Good day, and thank you for standing by. Welcome to the Navient first quarter 2021 earnings call. At this time, all participants are in listen only mode. After the speaker's presentations, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that this conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Nathan Rutledge. Please go ahead. Thanks, Mary. Good morning, and welcome to Navient's first quarter 2021 earnings call. With me today are Jack Remondi, 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 discussions will contain predictions, expectations, forward-looking statements, and other 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, including, among other things, uncertainties associated with the severity, magnitude, and duration of the COVID-19 pandemic and the related economic impact. 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 our financial reporting systems, internal controls over financial reporting or disclosure controls and procedures. Listeners should refer to the discussion of those factors on the company's Form 10-K and other filings with the SEC. 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. Our GAAP results and description of our non-GAAP financial measures and with a reconciliation to GAAP can be found in the first quarter 2021 supplemental earnings disclosure. This is posted on the investor page at navient.com. Thank you, and now I'll turn over the call to Jack. Thank you, Nathan. Good morning, everyone, and thank you for joining us today, and thank you for your interest in Navient. Our results this quarter were exceptional. In fact, they are a record high for a quarter. They are the result of our continued ability to adapt to the changing economic environment and the changing needs of our customers and clients. Our operational agility has been a long-term source of strength for Navient, but never has it been more apparent than during the pandemic. As a result of our ability to adapt and respond, we were able to provide relief to student loan borrowers in need, assist others in securing lower cost loans, and respond to clients with systems and people to address their rapidly growing and changing needs. We opportunistically captured the benefits of this low interest rate environment and strong investor appetite for quality assets. The benefits this quarter include historically low delinquency rates in both our FFELP and private loan portfolio, strong net interest margins as we continue to execute on several lower cost funding transactions, increased BPS revenue as we met our clients' changing needs, and two loan portfolio sales that accelerated cash flow and earnings with combined gains and related reserve release of $191 million. In total, we earned $304.5 million in core net income and delivered adjusted core earnings of $1.71 per share, an increase of 235% over the year ago quarter. This quarter, we sold $560 million in legacy private education loans and the residual from a $1 billion securitized refi loan portfolio. Both sales produced gains driven by lower discount rates on expected future cash flows and expectations of strong credit performance. Both highlight the value of our legacy and refi loan portfolios and the benefits our servicing brings to these portfolios. Demand for longer duration fixed income investments led investors to increase their valuation of private loan portfolios, given the strong credit performance and steady cash flows generated by the loans. While we don't intend to be a make and sell originator, strong investor demand made this an attractive time to sell, and it clearly demonstrates the value we create when we originate new refi loans. Even with the current interest holiday on government-owned federal loans and the calls for broad-based loan forgiveness, we saw solid demand from graduates looking to lock in today's low interest rates, thousands in interest expense by refinancing their student loans. One noticeable change we see is a higher portion of the loans refinanced are private loans. We see continued opportunity to help people save thousands in interest expense and further opportunity to expand the share of private loans being refinanced. I'm also optimistic of our ability to grow our in-school lending business. As the vaccines are more widely delivered, we expect the upcoming school year to return to a more traditional experience with more typical demand for responsible and transparent education financing solutions. Combined, we are reconfirming our projections for at least $5.5 billion in new loan originations in 2021. In our BPS segment, we're pleased to be able to respond quickly and in size to our state clients' needs. We leveraged our adaptable technology platforms so our teammates could provide much needed support in processing unemployment claims, providing contact tracing assistance, and more recently, resources to help accelerate vaccinations. While we're happy to continue to provide this critical assistance, we do hope the need for these services will decrease as the pandemic subsides. Our ability to adapt our systems and operations, to hire thousands of new remote employees and contractors, and respond with active assistance, often within just a few days, has been a great demonstration of the value we bring to a client. As the COVID project work begins to wind down, we are focused on leveraging our proven experience, capabilities, and flexibility to deliver value and innovation to longer term solutions. In our consumer lending business, a year ago, we, like many other lenders, increased our loan loss reserves in the face of significant economic uncertainty and rapidly rising unemployment. As the economy regained its footing, many consumers were able to manage their loans, including their student loans. In fact, the challenges created by the pandemic further demonstrated the value of a college education, as this segment of the population was more likely to be able to work remotely. Though credit performance to date has clearly outperformed our original expectations, with the economic outlook still uncertain, we have maintained our strong level of reserves. Our ongoing efforts to improve profitability contributed to our positive results this quarter. While traditionally this means a focus on operating expense, at Navient, this also includes a strong focus on reducing interest expense. We completed several new financings this quarter that achieve our lower cost objectives, and we've continued to reduce the balances of our most expensive debt, our corporate unsecured notes. Operating expense initiatives include enhanced web tools and ongoing automation efforts that both improve the customer experience and increase operating efficiency. We're also reviewing our space needs and have recently exited a lease on one of our more expensive offices. Our efforts to improve both operating and funding efficiency will continue. The implementation of CECL and the subsequent decline in interest rates impacted our targeted capital ratios earlier this year. I'm happy to report that with our strong financial performance over several quarters and the expected reversal of some of the derivative marks, we exceeded our target adjusted tangible equity ratio at March 31st. As a result, with the acceleration of earnings and release of capital from the loan sales, we will also accelerate our return of capital by increasing our planned share repurchases in 2021 by $200 million- $600 million for the full year. Finally, I remain optimistic about our outlook for the rest of 2021. Our portfolio performance remains strong. Our loan origination and fee revenue forecasts are intact, and our earnings outlook is well ahead of plan. In fact, we are well on a path to deliver our fourth year of year-over-year growth. Before I turn the call over to Joe, I want to thank my colleagues. Our results this quarter are the product of their efforts and commitment to serve our customers and clients. Thank you. Thank you for listening, and I'll now turn the call over to Joe for more detail on this quarter's results. Thank you, Jack, and thank you to everyone on today's call for your interest in Navient. During my prepared remarks, I will review the first quarter results for 2021. I will be referencing the earnings call presentation, which can be found on the company's website in the investor section. Our first quarter results compared to our original outlook for 2021 is provided on slide four. We are off to a great start to 2021, as we are currently on pace to exceed all of our original targets provided at the beginning of the year. This quarter's results reflect the continued dedication from Team Navient to meet the challenges and needs of our customers. As a result of the strong first quarter and updated outlook, we are increasing the range of our original 2021 adjusted core earnings per share guidance by over 30% to a range of $4.15- $4.25. Our outlook excludes regulatory and restructuring costs, reflects a favorable interest rate environment, and includes a 50% increase in planned full-year share repurchases in 2021 by utilizing the remaining share repurchase authority of $500 million. Key highlights from the quarter, beginning on slide five, include GAAP EPS of $2, an adjusted core EPS of $1.71. Lower delinquencies on both FFELP and private education loans. Sold $1.6 billion of private education loans that resulted in total gains on sale and release of provision of $191 million. Originated $1.7 billion of private education loans. Achieved BPS EBITDA margin of 29% in the quarter. Strengthened our capital position, and returned $129 million to shareholders in the form of repurchases and dividends. Let's move to segment reporting, beginning with federal education loans on slide six. The net interest margin improved to 97 basis points, which led to overall net interest income increasing 9% to $144 million compared to the first quarter of last year. Even as the average balance of loans declined by 9%. The increase from the year-ago quarter was driven by the favorable interest rate environment and ongoing improvement in funding costs. FFELP borrowers transitioned back to repayment. Total delinquency rates have declined 21% from the previous year to $3.8 billion. Fee income and operating expenses in this segment declined primarily as a result of the expected decreases in asset recovery volume, impact of COVID-19 on certain operational activities, and improvements in operating efficiencies. Now let's turn to slide seven in our consumer lending segment. The $180 million increase in net income was largely driven by the two loan sales that occurred in the quarter, which I will provide more color on in the following slide. The net interest margin of 299 basis points was in line with expectations, as the decline from the year-ago quarter was largely driven by the increased percentage of our high-quality private refi product within our consumer lending portfolio to nearly 40% of total loans. The delinquency rate declined 36% to 2.3% from a year ago. The charge-off rate fell to 68 basis points. As borrowers continue to transition out of forbearance, we feel confident that we are adequately reserved given the well-seasoned and high credit quality of our portfolio. At this time, we have not incorporated a significant change in our economic forecast as it relates to the allowance. Although the trends we are seeing remain highly encouraging. Excluding the provision release related to the loan sales, the remaining provision of $15 million was primarily related to $1.7 billion of newly originated education loans in the quarter. Let's turn to slide eight, which highlights our loan sales. In the first quarter, we sold $1.6 billion of private education loans, consisting of $560 million of non-refi loans and $1 billion of newly originated refi loans. The non-refi loans were all originated prior to 2014. These loans were primarily funded with unsecured debt, and we hold 8% of capital on our non-refi portfolio. The gain on sale from this portfolio totaled $46 million and resulted in the reversal of allowance for loan losses of $88 million. The second loan transaction consisted of a residual sale related to $1 billion of newly originated refi loans. We hold 5% of capital against refi loans, given the high credit quality and the low default rates that continue to outperform expectations. The gain on sale from this portfolio totaled $43 million and resulted in a reversal of allowance for loan losses of $14 million. The total gains associated with this transaction exceeded our last similar sale that occurred in 2019 and demonstrate the attractiveness of this asset class. The majority of the cash raised from these transactions will be used to reduce existing debt that was directly funding these loans, including unsecured debt and warehouse facilities. The gains on sale from these transactions, combined with the acceleration of future cash flows and release of capital, allowed us to increase our planned share repurchases for the rest of 2021 by $200 million, all while meeting our targeted capital thresholds. Our updated guidance presented today does not include any future loan sales. Let's continue to slide nine to review our business processing segment. In the first quarter, we continued to expand on opportunities that leverage our existing technology and infrastructure. This allowed us to achieve EBITDA margins of 29%, while more than doubling our total revenues to $125 million. The $68 million increase is largely due to supporting states in providing unemployment benefits, contact tracing, and vaccine administration that we believe will begin to decline during the second quarter as the economy reopens and these contracts are set to expire. The $37 million increase in expenses in the quarter associated with the growth in revenue in this segment contributed to increased total operating expenses for the company of $7 million from the year-ago quarter. We continue to focus on improving our operating efficiencies across all of our segments as our growth businesses contribute a larger proportion to our overall revenue and expense. Let's turn to our financing and capital allocation activity that is highlighted on slide 10. During the quarter, we repurchased 8.2 million shares at an average price of $12.23. At today's share price, our planned share repurchases of $500 million for the remainder of the year would reduce our outstanding share count by nearly 20%. In addition to the loan sales, we saw tremendous execution on the issuance of $2.8 billion of term funded ABS in the quarter, with $1 billion related to the residual sale. For example, our FFELP issuance that priced in February was over 30 basis points tighter than the previous transaction that priced in the fourth quarter and was our largest FFELP transaction since 2017. We continue to see increased demand for both our private and FFELP transactions. Our issuance of $500 million of unsecured debt in the quarter marked our lowest coupon ever printed for Navient's unsecured debt. On April 5th, we retired $627 million of unsecured debt and have no remaining maturities for the rest of the year. These transactions demonstrate our ability to lower our cost of funds while managing our debt maturity profile to better align to the cash flow projections of our total education loan portfolio. We ended the quarter with an adjusted tangible equity ratio of 6.2%, which was in line with our updated forecast. The cumulative negative mark-to-market losses related to derivative accounting declined by 19% to $499 million in the quarter due to the increase in projected rates and the natural passage of time. Excluding these temporary mark-to-market losses, which will reverse to zero as contracts mature, our adjusted tangible equity ratio is 8.1%. Turning to GAAP results on slide 11. We recorded first quarter GAAP net income of $370 million, or $2 per share, compared with a net loss of $106 million or $0.53 per share in the first quarter of 2020. In summary, the outperformance across all of our segments, highlighted by our financing activity and growth businesses, position us well to exceed our original targets, strengthen capital and increase returns to shareholders. I will now open the call for questions. As a reminder, to ask a question you will need to press star one on your telephone. To withdraw your question, press the pound key. Please standby while we compile the Q&A roster. Our first question comes from the line of Sanjay Sakhrani with KBW. Your line is open. Thanks. Good morning. Wanted to start off with the loan sale. I was just wondering what factors sort of led to your decision on the sale. Joe, I think I heard you say that you're not assuming any additional sales for the rest of the year. Maybe you could just talk about the thought process on future sales. Thanks. Sure. I think there's just has been an incredible demand for our asset class over the last several months and actually last several quarters. Just as a result of that demand, we took a look at our portfolio, and given the current interest rate environment and the attractiveness of this asset class, we felt it was appropriate to take advantage of this opportunity. As we've done in the past, we've been opportunistic. I mentioned 2019 loan sales. We've also sold loans prior to that on both the FFELP and private side, really felt that this was a great opportunity here that presented itself to demonstrate the value not only of our legacy portfolio, but also the value of the refi portfolio and the new originations. What we provided guidance today, our updated guidance, we're not forecasting any future loan sales as we do not believe that is our strategy of a make and sell model. We will be opportunistic as we have in the past. I would say that one thing to take into account with our updated guidance is that reflects the loss of these loans for the remaining nine months of the year in terms of that earning. This really is a great quarter that we saw, and I think it's going to lead to a great year based off of the early trends for the first call it four months here. Absolutely. I guess, maybe Jack, maybe you could just talk about if there's anything on the regulatory or political front that you're watching closely. I know you testified before the Senate committee a couple of weeks ago. Just maybe any thoughts from that as well. Thanks. I think on the regulatory side of the equation, I think that environment has been relatively stable in terms of no new developments. We continue to be eager to bring the outstanding items to resolution that we've had now for a number of years. As we've said in the past, the facts and circumstances that have come out of the discovery process there, I think make it very clear that the work we do is in full compliance with the loan programs and consumer laws. On the political side of the equation, there's been a tremendous amount of discussion and talk about student debt and the challenges it presents to some borrowers. I think the proposals that we've seen have been proposals that are broad-based, meaning everyone gets loan forgiveness of some, depending on the size. We've talked about that as being probably not the ideal solution for a couple of reasons. One is it doesn't address tomorrow's borrowers in any way, shape, or form. Two, it really is providing a fairly significant benefit at a super high cost to taxpayers indiscriminately, right? It's not targeting the relief to those who need it most and providing it to many who have received the value of their education. You mentioned that I testified. In that testimony, I mentioned that half a million borrowers each year that we service pay off their loans in full. We're reporting today delinquency rates in the FFELP and private loans that are at or near historic lows. This is clearly not an asset class where the majority of borrowers are struggling. There certainly are problems here. We know where they exist. We'll share that detail and hope that we can provide some assistance to policymakers as they try to address some of the concerns here. Okay, great. Thanks. Our next question comes from the line of Rick Shane with JP Morgan. Your line is open. Good morning, guys, and thanks for taking my question. Look, I'd like to delve in a little bit deeper on the business processing segment. You guys highlight the scalability of the model in terms of profitability. I think what's equally interesting is actually the practical scalability that you were able to increase the throughput so much and actually be able to address that operationally. You talk about some of the tolling of some of these contracts. If you can help us sort of understand what might happen in terms of revenue pressure, both on the government services and on the RCM side, that would be really helpful. I'm curious particularly if the RCM revenues are going to face the same downward pressure. Sure. I think you're absolutely right. One of the things that we have talked about is the agility and the adaptability of both our people and our systems in the last year. Our ability to move people to a work-from-home status quickly was certainly beneficial to the health and safety, but it also allowed us to scale up the number of folks that we had and could offer to states to address these rapidly rising needs of unemployment insurance processing and COVID contact tracing, et cetera, work that we did. We've hired thousands of employees and contractors over this timeframe to address this. All of them were trained virtually, all of them are working remotely, and all of them are connecting in to the systems that we've been able to adapt to be able to address whatever the unique needs are in this particular space. We're doing it at, I think, tremendous efficiency and performance levels for our clients. One state reported to us that our unemployment insurance processing team was operating at a 30% higher efficiency rate than all their other contractors. The work we're doing on the vaccine distribution involved a targeted outreach effort to hard-to-reach segments of the population to encourage them to sign up for vaccinations. That state now leads the country in vaccination rates. That's the type of work we've been able to do, and we're super excited to be able to do it. That revenue shows up in both government services and in healthcare RCM. The vaccine work and the contact tracing work is in RCM, for example, the unemployment is in the government services segment. We expect that revenue to probably start to decline in the second quarter. We would estimate it would decline by about a third as we move that specialty work as we move into Q2, eventually, most of it will go away. I think what we've been able to demonstrate to the states is the quality and capability of the services that we can bring to the table. Many of them are talking to us about opportunities that would be more permanent in nature versus project-related work here. The last thing I would just add, Rick, is that a bunch of our work and the traditional work we have done in BPS was significantly impacted by the pandemic. A lot of it is transportation related or revenue cycle management at hospitals. That volume declined dramatically as people traveled less, did fewer transactions. Even at hospitals, the inpatient and outpatient services declined rapidly unless it was COVID related. That is just now starting to come back. None of them are at 100% of pre-pandemic levels yet, but they're slowly inching their way back there. As the COVID project work comes down, we will see some of the core processing work that we've done also begin to rebuild here. Great. Thank you for answering that question so specifically. If I can ask one follow-up. You talked about the potential chain delta on the revenue side. Help us understand how much of the operating expenses are variable if revenues are down a third over time. How much will the operating expense decline as well? Most of the work, this is a heavy labor component of it, and most of those thousands of people that have been hired have been hired on a temporary basis. We'd be able to move that work, move that cost if the revenue were to decline. Great. Very helpful. Thank you very much. Our next question comes from the line of Arren Cyganovich, citi. Your line is open. Thanks. The thought process of the loan sales, how do you go through that, thinking about that relative to the present value of the residual cash flows associated with those loans versus the gain on sale? Are you exceeding that? I'm assuming that you're doing some sort of analysis whenever you're looking at those loan sales. Yeah, I would say, Arren, thanks for the question, is that when you look at the discount rates that were applied here, just speaking more towards the whole loan sales, certainly a much better outcome than what you and other analysts are modeling from a discount rate perspective on the private portfolio. I think that just speaks to the environment that we're in and the attractiveness of these assets. I talked about being all originated before 2014, but 99% of them were originated before 2010. These assets have been outstanding, are very well seasoned at this point in time. As we look at it versus our own projections, we felt that this was the appropriate time to just demonstrate to the marketplace, based on the bids that we were receiving, the value that we believe we're not getting in the share price. I think if you look at your models and as other analysts update it with similar assumptions, that should lead to an intrinsic value far higher than what we're trading at today. Got it. Thanks. I think, Arren, sorry, just to add to that, the ability to take those gains, which is basically an acceleration of earnings that we would have generated in the future and use them to buy back shares that are not reflecting those values today, is really what gets you to the decision to sell. Got it. That's helpful. Thanks, Jack. On that higher share repurchase amount of $500 million, that's more than what you did in the first quarter. Do you need to go through some sort of an accelerated program to achieve that, or do you think you can achieve that through just your regular share repurchase program? I think we can achieve that through our regular share repurchase program. I would say that certainly at these levels, we'll look to accelerate some of that into the second quarter. For your modeling purposes, I would weight it a little heavier in the second quarter, but we can do that through normal share repurchase activity. Great. Thank you. Our next question comes from the line of Moshe Orenbuch with Credit Suisse. Line is open. Great. Thanks. Following up on a couple of those other questions, have you looked at the rest of the portfolio and said, how much other assets could make that trade effective? When you think about those types of gains and where the stock price is today, how much of the existing book is in a position where it would be accretive to do that? When I think about the rest of the portfolio, and I touched upon this during our last quarter call, we were exploring other alternative ways in terms of financing. That included loan sales, but also different facilities that we've put in place over the years. There are advantages both in what we've done from the turbo repo facilities as well as loan sales where we can advance, call it, cash flows in future periods to today to take advantage of the share price. This is not just, I'd say one item on the table. There's many things that we look at to take advantage of the share price, which we've done over the last few years. I would say that this was an option that today was very attractive, and so we moved quickly to take advantage of that. We have other options on the table within our residuals as well as whole loans. Specifically to your question, on our non-refi portfolio that's unencumbered, we have a little less than $2 billion of those similar types of assets. Perfect. Thanks. Jack, you had said we're not becoming a make and sell company on the refi loans, but could you talk about whether was there something unique about that particular residual that made it better and more saleable? What would be the economics if it were to go to that model as you think about it today? I think as Joe mentioned, Moshe, we've got an investor marketplace here that is utilizing today's low interest rates as the basis for discounting future cash flows, and the current credit performance of the portfolio being in such an exceptionally strong position, you just end up with a pretty attractive deal. I think more so in the refi side of the equation than in the legacy component, this was really an ability for us to demonstrate to the investor community the value of our origination franchise in that space based on the types of gains that are available. We still continue to believe that we are better off owning these loans, given the ability to finance them with a 5% capital level and the securitization rates that we're able to obtain in the marketplace. I think it would be a little bit different if we were a bank and had a different capital structure required on this asset class. Great. Thank you very much. Again, if you would like to ask a question, press star one on your telephone. Our next question comes from the line of Eleanor Gravenhorst with Allstate. Your line is open. Hi, thank you for the call this morning. I'm just wondering if you could provide a little bit more details around the projected runoff for the Department of Education contract, the asset recovery services. Correct me if I'm wrong, I thought that was supposed to end at the start of 2022, and revenues have just declined, I guess, somewhat substantially quarter-over-quarter. Yes. We had two contracts with the Department of Ed, one was on an asset recovery basis. That contract has ended, the revenue associated with that has run off at this stage in the game. We also have a contract where we service loans for the Department of Ed, that is an ongoing contract. It has an expiration date that comes up towards at the end of this year. We expect the department, because the loans need to be serviced somewhere, we're working with the department and expect them to announce what their plans will be for that portfolio across all servicers sometime later this year. Okay. I'm sorry. I was just going to add, you asked, I think, the dollar size. That contract, it's about $145 million a year in total. Okay. Thank you. Then just on the charge-offs, obviously, those, I guess this quarter was lower than what you projected kind of for FY 2021 in total. Are you still kind of standing by your FY 2021 outlook in terms of charge-offs, or should we maybe guide towards something slightly lower levels, just given first quarter performance? We're not providing updated guidance, but we're certainly on pace and a trajectory to be below what the targets that we originally set out at the beginning of the year. Okay. Last question from me. You guided towards a $5.5 billion, I think, total originations for the year. Are you able to provide any color regarding what mix of that would be from the in-school segment versus maybe the refi product? We haven't broken that out and so we're still looking at that combination of $5.5 billion in total. I think it was important to reconfirm that, just given some of the commentary I think you've seen from other consumer lenders of reduced demand for new loans. We stand by our original forecast here, our $5.5 billion. Okay. Thank you. You're welcome. Thank you. Our next question comes from the line of Peter Troisi with Barclays. Your line is open. Hey, good morning. Joe, just on the loan sales, you mentioned principal proceeds from the non-refi private loans will be used to reduce unsecured debt. Seems like there's about $560 million of cash that you've earmarked for that reduction. Can you give us a sense for how much of that you might use to retire the unsecured bonds versus repaying the warehouse borrowing that you mentioned? Sure. On April 5th, we reduced all of the maturities to zero for 2021 through the repurchase of the $627 million that was due in July. I would say that in terms of the warehouse facility reduction, that's primarily related to the refi sale. On the whole loan transaction, there was about, call it just a little south of $200 million that was related to a turbo facility in that transaction. You're left with roughly $400 million to address the unsecured debt. Okay. That's helpful. Thank you. There are no further questions at this time. I turn the call back over to Nathan. Thanks, Mary. We'd like to thank everyone for joining us on today's call. Please contact me if you have any other follow-up questions. This concludes today's call. That concludes today's conference call. Thank you for participating. You may now disconnect.