Navient : 4th Quarter 2020 Earnings Release

NAVIENT REPORTS FOURTH-QUARTER 2020 FINANCIAL RESULTS

WILMINGTON, Del., January 26, 2021 - Navient (Nasdaq: NAVI) today released its fourth-quarter 2020 financial results.

FOURTH	• GAAP net income of $186 million ($0.99 diluted earnings per share) compared to $171 million
QUARTER	($0.78 diluted earnings per share) in the year-ago quarter.
RESULTS	• Adjusted(1) diluted Core Earnings(2) per share of $0.97 compared to $0.67 in the year-ago quarter.
	• Core Earnings of $166 million ($0.88 diluted Core Earnings per share) compared to $153 million
	($0.69 diluted Core Earnings per share) in the year-ago quarter.
FULL YEAR	• GAAP net income of $412 million ($2.12 diluted earnings per share) compared to $597 million
RESULTS	($2.56 diluted earnings per share) in the year-ago period.
	• Adjusted(1) diluted Core Earnings(2) per share of $3.40 compared to $2.64 in the year-ago period.
	• Core Earnings of $631 million ($3.24 diluted Core Earnings per share) compared to $607 million
	($2.60 diluted Core Earnings per share) in the year-ago period.

CEO COMMENTARY - "In a year defined by the COVID-19 crisis, Navient responded swiftly and decisively, leveraging our operational expertise and scaled infrastructure to support our customers and clients as they faced many challenges," said Jack Remondi, president and CEO of Navient. "Whether we were helping borrowers through repayment solutions or supporting our state and local partners manage their unique needs, we stepped up and our results reflect it. Strong credit performance, growth in our refinance business and strong business processing performance are among the highlights in our solid 2020 earnings. We especially appreciate the flexibility and commitment of our employees during this extraordinarily challenging year."

FOURTH-QUARTER HIGHLIGHTS COMPARED TO THE YEAR-AGO QUARTER

FEDERAL	• Net income of $134 million, down 1%.
EDUCATION	• Net interest income increased 9%.
LOANS
• FFELP Loan delinquency rate decreased 21% from 11.7% to 9.2%.
SEGMENT
CONSUMER	• Net income increased $19 million, or 21%.
LENDING	• Originated $1.1 billion of Private Education Refinance Loans.
SEGMENT
• Private Education Loan delinquency rate decreased 43% from 4.6% to 2.6%.
BUSINESS	• EBITDA(2) increased $11 million, or 100%, to $22 million, primarily due to revenue earned from
PROCESSING	new contracts to support states.
SEGMENT	• Revenue increased $34 million, or 58%, to $93 million.
CAPITAL	• Adjusted tangible equity ratio(2) of 5.0%. Pro forma adjusted tangible equity ratio of 7.1%.(2)
	• Paid $30 million in common stock dividends.
	• $600 million common share repurchase authority remains outstanding.
FUNDING &	• Retired $1.1 billion of senior unsecured debt, including $579 million scheduled to mature in 2021.
LIQUIDITY	• Issued $2.3 billion in term ABS.
EXPENSES	• Adjusted Core Earnings expenses(1) increased $5 million to $249 million. This increase was a
	result of a $25 million increase in the Business Processing segment in connection with a
	$34 million increase in related revenue, with the remaining $20 million decrease in expenses
	primarily in the Federal Education Loans and Consumer Lending segments.

1. Adjusted diluted Core Earnings per share and adjusted Core Earnings expenses, both non-GAAP financial measures, exclude $20 million,
   $(7) million, $42 million and $12 million of net restructuring and regulatory-related expenses in fourth-quarters 2020 and 2019, and in full-years 2020 and 2019, respectively. These expenses are net of $0, $20 million, $10 million and $30 million of insurance reimbursements for costs related to such matters over the same respective periods.
2. Item is a non-GAAP financial measure. For an explanation and reconciliation of our non-GAAP financial measures, see "Non-GAAP Financial Measures" on pages 19 - 29.

SEGMENT RESULTS - CORE EARNINGS

FEDERAL EDUCATION LOANS

In this segment, Navient holds and acquires FFELP Loans and performs servicing and asset recovery services on its own loan portfolio, federal education loans owned by the U.S. Department of Education and other institutions.

FINANCIAL RESULTS AND KEY PERFORMANCE METRICS

(Dollars in millions)			4Q20			3Q20			4Q19
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	162	$	161	$	148
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		-			4			8
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		79			87			127
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		241			244			267
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		70			64			89
Pre-tax income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		171			180			178
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	134	$	137	$	136
Segment net interest margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1.06%			1.03%			.87%
FFELP Loans:
FFELP Loan spread . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1.12%			1.10%			.93%
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	-	$	4	$	8
Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	9	$	9	$	9
Charge-off rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		.07%			.07%			.06%
Greater than 30-days delinquency rate . . . . . . . . . . . . . . . .			9.2%			9.3%			11.7%
Greater than 90-days delinquency rate . . . . . . . . . . . . . . . .			4.6%			3.5%			5.8%
Forbearance rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		13.8%			14.3%			12.2%
Average FFELP Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	59,389	$	60,695	$	65,642
Ending FFELP Loans, net . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	58,284	$	59,559	$	64,575
(Dollars in billions)
Number of accounts serviced for ED (in millions) . . . . . . . . . . . . .			5.6			5.6			5.6
Total federal loans serviced . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	284	$	284	$	287
Contingent collections receivables inventory . . . . . . . . . . . . . . . .	$	10.2	$	13.0	$	19.0

DISCUSSION OF RESULTS - 4Q20 vs. 4Q19

• Core Earnings were $134 million compared to $136 million in the year-ago quarter.
• Net interest income increased $14 million primarily due to a favorable interest rate environment.
• Provision for loan losses decreased $8 million. See pages 13 - 16 for discussion regarding transition to CECL on January 1, 2020.

1. Charge-offswere $9 million, unchanged from fourth-quarter 2019. CECL requires the charge-offs to include the premium or discount related to defaulted loans which increased the fourth-quarter 2020 and third-quarter 2020 charge-offs by $3 million and $3 million, respectively.

1. Delinquencies greater than 30 days were $4.4 billion compared with $6.3 billion in fourth-quarter 2019.

• 1. Forbearances were $7.7 billion, up $0.3 billion from $7.4 billion in pre-COVID-19fourth-quarter 2019. Forbearances have declined by approximately $9.4 billion from the COVID-19 peak in second-quarter 2020.
• Other revenue decreased $48 million primarily due to a $37 million decrease in asset recovery revenue, which was primarily a result of the wind-down of the ED asset recovery contract as well as the impact of COVID-19 on certain collection activities.
• Expenses were $19 million lower primarily as a result of the decrease in asset recovery revenue discussed above as well as improvements in operating efficiencies.

2

CONSUMER LENDING

In this segment, Navient holds, originates and acquires consumer loans and performs servicing activities on its own loan portfolio.

FINANCIAL RESULTS AND KEY PERFORMANCE METRICS

(Dollars in millions)			4Q20			3Q20			4Q19
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	176	$	189	$	195
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		2			10			42
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1			1			2
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		175			180			155
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		37			37			40
Pre-tax income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		138			143			115
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	108	$	110	$	89
Segment net interest margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		3.02%			3.24%			3.31%
Private Education Loans (including Refinance Loans):
Private Education Loan spread . . . . . . . . . . . . . . . . . . . . . . . .		3.22%			3.45%			3.52%
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	2	$	10	$	42
Charge-offs(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	28	$	40	$	97
Charge-off rate(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		.53%			.75%			1.75%
Greater than 30-days delinquency rate . . . . . . . . . . . . . . . . . .		2.6%			2.4%			4.6%
Greater than 90-days delinquency rate . . . . . . . . . . . . . . . . . .		1.0%			.6%			2.0%
Forbearance rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		3.9%			4.0%			2.7%
Average Private Education Loans . . . . . . . . . . . . . . . . . . . . . .	$	22,296	$	22,473	$	22,624
Ending Private Education Loans, net . . . . . . . . . . . . . . . . . . . .	$	21,079	$	21,289	$	22,245
Private Education Refinance Loans:
Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	2	$	2	$	1
Greater than 90-days delinquency rate . . . . . . . . . . . . . . . . . .			.1%			-%			-%
Average Private Education Refinance Loans . . . . . . . . . . . . .	$	8,167	$	7,768	$	5,976
Ending Private Education Refinance Loans . . . . . . . . . . . . . .	$	8,202	$	7,873	$	6,423
Private Education Refinance Loan originations . . . . . . . . . . .	$	1,148	$	1,288	$	1,643

1. Third-quarter2020 excludes the $23 million of charge-offs on the expected future recoveries on charged-off loans that occurred as a result of changing the charge-off rate from 81% to 81.4% in third-quarter 2020.

DISCUSSION OF RESULTS - 4Q20 vs. 4Q19

• Originated $1.1 billion of Private Education Refinance Loans compared to $1.6 billion in the year-ago quarter.
• Core Earnings increased 21% to $108 million compared to $89 million in the year-ago quarter.
• Net interest income decreased $19 million primarily due to the natural paydown of the non-refinance loan portfolio.
• Provision for loan losses decreased $40 million. There was not a significant change in the credit quality of the portfolio or in the current and forecasted economic conditions between September 30, 2020 and December 31, 2020. This resulted in minimal provision for the current quarter. See pages 13 - 16 for discussion regarding transition to CECL on January 1, 2020. Private Education Loan performance results include:

1. Charge-offswere $28 million compared with $97 million in fourth-quarter 2019.

1. Private Education Loan delinquencies greater than 90 days: $217 million, down $222 million from $439 million in fourth-quarter 2019.

1. Private Education Loan delinquencies greater than 30 days: $554 million, down $452 million from $1.0 billion in fourth-quarter 2019.

• 1. Private Education Loan forbearances: $844 million, up $240 million from $604 million in pre-COVID-19fourth-quarter 2019. Forbearances have declined by approximately $2.5 billion from the COVID-19 peak in second-quarter 2020.
• Expenses were $3 million lower primarily due to improvements in operating efficiencies.

3

BUSINESS PROCESSING

In this segment, Navient performs business processing services for non-education related government and healthcare clients.

FINANCIAL RESULTS AND KEY PERFORMANCE METRICS

(Dollars in millions)			4Q20			3Q20			4Q19
Revenue from government services . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	58	$	56	$	34
Revenue from healthcare services . . . . . . . . . . . . . . . . . . . . . . . . . . . .		35			34			25
Total fee revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		93			90			59
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		74			69			49
Pre-tax income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		19			21			10
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	15	$	16	$	8
EBITDA(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	22	$	23	$	11
EBITDA Margin(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		23%			25%			18%
Contingent collections receivables inventory (in billions) . . . . . . . . . .	$	16.0	$	15.0	$	14.9

1. Item is a non-GAAP financial measure. For an explanation and reconciliation of our non-GAAP financial measures, see below.

DISCUSSION OF RESULTS - 4Q20 vs. 4Q19

• Core Earnings increased 88% to $15 million compared to $8 million in the year-ago quarter.
• Revenue increased $34 million, or 58%, primarily as a result of revenue earned from contracts to support states in providing unemployment benefits and contact tracing services. These increases were partially offset by the impact of COVID-19.
• EBITDA was $22 million, up $11 million from the year-ago quarter. The increase in EBITDA is primarily the result of the revenue increase discussed above. EBITDA margin increased to 23% from 18%.

Definitions for capitalized terms in this release can be found in Navient's Annual Report on Form 10-K for the year ended December 31, 2019 (filed with the SEC on February 27, 2020). Certain reclassifications have been made to the balances as of and for the three months ended December 31, 2019, to be consistent with classifications adopted for 2020, and had no effect on net income, total assets or total liabilities.

Navient will host an earnings conference call tomorrow, January 27, 2021, at 8 a.m. ET. Navient executives will be on hand to discuss various highlights of the quarter and to answer questions related to the company's performance. To participate, join a live audio webcast at navient.com/investors or dial 855-838-4156 (USA and Canada) or dial 267-751-3600 (international) and use access code 1768064 starting at 7:45 a.m. ET.

Presentation slides for the conference call, as well as additional information about the company's loan portfolios, operating segments and other details, may be accessed at www.navient.com/investors under the webcasts tab.

A replay of the conference call will be available approximately two hours after the call's conclusion through February 10, 2021, at navient.com/investors or by dialing 855-859-2056 (USA and Canada) or 404-537-3406 (international) with access code 1768064.

This news release contains "forward-looking statements," within the meaning of the federal securities law, about our business and prospects and other information that is based on management's current expectations as of the date of this release. Statements that are not historical facts, including statements about the company's beliefs, opinions or expectations and statements that assume or are dependent upon future events, are forward-lookingstatements and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," "will," "would," "may," "could," "should," "goal," or "target." Forward-lookingstatements are subject to risks, uncertainties, assumptions and other factors that may cause actual results to be materially different from those reflected in such forward-lookingstatements. For Navient, these factors include, among others, the severity, magnitude and duration of the COVID-19pandemic, including

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