費用

 

 

233

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

233

 

 

 

17

 

 

 

44

 

 

 

73

 

 

 

99

 

善意和收購
無形資產
損害和
攤銷

 

 

3

 

 

 

—

 

 

 

(3

)

 

 

(3

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

重組/其他
重組
費用

 

 

4

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4

 

總支出

 

 

240

 

 

 

—

 

 

 

(3

)

 

 

(3

)

 

 

237

 

 

 

17

 

 

 

44

 

 

 

73

 

 

 

103

 

之前的收入（損失）
所得稅開支
（好處）

 

 

110

 

 

 

—

 

 

 

(34

)

 

 

(34

)

 

 

76

 

 

 

123

 

 

 

74

 

 

 

12

 

 

 

(133

)

所得稅開支
（好處）(2)

 

 

31

 

 

 

—

 

 

 

(12

)

 

 

(12

)

 

 

19

 

 

 

29

 

 

 

18

 

 

 

3

 

 

 

(31

)

淨利潤（虧損）

 

$

79

 

 

$

—

 

 

$

(22

)

 

$

(22

)

 

$

57

 

 

$

94

 

 

$

56

 

 

$

9

 

 

$

(102

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)
核心收益對GAAP的調整：

 

 

截至2023年9月30日的三個月

 

（百萬美金）

 

淨影響
衍生物
會計

 

 

淨影響
善意和
收購
無形資產

 

 

總

 

扣除貸款損失撥備後的淨利息收入（損失）

 

$

(11

)

 

$

—

 

 

$

(11

)

其他收入（損失）總額

 

 

(26

)

 

 

—

 

 

 

(26

)

善意和收購無形資產的減損和攤銷

 

 

—

 

 

 

(3

)

 

 

(3

)

核心收益總額對GAAP的調整

 

$

(37

)

 

$

3

 

 

 

(34

)

所得稅費用（福利）

 

 

 

 

 

 

 

 

(12

)

淨利潤（虧損）

 

 

 

 

 

 

 

$

(22

)

 

(2)
所得稅基於個別可報告分部稅前淨收入的一定百分比。

 

86

NA維恩特公司

綜合財務報表附註

（2024年9月30日以及截至三個月和九個月的信息

2024年9月30日和2023年9月30日未經審計）

 

12. 分部報告（續）

 

 

 

截至2024年9月30日的九個月

 

 

 

 

 

 

調整

 

 

 

 

 

可報告分部

 

（百萬美金）

 

總
GAAP

 

 

雷拉西-
聲明

 

 

添加/
（減去）

 

 

總
調整 (1)

 

 

總
核心
盈利

 

 

聯邦教育貸款

 

 

消費貸款

 

 

業務處理

 

 

其他

 

利息收入：

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

教育貸款

 

$

2,819

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1,861

 

 

$

958

 

 

$

—

 

 

$

—

 

現金和投資

 

 

129

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

75

 

 

 

20

 

 

 

—

 

 

 

34

 

利息收入總額

 

 

2,948

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,936

 

 

 

978

 

 

 

—

 

 

 

34

 

總利息支出

 

 

2,547

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,810

 

 

 

597

 

 

 

—

 

 

 

102

 

淨利息收入
（損失）

 

 

401

 

 

$

28

 

 

$

10

 

 

$

38

 

 

$

439

 

 

 

126

 

 

 

381

 

 

 

—

 

 

 

(68

)

減：貸款準備金
損失

 

 

68

 

 

 

 

 

 

 

 

 

 

 

 

68

 

 

 

(6

)

 

 

74

 

 

 

—

 

 

 

—

 

淨利息收入
撥備後（損失）
貸款損失

 

 

333

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

132

 

 

 

307

 

 

 

—

 

 

 

(68

)

其他收入（損失）：

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

服務收入

 

 

48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

39

 

 

 

9

 

 

 

—

 

 

 

—

 

資產追回和
業務處理
收入

 

 

228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

228

 

 

 

—

 

其他收入

 

 

33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

1

 

 

 

—

 

 

 

16

 

出售子公司收益

 

 

219

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

219

 

 

 

—

 

其他收入總額
（損失）

 

 

528

 

 

 

(28

)

 

 

17

 

 

 

(11

)

 

 

517

 

 

 

44

 

 

 

10

 

 

 

447

 

 

 

16

 

費用：

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

直接經營
費用

 

 

351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

53

 

 

 

110

 

 

 

188

 

 

 

—

 

未分配共享
服務費用

 

 

182

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

182

 

業務費用

 

 

533

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

533

 

 

 

53

 

 

 

110

 

 

 

188

 

 

 

182

 

善意和收購
無形資產
損害和
攤銷

 

 

145

 

 

 

—

 

 

 

(145

)

 

 

(145

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

重組/其他
重組
費用

 

 

35

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

35

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

35

 

總支出

 

 

713

 

 

 

—

 

 

 

(145

)

 

 

(145

)

 

 

568

 

 

 

53

 

 

 

110

 

 

 

188

 

 

 

217

 

之前的收入（損失）
所得稅開支
（好處）

 

 

148

 

 

 

—

 

 

 

172

 

 

 

172

 

 

 

320

 

 

 

123

 

 

 

207

 

 

 

259

 

 

 

(269

)

所得稅開支
（好處）(2)

 

 

41

 

 

 

—

 

 

 

33

 

 

 

33

 

 

 

74

 

 

 

28

 

 

 

47

 

 

 

60

 

 

 

(61

)

淨利潤（虧損）

 

$

107

 

 

$

—

 

 

$

139

 

 

$

139

 

 

$

246

 

 

$

95

 

 

$

160

 

 

$

199

 

 

$

(208

)

 

(1)
核心收益對GAAP的調整：

 

 

 

截至2024年9月30日的九個月

 

（百萬美金）

 

淨 影響
衍生物
會計

 

 

淨影響
善意和
收購
無形資產

 

 

總

 

扣除貸款損失撥備後的淨利息收入（損失）

 

$

38

 

 

$

—

 

 

$

38

 

其他收入（損失）總額

 

 

(11

)

 

 

—

 

 

 

(11

)

善意和收購無形資產的減損和攤銷

 

 

—

 

 

 

(145

)

 

 

(145

)

核心收益總額對GAAP的調整

 

$

27

 

 

$

145

 

 

 

172

 

所得稅費用（福利）

 

 

 

 

 

 

 

 

33

 

淨利潤（虧損）

 

 

 

 

 

 

 

$

139

 

 

(2)
所得稅基於個別可報告分部稅前淨收入的一定百分比。

 

 

 

87

NA維恩特公司

綜合財務報表附註

（2024年9月30日以及截至三個月和九個月的信息

2024年9月30日和2023年9月30日未經審計）

 

12. 分部報告（續）

 

 

 

截至2023年9月30日的九個月

 

 

 

 

 

 

調整

 

 

 

 

 

可報告分部

 

（百萬美金）

 

總
GAAP

 

 

雷拉西-
聲明

 

 

添加/
（減去）

 

 

總
調整 (1)

 

 

總
核心
盈利

 

 

聯邦教育貸款

 

 

消費貸款

 

 

業務處理

 

 

其他

 

利息收入：

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

教育貸款

 

$

3,227

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2,194

 

 

$

1,036

 

 

$

—

 

 

$

—

 

現金和投資

 

 

111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

56

 

 

 

20

 

 

 

—

 

 

 

35

 

利息收入總額

 

 

3,338

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,250

 

 

 

1,056

 

 

 

—

 

 

 

35

 

總利息支出

 

 

2,636

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,859

 

 

 

610

 

 

 

—

 

 

 

119

 

淨利息收入
（損失）

 

 

702

 

 

$

24

 

 

$

27

 

 

$

51

 

 

$

753

 

 

 

391

 

 

 

446

 

 

 

—

 

 

 

(84

)

減：貸款準備金
損失

 

 

68

 

 

 

 

 

 

 

 

 

 

 

 

68

 

 

 

51

 

 

 

17

 

 

 

—

 

 

 

—

 

淨利息收入
撥備後（損失）
貸款損失

 

 

634

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

340

 

 

 

429

 

 

 

—

 

 

 

(84

)

其他收入（損失）：

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

服務收入

 

 

48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

39

 

 

 

9

 

 

 

—

 

 

 

—

 

資產追回和
業務處理
收入

 

 

240

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

240

 

 

 

—

 

其他收入

 

 

59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

 

 

 

2

 

 

 

—

 

 

 

3

 

其他收入總額
（損失）

 

 

347

 

 

 

(24

)

 

 

(20

)

 

 

(44

)

 

 

303

 

 

 

49

 

 

 

11

 

 

 

240

 

 

 

3

 

費用：

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

直接經營
費用

 

 

394

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

55

 

 

 

124

 

 

 

215

 

 

 

—

 

未分配共享
服務費用

 

 

207

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

207

 

業務費用

 

 

601

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

601

 

 

 

55

 

 

 

124

 

 

 

215

 

 

 

207

 

善意和收購
無形資產
損害和
攤銷

 

 

8

 

 

 

—

 

 

 

(8

)

 

 

(8

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

重組/其他
重組
費用

 

 

23

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

23

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

23

 

總支出

 

 

632

 

 

 

—

 

 

 

(8

)

 

 

(8

)

 

 

624

 

 

 

55

 

 

 

124

 

 

 

215

 

 

 

230

 

之前的收入（損失）
所得稅開支
（好處）

 

 

349

 

 

 

—

 

 

 

15

 

 

 

15

 

 

 

364

 

 

 

334

 

 

 

316

 

 

 

25

 

 

 

(311

)

所得稅開支
（好處）(2)

 

 

93

 

 

 

—

 

 

 

(7

)

 

 

(7

)

 

 

86

 

 

 

78

 

 

 

75

 

 

 

6

 

 

 

(73

)

淨利潤（虧損）

 

$

256

 

 

$

—

 

 

$

22

 

 

$

22

 

 

$

278

 

 

$

256

 

 

$

241

 

 

$

19

 

 

$

(238

)

 

(1)
核心收益對GAAP的調整：

 

 

截至2023年9月30日的九個月

 

（百萬美金）

 

淨影響
衍生物
會計

 

 

淨影響
善意和
收購
無形資產

 

 

總

 

扣除貸款損失撥備後的淨利息收入（損失）

 

$

51

 

 

$

—

 

 

$

51

 

其他收入（損失）總額

 

 

(44

)

 

 

—

 

 

 

(44

)

善意和收購無形資產的減損和攤銷

 

 

—

 

 

 

(8

)

 

 

(8

)

核心收益總額對GAAP的調整

 

$

7

 

 

$

8

 

 

 

15

 

所得稅費用（福利）

 

 

 

 

 

 

 

 

(7

)

淨利潤（虧損）

 

 

 

 

 

 

 

$

22

 
(2)
所得稅基於個別可報告分部稅前淨收入的一定百分比。

 

 

88

NA維恩特公司

綜合財務報表附註

（2024年9月30日以及截至三個月和九個月的信息

2024年9月30日和2023年9月30日未經審計）

 

12. 分部報告（續）

蘇GAAP核心盈利調整回顧

 

 

 

截至9月30日的三個月，

 

 

截至9月30日的九個月，

 

（百萬美金）

 

2024

 

 

2023

 

 

2024

 

 

2023

 

GAAP淨利潤（虧損）

 

$

(2

)

 

$

79

 

 

$

107

 

 

$

256

 

核心收益對GAAP的調整：

 

 

 

 

 

 

 

 

 

 

 

 

衍生品會計的淨影響(1)

 

 

56

 

 

 

(37

)

 

 

27

 

 

 

7

 

淨影響和收購
無形資產(2)

 

 

140

 

 

 

3

 

 

 

145

 

 

 

8

 

淨稅項影響(3)

 

 

(34

)

 

 

12

 

 

 

(33

)

 

 

7

 

核心收益總額對GAAP的調整

 

 

162

 

 

 

(22

)

 

 

139

 

 

 

22

 

核心收益淨利潤

 

$

160

 

 

$

57

 

 

$

246

 

 

$

278

 

 

(1)
衍生品會計： 核心收益不包括因不符合GAAP下對沖會計處理資格的衍生品按市值計價估值而產生的周期性損益，以及因與GAAP下有效對沖相關的確認無效而產生的周期性按市值計價損益。根據GAAP，對於我們持有至到期的衍生品，合同有效期內按市值計算的損益將等於美金0 下限收入合同除外，其中按市值計算的收益將等於我們出售合同的金額。在我們的核心收益演示中，我們認識到這些對沖的經濟影響，這通常會導致支付或收到的任何淨結算現金在被對沖項目的生命周期內被按比例確認為利息費用或收入。
(2)
善意和收購的無形資產： 我們的核心收益不包括善意和無形資產的減損以及所收購無形資產的攤銷。
(3)
淨稅收影響： 此類稅收影響基於我們的核心收益有效稅率ar.

 

 

 

 

 

89

 

 

S自然

根據經修訂的1934年證券交易法的要求，登記人已正式促使以下正式授權的簽署人代表其簽署本報告。

 

 

 

 

 

NA維恩特公司

（註冊人）

 

 

作者：

 

/s/喬·費舍爾

 

 

喬·費舍爾

 

 

財務長

 

 

（首席財務會計官）

 

日期：2024年10月30日

90

 

APPEN迪克斯A

表格10-Q交叉引用索引

 

 

頁面

Number

 

 

第一部分.財務資料

 

 

 

 

 

 

項目1.

財務報表

48-89

 

 

 

項目2.

管理層對財務狀況和經營成果的討論和分析

7-39

 

 

 

項目3.

市場風險的定量和定性披露

41-44

 

 

 

項目4.

控制和程式

46

 

 

第二部分.其他信息

 

 

 

 

項目1.

法律訴訟

40, 78

 

 

 

項目1A.

危險因素

40

 

 

 

項目2.

股權證券的未登記銷售和收益的使用

44

 

 

 

項目3.

優先證券

不適用

 

 

 

項目4.

礦山安全披露

不適用

 

 

 

項目5.

其他信息

46

 

 

 

項目6.

展品

47

 

 

 

簽名

 

90

 

91