Navient (NAVI) 24 Jan 182017 Q4 Earnings call transcript

Good morning. My name is Christie and I will be your conference operator today. At this time, I would like to welcome everyone to the Navient Fourth Quarter 2017 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. [Operator Instructions] I will now turn the conference over to Joe Fisher. ahead. go Please

prepared Good quarter Christie. Remondi, welcome Navient’s After to CEO the open Thank for call call. morning With fourth questions. their CFO. our earnings Chris Jack we me XXXX will and up you, Lown, and remarks, today our are

of predictions, here. to the begin materially future other keep contain different our Listeners This SEC. statements. due forward-looking factors. from discussion mind we and to with variety filings the Actual of discussed could refer maybe a be factors Before those the will and company’s those the in expectations should results in XX-K Form discussion on

conference results XXXX supplemental our the navient.com. to in full Jack. this measures reconciliation Investors quarter we A can non-GAAP over the measures at And fourth earnings, call to we turn core now, our and posted be a During GAAP call is on the page found I you. to will GAAP will description call, earnings refer earnings. of This disclosure. Thank core

reduced we to one-third debt acquisitions $XXX the of Private in refinancing unsecured level revenue. a $XXX provide results outlook Thanks, $XXX by year I and year billion was business in dividends my shareholders for and million fronts. in today for perspective and adjusted us of million XX% returned loans. in maturities will and in Highlights years. thank over including repurchases. XXXX’s XX successful morning, your everyone the lowest charge-offs for include interest on the share, operating or share Joe. year. joining million $XXX billion net for fell Navient. million, also credit to share my We in you will student This generated XXXX of $X.XX Good $XX color a in loans, morning, on I We and income $X.X services XXXX a number core

and from distract CFPB am of our with plan. not claims business XXXX proud that our started did challenge Attorney team us particularly I executing General unsubstantiated While the the lawsuits, these let

half than to better, for our more making customers For continued the enrolled improve XX% and student in we income customer rates driven high numerous fact balances in enrollment by of to we of IDR. have of outperforming example, government loan loan default levels it to owned with And in borrowers exceptional serviced easier the programs. initiatives loan and XXXX, student the delivering student federal delinquency for service the complexity outcomes navigate clients repayment highlighted deliver industry to

new We contract of contracts, and significant to us our and revenue also business cycle federal municipal the to new wins, franchise. company, we continued through franchise growing our acquisitions corporate win from to In capabilities acquisitions and Duncan state as new areas distract healthcare loan across earnest management welcome contracts. student in renewed order all including Solutions

year in Our in stock foundation area I not that and and one expansions particular accomplished team team proud on in reflect is am accomplished financial our Navient however commitment of what our price. clients results, extremely of and for There built was the beyond, the new wins customers, our and dedication focus business business demonstrate to what objectives. contract and XXXX. does XXXX we the

value is businesses asset loan potential student the impacting negative to goal and put values the the rest the generation our our demonstrate business, Our continue legacy processing to pressures in here. value and business embedded to to in and growth

existing cost skill to meaningfully student transactions in in well loan million During infrastructure and growth contribute leverage will These of excess set capital acquisitions, and we in invested over portfolio $XXX which our XXXX. corporate in purchases returns our believe our will we XXXX, generate of and capital.

the quality the work, claims. demonstrate we front continue results the the regulatory accuracy of our superiority On the of present and of which our clearly to facts clearing the

We will and impacting student real forward put completion. to borrowers, issues address most the that solutions defend performance our continue notably college

While and Navient. was eager frustrating incredibly news the in with have tax acquisitions, to slower deal false value facts of for The I big to the these quickly the am resolution we possible reform of legal and it’s the these than to would and move is as big like cases. process as presentation of the act to passage December

our increase assets, While and million lower very rate we materially in it tax our impact, positive investments most – XX% cash people, will a systems also resulted help net and be allow will it competitive result have more in $XXX in reduction and will services, products, federal for to ultimately net returns The will to increase our cash tax the flow deferred support significantly will investors. better in tax flow. in effective new us

tax an to of out to In immediate change teammates or We You XXXX. all invest team. committed to our benefits products other in to for we people, our also some systems and will increased plans and $X,XXX immediately see deliver invest paid this are we our December, of the bonus projections employees in in announced XX% over the to of ways X,XXX evaluating value. our

at loan generating revenue for refinancing loans student progressed from business XXXX $X.X business, on Our and programs. in growing objectives maximizing services our are our least student our billion value to legacy business

and efficiency. also expand the services, our deliver to as operating our in cash on continuing expense, to growth efficiency services and our expect improve business predictable to flows, cash XX% this our continuing deliver those related to to and focused and improve non-education are will we operating credit margins. interest our focused to are we We continue operating portfolios amortize loan student performance flows legacy improve we on materially maximize In portfolios on expect

healthcare both here growth clients. expect our clients our government We will and come from municipal

attractive returns. to We with million loans. offerings, and allowing to very assets a our originate risk advantage refinancing student marketing generate expect provide adjusted strategies origination believe $X.X competitive digital product We of excellent platform unique us

cost Finally, million. XX% reduction saving our in and lower compared focus will operating X% expense acquisitions XXXX result in-year our for when to normalizing on with operating lower over meaningful efficiency corporate $XXX

commitment value our customers’ the franchise business of investors. our and to the Our results of team XXXX reflect clients and our financial

products, at built interest on and have strengths Our and on looking results. for our I later year’s originations loan systems XXXX. XXXX. in am us quarter and improve investments flows the our over to positioned the efficiency, the I and year about legacy to forward franchise to going and cash it look and people the look now growth maximize turn year to call. Thank potential and student momentum the I operating deliver your services in Chris for during to business of forward in a you delivering your this questions in am the deeper excited

to you call Navient. today’s interest Thank everyone you, on for Jack in thank your and

can Investor Section. Starting in $X.XX adjusted remarks, ago. earnings flat on EPS During Slide be will which call will EPS Full presentation year fourth both a from the referencing in I found a $X.XX prepared my core was ago. company’s the review quarterly I X XXXX. year website the the year year was on for and results the from $X.XX be adjusted end quarter, compared to

down a of This $X.XX resulted quarter the million in net full the to per $X.XX the we Cuts of Jobs $XXX a share non-cash loss as During and Tax and the EPS re-measurement share. recognized in reported the due quarter, December. wrote per assets deferred value enactment tax Act of for we of reported our loss signed year

We rate expect to XX% tax in rate XX%. change overall a federal tax our effective the approximately reduce to approximately from

initiatives, and a regulatory we costs million approximately quarter, of along $X corporate expected is expense, operating restructuring $XXX This $XX operating reduce before million efficiency incurred expenses in the other XXXX to During charge. restructuring million acquisitions. by with

FFELP The earnings fourth on and portfolio for with quarter FFELP interest quarter. in were $XX year points segment lower margin reporting of was of Let’s XXXX. $XX slightly points the quarter X. net basis The into margin. amortization ago XX fourth now versus core the the to compared the million Slide basis move net fourth XX was to our the decrease quarter million in interest beginning FFELP for primarily due

XX% to we million our floor X FFELP loans LIBOR $X.X acquisition our FFELP contracts In hedge to year-to-date the total month and X $XXX derivative today. than fourth into projected of rate these hedged billion. enter interest to more bringing of income quarter, continued month with acquired risk, We versus risks

in refinance and of from originated and quarter third acquisition that private the loans expected fourth the of million of in $XXX occurred turn to were The in let’s third Now, segment increased loans, million adjustment the $XXX cumulative XXXX. education quarter earnings quarter. including In a $XX result was the loan this decline X basis to in million points. Slide from $XX Core the quarter, segment. was net in quarter XXX our private of interest margin the the fourth million that fourth the education of

basis have refinance yield Newly loans average but lower of which an borrower approximately private loss acquired originated rate private XXX legacy expectations. lower than X%, have on points portfolio our education loan education significantly the we that is

that loans We the X% cost expect be will ABCP originations seasoning anticipate not be our actively this do we refinance same transition loans more NIM the to Refinance to in-school we in on as closer as lower we loans facilities to and portfolio. securitizations. securitizing new require

XXXX. basis amortization newly approximately refinance to education As the private our portfolio, the total we a of of legacy XXX with the loans, result NIM expect along originated be in points

loan losses as continued improvement quality over our and credit rates years the continued year-over-year. to in outperformed We and education are acquired Charge-off we that second very XX the delinquencies lowest billion we in pleased transitioned at quarter. $X private our portfolio the are as with levels in the decline expectations

to segment. Slide services X our to continue Let’s review business

we as beyond in more Non-education and We alone. we unit the the grew revenue to it are services of each that into important we performance growth the XXX% business year give in quarter is achieved XX% the space, within segment. and education very the ship fee proud fourth the detail across have of feel

Solutions, revenue and non-education XX% the XX% grew acquisition of fee Excluding Duncan respectively.

contracts leverage to revenue servicing Navient to new better results efficiencies continue process cycle. RCO Opportunities experience win contract. customers. the over for first our manage to this ability entire the streamline the We us healthcare drive allow and gives space, including in This like to our our

education turn with quarter. for billion fantastic year acquired the X highlights quarter financing billion which and the our to $X.X year. Slide Let’s loan the activity was XXXX for acquisitions, in fourth $XX in a

of fund facilities private our with and capacity ABS loans $X.X before million. our available loan $XXX over that ABCP FFELP transactions have we quarter to FFELP term. continue available education in issued the of We education plan in capacity ABCP ABCP one million. $XXX we them facilities billion for facilities refinance In securitize We to

$X.X of we For ABS. the year issued FFELP billion

almost XXXX deal than tighter of points deal FFELP basis XX was a financed first our that price yesterday XXXX. spread at Our first re-offer in

our cost levels. bring private funds issued our mixed education transaction to refi also tighter allowing of to first and We legacy us

As we call discussed points of life in spread X.X our weighted average that transaction XXX this is price a quarter of basis third with years.

maturity unsecured reduced to million the XXXX near-term $XXX focus the On the maturities. continued maturities XXXX we by during of our profile proceeds using to XX% by on We address re-opening side, year. during our

X, and our want as X allocation. excess I Consistently shareholders. shareholders. delivering dynamically growth we to to to to prioritize capital we capital Moving to opportunities is to And ensuring committed value Slides capital stock turn discuss acquisitions are capital with allocation how we our capital adequacy organic to repurchases balancing and paramount philosophy long-term allocation including and

followed education from to acquisitions. capital opportunistically is excess capital private and important by to a stable education portfolios. prioritization, we repurchases our X Slide to strategic Turning it is dividend. believe then originations of organically and acquiring loan share growing look We loan quarterly that refinance invest maintain allocation perspective This on the

and $XXX on the returned driving we and years in million XXXX, $XXX past billion growth deliver complementary million to in in businesses. will to Since X Importantly value organic approximately dividends, share integrating over we buybacks of have the shareholders. $X.X we made focus separation growth over acquisitions invested

company’s our We result a investors. within by authorization guidelines. informed provide the second equity capital to has our XXXX with in and we transparency. repurchase half to By range investors of increased XXXX. X.XXx. year have debt provide of is manage end rating it existing to ratio X.XXx TNA rating TNA models more resume historically we of agency requirements complete agencies refinancing TNA debt our equity requirements, capital in guidance In our internal guidance In generate used range the to ratio guidance light and this flow the we transition and The is continued $XXX confidence This to our to tighter appropriate view X.XXx projections, capital and to and capital to our X.XXx plan XXXX, with light and a in investors is provide end to tighter believe cash authority of existing and million and near-term share ratio. capital discussions with expect our of range our X.XXx leverage, position At our remaining.

year Let’s on now Slide guidance turn to XX. XXXX full

$XXX year We margin expect basis full interest approximately XXX net costs, private $XXX education million the of million, with approximately following; operating excluding interest basis regulatory expenses and points, full expenses between of margin XX points. year associated net loan FFELP

NIM includes for two hikes basis guidance points XX Our impact in XXXX. interest of the each of rate

of In addition related education the refinance full of following least originations our revenues year includes private least in non-education at billion, XXXX assumptions. year guidance loan growth $X.X Full XX%. at

expenses. between excluding share Finally costs $X.XX earnings and we see associated expenses regulatory with restructuring $X.XX and core per

loss questions. $XX XX. on fourth net per are of income share marks to or results We results quarter will now $XXX million quarter for XXXX. our million with net of in fourth compared primary core share GAAP the GAAP The differences to or open I derivative earnings between turn the Let’s the GAAP positions. $X.XX and call recorded per $X.XX Slide related

comes first from of your And Instructions] Jefferies. question Hecht [Operator John

Thanks taking Good questions. much my very morning, guys. for

you model plans the of think is, you run net discussed to I one net you of us expenses not for us order Earnest, might of any expense going million in I you that’s, from accounting savings with restructuring some am mentioned that the first able $XXX give sense to forward? have core Duncan The properly are share rate are the and through for wondering, that’s and that base to add a to context

Yes.

million, kind specific expense they don’t get both guidance that to want of give to to guidance weighted at that a companies – good if of just look OpEx but to if you rate our we $XXX those out and is think move operating of number X an come think back our you it and where So those to X.XX, that get for look entities, you expense way there can at of either that about way. that XX a I you into XXXX guidance, give it’s you simple you And then assumption a to operate. should equally side, it general upon sort

it then in for performing and a like going to this perfect. provisions on And year, are your adding the the about how be could about is you portfolio what you but should sense some content, year? that’s you Okay, have of then the you loans, – loss loss Chase we are for think of think is to provision Earnest better there give terms us looks this a how content little

Yes.

JPMorgan as great the portfolio, in credit So that on the experiencing – I remarks, are as clearly through said on said that we well. Chase side – on prepared trends came and my portfolio we

going number analytics of and help migrated completely a utilize better the were we we the and as we comfortable to overall that servicing in strategies of and feel the while sub-service portfolio portfolio our trends. generally, results haven’t our what’s and drive confident that think to credit portfolio in on systems, very I there see you services with in able so – on and

over so on side the to see And provision time. to think continue there number you expect decrease Earnest lower content and that the so significantly and should us I loss of

Decrease absolute in as a an percentage of basis? assets or

Both.

guys. Okay, very Thank you good. very much,

from a have question you Credit And Suisse. of Moshe Orenbuch

do have similar given given Thanks. taken time vis-à-vis out? back these of or think restructuring, is the I is it is better the questions, at about the your guess guidance expenses the the Actually, of that this it profitability of Earnest acquisition two couple, you first, how you kind

excellent of advantage we’ve – space. business that significant things expense starting hold in to interest servicing been to in are generate While On analytics equation we take areas, to data are looking we can our some our for in focus of loan Earnest, continue on same student legacy believe is really on the margins of is efficiency there. we – that returns net will side business take the amortizing, believe And it is many the equity also and space of Moshe performance given the processing are automation has on – us range mid X% for on there drive loans our generate on high-teens. that that refi these as in opportunities credit portfolios to we to in operating in and related we to loans, done looking the the the

Our in invest we originate that in grow marketing the loans, invest job used that purposes – for technology used the our is to related businesses. arena the business, we asset space in the technology that those to that really generation in though to is and

I versus of the equation at So would the look a more of side of cost investment take as equation. outside that

maybe allocation a what if think impact you talk of is asset growth, decisions? that ratio capital little further would And TNA Right. your and and XXXX the you how in could prospects just Jack about,

than to we in generating to and of capital themselves company, continued generation in you asset more that to look of both combine amount capital allocate the you the did we segments at significantly the when portfolios that of because a FFELP by see, refi of in the are terms to is where, portfolios we equation. of So that, of When – services generated way the loan do life and loans, return amortization the the private average investors. our business with on amortization enough performance processing significant shorter we we that is better the a I look capital those mean the level outlooks or the credit business of And traditional that capital existing capital side and at of allocate to private legacy student lower product releases. and the

decision share demands the we a to than our private the reflection what of of Our invested of the over loan capital more work in year two invested was allocating in corporate $XXX actually of rather purchased was asset a repurchase acquisitions the on capital XXXX million in we reflection front in capital the generation. portfolios

wanted you potentially originating about mean, in going have would potentially that that I though any be that, period, could thoughts private Just clear are student magnitude to obviously yourself, to be those loans capital? in the because different ‘XX start

really originations the works of loans year because Right. prior meaningful won’t Yes, you January any ‘XX the the disbursements the the as academic are originations because of second second on and year. just you are see cycle way campus cycle disbursements half really made until in

So, it big does for have ‘XX. a not capital us demand in

Got it. Thanks.

Christie, question? next

have a question Sanjay do KBW. from Sakhrani of We

more morning. back question you when that’s think based I this where the excess just that’s a or the bit you imply on Thanks. you are assuming probably are million have would left guess $XXX share expecting or Good on do than just talk even about on do to end the in what to exhaust I little capital goes could for a it about TNA, share repurchase more? range Can you whether guess repurchase? would previously the you your you that left we up not

what going people everybody have I of are pretty you be fully TNA would range around the seems business, One, things. very capital the the So, the ratio, the there much is important to that opportunities from because this in think people that may give two of forward rollout it I that portfolio capital capital. should is tighter say understand where done going a for this the it’s generation that and and excess

I to of One, that would to is is half committed we other XXXX our say exhausting I repurchase declarative clearly at think returning we things. two and capital are to made committed had excess I shareholders. XXXX the are that statement authorization second the now

assess so obviously that and have there returning of a and do to that policy. ways And that committed view we to on weekly, quarterly are a our lot monthly, position we our capital are will basis, you

excess? for other acquisitions, about of or ability to your acquisitions the portfolio think impair we some that XXXX when opportunities front active other could are And there meaningfully return that on

which there of large have is there legacy are most the acquiring, require student them that point acquired be portfolios we very loans you at student in little of been and interested know capital. FFELP certainly – loans Sanjay, as would this the out majority

anything that see requirements situation. don’t I on on capital front would horizon that our materially the So, alter

And the on servicing side?

or on the mean just… You contract the federal

done tuck-ins have have other that you the like past. you like things Generally in

acquisitions, XXXX integrating For going focusing on organic are corporate be and driving we our growth. to businesses

we coming talk So, when or to organic is that effectively we in about are expect generate we next and year. that XXXX in growth the expect generate businesses rates revenue place non-federal fee from this today that that year to

and is collections, then [ph] Okay. the on new I to you management And about the sure, touch Thank December, think want some on relates just understood for while then paradigm. know you capital made to also want what the that you extent that that all to back came just there the I to impact of And in look into I secondly, it’s point that about CESO maybe a you. of priorities? DOE your just the we make could as in talk it this XXXX, way, early but is any how to I opportunity

Sure.

effectively made received quarter. that this contract the in ever with of we we It’s first continuation in next, of and they prior contract, what the with was So happens placement largest not XX department of fourth a the collections years. on on a plus our Department the clear, the the large were placement had question, Ed single awarded us very

demonstrate have department, an We metrics to it’s success we us is continuing of those in department the under rates looking and for work for the for that been this doing business the space. are attractive

in are here. can wrapped have has and a thinking metric whole – and that more what it side gets it possible it up as bit elaborate than is on of think on going differently this maybe has moves with we Chris the servicing CESO as we equation business the treated the little RP – I forward, past. the this On

Yes.

to given things, but CESO. to would is we Two, things. around basically one, go around CESO lot impact of off, changes what how when the highlight their impacts out agencies speak a of potential rating of the they that are still the are into not clearly of it starts the couple and a I have about revised on TNA clarity take XXXX if and impacts the So consideration ways giving guidance views you a you the

So every clearly our we are will be would monitoring guidance be it. in like impacted that take years. accounting as in ratio at we closely standard, financial have least to impact into change consideration institution started We but by the about what TNA we and X think

an we of that? And don’t have initial estimate

do We not.

you. Thank Alright.

your And Rick from next of question comes Shane JPMorgan.

Hi, taking my guys. Thanks for questions.

on so assumptions can some out for the the out benefits that you You the close metrics, think lifetime of refis to really metrics, provided fill of can student lifetime is filled loans is the the types rate assuming we what the positive is and rate how the you loss about the to graduation XXX%, that, metrics student loans on and traditional the help rates, what the obviously, are to from both traditional refi you out loans loans? refi clarity on yields fill graduation of grad am what think yield terms the good loss it due on I private have us the – sort about and versus loans selection in can

debt loan Well, so the schools. customers graduate has focused from refi student marketplace with on generally exclusively

It working for into program who these in like that well. credit graduate offer. majority they these large get been component. undergraduate, their They actually most years, they time they as do of completed both several their federal to their their of a their them borrowers So to have grad, are income, have also completed have products refinance private attractive we refi balances only for are be have on able function to not the may terms is loans a borrowers and by – looking relatively and

you the loans So the loan just it’s credit graduation related can a on of at we metrics that going than We believe best in portrays the is – predictor not the defaults best borrowers, than space but defaults you they process. By both portfolio, high what the traditional federal see by can student a borrowed federal the loans, started allow of student complete process from bureau contrast, accounts have that that’s only loan of debt very, not federal our the look that know single data, $XX,XXX one that’s this based private space. less school When borrowers come statistics of is performance, X% we what from and just offering all is loan come see in in rate more that of that the in our is student of quality have legacy two-thirds the generate and that did I the aggregate predictor or very by the that just than $XX,XXX. borrowed and problem our across meaningful more the loan published forward. history opposite a in performance leading here clearly underwriting are when Ed student are high from borrowers graduation balances, about who of the in student and Department of in expand media of will single us refi high-quality our to who indicator as identify program. those problem writes volume it variety metric debt

give But trying we traditional there? you can student clarity down some lifetime a to loss when private refi those the are what’s Okay. loan, versus expectation a on us to pull

losses be rates traditionally in-school refi of the one-third loss that would what life you would lending the lending. and than expect would see space we in So, in-school less loan in the

when Okay. one-third don’t you to happens me so less sometimes And confused if which looking…. just we I than away are walk say

X% expect losses loss I so between the to today’s to cumulative yes, lifetime X% have sorry, be private in-school and generally a estimated space. typically, would X% are am in student to the we loans under in space So, somewhere refi

the In XX more of fact, the you you at if to range. actually the today look you basis XX loans, look at data point would refi trust something of in current at trust see – sort evidence if

very is assets data. X% again, about number So, these a less look than when attractive are at cycle, very attractive we fairly at the number conservative are a you

fact clear I why talked million FFELP because also opportunity because Got buyback that stock is than the is market helpful, savings. really you the fact is in moderating I the it willingness the remaining reinstated is the be response buyback appreciate that months? last that X see to say appreciate a you or that, I it loans it. tax the that am about on that’s of terms be a we in the curious your is that. I And what think guidance to over $XXX in on aggressive, wanted from terms growth to you seen price have of in it in greater just opportunity

Yes.

think at we look differently. I it So,

As that some our Jack also at in took of a end the since buyback of leverage going number you the consideration fact down out bottom we into our the range. are our origination to fact suspension factors business increased gotten and a mentioned, that the mentioned spin had

generation fairly exercise, going generate which forward. about think capital October, we since transpired a a went what’s we meaningful restructuring will in obviously as so And through longer efficiency term cost

excess are In a us generate tax addition, there obviously, the in to of a benefit, that give our factors the for number ability there lot confidence is but of capital long-term.

year it that of in the and authorization half of on feel so half. a again was we XXXX and the of resumption prudent happen like the the second plan And first will $XXX million

first the get build that by year end and of through year. of the within half the will the we So, capital

very you Thank guys. much Perfect.

And from you a with do Citi. Arren Cyganovich have question

about Jack I the discussing and includes new that apologize if that’s you basis missed of the NIM a to but the the said guidance you are strip were are I there, quarter, that this when assets? refinance out margin, been loans points would I XXX FFELP you expecting have think that if NIM you the X% the around last what legacy FFELP for

have the or sort really two as that. separately is basis higher what would portfolio scale it give say specific do to scales separate expect more X yet I’d will future should you for model and out look we Yes, think does in I portfolios. This be points to of that be break to not to X to you them able us the guidance

the new And it. side, business Got that’s fee thanks disclosures on the for helpful.

of services In much of breakdown in that the education the forward? that terms is going runoff remaining piece the how of is

sometime we roughly which servicing runoff. of only a the to to is the direct revenue several you worth next in related portfolio – our million be have the piece Ed Really, FFELP is out And is here. servicing contract, as that for the is up that in about loan Department contract related bid know also that likely that’s $XXX Anything is of was year. months

you the $XXX also million with intercompany that as the guess So, see well? would I in a decline servicing

of business Correct. with mean if those, having services think of all of the nothing legacy loan those a effectively certainly I and related loans. you amortizing the this those contracts over there. will new associated the – That’s down or portfolio student remaining revenues be unexpected life

portfolios in loan the have better the you we expected of to trying the model coming see we projections modeling are if flows We flows those folks bit well. from and bit provide cash and shared a have to providing disclosure more have as than the little Those that on over equation out side the cash time. little been fee actually been with

in does in that versus helpful. those that And is of expected non-education you middle how that’s acquisitions the much the I and year? organic just – late then made Yes, of guess XX% last part related lastly growth the kind some of of revenues,

XXXX. corporate not in assume acquisitions does it Well, any

So, I include organic in rest, that run-rate effectively Duncan it is Solutions but all of year mean growth. the does the component, it full

you. Thank alright. Okay,

You Instructions] Bank Hammond America/Merrill question of Mark Lynch. a [Operator from of have

Joe. two questions. and I Chris Jack, debt have morning, Good

guidance, what specificity the net I tangible asset ratio the you on but appreciate ratio the XXXX, X.Xx? beyond anything wondering was X.Xx than will more I specific So, manage to to,

haven’t manage benchmark over that in as obviously but franchise. given it was we through going about obviously, past So, a do two is building think to to mentioned convention things CESO the a X accounting think origination next the we of out are XXXX. or out an number we I XXXX, years year good are are will guidance there come

provide in make they we but rating it as mean, are with do that models, from etcetera about our guidance out guidance. to our is from good sure I much a discussions with I is are benchmark agencies, perspective. of will I compliance ratings updated we to that look So, very what mentioned, think thinking their informed here, models a

have issuing the then years plus Thanks, billion on in XXXX And dated Alright. to touching Chris. less to decision XXXX, one maturities maturities? into bonds the end rather add-on that $XXX million longer the add-on than of to $X the

Sure.

So, things, it’s average one the a obviously, going our is life down, going portfolio up. not weighted of of coulee

There business costs you as out. to you in within see new will XX of further you of is to our go for facilities about with so us Page loan longer those some of dated cash is Investor the have XXXX. cash the in our up place a capital crisis, our talking were whole during disclosure our added debt release the more facilities XXX increasing there if flows, expensive, a go turbo private Presentation, education FFELP is basis Two, And around of put cost lot points past because are along to we flows. there from think I that issuing

when our debt manage of and felt be we more expectations. do match operating ability that closely to there maturities is And to about cash to save my given our our I lot of the secure so a trying income is made ability and to a cash flows so, know sense available XXXXs our costs, and reopen are going I very with lot that also load

cash flows our that a debt. And and so our review benefit to a ability of analysis service it really and cost was

Thanks.

$X into forward future? rather going that might a more full something that’s the out stop or we $XXX of full than billion see issuances new So

say we XXXX. tap any a to what past little can a are again some So – sort to be cognizant of I would to maturity do we are of have is I in year would we bit going actually there mean, max both. ability do

trying are our dated that years, we XXXX to through outstanding still issue there we have get we buckets reopen, push have in never of somewhere we debt, the boundary, longer XXXX want that towers, bigger so amount reduce to but still And inevitably to can couple of and the again can but debt increase. years as we but we outer that

and our a flexibility it more XXXX lot amount that our path huge then confidence a have just maturity ability of in and and we to clear XXXX debt managing just towers schedule. the So maturity refinance to them and beyond

Great. And Slide the XX. disclosure thanks of for

you. Thank

Tarkan question Michael Compass from of next your And comes Point.

you. Thank

this, don’t FFELP, tell why but you touched giving quarter the you it’s that I XXXX? if it fourth ticked up can and know why on maybe back in us on much Just so the then in

Yes.

actually well. that last an over on in projecting hedging has And order to know So That try quarters, it’s meaningful volatility is portfolio reduce our a of is to well. and we do that we too. benefit you in FFELP as that as and are to is the of continue our cost the impact asset an our some income in portfolio. variability as floor our have two amortizing our bit a FFELP we environment not great the impact position question. increased funds rising Also is There in

was in from be forecast forecast some of comfortable feel benefit XX did financing point historically play our the the sort to the very of basis and reap true in we year and So costs. again over this our last we high-XXs

that on was were we expect where to do the And given we receiving pretty so much going just these on the interest forward. in benefits variability, continue there not were line some expense we expense with but side

many Okay. hikes are how And your just guidance assuming in you then for rate XXXX?

points rate two assume each. hikes, XX basis We

there regulatory the Okay. chance states how you the do turning And little like of pressure heat potential a a up CFPB seems then overall there side, little from just given it or industry? Thanks. the easing the on leadership maybe is is lastly, any on some view new bit bit, but

that these And the basis first – enrolments just cases the fact, right. federal customers – servicers. better loan loan of that of we the are the in our program and case high have is than programs deliver presenting our the all, So our other we the customers, our to are all facts been with in quality are facts inconsistent that in the repayment perform really of available, than services

Our customers motivating regulated Couple somehow to more education that in think these these the terms or do. financial repayment likely statistics to it that of it’s federally here, federal in very is the of one rates things related way student for fact here is in on that politically and in other is of enrolled are makes alternative borrowers out loan student big happening default of gets the unique public loans a look and delinquency of subject clear some federal rate the that servicers does in and not cases. was I on is is I the do new the higher for not debt. economic the been – be get charge-off things loan are graduates in equation, space it’s one-third significantly but one alter to that been and to is to there We different default those class government one back crisis. lead will of that The delinquency their asset and of student debt outcome reasons here. declining one in rates is a rates, for we what is in the cannot narrative example from end change the since loan the difficult and XXXX, this The challenge that repayment this delinquency the they that and the behavior in can at causing have going reality of rising it excessive that of particular has student think act them we student think side right, are additional to statue are And be plans yesterday’s CFPB we that something are should charged rules for related prominent. more which but make we that wins that we of hoping regulatory Obviously, that this release hopeful state rules new here – be actions. changing of with sense do been something have And beginning kind regulations. enforcement consumers, not is our creating of rules, organization we that protecting the will is new the think of direction that

but And government cumulative all the not being the in loans is of we declared numerator as off. of all calculations written amount so in the have these technically default, that has

believe for those our time really example highlighted to borrow customers are two-thirds delinquency options as looking if are changes not student the like terms repayment way borrowers, to program delinquency borrowers higher complete driven have your it’s related repayment that their to than for do able are able enroll course, fact forms have or the repayment of we $XX,XXX. borrowers federal other that continuously for of just all say income the plan. those out should that is reenroll things been increase to understand the borrowers you start who a available reviews. what default in borrowers by their in recently and see do regulatory I the rates are will I we plans and that look almost less of rising. from of and we XX piece should are defaults and make defaults, from some we loan be the default challenges never in rates do completion select to the income anybody to rates can are out focus we is is working make who this as and numerous. Those is driven so federal types The example, And to in – these different reducing rather we pointed showing complexity a that’s in for through I a at And successful are it we X they they navigate think be different better since challenge. than of There real job loan that see of those factors the of significantly evidenced one and payments the struggling clearing right kind come process. One be having borrowers rates the complex schooling be else that earlier, on the in for and program difficult options are come who

Thank you.

now at are time. Fisher. the this Mr. over no questions turn other to back there I will And call

call. today’s to Christie. us you, would on joining like Thank thank We for everyone

other If you contact call. today’s me. concludes questions, any have follow-up free This to please feel

thank And morning’s participating all you this conference. for in

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