Navient (NAVI) 21 Oct 202020 Q3 Earnings call transcript

Thank you for standing by and welcome to Navient’s Third Quarter 2020 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. [Operator Instructions]. Thank you. Mr. begin. may you Rutledge, Nathan

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

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

include, and are the magnitude, but to, and COVID-XX severity, the factors uncertainties with duration related limited risks of and the the pandemic not Navient, For impact. associated economic these

policies put reporting affected restrictions to financial reported controls from travel and maintain financial internal that previously, reporting negatively procedures. and not disclosure and have our systems, been home controls have our our place books over work the or close As ability in

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

interest for Navient. joining Nathan. Good you, morning, Thank for Thank you in us and today your everybody.

already. forward want even of to important Fisher the ability closely. Morris, and of earnings also those look our in I knowledge I'm I and commitment And quarter, I'm his to challenging on Relations, you CFO. wealth to our us And help role. stepping working in And Ted Joe value. Congratulations, the and his CFO. acknowledge helping I'd comments maintaining first he this small gap confident for more role I Before his thank brings have with know as and business to Ted Joe. outstanding welcome to a bridged my an deliver Joe Controller, was succeed. up Thanks see on like Joe Investor call Joe take with his who no and in for of this who as to begin to excited it you to This as Acting to him did Controller. out. task responsibilities while worked

communities in also our and to challenging to their and assist and team In proud of in in kept I'm our contact even unemployment of COVID our residents help other payroll. teammates deployed how team extremely apply things. to benefits, thousands we environment for We've as commitment. this and continues continues challenges meet and tracing. receive so, While model this borrowers significant pandemic, challenges, deliver we the continue of business business model quarter's our economic their pandemic Once demonstrate team individual the customers of helped clients. the to and create relief have address again, our resiliency, results. needs of adaptability to our this payment commitment and millions continues outstanding to with and results added thousands doing and employed our safe we Throughout perform

and quarter plan. they exceeded this results outstanding, were our Our

continued contributed words, return for environment, rate a strong earnings core focus adjusted and a other earnings strong we over efficiency. per driven the core on to every and delivered credit the our XX% results. substantial on operating year For our results quarter, in products, the XX% were business favorable of business The equity performance, demand quarter active ago interest improving processing credit quarter. our rose a for the increasing to quarter's $X.XX, area share In demand of by significant solutions,

in more to rate spreads. benefit and ago quarter $XX Net net net income $X million this to refi Xst a over the the interest to will the eliminated highlights. million provide The increase from favorable in floor will of continued $XX Joe quarter, And July by funding that fell details only environment shortly, income the reset While second on increase interest improving also quarter. I year start interest income some despite in originations the quarter. on income compared interest million floor contributed with the

net than funding the year beginning interest execution, our margin provided original we Given loans expect FFELP and to the of both private year. at guidance the rate for full and current environment greater be the

of millions pandemic, onset relief provided With the significant to payment borrowers. of we the

economic majority the borrowers recover, situation and requests As repayment. for forbearances began of fell to to returned successfully the

XX.X% of XX.X% For both of our at a of quarter peak forbearance example, decreased a rates at usage portfolios and forbearance in pre-COVID forbearance are quarter X% our year-to-date. to loan private The to FFELP end. consistent and did reduce from private delinquencies both our levels. in from in portfolio peak rates FFELP end, and In initial portfolios, portfolio XX.X% with defaults

As borrowers reserves very loan ability necessary. absorb if the delinquency significant returned have to low, loss our rates provide and substantial losses private repayment, remained to loan

third expected mid-teen The products, -- our the quarter. were disbursements, our This, segment, to lower of higher relaunched kept increase this next Refi to but totaled for the and billion originations are marketing quarter. ROE expect than reserves in originations very a set in refi credit and are X.X as fund year, students the in-school last demand attractive spreads our the $XX second virtual was quarter this fewer enrolled in targets. and through with saw plan. year, planned, and academic commitments through year demand with In our loan with schools we we new in programs totaled for along $XX at characteristics for underwriting, delinquencies disbursed strong Including operated loan the low conservative as line our many than and to end we strong million, Consumer million While loans second losses. with cover adequate defaults environment. substantial Lending

saw record revenue expected quarter by provide is and of driven EBITDA segment of This year-end. continued healthcare and needed residents. was with this our of ability continue much slow an business the the Revenue and in XX%. BPS assist services to transportation recovery through and in but EBITDA strong to performance their Our to states segment to margin

efficiency to to efforts operating strong our results. Our also our improve contributed

Operating Even top At priority customer core improved the work ratio improve the to time, operating as we're remains for X,XXX demand, and growing our continuing hired technology. $XX X% meet efficiency same million a to and us. leveraging new we efficiency XX% teammates in quarter. fell operating expense experience total our to

AI-powered launched online government clients. creating assistant and easier we've example, channels do make video it are to for constituents For an our with business to

continue shareholders ratios, million repurchase $XX to while of our the quarter strengthen outstanding this to we capital shares. including returning quarter, our in the Finally, X% of

originate outlook strength our in leverage a ability a earnings will business of operating high-quality of strong of excess our to and loan clear position, to loans. Every profile return business our to skills deliver challenging capital efficiency It shareholders. our outstanding attractive strong processing assist area capital we reflects our the credit demonstration continue business to model, increasing our of to the our to clients results. our is to very Given win and ability and ability and contributed this quarter's It environment. also our portfolio, new business

maintaining our Our earnings strength. maintain to dividend position financial a and our amortizing also capital And provide support while the operational surplus resources released business, along substantial the investors. to with capital from portfolios substantial legacy and this of loan all return

environment Joe? and your call has new pleased expect full interest between year. look to and performance I'm to our core listening of over acknowledge today increasing services, I a in while and juggling Thank for teammates, now their work arrangements new for the I and Adjusting and in results. the not clients. this to to the family to to We increase this I another our also your CFO, continue forward later very would strong forecast $X.XX quarter's uncertain my new in and earnings to customers questions the commitment been $X.XX supporting like turn in appreciate summary our you. to easy. needs Joe, call.

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

X, During my the and section. $X.XX XXXX call third Investors the ratio liquidity XX%, for can by on Slide we and achieved quarter on $X.X impacted BPS will position or quarter, of highlights shares, refi repurchased losses tangible the XX%, the record the results by operating referencing to derivative core reduced borrowers prepared related X% Starting business. strong expenses and increased to $XX EPS after provided capital be additional continued of COVID-XX, impact margins the million remarks, which on presentation pandemic EBITDA to I delivered of found will relief immediate options our negative X.X% from our private maintained $X.XX, to key of provide accounting. position, our EPS color payment the our I X.X% cumulative review of billion and efficiency COVID-XX of earnings GAAP mark-to-market loans, be ratio and the equity adjusted excluding website adjusted common company's in originated on improved

in portfolio, to our segment FFELP grant related On with continue reporting, beginning to both Federal those Education disaster on need. move to Loans forbearance Let’s Slide private X. and we

to to quarter. during decline XX.X% As occurred the borrowers the we've a forbearance towards third that transition second back usage quarter, from the XX.X% at the begin rates seen of end payment, of peak down

outlook interest on improved While margin unhedged prior to higher to income which the are net $X year. income operating margin to our along in points continue basis rates significant with million quarter. to contributed interest favorable a interest increase In the a to the expenses result, high to the ago from full to environment in be XX from points. the the the interest point as overall of mid in year portfolio by increase floor for net unhedged expectations increase year should XX net compared contributed lower This we net million points quarter, from The continues driven our XX% portfolio. the interest year, year. resulted increasing margin in income a FFELP basis segment's the floor The in net current are positively the XX amortize, largely impact XXX And income was net interest interest basis basis $XXX the net to raising to quarter range. we the prior margin The rate experiencing. led interest margin prior

turn Consumer Lending to Slide let's Now and segment. X our

second end. million quarter or declined to X.X% billion at at Forbearance quarter, $XXX and has the usage peaked XX.X% during $X.X or

additional any can you the requested page, to have successfully trajectory payment forbearance, forbearance options that of following available borrowers relief have the and of On see them. usage exited not

Our forbearance XX trends declined charge-off to rate fell borrowers XX% X.X%, XX% are delinquency by we're and The seeing encouraging. early the rate points. exit to basis as

forbearance our made loan of that XX% have customers refinance example, For have education a exited payment.

margin continue the quarter. Based lows well-seasoned forbearance, education Net borrowers a confident from with legacy million and charge-offs we quality of feel to in seen an loans interest transition we expectations, adequately of XXX. net quarter. the $XX modifications. from and beginning and portfolio. in is the billion loan these the of credit and $XXX driven high Refinance in As our fourth stability this average $X.X we related a of natural our newly of interest increase the XXX point, related are amortization will to than to decline Loan the associated income margin, Education largely significant net lower we with expect of The the originated quarter the that points The Private to provision absent of late-stage balance, million our in in delinquencies of primarily economy better increase both offsetting a combined reserved due interest loans was out was delinquencies interest The given basis to-date, in our FICO historic on reserve by lower performance portfolio. have deterioration these

basis points late-stage increased XXX full delinquencies assumes year related updated to XXX an margin net of loan interest build interest modifications. to points reserve basis and guidance Our

addition, Slide million. activity. saw quarter, In and our to growing results year-over-year, and expenses average the benefits Slide infrastructure while These In to in operating we to states support record ability rapidly a contact review balances leverage the XX% increase $XXX and unemployment to respond technology Processing our X XX, segment. order and declined providing to EBITDA financing income Business new XX% to to contributed to the our of highlights existing services. prior total increasing Continue of year Turn tracing which in third our margins our by revenue in XX%. opportunities from net

the $X.X of refi term private billion education third quarter, issued During we ABS.

points billion see as oversubscribed The private to education attractive second XXth, On of to loans. of the our by allowed $X.X continue demand have our priced year. October is quarter $X.X in assets high-quality we XX X.X million of our times. ABS $X.X $X.X We go primary we end, and This and year-to-date tighter securitized of take nearly FFELP of FFELP with of investor for billion loans book us to pricing private was deal billion we than billion for billion additional last transaction. in loans was FFELP capacity At basis along funding that loans which $XXX had facilities $X.X education for FFELP cash. our liquidity,

ended negative equity tangible we ratio very X% $XXX of to X% cumulative quarter, acquired shares for related $X.XX. accounting outstanding We in with quarter the a expectations. an strong average the the in in mark-to-market liquidity The of declined million we million to quarter As with quarter position. In and line by price an or losses of X.X derivative ended X.X%. shares adjusted the result, a the

contracts mark-to-market will Excluding reverse temporary to ratio equity is mature, that our adjusted tangible zero X.X%. as these losses

with share win results our GAAP million GAAP BPS on $XXX quarter in million contracts. of share or benefited third to per existing favorable We from Turning net net to our of results or Slide new compared summary, the recorded interest environment rate this infrastructure XX. per leverage $X.XX to $X.XX In $XXX of income quarter and third quarter a strong the XXXX. income ability

guidance credit $X.XX per can early per to feel deliver between of with the consistent $X.XX EPS range that core $X.XX that and exceed Assuming confident $X remains share performance results, EPS we original and we our share. core

to of call times. navigate presented proud the and all unique over to many turn now these over environment. would Ted, in my responded with call new appreciation role In team entire I a the how express me that team work hard innovative year my in finance and I help and to turn we effort I Navient extremely supporting solutions Before like to and of questions, for unprecedented customers to them our have the the will has I'm current clients challenges, to their questions.

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

-- the your Let Joe, you NIM congratulate of first the to role. the the and that guidance me can new little think of how for we be thanks more you, rest into for XXXX? kind about on the the on again, But that strength? of bit Can And drivers you should year. talk a about

income a to -- are environment. rate are federal rate fixed spread. a our benefit there So from the to floor continues of in we interest income contributor annual the favorable to portfolio, continuing although, floor our And couple reset be declined, the material

has strong to been investor demand, as new transactions at our of anticipated. that's our us cost indicated on than plans Joe with execute equation As spreads met tighter allowed had original of funding and the the or well, funds -- side very

our that's and to side, also well private the And between On through programs. accounting, as and aside a And well and equation, fewer -- we're loans rate needing coverage which delinquent there required -- delinquent, benefiting are lastly, getting of seeing for as aspect the that. from modification on then of prime the spread as as interest interest private CECL set LIBOR. to a the are accrued interest those loan we're the a borrowers less accounts, we unpaid loans benefit fewer unique side favorable as on accrued contributor relief we're

strong, also highlighted. then you the just quite could you been get And we think sense I there different color it. revenue has going temporary, the be unpack Can what's us some the a of more forward? what kind and of give permanent pieces run and better on more Got so BPS what's rate

Right.

have contract been related fourth the that continuing or would of quarter is work in work I significant third with call, to, the what the amount into a less unemployment we not or So Ideally, and doing aspects. tracing. in and because for long-term Right contracts roll that COVID doing tend quarterly insurance monthly be states. those now, there'll to demand work we're contact project

the of -- individual states. transportation. activities now, in time, healthcare we're to next anticipating. and majority end -- in continue That But the seeing or return roll as At can see change anticipating fourth not in we're of revenue we're the it demand our the a that's stands year. quarter and clients, right other So same what that the and to the upon of we're off into each depending at transactional beginning particularly

as And those stable, up -- and so businesses economic we to those should that the that pick recovery more is normal to return as becomes businesses begin something well. see

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

for Joe, taking And congratulations, Great. our and questions. thanks

the The about question first capital. -- was I basically had

You started made you and X again. of went said a bit about than months that's what talk good you progress, had ago. but you better I repurchasing kind mean, stock -- little Could

So maybe thinking equity give the background bit over -- future? for the you're targeting? buyback in as of us that a you're of And what little in what that now terms ratios to the means

Sure.

way So in capital guidance debt for to what of tangible terms agencies this out think looking remainder other have meet for think of share we're equity obviously, terms Moshe, the that set in it remainder of the hurdles ratios buybacks for of given our we returns our rating investors. adjusted is, to of the year year, and and we those we when the about we've think and X%. I beyond, And about the X.X%

in where as year, as And our rating look say more beyond an to pace will those any repurchases excess targeted we're take we a the the going capital advantage we levels that, be there's stronger to come form the levels this So we of more to above ratios are. into at of think where of position ratios, to capital really I going you're think it hand, can. what we when that opportunistic in opportunities Obviously, normalized to even of I those. what enter additional have agencies, XXXX, would build I specifically and to it's much we'll in of be we of we as have if any seeing done. But down extent return share would terms we

about you. to changes, but you're somewhat stack related, kind a Could debt to huge continuing And move lower continuing -- follow-up, you of as looking more talk not kind Got -- even. maybe of allow your that and sheet? would kind see? optimize balance Are you the steps do the any opportunities to you current any of side opportunities there in of take to that the anything environment to right-hand

particularly than alternative. ABS I mean, those strong. a financing And debt down because a as are at XXX the the -- that have funding into hope. we've result borrowing terms the against enter in the really that, taking of that been just to has principally, unsecured I through as in the repurchase expected. sheet, structure there, unsecured we've traditional them bring pretty couple marketplace advantage not bring outstanding costs, I basis I -- But of one kind opportunity but mix traditional restructuring been would XXX and us building what to periodically our our of easy rates difficult for So has side done years down maturities points those that's basis in faster of points, has would demand think have would significant been would otherwise the it's which to change And been that the balance isn't debt process for been the of of last vehicles, trusts over part balances some unsecured leveraging and able as that securitization equity than up been of but cheaper think

We into debt coming this XXXX. then we maturing, have quarter of a significant up have amount and

opportunity. have more transactions would we find able that available open have. I have give that would to us than in some But debt will hoped So of been we market

slides, me. about we sustained business What's the be to Why for X you going last XX%. showed that just what about The you you then And don't at how think plan, expenses? servicing ratio with were guidance XX% What's process level? here talking you. your that in should And efficiency year-to-date, that's on driver? I the guess, think the about revenues? it that? Got Is

in that high a on on is focused terms especially the targets put BPS from business mid absolutely hitting we remain that touched ratios. hitting teens. that segment, the the in And We obviously, on standpoint, focused out, operating we're that you margin of efficiency to as the

little our down within this but from a targeted range. So certainly, quarter,

to well to amortizes look other obviously, So forward, competitors, But I and of a pace time. the ratio. we us them feel that companies. across should confident mean, or and the look exceed efficiency our we not against portfolio better that target we or and you maintain focus from those a we're as positive, very ratio target, I on I achieve end levels, on this as say, over at think compares have on that something that looking to that's be XX% exceed go

question Your the Cyganovich line comes of Arren of Citi. next from

Joe. the on luck role. And your based guidance. The I forecasted, in guess, the Pell drop fourth for Congrats, new quarter the in that's good

reserve interest the driving that's NIM assume Pell that the what's there. I build. come mentioned You down to

low about going you comment of Is driving a year? expecting delinquencies in headwind CECL delinquencies. the of this be this because into to next other Are to rise XXXX? The benefit bit a

Yes.

we and ultimately, defaulted that use who status. And when and question those went in many pretty granted no there's delinquent XXXX delinquencies forbearance, defaults a pushed disaster were into wide of into have get XXXX. So customers might forbearance

private loan at are view, our expected we they're this as the the in. the year 'XX we interest what they're to calendar below the forbearance moving performance when just rates the So coming out portfolio of disappear. entering better look losses, than XXXX. had and in don't we expected. calendar the is provision would would expense beginning They said, the from those substantially for rates, charge-off year Those our of customers build, -- loans where And at what loss year, delinquencies repayment, in That more come have of year. those accrued that's as

keeps And is And that connect on those them loan them of one that real and year, to we that different attributes in where strategies borrowers track them see and and And find help our amortize that a spend be the successfully how been their I quite portfolio with so balances. can strive we'll servicing payment our use of portfolio in of we the -- watching trends. think, you helps hallmarks operation plan for. amortization has TDR last which even is we statistics, good over the something data

And the reserve Arren, well. just on as

institutions call, margin. As the the on for for XX-day interest reserves is net a mentioned Ted interest financial most the standard practice through that policy last

really look from from amount prior at to saw you going occur. as delinquencies. quarter occur that out would XX-day But see that to as can delinquency be build dollar not can it's how the the have our your you in all -- XX-day quarter, where forbearance, come as they delinquency next bucket. XX-days, XX-days you there's And on into It's build move you this some loans So quarter actually build XX-day declined. XX-day, if of and XX-days through buckets the

thinking to in What XXXX? so into I head the of Just are magnitude. magnitude headwind of around can get the we terms the try my

out that alone math an the -- to for what quarter. fourth I think if XXXX, just X.XX gave of the for backing mean would X.XX, of just that about guidance remainder impact you ‘XX from think the for this we the that

delinquencies you on XX XX. levels to delinquency as XX at you're could as, If are of closer impact, basis to the point basis see historic call point much that hit it, depending levels, level that I’d

XXX% essentially assuming you impact could XX, XX-days you're of what's in XX-days that on the into much end. through high of rolls if So to an see

mean just does going I next you Okay. that's then NAVI know we're appear years? on much it think this, you over do comment in a the can democratic for -- election. don't towards sweep headed if but potential the to What Got X it. And

focus by been particularly election debt. that. kind there We of with the population wide so finishing. think federal federal been loan I with But has much with not growing has modest and debt Well, I the borrowers in range less, and of equation, is this equation. true a would agree side challenges who this a $XX,XXX. all in -- of think borrow the of with are student we And during general And there's biggest acquired two-thirds balances, -- I've that on of debt student than with number primary all loan $XX,XXX of have whole the a you shared before, starting programs but debt debt borrowers not school happening, segments the struggling defaults less but as than the the relatively from who the of commentary high loan see that come less students received balances and who side

need. repeating and then some government the frontlines that relief most policymakers from with are itself years doing relief and there in where ways you're think some going relief in should we federal here. providing the have So that degree, not And had presents. prospects degree step challenges the more importantly, debt that, sure of and are to economic about because share means only earn and think better provide I those of families borrowing anything that, the over What good school. insights -- that on their making for to what understanding do we make to and road, to need that students making of help they helping the plans it is down financial to have better a consequences matched to programs fronts have And that sure those the it number as really that sure the to start are again a last very they conversations of X are the balance we've targeted be

line from Caintic of question Vincent the next of comes Stephens. Your

Joe, a promotion. well-deserved congratulations on

a So question first, student loan on just the trends originations. the and

and So how hybrid kind update guidance. your time to you it how range hit seems updated October different year quarter maybe because has is on to end somewhat the you so coming with trend people of the the understanding low far, this Any been third like this later? of as this just expect performing and

side -- So is this set seasonal. on we The is product so equation. of very in-school for the credit the haven't in demand that

in see disbursements again, school You and happening tend certifications and September being applications January. December, submitted July-August the then with the timeframe in to

definitely as year the seeing because we have paid. we're the are time already this and tuitions of at it's volume in have kids application Just enrolled prior been years, -- lower

it the we the -- for is to we going January. stand of have to at in how in schools -- plans for think the second I their here demand semester. that end possible they're see really operate yet higher But you release could October, as

until see so those changes about to don't to think visibility what's happen going And I until students semester. more plans next we're going and any have finalized, families become

helpful. That and Okay. makes sense

question, a Second the of kind follow-up on discussion. yield

of when funds continued there's are out go. understanding else there? NIM the already then and low can annual would there's else of change rates in cost anything good guidance of So some could also Is they about that had but And you kind reset. think improvements, -- some We thinking think XXXX, But about benchmark we as reserve there. as that build -- from I when benefit that there yield? the anything a the NIM, call the

obviously, think And that environment. the past remain Jack the we on are rates the shift on NIM that in And originate we're very loans pressure. additional as the the portfolio would is have continue will book, rate at FFELP mentioned ROEs. -- and highlight as private just would our cause that should mid-teens But we lower mix just rate in as than have we loans, targeting what seeing on item a interest beneficial other we're high what low. more I we're quality those legacy call, also I really a earlier interest on a refinance

Our comes Barrow, from next Hanley. question of line of Mark the Giambrone

there control think that you a the improve Great over power over is what find they're And time. then means announced congratulations. generally. be things a that just time? or sitting wonder of on you you And might that you great Wells if earnings portfolio out coming think potentially Joe, quarter, the progress guys business. that And acquire Fargo there there. could can would just chance I'm large curious, attractive, and I out

Thanks, Mark.

we that. see taking that the have be think is as in-school move think best in et could something And the in loans in-school their part we a us demand large and to But that origination they originate that from academic can long-term, of benefit believed like ways on for they the accounting be would were is CECL simply of certainly they here to I going our balance player the They the increasingly to portfolio into And to products become terms and in any was of we is do continue more a Wells loans would that may in I available opportunity sheet loan provisioning became reasons so consumer -- we participate that do of space. consideration. -- in other while of of the loans rules marketplace, combination expect a ownership, servicing, that future. of things And positive loan that have to always as bank one formidable for a to funding because So cetera. year, time any come as this we're eager be through find difficult. that

present opportunities So we'll themselves. be should looking they at those

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

I Joe, we into Congrats, year. just wanted deserved. guess expectations move NIM on to go back as well I next the

to I make want sure Just get it. completely

could rates you the private the you expectation sounds sustain it equal? to the student of we mid-XX XX sort like is else just to NIM, FFELP if where year? next that levels, NIM XX the all get XXs, For on level And then equal? else the drop I basis about that's stay basis loan out want make probably same, all points guys And points, I sure the that.

Yes.

guidance So had XXX you year, forecasting at look to of if beginning basis I points mean, basis the original the at right, points. been we our XXX

we points about this basis as that of I just you'll low what next based appropriate XXX or think range mix loans to way -- we on that's think end the an get end so and into we it year shift. of we south that think year, that add in the see that on is number as that, more And as

And FFELP?

Yes.

XXXX. and obviously, interest accurate. we rate absent that were I portfolio feel and interest into FFELP quarter the our in seeing on environment, what where the what statements for your seeing mean guidance think stability current that's the I predictability, we're of significant So the any, fourth the we're and changes environment rate comfortable of today really beyond in

fourth what very in to loans. the income -- than think and still just we the have up on annual about received where to closer XXXX more will how in certainly the FFELP for we equation principally been XXXX we're the wrapping the perform -- continue the get headwinds positive we earnings side company we'll look in and Sanjay, next reset at optimistic some side, there private add, on floor of provide -- the the back we benefits I January, on quarter to due But very year. as here, how guidance would

side wouldn't reserve a -- and materially on I not headwind the it here. is is of this certainly interest change private is So material outlook equation the that our something earnings headwind, a shouldn't while

And follow-up Wells a Great. Mark's opportunity. Fargo to just the then on question Okay.

think impact comment lawsuit this period, CFPB do to this a it it And to remains with threat side. on sort just of Obviously, there. sort there's in any pace regulatory lawsuit year, you have you lawsuit or we a your thinking other similar a New guys this? are states? poses the New specific Just was of And Jersey. on that's an Jersey follow-up of all on player There if originations is follow-on can enrollment maybe just lawsuits Could out just big the of still exited? this then given in where about

Yes.

classes for side and the originating not This in across is in were year, the of part was player private year federal the ‘XX loans country academic lending in-school both down on of Wells So for a a a an -- read a room because one in enrollments yesterday, major things. how on also high and you was somewhere means which I story of schools virtually, there significantly And dorms. no students fairly they're kinds or campus, us. on on equation, the not XXXX-XXXX think, I think board I like demand benefit for they're impact of are had down and because is many percentage Bloomberg paying students' suffering not completing

the cycle. place. say, favorable -- our hopefully, we flows be the -- we've that as the lending behind in and I for customers and terms take receive from strong normalized very hopefully logical continued we'll will utilize systems as origination to COVID So more next year, us reviews And loan of have and a academic will they just ease

And so experience a very, positive overall. customer very

supported circumstances. these obviously extremely support decision On that over without yesterday. circumstances New nothing consistently the they copycat or unfortunate Jersey lawsuit new evidence, Yes, the There's by has the the of a facts said here, is are have lawsuits we what be a by regulatory lawsuit because filed It's not been no it. equation. other CPB there defending file no a new side It years. a made we of But that facts new filed was to and any to will and allegations. states the

options. about including were fact, them income-driven opportunity number the by actually actual income-driven that supposedly witnesses everyone in think their has XX repayment lawsuit. A They of forbearance, submitted plans. came in all their we acknowledged evidence repayment has them in options, depositions that XX I to Navient CPB been see in of into enrolled repayment steered them who the up the tell with had did,

So federal were I else already government. something fraud they're how could steered have know they against if don't in Several committing the it. been into

are outlook that nothing it's in many these political in than statements would are dare cases. we I lawsuits have -- terms in filed very and So more confident been of these, our on say these

Your comes of [Operator Mark the of line question America. Hammond Bank next Instructions] from of

to Joe Nathan. and Congrats

On equity without to account adjustable of impact or the X.X% is X%, the mark-to-market? ratio, the derivative tangible with of target that cumulative

So that the impact. includes

at are that of mark X%. by this in we declined excluding quarter, So today, we're where you saw X.X%. the And

you that with in that a our expectations. gives sense we So were line

going of you gives sense it to how forward. back out a So that

of the for Got it. the cash didn't side quarter, I your Slide change second noticed the the third on FFELP the that far as to And really, expectations. that portfolio. XX, flow number as since then slide, quarter

to the on what's be So understand I flow -- are changed quarter-over-quarter assumptions going any in for the by to life? there wondering Or generated was the portfolio's changed of the trying there? for or cash rest expectations portfolio if FFELP just

Sure.

the curve. So quarter, yield forward as we do update every with obviously we

we that X/XX. take something account as that's So into of

third but we've done the the We other CPR in as also and -- our quarter, typically third quarters, in quarter, adjust in we mainly assumptions.

and increase So our prior the did prior quarter from CPR speeds year.

and we Stafford went was went from So saw X% sorry, consolidation X to from that -- essentially, to the what X%. portfolio FFELP from X% X% went Stafford

adjustments So quarter. those that had were big really in occur the we the

in means days, my some going hand Thanks, just of one, notes cash of Or high-yield is maturing to Joe. last And use for are that notes? are million those? financing you other to there refinance on $XXX X retire the these unsecured to

cash use on intend the to No, hand. we

from comes the from JPMorgan. Your of Rick Shane next question line

wanted there we quarter X segment, about in -- about book. reserve a think to There's about student portfolio the it refi and that in-school private this new I the it looks legacy the book, very the loan Lending the then primarily on think is interesting -- When to little congratulations. book, was talk it, and is the consolidation Joe, low. What's we allowance refi the in Consumer like the bit. me And there's on rate the activity the is segments. side.

points. actually entire quarter-over-quarter. guys basis pointed looks the like stayed But it's flat it rate XX portfolio you reserve the about out, As for

as on So channel? you in-school going on legacy book drive the that's higher you is through with the to continue there something the keep assumptions did ratio book refi allowance going the change or that to business

that quarter due this provision pointed out, as you refi volume, principally was loans. to we net which, the primarily made So loan is new

are loans of Our of activities refinancing that included are loss X% And the the over of do portfolio the to net number. the some little with has portfolio expectations in a existing that over see amount life loans. on there the you the refi and of amortization that the

of some are that volume loans generating is we're the of existing borrowers us. refinancing volume So actually who with

it. Got

then. sense makes That Okay.

time, refi the the lending in-school, between characteristics granularity different additional business? And be you given do that Okay. over will there and think pretty private student credit

do And in as look would some you much, see we that these mentioned. the a we question certainly, X much, lower become risk of much refi loan of components at out. the segments portfolio lending larger a the the mix, business, no than of portfolio is higher break statistics these So portfolio each overall I certainly you categories think at other and those -- quality, There's can performs activities. much

lending, -- sufficient a and X risks those student they when that level produces the In have manage are risks. job will to get an a income loan, debt. will graduate your in-school refi you don't Just their

years has You the earnings anywhere to graduated, X you've income be to X student able know and to underwrite of between that and already got again.

little both bit expectations look as to break So folks, detail rates. those And lower loss out of forward, in certainly, going a you terms significantly result, for performance. in spread, see can, a and we loss credit more

certainly ABS more the that disclosures. quarterly of themselves, through transactions do on of in the see You we the -- financing but obviously a can this can lot

that the be significant selection clearly yes, portfolio. positive would terrific because, refi to there's related Yes,

helpful. And it, that so especially to able be will be grows, to see and understand it as

question next Office. Your from of Family of Lee Cooperman Omega the comes line

observation. lead questions that I to of have me a series an

that lower? get I'll But are? your of pulls, you your The recurring this real and are earnings earnings think after the recurring in normalized you you do one. is, X.XX are? look and these that what You all materially think pushes earnings first at question Is recurring sit do about think earnings guys around indicative question as talked what you year. X.XX, what to or recurring

guidance of kind you're little but for of into a mean, XXXX, I Yes. looking bit I...

really, Not long-term. talking I'm

stock. buying back view obviously because of You spent have a you've billions dollars

of derives value earnings. the and value have you So a recurring view normalized some must

So I’m just you think? what curious would

look loan portfolio I a and fighting $X $Xs, large could sustain as amortization you're legacy high at of we would very that off -- obviously, the being low -- we that this able earnings to range…

ROE, XX went and X.X I all off S&P, what XX% figured X.X; say. Bloomberg Bloomberg, book is times terminal, are times you’d earnings, earnings, slight a nominal I value. Dividend we to X XX%; That's you S&P, reasonably ROE, this numbers times quarter, yield, Navient to yield priced XX%. their on Navient Okay. accurate. book book X.X, premium of Navient in S&P did okay? book value, mentioned Navient tangible dividend S&P times XX the And

The an company. in stock price Okay. my opinion is to embarrassment the

this in I like normally confused. he where amount grandfather I of feel the market because of price make objective highest the bumping now answer for years, have an repurchase, Has enormous XXs. but appreciate doesn't analyst You would care. I started stock recurring average the been you in The which $XX.XX. calls that and of the stock We I Moonstruck, is that The which unchanged our through is I've statement think, of worth cover think was convinced Board market? X about the you buying not back he's but the many high -- sense that a I is the in target power the shareholders been we we've has for -- on by years the XX. money over decided appreciated could stock haven't making a decade dividend, it it, it as to thought anybody. earning said back, return these the because know way the priced to to us looks the thought the don't would cheap, the buying XXs to a very for you honestly say, seem possibility market

So income. for investors hungry are

a for I growth, which -- That's really formula, paying, return I X we're on rate XX% the sustainable what, equity $X.XX. says growing. look been not DuPont times for $X.XX years. You've think, quarter at retention

bit little you're the So paying ability, have more. you a out

for If more company you our of bump size. $XX nothing million dividends the be at will in which XX%, cash, is there

wondering All them different the what of questions is stock. don't are buying. that just Street I dividend are you, statistics quarter. is cover experts want I'd why know do the ask than the the I'm right. as adjustment I honest down whether and would objectives think The between stock. terribly what And to they you, back because the of many the with interplay consensus that $X.XX. believe, just more morning, stock But to of what understand you price back I are can't buy the possible your and price trading than terrific not you you're morning, And see repurchase be program? a the on So so appealing, buy on you this your have this And

you cares nature sorry But nobody I'm us. of the for going about understand the but question. along, So

stock Thanks, your frustration Yes. price. share I Lee. the Yes. on

environment economic consistent price-to-book, when for P/E our strength I and able here to and -- would shows our raise is multiple, both in to been look environment that at strength higher mean able guidance a for challenging challenging you many not companies argue think and a weakness through be outperform of been the think I I this pretty the it earnings ratio multiple. environments, to particularly cycle not we've the the and company, in a a positive and has our lower in generate given

Exactly.

factors I weigh the that should. think number people than more of they a heavily are there

we'll as and of has I of heavily appropriately. people than decision economic more where stock a in weighs that risk the it think weeks, see an is made But change can maybe as had see the couple ever the the political hopefully, on more impact on can stock. stock a price

low any to to financial marketplace, buy difficult a is, well back yield the it's difference. to would with see think above book and I space relative able the that services or balance that share think But we I the pushing has relatively our higher make in between company that almost yield, I being could if how really something had a value. dividends below as repurchases benefit a stock see

with And But we'll decision to ultimately, the levels shares XXXX. Board into updating a and increasing have definitely as discussion would we start at dividend. move -- we inclined we so as these more be that's the be I regularly, be than repurchasing that that and to get

ignored. -- repurchase is the your that is, the the own one stock the company or market is repurchased repurchase it's totally by But reality Yes. No, signal complicated.

million. confidence whatever, the of The luck, is and dividend. other increase power And the signal Joe. of don't XX% a to own your earnings would But good have my you. think I I $XX confusion. the only in and about through hear I bumping nature But in dividend recurring the be the congratulations

next Your Jefferies. John of Hecht comes the line of question from

questions Clearly, asked have been and a lot answered. of

your incremental of you So just of said, is, mark-to-market the a couple for think decline Joe, derivatives. ones. X% I One accounting

change So that pace should X% of we acceleration time? think be will any over of there that, the quarter? that of as Or a

for I mean average is that obviously Obviously, fair we the the pieces in derivatives, X% purposes, and the to think life return there’s decline metrics there's that increase the X rates, saw, if terms about of that, modeling weighted other obviously, would an accelerate that. think But the interest purposes mark. about. I is of in your that moving years. primary Mark, And some there in behind

is that more say else all would X% common equal I terms of an of the environment. So being interest in rate

of competition markets in rates talked refi would Okay. the mean access Wells opportunities. second than question the some what bit somewhat the market, And What guys we fact to have little category. the about about that to I better that think Interest resilient I we some leaving other side? But been lower. is, have then that a anticipated. mean the clearly portfolio the bank might more than is are emerging capital have the of you

assume do or change how impact addressable might that competition and about How an over market you potential dislocations? So side just I on has think year refi overall next market and that set. two, given the on the

servicing remains our I our than put we perform do But in on We lender think know advantage. things. both markets obviously, funding our refi substantially when we think those your a to loans they and there's important. advantage capabilities. So attractive we And we service other couple are servicer capital of loans, and better hands. or biggest whether have think a those access in we of in-school Certainly, lending, books competitive it's areas, competitive they

continue plan refi. that make. payment It I is, piece in to particularly on have last find those our loan And look you believe just higher transactions, We side, that average. to you principally industry returns ABS cumulative an other federal to and comparison. outperform our default refi When statistics, portfolios refi And will at look track. so the this outperformed the I in an And this in earnings apples-to-apples at rates us consistently all our a someone marketing if kind on them program It of them the on difference those in we digital on and lower a of keeps think The that terms factors we percent a are XXs would rates, customer high them add also combination of anywhere mid-XXs to help of we that to with terms year-to-year origination servicers the cohort makes we is us cost is advantage in allows outperform makes do our to loans difference. allow generate that acquire. on experience in it's default area. working is a

alone average to So well. acquire we about the runs think our our CTA, cost industry half as

the that us pausing after it of billion origination second rebound and ability to quarter. the do factors grow in of combination terms competitive. And those you volume more to $X.X be allow So in saw to

Your comes from Henry final the Wedbush. of Coffey of question line

going -- all a in you’ve earnings book And value? to let insight about of some well? we and It's look all of terms the so, book reversals first, us just is that back can terms Joe. adjustments adjustments make it of we But that of calculation haven't Or we there those tangible to list, my Lee's to discussed couple fair congratulations is to me should discussed cash made that one also A into capital if long tangible other fair and and you at the Is as related is that capital of assume be value? factors, very the that some apply give all And talk of capital part exciting. value. in when points. comments, you ratios add

that, impacts So absolutely you're right, Mark, value. book the tangible

probably you're come that's time. $XXX going to mark talking So over about million back

equity the a just that benefit here. would natural several quarters we through from next that's over So GAAP into bleed

And if aren't, there, the different, correct? rules even they mark which wouldn't that were be accounting

not. It would

It not. would

Correct.

you're primarily does is more is Wells originated the this digital on -- -- you're piece a can a And was after looking likely marketing arrangement On view, the a if that buying of in more would to most listening business? sort wholly from or from student other way? that point loans that more And a drive make my to you're related play focused that of with business go is How channels. of and any out their beyond your of portfolio understanding, Wells Fargo topic, -- comments, branch. there of your just above you

loans through with originated online of student majority the in-school principally assistance vast through are the office. processes, financial So aid

as not a normally big you as is activity factor think branch So might here.

departure. this we this way, see certainly in Wells meaningful And loans. branch originating player there national banks ability in-school is We to is in-school do with in so There national banks don't any other no playing think left the translate for an getting bank marketplace into no origination into volume us. really

run as think just where in targeting well. more We're we us. really stable for X So educational is year predictable, is normal very conservative and a performance can a more we and We think school and is more more business this in predictable this opportunity appropriate, graduate times a good institutions lending, way. not-for-profit stable credit demand

years there loans of is, sort you've data And I the and the is had how in-school insight would into that, going in-school add experience opportunity said, is I the perform? your to market? in sector just an traditional Even Or riskier over that's given education only should be to greatest are you traditional loans how but strength you've perform, stick mean, private to servicing. your a of there the is not as channel, explored? all though that time

I an that lending road, I traditional access but somewhat view, the now for in largest in-school the opportunity. us -- greatest penetrate marketplace is opportunity and high-quality we I strongest our to marketplace It's and think think Once returns. the the we can us. It has, generate just right in for families cautious in attractive would not be return. and -- beyond loan would the to expanding truly at be make a from that down who we at footprint, benefit space look students product, can the

the like remarks. any now for Rutledge closing I call would to hand to Mr. over

everyone Please for contact We'd us Andrea. concludes to This like Thanks, you have today's thank joining today's on call. if call. me any questions. follow-up

This you concludes Thank today's for your call. participation.

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