Wilmington-based Navient reported a loss in the fourth quarter and lower earnings for the year, thanks to adjustments that reflect the recent enactment of a corporate tax cut and restructuring expenses.
Companies expect to recoup those losses with the cut in the corporate tax rate.
“This year’s results reflect our ability to add significant student loan portfolios while reducing private education loan charge-offs to their lowest levels in over 10 years and delivering meaningful growth in our non-education related businesses,” said Jack Remondi, CEO. “We also celebrate the achievements of more than 530,000 customers who successfully paid off their student loans. I’m extremely proud of our team’s ability to adapt to significant changes in our business over the last several years. We have developed and executed plans to capture the value of cash flows from our legacy portfolios and improve operating efficiency. This is an effort we’re continuing aggressively in 2018.”
The company services student loans and remains in the line of fire of a number of groups. over student loan burdens and collection practices.
The stock price has not budged despite the naming of an acting director for the Consumer Financial Protection Bureau who says he will not push the envelope in enforcement actions involving payday and other lenders.
Navient has defended its practices and has worked to diversify into areas such as online lending and providing services to cities with parking meters and related systems.
Navient’s share price is down about 14 percent over the past year. The company does pay a 4.75 percent dividend on its shares.
For the fourth-quarter of 2017, GAAP (Generally Accepted Accounting Principles) net loss was $84 million compared with GAAP net income of $145 million for the year-ago quarter.
For 2017, GAAP net income was $292 million compared with $681 million for 1916.
Fourth-quarter core earnings reflected a net loss of $131 million, compared with core earnings net income of $129 million for the year-ago quarter.
Factors behind the decrease in diluted core earnings per share from the year-ago quarter were the $224 million loss due to the enactment of the “Tax Cuts and Jobs Act” and $29 million of fourth-quarter 2017 restructuring expenses.
Excluding the fourth-quarter 2017 tax act of $224 million and restructuring and regulatory-related expenses of $32 million, fourth- quarter 2017, core earnings net income was $114 million compared with fourth-quarter 2016 core earnings net income of $130 million.
Core earnings for full-year 2017 were $251 million compared with $587 million for full-year 2016. The decrease in 2017 diluted core earnings per share compared with 2016 was primarily the result of the $224 million tax act, $29 million of restructuring expenses and a $224 million reduction in net interest income primarily due to the amortization of the portfolio.
Excluding the tax act loss of $224 million and restructuring and regulatory-related expenses of $43 million, full-year 2017 core earnings net income was $502 million compared with full-year 2016 core earnings net income of $597 million, excluding regulatory-related expenses of $17 million.
Navient reports core earnings because management makes its financial decisions based on such measures.
