Navient Q2 Profit Down - Update

(RTTNews) - Navient Corp. (NAVI) Wednesday said its second-quarter profit dropped from a year ago, as revenues declined. Navient is reporting its first earnings result after its spin off as an independent company earlier this quarter.

Navient's second-quarter profit dropped to $307 million or $0.71 per share from $543 million or $1.20 per share last year.

Excluding special items, core earnings for the quarter declined to $241 million or $0.56 per share from $447 million or $1.00 per share in the prior year quarter. On average, eight analysts polled by Thomson Reuters expected earnings of $0.54 per share for the quarter. Analysts' estimates typically exclude special items.

Net interest income for the quarter dropped to $662 million from $784 million last year, while total other income declined to $275 million from $490 million a year ago.

Analysts expected revenues of $562.5 million for the quarter.

Earlier this quarter, Sallie Mae (SLM) announced its plan to spin-off Navient, its loan management, servicing and asset recovery business, from its consumer banking business.

Navient reported core earnings at its Federally Guaranteed Student Loans segment of $72 million, down from $238 million last year. The sharp drop is primarily due to the $257 million gain from the sale of residual interests in FFELP loan securitization trusts completed in the year-ago quarter, as well as a reduction in net interest income due to the decrease in FFELP loans outstanding.

At June 30, 2014, Navient held $100 billion of FFELP loans compared with $107 billion last year.

Core earnings at Private Education Loans segment rose to $86 million from $61 million last year, due mainly to a $44 million decrease in the provision for private education loan losses.

Business services core earnings dropped to $130 million from $168 million last year, reflecting the $38 million gain recognized on the sale of a subsidiary in the year-ago quarter.

Navient said its results show continued improvement in student loan portfolio credit quality with 90-plus day delinquencies on its federal and private loan portfolio dropping to the lowest levels since 2008.

Delinquencies of 90 days or more dropped to 3.2 percent of loans in repayment, down from 4.0 percent last year. Total delinquencies declined to 7.1 percent of loans in repayment, from 8.4 percent a year ago.

NAVI closed Wednesday's trading at $17.82, up $ 0.12 or 0.68%, on the Nasdaq. The stock further gained $0.25 or 1.40%, in after-hours trade.