Navient Co. SR NT 6% 121543 (NASDAQ:JSM) reported first-quarter 2026 results that management said were in line with its full-year outlook, driven by strong growth in private student loan refinancing, continued expense reductions, and improving credit trends.
On the call, CEO David Yowan said the quarter showed “continued momentum in our ability to deliver high-quality loan growth while maintaining expense discipline.” He added that total originations increased more than 60% year over year, while “we financed loan originations grew 65% year-over-year, marking our 10th consecutive quarter of growth,” citing strength in demand generation and improved efficiency as the company scales.
Quarterly performance and credit trends
In the private consumer lending business, Hauber said first-quarter net income was $35 million, which he attributed to “the mix shift toward more refi loans in the portfolio and the impact of rate changes from different index resets across the segment’s assets and debt.” He added that the private portfolio grew by approximately $200 million quarter over quarter as refinance and in-school originations exceeded portfolio paydowns.
Credit improved in the quarter, according to Hauber:
- Private charge-off rates declined to 1.91% from 2.26% in the fourth quarter.
- 31+ day delinquency rates decreased to 5.5% from 6.3% quarter over quarter.
- 91+ day delinquencies fell to 2.5% from 2.9% quarter over quarter.
Hauber said Navient recorded an $18 million provision in the quarter, including $11 million tied to new originations. However, he cautioned that while the “improvement in year-to-date credit performance is encouraging,” private legacy delinquency and charge-off rates “continue to run above our longer-term historical levels.”
In the question-and-answer session, Hauber told Seaport Research Partners analyst William Ryan that management expects “continued improvement” from current levels and said reserve levels reflect the company’s expectations going forward.
Origination growth led by Earnest refinance
Hauber said Earnest delivered $778 million of refinance originations in the first quarter, up 65% year over year and “on pace with our 2026 target.” He said rate-check volume rose 62% year over year, which he described as evidence of demand generation and engagement.
Management highlighted stronger borrower credit quality, with Yowan saying first-quarter refinance originations carried an average FICO score of 775. Hauber said the higher FICO “underscor[es] the quality of borrowers we are attracting.”
In-school lending originations totaled $40 million in the quarter. Yowan described in-school lending as having a “solid quarter” with “strong credit quality and margins,” while Hauber said results were consistent with the company’s plan and that Navient is “well-positioned for the upcoming peak season.”
On origination seasonality, Hauber told Bank of America analyst Karoline Lada that second-quarter originations should be “very similar” to the first quarter, with the “meaningful difference” expected in the third quarter when the majority of in-school originations typically occur.
Graduate lending opportunity and market preparation
Management discussed preparations for an expected expansion in the graduate in-school lending market, referencing changes related to Grad PLUS. In response to questions about mix and market share, the company said it is in “active discussions with financial aid offices” that are trying to address funding gaps for graduate students.
Management said it expects the graduate portion of volume to rise versus prior years, while cautioning that the market is still developing. On the competitive landscape, the company said other lenders are also active and that “everybody… [is] in a little bit of a learning and wait-and-see mode” on how total volumes and mix will develop. Management said it expects to provide more information as results emerge during the third quarter.
Expenses, capital return, and funding activity
Navient emphasized lower costs following its transformation efforts. Hauber said total core operating expenses were $89 million in the first quarter, representing a 30% improvement versus the first quarter of 2025, and consistent with the company’s plan and its $350 million expense outlook for the year. He also noted the first quarter included about $5 million of wind-down costs related to completion of phase I of the company’s transformation that are not expected to recur.
In the federal education loan segment, Hauber said first-quarter net income was $22 million, down slightly from $24 million a year earlier. He said portfolio paydown reduced net interest income by $3 million, offset by a $3 million decrease in expenses, which he attributed in part to “variable cost benefits from outsourcing servicing.” Provision in the segment was $9 million, and the net charge-off rate increased to 29 basis points due to loans impacted by 2024 natural disasters that were written off in the quarter. Hauber said “the bulk of the impacts from this cohort is now behind us,” with delinquency rates improving during the quarter.
Regarding funding, Hauber said Navient completed a $683 million securitization backed by recently originated refinance loans and said investor demand remained strong, producing “attractive pricing.” He added that the company also priced a $550 million in-school securitization that was “significantly oversubscribed,” executed at favorable pricing, and is expected to release warehouse capacity ahead of peak in-school lending season. Addressing a question from Bank of America’s Ryan Shelley, Hauber said the company has an unsecured maturity in June and has “the right liquidity and plan to address” it, while describing a “clean path” for funding through the year.
On capital returns, Yowan said the company repurchased $23 million of shares during the quarter, describing the price as an opportunity to buy shares at a discount to book value. Hauber said Navient repurchased 2.3 million shares at an average price of $9.91 and returned $38 million to shareholders through repurchases and dividends. He also said the company’s adjusted tangible equity ratio remained above its long-term target at 8.9%.
CEO transition and call schedule change
Yowan said the completion of strategic initiatives and expense reduction targets announced in January 2024 marked “a natural time” for him to step down as CEO. He said Edward Bramson will become CEO in “a few weeks’ time,” and that Yowan will remain on the board.
Separately, Head of Investor Relations Jen Earyes said Navient’s earnings calls will move to an after-market-close schedule beginning next quarter, with details for the second-quarter 2026 call to be provided when the company announces its earnings release schedule in July.
About Navient Co. SR NT 6% 121543 (NASDAQ:JSM)
Navient Co SR NT 6% 121543 (NASDAQ:JSM) is a series of senior unsecured notes issued by Navient Corporation. The notes carry a fixed annual interest rate of 6.00% and mature on December 15, 2043. As unsecured obligations, they rank pari passu with all of Navient’s other unsubordinated debt and are structurally subordinated to any secured borrowings.
Interest on these notes is payable semi-annually on June 15 and December 15 of each year. Beginning December 15, 2023, Navient has the option to redeem the notes, in whole or in part, at a specified redemption price plus accrued interest, subject to the terms set forth in the governing indenture under which the notes were issued and trade under the ticker symbol JSM.
Navient Corporation, the issuer behind this debt issue, provides asset management and business processing solutions to education loan portfolios in the United States.
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