What changed in this filing

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Item 1. Financial Statements

2023-11-07 compared with 2023-08-07 · 186 added, 173 removed, 1073 unchanged (25% of the section changed)

3 unchanged sentences

(Dollars in thousands, except share data)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Loans and accrued interest receivable (net of allowance for loan losses of $ 110,093 and

54 unchanged sentences

(Dollars in thousands, except share data)

Three months ended Six months ended

June 30, June 30,

Three months ended Nine months ended

September 30, September 30,

2023 2022 2023 2022

13 unchanged sentences

Gain on sale of loans, net 5,362 2,627 32,685 5,616

Impairment expense — ( 6,284 ) — ( 6,284 )

Impairment and other expense, net ( 4,974 ) 121 ( 4,974 ) ( 6,163 )

Derivative market value adjustments and derivative settlements, net 3,957 63,262 ( 8,047 ) 251,210

25 unchanged sentences

(Dollars in thousands)

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

Net income $ 42,236 100,469 84,348 368,258

Other comprehensive income (loss):

Other comprehensive (loss) income:

Net changes related to foreign currency translation adjustments $ ( 8 ) 18 ( 11 ) 19

Net changes related to available-for-sale debt securities:

Unrealized holding gains (losses) arising during period, net 8,649 ( 33,822 ) 17,300 ( 50,520 )

Unrealized holding (losses) gains arising during period, net ( 4,566 ) 4,790 12,734 ( 45,730 )

Reclassification of (gains) losses recognized in net income, net ( 1,064 ) ( 578 ) 3,001 ( 4,220 )

2 unchanged sentences

Net changes related to equity method investee's other comprehensive income:

Loss on cash flow hedges ( 501 ) — ( 499 ) —

Gain (loss) on cash flow hedges 336 — ( 163 ) —

Income tax effect ( 80 ) 256 — — 40 ( 123 ) — —

Other comprehensive income (loss) 5,548 ( 26,358 ) 15,908 ( 41,162 )

Other comprehensive (loss) income ( 3,981 ) 3,219 11,927 ( 37,943 )

Comprehensive income 38,255 103,688 96,275 330,315

8 unchanged sentences

Class A Class B

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

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

Issuance of noncontrolling interests — — — — — — — — — 14,018 14,018

Net income (loss) — — — — — — — 104,798 — ( 4,329 ) 100,469

Other comprehensive loss — — — — — — — — ( 26,358 ) — ( 26,358 )

Other comprehensive income — — — — — — — — 3,219 — 3,219

Distribution to noncontrolling interests — — — — — — — — — ( 17,707 ) ( 17,707 )

4 unchanged sentences

Repurchase of common stock — ( 169,860 ) — — ( 2 ) — ( 4,450 ) ( 9,841 ) — — ( 14,293 )

Conversion of common stock — 1,233 ( 1,233 ) — — — — — — — —

Other — — — — — — — ( 5,675 ) — — ( 5,675 )

Balance as of September 30, 2022 — 26,483,298 10,673,659 $ — 265 107 837 3,208,044 ( 28,639 ) ( 14,255 ) 3,166,359

Balance as of June 30, 2023 — 26,646,490 10,668,460 $ — 266 107 10,114 3,270,250 ( 21,458 ) ( 11,765 ) 3,247,514

Balance as of March 31, 2023 — 26,623,662 10,668,460 $ — 266 107 4,639 3,251,677 ( 27,006 ) ( 6,354 ) 3,223,329

Issuance of noncontrolling interests — — — — — — — — — 19,092 19,092

Net income (loss) — — — — — — — 45,332 — ( 3,096 ) 42,236

Other comprehensive income — — — — — — — — 5,548 — 5,548

Other comprehensive loss — — — — — — — — ( 3,981 ) — ( 3,981 )

Distribution to noncontrolling interests — — — — — — — — — ( 40,057 ) ( 40,057 )

4 unchanged sentences

Repurchase of common stock — ( 5,948 ) — — — — ( 543 ) — — — ( 543 )

Balance as of June 30, 2023 — 26,646,490 10,668,460 $ — 266 107 10,114 3,270,250 ( 21,458 ) ( 11,765 ) 3,247,514

Balance as of September 30, 2023 — 26,655,651 10,668,460 $ — 267 107 14,165 3,305,881 ( 25,439 ) ( 35,826 ) 3,259,155

See accompanying notes to consolidated financial statements.

15 unchanged sentences

Conversion of common stock — 2,983 ( 2,983 ) — — — — — — — —

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

Other — — — — — — — ( 5,675 ) — — ( 5,675 )

Balance as of September 30, 2022 — 26,483,298 10,673,659 $ — 265 107 837 3,208,044 ( 28,639 ) ( 14,255 ) 3,166,359

Balance as of December 31, 2022 — 26,461,651 10,668,460 $ — 265 107 1,109 3,234,844 ( 37,366 ) 943 3,199,902

8 unchanged sentences

Repurchase of common stock — ( 47,195 ) — — — — ( 4,310 ) — — — ( 4,310 )

Balance as of June 30, 2023 — 26,646,490 10,668,460 $ — 266 107 10,114 3,270,250 ( 21,458 ) ( 11,765 ) 3,247,514

Balance as of September 30, 2023 — 26,655,651 10,668,460 $ — 267 107 14,165 3,305,881 ( 25,439 ) ( 35,826 ) 3,259,155

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(Dollars in thousands)

Six months ended

Nine months ended

September 30,

Net income attributable to Nelnet, Inc.

15 unchanged sentences

Impairment expense 2,588 6,163

(Increase) decrease in loan and investment accrued interest receivable ( 4,884 ) 184

Decrease (increase) in loan and investment accrued interest receivable 5,613 ( 16,206 )

Decrease in accounts receivable 64,738 47,514

Increase in other assets, net ( 11,480 ) ( 9,086 )

Decrease (increase) in other assets, net 7,069 ( 74,522 )

Decrease in the carrying amount of ROU asset, net 3,859 4,476

(Decrease) increase in accrued interest payable ( 123 ) 8,397

Decrease in other liabilities ( 8,916 ) ( 12,200 )

Increase in accrued interest payable 342 17,230

Increase in other liabilities 19,132 5,388

Decrease in the carrying amount of lease liability ( 3,908 ) ( 4,227 )

17 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

Six months ended

Nine months ended

September 30,

Cash flows from financing activities:

3 unchanged sentences

Increase in bank deposits, net 26,731 236,510

(Decrease) increase in due to customers ( 48,728 ) 43,544

Decrease in due to customers ( 6,422 ) ( 59,467 )

Dividends paid ( 29,049 ) ( 26,960 )

18 unchanged sentences

Issuance of noncontrolling interests $ 585 5,917

(a) The Company utilized $ 13.9 million and $ 4.1 million of federal and state tax credits related primarily to renewable energy during the six months ended June 30, 2023 and 2022, respectively.

(a) The Company utilized $ 49.0 million and $ 9.4 million of federal and state tax credits related primarily to renewable energy during the nine months ended September 30, 2023 and 2022, respectively.

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, 2023 December 31, 2022 June 30, 2022 December 31, 2021

September 30, 2023 December 31, 2022 September 30, 2022 December 31, 2021

Total cash and cash equivalents $ 187,690 118,146 63,198 125,563

9 unchanged sentences

The accompanying unaudited consolidated financial statements of Nelnet, Inc.

and subsidiaries (the “Company”) as of June 30, 2023 and for the three and six months ended June 30, 2023 and 2022 have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 2022 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.

and subsidiaries (the “Company”) as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 2022 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.

1 unchanged sentence

Actual results could differ from those estimates.

Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results for the year ending December 31, 2023.

Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results for the year ending December 31, 2023.

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, 2022 (the "2022 Annual Report").

1 unchanged sentence

Loans and accrued interest receivable consisted of the following:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Non-Nelnet Bank:

24 unchanged sentences

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.

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Non-Nelnet Bank:

5 unchanged sentences

Consumer and other loans 7.77 % —

(a) As of June 30, 2023 and December 31, 2022, 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 21.7 % and 22.4 %, respectively, and for Nelnet Bank was 10.0 % and 10.3 %, respectively.

(a) As of September 30, 2023 and December 31, 2022, 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 21.9 % and 22.4 %, respectively, and for Nelnet Bank was 10.0 % and 10.3 %, respectively.

The Company has sold portfolios of loans to unrelated third parties who securitized such loans.

As partial consideration received for the loans sold, the Company received residual interest in the loan securitizations that are included in "investments and notes receivable" on the Company's consolidated balance sheets.

The following table summarizes the loans sold and gains/losses recognized by the Company during the six months ended June 30, 2023 and 2022.

The following table summarizes the loans sold and gains/losses recognized by the Company during the nine months ended September 30, 2023 and 2022.

(par value) Gain (loss) Loan type Residual interest received in securitization

Six months ended June 30, 2023

Nine months ended September 30, 2023

January 31 $ 97,350 ( 1,441 ) Home equity 64.8 % (a)

4 unchanged sentences

May 2 127,663 11,729 Consumer 26.5

August 3 61,807 5,362 Consumer 24.3

$ 481,985 32,685

Six months ended June 30, 2022

Nine months ended September 30, 2022

January 26 $ 18,125 2,989 Consumer 6.6 %

June 30 114 — Home equity —

July 7 28,915 2,627 Consumer 7.6

$ 47,154 5,616

3 unchanged sentences

Balance at beginning of period Provision (negative provision) for loan losses Charge-offs Recoveries Initial allowance on loans purchased with credit deterioration Loan sales Balance at end of period

Three months ended June 30, 2023

Three months ended September 30, 2023

Non-Nelnet Bank:

6 unchanged sentences

$ 114,263 10,504 ( 8,908 ) 618 — ( 6,384 ) 110,093

Three months ended June 30, 2022

Three months ended September 30, 2022

Non-Nelnet Bank:

5 unchanged sentences

$ 120,424 9,625 ( 7,802 ) 383 12 ( 3,585 ) 119,057

Six months ended June 30, 2023

Nine months ended September 30, 2023

Non-Nelnet Bank:

6 unchanged sentences

$ 131,827 54,394 ( 28,332 ) 1,659 6 ( 49,461 ) 110,093

Six months ended June 30, 2022

Nine months ended September 30, 2022

Non-Nelnet Bank:

5 unchanged sentences

$ 127,113 18,575 ( 21,914 ) 996 156 ( 5,869 ) 119,057

The primary item impacting provision for loan losses was the establishment of an initial allowance for consumer loans originated and acquired during the periods presented above.

The primary item impacting provision for loan losses was the establishment of an initial allowance for loans originated and acquired during the periods presented above.

The following table summarizes annualized net charge-offs as a percentage of average loans for each of the Company's loan portfolios.

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

7 unchanged sentences

Unfunded Loan Commitments

As of June 30, 2023, Nelnet Bank has a liability of approximately $ 62,000 related to $ 4.1 million of unfunded private education and consumer loan commitments.

As of September 30, 2023, Nelnet Bank has a liability of approximately $ 217,000 related to $ 13.1 million of unfunded private education and consumer loan commitments.

The liability for unfunded loan commitments is included in "other liabilities" on the consolidated balance sheets.

During the six months ended June 30, 2023 and 2022, Nelnet Bank recognized negative provision for loan losses of approximately $ 23,000 and provision for loan losses of approximately $ 24,000 , respectively, related to unfunded loan commitments.

During the nine months ended September 30, 2023 and 2022, Nelnet Bank recognized provision for loan losses of approximately $ 132,000 and approximately $ 65,000 , respectively, related to unfunded loan commitments.

Loan Modifications to Borrowers Experiencing Financial Difficulty

3 unchanged sentences

The guidance also enhances the disclosure requirements for certain modifications of receivables made to borrowers experiencing financial difficulty and vintage disclosures reflecting gross charge-offs by year of origination.

Under the Higher Education Act, FFELP loan borrowers may be granted a deferment or forbearance for a period of time based on need.

In addition, eligible borrowers may qualify for income-driven repayment plans offered by the Department.

Because FFELP loan modifications are driven by the Higher Education Act, the Company does not consider these events as part of its loan modification programs.

Under the Higher Education Act, federally insured loan borrowers may be granted a deferment or forbearance for a period of time based on need.

In addition, eligible borrowers may qualify for income-driven repayment plans offered by the Department of Education (the "Department").

Because federally insured loan modifications are driven by the Higher Education Act, the Company does not consider these events as part of its loan modification programs.

Administrative forbearances (e.g.

9 unchanged sentences

The following table presents the Company’s loan status and delinquency amounts.

As of June 30, 2023 As of December 31, 2022 As of June 30, 2022

As of September 30, 2023 As of December 31, 2022 As of September 30, 2022

Federally insured loans - Non-Nelnet Bank:

25 unchanged sentences

Accrued interest receivable 2,750 2,146 2,207

Loan premium, net of unaccreted discount 183 ( 38 ) 94

Loan discount, net of unamortized premiums ( 8,069 ) ( 38 ) ( 185 )

Allowance for loan losses ( 16,944 ) ( 15,411 ) ( 15,577 )

10 unchanged sentences

Accrued interest receivable 1,716 3,658 2,561

Loan premium, net of unaccreted discount 750 ( 588 ) ( 1,965 )

Loan discount, net of unamortized premiums ( 180 ) ( 588 ) ( 1,847 )

Allowance for loan losses ( 14,022 ) ( 30,263 ) ( 13,290 )

Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 131,147 $ 323,722 $ 218,865

As of June 30, 2023 As of December 31, 2022 As of June 30, 2022

As of September 30, 2023 As of December 31, 2022 As of September 30, 2022

Federally insured loans - Nelnet Bank (a):

30 unchanged sentences

Loans in deferment $ 95 0.2 %

Loans in forbearance 32 0.1

Loans in repayment status:

6 unchanged sentences

Accrued interest receivable 373

Loan premium —

Loan discount ( 7 )

Allowance for loan losses ( 3,853 )

4 unchanged sentences

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, 2023

Six months ended June 30, 2023 2022 2021 2020 Total

Loan balance as of September 30, 2023

Nine months ended September 30, 2023 2022 2021 2020 Total

FICO at origination:

4 unchanged sentences

Greater than 794 13,719 80,523 61,283 5,425 160,950

No FICO score available or required (a) 1,573 — — — 1,573

$ 36,245 195,815 118,837 9,044 359,941

8 unchanged sentences

$ 209,846 133,788 10,248 353,882

(a) Loans with no FICO score available or required refers to loans issued to borrowers for which the Company cannot obtain a FICO score or are not required to under a special purpose credit program.

Management proactively assesses the risk and size of this loan category and, when necessary, takes actions to mitigate the credit risk.

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, 2022 and June 30, 2023, was not material.

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 September 30, 2023 and December 31, 2022, was not material.

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, 2023 based on year of origination.

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 September 30, 2023 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, 2023 2022 2021 2020 2019 Prior years Total

Nine months ended September 30, 2023 2022 2021 2020 2019 Prior years Total

Private education loans - Non-Nelnet Bank:

9 unchanged sentences

Accrued interest receivable 2,750

Loan premium, net of unaccreted discount 183

Loan discount, net of unamortized premiums ( 8,069 )

Allowance for loan losses ( 16,944 )

Total private education loans and accrued interest receivable, net of allowance for loan losses $ 270,741

Gross charge-offs - six months ended June 30, 2023 $ — — 5 2 381 1,321 1,709

Six months ended June 30, 2023 2022 2021 2020 2019 Prior years Total

Gross charge-offs - nine months ended September 30, 2023 $ — 35 10 105 548 1,581 2,279

Consumer and other loans - Non-Nelnet Bank:

8 unchanged sentences

Accrued interest receivable 1,716

Loan premium, net of unaccreted discount 750

Loan discount, net of unamortized premiums ( 180 )

Allowance for loan losses ( 14,022 )

Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 131,147

Gross charge-offs - six months ended June 30, 2023 $ 265 4,272 439 27 55 90 5,148

Gross charge-offs - nine months ended September 30, 2023 $ 2,866 5,580 583 27 80 128 9,264

Private education loans - Nelnet Bank (a):

12 unchanged sentences

Total private education loans and accrued interest receivable, net of allowance for loan losses $ 364,341

Gross charge-offs - six months ended June 30, 2023 $ — 614 — — — — 614

Gross charge-offs - nine months ended September 30, 2023 $ 20 637 — — — — 657

Nine months ended September 30, 2023 2022 2021 2020 2019 Prior years Total

Consumer and other loans - Nelnet Bank (a):

Loans in deferment $ 95 — — — — — 95

Loans in forbearance 32 — — — — — 32

Loans in repayment status:

6 unchanged sentences

Accrued interest receivable 373

Loan premium —

Loan discount ( 7 )

Allowance for loan losses ( 3,853 )

Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 46,124

Gross charge-offs - six months ended June 30, 2023 $ — — — — — — —

Gross charge-offs - nine months ended September 30, 2023 $ 517 — — — — — 517

(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.

1 unchanged sentence

The following tables summarize the Company’s outstanding debt obligations by type of instrument:

As of June 30, 2023

As of September 30, 2023

Interest rate

13 unchanged sentences

Consumer loan warehouse facility 49,937 5.68 % 11/14/25

Variable-rate bonds and notes issued in private education loan asset-backed securitizations 16,628 6.65 %

Variable-rate bonds and notes issued in private education loan asset-backed securitization 15,579 6.90 %

Fixed-rate bonds and notes issued in private education loan asset-backed securitization 16,626 5.35 %

1 unchanged sentence

Participation agreement 63 6.06 % 5/4/24

Repurchase agreements 415,514 5.81 % - 6.47 %

Repurchase agreement 336,523 6.26 % - 6.72 %

11/20/23 - 11/27/24

33 unchanged sentences

Loan warehousing allows the Company to buy and manage loans prior to transferring them into more permanent financing arrangements.

The following table summarizes the Company's warehouse facilities as of June 30, 2023.

The following table summarizes the Company's warehouse facilities as of September 30, 2023.

Type of loans Maximum financing amount Amount outstanding Amount available Expiration of liquidity provisions Final maturity date Advance rate Advanced as equity support

12 unchanged sentences

On May 25, 2023, this facility was amended to increase the maximum financing amount from $ 250.0 million to $ 432.0 million.

(d) On June 30, 2023, this facility was amended to extend the expiration of liquidity provisions to August 31, 2023.

(d) On June 30, 2023, August 31, 2023, and October 31, 2023, this facility was amended to extend the expiration of liquidity provisions to August 31, 2023, October 31, 2023, and December 31, 2023, respectively.

No additional amounts can be borrowed under this facility.

1 unchanged sentence

The Company has a $ 495.0 million unsecured line of credit that has a maturity date of September 22, 2026.

As of June 30, 2023, no amount was outstanding on the line of credit and $ 495.0 million was available for future use.

As of September 30, 2023, no amount was outstanding on the line of credit and $ 495.0 million was available for future use.

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 (bond investments).

As of June 30, 2023, $ 6.8 million (par value) of FFELP loan asset-backed securities were subject to outstanding participation interests held by Union Bank, as trustee, under this agreement.

As of September 30, 2023, $ 0.1 million (par value) 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.

3 unchanged sentences

As such, the FFELP loan asset-backed securities subject to this agreement are included on the Company's consolidated balance sheets 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.

See note 5 for additional information about the FFELP loan asset-backed securities investments serving as collateral under the remaining 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 (bond investments).

The first agreement has various maturity dates through November 27, 2024 or earlier if either party provides 180 days’ prior written notice, and the maturity date of the second agreement (as of June 30, 2023) was July 26, 2023.

Subsequent to June 30, 2023, the remaining outstanding balance of this facility was paid in full.

Under the first agreement, the Company is subject to margin deficit payment requirements if the fair value of the securities subject to the agreement is less than the original purchase price of such securities on any scheduled reset date, and under the second agreement, the Company was subject to margin deficit payment requirements if the fair value of the securities subject to the agreement was less than the original purchase price

of such securities and the counter-party provided notice requiring such payment.

Included in “bonds and notes payable” in the consolidated balance sheets as of June 30, 2023 was $ 347.6 million subject to the first agreement and $ 67.9 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.

Nelnet Bank has unsecured Federal Funds lines of credit with correspondent banks totaling $ 30.0 million at a stated interest rate at the time of borrowing.

Nelnet Bank has also established an account at the Federal Reserve Bank (FRB), the Federal Home Loan Bank (FHLB), and an additional $ 10.0 million Federal Funds line of credit with a correspondent bank which must be fully collateralized.

The FRB, FHLB, and secured Federal Funds line of credit accepts pledges of eligible securities.

In addition, FFELP and private education loans are accepted as collateral for FRB borrowings.

As of June 30, 2023 and December 31, 2022, Nelnet Bank had no amounts drawn on their Federal Funds, FRB, or FHLB lines of credit.

As of June 30, 2023, the Bank has $ 20.0 million of collateral pledged with the FRB that it may borrow against.

On May 3, 2021, the Company entered into a repurchase agreement with a non-affiliated third party, the proceeds of which are collateralized by certain private education and FFELP loan asset-backed securities (bond investments).

The agreement has various maturity dates through November 27, 2024 or earlier if either party provides 180 days’ prior written notice, and the Company is subject to margin deficit payment requirements if the fair value of the securities subject to the agreement is less than the original purchase price of such securities on any scheduled reset date.

Included in “bonds and notes payable” in the consolidated balance sheets as of September 30, 2023 was $ 336.5 million subject to this agreement.

On June 23, 2021, the Company entered into a separate repurchase agreement with a non-affiliated third party, which was collateralized by certain private education and FFELP loan asset-backed securities (bond investments).

The outstanding balance of this facility was paid in full during the third quarter of 2023.

Debt Repurchases

1 unchanged sentence

Gains/losses recorded by the Company from the repurchase of debt are included in "other, net" in "other income (expense)" on the Company's consolidated statements of income.

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

7 unchanged sentences

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, 2023, the Company holds $ 253.7 million (par value) of its own FFELP loan asset-backed securities.

As of June 30, 2023, $ 197.5 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).

As of September 30, 2023, the Company holds $ 257.3 million (par value) of its own FFELP loan asset-backed securities.

As of September 30, 2023, $ 118.9 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 agreement (as discussed above).

In April 2023, the Company redeemed $ 188.6 million of FFELP loan asset-backed debt securities (bonds and notes payable) prior to their maturity, of which the Company owned $ 140.5 million of the bonds that were redeemed.

4 unchanged sentences

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 2022 Annual Report.

A tabular presentation of such derivatives outstanding as of June 30, 2023 and December 31, 2022 is presented below.

A tabular presentation of such derivatives outstanding as of September 30, 2023 and December 31, 2022 is presented below.

Non-Nelnet Bank Derivatives

The following table summarizes the Company’s outstanding basis swaps, 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").

The following table summarizes the Company’s outstanding basis swaps, in which the Company received three-month LIBOR set discretely in advance and paid one-month LIBOR plus or minus a spread as defined in the agreements (the "1:3 Basis Swaps").

Subsequent to the discontinuation of LIBOR on June 30, 2023, the Company now receives and pays the term adjusted Secured Overnight Financing Rate (SOFR) plus the tenor spread adjustment to LIBOR.

Maturity Notional amount

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

2023 $ — 750,000

3 unchanged sentences

$ 3,150,000 3,900,000

The weighted average rate paid by the Company on the 1:3 Basis Swaps as of June 30, 2023 and December 31, 2022 was one-month LIBOR plus 10.1 basis points and 9.7 basis points, respectively.

The weighted average rate paid by the Company on the 1:3 Basis Swaps as of September 30, 2023 was the term adjusted SOFR plus the tenor spread adjustment relating to LIBOR plus 10.1 basis points and as of December 31, 2022 was one-month LIBOR plus 9.7 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, 2023 As of December 31, 2022 (a)

As of September 30, 2023 As of December 31, 2022 (a)

Maturity Notional amount Weighted average fixed rate paid by the Company (b) Notional amount Weighted average fixed rate paid by the Company (b)

7 unchanged sentences

Through March 15, 2023, the Company had received cash or had a receivable from the clearinghouse related to variation margin equal to the fair value of the $ 2.8 billion notional amount of fixed rate floor derivatives as of March 15, 2023 of $ 183.2 million, which included $ 19.1 million related to current period settlements.

(b) For the interest rate derivative maturing in 2030, the Company receives payments based on Secured Overnight Financing Rate (SOFR) that resets quarterly.

For the interest rate derivative maturing in 2032, the Company was to receive payments based on SOFR that reset quarterly.

For all other interest rate derivatives, the Company received payments based on three-month LIBOR that reset quarterly.

(b) For the interest rate derivative maturing in 2030, the Company receives payments based on SOFR that resets quarterly.

For all other interest rate derivatives that were terminated, the Company received payments based on three-month LIBOR that reset quarterly.

5 unchanged sentences

As a result, the change in market value of these derivative instruments is reported in current period earnings and presented in "derivative market value adjustments and derivative settlements, net" included in the consolidated statements of income.

The following table summarizes the outstanding derivative instruments used by Nelnet Bank to hedge exposure to variability in cash flows related to variable rate intercompany deposits as of June 30, 2023.

As of June 30, 2023

As of September 30, 2023

Maturity Notional amount Weighted average fixed rate paid by the Company (a)

1 unchanged sentence

2030 (b) 50,000 3.06

2032 (c) 25,000 4.03

$ 115,000 3.36 %

(a) For all interest rate derivatives, the Company receives payments based on SOFR that reset quarterly.

(b) This derivative with a $ 25 million notional amount has a forward effective start date in April 2026.

(a) For all interest rate derivatives, the Company receives payments based on SOFR that reset monthly or quarterly.

(b) These $ 25 million notional amount derivatives have forward effective start dates in April 2026 and May 2026, respectively.

Unlike the Company's Non-Nelnet Bank derivatives, Nelnet Bank's derivatives are not cleared post-execution at a regulated clearinghouse.

As such, the Company records these derivative instruments in the consolidated balance sheets on a gross basis as either an asset or liability measured at fair value.

As of June 30, 2023, the gross fair value of Nelnet Bank's interest rate swap derivatives was $ 1.1 million (an asset) that is included in "other assets" on the consolidated balance sheet.

As of September 30, 2023, the gross fair value of Nelnet Bank's interest rate swap derivatives was $ 3.1 million (an asset) that is included in "other assets" on the consolidated balance sheet.

Consolidated Financial Statement Impact Related to Derivatives

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,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

11 unchanged sentences

Investments and notes receivable consisted of the following:

As of June 30, 2023 As of December 31, 2022

As of September 30, 2023 As of December 31, 2022

Amortized cost Gross unrealized gains Gross unrealized losses Fair value Amortized cost Gross unrealized gains Gross unrealized losses Fair value

22 unchanged sentences

Venture capital and funds:

Measurement alternative (e) (f) 193,001 160,052

Measurement alternative (e) 193,106 160,052

Equity method 99,640 89,332

2 unchanged sentences

Investment in ALLO:

Voting interest/equity method (g) 43,588 67,538

Preferred membership interest and accrued and unpaid preferred return (h) 150,449 145,926

Voting interest/equity method (f) 26,294 67,538

Preferred membership interest and accrued and unpaid preferred return (g) 152,748 145,926

Total investment in ALLO 179,042 213,464

Beneficial interest in loan securitizations (i):

Beneficial interest in loan securitizations (h):

Consumer loans and other 98,701 39,249

2 unchanged sentences

Total beneficial interest in loan securitizations 191,152 138,738

Solar (j) ( 72,455 ) ( 55,448 )

Solar (i) ( 144,929 ) ( 55,448 )

Notes receivable 54,129 31,106

2 unchanged sentences

Total investments and notes receivable $ 1,945,688 $ 2,111,917

(a) A portion of FFELP loan asset-backed securities were subject to participation interests held by Union Bank, as discussed in note 3 under "Participation Agreement." As of June 30, 2023, the par value and fair value of these securities was $ 6.8 million and $ 6.3 million, respectively.

(b) A portion of private education loan asset-backed securities were subject to a repurchase agreement with a third party, as discussed in note 3 under "Repurchase Agreements." As of June 30, 2023, the par value and fair value of these securities was $ 307.6 million and $ 281.8 million, respectively.

(a) A portion of FFELP loan asset-backed securities were subject to participation interests held by Union Bank, as discussed in note 3 under "Participation Agreement." As of September 30, 2023, the par value and fair value of these securities was $ 0.1 million and $ 0.1 million, respectively.

(b) A portion of private education loan asset-backed securities were subject to a repurchase agreement with a third party, as discussed in note 3 under "Repurchase Agreements." As of September 30, 2023, the par value and fair value of these securities was $ 294.5 million and $ 260.1 million, respectively.

(c) On March 31, 2023, securities at Nelnet Bank with a fair value of $ 149.2 million were transferred from available-for-sale to held to maturity.

10 unchanged sentences

Accordingly, the Company did not adjust its carrying value of its Hudl investment to the February 2023 transaction value.

As of June 30, 2023, the carrying amount of the Company's investment in Hudl is $ 165.5 million, and the Company's equity ownership interests did not materially change as a result of the February 6, 2023 transaction.

As of September 30, 2023, the carrying amount of the Company's investment in Hudl is $ 165.5 million, and the Company's equity ownership interests did not materially change as a result of the February 6, 2023 transaction.

Graff, who has served on the Company's Board of Directors since May 2014, is CEO, co-founder, and a director of Hudl.

(f) 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" on the consolidated statements of income.

(g) During the first quarter of 2023, the Company contributed $ 8.4 million of additional equity to ALLO Holdings LLC, a holding company for ALLO Communications LLC (collectively referred to as "ALLO").

(f) During the first quarter of 2023, the Company contributed $ 8.4 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, 2023 and 2022, the Company recognized losses of $ 12.2 million and $ 16.9 million, respectively, under the HLBV method of accounting on its ALLO voting membership interests investment, and during the six months ended June 30, 2023 and 2022, the Company recognized losses of $ 32.4 million and $ 30.1 million, respectively.

Income and losses from the Company's investment in ALLO are included in "other, net" in "other income (expense)" on the consolidated statements of income.

(h) As of June 30, 2023, the outstanding preferred membership interests and accrued and unpaid preferred return of ALLO held by the Company was $ 145.9 million and $ 4.5 million, respectively.

The Company recognized losses under the HLBV method of accounting on its ALLO voting membership interests investment of $ 17.3 million and $ 17.6 million during the three months ended September 30, 2023 and 2022, respectively, and $ 49.7 million and $ 47.6 million during the nine months ended September 30, 2023 and 2022, respectively.

Losses from the Company's investment in ALLO are included in "other, net" in "other income (expense)" on the consolidated statements of income.

(g) As of September 30, 2023, the outstanding preferred membership interests and accrued and unpaid preferred return of ALLO held by the Company was $ 145.9 million and $ 6.8 million, respectively.

The preferred membership interests of ALLO held by the Company earn a preferred annual return of 6.25 %.

The Company recognized income on its ALLO preferred membership interests of $ 2.3 million and $ 2.1 million during the three months ended June 30, 2023 and 2022, respectively, and $ 4.5 million and $ 4.3 million during the six months ended June 30, 2023 and 2022, respectively.

The Company recognized income on its ALLO preferred membership interests of $ 2.3 million and $ 2.2 million during the three months ended September 30, 2023 and 2022, respectively, and $ 6.8 million and $ 6.4 million during the nine months ended September 30, 2023 and 2022, respectively.

This income is included in "other, net" in "other income (expense)" on the consolidated statements of income.

(i) The Company has partial ownership in certain consumer, private education, and federally insured student loan securitizations.

As of the latest remittance reports filed by the various trusts prior to or as of June 30, 2023, the Company's ownership correlates to approximately $ 680 million, $ 560 million, and $ 360 million of consumer, private education, and federally insured student loans, respectively, included in these securitizations.

(j) As of June 30, 2023, the Company has funded a total of $ 312.9 million in solar investments, which includes $ 120.0 million funded by syndication partners.

(h) The Company has partial ownership in certain consumer, private education, and federally insured student loan securitizations.

As of the latest remittance reports filed by the various trusts prior to or as of September 30, 2023, the Company's ownership correlates to approximately $ 660 million, $ 540 million, and $ 350 million of consumer, private education, and federally insured student loans, respectively, included in these securitizations.

(i) As of September 30, 2023, the Company has funded a total of $ 332.0 million in solar investments, which includes $ 126.5 million funded by syndication partners.

The carrying value of the Company’s investment in a solar project is reduced by tax credits earned when the solar project is placed-in-service.

The solar investment balance as of June 30, 2023 represents the sum of total tax credits earned on solar projects placed-in-service through June 30, 2023 and the calculated HLBV net losses being larger than the total investment contributions made by the Company on such projects.

As of June 30, 2023, the Company is committed to fund an additional $ 319.2 million on tax equity investments, of which $ 120.5 million is expected to be provided by syndication partners.

The solar investment balance as of September 30, 2023 represents the sum of total tax credits earned on solar projects placed-in-service through September 30, 2023 and the calculated HLBV net losses being larger than the total investment contributions made by the Company on such projects.

As of September 30, 2023, the Company is committed to fund an additional $ 265.9 million on tax equity investments, of which $ 128.7 million is expected to 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 losses on its solar investments of $ 7.9 million and $ 1.9 million during the three months ended June 30, 2023 and 2022, respectively, and $ 9.9 million and $ 2.9 million during the six months ended June 30, 2023 and 2022, respectively.

The Company recognized losses on its solar investments of $ 3.6 million and $ 4.2 million during the three months ended September 30, 2023 and 2022, respectively, and $ 13.5 million and $ 7.1 million during the nine months ended September 30, 2023 and 2022, respectively.

These losses, which include losses attributable to third-party noncontrolling interest investors (syndication partners), are included in “other, net” in "other income (expense)" on the consolidated statements of income.

Solar losses attributed to noncontrolling interest investors was $ 7.4 million and $ 2.0 million for the three months ended June 30, 2023 and 2022, respectively, and $ 10.1 million and $ 3.9 million during the six months ended June 30, 2023 and 2022, respectively, and is reflected in “net loss attributable to noncontrolling interests” in the consolidated statements of income.

The following table presents, by remaining contractual maturity, the amortized cost and fair value of debt securities at June 30, 2023:

As of June 30, 2023

Solar losses attributed to noncontrolling interest investors was $ 1.8 million and $ 4.1 million for the three months ended September 30, 2023 and 2022, respectively, and $ 12.0 million and $ 8.0 million during the nine months ended September 30, 2023 and 2022, respectively, and is reflected in “net loss attributable to noncontrolling interests” in the consolidated statements of income.

Excluding losses attributed to noncontrolling interest investors, the Company recognized losses on its solar investments of $ 1.8 million and $ 0.1 million during the three months ended September 30, 2023 and 2022, respectively, and losses of $ 1.5 million and gains of $ 0.9 million during the nine months ended September 30, 2023 and 2022, respectively.

The following table presents, by remaining contractual maturity, the amortized cost and fair value of debt securities at September 30, 2023:

As of September 30, 2023

1 year or less After 1 year through 5 years After 5 years through 10 years After 10 years Total

23 unchanged sentences

Total held-to-maturity investments at fair value $ 4,941 3,641 — 155,786 164,368

The following table presents securities classified as available-for-sale that have gross unrealized losses at June 30, 2023 and the fair value of such securities as of June 30, 2023.

The following table presents securities classified as available-for-sale that have gross unrealized losses at September 30, 2023 and the fair value of such securities as of September 30, 2023.

These securities are segregated between investments that had been in a continuous unrealized loss position for less than twelve months and twelve months or more, based on the point in time that the fair value declined below the amortized cost basis.

1 unchanged sentence

As part of that assessment, the Company concluded it currently has the intent and ability to retain these investments, and none of the unrealized losses were due to credit losses.

As of June 30, 2023

As of September 30, 2023

Unrealized loss position less than 12 months Unrealized loss position 12 months or more Total

11 unchanged sentences

The following table summarizes the gross proceeds received and gross realized gains and losses related to sales of available-for-sale asset-backed securities.

Three months ended Six months ended

June 30, June 30,

Three months ended Nine months ended

September 30, September 30,

2023 2022 2023 2022

6 unchanged sentences

Weighted average remaining useful life as of

June 30, 2023 (months)

June 30, 2023 December 31, 2022

September 30, 2023 (months)

September 30, 2023 December 31, 2022

Amortizable intangible assets, net:

8 unchanged sentences

Total - amortizable intangible assets, net 96 $ 51,910 63,501

The Company recorded amortization expense on its intangible assets of $ 3.5 million and $ 2.9 million for the three months ended June 30, 2023 and 2022, respectively, and $ 6.2 million and $ 5.3 million during the six months ended June 30, 2023 and 2022, respectively.

The Company recorded amortization expense on its intangible assets of $ 5.4 million and $ 3.3 million for the three months ended September 30, 2023 and 2022, respectively, and $ 11.6 million and $ 8.6 million during the nine months ended September 30, 2023 and 2022, respectively.

The Company will continue to amortize intangible assets over their remaining useful lives.

As of June 30, 2023, the Company estimates it will record amortization expense as follows:

2023 (July 1 - December 31) $ 10,765

As of September 30, 2023, the Company estimates it will record amortization expense as follows:

2023 (October 1 - December 31) $ 5,382

2028 and thereafter 18,504

The following table presents the carrying amount of goodwill as of June 30, 2023 and December 31, 2022 by reportable operating segment:

The following table presents the carrying amount of goodwill as of September 30, 2023 and December 31, 2022 by reportable operating segment:

Loan Servicing and Systems Education Technology, Services, and Payment Processing Asset Generation and Management Nelnet Bank Corporate and Other Activities Total

Goodwill balance $ 23,639 92,507 41,883 — 18,873 176,902

Impairment Expense

The Company continues to evaluate the use of office space as a large number of associates continue to work from home.

As a result, the Company recorded impairment charges related to operating lease assets and associated leasehold improvements of $ 5.0 million during the third quarter of 2023, which included a $ 2.4 million lease termination fee paid to Union Bank, a related party.

In 2022, the Company recorded non-cash impairment charges of $ 6.2 million, primarily related to one of its venture capital investments accounted for under the measurement alternative method.

The Company’s impairment charges are included in “impairment and other expense, net” in the consolidated statements of income.

Bank Deposits

Deposits are interest-bearing deposits and consist of brokered certificates of deposit (CDs) and retail and other savings deposits and CDs.

Deposits are interest-bearing deposits and primarily consist of brokered certificates of deposit (CDs) and retail and other savings deposits and CDs.

Retail and other deposits include savings deposits from Educational 529 College Savings and Health Savings plans, Short Term Federal Investment Trusts (STFIT), and commercial and institutional CDs.

3 unchanged sentences

Generally, early withdrawal of brokered CDs is prohibited (except in the case of death or legal incapacity).

Nelnet Bank has intercompany deposits from Nelnet, Inc.

and its subsidiaries totaling $ 140.4 million, including a $ 40.0 million pledged deposit from Nelnet, Inc.

As of September 30, 2023 and December 31, 2022, Nelnet Bank had intercompany deposits from Nelnet, Inc.

and its subsidiaries totaling $ 229.3 million and $ 98.3 million, respectively, including a $ 40.0 million pledged deposit from Nelnet, Inc.

as required under a Capital and Liquidity Maintenance Agreement with the FDIC.

1 unchanged sentence

The following table summarizes Nelnet Bank’s interest-bearing deposits, excluding intercompany deposits:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Brokered CDs, net of brokered deposit fees $ 203,470 254,817

Commercial 2,057 —

Retail and other savings (529, STFIT, and HSA) 491,496 410,556

1 unchanged sentence

Total interest-bearing deposits $ 718,053 691,322

The following table presents certificates of deposit remaining maturities as of June 30, 2023:

The following table presents certificates of deposit remaining maturities as of September 30, 2023:

After two years to three years $ 149,855

3 unchanged sentences

The Educational 529 College Savings, STFIT, and Health Savings plan deposits are large interest-bearing omnibus accounts structured to allow FDIC insurance to flow through to underlying individual depositors.

Except for the pledged deposit from Nelnet, Inc.

and an earmarked deposit required for intercompany transactions, there were no deposits exceeding the FDIC insurance limits as of June 30, 2023 and December 31, 2022.

Except for the commercial deposit, the pledged deposit from Nelnet, Inc., and an earmarked deposit required for intercompany transactions, there were no deposits exceeding the FDIC insurance limits as of September 30, 2023 and December 31, 2022.

Earnings per Common Share

2 unchanged sentences

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,

Three months ended September 30,

Common shareholders Unvested restricted stock shareholders Total Common shareholders Unvested restricted stock shareholders Total

3 unchanged sentences

Earnings per share - basic and diluted $ 1.21 1.21 1.21 2.80 2.80 2.80

Six months ended June 30,

Nine months ended September 30,

Common shareholders Unvested restricted stock shareholders Total Common shareholders Unvested restricted stock shareholders Total

6 unchanged sentences

The following tables present the results of each of the Company's reportable operating segments reconciled to the consolidated financial statements.

Three months ended June 30, 2023

Three months ended September 30, 2023

Loan Servicing and Systems Education Technology, Services, and Payment Processing Asset

13 unchanged sentences

Gain on sale of loans, net — — 5,362 — — — 5,362

Impairment expense — — — — — — —

Impairment and other expense, net ( 296 ) — — — ( 4,678 ) — ( 4,974 )

Derivative settlements, net — — 621 196 — — 817

17 unchanged sentences

$ 18,597 16,810 30,827 1,747 ( 22,649 ) — 45,332

Total assets as of June 30, 2023 $ 173,926 482,922 14,667,357 1,005,043 2,091,500 ( 613,116 ) 17,807,632

Three months ended June 30, 2022

Total assets as of September 30, 2023 $ 243,697 444,631 14,111,517 1,089,565 2,052,500 ( 719,228 ) 17,222,682

Three months ended September 30, 2022

Loan Servicing and Systems Education Technology, Services, and Payment Processing Asset

13 unchanged sentences

Gain on sale of loans, net — — 2,627 — — — 2,627

Impairment expense — — — — ( 6,284 ) — ( 6,284 )

Impairment and other expense, net — — — — 121 — 121

Derivative settlements, net — — 10,271 — — — 10,271

17 unchanged sentences

$ 16,655 14,119 85,023 809 ( 11,808 ) — 104,798

Total assets as of June 30, 2022 $ 240,437 546,235 17,388,228 864,659 2,273,216 ( 688,762 ) 20,624,013

Six months ended June 30, 2023

Total assets as of September 30, 2022 $ 235,858 440,859 16,374,493 884,089 2,360,882 ( 732,648 ) 19,563,533

Nine months ended September 30, 2023

Loan Servicing and Systems Education Technology, Services, and Payment Processing Asset

13 unchanged sentences

Gain on sale of loans, net — — 32,685 — — — 32,685

Impairment expense — — — — — — —

Impairment and other expense, net ( 296 ) — — — ( 4,678 ) — ( 4,974 )

Derivative settlements, net — — 23,940 279 — — 24,219

17 unchanged sentences

$ 50,702 59,216 44,111 3,038 ( 56,981 ) — 100,086

Total assets as of June 30, 2023 $ 173,926 482,922 14,667,357 1,005,043 2,091,500 ( 613,116 ) 17,807,632

Six months ended June 30, 2022

Total assets as of September 30, 2023 $ 243,697 444,631 14,111,517 1,089,565 2,052,500 ( 719,228 ) 17,222,682

Nine months ended September 30, 2022

Loan Servicing and Systems Education Technology, Services, and Payment Processing Asset

13 unchanged sentences

Gain on sale of loans, net — — 5,616 — — — 5,616

Impairment expense — — — — ( 6,284 ) — ( 6,284 )

Impairment and other expense, net — — — — ( 6,163 ) — ( 6,163 )

Derivative settlements, net — — 12,085 — — — 12,085

17 unchanged sentences

$ 36,095 50,499 322,732 1,915 ( 34,668 ) — 376,573

Total assets as of June 30, 2022 $ 240,437 546,235 17,388,228 864,659 2,273,216 ( 688,762 ) 20,624,013

Total assets as of September 30, 2022 $ 235,858 440,859 16,374,493 884,089 2,360,882 ( 732,648 ) 19,563,533

Disaggregated Revenue

1 unchanged sentence

Loan Servicing and Systems

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

6 unchanged sentences

Education Technology, Services, and Payment Processing

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

5 unchanged sentences

Solar Construction

GRNE Solar was acquired on July 1, 2022;

accordingly, there are no results for the three and six months ended June 30, 2022.

Three months ended June 30, 2023 Six months ended June 30, 2023

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022 (a)

Commercial revenue $ 4,101 7,856 12,339 7,856

2 unchanged sentences

Solar construction revenue $ 6,301 9,358 19,687 9,358

(a) GRNE Solar was acquired on July 1, 2022.

Other Income (Expense)

The following table presents the components of "other, net" in "other income (expense)" on the consolidated statements of income:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2023 2022 2023 2022

11 unchanged sentences

Nelnet Servicing, LLC (Nelnet Servicing) and Great Lakes Educational Loan Services, Inc.

(Great Lakes), both subsidiaries of the Company, are two of the current six private sector entities that have student loan servicing contracts with the Department.

Revenue earned by the Company related to these contracts was $ 95.7 million and $ 98.8 million for the three months ended June 30, 2023 and 2022, respectively, and $ 204.6 million and $ 207.9 million for the six months ended June 30, 2023 and 2022, respectively.

The Company also licensed its hosted servicing software to two of the six servicers for the Department.

(Great Lakes), both subsidiaries of the Company, are two of the current five private sector entities that have student loan servicing contracts with the Department.

Revenue earned by the Company related to these contracts was $ 100.2 million and $ 104.4 million for the three months ended September 30, 2023 and 2022, respectively, and $ 304.8 million and $ 312.4 million for the nine months ended September 30, 2023 and 2022, respectively.

The Company also earned remote hosted servicing revenue by licensing its software to certain third-party servicers for the Department.

Contract Modifications and Award

2 unchanged sentences

In April 2023, Nelnet Diversified Solutions, LLC (NDS), a subsidiary of the Company, received a contract award from the Department, pursuant to which NDS was selected to provide continued servicing capabilities for the Department's student aid recipients under a new Unified Servicing and Data Solution (USDS) contract (the "New Government Servicing Contract") which will replace the existing legacy Department student loan servicing contracts.

On October 11, 2023, the USDS contract awarded to NDS was novated to Nelnet Servicing.

The New Government Servicing Contract is effective April 24, 2023 and has a five year base period, with 2 two-year and 1 one-year possible extensions.

The Department's total loan servicing volume of more than 37 million existing borrowers will be allocated by the Department to NDS and four other third-party servicers that were awarded a USDS contract based on service and performance levels.

Under the New Government Servicing Contract, NDS will begin immediately to make required servicing platform enhancements, for which NDS will be compensated from the Department on certain of these investments.

The Department's total loan servicing volume of more than 37 million existing borrowers will be allocated by the Department to Nelnet Servicing and four other third-party servicers that were awarded a USDS contract based on service and performance levels.

Under the New Government Servicing Contract, Nelnet Servicing immediately began to make required servicing platform enhancements, for which it will be compensated from the Department on certain of these investments.

In April 2023, the Department indicated that servicing under the USDS contracts will go live in 2024 and it will extend the current legacy servicing contracts from December 14, 2023 to December 2024.

Until servicing under the USDS contracts goes live, the Company will continue to earn revenue for servicing borrowers under its current legacy servicing contracts with the Department.

Until servicing under the USDS contracts goes live, which is anticipated to be during the second quarter of 2024, the Company will continue to earn revenue for servicing borrowers under its current legacy servicing contracts with the Department.

The new USDS servicing contracts have multiple revenue components with tiered pricing based on borrower volume, while revenue earned under the legacy servicing contracts is primarily based on borrower status.

14 unchanged sentences

As of December 31, 2022, Edfinancial was servicing 4.5 million borrowers for the Department on the Company’s platform.

The Company began transferring Edfinancial's servicing volume to another servicing platform in the first quarter of 2023 which reduced the number of Edfinancial's borrowers serviced on the Company's platform

to 3.5 million borrowers as of March 31, 2023 and 579,000 borrowers as of June 30, 2023.

The Company began transferring Edfinancial's servicing volume to another servicing

platform in the first quarter of 2023 which reduced the number of Edfinancial's borrowers serviced on the Company's platform to 3.5 million borrowers as of March 31, 2023 and 579,000 borrowers as of June 30, 2023.

Edfinancial's remaining borrowers were transferred off of the Company's platform in July 2023.

3 unchanged sentences

The majority of this volume was transferred to another third-party servicing platform during the second quarter of 2023, and the remaining borrowers were transferred off of the Company's platform in July 2023.

As a result of the transfers discussed above, the Company has no remaining Department remote hosted servicing borrowers on its platform and software services revenue will be negatively impacted in future periods.

As a result of the transfers discussed above, the Company currently has no remaining Department remote hosted servicing borrowers on its platform and software services revenue will be negatively impacted in future periods.

However, the Company has executed an agreement with a third-party servicer awarded a USDS contract to license its servicing software to such entity and the Company anticipates earning remote hosted servicing revenue from this new customer when USDS goes live beginning in the second quarter of 2024.

Department of Education Debt Relief

5 unchanged sentences

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, 2023 As of December 31, 2022

As of September 30, 2023 As of December 31, 2022

Level 1 Level 2 Total Level 1 Level 2 Total

11 unchanged sentences

The following table summarizes the fair values of all of the Company’s financial instruments on the consolidated balance sheets:

As of June 30, 2023

As of September 30, 2023

Fair value Carrying value Level 1 Level 2 Level 3

34 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements