NAVIENT CORP (NAVI)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Selected Historical Financial Information and Ratios

(1)
Item is a non-GAAP financial measure. For a description and reconciliation, see “Non-GAAP Financial Measures – Core Earnings”

7

The Quarter in Review

We prepare financial statements and present financial results in accordance with GAAP. However, we also evaluate our business segments and present financial results on a basis that differs from GAAP. We refer to this different basis of presentation as Core Earnings. We provide this Core Earnings basis of presentation on a consolidated basis and for each business segment because this is what we review internally when making management decisions regarding our performance and how we allocate resources. We also include this information in our presentations with credit rating agencies, lenders and investors. Because our Core Earnings basis of presentation corresponds to our segment financial presentations, we are required by GAAP to provide certain Core Earnings disclosures in the notes to our consolidated financial statements for our business segments. See “Non-GAAP Financial Measures — Core Earnings” for a further discussion and a complete reconciliation between GAAP net income and Core Earnings.

First-quarter 2026 net income was $17 million ($0.17 diluted earnings per share), compared with net loss of $2 million ($0.02 diluted loss per share) for the year-ago quarter. See “Results of Operations — GAAP Comparison of First-Quarter 2026 Results with First-Quarter 2025” for a discussion of the primary contributors to the change in GAAP earnings between periods.

First-quarter 2026 Core Earnings net income was $19 million ($0.20 diluted Core Earnings per share), compared with $26 million ($0.25 diluted Core Earnings per share) for the year-ago quarter. See “Segment Results” for a discussion of the primary contributors to the change in Core Earnings between periods.

Financial highlights of first-quarter 2026 include:

Consumer Lending segment:

•
Net income of $35 million.

•
Net interest margin of 2.48%.

•
Originated $818 million of Private Education Loans, a 61% increase from a year ago.

Federal Education Loans segment:

•
Net income of $22 million.

•
Net interest margin of 0.65%.

•
FFELP Loan prepayments of $208 million compared to $256 million in first-quarter 2025.

Capital, funding and liquidity:

•
GAAP equity-to-asset ratio of 4.9% and adjusted tangible equity ratio(1) of 8.9%.

•
Repurchased $23 million of common shares.

•
Paid $15 million in common stock dividends.

•
Issued $683 million of asset-backed securities.

Operating Expenses:

•
Incurred operating expenses of $89 million.

(1)
Item is a non-GAAP financial measure. For a description and reconciliation, see “Non-GAAP Financial Measures.”

8

Results of Operations

GAAP Income Statements (Unaudited)

9

GAAP Comparison of First-Quarter 2026 Results with First-Quarter 2025

For the three months ended March 31, 2026, net income was $17 million, or $0.17 diluted earnings per common share, compared with net loss of $2 million, or $0.02 diluted loss per common share, for the year-ago period.

The primary contributors to the change in net income are as follows:

• Net interest income increased by $1 million primarily due to an increase in mark-to-market gains on fair value hedges recorded in interest expense. This was partially offset by the paydown of the FFELP portfolio, the Private Education Loan portfolio's changing product mix with Refinance Loans increasing as a percentage of the portfolio, and the impact of decreasing interest rates on the different index resets for the Private Education Loans and related funding.

• Provisions for loan losses decreased $3 million from $30 million to $27 million.

○ The provision for Private Education Loan losses decreased $4 million from $22 million to $18 million.

○ The provision for FFELP Loan losses increased $1 million from $8 million to $9 million.

The provision for Private Education Loan losses of $18 million in the current period included $11 million associated with loan originations. The provision of $22 million in the year-ago quarter included $7 million associated with loan originations and $15 million related to a general reserve build (primarily as a result of an increase in delinquency balances).

The provision for FFELP Loan losses of $9 million in the current period was primarily the result of increased charge-offs due to prior disaster forbearance volume, as well as the continued extension of the portfolio. The provision of $8 million in the year-ago quarter was primarily the result of an increase in delinquency balances.

• Asset recovery and business processing revenue decreased $23 million as a result of the sale of our government services business in February 2025. With the sale of our government services business, Navient no longer provides business processing segment services.

• Other income decreased $10 million primarily related to the transition services we had provided related to our various strategic initiatives. The transition services related to the outsourcing of loan servicing and the sale of our healthcare services business ended in May 2025. The transition services related to the sale of our government services business ended in October 2025.

• Net gains on derivative and hedging activities increased $30 million due primarily to interest rate fluctuations. Valuations of derivative instruments fluctuate based upon many factors including changes in interest rates and other market factors. As a result, net gains and losses on derivative and hedging activities may vary significantly in future periods.

• Operating expenses decreased $38 million, $23 million of which was due to a decline in business processing expenses as a result of the sale of our government services business in February 2025 ($20 million of the reduction is in the Business Processing segment and $3 million of the reduction is in the Other segment). In addition, there was an $11 million decline in expenses in connection with providing transition services related to our various strategic initiatives. As of October 2025 we had no further obligations to provide these transition services. There was a $7 million increase in marketing and other expenses associated with the growth of our consumer lending businesses. The remaining $11 million decrease primarily relates to cost saving initiatives implemented, which have reduced our operating costs mostly in connection with our shared service functions and corporate footprint.

• Restructuring and other reorganization expenses decreased $3 million primarily due to a decrease in severance-related costs incurred in connection with the various strategic initiatives that have been and continue to be implemented to simplify the company, continue to reduce our expense base and enhance our flexibility.

• The effective income tax rates for the current and year-ago periods were 48% and 54%, respectively. The effective income tax rates were elevated in both periods primarily due to changes in the valuation allowances attributed to disallowed interest expense and operating loss carryovers.

We repurchased 2.3 million and 2.6 million shares of our common stock during the first quarters of 2026 and 2025,

respectively. As a result of repurchases, our average outstanding diluted shares decreased by 6 million common shares (or 6%) from the year-ago period.

10

Segment Results

Consumer Lending Segment

The following table presents Core Earnings results for our Consumer Lending segment.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Form 10-K. This discussion and analysis also contains forward-looking statements and should be read in conjunction with the disclosures and information contained in “Forward-Looking and Cautionary Statements” and “Risk Factors” in this Form 10-K.

The objective of this discussion and analysis is to allow investors to view the Company from management’s perspective. Accordingly, we provide the reader with narrative context for how our management views our consolidated financial statements, additional context within which to assess our operating results, and information on the quality and variability of our earnings, liquidity and cash flows. The discussion that follows is primarily focused on 2025 versus 2024 results. Discussion and analysis of 2024 results compared to 2023 is included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K for the year ended December 31, 2024 as filed with the SEC on February 27, 2025, which is incorporated herein by reference.

Selected Historical Financial Information and Ratios

(1)
Item is a non-GAAP financial measure. For a description and reconciliation, see “Non-GAAP Financial Measures – Core Earnings.”

11

The Year in Review

We prepare financial statements and present financial results in accordance with GAAP. However, we also evaluate our business segments and present financial results on a basis that differs from GAAP. We refer to this different basis of presentation as Core Earnings. We provide this Core Earnings basis of presentation on a consolidated basis and for each business segment because this is what we review internally when making management decisions regarding our performance and how we allocate resources. We also include this information in our presentations with credit rating agencies, lenders and investors. Because our Core Earnings basis of presentation corresponds to our segment financial presentations, we are required by GAAP to provide certain Core Earnings disclosures in the notes to our consolidated financial statements for our business segments. See “Non-GAAP Financial Measures — Core Earnings” for a further discussion and a complete reconciliation between GAAP net income and Core Earnings.

2025 GAAP net loss was $80 million ($0.81 diluted loss per share), compared with net income of $131 million ($1.18 diluted earnings per share) in 2024. See “Results of Operations — GAAP Comparison of 2025 Results with 2024” for a discussion of the primary contributors to the change in GAAP earnings between periods.

2025 Core Earnings net loss was $35 million ($0.35 diluted Core Earnings loss per share), compared with Core Earnings net income of $221 million ($2.00 diluted Core Earnings per share) in 2024. See “Segment Results” for a discussion of the primary contributors to the change in Core Earnings between periods.

2025 GAAP and Core Earnings results included the following significant items:

•
$280 million provision for loan losses ($249 million for Consumer Lending and $31 million for FFELP). Of the $280 million, $41 million relates to originations with the remaining $239 million primarily associated with elevated delinquency balances, our forecasted macroeconomic outlook as well as the extension of the FFELP portfolio.

•
$11 million net benefit to net interest income from a decrease in prepayment rate assumptions ($18 million of additional net interest income from the FFELP Loan portfolio partially offset by a $7 million reduction in the Private Education Loan portfolio).

•
$25 million of regulatory and restructuring expenses.

Financial highlights of 2025 include:

Consumer Lending segment:

•
Net income of $20 million.

•
Net interest margin of 2.49%.

•
Originated $2.5 billion of Private Education Loans, a 77% increase compared to 2024.

Federal Education Loans segment:

•
Net income of $115 million.

•
Net interest margin of 0.69%.

•
FFELP Loan prepayments of $977 million compared to $5.4 billion in 2024.

Business Processing segment:

•
Navient ceased providing Business Processing segment services after the sale in February 2025 of its government services business.

Capital, funding and liquidity:

•
GAAP equity-to-asset ratio of 4.9% and adjusted tangible equity ratio(1) of 9.1%.

•
Repurchased $111 million of common shares.

•
Paid $63 million in common stock dividends.

•
Issued $2.2 billion of asset-backed securities.

(1) Item is a non-GAAP financial measure. For a description and reconciliation, see “Non-GAAP Financial Measures.”

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Operating Expenses:

•
Incurred operating expenses of $421 million, of which $30 million was in connection with transition services we provided related to our various strategic initiatives. There was $33 million of revenue recognized in Other revenue related to these services.

The transition services related to the outsourcing of loan servicing and the sale of our healthcare services

business ended in May 2025 and as of October 2025 we had no further obligations to provide transition

services for our government services business.

Results of Operations

GAAP Income Statements

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GAAP Comparison of 2025 Results with 2024

For the year ended December 31, 2025, net loss was $80 million, or $0.81 diluted loss per common share, compared with net income of $131 million, or $1.18 diluted earnings per common share, for the year-ago period.

The primary contributors to the change in net income (loss) are as follows:

•
Net interest income decreased by $17 million primarily as a result of the paydown of the Private Education Loan and FFELP Loan portfolios, the changing product mix of the Private Education Loan portfolio (Refinance Loans increased as a percentage of the portfolio) and the net impact of decreasing interest rates on the different index resets for the Private Education Loan and FFELP Loan assets and debt. Additionally, there was a $12 million decrease in mark-to-market gains on fair value hedges recorded in interest expense. These decreases were partially offset by a $55 million decline in premium amortization on the FFELP Loan portfolio due to both a decrease in prepayment rate assumptions, mostly in response to the significant decline in actual FFELP Loan prepayments since the beginning of 2025, as well as the significant decline in actual FFELP Loan prepayments from $5.4 billion in the year-ago period to $977 million in the current period.

•
Provisions for loan losses increased $167 million, from $113 million to $280 million:

o
The provision for Private Education Loan losses increased $137 million from $112 million to $249 million.

o
The provision for FFELP Loan losses increased $30 million from $1 million to $31 million.

The provision for Private Education Loan losses of $249 million in the current period included $41 million associated with loan originations and $208 million primarily associated with elevated delinquency balances as well as our forecasted macroeconomic outlook. The provision of $112 million in the year-ago period included $39 million related to lowering the expected recovery rate on defaulted loans, $32 million associated with loan originations and $41 million related to a general reserve build.

The provision for FFELP Loan losses of $31 million in the current period was primarily the result of elevated delinquency balances, our forecasted macroeconomic outlook, as well as the continued extension of the portfolio. The provision of $1 million in the year-ago period was primarily the result of relatively stable credit trends.

•
Asset recovery and business processing revenue decreased $248 million as a result of the sale of our healthcare services business in the third quarter of 2024 ($88 million of the decrease), and our government services business in February 2025 ($160 million of the decrease). With the sale of our government services business, Navient no longer provides business processing segment services.

•
Other income increased $17 million primarily related to the transition services we provided related to our various strategic initiatives. The transition services related to the outsourcing of loan servicing and the sale of our healthcare services business ended in May 2025. The transition services related to the sale of our government services business ended in October 2025.

•
Gain (loss) on sale of subsidiaries was a $191 million net gain in the year-ago period which included a $219 million gain on sale of our healthcare services business in third-quarter 2024 and a $28 million loss in fourth-quarter 2024 resulting from reclassification of our government services businesses to held for sale commensurate with our entering into an agreement on December 19, 2024 to sell these businesses, resulting in adjustment of the basis of these businesses to the expected sales price.

•
Net gains on derivative and hedging activities decreased $100 million. The primary factor affecting the change was interest rate fluctuations. Valuations of derivative instruments fluctuate based upon many factors including changes in interest rates and other market factors. As a result, net gains and losses on derivative and hedging activities may vary significantly in future periods.

•
Operating expenses decreased $259 million, $240 million of which was due to a decline in business processing expenses as a result of the sale of our government services business in February 2025 and our healthcare services business in the third quarter of 2024 ($208 million of the reduction is in the Business Processing segment and $32 million of the reduction is in the Other segment). In addition, regulatory-related expenses decreased $35 million primarily due to $43 million of regulatory-related expenses recorded in the year-ago period in connection with the September 2024 Consumer Financial Protection Bureau (the CFPB) settlement agreement. Current period expense includes $30 million, an $18 million increase from the prior year, of expense in connection with providing transition services related to our various strategic initiatives. There is $33 million of revenue recognized in the Other segment related to these services.

•
Goodwill and acquired intangible asset impairment and amortization expense decreased by $143 million primarily due to a $138 million impairment recognized in the year-ago period related to our government services business which was sold in February 2025.

14

•
Restructuring and other reorganization expenses decreased $22 million primarily due to a decrease in severance-related costs incurred in connection with the various strategic initiatives that have been and continue to be implemented to simplify the company, reduce our expense base and enhance our flexibility.

We repurchased 8.5 million and 11.5 million shares of our common stock during 2025 and 2024, respectively. As a result of repurchases, our average outstanding diluted shares decreased by 12 million common shares (or 11%) from the year-ago period.

Segment Results

Consumer Lending Segment

The following table presents Core Earnings results for our Consumer Lending segment.

Highlights of 2025 vs. 2024

•
Originated $2.5 billion of Private Education Loans compared to $1.4 billion, an increase of 77%.

o
Refinance Loan originations were $2.1 billion compared to $1.0 billion.

o
In-school loan originations were $401 million compared to $366 million.

•
Net income was $20 million compared to $196 million.

•
Net interest income decreased $87 million primarily due to the paydown and changing product mix of the loan portfolio (Refinance Loans increased as a percentage of the loan portfolio).

•
Provision for loan losses increased $137 million. The provision for loan losses of $249 million in the current period included $41 million associated with loan originations and $208 million primarily associated with elevated delinquency balances as well as our forecasted macroeconomic outlook. The provision for loan losses of $112 million in 2024 included $39 million related to lowering the expected recovery rate on defaulted loans, $32 million in connection with loan originations and $41 million related to a general reserve build (primarily as a result of an increase in delinquency balances).

o
Net charge-offs were unchanged at $335 million.

o
Private Education Loan delinquencies greater than 90 days: $434 million, up $15 million from $419 million.

o
Private Education Loan forbearances: $236 million, down $186 million from $422 million.

•
Expenses increased $4 million, or 3%, primarily as a result of higher marketing spend associated with 77% higher loan origination volume.

15

Key performance metrics are as follows:

Net Interest Margin

The following table details the net interest margin.

(1)
The average balances of the interest-earning assets for the respective periods are:

The 38 basis point decrease in the net interest margin in 2025 is primarily the result of a $19 million decrease (12 basis points) in loan discount amortization mostly related to a decrease in prepayment rate assumptions used to amortize loan discount. In addition, the continued shift of the Refinance Loan portfolio becoming a higher percentage of the overall Private Education Loan portfolio and the Refinance Loan portfolio earning a lower net interest margin compared to the legacy portfolio reduces the overall net interest margin.

As of December 31, 2025, our Private Education Loan portfolio totaled $15.5 billion, comprised of $8.8 billion of refinance loans and $6.7 billion of non-refinance loans. The weighted-average life of these portfolios as of December 31, 2025 was 5 years and 4 years, respectively, assuming a Constant Prepayment Rate (CPR) of 10% and 8%, respectively. As of December 31, 2024, the CPR assumption was 10% for both refinance and non-refinance loans.

Provision for Loan Losses

The provision for Private Education Loan losses increased $137 million. The provision for loan losses of $249 million in 2025 included $41 million associated with loan originations and $208 million primarily associated with elevated delinquency balances as well as our forecasted macroeconomic outlook. The provision for loan losses of $112 million in 2024 included $39 million related to lowering the expected recovery rate on defaulted loans, $32 million in connection with loan originations and $41 million related to a general reserve build (primarily as a result of an increase in delinquency balances).

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Operating Expenses

Operating expenses for our consumer lending segment include costs to originate, acquire, service and collect on our consumer loan portfolio. Operating expenses increased $4 million primarily as a result of higher marketing spend associated with higher loan origination volume.

Federal Education Loans Segment

The following table presents Core Earnings results for our Federal Education Loans segment.

Highlights of 2025 vs. 2024

•
Net income was $115 million compared to $105 million.

•
Net interest income increased $50 million primarily due to a $55 million decrease in premium amortization as a result of both a decrease in prepayment rate assumptions ($18 million benefit in 2025), in response to the significant decline in actual prepayments since the beginning of 2025, as well as the significant decline in actual prepayments from $5.4 billion in 2024 to $977 million in 2025. This was partially offset by the paydown of the loan portfolio.

•
Provision for loan losses increased $30 million. The $31 million of provision for loan losses in 2025 was primarily the result of elevated delinquency balances, our forecasted macroeconomic outlook as well as the continued extension of the portfolio. The $1 million of provision for loan losses in 2024 was

primarily the result of an increase in delinquency balances partially offset by elevated prepayment activity over the prior year.

o
Net charge-offs were $38 million compared to $36 million.

o
Delinquencies greater than 90 days were $2.4 billion compared to $2.2 billion.

o
Forbearances were $3.5 billion compared to $4.4 billion.

•
Expenses were $4 million lower primarily as a result of the outsourcing of the loan servicing of our portfolio to a third party on July 1, 2024. This created a variable cost structure resulting in a reduction in expenses as the portfolio paid down.

17

Key performance metrics are as follows:

Net Interest Margin

The following table details the net interest margin.

(1)
The average balances of the interest-earning assets for the respective periods are:

The 24 basis point increase in the net interest margin is primarily the result of loan premium amortization being $55 million lower in the current period (18 basis points) due to both a decrease in prepayment rate assumptions used to amortize loan premium, in response to the significant decline in actual prepayments since the beginning of 2025, as well as the significant decline in actual prepayments from $5.4 billion in 2024 to $977 million in 2025. The significant decline in actual prepayments in 2025 is primarily the result of changes in public policy under the current Administration.

As of December 31, 2025, our FFELP Loan portfolio totaled $28.1 billion. The weighted-average life of this portfolio as of December 31, 2025 was 8 years assuming a CPR of 3% through 2028 and 5% thereafter. As of December 31, 2024, the CPR assumption was 5%.

Floor Income

The following table analyzes, on a Core Earnings basis, the ability of the FFELP Loans in our portfolio to earn Floor Income after December 31, 2025 and 2024, based on interest rates as of those dates.

18

The following table presents a projection of the average balance of FFELP Consolidation Loans for which Fixed Rate Floor Income has been economically hedged with derivatives for the period from January 1, 2026 to December 31, 2028.

Provision for Loan Losses

Provision for loan losses increased $30 million. The $31 million of provision for loan losses in 2025 was primarily the result of elevated delinquency balances, our forecasted macroeconomic outlook as well as the continued extension of the portfolio. The $1 million of provision for loan losses in 2024 was primarily the result of an increase in delinquency balances partially offset by elevated prepayment activity over the prior year.

Operating Expenses

Operating expenses for the Federal Education Loans segment primarily include costs incurred to perform servicing on our FFELP Loan portfolio and federal education loans held by other institutions. Expenses were $4 million lower primarily as a result of the outsourcing of the loan servicing of our portfolio to a third party on July 1, 2024. This created a variable cost structure resulting in a reduction in expenses as the portfolio paid down.

Business Processing Segment

The following table presents Core Earnings results for our Business Processing segment.

Highlights of 2025 vs. 2024

•
With the sale of our government services business in February 2025, Navient no longer provides business processing segment services. Navient provided certain transition services ($33 million of revenue and $30 million of expense in 2025, reflected in the Other segment) in connection with the sale of our business processing businesses. As of October 2025, we had no further obligations to provide these transition services.

Key performance metrics are as follows:

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Other Segment

The following table presents Core Earnings results for our Other segment.

Net Interest Loss after Provision for Loan Losses

Net interest loss after provision for loan losses is due to the negative carrying cost of our corporate liquidity portfolio. The amount of the net interest loss is primarily a result of the size of the liquidity portfolio as well as the cost of funds of the debt funding the corporate liquidity portfolio.

Other Revenue

All revenue and expense in connection with the transition services we performed related to the outsourcing of loan servicing and divestiture of our Business Processing segment are included in the Other segment. Other revenue increased $23 million, of which $20 million related to these transition services.

Unallocated Shared Services Operating Expenses

Unallocated shared services operating expenses are costs primarily related to information technology costs related to infrastructure and operations, stock-based compensation expense, accounting, finance, legal, compliance and risk management, regulatory-related expenses, human resources, certain executive management, the Board of Directors, and transition services discussed above under "Other Revenue." Regulatory-related expenses include actual settlement amounts as well as third-party professional fees we incur in connection with such regulatory matters and are presented net of any insurance reimbursements for covered costs related to such matters. Operating expenses decreased $51 million from 2024, primarily as a result of a $35 million decrease in regulatory-related expenses. Regulatory-related expenses were $8 million and $43 million in 2025 and 2024, respectively, with 2024 including a contingency loss accrual of $51 million related to the $120 million settlement agreement entered into with the CFPB in September 2024. The remaining $16 million decrease in expenses primarily related to cost reduction efforts in connection with the various strategic initiatives that have been and continue to be implemented to simplify the Company, reduce our expense base and enhance our flexibility.

See “Note 12 — Commitments, Contingencies and Guarantees” for a discussion of legal and regulatory matters where it is reasonably possible that a loss contingency exists. The Company is unable to anticipate the timing of a resolution or the impact that certain matters may have on the Company’s consolidated financial position, liquidity, results of operation or cash flows. As a result, it is not possible at this time to estimate a range of potential exposure, if any, for amounts that may be payable in connection with certain matters and reserves have not been established. It is possible that an adverse ruling or rulings may have a material adverse impact on the Company.

Restructuring/Other Reorganization Expenses

These expenses decreased $22 million primarily due to a decrease in severance-related costs incurred in connection with the various strategic initiatives that have been and continue to be implemented to simplify the Company, reduce our expense base and enhance our flexibility.

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Financial Condition

This section provides information regarding the balances, activity and credit performance metrics of our education loan portfolio.

Summary of our Education Loan Portfolio

Ending Education Loan Balances, net

(1)
Loans for customers still attending school and are not yet required to make payments on the loan.

(2)
Includes loans in deferment or forbearance.

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Education Loan Activity

(1)
Includes the origination of $298 million, $201 million and $176 million of Private Education Refinance Loans in 2025, 2024 and 2023, respectively, that refinanced Private Education Loans and FFELP Loans that were on our balance sheet.

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Private Education Loan Portfolio Performance

(1)
Loans for customers who are attending school or are in other permitted educational activities and are not yet required to make payments on their loans, e.g., loans for customers who have requested and qualify for other permitted program deferments such as various military eligible deferments.

(2)
Loans for customers who have requested an extension of the grace period generally during employment transition or who have temporarily ceased making full payments due to hardship or other factors such as disaster relief consistent with established loan program servicing policies and procedures.

(3)
The period of delinquency is based on the number of days scheduled payments are contractually past due.

(4)
Excluding Private Education Refinance Loans, the cosigner rate was 67%, 66% and 65% for 2025, 2024 and 2023, respectively.

FFELP Loan Portfolio Performance

(1)
Loans for customers who may still be attending school or engaging in other permitted educational activities and are not yet required to make payments on their loans, e.g., residency periods for medical students or a grace period for bar exam preparation, as well as loans for customers who have requested and qualify for other permitted program deferments such as military, unemployment, or economic hardships.

(2)
Loans for customers who have used their allowable deferment time or do not qualify for deferment, who need additional time to obtain employment or who have temporarily ceased making payments due to hardship or other factors such as disaster relief.

(3)
The period of delinquency is based on the number of days scheduled payments are contractually past due.

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Allowance for Loan Losses