NELNET INC 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Management’s Discussion and Analysis of Financial Condition and Results of Operations is for the three and nine months ended September 30, 2025 and 2024. All dollars are in thousands, except per share amounts, unless otherwise noted.) The following discussion and analysis provides information that the Company’s management believes is relevant to an assessment and understanding of the consolidated results of operations and financial condition of the Company. The discussion should be read in conjunction with the Company’s consolidated financial statements included in the 2024 Annual Report. Forward-looking and cautionary statements This report contains forward-looking statements and information that are based on management's current expectations as of the date of this document. Statements that are not historical facts, including statements about the Company's plans and expectations for future financial condition, results of operations or economic performance, or that address management's plans and objectives for future operations, and statements that assume or are dependent upon future events, are forward-looking statements. The words “anticipate,” “assume,” “believe,” “continue,” “could,” “ensure,” “estimate,” “expect,” “forecast,” “future,” “intend,” “may,” “plan,” “potential,” “predict,” “scheduled,” “should,” “will,” “would,” and similar expressions, as well as statements in future tense, are intended to identify forward-looking statements. The forward-looking statements are based on assumptions and analyses made by management in light of management's experience and its perception of historical trends, current conditions, expected future developments, and other factors that management believes are appropriate under the circumstances. These statements are subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause the actual results and performance to be materially different from any future results or performance expressed or implied by such forward-looking statements. These factors include, among 40 others, the risks and uncertainties set forth in the “Risk Factors” sections of the 2024 Annual Report and this report and include such risks and uncertainties as: • risks related to the ability to successfully maintain and increase allocated volumes of student loans serviced by the Company under existing and future servicing contracts with the Department, risks related to unfavorable contract modifications or interpretations, risks related to consistently meeting service requirements to avoid the assessment of performance penalties, and risks related to the Company's ability to comply with agreements with third-party customers for the servicing of Federal Direct Loan Program, FFEL Program, private education, and consumer loans; • loan portfolio risks such as credit risk, prepayment risk, interest rate basis and repricing risk, risks related to the use of derivatives to manage exposure to interest rate fluctuations, uncertainties regarding the expected benefits from purchased securitized and unsecuritized FFELP, private education, consumer, and other loans, or investment interests therein, and initiatives to purchase additional FFELP, private education, consumer, and other loans; • financing and liquidity risks, including risks of changes in the interest rate environment; • risks from changes in the terms of education loans and in the educational credit and services markets resulting from changes in applicable laws, regulations, and government programs and budgets; • risks related to a breach of or failure in the Company's operational or information systems or infrastructure, or those of third-party vendors, including disclosure of confidential or personal information and/or damage to reputation resulting from cyber breaches; • risks related to use of artificial intelligence; • uncertainties inherent in forecasting future cash flows from student loan assets, including investment interests therein, and related asset-backed securitizations; • risks related to the ability of Nelnet Bank to achieve its business objectives and effectively deploy loan and deposit strategies and achieve expected market penetration; • risks related to the Company's solar tax equity investments and solar construction business, including risks of not being able to realize tax credits which remain subject to recapture by taxing authorities and risks from the impact of the enactment of the One Big Beautiful Bill that accelerates the expiration and phase out of solar energy credits; • risks and uncertainties related to other initiatives to pursue additional strategic investments (and anticipated income therefrom) including venture capital and real estate investments, reinsurance, acquisitions, and other activities (including risks associated with errors that occasionally occur in converting loan servicing portfolios to a new servicing platform), including activities that are intended to diversify the Company both within and outside of its historical core education-related businesses; • risks and uncertainties associated with climate change; and • risks and uncertainties associated with litigation matters and maintaining compliance with the extensive regulatory requirements applicable to the Company's businesses, including recent changes to the regulatory environment in the United States, and uncertainties inherent in the estimates and assumptions about future events that management is required to make in the preparation of the Company’s consolidated financial statements. All forward-looking statements contained in this report are qualified by these cautionary statements and are made only as of the date of this document. Although the Company may from time to time voluntarily update or revise its prior forward-looking statements to reflect actual results or changes in the Company's expectations, the Company disclaims any commitment to do so except as required by law. 41 OVERVIEW The Company is a diversified hybrid holding company with primary businesses being consumer lending, loan servicing, payments, and technology – with many of these businesses serving customers in the education space. The largest operating businesses engage in loan servicing and education technology services and payments. A significant portion of the Company's revenue is net interest income earned on a portfolio of federally insured student loans. The Company also makes and manages investments to further diversify both within and outside of its historical core education-related businesses including, but not limited to, investments in a fiber communications company (ALLO), early-stage and emerging growth companies (venture capital investments), real estate, reinsurance, and renewable energy (solar). In the Nelnet Financial Services division, which includes the Asset Generation and Management and Nelnet Bank reportable operating segments, the Company is also actively expanding its private education, consumer, and other loan portfolios. GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments The Company prepares its financial statements and presents its financial results in accordance with GAAP. However, it also provides additional non-GAAP financial information related to specific items management believes to be important in the evaluation of its operating results and performance. A reconciliation of the Company's GAAP net income to Non-GAAP net income excluding derivative market value adjustments, and a discussion of why the Company believes providing this additional information is useful to investors, are provided below. Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 GAAP net income attributable to Nelnet, Inc. $ 106,684 2,388 370,703 120,886 Realized and unrealized derivative market value adjustments (a) 788 13,165 10,978 3,668 Tax effect (b) (189) (3,160) (2,635) (880) Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments $ 107,283 12,393 379,046 123,674 Earnings per share: GAAP net income attributable to Nelnet, Inc. $ 2.94 0.07 10.18 3.29 Realized and unrealized derivative market value adjustments (a) 0.02 0.36 0.30 0.10 Tax effect (b) (0.01) (0.09) (0.07) (0.02) Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments $ 2.95 0.34 10.41 3.37 (a) "Derivative market value adjustments" includes both the realized portion of gains and losses (corresponding to variation margin received or paid on derivative instruments that are settled daily at a central clearinghouse) and the unrealized portion of gains and losses that are caused by changes in fair values of derivatives which do not qualify for "hedge treatment" under GAAP. "Derivative market value adjustments" does not include "derivative settlements" that represent the cash paid or received during the respective period to settle with derivative instrument counterparties the economic effect of the Company's derivative instruments based on their contractual terms. The accounting for derivatives requires that changes in the fair value of derivative instruments be recognized currently in earnings, with no fair value adjustment of the hedged item, unless specific hedge accounting criteria are met. Management has structured all of the Company’s derivative transactions with the intent that each is economically effective; however, the majority of the Company’s derivative instruments do not qualify for hedge accounting in the consolidated financial statements. As a result, the change in fair value for the derivative instruments that do not qualify for hedge accounting is reported in current period earnings with no consideration for the corresponding change in fair value of the hedged item. Under GAAP, the cumulative net realized and unrealized gain or loss caused by changes in fair values of derivatives in which the Company plans to hold to maturity will generally equal zero over the life of the contract. However, the net realized and unrealized gain or loss during any given reporting period fluctuates significantly from period to period. The Company believes these point-in-time estimates of asset and liability values related to its derivative instruments that are subject to interest rate fluctuations are subject to volatility mostly due to timing and market factors beyond the control of management, and affect the period-to-period comparability of the results of operations. Accordingly, the Company’s management utilizes operating results excluding these items for comparability purposes when making decisions regarding the Company’s performance and in presentations with credit rating agencies, lenders, and investors. Consequently, the Company reports this non-GAAP information because the Company believes that it provides additional information regarding operational and performance indicators that are closely assessed by management and represents what earnings would have been had these derivatives qualified for hedge accounting. There is no comprehensive, authoritative guidance for the presentation of such non-GAAP information, which is only meant to supplement GAAP results by providing additional information that management utilizes to assess performance. (b) The tax effects are calculated by multiplying the realized and unrealized derivative market value adjustments by the applicable statutory income tax rate. 42 Operating Segments The Company's reportable operating segments are described in note 1 of the notes to consolidated financial statements included in the 2024 Annual Report. They include: • Loan Servicing and Systems (LSS) - referred to as Nelnet Diversified Services (NDS) • Education Technology Services and Payments (ETSP) - referred to as Nelnet Business Services (NBS) • Asset Generation and Management (AGM), part of the Nelnet Financial Services (NFS) division • Nelnet Bank, part of the NFS division The Company earns fee-based revenue through its NDS and NBS reportable operating segments. The Company earns net interest income on its loan portfolio, consisting primarily of FFELP loans, through its AGM reportable operating segment. This segment is expected to generate significant amounts of cash as the FFELP portfolio amortizes. The Company actively works to maximize the amount and timing of cash flows generated from its FFELP portfolio and seeks to acquire additional loan assets to leverage its servicing scale and expertise to generate incremental earnings and cash flow. Nelnet Bank operates as an internet industrial bank franchise focused on the private education and unsecured consumer loan markets, with a home office in Salt Lake City, Utah. Other operating segments included in the NFS division include the Company's U.S. Securities and Exchange Commission (SEC)-registered investment advisor subsidiary (Whitetail Rock Capital Management LLC or "WRCM"), property and casualty reinsurance activities, investment activities in real estate, and investments in investment debt securities (primarily student loan and other asset-backed securities). Other business activities and operating segments that are not reportable and not part of the NFS division are combined and included in Corporate and Other Activities ("Corporate"). Corporate also includes interest income earned on cash balances held at the corporate level and interest expense incurred on unsecured corporate related debt transactions, certain investment activities including its investment in ALLO, early-stage and emerging growth companies (venture capital investments), solar tax equity investments, the operating results of the Company's solar engineering, procurement, and construction business, and certain shared service activities that are allocated to each operating segment based on estimated use of such activities and services. In addition, Corporate includes corporate costs and overhead functions not allocated to operating segments, including executive management, investments in innovation, and other holding company organizational costs. The information below presents the operating results (net income (loss) before taxes) for each of the Company's reportable and certain other operating segments reconciled to the consolidated financial statements for the three and nine months ended September 30, 2025 and 2024. See "Results of Operations" for additional detail regarding each reportable operating segment, the NFS operating segments, and Corporate and Other Activities under this Item 2. Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 NDS $ 46,270 (4,549) 84,741 13,686 NBS 24,957 26,813 95,963 100,046 Nelnet Financial Services division: AGM 36,621 (16,346) 93,848 41,710 Nelnet Bank 6,088 (4,758) 7,573 (7,330) WRCM 1,933 1,276 4,726 4,033 Nelnet Insurance Services 4,061 944 7,268 7,925 Real estate investments 1,513 1,865 (429) (2,223) Investment securities 12,936 9,953 29,031 34,590 Corporate: Unallocated corporate costs (9,909) (10,287) (31,819) (29,389) Solar tax equity investments (15,497) (8,509) (16,184) (8,775) Nelnet Renewable Energy - solar construction (6,025) (10,125) (30,201) (18,913) ALLO investment 1,137 6,606 194,789 1,953 Venture capital investments 33,520 2,136 39,080 4,848 Other corporate activities (1,268) 2,756 1,263 7,981 Eliminations/reclassifications 112 — 304 — Net income before taxes 136,448 (2,223) 479,953 150,141 Income tax (expense) benefit (35,773) 282 (120,294) (37,653) Net loss attributable to noncontrolling interests 6,009 4,329 11,044 8,398 Net income $ 106,684 2,388 370,703 120,886 43 2025 Operating Highlights Certain transactions have impacted the Company's operating results in 2025. These transactions are summarized below. Partial Redemption of ALLO Investment Nelnet had both voting and preferred membership interest investments in ALLO. On June 4, 2025, Nelnet redeemed a portion of its voting membership interests in ALLO and all its outstanding preferred membership interests, including the preferred return accrued on such membership interests through June 3, 2025. The Company received cash proceeds of $410.9 million from ALLO and recognized a pre-tax gain of $175.0 million as a result of this transaction. See note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information about this transaction. Government Servicing Contract Upon reaching a final agreement with the Department of Education, the Company's Loan Servicing and Systems operating segment (NDS) recognized $32.9 million of non-recurring revenue in the third quarter 2025 on a contract modification for services previously performed. Sale of Consumer Loans - Reversal of Allowance During the third quarter of 2025, the Company's AGM operating segment sold $203.3 million of consumer loans to an unrelated third party who securitized such loans. As partial consideration received for the loans sold, the Company received a residual interest in the loan securitization that is included in "other investments and notes receivable, net" on the Company's consolidated balance sheet. Once a loan is classified as held for sale, any allowance for loan losses that existed immediately prior to the reclassification to held for sale is reversed. During the third quarter of 2025, the Company reduced its allowance (and recognized negative provision expense) of $28.9 million (that increased income) related to this loan sale. Venture Capital Investment The Company has an investment in an unaffiliated third-party technology company (the “Investee”). On August 11, 2025, the Investee completed an additional equity raise and accepted tender offers to redeem existing equity holders with a portion of the proceeds. The Company redeemed a portion of its investment and received cash proceeds of $10.1 million and recognized a pre-tax gain of $7.8 million. The Company accounts for its investment in the Investee using the measurement alternative method, which requires it to adjust its carrying value of the investment for changes resulting from observable market transactions. As a result of the Investee’s equity raise, the Company recognized a pre-tax gain of $22.4 million during the third quarter of 2025 to adjust its carrying value of its remaining investment in the Investee to reflect the August 2025 transaction value. Recent Developments Canadian Student Loan Servicing Acquisition On October 23, 2025, the Company announced that it entered into a definitive and binding purchase agreement with DH Corporation, a wholly owned subsidiary of Finastra Holdings Limited (“Finastra”), pursuant to which Nelnet Canada, Inc., a wholly owned subsidiary of the Company, will acquire Finastra’s Canadian student loan servicing business for a purchase price of approximately $93 million in cash. The transaction is expected to close in the first calendar quarter of 2026, subject to customary closing conditions. Finastra’s Canadian student loan servicing business is the leading provider of student loan servicing solutions to governments and financial institutions in Canada providing technology enabled managed services across the loan lifecycle. The business currently services loans for 2.4 million borrowers on proprietary technology platforms. The operating results of this acquisition will be included in the Loan Servicing and Systems reportable operating segment following the closing of the transaction. Nelnet Foundation The Nelnet Foundation was established to help the Company fulfill its core value of giving back to the communities where we live and work. Historically, the Company has contributed annually to the Foundation to support this mission. Due to recent tax law changes and strong operating performance in 2025, the Company’s Board of Directors has approved a contribution of up to $35 million to the Foundation. The Company expects this amount will cover its 2025 annual contribution as well as contributions for the foreseeable future. The full contribution will be expensed in the fourth quarter of 2025. 44 CONSOLIDATED RESULTS OF OPERATIONS An analysis of the Company's consolidated operating results for the three and nine months ended September 30, 2025 compared with the same periods in 2024 is provided below. The Company operates as distinct reportable operating segments as described above. For a reconciliation of the reportable segment operating results to the consolidated results of operations, see note 12 of the notes to consolidated financial statements included under Part I, Item 1 of this report. Since the Company monitors and assesses its operations and results based on these segments, the discussion following the consolidated results of operations is presented on a reportable segment basis. Three months ended Nine months ended September 30, September 30, 2025 2024 2025 2024 Additional information Loan interest $ 162,717 190,211 501,260 609,064 Decrease was due to a decrease in the average balance of loans and gross yield earned on loans. Investment interest 43,241 50,272 124,815 143,086 Includes income from interest-earning deposits and investments and restricted cash in asset-backed securitizations. Decrease was due to a decrease in interest rates and interest earned on restricted cash in asset-backed securitizations due to lower balances. These decreases were partially offset by an increase in the average balance of investments. Total interest income 205,958 240,483 626,075 752,150 Interest expense 120,708 168,328 378,677 539,367 Decrease was due to a decrease in the average balance of debt outstanding and decrease in cost of funds, partially offset by an increase in interest expense on a larger deposit balance at Nelnet Bank. Net interest income 85,250 72,155 247,398 212,783 Less (negative provision) provision for loan losses (3,563) 18,111 29,704 32,551 Represents the current period provision to reflect the lifetime expected credit losses related to the Company's loan portfolio. During the third quarter of 2025 and second quarter of 2024, the Company reduced its allowance (and recognized negative provision expense) of $28.9 million and $12.6 million, respectively, related to consumer loan sales. See note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report for the factors impacting provision for loan losses for the periods presented. Net interest income after provision for loan losses 88,813 54,044 217,694 180,232 Other income (expense): LSS revenue 151,052 108,175 392,517 344,428 See LSS operating segment - results of operations. ETSP revenue 129,321 118,179 394,836 378,627 See ETSP operating segment - results of operations. Reinsurance premiums earned 23,165 16,619 73,964 44,250 Represents premiums earned, net of ceded portion, from reinsurance treaties on property and casualty policies. Increase was primarily due to an increase in overall property volume and new business. Solar construction revenue 5,738 19,321 10,992 42,741 Represents revenue earned from NRE providing solar EPC services. Uncertain economic conditions and legislation activity have impacted new construction projects being initiated which has adversely impacted and will continue to adversely impact revenue. See Part II, Item 1A "Risk Factors" of this report for additional information on the adverse impacts on NRE's business related to the enactment of the One Big Beautiful Bill. Other, net 35,730 15,706 82,401 33,807 See table below for the components of "other, net." Loss on sale of loans, net (2,472) (107) (1,562) (1,685) The Company recognizes gains/losses from selling loans. See NFS division - results of operations - AGM operating segment. Gain on partial redemption of ALLO investment — — 175,044 — Represents a gain recognized from the partial redemption of the ALLO investment. See note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information. Derivative settlements, net 761 1,640 2,250 5,046 The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate volatility. Derivative settlements for each applicable period should be evaluated with the Company's net interest income. See NFS division - results of operations - AGM and Nelnet Bank operating segments - for additional information. Derivative market value adjustments, net (788) (13,165) (10,978) (3,668) Includes the realized and unrealized gains and losses that are caused by changes in fair values of derivatives which do not qualify for "hedge treatment" under GAAP. The majority of the derivative market value adjustments during the periods presented related to the changes in fair value of AGM's floor income interest rate swaps and derivatives at Nelnet Bank. Such changes reflect that a decrease in the forward yield curve during a reporting period results in a decrease in the fair value of the Company's floor income interest rate swaps, and an increase in the forward yield curve during a reporting period results in an increase in the fair value of such swaps. Total other income (expense), net 342,507 266,368 1,119,464 843,546 Cost of services and expenses: Loan servicing contract fulfillment and acquisition costs 2,021 196 5,500 392 Represents primarily the amortization of previously capitalized contract fulfillment costs. The costs were pre-contract costs incurred to enhance the resources of the Company to satisfy future performance obligations. 45 Cost to provide education technology services and payments 50,363 45,273 138,254 134,106 Represents direct costs to provide payment processing and instructional services in ETSP. See ETSP operating segment - results of operations. Cost to provide solar construction services 7,607 26,815 29,485 49,115 Represents direct costs related to NRE providing solar construction services. Since the acquisition of GRNE Solar, NRE has incurred low and, in many cases, negative margins on legacy projects. The Company has a handful of remaining legacy construction contracts it is obligated to complete, down from over 30 at the beginning of 2024. NRE continues to recognize loss reserves that represent NRE's estimate of costs it will incur to complete the remaining legacy contracts. Total cost of services 59,991 72,284 173,239 183,613 Salaries and benefits 144,778 146,192 417,700 429,701 Decrease was primarily due to staff reductions announced in June 2024 in the LSS operating segment after the completion of required servicing platform enhancements for the new government servicing contract and the transfer of direct loan servicing volume to one platform. These staff reductions took place during the second half of 2024. These reductions were partially offset by an increase in headcount at the ETSP operating segment to support the growth of its customer base and the investment in the development of new technologies. Depreciation and amortization 7,327 13,661 24,206 45,572 Includes depreciation of property and equipment and the amortization of intangibles from prior business acquisitions. Decrease was primarily due to (i) reduction in depreciation as a result of prior year non-cash impairment charges recognized for lease, buildings, and associated improvements as the Company consolidated office space; and (ii) certain information technology activities moved to cloud computing and such expenses classified as other expenses. Reinsurance losses and underwriting expenses 19,962 16,761 67,836 39,066 Represents case reserve, estimated loss reserve, and amortization of acquisition costs, which consist primarily of commissions and brokerage expenses, net of ceded portion, from reinsurance treaties on property and casualty policies. Increase was primarily due to an increase in overall property volume and new business. Increase was also related to increased claims development in several commercial auto programs, which the Company has exited; however, adverse development of related expenses may continue to be recognized in future periods. Other expenses 53,669 44,685 153,200 138,820 Includes expenses such as postage and distribution, consulting and professional fees, servicing fees, marketing, travel, communications, and certain information technology-related costs. Increase was primarily due to certain information technology activities moved to cloud computing and such expenses are classified as other expenses. See corresponding decrease to depreciation and amortization above. Total operating expenses 225,736 221,299 662,942 653,159 Impairment expense and provision for beneficial interests 9,145 29,052 21,024 36,865 Represents primarily the provision expense of recognized non-cash allowances for the Company's beneficial interest in certain loan securitizations due to an increase in cumulative loss expectations and non-cash impairment charges related to operating lease assets and a solar development project. See note 9 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information. Total expenses 294,872 322,635 857,205 873,637 Income (loss) before income taxes 136,448 (2,223) 479,953 150,141 Income tax (expense) benefit (35,773) 282 (120,294) (37,653) The year-to-date effective tax rate was 24.50% and 23.75% for the nine months ended September 30, 2025 and 2024, respectively. The Company expects its effective tax rate for the year ending December 31, 2025 will range between 23% and 25%. Net income (loss) 100,675 (1,941) 359,659 112,488 Net loss attributable to noncontrolling interests 6,009 4,329 11,044 8,398 Represents the net income/loss attributable to the holders of noncontrolling membership interests. The majority is attributed to noncontrolling membership interests related to the Company's solar tax equity investments. Net income attributable to Nelnet, Inc. $ 106,684 2,388 370,703 120,886 Additional information: See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional information about non-GAAP financial information. Net income attributable to Nelnet, Inc. $ 106,684 2,388 370,703 120,886 Derivative market value adjustments, net 788 13,165 10,978 3,668 Tax effect (189) (3,160) (2,635) (880) Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments $ 107,283 12,393 379,046 123,674 46 The following table summarizes 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, 2025 2024 2025 2024 Additional information Investment activity, net (a) $ 42,317 8,529 56,216 7,447 See note (b) below for additional information. Administration/sponsor fee income 2,267 1,420 4,978 4,448 See NFS division - results of operations - AGM operating segment. Investment advisory services (WRCM) 2,010 1,394 4,987 4,427 See NFS division - results of operations - NFS other operating segments. Borrower late fee income 1,817 1,741 5,046 7,460 See NFS division - results of operations - AGM operating segment. ALLO preferred return — 4,783 14,400 11,353 See Corporate - results of operations and note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report. Loss from ALLO voting membership interest investment — — — (10,693) See Corporate - results of operations and note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report. Loss from solar investments, net (10,884) (11,238) (11,930) (11,068) See Corporate - results of operations and note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report. (Loss) gain on debt repurchases (8,304) 7 (7,865) (2) See NFS division - results of operations - AGM operating segment and note 4 of the notes to consolidated financial statements included under Part I, Item 1 of this report. Other 6,507 9,070 16,569 20,435 Other, net $ 35,730 15,706 82,401 33,807 (a) The Company anticipates fluctuations in future periodic earnings resulting from investment purchases, sales, and valuation adjustments. (b) During the third quarter of 2025, the Company recognized a $7.8 million realized gain as a result of redeeming a portion of a venture capital investment and a $22.4 million unrealized gain to adjust the carrying value of its remaining equity interests in this investment to the transaction value. See note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information. Investment activity by operating segment and investment type follows: Real Estate Venture Capital and Funds Equity / Bonds Total Real Estate Venture Capital and Funds Equity / Bonds Total Three months ended September 30, 2025 2024 NFS - AGM $ — 4,453 — 4,453 — 1,778 — 1,778 NFS - Nelnet Bank — 641 741 1,382 — 219 589 808 NFS - Other Operating Segments 1,888 — 775 2,663 2,116 — 1,349 3,465 Corporate — 33,824 (5) 33,819 — 2,478 — 2,478 $ 1,888 38,918 1,511 42,317 2,116 4,475 1,938 8,529 Nine months ended September 30, 2025 2024 NFS - AGM $ — 9,601 — 9,601 — (600) — (600) NFS - Nelnet Bank — 514 1,176 1,690 — 31 1,874 1,905 NFS - Other Operating Segments 698 — 4,155 4,853 (1,510) — 1,872 362 Corporate — 40,077 (5) 40,072 — 5,780 — 5,780 $ 698 50,192 5,326 56,216 (1,510) 5,211 3,746 7,447 47 LOAN SERVICING AND SYSTEMS OPERATING SEGMENT – RESULTS OF OPERATIONS Loan Servicing Volumes As of September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 Servicing volume (dollars in millions): Government $ 458,679 465,689 482,786 489,877 492,142 489,298 495,409 494,691 FFELP 11,982 12,386 12,826 13,260 13,745 14,576 15,783 17,462 Private and consumer 38,060 38,018 46,728 29,226 20,666 19,876 21,015 20,493 Total $ 508,721 516,093 542,340 532,363 526,553 523,750 532,207 532,646 Number of servicing borrowers: Government 12,387,665 12,694,386 13,453,127 14,049,550 14,114,468 14,096,152 14,328,013 14,503,057 FFELP 482,696 502,205 524,421 549,861 574,979 610,745 656,814 725,866 Private and consumer 1,325,037 1,326,451 1,350,999 1,168,293 851,747 829,072 882,256 894,703 Total 14,195,398 14,523,042 15,328,547 15,767,704 15,541,194 15,535,969 15,867,083 16,123,626 Number of remote hosted borrowers: 2,839,493 2,056,358 1,427,800 842,200 662,075 133,681 65,295 70,580 Summary and Comparison of Operating Results Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Additional information Interest income $ 531 894 1,875 4,046 Represents interest income on cash balances primarily collected from borrower remittances that are subsequently disbursed to servicing customers (lenders). Decrease was due to a decrease in average balance of loan repayment funds held in custody for lenders and a decrease in interest rates. Loan servicing and systems revenue 151,052 108,175 392,517 344,428 See table below for additional information. Intersegment servicing revenue 5,313 5,428 16,600 18,419 Represents revenue earned by LSS from servicing loans for AGM and Nelnet Bank. Decrease was due to the continued amortization of AGM's FFELP portfolio. Intersegment servicing revenue will continue to decrease as AGM's FFELP portfolio pays off. Other income 105 690 331 2,085 Decrease was due to administrative support services provided in 2024 that are no longer being provided. The 2025 activity represents revenue earned from leasing available owned office space to third parties. Total other income 156,470 114,293 409,448 364,932 Contract fulfillment and acquisition costs 2,021 196 5,500 392 Represents primarily the amortization of previously capitalized contract fulfillment costs. The costs were pre-contract costs incurred to enhance the resources of the Company to satisfy future performance obligations. Salaries and benefits 70,126 76,820 205,249 224,172 Decrease was due to staff reductions announced in June 2024 after the completion of required servicing platform enhancements for the new government servicing contract and the transfer of direct loan servicing volume to one platform. These staff reductions took place during the second half of 2024. Depreciation 1,725 4,854 6,199 15,304 Decrease was due to certain information technology activities moved to cloud computing and incurred at the corporate level and such costs are classified as other expenses and intercompany expenses, respectively. Postage expense 8,735 8,467 25,861 28,350 Increase during the three months ended September 30, 2025 compared with the same period in 2024 was primarily due to an increase in consumer loan servicing volume from the conversion of Discover Financial Services and SoFi Lending Corp. during the fourth quarter of 2024 and first quarter of 2025 and higher postage rates. The decrease in the nine months ended September 30, 2025 compared with the same period in 2024 was due to a non-recurring volume-based credit earned from the Company's mail provider and recognized in the first quarter of 2025. Other expenses 10,862 11,000 32,793 31,119 The total of other expenses and intercompany expenses decreased due to moving to one platform in 2024 and continued focus on expense reductions. Intersegment expenses represents costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services. Intersegment expenses 17,262 18,399 50,980 55,955 Total operating expenses 108,710 119,540 321,082 354,900 Total expenses 110,731 119,736 326,582 355,292 48 Income (loss) before income taxes 46,270 (4,549) 84,741 13,686 Income tax (expense) benefit (11,105) 1,092 (20,338) (3,284) Represents income tax expense at an effective tax rate of 24%. Net income (loss) $ 35,165 (3,457) 64,403 10,402 GAAP before tax operating margin 30.0 % (4.0) % 21.0 % 3.8 % Before tax operating margin is a measure of before tax operating profitability as a percentage of revenue, and for LSS is calculated as income before income taxes divided by the total of loan servicing and systems revenue (less contract fulfillment and acquisition costs), intersegment servicing revenue, and other income. The Company uses this metric to monitor and assess the segment’s performance, manage operating costs, identify and evaluate business trends affecting the segment, and make strategic decisions, and believes that it provides additional information to facilitate an understanding of the operating performance of the segment and provides a meaningful comparison of the results of operations between periods. Before tax operating margin, excluding the $32.9 million of non-recurring government loan servicing revenue recognized in the third quarter of 2025 as discussed below, increased due to an increase in private education and consumer loan servicing volume and a decrease in total expenses obtained through cost-saving measures executed primarily in 2024. This was partially offset for the nine months ended September 30, 2025 compared with the same period in 2024 due to lower revenue earned on a per-borrower blended basis under the new government servicing contract (which the Company recognized revenue under beginning April 1, 2024) as compared with the legacy government contract. Non-recurring government loan servicing revenue (19.0) — (7.0) — Non-GAAP before tax operating margin, excluding non-recurring government loan servicing revenue 11.0 % (4.0) % 14.0 % 3.8 % Loan servicing and systems revenue The following table presents disaggregated revenue by service offering for each reporting period: Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Additional information Government loan servicing $ 112,798 85,215 285,896 277,705 Represents revenue from the Company's servicing contract with the Department. Upon reaching a final agreement with the Department, the Company recognized $32.9 million of non-recurring revenue in the third quarter of 2025 on a contract modification for services previously performed. Excluding the non-recurring revenue, the decrease was due to a decrease in the number of borrowers serviced, and for the nine months ended September 30, 2025 compared to the same period in 2024 was also due to lower revenue earned on a per-borrower blended basis under the new government servicing contract (which the Company recognized revenue under beginning April 1, 2024) as compared with the legacy government contract. The Company expects the number of borrowers serviced under this contract will continue to decrease through the fourth quarter of 2025 as volume is transferred from the Company to its remote hosted servicing customer at the Department's direction to stand-up and establish the new servicer. In addition, volume is expected to decrease beginning in the fourth quarter of 2025 due to borrowers exiting the CARES forbearance period that have not made payments. These borrowers are expected to be transferred to the Debt Management and Collections System that is operated by the Department of Education and used to manage and facilitate the collection of defaulted federal student loans. Private education and consumer loan servicing 24,293 13,057 69,721 38,634 Increase was due to an increase in loan servicing volume from the conversion of Discover Financial Services and SoFi Lending Corp. loan portfolios during the fourth quarter of 2024 and first quarter of 2025. Over time, revenue earned on the Discover Financial Services portfolio will decrease as borrowers pay off their loans. FFELP loan servicing 2,035 2,945 6,909 9,570 Represents revenue from servicing third-party customers' FFELP portfolios. Over time, FFELP servicing revenue will decrease as third-party customers' FFELP portfolios pay off. Software services 10,584 5,197 27,027 14,617 Represents revenue from providing remote hosted servicing software to certain Department and other servicers and providing diversified technology services. Increase was primarily due to the Company's recognition of revenue beginning in the second quarter of 2024 from a new remote hosted servicing customer awarded a USDS contract. The Company expects software services revenue to increase through the fourth quarter of 2025 as additional volume is transferred from the Company to this new remote hosted servicing customer at the Department's direction to stand-up and establish the new servicer. Outsourced services 1,342 1,761 2,964 3,902 Represents revenue from providing contact center and back office operational outsourcing services. Loan servicing and systems revenue $ 151,052 108,175 392,517 344,428 49 EDUCATION TECHNOLOGY SERVICES AND PAYMENTS OPERATING SEGMENT – RESULTS OF OPERATIONS As discussed further in the Company's 2024 Annual Report, this segment of the Company’s business is subject to seasonal fluctuations which correspond, or are related to, the traditional school year. Based on the timing of revenue recognition and when expenses are incurred, revenue and before tax operating margin are higher in the first quarter compared with the remainder of the year. Summary and Comparison of Operating Results Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Additional information Interest income $ 8,564 9,734 20,921 23,315 Represents interest income on tuition funds held in custody for schools. Decrease was due to a decrease in interest rates partially offset by higher balances. Education technology services and payments revenue 129,321 118,179 394,836 378,627 See table below for additional information. Intersegment revenue 70 60 198 166 Total other income 129,391 118,239 395,034 378,793 Cost of services 50,363 45,273 138,254 134,106 See table below for additional information. Salaries and benefits 43,029 41,053 126,368 121,956 Increase was due to an increase in headcount to support the growth of the customer base and the investment in the development of new technologies. Depreciation and amortization 2,504 2,616 7,439 8,012 Other expenses 9,537 7,614 28,489 23,772 Increase was due to an increase in professional fees and technology services. Intersegment expenses, net 6,420 4,604 18,297 14,216 Represents costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services. Total operating expenses 61,490 55,887 180,593 167,956 Impairment expense 1,145 — 1,145 — The Company recorded a non-cash impairment charge related to capitalized software during the third quarter of 2025. Total expenses 112,998 101,160 319,992 302,062 Income before income taxes 24,957 26,813 95,963 100,046 Income tax expense (5,990) (6,450) (23,042) (24,035) Represents income tax expense at an effective tax rate of 24%. Net income 18,967 20,363 72,921 76,011 Net loss attributable to noncontrolling interests — 54 45 101 Amounts for noncontrolling interests reflect the net loss attributable to the holders of minority membership interests in NextGen. In April 2025, the Company acquired the remaining 20.0% of NextGen for $3.9 million. Net income $ 18,967 20,417 72,966 76,112 Net income has been negatively impacted in 2025 compared with 2024 due to a decrease in contribution from FACTS education services as a result of the end of funding of the EANS program in 2024 as described in the revenue table below and an increase in operating expenses to support the growth in the customer base and investments in the development of new technologies. 50 Education technology services and payments revenue The following table presents disaggregated revenue by service offering and before tax operating margin for each reporting period: Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Additional information Tuition payment plan services $ 32,971 31,659 109,057 104,702 Increase was due to a higher number of payment plans in the K-12 and higher education markets for both new and existing customers. Payment processing 59,484 55,813 148,535 137,926 Increase was due to an increase in payment volumes for both the K-12 and higher education markets due to new customers and an increase in volume from existing customers. Education technology services 36,323 30,080 136,499 133,306 Increase was due to an increase in professional development services and instructional services from non-Emergency Assistance to Non-Public Schools (EANS) funding sources, in addition to increases in revenue from the Company's financial aid management and enrollment services. The timing and amount of revenue recognition for professional development and instructional services depends on both the availability of government funding to schools and each school's decision regarding when and how to use those funds. This increase was partially offset by a decrease in FACTS education services revenue which resulted from the winding down of economic aid provided to private schools in response to the COVID-19 pandemic. Instructional services revenue provided to private schools has been funded by the EANS program. The EANS II program funding ended on September 30, 2024. Although schools still have allocated funds to spend, future instructional services revenue will be adversely impacted compared to recent historical results due to the EANS funding ending in 2024. Revenue earned under the EANS program was $1.6 million and $0.1 million for the first and second quarters of 2025 ($1.7 million earned year to date through September 30, 2025) and $2.4 million and $21.4 million for the three and nine month periods ended September 30, 2024. Other 543 627 745 2,693 Education technology services and payments revenue 129,321 118,179 394,836 378,627 Cost of services 50,363 45,273 138,254 134,106 Represents direct costs to provide payment processing revenue and such costs decrease/increase in relationship to payment volumes. Costs to provide instructional services are also a component of this expense and decrease/increase in relationship to instructional services revenues. Net revenue $ 78,958 72,906 256,582 244,521 GAAP before tax operating margin 31.6 % 36.8 % 37.4 % 40.9 % Before tax operating margin, excluding net interest income, is a non-GAAP measure of before tax operating profitability as a percentage of revenue, and for the ETSP segment is calculated as income before income taxes less net interest income divided by net revenue. The Company uses this metric to monitor and assess the segment’s performance, manage operating costs, identify and evaluate business trends affecting the segment, and make strategic decisions, and believes that it facilitates an understanding of the operating performance of the segment and provides a meaningful comparison of the results of operations between periods. Before tax operating margin, excluding net interest income, decreased primarily due to an increase in operating expenses to support the growth in the customer base and investments in the development of new technologies. Before tax operating margin will continue to be impacted by these items throughout 2025 compared with 2024. Net interest income (10.8) (13.4) (8.2) (9.5) Non-GAAP before tax operating margin, excluding net interest income 20.8 % 23.4 % 29.2 % 31.4 % 51 NELNET FINANCIAL SERVICES DIVISION - RESULTS OF OPERATIONS Asset Generation and Management Operating Segment Loan Portfolio As of September 30, 2025, the AGM operating segment had an $8.8 billion loan portfolio, consisting primarily of federally insured loans. For a summary of the Company’s loan portfolio as of September 30, 2025 and December 31, 2024, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report. Loan Activity The following table sets forth the activity of loans in the AGM operating segment: FFELP Private Consumer loans and other financing receivables Total Three months ended September 30, 2025 Balance as of June 30, 2025 $ 8,367,085 156,614 411,470 8,935,169 Loan acquisitions (a) 70,301 — 1,516,370 1,586,671 Repayments, claims, capitalized interest, participations, and other, net (214,179) (8,084) (883,850) (1,106,113) Loans lost to external parties (55,470) (793) — (56,263) Loans sold (229,983) — (203,251) (433,234) Loans contributed to Nelnet Bank (77,497) — — (77,497) Balance as of September 30, 2025 $ 7,860,257 147,737 840,739 8,848,733 Three months ended September 30, 2024 Balance as of June 30, 2024 $ 9,483,733 247,437 179,447 9,910,617 Loan acquisitions 104,914 — 129,202 234,116 Repayments, claims, capitalized interest, participations, and other, net (310,953) (12,300) (62,951) (386,204) Loans lost to external parties (206,952) (842) — (207,794) Loans sold — — (1,146) (1,146) Balance as of September 30, 2024 $ 9,070,742 234,295 244,552 9,549,589 Nine months ended September 30, 2025 Balance as of December 31, 2024 $ 8,388,564 221,744 345,560 8,955,868 Loan acquisitions (a) 773,727 — 1,788,660 2,562,387 Repayments, claims, capitalized interest, participations, and other, net (681,548) (29,539) (1,090,082) (1,801,169) Loans lost to external parties (181,006) (2,295) — (183,301) Loans sold (361,983) — (203,399) (565,382) Loans contributed to Nelnet Bank (77,497) (42,173) — (119,670) Balance as of September 30, 2025 $ 7,860,257 147,737 840,739 8,848,733 Nine months ended September 30, 2024 Balance as of December 31, 2023 $ 11,686,207 277,320 85,935 12,049,462 Loan acquisitions 104,914 — 405,211 510,125 Repayments, claims, capitalized interest, participations, and other, net (961,171) (40,258) (111,253) (1,112,682) Loans lost to external parties (1,559,516) (2,767) — (1,562,283) Loans sold (199,692) — (135,341) (335,033) Balance as of September 30, 2024 $ 9,070,742 234,295 244,552 9,549,589 (a) The Company began to acquire Pay Later receivables during the third quarter of 2025. Consumer loan acquisitions excluding Pay Later receivables was $169.9 million and $442.2 million during the three and nine months ended September 30, 2025, respectively. 52 The Company has partial ownership in certain consumer, private education, and federally insured student loan securitizations that are accounted for as held-to-maturity beneficial interest investments and included in "other investments and notes receivable, net" in the Company's consolidated financial statements. As of the latest remittance reports filed by the various trusts prior to or as of September 30, 2025, the Company’s ownership correlates to approximately $1.75 billion of loans included in these securitizations. The loans held in these securitizations are not included in the above table. Investment interest income earned by the Company from the beneficial interest in loan securitizations is included in "investment interest" on the Company's consolidated statements of income and is not a component of the Company's loan interest income. Beginning in late 2021, the Company experienced accelerated run-off of its FFELP portfolio due to FFELP borrowers consolidating their loans into Federal Direct Loan Program loans as a result of the CARES Act payment pause on Department-held loans and the initiatives offered by the Department for FFELP borrowers to consolidate their loans to qualify for loan forgiveness under various programs. However, the Company has experienced a significant decrease in FFELP borrowers consolidating their loans into the Federal Direct Loan Program since August 2024, which has resulted in prepayment rates on the Company’s FFELP portfolio being more consistent with longer-term historical rates. Allowance for Loan Losses, Loan Delinquencies, and Loan Charge-offs For a summary of the allowance as a percentage of the ending balance, loan status, delinquency amounts, and other key credit quality indicators for each of AGM’s loan portfolios as of September 30, 2025 and December 31, 2024; and the activity in AGM's allowance for loan losses and net charge-offs as a percentage of average loans for the three and nine months ended September 30, 2025 and 2024, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report. Loan Spread Analysis The following table analyzes the loan spread on AGM’s portfolio of loans, which represents the spread between the yield earned on loan assets and the costs of the liabilities and derivative instruments used to fund the assets. The spread amounts included in the following table are calculated by using the notional dollar values found in the table under the caption "Net loan interest income, including settlements on derivatives" below, divided by the average balance of loans or debt outstanding. Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Variable loan yield, gross 6.89 % 8.16 % 7.37 % 8.10 % Consolidation rebate fees (0.83) (0.80) (0.82) (0.80) Discount accretion, net of premium and deferred origination costs amortization 0.50 (0.02) 0.07 0.04 Variable loan yield, net 6.56 7.34 6.62 7.34 Loan cost of funds - interest expense (a) (5.34) (6.44) (5.45) (6.48) Loan cost of funds - derivative settlements (b) (c) 0.01 0.01 0.01 0.01 Variable loan spread 1.23 0.91 1.18 0.87 Fixed-rate floor income, gross 0.05 0.01 0.05 0.01 Fixed-rate floor income - derivative settlements (b) (d) 0.02 0.05 0.02 0.04 Fixed-rate floor income, net of settlements on derivatives 0.07 0.06 0.07 0.05 Core loan spread 1.30 % 0.97 % 1.25 % 0.92 % Average balance of AGM's loans $ 8,774,923 9,792,095 9,178,273 10,612,686 Average balance of AGM's debt outstanding 7,775,269 9,296,236 8,219,778 10,280,527 (a) The Company recognized $5.6 million in non-cash interest expense during the third quarter of 2024 as a result of writing off the remaining unamortized debt discount related to the redemption of certain asset-backed debt securities prior to their maturity. This non-cash expense was excluded from the respective periods in the table above. (b) Derivative settlements represent the cash paid or received during the respective period to settle with derivative instrument counterparties the economic effect of the Company's derivative instruments based on their contractual terms. Derivative accounting requires that net settlements with respect to derivatives that do not qualify for "hedge treatment" under GAAP be recorded in a separate income statement line item below net interest income. The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate volatility. As such, management believes derivative settlements for each applicable period should be evaluated with the Company’s net interest income (loan spread) as presented in this table. The Company reports this non-GAAP information because the Company believes that it provides additional information regarding operational and performance indicators that are closely assessed by management. There is no comprehensive, authoritative guidance for the presentation of such non-GAAP information, 53 which is only meant to supplement GAAP results by providing additional information that management utilizes to assess performance. See note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information on the Company's Non-Nelnet Bank derivative instruments, including the net settlement activity recognized by the Company for each type of derivative for the 2025 and 2024 periods presented in the table under the caption "Consolidated Financial Statement Impact Related to Derivatives - Statements of Income" in note 5 and in this table. A reconciliation of core loan spread, which includes the impact of derivative settlements on loan spread, to loan spread without derivative settlements follows: Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Core loan spread 1.30 % 0.97 % 1.25 % 0.92 % Derivative settlements (basis swaps) (0.01) (0.01) (0.01) (0.01) Derivative settlements (fixed-rate floor income) (0.02) (0.05) (0.02) (0.04) Loan spread 1.27 % 0.91 % 1.22 % 0.87 % (c) Derivative settlements consist of net settlements received related to the Company’s basis swaps. (d) Derivative settlements consist of net settlements received related to the Company’s floor income interest rate swaps. The relationship between the indices in which AGM earns interest on its loans and funds such loans has a significant impact on loan spread. See Item 3, “Quantitative and Qualitative Disclosures About Market Risk - Interest Rate Risk - AGM Operating Segment,” which provides additional detail on AGM’s FFELP student loan assets and related funding for those assets. In a decreasing interest rate environment, student loan spread on FFELP loans decreases in the short term because of the timing of interest rate resets on the Company's assets occurring daily in contrast to the timing of the interest rate resets on the Company's debt occurring either monthly or quarterly. This also results in student loan spread increasing in the short term in an increasing interest rate environment. Variable loan spread was higher during the three and nine months ended September 30, 2025 compared with the same periods in 2024 due to an increase in loans funded by the Company with operating cash (versus funded with debt). As of September 30, 2025, AGM had $291.9 million (par value) of unencumbered federally insured, private education, consumer, and other loans (as compared to $253.5 million, $249.2 million, and $77.0 million as of December 31, 2024, September 30, 2024, and December 31, 2023, respectively). The difference between variable loan spread and core loan spread is fixed-rate floor income earned on a portion of AGM's federally insured student loan portfolio. See Item 3, “Quantitative and Qualitative Disclosures About Market Risk - Interest Rate Risk - AGM Operating Segment,” which provides additional detail on AGM's federally insured student loans earning fixed-rate floor income. Summary and Comparison of Operating Results Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Additional information Interest income: Loan interest $ 145,984 180,571 457,752 583,907 See table below for additional analysis. Investment interest 12,051 18,970 37,462 54,513 Decrease was due to less investment interest earned on beneficial interest investments and restricted cash included in student loan securitizations and other secured debt facilities. AGM earned $7.3 million and $10.5 million of interest income on beneficial interest investments for the three months ended September 30, 2025 and 2024, respectively, and $23.7 million and $27.5 million for the nine months ended September 30, 2025 and 2024, respectively. Interest earned on restricted cash decreased due to lower balances and a decrease in interest rates. Total interest income 158,035 199,541 495,214 638,420 Loan interest expense 104,616 156,050 334,869 504,509 See table below for additional analysis. Intercompany interest expense 8,734 5,092 12,850 19,169 Represents interest paid by AGM to Nelnet, Inc. (parent company) related to (i) internal borrowings to fund equity advances on certain AGM debt facilities; and (ii) AGM issued bonds held by Nelnet, Inc. Increase for the three months ended September 2025 compared with the same period in 2024 was due to an increase in the weighted average balance of outstanding AGM issued bonds held by Nelnet, Inc., partially offset by a decrease in interest rates. Decrease for the nine months ended September 2025 compared with the same period in 2024 was due to a decrease in the weighted average balance of outstanding AGM issued bonds held by Nelnet, Inc. and a decrease in interest rates. Intercompany interest is eliminated for consolidated financial reporting purposes. Net interest income 44,685 38,399 147,495 114,742 54 Less (negative provision) provision for loan losses (7,374) 11,968 16,770 14,199 During the third quarter of 2025 and second quarter of 2024, the Company reduced its allowance (and recognized negative provision expense) of $28.9 million and $12.6 million, respectively, related to consumer loan sales. See note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information and other factors impacting provision for loan losses for the periods presented. Net interest income after provision for loan losses 52,059 26,431 130,725 100,543 Other income, net 195 4,918 11,697 11,239 Represents primarily gain/loss on debt repurchases, borrower late fees, income from providing administration activities for third parties, sponsor fee income, and income/losses from AGM's investment in joint ventures. See "Overview - Consolidated Results of Operations" for further detail included in other income. Loss on sale of loans, net (2,472) (107) (1,562) (1,685) The Company recognizes gains/losses from selling portfolios of loans. See above under "Loan Activity" for loans sold during the three and nine months ended September 30, 2025 and 2024. Derivative settlements, net 594 1,359 1,756 4,356 The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate volatility. Derivative settlements for each applicable period should be evaluated with the Company's net interest income as reflected in the table below. Derivative market value adjustments, net (461) (9,518) (6,422) (2,875) Includes the realized and unrealized gains and losses that are caused by changes in fair values of derivatives which do not qualify for "hedge treatment" under GAAP. The majority of the derivative market value adjustments during the periods presented related to the changes in fair value of the Company's floor income interest rate swaps. Such changes reflect that a decrease in the forward yield curve during a reporting period results in a decrease in the fair value of the Company's floor income interest rate swaps, and an increase in the forward yield curve during a reporting period results in an increase in the fair value of such swaps. Total other income, net (2,144) (3,348) 5,469 11,035 Salaries and benefits 1,971 1,220 4,661 3,529 Increase was due to an increase in headcount as the Company actively expands into new asset loan classes. Servicing fees 6,687 7,011 20,700 24,503 Represents servicing fees paid to (i) third parties and (ii) LSS for the servicing of AGM’s loans. The amounts paid to LSS exceed the actual cost of servicing the loans. Decrease was due to the amortization of the FFELP student loan portfolio, the majority of which is serviced by LSS. Intercompany servicing expense of $4.5 million and $5.2 million during the three months ended September 30, 2025 and 2024, respectively, and $14.2 million and $17.7 million during the nine months ended September 30 2025 and 2024, respectively, was eliminated for consolidated financial reporting purposes. Other expenses 1,243 970 4,595 3,217 Increase was due to an increase in costs associated with the Company actively expanding into new asset loan classes. Intersegment expenses 1,248 1,276 3,758 3,756 Includes costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services. Total operating expenses 11,149 10,477 33,714 35,005 Total operating expenses were 51 and 43 basis points of the average balance of loans for the three months ended September 30, 2025 and 2024, respectively, and 49 and 44 for the nine months ended September 30, 2025 and 2024, respectively. Increase in expenses compared to the average balance of loans was due to an increase in costs associated with the Company actively expanding into new asset classes. Provision for beneficial interests 2,145 28,952 8,632 34,863 During the periods presented, the Company recorded an allowance for credit losses (and related provision expense) related to the Company's beneficial interest in certain loan securitizations. See note 9 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information. Total expenses 13,294 39,429 42,346 69,868 Income (loss) before income taxes 36,621 (16,346) 93,848 41,710 Income tax (expense) benefit (8,783) 3,923 (22,508) (10,010) Represents income tax expense at an effective tax rate of 24%. Net income (loss) 27,838 (12,423) 71,340 31,700 Net income attributable to noncontrolling interests (27) — (67) — Net income (loss) $ 27,811 (12,423) 71,273 31,700 Additional information: GAAP net income (loss) $ 27,811 (12,423) 71,273 31,700 See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional information about non-GAAP financial information. Increase in net income, excluding derivative market value adjustments, was due to (1) an increase in net loan interest income due to an increase in core loan spread, offset by the decrease in the average balance of loans outstanding; (2) the reduction of allowance (and negative provision) related to loans sold in the third quarter of 2025; and (3) a reduction of provision expense related to beneficial interest investments. These items were offset by an increase in an initial provision expense for loans purchased during the periods and a decrease in investment interest income. Derivative market value adjustments, net 461 9,518 6,422 2,875 Tax effect (111) (2,284) (1,541) (690) Non-GAAP net income (loss), excluding derivative market value adjustments $ 28,161 (5,189) 76,154 33,885 55 Net loan interest income, including settlements on derivatives The following table summarizes the components of "loan interest," "loan interest expense," and "derivative settlements, net:" Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Additional information Variable interest income, gross $ 152,100 200,528 506,012 643,714 Decrease was due to a decrease in the average balance of loans and gross yield earned on loans. Consolidation rebate fees (18,172) (19,687) (55,817) (63,870) Decrease was due to a decrease in the average consolidation loan balance. Discount accretion, net of premium and deferred origination costs amortization 11,029 (495) 4,558 3,500 Increase in net discount accretion for the three and nine months ended September 30, 2025 was due to a new forward flow agreement of Pay Later receivables purchased during the third quarter of 2025 that have a short estimated life and purchased at a discount. Variable interest income, net 144,957 180,346 454,753 583,344 Interest on bonds and notes payable (104,616) (156,050) (334,869) (504,509) Decrease was due to a decrease in the average balance of debt outstanding and cost of funds. Derivative settlements, net (a) 156 159 463 773 Represents net derivative settlements received related to the Company’s basis swaps. Variable loan interest margin, net of settlements on derivatives 40,497 24,455 120,347 79,608 Fixed-rate floor income, gross 1,027 225 2,999 563 Increase was due to lower interest rates. Derivative settlements, net (a) 438 1,200 1,293 3,583 Represents net derivative settlements received related to the Company's floor income interest rate swaps. Decrease was due to lower interest rates. Fixed-rate floor income, net of settlements on derivatives 1,465 1,425 4,292 4,146 Net loan interest income, including derivative settlements (core loan interest income) (a) $ 41,962 25,880 124,639 83,754 (a) Net loan interest income, including derivative settlements (core loan interest income) is a non-GAAP financial measure. For an explanation of GAAP accounting for derivative settlements and the reasons why the Company reports these non-GAAP measures (and the limitations thereof), see footnote (b) to the table immediately under the caption “Loan Spread Analysis” above. See note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information on the Company's derivative instruments, including the net settlement activity recognized by the Company for each period and for each type of derivative referred to in the "Additional information" column of this table, which is presented in the table in note 5 under the caption "Consolidated Financial Statement Impact Related to Derivatives - Statements of Income". 56 Nelnet Bank Operating Segment Loan Portfolio As of September 30, 2025, Nelnet Bank had a $974.9 million loan portfolio. For a summary of Nelnet Bank’s loan portfolio as of September 30, 2025 and December 31, 2024, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report. Loan Activity The following table sets forth the activity of loans in the Nelnet Bank operating segment: FFELP Private Consumer and other Total Three months ended September 30, 2025 Balance as of June 30, 2025 $ 106,555 516,663 204,423 827,641 Loan acquisitions and originations — 36,175 74,654 110,829 Repayments (5,104) (23,442) (12,538) (41,084) Loans contributed from AGM 77,497 — — 77,497 Balance as of September 30, 2025 $ 178,948 529,396 266,539 974,883 Three months ended September 30, 2024 Balance as of June 30, 2024 $ — 354,412 187,939 542,351 Loan acquisitions and originations — 10,843 36,409 47,252 Repayments — (12,601) (17,130) (29,731) Balance as of September 30, 2024 $ — 352,654 207,218 559,872 Nine months ended September 30, 2025 Balance as of December 31, 2024 $ — 482,445 162,152 644,597 Loan acquisitions and originations 111,040 73,572 129,385 313,997 Repayments (9,589) (68,794) (24,998) (103,381) Loans contributed from AGM 77,497 42,173 — 119,670 Balance as of September 30, 2025 $ 178,948 529,396 266,539 974,883 Nine months ended September 30, 2024 Balance as of December 31, 2023 $ — 360,520 72,352 432,872 Loan acquisitions and originations — 28,948 176,257 205,205 Repayments — (36,814) (41,391) (78,205) Balance as of September 30, 2024 $ — 352,654 207,218 559,872 Allowance for Loan Losses, Loan Delinquencies, and Loan Charge-offs For a summary of the allowance as a percentage of the ending balance, loan status, delinquency amounts, and other key credit quality indicators for each of Nelnet Bank's loan portfolios as of September 30, 2025 and December 31, 2024; and the activity in Nelnet Bank's allowance for loan losses and net charge-offs as a percentage of average loans for the three and nine months ended September 30, 2025 and 2024, see note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report. Investments As of September 30, 2025, Nelnet Bank had a $1.01 billion investment portfolio, consisting primarily of asset-backed securities. For a summary of Nelnet Bank's asset-backed securities investments as of September 30, 2025 and December 31, 2024, see note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report. Deposits As of September 30, 2025, Nelnet Bank had $1.73 billion of deposits, which included $256.3 million from Nelnet, Inc. (parent company) and its subsidiaries (intercompany), and thus have been eliminated for consolidated financial reporting purposes. For a summary of deposits as of September 30, 2025 and December 31, 2024, see note 10 of the notes to consolidated financial statements included under Part I, Item 1 of this report. 57 Average Balance Sheet The following table reflects the rates earned on interest-earning assets and paid on interest-bearing liabilities: Three months ended September 30, (a) Nine months ended September 30, (a) 2025 2024 2025 2024 Balance Rate Balance Rate Balance Rate Balance Rate Average assets Federally insured student loans $ 155,873 6.24 % $ — — % $ 97,053 6.23 % $ — — % Private education loans 517,782 6.45 351,468 4.37 509,055 6.31 359,242 4.33 Consumer and other loans 227,211 10.25 198,337 11.58 190,781 10.48 149,414 12.07 Cash and investments 957,479 6.15 650,951 7.65 892,017 6.19 618,130 7.20 Total interest-earning assets 1,858,345 6.74 % 1,200,756 7.34 % 1,688,906 6.71 % 1,126,786 6.93 % Non-interest-earning assets 19,203 16,379 15,801 15,667 Total assets $ 1,877,548 $ 1,217,135 $ 1,704,707 $ 1,142,453 Average liabilities and equity Brokered deposits $ 269,913 2.12 % $ 247,726 1.95 % $ 262,837 2.06 % $ 229,698 1.74 % Intercompany deposits 168,768 4.02 168,639 4.71 133,708 3.90 158,628 4.80 Retail and other deposits 1,173,846 4.24 644,051 5.01 1,070,813 4.23 603,292 4.98 Federal funds purchased and other borrowed money 25,038 4.92 — — 16,287 5.01 — — Total interest-bearing liabilities 1,637,565 3.88 % 1,060,416 4.25 % 1,483,645 3.82 % 991,618 4.20 % Non-interest-bearing liabilities 12,999 8,507 10,561 7,786 Equity 226,984 148,212 210,501 143,049 Total liabilities and equity $ 1,877,548 $ 1,217,135 $ 1,704,707 $ 1,142,453 Net interest margin 3.32 % 3.59 % 3.35 % 3.23 % (a) Calculated using average daily balances. 58 Summary and Comparison of Operating Results Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Additional information Interest income: Loan interest $ 16,733 9,639 43,508 25,157 Represents interest earned on loans. Increase was due to an increase in the balance and mix of loans. Investment interest 14,849 12,522 41,278 33,301 Represents interest earned on cash and investments. Increase was due to an increase of these balances, partially offset by a decrease in interest rates. Total interest income 31,582 22,161 84,786 58,458 Interest expense 16,179 11,606 42,928 31,872 Represents interest expense on deposits. Increase was due to an increase in the balance of deposits, partially offset by a decrease in interest rates. Net interest income 15,403 10,555 41,858 26,586 Provision for loan losses 3,811 6,143 12,934 18,352 See note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report for factors impacting provision for loan losses for the periods presented. Net interest income after provision for loan losses 11,592 4,412 28,924 8,234 Other income, net 1,308 841 1,842 1,991 Represents primarily net gains and income from investments. Derivative settlements, net 167 281 494 690 Nelnet Bank uses derivatives to hedge its exposure related to variable-rate deposits to minimize volatility from future changes in interest rates. Nelnet Bank has designated all of its derivative instruments as cash flow hedges; however, because certain hedged items are intercompany deposits, the corresponding derivative instruments are not eligible for hedge accounting in the consolidated financial statements. Accordingly, changes in fair value of such derivatives are recorded through earnings and presented as "derivative market value adjustments, net" in the statements of operations. "Derivative settlements, net" represent the cash paid or received during the respective period to settle with derivative instrument counterparties the economic effect of the Company's derivative instruments that do not qualify for hedge accounting based on their contractual terms. For additional information on Nelnet Bank's derivative portfolio, see note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report. Derivative market value adjustments, net (327) (3,647) (4,556) (793) Total other income, net 1,148 (2,525) (2,220) 1,888 Salaries and benefits 2,817 2,973 8,424 8,491 Represents salaries and benefits of Nelnet Bank associates and third-party contract labor. Depreciation 355 343 1,046 944 Servicing fees 838 285 2,329 711 Represents primarily fees paid to LSS for servicing certain of Nelnet Bank's loans. Intercompany servicing expense of $0.7 million and $0.2 million for the three months ended September 30, 2025 and 2024, respectively, and $1.9 million and $0.5 million for the nine months ended September 30, 2025 and 2024, respectively, was eliminated for consolidated financial reporting purposes. Other expenses 1,916 2,463 5,243 5,577 Represents various expenses such as marketing, consulting and professional fees, collection costs, software, FDIC insurance, and management fees. Intersegment expenses 726 581 2,089 1,729 Intersegment expenses include costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services. Total operating expenses 6,652 6,645 19,131 17,452 Income (loss) before income taxes 6,088 (4,758) 7,573 (7,330) Income tax (expense) benefit (1,483) 1,143 (1,816) 1,800 Represents an effective tax rate of 24.4% and 24.0% for the three months ended September 30, 2025 and 2024, respectively, and 24.0% and 24.6% for the nine months ended September 30, 2025 and 2024, respectively. Net income (loss) $ 4,605 (3,615) 5,757 (5,530) Additional information: Net income (loss) $ 4,605 (3,615) 5,757 (5,530) See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional details about non-GAAP financial information. Derivative market value adjustments, net 327 3,647 4,556 793 Tax effect (78) (875) (1,093) (190) Net income (loss), excluding derivative market value adjustments $ 4,854 (843) 9,220 (4,927) 59 NFS Other Operating Segments The following table summarizes the operating results of other operating segments included in NFS that are not reportable. Income taxes are allocated based on 24% of income (loss) before taxes for each activity. Summary and Comparison of Operating Results WRCM (a) Nelnet Insurance Services (b) Real estate investments (c) Investment securities (d) Total Three months ended September 30, 2025 Investment interest $ 4 2,552 — 12,429 14,985 Interest expense — (1,313) — (46) (1,359) Net interest income 4 1,239 — 12,383 13,626 Reinsurance premiums earned — 23,165 — — 23,165 Other income, net 2,017 1,183 1,888 586 5,674 Salaries and benefits (34) (386) (248) — (668) Reinsurance losses and underwriting expenses — (19,962) — — (19,962) Other expenses (50) (1,030) (22) (1) (1,103) Intersegment expenses, net (4) (148) (105) (32) (289) Income (loss) before income taxes 1,933 4,061 1,513 12,936 20,443 Income tax (expense) benefit (418) (974) (369) (3,105) (4,866) Net (income) loss attributable to noncontrolling interests (193) — 24 — (169) Net income (loss) $ 1,322 3,087 1,168 9,831 15,408 Three months ended September 30, 2024 Investment interest $ 4 1,354 95 10,962 12,415 Interest expense — (463) — (1,782) (2,245) Net interest income 4 891 95 9,180 10,170 Reinsurance premiums earned — 16,619 — — 16,619 Other income, net 1,399 1,427 2,116 809 5,751 Salaries and benefits (54) (138) (206) — (398) Reinsurance losses and underwriting expenses — (16,761) — — (16,761) Other expenses (69) (1,042) (31) (1) (1,143) Intersegment expenses, net (4) (52) (109) (35) (200) Income (loss) before income taxes 1,276 944 1,865 9,953 14,038 Income tax (expense) benefit (276) (227) (450) (2,388) (3,341) Net (income) loss attributable to noncontrolling interests (128) — 11 — (117) Net income (loss) $ 872 717 1,426 7,565 10,580 60 WRCM (a) Nelnet Insurance Services (b) Real estate investments (c) Investment securities (d) Total Nine months ended September 30, 2025 Investment interest $ 11 7,009 — 25,656 32,676 Interest expense — (3,509) — (49) (3,558) Net interest income 11 3,500 — 25,607 29,118 Reinsurance premiums earned — 73,964 — — 73,964 Other income, net 4,997 2,829 698 3,526 12,050 Salaries and benefits (96) (931) (658) — (1,685) Reinsurance losses and underwriting expenses — (67,836) — — (67,836) Other expenses (175) (3,819) (82) (4) (4,080) Intersegment expenses, net (11) (439) (306) (98) (854) Impairment expense — — (81) — (81) Income (loss) before income taxes 4,726 7,268 (429) 29,031 40,596 Income tax (expense) benefit (1,021) (1,744) 87 (6,967) (9,645) Net (income) loss attributable to noncontrolling interests (473) — 66 — (407) Net income (loss) $ 3,232 5,524 (276) 22,064 30,544 Nine months ended September 30, 2024 Investment interest $ 11 3,693 380 39,826 43,910 Interest expense — (1,052) — (6,216) (7,268) Net interest income 11 2,641 380 33,610 36,642 Reinsurance premiums earned — 44,250 — — 44,250 Other income, net 4,408 2,773 (1,510) 1,092 6,763 Salaries and benefits (161) (375) (593) — (1,129) Reinsurance losses and underwriting expenses — (39,066) — — (39,066) Other expenses (214) (2,100) (152) (4) (2,470) Intersegment expenses, net (11) (198) (348) (108) (665) Income (loss) before income taxes 4,033 7,925 (2,223) 34,590 44,325 Income tax (expense) benefit (871) (1,902) 525 (8,302) (10,550) Net (income) loss attributable to noncontrolling interests (403) — 37 — (366) Net income (loss) $ 2,759 6,023 (1,661) 26,288 33,409 (a) The Company provides investment advisory services through Whitetail Rock Capital Management, LLC (WRCM), the Company's SEC-registered investment advisor subsidiary, under various arrangements. WRCM earned management and performance fees of $2.0 million and $1.4 million for the three months ended September 30, 2025 and 2024, respectively, and $5.0 million and $4.4 million for the nine months ended September 30, 2025 and 2024, respectively. Fees earned by WRCM are included in "other income, net" in the table above. (b) Represents primarily the operating results of the Company’s reinsurance treaties on property and casualty policies. The increase in reinsurance premiums and associated reinsurance losses and underwriting expenses in the three and nine months ended September 30, 2025 compared with the same periods in 2024 was primarily due to an increase in overall property volume and new business. Reinsurance losses and underwriting expenses also increased related to increased claims development in several commercial auto programs, which the Company has exited; however, adverse development of related expenses may continue to be recognized in future periods. Other operating expenses have also increased to support the growth of this business. (c) Represents the operating results of the Company’s real estate investments and the administrative costs to manage this portfolio. Included in "other income, net" in the table above are primarily the net gains/losses recognized related to the Company's proportionate share of certain real estate investments accounted for under the equity method, and realized gains from the sale of real estate investments. (d) Represents interest income earned on investment debt securities (primarily student loan and other asset-backed securities, including Nelnet-owned asset-backed securities which it has repurchased and are eliminated in consolidation), interest income on certain notes receivable, unrealized gains/losses on marketable equity securities, realized gains/losses on marketable equity securities and investment debt securities, and other costs to manage these investments. The activity also includes interest expense incurred on debt used to finance such investments. The increase in investment interest for the three months ended September 30, 2025 compared with the same period in 2024 was primarily due to an increase in the average balance of investment securities as a result of the Company repurchasing $377.6 million of its own debt during the third quarter of 2025. The decrease in investment interest income and interest expense for the nine months ended September 30, 2025 compared with the same period in 2024 was primarily due to a decrease in the average balance of investment securities and debt outstanding, respectively, and a decrease in interest rates earned on such investments. As of December 31, 2024, the majority of debt used to finance such investments had been repaid. See Item 3, "Quantitative and Qualitative Disclosures About Market Risk - Interest Rate and Market Risk - Investments," which provides additional detail on NFS's investment debt securities. 61 CORPORATE AND OTHER ACTIVITIES – RESULTS OF OPERATIONS Other business activities and operating segments that are not reportable and not part of the NFS division are combined and included in Corporate and Other Activities (“Corporate”). The following table summarizes the operating results of these activities. Income taxes are allocated based on 24% of income (loss) before taxes for each activity. The difference between the Corporate income tax expense and the sum of taxes calculated for each activity is included in income taxes in “other” in the table below. Summary and Comparison of Operating Results Shared services (a) Solar tax equity investments (b) Nelnet Renewable Energy (c) ALLO investment (d) Venture capital investments (e) Other Total Three months ended September 30, 2025 Investment interest $ — — — — — 3,134 3,134 Interest expense — — (2) — — (690) (692) Net interest income (expense) — — (2) — — 2,444 2,442 Solar construction revenue — — 5,738 — — — 5,738 Other income, net 600 (8,766) — (161) 33,824 2,839 28,336 Cost to provide solar construction services — — (7,607) — — — (7,607) Salaries and benefits (20,919) (402) (3,273) — (230) (1,369) (26,193) Depreciation and amortization (2,493) — (212) — — (38) (2,743) Other expenses (13,902) (502) (171) 1,298 (28) (4,596) (17,901) Intersegment expenses, net 26,805 (66) (404) — (46) (548) 25,741 Impairment expense — (5,761) (94) — — — (5,855) (Loss) income before income taxes (9,909) (15,497) (6,025) 1,137 33,520 (1,268) 1,958 Income tax benefit (expense) 2,378 2,203 1,446 (273) (8,045) (1,256) (3,547) Net loss attributable to noncontrolling interests — 6,317 — — — — 6,317 Net (loss) income $ (7,531) (6,977) (4,579) 864 25,475 (2,524) 4,728 Three months ended September 30, 2024 Investment interest $ — 1 1 — — 3,103 3,105 Interest expense — — (103) — — (601) (704) Net interest income (expense) — 1 (102) — — 2,502 2,401 Solar construction revenue — — 19,321 — — — 19,321 Other income, net 714 (7,640) 43 4,503 2,478 3,408 3,506 Cost to provide solar construction services — — (26,815) — — — (26,815) Salaries and benefits (19,411) (621) (1,375) — (187) (2,258) (23,852) Depreciation and amortization (5,463) — (284) — (8) (93) (5,848) Other expenses (11,761) (205) (535) 2,104 (26) (693) (11,116) Intersegment expenses, net 25,634 (44) (378) (1) (21) (110) 25,080 Impairment expense — — — — (100) — (100) (Loss) income before income taxes (10,287) (8,509) (10,125) 6,606 2,136 2,756 (17,423) Income tax benefit (expense) 2,469 988 2,430 (1,585) (513) 126 3,915 Net loss attributable to noncontrolling interests — 4,392 — — — — 4,392 Net (loss) income $ (7,818) (3,129) (7,695) 5,021 1,623 2,882 (9,116) 62 Shared services (a) Solar tax equity investments (b) Nelnet Renewable Energy (c) ALLO investment (d) Venture capital investments (e) Other Total Nine months ended September 30, 2025 Investment interest $ — 6 — — — 8,101 8,107 Interest expense — — (5) — — (1,971) (1,976) Net interest income (expense) — 6 (5) — — 6,130 6,131 Solar construction revenue — — 10,992 — — — 10,992 Other income, net 1,817 (8,264) — 13,555 40,077 8,991 56,176 Gain on partial redemption of ALLO investment — — — 175,044 — — 175,044 Cost to provide solar construction services — — (29,485) — — — (29,485) Salaries and benefits (58,239) (1,163) (6,767) — (665) (4,638) (71,472) Depreciation and amortization (8,678) — (729) — (1) (114) (9,522) Other expenses (41,487) (804) (999) 6,190 (59) (8,024) (45,183) Intersegment expenses, net 78,037 (198) (1,212) — (132) (1,082) 75,413 Impairment expense (3,269) (5,761) (1,996) — (140) — (11,166) (Loss) income before income taxes (31,819) (16,184) (30,201) 194,789 39,080 1,263 156,928 Income tax benefit (expense) 7,637 1,058 7,248 (46,749) (9,379) (2,760) (42,945) Net loss attributable to noncontrolling interests — 11,777 — — — — 11,777 Net (loss) income $ (24,182) (3,349) (22,953) 148,040 29,701 (1,497) 125,760 Nine months ended September 30, 2024 Investment interest $ — 2 32 — — 9,532 9,566 Interest expense — — (811) — — (1,303) (2,114) Net interest income (expense) — 2 (779) — — 8,229 7,452 Solar construction revenue — — 42,741 — — — 42,741 Other income, net 2,170 (6,398) 136 459 5,780 9,583 11,730 Cost to provide solar construction services — — (49,115) — — — (49,115) Salaries and benefits (58,654) (1,905) (6,006) — (663) (4,931) (72,159) Depreciation and amortization (20,191) — (823) — (21) (277) (21,312) Other expenses (32,093) (573) (1,763) 1,498 (52) (4,376) (37,359) Intersegment expenses, net 79,379 99 (1,439) (4) (59) (247) 77,729 Impairment expense — — (1,865) — (137) — (2,002) (Loss) income before income taxes (29,389) (8,775) (18,913) 1,953 4,848 7,981 (42,295) Income tax benefit (expense) 7,053 424 4,142 (469) (1,164) (1,560) 8,426 Net loss attributable to noncontrolling interests — 7,009 1,654 — — — 8,663 Net (loss) income $ (22,336) (1,342) (13,117) 1,484 3,684 6,421 (25,206) (a) Includes corporate activities related to internal audit, human resources, accounting, legal, enterprise risk management, information technology, occupancy, and marketing. These costs are allocated to each operating segment based on estimated use of such activities and services. The amount allocated to operating segments is reflected as “intersegment expenses, net” in the table above. Also includes corporate costs and overhead functions not allocated to operating segments, including executive management, investments in innovation, and other holding company organizational costs. (b) Includes operating results of the Company's tax equity investments in renewable energy solar partnerships. The Company accounts for these investments using the HLBV method of accounting, which commonly results in accelerated losses in the initial years of the investment and gains recognized at the end of the contractual agreement (typically five years). In the periods presented, the Company recognized net HLBV losses. These losses are also offset by revenue earned by the Company related to management, consulting, and performance fees provided on tax equity investments syndicated to third parties. Due to the recognition pattern (accelerated losses in initial years and gains upon sale at the end of the contractual agreement), these investments may create volatility in earnings. During the third quarter of 2025, the Company recognized a non-cash impairment charge of $5.8 million related to its ownership in a solar development project. For additional information on the results of this operating segment, see note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report. (c) Nelnet Renewable Energy (NRE) is the Company’s solar construction business that provides full-service engineering, procurement, and construction (EPC) services to commercial entities. The Company entered this business from its acquisition of 80% of GRNE Solar in June 2022. On June 30, 2024, the Company acquired the remaining 20% of GRNE Solar for $0.3 million. 63 Since the acquisition of GRNE Solar, NRE has incurred low and, in many cases, negative margins on legacy projects. The Company has a handful of remaining legacy construction contracts it is obligated to complete, down from over 30 at the beginning of 2024. NRE continues to recognize loss reserves that represent NRE's estimate of costs it will incur to complete the remaining legacy contracts. The loss reserve expense is included in "cost to provide solar construction services" in the table above. In addition, uncertain economic conditions and legislation activity have impacted new construction projects being initiated which has adversely impacted and will continue to adversely impact revenue. See Part II, Item 1A "Risk Factors" of this report for additional information on the adverse impacts on NRE's business related to the enactment of the One Big Beautiful Bill. (d) Represents primarily the Company's share of loss on its voting membership interest and income on its preferred membership interests in ALLO. For additional information on the results of these investments, see note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report. On June 4, 2025, the Company redeemed a portion of its voting membership interests in ALLO and all its outstanding preferred membership interests, including the preferred return accrued on such membership interests through June 3, 2025, and recognized a pre-tax gain of $175.0 million as a result of this transaction. See note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information. (e) Represents the operating results of the Company’s venture capital investments, including Hudl which the Company accounts for using the measurement alternative method, and the administrative costs to manage this portfolio. These investments may create volatility in earnings from recognizing results of certain equity method investees, periodic adjustment of certain fund investments to their respective fair value, and, when applicable, observable price changes on certain measurement alternative investments. For instance, during the third quarter 2025, the Company recognized a realized gain of $7.8 million as a result of redeeming a portion of its investment in an unaffiliated third-party technology company (the "Investee"), and an unrealized gain of $22.4 million to adjust its carrying value of its remaining investment in the Investee to the transaction value. For additional information, see note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report. 64 LIQUIDITY AND CAPITAL RESOURCES The Company’s Loan Servicing and Systems, and Education Technology Services and Payments operating segments are non-capital intensive and both produce positive operating cash flows. As such, a minimal amount of debt and equity capital is allocated to these segments and any liquidity or capital needs are satisfied using cash flow from operations. Therefore, the Liquidity and Capital Resources discussion is concentrated on the Company’s liquidity and capital needs to meet existing debt obligations in the Nelnet Financial Services division, which includes the Asset Generation and Management and Nelnet Bank reportable operating segments, and the Company's other initiatives to pursue additional strategic investments. On July 4, 2025, the One Big Beautiful Bill (the "Bill") was enacted into law. Among other substantial changes to the tax code, the Bill makes numerous changes to the federal student loan program. Graduate students and parents of undergraduates will be subject to new caps on federal lending. Overall, we expect these changes will boost privatization of student lending and may create opportunities for the Company to expand its private education loan originations and acquisitions. Sources of Liquidity As of September 30, 2025, the Company's sources of liquidity included: Cash and cash equivalents $ 216,425 Less: Cash and cash equivalents held at Nelnet Bank (a) (13,993) Net cash and cash equivalents 202,432 Available-for-sale (AFS) debt securities (investments) - at fair value 1,282,067 Less: AFS debt securities held at Nelnet Bank - at fair value (a) (788,274) AFS private education and consumer loan debt securities - held as risk retention - at fair value (b) (200,652) Restricted investments (c) (125,985) Unencumbered AFS debt securities (investments) - at fair value 167,156 Unencumbered federally insured, private, consumer, and other loans (Non-Nelnet Bank) - at par 291,938 Unencumbered repurchased Nelnet issued asset-backed debt securities - at par (not included on consolidated financial statements) (d) 499,524 Unused capacity on unsecured line of credit (e) 495,000 Sources of liquidity as of September 30, 2025 $ 1,656,050 (a) Cash and investments held at Nelnet Bank are generally not available for Company activities outside of Nelnet Bank. (b) The Company is sponsor for certain private education and consumer loan securitizations and as sponsor, is required to provide a certain level of risk retention. To satisfy this requirement, the Company has purchased bonds issued in the securitizations. The majority of the purchased bonds reflected in the table above relate to private education loan securitizations. For these securitizations, the Company is required to retain these bonds 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 these bonds to a third party. The Company estimates these bonds will be restricted from trading until approximately the first half of 2027. (c) The Company is required to hold collateral in third-party trusts related to its reinsurance business. (d) 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, redeem the notes at par as cash is generated by the trust estate, or pledge the securities as collateral on repurchase agreements. 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. (e) The Company has a $495.0 million unsecured line of credit that matures on September 22, 2026. As of September 30, 2025, there was no amount outstanding on the unsecured line of credit and $495.0 million was available for future use. 65 The Company intends to use its liquidity position to capitalize on market opportunities, including FFELP, private education, consumer, and other loan acquisitions (or investment interests therein); strategic acquisitions and investments; and capital management initiatives, including stock repurchases, debt repurchases, and dividend distributions. The timing and size of these opportunities will vary and will have a direct impact on the Company's cash and investment balances. On October 23, 2025, the Company announced that it entered into a definitive and binding purchase agreement to purchase a Canadian student loan servicing business for a purchase price of approximately $93 million in cash. The transaction is expected to close in the first calendar quarter of 2026, subject to customary closing conditions. See note 17 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information about this acquisition. Partial Redemption of ALLO Investment Nelnet had both voting and preferred membership interest investments in ALLO. On June 4, 2025, Nelnet redeemed a portion of its voting membership interests in ALLO and all its outstanding preferred membership interests, including the preferred return accrued on such membership interests through June 3, 2025. The Company received cash proceeds of $410.9 million from ALLO and recognized a pre-tax gain of $175.0 million as a result of this transaction. See note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information about this transaction. The majority of the proceeds from this transaction were used by the Company to pay down third-party debt that was used to fund loan assets and repurchase certain of the Company's own asset-backed securities (bonds and notes payable) in the secondary market. During the three months ended September 30, 2025, the Company repurchased $377.6 million (par value) of its own debt. Cash Flows The Company has historically generated positive cash flow from operations. During the nine months ended September 30, 2025 and 2024, the Company generated $285.4 million and $482.4 million, respectively, in cash from operating activities. The decrease in 2025 compared with 2024 was due to: • Adjustments to net income for certain non-cash items, including the gain recognized on the partial redemption of the Company's ALLO investment, deferred income tax benefit, loan discount and deferred lender fees accretion, depreciation and amortization, and gain/loss on investments; and • The impact of changes to accrued interest receivable and accounts receivable during the nine months ended September 30, 2025 compared with the same period in 2024. These factors were partially offset by: • An increase in net income; and • The impact of changes to other liabilities during the nine months ended September 30, 2025 compared with the same period in 2024. The primary items included in the statement of cash flows for investing activities are the purchase, origination, repayment, and sale of loans, the purchase and sale of available-for-sale securities, and the purchase and sale of other investments. During June 2025, the Company received cash proceeds of $410.9 million from the redemption of its membership interests in ALLO. The proceeds from the ALLO redemption are included in investing activities on the statement of cash flows. The primary items included in financing activities are the payments on and proceeds from bonds and notes payable, the change in deposits at Nelnet Bank used to fund loans and investment activity at Nelnet Bank, issuance of noncontrolling interests, and repurchases of common stock. Cash provided by investing activities and used in financing activities for the nine months ended September 30, 2025 was $519.0 million and $968.9 million, respectively. Cash provided by investing activities and used in financing activities for the nine months ended September 30, 2024 was $2.08 billion and $2.69 billion, respectively. Investing and financing activities are further addressed in the discussion that follows. 66 Liquidity Needs and Sources of Liquidity Available to Satisfy Debt Obligations Secured by Loan Assets and Related Collateral - AGM Operating Segment The following table shows AGM's debt obligations outstanding that are secured by loan assets and related collateral: As of September 30, 2025 Carrying amount Final maturity Bonds and notes issued in asset-backed securitizations $ 6,703,249 8/26/30 - 9/25/69 FFELP and consumer loan warehouse and other facilities 1,160,959 1/29/27 - 2/29/28 $ 7,864,208 Bonds and Notes Issued in Asset-backed Securitizations The majority of AGM’s portfolio of student loans is funded in asset-backed securitizations that are structured to substantially match the maturity of the funded assets, thereby minimizing liquidity risk. Cash generated from student loans funded in asset-backed securitizations provides the source of liquidity to satisfy all obligations related to the outstanding bonds and notes issued in such securitizations. In addition, due to (i) the difference between the yield AGM receives on the loans and cost of financing within these transactions, and (ii) the servicing and administration fees that AGM earns from these transactions, AGM has created a portfolio that the Company expects to generate earnings and significant cash flow over the life of these transactions. As of September 30, 2025, based on cash flow models developed to reflect management’s current estimate of, among other factors, prepayments, defaults, deferment, forbearance, and interest rates, AGM expects future undiscounted cash flows from its portfolio to be approximately $1.04 billion as detailed below. The actual timing of cash flows released from the securitizations could be impacted based on when and if the Company terminates a securitization by exercising clean-up calls on the underlying securities when the assets in such securitization reach a certain threshold. The forecasted cash flow presented below includes loans funded in asset-backed securitizations as of September 30, 2025, the majority of which are federally insured student loans. As of September 30, 2025, AGM had $7.4 billion of loans included in asset-backed securitizations, which represented 84.0% of its total loan portfolio. The forecasted cash flow does not include cash flows that the Company expects to receive in relation to loans funded in its warehouse facilities, unencumbered federally insured, private education, consumer, and other loans funded with operating cash, its ownership of beneficial interest in loan securitizations (such beneficial interest investments are classified as "other investments and notes receivable, net" on the Company's consolidated balance sheets), loans acquired subsequent to September 30, 2025, and loans owned by Nelnet Bank. 67 Asset-backed Securitization Cash Flow Forecast $1.04 billion (dollars in millions) The forecasted future undiscounted cash flows of approximately $1.04 billion include approximately $0.74 billion (as of September 30, 2025) of overcollateralization included in the asset-backed securitizations. These excess net asset positions are included in the consolidated balance sheets in the balances of "loans and accrued interest receivable, net" and "restricted cash." The difference between the total estimated future undiscounted cash flows and the overcollateralization of approximately $0.30 billion, or approximately $0.23 billion after income taxes based on the estimated effective tax rate, represents estimated future net interest income (earnings) from the portfolio and is expected to be accretive to the Company's balance of consolidated shareholders' equity from the September 30, 2025 balance. The Company uses various assumptions, including prepayments and future interest rates, when preparing its cash flow forecast. These assumptions are further discussed below. Prepayments : The primary variables in establishing a life of loan estimate are the level and timing of prepayments. Prepayment rates equal the amount of loans that prepay annually as a percentage of the beginning-of-period balance, net of scheduled principal payments. A number of factors can affect estimated prepayment rates, including the level of consolidation activity, borrower default rates, and utilization of debt management options such as income-based repayment, deferments, and forbearance. Should any of these factors change, management may revise its assumptions, which in turn would impact the projected future cash flow. The Company’s cash flow forecast above assumes prepayment rates of 6% for both federally insured consolidation and Stafford loans. Prepayment rates for private education loans range from 11% to 20%. Beginning in late 2021, the Company experienced accelerated run-off (prepayments) of its FFELP portfolio due to FFELP borrowers consolidating their loans into Federal Direct Loan Program loans to qualify for loan forgiveness under various initiatives and programs offered by the federal government and the Department. However, the Company has experienced a significant decrease in FFELP borrowers consolidating their loans into the Federal Direct Loan Program since August 2024, which has resulted in prepayment rates on the Company’s FFELP portfolio being more consistent with longer-term historical rates. 68 The following table summarizes the estimated impact to the above forecasted cash flows if prepayments were greater than the prepayment rate assumptions used to calculate the forecasted cash flows: Increase in prepayment rate Reduction in forecasted cash flow from table above Forecasted cash flow using increased prepayment rate 2x $0.07 billion $0.97 billion 4x $0.20 billion $0.84 billion If the entire AGM student loan portfolio was prepaid, the Company would receive the full amount of overcollateralization included in the asset-backed securitizations of approximately $0.74 billion (as of September 30, 2025); however, the Company would not receive the $0.30 billion ($0.23 billion after tax) of estimated future earnings from the portfolio. Interest rates : The Company funds a portion of its student loans with floating rate securities that are indexed to 90-day SOFR. Meanwhile, the interest earned on the Company’s student loan assets is indexed primarily to the 30-day average SOFR in effect for each day in a calendar quarter. The different interest rate characteristics of the Company’s loan assets and liabilities funding these assets result in basis risk. The Company’s cash flow forecast assumes, for the life of the portfolio, a relationship between the various SOFR indices that is implied by the current forward SOFR curves. If the forecast is computed assuming a spread of an additional 12 basis points between 3-month Term SOFR and 30-day average SOFR for the life of the portfolio, the cash flow forecast would be reduced by approximately $5 million to $15 million. The Company uses the current forward interest rate yield curve to forecast cash flows. A change in the forward interest rate curve would impact the future cash flows generated from the portfolio. See Item 3, "Quantitative and Qualitative Disclosures About Market Risk — Interest Rate Risk — AGM Operating Segment" for additional information about various interest rate risks which may impact future cash flows from AGM's loan assets. Warehouse and Other Facilities Warehousing allows the Company to buy and manage loans prior to transferring them into more permanent financing arrangements. For a summary of the Company's warehouse and other facilities outstanding as of September 30, 2025, see note 4 of the notes to consolidated financial statements included under Part I, Item 1 of this report. Upon termination or expiration of the warehouse and other secured facilities, the Company would expect to access the securitization market, obtain replacement facilities, use operating cash, consider the sale of assets, or transfer collateral to satisfy any remaining obligations. Asset-backed Securities Transactions The Company, through its subsidiaries, has historically funded loans by completing asset-backed securitizations. Depending on market conditions, the Company anticipates continuing to access the asset-backed securitization market. Such asset-backed securitization transactions would be used to refinance loans included in its warehouse facilities and existing asset-backed securitizations and/or finance loans purchased from third parties and loans that are currently unencumbered. There were no asset-backed securitization transactions completed during the nine months ended September 30, 2025. Other Uses of Liquidity Subsequent to the Reconciliation Act of 2010, the Company no longer originates FFELP loans but continues to acquire FFELP loan portfolios from third parties and believes additional loan purchase opportunities exist, including opportunities to purchase private education, consumer, and other loans (or investment interests therein). The Company plans to fund additional loan acquisitions and related investments using current cash; cash provided by operating activities; proceeds from the sale of certain investments; its unsecured line of credit, its Union Bank student loan participation agreement, and its Union Bank student loan asset-backed securities participation agreement (each as described below), and/or establishing similar secured and unsecured borrowing facilities; using its existing warehouse facilities (as described above); increasing the capacity under existing and/or establishing new warehouse facilities; and continuing to access the asset-backed securities market. Union Bank Participation Agreements The Company maintains an agreement with 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 student loans. As of September 30, 2025, $721.7 million of loans were subject to outstanding participation interests held by Union Bank, as trustee, under this agreement. 69 The agreement automatically renews annually and is terminable by either party upon five business days' notice. This agreement provides beneficiaries of Union Bank’s grantor trusts with access to investments in interests in student loans, while providing liquidity to the Company. The Company can sell participation interests in loans to Union Bank to the extent of availability under the grantor trusts, up to $900.0 million or an amount in excess of $900.0 million if mutually agreed to by both parties. Loans participated under this agreement have been accounted for by the Company as loan sales. Accordingly, the participation interests sold are not included on the Company’s consolidated balance sheets. The Company also has an agreement with Union Bank under which Union Bank has agreed to purchase from the Company participation interests in FFELP loan asset-backed securities (bond investments). The agreement automatically renews annually and is terminable by either party upon five business days' notice. 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 at fair value" and the participation interests outstanding have been accounted for by the Company as a secured borrowing. As of September 30, 2025, $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. Liquidity Impact Related to Beneficial Interest in Loan Securitizations The Company has partial ownership in consumer, private education, and federally insured student loan third-party securitizations that are classified as "beneficial interest in loan securitizations" and included in "other investments and notes receivable, net" on the Company's consolidated balance sheets. These residual interests were acquired by the Company or have been received by the Company as consideration from selling portfolios of loans to unrelated third parties who securitized such loans. As of the latest remittance reports filed by the various trusts prior to or as of September 30, 2025, the Company's ownership correlates to approximately $1.75 billion of loans included in these securitizations. Investment interest income earned by the Company from the beneficial interest in loan securitizations is included in "investment interest" on the Company's consolidated statements of income and is not a component of the Company's loan interest income. As of September 30, 2025, the investment balance on the Company's consolidated balance sheet of its beneficial interest in loan securitizations was $201.8 million. For a summary of this investment balance, see note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report. The Company's partial ownership percentage in each loan securitization grants the Company the right to receive the corresponding percentage of cash flows generated by the securitization. As of September 30, 2025, based on cash flow models developed to reflect management’s current estimate of, among other factors, prepayments, defaults, deferment, forbearance, and interest rates, the Company currently expects future undiscounted cash flows from its partial ownership in these securitizations to be approximately $291.7 million. The vast majority of these cash flows are expected to be received over the next 5 years. The difference between the total estimated future undiscounted cash flows from these residual interests ($291.7 million) and the investment carrying value ($201.8 million) of $89.9 million, or $68.3 million after income taxes based on the estimated effective tax rate, represents estimated future investment interest income (earnings) from these investments and is expected to be accretive to the Company's balance of consolidated shareholders' equity from the September 30, 2025 balance. The undiscounted future cash flows from the consumer and private education loan securitizations are highly subject to credit risk (defaults). If defaults are higher than management's current estimate, the forecasted cash flows and estimated future investment interest income (earnings) from these securitizations would be adversely impacted. Sources and Needs of Liquidity - Nelnet Bank Sources of Liquidity Nelnet Bank launched operations in November 2020. Nelnet Bank was funded by the Company with an initial capital contribution of $100 million and the Company made a pledged deposit of $40.0 million with Nelnet Bank, as required under an agreement with the FDIC as discussed below. The Company has contributed an additional $126 million to Nelnet Bank since its inception (which includes cash, investments, loans, and equity in a student loan trust). Based on Nelnet Bank's business plan for growth and current financial condition, the Company believes it will make additional capital contributions to the bank in future periods. Nelnet Bank also has unsecured Federal Funds lines of credit with correspondent banks and has established accounts at the Federal Reserve Bank and the Federal Home Loan Bank. 70 The growth of Nelnet Bank is primarily driven by its ability to achieve loan growth goals while sustaining credit quality and maintaining cost-efficient funding sources to support its loan growth. Deposits Nelnet Bank utilizes brokered, retail, and other deposits to meet its funding needs and enhance its liquidity position. The deposits can be term or liquid deposits. The term deposits have terms from three months to ten years. Retail, commercial, and institutional deposits are sourced through a direct banking platform and a deposit marketplace and provide diversified funding sources. Brokered deposits are sourced through a network of brokers and provide a stable source of funding. In addition, Nelnet Bank accepts certain deposits considered non-brokered that are held in large accounts structured to allow FDIC insurance to flow through to underlying individual depositors. The deposits are diversified with deposits from Educational 529 College Savings and Health Savings plans, STFIT, and FDIC sweep deposits. Regulatory Capital Prior to Nelnet Bank’s launch of operations, Nelnet Bank, Nelnet, Inc. (the parent), and Michael S. Dunlap (Nelnet, Inc.’s controlling shareholder) entered into a Capital and Liquidity Maintenance Agreement and a Parent Company Agreement with the FDIC in connection with Nelnet, Inc.’s role as a source of financial strength for Nelnet Bank. As part of the Capital and Liquidity Maintenance Agreement, Nelnet, Inc. is obligated to (i) contribute capital to Nelnet Bank for it to maintain capital levels that meet FDIC requirements for a “well capitalized” bank, including a leverage ratio of capital to total assets of at least 12%; (ii) provide and maintain an irrevocable asset liquidity takeout commitment for the benefit of Nelnet Bank in an amount equal to the greater of either 10% of Nelnet Bank’s total assets or such additional amount as agreed to by Nelnet Bank and Nelnet, Inc.; (iii) provide additional liquidity to Nelnet Bank in such amount and duration as may be necessary for Nelnet Bank to meet its ongoing liquidity obligations; and (iv) establish and maintain a pledged deposit of $40.0 million with Nelnet Bank. As of September 30, 2025, Nelnet Bank's leverage ratio of capital to total assets was 12.7%. Liquidity Impact Related to Solar Tax Equity Investments The Company makes solar tax equity investments in renewable energy solar partnerships that support the development and operations of solar projects. As of September 30, 2025, the Company has funded a total of $306.1 million in tax equity investments which remain outstanding for itself and $307.5 million on behalf of its syndication partners, for a funded total of $613.6 million. These investments provide a federal income tax credit under the Internal Revenue Code, currently equaling 30% to 70% of the eligible project cost, with the tax credit available when the project is placed in service. The Company is then allowed to reduce its tax estimates paid to the U.S. Treasury based on the credits earned. In addition to the credits, the Company structures the investments to receive quarterly distributions of cash from the operating earnings of the solar project for a period of at least five years after the project is placed in service. After that period, the contractual agreements typically provide for the Company’s entire interest in the projects to be sold at the fair market value of the discounted forecasted future cash flows allocable to the Company. Based on the timing of when the Company funds a project and decreases its tax estimate to the U.S. Treasury due to earning of the tax credit, the net amount of capital funded to solar tax equity investments at any point in time is not significant and has a minimal impact on the Company’s liquidity. As of September 30, 2025, the Company is committed to fund an additional $86.7 million directly in solar tax equity investments and $115.9 million will be funded by its syndication partners, for a total commitment of $202.6 million. In periods in which the Company makes significant investments in solar tax equity investments, operating results are negatively impacted due to the accelerated losses recognized in the initial years of investment. However, given the timing and amount of cash flows expected to be generated over the life of these investments, the Company considers these investments a good use of capital. Through September 30, 2025, the Company has recognized cumulative pre-tax losses (excluding noncontrolling interests) of approximately $70 million on its tax equity investments currently outstanding. The Company expects its current investments (assuming no additional investments are made subsequent to September 30, 2025) to generate approximately $110 million of pre-tax earnings (excluding noncontrolling interests) over the life of the investments. Accordingly, the Company expects to recognize approximately $180 million in pre-tax income (excluding noncontrolling interests) on such investments between October 1, 2025 and June 30, 2031 (the remaining years of its current investments). Liquidity Impact Related to Hedging Activities The Company utilizes derivative instruments to manage interest rate sensitivity. By using derivative instruments, the Company is exposed to market risk which could impact its liquidity. All Non-Nelnet Bank over-the-counter derivative contracts executed by the Company are cleared post-execution at a regulated clearinghouse. Clearing is a process by which a third party, the clearinghouse, steps in between the original counterparties and guarantees the performance of both, by requiring that each post liquid collateral on an initial (initial margin) and mark-to- 71 market (variation margin) basis to cover the clearinghouse’s potential future exposure in the event of default. Nelnet Bank derivative contracts have protection against counterparty risk provided by International Swaps and Derivatives Association, Inc. agreements. The agreements require collateral to be exchanged based on the net fair value of derivatives with each counterparty. The Company’s exposure related to the Nelnet Bank derivatives is limited to the value of the derivative contracts in a gain position, less any collateral held by us. Based on the derivative portfolio outstanding as of September 30, 2025, the Company does not anticipate any movement in interest rates having a material impact on its capital or liquidity profile, nor does the Company expect that any movement in interest rates would have a material impact on its ability to make variation margin payments to its third-party clearinghouse and/or payments to its counterparties for its non-centrally cleared derivatives. Unsecured Line of Credit As discussed above, the Company has a $495.0 million unsecured line of credit with a maturity date of September 22, 2026. As of September 30, 2025, the unsecured line of credit had no amount outstanding and $495.0 million was available for future use. Upon the maturity date of this facility, there can be no assurance that the Company will be able to maintain this line of credit, increase or maintain the amount outstanding under the line, or find alternative funding if necessary. Stock Repurchases In 2022, the Board of Directors authorized a stock repurchase program to repurchase up to a total of five million shares of the Company's Class A common stock during the three-year period ended May 8, 2025. On May 8, 2025, the Company announced that its Board of Directors authorized a new stock repurchase program to repurchase up to a total of five million shares of the Company's Class A common stock during the three-year period ending May 8, 2028. The five million shares authorized under the new program include the remaining unpurchased shares from the prior program, which the new program replaced. As of September 30, 2025, 4,610,575 shares remained authorized for repurchase under the Company's stock repurchase program. Shares may be repurchased from time to time on the open market, in private transactions (including with related parties), or otherwise, depending on various factors, including share prices and other potential uses of liquidity. Shares repurchased by the Company during the first three quarters of 2025 are shown below. Certain of these repurchases were made pursuant to trading plans adopted by the Company in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934. For additional information on stock repurchases during the third quarter of 2025, see "Stock Repurchases" under Part II, Item 2 of this report. Total shares repurchased Purchase price (in thousands) Average price of shares repurchased (per share) (a) Quarter ended March 31, 2025 38,491 $ 4,458 115.81 Quarter ended June 30, 2025 183,554 21,360 116.37 Quarter ended September 30, 2025 217,850 27,273 125.19 Total 439,895 $ 53,091 120.69 (a) The average price of shares repurchased for each period presented includes excise taxes. On August 25, 2025, the Company repurchased, in a privately negotiated transaction under the Company’s existing stock repurchase program, a total of 41,929 shares of the Company’s Class A common stock from a certain significant shareholder. The shares were repurchased at a discount to the closing market price of the Company’s Class A common stock as of August 21, 2025, and the transaction was separately approved by the Company’s Board of Directors and its Nominating and Corporate Governance Committee. Dividends On September 16, 2025, the Company paid a third quarter 2025 cash dividend on the Company's Class A and Class B common stock of $0.30 per share. In addition, the Company's Board of Directors has declared a fourth quarter 2025 cash dividend on the Company's outstanding shares of Class A and Class B common stock of $0.33 per share. The fourth quarter cash dividend will be paid on December 15, 2025 to shareholders of record at the close of business on December 1, 2025. The Company plans to continue making regular quarterly dividend payments, subject to future earnings, capital requirements, financial condition, and other factors. 72 CRITICAL ACCOUNTING ESTIMATES This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of income and expenses during the reporting periods. The Company bases its estimates and judgments on historical experience and on various other factors that the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under varying assumptions or conditions. Note 2 of the notes to consolidated financial statements included in the Company’s 2024 Annual Report includes a summary of the significant accounting policies and methods used in the preparation of the consolidated financial statements. On an on-going basis, management evaluates its estimates and judgments, particularly as they relate to accounting policies that management believes are most “critical” — that is, they are most important to the portrayal of the Company’s financial condition and results of operations and they require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Management has identified the allowance for loan losses as a critical accounting policy and estimate, as discussed further under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates – Allowance for Loan Losses” in the Company’s 2024 Annual Report. For additional information regarding changes in the Company’s allowance for loan losses for the three and nine months ended September 30, 2025 and 2024, see the caption “Activity in the Allowance for Loan Losses” in note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report. There have been no material changes to the Company’s critical accounting policy and estimate since December 31, 2024. RECENT ACCOUNTING PRONOUNCEMENTS In December 2023, the FASB issued accounting guidance to address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This guidance will be effective for the Company for the year ending December 31, 2025 annual financial statements, with early adoption permitted. The Company intends to adopt the standard when it becomes effective for the year ending December 31, 2025 and apply the standard on a retrospective basis. Management is currently evaluating the impact this guidance will have on the disclosures included in the notes to the consolidated financial statements. Based upon this review, the Company has not yet identified nor does it anticipate a material impact to its financial statement disclosures. Presentation changes include new disclosures for the tax rate in percentages and dollars, pre-defined breakouts, and cash payments to the Company's most significant jurisdictions. In November 2024, the FASB issued accounting guidance to increase disclosure requirements primarily through enhanced disclosures about types of expenses (including employee compensation, depreciation, and amortization) in commonly presented expense captions. This guidance will be effective for the Company for fiscal years beginning after December 15, 2026. The guidance is required to be applied prospectively with the option for retrospective application. Management is currently evaluating the impact this guidance will have on the disclosures included in the notes to the consolidated financial statements. There are no other recently issued, but not yet adopted, accounting pronouncements which are expected to have a material impact on the Company's consolidated financial statements and related disclosures.