Navient Q1 Earnings Beat Estimates on Lower Expenses, NII Dips Y/Y

Navient Corporation NAVI has reported first-quarter 2025 adjusted earnings per share (EPS) of 28 cents, surpassing the Zacks Consensus Estimate of 19 cents. It reported earnings of 63 cents in the prior-year quarter.

Results were driven by lower expenses. However, a rise in provision for loan losses and a decrease in net interest income (NII) were headwinds.

Navient’s GAAP net loss was $2 million against a net income of $73 million in the prior-year quarter.

Navient’s NII & Expenses Decline

NII fell 11.7% year over year to $144 million in the first quarter. It topped the Zacks Consensus Estimate by 7.4%.

Total other income decreased 80.1% year over year to $26 million.

Provision for loan losses was $30 million, up from $12 million in the prior-year quarter.

Total expenses decreased 29.9% year over year to $131 million.

NAVI’s Quarterly Performance of Segments

Federal Education Loans: The segment generated a net income of $24 million, which declined 40% year over year.

As of March 31, 2025, the company’s net FFELP loans were $30.2 billion, down 1.9% sequentially.

Consumer Lending: This segment reported a net income of $46 million, which decreased 36.9% from the year-ago quarter.

The private education loan delinquency rate greater than 30 days was 6.4% compared with 5% in the prior-year quarter.

As of March 31, 2025, the company’s private education loans were $15.7 billion, which decreased marginally from the prior quarter. Navient originated $470 million of private education refinance loans in the reported quarter.

Business Processing: The company reported a segmental net income of $2 million compared with $6 million in the year-ago quarter.

Navient’s Liquidity

To meet liquidity needs, NAVI expects to utilize various sources, including cash and investment portfolio, predictable operating cash flows provided by operating activities, the repayment of principal on unencumbered education loan assets, and distributions from securitization trusts. It may also draw down on the secured FFELP Loan and Private Education Loan facilities, issue term asset-backed securities (ABS), enter additional Private Education Loan and ABS repurchase facilities, or issue additional unsecured debt.

Notably, the company had $642 million of total unrestricted cash and liquid investments as of March 31, 2025.

Navient’s Capital Distribution Activities

In the first quarter, the company paid out $16 million in common stock dividends.

In the reported quarter, Navient repurchased shares of common stock for $35 million. As of March 31, 2025, there was $76 million of the remaining share-repurchase authority.

Our Take on NAVI

Navient has been an eminent portfolio holder of private education loans. Its diversified business segments are likely to support revenue growth. The strategic actions undertaken to control expenses are expected to support financials in the upcoming period. The company’s first-quarter results benefited from a decline in expenses. However, lower NII is a near-term concern.

Navient Corporation Price, Consensus and EPS Surprise

Navient Corporation price-consensus-eps-surprise-chart | Navient Corporation Quote

Currently, NAVI carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Navient’s Peers

Capital One’s COF adjusted earnings of $4.06 per share handily surpassed the Zacks Consensus Estimate of $3.66. The bottom line also compared favorably with $3.21 in the prior-year quarter. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

COF’s results benefited from higher net interest income (NII) and non-interest income. Also, provisions declined during the quarter. However, the increase in expenses and lower loan balance were undermining factors.

Ally Financial’s ALLY first-quarter 2025 adjusted earnings of 58 cents per share handily surpassed the Zacks Consensus Estimate of 43 cents. Also, the bottom line reflected a jump of 41.5% from the year-ago quarter.

Results benefited from a rise in net finance revenues and lower provisions. However, lower other revenues, higher non-interest expenses, and a decline in net finance receivables and loans and deposits were the undermining factors for ALLY.

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