Navient Corporation

Thank you, Andrew.

Good morning and welcome to Naviant's third quarter 2020 earnings call. With me today are Jack Raimondi, our CEO, and Joe Fisher, our CFO. After their prepared remarks, we will open up the call for questions. Before we begin, keep in mind our discussion will contain predictions, expectations, forward-looking statements, and information about our business that is based on management's current expectations as of the date of this presentation. Actual results in the future may be materially different from those discussed here. This could be due to a variety of factors. Listeners should refer to the discussion of those factors on the company's Form 10-K and other filings with the SEC. For Navient, these factors include, but are not limited to, the risks and uncertainties associated with the severity, magnitude, and duration of the COVID-19 pandemic and the related economic impacts. As reported previously, the work from home policies and travel restrictions that have been put in place have not negatively affected our ability to close our books and maintain financial reporting systems, internal controls, and other over-financial reporting or disclosure controls and procedures. During this conference call, we will refer to non-GAAP financial measures, including core earnings, adjusted tangible equity ratio, and various other non-GAAP financial measures derived from core earnings. A description of our non-GAAP financial measures and a full reconciliation to GAAP measures and our GAAP results can be found in the third quarter 2020 supplemental earnings disclosure. This is posted on the investors page at Navient.com. Thank you, and I'll turn the call over to Jack.

Thank you, Nathan. Good morning, everybody. Thank you for joining us today and for your interest in Navient. Before I begin my comments on the quarter, I'd like to welcome Joe Fisher to his first earnings call as CFO. Joe brings a wealth of knowledge of our business and an outstanding commitment to help us deliver value. And for those of you who have worked with Joe in his role in investor relations, you know this already. I'm excited to see Joe take on this important and challenging role, and I look forward to working with him even more closely, and I'm confident in his ability to succeed. Congratulations, Joe. I also want to acknowledge and thank Ted Morris, our controller, who bridged the gap as acting CFO. This was no small task, and he did it while maintaining his responsibilities as controller. Thanks, Ted, for stepping up and for helping out. While the pandemic continues to create significant challenges, our business model continues to deliver outstanding results. Once again, this quarter's results demonstrate the resiliency, adaptability, and commitment of our team and our business model as we continue to meet the needs of customers and clients. Throughout this pandemic, we have helped millions of borrowers adjust to their individual economic challenges with payment relief and other assistance. We've also deployed thousands of our teammates to help residents apply for and receive unemployment benefits and assist communities in COVID contact tracing. In doing so, we kept our team safe and employed and even added thousands to our payroll. I'm extremely proud of how our team continues to perform in this challenging environment and in their commitment. Our results this quarter were outstanding, and they exceeded our plan. For the quarter, adjusted core earnings per share rose a substantial 58% over the year-ago quarter to $1.03, and we delivered a core earnings return on equity of 33% in the quarter. The quarter's results were driven by continued strong credit performance, increasing demand for our credit products, a favorable interest rate environment, significant demand for business processing solutions, and our active focus on improving operating efficiency. In other words, every area of the business contributed to our strong results. While Joe will provide more details on the quarter shortly, I will start with some of the highlights. Net interest income continued to benefit from a favorable interest rate environment and improving funding spreads. The increase in refi originations also contributed to the $12 million increase in net interest income over the year-ago quarter. And despite the floor reset on July 1st that eliminated $30 million in floor income this quarter, net interest income fell by only $8 million compared to the second quarter. Given the current rate environment and funding execution, we expect our full-year net interest margin for both FELP and private loans to be greater than the original guidance provided at the beginning of the year. With the onset of the pandemic, we provided significant payment relief to millions of borrowers. As the economic situation began to recover, requests for forbearances fell, and the majority of borrowers successfully returned to repayment. For example, forbearance rates decreased from a peak of 28.5% in our felt portfolio to 14.3% at quarter end, and from a peak of 14.7% in our private loan portfolio to 4% at quarter end. In both portfolios, forbearance rates are consistent with pre-COVID levels. The initial usage of forbearance did reduce delinquencies and defaults in both our FELP and private portfolios year-to-date. At borrowers' return to repayment, private loan delinquency rates have remained very low, and our substantial loan loss reserves provide the ability to absorb significant losses if necessary. While we expect delinquencies and defaults to increase next year, Our substantial reserves are set for this and are adequate to cover expected losses. In our consumer lending segment, we saw strong demand for our refi loan products as we relaunched marketing in the quarter. Refi originations this quarter totaled $1.3 billion with attractive spreads and very strong credit characteristics and in line with our mid-teen ROE targets. The demand for loans to fund in-school programs was higher than last year, but lower than planned, as fewer students were enrolled and many schools operated in a virtual environment. This, along with conservative underwriting, kept new loan originations at the low end of our plan, including second disbursements, commitments in the academic year total $60 million, with $37 million disbursed through the third quarter. Our BPS segment saw record revenue in EBITDA in the quarter, with an EBITDA margin of 25%. Revenue was driven by the continued but slow recovery of business in health care and transportation, and in our ability to assist states to provide much-needed services to their residents. The strong performance of this segment is expected to continue through year-end. Our efforts to improve our operating efficiency also contributed to our strong results. Even as we hired 2,000 teammates to meet growing demand, total operating expense fell $20 million, and our core operating efficiency ratio improved 8% to 45% in the quarter. Operating efficiency remains a top priority for us. At the same time, we're continuing our work to improve customer experience and leveraging new technology. For example, we've launched an AI-powered online assistant and are creating video channels to make it easier for constituents to do business with our government clients. Finally, we continue to strengthen our capital ratios while returning $96 million to shareholders in the quarter, including the repurchase this quarter of 4% of our outstanding shares. Given our earnings outlook and strong capital position, we will continue to return excess capital to shareholders. Every area of our business contributed to this quarter's outstanding results. It is a clear demonstration of the strength of our business model, the strong credit profile of our loan portfolio, and our ability to originate high-quality attractive loans. It also reflects our ability to leverage our business processing skills to assist our clients and win new business and our ability to deliver increasing operating efficiency in a very challenging environment. Our earnings, along with the capital released from our amortizing legacy loan portfolios, also provide substantial resources to support the business, maintain our dividend, and return surplus capital to investors. And all this while maintaining a position of substantial financial and operational strength. We expect this strong performance to continue, supporting another increase in our core earnings forecast to between $3.25 and $3.28 for the full year. I also would like to acknowledge my teammates and their commitment to our customers and clients. Adjusting to new work arrangements and new services while juggling the uncertain environment and increasing family needs has not been easy. Thank you. I appreciate your interest in listening in today, and I look forward to your questions later in the call. I'm very pleased now to turn the call over to our new CFO, Joe, for a summary of this quarter's results. Joe?