Navient Co. SR NT 6% 121543 (NASDAQ:JSM) reported third-quarter 2026 earnings of $0.16 per share under generally accepted accounting principles and $0.03 per share on a core basis, as strong loan origination growth coincided with higher provisions on older loans.
The company originated $1.4 billion of loans during the quarter, with growth across refinancing and in-school lending. Chief Executive Officer and Board Chair Ed Bramson said total originations at the Earnest brand rose almost 80% from a year earlier, following investments in marketing and credit teams.
Navient’s adjusted tangible equity ratio rose to 9.5% at the end of September from 9.0% at the end of June. The company returned $25 million to shareholders through dividends and share repurchases during the quarter, Chief Financial Officer Steve Hauber said.
Loan growth and changing portfolio
Refinance originations increased 65% year over year, with a weighted average FICO score of 775 for new loans, Hauber said. In-school originations rose 84% to $479 million, including growth of more than 170% in graduate lending.
Bramson said a personal loan test generated $46 million in originations, compared with none a year earlier. More than 60% of those loans were cross-sold using data from the refinance business, he said, helping reduce acquisition costs. The company plans to expand the test next year, although Bramson said he did not expect it to be “huge.”
Navient expects approximately $700 million of fourth-quarter originations, based on a full-year plan of $3.8 billion and roughly $3.1 billion originated through the first nine months, Bramson said. He anticipated more personal loans, less in-school lending because of seasonality and roughly flat refinance volume.
The third quarter was Navient’s first reporting period using the fair value option for new in-school originations. It recognized a positive $23 million fair value adjustment on those loans, representing an average value of approximately 105% of par. Hauber said the valuation reflected both the loans’ initial value and market movements during the quarter.
Bramson said Navient’s longer-term intent is likely to make in-school loans a product manufactured for sale, citing market demand and the product’s margins. The company is currently more structured to securitize loans and sell the residual, he said.
Legacy loan sales and provisions
Navient sold approximately $750 million of legacy private loans during the quarter and recognized a $162 million gain, including $91 million of loan discount, Hauber said. It also classified an additional $1.4 billion of legacy private loans as held for sale, recording a $29 million provision to bring them to fair value.
The company separately classified approximately $1 billion of previously originated in-school loans as held for sale. Their fair value exceeded their carrying basis, allowing Navient to release prior loan-loss allowances and recognize a $42 million provision benefit. Together, the held-for-sale classifications produced a net $13 million provision benefit.
Total third-quarter provision was $227 million, including $214 million for consumer loans and $13 million for federal education loans. The consumer provision included $211 million on previously originated private loans: $178 million tied to the legacy portfolio and $33 million to refinance loans.
Hauber said the legacy provision reflected delinquencies and charge-offs remaining elevated longer than previously anticipated. The refinance provision primarily related to loans originated before 2025, whose performance was weaker than expected, he said.
After the sales and held-for-sale moves, Navient evaluated $3.3 billion of remaining private legacy loans subject to its credit-loss reserve model. Hauber said recent collection and delinquency trends pointed to flat to modestly favorable performance in the near term, although management expects improvement over the longer term.
Rates pressure returns
Bramson said Navient has raised rates on new loans more slowly than benchmark rates, which have climbed rapidly. The company has not yet seen reduced demand, he said, but is watching for an effect on originations as it continues to increase loan coupons.
In response to an analyst’s question, Bramson said refinance returns on equity had fallen from well into the 20% range at the beginning of the year to the teens and, at current pricing, single digits in some cases. He said Navient expected to catch up with roughly two-thirds of the benchmark-rate increase by year-end, after which it would assess the effect on originations.
Total expenses fell to $77 million from $109 million a year earlier. Approximately half of the reduction came from insurance proceeds related to prior litigation matters, while cost reductions across the company accounted for most of the remainder, Hauber said. Navient remains on pace for full-year operating expenses of $350 million or less, excluding regulatory and restructuring expenses.
Consumer lending net income was $2 million, compared with a $76 million loss a year earlier. Federal education loan segment net income fell to $22 million from $35 million; Hauber said the prior-year period included an $18 million benefit from a change in prepayment assumptions.
About Navient Co. SR NT 6% 121543 (NASDAQ:JSM)
Navient Corporation is a U.S.-based financial services company focused on managing education-related loans and providing asset recovery services. Its activities have included servicing student loans, collecting payments and helping borrowers manage repayment.
The company’s loan-related business centers on education loans, including private student loans and loans acquired through the Federal Family Education Loan Program. Navient also provides asset recovery services to government and commercial clients.
Navient was formed in 2014 through the separation of SLM Corporation, commonly known as Sallie Mae.
