Navient : 4th Quarter 2021 Earnings Release

NAVIENT REPORTS FOURTH-QUARTER 2021 FINANCIAL RESULTS

WILMINGTON, Del., January 25, 2022 - Navient (Nasdaq: NAVI) today released its fourth-quarter 2021 financial results.

FOURTH	• GAAP net loss of $11 million(1) ($0.07 diluted loss per share) compared to $186 million net
QUARTER	income ($0.99 diluted earnings per share) in the year-ago quarter.
RESULTS	• Adjusted Core Earnings(2) diluted earnings per share of $0.78 compared to $0.97 in the
	year-ago quarter.
FULL YEAR	• GAAP net income of $717 million(1) ($4.18 diluted earnings per share) compared to
RESULTS	$412 million ($2.12 diluted earnings per share) in the year-ago period.
	• Adjusted Core Earnings(2) diluted earnings per share of $4.45 compared to $3.40 in the
	year-ago period.

CEO COMMENTARY - "In 2021, Navient demonstrated remarkable agility across our business, delivering outstanding results for our customers, clients, investors and teammates," said Jack Remondi, president and CEO of Navient. "We delivered strong financial results with adjusted core earnings per share increasing 31%, grew loan originations by 30%, earned $488 million in business processing revenue, and simplified and de-risked our business model. Our accomplishments in 2021 position the company to continue to deliver attractive returns and sustainable growth in 2022 and beyond."

FOURTH-QUARTER HIGHLIGHTS COMPARED TO THE YEAR-AGO QUARTER

FEDERAL	• Net income decreased $26 million, or 19%, from $134 million to $108 million.
EDUCATION	• FFELP Loan delinquency rate increased from 9.2% to 10.6% and are below pre-pandemic
LOANS SEGMENT	levels.
CONSUMER	• Net income decreased $19 million, or 18%, from $108 million to $89 million.
LENDING	• Originated $1.4 billion of Private Education Loans.
SEGMENT	• Private Education Loan delinquency rate increased from 2.6% to 3.2% and are below
	pre-pandemic levels.
BUSINESS	• EBITDA(2) increased $1 million, or 5%, from $22 million to $23 million.
PROCESSING	• Revenue increased $18 million, or 19%, to $111 million.
SEGMENT
CAPITAL	• Adjusted tangible equity ratio(2) increased to 5.9% from 5.0%.
	• Repurchased $150 million of common shares. Authorized $1 billion in a new multi-year share
	repurchase program in December, all of which remains outstanding.
	• Paid $25 million in common stock dividends.
FUNDING &	• Issued $2.0 billion in term ABS and $750 million in unsecured debt.
LIQUIDITY	• Retired $1.1 billion of unsecured debt, resulting in a pre-tax loss of $41 million ($0.21 per
	share), compared with $1.1 billion retired at a $6 million loss in the year-ago quarter.
EXPENSES	• Adjusted Core Earnings expenses(2) decreased $12 million to $237 million.

1. Regulatory expenses (which are excluded from Adjusted Core Earnings(2) expenses) for fourth-quarter 2021 and full-year 2021 include $170 million, on an after-tax basis, related to the resolution of previously disclosed State Attorneys General litigation and investigations. See "GAAP Comparison of 2021 Results with 2020" on pages 10 - 12 for further details. This expense equals $1.08 per share for fourth-quarter 2021 and $0.99 per share for the full-year 2021.
2. Item is a non-GAAP financial measure. For a description and reconciliation, see "Non-GAAP Financial Measures" on pages 19 - 29.

SEGMENT RESULTS - CORE EARNINGS

FEDERAL EDUCATION LOANS

In this segment, Navient owns FFELP Loans and performs servicing and asset recovery services for this loan portfolio, as well as for FFELP Loans owned by other institutions.

FINANCIAL RESULTS AND KEY PERFORMANCE METRICS

(Dollars in millions)			4Q21			3Q21			4Q20
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	140	$	151	$	162
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		-			-			-
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		49			61			79
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		189			212			241
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		52			53			70
Pre-tax income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		137			159			171
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	108	$	122	$	134
Segment net interest margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		.99%			1.04%			1.06%
FFELP Loans:
FFELP Loan spread . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1.06%			1.10%			1.12%
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	-	$	-	$	-
Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	7	$	8	$	9
Charge-off rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		.06%			.07%			.07%
Greater than 30-days delinquency rate . . . . . . . . . . . . . . . . . .		10.6%			8.5%			9.2%
Greater than 90-days delinquency rate . . . . . . . . . . . . . . . . . .		4.8%			4.3%			4.6%
Forbearance rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		12.4%			15.4%			13.8%
Average FFELP Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	53,960	$	55,435	$	59,389
Ending FFELP Loans, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	52,641	$	54,350	$	58,284
(Dollars in billions)
Number of accounts serviced for ED (in millions)(1) . . . . . . . . . . . . .			-			5.6			5.6
Total federal loans serviced(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	61	$	284	$	284
Contingent collections receivables inventory . . . . . . . . . . . . . . . . . . .	$	11.7	$	11.8	$	10.9

1. Closed on the novation and transfer of our ED servicing contract to a third party in October 2021. As of year-end 2021, we serviced $61 billion in FFELP (federally guaranteed) loans.

DISCUSSION OF RESULTS - 4Q21 vs. 4Q20

• Core Earnings were $108 million compared to $134 million.
• Net interest income decreased $22 million, primarily due to the natural paydown of the portfolio.
• Provision for loan losses was unchanged at $0.

1. Charge-offswere $7 million compared with $9 million.

1. Delinquencies greater than 30 days were $4.7 billion compared with $4.4 billion.

• 1. Forbearances were $6.3 billion, down $1.4 billion from $7.7 billion.
• Other revenue decreased $30 million which was primarily a result of the impact of COVID-19 on certain collection activities, as well as the transfer of the ED servicing contract to a third party in October 2021.
• Expenses were $18 million lower primarily as a result of the decrease in the other revenue discussed above.

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CONSUMER LENDING

In this segment, Navient owns, originates, acquires and services consumer loans.

FINANCIAL RESULTS AND KEY PERFORMANCE METRICS

(Dollars in millions)			4Q21			3Q21			4Q20
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	152	$	163	$	176
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		5			22			2
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		2			-			1
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		149			141			175
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		37			45			37
Pre-tax income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		112			96			138
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	89	$	73	$	108
Segment net interest margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		2.76%			2.98%			3.02%
Private Education Loans (including Refinance Loans):
Private Education Loan spread . . . . . . . . . . . . . . . . . . . . . . . .		2.92%			3.17%			3.22%
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	5	$	22	$	2
Charge-offs(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	44	$	39	$	28
Charge-off rate(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		.87%			.77%			.53%
Greater than 30-days delinquency rate . . . . . . . . . . . . . . . . . .		3.2%			3.0%			2.6%
Greater than 90-days delinquency rate . . . . . . . . . . . . . . . . . .		1.5%			1.1%			1.0%
Forbearance rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		2.6%			3.9%			3.9%
Average Private Education Loans . . . . . . . . . . . . . . . . . . . . . .	$	21,106	$	20,938	$	22,296
Ending Private Education Loans, net . . . . . . . . . . . . . . . . . . . .	$	20,171	$	20,018	$	21,079
Private Education Refinance Loans:
Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	2	$	3	$	2
Greater than 90-days delinquency rate . . . . . . . . . . . . . . . . . .		.1%			.1%			.1%
Average Private Education Refinance Loans . . . . . . . . . . . . .	$	9,631	$	8,987	$	8,167
Ending Private Education Refinance Loans, net . . . . . . . . . . .	$	9,791	$	9,171	$	8,202
Private Education Refinance Loan originations . . . . . . . . . . .	$	1,366	$	1,489	$	1,148

1. Third-quarter2021 excludes $16 million of charge-offs on the expected future recoveries of charged-off loans that occurred as a result of changing the charge-off rate from 81.4% to 81.7% in third-quarter 2021.

DISCUSSION OF RESULTS - 4Q21 vs. 4Q20

• Originated $1.4 billion of Private Education Loans, an increase of 20% compared to $1.2 billion.
• Core Earnings were $89 million compared to $108 million.
• Net interest income decreased $24 million primarily due to the natural paydown of the non-refinance loan portfolio, as well as the $1.6 billion of loan sales in first-quarter 2021. Partially offsetting this decrease was the growth of the Private Education Refinance Loan portfolio. The net interest margin decreased 26 basis points primarily as a result of reserving for the increase in the greater than 90-days delinquent accrued interest receivable balance. However, the greater than 90-day delinquency rate is below pre-pandemic levels.
• Provision for loan losses increased $3 million. The provision for loan losses in both periods primarily related to loan originations. There has been an improvement in the current and forecasted economic conditions since the prior period, but such improvement has not mitigated the uncertainty related to the potential negative impact on the portfolio from the end of various payment relief and stimulus benefits recently and in the future.

1. Charge-offswere $44 million compared with $28 million.

1. Private Education Loan delinquencies greater than 90 days: $297 million, up $80 million from $217 million.

1. Private Education Loan delinquencies greater than 30 days: $650 million, up $96 million from $554 million.

• 1. Private Education Loan forbearances: $535 million, down $309 million from $844 million.
• Expenses were unchanged at $37 million.

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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)			4Q21			3Q21			4Q20
Revenue from government services . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	54	$	75	$	58
Revenue from healthcare services . . . . . . . . . . . . . . . . . . . . . . . . . . . .		57			47			35
Total fee revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		111			122			93
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		90			87			74
Pre-tax income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		21			35			19
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	17	$	27	$	15
EBITDA(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	23	$	38	$	22
EBITDA margin(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		20%			31%			23%
Contingent collections receivables inventory (in billions) . . . . . . . . . .	$	9.6	$	11.5	$	17.1

1. Item is a non-GAAP financial measure. For an explanation and reconciliation of our non-GAAP financial measures, see pages 19 - 29.

DISCUSSION OF RESULTS - 4Q21 vs. 4Q20

• Core Earnings were $17 million compared to $15 million.
• Revenue increased $18 million, or 19%, primarily due to contracts to provide unemployment benefits, contact tracing and vaccine administration services, as well as revenue increases from services we perform for our government and healthcare services clients.
• EBITDA was $23 million, up $1 million, or 5%. The increase in EBITDA is primarily the result of the revenue increase discussed above. The EBITDA margin decreased to 20% from 23%.

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, 2020 (filed with the SEC on February 26, 2021).

Navient will host an earnings conference call tomorrow, January 26, 2022, 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 9861258 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 9, 2022, at navient.com/investors or by dialing 855-859-2056 (USA and Canada) or 404-537-3406 (international) with access code 9861258.

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 changes in the macroeconomic environment, restrictions on business, individual or travel activities intended to slow the spread of the pandemic and volatility in market conditions resulting from the pandemic including interest rates, the value of equities and other financial assets; the risks and uncertainties associated with increases in financing costs; the availability of financing or limits on our liquidity resulting from disruptions in the capital markets or other factors; unanticipated increases in costs associated with compliance with federal, state or local laws and regulations; changes in

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the demand for asset management and business processing solutions or other changes in marketplaces in which we compete (including increased competition); changes in accounting standards including but not limited to changes pertaining to loan loss reserves and estimates or other accounting standards that may impact our operations; adverse outcomes in any significant litigation to which the company is a party; credit risk associated with the company's underwriting standards or exposure to third parties, including counterparties to hedging transactions; and changes in the terms of education loans and the educational credit marketplace (including changes resulting from the CARES Act or other new laws and the implementation of existing laws). The company could also be affected by, among other things: unanticipated repayment trends on loans including prepayments or deferrals in our securitization trusts that could accelerate or delay repayment of the bonds; reductions to our credit ratings, the credit ratings of asset-backed securitizations we sponsor or the credit ratings of the United States of America; failures of our operating systems or infrastructure or those of third-party vendors; risks related to cybersecurity including the potential disruption of our systems or those of our third-party vendors or customers, or potential disclosure of confidential customer information; damage to our reputation resulting from cyber-breaches or litigation; failure to successfully implement cost-cutting initiatives and adverse effects of such initiatives on our business; failure to adequately integrate acquisitions or realize anticipated benefits from acquisitions including delays or errors in converting portfolio acquisitions to our servicing platform; changes in law and regulations whether new laws or regulations, or new interpretations of existing laws and regulations applicable to any of our businesses or activities or those of our vendors, suppliers or customers; changes in the general interest rate environment, including the availability of any relevant money-market index rate, including LIBOR, or the relationship between the relevant money-market index rate and the rate at which our assets are priced; our ability to successfully effectuate any acquisitions and other strategic initiatives; activities by shareholder activists, including a proxy contest or any unsolicited takeover proposal; changes in general economic conditions; and the other factors that are described in the "Risk Factors" section of Navient's Annual Report on Form 10-K for the year ended December 31, 2020, and in our other reports filed with the Securities and Exchange Commission. The preparation of the company's consolidated financial statements also requires management to make certain estimates and assumptions including estimates and assumptions about future events. These estimates or assumptions may prove to be incorrect and actual results could differ materially. All forward-looking statements contained in this release are qualified by these cautionary statements and are made only as of the date of this release. The company does not undertake any obligation to update or revise these forward-looking statements except as required by law.

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About Navient

Navient (Nasdaq: NAVI) is a leading provider of education loan management and business processing solutions for education, healthcare, and government clients at the federal, state, and local levels. Navient helps clients and millions of Americans achieve success through technology-enabled financing, services and support. Learn more at Navient.com.

Contact:

Media:

Paul Hartwick, 302-283-4026, [e-mail]

Investors: Nathan Rutledge, 703-984-6801, [e-mail]

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