What changed in this filing

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Item 1. Financial Statements

2024-05-09 compared with 2023-11-07 · 279 added, 508 removed, 751 unchanged (51% of the section changed)

3 unchanged sentences

(Dollars in thousands, except share data)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Loans and accrued interest receivable (net of allowance for loan losses of $ 106,008 and

5 unchanged sentences

Total cash and cash equivalents 179,682 168,112

Investments and notes receivable 1,945,688 2,111,917

Investments and notes receivable (including investments at fair value of $ 1,037,637 and $ 988,841 , respectively)

1,921,691 1,870,968

Restricted cash 618,363 488,723

Restricted cash - due to customers 142,778 368,656

Restricted investments 36,076 17,969

Accounts receivable (net of allowance for doubtful accounts of $ 4,248 and $ 4,304 , respectively)

44 unchanged sentences

(Dollars in thousands, except share data)

Three months ended Nine months ended

September 30, September 30,

2023 2022 2023 2022

Three months ended

Interest income:

8 unchanged sentences

Loan servicing and systems revenue 127,201 139,227

Education technology, services, and payment processing revenue 113,796 106,894 357,258 310,211

Education technology services and payments revenue 143,539 133,603

Solar construction revenue 13,726 8,651

Other, net 17,015 ( 14,071 )

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

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

(Loss) gain on sale of loans, net ( 41 ) 11,812

Derivative market value adjustments and derivative settlements, net 9,721 ( 14,074 )

1 unchanged sentence

Cost of services:

Cost to provide education technology, services, and payment processing services 43,694 42,676 131,804 109,073

Cost to provide education technology services and payments 48,610 47,704

Cost to provide solar construction services 14,229 8,299

14 unchanged sentences

shareholders - basic and diluted

$ 1.21 2.80 2.67 9.99

Weighted average common shares outstanding - basic and diluted

4 unchanged sentences

(Dollars in thousands)

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

2023 2022 2023 2022

Three months ended March 31,

Net income $ 71,008 23,017

Other comprehensive (loss) income:

Other comprehensive income:

Net changes related to foreign currency translation adjustments $ 5 ( 3 )

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

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

Unrealized holding gains arising during period, net of losses 16,761 8,651

Reclassification of (gains) losses recognized in net income, net ( 552 ) 4,982

2 unchanged sentences

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

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

(Loss) gain on cash flow hedge ( 967 ) 2

Income tax effect 232 ( 735 ) — 2

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

Other comprehensive income 11,643 10,360

Comprehensive income 82,651 33,377

8 unchanged sentences

Class A Class B

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 income — — — — — — — — 3,219 — 3,219

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

Cash dividends on Class A and Class B common stock - $ 0.24 per share

— — — — — — — ( 8,925 ) — — ( 8,925 )

Issuance of common stock, net of forfeitures — 38,192 — — 1 — 476 — — — 477

Compensation expense for stock based awards — — — — — — 3,631 — — — 3,631

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

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

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

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

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

Cash dividends on Class A and Class B common stock - $ 0.26 per share

— — — — — — — ( 9,701 ) — — ( 9,701 )

Issuance of common stock, net of forfeitures — 15,109 — — 1 — 499 — — — 500

Compensation expense for stock based awards — — — — — — 4,095 — — — 4,095

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

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.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Dollars in thousands, except share data)

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 Noncontrolling interests Total equity

Class A Class B

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

1 unchanged sentence

Net income (loss) — — — — — — — 26,487 — ( 3,470 ) 23,017

Other comprehensive loss — — — — — — — — ( 37,943 ) — ( 37,943 )

Other comprehensive income — — — — — — — — 10,360 — 10,360

Distribution to noncontrolling interests — — — — — — — — — ( 5,028 ) ( 5,028 )

4 unchanged sentences

Repurchase of common stock — ( 36,513 ) — — — — ( 3,302 ) — — — ( 3,302 )

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

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

Balance as of December 31, 2023 — 26,400,630 10,663,088 $ — 264 107 3,096 3,279,273 ( 20,119 ) ( 40,706 ) 3,221,915

8 unchanged sentences

Repurchase of common stock — ( 396,724 ) — — ( 4 ) — ( 6,221 ) ( 29,244 ) — — ( 35,469 )

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

Balance as of March 31, 2024 — 26,055,314 10,663,088 $ — 261 107 1,101 3,312,869 ( 8,476 ) ( 48,082 ) 3,257,780

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(Dollars in thousands)

Nine months ended

September 30,

Three months ended

Net income attributable to Nelnet, Inc.

2 unchanged sentences

Net income 71,008 23,017

Adjustments to reconcile net income to net cash provided by operating activities, net of business acquisition:

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 33,957 34,211

3 unchanged sentences

Proceeds from termination of derivative instruments — 164,079

(Payments to) proceeds from clearinghouse - initial and variation margin, net ( 210,168 ) 227,448

Gain on sale of loans, net ( 32,685 ) ( 5,616 )

Loss on investments, net 67,940 13,605

Proceeds from sale of equity securities, net 75 42,863

Deferred income tax (benefit) expense ( 24,712 ) 57,633

Proceeds from (payments to) clearinghouse - initial and variation margin, net 4,054 ( 210,284 )

Loss (gain) on sale of loans, net 41 ( 11,812 )

Loss on investments, net of gains 8,348 24,344

Deferred income tax benefit ( 2,234 ) ( 13,750 )

Non-cash compensation expense 3,166 3,838

Impairment expense 2,588 6,163

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

Decrease in loan and investment accrued interest receivable 79,841 16,630

Decrease in accounts receivable 61,494 43,675

1 unchanged sentence

Decrease in the carrying amount of ROU asset, net 953 1,251

Increase in accrued interest payable 342 17,230

Increase in other liabilities 19,132 5,388

Decrease in accrued interest payable ( 3,408 ) ( 1,675 )

Decrease in other liabilities ( 50,218 ) ( 3,729 )

Decrease in the carrying amount of lease liability ( 1,025 ) ( 1,275 )

Other ( 36 ) 270

Net cash provided by operating activities 211,915 122,845

1 unchanged sentence

Purchases and originations of loans ( 157,047 ) ( 289,177 )

Purchases of loans from a related party ( 467,554 ) ( 8,242 )

Net proceeds from loan repayments, claims, and capitalized interest 1,147,413 684,962

1 unchanged sentence

Purchases of available-for-sale securities ( 163,610 ) ( 242,370 )

Purchases of restricted available-for-sale securities ( 18,287 ) —

Proceeds from sales of available-for-sale securities 153,033 492,173

Proceeds from sales of restricted available-for-sale securities 340 —

Proceeds from beneficial interest in loan securitizations 5,875 4,725

Purchases of other investments and issuance of notes receivable ( 70,975 ) ( 70,509 )

Proceeds from other investments 29,768 42,524

Purchases of held-to-maturity debt securities ( 11,325 ) —

Proceeds from other investments and repayments of notes receivable 10,820 11,114

Redemption of held-to-maturity debt securities 1,779 —

Purchases of property and equipment ( 23,225 ) ( 24,430 )

Business acquisition, net of cash acquired — ( 35,973 )

Net cash provided by investing activities $ 1,086,079 723,932

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

Nine months ended

September 30,

Three months ended

Cash flows from financing activities:

2 unchanged sentences

Payments of debt issuance costs ( 31 ) ( 169 )

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

Increase (decrease) in bank deposits, net 58,462 ( 15,555 )

Decrease in due to customers ( 150,712 ) ( 67,642 )

5 unchanged sentences

Net cash used in financing activities ( 1,382,499 ) ( 1,306,259 )

Effect of exchange rate changes on cash ( 206 ) ( 447 )

Effect of exchange rate changes on cash and restricted cash ( 163 ) ( 91 )

Net decrease in cash, cash equivalents, and restricted cash ( 84,668 ) ( 459,573 )

5 unchanged sentences

Cash disbursements made for operating leases $ 1,258 1,705

Noncash operating, investing, and financing activity:

Non-cash operating, investing, and financing activity:

ROU assets obtained in exchange for lease obligations $ 48 15,545

3 unchanged sentences

Issuance of noncontrolling interests $ 12,566 —

(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.

(a) The Company utilized $ 8.6 million and $ 5.7 million of federal and state tax credits related primarily to renewable energy during the three months ended March 31, 2024 and 2023, respectively.

The following table presents 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

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

March 31, 2024 December 31, 2023 March 31, 2023 December 31, 2022

Total cash and cash equivalents $ 179,682 168,112 187,574 118,146

9 unchanged sentences

The accompanying unaudited consolidated financial statements of Nelnet, Inc.

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.

and subsidiaries (the “Company”) as of March 31, 2024 and for the three months ended March 31, 2024 and 2023 have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 2023 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 nine months ended September 30, 2023 are not necessarily indicative of the results for the year ending December 31, 2023.

Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results for the year ending December 31, 2024.

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, 2023 (the "2023 Annual Report").

1 unchanged sentence

Loans and accrued interest receivable consisted of the following:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Non-Nelnet Bank:

6 unchanged sentences

Non-Nelnet Bank loans 10,799,942 12,049,462

Federally insured loans 59,261 65,913

Private education loans 364,766 360,520

9 unchanged sentences

Non-Nelnet Bank allowance for loan losses ( 95,220 ) ( 95,945 )

Federally insured loans ( 148 ) ( 170 )

Private education loans ( 3,660 ) ( 3,347 )

3 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.

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Non-Nelnet Bank:

2 unchanged sentences

Consumer and other loans 12.08 % 13.66 %

Federally insured loans (a) 0.25 % 0.26 %

Private education loans 1.00 % 0.93 %

Consumer and other loans 5.99 % 7.40 %

(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.

(a) As of March 31, 2024 and December 31, 2023, the allowance for loan losses as a percent of the risk sharing component of federally insured student loans not covered by the federal guaranty was 21.7 % and 21.8 %, 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 nine months ended September 30, 2023 and 2022.

The following table summarizes the loans sold and gains/losses recognized by the Company during the three months ended March 31, 2024 and 2023.

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

Nine months ended September 30, 2023

Three months ended March 31, 2024

March 27 $ 199,694 — FFELP —

March 28 405 ( 41 ) Home equity —

$ 200,099 ( 41 )

Three months ended March 31, 2023

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

1 unchanged sentence

March 2 122,132 8,966 Consumer 24.6 (a)

April 4 5,633 659 Consumer —

April 13 24,980 3,123 Consumer 11.3

May 2 127,663 11,729 Consumer 26.5

August 3 61,807 5,362 Consumer 24.3

$ 481,985 32,685

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

March 22 145 ( 63 ) Home equity —

$ 261,902 11,812

2 unchanged sentences

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 Loan sales Balance at end of period

Three months ended September 30, 2023

Balance at beginning of period Provision (negative provision) for loan losses Charge-offs Recoveries Loan sales Balance at end of period

Three months ended March 31, 2024

Non-Nelnet Bank:

2 unchanged sentences

Consumer and other loans 11,742 8,690 ( 1,957 ) 381 ( 95 ) 18,761

Federally insured loans 154 ( 2 ) ( 4 ) — — — 148

Private education loans 3,347 757 ( 446 ) 2 — 3,660

1 unchanged sentence

$ 104,643 11,029 ( 10,243 ) 674 ( 95 ) 106,008

Three months ended September 30, 2022

Non-Nelnet Bank:

Federally insured loans $ 92,593 888 ( 5,715 ) — 12 — 87,778

Private education loans 15,253 1,154 ( 1,066 ) 236 — — 15,577

Consumer and other loans 10,576 7,173 ( 1,021 ) 147 — ( 3,585 ) 13,290

Federally insured loans 258 ( 94 ) — — — — 164

Private education loans 1,744 504 — — — — 2,248

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

Nine months ended September 30, 2023

Three months ended March 31, 2023

Non-Nelnet Bank:

6 unchanged sentences

$ 131,827 34,290 ( 9,691 ) 384 ( 22,106 ) 134,704

Nine months ended September 30, 2022

Non-Nelnet Bank:

Federally insured loans $ 103,381 505 ( 16,264 ) — 156 — 87,778

Private education loans 16,143 1,971 ( 3,072 ) 531 — 4 15,577

Consumer and other loans 6,481 14,702 ( 2,489 ) 465 — ( 5,869 ) 13,290

Federally insured loans 268 ( 102 ) ( 2 ) — — — 164

Private education loans 840 1,499 ( 87 ) — — ( 4 ) 2,248

$ 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 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 September 30, Nine months ended September 30,

2023 2022 2023 2022

Three months ended March 31,

Non-Nelnet Bank:

5 unchanged sentences

Consumer and other loans 8.01 % —

The Company recorded a negative provision for loan losses for the three months ended March 31, 2024 for its Non-Nelnet Bank federally insured and private education loan portfolios primarily due to the amortization of these portfolios.

The primary item impacting provision for loan losses for Non-Nelnet Bank consumer loans and Nelnet Bank's loan portfolios for the three months ended March 31, 2024 was the establishment of an initial allowance for loans originated and acquired during the period.

The Company recorded a provision for loan losses for the three months ended March 31, 2023 due to (i) management's estimate of declining economic conditions as of March 31, 2023 in comparison to management's estimate of economic conditions used to determine the allowance for loan losses as of December 31, 2022;

and (ii) the establishment of an initial allowance for loans originated and acquired during the period.

These amounts were partially offset by the amortization of the federally insured loan portfolio.

Unfunded 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.

As of March 31, 2024 and December 31, 2023, Nelnet Bank had a liability of approximately $ 57,000 and $ 158,000 , respectively, related to $ 9.1 million and $ 12.3 million, respectively, of unfunded private education, consumer, and other loan commitments.

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

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

On January 1, 2023, the Company adopted ASU No.

2022-02, Financial Instruments – Credit Losses:

Troubled Debt Restructurings and Vintage Disclosures, which eliminates the troubled debt restructurings recognition and measurement guidance and instead requires an entity to evaluate whether the modification represents a new loan or a continuation of an existing loan.

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, 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.

bankruptcy, military service, death and disability, and disaster forbearance) are required by law and therefore are also not considered as part of the Company's loan modification programs.

The Company does offer payment delays in the form of deferments or forbearances on certain private education and consumer loan programs for short-term periods.

The Company generally considers payment delays to be insignificant when the delay is 3 months or less.

The amortized cost of the Company’s private education and consumer loans in which the borrower is experiencing financial difficulty and the financial effect of such loan modifications is not material.

During the three months ended March 31, 2024 and 2023, Nelnet Bank recognized negative provision for loan losses of approximately $ 101,000 and $ 15,000 , respectively, related to unfunded loan commitments.

Key Credit Quality Indicators

4 unchanged sentences

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

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

As of March 31, 2024 As of December 31, 2023 As of March 31, 2023

Federally insured loans - Non-Nelnet Bank:

28 unchanged sentences

Total private education loans and accrued interest receivable, net of allowance for loan losses $ 241,790 $ 256,186 $ 228,696

As of March 31, 2024 As of December 31, 2023 As of March 31, 2023

Consumer and other loans - Non-Nelnet Bank:

11 unchanged sentences

Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 132,305 $ 72,580 $ 278,430

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

Federally insured loans - Nelnet Bank (a):

Loans in-school/grace/deferment $ 283 0.5 % $ 241 0.4 % $ 274 0.4 %

Loans in forbearance 862 1.5 981 1.5 2,551 3.5

Loans in repayment status:

Loans current 57,059 98.3 % 63,225 97.8 % 68,970 98.4 %

Loans delinquent 30-59 days 333 0.6 436 0.7 353 0.5

Loans delinquent 60-89 days 81 0.1 466 0.7 130 0.2

Loans delinquent 90-119 days 12 0.0 222 0.3 5 0.0

Loans delinquent 120-270 days 428 0.7 183 0.3 508 0.7

Loans delinquent 271 days or greater 203 0.3 159 0.2 114 0.2

Total loans in repayment 58,116 98.0 100.0 % 64,691 98.1 100.0 % 70,080 96.1 100.0 %

Total federally insured loans 59,261 100.0 % 65,913 100.0 % 72,905 100.0 %

Accrued interest receivable 2,008 1,758 1,607

Loan premium 19 20 23

Allowance for loan losses ( 148 ) ( 170 ) ( 164 )

Total federally insured loans and accrued interest receivable, net of allowance for loan losses $ 61,140 $ 67,521 $ 74,371

Private education loans - Nelnet Bank (a):

14 unchanged sentences

Loans in deferment $ 141 0.1 % $ 103 0.1 % $ — — %

Loans in forbearance 32 0.1

Loans in repayment status:

6 unchanged sentences

Accrued interest receivable 880 575 117

Loan discount ( 7 )

Loan premium, net of unaccreted discount 1,359 ( 6 ) 1

Allowance for loan losses ( 7,128 ) ( 5,351 ) ( 1,827 )

1 unchanged sentence

(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.

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 September 30, 2023

Nine months ended September 30, 2023 2022 2021 2020 Total

An additional key credit quality indicator for Nelnet Bank private education and consumer loans is FICO scores at the time of origination.

The following tables highlight the gross principal balance of Nelnet Bank's portfolios, by year of origination, stratified by FICO score at the time of origination.

Nelnet Bank Private Education Loans

Loan balance as of March 31, 2024

Three months ended March 31, 2024 2023 2022 2021 2020 Total

FICO at origination:

4 unchanged sentences

Greater than 794 1,523 18,207 75,304 56,079 4,979 156,092

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

No FICO score available or required 2,488 6,055 — — — 8,543

$ 6,804 54,677 184,936 109,810 8,539 364,766

7 unchanged sentences

Greater than 794 15,057 77,996 58,695 5,226 156,974

No FICO score available or required 4,052 — — — 4,052

$ 46,907 190,466 114,278 8,869 360,520

(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.

Nelnet Bank Consumer and Other Loans

Loan balance as of March 31, 2024

Three months ended March 31, 2024 2023 2022 2021 2020 Total

FICO at origination:

Less than 720 $ 12,913 18,324 — — — 31,237

720 - 769 21,017 29,900 48 — — 50,965

Greater than 769 21,359 14,280 108 — — 35,747

No FICO score available or required 230 441 282 55 — 1,008

$ 55,519 62,945 438 55 — 118,957

Loan balance as of December 31, 2023

2023 2022 2021 2020 Total

FICO at origination:

Less than 720 $ 21,412 — — — 21,412

720 - 769 33,571 51 — — 33,622

Greater than 769 16,484 109 — — 16,593

No FICO score available or required 386 284 55 — 725

$ 71,853 444 55 — 72,352

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 September 30, 2023 and December 31, 2022, 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 March 31, 2024 and December 31, 2023, 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 September 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 March 31, 2024 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.

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

Three months ended March 31, 2024 2023 2022 2021 2020 Prior years Total

Private education loans - Non-Nelnet Bank:

12 unchanged sentences

Total private education loans and accrued interest receivable, net of allowance for loan losses $ 241,790

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

Gross charge-offs - three months ended March 31, 2024 $ — — — 76 36 901 1,013

Consumer and other loans - Non-Nelnet Bank:

11 unchanged sentences

Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 132,305

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

Gross charge-offs - three months ended March 31, 2024 $ — 733 1,076 101 21 26 1,957

Three months ended March 31, 2024 2023 2022 2021 2020 Prior years Total

Private education loans - Nelnet Bank (a):

12 unchanged sentences

Total private education loans and accrued interest receivable, net of allowance for loan losses $ 369,243

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

Gross charge-offs - three months ended March 31, 2024 $ — 178 146 122 — — 446

Consumer and other loans - Nelnet Bank (a):

Loans in deferment $ 86 55 — — — — 141

Loans in forbearance 32 — — — — — 32

Loans in repayment status:

6 unchanged sentences

Accrued interest receivable 880

Loan discount ( 7 )

Loan premium, net of unaccreted discount 1,359

Allowance for loan losses ( 7,128 )

Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 114,068

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

Gross charge-offs - three months ended March 31, 2024 $ — 1,967 — — — — 1,967

1 unchanged sentence

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

As of September 30, 2023

As of March 31, 2024

Interest rate

11 unchanged sentences

4/2/25 / 5/22/25

Private education loan warehouse facility 38,183 5.63 % 12/31/23

Consumer loan warehouse facility 41,762 5.55 % 11/14/25

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 %

Variable-rate bonds and notes issued in private education loan asset-backed securitizations 71,963 6.90 % / 7.57 %

6/25/49 / 11/25/53

Fixed-rate bonds and notes issued in private education loan asset-backed securitizations 70,310 5.35 % / 7.15 %

12/28/43 / 11/25/53

Unsecured line of credit — — 9/22/26

Participation agreement 63 6.06 % 5/4/24

Participation agreements 9,023 5.58 % - 6.06 %

5/4/24 / 1/30/33

Repurchase agreement 114,498 6.43 % - 6.74 %

16 unchanged sentences

10/25/67 - 8/27/68

FFELP loan warehouse facility 978,956 4.69 % / 4.71 %

Private education loan warehouse facility 64,356 4.72 % 12/31/23

FFELP loan warehouse facilities 1,398,485 5.41 % - 5.70 %

4/2/25 / 5/22/25

Consumer loan warehouse facility 23,691 5.70 % 11/14/25

1 unchanged sentence

6/25/49 / 11/25/53

Fixed-rate bonds and notes issued in private education loan asset-backed securitization 23,032 3.60 % / 5.35 %

Fixed-rate bonds and notes issued in private education loan asset-backed securitizations 80,130 5.35 % / 7.15 %

12/28/43 / 11/25/53

Unsecured line of credit — — 9/22/26

Participation agreement 395,432 5.02 % 5/4/23

Repurchase agreements 567,254 0.97 % - 5.60 %

Participation agreements 10,063 5.58 % - 6.08 %

3/12/24 / 5/4/24

Repurchase agreement 208,164 6.35 % - 6.81 %

1/22/24 - 12/20/24

Other - due to related party 5,778 5.00 % - 6.05 %

5 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 September 30, 2023.

The following table summarizes the Company's warehouse facilities as of March 31, 2024.

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

2 unchanged sentences

$ 1,382,000 1,066,197 315,803 $ 79,289

Private (d) 38,183 38,183 — 10/31/2023 12/31/2023 — 17,910

Consumer 250,000 49,937 200,063 11/14/2024 11/14/2025 70 % 21,328

(a) On March 31, 2023, this facility was amended to increase the aggregate maximum financing amount available from $ 1.20 billion to $ 1.25 billion.

On May 22, 2023, this facility was amended to extend the expiration of liquidity provisions and final maturity date to November 22, 2023 and November 22, 2024, respectively.

Consumer (d) 150,000 41,762 108,238 11/14/2024 11/14/2025 70 % 17,405

(a) Effective March 6, 2024, the maximum financing amount on this facility was reduced from $ 1.25 billion to $ 950 million.

(b) This facility has a static advance rate until the expiration date of the liquidity provisions.

2 unchanged sentences

The loans would then be funded at this new advance rate until the final maturity date of the facility.

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, 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.

(c) On April 2, 2024, this facility was amended to reduce the maximum financing amount from $ 432 million to $ 375 million, and to extend the expiration of liquidity provisions and final maturity date to April 1, 2025 and April 1, 2026, respectively.

(d) On March 11, 2024, this facility was amended to reduce the maximum financing amount from $ 200 million to $ 150 million.

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 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 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.

On May 4, 2023, the agreement automatically renewed for another year through May 4, 2024.

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 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 the remaining participation agreement.

Repurchase Agreements

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.

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 this repurchase agreement.

As of March 31, 2024, no amount was outstanding on the line of credit and $ 495.0 million was available for future use.

Repurchase Agreement

The Company has a repurchase agreement with a non-affiliated third party, the proceeds of which are collateralized by certain private education loan asset-backed securities (bond investments).

The outstanding balance under this agreement as of March 31, 2024 was $ 114.5 million.

The agreement has various maturity dates through December 20, 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.

See note 5 for additional information about the private education loan asset-backed securities investments serving as collateral for this repurchase agreement.

Debt Repurchases

The following table summarizes the Company's repurchases of its own debt.

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 September 30, Nine months ended September 30,

2023 2022 2023 2022

Purchase price $ ( 4,284 ) ( 13,563 ) ( 5,112 ) ( 67,081 )

Par value 5,033 13,903 5,941 69,133

Remaining unamortized cost of issuance ( 12 ) ( 180 ) ( 14 ) ( 821 )

Gain $ 737 160 815 1,231

The Company has repurchased certain of its own asset-backed securities (bonds and notes payable) in the secondary market.

2 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 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.

The remaining unamortized debt discount associated with these bonds at the time of redemption was written-off, resulting in a $ 25.9 million non-cash expense recognized in April 2023.

This expense is included in "interest expense on bonds and notes payable and bank deposits" on the consolidated statements of income.

As of March 31, 2024, the Company holds $ 310.3 million (par value) of its own FFELP asset-backed securities.

Derivative Financial Instruments

The Company uses derivative financial instruments primarily 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 2022 Annual Report.

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 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.

The Company uses settled-to-market 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 5 of the notes to consolidated financial statements included in the 2023 Annual Report.

A tabular presentation of such derivatives outstanding as of March 31, 2024 and December 31, 2023 is presented below.

The following table summarizes the Company’s outstanding basis swaps as of March 31, 2024 and December 31, 2023, in which the Company receives and pays the term adjusted Secured Overnight Financing Rate (SOFR) plus the tenor spread adjustment to LIBOR.

Prior to the discontinuation of LIBOR on June 30, 2023, 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").

Maturity Notional amount

September 30, 2023 December 31, 2022

2024 $ 1,750,000

2026 1,150,000

2026 1,150,000 1,150,000

2027 250,000 250,000

$ 3,150,000 3,900,000

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.

The weighted average rate paid by the Company on the 1:3 Basis Swaps as of March 31, 2024 and December 31, 2023 was the term adjusted SOFR (plus the tenor spread adjustment relating to LIBOR) plus 10.1 basis points.

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 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)

The following table summarizes the outstanding derivative instruments used by the Company as of March 31, 2024 and December 31, 2023, to economically hedge loans earning fixed rate floor income.

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

2026 $ 200,000 3.92 %

2028 50,000 3.56

2029 (b) 50,000 3.17

2030 (c) 100,000 3.63

$ 400,000 3.71 %

2032 — — 200,000 2.92

$ 50,000 3.44 % $ 2,800,000 0.70 %

(a) On March 15, 2023, to minimize the Company's exposure to market volatility, the Company terminated its entire derivative portfolio hedging loans earning fixed rate floor income ($ 2.8 billion in notional amount of derivatives).

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 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.

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

(b) This $ 50 million notional amount derivative has a forward effective start date in January 2026.

During the first quarter of 2023, the Company received $ 183.2 million, which included $ 19.1 million related to 2023 settlements, to terminate $ 2.8 billion in notional amount of floor income interest rate swaps prior to their final maturity.

Nelnet Bank Derivatives

Interest Rate Swaps

Derivative instruments are used by Nelnet Bank to hedge the exposure to variability in cash flows of variable rate intercompany deposits primarily to minimize the exposure to volatility in cash flows from future changes in interest rates.

Nelnet Bank has structured these derivatives so that each is economically effective;

however, because these derivatives are hedging intercompany deposits, the derivative instruments are not eligible for hedge accounting in the consolidated financial statements.

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 September 30, 2023.

As of September 30, 2023

The following table summarizes the outstanding non-centrally cleared derivative instruments used by Nelnet Bank as of March 31, 2024 and December 31, 2023, to hedge exposure to variability in cash flows related to variable rate intercompany deposits.

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

2 unchanged sentences

2032 (c) 25,000 4.03

2033 (d) 25,000 3.90

$ 140,000 3.46 %

2 unchanged sentences

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 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.

(d) This $ 25 million notional amount derivative has a forward effective start date in November 2025.

Consolidated Financial Statement Impact Related to Derivatives

Balance Sheets

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 (included in "other assets") or liability (included in "other liabilities") measured at fair value.

The following table summarizes the fair value of the Company's Nelnet Bank derivatives as reflected in the consolidated balance sheets.

Fair value of asset derivatives Fair value of liability derivatives

As of March 31, 2024 As of December 31, 2023 As of March 31, 2024 As of December 31, 2023

Interest rate swaps - Nelnet Bank $ 1,820 452 1,085 1,976

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 September 30, Nine months ended September 30,

2023 2022 2023 2022

Three months ended March 31,

1:3 basis swaps $ 365 859

9 unchanged sentences

Investments and Notes Receivable

Investments and notes receivable consisted of the following:

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

"Restricted investments" and “investments and notes receivable” consisted of the following:

As of March 31, 2024 As of December 31, 2023

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

Investments (at fair value):

Available-for-sale asset-backed securities

Restricted available-for-sale investments (at fair value):

FFELP loan and other debt securities $ 34,958 1,198 ( 80 ) 36,076 16,993 1,069 ( 93 ) 17,969

Non-restricted available-for-sale investments (at fair value):

Non-Nelnet Bank:

FFELP loan (a) $ 295,986 5,930 ( 5,310 ) 296,606 463,861 3,498 ( 11,105 ) 456,254

Private education loan (b) 294,068 — ( 33,960 ) 260,108 335,903 — ( 29,438 ) 306,465

FFELP loan $ 263,335 6,226 ( 3,043 ) 266,518 271,479 4,883 ( 5,393 ) 270,969

Private education loan (a) 269,983 — ( 21,547 ) 248,436 281,791 — ( 28,874 ) 252,917

Other debt securities 20,586 1,803 — 22,389 41,693 2,020 ( 1,275 ) 42,438

Total Non-Nelnet Bank 553,904 8,029 ( 24,590 ) 537,343 594,963 6,903 ( 35,542 ) 566,324

FFELP loan (c) 318,919 3,329 ( 2,393 ) 319,855 349,855 955 ( 8,853 ) 341,957

FFELP loan 300,235 7,171 ( 1,611 ) 305,795 304,555 4,488 ( 2,286 ) 306,757

Private education loan 29,440 88 — 29,528 17,083 20 ( 10 ) 17,093

7 unchanged sentences

Non-Nelnet Bank:

Debt securities (d) 4,700 18,554

FFELP loan asset-backed securities (c) 158,125 —

Other debt securities 241 220

Debt securities 4,700 4,700

FFELP loan asset-backed securities 148,438 149,938

Private education loan asset-backed securities 8,100 8,100

Total Nelnet Bank 156,538 158,038

1 unchanged sentence

Venture capital and funds:

Measurement alternative (e) 193,106 160,052

Measurement alternative 194,574 194,084

Equity method 102,309 91,464

2 unchanged sentences

Investment in ALLO:

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

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

Voting interest/equity method (b) — 10,693

Preferred membership interest and accrued and unpaid preferred return (c) 157,456 155,047

Total investment in ALLO 157,456 165,740

Beneficial interest in loan securitizations (h):

Consumer loans and other 98,701 39,249

Beneficial interest in loan securitizations (d):

Consumer loans 147,076 134,113

Private education loans 66,307 68,372

1 unchanged sentence

Total beneficial interest in loan securitizations 235,824 225,079

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

Solar (e) ( 133,772 ) ( 121,779 )

Notes receivable 53,140 53,747

2 unchanged sentences

Total investments and notes receivable $ 1,921,691 $ 1,870,968

(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.

The securities were reclassified at fair value at the time of the transfer, and such transfer represented a non-cash transaction.

Accumulated other comprehensive income as of March 31, 2023 included pre-tax unrealized losses of $ 3.7 million related to the transfer.

These unrealized losses are being amortized, consistent with the amortization of any discounts on such securities, over the remaining lives of the respective securities as an adjustment of yield.

(d) On March 31, 2023, certain Non-Nelnet Bank debt securities were transferred from held to maturity to available-for-sale.

(e) The Company has an investment in Agile Sports Technologies, Inc.

(doing business as “Hudl”) that is included in “venture capital and funds” in the above table.

On February 6, 2023, the Company acquired additional ownership interests in Hudl for $ 31.5 million.

Such ownership interests were purchased by the Company from certain existing Hudl investors.

The Company accounts for its investment in Hudl using the measurement alternative method, which requires it to adjust its carrying value of the investment for changes resulting from observable market transactions.

The February 6, 2023 transaction was not considered an observable market transaction (not orderly) because it was not subject to customary marketing activities, and the price was privately negotiated between the Company and the selling parties.

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

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 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.

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.

(a) A portion of the private education loan asset-backed securities were subject to a repurchase agreement with a third party, as discussed in note 3 under "Repurchase Agreement." As of March 31, 2024, the par value and fair value of these securities was $ 151.9 million and $ 135.3 million, respectively.

(b) The Company accounts for its voting membership interests in ALLO under the Hypothetical Liquidation at Book Value (HLBV) method of accounting.

The Company recognized losses under the HLBV method of accounting on its ALLO voting membership interests investment of $ 10.7 million and $ 20.2 million during the three months ended March 31, 2024 and 2023, 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 $ 2.2 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.

Absent additional equity contributions, the Company will not recognize additional losses for its voting membership interests in ALLO.

(c) As of March 31, 2024, the outstanding preferred membership interests and accrued and unpaid preferred return of ALLO held by the Company was $ 155.0 million and $ 2.4 million, respectively.

The preferred membership interests of ALLO held by the Company historically earned a preferred annual return of 6.25 % that increased to 10.00 % on April 1, 2024.

The Company recognized income on its ALLO preferred membership interests of $ 2.4 million and $ 2.2 million during the three months ended March 31, 2024 and 2023, respectively.

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

(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.

(d) 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 March 31, 2024, the Company's ownership correlates to approximately $ 965 million, $ 490 million, and $ 335 million of consumer, private education, and federally insured student loans, respectively, included in these securitizations.

(e) As of March 31, 2024, the Company has funded a total of $ 491.8 million in solar investments, which includes $ 208.9 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 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.

As of March 31, 2024, the Company has earned a total of $ 511.6 million of tax credits, which includes $ 248.6 million earned by syndication partners.

The solar investment carrying value on the consolidated balance sheet of $( 133.8 ) million as of March 31, 2024 represents the sum of total tax credits earned on solar projects placed-in-service through March 31, 2024 and the calculated HLBV cumulative net losses being larger than the total investment contributions made by the Company and its syndication partners on such projects.

The solar investment balance as of March 31, 2024, excluding the portion owned by syndication partners and reflected as "noncontrolling interests" on the consolidated balance sheet, was $( 70.1 ) million.

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 $ 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 $ 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

The Company recognized net gains of $ 3.0 million and net losses of $ 1.9 million on its solar investments during the three months ended March 31, 2024 and 2023, respectively.

These amounts, which include net 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 net losses attributed to noncontrolling interest investors was $ 1.2 million and $ 2.7 million for the three months ended March 31, 2024 and 2023, respectively, and is reflected in “net loss attributable to noncontrolling interests” in the consolidated statements of income.

Excluding net losses attributed to noncontrolling interest investors, the Company recognized net gains on its solar investments of $ 4.2 million and $ 0.8 million during the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, the Company is committed to fund an additional $ 146.6 million on solar investments, of which $ 76.2 million is expected to be provided by syndication partners.

The following table presents, by remaining contractual maturity, the amortized cost and fair value of debt securities as of March 31, 2024:

As of March 31, 2024

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

Available-for-sale asset-backed securities

Restricted Investments:

FFELP loan and other debt securities $ — 9,267 4,017 21,674 34,958

Fair value — 9,270 4,037 22,769 36,076

Non-Nelnet Bank:

16 unchanged sentences

FFELP loan asset-backed securities — 3,278 1,407 143,753 148,438

Other debt securities 241 — — — 241

Private education loan asset-backed securities — — — 8,100 8,100

Total Nelnet Bank — 3,278 1,407 151,853 156,538

2 unchanged sentences

Total held-to-maturity investments at fair value $ 4,700 3,351 1,435 155,007 164,493

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.

Beneficial interest in loan securitizations (a):

Amortized cost $ — — — — 235,824

Fair value $ — — — — 260,537

(a) The Company's beneficial interest in loan securitizations are not due at a singe maturity date.

The following table summarizes the unrealized positions for held-to-maturity investments and the beneficial interest in loan securitizations as of March 31, 2024:

Carrying value Gross unrealized gains Gross unrealized losses (a) Fair value

Asset-backed and other securities $ 161,238 3,302 ( 47 ) 164,493

Beneficial interest in loan securitizations 235,824 28,806 ( 4,093 ) 260,537

(a) None of the unrealized losses at March 31, 2024 were due to credit losses.

The following table presents securities classified as available-for-sale that have gross unrealized losses at March 31, 2024 and the fair value of such securities as of March 31, 2024.

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 September 30, 2023

As of March 31, 2024

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

Available-for-sale asset-backed securities Unrealized loss Fair value Unrealized loss Fair value Unrealized loss Fair value

Unrealized loss Fair value Unrealized loss Fair value Unrealized loss Fair value

Available-for-sale asset-backed securities

Restricted Investments:

FFELP loan and other debt securities $ ( 80 ) 8,175 — — ( 80 ) 8,175

Non-Nelnet Bank:

1 unchanged sentence

Private education loan — — ( 21,547 ) 248,436 ( 21,547 ) 248,436

Other debt securities ( 437 ) 21,299 — — ( 437 ) 21,299

Total Non-Nelnet Bank ( 335 ) 16,011 ( 24,255 ) 367,902 ( 24,590 ) 383,913

FFELP loan ( 779 ) 26,112 ( 832 ) 34,654 ( 1,611 ) 60,766

Private education loan — — ( 83 ) 1,526 ( 83 ) 1,526

Other debt securities ( 63 ) 15,088 ( 1,435 ) 14,713 ( 1,498 ) 29,801

2 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 Nine months ended

September 30, September 30,

2023 2022 2023 2022

Three months ended

Gross proceeds from sales $ 153,373 492,173

5 unchanged sentences

Weighted average remaining useful life as of

September 30, 2023 (months)

September 30, 2023 December 31, 2022

March 31, 2024 (months)

March 31, 2024 December 31, 2023

Amortizable intangible assets, net:

2 unchanged sentences

Trade names (net of accumulated amortization of $ 148 and $ 8,268 , respectively)

21 3,733 8,293

Computer software (net of accumulated amortization of $ 659 and $ 574 , respectively)

37 1,061 1,146

Other (net of accumulated amortization of $ 986 and $ 490 , respectively)

45 1,454 1,950

Total amortizable intangible assets, net 100 $ 42,670 44,819

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 recorded amortization expense on its intangible assets of $ 2.1 million and $ 2.7 million for the three months ended March 31, 2024 and 2023, respectively.

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

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

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

As of March 31, 2024, the Company estimates it will record amortization expense as follows:

2024 (April 1 - December 31) $ 6,342

2029 and thereafter 13,149

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.

The following table presents the carrying amount of goodwill as of March 31, 2024 and December 31, 2023 by reportable operating segment:

Nelnet Financial Services

Loan Servicing and Systems Education Technology Services and Payments Asset

Generation and

Management Nelnet Bank NFS Other Operating Segments Corporate and Other Activities Total

Total goodwill $ 23,639 92,507 41,883 — — — 158,029

Bank Deposits

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.

Union Bank, a related party, is the program manager for the College Savings plans and trustee for the STFIT Trust.

CDs are accounts that have a stipulated maturity and interest rate.

For savings accounts, the depositor may be required to give written notice of any intended withdrawal no less than seven days before the withdrawal is made.

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

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.

All intercompany deposits held at Nelnet Bank are eliminated for consolidated financial reporting purposes.

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Retail and other savings $ 575,732 517,960

Brokered CDs, net of brokered deposit fees 204,174 203,522

Commercial 2,057 —

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

Retail and other CDs (commercial and institutional) 19,320 20,060

Commercial 2,835 2,057

Total interest-bearing deposits $ 802,061 743,599

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

As of March 31, 2024 and December 31, 2023, Nelnet Bank had intercompany deposits from Nelnet, Inc.

and its subsidiaries totaling $ 158.6 million and $ 104.0 million, respectively, including a $ 40.0 million pledged deposit from Nelnet, Inc.

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

All intercompany deposits held at Nelnet Bank are eliminated for consolidated financial reporting purposes.

The following table presents certificates of deposit remaining maturities as of March 31, 2024:

One year or less $ —

After one year to two years 63,026

After two years to three years 159,320

1 unchanged sentence

After four years to five years 800

After five years —

Total $ 223,494

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 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.

Retail and other deposits include savings deposits from Educational 529 College Savings, Short Term Federal Investment Trusts, and Health Savings plan deposits.

These deposits are large interest-bearing omnibus accounts structured to allow FDIC insurance to flow through to underlying individual depositors.

There were no deposits exceeding the FDIC insurance limits as of March 31, 2024, with the exception of $ 45.0 million, which includes the commercial deposit, the pledged deposit from Nelnet, Inc., and an earmarked deposit required for intercompany transactions.

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 September 30,

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

Net income attributable to Nelnet, Inc.

$ 44,367 965 45,332 102,763 2,035 104,798

Weighted-average common shares outstanding - basic and diluted 36,699,510 798,563 37,498,073 36,654,781 725,712 37,380,493

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

Nine months ended September 30,

Three months ended March 31,

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 September 30, 2023

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 $ 1,098 8,934 248,878 15,171 16,253 ( 5,783 ) 284,551

Interest expense — — 197,393 9,456 6,093 ( 5,783 ) 207,159

Net interest income 1,098 8,934 51,485 5,715 10,160 — 77,392

Less provision for loan losses — — 8,732 1,927 — — 10,659

Net interest income after provision for loan losses 1,098 8,934 42,753 3,788 10,160 — 66,733

Other income (expense):

Loan servicing and systems revenue 127,892 — — — — — 127,892

Intersegment revenue 6,944 77 — — — ( 7,021 ) —

Education technology, services, and payment processing revenue — 113,796 — — — — 113,796

Solar construction revenue — — — — 6,301 — 6,301

Other, net 687 — 2,776 565 ( 4,238 ) — ( 211 )

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

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

Derivative settlements, net — — 621 196 — — 817

Derivative market value adjustments, net — — 1,192 1,948 — — 3,140

Total other income (expense), net 135,227 113,873 9,951 2,709 ( 2,615 ) ( 7,021 ) 252,123

Cost of services:

Cost to provide education technology, services, and payment processing services — 43,694 — — — — 43,694

Cost to provide solar construction services — — — — 7,783 — 7,783

Total cost of services — 43,694 — — 7,783 — 51,477

Operating expenses:

Salaries and benefits 73,310 39,776 1,242 2,520 25,019 ( 663 ) 141,204

Depreciation and amortization 5,023 3,030 — 259 13,522 — 21,835

Other expenses 15,629 8,309 2,952 1,290 23,192 — 51,370

Intersegment expenses, net 17,894 5,875 7,948 129 ( 25,488 ) ( 6,358 ) —

Total operating expenses 111,856 56,990 12,142 4,198 36,245 ( 7,021 ) 214,409

Income (loss) before income taxes 24,469 22,123 40,562 2,299 ( 36,483 ) — 52,970

Income tax (expense) benefit ( 5,872 ) ( 5,307 ) ( 9,735 ) ( 552 ) 10,732 — ( 10,734 )

Net income (loss) 18,597 16,816 30,827 1,747 ( 25,751 ) — 42,236

Net (income) loss attributable to noncontrolling interests — ( 6 ) — — 3,102 — 3,096

Net income (loss) attributable to Nelnet, Inc.

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

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

Generation and

Management Nelnet Bank Corporate and Other Activities Eliminations Total

Total interest income $ 831 3,707 182,932 7,551 10,860 ( 2,748 ) 203,133

Interest expense — — 120,009 3,298 6,067 ( 2,748 ) 126,625

Net interest income 831 3,707 62,923 4,253 4,793 — 76,508

Less provision for loan losses — — 9,215 450 — — 9,665

Net interest income after provision for loan losses 831 3,707 53,708 3,803 4,793 — 66,843

Other income (expense):

Loan servicing and systems revenue 134,197 — — — — — 134,197

Intersegment revenue 8,281 8 — — — ( 8,289 ) —

Education technology, services, and payment processing revenue — 106,894 — — — — 106,894

Solar construction revenue — — — — 9,358 — 9,358

Other, net 596 — 4,627 566 ( 3,564 ) — 2,225

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

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

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

Derivative market value adjustments, net — — 52,991 — — — 52,991

Total other income (expense), net 143,074 106,902 70,516 566 5,915 ( 8,289 ) 318,684

Cost of services:

Cost to provide education technology, services, and payment processing services — 42,676 — — — — 42,676

Cost to provide solar construction services — — — — 5,968 — 5,968

Total cost of services — 42,676 — — 5,968 — 48,644

Operating expenses:

Salaries and benefits 82,067 34,950 653 1,814 27,713 — 147,198

Depreciation and amortization 5,784 2,532 — 4 10,452 — 18,772

Other expenses 16,654 7,034 3,349 1,427 15,395 — 43,858

Intersegment expenses, net 17,486 4,762 8,350 69 ( 22,378 ) ( 8,289 ) —

Total operating expenses 121,991 49,278 12,352 3,314 31,182 ( 8,289 ) 209,828

Income (loss) before income taxes 21,914 18,655 111,872 1,055 ( 26,442 ) — 127,055

Income tax (expense) benefit ( 5,259 ) ( 4,475 ) ( 26,849 ) ( 246 ) 10,244 — ( 26,586 )

Net income (loss) 16,655 14,180 85,023 809 ( 16,198 ) — 100,469

Net (income) loss attributable to noncontrolling interests — ( 61 ) — — 4,390 — 4,329

Net income (loss) attributable to Nelnet, Inc.

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

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

Three months ended March 31, 2024

Nelnet Financial Services

Loan Servicing and Systems Education Technology Services and Payments Asset

Generation and

Management Nelnet Bank Corporate and Other Activities Eliminations Total

Management Nelnet Bank NFS Other Operating Segments Corporate and Other Activities Eliminations Total

Total interest income $ 1,894 7,866 231,463 17,064 15,616 3,815 ( 8,915 ) 268,802

6 unchanged sentences

Intersegment revenue 6,886 49 — — — — ( 6,935 ) —

Education technology, services, and payment processing revenue — 357,258 — — — — 357,258

Education technology services and payments revenue — 143,539 — — — — — 143,539

Solar construction revenue — — — — — 13,726 — 13,726

Other, net 710 — 4,983 375 12,941 ( 1,994 ) — 17,015

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

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

(Loss) gain on sale of loans, net — — ( 41 ) — — — — ( 41 )

Derivative settlements, net — — 1,555 202 — — — 1,757

2 unchanged sentences

Cost of services:

Cost to provide education technology, services, and payment processing services — 131,804 — — — — 131,804

Cost to provide education technology services and payments — 48,610 — — — — — 48,610

Cost to provide solar construction services — — — — — 14,229 — 14,229

9 unchanged sentences

Net income (loss) 12,152 36,200 25,644 888 10,488 ( 14,367 ) — 71,008

Net (income) loss attributable to noncontrolling interests — 113 — — 15,625 — 15,738

Net loss (income) attributable to noncontrolling interests — 17 — — ( 120 ) 2,305 — 2,202

Net income (loss) attributable to Nelnet, Inc.

$ 12,152 36,217 25,644 888 10,368 ( 12,062 ) — 73,210

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

Total assets as of March 31, 2024 $ 212,381 389,990 12,315,238 1,125,122 1,111,587 880,107 ( 635,763 ) 15,398,662

Three months ended March 31, 2023

Nelnet Financial Services

Loan Servicing and Systems Education Technology Services and Payments Asset

Generation and

Management Nelnet Bank Corporate and Other Activities Eliminations Total

Management Nelnet Bank NFS Other Operating Segments Corporate and Other Activities Eliminations Total

Total interest income $ 1,037 6,036 234,719 12,259 18,660 2,539 ( 9,282 ) 265,968

6 unchanged sentences

Intersegment revenue 7,790 56 — — — — ( 7,846 ) —

Education technology, services, and payment processing revenue — 310,211 — — — — 310,211

Education technology services and payments revenue — 133,603 — — — — — 133,603

Solar construction revenue — — — — — 8,651 — 8,651

Other, net 608 — 2,845 210 ( 741 ) ( 16,993 ) — ( 14,071 )

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

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

(Loss) gain on sale of loans, net — — 11,812 — — — — 11,812

Derivative settlements, net — — 23,337 — — — — 23,337

2 unchanged sentences

Cost of services:

Cost to provide education technology, services, and payment processing services — 109,073 — — — — 109,073

Cost to provide education technology services and payments — 47,704 — — — — — 47,704

Cost to provide solar construction services — — — — — 8,299 — 8,299

9 unchanged sentences

Net income (loss) 19,166 28,571 ( 168 ) ( 58 ) 3,968 ( 28,462 ) — 23,017

Net (income) loss attributable to noncontrolling interests — ( 8 ) — — 8,323 — 8,315

Net loss (income) attributable to noncontrolling interests — 138 — — ( 140 ) 3,472 — 3,470

Net income (loss) attributable to Nelnet, Inc.

$ 19,166 28,709 ( 168 ) ( 58 ) 3,828 ( 24,990 ) — 26,487

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

Total assets as of March 31, 2023 $ 232,667 424,742 14,939,324 1,000,659 1,206,023 1,002,249 ( 723,055 ) 18,082,609

Disaggregated Revenue

1 unchanged sentence

Loan Servicing and Systems

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

2023 2022 2023 2022

Three months ended March 31,

Government loan servicing $ 105,474 108,880

4 unchanged sentences

Loan servicing and systems revenue $ 127,201 139,227

Education Technology, Services, and Payment Processing

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

2023 2022 2023 2022

Education Technology Services and Payments

Three months ended March 31,

Tuition payment plan services $ 38,880 34,187

Payment processing 47,786 44,041

Education technology and services 31,793 32,548 132,796 110,755

Education technology services 56,021 54,787

Other 852 588

Education technology, services, and payment processing revenue $ 113,796 106,894 357,258 310,211

Education technology services and payments revenue $ 143,539 133,603

Solar Construction

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

2023 2022 2023 2022 (a)

Three months ended March 31,

Commercial revenue $ 11,578 5,876

Residential revenue 2,085 1,398 7,266 1,398

Other 115 104 82 104

Residential revenue (a) 2,148 2,775

Solar construction revenue $ 13,726 8,651

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

(a) On April 12, 2024, the Company announced a change in its solar engineering, procurement, and construction operations to focus exclusively on the commercial solar market and will discontinue its residential solar operations.

As a result, residential revenue will decline in future periods as existing customer contracts are completed.

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 September 30, Nine months ended September 30,

2023 2022 2023 2022

ALLO preferred return $ 2,299 2,164 6,822 6,420

Three months ended March 31,

Reinsurance premiums $ 12,780 535

Borrower late fee income 3,133 2,247

Gain (loss) from solar investments, net 2,971 ( 1,947 )

ALLO preferred return 2,409 2,249

Administration/sponsor fee income 1,546 1,772

Investment advisory services 1,633 1,612 4,884 4,375

Investment advisory services (WRCM) 1,508 1,612

Loss from ALLO voting membership interest investment ( 10,693 ) ( 20,213 )

Loss from solar investments ( 3,605 ) ( 4,216 ) ( 13,481 ) ( 7,100 )

Investment activity, net ( 1,298 ) ( 3,577 )

3 unchanged sentences

Government Loan Servicing

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

(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

Effective April 1, 2023, the Department modified the student loan servicing contracts between the Department and each of Nelnet Servicing and Great Lakes (the “servicing contracts”) to reduce the monthly fee under the servicing contracts by $ 0.19 per borrower on certain borrower statuses.

The Company's current student loan servicing contracts with the Department were scheduled to expire on December 14, 2023.

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 Nelnet Servicing and four other third-party servicers that were awarded a USDS contract based on service and performance levels.

Nelnet Servicing, a subsidiary of the Company, earns loan servicing revenue from a servicing contract with the Department of Education (the "Department").

Revenue earned by the Company related to this contract was $ 105.5 million and $ 108.9 million for the three months ended March 31, 2024 and 2023, respectively.

The Company's legacy student loan servicing contract with the Department was scheduled to expire on December 14, 2023.

In April 2023, Nelnet Servicing received a contract award from the Department, pursuant to which it 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 replaced the legacy Department student loan servicing contract.

The New Government Servicing Contract became 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 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, 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.

Assuming borrower volume remains consistent under the USDS servicing contract, the Company expects revenue earned on a per borrower blended basis will decrease under the USDS contract versus the current legacy contracts.

However, consistent with the current legacy contracts, the Company expects to earn additional revenue from the Department under the USDS servicing contract for change requests, consolidations, and other support services.

As discussed below, during the second quarter of 2023, the Company completed the transfer of Great Lakes direct loan servicing volume to the Nelnet servicing platform.

The associated cost savings with moving government borrowers to one servicing platform will be partially offset under the USDS contract as the Company will incur additional costs for cybersecurity and other system specifications as required under the new contract.

Loan Volume Transfers - Full Service Borrowers

In February 2023, the Department notified the Company of its intention to transfer up to one million of the Company’s existing Department servicing borrowers to another third-party servicer.

This transfer decision was not based on the Company's performance.

These transfers began in the second quarter of 2023 and were completed in July 2023.

In addition, the Company completed the transfer of active borrowers of Great Lakes direct loan servicing volume to the Nelnet servicing platform (the GreatNet Federal servicing platform) during the second quarter of 2023.

The Company anticipates the decommissioning of the Great Lakes' platform to be completed by the end of 2023.

Therefore, potential associated cost savings as a result of transferring direct loan servicing volume to one platform will not be recognized in operating results until 2024.

Loan Volume Transfers - Remote Hosted Servicing Borrowers

Edfinancial Services, LLC ("Edfinancial"), a current servicer for the Department, utilized Nelnet Servicing's platform to service their loans for the Department (remote hosted servicing customer).

In the fourth quarter of 2022, Nelnet Servicing and Edfinancial reached an agreement on a decommission schedule transferring Edfinancial’s direct loan servicing volume to another third-party servicing platform.

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.

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

In February 2023, the Company’s other remote hosted servicing customer notified the Company the Department intended to move that customer’s servicing borrowers to a different third-party servicing platform.

This transfer decision was the result of this customer not being one of the servicers awarded a USDS contract.

As of March 31, 2023, this remote hosted servicing customer was servicing 1.4 million borrowers for the Department on the Company's platform.

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 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

In August 2022, the Department announced a broad based student debt relief plan that would provide targeted student debt cancellation to borrowers with loans held by the Department with unconditional loan cancellation in amounts of up to $20,000 for eligible borrowers who received a Pell Grant, or of up to $10,000 for eligible borrowers who did not receive a Pell Grant.

Federal courts blocked implementation of the Department's broad based student debt relief plan and on June 30, 2023, the Supreme Court struck down the Department's plan.

While the current version of the Department's forgiveness plan has been invalidated, the Department recently announced that it has begun a new rulemaking process to consider other ways to provide debt relief to borrowers.

The Company cannot predict the timing, nature, or ultimate outcome of any future potential student loan forgiveness programs as a result of the rulemaking process.

Revenue earned under the current Department servicing contracts will decrease in future periods if the Department successfully implements broad based loan forgiveness.

Servicing under the New Government Servicing Contract went live on April 1, 2024 and the Company will recognize revenue in accordance with this new contract beginning in the second quarter of 2024.

The Company earned revenue for servicing borrowers under the legacy servicing contract with the Department through March 31, 2024.

The New Government Servicing Contract has multiple revenue components with tiered pricing based on borrower volume, while revenue earned under the legacy servicing contract was primarily based on borrower status.

Assuming borrower volume remains consistent under the New Government Servicing Contract, the Company expects revenue earned on a per borrower blended basis will decrease under the New Government Servicing Contract versus the legacy contract.

However, consistent with the legacy contract, the Company expects to earn additional revenue from the Department under the New Government Servicing Contact for change requests and other support services.

The following tables present the Company’s financial assets and liabilities that are measured at fair value on a recurring basis.

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

As of March 31, 2024 As of December 31, 2023

Level 1 Level 2 Total Level 1 Level 2 Total

3 unchanged sentences

Total investments 155 1,018,588 1,073,713 172 955,804 1,006,810

Derivative instruments (b) — 3,056 3,056 — — —

Derivative instruments — 1,820 1,820 — 452 452

Total assets $ 155 1,020,408 1,075,533 172 956,256 1,007,262

Derivative instruments $ — 1,085 1,085 — 1,976 1,976

Total liabilities $ — 1,085 1,085 — 1,976 1,976

(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.

(b) Nelnet Bank derivatives are accounted for at fair value on a recurring basis.

The fair value of derivative financial instruments is determined using a market approach in which derivative pricing models use the stated terms of the contracts and observable yield curves and volatilities from active markets.

When determining the fair value of derivatives, Nelnet Bank takes into account counterparty credit risk for positions where it is exposed to the counterparty on a net basis by assessing exposure net of collateral held.

The net exposures for each counterparty are adjusted based on market information available for the specific counterparty.

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

As of September 30, 2023

As of March 31, 2024

Fair value Carrying value Level 1 Level 2 Level 3

15 unchanged sentences

Due to customers 274,757 274,757 274,757 — —

Derivative instruments 1,085 1,085 — 1,085 —

As of December 31, 2023

10 unchanged sentences

Restricted cash – due to customers 368,656 368,656 368,656 — —

Derivative instruments 452 452 — 452 —

Financial liabilities:

3 unchanged sentences

Due to customers 425,507 425,507 425,507 — —

Derivative instruments 1,976 1,976 — 1,976 —

The methodologies for estimating the fair value of financial assets and liabilities are described in note 23 of the notes to consolidated financial statements included in the 2023 Annual Report.

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