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 months ended March 31, 2026 and 2025. 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 and analysis should be read in conjunction with the Company’s consolidated financial statements included in the 2025 Annual Report. 30 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,” "focus," “forecast,” “future,” “intend,” “may,” "objective," “plan,” “potential,” “predict,” "pursue," “scheduled,” “should,” "strategy," “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 others, the risks and uncertainties set forth in the “Risk Factors” section of the 2025 Annual 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, Canada Student 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 residual 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 residual 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 partnerships, 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 (and anticipated income therefrom) including venture capital, real estate, reinsurance, acquisitions, and other activities, 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, maintaining compliance with the extensive regulatory requirements applicable to the Company's businesses, 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. 31 OVERVIEW The Company is an operating holding company with primary businesses in consumer lending, loan servicing, payments, and technology-enabled services, many of which are focused on serving customers in the education sector. The Company conducts these activities both directly and through its wholly owned and majority-owned subsidiaries, and actively manages and operates its businesses on an integrated basis. Nelnet’s largest operating and technology platforms support loan servicing and education-related technology and payment solutions. A significant portion of the Company’s revenue is derived from net interest income earned on a portfolio of federally insured student loans, a substantial portion of which is serviced by the Company. The Company has also broadened its operating business mix both within and beyond its historical education-focused activities. These businesses include banking and other financial services conducted through the Company’s bank and other subsidiaries, asset management and related customer-facing servicing, real estate development and management, reinsurance operations, renewable energy development, and selected strategic interests in early-stage, emerging growth, and other operating enterprises. The Company actively manages such businesses and holds interests in them for strategic and operational purposes. 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 March 31, 2026 2025 GAAP net income attributable to Nelnet, Inc. $ 71,126 82,560 Realized and unrealized derivative market value adjustments (a) (1,587) 6,324 Tax effect (b) 381 (1,519) Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments $ 69,920 87,365 Earnings per share: GAAP net income attributable to Nelnet, Inc. $ 1.97 2.26 Realized and unrealized derivative market value adjustments (a) (0.04) 0.17 Tax effect (b) 0.01 (0.04) Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments $ 1.94 2.39 (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. 32 Operating Segments The Company's reportable operating segments are described in note 1 of the notes to consolidated financial statements included in the 2025 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. In addition to AGM and Nelnet Bank being part of the NFS division, NFS's other operating segments that are not reportable include the operating results of: • Nelnet Insurance Services, which primarily includes multiple reinsurance treaties on property and casualty policies • Whitetail Rock Capital Management, LLC (WRCM), the Company's U.S. Securities and Exchange Commission (SEC)-registered investment advisor subsidiary • The Company’s ownership and activities in real estate • The Company’s ownership and management of its bond portfolio (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 includes the following items: • Shared service activities related to 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 • Corporate costs and overhead functions not allocated to operating segments, including executive management, innovation initiatives, and other holding company organizational costs • The operating results of the Company’s participation in renewable energy solar developments through tax equity structures and administrative and management services provided by the Company on solar tax equity investments made by third parties • The operating results of Nelnet Renewable Energy (NRE), a solar engineering, procurement, and construction business, which the Company sold during the fourth quarter of 2025, but retained a limited number of construction contracts to complete following the sale • The operating results of certain of the Company’s investment activities, including its ownership in ALLO and early-stage and emerging growth companies (venture capital) • Interest income earned on cash balances held at the corporate level • Other product and service offerings that are not considered reportable operating segments 33 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. 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 March 31, 2026 2025 NDS $ 19,801 18,512 NBS 47,813 47,462 Nelnet Financial Services division: AGM 30,520 29,834 Nelnet Bank 9,219 1,952 NFS other operating segments (742) 10,060 Corporate: Unallocated shared services and corporate costs (11,106) (9,988) Solar tax equity (22,044) 1,205 Other corporate operating segments 2,200 7,104 Net income before taxes 75,661 106,140 Income tax expense (20,061) (25,010) Net loss attributable to noncontrolling interests 15,526 1,430 Net income $ 71,126 82,560 Impact of Transactions on 2026 Operating Results Operating results for the three months ended March 31, 2026 were influenced by several transactions that significantly affected certain components of income. The impacts of these items are summarized below to provide additional context for the Company’s financial performance during the period. AGM Operating Segment Growth in Pay Later receivable volumes contributed to higher loan interest income during the quarter, along with increased provision for loan losses and borrower late fee income. AGM began acquiring Pay Later receivables during the third quarter of 2025; these receivables are generally purchased at a discount and have short expected durations. As of March 31, 2026, the balance of Pay Later receivables was $766.2 million. In addition, AGM holds interests in certain joint ventures engaged in the acquisition and management of loan portfolios. During the three months ended March 31, 2026, AGM recognized $15.4 million of income from these joint ventures. Equity Investments During the three months ended March 31, 2026, the Company recognized $10.8 million of losses related to marketable equity securities with readily determinable fair values. These losses were primarily unrealized and resulted from changes in market values during the period. The majority of these losses are included in “NFS other operating segments” in the table above. Solar Tax Equity During the three months ended March 31, 2026, the Company recognized $22.5 million of losses related to its solar tax equity partnerships. These losses reflect the accounting treatment required under the hypothetical liquidation at book value (“HLBV”) method and were influenced by contributions made to these partnerships in recent periods. Losses attributable to noncontrolling interest partners totaled $13.4 million for the quarter and are included in “net loss attributable to noncontrolling interests.” The Company consolidates its solar tax equity partnerships because it holds management and control rights, with third‑party investor interests reflected as noncontrolling interests. The HLBV method commonly results in the recognition of accelerated losses in the early years of a partnership. 34 CONSOLIDATED RESULTS OF OPERATIONS An analysis of the Company's consolidated operating results for the three months ended March 31, 2026 compared with the same period in 2025 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 11 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 March 31, 2026 2025 Additional information Loan interest $ 171,024 166,439 Increase was due to an increase in the average balance of consumer and other loans held within the AGM and Nelnet Bank operating segments, partially offset by a decrease in the average balance of FFELP loans at AGM and gross yield earned on loans. Investment interest 40,202 41,389 Includes income from operating cash, 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 211,226 207,828 Interest expense 109,583 125,114 Decrease was due to a decrease in the average balance of debt outstanding and decrease in cost of funds. These decreases were partially offset by an increase in interest expense on larger deposit balances at Nelnet Bank. Net interest income 101,643 82,714 Less provision for loan losses 53,244 15,337 Represents the current period provision to reflect the lifetime expected credit losses related to the Company's loan portfolio. The increase was driven by the significant increase in the volume of Pay Later receivables acquired since the third quarter of 2025. See note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional factors impacting provision for loan losses for the periods presented. Less provision for beneficial interests 4,130 1,510 Represents the current period provision expense related to the Company’s beneficial interest in certain loan securitizations. See note 5 of the notes to consolidated financial statements in this report for additional information. Net interest income after provision 44,269 65,867 Other income (expense): LSS revenue 127,842 120,741 See LSS operating segment - results of operations. ETSP revenue 154,436 147,330 See ETSP operating segment - results of operations. Reinsurance premiums earned 22,536 24,687 Represents premiums earned, net of ceded portion, from reinsurance treaties on primarily property and casualty policies. Decrease was primarily due to timing of premium recognition under certain reinsurance treaties. Solar construction revenue — 3,995 Represents revenue earned from NRE providing solar construction services. The Company sold NRE in November 2025. Other, net 10,437 24,603 See table below for the components of "other, net." Derivative settlements, net 580 746 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 market value adjustments, net 1,587 (6,324) 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. Total other income (expense), net 317,418 315,778 Cost of services and expenses: Loan servicing contract fulfillment and acquisition costs 2,087 1,633 Represents primarily the amortization of previously capitalized contract fulfillment costs. Cost to provide education technology services and payments 49,953 48,047 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 — 7,828 Represents direct costs related to NRE providing solar construction services. The Company sold NRE in November 2025. Total cost of services 52,040 57,508 Salaries and benefits 139,371 138,223 Increase was primarily due to higher headcount at the ETSP operating segment to support the growth of its customer base and the investment in the development of new technologies, as well as increased headcount in the NFS division to support growth. These increases were partially offset by lower headcount in the LSS operating segment, reflecting ongoing cost-efficiency initiatives. Depreciation and amortization 9,170 9,255 Includes depreciation of property and equipment and the amortization of intangibles from prior business acquisitions. Decrease was primarily due to certain information technology activities moved to cloud computing and such expenses classified as other expenses. These decreases were partially offset by an increase in amortization due to the acquisition of NDS Canada during the first quarter of 2026. Reinsurance losses and underwriting expenses 23,605 22,212 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 primarily property and casualty policies. 35 Other expenses 61,840 48,307 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 higher legal and transition service costs related to closing the NDS Canada acquisition and subsequent integration activities, as well as increased expenses related to certain information technology activities moved to cloud computing. Total operating expenses 233,986 217,997 Income before income taxes 75,661 106,140 Income tax expense (20,061) (25,010) The effective tax rate was 22.00% and 23.25% for the three months ended March 31, 2026 and 2025, respectively. The Company expects its effective tax rate will range between 22.0% and 24.5% for the remainder of 2026. Net income 55,600 81,130 Net loss attributable to noncontrolling interests 15,526 1,430 Represents the net loss attributable to the holders of noncontrolling membership interests, the majority of which are related to renewable energy solar developments. Net income attributable to Nelnet, Inc. $ 71,126 82,560 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. $ 71,126 82,560 Derivative market value adjustments, net (1,587) 6,324 Tax effect 381 (1,519) Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments $ 69,920 87,365 The following table summarizes the components of "other, net" in "other income (expense)" on the consolidated statements of income: Three months ended March 31, 2026 2025 Additional information Investment activity, net (a) $ 15,169 5,161 See note (b) below for additional information. Borrower late fee income 8,457 1,587 See NFS division - results of operations - AGM operating segment. Administration/sponsor fee income 1,549 1,305 See NFS division - results of operations - AGM operating segment. Investment advisory services (WRCM) 1,336 1,473 See NFS division - results of operations - NFS other operating segments. ALLO preferred return 978 8,416 See Corporate - results of operations. Loss from solar investments, net (22,531) 456 See Corporate - results of operations and note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report. Other 5,479 6,205 Other, net $ 10,437 24,603 (a) The Company anticipates fluctuations in future periodic earnings resulting from investment purchases, sales, and valuation adjustments. (b) Investment activity by operating segment and investment type follows: Real Estate Venture Capital and Funds Equity Securities Bonds Total Real Estate Venture Capital and Funds Equity Securities Bonds Total Three months ended March 31, 2026 2025 NFS - AGM $ — 15,361 — — 15,361 — 1,047 — — 1,047 NFS - Nelnet Bank — 1,067 — 333 1,400 — (62) — 287 225 NFS - Other Operating Segments 2,733 — (9,658) 1,658 (5,267) (1,643) — — 1,040 (603) Corporate — 4,803 (1,128) — 3,675 — 4,492 — — 4,492 $ 2,733 21,231 (10,786) 1,991 15,169 (1,643) 5,477 — 1,327 5,161 36 LOAN SERVICING AND SYSTEMS OPERATING SEGMENT – RESULTS OF OPERATIONS On February 2, 2026, the Company acquired a Canadian student loan servicing business for CAD $144.2 million (USD $105.8 million). The acquired business (“NDS Canada”) delivers technology-enabled student loan servicing for governments and a financial institution, managing 2.7 million borrowers on proprietary platforms. Beginning on the acquisition date, the operating results of NDS Canada are included in the Loan Servicing and Systems reportable operating segment. Summary and Comparison of Operating Results Three months ended March 31, 2026 2025 Interest income $ 591 721 Loan servicing and systems revenue (see disaggregated revenue by service offering below) 127,842 120,741 Intersegment servicing revenue 5,006 5,684 Other income (211) 112 Total other income 132,637 126,537 Contract fulfillment and acquisition costs 2,087 1,633 Salaries and benefits 67,621 69,574 Depreciation and amortization 4,002 2,654 Postage expense 8,805 7,575 Other expenses 14,193 10,832 Intersegment expenses 16,719 16,478 Total operating expenses 111,340 107,113 Income before income taxes 19,801 18,512 Income tax expense (4,752) (4,443) Net income $ 15,049 14,069 GAAP before tax operating margin 15.2 % 14.8 % Amortization expense related to acquired intangibles from NDS Canada acquisition 1.4 — Non-GAAP before tax operating margin, excluding amortization expense (a) 16.6 % 14.8 % (a) Before tax operating margin, excluding amortization expense, is a non-GAAP measure of before tax operating profitability as a percentage of revenue, and for the LSS segment is calculated as income before income taxes (less amortization expense related to the acquired intangibles from the NDS Canada acquisition that was $1.9 million for the three months ended March 31, 2026) 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 amortization expense, improved primarily due to lower salaries and benefits associated with headcount reductions, excluding the impact of employees added through the NDS Canada acquisition, reflecting ongoing cost-efficiency initiatives. 37 Loan Servicing Volumes As of March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2024 Servicing volume (dollars in millions): Department of Education $ 431,049 434,479 458,679 465,689 482,786 489,877 Canada Student Loan Program 42,692 — — — — — FFELP 11,195 11,594 11,982 12,386 12,826 13,260 Private and consumer 40,785 40,088 38,060 38,018 46,728 29,226 Total $ 525,721 486,161 508,721 516,093 542,340 532,363 Number of servicing borrowers: Department of Education 11,048,314 11,426,789 12,387,665 12,694,386 13,453,127 14,049,550 Canada Student Loan Program 2,708,392 — — — — — FFELP 443,028 463,109 482,696 502,205 524,421 549,861 Private and consumer 1,327,471 1,349,414 1,325,037 1,326,451 1,350,999 1,168,293 Total 15,527,205 13,239,312 14,195,398 14,523,042 15,328,547 15,767,704 Number of remote hosted borrowers: 2,824,963 2,886,458 2,839,493 2,056,358 1,427,800 842,200 Loan servicing and systems revenue The following table presents disaggregated revenue by service offering for each reporting period: Three months ended March 31, 2026 2025 Additional information Department of Education loan servicing $ 76,119 87,358 Represents revenue from the Company’s servicing contract with the Department. The decrease was primarily attributable to a reduction in the number of borrowers serviced. Borrower volume declined throughout 2025 as servicing volume was transferred, at the Department’s direction, from the Company to its remote-hosted servicing customer to support the stand‑up of a new servicer. In addition, borrower volume declined beginning in the fourth quarter of 2025 as certain borrowers exiting the CARES Act forbearance period failed to resume payment activity and were transferred to the Department’s Debt Management and Collections System for management of defaulted federal student loans. Canada Student Loan Program loan servicing 11,332 — Represents revenue from NDS Canada's student loan servicing contract with the Government of Canada, including direct agreements with three provinces and a program administered through a financial institution. NDS Canada earns a monthly servicing fee based on borrower volume. The Company also earns additional revenue for approved change requests related to platform enhancements, achieving delinquency and default performance targets, and certain transactional servicing activities, including disbursements, application processing, and postage. Canada loan servicing revenue was recognized by the Company beginning February 2, 2026, the date the Company acquired NDS Canada. Private education and consumer loan servicing 25,661 22,696 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 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 2,254 2,633 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 11,763 6,992 Represents revenue from providing remote hosted servicing software, primarily to one of the Department’s servicers, as well as diversified technology services. The increase was driven primarily by higher revenue from the Company's Department remote hosted servicing customer, as the Company transferred borrower volume to this new servicer throughout 2025 at the Department’s direction to establish initial volume. The Company does not expect to transfer additional volume to this servicer in 2026. Outsourced services 713 1,062 Represents revenue from providing contact center and back office operational outsourcing services. Loan servicing and systems revenue $ 127,842 120,741 38 EDUCATION TECHNOLOGY SERVICES AND PAYMENTS OPERATING SEGMENT – RESULTS OF OPERATIONS As discussed further in the Company's 2025 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 March 31, 2026 2025 Interest income $ 6,118 6,939 Education technology services and payments revenue (see disaggregated revenue by service offering below) 154,436 147,330 Intersegment revenue 72 64 Total other income 154,508 147,394 Cost of services (see disaggregated revenue by service offering below) 49,953 48,047 Salaries and benefits 42,696 41,741 Depreciation and amortization 2,369 2,430 Other expenses 11,761 9,048 Intersegment expenses, net 6,034 5,605 Total operating expenses 62,860 58,824 Income before income taxes 47,813 47,462 Income tax expense (11,475) (11,402) Net income 36,338 36,060 Net loss attributable to noncontrolling interests — 45 Net income $ 36,338 36,105 GAAP before tax operating margin 45.8 % 47.8 % Net interest income (5.9) (7.0) Non-GAAP before tax operating margin, excluding net interest income (a) 39.9 % 40.8 % (a) 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. ETSP before tax operating margin decreased due to an increase in operating expenses to support the growth in the customer base and investments in the development of new technologies. 39 Education technology services and payments revenue The following table presents disaggregated revenue by service offering for each reporting period: Three months ended March 31, 2026 2025 Additional information Tuition payment plan services $ 41,855 40,072 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 55,887 51,536 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 56,114 55,695 Increase was primarily driven by growth in student information system revenue. The increase was partially offset by a decline in FACTS education services revenue, reflecting the end of economic aid provided to private schools ("EANS program") in response to the COVID-19 pandemic. Revenue recognized under the EANS program totaled $1.6 million for the first quarter of 2025, which was the last quarter for revenue related to that program. Other 580 27 Education technology services and payments revenue 154,436 147,330 Cost of services 49,953 48,047 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 $ 104,483 99,283 40 NELNET FINANCIAL SERVICES DIVISION - RESULTS OF OPERATIONS Asset Generation and Management Operating Segment Loan Portfolio As of March 31, 2026, the AGM operating segment had an $8.41 billion loan portfolio, consisting primarily of federally insured loans. For a summary of the Company’s loan portfolio as of March 31, 2026 and December 31, 2025, see note 2 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 March 31, 2026 Balance as of December 31, 2025 $ 7,437,243 139,209 1,122,717 8,699,169 Loan acquisitions (a) 299,549 — 3,035,923 3,335,472 Repayments, claims, capitalized interest, participations, and other, net (225,321) (8,247) (2,944,723) (3,178,291) Loans lost to external parties (42,146) (745) — (42,891) Loans sold (107,969) — (318) (108,287) Loans contributed to Nelnet Bank (295,993) — — (295,993) Balance as of March 31, 2026 $ 7,065,363 130,217 1,213,599 8,409,179 Three months ended March 31, 2025 Balance as of December 31, 2024 $ 8,388,564 221,744 345,560 8,955,868 Loan acquisitions 702,800 — 129,787 832,587 Repayments, claims, capitalized interest, participations, and other, net (230,558) (12,535) (93,984) (337,077) Loans lost to external parties (58,764) (702) — (59,466) Loans sold (131,758) — (148) (131,906) Balance as of March 31, 2025 $ 8,670,284 208,507 381,215 9,260,006 (a) The Company began to acquire Pay Later receivables during the third quarter of 2025. Consumer loan acquisitions excluding Pay Later receivables was $182.1 million during the three months ended March 31, 2026. 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 March 31, 2026, the Company’s ownership correlates to approximately $1.64 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. 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 March 31, 2026 and December 31, 2025; and the activity in AGM's allowance for loan losses and net charge-offs as a percentage of average loans for the three months ended March 31, 2026 and 2025, see note 2 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 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" below, divided by the average balance of loans or debt outstanding. 41 Three months ended March 31, 2026 2025 Variable loan yield, gross 6.77 % 7.43 % Consolidation rebate fees (0.79) (0.79) Discount accretion, net of premium and deferred origination costs amortization 1.23 (0.13) Variable loan yield, net 7.21 6.51 Loan cost of funds - interest expense (4.82) (5.39) Variable loan spread 2.39 1.12 Fixed-rate floor income, gross 0.08 0.04 Loan spread 2.47 % 1.16 % Average balance of AGM's loans $ 8,481,420 9,544,317 Average balance of AGM's debt outstanding 7,798,205 8,451,699 Variable loan spread was higher during the three months ended March 31, 2026 compared with the same period in 2025 due to an increase in consumer loans as a percentage of AGM’s overall loan portfolio. Consumer loans earn a higher yield than FFELP loans. 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. 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. Summary and Comparison of Operating Results Three months ended March 31, 2026 2025 Additional information Interest income: Loan interest $ 152,353 154,469 See table below for additional analysis. Investment interest: Residual interest 6,445 8,666 Represents residual interest earned on beneficial interest investments. Other investment interest 4,214 4,103 Represents investment interest earned on restricted cash included in student loan securitizations and other secured borrowings. Total investment interest 10,659 12,769 Total interest income 163,012 167,238 Loan interest expense 92,552 112,411 See table below for additional analysis. Intercompany interest expense 3,005 1,892 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. Intercompany interest is eliminated for consolidated financial reporting purposes. Total interest expense 95,557 114,303 Net interest income 67,455 52,935 Less provision for loan losses 48,466 13,012 The increase was driven by the significant increase in the volume of Pay Later receivables acquired since the third quarter of 2025. See note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional factors impacting provision for loan losses for the periods presented. Less provision for beneficial interests 4,130 1,510 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. Net interest income after provision 14,859 38,413 Other income, net 26,246 4,904 Represents primarily borrower late fees, income from providing administration activities for third parties, sponsor fee income, and income/losses from AGM's investment in joint ventures. Increase in 2026 compared with 2025 was due to an increase in income from AGM's joint ventures and borrower late fee income. See "Overview - Consolidated Results of Operations" for further detail included in other income. Derivative settlements, net 104 582 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 market value adjustments, net 1,494 (3,795) 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. Total other income, net 27,844 1,691 42 Salaries and benefits 1,628 1,221 Servicing fees 8,152 6,911 Represents servicing fees paid to third parties and LSS for the servicing of AGM’s loans. Increase was due to an increase in volume of Pay Later receivables the Company began to purchase during the third quarter of 2025, partially offset by the amortization of the FFELP student loan portfolio, the majority of which is serviced by LSS. Intercompany servicing expense of $4.3 million and $4.9 million during the three months ended March 31, 2026 and 2025, respectively, was eliminated for consolidated financial reporting purposes. Other expenses 1,051 888 Intersegment expenses 1,352 1,250 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 12,183 10,270 Total operating expenses were 57 basis points and 43 basis points of the average balance of loans for the three months ended March 31, 2026 and 2025, respectively. The 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 and a decrease in the average balance of loans. Income before income taxes 30,520 29,834 Income tax expense (7,321) (7,156) Represents income tax expense at an effective tax rate of 24%. Net income 23,199 22,678 Net income attributable to noncontrolling interests (18) (17) Net income $ 23,181 22,661 Additional information: GAAP net income $ 23,181 22,661 See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional information about non-GAAP financial information. Derivative market value adjustments, net (1,494) 3,795 Tax effect 359 (911) Non-GAAP net income, excluding derivative market value adjustments $ 22,046 25,545 Net loan interest income The following table summarizes the components of "loan interest" and "loan interest expense" from the table above. Three months ended March 31, 2026 2025 Additional information Variable interest income, gross $ 141,852 175,306 Decrease was due to a decrease in the average balance of loans and gross yield earned on loans. Consolidation rebate fees (16,717) (18,748) Decrease was due to a decrease in the average consolidation loan balance. Discount accretion, net of premium and deferred origination costs amortization 25,655 (3,064) Increase in discount accretion was due to a forward flow agreement of Pay Later receivables the Company began to purchase during the third quarter of 2025 at a discount that have a short estimated life. Variable interest income, net 150,790 153,494 Interest on bonds and notes payable (92,552) (112,411) Decrease was due to a decrease in the average balance of debt outstanding and cost of funds. Variable loan interest margin 58,238 41,083 Fixed-rate floor income 1,563 975 Increase was due to lower interest rates. Net loan interest income $ 59,801 42,058 Factors Affecting Operating Results • AGM began to acquire Pay Later receivables during the third quarter of 2025. These receivables are generally purchased at a discount and have a short expected duration. As of March 31, 2026, the balance of Pay Later receivables was $766.2 million. Growth in Pay Later receivable volumes contributed to increase in loan interest income, higher provision for loan losses, and increased borrower late fee income. • AGM holds interests in certain joint ventures engaged in the acquisition and management of loan portfolios. For the three months ended March 31, 2026, AGM recognized $15.4 million of income from these joint ventures, compared with $1.0 million in the comparable period of 2025. Such amounts are included in “Other income, net” in the table above titled “Summary and Comparison of Operating Results.” 43 Nelnet Bank Operating Segment Loan Portfolio As of March 31, 2026, Nelnet Bank had a $1.26 billion loan portfolio. For a summary of Nelnet Bank’s loan portfolio as of March 31, 2026 and December 31, 2025, see note 2 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 March 31, 2026 Balance as of December 31, 2025 $ 172,320 518,634 266,608 957,562 Loan acquisitions and originations — 45,096 11,666 56,762 Repayments (9,742) (24,349) (14,776) (48,867) Loans contributed from AGM 295,993 — — 295,993 Balance as of March 31, 2026 $ 458,571 539,381 263,498 1,261,450 Three months ended March 31, 2025 Balance as of December 31, 2024 $ — 482,445 162,152 644,597 Loan acquisitions and originations 111,002 29,041 4,555 144,598 Repayments (815) (22,035) (4,712) (27,562) Balance as of March 31, 2025 $ 110,187 489,451 161,995 761,633 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 March 31, 2026 and December 31, 2025; and the activity in Nelnet Bank's allowance for loan losses and net charge-offs as a percentage of average loans for the three months ended March 31, 2026 and 2025, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report. Investments As of March 31, 2026, Nelnet Bank had a $1.18 billion investment portfolio, consisting primarily of asset-backed securities. For a summary of Nelnet Bank's asset-backed securities investments as of March 31, 2026 and December 31, 2025, see note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report. Deposits As of March 31, 2026, Nelnet Bank had $1.96 billion of deposits, which included $212.2 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 March 31, 2026 and December 31, 2025, see note 9 of the notes to consolidated financial statements included under Part I, Item 1 of this report. 44 Average Balance Sheet The following table reflects the rates earned on interest-earning assets and paid on interest-bearing liabilities: Three months ended March 31, (a) 2026 2025 Balance Rate Balance Rate Average assets Federally insured student loans $ 270,655 5.48 % $ 25,621 6.55 % Private education loans 539,383 6.42 489,211 6.10 Consumer and other loans 266,204 9.86 162,602 10.47 Cash and investments 1,144,173 5.87 793,537 6.39 Total interest-earning assets 2,220,415 6.44 % 1,470,971 6.75 % Non-interest-earning assets 57,703 14,646 Total assets $ 2,278,118 $ 1,485,617 Average liabilities and equity Brokered deposits $ 303,714 2.54 % $ 249,259 1.95 % Intercompany deposits 195,816 3.71 72,836 3.41 Retail and other deposits 1,359,995 3.80 962,954 4.21 Federal funds purchased and other borrowed money 90,224 4.14 10,404 4.69 Total interest-bearing liabilities 1,949,749 3.61 % 1,295,453 3.73 % Non-interest-bearing liabilities 15,528 8,602 Equity 312,841 181,562 Total liabilities and equity $ 2,278,118 $ 1,485,617 Net interest margin 3.26 % 3.46 % (a) Calculated using average daily balances. 45 Summary and Comparison of Operating Results Three months ended March 31, 2026 2025 Interest income: Loan interest $ 18,671 11,971 Investment interest 16,565 12,496 Total interest income 35,236 24,467 Interest expense 17,407 12,077 Net interest income 17,829 12,390 Provision for loan losses 4,778 2,325 Net interest income after provision for loan losses 13,051 10,065 Other income, net 1,558 142 Derivative settlements, net 39 164 Derivative market value adjustments, net 1,000 (2,529) Total other income, net 2,597 (2,223) Salaries and benefits 2,915 2,816 Depreciation 352 339 Servicing fees 1,227 667 Other expenses 1,278 1,358 Intersegment expenses 657 710 Total operating expenses 6,429 5,890 Income before income taxes 9,219 1,952 Income tax expense (2,106) (434) Net income $ 7,113 1,518 Additional information: Net income $ 7,113 1,518 Derivative market value adjustments, net (1,000) 2,529 Tax effect 240 (607) Net income, excluding derivative market value adjustments $ 6,353 3,440 Factors Affecting Operating Results • Nelnet Bank’s growth was driven by higher loan and investment balances, funded primarily through increased deposit balances. In its early years, Nelnet Bank experienced operating losses as it invested in building the personnel and infrastructure necessary to support future growth. As Nelnet Bank has matured, operating expenses have stabilized while loans and deposits have continued to grow. This operating leverage has driven increased net interest income and net income for the three months ended March 31, 2026 as compared to the same period of 2025. 46 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 Nelnet Insurance Services WRCM Real estate Bond portfolio Total Three months ended March 31, 2026 Investment interest $ 2,861 4 — 5,652 8,517 Interest expense (1,373) — — (1) (1,374) Net interest income 1,488 4 — 5,651 7,143 Reinsurance premiums earned 22,536 — — — 22,536 Other income, net 435 1,338 2,733 (8,092) (3,586) Salaries and benefits (599) (34) (879) — (1,512) Reinsurance losses and underwriting expenses (23,605) — — — (23,605) Other expenses (1,092) (93) (73) (3) (1,261) Intersegment expenses, net (146) (5) (275) (31) (457) (Loss) income before income taxes (983) 1,210 1,506 (2,475) (742) Income tax benefit (expense) 236 (290) (378) 594 162 Net (income) loss attributable to noncontrolling interests — — 69 — 69 Net (loss) income $ (747) 920 1,197 (1,881) (511) Three months ended March 31, 2025 Investment interest $ 1,994 4 — 6,822 8,820 Interest expense (769) — — (1) (770) Net interest income 1,225 4 — 6,821 8,050 Reinsurance premiums earned 24,687 — — — 24,687 Other income, net 574 1,473 (1,643) 706 1,110 Salaries and benefits (249) (32) (197) — (478) Reinsurance losses and underwriting expenses (22,212) — — — (22,212) Other expenses (677) (63) (112) (1) (853) Intersegment expenses, net (109) (4) (99) (32) (244) (Loss) income before income taxes 3,239 1,378 (2,051) 7,494 10,060 Income tax benefit (expense) (777) (298) 489 (1,799) (2,385) Net (income) loss attributable to noncontrolling interests — (138) 14 — (124) Net (loss) income $ 2,462 942 (1,548) 5,695 7,551 Factors Affecting Operating Results • During the three months ended March 31, 2026 , the Company recognized an unrealized loss on certain marketable equity securities of $9.7 million that is included under "Bond portfolio" in "other income, net" in the table above. These losses resulted from changes in market values during the period. 47 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 Solar tax equity Nelnet Renewable Energy (NRE) ALLO Venture capital Other Total Three months ended March 31, 2026 Investment interest $ — 300 — — — 2,836 3,136 Interest expense — (2) — — — (627) (629) Net interest income (expense) — 298 — — — 2,209 2,507 Solar construction revenue — 282 (282) — — — — Other income, net 511 (21,797) 403 978 4,803 1,524 (13,578) Derivative settlements — — — — — 437 437 Derivative market value adjustments — — — — — (907) (907) Cost to provide solar construction services — — — — — — — Salaries and benefits (20,182) (563) (179) (38) (205) (1,848) (23,015) Depreciation and amortization (2,064) (11) (3) — — (369) (2,447) Other expenses (15,120) (163) (2,386) (1) (48) (1,384) (19,102) Intersegment expenses, net 25,749 (90) (15) (2) (60) (435) 25,147 (Loss) income before income taxes (11,106) (22,044) (2,462) 937 4,490 (773) (30,958) Income tax benefit (expense) 2,665 1,575 591 (225) (1,078) 1,903 5,431 Net loss attributable to noncontrolling interests — 15,483 — — — — 15,483 Net (loss) income $ (8,441) (4,986) (1,871) 712 3,412 1,130 (10,044) Three months ended March 31, 2025 Investment interest $ — 5 — — — 2,307 2,312 Interest expense — — (2) — — (631) (633) Net interest income (expense) — 5 (2) — — 1,676 1,679 Solar construction revenue — — 3,995 — — — 3,995 Other income, net 619 1,730 — 8,416 4,492 2,981 18,238 Derivative settlements — — — — — — — Derivative market value adjustments — — — — — — — Cost to provide solar construction services — — (7,828) — — — (7,828) Salaries and benefits (18,720) (388) (1,644) — (207) (1,537) (22,496) Depreciation and amortization (3,519) — (276) — (1) (37) (3,833) Other expenses (13,184) (77) (421) — (24) (1,880) (15,586) Intersegment expenses, net 24,816 (65) (399) — (40) (257) 24,055 (Loss) income before income taxes (9,988) 1,205 (6,575) 8,416 4,220 946 (1,776) Income tax benefit (expense) 2,397 (678) 1,578 (2,020) (1,013) 546 810 Net loss attributable to noncontrolling interests — 1,623 — — — — 1,623 Net (loss) income $ (7,591) 2,150 (4,997) 6,396 3,207 1,492 657 Factors Affecting Operating Results • Solar tax equity: The Company holds equity interests in partnerships that invest in solar tax equity projects intended to promote renewable energy generation. Because the Company has management and control over these partnerships, they are consolidated in the Company’s consolidated financial statements, with third-party interests presented as noncontrolling interests. The Company accounts for its solar tax equity interests using the hypothetical liquidation at book value (“HLBV”) method, which commonly results in the recognition of accelerated losses in the early years of a 48 partnership. Based on contributions made to these partnerships in recent periods, the Company recognized losses of $22.5 million related to its solar tax equity partnerships during the three months ended March 31, 2026, compared to a gain of $0.5 million for the same period in 2025. These amounts are included in “other income, net” in the table above. Losses attributable to noncontrolling interest partners were $13.4 million and $1.0 million for the three months ended March 31, 2026 and 2025, respectively, and are included in “net loss attributable to noncontrolling interests” in the table above. See note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report. • NRE: NRE was the Company’s solar construction subsidiary, providing full‑service engineering, procurement, and construction services. Following its acquisition, NRE experienced low and, in certain cases, negative project margins. In addition, changes in legislation reducing clean energy tax incentives, tariff uncertainty, and rising construction costs adversely affected NRE's revenue and operating results. As a result of these factors, the Company sold NRE in November 2025. Although the Company retained a limited number of construction contracts to complete following the sale, the Company does not expect the operating results from such contracts to be significant in future periods. • ALLO: In June 2025, ALLO redeemed all of the Company's preferred membership interests that were outstanding at that time. Included in the Company's operating results for the three months ended March 31, 2025 was $8.4 million of ALLO preferred return. In the fourth quarter of 2025 and first quarter of 2026, the Company contributed a total of $23.5 million of additional capital in return for preferred membership interest in ALLO that earns a 20% preferred return. During the first quarter of 2026, the Company recognized $1.0 million of ALLO preferred return related to this new capital. • Equity securities: During the three months ended March 31, 2026, the Company recognized realized and unrealized losses on a certain marketable equity security of $1.1 million that is included under "Other" in "other income, net" in the table above. These losses resulted from changes in market values during the period. 49 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. Sources of Liquidity As of March 31, 2026, the Company's sources of liquidity included: Cash and cash equivalents $ 240,007 Less: Cash and cash equivalents held at Nelnet Bank (a) (19,577) Net cash and cash equivalents 220,430 Available-for-sale (AFS) debt securities (investments) - at fair value 1,412,729 Less: AFS debt securities held at Nelnet Bank - at fair value (a) (949,910) AFS private education and consumer loan debt securities - held as risk retention - at fair value (b) (179,397) Restricted investments - at fair value (c) (194,688) Unencumbered AFS debt securities (investments) - at fair value 88,734 Unencumbered federally insured, private, consumer, and other loans (Non-Nelnet Bank) - at par 317,598 Unencumbered repurchased Nelnet issued asset-backed debt securities - at par (not included on consolidated financial statements) (d) 238,148 Unused capacity on unsecured line of credit (e) 435,000 Sources of liquidity as of March 31, 2026 $ 1,299,910 (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) On March 31, 2026, the Company entered into a $435.0 million unsecured line of credit that matures on March 31, 2031. See note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report. As of March 31, 2026, there was no amount outstanding on the unsecured line of credit and $435.0 million was available for future use. The Company intends to use its current and future liquidity position to capitalize on market opportunities, including FFELP, private education, consumer, and other loan acquisitions (or residual interests therein); strategic acquisitions; 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. 50 Cash Flows The Company has historically generated positive cash flow from operations. During the three months ended March 31, 2026 and 2025, the Company generated $73.1 million and $91.2 million, respectively, in cash from operating activities. The decrease in 2026 compared with 2025 was due to: • A decrease in net income; • Adjustments to net income for certain non-cash items, including loan discount and deferred lender fees accretion and deferred income taxes; and • The impact of changes to accrued interest receivable, accounts receivable, and other assets during the three months ended March 31, 2026 compared with the same period in 2025. These factors were partially offset by: • Adjustments to net income for certain non-cash items, including provision for loan losses and loss on investments; and • The impact of changes to other liabilities during the three months ended March 31, 2026 compared with the same period in 2025. 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, the purchase and sale of other investments, and business acquisitions. The primary items included in financing activities are the payments on and proceeds from bonds and notes payable and the change in deposits at Nelnet Bank used to fund loans and investment activity, and the change in due to customers. Cash provided by investing activities and used in financing activities for the three months ended March 31, 2026 was $31.1 million and $244.2 million, respectively. Cash provided by investing activities and used in financing activities for the three months ended March 31, 2025 was $136.4 million and $326.4 million, respectively. Investing and financing activities are further addressed in the discussion that follows. Sources and Needs of Liquidity - AGM Operating Segment The Company plans to fund additional loan acquisitions (or residual interests therein) through a combination of current cash; cash generated from operating activities and expected future cash flows from loan securitizations; proceeds from the sale of certain investments; borrowings under its unsecured line of credit, Union Bank student loan participation agreement, and Union Bank student loan asset-backed securities participation agreement, or similar secured and unsecured borrowing facilities; utilization of existing warehouse facilities; expansion of capacity under existing and/or establishment of new warehouse facilities; and continued access to the asset-backed securities market. Sources of Liquidity Asset-backed Securities Transactions The Company, through its subsidiaries, has historically funded loans by completing 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. 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 three months ended March 31, 2026. Warehouse Facilities Warehousing allows the Company to buy and manage loans prior to transferring them into more permanent financing arrangements. See note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report for a discussion of the Company's warehouse facilities outstanding as of March 31, 2026. Union Bank Participation Agreement 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. The agreement automatically renews annually and is terminable by either party upon five business days' notice. As of March 31, 2026, $659.0 million of 51 loans were subject to outstanding participation interests held by Union Bank, as trustee, under this agreement. 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. Liquidity Impact Related to Debt Obligations Secured by Loan Assets and Related Collateral The following table shows AGM's debt obligations outstanding that are secured by loan assets and related collateral: As of March 31, 2026 Carrying amount Final maturity Bonds and notes issued in asset-backed securitizations $ 6,420,865 10/25/33 - 11/27/90 FFELP and consumer loan warehouse and other facilities 1,237,681 7/30/27 - 2/29/28 $ 7,658,546 Warehouse Facilities 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. Bonds and Notes Issued in Asset-backed Securitizations 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 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 March 31, 2026, 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 funded in asset-backed securitizations to be approximately $1.00 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 March 31, 2026, the majority of which are federally insured student loans. As of March 31, 2026, AGM had $6.7 billion of loans included in asset-backed securitizations, which represented 79.6% 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 March 31, 2026, and loans owned by Nelnet Bank. 52 Asset-backed Securitization Cash Flow Forecast $1.00 billion (dollars in millions) The forecasted future undiscounted cash flows of approximately $1.00 billion include approximately $0.73 billion (as of March 31, 2026) 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 $0.27 billion, or approximately $0.20 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 March 31, 2026 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%. 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 $0.06 billion $0.94 billion 4x $0.17 billion $0.83 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 $0.73 billion (as of March 31, 2026); however, the Company would not receive the $0.27 billion ($0.20 billion after tax) of estimated future earnings from the portfolio. 53 Interest rates : The Company funds a portion of its student loans with variable 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. 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 March 31, 2026, the Company's ownership correlates to approximately $1.64 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 March 31, 2026, the investment balance on the Company's consolidated balance sheet of its beneficial interest in loan securitizations was $197.8 million. For a summary of this investment balance, see note 5 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 March 31, 2026, 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 $276.8 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 ($276.8 million) and the investment carrying value ($197.8 million) of $79.0 million, or $60.0 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 March 31, 2026 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 Nelnet Bank’s growth strategy is supported by a combination of parent company capital support, diversified deposit funding, and access to supplemental liquidity sources. Nelnet Bank’s primary liquidity needs relate to funding loan originations and acquisitions while maintaining appropriate capital and liquidity levels. Nelnet Bank operates under a capital and liquidity maintenance agreement that requires Nelnet, Inc., Nelnet Bank's parent company, to serve as a source of financial strength to Nelnet Bank. Nelnet, Inc. has provided capital contributions to support Nelnet Bank’s growth since inception and expects to continue to provide equity capital as necessary to support balance sheet growth and to meet regulatory capital requirements. During the first quarter of 2026, Nelnet, Inc. contributed two student loan securitization trusts that included $44.6 million of net assets. Through March 31, 2026, the Company has contributed $322.6 million of initial and ongoing capital to Nelnet Bank (such capital contributions have included cash, investments, loans, and equity in student loan trusts). Nelnet Bank funds the majority of its assets through a diversified deposit base, including retail, commercial, institutional, and brokered deposits sourced through direct banking platforms and deposit marketplaces. Deposit products include both liquid and term deposits with varying maturities, which provide funding stability and flexibility. Management expects continued deposit growth to be the primary source of funding for future loan growth. 54 In addition to deposit funding, Nelnet Bank maintains access to unsecured federal funds lines with correspondent banks and has established borrowing capacity with the Federal Reserve Bank and the Federal Home Loan Bank. These sources provide additional liquidity and funding flexibility as needed. Other Sources of Liquidity Unsecured Line of Credit On March 31, 2026, the Company entered into a new $435.0 million unsecured line of credit with a maturity date of March 31, 2031. In conjunction with entering into the new line of credit, the Company terminated its $495.0 million line of credit which had a scheduled maturity date of September 22, 2026. There was no outstanding balance on the $495.0 million line of credit on the date of termination. As of March 31, 2026, the new unsecured line of credit had no amount outstanding and $435.0 million was available for future use. Upon the maturity date of the new 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. Union Bank Participation Agreement The Company 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 (investments) 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. As of March 31, 2026, $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. Stock Repurchases 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, 2028. As of March 31, 2026, 4,398,221 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 three months ended March 13, 2026 are shown below. For additional information on stock repurchases during the first quarter of 2026, 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) Quarter ended March 31, 2026 126,319 $ 16,280 128.88 Dividends On March 13, 2026, the Company paid a first quarter 2026 cash dividend on the Company's Class A and Class B common stock of $0.33 per share. In addition, the Company's Board of Directors has declared a second quarter 2026 cash dividend on the Company's outstanding shares of Class A and Class B common stock of $0.33 per share. The second quarter cash dividend will be paid on June 15, 2026 to shareholders of record at the close of business on June 1, 2026. The Company plans to continue making regular quarterly dividend payments, subject to future earnings, capital requirements, financial condition, and other factors. RECENT ACCOUNTING PRONOUNCEMENTS 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. 55