We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Navient (NAVI) Q2 Earnings Beat Estimates as Provisions Fall
Read MoreHide Full Article
Navient Corporation (NAVI - Free Report) reported second-quarter 2020 core earnings per share of 92 cents that surpassed the Zacks Consensus Estimate of 48 cents. Also, the bottom line was above the year-ago quarter figure of 74 cents.
Core earnings excluded the impacts of certain other one-time items, including mark-to-market gains/losses on derivatives along with goodwill and acquired intangible asset amortization, and impairment.
Second-quarter results of Navient were supported by a rise in net interest income. Also, a fall in expenses and provisions were tailwinds. However, private education loans declined. Moreover, a year-over-year decline in fee income was an undermining factor.
GAAP net income for the quarter was $125 million or 64 cents per share compared with $153 million or 64 cents per share in the year-ago quarter.
Net Interest Income Increase, Provisions Fall (on Core Earnings Basis)
Net interest income (NII) increased 11.1% year over year to $329 million.
Non-interest income declined 32.6% year over year to $163 million. The fall was mainly attributed to lower asset recovery and business processing along with servicing revenues.
Provision for loan losses fell 35.3% year over year to $44 million.
Total expenses declined 11.6% from the year-ago quarter to $214 million. Lower operating expenses mainly led to the fall.
Segment Performance
Federal Education Loans: The segment generated core earnings of $87 million, up 11.5% year over year. Higher revenues along with a fall in expenses posed as tailwinds.
As of Jun 30, 2020, the company’s FFELP loans were $60.9 billion, down 2.5% sequentially.
Consumer Lending: The segment reported core earnings of $54 million, up 2.4% year over year. Lower provisions and rise in revenues were the positives. Net interest margin was 3.2%, down 2 basis points.
Private education loan delinquencies of 30 days or more of $426 million were down $644 million from the prior-year quarter.
As of Jun 30, 2020, the company’s private education loans totaled $21.5 billion, down 3.9% from the prior quarter. Also, Navient originated $238 million of private education refinance loans in the quarter.
Business Processing: The segment reported core earnings of $6 million compared with $7 million in the year-ago quarter. Higher expenses and a fall in revenues led to the decline.
Source of Funding and Liquidity
In order to meet liquidity needs, Navient expects to utilize various sources, including cash and investment portfolio, issuance of additional unsecured debt, repayment of principal on unencumbered student-loan assets, and distributions from securitization trusts (including servicing fees). It might also issue term asset-backed securities (“ABS”).
During the reported quarter, Navient issued $1.3 billion in term ABS. Notably, it had $1.6 billion of cash as of Jun 30, 2020.
Capital-Deployment Activities
In the second quarter, the company paid out $31 million in common stock dividends. As of Jun 30, 2020, it had $665 million of remaining share-repurchase authority.
Our Take
Navient’s prudent cost-management efforts support bottom-line expansion. Also, non-interest income increased on the back of several measures taken to build its base. However, its involvement in improper lending practices is likely to keep legal expenses elevated. Also, increasing financing costs, subject to substantial volatility in capital markets, is concerning.
Navient Corporation Price, Consensus and EPS Surprise
Comerica (CMA - Free Report) reported second-quarter 2020 earnings per share of 80 cents, significantly surpassing the Zacks Consensus Estimate of 21 cents. Earnings, however, were lower than the prior-year quarter figure of $1.94.
Zions Bancorporation’s (ZION - Free Report) second-quarter 2020 net earnings per share of 34 cents missed the Zacks Consensus Estimate of 37 cents. Moreover, the bottom line compares unfavorably with the year-ago quarter’s 99 cents.
BancorpSouth Bank reported second-quarter 2020 net operating earnings of 59 cents per share that beat the Zacks Consensus Estimate of 31 cents. However, the bottom line compares unfavorably with the year-ago quarter’s 61 cents.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
These 7 were selected because of their superior potential for immediate breakout.
Image: Bigstock
Navient (NAVI) Q2 Earnings Beat Estimates as Provisions Fall
Navient Corporation (NAVI - Free Report) reported second-quarter 2020 core earnings per share of 92 cents that surpassed the Zacks Consensus Estimate of 48 cents. Also, the bottom line was above the year-ago quarter figure of 74 cents.
Core earnings excluded the impacts of certain other one-time items, including mark-to-market gains/losses on derivatives along with goodwill and acquired intangible asset amortization, and impairment.
Second-quarter results of Navient were supported by a rise in net interest income. Also, a fall in expenses and provisions were tailwinds. However, private education loans declined. Moreover, a year-over-year decline in fee income was an undermining factor.
GAAP net income for the quarter was $125 million or 64 cents per share compared with $153 million or 64 cents per share in the year-ago quarter.
Net Interest Income Increase, Provisions Fall (on Core Earnings Basis)
Net interest income (NII) increased 11.1% year over year to $329 million.
Non-interest income declined 32.6% year over year to $163 million. The fall was mainly attributed to lower asset recovery and business processing along with servicing revenues.
Provision for loan losses fell 35.3% year over year to $44 million.
Total expenses declined 11.6% from the year-ago quarter to $214 million. Lower operating expenses mainly led to the fall.
Segment Performance
Federal Education Loans: The segment generated core earnings of $87 million, up 11.5% year over year. Higher revenues along with a fall in expenses posed as tailwinds.
As of Jun 30, 2020, the company’s FFELP loans were $60.9 billion, down 2.5% sequentially.
Consumer Lending: The segment reported core earnings of $54 million, up 2.4% year over year. Lower provisions and rise in revenues were the positives. Net interest margin was 3.2%, down 2 basis points.
Private education loan delinquencies of 30 days or more of $426 million were down $644 million from the prior-year quarter.
As of Jun 30, 2020, the company’s private education loans totaled $21.5 billion, down 3.9% from the prior quarter. Also, Navient originated $238 million of private education refinance loans in the quarter.
Business Processing: The segment reported core earnings of $6 million compared with $7 million in the year-ago quarter. Higher expenses and a fall in revenues led to the decline.
Source of Funding and Liquidity
In order to meet liquidity needs, Navient expects to utilize various sources, including cash and investment portfolio, issuance of additional unsecured debt, repayment of principal on unencumbered student-loan assets, and distributions from securitization trusts (including servicing fees). It might also issue term asset-backed securities (“ABS”).
During the reported quarter, Navient issued $1.3 billion in term ABS. Notably, it had $1.6 billion of cash as of Jun 30, 2020.
Capital-Deployment Activities
In the second quarter, the company paid out $31 million in common stock dividends. As of Jun 30, 2020, it had $665 million of remaining share-repurchase authority.
Our Take
Navient’s prudent cost-management efforts support bottom-line expansion. Also, non-interest income increased on the back of several measures taken to build its base. However, its involvement in improper lending practices is likely to keep legal expenses elevated. Also, increasing financing costs, subject to substantial volatility in capital markets, is concerning.
Navient Corporation Price, Consensus and EPS Surprise
Navient Corporation price-consensus-eps-surprise-chart | Navient Corporation Quote
Currently, Navient carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Companies
Comerica (CMA - Free Report) reported second-quarter 2020 earnings per share of 80 cents, significantly surpassing the Zacks Consensus Estimate of 21 cents. Earnings, however, were lower than the prior-year quarter figure of $1.94.
Zions Bancorporation’s (ZION - Free Report) second-quarter 2020 net earnings per share of 34 cents missed the Zacks Consensus Estimate of 37 cents. Moreover, the bottom line compares unfavorably with the year-ago quarter’s 99 cents.
BancorpSouth Bank reported second-quarter 2020 net operating earnings of 59 cents per share that beat the Zacks Consensus Estimate of 31 cents. However, the bottom line compares unfavorably with the year-ago quarter’s 61 cents.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>