Navient Q3 Profit Up 38%

(RTTNews) - Navient Corp. (NAVI) on Wednesday reported a 38 percent increase in profit for the third quarter from last year on higher revenues as well as improvements in delinquencies and defaults.

Navient, a provider of financial products and services focusing on the education sector, is reporting its second earnings results after its spin off as an independent company in April.

Navient's net income for the third quarter was $359 million or $0.85 per share, up from $260 million or $0.57 per share in the year-ago period.

Excluding special items, core earnings for the quarter were $218 million or $0.52 per share, compared to $259 million or $0.58 per share in the prior year quarter. On average, eight analysts polled by Thomson Reuters expected the company to report earnings of $0.52 per share for the quarter. Analysts' estimates typically exclude special items.

The latest quarter's core earnings was impacted by a $39 million reduction in asset recovery revenue, primarily related to a legislative reduction in certain fees earned effective July 1, 2014, as well as a $48 million reduction in net interest income. These were partially offset by a $47 million decrease in provisions for loan losses.

Net interest income for the quarter declined 22 percent to $624 million from $799 million last year, while total other income quadrupled to $288 million from $69 million a year ago. Analysts had a consensus revenue estimate of $514.67 million for the quarter.

In the preceding 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 $79 million, down from $91 million in the same period last year. The decrease is primarily due to a reduction in net interest income due to the decrease in FFELP loans outstanding.

The company acquired $521 million in FFELP loans in the latest quarter for a total of $1.8 billion of FFELP loans acquired year to date. At September 30, 2014, Navient held $97.7 billion of FFELP loans.

Core earnings at Private Education Loans segment rose to $98 million from $75 million last year, due mainly to a $46 million decrease in the provision for private education loan losses.

Business services core earnings dropped to $85 million from $127 million in the same period last year, reflecting lower asset recovery revenue primarily related to a legislative reduction in certain fees earned as well as a lower balance of FFELP loans serviced.

Navient's results showed continued improvement in student loan portfolio credit quality, with charge-off rates on private education loan portfolio improving to lower levels since 2008.

Delinquencies of 90 days or more dropped to 3.4 percent of loans in repayment, down from 4.2 percent last year. Total delinquencies declined to 7.9 percent of loans in repayment, from 9.8 percent a year ago.

NAVI closed Wednesday's trading at $17.42, down $0.05 or 0.29 percent on a volume of 3.79 million shares. In after-hours, the stock gained $0.06 or 0.34 percent to $17.48.