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Navient (NAVI) Q1 Earnings Beat on Lower Expenses, NII Dips
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Navient Corporation (NAVI - Free Report) has reported first-quarter 2024 adjusted earnings per share (excluding regulatory-related and restructuring expenses) of 63 cents, surpassing the Zacks Consensus Estimate of 58 cents. It reported 86 cents in the prior-year quarter.
Results were driven by a rise in total other income and a fall in expenses. However, a decline in net interest income (NII) has affected the results.
Navient’s GAAP net income was $73 million. It recorded a net income of $111 million in the prior-year quarter.
NII Declines, Expenses Fall
NII plunged 35% year over year to $152 million in the first quarter. Further, it missed the Zacks Consensus Estimate of $188.04 million.
Total other income increased 53% year over year to $135 million. The upside stemmed from an increase in asset recovery and business processing revenues.
Provision for loan losses was $12 million, while the company recorded a benefit of $14 million in the year-earlier quarter.
Total expenses decreased 3% year over year to $187 million.
Quarterly Performance of Segments
Federal Education Loans: The segment generated a net income of $40 million, which declined 54% year over year.
As of Mar 31, 2024, the company’s net Federal Family Education Loan Program (“FFELP”) loans were $35.87 billion, down 5.4% sequentially.
Consumer Lending: This segment reported a net income of $73 million, which decreased from $110 million in the year-ago quarter.
The private education loan delinquency rate greater than 30 days was 5% compared with 4.5% in the prior-year quarter.
As of Mar 31, 2024, the company’s private education loans were $16.6 billion, which decreased 1.7% from the prior quarter. Navient originated $228 million of private education refinance loans in the reported quarter.
Business Processing: Segmental net income of $6 million increased from $4 million in the year-ago quarter.
Liquidity
To meet liquidity needs, Navient expects to utilize various sources, including cash and investment portfolio, predictable operating cash flows provided by operating activities, the repayment of principal on unencumbered education loan assets and distributions from securitization trusts. It may also draw down on the secured FFELP Loan and Private Education Loan facilities, issue term asset-backed securities (ABS), enter additional Private Education Loan and ABS repurchase facilities or issue additional unsecured debt.
Notably, it had $823 million of total unrestricted cash and liquid investments as of Mar 31, 2024.
Capital Distribution Activities
In the first quarter, the company paid out $18 million in common stock dividends.
In the reported quarter, Navient repurchased shares of common stock for $43 million. As of Mar 31, 2024, there was $247 million of the remaining share-repurchase authority.
Our Take
NAVI has been an eminent portfolio holder of private education loans. Its diversified business segments are likely to support revenue growth. The strategic actions undertaken by the company will support financials in the upcoming period.
The company’s first-quarter results reflect lower NII and a rise in provisions, which were concerning. Further, any rise in expenses is expected to increase the bottom-line pressure in the near term.
Navient Corporation Price, Consensus and EPS Surprise
Performance & Earnings Release Dates of Other Consumer Loan Providers
Ally Financial’s (ALLY - Free Report) first-quarter 2024 adjusted earnings of 45 cents per share surpassed the Zacks Consensus Estimate of 33 cents. However, the bottom line reflects a decline of 45.1% from the year-ago quarter.
ALLY’s results were primarily aided by an improvement in other revenues. However, a decline in net financing revenues, along with higher expenses and provisions, were the undermining factors.
Capital One Financial (COF - Free Report) is scheduled to report first-quarter numbers on Apr 25, 2024.
The consensus estimate for COF’s first-quarter 2024 earnings has been revised 2.4% downward over the past month to $3.25. It indicates a year-over-year rise of 40.7%.
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Navient (NAVI) Q1 Earnings Beat on Lower Expenses, NII Dips
Navient Corporation (NAVI - Free Report) has reported first-quarter 2024 adjusted earnings per share (excluding regulatory-related and restructuring expenses) of 63 cents, surpassing the Zacks Consensus Estimate of 58 cents. It reported 86 cents in the prior-year quarter.
Results were driven by a rise in total other income and a fall in expenses. However, a decline in net interest income (NII) has affected the results.
Navient’s GAAP net income was $73 million. It recorded a net income of $111 million in the prior-year quarter.
NII Declines, Expenses Fall
NII plunged 35% year over year to $152 million in the first quarter. Further, it missed the Zacks Consensus Estimate of $188.04 million.
Total other income increased 53% year over year to $135 million. The upside stemmed from an increase in asset recovery and business processing revenues.
Provision for loan losses was $12 million, while the company recorded a benefit of $14 million in the year-earlier quarter.
Total expenses decreased 3% year over year to $187 million.
Quarterly Performance of Segments
Federal Education Loans: The segment generated a net income of $40 million, which declined 54% year over year.
As of Mar 31, 2024, the company’s net Federal Family Education Loan Program (“FFELP”) loans were $35.87 billion, down 5.4% sequentially.
Consumer Lending: This segment reported a net income of $73 million, which decreased from $110 million in the year-ago quarter.
The private education loan delinquency rate greater than 30 days was 5% compared with 4.5% in the prior-year quarter.
As of Mar 31, 2024, the company’s private education loans were $16.6 billion, which decreased 1.7% from the prior quarter. Navient originated $228 million of private education refinance loans in the reported quarter.
Business Processing: Segmental net income of $6 million increased from $4 million in the year-ago quarter.
Liquidity
To meet liquidity needs, Navient expects to utilize various sources, including cash and investment portfolio, predictable operating cash flows provided by operating activities, the repayment of principal on unencumbered education loan assets and distributions from securitization trusts. It may also draw down on the secured FFELP Loan and Private Education Loan facilities, issue term asset-backed securities (ABS), enter additional Private Education Loan and ABS repurchase facilities or issue additional unsecured debt.
Notably, it had $823 million of total unrestricted cash and liquid investments as of Mar 31, 2024.
Capital Distribution Activities
In the first quarter, the company paid out $18 million in common stock dividends.
In the reported quarter, Navient repurchased shares of common stock for $43 million. As of Mar 31, 2024, there was $247 million of the remaining share-repurchase authority.
Our Take
NAVI has been an eminent portfolio holder of private education loans. Its diversified business segments are likely to support revenue growth. The strategic actions undertaken by the company will support financials in the upcoming period.
The company’s first-quarter results reflect lower NII and a rise in provisions, which were concerning. Further, any rise in expenses is expected to increase the bottom-line pressure in the near term.
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 & Earnings Release Dates of Other Consumer Loan Providers
Ally Financial’s (ALLY - Free Report) first-quarter 2024 adjusted earnings of 45 cents per share surpassed the Zacks Consensus Estimate of 33 cents. However, the bottom line reflects a decline of 45.1% from the year-ago quarter.
ALLY’s results were primarily aided by an improvement in other revenues. However, a decline in net financing revenues, along with higher expenses and provisions, were the undermining factors.
Capital One Financial (COF - Free Report) is scheduled to report first-quarter numbers on Apr 25, 2024.
The consensus estimate for COF’s first-quarter 2024 earnings has been revised 2.4% downward over the past month to $3.25. It indicates a year-over-year rise of 40.7%.