Navient Q4 Earnings Beat Estimates on Lower Expenses, NII Dips Y/Y

Core Insights - Navient Corporation (NAVI) reported fourth-quarter 2024 adjusted earnings per share (EPS) of 25 cents, exceeding the Zacks Consensus Estimate of 20 cents, but down from 70 cents in the prior-year quarter [1] - For the full year 2024, adjusted EPS was $2, missing the Zacks Consensus Estimate of $2.41 and down from $2.45 in the previous year [2] Financial Performance - Navient's GAAP net income for the fourth quarter was $24 million, a recovery from a net loss of $28 million in the prior-year quarter. However, for 2024, GAAP net income was $131 million, reflecting a 42.5% decline year over year [3] - Net interest income (NII) decreased by 30.6% year over year to $134 million in the fourth quarter, missing the Zacks Consensus Estimate of $151.05 million. For 2024, core NII was down 39.4% to $573 million, also missing the consensus estimate [4] - Total other income increased by 41.9% year over year to $88 million, primarily due to a gain on the sale of a subsidiary [4] - Provision for loan losses was $45 million, down 18.2% from the prior-year quarter, while total expenses decreased by 25.5% year over year to $152 million [5] Segment Performance - In the Federal Education Loans segment, net income was $10 million, down 84.1% year over year, with net FFELP loans at $30.6 billion, a decrease of 18.6% sequentially [6] - The Consumer Lending segment reported a net income of $37 million, a decrease of 19.6% from the year-ago quarter, with a private education loan delinquency rate greater than 30 days rising to 6.1% from 5.1% [6] - The Business Processing segment incurred a net loss of $20 million, compared to a net income of $8 million in the prior-year quarter [7] Liquidity and Capital Management - As of December 31, 2024, Navient had $722 million in total unrestricted cash and liquid investments [9] - The company plans to utilize various sources for liquidity, including cash, predictable operating cash flows, and potential debt issuance [8] - In the fourth quarter, Navient paid out $17 million in common stock dividends and repurchased shares for $65 million, with $111 million remaining in share-repurchase authority [10] Strategic Outlook - The company is recognized as a significant holder of private education loans, with diversified business segments expected to support revenue growth. Strategic cost control measures are anticipated to bolster financial performance in the near term, despite concerns over lower NII [11]