Navient (NAVI) 24 Oct 182018 Q3 Earnings call transcript

Good morning. My name is Lisa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Navient Third Quarter 2018 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator Mr. begin may your you conference. Fisher,

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

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

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

joining Joe. for and morning, today. And your everyone, in thank you you Navient. Good interest thank Thanks, for us

quarter year's core per contributions adjusted once consistent driven and flow originations, private of Earnings quarter margins this performance. With ratios. this earnings leading saw our and by results student are operating refi loan from expense. again earnings, $X.XX, third we business lower credit of in cash improved continue share each continued segments, strong higher Our performance, to stable stronger success equity

$XXX platform of to advantage. profiles. platforms provide second from above for the colleagues us end XX% our a have we strong the $X.X competitive to ability refi of earnings $X have capture tools digital a The of loan all XXXX. while the date, to the significantly expectations million are billion include originations, result, These maintaining unique originated meet a high our loans, earnest for Year in have credit of target Highlights developed strong quarter for year. quarter. we increasing and exceed As our volume, original confident technology marketing increase in billion our allowed very or

capture we addition, averages. our a remain board in and not margins $X quarter. environment, rising we date, and variable, Earnings remains have XX% compared very more billion in in ability of With at our saw saw to growth new ramp we Processing acquisition be our as in And are clients up Business expect year to a full organic a the increase of opportunities can In also current In this segment industry market significantly Even we to we and segment, value receivables as cost demand. healthcare in this EBITDA contingent $X.X rate to reduced lower proposition inventory. executing billion. originated we now especially marketplaces. attractive originations overall conditions municipal

contract This provide end year. quarter, will that Rico services Puerto in were notified we next toll our sometime to

contract include As balance amortized at intangible assigned the write-off and we the result, GAAP this the of of quarter's asset results to this a acquisition. time the the of

payment loans the we programs, discussed impacted being private and to a delinquent grant federal in temporary that took relief year. the current. various borrowers major both in disaster. from stages our last brought We natural have previously place impact loan results This natural payment In disasters by of

a defaults driver concentrated delayed are quarters. result, principal in defaults this is period. few and a for the the some, higher As of This

of then disaster quarter as loan and were private For the borrowers a relief received disasters declaration. defaults are natural payment this $XX million related in experiencing result who other to hurricanes and difficulty before roughly example, the hit, payment

natural had appropriate disasters. smaller experienced was to We the expected substantially This quarter. established next will but we event see a and default prior similar reserves

And savings are result, each provision priority operating improvements a loan record in year. the operating this remains delivering long a losses achieving efficiency. successful track our while ongoing have As management and higher is High defaults for we for stable. very quarter, and

other RFP gross-up revenue acquisitions, changes First the offset required the more growth Consumer also accounting the which within Federal adjusting business of transition and in rules. contract clearly. the expense, stage segment, objectives. quarter department Data new are moved compared this that this the services highlights gains Lending servicing sometimes this see the amount latest make year. here expenses the The we items next original in structure in to are the declined some accounting difficult to In segment, Education of of these XX% by ago of and Department has are XX% changed due has to our More and presentation X quarter's we released specifically, to for the So earnings of and revenue. and of the RFP some round, to segment, expenses this when equal segments new operating morning our Slide their operating Loan year XX% by our after in providing

our are improve more appropriate business create and a partners work importantly opportunities. with construct program continuing teaming to the We to helps response that

our sheet. Finally, new equity. within a share maintain program, to million our balance while financial strong range has This a us target $XXX allowed to continuing us performance for repurchase announce

that of our I'll my of focus to review Forum pleased repurchases. I'm the turn in now to returning repurchase share long-stated deliver the questions strong and for Chris? plan by pleased and with quarter's time diversity, later via Women this the excess Executive our again and share quarter our Overall, dividends value the capital of this results for customers program our recognized Our execute ability our I'm Chris call I teammates. has plan, call. investors. with look commitment your and announce the business to more a And over results is the gender consistent our of and reflect financial been detailed in results. strong forward Philadelphia. for also board of

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

continued remarks, be company's brings originations, growth year-to-date management. can was Investors include $X.XX call $X.XX found quarter. prepared XXXX. will EPS $X.XX. Slide highlights quarter-over-quarter referencing the in adjusted on for the the on third from third core processing my quarter be the adjusted interest the growth quarter in net year-ago EPS A in During XX% our revenue presentation, This the Loan are to section. the versus X, XX% quarter review core expense on will few margins, in key which results Refinance I from business I Starting earnings and focus year-over-year website improved

the asset natural a recovery rate year-ago for inventory elevated X. to quarter. disasters prior Federal prior $XX from for million on declined versus quarter XXXX. XXXX the revenue segment were Slide million quarter XX% consistent reporting, for third $XXX in billion unchanged and while rates, this result quarter. Education from of and increased the quarter. in from contributed The This Loans as the as beginning growth third Core $XX in with have The from the earnings FFELP is of quarter. Let's now move the the Contingent to in placements year-ago late-stage fourth a in the quarter in of increase provision $XXX beginning loans in million the quarter collections with improved prior the the charge-off delinquency expectations quarter was our

year-ago basis estimated from XX every both for for most We quarter quarter. temporary hurricanes. with increase due to and they a primarily a FFELP third higher revenue. for than to our quarter from the private million expense points, accounting Operating in impact Data, and have adopted the a from expenses transition the and reflect allowance points their standard current the loans XXXX loan increase million services the Our was contact net revenue in recent $X servicer corresponding by borrower agreement were any expense margin both offset questions. XX losses to prior The if the encourage $XX expenses basis First recognition interest unchanged increased from

operating year-ago quarter. from items, the segment a these Excluding XX% declined expenses in

million earnings of and in Lending The segment. Slide to Now margin let's Consumer $XX to $XX quarter third our the the net segment Lending XXXX. basis XXX turn million increased X, Core was from interest in Consumer was increase the of of underlying prior lower timing in our use cost with points quarter the to in reduction attributable expectations. of resets a and assets, modifications the line The loan on primarily the from funds. the

Loans, During Refinance the we Education have and first quarter, the nine originated million months, we through of $XXX originated billion. $X

basis We Lending portfolio. delinquency or credit of late continue strong performance Refinance over rate below to Education healthy Loans at points. and in see now with demand Consumer XX and our product XX% this charge-off stage represent

in million in quarter, XX.X%, our the a During updated to XX% $XX and year-over-year, delinquencies rate line rate were charge-offs. with the recovery $XX expectations Provisions charge-off from long-term resulting million expectations. as increase in we declined

segment our quarter. Let's contingent this continue a government increased is revenues the XX% placements grew collection result Services contracts. in local primarily The year-ago increase services from and X segment. Fee Slide of to Business XX% inventory Federal review from to quarter-over-quarter in

expenses. Let's turn our provide additional on Slide to color focus X continued on to

initiatives XX% track an decline favorably to have Year-to-date, a compares balance expense Education expense in in operating decline managing strong on very our structure build exceeding We our average of portfolio. resulted operating and Loan our continue improving total expenses, adjusted of record operating ongoing in that to efficiency peers. the our

Let's X, turn financing Slide our to activity. which highlights

$XX set refinancing we quarter, cash primarily economics million remaining retired In FFELP million ABS FFELP unsecured XXXX. due unrestricted of of $XXX $XXX the our which continue these Year-to-date, Private transaction. the Loan the Private and facility have repurchased million, in Education million Loan and maturities We overall was aggressively financing pursue $XXX $X.X XXXX. in favorable $X loss into for XXXX. quarter, increased we transaction, ABS in additional to to more of expire resulted of quarter, million facility with in or issued all Education the another During by refinance and not We issued any $XXX have we ABS to assets Loan efficiencies. that do the through notes billion compared million we

shares repurchase was repurchased expect under the $XXX end X.XX quarter, company of remaining of to for to year million times, continue the and we program. the share At X.XX authority and times. TNA million quarter, the During end million, X.XX have ratio $XX and our X.X between our the

positions. derivative share positioned to guidance, for across earnings meet delivered and XXXX. full our the our to positive expect XXXX summary, per year or questions. of In for laser we $XXX Slide remain I'll high-end well net the call GAAP or efficiencies, and results quarter share third in differences to net recorded of are of We per between $X.XX marks third million primary compared $X.XX GAAP the million XXXX. share The or per with of income results core results turn on related $XXX the now X. GAAP are exceed We the on quarter Let's driving focused we earnings we board. income open

Your [Operator Mark the Instructions] of first with comes Barclays. DeVries line question from

Thanks. kind Can agreement more the about after see we and can what Data changes of you expense to transition? talk or services the with First expect savings

converts was - of and be depending for a cost So used the leveraged convert once the company, can't and we I The cost is the a sold both services student exclusively reduction for amortizes platform but agreement move more and that it's a referenced up expenses more as it platform and to Department for loan with is, contract. platform to us what believe major to our create to the basically more structure what day variable agreement pick versus arrangement happens just the the cost on transition our from servicers. us - related to a one. you we structure it variable Chris neutral industry-leading portfolio sold platform First platform could effort Ed also the It's principally, other by Data, that

in Data. And center run or that so, First And we we we continuing are to cost for billing are the platform that them our incur. data

operating a system pass basically until likely an the it's from converted XXXX. is So sometime expense through in structure

the really less just to it. that margins as And, rates, or effectively you you're confirm of passing higher? Got of higher seeing on borrowers refinance. I rates most of the preserving of despite for therefore, more indicated kind on you're Jack, and much impact cost you rates, think the higher Can incentive not move an here

have smaller, rates consumers demand they have But consumer we so interest loans. that that program PLUS a the is have XXXX. this space a a as and be of in goal. and been on that might combination increasing to principally loans, the been working rates - higher Yes, PLUS and rates of like are gradually a achieve can We still are And demand extent, lesser savings margins the has the in private towards paying would steadily still in see function that not Grad while for student really significant. risen wider to refi program,

remains the for the demand product so, And robust. very

you. thank Great, Okay.

High Your next the question Hammond Bank of Mark comes America with line Yield. of from

three and morning, Good Chris Jack, Hi. Joe. quick I had questions.

one, occurred this the segment, Federal would you first break that quarter? other be able down So revenue $XX million the the in to in

Yeah, revenue to transaction so that discussed. as from that relate you agreement pass-through should with think of we Data half and with of First the it TSA was half the our

about think a So roughly split. it XX/XX

of So is of roughly that it we gain half and on the it the pass-through realized half is platform.

cash billion. thanks, the And the down That is cash is flow residuals, Chris. million right, secured see FFELP slide, flow All I on $X.X then, the sequentially. $XXX FFELP from

drove asking Just what that.

one I facility about - another. it's we what portfolio biggest talked our earlier as Yeah, to from refinanced the FFELP

wide financing perspective rates. fairly strong fairly our One a a had attractively facilities, from or of advance priced while

And an all-in facility into that better we able that those were move was facility. in to another cost than so, assets

result. that was So the primary

the You balance big with maturities increase our in we up. see Obviously, are position the storing the coming sheet. we in cash have capital

feel our but the also not ability we with XXXX XXXX comfortable maturities, So maturities. only the address very to

Got Slide labeled is lastly, for? it. debt XX unsecured then, pro forma. pro it Chris. too, And What's on Thanks, forma

debt just - for question. outstanding just just forma pro and I the the say. mean, historically. But the something today. is number it's for think today. it's we It's calculation debt it's calculation. outstanding the I a the is good probably it a that been It's It's what

so you much. Thank Okay.

of Credit with Suisse. line Moshe comes Orenbuch next Your from the question

Hey, Chris, about how kind And of thing just end TNA that or you could bit the repurchase a you given context? more are the of that share use lower related, Or than Thanks. you about - think you whether amount little the kind for do quarter's the earnings? whether helps that referenced, sort Great. financing in a of going talk you able that, hurts ratio? are to be available at that to of

so, guidance, obviously, achieve our than by TNA balance debt, pay that And year well, cash issue, term X.XX our was sheet the expected. when actually does down it What That ratio to we we financing off. it ratio. is go of of raises having of Well, times gave within to managed the find X.XX yield it more market to high of to instead end. TNA instead to sooner helps to longer pay debt we

of see you of all so, highlighting asset our our situation, capital and cost. at really it TNA benefit and and simply to aggressively our was base us ratio for by the better is what inevitably opportunities looking And much cash at the of looking structure. So raise inheres off refinancing our a also to assets that rolling, of instead

So it really was a win-win.

a our improve was great spend cost very of us team. at lower are We you that time to to As capital to a our aware, well transaction have realize optimize strong cash looking we structure. a And for position. treasury a lot financing

of continue board. us team the a just efficiencies desire - for to also it was strength and for shows the across it to the the really look So

find it. a on this, mentioned to up like about they're a with sense contracts kind is you after down way Rican kind there for coming out tend to the Puerto a can given of we matter, give Got we have fact? us because breakdown as collecting respect toll what's to And when the some seems separate just of of what and renewal, pike so various that the the it to contract,

our broadly company. contracts of defined thousands have we within So

a with contracts island question. the And about And don't And contracts. But surprise smooth don't to provide a specific the that what we generally on clearly us But transition. working happened. clearly to guidance so, we we're of ensure I was understand individually. that talk individual

Right, well, consider you more maybe should material the it's for something ones. Thanks.

on add equation. the would of just side the I funding

of to see I in are as quarter, at risk terms vehicles, the net expense, some really also think structured of of they do the the operating or financial not benefit improve and And also whether first residual the company, Our focused and financing this different cash interest some of ratio just well. designed are hedging just financings new you both efficiency operating activities. on these deals, TNA margins our basis structure operating improve things of really the are they the but flows the

really a us So it's front been on say. expenses solid for operating the performance I to that should in addition

Got it. Thanks.

Your next KBW. question line the with comes of Sanjay Sakhrani from

Thanks.

portfolios. and and been just just coming So FFELP the talk loan your you expectations what's have that? NIMs than driving Can better

Sure.

and had that improve been year thoughts I rolled is the we place. place as the ideas this we we we our what think, structures helpful said, X-Xs to has keep to do lot and and Obviously, put just programmatic hedging back in last it into has financing there Jack NIM. [ph] could of very policy both how things NIM - around goes I remember, could that stabilizing a year, you in year, we been in

warehouse have that We financing helpful just the just look happened, thought, this markets some transactions these to we've do inevitably with improve that. to the fortunate to conducive, been need try we benefits need you, from financing to be partners you into enough our continue think to transaction just has This on to hard able under obviously, strong we find of to make cost capital and could been going been NIM. and but rock Our a perspective It's on you see be year. do then that rates very to we helpful. this benefits of our for advance find, structure what cost we a about costs again to push to we how can financing. very finally, And every did FFELP

been our of comfortable work are we behind in we where again, it. a has that's but on there with lot and gone So NIM, very feel confident

both is assets this sustainable So level for classes? those

refi good obviously I'd on sustainable Well, which short- a the has portfolio private portfolio legacy feel than as are on may our we is, we Then amortizes, in thing today things, clearly is a the highlight you the replacing portfolio, number we attractive lower what a portfolio. NIM see of dependent the risk-adjusted credit but the obviously to medium-term. with it's private the is about on that return, but very portfolio credit very NIMs a basis, only think,

because not like-for-like, the otherwise, better are But So been. come you in see historic is assets is should NIMs you'll they've - NIMs refi see with replacing just or even down assets. the are deterioration NIM that there - potentially we're at than NIM where

Okay. on your And product, only you've And mean, expectations by then well markets. I refi half been to focus have ahead XX%. almost the able those the like like on trended of

should pretty as another good we because have assume for you future, the now levels move the So into are year? these we opportunity next rate run

we So acquisition portfolio another What and Obviously, January on to make we can would result the of in made phenomenal building the haven't driving job, result. is, the efficiencies really better you decision technology that's until cost behind decision say a has the a team a the X. opportunity. it, out I done

We achieving are today as as that looking or focused with for. are improving we're we volumes, margins

refi perspective as on our mentioned, fourth third versus think, is basically similar. year, should for quarter, origination billion of total we're Jack looking of volume, I So $X.X an relatively be from par quarter rest which the

XXXX, that forward opportunity in margins, be it. also improve if cetera. volume, looking we'll should to try there maintain but is clearly, advantage so of sort to look to et us going And take that you of And

Thanks. Great. Okay.

question next with from John Your Jefferies. comes Hecht

first you're your the one been forth like I for guys. my question. and hedging quarter and mix bit future. Can next has specific there on anticipate assumption portfolio in that very there, of follow-up I'm that is sounds in about that NIM margin? wondering should least more shift Thanks in of few seasoning Sanjay's much margin the efficiencies, lit terms FFELP a my morning, question. the portfolio, so segment, Lending forth. your you Good suggesting Consumer for for from pretty and at think one for stable, so based the visible just guess, we though sort taking what clarify for the you is is been it's a because a It variable

So year million $XXX we've gave private credit. guidance for for of the full

of are I and feel still expect guidance the in would we in little below that half the about But good second that year, perspective saw first to the say the half we that. even bit a be still guidance maybe of You from year, that above firm. a about that that. we holds

for just basis, return risk-adjusted feel in fourth And the But provide XXXX of year the to attrition. in position cost the finance in the that about that our structure for a things NIM - portfolio. full business. But legacy bigger on shift there that would guidance of for which starts to start Consumer in NIM very good I the some deterioration good refi overall. will feel highlight roll a XXXX. actually so segment, financing XXXX, that call assets improve, off, again, because very is But within profile. going some in those again, the into be to of going the we quarter about have credit purely would is private I be our obviously Going not almost just we shift portfolio you will to portfolio, Lending the a reduce the of we because

Okay. That's helpful. Thanks.

in Second opportunities regard? update for rate-oriented. various you certain banks. market-oriented to that question you Do I different competition-oriented, about for and talked on time, is, the that it's buy guys have opportunities over portfolios know, any we've guys

the point of transacted on of the have in FFELP equation, most So time. bank this side FFELP portfolios the large at

opportunities see in the buy them. we years. going see on so what traditionally bidding would non-profits repeats active remain we're But entities state and And we be to are that have space. not in certainly are holders, And if prior long-term of been that opportunities opportunistic saw agencies. We portfolios, from really to we

and of stopped, the equation, of all were have the side On been originating private the legacy portfolios credit loans where sold. banks

extent be in really in to and getting active to front. available the We that would were made And space. certainly portfolios the that buyer be are natural prime

significant One identify current honed we customers alternative with the advantages loans. we some it's that see we them - payments that's that of manageable buy And really that have bring help offer private and strategies of arena. side - stay keep in as borrowers, keep onto them the that how improve their we plan and have high-risk equation our things the payment is to and they on their We we our performance. them both the portfolios materially successfully overall in when moved platform, FFELP help

And advantages those so help, but you need too. willing sellers

that question. for then update. Thanks Okay. And final

I forward rate onetime think, the Lending that - a of you just guys Maybe referred how to anything some Consumer think do segment. catalyst you or than is adjustment? can the reduce going recovery that for for we that adjustment about

that a is onetime So adjustment.

should recovery had them rates, change recovery we're obviously we we've for about been change case as that monitor them been over provisioning doing our we the the but year. think it, potential to we've And the monitoring what rates. year in quarterly, monitoring You is over

that, So was from back, portfolio holds therefore, impact adjustments from XX.X%, going the the and what our quarter, for accounted provision charge-offs. be recovery our change seeing that to there on already in rate just why something recover is will XX% our what our any the monitor And we all there shouldn't we It's to time the expectation of expect been ensure no we're it's forward. well today in very to that portfolio, that's this market.

very Thanks guys. much, Great.

Michael Compass next with Your the line Tarkan Point. comes question Instructions] [Operator from of

questions. Thanks my taking for

reserves. think shift relates NIM. mix how as Can the earnings back shift talk maybe it on the Just mix about and on to credit to you about,

Earnest can talk you're for loans? So reserves we metric specifically, looking And as where that - coming to in those about how are I in move sort forward? loans I'm think but about of lower, of at X.X% you losses think reserving know, much repayment. as we

I think, talked the X%. under the about refi loan of loss side we of equation, life expectations of it's in So have

and would performance certainly Our that support number more.

loans confident made unlike here. in-school years the been And student the very during unlike these levels These stage established themselves we're and So are have have see for about number portfolios, in traditional of same who career results into result, where a of private our we're period. see Remember, income a are borrowers, low as their repayment successful are very have in borrowers, we that that who opportunities. not delinquency in legacy loan would very, private you fall. reach that heading

Thanks.

side, lapped fair going think Duncan, July, XXXX. expense But to you've don't core as they that, guidance and it give guess should we mean, know, November. I in lap be want migration do Is in you're of about to going on in Earnest On I expenses, to the say I how the lower? your actually XXXX, numbers you lower are

on focus, Chris as both efficiencies. I really and had our So mentioned, operating is improving

expertise in take service product these business when - acquired some their operating of the this BP so Business to And - an marry with expertise. efficiency or space looked entity's we these at able it Processing space lines our as example. and expertise been We've

So process workflows analytics operating improving the adding data results. to to adding dramatically automation, improve

developed some developed we've in marketing said, entities space. the the the little smaller it strategies. terms thing believe visible, the cost sizes lowest to healthcare and in and in in that transparency business and the do in space, less because there that the we've for arenas, marry were And acquiring other see refi to had lead but bit very capabilities, capabilities, We exactly of an digital the is we municipal able of the clearly the thing of same same done public what account well. the workflows with that the underwriting of excellent You as modeling technology become Earnest we in the We experts and operating improve industry example. a as flows.

manual as versus also And And thousands permeates CFO I'd enacted through group, the today of transactions robotics. we've monthly say automatically automation the and intervention. well. back reconciling We're office it middle

the there to at focused is, we only but businesses. scale growth So the board down, our all it's continue on automation, driving across improving driving as not efficiencies, amortizes just it business, as

base expense was side, think, on expense So and expect that to continue push to as down the I question continues business we your the drive efficiencies mature. to

thanks. for me. And one then just Okay, last

are Just not the side, say? the I fed expect Is placements inventory fair with XXXX. half those inventory in revenue recovery in really know, that asset increase But we the fluid. of should associated to that to I until, guess, back very pickup

We've right. will bit XXXX. year, really the obviously that of in into end and this roll at through That's the XXXX, XXXX, receiving and through end of we've start little XXXX at more to started received but and starting a then roll placements

Perfect. Thank you.

with The next Henry Wedbush. question comes from line Coffey of the

for unrelated, thank taking the reset loan margin. spending morning, student but on Yes. been and of number of items The timing has my question. one private issue. sort Good an you the Two

rise, to that an lag, have or issue still before Do everything likely month a rise two realigns think, the of rates with refinancing itself and is simple all be rates year. where point As of the is in or more work trends is kind rates this rising and and you've other done adjusted margin? correlation a this you between you've that to where

again, determines up. still monthly that the caught quarter's there so been is month, What a in that But catch We is usually It's fed very important. we closely. look at reset always get the than or short-term has those date there lag. falls follow month So the interesting. but you on dates whether resets, are again fed less of variability, day there

also and back, backside, on to this goes it as as and then these becomes highlight where rate environment, of our also we beneficiary But some resets amortizing on. the issue less well. we when an of short-term portfolio, the on have that less And times come top so rates get

revenue, and on is the of cash blips. It these They track, it follow our are issues. our a in So meaningful real flows is something, issue. but aren't aggressively minor and totality we

both improve servicing look the mean, the how they and lawsuits, and unrelated but sense complaints get the through is whole completely simplify obviously most around they this the servicers mean, going of a been question, of us cetera, primary change student borrowers? lot at when to servicing, for hopefully then - rhetoric, you student everybody. of And it you Department finally Can go, there's - the once complex do loan students just they where is of seems think Ed I process? how give for contract processes you are business will et I some culprit

Sure.

repayment at or overall the year's been some options filled that mean, improved over federal complaints we advocating those that types point, table bring rate. You're retraction, of borrowers XX% it There is are the CFPB income those about my XX% have in tools look inquiries the federal the It's for simplify when to program design. XX Ed XX - first to have a portal, example, as well. the able items. submitted I that, repayment those able portfolios, last interest the to we've dramatically whole of be The program. results. want typical advocating complexity Department of of to of And points been different bureau bring we're to a comments were Then to we'll the the the don't loan the to reporting based programs. credit comments pages like delinquency I that that jargon. on to we I definitely something available in are application government review with long. correct It's of as

portfolio example, XX be would been to to the and we've to the e-signatures on to repayment days from like XX% income as rate think modern completion successful not over the simplify on complete able that by - technology, drive side For the you XX borrowers loan use to in but days, helping be super simply able consumers would love for forms within process the bring to XX% increase well. direct forms, able and to FFELP

you. thank Great,

But hands. their is in that

they they of this se is process haven't or kind had RFP really per a…? mean, - out anything in laid I the

the is require RFP of it well. as changes and some in legislative of would it Some

much. Great. Thank very you

next Your comes from question with Rick the line Morgan. Shane of J.P.

have guys. $X.X buying remaining at balancing funding. maturities. the capital billion Hey, taking done questions year, a the you over good stock, you job for guys look rotating this In maturities Thanks morning. markets activity funding, have the XXXX, When last my we back and

the available, what those and into $X.X issuance? maturities to a higher of opportunities markets unencumbered cushion. best headed keep unsecured have structure I'm But continue term as You that a unsecured where XXXX percentage - of will the assets you to billion curious is on assuming you plan you'll assets. if are meet I'm the see the just unencumbered try for

aggressively been an finance high sheet, Obviously, sheet to do of trying high going off balance market. So as issue of to debt. we've instead And year, to while. markets of the the little capital trying perspective I for you've last yield seen from balance these raise additional in things raising yield our is in a raise the purse we're the of think from or one have instead our is, cash what we

we side, we as other And In around to closer can are from get that be there have as about. doing we cash facilities as that mentioned large portfolio pretty that the transaction a some we lot you that can they well. think things saw some about. talked a unencumbered expiration, the You FFELP realize

mentioned maturities have So in the you we XXXX.

$X as the of We cash from going to our year are in next done. today the obviously balance huge for sheet over amount billion We well have activities over a of XXXX. cash we've generate

And potentially so, of balance mixed of, position very today. issuance could will a the cash We'll in raise I would be look high cash XXXX. yield there in - sheet. be strong off additional use to We're there

with XXXX high any comfortable really feel the have to the yield almost where base. in But in over in XXXX, we we market think maturity and also and I of of that asset last lot unencumbered scenario. So get regardless to we levers this a pull are

if high think - possible. exactly that I'm mixture of a reduce but So to if But yield we sure footprint answers strong question. your not all, our I desire a

to the of QX It optimizing from you're kind hearing going looked very percentage, funding in structures that repositioning issuance at I me me, But mix anticipation unsecured to reduce to going secured answer in the sounds to as in it now a Okay. to forward. of That's actually unsecured like some question, XXXX. helpful. - the it - sounds that

company almost to looking this day of highest do and is ourself. unsecured to me should benefit what the the away we debt. cost it's will finance Jack cost. to goal And high quite our that And doing reduce to doing. things from should continue clearly yield that be down it's what therefore, for be pay every reminds our We continue company honestly, that companies is we ways finance overall. And cost. market, the It's the financing

Got it.

very much. Thank Okay. you

next from comes Your Citi. the question line of with Ashish Nair

follow-ups, Hi, for you my billion? NIM just remind of the guys. us Thanks I as assumptions question. your question of in flow quick cash what XXXX earlier. are $X.X had slides, sort underlying taking one Could you show Mark's a on the for couple the

We don't provide guidance. that

For any we probably be - NIM defined. obviously, NIMs that the forecast that those will for - NIM three that right. shows The We've over the go to around will happen away things floor floor And you quarter But are providing broadly XXXX. then current market, It floor income. income you in lock assume assume sort - over fourth to our disclosure guidance forward time. a increased time, income. of can years within our

NIM locked amortized that from a but in from feel down see comfortable You very that we've structure. we away time, what with over

that wanted this want - the is the to already just seen And the number of clarify have Got also, current you make you've to provisions. it. year provisioned. you form on disaster [ph] in sort that sure said I

that private about portfolio? private loan we if should related, education affects how higher you million had talk portfolio, talked the you so, also And a loan $XX for about And of environment your assume sort XQ? could earlier rate

I'm which sorry, portfolio?

The private education portfolio. loan

the still the feel for first about going of talk very holds fourth let's good true. second into the so still the We $XX guidance. - about that year that quarter. We half provision million Right,

then there a was change it rate a bit rising no discussed million. So little - And the on before. was $XX on environment, that

reset. Our assets do

reset. they all - quicker. Our But costs reset these costs do

term two some it And us. when inevitably this term missed of get And But other reset. that negative catches it way. helps said, of that a up. goes is the there benefit on backside month the you as I drag so, short environment short rate And like or we to

long And cash of anything we think this therefore, generate on else we those the an flow of basis and about so that drags through we much within company our cycle that the about think as flows. ECF is are encompassed contemplated term as And this thought and the company already those as cash process. value

Right, charge-offs should I clarified. provisions. on have the sort of and I impact meant,

decades repayment. The seeing And now. board our lows. as And student biggest the terms the in of we're across and existing is loans as of rates jobs portfolios for loan market strong course, entering and economy is both Unemployment the driver, at that right extremely well federal of private borrowers economy. new charge-offs obviously the in are

for of which delinquency class are graduating jobs would strength If XXXX repayment entered the class lower XX% the interest than repayment, you that's rates they all into opportunities last be the and that graduating that And really driven where versus look at But the rates. yet economy recession. were the the of XXXX, entered peak the portfolio by there has not repayment. of at months the X is

consistent you were unsecured reduce that just you Great. looking able very X.XX rolling maturities And was great I target. of Do - that assume your hear to for would ratio to or would with that's I footprint. to another you're how long-term? be That's point the you your consistent to I this level debt any X.XX But be of wanted much of TNA with foresee with sort don't or know that sort to it the increasing clarify, would issuance look helpful. discuss point. at you new comfortable

and let No, an we capital both available points. stay that was to and the let's refined understanding into mean, down also break return of sheet, me within - going say just to pay to how debt balance shareholders guidance. to two would that how could that we're capital run provide leveraging our I the debt guidance we and on equity well, company, the was investors therefore,

you we assume to X.XX - that that XXXX. good XXXX, range assume is should should but times for You formalized it that haven't X.XX for a

CECL. being us from and CECL institution important manage and into these financial times adjustments into to remember good that. prepared X.XX we're XXXX it's that head position a every for think to - I that is CECL for all think with X.XX all And to we area heading provides

clearly guidance. lot going a into for of are rationale reasons and there true So holds that And CECL.

year. it. And for rest you good Got so Thank much, guys. luck the of

you. Thank

question HIMCO. from with the next of comes Your Pascavis Travis line

general the Thanks maybe thinking been curious, those have morning. questions Most what for attraction, to just your around question of assets exceeding my taking is refi you're good around But the attracting Hey, a job expectations. I'm those my great how call. answered, book, borrowers.

Given compellingness attract the competition to how besides differentiate you lower out yourself, and the do them the obviously and borrower? rate there, just

based of and to consumer competition approach How their private is benefit credit attract relatively materially, take our the portals or is exceptional loans. loan to marketing principally here. a high the to And really consumer. on to driver we looking is coupon a those able That ahead customers the of your has digital rate profile. that it lower PLUS Grad that been a So we're a developed financial loan a refinance

that get to the to are marketing mail. the competitors likely on process the they're focus direct versus those allows channels origination rate to loans most our We're is digital customer primarily. the through earlier We mail allow and platforms to close on also us minimal to to of on provided, and amounts application which capabilities far be venue searching, then, principally quickly digitally most channels that based others. of consumer provide That than those versus us in quotes information internally our in -

that speed so, compared rate are to our peers. processing really the that check, and differentiate combination of search, And us things

would these winning terms opportunity in proposition kind the in distinctly be you is - the think and market the share? there of new about say of Great. should extended I particular or - And could any in attributes that different primary January marketing of market that to

are not holder think the I largest Mae. student Sallie from of private private we the refi loans presently loan Well, second refinancing in space,

us. After

sorry. - us After

available that say so And that us that January to students what are beginning the for as in in our available - And then us opportunity well. will be. January. is And in evaluating, - that's to course, of is in-school is cannot under we're lending January but opportunity, intentions space something until other

Thanks understood. Understood, I it. lot. appreciate a

You're welcome.

our do today. concludes closing session Q&A Fisher, Mr. any remarks? you for That have

everyone like I'd thank Lisa. call. Thank today's you, for to joining us on

any follow-up call free today's questions, have to you me This feel directly. call. If concludes

today's in Thank conference. you for participating

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