Navient(NAVI) - 2024 Q4 - Annual Report

Financial Performance - GAAP net income for 2024 was $131 million, down from$228 million in 2023, with diluted earnings per share of $1.18[70]. - Return on common stockholders' equity decreased to 5$105 million in 2024 from $319 million in 2023, representing a 67$221 million ($2.00 diluted Core Earnings per share), down from$303 million ($2.45 diluted Core Earnings per share) in 2023, reflecting a decrease of 27$234 million for 2024, a significant increase from $36 million in 2023[205]. - Total revenue for the Business Processing segment reached$462 million in 2024, compared to $321 million in 2023[205]. - Total expenses for the year were$865 million, with direct operating expenses at $445 million and unallocated shared services expenses at$235 million[187]. - Total interest income reached $3,809 million, with education loans contributing$3,655 million and cash and investments adding $154 million[187]. Loan Portfolio - Navient manages a portfolio of$30.9 billion in federally guaranteed Federal Family Education Loan Program (FFELP) Loans and $15.7 billion in Private Education Loans[27][28]. - As of December 31, 2024, Navient's portfolio of FFELP Loans was$31 billion, with a net interest margin of 0.45%[43]. - Navient's Private Education Loans portfolio totaled $15.7 billion as of December 31, 2024, with a net interest margin of 2.87$46,568 million, a decrease from $54,827 million in 2023, representing a decline of approximately 15$16,157 million, with average loans in repayment at $16,078 million[129]. - The total balance of loans in forbearance decreased to$4,365 million in 2024 from $6,147 million in 2023, indicating improved repayment conditions[127]. - The percentage of loans delinquent greater than 90 days increased to 8.7$249 million, including $179 million in share repurchases and$70 million in dividends[34]. - The company repurchased $179 million of common shares, with$111 million of repurchase authority remaining[75]. Asset Management - Total assets as of December 31, 2024, were $51.8 billion, a decrease from$61.4 billion in 2023[67]. - The total unencumbered tangible assets amounted to $2.9 billion, including$1.3 billion in unencumbered education loans[141]. - The company reported a liquidity position with unrestricted cash of $722 million and total primary liquidity sources of$1,196 million as of December 31, 2024[140]. Risk Management - Navient emphasizes the importance of risk management for continued success[210]. - The company assigns risk oversight and management responsibilities at various organizational levels[210]. - Comprehensive risk management practices are maintained to identify, measure, monitor, evaluate, control, and report significant risks[210]. - Continuous evaluation of risk management practices is conducted to ensure effectiveness and identify areas for improvement[210]. - Coordination of risk management activities is a routine process within the organization[210]. - The company focuses on understanding the inherent risks in its business operations[210]. - Effective management of risks is critical for achieving strategic objectives[210]. - Risk assessment is an ongoing responsibility across various levels of the organization[210]. - The company aims to enhance its risk management framework regularly[210]. - Significant risks are reported systematically to ensure transparency and accountability[210]. Loan Loss Provisions - The provision for Private Education Loan losses increased to $112 million in 2024, up from$67 million in the prior year[79]. - Provision for loan losses decreased to $1 million in 2024 from$56 million in 2023, a reduction of 98%[87]. - The allowance for loan losses increased to $621 million in 2024 from$832 million in 2023, indicating a reduction in the reserve for potential loan defaults[125]. - The Private Education Loan provision for loan losses was $112 million in 2024, including$39 million related to lowering expected recovery rates on defaulted loans[156]. Business Operations - Navient completed the sale of its healthcare services business for $369 million, resulting in a$219 million gain on sale[40]. - A strategic outsourcing agreement was established with MOHELA for student loan servicing, transitioning nearly 900 employees[40]. - Restructuring and reorganization charges in 2024 amounted to $39 million, primarily related to severance from job abolishments[40]. - The company aims to complete its strategic actions to simplify the company by the end of 2025[39]. Market Conditions - The introduction of various federal loan forgiveness plans has triggered increased consolidation activity among FFELP borrowers, impacting the company's results[180]. - The company expects future origination volume for Private Education Refinance Loans to increase in 2025, supported by strong liquidity and high credit quality[171].