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Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2016

Segment Results and Reconciliations to GAAP

Segment Results and Reconciliations to GAAP

		Three Months Ended September 30, 2016
(Dollars in millions)		FFELP Loans				Private Education Loans				Business Services				Other				Elimina- tions(1)				Total “Core Earnings”				Adjustments												Total GAAP
																										Reclassi- fications				Additions/ (Subtractions)				Total Adjustments(2)
Interest income:
Education loans		$	617			$	401			$	—			$	—			$	—			$	1,018			$	28			$	(14	)		$	14			$	1,032
Other loans			—				—				—				2				—				2				—				—				—				2
Cash and investments			4				—				—				1				—				5				—				—				—				5
Total interest income			621				401				—				3				—				1,025				28				(14	)			14				1,039
Total interest expense			413				178				—				29				—				620				7				—				7				627
Net interest income (loss)			208				223				—				(26	)			—				405				21				(14	)			7				412
Less: provisions for loan losses			13				92				—				1				—				106				—				—				—				106
Net interest income (loss) after provisions for loan losses			195				131				—				(27	)			—				299				21				(14	)			7				306
Other income (loss):
Servicing revenue			13				4				155				—				(96	)			76				—				—				—				76
Asset recovery and business processing revenue			—				—				97				—				—				97				—				—				—				97
Other income (loss)			—				—				—				5				—				5				(21	)			153				132				137
Gains on debt repurchases			—				—				—				1				—				1				—				—				—				1
Total other income (loss)			13				4				252				6				(96	)			179				(21	)			153				132				311
Expenses:
Direct operating expenses			99				40				124				10				(96	)			177				—				—				—				177
Overhead expenses			—				—				—				51				—				51				—				—				—				51
Operating expenses			99				40				124				61				(96	)			228				—				—				—				228
Goodwill and acquired intangible asset impairment and amortization			—				—				—				—				—				—				—				12				12				12
Restructuring and other reorganization expenses			—				—				—				—				—				—				—				—				—				—
Total expenses			99				40				124				61				(96	)			228				—				12				12				240
Income (loss) from continuing operations, before income tax expense (benefit)			109				95				128				(82	)			—				250				—				127				127				377
Income tax expense (benefit)(3)			40				35				47				(29	)			—				93				—				54				54				147
Net income (loss) from continuing operations			69				60				81				(53	)			—				157				—				73				73				230
Income (loss) from discontinued operations, net of tax expense (benefit)			—				—				—				—				—				—				—				—				—				—
Net income (loss)		$	69			$	60			$	81			$	(53	)		$	—			$	157			$	—			$	73			$	73			$	230

⁽¹⁾  The eliminations in servicing revenue and direct operating expense represent the elimination of intercompany servicing revenue where the Business Services segment performs the loan servicing function for the FFELP Loans segment.

⁽²⁾ “Core Earnings” adjustments to GAAP:

		Three Months Ended September 30, 2016
(Dollars in millions)		Net Impact from Spin-Off of SLM BankCo				Net Impact of Derivative Accounting				Net Impact of Acquired Intangibles				Total
Net interest income after provisions for loan losses		$	—			$	7			$	—			$	7
Total other income (loss)			—				132				—				132
Operating expenses			—				—				—				—
Goodwill and acquired intangible asset impairment and amortization			—				—				12				12
Restructuring and other reorganization expenses			—				—				—				—
Total “Core Earnings” adjustments to GAAP		$	—			$	139			$	(12	)			127
Income tax expense (benefit)															54
Net income (loss)														$	73

⁽³⁾  Income taxes are based on a percentage of net income before tax for the individual reportable segment.

		Three Months Ended September 30, 2015
(Dollars in millions)		FFELP Loans				Private Education Loans				Business Services				Other				Elimina- tions(1)				Total “Core Earnings”				Adjustments												Total GAAP
																										Reclassi- fications				Additions/ (Subtractions)				Total Adjustments(2)
Interest income:
Education loans		$	526			$	444			$	—			$	—			$	—			$	970			$	164			$	(60	)		$	104			$	1,074
Other loans			—				—				—				1				—				1				—				—				—				1
Cash and investments			2				—				—				—				—				2				—				—				—				2
Total interest income			528				444				—				1				—				973				164				(60	)			104				1,077
Total interest expense			317				170				—				26				—				513				11				—				11				524
Net interest income (loss)			211				274				—				(25	)			—				460				153				(60	)			93				553
Less: provisions for loan losses			7				117				—				(1	)			—				123				—				—				—				123
Net interest income (loss) after provisions for loan losses			204				157				—				(24	)			—				337				153				(60	)			93				430
Other income (loss):
Servicing revenue			16				5				161				—				(106	)			76				—				—				—				76
Asset recovery and business processing revenue			—				—				85				—				—				85				—				—				—				85
Other income (loss)			—				—				2				3				—				5				(153	)			168				15				20
Gains on debt repurchases			—				—				—				—				—				—				—				—				—				—
Total other income (loss)			16				5				248				3				(106	)			166				(153	)			168				15				181
Expenses:
Direct operating expenses			109				39				123				9				(106	)			174				—				—				—				174
Overhead expenses			—				—				—				54				—				54				—				—				—				54
Operating expenses			109				39				123				63				(106	)			228				—				—				—				228
Goodwill and acquired intangible asset impairment and amortization			—				—				—				—				—				—				—				3				3				3
Restructuring and other reorganization expenses			—				—				—				—				—				—				—				—				—				—
Total expenses			109				39				123				63				(106	)			228				—				3				3				231
Income (loss) from continuing operations, before income tax expense (benefit)			111				123				125				(84	)			—				275				—				105				105				380
Income tax expense (benefit)(3)			41				46				46				(31	)			—				102				—				42				42				144
Net income (loss) from continuing operations			70				77				79				(53	)			—				173				—				63				63				236
Income from discontinued operations, net of tax expense			—				—				—				1				—				1				—				—				—				1
Net income (loss)		$	70			$	77			$	79			$	(52	)		$	—			$	174			$	—			$	63			$	63			$	237

⁽¹⁾  The eliminations in servicing revenue and direct operating expense represent the elimination of intercompany servicing revenue where the Business Services segment performs the loan servicing function for the FFELP Loans segment.

⁽²⁾ “Core Earnings” adjustments to GAAP:

		Three Months Ended September 30, 2015
(Dollars in millions)		Net Impact from Spin-Off of SLM BankCo				Net Impact of Derivative Accounting				Net Impact of Acquired Intangibles				Total
Net interest income after provisions for loan losses		$	—			$	93			$	—			$	93
Total other income (loss)			—				15				—				15
Operating expenses			—				—				—				—
Goodwill and acquired intangible asset impairment and amortization			—				—				3				3
Restructuring and other reorganization expenses			—				—				—				—
Total “Core Earnings” adjustments to GAAP		$	—			$	108			$	(3	)			105
Income tax expense (benefit)															42
Net income (loss)														$	63

⁽³⁾  Income taxes are based on a percentage of net income before tax for the individual reportable segment.

		Nine Months Ended September 30, 2016
(Dollars in millions)		FFELP Loans				Private Education Loans				Business Services				Other				Elimina- tions(1)				Total “Core Earnings”				Adjustments												Total GAAP
																										Reclassi- fications				Additions/ (Subtractions)				Total Adjustments(2)
Interest income:
Education loans		$	1,760			$	1,213			$	—			$	—			$	—			$	2,973			$	222			$	(99	)		$	123			$	3,096
Other loans			—				—				—				5				—				5				—				—				—				5
Cash and investments			12				2				—				3				—				17				—				—				—				17
Total interest income			1,772				1,215				—				8				—				2,995				222				(99	)			123				3,118
Total interest expense			1,159				522				—				85				—				1,766				25				—				25				1,791
Net interest income (loss)			613				693				—				(77	)			—				1,229				197				(99	)			98				1,327
Less: provisions for loan losses			30				296				—				1				—				327				—				—				—				327
Net interest income (loss) after provisions for loan losses			583				397				—				(78	)			—				902				197				(99	)			98				1,000
Other income (loss):
Servicing revenue			45				11				470				—				(296	)			230				—				—				—				230
Asset recovery and business processing revenue			—				—				288				—				—				288				—				—				—				288
Other income (loss)			—				—				2				10				—				12				(197	)			260				63				75
Gains on debt repurchases			—				—				—				1				—				1				—				—				—				1
Total other income (loss)			45				11				760				11				(296	)			531				(197	)			260				63				594
Expenses:
Direct operating expenses			305				124				383				22				(296	)			538				—				—				—				538
Overhead expenses			—				—				—				168				—				168				—				—				—				168
Operating expenses			305				124				383				190				(296	)			706				—				—				—				706
Goodwill and acquired intangible asset impairment and amortization			—				—				—				—				—				—				—				22				22				22
Restructuring and other reorganization expenses			—				—				—				—				—				—				—				—				—				—
Total expenses			305				124				383				190				(296	)			706				—				22				22				728
Income (loss) from continuing operations, before income tax expense (benefit)			323				284				377				(257	)			—				727				—				139				139				866
Income tax expense (benefit)(3)			120				105				140				(96	)			—				269				—				62				62				331
Net income (loss) from continuing operations			203				179				237				(161	)			—				458				—				77				77				535
Income (loss) from discontinued operations, net of tax expense (benefit)			—				—				—				—				—				—				—				—				—				—
Net income (loss)		$	203			$	179			$	237			$	(161	)		$	—			$	458			$	—			$	77			$	77			$	535

⁽¹⁾  The eliminations in servicing revenue and direct operating expense represent the elimination of intercompany servicing revenue where the Business Services segment performs the loan servicing function for the FFELP Loans segment.

⁽²⁾ “Core Earnings” adjustments to GAAP:

		Nine Months Ended September 30, 2016
(Dollars in millions)		Net Impact from Spin-Off of SLM BankCo				Net Impact of Derivative Accounting				Net Impact of Acquired Intangibles				Total
Net interest income after provisions for loan losses		$	—			$	98			$	—			$	98
Total other income (loss)			—				63				—				63
Operating expenses			—				—				—				—
Goodwill and acquired intangible asset impairment and amortization			—				—				22				22
Restructuring and other reorganization expenses			—				—				—				—
Total “Core Earnings” adjustments to GAAP		$	—			$	161			$	(22	)			139
Income tax expense (benefit)															62
Net income (loss)														$	77

⁽³⁾  Income taxes are based on a percentage of net income before tax for the individual reportable segment.

		Nine Months Ended September 30, 2015
(Dollars in millions)		FFELP Loans				Private Education Loans				Business Services				Other				Elimina- tions(1)				Total “Core Earnings”				Adjustments												Total GAAP
																										Reclassifi- cations				Additions/ (Subtractions)				Total Adjustments(2)
Interest income:
Education loans		$	1,581			$	1,335			$	—			$	—			$	—			$	2,916			$	489			$	(178	)		$	311			$	3,227
Other loans			—				—				—				5				—				5				—				—				—				5
Cash and investments			5				—				—				1				—				6				—				—				—				6
Total interest income			1,586				1,335				—				6				—				2,927				489				(178	)			311				3,238
Total interest expense			928				514				—				84				—				1,526				27				—				27				1,553
Net interest income (loss)			658				821				—				(78	)			—				1,401				462				(178	)			284				1,685
Less: provisions for loan losses			19				428				—				(1	)			—				446				—				—				—				446
Net interest income (loss) after provisions for loan losses			639				393				—				(77	)			—				955				462				(178	)			284				1,239
Other income (loss):
Servicing revenue			78				17				487				—				(324	)			258				—				—				—				258
Asset recovery and business processing revenue			—				—				273				—				—				273				—				—				—				273
Other income (loss)			—				—				4				11				—				15				(462	)			535				73				88
Gains on sales of loans and investments			12				—				—				—				—				12				—				—				—				12
Gains on debt repurchases			—				—				—				—				—				—				—				—				—				—
Total other income (loss)			90				17				764				11				(324	)			558				(462	)			535				73				631
Expenses:
Direct operating expenses			336				127				355				20				(324	)			514				—				—				—				514
Overhead expenses			—				—				—				169				—				169				—				—				—				169
Operating expenses			336				127				355				189				(324	)			683				—				—				—				683
Goodwill and acquired intangible asset impairment and amortization			—				—				—				—				—				—				—				7				7				7
Restructuring and other reorganization expenses			—				—				—				—				—				—				—				32				32				32
Total expenses			336				127				355				189				(324	)			683				—				39				39				722
Income (loss) from continuing operations, before income tax expense (benefit)			393				283				409				(255	)			—				830				—				318				318				1,148
Income tax expense (benefit)(3)			146				105				152				(95	)			—				308				—				130				130				438
Net income (loss) from continuing operations			247				178				257				(160	)			—				522				—				188				188				710
Income from discontinued operations, net of tax expense			—				—				—				1				—				1				—				—				—				1
Net income (loss)		$	247			$	178			$	257			$	(159	)		$	—			$	523			$	—			$	188			$	188			$	711

⁽¹⁾  The eliminations in servicing revenue and direct operating expense represent the elimination of intercompany servicing revenue where the Business Services segment performs the loan servicing function for the FFELP Loans segment.

⁽²⁾ “Core Earnings” adjustments to GAAP:

		Nine Months Ended September 30, 2015
(Dollars in millions)		Net Impact from Spin-Off of SLM BankCo				Net Impact of Derivative Accounting				Net Impact of Acquired Intangibles				Total
Net interest income after provisions for loan losses		$	—			$	284			$	—			$	284
Total other income (loss)			—				73				—				73
Operating expenses			—				—				—				—
Goodwill and acquired intangible asset impairment and amortization			—				—				7				7
Restructuring and other reorganization expenses			32				—				—				32
Total “Core Earnings” adjustments to GAAP		$	(32	)		$	357			$	(7	)			318
Income tax expense (benefit)															130
Net income (loss)														$	188

⁽³⁾  Income taxes are based on a percentage of net income before tax for the individual reportable segment.

Core Earnings Adjustments to GAAP

Summary of “Core Earnings” Adjustments to GAAP

		Three Months Ended September 30,								Nine Months Ended September 30,
(Dollars in millions)		2016				2015				2016				2015
“Core Earnings” adjustments to GAAP:
Net impact of the removal of SLM BankCo’s operations and restructuring and reorganization expense in connection with the Spin-Off(1)		$	—			$	—			$	—			$	(32	)
Net impact of derivative accounting(2)			139				108				161				357
Net impact of goodwill and acquired intangibles assets(3)			(12	)			(3	)			(22	)			(7	)
Net tax effect(4)			(54	)			(42	)			(62	)			(130	)
Total “Core Earnings” adjustments to GAAP		$	73			$	63			$	77			$	188

⁽¹⁾ SLM BankCo’s operations and restructuring and other reorganization expense in connection with the Spin-Off: For “Core Earnings,” we have assumed the consumer banking business (SLM BankCo) was never a part of Navient’s historical results prior to the deemed distribution of SLM BankCo on April 30, 2014 and we have removed the restructuring and other reorganization expense incurred in connection with the Spin-Off, including the restructuring expenses related to the restructuring initiative launched in second-quarter 2015 to simplify and streamline the Company’s management structure post-Spin-Off. Excluding these items provides management with a useful basis from which to better evaluate results from ongoing operations against results from prior periods. The adjustment relates to the exclusion of the consumer banking business and represents the operations, assets, liabilities and equity of SLM BankCo, which is comprised of Sallie Mae Bank, Upromise Rewards, the Insurance Business, and the Private Education Loan origination functions. Included in these amounts are also certain general corporate overhead expenses related to the consumer banking business. General corporate overhead consists of costs primarily associated with accounting, finance, legal, human resources, certain information technology costs, stock compensation, and executive management and the board of directors. These costs were generally allocated to the consumer banking business based on the proportionate level of effort provided to the consumer banking business relative to SLM Corporation using a relevant allocation driver (e.g., in proportion to the number of employees by function that were being transferred to SLM BankCo as opposed to remaining at Navient). All intercompany transactions between SLM BankCo and Navient have been eliminated. In addition, all preferred stock dividends have been removed as SLM BankCo succeeded SLM Corporation as the issuer of the preferred stock in connection with the Spin-Off. The restructuring and other reorganization expense incurred in connection with the Spin-Off includes the restructuring expenses related to the restructuring initiative launched in second-quarter 2015 to simplify and streamline the Company’s management structure post-Spin-Off.

⁽²⁾ Derivative accounting: “Core Earnings” exclude periodic unrealized gains and losses that are caused by the mark-to-market valuations on derivatives that do not qualify for hedge accounting treatment under GAAP as well as the periodic unrealized gains and losses that are a result of ineffectiveness recognized related to effective hedges under GAAP. These unrealized gains and losses occur in our FFELP Loans, Private Education Loans and Other business segments. Under GAAP, for our derivatives that are held to maturity, the cumulative net unrealized gain or loss over the life of the contract will equal $0 except for Floor Income Contracts where the cumulative unrealized gain will equal the amount for which we sold the contract. In our “Core Earnings” presentation, we recognize the economic effect of these hedges, which generally results in any net settlement cash paid or received being recognized ratably as an interest expense or revenue over the hedged item’s life.

⁽³⁾ Goodwill and acquired intangible assets: Our “Core Earnings” exclude goodwill and intangible asset impairment and amortization of acquired intangible assets.

⁽⁴⁾ Net tax effect: Such tax effect is based upon our “Core Earnings” effective tax rate for the year.

Assets [Member] | FFELP Loans Segment [Member]

Asset Information for Loans Segment

The following table includes GAAP basis asset information for our FFELP Loans segment.

(Dollars in millions)		September 30, 2016				December 31, 2015
FFELP Loans, net		$	90,146			$	96,498
Cash and investments(1)			3,260				3,572
Other			1,954				2,015
Total assets		$	95,360			$	102,085

⁽¹⁾  Includes restricted cash and investments.

Assets [Member] | Private Education Loans Segment [Member]

Asset Information for Loans Segment

The following table includes GAAP basis asset information for our Private Education Loans segment.

(Dollars in millions)		September 30, 2016				December 31, 2015
Private Education Loans, net		$	24,010			$	26,394
Cash and investments(1)			713				596
Other			1,946				1,988
Total assets		$	26,669			$	28,978

⁽¹⁾  Includes restricted cash and investments.

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- Definition

Tabular disclosure of the reconciliation of the company's "Core Earnings" segment totals to its consolidated operating results in accordance with GAAP.

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Tabular disclosure of the profit or loss and total assets for each reportable segment. An entity discloses certain information on each reportable segment if the amounts (a) are included in the measure of segment profit or loss reviewed by the chief operating decision maker or (b) are otherwise regularly provided to the chief operating decision maker, even if not included in that measure of segment profit or loss.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
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-Section 50
-Paragraph 22
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