NELNET INC 10-Q

ITEM 1. FINANCIAL STATEMENTS NELNET, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share data) (unaudited) As of As of June 30, 2022 December 31, 2021 Assets: Loans and accrued interest receivable (net of allowance for loan losses of $ 120,424 and $ 127,113 , respectively) $ 16,916,344 18,335,197 Cash and cash equivalents: Cash and cash equivalents - not held at a related party 32,849 30,128 Cash and cash equivalents - held at a related party 95,650 95,435 Total cash and cash equivalents 128,499 125,563 Investments and notes receivable 1,988,450 1,588,919 Restricted cash 754,693 741,981 Restricted cash - due to customers 290,850 326,645 Accounts receivable (net of allowance for doubtful accounts of $ 1,342 and $ 1,160 , respectively) 119,774 163,315 Goodwill 149,117 142,092 Intangible assets, net 70,086 52,029 Property and equipment, net 123,738 119,413 Other assets 82,462 82,887 Total assets $ 20,624,013 21,678,041 Liabilities: Bonds and notes payable $ 16,115,269 17,631,089 Accrued interest payable 12,963 4,566 Bank deposits 588,474 344,315 Other liabilities 406,686 379,231 Due to customers 409,476 366,002 Total liabilities 17,532,868 18,725,203 Commitments and contingencies Equity: Nelnet, Inc. shareholders' equity: Preferred stock, $ 0.01 par value. Authorized 50,000,000 shares; no shares issued or outstanding — — Common stock: Class A, $ 0.01 par value. Authorized 600,000,000 shares; issued and outstanding 26,613,733 shares and 27,239,654 shares, respectively 266 272 Class B, convertible, $ 0.01 par value. Authorized 60,000,000 shares; issued and outstanding 10,674,892 shares and 10,676,642 shares, respectively 107 107 Additional paid-in capital 1,180 1,000 Retained earnings 3,127,687 2,940,523 Accumulated other comprehensive (loss) earnings, net ( 31,858 ) 9,304 Total Nelnet, Inc. shareholders' equity 3,097,382 2,951,206 Noncontrolling interests ( 6,237 ) 1,632 Total equity 3,091,145 2,952,838 Total liabilities and equity $ 20,624,013 21,678,041 Supplemental information - assets and liabilities of consolidated education lending variable interest entities: Loans and accrued interest receivable $ 16,294,069 17,981,414 Restricted cash 678,871 674,073 Bonds and notes payable ( 15,823,651 ) ( 17,462,456 ) Accrued interest payable and other liabilities ( 60,461 ) ( 36,276 ) Net assets of consolidated education lending variable interest entities $ 1,088,828 1,156,755 See accompanying notes to consolidated financial statements. 2 NELNET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except share data) (unaudited) Three months ended Six months ended June 30, June 30, 2022 2021 2022 2021 Interest income: Loan interest $ 134,706 122,005 246,083 246,123 Investment interest 16,881 11,578 30,700 16,563 Total interest income 151,587 133,583 276,783 262,686 Interest expense on bonds and notes payable and bank deposits 73,642 49,991 121,721 77,764 Net interest income 77,945 83,592 155,062 184,922 Less provision (negative provision) for loan losses 9,409 374 8,974 ( 16,674 ) Net interest income after provision for loan losses 68,536 83,218 146,088 201,596 Other income/expense: Loan servicing and systems revenue 124,873 112,094 261,241 223,611 Education technology, services, and payment processing revenue 91,031 76,702 203,317 171,960 Other 12,647 22,921 22,524 18,317 Gain on sale of loans — 15,271 2,989 15,271 Impairment expense and provision for beneficial interests, net ( 6,284 ) ( 500 ) ( 6,284 ) 1,936 Derivative market value adjustments and derivative settlements, net 45,024 ( 6,989 ) 187,949 27,516 Total other income/expense 267,291 219,499 671,736 458,611 Cost to provide education technology, services, and payment processing services 30,852 21,676 66,397 48,728 Operating expenses: Salaries and benefits 141,398 118,968 290,813 234,759 Depreciation and amortization 18,250 20,236 35,206 40,419 Other expenses 36,940 32,587 76,439 69,286 Total operating expenses 196,588 171,791 402,458 344,464 Income before income taxes 108,387 109,250 348,969 267,015 Income tax expense 25,483 26,237 81,180 61,098 Net income 82,904 83,013 267,789 205,917 Net loss attributable to noncontrolling interests 2,225 854 3,987 1,548 Net income attributable to Nelnet, Inc. $ 85,129 83,867 271,776 207,465 Earnings per common share: Net income attributable to Nelnet, Inc. shareholders - basic and diluted $ 2.26 2.16 7.18 5.36 Weighted average common shares outstanding - basic and diluted 37,710,214 38,741,486 37,875,108 38,672,902 See accompanying notes to consolidated financial statements. 3 NELNET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Dollars in thousands) (unaudited) Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 Net income $ 82,904 83,013 267,789 205,917 Other comprehensive (loss) income: Net changes related to foreign currency translation adjustments $ ( 8 ) ( 1 ) 1 — Net changes related to available-for-sale debt securities: Unrealized holding (losses) gains arising during period, net ( 33,822 ) 2,897 ( 50,520 ) 7,246 Reclassification of gains recognized in net income, net of losses ( 849 ) ( 371 ) ( 3,642 ) ( 879 ) Income tax effect 8,321 ( 26,350 ) ( 606 ) 1,920 12,999 ( 41,163 ) ( 1,528 ) 4,839 Other comprehensive (loss) income ( 26,358 ) 1,919 ( 41,162 ) 4,839 Comprehensive income 56,546 84,932 226,627 210,756 Comprehensive loss attributable to noncontrolling interests 2,225 854 3,987 1,548 Comprehensive income attributable to Nelnet, Inc. $ 58,771 85,786 230,614 212,304 See accompanying notes to consolidated financial statements. 4 NELNET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Dollars in thousands, except share data) (unaudited) Nelnet, Inc. Shareholders Preferred stock shares Common stock shares Preferred stock Class A common stock Class B common stock Additional paid-in capital Retained earnings Accumulated other comprehensive (loss) earnings Noncontrolling interests Total equity Class A Class B Balance as of March 31, 2021 — 27,367,797 11,154,171 $ — 274 112 5,859 2,736,923 9,022 ( 3,089 ) 2,749,101 Issuance of noncontrolling interests — — — — — — — — — 5,488 5,488 Net income (loss) — — — — — — — 83,867 — ( 854 ) 83,013 Other comprehensive income — — — — — — — — 1,919 — 1,919 Distribution to noncontrolling interests — — — — — — — — — ( 6,727 ) ( 6,727 ) Cash dividends on Class A and Class B common stock - $ 0.22 per share — — — — — — — ( 8,475 ) — — ( 8,475 ) Issuance of common stock, net of forfeitures — 32,513 — — — — 1,824 — — — 1,824 Compensation expense for stock based awards — — — — — — 2,874 — — — 2,874 Repurchase of common stock — ( 5,368 ) — — — — ( 399 ) — — — ( 399 ) Conversion of common stock — 100,000 ( 100,000 ) — 1 ( 1 ) — — — — — Balance as of June 30, 2021 — 27,494,942 11,054,171 $ — 275 111 10,158 2,812,315 10,941 ( 5,182 ) 2,828,618 Balance as of March 31, 2022 — 27,151,270 10,674,892 $ — 272 107 1,208 3,092,226 ( 5,500 ) ( 3,250 ) 3,085,063 Issuance of noncontrolling interests — — — — — — — — — 9,275 9,275 Net income (loss) — — — — — — — 85,129 — ( 2,225 ) 82,904 Other comprehensive loss — — — — — — — — ( 26,358 ) — ( 26,358 ) Distribution to noncontrolling interests — — — — — — — — — ( 10,037 ) ( 10,037 ) Cash dividends on Class A and Class B common stock - $ 0.24 per share — — — — — — — ( 8,973 ) — — ( 8,973 ) Issuance of common stock, net of forfeitures — 20,720 — — — — 2,116 — — — 2,116 Compensation expense for stock based awards — — — — — — 3,187 — — — 3,187 Repurchase of common stock — ( 558,257 ) — — ( 6 ) — ( 5,331 ) ( 40,695 ) — — ( 46,032 ) Balance as of June 30, 2022 — 26,613,733 10,674,892 $ — 266 107 1,180 3,127,687 ( 31,858 ) ( 6,237 ) 3,091,145 See accompanying notes to consolidated financial statements. 5 NELNET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Dollars in thousands, except share data) (unaudited) Nelnet, Inc. Shareholders Preferred stock shares Common stock shares Preferred stock Class A common stock Class B common stock Additional paid-in capital Retained earnings Accumulated other comprehensive (loss) earnings Noncontrolling interests Total equity Class A Class B Balance as of December 31, 2020 — 27,193,154 11,155,571 $ — 272 112 3,794 2,621,762 6,102 ( 3,693 ) 2,628,349 Issuance of noncontrolling interests — — — — — — — — — 6,888 6,888 Net income (loss) — — — — — — — 207,465 — ( 1,548 ) 205,917 Other comprehensive income — — — — — — — — 4,839 — 4,839 Distribution to noncontrolling interests — — — — — — — — — ( 6,829 ) ( 6,829 ) Cash dividends on Class A and Class B common stock - $ 0.44 per share — — — — — — — ( 16,912 ) — — ( 16,912 ) Issuance of common stock, net of forfeitures — 231,955 — — 2 — 3,913 — — — 3,915 Compensation expense for stock based awards — — — — — — 4,859 — — — 4,859 Repurchase of common stock — ( 31,567 ) — — — — ( 2,408 ) — — — ( 2,408 ) Conversion of common stock — 101,400 ( 101,400 ) — 1 ( 1 ) — — — — — Balance as of June 30, 2021 — 27,494,942 11,054,171 $ — 275 111 10,158 2,812,315 10,941 ( 5,182 ) 2,828,618 Balance as of December 31, 2021 — 27,239,654 10,676,642 $ — 272 107 1,000 2,940,523 9,304 1,632 2,952,838 Issuance of noncontrolling interests — — — — — — — — — 11,279 11,279 Net income (loss) — — — — — — — 271,776 — ( 3,987 ) 267,789 Other comprehensive loss — — — — — — — — ( 41,162 ) — ( 41,162 ) Distribution to noncontrolling interests — — — — — — — — — ( 15,161 ) ( 15,161 ) Cash dividends on Class A and Class B common stock - $ 0.48 per share — — — — — — — ( 18,035 ) — — ( 18,035 ) Issuance of common stock, net of forfeitures — 310,639 — — 3 — 6,498 — — — 6,501 Compensation expense for stock based awards — — — — 6,027 — — — 6,027 Repurchase of common stock — ( 938,310 ) — — ( 9 ) — ( 12,345 ) ( 66,577 ) — — ( 78,931 ) Conversion of common stock — 1,750 ( 1,750 ) — — — — — — — — Balance as of June 30, 2022 — 26,613,733 10,674,892 $ — 266 107 1,180 3,127,687 ( 31,858 ) ( 6,237 ) 3,091,145 See accompanying notes to consolidated financial statements. 6 NELNET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited) Six months ended June 30, 2022 2021 Net income attributable to Nelnet, Inc. $ 271,776 207,465 Net loss attributable to noncontrolling interests ( 3,987 ) ( 1,548 ) Net income 267,789 205,917 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization, including debt discounts and loan premiums and deferred origination costs 74,080 76,754 Loan discount accretion ( 19,554 ) ( 14,606 ) Provision (negative provision) for loan losses 8,974 ( 16,674 ) Derivative market value adjustments ( 186,135 ) ( 37,194 ) Proceeds from termination of derivative instruments, net 68,021 — Proceeds from clearinghouse - initial and variation margin, net of payments 133,622 38,440 Gain on sale of loans ( 2,989 ) ( 15,271 ) Loss on investments, net 3,207 812 (Gain) loss from repurchases of debt, net ( 1,071 ) 695 Proceeds from sale (purchases) of equity securities, net 42,398 ( 19,764 ) Deferred income tax expense 49,890 18,173 Non-cash compensation expense 6,171 4,980 Provision (negative provision) for beneficial interests and impairment expense, net 6,284 ( 1,936 ) Decrease (increase) in loan and investment accrued interest receivable 184 ( 40,488 ) Decrease (increase) in accounts receivable 44,786 ( 9,446 ) (Increase) decrease in other assets, net ( 8,015 ) 32,241 Decrease in the carrying amount of ROU asset, net 2,735 3,962 Increase (decrease) in accrued interest payable 8,397 ( 23,779 ) Decrease in other liabilities, net ( 12,200 ) ( 13,663 ) Decrease in the carrying amount of lease liability ( 2,860 ) ( 3,288 ) Net cash provided by operating activities 483,714 185,865 Cash flows from investing activities: Purchases and originations of loans ( 396,486 ) ( 1,040,573 ) Purchases of loans from a related party ( 7,675 ) ( 20,847 ) Net proceeds from loan repayments, claims, and capitalized interest 1,792,930 1,047,645 Proceeds from sale of loans 15,278 65,224 Purchases of available-for-sale securities ( 735,140 ) ( 363,485 ) Proceeds from sales of available-for-sale securities 319,752 38,511 Proceeds from beneficial interest in loan securitizations 13,212 19,077 Purchases of other investments and issuance of notes receivable ( 147,400 ) ( 128,011 ) Proceeds from other investments 23,955 167,821 Purchases of property and equipment ( 34,152 ) ( 28,784 ) Business acquisition, net of cash acquired ( 7,320 ) — Net cash provided by (used in) investing activities 836,954 ( 243,422 ) 7 NELNET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) Six months ended June 30, 2022 2021 Cash flows from financing activities: Payments on bonds and notes payable $ ( 1,695,697 ) ( 1,073,523 ) Proceeds from issuance of bonds and notes payable 159,931 1,114,821 Payments of debt issuance costs ( 851 ) ( 3,035 ) Increase in bank deposits, net 244,159 148,208 Increase in due to customers 43,544 1,746 Dividends paid ( 18,035 ) ( 16,912 ) Repurchases of common stock ( 78,931 ) ( 2,408 ) Proceeds from issuance of common stock 801 689 Issuance of noncontrolling interests 5,142 7,480 Distribution to noncontrolling interests ( 699 ) ( 423 ) Net cash (used in) provided by financing activities ( 1,340,636 ) 176,643 Effect of exchange rate changes on cash ( 179 ) ( 108 ) Net (decrease) increase in cash, cash equivalents, and restricted cash ( 20,147 ) 118,978 Cash, cash equivalents, and restricted cash, beginning of period 1,194,189 958,395 Cash, cash equivalents, and restricted cash, end of period $ 1,174,042 1,077,373 Supplemental disclosures of cash flow information: Cash disbursements made for interest $ 89,281 78,904 Cash disbursements made for income taxes, net of refunds and credits received (a) $ 21,137 14,229 Cash disbursements made for operating leases $ 3,538 4,096 Non-cash operating, investing, and financing activity: ROU assets obtained in exchange for lease obligations $ 746 823 Receipt of beneficial interest in consumer loan securitization $ 3,660 19,280 Distribution to noncontrolling interests $ 14,462 6,406 Issuance of noncontrolling interests $ 6,137 592 (a) The Company utilized $ 4.1 million and $ 22.0 million of federal and state tax credits related primarily to renewable energy during the six months ended June 30, 2022 and 2021, respectively. Supplemental disclosures of noncash activities regarding the Company's business acquisition are contained in note 6. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets to the total of the amounts reported in the consolidated statements of cash flows. As of As of As of As of June 30, 2022 December 31, 2021 June 30, 2021 December 31, 2020 Total cash and cash equivalents $ 128,499 125,563 212,989 121,249 Restricted cash 754,693 741,981 616,711 553,175 Restricted cash - due to customers 290,850 326,645 247,673 283,971 Cash, cash equivalents, and restricted cash $ 1,174,042 1,194,189 1,077,373 958,395 See accompanying notes to consolidated financial statements. 8 NELNET, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts, unless otherwise noted) (unaudited) 1. Basis of Financial Reporting The accompanying unaudited consolidated financial statements of Nelnet, Inc. and subsidiaries (the “Company”) as of June 30, 2022 and for the three and six months ended June 30, 2022 and 2021 have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 2021 and, in the opinion of the Company’s management, the unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results of operations for the interim periods presented. The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results for the year ending December 31, 2022. The unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the "2021 Annual Report"). Reclassification of Prior Period Cash Flows Presentation The line item in the Company's consolidated statements of cash flows for changes during a period in amounts "due to customers" was previously presented in cash flows from operating activities, and has been corrected for the periods presented in this report (including the prior year period) to be presented in cash flows from financing activities. This correction has no impact on the Company's previously reported consolidated net income, total assets (including cash and cash equivalents), liabilities, and equity, and while the correction has a corresponding impact on the amounts of cash flows from operating and financing activities, it has no impact on the net increase or decrease in cash for previously reported periods. The Company has concluded that the correction was not material from a combined quantitative and qualitative perspective to its previously issued interim financial statements for 2022, or its previously issued financial statements for 2021, 2020, and 2019. 9 2. Loans and Accrued Interest Receivable and Allowance for Loan Losses Loans and accrued interest receivable consisted of the following: As of As of June 30, 2022 December 31, 2021 Non-Nelnet Bank: Federally insured student loans: Stafford and other $ 3,548,901 3,904,000 Consolidation 11,880,710 13,187,047 Total 15,429,611 17,091,047 Private education loans 272,943 299,442 Consumer and other loans 152,583 51,301 Non-Nelnet Bank loans 15,855,137 17,441,790 Nelnet Bank: Federally insured student loans 77,428 88,011 Private education loans 346,125 169,890 Nelnet Bank loans 423,553 257,901 Accrued interest receivable 780,691 788,552 Loan discount, net of unamortized loan premiums and deferred origination costs ( 22,613 ) ( 25,933 ) Allowance for loan losses: Non-Nelnet Bank: Federally insured loans ( 92,593 ) ( 103,381 ) Private education loans ( 15,253 ) ( 16,143 ) Consumer and other loans ( 10,576 ) ( 6,481 ) Non-Nelnet Bank allowance for loan losses ( 118,422 ) ( 126,005 ) Nelnet Bank: Federally insured loans ( 258 ) ( 268 ) Private education loans ( 1,744 ) ( 840 ) Nelnet Bank allowance for loan losses ( 2,002 ) ( 1,108 ) $ 16,916,344 18,335,197 The following table summarizes the allowance for loan losses as a percentage of the ending loan balance for each of the Company's loan portfolios. As of As of June 30, 2022 December 31, 2021 Non-Nelnet Bank: Federally insured student loans (a) 0.60 % 0.60 % Private education loans 5.59 % 5.39 % Consumer and other loans (b) 6.93 % 12.63 % Nelnet Bank: Federally insured student loans (a) 0.33 % 0.30 % Private education loans 0.50 % 0.49 % (a) As of June 30, 2022 and December 31, 2021, the allowance for loan losses as a percent of the risk sharing component of federally insured student loans not covered by the federal guaranty for non-Nelnet Bank was 21.8 % and 22.2 %, respectively, and for Nelnet Bank was 13.2 % and 12.1 %, respectively. (b) During the second quarter of 2022, the Company purchased home equity loans that generally have lower default rates than unsecured consumer loans. As such, the allowance for loan losses as a percentage of the ending loan balance has decreased as of June 30, 2022 as compared to December 31, 2021. Gain on Sale of Loans On January 26, 2022, the Company sold $ 18.1 million (par value) of consumer loans to an unrelated third party who securitized such loans. The Company recognized a gain of $ 3.0 million (pre-tax) as part of this transaction. As partial consideration received for the consumer loans sold, the Company received a 6.6 percent residual interest in the consumer loan securitization, which is included in "investments and notes receivable" on the Company's consolidated balance sheet. 10 Activity in the Allowance for Loan Losses The following table presents the activity in the allowance for loan losses by portfolio segment. Balance at beginning of period Provision (negative provision) for loan losses Charge-offs Recoveries Initial allowance on loans purchased with credit deterioration (a) Loan sales Balance at end of period Three months ended June 30, 2022 Non-Nelnet Bank: Federally insured loans $ 95,995 2,365 ( 5,788 ) — 21 — 92,593 Private education loans 14,622 1,217 ( 707 ) 118 — 3 15,253 Consumer and other loans 5,710 5,245 ( 531 ) 152 — — 10,576 Nelnet Bank: Federally insured loans 247 13 ( 2 ) — — — 258 Private education loans 1,251 569 ( 73 ) — — ( 3 ) 1,744 $ 117,825 9,409 ( 7,101 ) 270 21 — 120,424 Three months ended June 30, 2021 Non-Nelnet Bank: Federally insured loans $ 121,846 ( 397 ) ( 1,172 ) — 525 — 120,802 Private education loans 20,670 ( 1,004 ) ( 403 ) 139 — 1 19,403 Consumer and other loans 14,134 1,706 ( 1,464 ) 235 — ( 9,909 ) 4,702 Nelnet Bank: Federally insured loans — 245 — — — — 245 Private education loans 744 ( 176 ) — — — ( 1 ) 567 $ 157,394 374 ( 3,039 ) 374 525 ( 9,909 ) 145,719 Six months ended June 30, 2022 Non-Nelnet Bank Federally insured loans $ 103,381 ( 383 ) ( 10,549 ) — 144 — 92,593 Private education loans 16,143 817 ( 2,006 ) 295 — 4 15,253 Consumer and other loans 6,481 7,529 ( 1,469 ) 319 — ( 2,284 ) 10,576 Nelnet Bank Federally insured loans 268 ( 8 ) ( 2 ) — — — 258 Private education loans 840 995 ( 87 ) — — ( 4 ) 1,744 $ 127,113 8,950 ( 14,113 ) 614 144 ( 2,284 ) 120,424 Six months ended June 30, 2021 Non-Nelnet Bank Federally insured loans $ 128,590 ( 7,880 ) ( 1,233 ) — 1,325 — 120,802 Private education loans 19,529 427 ( 896 ) 341 — 2 19,403 Consumer and other loans 27,256 ( 9,712 ) ( 3,414 ) 481 — ( 9,909 ) 4,702 Nelnet Bank Federally insured loans — 245 — — — — 245 Private education loans 323 246 — — — ( 2 ) 567 $ 175,698 ( 16,674 ) ( 5,543 ) 822 1,325 ( 9,909 ) 145,719 (a) During the three months ended June 30, 2022 and 2021, and six months ended June 30, 2022 and 2021, the Company acquired $ 1.6 million (par value), $ 34.7 million (par value), $ 10.8 million (par value), and $ 88.7 million (par value), respectively, of federally insured rehabilitation loans that met the definition of purchased loans with credit deterioration ("PCD loans") when they were purchased by the Company. The Company recorded a negative provision for loan losses for its federally insured loan portfolio for the three months ended March 31, 2022 due to the amortization of the portfolio and an increase in expected prepayments as a result of an initiative offered by the Department of Education (the “Department”) for Federal Family Education Loan Program ("FFELP" or "FFEL Program") borrowers to consolidate their loans into Federal Direct Loan Program loans with the Department by October 31, 2022 to qualify for loan forgiveness under the Public Service Loan Forgiveness program. The Company recorded a provision for loan losses on its consumer loan portfolio during the three months ended March 31, 2022 as a result of loans acquired during the period. 11 The Company recorded a provision for loan losses for its federally insured, private education, consumer, and other loan portfolios for the three months ended June 30, 2022 due to management's estimate of worsening economic conditions as of June 30, 2022 in comparison to management's estimate of economic conditions used to determine the allowance for loan losses as of March 31, 2022. In addition, the Company recorded provision for loan losses on its consumer and other loan portfolio during the three months ended June 30, 2022 as a result of loans acquired during the period. The provision for loan losses recognized by the Company for its federally insured loan portfolio during the three months ended June 30, 2022 was partially offset due to the continued amortization of the portfolio and an increase in the estimate of prepayments as of June 30, 2022 in comparison to management's estimate used to determine the allowance for loan losses as of March 31, 2022. Unfunded Private Education Loan Commitments As of June 30, 2022, Nelnet Bank has a liability of approximately $ 36,000 related to $ 3.0 million of unfunded private education loan commitments. The liability for unfunded loan commitments is included in "other liabilities" on the consolidated balance sheet. During the six months ended June 30, 2022, Nelnet Bank recognized provision for loan losses of approximately $ 24,000 related to unfunded loan commitments. Key Credit Quality Indicators Loan Status and Delinquencies Key credit quality indicators for the Company's federally insured, private education, consumer, and other loan portfolios are loan status, including delinquencies. The impact of changes in loan status is incorporated into the allowance for loan losses calculation. Delinquencies have the potential to adversely impact the Company’s earnings through increased servicing and collection costs and account charge-offs. The table below shows the Company’s loan status and delinquency amounts. As of June 30, 2022 As of December 31, 2021 As of June 30, 2021 Federally insured loans - Non-Nelnet Bank: Loans in-school/grace/deferment $ 763,957 4.9 % $ 829,624 4.9 % $ 955,227 5.0 % Loans in forbearance 1,246,882 8.1 1,118,667 6.5 2,079,368 11.0 Loans in repayment status: Loans current 11,551,817 86.1 % 12,847,685 84.9 % 13,995,297 88.0 % Loans delinquent 31-60 days 464,234 3.5 895,656 5.9 580,602 3.7 Loans delinquent 61-90 days 309,252 2.3 352,449 2.3 262,353 1.6 Loans delinquent 91-120 days 187,452 1.4 251,075 1.7 104,124 0.7 Loans delinquent 121-270 days 638,189 4.7 592,449 3.9 398,965 2.5 Loans delinquent 271 days or greater 267,828 2.0 203,442 1.3 562,928 3.5 Total loans in repayment 13,418,772 87.0 100.0 % 15,142,756 88.6 100.0 % 15,904,269 84.0 100.0 % Total federally insured loans 15,429,611 100.0 % 17,091,047 100.0 % 18,938,864 100.0 % Accrued interest receivable 775,337 784,716 830,973 Loan discount, net of unamortized premiums and deferred origination costs ( 26,674 ) ( 28,309 ) ( 24,129 ) Allowance for loan losses ( 92,593 ) ( 103,381 ) ( 120,802 ) Total federally insured loans and accrued interest receivable, net of allowance for loan losses $ 16,085,681 $ 17,744,073 $ 19,624,906 Private education loans - Non-Nelnet Bank: Loans in-school/grace/deferment $ 15,403 5.6 % $ 9,661 3.2 % $ 10,195 2.9 % Loans in forbearance 2,447 0.9 3,601 1.2 3,884 1.1 Loans in repayment status: Loans current 250,268 98.1 % 280,457 98.0 % 330,097 98.3 % Loans delinquent 31-60 days 1,980 0.8 2,403 0.8 3,962 1.2 Loans delinquent 61-90 days 782 0.3 976 0.3 818 0.2 Loans delinquent 91 days or greater 2,063 0.8 2,344 0.9 1,138 0.3 Total loans in repayment 255,093 93.5 100.0 % 286,180 95.6 100.0 % 336,015 96.0 100.0 % Total private education loans 272,943 100.0 % 299,442 100.0 % 350,094 100.0 % Accrued interest receivable 2,058 1,960 2,360 Loan premium, net of unamortized discount 94 ( 1,123 ) ( 1,547 ) Allowance for loan losses ( 15,253 ) ( 16,143 ) ( 19,403 ) Total private education loans and accrued interest receivable, net of allowance for loan losses $ 259,842 $ 284,136 $ 331,504 12 As of June 30, 2022 As of December 31, 2021 As of June 30, 2021 Consumer and other loans - Non-Nelnet Bank: Loans in deferment $ 64 0.0 % $ 43 0.1 % $ 38 0.1 % Loans in repayment status: Loans current 150,812 98.9 % 49,697 97.0 % 41,039 96.1 % Loans delinquent 31-60 days 515 0.3 414 0.8 387 0.9 Loans delinquent 61-90 days 435 0.3 322 0.6 484 1.1 Loans delinquent 91 days or greater 757 0.5 825 1.6 819 1.9 Total loans in repayment 152,519 100.0 100.0 % 51,258 99.9 100.0 % 42,729 99.9 % 100.0 % Total consumer and other loans 152,583 100.0 % 51,301 100.0 % 42,767 100.0 % Accrued interest receivable 1,376 396 328 Loan discount, net of unamortized premiums ( 1,965 ) 913 377 Allowance for loan losses ( 10,576 ) ( 6,481 ) ( 4,702 ) Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 141,418 $ 46,129 $ 38,770 Federally insured loans - Nelnet Bank (a): Loans in-school/grace/deferment $ 283 0.4 % $ 330 0.4 % $ 103 0.1 % Loans in forbearance 1,029 1.3 1,057 1.2 1,026 1.1 Loans in repayment status: Loans current 74,883 98.4 % 85,599 98.8 % 95,402 99.3 % Loans delinquent 30-59 days 587 0.8 816 1.0 593 0.6 Loans delinquent 60-89 days 165 0.2 — — 43 0.1 Loans delinquent 90-119 days 245 0.3 — — — — Loans delinquent 120-270 days 236 0.3 209 0.2 — — Loans delinquent 271 days or greater — — — — — — Total loans in repayment 76,116 98.3 100.0 % 86,624 98.4 100.0 % 96,038 98.8 100.0 % Total federally insured loans 77,428 100.0 % 88,011 100.0 % 97,167 100.0 % Accrued interest receivable 1,381 1,216 1,179 Loan premium 23 26 29 Allowance for loan losses ( 258 ) ( 268 ) ( 245 ) Total federally insured loans and accrued interest receivable, net of allowance for loan losses $ 78,574 $ 88,985 $ 98,130 Private education loans - Nelnet Bank (a): Loans in-school/grace/deferment $ 1,160 0.3 % $ 150 0.1 % $ 82 0.1 % Loans in forbearance 1,236 0.4 460 0.3 133 0.1 Loans in repayment status: Loans current 343,148 99.8 % 169,157 99.9 % 93,189 100.0 % Loans delinquent 30-59 days 169 0.1 51 — — — Loans delinquent 60-89 days 412 0.1 — — — — Loans delinquent 90 days or greater — — 72 0.1 — — Total loans in repayment 343,729 99.3 100.0 % 169,280 99.6 100.0 % 93,189 99.8 100.0 % Total private education loans 346,125 100.0 % 169,890 100.0 % 93,404 100.0 % Accrued interest receivable 539 264 149 Deferred origination costs 5,909 2,560 1,374 Allowance for loan losses ( 1,744 ) ( 840 ) ( 567 ) Total private education loans and accrued interest receivable, net of allowance for loan losses $ 350,829 $ 171,874 $ 94,360 (a) For the periods presented for Nelnet Bank, the delinquency bucket periods conform with the delinquency bucket periods reflected in Nelnet Bank's Call Reports filed with the Federal Deposit Insurance Corporation. 13 FICO Scores - Nelnet Bank Private Education Loans An additional key credit quality indicator for Nelnet Bank private education loans is FICO scores at the time of origination. The following tables highlight the gross principal balance of Nelnet Bank's private education loan portfolio, by year of origination, stratified by FICO score at the time of origination. Loan balance as of June 30, 2022 Six months ended June 30, 2022 2021 2020 Total FICO at origination: Less than 705 $ 4,042 5,627 95 9,764 705 - 734 18,060 10,959 264 29,283 735 - 764 31,516 17,165 1,007 49,688 765 - 794 54,493 33,080 1,353 88,926 Greater than 794 85,571 76,274 6,619 168,464 $ 193,682 143,105 9,338 346,125 Loan balance as of December 31, 2021 2021 2020 Total FICO at origination: Less than 705 $ 6,481 100 6,581 705 - 734 11,697 276 11,973 735 - 764 18,611 1,072 19,683 765 - 794 36,274 1,467 37,741 Greater than 794 86,141 7,771 93,912 $ 159,204 10,686 169,890 Nonaccrual Status The Company does not place federally insured loans on nonaccrual status due to the government guaranty. The amortized cost of private education, consumer, and other loans on nonaccrual status, as well as the allowance for loan losses related to such loans, as of December 31, 2021 and June 30, 2022, was not material. 14 Amortized Cost Basis by Origination Year The following table presents the amortized cost of the Company's private education, consumer, and other loans by loan status and delinquency amount as of June 30, 2022 based on year of origination. Effective July 1, 2010, no new loan originations can be made under the FFEL Program and all new federal loan originations must be made under the Federal Direct Loan Program. As such, all the Company’s federally insured loans were originated prior to July 1, 2010. Six months ended June 30, 2022 2021 2020 2019 2018 Prior years Total Private education loans - Non-Nelnet Bank: Loans in school/grace/deferment $ 1,601 7,311 1,784 3,093 — 1,614 15,403 Loans in forbearance — — 368 632 47 1,400 2,447 Loans in repayment status: Loans current 3,947 3,071 57,126 44,044 410 141,670 250,268 Loans delinquent 31-60 days — — 104 421 — 1,455 1,980 Loans delinquent 61-90 days — 20 52 — — 710 782 Loans delinquent 91 days or greater — 7 111 79 — 1,866 2,063 Total loans in repayment 3,947 3,098 57,393 44,544 410 145,701 255,093 Total private education loans $ 5,548 10,409 59,545 48,269 457 148,715 272,943 Accrued interest receivable 2,058 Loan premium, net of unamortized discount 94 Allowance for loan losses ( 15,253 ) Total private education loans and accrued interest receivable, net of allowance for loan losses $ 259,842 Consumer and other loans - Non-Nelnet Bank: Loans in deferment $ 16 38 — — 10 — 64 Loans in repayment status: Loans current 101,890 40,772 1,865 3,118 3,130 37 150,812 Loans delinquent 31-60 days 163 219 26 60 44 3 515 Loans delinquent 61-90 days 151 194 14 46 30 — 435 Loans delinquent 91 days or greater 68 119 16 196 358 — 757 Total loans in repayment 102,272 41,304 1,921 3,420 3,562 40 152,519 Total consumer and other loans $ 102,288 41,342 1,921 3,420 3,572 40 152,583 Accrued interest receivable 1,376 Loan discount, net of unamortized premiums ( 1,965 ) Allowance for loan losses ( 10,576 ) Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 141,418 Private education loans - Nelnet Bank (a): Loans in school/grace/deferment $ 863 297 — — — — 1,160 Loans in forbearance 665 440 131 — — — 1,236 Loans in repayment status: Loans current 192,101 141,840 9,207 — — — 343,148 Loans delinquent 30-59 days — 169 — — — — 169 Loans delinquent 60-89 days 53 359 — — — — 412 Loans delinquent 90 days or greater — — — — — — — Total loans in repayment 192,154 142,368 9,207 — — — 343,729 Total private education loans $ 193,682 143,105 9,338 — — — 346,125 Accrued interest receivable 539 Deferred origination costs 5,909 Allowance for loan losses ( 1,744 ) Total private education loans and accrued interest receivable, net of allowance for loan losses $ 350,829 (a) For the periods presented for Nelnet Bank, the delinquency bucket periods conform with the delinquency bucket periods reflected in Nelnet Bank's Call Reports filed with the Federal Deposit Insurance Corporation. 15 3. Bonds and Notes Payable The following tables summarize the Company’s outstanding debt obligations by type of instrument: As of June 30, 2022 Carrying amount Interest rate range Final maturity Variable-rate bonds and notes issued in FFELP loan asset-backed securitizations: Bonds and notes based on indices $ 14,323,434 1.22 % - 3.62 % 2/27/28 - 9/25/69 Bonds and notes based on auction 221,385 0.00 % - 2.30 % 3/32/32 - 8/27/46 Total FFELP variable-rate bonds and notes 14,544,819 Fixed-rate bonds and notes issued in FFELP loan asset-backed securitizations 703,600 1.42 % - 3.45 % 10/25/67 - 8/27/68 FFELP loan warehouse facility 4,618 1.64 % 11/22/23 Private education loan warehouse facility 89,466 1.71 % 10/31/23 Variable-rate bonds and notes issued in private education loan asset-backed securitizations 24,737 3.10 % / 3.37 % 12/26/40 / 6/25/49 Fixed-rate bonds and notes issued in private education loan asset-backed securitization 25,200 3.60 % / 5.35 % 12/26/40 / 12/28/43 Unsecured line of credit — — 9/22/26 Participation agreement 393,480 2.41 % 5/4/23 Repurchase agreements 500,690 0.97 % - 2.81 % 8/8/22 - 11/27/24 16,286,610 Discount on bonds and notes payable and debt issuance costs ( 171,341 ) Total $ 16,115,269 As of December 31, 2021 Carrying amount Interest rate range Final maturity Variable-rate bonds and notes issued in FFELP loan asset-backed securitizations: Bonds and notes based on indices $ 15,887,295 0.23 % - 2.10 % 5/27/25 - 9/25/69 Bonds and notes based on auction 248,550 0.00 % - 1.09 % 3/22/32 - 8/27/46 Total FFELP variable-rate bonds and notes 16,135,845 Fixed-rate bonds and notes issued in FFELP loan asset-backed securitizations 772,935 1.42 % - 3.45 % 10/25/67 - 8/27/68 FFELP loan warehouse facility 5,048 0.21 % 5/22/23 Private education loan warehouse facility 107,011 0.24 % 2/13/23 Variable-rate bonds and notes issued in private education loan asset-backed securitizations 31,818 1.65 % / 1.85 % 12/26/40 / 6/25/49 Fixed-rate bonds and notes issued in private education loan asset-backed securitization 28,613 3.60 % / 5.35 % 12/26/40 / 12/28/43 Unsecured line of credit — — 9/22/26 Participation agreement 253,969 0.78 % 5/4/22 Repurchase agreements 483,848 0.66 % - 1.46 % 5/27/22 - 12/20/23 Secured line of credit 5,000 1.91 % 5/30/22 17,824,087 Discount on bonds and notes payable and debt issuance costs ( 192,998 ) Total $ 17,631,089 16 Warehouse Facilities The Company funds a portion of its loan acquisitions using warehouse facilities. Loan warehousing allows the Company to buy and manage loans prior to transferring them into more permanent financing arrangements. FFELP loan warehouse facility As of June 30, 2022, the Company’s FFELP warehouse facility had an aggregate maximum financing amount available of $ 25.0 million that was reduced from $ 60.0 million per a May 23, 2022 amendment to the facility. The May 2022 amendment also extended the liquidity provisions and final maturity to November 22, 2022 and November 22, 2023, respectively. As of June 30, 2022, $ 4.6 million was outstanding under this facility, $ 20.4 million was available for future funding, and the Company had $ 0.3 million advanced as equity support. Private education loan warehouse facility As of June 30, 2022, the Company's private education warehouse facility had an aggregate maximum financing amount available of $ 175.0 million and an advance rate of 80 to 90 percent. On June 30, 2022, the Company amended the facility to extend the liquidity provisions through October 31, 2022 and final maturity date to October 31, 2023. As of June 30, 2022, $ 89.5 million was outstanding under this warehouse facility, $ 85.5 million was available for future funding, and the Company had $ 10.1 million advanced as equity support. Unsecured Line of Credit The Company has a $ 495.0 million unsecured line of credit that has a maturity date of September 22, 2026. As of June 30, 2022, no amount was outstanding on the line of credit and $ 495.0 million was available for future use. The line of credit provides that the Company may increase the aggregate financing commitments, through the existing lenders and/or through new lenders, up to a total of $ 737.5 million, subject to certain conditions. Participation Agreement The Company has an agreement with Union Bank and Trust Company ("Union Bank"), a related party, as trustee for various grantor trusts, under which Union Bank has agreed to purchase from the Company participation interests in FFELP loan asset-backed securities. As of June 30, 2022, $ 393.4 million of FFELP loan asset-backed securities were subject to outstanding participation interests held by Union Bank, as trustee, under this agreement. The agreement automatically renews annually and is terminable by either party upon five business days' notice. On May 4, 2022, the agreement automatically renewed for another year through May 4, 2023. The Company can participate FFELP loan asset-backed securities to Union Bank to the extent of availability under the grantor trusts, up to $ 400.0 million or an amount in excess of $ 400.0 million if mutually agreed to by both parties. The Company maintains legal ownership of the FFELP loan asset-backed securities and, in its discretion, approves and accomplishes any sale, assignment, transfer, encumbrance, or other disposition of the securities. As such, the FFELP loan asset-backed securities subject to this agreement are included on the Company's consolidated balance sheet as "investments and notes receivable" and the participation interests outstanding have been accounted for by the Company as a secured borrowing. See note 5 for additional information about the FFELP loan asset-backed securities investments serving as collateral under this participation agreement. Repurchase Agreements On May 3, 2021 and June 23, 2021, the Company entered into repurchase agreements with non-affiliated third parties, the proceeds of which are collateralized by certain private education and FFELP loan asset-backed securities. The first agreement has various maturity dates through November 27, 2024 or earlier if either party provides 180 days’ prior written notice, and the second agreement has various maturity dates through January 13, 2023. Included in “bonds and notes payable” as of June 30, 2022 was $ 228.5 million subject to the first agreement and $ 272.2 million subject to the second agreement. See note 5 and below under "Debt Repurchases" for additional information about the private education and FFELP loan asset-backed securities investments, respectively, serving as collateral for these repurchase agreements. Accrued Interest Liability During the first quarter of 2021, the Company reversed a historical accrued interest liability of $ 23.8 million on certain bonds, which liability the Company determined was no longer probable of being required to be paid. The liability was initially recorded when certain asset-backed securitizations were acquired in 2011 and 2013. The reduction of this liability is reflected in (a reduction of) "interest expense on bonds and notes payable and bank deposits" in the consolidated statements of income. 17 Debt Repurchases During the three and six months ended June 30, 2022, the Company repurchased $ 36.7 million and $ 55.2 million, respectively, of its own debt and recognized gains of $ 1.0 million and $ 1.1 million, respectively. During the second quarter of 2021, the Company repurchased $ 19.8 million of its own debt and recognized a loss of $ 0.7 million. The Company has repurchased certain of its own asset-backed securities (bonds and notes payable) in the secondary market. For accounting purposes, these notes are eliminated in consolidation and are not included in the Company's consolidated financial statements. However, these securities remain legally outstanding at the trust level and the Company could sell these notes to third parties or redeem the notes at par as cash is generated by the trust estate. Upon a sale of these notes to third parties, the Company would obtain cash proceeds equal to the market value of the notes on the date of such sale. As of June 30, 2022, the Company holds $ 431.2 million (par value) of its own FFELP asset-backed securities. As of June 30, 2022, $ 206.9 million (par value) of the Company's repurchased FFELP loan asset-backed securities were serving as collateral on amounts outstanding under the Company's repurchase agreements (as discussed above). 4. Derivative Financial Instruments The Company uses derivative financial instruments to manage interest rate risk. Derivative instruments used as part of the Company's interest rate risk management strategy are further described in note 6 of the notes to consolidated financial statements included in the 2021 Annual Report. A tabular presentation of such derivatives outstanding as of June 30, 2022 and December 31, 2021 is presented below. Basis Swaps The following table summarizes the Company’s outstanding basis swaps as of June 30, 2022 and December 31, 2021, in which the Company receives three-month LIBOR set discretely in advance and pays one-month LIBOR plus or minus a spread as defined in the agreements (the "1:3 Basis Swaps"). Maturity Notional amount As of As of June 30, 2022 December 31, 2021 2022 $ 1,000,000 2,000,000 2023 750,000 750,000 2024 1,750,000 1,750,000 2026 1,150,000 1,150,000 2027 250,000 250,000 $ 4,900,000 5,900,000 The weighted average rate paid by the Company on the 1:3 Basis Swaps as of June 30, 2022 and December 31, 2021 was one-month LIBOR plus 9.4 basis points and 9.1 basis points, respectively. Interest Rate Swaps – Floor Income Hedges The following table summarizes the outstanding derivative instruments used by the Company to economically hedge loans earning fixed rate floor income. As of June 30, 2022 As of December 31, 2021 Maturity Notional amount Weighted average fixed rate paid by the Company (a) Notional amount Weighted average fixed rate paid by the Company (a) 2022 $ — — % $ 500,000 0.94 % 2023 250,000 0.32 900,000 0.62 2024 2,250,000 0.35 2,500,000 0.35 2025 — — 500,000 0.35 2026 500,000 1.02 500,000 1.02 2031 100,000 1.53 100,000 1.53 $ 3,100,000 0.49 % $ 5,000,000 0.55 % (a) For all interest rate derivatives, the Company receives discrete three-month LIBOR. 18 In March 2022, the Company terminated $ 650 million in notional amount of derivatives ($ 500 million and $ 150 million that had maturity dates in 2022 and 2023, respectively) for net payments of $ 0.1 million. On April 29, 2022, the Company terminated $ 1.25 billion in notional amount of derivatives ($ 500 million, $ 250 million, and $ 500 million that had maturity dates in 2023, 2024, and 2025, respectively) for total proceeds of $ 68.1 million. Consolidated Financial Statement Impact Related to Derivatives - Statements of Income The following table summarizes the components of "derivative market value adjustments and derivative settlements, net" included in the consolidated statements of income. Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 Settlements: 1:3 basis swaps $ 931 ( 221 ) 1,327 ( 240 ) Interest rate swaps - floor income hedges 3,692 ( 5,153 ) 487 ( 9,438 ) Total settlements - income (expense) 4,623 ( 5,374 ) 1,814 ( 9,678 ) Change in fair value: 1:3 basis swaps ( 148 ) ( 1,106 ) 741 1,693 Interest rate swaps - floor income hedges 40,549 ( 509 ) 185,394 35,501 Total change in fair value - income (expense) 40,401 ( 1,615 ) 186,135 37,194 Derivative market value adjustments and derivative settlements, net - income (expense) $ 45,024 ( 6,989 ) 187,949 27,516 19 5. Investments and Notes Receivable A summary of the Company's investments and notes receivable follows: As of June 30, 2022 As of December 31, 2021 Amortized cost Gross unrealized gains Gross unrealized losses (a) Fair value Amortized cost Gross unrealized gains Gross unrealized losses Fair value Investments (at fair value): FFELP loan asset-backed securities- available-for-sale (b) $ 821,154 4,509 ( 16,028 ) 809,635 480,691 14,710 ( 719 ) 494,682 Private education loan asset-backed securities - available-for-sale (c) 366,602 — ( 28,161 ) 338,441 414,286 507 ( 2,241 ) 412,552 Other debt securities - available-for-sale 148,686 24 ( 2,249 ) 146,461 22,435 — — 22,435 Total available-for-sale debt securities $ 1,336,442 4,533 ( 46,438 ) 1,294,537 917,412 15,217 ( 2,960 ) 929,669 Equity securities 36,945 71,986 Total investments (at fair value) 1,331,482 1,001,655 Other Investments (not measured at fair value): Other debt securities - held-to-maturity 8,200 8,200 Venture capital and funds: Measurement alternative 159,332 157,609 Equity method 82,147 67,840 Total venture capital and funds 241,479 225,449 Real estate: Equity method 57,532 47,226 Notes receivable 5,069 — Total real estate 62,601 47,226 Investment in ALLO: Voting interest/equity method (d) 91,832 87,247 Preferred membership interest and accrued and unpaid preferred return (e) 141,599 137,342 Total investment in ALLO 233,431 224,589 Beneficial interest in loan securitizations (f): Private education loans, including accrued interest 77,308 66,008 Consumer loans 26,197 28,366 Federally insured student loans 24,300 25,768 Total beneficial interest in loan securitizations 127,805 120,142 Solar (g) ( 54,499 ) ( 42,457 ) Notes receivable 33,012 — Tax liens, affordable housing, and other 4,939 4,115 Total investments (not measured at fair value) 656,968 587,264 Total investments and notes receivable $ 1,988,450 $ 1,588,919 (a) As of June 30, 2022, the aggregate fair value of available-for-sale debt securities with unrealized losses was $ 1.1 billion. The Company currently has the intent and ability to retain these investments, and none of the unrealized losses were due to credit losses. (b) As of June 30, 2022, $ 393.4 million (par value) of FFELP loan asset-backed securities were subject to participation interests held by Union Bank, as discussed in note 3 under "Participation Agreement." (c) The Company's private education loan asset-backed securities portfolio is subject to repurchase agreements with third parties, as discussed in note 3 under “Repurchase Agreements.” (d) On February 25, 2022, the Company contributed $ 34.7 million of additional equity to ALLO Holdings LLC, a holding company for ALLO Communications LLC (collectively referred to as "ALLO"). As a result of this equity contribution, the Company's voting membership interests percentage in ALLO did not materially change. The Company accounts for its voting membership interests in ALLO under the Hypothetical Liquidation at Book Value ("HLBV") method of accounting. During the three months ended June 30, 2022 and 2021, the Company recognized a pre-tax loss of $ 16.9 million and income of $ 1.1 million, respectively, under the HLBV method of accounting on its ALLO 20 voting membership interests investment, and during the six months ended June 30, 2022 and 2021, the Company recognized pre-tax losses of $ 30.1 million and $ 21.1 million, respectively. Income and losses from the Company's investment in ALLO are included in "other" in "other income/expense" on the consolidated statements of income. In the second quarter of 2021, the Company revised its accounting policy to correct for an error in its method of applying the HLBV method of accounting for its investment in ALLO. Prior to the second quarter of 2021, the Company calculated Nelnet’s liquidation basis in ALLO under the HLBV method by using Nelnet’s proportionate share of tax losses and amortizing any basis difference using tax methods. The Company determined that Nelnet’s liquidation basis in ALLO under the HLBV method should equal ALLO’s GAAP losses and amortization of any basis difference should use book lives. During the second quarter of 2021, the Company recorded an adjustment to reflect the cumulative net impact on prior periods (since the deconsolidation of ALLO on December 21, 2020) for the correction of this error that resulted in a $ 14.0 million increase to the Company’s ALLO investment balance and a corresponding pre-tax increase to other income. The Company concluded this error had an immaterial impact on 2021 results as well as the results for prior periods. (e) As of June 30, 2022, the outstanding preferred membership interests and accrued and unpaid preferred return of ALLO held by the Company was $ 137.3 million and $ 4.3 million, respectively. The preferred membership interests of ALLO held by the Company earn a preferred annual return of 6.25 percent. The Company recognized pre-tax income on its ALLO preferred membership interests of $ 2.1 million and $ 2.0 million during the three months ended June 30, 2022 and 2021, respectively, and $ 4.3 million during both the six months ended June 30, 2022 and 2021. This income is included in "other" in "other income/expense" on the consolidated statements of income. (f) The Company has partial ownership in certain private education, consumer, and federally insured student loan securitizations. As of the latest remittance reports filed by the various trusts prior to or as of June 30, 2022, the Company's ownership correlates to approximately $ 650 million, $ 160 million, and $ 430 million of private education, consumer, and federally insured student loans, respectively, included in these securitizations. (g) As of June 30, 2022, the Company has funded a total of $ 241.3 million in solar investments, which includes $ 71.4 million funded by syndication partners. The carrying value of the Company’s solar investments are reduced by tax credits earned when the solar project is placed in service. The solar investment balance at June 30, 2022 represents the sum of total tax credits earned on solar projects placed in service through June 30, 2022 and the calculated HLBV net losses being larger than total payments made by the Company on such projects. As of June 30, 2022, the Company is committed to fund an additional $ 51.9 million on these projects, of which $ 43.1 million will be provided by syndication partners. The Company accounts for its solar investments using the HLBV method of accounting. For the majority of the Company’s solar investments, the HLBV method of accounting results in accelerated losses in the initial years of investment. The Company recognized pre-tax losses on its solar investments of $ 1.9 million and $ 2.3 million during the three months ended June 30, 2022 and 2021, respectively, and $ 2.9 million and $ 4.0 million during the six months ended June 30, 2022 and 2021, respectively. These losses are included in “other” in "other income/expense" on the consolidated statements of income. Losses from solar investments include losses attributable to third-party minority interest investors (syndication partners) that are included in “net loss attributable to noncontrolling interests” in the consolidated statements of income. Solar losses attributed to minority investors was $ 2.0 million and $ 0.6 million for the three months ended June 30, 2022 and 2021, respectively, and $ 3.8 million and $ 1.9 million for the six months ended June 30, 2022 and 2021, respectively. Impairment Expense During the second quarter of 2022, the Company recorded an impairment charge of $ 5.4 million related primarily to one of its venture capital investments accounted for under the measurement alternative method. The impairment expense is included in "impairment expense and provision for beneficial interests, net" on the consolidated statements of income. 21 6. Business Combination NGWeb Solutions, LLC On April 30, 2022, the Company acquired 30 percent of the ownership interests of NGWeb Solutions, LLC ("NextGen") for total cash consideration of $ 9.2 million. NextGen provides software solutions primarily to higher education institutions to enable administrators to efficiently manage online forms, scholarships, employment, online timesheets, and other specialized processes that require signed authorizations and interactions with student information. Prior to the acquisition, the Company owned 50 percent of the ownership interests of NextGen and accounted for this investment under the equity method. As a result of the acquisition, the previously held 50 percent ownership interests was remeasured to its fair value as of the April 30, 2022 date of acquisition of the additional 30 percent of the ownership interests, resulting in a $ 15.2 million revaluation gain, which is included in "other" in "other income/expense" on the consolidated statements of income. For segment reporting, this gain is included in "Corporate and Other Activities." Subsequent to the acquisition, the Company will consolidate the operating results of NextGen and such results will be included in the Education Technology, Services, and Payment Processing reportable segment. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date. The fair values of the assets and liabilities related to NextGen are subject to refinement as the Company completes its analysis relative to the fair values at the date of acquisition. Cash and cash equivalents $ 1,885 Accounts receivable 1,315 Property and equipment 800 Other assets 201 Intangible assets 23,395 Excess cost over fair value of net assets acquired (goodwill) 7,025 Other liabilities ( 3,937 ) Net assets acquired 30,684 Minority interest ( 6,137 ) Remeasurement of previously held investment ( 15,342 ) Total consideration paid by the Company $ 9,205 The $ 23.4 million of acquired intangible assets is made up of computer software of $ 18.8 million ( 5 -year useful life) and customer relationships of $ 4.6 million ( 7 -year useful life). 22 7. Intangible Assets Intangible assets consisted of the following: Weighted average remaining useful life as of June 30, 2022 (months) As of As of June 30, 2022 December 31, 2021 Amortizable intangible assets, net: Customer relationships (net of accumulated amortization of $ 47,328 and $ 97,398 , respectively) 96 $ 48,552 47,894 Computer software (net of accumulated amortization of $ 3,411 and $ 3,669 , respectively) 52 21,534 4,135 Total - amortizable intangible assets, net 82 $ 70,086 52,029 The Company recorded amortization expense on its intangible assets of $ 2.9 million and $ 8.3 million during the three months ended June 30, 2022 and 2021, respectively, and $ 5.3 million and $ 16.6 million during the six months ended June 30, 2022 and 2021, respectively. The Company will continue to amortize intangible assets over their remaining useful lives. As of June 30, 2022, the Company estimates it will record amortization expense as follows: 2022 (July 1 - December 31) $ 7,176 2023 14,243 2024 11,870 2025 9,057 2026 8,930 2027 and thereafter 18,810 $ 70,086 8. Goodwill The carrying amount of goodwill by reportable operating segment was as follows: Loan Servicing and Systems Education Technology, Services, and Payment Processing Asset Generation and Management Nelnet Bank Corporate and Other Activities Total Balance as of December 31, 2021 and March 31, 2022 $ 23,639 76,570 41,883 — — 142,092 Goodwill acquired — 7,025 — — — 7,025 Balance as of June 30, 2022 $ 23,639 83,595 41,883 — — 149,117 23 9. Earnings per Common Share Presented below is a summary of the components used to calculate basic and diluted earnings per share. The Company applies the two-class method in computing both basic and diluted earnings per share, which requires the calculation of separate earnings per share amounts for common stock and unvested share-based awards. Unvested share-based awards that contain nonforfeitable rights to dividends are considered securities which participate in undistributed earnings with common stock. Three months ended June 30, 2022 2021 Common shareholders Unvested restricted stock shareholders Total Common shareholders Unvested restricted stock shareholders Total Numerator: Net income attributable to Nelnet, Inc. $ 83,485 1,644 85,129 82,479 1,388 83,867 Denominator: Weighted-average common shares outstanding - basic and diluted 36,981,990 728,224 37,710,214 38,100,092 641,394 38,741,486 Earnings per share - basic and diluted $ 2.26 2.26 2.26 2.16 2.16 2.16 Six months ended June 30, 2022 2021 Common shareholders Unvested restricted stock shareholders Total Common shareholders Unvested restricted stock shareholders Total Numerator: Net income attributable to Nelnet, Inc. $ 266,735 5,041 271,776 204,209 3,256 207,465 Denominator: Weighted-average common shares outstanding - basic and diluted 37,172,606 702,502 37,875,108 38,065,869 607,033 38,672,902 Earnings per share - basic and diluted $ 7.18 7.18 7.18 5.36 5.36 5.36 24 10. Segment Reporting See note 15 of the notes to consolidated financial statements included in the 2021 Annual Report for a description of the Company's operating segments. The following tables include the results of each of the Company's operating segments reconciled to the consolidated financial statements. Three months ended June 30, 2022 Loan Servicing and Systems Education Technology, Services, and Payment Processing Asset Generation and Management Nelnet Bank Corporate and Other Activities Eliminations Total Total interest income $ 246 874 140,396 5,212 6,235 ( 1,376 ) 151,587 Interest expense 20 — 69,708 1,639 3,652 ( 1,376 ) 73,642 Net interest income 226 874 70,688 3,573 2,583 — 77,945 Less provision (negative provision) for loan losses — — 8,827 582 — — 9,409 Net interest income after provision for loan losses 226 874 61,861 2,991 2,583 — 68,536 Other income/expense: Loan servicing and systems revenue 124,873 — — — — — 124,873 Intersegment revenue 8,381 7 — — — ( 8,388 ) — Education technology, services, and payment processing revenue — 91,031 — — — — 91,031 Other 611 — 5,133 157 6,747 — 12,647 Gain on sale of loans — — — — — — — Impairment expense and provision for beneficial interests, net — — — — ( 6,284 ) — ( 6,284 ) Derivative settlements, net — — 4,623 — — — 4,623 Derivative market value adjustments, net — — 40,401 — — — 40,401 Total other income/expense 133,865 91,038 50,157 157 463 ( 8,388 ) 267,291 Cost of services — 30,852 — — — — 30,852 Operating expenses: Salaries and benefits 83,220 32,120 614 1,714 23,729 — 141,398 Depreciation and amortization 5,318 2,698 — 4 10,230 — 18,250 Other expenses 13,507 6,750 3,543 899 12,241 — 36,940 Intersegment expenses, net 18,558 4,805 8,513 57 ( 23,545 ) ( 8,388 ) — Total operating expenses 120,603 46,373 12,670 2,674 22,655 ( 8,388 ) 196,588 Income (loss) before income taxes 13,488 14,687 99,348 474 ( 19,609 ) — 108,387 Income tax (expense) benefit ( 3,237 ) ( 3,525 ) ( 23,844 ) ( 106 ) 5,228 — ( 25,483 ) Net income (loss) 10,251 11,162 75,504 368 ( 14,381 ) — 82,904 Net loss attributable to noncontrolling interests — 53 — — 2,172 — 2,225 Net income (loss) attributable to Nelnet, Inc. $ 10,251 11,215 75,504 368 ( 12,209 ) — 85,129 Total assets as of June 30, 2022 $ 240,437 546,235 17,388,228 864,659 2,273,216 ( 688,762 ) 20,624,013 25 Three months ended June 30, 2021 Loan Servicing and Systems Education Technology, Services, and Payment Processing Asset Generation and Management Nelnet Bank Corporate and Other Activities Eliminations Total Total interest income $ 30 210 129,965 2,041 1,524 ( 187 ) 133,583 Interest expense 23 — 48,670 392 1,093 ( 187 ) 49,991 Net interest income 7 210 81,295 1,649 431 — 83,592 Less provision (negative provision) for loan losses — — 305 69 — — 374 Net interest income after provision for loan losses 7 210 80,990 1,580 431 — 83,218 Other income/expense: Loan servicing and systems revenue 112,094 — — — — — 112,094 Intersegment revenue 8,480 3 — — — ( 8,483 ) — Education technology, services, and payment processing revenue — 76,702 — — — — 76,702 Other 701 — 2,316 4 19,900 — 22,921 Gain on sale of loans — — 15,271 — — — 15,271 Impairment expense and provision for beneficial interests, net — — — — ( 500 ) — ( 500 ) Derivative settlements, net — — ( 5,374 ) — — — ( 5,374 ) Derivative market value adjustments, net — — ( 1,615 ) — — — ( 1,615 ) Total other income/expense 121,275 76,705 10,598 4 19,400 ( 8,483 ) 219,499 Cost of services — 21,676 — — — — 21,676 Operating expenses: Salaries and benefits 68,388 27,094 556 1,578 21,351 — 118,968 Depreciation and amortization 7,974 2,956 — — 9,305 — 20,236 Other expenses 13,273 4,437 3,567 237 11,074 — 32,587 Intersegment expenses, net 16,134 3,520 8,549 37 ( 19,757 ) ( 8,483 ) — Total operating expenses 105,769 38,007 12,672 1,852 21,973 ( 8,483 ) 171,791 Income (loss) before income taxes 15,513 17,232 78,916 ( 268 ) ( 2,142 ) — 109,250 Income tax (expense) benefit ( 3,723 ) ( 4,136 ) ( 18,940 ) 64 497 — ( 26,237 ) Net income (loss) 11,790 13,096 59,976 ( 204 ) ( 1,645 ) — 83,013 Net loss attributable to noncontrolling interests — — — — 854 — 854 Net income (loss) attributable to Nelnet, Inc. $ 11,790 13,096 59,976 ( 204 ) ( 791 ) — 83,867 Total assets as of June 30, 2021 $ 205,214 424,079 20,783,755 407,611 1,489,212 ( 281,008 ) 23,028,863 26 Six months ended June 30, 2022 Loan Servicing and Systems Education Technology, Services, and Payment Processing Asset Generation and Management Nelnet Bank Corporate and Other Activities Eliminations Total Total interest income $ 313 1,213 258,994 8,241 10,227 ( 2,205 ) 276,783 Interest expense 44 — 115,711 2,494 5,678 ( 2,205 ) 121,721 Net interest income 269 1,213 143,283 5,747 4,549 — 155,062 Less provision (negative provision) for loan losses — — 7,963 1,011 — — 8,974 Net interest income after provision for loan losses 269 1,213 135,320 4,736 4,549 — 146,088 Other income/expense: Loan servicing and systems revenue 261,241 — — — — — 261,241 Intersegment revenue 16,860 10 — — — ( 16,870 ) — Education technology, services, and payment processing revenue — 203,317 — — — — 203,317 Other 1,350 — 11,644 1,659 7,872 — 22,524 Gain on sale of loans — — 2,989 — — — 2,989 Impairment expense and provision for beneficial interests, net — — — — ( 6,284 ) — ( 6,284 ) Derivative settlements, net — — 1,814 — — — 1,814 Derivative market value adjustments, net — — 186,135 — — — 186,135 Total other income/expense 279,451 203,327 202,582 1,659 1,588 ( 16,870 ) 671,736 Cost of services — 66,397 — — — — 66,397 Operating expenses: Salaries and benefits 175,192 63,406 1,205 3,268 47,742 — 290,813 Depreciation and amortization 10,272 5,013 — 7 19,914 — 35,206 Other expenses 29,721 12,514 6,576 1,584 26,045 — 76,439 Intersegment expenses, net 38,955 9,410 17,344 102 ( 48,941 ) ( 16,870 ) — Total operating expenses 254,140 90,343 25,125 4,961 44,760 ( 16,870 ) 402,458 Income (loss) before income taxes 25,580 47,800 312,777 1,434 ( 38,623 ) — 348,969 Income tax (expense) benefit ( 6,139 ) ( 11,472 ) ( 75,066 ) ( 328 ) 11,826 — ( 81,180 ) Net income (loss) 19,441 36,328 237,711 1,106 ( 26,797 ) — 267,789 Net loss attributable to noncontrolling interests — 53 — — 3,934 — 3,987 Net income (loss) attributable to Nelnet, Inc. $ 19,441 36,381 237,711 1,106 ( 22,863 ) — 271,776 Total assets as of June 30, 2022 $ 240,437 546,235 17,388,228 864,659 2,273,216 ( 688,762 ) 20,624,013 27 Six months ended June 30, 2021 Loan Servicing and Systems Education Technology, Services, and Payment Processing Asset Generation and Management Nelnet Bank Corporate and Other Activities Eliminations Total Total interest income $ 63 473 256,367 3,418 2,770 ( 405 ) 262,686 Interest expense 47 — 75,620 586 1,916 ( 405 ) 77,764 Net interest income 16 473 180,747 2,832 854 — 184,922 Less provision (negative provision) for loan losses — — ( 17,165 ) 491 — — ( 16,674 ) Net interest income after provision for loan losses 16 473 197,912 2,341 854 — 201,596 Other income/expense: Loan servicing and systems revenue 223,611 — — — — — 223,611 Intersegment revenue 16,748 6 — — — ( 16,754 ) — Education technology, services, and payment processing revenue — 171,960 — — — — 171,960 Other 1,814 — 2,760 26 13,716 — 18,317 Gain on sale of loans — — 15,271 — — — 15,271 Impairment expense and provision for beneficial interests, net — — 2,436 — ( 500 ) — 1,936 Derivative settlements, net — — ( 9,678 ) — — — ( 9,678 ) Derivative market value adjustments, net — — 37,194 — — — 37,194 Total other income/expense 242,173 171,966 47,983 26 13,216 ( 16,754 ) 458,611 Cost of services — 48,728 — — — — 48,728 Operating expenses: Salaries and benefits 134,846 53,035 1,051 3,065 42,761 — 234,759 Depreciation and amortization 16,166 6,027 — — 18,225 — 40,419 Other expenses 26,557 9,259 7,344 781 25,346 — 69,286 Intersegment expenses, net 33,024 7,184 16,976 40 ( 40,470 ) ( 16,754 ) — Total operating expenses 210,593 75,505 25,371 3,886 45,862 ( 16,754 ) 344,464 Income (loss) before income taxes 31,596 48,206 220,524 ( 1,519 ) ( 31,792 ) — 267,015 Income tax (expense) benefit ( 7,583 ) ( 11,570 ) ( 52,926 ) 351 10,630 — ( 61,098 ) Net income (loss) 24,013 36,636 167,598 ( 1,168 ) ( 21,162 ) — 205,917 Net loss attributable to noncontrolling interests — — — — 1,548 — 1,548 Net income (loss) attributable to Nelnet, Inc. $ 24,013 36,636 167,598 ( 1,168 ) ( 19,614 ) — 207,465 Total assets as of June 30, 2021 $ 205,214 424,079 20,783,755 407,611 1,489,212 ( 281,008 ) 23,028,863 28 11. Disaggregated Revenue The following tables provide disaggregated revenue by service offering and/or customer type for the Company's fee-based reportable operating segments. Loan Servicing and Systems Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 Government servicing $ 98,815 79,239 207,940 157,413 Private education and consumer loan servicing 12,122 12,816 24,995 21,364 FFELP servicing 4,011 4,703 8,259 9,373 Software services 7,907 7,374 15,308 15,827 Outsourced services and other 2,018 7,962 4,739 19,634 Loan servicing and systems revenue $ 124,873 112,094 261,241 223,611 Education Technology, Services, and Payment Processing Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 Tuition payment plan services $ 27,637 26,538 58,352 56,088 Payment processing 27,968 25,008 66,039 58,046 Education technology and services 34,956 24,930 78,207 57,457 Other 470 226 719 369 Education technology, services, and payment processing revenue $ 91,031 76,702 203,317 171,960 Other Income/Expense The following table provides the components of "other" in "other income/expense" on the consolidated statements of income: Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 Income/gains from investments, net $ 18,127 15,591 29,983 24,089 Borrower late fee income 2,436 744 4,867 1,184 ALLO preferred return 2,140 2,020 4,257 4,342 Administration/sponsor fee income 2,012 — 4,134 — Investment advisory services 1,482 1,145 2,764 3,842 Loss from ALLO voting membership interest investment ( 16,941 ) 1,094 ( 30,071 ) ( 21,125 ) Loss from solar investments ( 1,854 ) ( 2,302 ) ( 2,884 ) ( 3,982 ) Other 5,245 4,629 9,474 9,967 $ 12,647 22,921 22,524 18,317 12. Major Customer The Company earns loan servicing revenue from servicing contracts with the Department. Revenues earned by the Company related to these contracts are set forth in the "Government servicing" line item of the "Loan Servicing and Systems" table in note 11. The Company's student loan servicing contracts with the Department are scheduled to expire on December 14, 2023. In 2017, the Department initiated a contract procurement process referred to as the Next Generation Financial Services Environment for a new framework for the servicing of all student loans owned by the Department. The Consolidated Appropriations Act, 2021 contains provisions directing certain aspects of the process, including that any new federal student loan servicing environment is required to provide for the participation of multiple student loan servicers and the allocation of borrower accounts to eligible student loan servicers based on performance. In the second quarter of 2022, the Department released a solicitation entitled Unified Servicing and Data Solution ("USDS") for the new servicing framework. The Company responded to the USDS solicitation. The Company cannot predict the timing, nature, or ultimate outcome of this or any other contract procurement process by the Department. 29 13. Fair Value The following tables present the Company’s financial assets and liabilities that are measured at fair value on a recurring basis. As of June 30, 2022 As of December 31, 2021 Level 1 Level 2 Total Level 1 Level 2 Total Assets: Investments: FFELP loan asset-backed debt securities - available-for-sale $ — 809,635 809,635 — 494,682 494,682 Private education loan asset-backed debt securities - available-for-sale — 338,441 338,441 — 412,552 412,552 Other debt securities - available-for-sale 100 146,361 146,461 100 22,335 22,435 Equity securities 7,298 — 7,298 63,154 — 63,154 Equity securities measured at net asset value (a) 29,647 8,832 Total investments 7,398 1,294,437 1,331,482 63,254 929,569 1,001,655 Total assets $ 7,398 1,294,437 1,331,482 63,254 929,569 1,001,655 (a) In accordance with the Fair Value Measurements Topic of the FASB Accounting Standards Codification, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The following table summarizes the fair values of all of the Company’s financial instruments on the consolidated balance sheets: As of June 30, 2022 Fair value Carrying value Level 1 Level 2 Level 3 Financial assets: Loans receivable $ 16,533,011 16,135,653 — — 16,533,011 Accrued loan interest receivable 780,691 780,691 — 780,691 — Cash and cash equivalents 128,499 128,499 128,499 — — Investments (at fair value) 1,331,482 1,331,482 7,398 1,294,437 — Beneficial interest in loan securitizations 137,726 127,805 — — 137,726 Restricted cash 754,693 754,693 754,693 — — Restricted cash – due to customers 290,850 290,850 290,850 — — Financial liabilities: Bonds and notes payable 15,765,820 16,115,269 — 15,765,820 — Accrued interest payable 12,963 12,963 — 12,963 — Bank deposits 566,293 588,474 208,003 358,290 — Due to customers 409,476 409,476 409,476 — — As of December 31, 2021 Fair value Carrying value Level 1 Level 2 Level 3 Financial assets: Loans receivable $ 18,576,272 17,546,645 — — 18,576,272 Accrued loan interest receivable 788,552 788,552 — 788,552 — Cash and cash equivalents 125,563 125,563 125,563 — — Investments (at fair value) 1,001,655 1,001,655 63,254 929,569 — Beneficial interest in loan securitizations 142,391 120,142 — — 142,391 Restricted cash 741,981 741,981 741,981 — — Restricted cash – due to customers 326,645 326,645 326,645 — — Financial liabilities: Bonds and notes payable 17,819,902 17,631,089 — 17,819,902 — Accrued interest payable 4,566 4,566 — 4,566 — Bank deposits 342,463 344,315 184,897 157,566 — Due to customers 366,002 366,002 366,002 — — The methodologies for estimating the fair value of financial assets and liabilities are described in note 22 of the notes to consolidated financial statements included in the 2021 Annual Report. 30 14. Subsequent Event On July 1, 2022, the Company acquired 80 percent of the outstanding ownership interests of GRNE-Nelnet, LLC ("GRNE") and its affiliate ENRG-Nelnet, LLC ("ENRG") for $ 29.7 million in cash. GRNE designs and installs residential, commercial, and utility-scale solar systems in the Midwest. ENRG owns certain assets that generate and sell solar energy. The operating results of GRNE and ENRG will be included in the Company's consolidated results of operations beginning July 1, 2022 .