NELNET INC 10-Q

ITEM 1. FINANCIAL STATEMENTS NELNET, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share data) (unaudited) As of As of March 31, 2025 December 31, 2024 Assets: Loans and accrued interest receivable (net of allowance for loan losses of $ 120,076 and $ 114,890 , respectively) $ 10,422,704 9,992,744 Cash and cash equivalents: Cash and cash equivalents - not held at a related party 67,107 48,838 Cash and cash equivalents - held at a related party 153,410 145,680 Total cash and cash equivalents 220,517 194,518 Investments and notes receivable: Investments at fair value 1,238,903 1,160,320 Other investments and notes receivable, net 1,063,647 1,040,376 Total investments and notes receivable 2,302,550 2,200,696 Restricted cash 317,139 332,100 Restricted cash - due to customers 294,471 404,402 Accounts receivable (net of allowance for doubtful accounts of $ 2,617 and $ 2,877 , respectively) 129,864 159,934 Goodwill 158,029 158,029 Intangible assets, net 34,803 36,328 Property and equipment, net 89,584 95,185 Other assets 222,297 203,817 Total assets $ 14,191,958 13,777,753 Liabilities: Bonds and notes payable $ 8,656,157 8,309,797 Accrued interest payable 22,394 21,046 Bank deposits 1,313,407 1,186,131 Other liabilities 457,714 483,193 Due to customers 379,277 478,469 Total liabilities 10,828,949 10,478,636 Commitments and contingencies Equity: Nelnet, Inc. shareholders' equity: Preferred stock, $ 0.01 par value. Authorized 50,000,000 shares; no shares issued or outstanding — — Common stock: Class A, $ 0.01 par value. Authorized 600,000,000 shares; issued and outstanding 25,697,581 shares and 25,634,748 shares, respectively 257 256 Class B, convertible, $ 0.01 par value. Authorized 60,000,000 shares; issued and outstanding 10,658,604 shares 107 107 Additional paid-in capital 6,649 7,389 Retained earnings 3,412,939 3,340,540 Accumulated other comprehensive (loss) earnings, net ( 429 ) 1,470 Total Nelnet, Inc. shareholders' equity 3,419,523 3,349,762 Noncontrolling interests ( 56,514 ) ( 50,645 ) Total equity 3,363,009 3,299,117 Total liabilities and equity $ 14,191,958 13,777,753 Supplemental information - assets and liabilities of consolidated education and other lending variable interest entities: Loans and accrued interest receivable $ 9,369,071 9,122,609 Restricted cash 290,100 287,389 Bonds and notes payable ( 8,741,203 ) ( 8,452,614 ) Accrued interest payable and other liabilities ( 89,043 ) ( 88,200 ) Net assets of consolidated education and other lending variable interest entities $ 828,925 869,184 See accompanying notes to consolidated financial statements. 2 NELNET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except share data) (unaudited) Three months ended March 31, 2025 2024 Interest income: Loan interest $ 166,439 216,724 Investment interest 41,389 52,078 Total interest income 207,828 268,802 Interest expense on bonds and notes payable and bank deposits 125,114 194,580 Net interest income 82,714 74,222 Less provision for loan losses 15,337 10,828 Net interest income after provision for loan losses 67,377 63,394 Other income (expense): Loan servicing and systems revenue 120,741 127,201 Education technology services and payments revenue 147,330 143,539 Reinsurance premiums earned 24,687 12,780 Solar construction revenue 3,995 13,726 Other, net 23,694 4,082 Gain (loss) on sale of loans, net 909 ( 141 ) Derivative market value adjustments and derivative settlements, net ( 5,578 ) 9,721 Total other income (expense), net 315,778 310,908 Cost of services and expenses: Loan servicing contract fulfillment and acquisition costs 1,633 — Cost to provide education technology services and payments 48,047 48,610 Cost to provide solar construction services 7,828 14,229 Total cost of services 57,508 62,839 Salaries and benefits 138,223 143,875 Depreciation and amortization 9,255 16,769 Reinsurance losses and underwriting expenses 22,212 11,317 Other expenses 48,226 45,528 Total operating expenses 217,916 217,489 Impairment expense and provision for beneficial interests 1,591 37 Total expenses 277,015 280,365 Income before income taxes 106,140 93,937 Income tax expense 25,010 23,181 Net income 81,130 70,756 Net loss attributable to noncontrolling interests 1,430 2,652 Net income attributable to Nelnet, Inc. $ 82,560 73,408 Earnings per common share: Net income attributable to Nelnet, Inc. shareholders - basic and diluted $ 2.26 1.98 Weighted average common shares outstanding - basic and diluted 36,478,426 37,156,971 See accompanying notes to consolidated financial statements. 3 NELNET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Dollars in thousands) (unaudited) Three months ended March 31, 2025 2024 Net income $ 81,130 70,756 Other comprehensive (loss) income: Net changes related to foreign currency translation adjustments $ ( 16 ) 5 Net changes related to available-for-sale debt securities: Unrealized holding (losses) gains arising during period, net ( 2,767 ) 16,761 Reclassification of gains recognized in net income, net ( 483 ) ( 552 ) Amortization of net unrealized loss on securities transferred from available-for-sale to held-to-maturity 47 71 Income tax effect 769 ( 2,434 ) ( 3,907 ) 12,373 Net changes related to equity method investee's other comprehensive income: Gain (loss) on cash flow hedge 725 ( 967 ) Income tax effect ( 174 ) 551 232 ( 735 ) Other comprehensive (loss) income ( 1,899 ) 11,643 Comprehensive income 79,231 82,399 Comprehensive loss attributable to noncontrolling interests 1,430 2,652 Comprehensive income attributable to Nelnet, Inc. $ 80,661 85,051 See accompanying notes to consolidated financial statements. 4 NELNET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Dollars in thousands, except share data) (unaudited) Nelnet, Inc. Shareholders Preferred stock shares Common stock shares Preferred stock Class A common stock Class B common stock Additional paid-in capital Retained earnings Accumulated other comprehensive (loss) earnings Noncontrolling interests Total equity Class A Class B Balance as of December 31, 2023 — 26,400,630 10,663,088 $ — 264 107 3,096 3,270,403 ( 20,119 ) ( 53,644 ) 3,200,107 Net income (loss) — — — — — — — 73,408 — ( 2,652 ) 70,756 Other comprehensive income — — — — — — — — 11,643 — 11,643 Issuance of noncontrolling interests — — — — — — — — — 1,532 1,532 Distribution to noncontrolling interests — — — — — — — — — ( 6,706 ) ( 6,706 ) Cash dividends on Class A and Class B common stock - $ 0.28 per share — — — — — — — ( 10,370 ) — — ( 10,370 ) Issuance of common stock, net of forfeitures — 51,408 — — 1 — 1,126 — — — 1,127 Compensation expense for stock based awards — — — — — — 3,100 — — — 3,100 Repurchase of common stock — ( 396,724 ) — — ( 4 ) — ( 6,221 ) ( 29,244 ) — — ( 35,469 ) Balance as of March 31, 2024 — 26,055,314 10,663,088 $ — 261 107 1,101 3,304,197 ( 8,476 ) ( 61,470 ) 3,235,720 Balance as of December 31, 2024 — 25,634,748 10,658,604 $ — 256 107 7,389 3,340,540 1,470 ( 50,645 ) 3,299,117 Net income (loss) — — — — — — — 82,560 — ( 1,430 ) 81,130 Other comprehensive loss — — — — — — — — ( 1,899 ) — ( 1,899 ) Issuance of noncontrolling interests — — — — — — — — — 2,297 2,297 Distribution to noncontrolling interests — — — — — — — — — ( 6,736 ) ( 6,736 ) Cash dividends on Class A and Class B common stock - $ 0.28 per share — — — — — — — ( 10,161 ) — — ( 10,161 ) Issuance of common stock, net of forfeitures — 101,324 — — 1 — 663 — — — 664 Compensation expense for stock based awards — — — — — — 3,055 — — — 3,055 Repurchase of common stock — ( 38,491 ) — — — — ( 4,458 ) — — — ( 4,458 ) Balance as of March 31, 2025 — 25,697,581 10,658,604 $ — 257 107 6,649 3,412,939 ( 429 ) ( 56,514 ) 3,363,009 See accompanying notes to consolidated financial statements. 5 NELNET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited) Three months ended March 31, 2025 2024 Net income attributable to Nelnet, Inc. $ 82,560 73,408 Net loss attributable to noncontrolling interests ( 1,430 ) ( 2,652 ) Net income 81,130 70,756 Adjustments to reconcile net income to net cash provided by operating activities, net of acquisitions: Depreciation and amortization, including debt discounts and loan premiums and deferred origination costs 23,123 33,957 Loan discount and deferred lender fees accretion ( 19,407 ) ( 7,433 ) Provision for loan losses 15,337 10,828 Derivative market value adjustments 6,324 ( 7,964 ) (Payments to) proceeds from clearinghouse - initial and variation margin, net ( 810 ) 4,054 (Gain) loss on sale of loans, net ( 909 ) 141 (Gain) loss on investments, net ( 8,307 ) 8,183 Deferred income tax expense (benefit) 4,316 ( 2,173 ) Non-cash compensation expense 3,115 3,166 Impairment expense and provision for beneficial interests 1,591 37 Changes in operating assets and liabilities: Decrease in loan and investment accrued interest receivable 13,488 79,841 Decrease in accounts receivable 30,087 61,494 (Increase) decrease in other assets, net ( 18,886 ) 10,443 Decrease in the carrying amount of ROU asset, net 954 953 Decrease in accrued interest payable ( 2,974 ) ( 3,408 ) Decrease in other liabilities ( 37,102 ) ( 50,218 ) Decrease in the carrying amount of lease liability ( 897 ) ( 1,025 ) Other 996 ( 73 ) Total adjustments 10,039 140,803 Net cash provided by operating activities 91,169 211,559 Cash flows from investing activities, net of acquisitions: Purchases and originations of loans, including cash paid for student loan trusts, net of cash and restricted cash acquired ( 173,931 ) ( 157,047 ) Purchases of loans from a related party ( 136,667 ) — Net proceeds from loan repayments, claims, and capitalized interest 423,817 1,147,413 Proceeds from sale of loans 72,502 269 Proceeds from sale of loans to a related party 59,939 199,694 Purchases of available-for-sale securities ( 139,007 ) ( 181,897 ) Proceeds from sales of available-for-sale securities 74,781 153,373 Proceeds from beneficial interest in loan securitizations 18,948 5,875 Purchases of other investments and issuance of notes receivable ( 80,091 ) ( 70,975 ) Proceeds from other investments and repayments of notes receivable 15,668 11,176 Redemption of held-to-maturity debt securities 3,776 1,779 Purchases of property and equipment ( 3,378 ) ( 23,225 ) Net cash provided by investing activities $ 136,357 1,086,435 6 NELNET, INC. AND SUBSIDIARIES (Continued) CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited) Three months ended March 31, 2025 2024 Cash flows from financing activities, net of acquisitions: Payments on bonds and notes payable $ ( 347,217 ) ( 1,276,160 ) Proceeds from issuance of bonds and notes payable — 18,108 Payments of debt issuance costs ( 69 ) ( 31 ) Increase in bank deposits, net 127,276 58,462 Decrease in due to customers ( 99,176 ) ( 150,712 ) Dividends paid ( 10,161 ) ( 10,370 ) Repurchases of common stock ( 4,458 ) ( 35,469 ) Proceeds from issuance of common stock 341 374 Issuance of noncontrolling interests 8,869 14,098 Distribution to noncontrolling interests ( 1,850 ) ( 799 ) Net cash used in financing activities ( 326,445 ) ( 1,382,499 ) Effect of exchange rate changes on cash and restricted cash 26 ( 163 ) Net decrease in cash, cash equivalents, and restricted cash ( 98,893 ) ( 84,668 ) Cash, cash equivalents, and restricted cash, beginning of period 931,020 1,025,491 Cash, cash equivalents, and restricted cash, end of period $ 832,127 940,823 Supplemental disclosures of cash flow information: Cash disbursements made for interest $ 119,241 185,784 Cash disbursements made for income taxes, net of refunds and credits received (a) $ 1,311 791 Cash disbursements made for operating leases $ 1,179 1,258 Non-cash operating, investing, and financing activity: ROU assets obtained in exchange for lease obligations $ 84 48 Distribution to noncontrolling interests $ 4,886 5,907 Issuance of noncontrolling interests $ 6,572 12,566 (a) The Company utilized $ 14.1 million and $ 8.6 million of federal and state tax credits related primarily to renewable energy during the three months ended March 31, 2025 and 2024, respectively. Supplemental disclosures of non-cash activities regarding the Company's acquisition of certain student loan trusts are contained in note 3. 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 March 31, 2025 December 31, 2024 March 31, 2024 December 31, 2023 Total cash and cash equivalents $ 220,517 194,518 179,682 168,112 Restricted cash 317,139 332,100 618,363 488,723 Restricted cash - due to customers 294,471 404,402 142,778 368,656 Cash, cash equivalents, and restricted cash $ 832,127 931,020 940,823 1,025,491 See accompanying notes to consolidated financial statements. 7 NELNET, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts, unless otherwise noted) (unaudited) 1. Basis of Financial Reporting The accompanying unaudited consolidated financial statements of Nelnet, Inc. and subsidiaries (the “Company” or "Nelnet") as of March 31, 2025 and for the three months ended March 31, 2025 and 2024 have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 2024 and, in the opinion of the Company’s management, the unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results of operations for the interim periods presented. The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results for the year ending December 31, 2025. 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, 2024 (the "2024 Annual Report"). 2. Reclassification and Immaterial Error Corrections During the second quarter of 2024, the Company identified certain immaterial errors in the previously issued consolidated financial statements that have been corrected to conform to the March 31, 2025 presentation. Loan Sales The Company determined the reversal of provision for loan losses resulting from the sale of loans should be presented as a reduction to the provision for loan losses rather than the historical presentation as a gain/(loss) on sale of loans included in "other income (expense)" on the consolidated statements of income. Prior period amounts have been corrected to conform to the current period presentation resulting in a reclassification of $ 0.1 million for the three months ended March 31, 2024. This correction had no impact on previously reported consolidated assets, liabilities, equity, net income, and cash flows from operating activities. Solar Tax Equity Investments The Company relies on audited financial statements provided by third parties to record its share of earnings or losses on its solar tax equity investments. The Company determined that the Hypothetical Liquidation at Book Value (HLBV) method of accounting was not consistently adopted by all third parties in such audited financial statements for those solar tax equity investments made under a lease pass-through structure. The adoption of the HLBV method of accounting accelerates accounting losses in the initial years of the investment but has no impact on the overall economics of the transaction. During the second quarter of 2024, the Company fully adopted HLBV accounting for these investments and prior period amounts have been corrected, resulting in an increase in solar investment losses included in "other, net" in "other income (expense)" on the consolidated statements of income of $ 0.2 million for the three months ended March 31, 2024, offset by an increase in "net loss attributable to noncontrolling interests" of $ 0.4 million. The after-tax net income impact to Nelnet, Inc. was an increase of $ 0.2 million for the three months ended March 31, 2024. Consolidated "total equity" on the consolidated balance sheet was reduced $ 21.8 million as of December 31, 2023, which reflects the cumulative impact of this correction through such date. 8 3. Loans and Accrued Interest Receivable and Allowance for Loan Losses Loans and accrued interest receivable consisted of the following: As of As of March 31, 2025 December 31, 2024 Non-Nelnet Bank: Federally insured loans: Stafford and other $ 2,102,961 2,108,960 Consolidation 6,567,323 6,279,604 Total 8,670,284 8,388,564 Private education loans 208,507 221,744 Consumer and other loans 381,215 345,560 Non-Nelnet Bank loans 9,260,006 8,955,868 Nelnet Bank: Federally insured loans: Stafford and other 10,336 — Consolidation 99,851 — Total 110,187 — Private education loans 489,451 482,445 Consumer and other loans 161,995 162,152 Nelnet Bank loans 761,633 644,597 Accrued interest receivable 566,275 549,283 Loan discount and deferred lender fees, net of unamortized loan premiums and deferred origination costs ( 45,134 ) ( 42,114 ) Allowance for loan losses: Non-Nelnet Bank: Federally insured loans ( 48,906 ) ( 49,091 ) Private education loans ( 10,394 ) ( 11,130 ) Consumer and other loans ( 43,904 ) ( 38,468 ) Non-Nelnet Bank allowance for loan losses ( 103,204 ) ( 98,689 ) Nelnet Bank: Federally insured loans ( 362 ) — Private education loans ( 9,893 ) ( 10,086 ) Consumer and other loans ( 6,617 ) ( 6,115 ) Nelnet Bank allowance for loan losses ( 16,872 ) ( 16,201 ) $ 10,422,704 9,992,744 The following table summarizes the allowance for loan losses as a percentage of the ending loan balance for each of the Company's loan portfolios. As of As of March 31, 2025 December 31, 2024 Non-Nelnet Bank: Federally insured loans (a) 0.56 % 0.59 % Private education loans 4.98 % 5.02 % Consumer and other loans 11.52 % 11.13 % Nelnet Bank: Federally insured loans (a) 0.33 % — Private education loans 2.02 % 2.09 % Consumer and other loans 4.08 % 3.77 % (a) 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 20.2 % and 20.6 % as of March 31, 2025 and December 31, 2024, respectively, and for Nelnet Bank was 16.3 % as of March 31, 2025. 9 Student Loan Trust Acquisitions In March 2025, the Company acquired the ownership interests in certain trusts giving the Company rights to the residual interest. The trusts included $ 646.9 million (par value) of federally insured Stafford and consolidation loans funded to term with $ 721.3 million (par value) of bonds and notes payable, $ 32.2 million of cash and restricted cash, and $ 27.4 million of other net assets. The Company has consolidated these trusts on its consolidated balance sheet as the Company is the primary beneficiary of the trusts. Upon acquisition, the Company recorded the student loans and bonds and notes payable at fair value, resulting in the recognition of a student loan net discount of $ 6.6 million and a bonds and notes payable discount of $ 31.1 million. These net discounts will be accreted using the effective interest method over the lives of the underlying assets and liabilities. Activity in the Allowance for Loan Losses The following table presents the activity in the allowance for loan losses by portfolio segment. Balance at beginning of period Provision (negative provision) for loan losses Charge-offs Recoveries Balance at end of period Three months ended March 31, 2025 Non-Nelnet Bank: Federally insured loans $ 49,091 2,634 ( 2,819 ) — 48,906 Private education loans 11,130 — ( 933 ) 197 10,394 Consumer and other loans 38,468 10,378 ( 5,178 ) 236 43,904 Nelnet Bank: Federally insured loans — 365 ( 3 ) — 362 Private education loans 10,086 1,085 ( 1,394 ) 116 9,893 Consumer and other loans 6,115 1,003 ( 569 ) 68 6,617 $ 114,890 15,465 ( 10,896 ) 617 120,076 Three months ended March 31, 2024 Non-Nelnet Bank: Federally insured loans $ 68,453 ( 1,870 ) ( 4,860 ) — 61,723 Private education loans 15,750 ( 265 ) ( 1,013 ) 264 14,736 Consumer and other loans 11,742 8,590 ( 1,952 ) 381 18,761 Nelnet Bank: Private education loans 3,347 757 ( 446 ) 2 3,660 Consumer and other loans 5,351 3,717 ( 1,967 ) 27 7,128 $ 104,643 10,929 ( 10,238 ) 674 106,008 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 March 31, 2025 2024 Non-Nelnet Bank: Federally insured loans 0.13 % 0.17 % Private education loans 1.39 % 1.12 % Consumer and other loans 5.44 % 5.71 % Nelnet Bank: Federally insured loans 0.05 % — Private education loans 1.06 % 0.49 % Consumer and other loans (a) 1.25 % 8.01 % (a) Decrease in annualized net charge-offs as a percentage of average loans was due to a change in mix of consumer loan portfolios that resulted in a portfolio of loans with an overall higher credit quality in 2025 as compared with 2024 and Nelnet Bank exiting a consumer loan program in December 2024 that had previously incurred significant charge-offs. 10 The Company recorded a provision for loan losses for the three months ended March 31, 2025 due primarily to the establishment of an initial allowance for loans originated and acquired during the period. 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. Unfunded Loan Commitments As of March 31, 2025 and December 31, 2024, Nelnet Bank had a liability of approximately $ 198,000 and $ 326,000 , respectively, related to $ 28.8 million and $ 40.7 million, respectively, of unfunded private education, consumer, and other loan commitments. When a new loan commitment is made, the Company records an allowance that is included in "other liabilities" on the consolidated balance sheet by recording a provision for loan losses. When the loan is funded, the Company transfers the liability to the allowance for loan losses. Below is a reconciliation of the provision for loan losses reported in the consolidated statements of income. Three months ended March 31, 2025 2024 Provision for loan losses from allowance activity table above $ 15,465 10,929 Negative provision for unfunded loan commitments ( 128 ) ( 101 ) Provision for loan losses reported in consolidated statements of income $ 15,337 10,828 11 Key Credit Quality Indicators Loan Status and Delinquencies Key credit quality indicators for the Company’s federally insured, private education, consumer, and other loan portfolios are loan status, including delinquencies. The impact of changes in loan status is incorporated into the allowance for loan losses calculation. Delinquencies have the potential to adversely impact the Company’s earnings through increased servicing and collection costs and account charge-offs. Loans in repayment include loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period (but for purposes of the following tables, do not include those loans while they are in forbearance). The following table presents the Company’s loan status and delinquency amounts. As of March 31, 2025 As of December 31, 2024 As of March 31, 2024 Federally insured loans - Non-Nelnet Bank: Loans in-school/grace/deferment $ 401,868 4.6 % $ 376,765 4.5 % $ 490,402 4.7 % Loans in forbearance 546,170 6.3 586,412 7.0 777,141 7.5 Loans in repayment status: Loans current 6,536,815 84.7 % 6,374,897 85.9 % 7,691,650 84.4 % Loans delinquent 31-60 days 306,032 4.0 243,348 3.3 360,237 3.9 Loans delinquent 61-90 days 239,477 3.1 166,474 2.2 189,035 2.1 Loans delinquent 91-120 days 155,641 2.0 113,838 1.5 143,656 1.6 Loans delinquent 121-270 days 326,523 4.2 380,823 5.1 422,979 4.6 Loans delinquent 271 days or greater 157,758 2.0 146,007 2.0 307,952 3.4 Total loans in repayment 7,722,246 89.1 100.0 % 7,425,387 88.5 100.0 % 9,115,509 87.8 100.0 % Total federally insured loans 8,670,284 100.0 % 8,388,564 100.0 % 10,383,052 100.0 % Accrued interest receivable 551,512 540,272 677,001 Loan discount, net of unamortized premiums and deferred origination costs ( 28,020 ) ( 21,513 ) ( 26,658 ) Allowance for loan losses ( 48,906 ) ( 49,091 ) ( 61,723 ) Total federally insured loans and accrued interest receivable, net of allowance for loan losses $ 9,144,870 $ 8,858,232 $ 10,971,672 Private education loans - Non-Nelnet Bank: Loans in-school/grace/deferment $ 5,850 2.8 % $ 5,997 2.7 % $ 8,979 3.4 % Loans in forbearance 1,512 0.7 2,089 0.9 2,601 1.0 Loans in repayment status: Loans current 195,573 97.2 % 206,825 96.8 % 243,637 97.4 % Loans delinquent 31-60 days 2,136 1.1 3,424 1.6 2,162 0.9 Loans delinquent 61-90 days 1,794 0.9 1,275 0.6 1,542 0.6 Loans delinquent 91 days or greater 1,642 0.8 2,134 1.0 2,661 1.1 Total loans in repayment 201,145 96.5 100.0 % 213,658 96.4 100.0 % 250,002 95.6 100.0 % Total private education loans 208,507 100.0 % 221,744 100.0 % 261,582 100.0 % Accrued interest receivable 1,948 2,019 2,560 Loan discount, net of unamortized premiums ( 5,928 ) ( 6,350 ) ( 7,616 ) Allowance for loan losses ( 10,394 ) ( 11,130 ) ( 14,736 ) Total private education loans and accrued interest receivable, net of allowance for loan losses $ 194,133 $ 206,283 $ 241,790 Consumer and other loans - Non-Nelnet Bank: Loans in deferment $ 205 0.1 % $ 150 0.0 % $ 54 0.0 % Loans in repayment status: Loans current 369,364 97.0 % 335,355 97.1 % 150,947 97.2 % Loans delinquent 31-60 days 3,413 0.9 3,667 1.1 1,758 1.1 Loans delinquent 61-90 days 3,170 0.8 2,143 0.6 1,471 1.0 Loans delinquent 91 days or greater 5,063 1.3 4,245 1.2 1,078 0.7 Total loans in repayment 381,010 99.9 100.0 % 345,410 100.0 100.0 % 155,254 100.0 100.0 % Total consumer and other loans 381,215 100.0 % 345,560 100.0 % 155,308 100.0 % Accrued interest receivable 2,071 1,868 1,209 Loan discount and deferred lender fees, net of unamortized premiums ( 9,437 ) ( 10,713 ) ( 5,451 ) Allowance for loan losses ( 43,904 ) ( 38,468 ) ( 18,761 ) Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 329,945 $ 298,247 $ 132,305 12 As of March 31, 2025 As of December 31, 2024 As of March 31, 2024 Federally insured loans - Nelnet Bank (a): Loans in-school/grace/deferment $ 3,000 2.7 % Loans in forbearance 5,433 4.9 Loans in repayment status: Loans current 92,027 90.4 % Loans delinquent 30-59 days 3,725 3.7 Loans delinquent 60-89 days 1,447 1.4 Loans delinquent 90-119 days 1,063 1.0 Loans delinquent 120-270 days 2,423 2.4 Loans delinquent 271 days or greater 1,069 1.1 Total loans in repayment 101,754 92.4 100.0 % Total federally insured loans 110,187 100.0 % Accrued interest receivable 5,065 Loan premium 1,307 Allowance for loan losses ( 362 ) Total federally insured loans and accrued interest receivable, net of allowance for loan losses $ 116,197 Private education loans - Nelnet Bank (a): Loans in-school/grace/deferment $ 45,026 9.2 % $ 31,674 6.6 % $ 42,699 11.7 % Loans in forbearance 1,370 0.3 3,061 0.6 1,277 0.4 Loans in repayment status: Loans current 436,547 98.5 % 439,569 98.2 % 318,906 99.4 % Loans delinquent 30-59 days 2,732 0.6 4,327 1.0 327 0.1 Loans delinquent 60-89 days 1,937 0.5 1,497 0.3 665 0.2 Loans delinquent 90 days or greater 1,839 0.4 2,317 0.5 892 0.3 Total loans in repayment 443,055 90.5 100.0 % 447,710 92.8 100.0 % 320,790 87.9 100.0 % Total private education loans 489,451 100.0 % 482,445 100.0 % 364,766 100.0 % Accrued interest receivable 4,636 4,103 2,445 Loan discount, net of unamortized premiums and deferred origination costs ( 3,973 ) ( 4,581 ) 5,692 Allowance for loan losses ( 9,893 ) ( 10,086 ) ( 3,660 ) Total private education loans and accrued interest receivable, net of allowance for loan losses $ 480,221 $ 471,881 $ 369,243 Consumer and other loans - Nelnet Bank (a): Loans in deferment $ 7,295 4.5 % $ 5,186 3.2 % $ 141 0.1 % Loans in repayment status: Loans current 153,416 99.2 % 155,772 99.2 % 115,152 96.9 % Loans delinquent 30-59 days 523 0.3 803 0.5 1,511 1.3 Loans delinquent 60-89 days 462 0.3 243 0.2 1,084 0.9 Loans delinquent 90 days or greater 299 0.2 148 0.1 1,069 0.9 Total loans in repayment 154,700 95.5 100.0 % 156,966 96.8 100.0 % 118,816 99.9 100.0 % Total consumer and other loans 161,995 100.0 % 162,152 100.0 % 118,957 100.0 % Accrued interest receivable 1,043 1,021 880 Loan premium, net of unaccreted discount 917 1,043 1,359 Allowance for loan losses ( 6,617 ) ( 6,115 ) ( 7,128 ) Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 157,338 $ 158,101 $ 114,068 (a) For the periods presented for Nelnet Bank, the delinquency bucket periods conform with the delinquency bucket periods reflected in Nelnet Bank's Call Reports filed with the Federal Deposit Insurance Corporation. 13 FICO Scores An additional key credit quality indicator for Nelnet Bank private education and consumer loans is FICO scores at the time of origination or purchase. 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 or purchase. Nelnet Bank Private Education Loans Loan balance as of March 31, 2025 Three months ended March 31, 2025 2024 2023 2022 2021 Prior years Total FICO at origination or purchase: Less than 705 $ 857 3,037 3,291 4,633 3,989 15,620 31,427 705 - 734 1,613 5,152 8,689 19,100 7,345 12,841 54,740 735 - 764 2,887 5,844 8,105 28,984 12,156 18,911 76,887 765 - 794 2,498 6,538 5,854 45,042 23,344 24,578 107,854 Greater than 794 3,747 14,873 14,433 64,876 47,078 65,742 210,749 No FICO score available or required (a) — 2,402 5,392 — — — 7,794 $ 11,602 37,846 45,764 162,635 93,912 137,692 489,451 Loan balance as of December 31, 2024 2024 2023 2022 2021 2020 Prior years Total FICO at origination or purchase: Less than 705 $ 2,566 3,578 4,759 4,182 331 15,485 30,901 705 - 734 3,736 8,874 19,666 7,531 426 12,349 52,582 735 - 764 4,398 8,629 29,918 12,775 1,286 17,920 74,926 765 - 794 4,600 6,115 46,340 24,073 1,105 23,867 106,100 Greater than 794 9,971 15,471 67,454 49,408 4,406 63,258 209,968 No FICO score available or required (a) 2,476 5,492 — — — — 7,968 $ 27,747 48,159 168,137 97,969 7,554 132,879 482,445 Nelnet Bank Consumer and Other Loans Loan balance as of March 31, 2025 Three months ended March 31, 2025 2024 2023 2022 2021 Prior years Total FICO at origination: Less than 720 $ 57 18,944 1,630 — 371 1,655 22,657 720 - 769 266 40,681 4,196 17 5,916 8,115 59,191 Greater than 769 2,337 56,077 6,389 100 5,791 3,764 74,458 No FICO score available or required (a) 14 4,910 435 276 54 — 5,689 $ 2,674 120,612 12,650 393 12,132 13,534 161,995 Loan balance as of December 31, 2024 2024 2023 2022 2021 2020 Prior years Total FICO at origination: Less than 720 $ 19,264 1,762 — 376 675 1,170 23,247 720 - 769 41,217 4,502 19 6,152 5,448 3,105 60,443 Greater than 769 57,323 6,577 103 5,834 2,755 1,165 73,757 No FICO score available or required (a) 3,936 437 277 55 — — 4,705 $ 121,740 13,278 399 12,417 8,878 5,440 162,152 (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. 14 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 March 31, 2025 and December 31, 2024, 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 March 31, 2025 based on year of origination. Effective July 1, 2010, no new loan originations can be made under the Federal Family Education Loan Program (the "FFEL Program" or FFELP) and all new federal loan originations must be made under the Federal Direct Loan Program. As such, all of the Company’s federally insured loans were originated prior to July 1, 2010. Three months ended March 31, 2025 2024 2023 2022 2021 Prior years Total Private education loans - Non-Nelnet Bank: Loans in-school/grace/deferment $ — — — 487 2,295 3,068 5,850 Loans in forbearance — — — 29 525 958 1,512 Loans in repayment status: Loans current — — 188 3,966 4,958 186,461 195,573 Loans delinquent 31-60 days — — — — 64 2,072 2,136 Loans delinquent 61-90 days — — — 3 25 1,766 1,794 Loans delinquent 91 days or greater — — — — 87 1,555 1,642 Total loans in repayment — — 188 3,969 5,134 191,854 201,145 Total private education loans $ — — 188 4,485 7,954 195,880 208,507 Accrued interest receivable 1,948 Loan discount, net of unamortized premiums ( 5,928 ) Allowance for loan losses ( 10,394 ) Total private education loans and accrued interest receivable, net of allowance for loan losses $ 194,133 Gross charge-offs - three months ended March 31, 2025 $ — — — — — 933 933 Consumer and other loans - Non-Nelnet Bank: Loans in deferment $ — 48 157 — — — 205 Loans in repayment status: Loans current 87,997 238,966 39,437 2,345 323 296 369,364 Loans delinquent 31-60 days — 1,949 1,199 246 19 — 3,413 Loans delinquent 61-90 days — 1,971 979 220 — — 3,170 Loans delinquent 91 days or greater — 3,889 1,124 50 — — 5,063 Total loans in repayment 87,997 246,775 42,739 2,861 342 296 381,010 Total consumer and other loans $ 87,997 246,823 42,896 2,861 342 296 381,215 Accrued interest receivable 2,071 Loan discount and deferred lender fees, net of unamortized premiums ( 9,437 ) Allowance for loan losses ( 43,904 ) Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 329,945 Gross charge-offs - three months ended March 31, 2025 $ — 2,076 2,847 127 9 119 5,178 15 Three months ended March 31, 2025 2024 2023 2022 2021 Prior years Total Private education loans - Nelnet Bank (a): Loans in-school/grace/deferment $ 5,427 21,515 10,133 6,070 522 1,359 45,026 Loans in forbearance — — 210 347 145 668 1,370 Loans in repayment status: Loans current 6,107 15,978 34,191 155,473 92,067 132,731 436,547 Loans delinquent 30-59 days 68 162 380 333 401 1,388 2,732 Loans delinquent 60-89 days — 119 160 112 697 849 1,937 Loans delinquent 90 days or greater — 72 690 300 80 697 1,839 Total loans in repayment 6,175 16,331 35,421 156,218 93,245 135,665 443,055 Total private education loans $ 11,602 37,846 45,764 162,635 93,912 137,692 489,451 Accrued interest receivable 4,636 Loan discount, net of unamortized premiums and deferred origination costs ( 3,973 ) Allowance for loan losses ( 9,893 ) Total private education loans and accrued interest receivable, net of allowance for loan losses $ 480,221 Gross charge-offs - three months ended March 31, 2025 $ — 139 119 105 84 947 1,394 Consumer and other loans - Nelnet Bank (a): Loans in deferment $ 2,087 5,208 — — — — 7,295 Loans in repayment status: Loans current 587 114,453 12,568 393 12,061 13,354 153,416 Loans delinquent 30-59 days — 432 — — — 91 523 Loans delinquent 60-89 days — 288 40 — 71 63 462 Loans delinquent 90 days or greater — 231 42 — — 26 299 Total loans in repayment 587 115,404 12,650 393 12,132 13,534 154,700 Total consumer and other loans $ 2,674 120,612 12,650 393 12,132 13,534 161,995 Accrued interest receivable 1,043 Loan premium, net of unaccreted discount 917 Allowance for loan losses ( 6,617 ) Total consumer and other loans and accrued interest receivable, net of allowance for loan losses $ 157,338 Gross charge-offs - three months ended March 31, 2025 $ — 192 242 — 77 58 569 (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. 16 4. Bonds and Notes Payable The following tables summarize the Company’s outstanding debt obligations by type of instrument: As of March 31, 2025 Carrying amount Interest rate range Final maturity Variable-rate bonds and notes issued in FFELP loan asset-backed securitizations: Bonds and notes based on indices $ 6,956,048 4.71 % - 6.43 % 8/26/30 - 9/25/69 Bonds and notes based on auction 457,395 4.22 % - 6.19 % 3/22/32 - 11/1/47 Total FFELP variable-rate bonds and notes 7,413,443 Fixed-rate bonds and notes issued in FFELP loan asset-backed securitizations 335,506 1.42 % - 3.45 % 10/25/67 - 8/27/68 FFELP loan warehouse facilities 821,803 5.21 % - 5.35 % 5/1/26 / 7/31/26 Consumer loan warehouse facilities 68,877 6.14 % / 6.42 % 8/1/26 / 11/13/27 Variable-rate bonds and notes issued in private education loan asset-backed securitizations 49,771 5.90 % / 6.59 % 6/25/49 / 11/25/53 Fixed-rate bonds and notes issued in private education loan asset-backed securitizations 39,508 7.15 % 11/25/53 Unsecured line of credit — — 9/22/26 Participation agreements 2,498 5.07 % - 5.82 % 5/4/25 / 1/30/33 8,731,406 Discount on bonds and notes payable and debt issuance costs ( 75,249 ) Total $ 8,656,157 As of December 31, 2024 Carrying amount Interest rate range Final maturity Variable-rate bonds and notes issued in FFELP loan asset-backed securitizations: Bonds and notes based on indices $ 6,923,824 4.89 % - 6.45 % 8/26/30 - 9/25/69 Bonds and notes based on auction 36,395 5.71 % - 5.72 % 3/22/32 - 8/25/37 Total FFELP variable-rate bonds and notes 6,960,219 Fixed-rate bonds and notes issued in FFELP loan asset-backed securitizations 346,359 1.42 % - 3.45 % 10/25/67 - 8/27/68 FFELP loan warehouse facilities 853,165 4.41 % - 4.69 % 1/31/26 / 4/1/26 Consumer loan warehouse facilities 90,000 4.46 % / 4.57 % 8/1/26 / 11/13/27 Variable-rate bonds and notes issued in private education loan asset-backed securitizations 54,973 5.90 % / 6.82 % 6/25/49 / 11/25/53 Fixed-rate bonds and notes issued in private education loan asset-backed securitizations 50,415 5.35 % / 7.15 % 12/28/43 / 11/25/53 Unsecured line of credit — — 9/22/26 Participation agreements 3,320 5.27 % - 5.82 % 5/4/25 / 1/30/33 8,358,451 Discount on bonds and notes payable and debt issuance costs ( 48,654 ) Total $ 8,309,797 17 Warehouse Facilities The Company funds a portion of its loan acquisitions using warehouse facilities. Loan warehousing allows the Company to buy and manage loans prior to transferring them into more permanent financing arrangements. The following table summarizes the Company's warehouse facilities as of March 31, 2025. Type of loans Maximum financing amount Amount outstanding Amount available Expiration of liquidity provisions Final maturity date Advance rate Advanced as equity support FFELP (a) $ 600,000 544,067 55,933 7/31/2025 7/31/2026 note (b) $ 39,554 FFELP (c) 375,000 277,736 97,264 5/1/2025 5/1/2026 92 % 23,265 $ 975,000 821,803 153,197 $ 62,819 Consumer $ 100,000 3,877 96,123 11/13/2026 11/13/2027 70 % $ 1,775 Consumer 125,000 65,000 60,000 1/1/2026 8/1/2026 60 % - 80 % 21,299 $ 225,000 68,877 156,123 $ 23,074 (a) On January 31, 2025, the Company extended the liquidity provisions and final maturity date on this facility to July 31, 2025 and July 31, 2026, respectively. (b) This facility has a static advance rate until the expiration date of the liquidity provisions. The maximum advance rates for this facility are 90 % to 96 %, and the minimum advance rates are 84 % to 90 %. In the event the liquidity provisions are not extended, the valuation agent has the right to perform a one-time mark to market on the underlying loans funded in this facility, subject to a floor. The loans would then be funded at this new advance rate until the final maturity date of the facility. (c) On March 31, 2025, the Company extended the liquidity provisions and final maturity date on this facility to May 1, 2025 and May 1, 2026, respectively, and on April 10, 2025, extended the liquidity provisions and final maturity to May 1, 2026 and May 1, 2027, respectively. 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 March 31, 2025, no amount was outstanding on the line of credit and $ 495.0 million was available for future use. Debt Repurchases The Company has repurchased certain of its own asset-backed securities (bonds and notes payable) in the secondary market. For accounting purposes, these notes are eliminated in consolidation and are not included in the Company's consolidated financial statements. However, these securities remain legally outstanding at the trust level and the Company could sell these notes to third parties or redeem the notes at par as cash is generated by the trust estate. Upon a sale of these notes to third parties, the Company would obtain cash proceeds equal to the market value of the notes on the date of such sale. As of March 31, 2025, the Company holds $ 97.4 million (par value) of its own FFELP asset-backed securities. 5. Derivative Financial Instruments Non-Nelnet Bank Derivatives 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 2024 Annual Report. Basis Swaps The following table summarizes the Company’s outstanding basis swaps as of March 31, 2025 and December 31, 2024 used to hedge its basis risk and repricing risk on a portion of its FFELP student loan assets. For these derivative instruments, the Company receives payments indexed to three-month SOFR and makes payments based on the one-month SOFR index (plus or minus a spread) as defined in the agreements (the "Basis Swaps"). Maturity Notional amount 2026 $ 1,150,000 2027 250,000 $ 1,400,000 18 Interest Rate Swaps – Floor Income Hedges The following table summarizes the outstanding derivative instruments used by the Company as of March 31, 2025 and December 31, 2024 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 % (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. (c) A $ 50 million notional amount derivative maturing in 2030 has a forward effective start date in November 2025. Nelnet Bank Derivatives Interest Rate Swaps The following table summarizes the outstanding non-centrally cleared derivative instruments used by Nelnet Bank as of March 31, 2025 and December 31, 2024, 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) 2028 $ 40,000 3.33 % 2029 25,000 3.37 2030 (b) 50,000 3.06 2032 (c) 25,000 4.03 2033 (d) 25,000 3.90 $ 165,000 3.44 % (a) For all interest rate derivatives, the Company receives monthly or quarterly payments based on SOFR that resets daily. (b) These $ 25 million notional amount derivatives have forward effective start dates in April 2026 and May 2026, respectively. (c) This $ 25 million notional amount derivative has a forward effective start date in February 2027. (d) This $ 25 million notional amount derivative has a forward effective start date in November 2025. 19 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, 2025 As of December 31, 2024 As of March 31, 2025 As of December 31, 2024 Interest rate swaps - Nelnet Bank $ 1,473 3,232 822 53 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 March 31, 2025 2024 Settlements: Basis swaps $ 153 365 Interest rate swaps - floor income hedges 429 1,190 Interest rate swaps - Nelnet Bank 164 202 Total settlements - income 746 1,757 Change in fair value: Basis swaps ( 138 ) ( 354 ) Interest rate swaps - floor income hedges ( 3,657 ) 6,060 Interest rate swaps - Nelnet Bank ( 2,529 ) 2,258 Total change in fair value - (expense) income ( 6,324 ) 7,964 Derivative market value adjustments and derivative settlements, net - (expense) income $ ( 5,578 ) 9,721 20 6. Investments and Notes Receivable “Total investments and notes receivable” consisted of the following: As of March 31, 2025 As of December 31, 2024 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 Non-Nelnet Bank: FFELP loan $ 129,556 4,157 ( 3,175 ) 130,538 188,386 5,804 ( 896 ) 193,294 FFELP loan and other debt securities - restricted (a) 120,355 3,535 ( 372 ) 123,518 98,914 3,151 ( 78 ) 101,987 Private education loan (b) 226,575 — ( 17,160 ) 209,415 237,288 — ( 18,118 ) 219,170 Other debt securities 38,942 2,692 ( 10 ) 41,624 32,552 2,500 — 35,052 Total Non-Nelnet Bank 515,428 10,384 ( 20,717 ) 505,095 557,140 11,455 ( 19,092 ) 549,503 Nelnet Bank: FFELP loan 239,694 6,330 ( 632 ) 245,392 231,543 6,060 ( 270 ) 237,333 Private education loan 5,888 — ( 1 ) 5,887 1,596 — — 1,596 Other debt securities 401,700 1,855 ( 1,867 ) 401,688 296,944 1,775 ( 1,325 ) 297,394 Total Nelnet Bank 647,282 8,185 ( 2,500 ) 652,967 530,083 7,835 ( 1,595 ) 536,323 Total available-for-sale asset-backed securities $ 1,162,710 18,569 ( 23,217 ) 1,158,062 1,087,223 19,290 ( 20,687 ) 1,085,826 Equity securities 80,841 74,494 Total investments at fair value 1,238,903 1,160,320 Other investments and notes receivable (not measured at fair value): Nelnet Bank: Held-to-maturity asset-backed securities FFELP loan 202,739 203,439 Private education loan 4,618 7,335 Total Nelnet Bank held-to-maturity asset-backed securities 207,357 210,774 Venture capital, funds, and other: Measurement alternative (c) 205,749 200,782 Equity method 163,258 170,258 Total venture capital and funds 369,007 371,040 Real estate equity method 138,123 131,745 Investment in ALLO (d): Voting interest/equity method — — Preferred membership interests and accrued and unpaid preferred return 234,030 225,614 Total investment in ALLO 234,030 225,614 Beneficial interest in loan securitizations (e): Consumer loans, net of allowance for credit losses of $ 39,826 and $ 38,590 as of March 31, 2025 and December 31, 2024, respectively 137,961 142,764 Private education loans, net of allowance for credit losses of $ 1,175 and $ 901 as of March 31, 2025 and December 31, 2024, respectively 50,389 52,824 Federally insured student loans 18,017 18,221 Total beneficial interest in loan securitizations, net of allowance 206,367 213,809 Solar (f) ( 167,048 ) ( 155,048 ) Notes receivable 64,281 32,258 Tax liens, affordable housing, and other 11,530 10,184 Total other investments and notes receivable (not measured at fair value) 1,063,647 1,040,376 Total investments and notes receivable $ 2,302,550 $ 2,200,696 21 (a) Represent investments held in third-party trusts as collateral for the Company’s reinsurance business. (b) As sponsor of certain private education loan securitizations, the Company is required to provide a certain level of risk retention, and has purchased bonds issued in such securitizations to satisfy this requirement. The bonds purchased to satisfy the risk retention requirement are included in the above table. The Company must retain these investment securities until the latest of (i) the date the aggregate outstanding principal balance of the loans in the securitization is 33 % or less of the initial loan balance, and (ii) the date the aggregate outstanding principal balance of the bonds is 33 % or less of the aggregate initial outstanding principal balance of the bonds, at which time the Company can sell its investment securities (bonds) to a third party. (c) The Company has an investment in Agile Sports Technologies, Inc. (doing business as “Hudl”). During the first quarter of 2025, the Company acquired additional ownership interests in Hudl for $ 3.8 million from existing Hudl investors. This transaction was not considered an observable market transaction (not orderly) because it was not subject to customary marketing activities. Accordingly, the Company did not adjust its carrying value of its Hudl investment to the transaction value. As of March 31, 2025, the carrying amount of the Company's investment in Hudl is $ 172.5 million. David S. Graff, who has served on the Company's Board of Directors since May 2014, is CEO, co-founder, and a director of Hudl. (d) The Company has both a voting and preferred membership interest investment in ALLO Holdings, LLC (referred to collectively with its subsidiary ALLO Communications LLC as "ALLO"). The Company's voting membership interest in ALLO is accounted for under the HLBV method of accounting. Under the HLBV method of accounting, the Company recognized $ 10.7 million of losses during the three months ended March 31, 2024, reducing the carrying value of the voting membership interest investment to $ 0 . Absent additional equity contributions with respect to ALLO's voting membership interest, the Company will not recognize additional losses for its voting membership interest in ALLO. As of March 31, 2025, the outstanding preferred membership interests and accrued and unpaid preferred return of ALLO held by the Company was $ 225.6 million and $ 8.4 million, respectively. The Company earns a preferred return of 13.50 % and 20.00 % on $ 169.1 million and $ 56.5 million, respectively, of the Company's preferred membership interests of ALLO. The Company recognized income on its ALLO preferred membership interests of $ 8.4 million and $ 2.4 million during the three months ended March 31, 2025 and 2024, respectively. The income statement activity from the Company's investment in ALLO is included in "other, net" in "other income (expense)" on the consolidated statements of income. In April 2025, the Company executed a transaction that is expected to close in late May 2025. Upon closing, the Company expects all of its outstanding preferred membership interests, including the preferred return accrued on such membership interests, to be redeemed by ALLO. In addition, a portion of its voting membership interest will also be redeemed. The Company expects to receive aggregate cash proceeds of approximately $ 410 million from ALLO and recognize a pre-tax gain of approximately $ 175 million as a result of this transaction. See note 16 for additional information. (e) The Company has partial ownership in certain consumer, private education, and federally insured student loan securitizations, which are accounted for as held-to-maturity beneficial interest investments. As of the latest remittance reports filed by the various trusts prior to or as of March 31, 2025, the Company's ownership correlates to approximately $ 1.10 billion, $ 440 million, and $ 280 million of consumer, private education, and federally insured student loans, respectively, included in these securitizations. The Company recorded an additional $ 1.5 million allowance for credit losses (and related provision expense) during the three months ended March 31, 2025 on these investments. This expense is included in "impairment expense and provision for beneficial interests" on the consolidated statement of income. (f) The Company invests in solar tax equity investments through investment partnerships. Due to the management and control of each of these investment partnerships, such partnerships that invest in tax equity investments are consolidated on the Company’s consolidated financial statements, with the third-party co-investor’s portion being presented as noncontrolling interests. As of March 31, 2025, the Company has invested a total of $ 309.9 million and its third-party investors have invested $ 280.4 million in tax equity investments that remain outstanding in renewable energy solar partnerships that support the development and operations of solar projects. 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. As of March 31, 2025, the Company and its third-party co-investors have earned $ 331.0 million and $ 265.1 million, respectively, of tax credits on those projects that remain outstanding. The solar investment negative carrying value on the consolidated balance sheet of $ 167.0 million as of March 31, 2025 represents the sum of total tax credits earned on solar projects placed in service through March 31, 2025 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 negative carrying value as of March 31, 2025, excluding the portion owned by syndication partners that is reflected as "noncontrolling interests" on the consolidated balance sheet, was $ 94.0 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 following table presents (i) the Company's recognized HLBV losses and gains recognized from sales of certain investments at the end of the contractual agreement (typically five years ), which include losses and gains attributable to third-party noncontrolling interest investors (syndication partners), included in “other, net” in "other income (expense)" on the consolidated statements of income, (ii) solar net losses and gains attributed to noncontrolling interest investors included in “net loss attributable to noncontrolling interests” on the consolidated statements of income, and (iii) the Company's recognized net gain excluding amounts attributed to noncontrolling interest investors (such amount reflecting the before tax net income impact of such solar tax equity investments to the Company). 22 Three months ended March 31, 2025 2024 Losses from HLBV accounting (gross) $ ( 2,616 ) ( 1,427 ) Gains from sales (gross) 3,072 4,207 Gains from solar investments, net 456 2,780 Less: losses attributable to noncontrolling members, net ( 1,046 ) ( 1,641 ) Net gain, excluding amounts attributed to noncontrolling interest investors $ 1,502 4,421 The following table presents, by remaining contractual maturity, the amortized cost and fair value of debt securities as of March 31, 2025: As of March 31, 2025 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 Non-Nelnet Bank: FFELP loan $ — 204 2,514 126,838 129,556 FFELP loan and other debt securities - restricted — 5,500 15,951 98,904 120,355 Private education loan — — — 226,575 226,575 Other debt securities — 100 8,487 30,355 38,942 Total Non-Nelnet Bank — 5,804 26,952 482,672 515,428 Fair value — 5,943 27,021 472,131 505,095 Nelnet Bank: FFELP loan 44,926 21,799 29,022 143,947 239,694 Private education loan — — 4,612 1,276 5,888 Other debt securities — 27,019 64,075 310,606 401,700 Total Nelnet Bank 44,926 48,818 97,709 455,829 647,282 Fair value 44,682 48,887 98,082 461,316 652,967 Total available-for-sale asset-backed securities at amortized cost $ 44,926 54,622 124,661 938,501 1,162,710 Total available-for-sale asset-backed securities at fair value $ 44,682 54,830 125,103 933,447 1,158,062 Held-to-maturity asset-backed securities Nelnet Bank: FFELP loan $ — 2,684 11,759 188,296 202,739 Private education loan — — — 4,618 4,618 Total held-to-maturity asset-backed securities at amortized cost $ — 2,684 11,759 192,914 207,357 Total held-to-maturity asset-backed securities at fair value $ — 2,743 11,627 198,534 212,904 Beneficial interest in loan securitizations (a): Amortized cost $ — — — — 206,367 Fair value $ — — — — 221,991 (a) The Company's beneficial interest in loan securitizations are not due at a single maturity date. The following table summarizes the unrealized positions for held-to-maturity asset-backed securities investments and the beneficial interest in loan securitizations as of March 31, 2025: Carrying value Gross unrealized gains Gross unrealized losses Fair value Asset-backed securities $ 207,357 6,074 ( 527 ) 212,904 Beneficial interest in loan securitizations 206,367 16,824 ( 1,200 ) 221,991 23 The following table presents securities classified as available-for-sale that have gross unrealized losses as of March 31, 2025 and the fair value of such securities as of March 31, 2025. 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. All securities in the table below have been evaluated to determine if a credit loss exists. 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 March 31, 2025 Unrealized loss position less than 12 months Unrealized loss position 12 months or more Total Unrealized loss Fair value Unrealized loss Fair value Unrealized loss Fair value Available-for-sale asset-backed securities Non-Nelnet Bank: FFELP loan $ ( 240 ) 10,614 ( 2,935 ) 46,474 ( 3,175 ) 57,088 FFELP loan and other debt securities - restricted ( 141 ) 12,037 ( 231 ) 2,288 ( 372 ) 14,325 Private education loan — — ( 17,160 ) 209,415 ( 17,160 ) 209,415 Other debt securities ( 10 ) 1,990 — — ( 10 ) 1,990 Total Non-Nelnet Bank ( 391 ) 24,641 ( 20,326 ) 258,177 ( 20,717 ) 282,818 Nelnet Bank: FFELP loan ( 418 ) 52,348 ( 214 ) 16,408 ( 632 ) 68,756 Private education loan ( 1 ) 4,611 — — ( 1 ) 4,611 Other debt securities ( 752 ) 29,220 ( 1,115 ) 13,948 ( 1,867 ) 43,168 Total Nelnet Bank ( 1,171 ) 86,179 ( 1,329 ) 30,356 ( 2,500 ) 116,535 Total available-for-sale asset-backed securities $ ( 1,562 ) 110,820 ( 21,655 ) 288,533 ( 23,217 ) 399,353 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 March 31, 2025 2024 Gross proceeds from sales $ 74,781 153,373 Gross realized gains $ 933 1,054 Gross realized losses ( 450 ) ( 502 ) Net gains $ 483 552 24 7. Intangible Assets Intangible assets consisted of the following: Weighted average remaining useful life as of March 31, 2025 (months) As of As of March 31, 2025 December 31, 2024 Amortizable intangible assets, net: Customer relationships (net of accumulated amortization of $ 54,303 and $ 54,644 , respectively) 94 $ 33,541 34,960 Trade names (net of accumulated amortization of $ 225 and $ 205 , respectively) 85 545 565 Computer software (net of accumulated amortization of $ 1,003 and $ 917 , respectively) 25 717 803 Total amortizable intangible assets, net 93 $ 34,803 36,328 The Company recorded amortization expense on its intangible assets of $ 1.5 million and $ 2.1 million for the three months ended March 31, 2025 and 2024, respectively. The Company will continue to amortize intangible assets over their remaining useful lives. As of March 31, 2025, the Company estimates it will record amortization expense as follows: 2025 (April 1 - December 31) $ 4,574 2026 6,012 2027 5,714 2028 5,354 2029 4,008 2030 and thereafter 9,141 $ 34,803 8. Goodwill The following table presents the carrying amount of goodwill as of March 31, 2025 and December 31, 2024 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 25 9. Bank Deposits The following table summarizes Nelnet Bank’s interest-bearing deposits, excluding intercompany deposits: As of As of March 31, 2025 December 31, 2024 Retail and other savings $ 1,030,449 916,475 Brokered CDs, net of brokered deposit fees 261,495 247,872 Retail and other CDs, net of issuance fees 21,463 21,784 Total interest-bearing deposits $ 1,313,407 1,186,131 As of March 31, 2025 and December 31, 2024, Nelnet Bank had intercompany deposits from Nelnet, Inc. and its subsidiaries totaling $ 68.6 million and $ 68.5 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, 2025: One year or less $ 63,507 After one year to two years 159,825 After two years to three years 1,598 After three years to four years 801 After four years to five years 43,671 After five years 13,556 Total $ 282,958 Retail and other savings deposits include deposits from Educational 529 College Savings and Health Savings plans, retirement savings plans, Short Term Federal Investment Trust (STFIT), and FDIC sweep deposits. These deposits are large interest-bearing omnibus accounts structured to allow FDIC insurance to flow through to underlying individual depositors. The deposits exceeding the FDIC insurance limits as of March 31, 2025 were $ 44.7 million, the majority of which are intercompany deposits from Nelnet, Inc. and its subsidiaries. Union Bank, a related party, is the program manager for certain of the Educational 529 College Savings plans and trustee for the STFIT. 10. Earnings per Common Share The following table presents the components used to calculate basic and diluted earnings per share. The Company applies the two-class method in computing both basic and diluted earnings per share, which requires the calculation of separate earnings per share amounts for common stock and unvested share-based awards. Unvested share-based awards that contain nonforfeitable rights to dividends are considered securities which participate in undistributed earnings with common stock. Three months ended March 31, 2025 2024 Common shareholders Unvested restricted stock shareholders Total Common shareholders Unvested restricted stock shareholders Total Numerator: Net income attributable to Nelnet, Inc. $ 81,017 1,543 82,560 71,921 1,487 73,408 Denominator: Weighted-average common shares outstanding - basic and diluted 35,796,531 681,895 36,478,426 36,404,364 752,607 37,156,971 Earnings per share - basic and diluted $ 2.26 2.26 2.26 1.98 1.98 1.98 26 11. Segment Reporting See note 16 of the notes to consolidated financial statements included in the 2024 Annual Report for a description of the Company's operating segments. The following tables present the results of each of the Company's reportable operating segments reconciled to the consolidated financial statements. Three months ended March 31, 2025 Reportable Segments Reconciling Items Loan Servicing and Systems (LSS) Education Technology Services and Payments (ETSP) Asset Generation and Management Nelnet Bank Total Reportable Segments NFS Other Operating Segments Corporate and Other Activities Eliminations/ Reclassifications Total Interest income: Loan interest $ — — 154,469 11,971 166,440 — — — 166,439 Investment interest 721 6,939 12,769 12,496 32,925 8,820 2,312 ( 2,669 ) 41,389 Total interest income 721 6,939 167,238 24,467 199,365 8,820 2,312 ( 2,669 ) 207,828 Interest expense — — 114,303 12,077 126,380 770 633 ( 2,669 ) 125,114 Net interest income 721 6,939 52,935 12,390 72,985 8,050 1,679 — 82,714 Less provision for loan losses — — 13,012 2,325 15,337 — — — 15,337 Net interest income after provision for loan losses 721 6,939 39,923 10,065 57,648 8,050 1,679 — 67,377 Other income (expense): LSS revenue 120,741 — — — 120,741 — — — 120,741 Intersegment revenue 5,684 64 — — 5,748 — — ( 5,748 ) — ETSP revenue — 147,330 — — 147,330 — — — 147,330 Reinsurance premiums earned — — — — — 24,687 — — 24,687 Solar construction revenue — — — — — — 3,995 — 3,995 Other, net 112 — 3,995 142 4,249 1,110 18,238 97 23,694 Gain (loss) on sale of loans, net — — 909 — 909 — — — 909 Derivative settlements, net — — 582 164 746 — — — 746 Derivative market value adjustments, net — — ( 3,795 ) ( 2,529 ) ( 6,324 ) — — — ( 6,324 ) Total other income (expense), net 126,537 147,394 1,691 ( 2,223 ) 273,399 25,797 22,233 ( 5,651 ) 315,778 Cost of services and expenses: Total cost of services 1,633 48,047 — — 49,680 — 7,828 — 57,508 Salaries and benefits 69,574 41,741 1,221 2,816 115,352 478 22,496 ( 104 ) 138,223 Depreciation and amortization 2,654 2,430 — 339 5,423 — 3,833 — 9,255 Reinsurance losses and underwriting expenses — — — — — 22,212 — — 22,212 Postage expense 7,575 7,575 ( 7,575 ) — Servicing fees 6,911 667 7,578 ( 7,578 ) — Other expenses (a) 10,832 9,048 888 1,358 22,126 772 15,586 9,741 48,226 Intersegment expenses, net 16,478 5,605 1,250 710 24,043 244 ( 24,055 ) ( 232 ) — Total operating expenses 107,113 58,824 10,270 5,890 182,097 23,706 17,860 ( 5,748 ) 217,916 Impairment expense and provision for beneficial interests — — 1,510 — 1,510 81 — — 1,591 Total expenses 108,746 106,871 11,780 5,890 233,287 23,787 25,688 ( 5,748 ) 277,015 Income (loss) before income taxes 18,512 47,462 29,834 1,952 97,760 10,060 ( 1,776 ) 97 106,140 Income tax (expense) benefit ( 4,443 ) ( 11,402 ) ( 7,156 ) ( 434 ) ( 23,435 ) ( 2,385 ) 810 — ( 25,010 ) Net income (loss) 14,069 36,060 22,678 1,518 74,325 7,675 ( 966 ) 97 81,130 Net loss (income) attributable to noncontrolling interests — 45 ( 17 ) — 28 ( 124 ) 1,623 ( 97 ) 1,430 Net income (loss) attributable to Nelnet, Inc. $ 14,069 36,105 22,661 1,518 74,353 7,551 657 — 82,560 Total assets as of March 31, 2025 $ 184,142 469,706 10,362,549 1,689,633 12,706,030 874,667 873,211 ( 261,950 ) 14,191,958 (a) Other expenses for each reportable segment includes: LSS - communications, professional fees, collection costs, software, and computer services and subscriptions. ETSP - advertising, professional fees, analysis fees, computer services and subscriptions, and travel. AGM - trustee fees and professional fees. Nelnet Bank - marketing, consulting and professional fees, software, insurance, and management fee expense. 27 Three months ended March 31, 2024 Reportable Segments Reconciling Items Loan Servicing and Systems (LSS) Education Technology Services and Payments (ETSP) Asset Generation and Management Nelnet Bank Total Reportable Segments NFS Other Operating Segments Corporate and Other Activities Eliminations/ Reclassifications Total Interest income: Loan interest $ — — 209,628 7,096 216,724 — — — 216,724 Investment interest 1,894 7,866 21,835 9,968 41,563 15,616 3,815 ( 8,915 ) 52,078 Total interest income 1,894 7,866 231,463 17,064 258,287 15,616 3,815 ( 8,915 ) 268,802 Interest expense — — 190,905 9,497 200,402 2,418 676 ( 8,915 ) 194,580 Net interest income 1,894 7,866 40,558 7,567 57,885 13,198 3,139 — 74,222 Less provision for loan losses — — 6,455 4,373 10,828 — — — 10,828 Net interest income after provision for loan losses 1,894 7,866 34,103 3,194 47,057 13,198 3,139 — 63,394 Other income (expense): LSS revenue 127,201 — — — 127,201 — — — 127,201 Intersegment revenue 6,886 49 — — 6,935 — — ( 6,935 ) — ETSP revenue — 143,539 — — 143,539 — — — 143,539 Reinsurance premiums earned — — — — — 12,780 — — 12,780 Solar construction revenue — — — — — — 13,726 — 13,726 Other, net 710 — 4,983 375 6,068 161 ( 2,147 ) — 4,082 Gain (loss) on sale of loans, net — — ( 141 ) — ( 141 ) — — — ( 141 ) Derivative settlements, net — — 1,555 202 1,757 — — — 1,757 Derivative market value adjustments, net — — 5,706 2,258 7,964 — — — 7,964 Total other income (expense), net 134,797 143,588 12,103 2,835 293,323 12,941 11,579 ( 6,935 ) 310,908 Cost of services and expenses: Total cost of services — 48,610 — — 48,610 — 14,229 — 62,839 Salaries and benefits 76,722 40,167 1,195 2,721 120,805 358 23,521 ( 807 ) 143,875 Depreciation and amortization 5,109 2,683 — 260 8,052 — 8,716 — 16,769 Reinsurance losses and underwriting expenses — — — — — 11,317 — — 11,317 Postage expense 10,605 10,605 ( 10,605 ) — Servicing fees 8,951 233 9,184 ( 9,184 ) — Other expenses (a) 8,933 7,558 1,109 1,111 18,711 485 13,402 12,931 45,528 Intersegment expenses, net 19,332 4,801 1,208 557 25,898 217 ( 26,845 ) 730 — Total operating expenses 120,701 55,209 12,463 4,882 193,255 12,377 18,794 ( 6,935 ) 217,489 Impairment expense and provision for beneficial interests — — — — — — 37 — 37 Total expenses 120,701 103,819 12,463 4,882 241,865 12,377 33,060 ( 6,935 ) 280,365 Income (loss) before income taxes 15,990 47,635 33,743 1,147 98,515 13,762 ( 18,342 ) — 93,937 Income tax (expense) benefit ( 3,838 ) ( 11,435 ) ( 8,099 ) ( 259 ) ( 23,631 ) ( 3,274 ) 3,723 — ( 23,181 ) Net income (loss) 12,152 36,200 25,644 888 74,884 10,488 ( 14,619 ) — 70,756 Net loss (income) attributable to noncontrolling interests — 17 — — 17 ( 120 ) 2,755 — 2,652 Net income (loss) attributable to Nelnet, Inc. $ 12,152 36,217 25,644 888 74,901 10,368 ( 11,864 ) — 73,408 Total assets as of March 31, 2024 $ 212,381 389,990 12,315,238 1,125,122 14,042,731 1,111,587 803,709 ( 583,815 ) 15,374,212 (a) Other expenses for each reportable segment includes: LSS - occupancy, communications, professional fees, software, and computer services and subscriptions. ETSP - advertising, professional fees, analysis fees, computer services and subscriptions, travel, and provision for losses. AGM - trustee fees and professional fees. Nelnet Bank - consulting and professional fees, software, and insurance. 28 12. Disaggregated Revenue The following tables present disaggregated revenue for the Company's fee-based operating segments. Loan Servicing and Systems Three months ended March 31, 2025 2024 Government loan servicing $ 87,358 105,474 Private education and consumer loan servicing 22,696 12,620 FFELP loan servicing 2,633 3,380 Software services 6,992 4,541 Outsourced services 1,062 1,186 Loan servicing and systems revenue $ 120,741 127,201 Education Technology Services and Payments Three months ended March 31, 2025 2024 Tuition payment plan services $ 40,072 38,880 Payment processing 51,536 47,786 Education technology services 55,695 56,021 Other 27 852 Education technology services and payments revenue $ 147,330 143,539 Solar Construction Three months ended March 31, 2025 2024 Commercial revenue $ 3,989 11,920 Residential revenue (a) 6 1,806 Solar construction revenue $ 3,995 13,726 (a) In April 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 from historical amounts 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 March 31, 2025 2024 ALLO preferred return $ 8,416 2,409 Investment activity, net 5,161 ( 1,298 ) Borrower late fee income 1,587 3,133 Investment advisory services (WRCM) 1,473 1,508 Administration/sponsor fee income 1,305 1,546 Gain from solar investments, net 456 2,780 Loss from ALLO voting membership interest investment — ( 10,693 ) Other 5,296 4,697 Other, net $ 23,694 4,082 29 13. Reinsurance The following table presents reinsurance premiums written and earned and loss reserves, commissions, and broker fees. Three months ended March 31, 2025 2024 Premiums written: Assumed $ 60,853 30,887 Ceded ( 23,229 ) ( 15,443 ) Net premiums written $ 37,624 15,444 Premiums earned: Assumed $ 47,723 25,504 Ceded ( 23,036 ) ( 12,724 ) Net premiums earned $ 24,687 12,780 Loss reserve, commissions, and broker fees: Assumed $ 42,641 22,842 Ceded ( 20,429 ) ( 11,525 ) Reinsurance losses and underwriting expenses $ 22,212 11,317 The Company’s loss reserve balance, net of amounts ceded to reinsurers, was $ 46.0 million and $ 33.1 million as of March 31, 2025 and December 31, 2024, respectively, which is included in "other liabilities" on the consolidated balance sheets. 14. Major Customer Government Loan Servicing 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 $ 87.4 million and $ 105.5 million for the three months ended March 31, 2025 and 2024, 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 which replaced the legacy Department student loan servicing contract. The USDS contract became effective in April 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 was allocated by the Department to the Company and four other third-party servicers that were awarded a USDS contract. Servicing under the USDS contract went live on April 1, 2024 and the Company recognized 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 Company earns less revenue from the Department on a per borrower blended basis under the new USDS servicing contract as compared with the legacy servicing contract. 15. Fair Value The following tables present the Company’s financial assets and liabilities that are measured at fair value on a recurring basis. As of March 31, 2025 As of December 31, 2024 Level 1 Level 2 Total Level 1 Level 2 Total Assets: Investments: Asset-backed debt securities - available-for-sale $ 100 1,157,962 1,158,062 100 1,085,726 1,085,826 Equity securities 445 — 445 455 — 455 Equity securities measured at net asset value (a) 80,396 74,039 Total investments 545 1,157,962 1,238,903 555 1,085,726 1,160,320 Derivative instruments — 1,473 1,473 — 3,232 3,232 Total assets $ 545 1,159,435 1,240,376 555 1,088,958 1,163,552 Liabilities: Derivative instruments $ — 822 822 — 53 53 Total liabilities $ — 822 822 — 53 53 (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. 30 The following table summarizes the fair values of all of the Company’s financial instruments on the consolidated balance sheets. The methodologies for estimating the fair value of financial assets and liabilities are described in note 24 of the notes to consolidated financial statements included in the 2024 Annual Report. As of March 31, 2025 Fair value Carrying value Level 1 Level 2 Level 3 Financial assets: Loans receivable $ 10,268,097 9,856,429 — — 10,268,097 Accrued loan interest receivable 566,275 566,275 — 566,275 — Cash and cash equivalents 220,517 220,517 220,517 — — Investments at fair value 1,238,903 1,238,903 545 1,157,962 — Investments - held-to-maturity asset-backed securities 212,904 207,357 — 212,904 — Notes receivable 64,281 64,281 — 64,281 — Beneficial interest in loan securitizations 221,991 206,367 — — 221,991 Restricted cash 317,139 317,139 317,139 — — Restricted cash – due to customers 294,471 294,471 294,471 — — Derivative instruments 1,473 1,473 — 1,473 — Financial liabilities: Bonds and notes payable 8,584,733 8,656,157 — 8,584,733 — Accrued interest payable 22,394 22,394 — 22,394 — Bank deposits 1,300,242 1,313,407 858,424 441,818 — Due to customers 379,277 379,277 379,277 — — Derivative instruments 822 822 — 822 — As of December 31, 2024 Fair value Carrying value Level 1 Level 2 Level 3 Financial assets: Loans receivable $ 10,008,165 9,443,461 — — 10,008,165 Accrued loan interest receivable 549,283 549,283 — 549,283 — Cash and cash equivalents 194,518 194,518 194,518 — — Investments at fair value 1,160,320 1,160,320 555 1,085,726 — Investments - held-to-maturity asset-backed securities 216,164 210,774 — 216,164 — Notes receivable 32,258 32,258 — 32,258 — Beneficial interest in loan securitizations 229,510 213,809 — — 229,510 Restricted cash 332,100 332,100 332,100 — — Restricted cash – due to customers 404,402 404,402 404,402 — — Derivative instruments 3,232 3,232 — 3,232 — Financial liabilities: Bonds and notes payable 8,343,565 8,309,797 — 8,343,565 — Accrued interest payable 21,046 21,046 — 21,046 — Bank deposits 1,172,707 1,186,131 744,721 427,986 — Due to customers 478,469 478,469 478,469 — — Derivative instruments 53 53 — 53 — 16. Subsequent Event - Partial Redemption of ALLO Investment Nelnet has both a voting and preferred membership interest investment in ALLO. On April 18, 2025, ALLO executed a financing transaction that will result in gross proceeds to ALLO of $ 500 million (the “Financing”). In conjunction with the Financing, on April 18, 2025, Nelnet, ALLO, and certain other ALLO investors entered into a Membership Unit Redemption Agreement (the “Redemption Agreement”) pursuant to which ALLO will redeem certain of its membership interests from certain investors in ALLO, including Nelnet (the “Transaction”). As part of the Transaction, ALLO will redeem all of Nelnet's outstanding preferred membership interests, including the preferred return accrued on such membership interests as of the closing date. In addition, ALLO will redeem a portion of Nelnet’s voting membership interest of ALLO. The Transaction is expected to close in late May 2025, subject to customary closing conditions. 31 Upon closing, Nelnet expects to receive aggregate cash proceeds of approximately $ 410 million from ALLO for these redemptions and recognize a pre-tax gain of approximately $ 175 million. Immediately following the closing of the Transaction, Nelnet will not own any preferred membership interests of ALLO, but will maintain a significant voting equity investment in ALLO. Nelnet’s ownership of ALLO will decrease from 45 % to approximately 26 %. Nelnet will continue to account for its remaining voting membership interest of ALLO under the HLBV method of accounting, with the carrying value of such interest remaining at $ 0 as of the closing date of the Transaction.