NAVI

• Core Financial Results

• Reported core EPS of $0.29 for Q2 2026; excluding net one-time benefits ($0.04 per share from a $12 million investment gain partially offset by $3 million trust call loss and $4 million regulatory/restructuring expenses), core EPS was $0.25, up from $0.20 in Q2 2025
• Total operating expenses were $85 million in Q2 2026, 18% lower than $100 million in Q2 2025
• The company completed two securitizations (one in-school, one refinance) in the quarter, issued $500 million in new unsecured debt while retiring $500 million in maturing bonds, and returned $17 million to shareholders via dividends and share repurchases

• Strategic Transformation Progress

• Navient benefited from prior strategic changes including improved liquidity and major fixed cost reductions under former CEO David Yowan, who stepped down in June 2026
• Originations growth is accelerating across both refinance and in-school product lines, driven by higher student loan refinancing demand, with further in-school growth expected in H2 2026 due to seasonality and expanded graduate education lending policy changes
• New personal loan products are in the testing phase, with expected demand growth starting in 2027

• Capital Allocation and Accounting Updates

• Navient classified $528 million (nearly 10%) of its $5.4 billion legacy private loan portfolio as held for sale, to redeploy capital from strategically irrelevant legacy loans to higher-priority growth areas; this released $19 million in loan loss allowance that was reallocated to the remaining portfolio
• Starting Q3 2026, newly originated in-school loans will be accounted for at fair value (previous originations remain at amortized cost), which better reflects economic reality given that almost all new in-school originations are intended for securitization or sale, and eliminates near-term provision expense for these originations

• Full-year 2026 operating expenses are expected to be $350 million or lower, matching prior guidance and the company remains on track to hit this target
• Full-year 2026 in-school origination volume is projected to reach just above $600 million, representing 50% year-over-year growth
• 2026 full-year origination volume guidance remains unchanged, and the company is currently on pace to meet this outlook
• The adjusted tangible equity ratio is expected to stay in an 8-9% range going forward, consistent with the company's 8% minimum target
• The company has capacity for additional share repurchases in H2 2026 under its existing $100 million annual authorization, with ~$75-$76 million remaining as of Q2 end
• Additional demand growth is expected for new personal loan products in 2027 and beyond after testing is completed

1. Consumer Lending Segment: Net income was $27 million in Q2 2026, compared to $26 million in Q2 2025. It accounts for 50.9% of total Q2 2026 net income across segments. Combined originations grew over 60% year-over-year to $815 million total, with $735 million from refinance products (driven by the Earnest platform, up over 60% YoY) and $80 million from in-school lending (up 40% YoY). Credit quality improved: 31+ day delinquencies declined to 5.4% from 5.5% last quarter, 91+ day delinquencies declined to 2.4% from 2.5%, and charge-off rates decreased to 1.8% from 1.9% last quarter.
2. Federal Education Loan Segment: Net income was $26 million in Q2 2026, compared to $30 million in Q2 2025. It accounts for 49.1% of total Q2 2026 net income across segments. Net interest income and operating expenses declined as expected due to ongoing paydown of the portfolio. Credit trends continued to normalize: 91+ day delinquencies declined to 8.0% (50 bps better than last quarter, 200+ bps better than YoY), and charge-off rates improved to 18 bps from 29 bps last quarter.

• Actual future results may differ materially from management's current expectations due to a variety of macroeconomic and market risks, referenced in the company's SEC filings including Form 10-K
• The pace of credit quality improvement in the legacy private loan portfolio moderated in Q2 2026 and remained above long-term historical norms, creating uncertainty around future loss expectations
• Rising interest rates have compressed net interest margins on refinance loans in the current period
• Small current in-school origination volumes limit strategic options for loan disposition in the short term
• Valuation of new in-school loans under the fair value option is not finalized and will depend on third-quarter origination activity, creating near-term uncertainty around reported results

Q: What is the expected mix of in-school loan disposition (retention, securitization, outright sales) after adopting the fair value option, and will securitization structures change? Is the initial fair value mark expected to be positive? / A: The company expects securitization structures to remain unchanged from prior practice, with most structures staying on-balance sheet. Currently, because in-school origination volumes are still small, almost all new originations will be securitized in the short term. Outright sales may become more common as volumes grow. All disposition decisions will be made on a deal-by-deal basis based on strategic and economic value. Management expects a positive initial fair value mark, but the exact number will depend on Q3 originations and will be reported in the next quarterly call.

Q: What drives the $23 million reserve build on the remaining private loan portfolio, and is it concentrated in new or legacy loans? Are the held-for-sale legacy loans higher quality than the remaining legacy portfolio? / A: The $23 million reserve build is almost entirely concentrated in the remaining legacy private portfolio. While credit quality still improved in Q2, the pace of improvement was slower than expected and remains above long-term historical norms, so the reserve build accounts for this continued uncertainty. The held-for-sale classification and reserve build are independent actions: the $19 million reserve release only applies to the $528 million classified held for sale, which was selected primarily because it had no existing risk retention requirements from prior securitizations, not because of differing quality.

Q: Refinance spreads have been pressured by rising interest rates — what is the outlook for spreads in H2 2026? Why was share buyback activity low in Q2, and what should we expect for H2? / A: Management noted that current net interest margins on refinance loans are lower than other products, but the business is pursued for long-term share gains, and lower loss levels partially offset compressed spreads. Spreads are expected to remain similar to first quarter levels in H2. The low Q2 buyback level is due to Q3 growth capital needs and the parameters of the existing 10b-5 buy plan, which did not trigger repurchases in the quarter. There is ~$75-76 million remaining under the full-year $100 million authorization, so there is capacity for additional repurchases in H2 if conditions allow.

Q: Is the $23 million reserve build sufficient to align with current expectations for the private portfolio, and what is the target range for the adjusted tangible equity ratio going forward? / A: Management conducts a thorough quarterly reserve evaluation incorporating portfolio trends, composition and macroeconomic factors, and believes the current reserve level is appropriate after the build, though uncertainty remains and reserves will be reevaluated each quarter. The adjusted tangible equity ratio ended Q2 at 9%, up slightly from 8.9%, and management targets a minimum of 8%, so a range of 8-9% is a reasonable expectation going forward.