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 six months ended June 30, 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. 34 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, Canadian, 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. 35 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 June 30, Six months ended June 30, 2026 2025 2026 2025 GAAP net income attributable to Nelnet, Inc. $ 66,662 181,459 137,788 264,018 Realized and unrealized derivative market value adjustments (a) (3,686) 3,866 (5,273) 10,190 Tax effect (b) 885 (928) 1,266 (2,446) Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments $ 63,861 184,397 133,781 271,762 Earnings per share: GAAP net income attributable to Nelnet, Inc. $ 1.85 4.97 3.82 7.24 Realized and unrealized derivative market value adjustments (a) (0.10) 0.11 (0.15) 0.28 Tax effect (b) 0.02 (0.03) 0.04 (0.07) Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments $ 1.77 5.05 3.71 7.45 (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. 36 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) and certain marketable equity 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 37 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 six months ended June 30, 2026 and 2025. 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 June 30, Six months ended June 30, 2026 2025 2026 2025 NDS $ 14,822 19,959 34,624 38,471 NBS 19,364 23,542 67,178 71,005 Nelnet Financial Services division: AGM 29,194 27,393 59,716 57,226 Nelnet Bank 13,828 (465) 23,047 1,487 NFS other operating segments 21,861 10,091 21,118 20,152 Corporate: Unallocated shared services and corporate costs (13,596) (11,923) (24,703) (21,911) Solar tax equity (21,642) (1,892) (43,966) (686) Nelnet Renewable Energy - solar construction (390) (17,601) (2,571) (24,175) Other corporate operating segments 1,973 188,258 6,631 201,935 Net income before taxes 65,413 237,364 141,074 343,504 Income tax expense (19,942) (59,510) (40,003) (84,521) Net loss attributable to noncontrolling interests 21,191 3,605 36,717 5,035 Net income $ 66,662 181,459 137,788 264,018 Impact of Transactions on 2026 Operating Results Operating results for the three and six months ended June 30, 2026 compared to the same periods in 2025 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. Nelnet Bank In its initial years, Nelnet Bank incurred operating losses as it invested in the personnel and infrastructure needed to support future growth. As the bank has matured, operating expenses have stabilized while loan and deposit balances have continued to expand. This operating leverage has contributed to increased net interest income and net income for the three and six months ended June 30, 2026, compared with the corresponding periods in 2025. During 2026, the Company’s AGM operating segment contributed certain student loan trusts to Nelnet Bank, including $716.3 million of federally insured loans. Following these contributions, Nelnet Bank repaid the related securitization debt and funded the loans with deposits. These transactions were a significant contributor to the increase in Nelnet Bank's loan balance during 2026. NFS Other Operating Segments During the three and six months ended June 30, 2026, the Company recognized an unrealized gain of $8.6 million and an unrealized loss of $1.1 million, respectively, from changes in the fair value of certain marketable equity securities. These fair value adjustments were a significant driver of the increase in income before income taxes for the NFS other operating segments in the second quarter of 2026 compared with the prior-year period; however, they had only a limited impact on the year-to-date comparison. Operating results may continue to fluctuate and be impacted in future periods by fair value adjustments of marketable equity securities. Solar Tax Equity During the three and six months ended June 30, 2026, the Company recognized $22.5 million and $45.0 million of losses related to its solar tax equity partnerships, respectively. These losses reflect the accounting treatment required under the HLBV method and were influenced by contributions made to these partnerships in recent periods. The HLBV method commonly results in the recognition of accelerated losses in the early years of a partnership. The Company consolidates its solar tax equity partnerships because it holds management and control rights, with third‑party investor interests reflected as noncontrolling interests. Losses attributable to noncontrolling interest partners totaled $19.5 million and $32.9 million for the three and six 38 months ended June 30, 2026, and are included in “net loss attributable to noncontrolling interests” in the table above. See note 5 of the notes to consolidated financial statements in this report for additional information. Nelnet Renewable Energy (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 Investment During the three months ended June 30, 2025, the Company recognized a $175.0 million gain on a partial redemption of the Company's voting membership interests in ALLO. In addition, ALLO redeemed all of the Company's preferred membership interests in ALLO that were outstanding at that time. Included in the Company's operating results for the three and six months ended June 30, 2025 was $6.0 million and $14.4 million of ALLO preferred return, respectively. The operating results from the Company's investment in ALLO is included in "other corporate operating segments" in the table above. CONSOLIDATED RESULTS OF OPERATIONS An analysis of the Company's consolidated operating results for the three and six months ended June 30, 2026 compared with the same periods 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 Six months ended June 30, June 30, 2026 2025 2026 2025 Additional information Loan interest $ 164,598 172,104 335,622 338,543 Decrease was due to a decrease in the average consolidated balance of FFELP loans and gross yield earned on loans, partially offset by an increase in loan discount accretion and the average balance of consumer and other loans held within the AGM and Nelnet Bank operating segments. Investment interest 40,315 40,185 80,517 81,574 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 other investments. Total interest income 204,913 212,289 416,139 420,117 Interest expense 108,902 132,854 218,485 257,968 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 96,011 79,435 197,654 162,149 Less provision for loan losses 41,077 17,930 94,321 33,267 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 establishment of an initial allowance for loans originated and acquired during the periods, including 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 information. Less provision for beneficial interests 2,441 4,977 6,571 6,487 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 included under Part I, Item 1 of this report for additional information. Net interest income after provision 52,493 56,528 96,762 122,395 Other income (expense): LSS revenue 132,244 120,724 260,086 241,465 See LSS operating segment - results of operations. ETSP revenue 118,884 118,184 273,319 265,515 See ETSP operating segment - results of operations. Reinsurance premiums earned 40,625 26,112 63,161 50,799 Represents premiums earned, net of ceded portion, from reinsurance treaties on primarily property and casualty policies. Increase was primarily due to timing of premium recognition under certain reinsurance treaties. Solar construction revenue — 1,259 — 5,254 Represents revenue earned from NRE providing solar construction services. The Company sold NRE in November 2025. 39 Other, net 18,399 22,976 28,836 47,579 See table below for the components of "other, net." Gain on partial redemption of ALLO investment — 175,044 — 175,044 Represents a gain recognized from the partial redemption of the Company's ALLO investment. Derivative settlements, net 166 744 746 1,489 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 3,686 (3,866) 5,273 (10,190) 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 314,004 461,177 631,421 776,955 Cost of services and expenses: Loan servicing contract fulfillment and acquisition costs 2,087 1,845 4,174 3,478 Represents primarily the amortization of previously capitalized contract fulfillment costs. Cost to provide education technology services and payments 39,183 39,844 89,136 87,891 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 — 14,050 — 21,878 Represents direct costs related to NRE providing solar construction services. The Company sold NRE in November 2025. Total cost of services 41,270 55,739 93,310 113,247 Salaries and benefits 152,664 134,699 292,035 272,922 Increase was primarily due to the acquisition of NDS Canada during the first quarter of 2026 and higher 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 10,142 7,624 19,312 16,879 Includes depreciation of property and equipment and the amortization of intangibles from prior business acquisitions. Increase was primarily driven by an increase in amortization due to the acquisition of NDS Canada during the first quarter of 2026. Reinsurance losses and underwriting expenses 32,809 25,662 56,414 47,874 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. Other expenses 64,199 56,617 126,038 104,924 Includes expenses such as postage and distribution, consulting and professional fees, servicing fees, marketing, travel, communications, certain information technology-related costs, and impairment charges. 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 to support development of new technologies. Total operating expenses 259,814 224,602 493,799 442,599 Income before income taxes 65,413 237,364 141,074 343,504 Income tax expense (19,942) (59,510) (40,003) (84,521) The effective tax rate was 23.03% and 24.70% for the three months ended June 30, 2026 and 2025, respectively and 22.50% and 24.25% for the six months ended June 30, 2026 and 2025, respectively. The decrease in the effective tax rate in 2026 as compared with 2025 was impacted by the state effective tax rate. The Company expects its effective tax rate will range between 22.5% and 24.5% for the remainder of 2026. Net income 45,471 177,854 101,071 258,983 Net loss attributable to noncontrolling interests 21,191 3,605 36,717 5,035 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. $ 66,662 181,459 137,788 264,018 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. $ 66,662 181,459 137,788 264,018 Derivative market value adjustments, net (3,686) 3,866 (5,273) 10,190 Tax effect 885 (928) 1,266 (2,446) Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments $ 63,861 184,397 133,781 271,762 40 The following table summarizes the components of "other, net" in "other income (expense)" on the consolidated statements of income: Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Additional information Investment activity, net (a) $ 19,643 14,837 35,794 28,412 See note (b) below for additional information. Borrower late fee income 7,791 1,642 16,249 3,231 See NFS division - results of operations - AGM operating segment. Administration/sponsor fee income 1,606 1,293 3,155 2,598 See NFS division - results of operations - AGM operating segment. Investment advisory services (WRCM) 1,380 1,504 2,715 2,977 See NFS division - results of operations - NFS other operating segments. Loss from solar investments, net (22,497) (1,502) (45,028) (1,046) 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 10,476 5,202 15,951 11,407 Other, net $ 18,399 22,976 28,836 47,579 (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 June 30, 2026 2025 NFS - AGM $ — 8,649 — (20) 8,629 — 4,213 — — 4,213 NFS - Nelnet Bank — (15) — 470 455 — (65) — 149 84 NFS - Other Operating Segments (1,034) — 8,629 1,191 8,786 453 — 654 1,686 2,793 Corporate — 1,316 457 — 1,773 — 7,747 — — 7,747 $ (1,034) 9,950 9,086 1,641 19,643 453 11,895 654 1,835 14,837 Six months ended June 30, 2026 2025 NFS - AGM $ — 24,011 — (20) 23,991 — 5,260 — — 5,260 NFS - Nelnet Bank — 1,053 — 803 1,856 — (127) — 435 308 NFS - Other Operating Segments 1,698 — (1,050) 2,872 3,520 (1,190) — 645 2,735 2,190 Corporate — 7,097 (670) — 6,427 — 20,654 — — 20,654 $ 1,698 32,161 (1,720) 3,655 35,794 (1,190) 25,787 645 3,170 28,412 41 LOAN SERVICING AND SYSTEMS OPERATING SEGMENT – RESULTS OF OPERATIONS On February 2, 2026, the Company acquired a Canadian student loan servicing 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. See note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information. Summary and Comparison of Operating Results Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Interest income, net $ 582 624 1,174 1,345 Loan servicing and systems revenue (see disaggregated revenue by service offering below) 132,244 120,724 260,086 241,465 Intersegment servicing revenue 4,798 5,603 9,804 11,287 Other income (57) 113 (267) 225 Total other income 136,985 126,440 269,623 252,977 Contract fulfillment and acquisition costs 2,087 1,845 4,174 3,478 Salaries and benefits 74,924 65,549 142,545 135,123 Depreciation and amortization 5,071 1,821 9,073 4,474 Postage expense 8,237 9,551 17,043 17,127 Other expenses 15,193 11,099 29,386 21,931 Intersegment expenses 17,233 17,240 33,952 33,718 Total operating expenses 120,658 105,260 231,999 212,373 Income before income taxes 14,822 19,959 34,624 38,471 Income tax expense (3,557) (4,790) (8,309) (9,233) Net income $ 11,265 15,169 26,315 29,238 GAAP before tax operating margin 11.0 % 16.0 % 13.0 % 15.4 % Amortization expense related to acquired intangibles from NDS Canada acquisition 2.1 — 1.8 — Non-GAAP before tax operating margin, excluding amortization expense (a) 13.1 % 16.0 % 14.8 % 15.4 % (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 ($2.8 million and $4.7 million for the three and six months ended June 30, 2026, respectively), divided by the total of loan servicing and systems revenue (net of 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, decreased in 2026 compared with 2025 due to a decrease in Department loan servicing revenue, primarily driven by a decrease in the number of borrowers and further explained in the disaggregated revenue table below. This was partially offset by lower salaries and benefits (excluding the impact of employees added through the NDS Canada acquisition) reflecting ongoing cost-efficiency initiatives and headcount reductions, as well as lower postage expense (which was also driven by a decrease in Department borrowers). 42 Loan Servicing Volumes As of June 30, 2026 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 $ 423,605 431,049 434,479 458,679 465,689 482,786 489,877 Canada student loans 42,942 42,692 — — — — — FFELP 10,853 11,195 11,594 11,982 12,386 12,826 13,260 Private and consumer 41,815 40,785 40,088 38,060 38,018 46,728 29,226 Total $ 519,215 525,721 486,161 508,721 516,093 542,340 532,363 Number of servicing borrowers: Department of Education 10,679,141 11,048,314 11,426,789 12,387,665 12,694,386 13,453,127 14,049,550 Canada student loans 2,681,563 2,708,392 — — — — — FFELP 429,298 443,028 463,109 482,696 502,205 524,421 549,861 Private and consumer 1,360,744 1,327,471 1,349,414 1,325,037 1,326,451 1,350,999 1,168,293 Total 15,150,746 15,527,205 13,239,312 14,195,398 14,523,042 15,328,547 15,767,704 Number of remote hosted borrowers: 2,681,324 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 June 30, Six months ended June 30, 2026 2025 2026 2025 Additional information Department of Education loan servicing $ 74,639 85,737 150,759 173,100 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. The Company does not expect to transfer additional volume to this servicer in 2026. 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 loans 17,685 — 29,016 — 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 26,114 22,733 51,775 45,426 Increase was due to an increase in loan servicing volume from the continued 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 1,968 2,241 4,222 4,873 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 11,384 9,452 23,147 16,444 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 454 561 1,167 1,622 Represents revenue from providing contact center and back office operational outsourcing services. Loan servicing and systems revenue $ 132,244 120,724 260,086 241,465 43 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 June 30, Six months ended June 30, 2026 2025 2026 2025 Interest income $ 4,732 5,417 10,851 12,356 Education technology services and payments revenue (see disaggregated revenue by service offering below) 118,884 118,184 273,319 265,515 Intersegment revenue 74 65 145 129 Other income 1,902 — 1,902 — Total income 120,860 118,249 275,366 265,644 Cost of services (see disaggregated revenue by service offering below) 39,183 39,844 89,136 87,891 Salaries and benefits 45,596 41,598 88,292 83,339 Depreciation and amortization 2,442 2,505 4,811 4,936 Other expenses 12,714 9,904 24,474 18,952 Intersegment expenses, net 6,293 6,273 12,326 11,877 Total operating expenses 67,045 60,280 129,903 119,104 Income before income taxes 19,364 23,542 67,178 71,005 Income tax expense (4,648) (5,650) (16,123) (17,052) Net income 14,716 17,892 51,055 53,953 Net loss attributable to noncontrolling interests — — — 45 Net income $ 14,716 17,892 51,055 53,998 GAAP before tax operating margin 24.3 % 30.0 % 36.5 % 40.0 % Net interest income (5.9) (6.9) (5.9) (7.0) Non-GAAP before tax operating margin, excluding net interest income (a) 18.4 % 23.1 % 30.6 % 33.0 % (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 in 2026 compared with 2025 due to an increase in operating expenses to support the growth in the customer base and investments in the development of new technologies. 44 Education technology services and payments revenue The following table presents disaggregated revenue by service offering for each reporting period: Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Additional information Tuition payment plan services $ 37,005 36,013 78,859 76,085 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 39,409 37,515 95,297 89,051 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 42,312 44,481 98,426 100,177 Decrease during the three months ended June 30, 2026 compared with the same period in 2025 was primarily due to a decrease in professional development. The timing and amount of revenue recognition for professional development depends on both the availability of government funding to schools and each school's decision regarding when and how to use those funds. The decrease during the six months ended June 30, 2026 compared with the same period in 2025 was also driven 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 $1.7 million for the six months ended June 30, 2025. The decrease was partially offset by growth in student information system revenue. Other 158 175 737 202 Education technology services and payments revenue 118,884 118,184 273,319 265,515 Cost of services 39,183 39,844 89,136 87,891 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 $ 79,701 78,340 184,183 177,624 45 NELNET FINANCIAL SERVICES DIVISION - RESULTS OF OPERATIONS Asset Generation and Management Operating Segment Loan Portfolio As of June 30, 2026, the AGM operating segment had a $7.83 billion loan portfolio, consisting primarily of federally insured loans. For a summary of the Company’s loan portfolio as of June 30, 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 June 30, 2026 Balance as of March 31, 2026 $ 7,065,363 130,217 1,213,599 8,409,179 Loan acquisitions (a) 115,737 — 3,067,022 3,182,759 Repayments, claims, capitalized interest, participations, and other, net (198,656) (7,112) (3,066,989) (3,272,757) Loans lost to external parties (18,864) (287) — (19,151) Loans sold (49,892) — (76) (49,968) Loans contributed to Nelnet Bank (420,291) — — (420,291) Balance as of June 30, 2026 $ 6,493,397 122,818 1,213,556 7,829,771 Three months ended June 30, 2025 Balance as of March 31, 2025 $ 8,670,284 208,507 381,215 9,260,006 Loan acquisitions 626 — 142,503 143,129 Repayments, claims, capitalized interest, participations, and other, net (236,813) (8,920) (112,248) (357,981) Loans lost to external parties (66,771) (800) — (67,571) Loans sold (241) — — (241) Loans contributed to Nelnet Bank — (42,173) — (42,173) Balance as of June 30, 2025 $ 8,367,085 156,614 411,470 8,935,169 Six months ended June 30, 2026 Balance as of December 31, 2025 $ 7,437,243 139,209 1,122,717 8,699,169 Loan acquisitions (a) 415,286 — 6,102,945 6,518,231 Repayments, claims, capitalized interest, participations, and other, net (423,977) (15,359) (6,011,712) (6,451,048) Loans lost to external parties (61,010) (1,032) — (62,042) Loans sold (157,861) — (394) (158,255) Loans contributed to Nelnet Bank (716,284) — — (716,284) Balance as of June 30, 2026 $ 6,493,397 122,818 1,213,556 7,829,771 Six months ended June 30, 2025 Balance as of December 31, 2024 $ 8,388,564 221,744 345,560 8,955,868 Loan acquisitions 703,425 — 272,290 975,715 Repayments, claims, capitalized interest, participations, and other, net (467,370) (21,455) (206,232) (695,057) Loans lost to external parties (125,535) (1,502) — (127,037) Loans sold (131,999) — (148) (132,147) Loans contributed to Nelnet Bank — (42,173) — (42,173) Balance as of June 30, 2025 $ 8,367,085 156,614 411,470 8,935,169 (a) The Company began to acquire Pay Later receivables during the third quarter of 2025. Consumer loan acquisitions excluding Pay Later receivables was $205.5 million and $387.5 million during the three and six months ended June 30, 2026, respectively. 46 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 June 30, 2026, the Company’s ownership correlates to approximately $1.58 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. The Company also has ownership interests in certain entities whose primary business is to acquire, own, and manage loan assets which are accounted for as equity method investments and included in "other investments and notes receivable, net" in the Company's consolidated financial statements. As of June 30, 2026, the Company's ownership in these entities correlates to approximately $1.20 billion of loans included in these entities. The loans held in these entities are not included in the above table. The ownership interests in these entities are recorded at cost and subsequently increased or decreased by the amount of the Company's proportionate share of the net earnings or losses of each entity. During the three months ended June 30, 2026 and 2025 and six months ended June 30, 2026 and 2025, the Company recognized income of $8.6 million and $4.2 million, respectively, and $24.0 million and $5.3 million, respectively, related to these businesses that is included in "other, net" in "other income (expense)" on the 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 June 30, 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 and six months ended June 30, 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. Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Variable loan yield, gross 6.58 % 7.77 % 6.68 % 7.59 % Consolidation rebate fees (0.75) (0.82) (0.77) (0.80) Discount accretion, net of premium and deferred origination costs amortization 1.09 (0.15) 1.16 (0.14) Variable loan yield, net 6.92 6.80 7.07 6.65 Loan cost of funds - interest expense (4.67) (5.60) (4.75) (5.50) Variable loan spread 2.25 1.20 2.32 1.15 Fixed-rate floor income, gross 0.08 0.04 0.08 0.05 Loan spread 2.33 % 1.24 % 2.40 % 1.20 % Average balance of AGM's loans $ 8,039,243 9,215,579 8,260,332 9,379,948 Average balance of AGM's debt outstanding 7,375,706 8,439,800 7,585,788 8,445,716 Variable loan spread was higher during the three and six months ended June 30, 2026 compared with the same periods 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. Variable loan spread was also impacted by the increase in discount accretion primarily from Pay Later receivables the Company began to purchase during the third quarter of 2025 at a discount that have a short estimated life. The difference between variable loan spread and 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. 47 Summary and Comparison of Operating Results Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Additional information Interest income: Loan interest $ 140,264 157,300 292,616 311,768 See table below for additional analysis. Investment interest: Residual interest 6,215 7,741 12,659 16,407 Represents residual interest earned on beneficial interest investments. Decrease is due to a decrease in the investment balance. Other investment interest 4,112 4,900 8,328 9,004 Represents investment interest earned on restricted cash included in student loan securitizations and other secured borrowings. Total investment interest 10,327 12,641 20,987 25,411 Total interest income 150,591 169,941 313,603 337,179 Loan interest expense 85,823 117,843 178,375 230,254 See table below for additional analysis. Intercompany interest expense 1,602 2,223 4,606 4,115 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 87,425 120,066 182,981 234,369 Net interest income 63,166 49,875 130,622 102,810 Less provision for loan losses 41,326 11,133 89,792 24,144 The increase was driven by the establishment of an initial allowance for loans acquired during the periods, including 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 information. Less provision for beneficial interests 2,441 4,977 6,571 6,487 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 19,399 33,765 34,259 72,179 Other income, net 19,765 7,507 46,012 12,411 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 89 581 193 1,162 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 1,972 (2,165) 3,466 (5,961) 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 21,826 5,923 49,671 7,612 Salaries and benefits 1,883 1,469 3,511 2,690 Servicing fees 7,752 7,102 15,904 14,013 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 $3.7 million and $4.8 million during the three months ended June 30, 2026 and 2025, respectively, and $7.9 million and $9.7 million during the six months ended June 30, 2026 and 2025, respectively, was eliminated for consolidated financial reporting purposes. Other expenses 1,000 2,464 2,051 3,352 Intersegment expenses 1,396 1,260 2,748 2,510 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 12,031 12,295 24,214 22,565 Income before income taxes 29,194 27,393 59,716 57,226 Income tax expense (7,005) (6,569) (14,325) (13,725) Represents income tax expense at an effective tax rate of 24%. Net income 22,189 20,824 45,391 43,501 48 Net income attributable to noncontrolling interests (9) (23) (27) (40) Net income $ 22,180 20,801 45,364 43,461 Additional information: GAAP net income $ 22,180 20,801 45,364 43,461 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 (1,972) 2,165 (3,466) 5,961 Tax effect 473 (520) 832 (1,431) Non-GAAP net income, excluding derivative market value adjustments $ 20,681 22,446 42,730 47,991 Net loan interest income The following table summarizes the components of "loan interest" and "loan interest expense" from the table above. Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Additional information Variable interest income, gross $ 131,894 178,606 273,746 353,912 Decrease was due to a decrease in the average balance of loans and gross yield earned on loans. Consolidation rebate fees (14,988) (18,897) (31,706) (37,645) Decrease was due to a decrease in the average consolidation loan balance. Discount accretion, net of premium and deferred origination costs amortization 21,836 (3,406) 47,490 (6,471) 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 138,742 156,303 289,530 309,796 Interest on bonds and notes payable (85,823) (117,843) (178,375) (230,254) Decrease was due to a decrease in the average balance of debt outstanding and cost of funds. Variable loan interest margin 52,919 38,460 111,155 79,542 Fixed-rate floor income 1,522 997 3,086 1,972 Increase was due to lower interest rates. Net loan interest income $ 54,441 39,457 114,241 81,514 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 June 30, 2026, the balance of Pay Later receivables was $699.8 million. Growth in Pay Later receivable volumes contributed to increased 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, ownership, and management of loan portfolios. During the three and six months ended June 30, 2026, AGM recognized $8.6 million and $24.0 million of income from these joint ventures, respectively, compared with $4.2 million and $5.3 million in the same periods of 2025, respectively. Such amounts are included in “Other income, net” in the above table titled “Summary and Comparison of Operating Results.” • During 2026, AGM contributed certain student loan trusts to Nelnet Bank that included $716.3 million of federally insured loans. The contribution of these loans to Nelnet Bank has resulted in a decrease in loan interest income for the three and six months ended June 30, 2026 compared with the same periods in 2025. 49 Nelnet Bank Operating Segment Loan Portfolio As of June 30, 2026, Nelnet Bank had a $1.64 billion loan portfolio. For a summary of Nelnet Bank’s loan portfolio as of June 30, 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 June 30, 2026 Balance as of March 31, 2026 $ 458,571 539,381 263,498 1,261,450 Loan acquisitions and originations — 6,580 13,845 20,425 Repayments (25,521) (24,802) (12,746) (63,069) Loans contributed from AGM 420,291 — — 420,291 Balance as of June 30, 2026 $ 853,341 521,159 264,597 1,639,097 Three months ended June 30, 2025 Balance as of March 31, 2025 $ 110,187 489,451 161,995 761,633 Loan acquisitions and originations 38 8,354 50,175 58,567 Repayments (3,670) (23,315) (7,747) (34,732) Loans contributed from AGM — 42,173 — 42,173 Balance as of June 30, 2025 $ 106,555 516,663 204,423 827,641 Six months ended June 30, 2026 Balance as of December 31, 2025 $ 172,320 518,634 266,608 957,562 Loan acquisitions and originations — 51,676 25,511 77,187 Repayments (35,263) (49,151) (27,522) (111,936) Loans contributed from AGM 716,284 — — 716,284 Balance as of June 30, 2026 $ 853,341 521,159 264,597 1,639,097 Six months ended June 30, 2025 Balance as of December 31, 2024 $ — 482,445 162,152 644,597 Loan acquisitions and originations 111,040 37,396 54,730 203,166 Repayments (4,485) (45,351) (12,459) (62,295) Loans contributed from AGM — 42,173 — 42,173 Balance as of June 30, 2025 $ 106,555 516,663 204,423 827,641 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 June 30, 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 and six months ended June 30, 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 June 30, 2026, Nelnet Bank had a $1.29 billion investment portfolio, consisting primarily of asset-backed securities. For a summary of Nelnet Bank's asset-backed securities investments as of June 30, 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 June 30, 2026, Nelnet Bank had $2.51 billion of deposits, which included $285.8 million of intercompany deposits from Nelnet, Inc. (parent company) and its subsidiaries, and thus have been eliminated for consolidated financial reporting purposes. For a summary of deposits as of June 30, 2026 and December 31, 2025, see note 9 of the notes to consolidated financial statements included under Part I, Item 1 of this report. 50 Average Balance Sheet The following table reflects average daily balances and the annualized rates earned on interest-earning assets and paid on interest-bearing liabilities: Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Balance Rate Balance Rate Balance Rate Balance Rate Average assets Federally insured student loans $ 708,027 5.39 % $ 108,235 6.14 % $ 490,549 5.42 % $ 67,156 6.21 % Private education loans 530,455 6.30 519,858 6.37 534,894 6.36 504,619 6.24 Consumer and other loans 266,072 9.78 181,821 10.79 266,138 9.82 172,265 10.64 Cash and investments 1,333,171 5.60 923,233 6.05 1,250,762 5.67 858,743 6.21 Total interest-earning assets 2,837,725 6.07 % 1,733,147 6.65 % 2,542,343 6.20 % 1,602,783 6.69 % Non-interest-earning assets 57,563 13,504 46,065 14,071 Total assets $ 2,895,288 $ 1,746,651 $ 2,588,408 $ 1,616,854 Average liabilities and equity Brokered deposits $ 596,888 3.79 % $ 269,112 2.11 % $ 451,111 3.37 % $ 259,240 2.03 % Intercompany deposits 205,099 3.60 158,465 3.99 200,483 3.65 115,887 3.81 Retail and other deposits 1,478,354 3.83 1,073,322 4.24 1,419,501 3.82 1,018,443 4.22 Federal funds purchased and other borrowed money 184,044 4.28 13,258 5.45 137,394 4.24 11,839 5.12 Total interest-bearing liabilities 2,464,385 3.84 % 1,514,157 3.84 % 2,208,489 3.74 % 1,405,409 3.79 % Non-interest-bearing liabilities 14,128 10,037 14,824 9,323 Equity 416,775 222,457 365,095 202,122 Total liabilities and equity $ 2,895,288 $ 1,746,651 $ 2,588,408 $ 1,616,854 Net interest margin 2.74 % 3.29 % 2.95 % 3.37 % 51 Summary and Comparison of Operating Results Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Interest income: Loan interest $ 24,334 14,804 43,006 26,775 Investment interest 18,614 13,934 35,178 26,430 Total interest income 42,948 28,738 78,184 53,205 Interest expense 23,657 14,672 41,064 26,749 Net interest income 19,291 14,066 37,120 26,456 (Negative provision) provision for loan losses (249) 6,797 4,529 9,123 Net interest income after provision for loan losses 19,540 7,269 32,591 17,333 Other income, net 564 392 2,122 534 Derivative settlements, net 77 163 116 327 Derivative market value adjustments, net 1,714 (1,701) 2,714 (4,229) Total other income, net 2,355 (1,146) 4,952 (3,368) Salaries and benefits 3,589 2,791 6,504 5,607 Depreciation 306 352 658 691 Servicing fees 1,635 824 2,862 1,491 Other expenses 1,842 1,969 3,120 3,327 Intersegment expenses 695 652 1,352 1,362 Total operating expenses 8,067 6,588 14,496 12,478 Income (loss) before income taxes 13,828 (465) 23,047 1,487 Income tax (expense) benefit (3,310) 101 (5,416) (333) Net income (loss) $ 10,518 (364) 17,631 1,154 Additional information: GAAP net income (loss) $ 10,518 (364) 17,631 1,154 Derivative market value adjustments, net (1,714) 1,701 (2,714) 4,229 Tax effect 411 (408) 651 (1,015) Non-GAAP net income, excluding derivative market value adjustments $ 9,215 929 15,568 4,368 Factors Affecting Operating Results • Nelnet Bank’s growth was driven by higher loan and investment balances, funded primarily through increased deposit balances. During 2026, the Company’s Asset Generation and Management operating segment contributed certain student loan trusts to Nelnet Bank that included $716.3 million of federally insured loans. Following these contributions, Nelnet Bank repaid the related securitization debt and funded the loans with deposits. These transactions were a significant contributor to the increase in loan balances during 2026. In its initial years, Nelnet Bank incurred operating losses as it invested in the personnel and infrastructure needed to support future growth. As the bank has matured, operating expenses have stabilized while loan and deposit balances have continued to expand. This operating leverage has contributed to increased net interest income and net income for the three and six months ended June 30, 2026, compared with the corresponding periods in 2025. 52 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 and marketable equity securities Total Three months ended June 30, 2026 Investment interest $ 3,594 4 — 4,211 7,809 Interest expense (1,169) — — (1) (1,170) Net interest income 2,425 4 — 4,210 6,639 Reinsurance premiums earned 40,625 — — — 40,625 Other income, net 1,068 1,416 (1,034) 9,672 11,122 Salaries and benefits (534) (34) (1,000) — (1,568) Reinsurance losses and underwriting expenses (32,809) — — — (32,809) Other expenses (1,451) (78) (132) (1) (1,662) Intersegment expenses, net (197) (5) (252) (32) (486) Income (loss) before income taxes 9,127 1,303 (2,418) 13,849 21,861 Income tax (expense) benefit (2,190) (313) 580 (3,324) (5,247) Net loss (income) attributable to noncontrolling interests — — 3 — 3 Net income (loss) $ 6,937 990 (1,835) 10,525 16,617 Three months ended June 30, 2025 Investment interest $ 2,464 4 — 6,402 8,870 Interest expense (1,427) — — (1) (1,428) Net interest income 1,037 4 — 6,401 7,442 Reinsurance premiums earned 26,112 — — — 26,112 Other income, net 1,073 1,506 453 2,233 5,265 Salaries and benefits (296) (30) (213) — (539) Reinsurance losses and underwriting expenses (25,662) — — — (25,662) Other expenses (2,113) (63) (29) (1) (2,206) Intersegment expenses, net (182) (4) (103) (32) (321) Income (loss) before income taxes (31) 1,413 108 8,601 10,091 Income tax (expense) benefit 8 (305) (33) (2,065) (2,395) Net loss (income) attributable to noncontrolling interests — (141) 27 — (114) Net income (loss) $ (23) 967 102 6,536 7,582 53 Nelnet Insurance Services WRCM Real estate Bond portfolio and marketable equity securities Total Six months ended June 30, 2026 Investment interest $ 6,454 7 — 9,865 16,326 Interest expense (2,542) — — (2) (2,544) Net interest income 3,912 7 — 9,863 13,782 Reinsurance premiums earned 63,161 — — — 63,161 Other income, net 1,502 2,754 1,698 1,582 7,536 Salaries and benefits (1,133) (68) (1,880) — (3,081) Reinsurance losses and underwriting expenses (56,414) — — — (56,414) Other expenses (2,543) (171) (205) (4) (2,923) Intersegment expenses, net (343) (11) (527) (62) (943) Income (loss) before income taxes 8,142 2,511 (914) 11,379 21,118 Income tax (expense) benefit (1,954) (603) 202 (2,731) (5,086) Net loss (income) attributable to noncontrolling interests — — 72 — 72 Net income (loss) $ 6,188 1,908 (640) 8,648 16,104 Six months ended June 30, 2025 Investment interest $ 4,457 7 — 13,226 17,690 Interest expense (2,196) — — (2) (2,198) Net interest income 2,261 7 — 13,224 15,492 Reinsurance premiums earned 50,799 — — — 50,799 Other income, net 1,647 2,980 (1,190) 2,939 6,376 Salaries and benefits (546) (62) (409) — (1,017) Reinsurance losses and underwriting expenses (47,874) — — — (47,874) Other expenses (2,790) (125) (141) (3) (3,059) Intersegment expenses, net (291) (7) (202) (65) (565) Income (loss) before income taxes 3,206 2,793 (1,942) 16,095 20,152 Income tax (expense) benefit (770) (603) 456 (3,862) (4,779) Net loss (income) attributable to noncontrolling interests — (279) 41 — (238) Net income (loss) $ 2,436 1,911 (1,445) 12,233 15,135 Factors Affecting Operating Results • Nelnet Insurance Services : The increase in reinsurance premiums earned in the three and six months ended June 30, 2026 compared with the same periods in 2025 was primarily due to timing of premium recognition under certain reinsurance treaties. Net income was positively impacted in 2026 as compared to 2025 due to an increase in interest income from the float earned on cash premiums and improved underwriting margins. • Bond portfolio and marketable equity securities : During the three and six months ended June 30, 2026 , the Company recognized an unrealized gain of $8.6 million and an unrealized loss of $1.1 million, respectively, resulting from changes in the fair value of certain marketable equity securities. These amounts are included in "other income, net" in the table above. Operating results may continue to fluctuate and be impacted in future periods by fair value adjustments of marketable equity securities. 54 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 under “Other” in the table below. Summary and Comparison of Operating Results Shared services Solar tax equity Nelnet Renewable Energy (NRE) Venture capital Other Total Three months ended June 30, 2026 Investment interest $ — — — — 2,165 2,165 Interest expense — (2) — — (562) (564) Net interest income (expense) — (2) — — 1,603 1,601 Solar construction revenue — — — — — — Other income, net 482 (20,106) (140) 137 4,714 (14,913) Gain on partial redemption of ALLO investment — — — — — — Derivative settlements — — — — — — Derivative market value adjustments — — — — — — Cost to provide solar construction services — — — — — — Salaries and benefits (22,286) (633) (104) (243) (1,844) (25,110) Depreciation and amortization (1,942) (13) (1) — (367) (2,323) Other expenses (16,389) (792) (133) (6) (1,634) (18,954) Intersegment expenses, net 26,539 (96) (12) (50) (353) 26,028 (Loss) income before income taxes (13,596) (21,642) (390) (162) 2,119 (33,671) Income tax benefit (expense) 3,263 103 94 39 326 3,825 Net loss attributable to noncontrolling interests — 21,213 — — — 21,213 Net (loss) income $ (10,333) (326) (296) (123) 2,445 (8,633) Three months ended June 30, 2025 Investment interest $ — 1 — — 2,660 2,661 Interest expense — — (2) — (649) (651) Net interest income (expense) — 1 (2) — 2,011 2,010 Solar construction revenue — — 1,259 — — 1,259 Other income, net 598 (1,228) — 1,762 8,471 9,603 Gain on partial redemption of ALLO investment — — — — 175,044 175,044 Derivative settlements — — — — — — Derivative market value adjustments — — — — — — Cost to provide solar construction services — — (14,050) — — (14,050) Salaries and benefits (18,600) (374) (1,850) (229) (1,731) (22,784) Depreciation and amortization (2,666) — (241) — (39) (2,946) Other expenses (17,671) (225) (2,309) (148) 3,347 (17,006) Intersegment expenses, net 26,416 (66) (408) (45) (281) 25,616 (Loss) income before income taxes (11,923) (1,892) (17,601) 1,340 186,822 156,746 Income tax benefit (expense) 2,862 (467) 4,224 (321) (46,505) (40,207) Net loss attributable to noncontrolling interests — 3,838 — — — 3,838 Net (loss) income $ (9,061) 1,479 (13,377) 1,019 140,317 120,377 55 Shared services Solar tax equity Nelnet Renewable Energy (NRE) Venture capital Other Total Six months ended June 30, 2026 Investment interest $ — 300 — — 5,000 5,300 Interest expense — (3) — — (1,192) (1,195) Net interest income (expense) — 297 — — 3,808 4,105 Solar construction revenue — — — — — — Other income, net 993 (41,903) 263 4,940 7,214 (28,493) Gain on partial redemption of ALLO investment — — — — — — Derivative settlements — — — — 437 437 Derivative market value adjustments — — — — (907) (907) Cost to provide solar construction services — — — — — — Salaries and benefits (42,468) (1,196) (284) (447) (3,730) (48,125) Depreciation and amortization (4,007) (23) (4) — (736) (4,770) Other expenses (31,509) (955) (2,519) (54) (3,019) (38,056) Intersegment expenses, net 52,288 (186) (27) (110) (789) 51,176 (Loss) income before income taxes (24,703) (43,966) (2,571) 4,329 2,278 (64,633) Income tax benefit (expense) 5,929 1,745 617 (1,039) 2,004 9,256 Net loss attributable to noncontrolling interests — 36,696 — — — 36,696 Net (loss) income $ (18,774) (5,525) (1,954) 3,290 4,282 (18,681) Six months ended June 30, 2025 Investment interest $ — 6 — — 4,967 4,973 Interest expense — — (3) — (1,281) (1,284) Net interest income (expense) — 6 (3) — 3,686 3,689 Solar construction revenue — — 5,254 — — 5,254 Other income, net 1,217 502 — 6,254 19,867 27,840 Gain on partial redemption of ALLO investment — — — — 175,044 175,044 Derivative settlements — — — — — — Derivative market value adjustments — — — — — — Cost to provide solar construction services — — (21,878) — — (21,878) Salaries and benefits (37,320) (761) (3,494) (436) (3,268) (45,279) Depreciation and amortization (6,185) — (517) (1) (75) (6,778) Other expenses (30,855) (302) (2,730) (171) 1,466 (32,592) Intersegment expenses, net 51,232 (131) (807) (86) (538) 49,670 (Loss) income before income taxes (21,911) (686) (24,175) 5,560 196,182 154,970 Income tax benefit (expense) 5,259 (1,146) 5,802 (1,334) (47,979) (39,398) Net loss attributable to noncontrolling interests — 5,461 — — — 5,461 Net (loss) income $ (16,652) 3,629 (18,373) 4,226 148,203 121,033 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 HLBV method, which commonly results in the recognition of accelerated losses in the early years of a partnership. Based on contributions made to these partnerships in recent periods, the Company recognized losses of $22.5 million and $45.0 million related to its solar tax equity partnerships during the three and six months ended June 30, 2026, respectively, compared with $1.5 million and $1.0 million for the same periods in 2025. These amounts are included in “other income, net” in the tables above. Losses attributable to noncontrolling interest partners were $19.5 million and $32.9 million for the three 56 and six months ended June 30, 2026, respectively, compared with $3.2 million and $4.2 million for the same periods in 2025. These amounts are included in “net loss attributable to noncontrolling interests” in the tables 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. • Gain from partial redemption of ALLO investment : The operating results from the Company's investment in ALLO is included under "Other" in the tables above. In June 2025, the Company recognized a $175.0 million gain on a partial redemption of the Company's voting membership interests in ALLO. In addition, ALLO redeemed all of the Company's preferred membership interests in ALLO that were outstanding at that time. Included in the Company's operating results for the three and six months ended June 30, 2025 was $6.0 million and $14.4 million of ALLO preferred return, respectively. The preferred return is included in "other income, net" in the tables above. 57 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 June 30, 2026, the Company's sources of liquidity included: Cash and cash equivalents $ 172,430 Less: Cash and cash equivalents held at Nelnet Bank (a) (17,546) Net cash and cash equivalents 154,884 Available-for-sale (AFS) debt securities (investments) - at fair value 1,578,340 Less: AFS debt securities held at Nelnet Bank - at fair value (a) (1,054,882) AFS private education and consumer loan debt securities - held as risk retention - at fair value (b) (170,705) Restricted investments - at fair value (c) (194,770) Unencumbered AFS debt securities (investments) - at fair value 157,983 Unencumbered federally insured, private, consumer, and other loans (Non-Nelnet Bank) - at par 423,235 Unencumbered repurchased Nelnet issued asset-backed debt securities - at par (not included on consolidated financial statements) (d) 111,514 Unused capacity on unsecured line of credit (e) 435,000 Sources of liquidity as of June 30, 2026 $ 1,282,616 (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 $435.0 million unsecured line of credit that matures on March 31, 2031. As of June 30, 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. 58 Cash Flows The Company has historically generated positive cash flow from operations. During the six months ended June 30, 2026 and 2025, the Company generated $151.0 million and $172.9 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, derivative market value adjustments, and depreciation and amortization; and • The impact of changes to other assets, other liabilities, and accrued interest receivable during the six months ended June 30, 2026 compared with the same period in 2025. These factors were partially offset by: • Adjustments to net income for certain non-cash items, including the gain on the partial redemption of the Company's ALLO investment, deferred income tax benefit, provision for loan losses, and loss on investments; and • The impact of changes to accounts receivable during the six months ended June 30, 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, the change in due to customers, issuances of noncontrolling interests, and repurchases of common stock. Cash used in investing activities and used in financing activities for the six months ended June 30, 2026 was $34.9 million and $109.7 million, respectively. Cash provided by investing activities and used in financing activities for the six months ended June 30, 2025 was $709.8 million and $1.01 billion, 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 six months ended June 30, 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 June 30, 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 June 30, 2026, $574.4 million of loans 59 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 June 30, 2026 Carrying amount Final maturity Bonds and notes issued in asset-backed securitizations $ 5,856,905 10/25/33 - 11/27/90 FFELP and consumer loan warehouse and other facilities 1,221,476 7/30/27 - 2/29/28 $ 7,078,381 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 June 30, 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 $0.82 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 June 30, 2026, the majority of which are federally insured student loans. As of June 30, 2026, AGM had $6.1 billion of loans included in asset-backed securitizations, which represented 78.3% 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 June 30, 2026, and loans owned by Nelnet Bank. During 2026, the Company’s AGM operating segment contributed certain asset-backed securitization trusts to Nelnet Bank, including $716.3 million of federally insured loans that included $108.9 million of overcollateralization. Following these contributions, Nelnet Bank repaid the related securitization debt and funded the loans with deposits. These transactions were a significant contributor to the decrease in forecasted future cash flows as disclosed in the prior quarter. 60 Asset-backed Securitization Cash Flow Forecast $0.82 billion (dollars in millions) The forecasted future undiscounted cash flows of approximately $0.82 billion include approximately $0.62 billion (as of June 30, 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 $0.20 billion, or approximately $0.15 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 June 30, 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 $0.05 billion $0.77 billion 4x $0.14 billion $0.68 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 $0.62 billion (as of June 30, 2026); however, the Company would not receive the $0.20 billion ($0.15 billion after tax) of estimated future earnings from the portfolio. 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 61 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 June 30, 2026, the Company's ownership correlates to approximately $1.58 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 June 30, 2026, the investment balance on the Company's consolidated balance sheet of its beneficial interest in loan securitizations was $188.9 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 June 30, 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 $266.0 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 ($266.0 million) and the investment carrying value ($188.9 million) of $77.1 million, or $58.6 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 June 30, 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. Through June 30, 2026, the Company has contributed $431.3 million of initial and ongoing capital to Nelnet Bank. Such capital contributions have included cash, investments, loans, and equity in student loan trusts. During the six months ended June 30, 2026, Nelnet, Inc. contributed seven student loan securitization trusts that included $153.4 million of net assets. 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. 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. 62 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 June 30, 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 June 30, 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 ending May 8, 2028. As of June 30, 2026, 4,219,239 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 half of 2026 are shown below. For additional information on stock repurchases during the second 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) (a) Quarter ended March 31, 2026 126,319 $ 16,280 128.88 Quarter ended June 30, 2026 190,281 24,353 127.99 Total 316,600 $ 40,633 128.34 (a) The average price of shares repurchased for the quarter ended June 30, 2026 includes excise taxes. Dividends On June 15, 2026, the Company paid a second 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 third quarter 2026 cash dividend on the Company's outstanding shares of Class A and Class B common stock of $0.33 per share. The third quarter cash dividend will be paid on September 15, 2026 to shareholders of record at the close of business on September 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 disclosures included in the notes to the consolidated financial statements. The Company does not expect the standard to impact the Company's financial condition or results of operations. 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. 63