EX-99.2 3 aex992-050825xsupplement.htm EX-99.2 Document

For Release: May 8, 2025
Investor Contact: Phil Morgan, 402.458.3038
Nelnet, Inc. supplemental financial information for the first quarter 2025
(All dollars are in thousands, except per share amounts, unless otherwise noted)
The following information should be read in connection with Nelnet, Inc.'s (the “Company's”) press release for first quarter 2025 earnings, dated May 8, 2025, and the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 (the "Q1 2025 10-Q Quarterly Report").
Forward-looking and cautionary statements
This report contains forward-looking statements and information that are based on management's current expectations as of the date of this document. Statements that are not historical facts, including statements about the Company's plans and expectations for future financial condition, results of operations or economic performance, or that address management's plans and objectives for future operations, and statements that assume or are dependent upon future events, are forward-looking statements. The words “anticipate,” “assume,” “believe,” “continue,” “could,” “ensure,” “estimate,” “expect,” “forecast,” “future,” “intend,” “may,” “plan,” “potential,” “predict,” “scheduled,” “should,” “will,” “would,” and similar expressions, as well as statements in future tense, are intended to identify forward-looking statements.
The forward-looking statements are based on assumptions and analyses made by management in light of management's experience and its perception of historical trends, current conditions, expected future developments, and other factors that management believes are appropriate under the circumstances. These statements are subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause the actual results and performance to be materially different from any future results or performance expressed or implied by such forward-looking statements. These factors include, among others, the risks and uncertainties set forth in the “Risk Factors” section of the Company's Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 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 U.S. Department of Education (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, Federal Family Education Loan Program (the "FFEL Program" or FFELP), private education, and consumer loans;
•loan portfolio risks such as credit risk, prepayment risk, interest rate basis and repricing risk, risks related to the use of derivatives to manage exposure to interest rate fluctuations, uncertainties regarding the expected benefits from purchased securitized and unsecuritized FFELP, private education, consumer, and other loans, or investment interests therein, and initiatives to purchase additional FFELP, private education, consumer, and other loans;
•financing and liquidity risks, including risks of changes in the interest rate environment;
•risks from changes in the terms of education loans and in the educational credit and services markets resulting from changes in applicable laws, regulations, and government programs and budgets;
•risks related to a breach of or failure in the Company's operational or information systems or infrastructure, or those of third-party vendors, including disclosure of confidential or personal information and/or damage to reputation resulting from cyber breaches;
•risks related to use of artificial intelligence;
•uncertainties inherent in forecasting future cash flows from student loan assets, including investment interests therein, and related asset-backed securitizations;
•risks related to the ability of Nelnet Bank to achieve its business objectives and effectively deploy loan and deposit strategies and achieve expected market penetration;
•risks related to the expected benefits to the Company from its continuing investment in ALLO Holdings, LLC (referred to collectively with its subsidiary ALLO Communications LLC as "ALLO"), and risks related to solar tax equity investments, including risks of not being able to realize tax credits which remain subject to recapture by taxing authorities;
•risks and uncertainties related to other initiatives to pursue additional strategic investments (and anticipated income therefrom) including venture capital and real estate investments, reinsurance, acquisitions, solar construction, and other activities (including risks associated with errors that occasionally occur in converting loan servicing portfolios to a new servicing platform), including activities that are intended to diversify the Company both within and outside of its historical core education-related businesses;
•risks and uncertainties associated with climate change; and
•risks and uncertainties associated with litigation matters and maintaining compliance with the extensive regulatory requirements applicable to the Company's businesses, including changes to the regulatory environment from the change in presidential administration, 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.
1

Consolidated Statements of Income
(Dollars in thousands, except share data)
(unaudited)
Three months ended
March 31, 2025December 31, 2024March 31, 2024(1)
Interest income:
Loan interest$166,439 178,434 216,724 
Investment interest41,389 42,815 52,078 
Total interest income207,828 221,249 268,802 
Interest expense on bonds and notes payable and bank deposits125,114 141,170 194,580 
Net interest income82,714 80,079 74,222 
Less provision for loan losses15,337 22,057 10,828 
Net interest income after provision for loan losses67,377 58,022 63,394 
Other income (expense):
Loan servicing and systems revenue120,741 137,981 127,201 
Education technology services and payments revenue147,330 108,335 143,539 
Reinsurance premiums earned24,687 18,673 12,780 
Solar construction revenue3,995 13,828 13,726 
Other, net23,694 27,794 4,082 
Gain (loss) on sale of loans, net909 42 (141)
Derivative settlements, net746 1,087 1,757 
Derivative market value adjustments, net(6,324)13,792 7,964 
Total other income (expense), net315,778 321,532 310,908 
Cost of services and expenses:
Loan servicing contract fulfillment and acquisition costs1,633 1,497 — 
Cost to provide education technology services and payments48,047 38,658 48,610 
Cost to provide solar construction services7,828 28,558 14,229 
Total cost of services57,508 68,713 62,839 
Salaries and benefits138,223 147,229 143,875 
Depreciation and amortization9,255 12,544 16,769 
Reinsurance losses and underwriting expenses22,212 16,180 11,317 
Other expenses48,226 50,681 45,528 
Total operating expenses217,916 226,634 217,489 
Impairment expense and provision for beneficial interests1,591 5,764 37 
Total expenses277,015 301,111 280,365 
Income before income taxes106,140 78,443 93,937 
Income tax expense(25,010)(15,016)(23,181)
Net income81,130 63,427 70,756 
Net loss (gain) attributable to noncontrolling interests1,430 (268)2,652 
Net income attributable to Nelnet, Inc.$82,560 63,159 73,408 
Earnings per common share:
Net income attributable to Nelnet, Inc. shareholders - basic and diluted$2.26 1.73 1.98 
Weighted average common shares outstanding - basic and diluted36,478,426 36,461,513 37,156,971 
(1)    During the second quarter of 2024, the Company identified certain immaterial errors in the previously issued consolidated financial statements that have been corrected to conform to the March 31, 2025 presentation. Refer to the Company's quarterly report on Form 10-Q for the three months ended March 31, 2025 that was filed with the Securities and Exchange Commission on May 8, 2025 for additional information.
2

Condensed Consolidated Balance Sheets
(Dollars in thousands)
(unaudited)
As ofAs ofAs of
March 31, 2025December 31, 2024March 31, 2024(1)
Assets:
Loans and accrued interest receivable, net$10,422,704 9,992,744 11,829,078 
Cash, cash equivalents, and investments2,523,067 2,395,214 2,112,999 
Restricted cash611,610 736,502 761,141 
Goodwill and intangible assets, net192,832 194,357 200,699 
Other assets441,745 458,936 470,295 
Total assets$14,191,958 13,777,753 15,374,212 
Liabilities:
Bonds and notes payable$8,656,157 8,309,797 10,582,513 
Bank deposits1,313,407 1,186,131 802,061 
Other liabilities859,385 982,708 753,918 
Total liabilities10,828,949 10,478,636 12,138,492 
Equity:
Total Nelnet, Inc. shareholders' equity3,419,523 3,349,762 3,297,190 
Noncontrolling interests(56,514)(50,645)(61,470)
Total equity3,363,009 3,299,117 3,235,720 
Total liabilities and equity$14,191,958 13,777,753 15,374,212 
(1)    During the second quarter of 2024, the Company identified certain immaterial errors in the previously issued consolidated financial statements that have been corrected to conform to the March 31, 2025 presentation. Refer to the Company's quarterly report on Form 10-Q for the three months ended March 31, 2025 that was filed with the Securities and Exchange Commission on May 8, 2025 for additional information.
3

Overview
The Company is a diversified hybrid holding company with primary businesses being consumer lending, loan servicing, payments, and technology – with many of these businesses serving customers in the education space. The largest operating businesses engage in loan servicing and education technology services and payments. A significant portion of the Company's revenue is net interest income earned on a portfolio of federally insured student loans. The Company also makes and manages investments to further diversify both within and outside of its historical core education-related businesses including, but not limited to, investments in a fiber communications company (ALLO), early-stage and emerging growth companies (venture capital investments), real estate, reinsurance, and renewable energy (solar). In the Nelnet Financial Services division, which includes Nelnet Bank, the Company is also actively expanding its private education, consumer, and other loan portfolios.
Reclassification and Immaterial Error Corrections
During the second quarter of 2024, the Company identified certain immaterial errors in the previously issued consolidated financial statements that have been corrected to conform to the March 31, 2025 presentation. Refer to the Company's quarterly report on Form 10-Q for the three months ended March 31, 2025 that was filed with the Securities and Exchange Commission on May 8, 2025 for additional information.
GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments
The Company prepares its financial statements and presents its financial results in accordance with GAAP. However, it also provides additional non-GAAP financial information related to specific items management believes to be important in the evaluation of its operating results and performance. A reconciliation of the Company's GAAP net income to Non-GAAP net income excluding derivative market value adjustments, and a discussion of why the Company believes providing this additional information is useful to investors, are provided below.
Three months ended
March 31, 2025December 31, 2024March 31, 2024
GAAP net income attributable to Nelnet, Inc.$82,560 63,159 73,408 
Realized and unrealized derivative market value adjustments (a)6,324 (13,792)(7,964)
Tax effect (b)(1,519)3,310 1,911 
Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments$87,365 52,677 67,355 
Earnings per share:
GAAP net income attributable to Nelnet, Inc.$2.26 1.73 1.98 
Realized and unrealized derivative market value adjustments (a)0.17 (0.38)(0.22)
Tax effect (b)(0.04)0.09 0.05 
Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments$2.39 1.44 1.81 
(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 Company’s derivative instruments do not qualify for hedge accounting in the consolidated financial statements. As a result, the change in fair value of derivative instruments 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 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.
4

Recent Developments - Partial Redemption of ALLO Investment
Nelnet has both a voting and preferred membership interest investment in ALLO. On April 18, 2025, ALLO executed a financing transaction that will result in gross proceeds to ALLO of $500 million (the “Financing”). In conjunction with the Financing, on April 18, 2025, Nelnet, ALLO, and certain other ALLO investors entered into a Membership Unit Redemption Agreement (the “Redemption Agreement”) pursuant to which ALLO will redeem certain of its membership interests from certain investors in ALLO, including Nelnet (the “Transaction”).
As part of the Transaction, ALLO will redeem all of Nelnet's outstanding preferred membership interests, including the preferred return accrued on such membership interests as of the closing date. In addition, ALLO will redeem a portion of Nelnet’s voting membership interest of ALLO. The Transaction is expected to close in late May 2025, subject to customary closing conditions.
Upon closing, Nelnet expects to receive aggregate cash proceeds of approximately $410 million from ALLO for these redemptions and recognize a pre-tax gain of approximately $175 million.
Immediately following the closing of the Transaction, Nelnet will not own any preferred membership interests of ALLO, but will maintain a significant voting equity investment in ALLO. Nelnet’s ownership of ALLO will decrease from 45% to approximately 26%. Nelnet will continue to account for its remaining voting membership interest of ALLO under the Hypothetical Liquidation at Book Value (HLBV) method of accounting, with the carrying value of such interest remaining at $0 as of the closing date of the Transaction.
Operating Segments
The Company's reportable operating segments are described in note 1 of the notes to consolidated financial statements included in the 2024 Annual Report. They include:
•Loan Servicing and Systems (LSS) - referred to as Nelnet Diversified Services (NDS)
•Education Technology Services and Payments (ETSP) - referred to as Nelnet Business Services (NBS)
•Asset Generation and Management (AGM), part of the Nelnet Financial Services (NFS) division
•Nelnet Bank, part of the NFS division
The Company earns fee-based revenue through its NDS and NBS reportable operating segments. The Company earns net interest income on its loan portfolio, consisting primarily of FFELP loans, through its AGM reportable operating segment. This segment is expected to generate significant amounts of cash as the FFELP portfolio amortizes. The Company actively works to maximize the amount and timing of cash flows generated from its FFELP portfolio and seeks to acquire additional loan assets to leverage its servicing scale and expertise to generate incremental earnings and cash flow. Nelnet Bank operates as an internet industrial bank franchise focused on the private education and unsecured consumer loan markets, with a home office in Salt Lake City, Utah. Other operating segments included in the NFS division include the Company's U.S. Securities and Exchange Commission (SEC)-registered investment advisor subsidiary, property and casualty reinsurance activities, investment activities in real estate, and investment debt securities (primarily student loan and other asset-backed securities) and interest expense incurred on debt used to finance such investments.
Other business activities and operating segments that are not reportable and not part of the NFS division are combined and included in Corporate and Other Activities ("Corporate"). Corporate also includes interest income earned on cash balances held at the corporate level and interest expense incurred on unsecured corporate related debt transactions, certain investment activities including its investment in ALLO, early-stage and emerging growth companies (venture capital investments), and solar tax equity investments, the operating results of the Company's solar engineering, procurement, and construction business, and certain shared service activities that are allocated to each operating segment based on estimated use of such activities and services. In addition, Corporate includes corporate costs and overhead functions not allocated to operating segments, including executive management, investments in innovation, and other holding company organizational costs.

5

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 months ended March 31, 2025 and 2024.
Three months ended March 31,Certain Items Impacting Comparability
(All dollar amounts below are pre-tax)
20252024
NDS$18,512 15,990 
•An increase in before tax operating margin due to an increase in private education and consumer loan servicing volume and a decrease in total expenses obtained through cost-saving measures. This was partially offset by a decrease in government loan servicing revenue due to lower revenue earned on a per borrower blended basis under the new government servicing contract (which the Company began recognizing revenue under on April 1, 2024).
NBS47,462 47,635 
•ETSP revenue increased to $147.3 million for the three months ended March 31, 2025 compared with $143.5 million for the same period in 2024. However, NBS experienced a decrease in before tax operating margin due to a decrease in FACTS education services revenue and an increase in operating expenses to support the growth in the customer base and investments in the development of new technologies. Net income and before tax operating margin will continue to be impacted by these items throughout 2025 compared with 2024.
Nelnet Financial Services division:
AGM29,834 33,743 
•The recognition of $13.0 million and $6.5 million in provision for loan losses for the three months ended March 31, 2025 and 2024, respectively. Increase was due to an increase of loan acquisitions in the first quarter of 2025.
•A decrease of $9.1 million in investment interest income for the three months ended March 31, 2025 compared with the same period in 2024, due to a decrease of interest earned on restricted cash driven by lower balances and a decrease in interest rates and a decrease of interest income from beneficial interest investments.
•A net loss of $3.8 million and net income of $5.7 million related to changes in the fair values of derivative instruments that do not qualify for hedge accounting for the three months ended March 31, 2025 and 2024, respectively.
•An increase in net loan interest income of $16.6 million for the three months ended March 31, 2025 compared with the same period in 2024, due to an increase in loan spread driven by an increase in consumer loans funded with operating cash (versus funded with debt), partially offset by a decrease in the average balance of loans.
Nelnet Bank1,952 1,147 
•An increase of $4.8 million in net interest income for the three months ended March 31, 2025 compared with the same period in 2024 due to an increase in the average balance of loans and investments and an increase in net interest margin.
•A net loss of $2.5 million and net income of $2.3 million related to changes in the fair values of derivative instruments that do not qualify for hedge accounting for the three months ended March 31, 2025 and 2024, respectively.
•The recognition of $2.3 million and $4.4 million of provision for loan losses for the three months ended March 31, 2025 and 2024, respectively.
NFS other operating segments10,060 13,762 
•Net interest income earned on investment debt securities (primarily student loan and other asset-backed securities) was $6.8 million for the three months ended March 31, 2025 compared with $12.2 million for the same period in 2024.
Corporate:
Unallocated corporate costs(9,988)(10,045)

Solar tax equity investments1,205 2,314 
•Includes operating results of the Company's tax equity investments in renewable energy solar partnerships. The Company accounts for these investments under the HLBV method of accounting, which commonly results in accelerated losses in the initial years of the investment. In the periods presented, these HLBV net losses are offset by gains recognized from sales of certain investments at the end of the contractual agreement (typically five years). These losses are also offset by revenue earned by the Company related to management, consulting, and performance fees provided on tax equity investments made by third parties. Due to the recognition pattern (accelerated losses in initial years and gains upon sale at the end of the contractual agreement), these investments may create volatility in earnings.
•Due to the Company's management and control of each of these partnerships, such partnerships that invest in tax equity investments are consolidated on the Company's consolidated financial statements, with the third-party co-investor's portion being presented as non-controlling interests.
Nelnet Renewable Energy - solar construction(6,575)(4,037)
•Since the acquisition of GRNE Solar in 2022, the Company has incurred low and, in some cases, negative margins on certain legacy solar construction projects. The Company has a handful of remaining legacy construction contracts to complete, down from over 30 at the beginning of 2024. Uncertain economic conditions have impacted the costs to complete existing construction contracts and new construction projects being initiated which may continue to negatively impact margins and revenue, respectively, in future periods.
ALLO investment8,416 (8,593)
•The recognition of no loss in the three months ended March 31, 2025 compared with a loss of $10.7 million for the same period in 2024 related to the Company's ALLO voting membership interest investment. The loss recognized in the first quarter of 2024 reduced the Company's carrying value of its voting membership interest to $0. Absent additional equity contributions with respect to ALLO's voting membership interest, the Company will not recognize additional losses for its voting membership interest in ALLO.
•The recognition of income of $8.4 million on the Company's preferred membership interests in ALLO for the three months ended March 31, 2025 compared with $2.4 million for the same period in 2024.
6

Venture capital investments4,220 (704)
•Includes operating results of the Company's venture capital investments. During the first quarter of 2025, the Company recognized income, net of losses, of $2.1 million from equity method investees, $1.7 million related to the periodic adjustment of certain fund investments to their respective fair value, and $0.6 million on certain measurement alternative investments as a result of observable price changes.
Other corporate activities946 2,723 

Eliminations/reclassifications97 — 
Net income before taxes106,140 93,937 
Income tax expense(25,010)(23,181)
Net loss attributable to noncontrolling interests1,430 2,652 
•The majority of noncontrolling interests represents losses attributed to noncontrolling membership interests related to the Company’s solar tax equity investments.
Net income$82,560 73,408 

7

Segment Reporting
The following tables present the results of each of the Company's reportable operating segments reconciled to the consolidated financial statements.
 Three months ended March 31, 2025
Reportable SegmentsReconciling Items
Loan Servicing and Systems Education Technology Services and PaymentsAsset
Generation and
Management		Nelnet BankTotal Reportable SegmentsNFS Other Operating SegmentsCorporate and Other ActivitiesEliminations/ ReclassificationsTotal
Interest income:
Loan interest$— — 154,469 11,971 166,440 — — — 166,439 
Investment interest721 6,939 12,769 12,496 32,925 8,820 2,312 (2,669)41,389 
Total interest income721 6,939 167,238 24,467 199,365 8,820 2,312 (2,669)207,828 
Interest expense— — 114,303 12,077 126,380 770 633 (2,669)125,114 
Net interest income721 6,939 52,935 12,390 72,985 8,050 1,679 — 82,714 
Less provision for loan losses— — 13,012 2,325 15,337 — — — 15,337 
Net interest income after provision for loan losses721 6,939 39,923 10,065 57,648 8,050 1,679 — 67,377 
Other income (expense):
LSS revenue120,741 — — — 120,741 — — — 120,741 
Intersegment revenue5,684 64 — — 5,748 — — (5,748)— 
ETSP revenue— 147,330 — — 147,330 — — — 147,330 
Reinsurance premiums earned— — — — — 24,687 — — 24,687 
Solar construction revenue— — — — — — 3,995 — 3,995 
Other, net112 — 3,995 142 4,249 1,110 18,238 97 23,694 
Gain (loss) on sale of loans, net— — 909 — 909 — — — 909 
Derivative settlements, net— — 582 164 746 — — — 746 
Derivative market value adjustments, net— — (3,795)(2,529)(6,324)— — — (6,324)
Total other income (expense), net126,537 147,394 1,691 (2,223)273,399 25,797 22,233 (5,651)315,778 
Cost of services and expenses:
Total cost of services1,633 48,047 — — 49,680 — 7,828 — 57,508 
Salaries and benefits69,574 41,741 1,221 2,816 115,352 478 22,496 (104)138,223 
Depreciation and amortization2,654 2,430 — 339 5,423 — 3,833 — 9,255 
Reinsurance losses and underwriting expenses— — — — — 22,212 — — 22,212 
Postage expense7,575 7,575 (7,575)— 
Servicing fees6,911 667 7,578 (7,578)— 
Other expenses10,832 9,048 888 1,358 22,126 772 15,586 9,741 48,226 
Intersegment expenses, net16,478 5,605 1,250 710 24,043 244 (24,055)(232)— 
Total operating expenses107,113 58,824 10,270 5,890 182,097 23,706 17,860 (5,748)217,916 
Impairment expense and provision for beneficial interests— — 1,510 — 1,510 81 — — 1,591 
Total expenses108,746 106,871 11,780 5,890 233,287 23,787 25,688 (5,748)277,015 
Income (loss) before income taxes18,512 47,462 29,834 1,952 97,760 10,060 (1,776)97 106,140 
Income tax (expense) benefit(4,443)(11,402)(7,156)(434)(23,435)(2,385)810 — (25,010)
Net income (loss)14,069 36,060 22,678 1,518 74,325 7,675 (966)97 81,130 
Net loss (income) attributable to noncontrolling interests— 45 (17)— 28 (124)1,623 (97)1,430 
Net income (loss) attributable to Nelnet, Inc.$14,069 36,105 22,661 1,518 74,353 7,551 657 — 82,560 



8

 Three months ended December 31, 2024
Reportable SegmentsReconciling Items
Loan Servicing and Systems Education Technology Services and PaymentsAsset
Generation and
Management		Nelnet BankTotal Reportable SegmentsNFS Other Operating SegmentsCorporate and Other ActivitiesEliminations/ ReclassificationsTotal
Interest income:
Loan interest$— — 165,210 13,224 178,434 — — — 178,434 
Investment interest831 6,576 13,789 12,691 33,887 10,447 2,207 (3,726)42,815 
Total interest income831 6,576 178,999 25,915 212,321 10,447 2,207 (3,726)221,249 
Interest expense— — 130,668 12,987 143,655 1,568 (327)(3,726)141,170 
Net interest income831 6,576 48,331 12,928 68,666 8,879 2,534 — 80,079 
Less provision for loan losses— — 13,493 8,564 22,057 — — — 22,057 
Net interest income after provision for loan losses831 6,576 34,838 4,364 46,609 8,879 2,534 — 58,022 
Other income (expense):
LSS revenue137,981 — — — 137,981 — — — 137,981 
Intersegment revenue6,073 55 — — 6,128 — — (6,128)— 
ETSP revenue— 108,335 — — 108,335 — — — 108,335 
Reinsurance premiums earned— — — — — 18,673 — — 18,673 
Solar construction revenue— — — — — — 13,828 — 13,828 
Other, net684 — 4,640 960 6,284 1,549 19,884 77 27,794 
Gain (loss) on sale of loans, net— — 42 — 42 — — — 42 
Derivative settlements, net— — 860 227 1,087 — — — 1,087 
Derivative market value adjustments, net— — 8,297 5,495 13,792 — — — 13,792 
Total other income (expense), net144,738 108,390 13,839 6,682 273,649 20,222 33,712 (6,051)321,532 
Cost of services and expenses:
Total cost of services1,497 38,658 — — 40,155 — 28,558 — 68,713 
Salaries and benefits76,194 42,760 1,255 2,631 122,840 457 23,989 (57)147,229 
Depreciation and amortization4,171 2,519 — 338 7,028 — 5,516 — 12,544 
Reinsurance losses and underwriting expenses— — — — — 16,180 — — 16,180 
Postage expense8,470 8,470 (8,470)— 
Servicing fees7,087 662 7,749 (7,749)— 
Other expenses12,163 8,509 936 1,396 23,004 882 16,220 10,575 50,681 
Intersegment expenses, net15,528 4,669 1,281 632 22,110 188 (21,871)(427)— 
Total operating expenses116,526 58,457 10,559 5,659 191,201 17,707 23,854 (6,128)226,634 
Impairment expense and provision for beneficial interests736 — 4,628 — 5,364 — 400 — 5,764 
Total expenses118,759 97,115 15,187 5,659 236,720 17,707 52,812 (6,128)301,111 
Income (loss) before income taxes26,810 17,851 33,490 5,387 83,538 11,394 (16,566)77 78,443 
Income tax (expense) benefit(6,434)(4,298)(8,038)(1,222)(19,992)(2,711)7,688 — (15,016)
Net income (loss)20,376 13,553 25,452 4,165 63,546 8,683 (8,878)77 63,427 
Net loss (income) attributable to noncontrolling interests— 57 — — 57 (97)(151)(77)(268)
Net income (loss) attributable to Nelnet, Inc.$20,376 13,610 25,452 4,165 63,603 8,586 (9,029)— 63,159 






9

 Three months ended March 31, 2024
Reportable SegmentsReconciling Items
Loan Servicing and SystemsEducation Technology Services and PaymentsAsset
Generation and
Management		Nelnet BankTotal Reportable SegmentsNFS Other Operating SegmentsCorporate and Other ActivitiesEliminations/ ReclassificationsTotal
Interest income:
Loan interest$— — 209,628 7,096 216,724 — — — 216,724 
Investment interest1,894 7,866 21,835 9,968 41,563 15,616 3,815 (8,915)52,078 
Total interest income1,894 7,866 231,463 17,064 258,287 15,616 3,815 (8,915)268,802 
Interest expense— — 190,905 9,497 200,402 2,418 676 (8,915)194,580 
Net interest income1,894 7,866 40,558 7,567 57,885 13,198 3,139 — 74,222 
Less provision for loan losses— — 6,455 4,373 10,828 — — — 10,828 
Net interest income after provision for loan losses1,894 7,866 34,103 3,194 47,057 13,198 3,139 — 63,394 
Other income (expense):
LSS revenue127,201 — — — 127,201 — — — 127,201 
Intersegment revenue6,886 49 — — 6,935 — — (6,935)— 
ETSP revenue— 143,539 — — 143,539 — — — 143,539 
Reinsurance premiums earned— — — — — 12,780 — — 12,780 
Solar construction revenue— — — — — — 13,726 — 13,726 
Other, net710 — 4,983 375 6,068 161 (2,147)— 4,082 
Gain (loss) on sale of loans, net— — (141)— (141)— — — (141)
Derivative settlements, net— — 1,555 202 1,757 — — — 1,757 
Derivative market value adjustments, net— — 5,706 2,258 7,964 — — — 7,964 
Total other income (expense), net134,797 143,588 12,103 2,835 293,323 12,941 11,579 (6,935)310,908 
Cost of services and expenses:
Total cost of services— 48,610 — — 48,610 — 14,229 — 62,839 
Salaries and benefits76,722 40,167 1,195 2,721 120,805 358 23,521 (807)143,875 
Depreciation and amortization5,109 2,683 — 260 8,052 — 8,716 — 16,769 
Reinsurance losses and underwriting expenses— — — — — 11,317 — — 11,317 
Postage expense10,605 10,605 (10,605)— 
Servicing fees8,951 233 9,184 (9,184)— 
Other expenses8,933 7,558 1,109 1,111 18,711 485 13,402 12,931 45,528 
Intersegment expenses, net19,332 4,801 1,208 557 25,898 217 (26,845)730 — 
Total operating expenses120,701 55,209 12,463 4,882 193,255 12,377 18,794 (6,935)217,489 
Impairment expense and provision for beneficial interests— — — — — — 37 — 37 
Total expenses120,701 103,819 12,463 4,882 241,865 12,377 33,060 (6,935)280,365 
Income (loss) before income taxes15,990 47,635 33,743 1,147 98,515 13,762 (18,342)— 93,937 
Income tax (expense) benefit(3,838)(11,435)(8,099)(259)(23,631)(3,274)3,723 — (23,181)
Net income (loss)12,152 36,200 25,644 888 74,884 10,488 (14,619)— 70,756 
Net loss (income) attributable to noncontrolling interests— 17 — — 17 (120)2,755 — 2,652 
Net income (loss) attributable to Nelnet, Inc.$12,152 36,217 25,644 888 74,901 10,368 (11,864)— 73,408 






10

Loan Servicing and Systems Revenue
The following table presents disaggregated revenue by service offering for the Loan Servicing and Systems operating segment.
Three months ended
March 31, 2025December 31, 2024March 31, 2024
Government loan servicing (a)$87,358 103,217 105,474 
Private education and consumer loan servicing (b)22,696 24,819 12,620 
FFELP loan servicing2,633 2,642 3,380 
Software services6,992 6,415 4,541 
Outsourced services1,062 888 1,186 
Loan servicing and systems revenue$120,741 137,981 127,201 
(a)    Three months ended December 31, 2024 included $10.9 million of non-recurring revenue related to a settlement regarding certain inflation provisions included in the Company's legacy servicing contract.
(b)    Three months ended December 31, 2024 included $4.0 million of non-recurring revenue related to conversion activity.

Loan Servicing Volumes
As of
March 31,
2025		December 31,
2024		September 30,
2024		June 30,
2024		March 31,
2024		December 31,
2023
Servicing volume (dollars in millions):
Government$482,786 489,877 492,142 489,298 495,409 494,691 
FFELP12,826 13,260 13,745 14,576 15,783 17,462 
Private and consumer46,728 29,226 20,666 19,876 21,015 20,493 
Total$542,340 532,363 526,553 523,750 532,207 532,646 
Number of servicing borrowers:
Government13,453,127 14,049,550 14,114,468 14,096,152 14,328,013 14,503,057 
FFELP524,421 549,861 574,979 610,745 656,814 725,866 
Private and consumer1,645,423 1,168,293 851,747 829,072 882,256 894,703 
Total15,622,971 15,767,704 15,541,194 15,535,969 15,867,083 16,123,626 
Number of remote hosted borrowers:1,427,800 842,200 662,075 133,681 65,295 70,580 
Education Technology Services and Payments Revenue
The following table presents disaggregated revenue by servicing offering for the Education Technology Services and Payments operating segment.
Three months ended
March 31, 2025December 31, 2024March 31, 2024
Tuition payment plan services$40,072 31,149 38,880 
Payment processing51,536 41,117 47,786 
Education technology services55,695 35,759 56,021 
Other27 310 852 
Education technology services and payments revenue$147,330 108,335 143,539 
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.
11

Other Income (Expense)
The following table presents the components of "other, net" in "other income (expense)" on the consolidated statements of income:
 Three months ended
 March 31, 2025December 31, 2024March 31, 2024
ALLO preferred return$8,416 6,133 2,409 
Investment activity, net5,161 4,989 (1,298)
Borrower late fee income1,587 1,369 3,133 
Investment advisory services (WRCM)1,473 1,508 1,508 
Administration/sponsor fee income1,305 1,375 1,546 
Gain from solar investments, net (a)456 4,559 2,780 
Loss from ALLO voting membership interest investment— — (10,693)
Other5,296 7,861 4,697 
Other, net$23,694 27,794 4,082 
(a)    The Company accounts for its solar investments using the HLBV method of accounting. For the majority of the Company’s solar investments, the HLBV method of accounting results in accelerated losses in the initial years of investment. The following table presents (i) the Company's recognized HLBV losses and gains recognized from sales of certain investments at the end of the contractual agreement (typically five years), which include losses and gains attributable to third-party noncontrolling interest investors (syndication partners), included in “other, net” in "other income (expense)" on the consolidated statements of income, (ii) solar net losses and gains attributed to noncontrolling interest investors included in “net loss attributable to noncontrolling interests” on the consolidated statements of income, and (iii) the Company's recognized net gain excluding amounts attributed to noncontrolling interest investors (such amount reflecting the before tax net income impact of such solar tax equity investments to the Company).
Three months ended
March 31, 2025December 31, 2024March 31, 2024
Losses from HLBV accounting (gross)$(2,616)(6,530)(1,427)
Gains from sales (gross)3,072 11,089 4,207 
Gains from solar investments, net456 4,559 2,780 
Less: (losses) gains attributable to noncontrolling members, net(1,046)970 (1,641)
Net gain, excluding amounts attributed to noncontrolling interest investors$1,502 3,589 4,421 

12

Derivative Settlements
The following table summarizes the components of "derivative settlements, net" included in the consolidated statements of income.
 Three months ended
 March 31, 2025December 31, 2024March 31, 2024
Basis swaps$153 156 365 
Interest rate swaps - floor income hedges429 704 1,190 
Interest rate swaps - Nelnet Bank164 227 202 
Total derivative settlements - income$746 1,087 1,757 
Loans and Accrued Interest Receivable and Allowance for Loan Losses
Loans and accrued interest receivable and allowance for loan losses consisted of the following:
As ofAs ofAs of
 March 31, 2025December 31, 2024March 31, 2024
Non-Nelnet Bank:
Federally insured loans:
Stafford and other$2,102,961 2,108,960 2,546,852 
Consolidation6,567,323 6,279,604 7,836,200 
Total8,670,284 8,388,564 10,383,052 
Private education loans208,507 221,744 261,582 
Consumer and other loans381,215 345,560 155,308 
Non-Nelnet Bank loans9,260,006 8,955,868 10,799,942 
Nelnet Bank:
Federally insured loans:
Stafford and other10,336 — — 
Consolidation99,851 — — 
Total110,187 — — 
Private education loans489,451 482,445 364,766 
Consumer and other loans161,995 162,152 118,957 
Nelnet Bank loans761,633 644,597 483,723 
Accrued interest receivable566,275 549,283 684,095 
Loan discount and deferred lender fees, net of unamortized loan premiums and deferred origination costs(45,134)(42,114)(32,674)
Allowance for loan losses:
Non-Nelnet Bank:
Federally insured loans(48,906)(49,091)(61,723)
Private education loans(10,394)(11,130)(14,736)
Consumer and other loans(43,904)(38,468)(18,761)
Non-Nelnet Bank allowance for loan losses(103,204)(98,689)(95,220)
Nelnet Bank:
Federally insured loans(362)— — 
Private education loans(9,893)(10,086)(3,660)
Consumer and other loans(6,617)(6,115)(7,128)
Nelnet Bank allowance for loan losses(16,872)(16,201)(10,788)
$10,422,704 9,992,744 11,829,078 
The Company has partial ownership in certain consumer, private education, and federally insured student loan securitizations that are accounted for as held-to-maturity beneficial interest investments and included in "other investments and notes receivable, net" in the Company's consolidated financial statements. As of the latest remittance reports filed by the various trusts prior to or as of March 31, 2025, the Company’s ownership correlates to approximately $1.82 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.
13

The following table summarizes the allowance for loan losses as a percentage of the ending loan balance for each of the Company's loan portfolios.
As ofAs ofAs of
March 31, 2025December 31, 2024March 31, 2024
Non-Nelnet Bank:
Federally insured loans (a)0.56 %0.59 %0.59 %
Private education loans4.98 %5.02 %5.63 %
Consumer and other loans11.52 %11.13 %12.08 %
Nelnet Bank:
Federally insured loans (a)0.33 %— — 
Private education loans2.02 %2.09 %1.00 %
Consumer and other loans4.08 %3.77 %5.99 %
(a)    The allowance for loan losses as a percent of the risk sharing component of federally insured student loans not covered by the federal guaranty for non-Nelnet Bank was 20.2%, 20.6%, and 21.7% as of March 31, 2025, December 31, 2024, and March 31, 2024, respectively, and for Nelnet Bank was 16.3% as of March 31, 2025.
Loan Activity - Non-Nelnet Bank
The following table sets forth the activity of the Company's AGM (Non-Nelnet Bank) loan portfolios:
FFELPPrivateConsumer and otherTotal
Three months ended March 31, 2025
Balance as of December 31, 2024$8,388,564 221,744 345,560 8,955,868 
Loan acquisitions702,800 — 129,787 832,587 
Repayments, claims, capitalized interest, participations, and other, net(230,558)(12,535)(93,984)(337,077)
Loans lost to external parties(58,764)(702)— (59,466)
Loans sold(131,758)— (148)(131,906)
Balance as of March 31, 2025$8,670,284 208,507 381,215 9,260,006 
Three months ended December 31, 2024
Balance as of September 30, 2024$9,070,742 234,295 244,552 9,549,589 
Loan acquisitions2,000 — 194,333 196,333 
Repayments, claims, capitalized interest, participations, and other, net(248,071)(11,005)(80,677)(339,753)
Loans lost to external parties(57,208)(1,546)— (58,754)
Loans sold(378,899)— (12,648)(391,547)
Balance as of December 31, 2024$8,388,564 221,744 345,560 8,955,868 
Three months ended March 31, 2024
Balance as of December 31, 2023$11,686,207 277,320 85,935 12,049,462 
Loan acquisitions— — 80,730 80,730 
Repayments, claims, capitalized interest, participations, and other, net(324,953)(14,591)(10,952)(350,496)
Loans lost to external parties(778,508)(1,147)— (779,655)
Loans sold(199,694)— (405)(200,099)
Balance as of March 31, 2024$10,383,052 261,582 155,308 10,799,942 
Beginning in late 2021, the Company experienced accelerated run-off of its FFELP portfolio due to FFELP borrowers consolidating their loans into Federal Direct Loan Program loans as a result of the CARES Act payment pause on Department held loans and the initiatives offered by the Department for FFELP borrowers to consolidate their loans to qualify for loan forgiveness under various programs. However, the Company has experienced a significant decrease in FFELP borrowers consolidating their loans into the Federal Direct Loan Program since August 2024 that has resulted in prepayment rates on the Company’s FFELP portfolio being more consistent with longer-term historical rates.
14

Loan Spread Analysis - Non-Nelnet Bank
The following table analyzes the loan spread on AGM’s (Non-Nelnet Bank) portfolio of loans, which represents the spread between the yield earned on loan assets and the costs of the liabilities and derivative instruments used to fund the assets.
Three months ended
 March 31, 2025December 31, 2024March 31, 2024
Variable loan yield, gross7.43 %7.85 %7.99 %
Consolidation rebate fees(0.79)(0.80)(0.80)
Premium and deferred origination costs amortization, net of discount accretion(0.13)(0.08)0.09 
Variable loan yield, net6.51 6.97 7.28 
Loan cost of funds - interest expense(5.39)(5.86)(6.50)
Loan cost of funds - derivative settlements (a) (b)0.01 0.01 0.01 
Variable loan spread1.13 1.12 0.79 
Fixed rate floor income, gross0.04 0.03 0.01 
Fixed rate floor income - derivative settlements (a) (c)0.02 0.03 0.04 
Fixed rate floor income, net of settlements on derivatives0.06 0.06 0.05 
Core loan spread1.19 %1.18 %0.84 %
Average balance of AGM's loans$9,544,3179,403,661 11,561,504 
Average balance of AGM's debt outstanding8,451,6998,654,618 11,387,400 
(a)    Derivative settlements represent the cash paid or received during the respective period to settle with derivative instrument counterparties the economic effect of the Company's derivative instruments based on their contractual terms. Derivative accounting requires that net settlements with respect to derivatives that do not qualify for "hedge treatment" under GAAP be recorded in a separate income statement line item below net interest income. The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate volatility. As such, management believes derivative settlements for each applicable period should be evaluated with the Company’s net interest income (loan spread) as presented in this table. The Company reports this non-GAAP information because the Company believes that it provides additional information regarding operational and performance indicators that are closely assessed by management. There is no comprehensive, authoritative guidance for the presentation of such non-GAAP information, which is only meant to supplement GAAP results by providing additional information that management utilizes to assess performance. See "Derivative Settlements" included in this supplement for the net settlement activity recognized by the Company for each type of derivative for the periods presented in the table.
A reconciliation of core loan spread, which includes the impact of derivative settlements on loan spread, to loan spread without derivative settlements follows.
Three months ended
March 31, 2025December 31, 2024March 31, 2024
Core loan spread1.19 %1.18 %0.84 %
Derivative settlements (basis swaps)(0.01)(0.01)(0.01)
Derivative settlements (fixed rate floor income)(0.02)(0.03)(0.04)
Loan spread1.16 %1.14 %0.79 %

(b)    Derivative settlements consist of net settlements received related to the Company’s basis swaps.
(c)    Derivative settlements consist of net settlements received related to the Company’s floor income interest rate swaps.

15

Loan Activity - Nelnet Bank
The following table sets forth the activity of Nelnet Bank's loan portfolios:
FFELPPrivateConsumer and otherTotal
Three months ended March 31, 2025
Balance as of December 31, 2024$— 482,445 162,152 644,597 
Loan acquisitions and originations111,002 29,041 4,555 144,598 
Repayments(815)(22,035)(4,712)(27,562)
Balance as of March 31, 2025$110,187 489,451 161,995 761,633 
Three months ended December 31, 2024
Balance as of September 30, 2024$— 352,654 207,218 559,872 
Loan acquisitions and originations— 151,966 34,268 186,234 
Repayments— (22,175)(14,246)(36,421)
Loans sold to AGM— — (65,088)(65,088)
Balance as of December 31, 2024$— 482,445 162,152 644,597 
Three months ended March 31, 2024
Balance as of December 31, 2023$— 360,520 72,352 432,872 
Loan acquisitions and originations— 16,715 56,847 73,562 
Repayments— (12,469)(10,242)(22,711)
Balance as of March 31, 2024$— 364,766 118,957 483,723 
Average Balance Sheet - Nelnet Bank
The following table reflects the rates earned on interest-earning assets and paid on interest-bearing liabilities for Nelnet Bank.
Three months ended (a)
March 31, 2025December 31, 2024March 31, 2024
BalanceRateBalanceRateBalanceRate
Average assets
Federally insured student loans$25,621 6.55 %$— — %$— — %
Private education loans489,211 6.10 482,380 6.41 366,858 4.28 
Consumer and other loans162,602 10.47 194,105 11.17 97,136 13.23 
Cash and investments793,537 6.39 713,497 7.08 577,947 6.94 
Total interest-earning assets1,470,971 6.75 %1,389,982 7.42 %1,041,941 6.59 %
Non-interest-earning assets14,646 19,592 12,767 
Total assets$1,485,617 $1,409,574 $1,054,708 
Average liabilities and equity
Brokered deposits$249,259 1.95 %248,497 1.95 %$204,651 1.39 %
Intercompany deposits 72,836 3.41 107,866 3.92 160,349 4.90 
Retail and other deposits962,954 4.21 854,323 4.59 544,136 4.90 
Federal funds purchased and other borrowed money10,404 4.69 24,532 10.02 — — 
Total interest-bearing liabilities1,295,453 3.73 %1,235,218 4.11 %909,136 4.11 %
Non-interest-bearing liabilities8,602 8,347 8,477 
Equity181,562 166,009 137,095 
Total liabilities and equity$1,485,617 $1,409,574 $1,054,708 
Net interest margin3.46 %3.76 %3.00 %
(a) Calculated using average daily balances.
16