Navient Corp. released Q1 financial results on Thursday that include $830 million of student loan purchases, $300 million of common share repurchases and the acquisition of a new asset recovery and business process outsourcing firm focused on state and local public sector markets.
For Q1, GAAP net income was $292 million, compared with $219 million for the year-ago quarter.
Core earnings for the quarter were $194 million, compared with $142 million for the year-ago quarter. Excluding expenses associated with regulatory matters, Q1 2015 and 2014 diluted core earnings per share were $0.48 and $0.49, respectively.
Core earnings excluded impact of the financial results of the consumer banking business for periods prior to the spin-off from Sallie Mae in April 2014, as well as the related restructuring and reorganization expenses. It also excludes the impact of certain other one-time items including unrealized, mark-to-market gains/losses on derivatives and goodwill and acquired intangible asset amortization and impairment.
Results of Navient the loan management, servicing and asset recovery company formed through the strategic split of Sallie Mae in April 2014 reflects lower provisions for loan losses, more than offset by lower asset recovery revenues, reduced net interest income and higher expenses.
"We're pleased to begin our first full year as Navient by helping more recent college graduates successfully transition into repayment," said Jack Remondi, president and CEO at Navient. "Private credit quality also continued to improve, leading to a lower loan loss provision. During the quarter, we continued to make investments to enhance our service to clients and customers, and we continue to deliver on our growth plan by welcoming Gila to our family of top-performing asset recovery firms, adding 600 clients and accelerating our growth in business process outsourcing."
Private Education Loans
In its private education loans segment, Navient acquires, finances and services private education loans. Core earnings for the segment were $77 million in first-quarter 2015, compared with the year-ago quarter's $74 million.
The increase is primarily the result of a $16 million decrease in the provision for private education loan losses, a $6 million increase in servicing fees and a $9 million reduction in expenses. This was mostly offset by a $26 million decrease in net interest income because of a decline in the net interest margin and the balance of the portfolio.
Core earnings first-quarter 2015 private education loan portfolio results vs. first-quarter 2014 are as follows:
- Delinquencies of 90 days or more of 3.6% of loans in repayment, down from 3.9%.
- Total delinquencies of 6.9% of loans in repayment, down from 7.8%.
- Annualized charge-off rate of 2.9% of average loans in repayment, down from 3.3%.
- Net interest margin of 3.74%, down from 3.91%.
- Provision for private education loan losses of $120 million, down from $136 million.
At March 31, Navient held $29.0 billion of private education loans, compared with $30.9 billion of private education loans held at March 31, 2014.