Navient : 4th Quarter 2020 Earnings Call

2020 4th Quarter and Full Year Earnings Call Presentation

January 27, 2021

Forward-Looking Statements; Non-GAAP Financial Measures

The following information is current as of December 31, 2020 (unless otherwise noted) and should be read in connection with Navient Corporation's "Navient" Annual Report on Form 10-K for the year ended December 31, 2019 (the "2019 Form 10-K"), filed by Navient with the Securities and Exchange Commission (the "SEC") on February 27, 2020 and subsequent reports filed by Navient with the SEC. Definitions for capitalized terms in this presentation not defined herein can be found in the 2019 Form 10-K. This presentation contains "forward-looking statements", within the meaning of the federal securities laws, about our business, and other information that is based on management's current expectations as of the date of this presentation. Statements that are not historical facts, including statements about the company's beliefs, opinions or expectations and statements that assume or are dependent upon future events, are forward-looking statements and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," "will," "would," "may," "could," "should," "goal," or "target." Forward-looking statements are subject to risks, uncertainties, assumptions and other factors that may cause actual results to be materially different from those reflected in such forward-looking statements.

For Navient, these factors include, among others, the risks and uncertainties associated with:

• the severity, magnitude and duration of the COVID-19 pandemic, including changes in the macroeconomic environment, restrictions on business, individual or travel activities intended to slow the spread of the pandemic and volatility in market conditions resulting from the pandemic including interest rates, the value of equities and other financial assets;
• the risks and uncertainties associated with increases in financing costs;
• unanticipated increases in costs associated with compliance with federal, state or local laws and regulations;
• changes in the demand for asset management and business processing solutions or other changes in marketplaces in which we compete (including increased competition);
• changes in accounting standards including but not limited to changes pertaining to loan loss reserves and estimates or other accounting standards that may impact our operations;
• adverse outcomes in any significant litigation to which the company is a party;
• credit risk associated with the company's underwriting standards or exposure to third parties, including counterparties to hedging transactions; and
• changes in the terms of education loans and the educational credit marketplace (including changes resulting from the CARES Act or other new laws and the implementation of existing laws).

The company could also be affected by, among other things:

• unanticipated repayment trends on loans including prepayments or deferrals in our securitization trusts that could accelerate or delay repayment of the bonds;
• reductions to our credit ratings, the credit ratings of asset-backed securitizations we sponsor or the credit ratings of the United States of America;
• failures of our operating systems or infrastructure or those of third-party vendors;
• risks related to cybersecurity including the potential disruption of our systems or those of our third-party vendors or customers or potential disclosure of confidential customer information;
• damage to our reputation resulting from cyber-breaches, litigation, the politicization of student loan servicing or other actions or factors;
• failure to successfully implement cost-cutting initiatives and adverse effects of such initiatives on our business;
• failure to adequately integrate acquisitions or realize anticipated benefits from acquisitions including delays or errors in converting portfolio acquisitions to our servicing platform;
• changes in law and regulations whether new laws or regulations or new interpretations of existing laws and regulations applicable to any of our businesses or activities or those of our vendors, suppliers or customers;
• changes in the general interest rate environment, including the availability of any relevant money-market index rate, including LIBOR, or the relationship between the relevant money-market index rate and the rate at which our assets are priced;
• our ability to successfully effectuate any acquisitions and other strategic initiatives;
• activities by shareholder activists, including a proxy contest or any unsolicited takeover proposal;
• changes in general economic conditions; and
• the other factors that are described in the "Risk Factors" section of the 2019 Form 10-K and in our other reports filed with the Securities and Exchange Commission.

The preparation of the company's consolidated financial statements also requires management to make certain estimates and assumptions including estimates and assumptions about future events. These estimates or assumptions may prove to be incorrect and actual results could differ materially. All forward-looking statements contained in this release are qualified by these cautionary statements and are made only as of the date of this release. The company does not undertake any obligation to update or revise these forward-looking statements except as required by law.

Navient reports financial results on a GAAP basis and also provides certain non-GAAP performance measures, including Core Earnings, Adjusted Tangible Equity Ratio, and various other non-GAAP financial measures derived from Core Earnings. When compared to GAAP results, Core Earnings exclude the impact of: (1) mark-to-market gains/losses on derivatives; and (2) goodwill and acquired intangible asset amortization and impairment. Navient provides Core Earnings measures because this is what management uses when making management decisions regarding Navient's performance and the allocation of corporate

resources. Navient Core Earnings are not defined terms within GAAP and may not be comparable to similarly titled measures reported by other companies. For additional information, see Core Earnings in Navient's fourth quarter earnings release and pages 18 - 20 of this presentation for a further discussion and a complete reconciliation between GAAP net income and Core Earnings.

© 2021 Navient Solutions, LLC. All rights reserved.

2

Continued To Build Long-term Value Through A Challenging Environment in 2020

Federal Education Loans

Segment

• Providing payment relief to borrowers impacted by COVID-19
• Improved net interest margin from 83 bps to 99 bps, year over year, as our portfolio benefits from a
  low-rate environment
• Actively managed our portfolio, decreasing our delinquency rate from 11.7% to 9.2% year over year
• Reduced operating expenses $72 million, or 20%, year over year

Consumer Lending Segment

• Dynamically adjusted our originations in response to capital market conditions, ensuring originations meet our mid-teensROE target return thresholds
• Originated $4.6 billion of Private Education Refinance Loans
• Actively managed our portfolio, decreasing our delinquency rate from 4.6% to 2.6% year over year
• Reduced operating expenses by $10 million, or 6%, year over year

Business Processing Segment

• Rapidly pivoted from COVID-19 impacted segments to support new state contracts
• Over 3,000 Navient employees working on unemployment insurance response and contact tracing services 1
• New contracts drove revenue resiliency year over year despite unprecedented disruption
• Affirmed our differentiated expertise and franchise value to existing and new clients

99 bps NIM

320 bps NIM

19% EBITDA margin 2

Note: Yearly data is as of 12/31/2020, unless otherwise noted.

1. As of 1/14/2021
2. Item is a non-GAAP financial measure. See pages 18 to 20 for a description and reconciliation.

© 2021 Navient Solutions, LLC. All rights reserved.

3

Outlook

2021 EPS Guidance: $3.10 - $3.25 1

Key Company & Business Segment Metrics

		2020	2020		2021
		Original 2 Targets	Actuals		Guidance
Core Earnings Return on Equity 3		High Teens to Low Twenties	30%	✓	Low Twenties
Core Earnings Efficiency Ratio 3	~50%	48%	✓	~52%
Adjusted Tangible Equity Ratio 4		Above 6.0%	5.0%		~5.5%
	(Pro forma Adjusted Tangible
			Equity Ratio of 7.1%) 4
Net Interest Margin - Federal		Low to Mid 80's	0.99%	✓	Mid to High 90's
Education Loan Segment
Charge-off Rate - Federal	0.06% - 0.08%	0.10%		~0.10%
Education Loan Segment
Net Interest Margin - Consumer	3.00% - 3.10%	3.20%	✓	2.70% - 2.80%
Lending Segment
Charge-off Rate - Consumer	1.5% - 1.7%	0.88%	✓	1.5% - 2.0%
Lending Segment
EBITDA Margin - Business		High Teens	19%	✓	High Teens
Processing Segment 3
1 Adjusted diluted Core Earnings per share excludes net restructuring and regulatory-related expenses.
2 Key Company & Business Segment Metrics were first provided on January 22nd, 2020.
3 Item is a non-GAAP financial measure. See pages 18 to 20	for a description and reconciliation.
4 Item is a non-GAAP financial measure. See pages 18 to 20	for a description and reconciliation. Cumulative derivative accounting mark to market losses decreased by 6% to $616 million during the fourth quarter but will reverse to
zero as contracts mature. Excluding this amount would result in an ATE ratio of 7.1% as of December 31, 2020.			4
© 2021 Navient Solutions, LLC. All rights reserved.