Navient (NAVI) 23 Oct 192019 Q3 Earnings call transcript

Thank you for standing by and welcome to the Navient Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today’s conference is being recorded. After the speakers' remarks -- after the speakers' presentation, there will be a question-and-answer session. [Operator Instructions].

to conference like speaker to now Mr. today would hand over the your I Fisher. Joe you. Thank ahead, go Please sir.

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

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

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

I'll Jack. the call Now, over to turn

strong segments, everyone Good per of in interest across of us joining and today to Joe. you We for business earnings $X.XX. and your Thanks, I'm quarter. saw exceptional sharing all the for thrilled another delivering be results core Navient. thank contributions share morning,

to net This increase an saw strength in -- quarter in increase saw XX%. margins, loan our better we and margin originations credit, EBITDA in delivered continued interest delivered refi a EPS XX%

third months year shared full-year and a nine raising time year, first we the we January the to of with guidance $X.XX to the Through in targets are this for $X.XX. range EPS of back the we exceeding you financial are

investors. deliver ability demonstrate to clients our continue quarter this customers, our value to for results Our and

risk-adjusted we on maximizing an cash attractive leveraging and achieving to are as new this We're our And businesses. producing quarter. evidenced strong equity delivering generate XX% efficiencies and very capital return growth returns capabilities by in our our high-quality operating earnings, flows,

net the has reduce to stronger more balance develop to by for outstanding continue billion. quarter interest This to margins, options as the and our innovative expensive this from eliminated include: us lower-cost need year the portfolio. highlights Some finance loan debt we unsecured $X access student

FFELP and Delinquency Loan Credit performance rates portfolios new our are to Private significant of record lows setting Education show either strength. in ones. Department matching continues or

For example, the our fell X.X% for from The portfolio X.X% private was charge-off down XX% XX-day to rate loan quarter plus portfolio. our private our delinquency for a rate for portfolio year-ago. and this X.X%, credit FFELP

increase a originations $X.XX quarter from Loan the in billion, total year-ago billion year-to-date. and totaled robust XX% a $X.X

our pay see We strong save their demand expense continue and interest thousands to dollars off help for very clients them faster. products, of loans which typically in

in-school strong Credit approach, we margins very MVP use we product. an quality for could future on higher was which this are this loan are and year's launched an and Earlier year year. last and growth. to used We designed than volume learnings enhancements create

Our are to focus payments, options the to paying target which in-school high-quality given both of available make marketplace. in refi who wanted increasingly borrowers -- important was

primarily due disappointingly offer the academic to terms Loan volume eligibility to immaterial and this season was consistent nationally. inability

to plans We we incorporate academic next what address have this for prepare learned we've the to as season. and

we Processing Business our signed new in and segment, transportation government, several In clients healthcare.

on automation XX% to focus Our EBITDA the help the for continued increase margin and segment solutions support an data-driven in quarter.

to $XXX including million $XXX to million X.X million this a purchase Finally, shareholders shares. we returned quarter,

million major under bid revenue. generates borrowers contract engaged annual with of solution. now the with this Education's the approximately actively components gone to proposed Under and of segment next-generation the servicing been today's contract, We’ve to our award. provide just awaiting solution of we X% has servicing end-to-end Department Each X.X total

borrowers loan focuses a we proposal loans. competitive successfully submitted on how student help very manage that We their

we in as repayment enrollment exceptional default options. is alternative prevention driven plans, others lead in including Our and history income payment consistently here

In will over rule the known the as the This accounting loan. Preparing life new is this for to of effort new CECL Chris policy expected policy of loan requires for for losses. on policy this establish a in adopt our accounting, new and losses estimate will remarks. reserves January, the major implementation loan we provide financial institutions his

estimates We’ve robust predictions losses requirement The of at loan of along employment with loan graduation estimate different etcetera. stages environments life rates to lifecycle built numerous includes a on the of and economic GAAP originated capital our annual of loss using to experience loans. new and will of and data estimate. extensive loan ratios our acquired produce newly or life model this policy alter profitability the This rates accounting

repurchase of capital authority plan implementation plan to we the we this this utilize and changes maintain our return plans quarter a fourth ratios, policy while in result share to existing loan-loss capital in will year. XXXX. our remaining reserves the or reclassification dividend We do January, will equity and our any our to anticipate $XX change not one-time million under to in In this available of the

repurchase are today announcing multiyear multi-ship $X billion we Furthermore, a authority. -- new share

$XXX remaining plan plan through purchases XXXX. to approximately the the in in allocate million to from prior to this expect addition We $XX million

efficiency, this growth financial new businesses capital As returning continuing to results quarter's our to improving illustrate, are objectives, in including cash we operating and maximizing generating flows, exceed investors. our

well-positioned the also same XXXX. do to We in are

the Chris And provide deeper will results. quarter's listening a today. of review in for Chris? Thanks now

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

for Section. I presentation, I remarks, the third website prepared the review can quarter in call earnings the be which will be company's XXXX. my referencing found the results Investors will During in

spreads capital structures; dividends quarter EPS core and repurchase loan and securitizations additional facility XX% the Key equity year-over-year return $XXX as quarter. across of improved refinance of of our million from X.X to through the shareholders Starting the education attractive continued year-ago shares. the on on result credit, Slide structure of the strong in include: a in quality portfolio, $X.XX our in loan and originations and increase optimization core from improvement at of XX% highlights return adjusted million a third versus was $X.XX further quarter X, credit

earnings move year-ago interest to Education third points Let's $XXX reporting, X. XX Both guidance. and margin for a charge-off our the line was basis Slide with net the significantly were points. Core has million from declined on at charge-off with The a the segment in delinquency basis beginning Federal quarter. rates with Loans rate X

recovery $XX Asset increase success million This rehabilitating or our XX% new the increased revenue continued prior year. from placements. demonstrates

in declined forbearance year-over-year. Slide XX% on total XX% declined as this in delinquency to Consumer Core the turn the to X increased strong segment let's million. segment Lending Credit performance Now $XX its rate segment. year-over-year XX% continued earnings our rate and the quality

$X.X at loans spreads. we During originated of billion the refinance education quarter, attractive

quarter private XXX year-over-year. declined points basis interest margin The total increased points. less portfolio The education basis the than second XX from X% to net

interest to we rate to benefit we net more now initiatives, expect efficient XXXs. environment financing by be for the continue see the While favorable of interest primarily full-year and this in increase the was the margins driven mid

Let's automation and our review was margins Total quarter driven healthcare continue the while as synergies, by to Processing in increased our and to EBITDA to targets were growing XX%, This services implemented both accomplished million Business Slide X exceeding multiple RCM $XX revenues won cost government engagements. management. segment. disciplined continued and and

allowance reserve. non-TDR an life in The impact primarily between sheet, income to allocation Slide let's a anticipated turn our result adoption the financing and to is expected estimated Before change highlighting statement from $XXX capital to CECL activity, the discuss implementation philosophy. in balance is X million This driven the of to of reserve our and loan FFELP of $XXX increase our of and X-year portfolio to incremental by million. portfolio a CECL

after-tax our expected estimated The to significantly benefit periods. ongoing decrease on profitability is implementation. impact ratios to provision compared million. from to leverage initially a implementation, equity by $XXX will $XXX increase of reduced expense After This to one day prior is million

new primarily The our the driven will ratios, loans are as reserved provision be loan. pressure will is of which temporarily change life a originated, the of profitability expected the which the rebuild of XXXX increased to be in XXXX. capital in for quickly that education by result will This amount

any not our change capital we philosophy. do result, return a As to see

As line $X broadly capital our share Jack expect approved Board be XXXX mentioned, a XXXX. in to multi-year and billion we buyback with program our return

of X, Slide increase in the increasing increased X.XXx. The quarter result million $XXX share second as of repurchases activity third financial a in first a from while began activity. share We TNA repurchase our the quarter's to occurred our a that highlights turn Let's XX% the financing ratio outlook. represent confidence activity which maintaining in our quarter the

issued ABS of optimize In XXXX for our the March In ABS. we million we private the existing million $X unsecured Earlier ABS also two legacy warehouse order notice of also billion in for term we transactions $XXX facilities. call make-whole and issued week, this in term Private $XXX debt. a quarter, FFELP quarter, to call capacity education Education of

have Some as of process of to full approximately billion. debt redemption. reduce you cause being balance our $X.X seen expected This may is a DTCC incorrectly unsecured by total this This outstanding in reported to corrected. the

accounting of in quarter the to loss this expect million. generate $XX fourth an We approximately

Moving to Slide X.

settlement year, and we our model. cash assumptions the of As a flow disclosed hired agreement part proxy earlier third-party review this to

has cash that of to completed our in their party includes quarterly review, update. flow enhancements and our quarter third analysis result as The regular a third addition forecast

the We outlined Moving XXXX of the beginning focused on remain XX. targets to the Slide at year.

the from earnings first we per announced from XXXX exceptional are expense. As guidance guidance to and nine of our million our to original a the a fourth-quarter call guidance performance recently of result share make-whole This $X.XX includes billion. regulatory XX% the loss $X.XX the raising core a $X range through represents of $XX restructuring and excluding increase estimated months,

third to the core with Finally, of million to to or per to goodwill quarter. intangible income and XX. $XXX quarter or and are summary, In exceed let's per recorded income results the accounting the company between and positions $X.XX fourth marks $X.XX look finish to results Slide million earnings share share on entire and GAAP continue in our across quarter third a the compared for GAAP we strong of assets. we of The the derivative GAAP differences forward net expectations XXXX. $XXX turn related net We

will I the questions. call now for open

ready are questions. for we Pauley,

And your first Instructions] line [Operator the with from KBW. of Sanjay question comes Sakhrani

is talk the just I chance secondly, wondering to over mentioned it And if their Thanks. talk should year? return really of to movements you we driven I then that plays Chris, guidance year and sure impacted next out how -- the Jack. one CECL. make the for what got by impacts? that impacts to upgrade, how course a related two going Good wanted thoughts and agencies much were? basis was and the Chris, interest you isn't Thanks. for had into basis just and on how the think by morning. understand rate I could the capital the Just you’ve of the that about you about EPS rating

for start your So on question and I will thanks the second with questions. first

with rating talks have agencies. We the

We announce is these have as of they in our Obviously, were preliminary this comfort well, a us which to number preliminary today, line give reviewed but results. with views our generally numbers. as

have did therefore we and So this insight quarter. from that I’ve shared input and them

On third the the in last the benefit quarter was the said prime from of our versus received quarter question, end at the benefit during rate quarter. the interest full obviously, we there a -- of which the assets,

big -- isn't a quarter. are in We benefit projection fourth the for our

unclear is December, -- we’re third is through and of say but at that's see rate We if -- a probably or most cut October I'd that -- our point has the quarter. December. to It clearly in expectation in rate one benefit that cut going the come point, this at at more it this on are

in-school strategies elaborate the great. disappointment a little maybe you bit then, just to Okay, on tackle Thanks. And there. loan about could the maybe that? Could Jack, talk you growth

Sure.

states. of one state we interest during to kind the the to period product student developed that for or during in-school similar capitalize of what the items on in-school And loans. differ that we one a is process for So features accounts one in plan the the to that do the of the inability of had certain we encountered and our things loan approach refi use that licensing

conditions that And different for lenders that so and side we of what equation. as terms on they that our recommending differ. fairly or were co-borrower would were borrower of residing significant was offering created in and meant the a in And promoting state schools just that obstacle depending the the was in

I process, of customers strong that a through the the saw some For did our of very move unique that think features we we acceptance offered.

we I that invite deploy. And that were of one think quicker things as able said, we the high-quality I how signing payments example, -- a while to For value of particularly of process, willingness saw was the and our into cosigner both to the was that with And in-school. customers rate an the making they can that the check make satisfied in-school. understanding payments they’re in customer acceptance a an and -- -- I

our could upon I think risk be opportunity allow partner us year, will address the an the can single terms bank graduation. a How marketplace it conditions they would the see borrowers across -- in was where working loans have with We students that factors have decrease particularly set marketplace. customers offer that? to important next basically after the that to and of we which nationally to a do and refinance we

Okay, great.

you. Thank

of line Lee with Our from Omega Cooperman question Office. comes Family the

you very Appreciate it. Thank much.

$X guess something share, value, forma our should on impact which book earnings the You like assume what pro but disclosed Because the bit. it is the I lift won our CECL our a quite a impact I we on is earnings?

that earned a sustainable? Would say number two, in So that that being you this will you as number one. is Question view question now XX% number or just be over you reasonably earning equity. we're

And is movement strange but it accounting policy first of the existed adjust a -- of described estimates. the a what policy because it's the it right? at only that the not. CECL equity estimates you're that, of life them and adjusts the geography, lifecycle CECL end loan were would question, over loan. cycle based be on regardless losses, can the whether best the So really accounting all be a in did We value, book very of correct the is, is -- as expect into same It would takes in the that the balances of moves earnings loan on or

just geographical really there. it's change temporary So a

eliminating with adoption, you if -- In CECL get you’re one would you you of not -- estimates making at be for the of course that loan provisions terms be remaining right changes on the happens your earnings, on existing the of the future is would CECL portfolio life.

provision decline see over timeframe. -- loan for and loss to the loss adjustments loan estimates, of have So materially the to charges life expect beyond. make expense we book a we life you the and of you'll or loans we only should XXXX course do is full would provision to The purchase loans loss any that of loans, as that loan in

-- these go this obviously, to is of terms something what hope with CECL we In number think return we’re on is equity, will equity we this be and -- targeting that to able down. achieve, continue book to

actually ironically So lease we as our move into XXXX. will rise

more. The Right. selling forma pro probably generally or XX%, -- XX% book are knowledge or something that. that like financials, for in equity of maybe selling on are We're the Xx book companies X.X on my

insight overhang, for the to can't as Elizabeth the legal So resolution concerns I achieve we from stems clarity Warren, assume overhang forgetting because this us? Elizabeth think that any of some future moment legal might the The you yet. for forecast and of the the Warren when

is in that agree -- a I process do us. significant is legal is process. overhang calls that litigation an think as not prior the the grinding I've This slow is I for a -- issue civil mentioned a

stage We year the discovery the in and fact expert we that end up have process court sets to completed a then date setting process, there. next for early discovery expect

without which note an any this customer of having to here call, without to or was made important is it actually XX can that lawsuit was allegation extensive really filed, in filed witnesses think discovery to this their the anyone the we that identified from phone the so claims things -- has kind steering. process, the of listening of One disclosed is they supporting place. see is supposedly as The meaning when at And available is listening point. any publicly CFPB fact calls first phone customer as

In repayment did Navient income have driven information no, fact, provide on all said, plans. me

are exist, are And this confident So continues are allegations which reason because but case we to fighting baseless. defense. the this was we why is case, unfortunate it's that brought reasons for political the in our this

reckless, question Right. theoretical One practical. probably necessarily

back flat would more to for What the looking buying for dividend been level repurchase? money suggest, you rather dividend than necessary stock-price stock. of would be consistent you and returning you think have be keeping would We a at

high-class think issue, going somewhere problem to of but handle be of at love something portfolio enterprise function cash ongoing look the franchise a a luxury we that the legacy I’d it's the That's off and -- flows then, here, value to the I course, have that’s that expected the When -- two on the begins stock-price. the with the business of of coming addressing business activities. of value look,

going Got you're you. to thought All right. say that. I

doing very responses. it comes. I much when job for you a fine Thank very appreciate You’re it. your

Lee. you, Thank

the comes John And next with Jefferies. your line question from of Hecht

about it. guys. John little -- bit very or you Jack, Thanks mean, a I or talked maybe much, did the Chris

talked part latter influences talked thinking basis variety lower also year the different through but the risk, rates you rates, a volumes. next You about but of about the impact influences, year, of just have of this it

I think forth. the in and if for the so volumes refi opportunity market set

So we talk the us think declining maybe several over can or through rate want environment? to remind a all elements about just us you about we of think when quarters next the

Sure.

So couple of points a there.

environment, interest the increased we and in to fourth product it lower has into clearly the refi see continue the quarter. On that rate going

lower into of We are spreads a the today at stay XXXX rates mentioned attractive that they’re. continue and lender the we're off capturing very so in Jack as rates product that and returns should product, where spread decline as even

the the we there's declining are actually rate but of anticipation biggest of rates, beneficiaries, where where an places One declined. zone

of depending prime to the portfolio there next assets is rates mismatch to rest year the lower cuts we be continued year we'll and our pegged prime are than with that that rate LIBOR and the But a where funded reset. so given LIBOR, and prime on be continue through this And have. watching into

in forecast, models could our well. rate as upside but if are that environment cuts be expected, than there continue. should So more that clearly and it It our is continues,

loans education very or or then, you’re for any -- Any And in private us? obviously, can us light borrower? seeing there refinance in shed you geographical Okay. of trends any give you characteristics that the Can strong momentum can in you type quarter. the is

have in borrowers, or loan workplace double in their are range. they is in low FICO scores loan refi six be the balances between of credit payments our the low have typically and to the their look are successfully target audience of to been tend education marketed making or has -- X into and loans. larger balances real The result or making that somewhere a the So are this high experience X and been on record their balance graduate years. by date. the at for in characteristics primarily losses borne payments real the well extremely digits both repayment product who this demonstrated the actual high is the debt five undergraduate figures students in who the XXXs. have that. successfully income six-figure figures, and case track means when customers out on completed degrees. to you have out But is That as They of typically with portfolio And Their

way is in Chris all mentioned interest loans have into seeing -- margins up federal the coupons has it's and are both options ability, student up been better with refinancing, As year-to-date rate though environment there, the the the space, typically customers sevens. I that. the the loan it's and XX% in high-fives better also the the associated that particularly quality mentioned, up year's even characteristics this volume

them terms them the with push in And and kind their and interest and dollars payments programs is really indirect to so faster. ability give we're expense loans offer able that save of This the repay can conditions term. extend to which of thousands to federal are designed out contrast

seeing with cash flow and or even better free I volumes the stable we increased are to even on etcetera. credit think it's metrics important emphasize FICO

So year on really it's for refinance a us great been the side.

timing can ask million of great the that's if stage what Phase buyback that question. think should And that about? one one color. Jack, Well, -- I quick was Great. $XXX we the of

be end that'll share through to that through So XXXX. the the of amount repurchases return we expect

Perfect. much. Thank you very

Hammond question line next comes your And from of of Bank the with Mark America.

and as insight cycles assumed Chris can Joe. Hi, any is give On economic type there? Thanks. Jack, to CECL, you what of

we've So etcetera multi-economic you scenarios you the that then those and three CECL scenarios, the the be significant number you so to options model are is scenarios an scenarios, and those a you stable, deterioration, CECL require three of different wait outcome. scenarios actually of chosen drive mix model can to drive can use chose recession choose. But

is it so analysis. a And multi-variable

stable deterioration/recession in of that number You’re can are we blending general, to would I you their models regard. some waiting economic scenarios. I sort and tell different no would people What in a be and think most in assuming of

the just at quickly net still tangible Thanks. be Is what X.Xx? the And statements in is first generally then estimated you’re asset also shared CECL, when CECL the that your GAAP above regarding to targeting X.Xx above or first the was end ratio remaining ballpark quarter. of

Yes.

What debt, that paying in and attention utilizing our the last is constraints structure ratios is unsecured from sheet. able agency a risk-adjusted What and ballpark. we’re capital in our and highlight with like balance to efficient facing is year clearly been our down being assets pay it capital capital also we’re other we’ve rating assets optimize things the balance so and on to our sheet because over the generally more perspective future So models.

fourth to of degree on to less so that analysis TNA look capital plans. risk-adjusted quarter. influence capital talk allocation the as towards And our in And we some we'll more the management capital an drive ratio about is becoming

one some best the just can And loans, collateral seasoning, loans me, sheet, however you terms billion can them. you it's refi balance $X.X unencumbered the of of private for me can describe is, then on great. the in whether represent Okay, loans for last in-school however you or

portfolio achieve very in leverage it's credit and if in needed could against, it's to clearly it seasoned and portfolio that our stats. loans we we of is the Most private

credit to to leverage is in just it we or have that so some against the And private future. unencumbered create monetize option the

it. Thanks, Chris, Joe. appreciate and I Jack

Welcome.

you. Thank

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

thanks. had this you follow-up you can that the on year what we’ve a you originations. loan any, impact, rallying had impact the -- offer? it origination? has can that I had as rates the have private boost seen your demand Yes, And incentive the is and What ability on on seen generate question rate also spreads to on if

Sure.

as we're So a said, spread Chris lender.

So what we environment, are the our cost and looking we for is able less loan funds. about in generate the the said, more and absolute yield of both. between And yield as on about the difference this to we're

well are quality metrics seeing loans on the no as is credit There's a originated sparks as demand. rate question interest more on the environment that we loans. lower We higher-quality, higher-margin the year-to-date both

opportunity of repayment and X% borrowers or and in-school in greater I coming interest it's X% in thousands interest of refi having convert what driver the out as take a demand a the loan said, rate is -- today being it just awareness of and for X% interest a the in as we a the into the of largest loan X% rate dollars opportunity to space. of I the expense. somewhere saving, or period status X% product think really see But in

at it look really it a we don't basis, an absolute rate on we on at spread look So basis.

that this has of industry year, throughout much becoming half last would the that and year. entire in continued the started rational I What highlight rationality starting second more probably

with. pricing any which hasn't been has looking gain from there rationality pleased people continued etcetera, that to perspective very a we’ve been share So

in just to, more at or Okay. exceeded And volumes are getting that? the other year. marketing, of there to that more are this your you or you environment expectations have your alluded part drivers effective due rational Is

of customized participate the it's But is to our solution environment want and product are would to origination also obligations very a their for they I process features in meet select evolve marketing think easy all designed the offering consumers strategies effectively pay They the of make demand that that rate payment of to and monthly based and for is the kind loan there is is here customer. in. balance a a I payment provide down objectives. the really and to -- to and get Certainly the better. get meet that factor. above. each budget to continue process our underwriting to the approach allows are that add term their and our that on

really it's those us. volume and of are So the that combination factors demand for driving

got what And drove the just then the during it. income asset in recovery Okay, quarter? finally, strength

So year of the of placement XX and large received a we last a months, half, from in the Department accounts Education.

some We options performance Department And payment that timeframe received have two terms increased to a also signed available outperformed on We ability and customers, our over the that them to so recoveries. competition federal of them connect importantly, afford they activity them that. can the is what it was different they get and -- with do we side, portfolio new on placement of plan guarantors is obligations basically into in old look relationship FFELP demonstrate on XX% driving the the that educate back equation. the student at we example best, as placements the loan the book more an in that Ed entities side by their and satisfy of in which

Okay, great. Thank you.

welcome. You’re

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

here. that’s guys. just for would you’ve and on efficiency this going the what's on love static Jack, my actions slide to use financing increase want focus dynamic taking into putting reliability with questions in to Hey, a these to these basis, Thanks word component. of X what the on on I clearly morning. actions understand sensitivity swaps place curious do your or basis would on not, a all NIM? then And I XXXX? if

a them. publish our mute liability we muted been our see can the have even sensitivities, rate they We’ve hedging but return able programs we’ve sensitivity interest we’ve of couple that’s on and to actually and the interest perspective. -- last the story those huge So hedging activities sensitivity. think that able muted and you further we the benefit rate been from to years over sensitivity what a generate to and

I versus things question it we financing dynamic the I side, way. static could this about think term. about perspective. Your on We on a rate, think think financing from think two answer we Obviously, about

always in biggest are we a lot financing. Financing our a focus reduce It's company. for on on. something rate We the looking is cost to ways

And do them call, We’ve them using and what really over just we to debt. at had securitizations we've those couple lower pursue find cost on-balance of a banks X opportunities the trust bit years and be cost things term finance us basis to to and to been approach lower put points. is generally so deals savings aggressively like a able create last asset take points for do can to We or the assets want can us basis XXX into that to sheet about repackage facilities. unsecured

said attractive. have you more So, term high the yield then it's in very basis But clearly you market, don't XXX I about the which like have is points expensive.

really do been around add to financing with and assets So, term and the just to our our get to our pleased know perspective, I our cost efficient we structure eye much it. we've more but ability improve you cost that want optimize keep Jack our anything? sensitivity don't on capital of very

the tapping costs. on just It's the liquidity into for are innovation, profile. risk additional add, we like rate solutions not risk that or company. I are not our lowering changing interest taking not would I the the here mean, just They’re

it. just enhance a rate expect in lower these where that? or little I'm environment your things bit shifting to floating go by if strategies funding going more to wondering actually potentially Got sensitivity to rates we an

dealt liability think costs a it's our I is asset in of No, that financing we lines that capture is kind and sort just float. that mix along of

cost -- its really our look think, optimize to and So, because this ultimate you I the have just flow liabilities what generally. assets we

Terrific.

you, Okay, great. Thank guys.

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

Thanks, have actually guys. questions and been Most answered. my of asked

what likely Jack, a and various talk and little about contract thought, we're I the Although the more just pieces? little could bit elements to hear bit about, a renewal you when about

contract those intent has been this an component Clearly Yes, the so have of and go where in couple responses parts submitted. moving there's next the department a is space. solicited signaled generation to

We are now waiting award.

award that an is take to time even implementation. going for expectation Our it's with

have at haven't seen with contracts current December specific the this intent an we in Ed are but major in proposals this They those, actually servicers Department set stage of the game. expire that So, to have the year. the extend of the signaled to

for this and less the As the we we service an today. for total the accounts million the of said revenue. job for than for on contract department but X.X represents we contract X% I more -- Ed side think outstanding of our and us of importantly entire the do this is Department important an customers, Certainly

call about going you've you. the of balance Then done a finance talked couple billion $X tapping of you're from of Chris, Got really you parts Have sheet. various how a of maturity? the XXXX on follow-ups. kind the the great job cash to

Well, what high I We say use. don't is need we yield. to need don't issue to

make-whole billion only found to for the and the well. additional like $X we strong for raise as So XXXX incredibly cash in position an we options call but feel not we're

Got you. That’s …

-- will talk what call Moshe, the about talk in will it fourth We we've about quarter executed. we

I originations mean, you've the expense the kind a more of general loan expenses refi private in because side. kind just the fee on And it. then of of had little on better business the based lastly, Got results

forward how that little acquisition that refi in how maybe are a behaving bit market. talk costs you about Just just see going and about

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persisted you the that's think stepped you So volumes? even up as

Yes.

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You're welcome.

Coffey with And question your from Wedbush. comes next Henry

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Thank Great. much. you very

with of Point. question Ryan And the Bill Compass your comes from line next

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question the comes from next Your Peter Troisi of Barclays. with line

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Thank you.

And this concludes the the of Q&A portion call.

back now Fisher go for to Mr. closing will We remarks.

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today’s gentlemen, Thank this and participation. for you conference. concludes you. Ladies Thank your

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