Forward-Looking Statements; Non-GAAP Financial Measures

The following information is current as of December 31, 2022 (unless otherwise noted) and should be read in connection with Navient Corporation's "Navient" Annual Report on Form 10-K for the year end December 31, 2021 (the "2021 Form 10-K"), filed by Navient with the Securities and Exchange Commission (the "SEC") on February 25, 2022 and subsequent reports filed by Navient with the SEC. Definitions for capitalized terms

in this presentation not defined herein can be found in the 2021 Form 10-K. This presentation 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 presentation. 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-looking statements and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," "will," "would," "may," "could," "should," "goal," or "target." Forward-looking statements are subject to risks, uncertainties, assumptions and other factors that may cause actual results to be materially different from those reflected in such forward-looking statements.

For Navient, these factors include, among others, the risks and uncertainties associated with:

  • the continuing impact of the COVID-19 pandemic, 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 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 education loans including prepayments or deferrals resulting from new interpretations of current laws, rules or regulations or future laws, executive orders or other policy initiatives which operate to encourage or require consolidation, abolish existing or create additional income-based repayment or debt forgiveness programs or establish other policies and programs which may increase the prepayment rates on education loans and accelerate repayment of the bonds in our securitization trusts;
  • 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, including the potential impact of persistent inflation; 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, 2021, and in our other reports filed with the SEC.

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.

Navient reports financial results on a GAAP basis and also provides certain non-GAAP performance measures, including Core Earnings, Adjusted Tangible Equity Ratio, and various other non-GAAP financial measures derived from Core Earnings. When compared to GAAP results, Core Earnings exclude the impact of: (1) mark-to-market gains/losses on derivatives; and (2) goodwill and acquired intangible asset amortization and impairment. Navient provides Core Earnings measures because this is what management uses when making management decisions regarding Navient's performance and the allocation of corporate

resources. Navient Core Earnings are not defined terms within GAAP and may not be comparable to similarly titled measures reported by other companies. For additional information, see Core Earnings in Navient's fourth quarter earnings release and pages 16 - 18 of this presentation for a further discussion and a complete reconciliation between GAAP net income and Core Earnings.

Confidential and proprietary information © 2023 Navient Solutions, LLC. All rights reserved.

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Federal Education Loans

  • Total revenue of

$138 million

reflects our continued success in managing interest rate risk

  • Segment operating expenses reduced

by $25 million

demonstrates our commitment to operating efficiency

  • Supporting

borrowers as they

navigate evolving student loan policy

Consumer Lending

  • Originated

$169 million

of high-quality Private Education Loans

  • In-Schooloriginations

grew ~10x the market rate1 year

over year

  • Committed to a

disciplined growth strategy

to drive long-term value

Business Processing

  • Generated

$70 million in

revenue

  • Revenue from traditional services

grew 27% by

leveraging past work to win new contracts

  • Technology enabled platform & differentiated expertise enhances

the client experience and

allows for rapid implementation

Note: Financial data reflects fourth quarter 2022 performance on a Core Earnings basis unless otherwise noted; growth and reduction comparisons against fourth quarter 2021. 1 Comparison to market based on certified loan volume against historical market average growth reported by Enterval Analytics.

Confidential and proprietary information © 2023 Navient Solutions, LLC. All rights reserved.

3

Operating Results

Selected Financial Information and Ratios

(In millions, except per share amounts)

Q4 22

Q4 21

2022

2021

GAAP Diluted EPS

$0.78

($0.07)

$4.49

$4.18

Adjusted Core Earnings

$0.85

$0.78

$3.43

$4.45

EPS 1, 2

Average common stock

134

157

144

172

equivalent

Ending total education

$62,250

$72,812

$62,250

$72,812

loans, net

Average total education

$65,370

$75,066

$69,707

$77,243

loans

Net Interest Margin,

0.94%

0.99%

1.01%

0.99%

Federal Education Loans

Segment

Net Interest Margin,

2.87%

2.76%

2.81%

2.92%

Consumer Lending Segment

4th Quarter & Full Year 2022 Highlights

  • Adjusted Core EPS1, 2 of $0.85 in Q4 22 and $3.43 in FY22
    • Core Earnings Return on Equity 15% in Q4 22 and 17% in FY22
  • Originated $169 million of high-quality private education loans in Q4 22, bringing total originations for FY22 to over $2 billion
    • In-school grew by 52% to $322 million3 in FY22
  • Generated $70 million in revenue within our Business Processing segment in Q4 22
  • FY22 Total Adjusted Core Earnings expenses decreased by 21%1 compared to FY21
  • Achieved FY22 Core Earning Efficiency Ratio of 52%1

• Grew Adjusted Tangible Net Equity to 7.7%1 while returning $491 million through share repurchases & dividends in FY22

Note: Financial measures reflect performance on a Core Earnings basis unless otherwise noted.

  1. Item is a non-GAAP financial measure. See pages 16 - 18 for a description and reconciliation.
  2. Adjusted diluted Core Earnings per share excludes restructuring and regulatory expenses. Original 2022 Full Year Guidance provided on January 26, 2022 included 2022 Full Year EPS guidance of $3.00-$3.15.
  3. Certified volume of the In-school loan product for full year 2022 was $322 million. Growth is a comparison of 2022 and 2021 volume by dollar amount.

Confidential and proprietary information © 2023 Navient Solutions, LLC. All rights reserved.

4

Federal Education Loans Segment

Selected Financial Information and Ratios

($ In millions)

Q4 22

Q4 21

2022

2021

Segment net interest margin

0.94%

0.99%

1.01%

0.99%

FFELP Loans

Provision for loan losses

$ -

$ -

$ -

$ -

Net Charge-offs

$11

$7

$40

$26

Annualized Net Charge-off

0.13%

0.06%

0.10%

0.06%

rate

Greater than 30-days

15.6%

10.6%

15.6%

10.6%

delinquency rate

Greater than 90-days

9.6%

4.8%

9.6%

4.8%

delinquency rate

Forbearance rate

18.1%

12.4%

18.1%

12.4%

Average FFELP Loans

$45,580

$53,960

$49,183

$56,018

Operating Expense

$27

$52

$106

$223

Net Income

$97

$108

$407

$454

Total federal loans serviced

$51

$61

$51

$61

(billions)

Note: Segment financial measures reflect performance on a Core Earnings basis unless otherwise noted.

4th Quarter & Full Year 2022 Highlights

Federal Education Loans

Q4

22 Net Interest Margin:

94 bps

Q4

22 Annualized Net Charge-off Rate:

13 bps

FY 22 Net Interest Margin:

101 bps

FY 22 Annualized Net Charge-off Rate:

10 bps

  • Expenses declined by $25 million, or 48%, compared to Q4 21
    • FY22 segment expenses were $106 million, a reduction of over 50% from FY21
  • Delinquency rate increased year over year as expected as borrowers returned to repayment from pandemic-related relief programs

Full Year 2022

NIM for the segment at 101 bps

exceeded guidance

of Mid 90s bps

Confidential and proprietary information © 2023 Navient Solutions, LLC. All rights reserved.

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Navient Corporation published this content on 24 January 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 January 2023 21:36:01 UTC.