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Navient (NAVI) Up as Q2 Earnings Beat Estimates on Lower Costs

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Shares of Navient Corporation (NAVI - Free Report) gained 4.3% in after-hours trading in response to better-than-expected second-quarter 2022 results. Adjusted core earnings per share of 92 cents handily surpassed the Zacks Consensus Estimate of 79 cents. However, the bottom line was lower than the prior-year quarter’s 98 cents.

The results of Navient were affected by the fall in non-interest income and net interest income (NII). The overall segmental performance reflects a downside. Nonetheless, the company managed to improve its expenses.

Navient’s GAAP net income was $180 million, down from $185 million in the prior-year quarter.

NII & Expenses Decrease, Provisions Rise

NII (on a non-GAAP basis) was $271 million, down 4% year over year. The reported figure surpassed the Zacks Consensus Estimate of $264.5 million.

Interest income from private education loans declined 6% to $277 million.

Total other income fell 24% to $134 million.

Provision for loan losses was $18 million against a benefit of $1 million in the prior-year quarter.

Total expenses declined 25% to $193 million. This was primarily due to a fall in operating expenses.

Notably, the company had $976 million of cash and cash equivalents as of Jun 30, 2022.

Segmental Performance

Federal Education Loans: The segment generated a net income of $110 million, down 3% year over year.

As of Jun 30, 2022, the company’s net Federal Family Education Loan Program (FFELP) loans were $49.21 billion, down 4% sequentially.

Consumer Lending: The segment reported a net income of $71 million, which decreased 26% from the year-ago quarter. Higher provision for loan losses affected the segment’s performance.

Private education loan delinquencies of 30 days of $822 million were up from the prior-year quarter’s $505 million.

As of Jun 30, 2022, the company’s net private education loans totaled $19.67 billion, down marginally from the prior quarter. In addition, Navient originated $374 million of private education refinance loans.

Business Processing: The segment reported a net income of $10 million, down 66% from $29 million in the year-ago quarter.

Capital Deployment Activities

In the second quarter, the company paid out $23 million in common stock dividends.

In the reported quarter, Navient repurchased $105 million of common stock. As of Jun 30, 2022, there was $780 million of the remaining share repurchase authority.

Our Take

Navient’s diversified business segments support revenue growth. It has an eminent portfolio holder of private education loans. In the second quarter, the company lowered its expenses. However, a decline in NII and fee income the matter of concern.

Navient Corporation Price, Consensus and EPS Surprise

Navient Corporation Price, Consensus and EPS Surprise

Navient Corporation price-consensus-eps-surprise-chart | Navient Corporation Quote

Currently, Navient carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Finance Stocks

Synovus Financial Corp. (SNV - Free Report) reported second-quarter 2022 adjusted earnings per share of $1.17, beating the Zacks Consensus Estimate of $1.10. However, the bottom line declined 2.5% from the prior-year quarter’s reported number.

Synovus Financial’s results were affected by escalating expenses and a fall in fee income. Nonetheless, it recorded a rise in NII, net interest margin, total loans and a significant decline in non-performing loans and assets.

Regions Financial Corporation (RF - Free Report) has reported second-quarter 2022 earnings of 59 cents per share, beating the Zacks Consensus Estimate of 53 cents. However, the results compare unfavorably with the prior-year figure of 77 cents.

Regions Financial’s results were driven by a rise in fee income and NII. Average loan and deposit balances also improved. However, rising expenses and provision for credit losses affected the bottom line. Capital ratios continued to deteriorate in the quarter.


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