Nelnet (NNI) Q1 2026 earnings fall on higher loan loss provisions
Filing Impact
Filing Sentiment
Form Type
10-Q
Rhea-AI Filing Summary
Nelnet, Inc. reported net income attributable to shareholders of $71.1 million for the quarter ended March 31, 2026, down from $82.6 million a year earlier, or $1.97 per diluted share versus $2.26. Net interest income rose to $101.6 million, but the provision for loan losses increased sharply to $53.2 million from $15.3 million, largely tied to growth in consumer and Pay Later receivables. Fee-based revenue remained a major driver, with loan servicing and systems revenue of $127.8 million and education technology services and payments revenue of $154.4 million. The company acquired Canadian servicer NDS Canada for about $105.8 million, adding $69.1 million of intangible assets and $47.0 million of goodwill. Nelnet Bank continued to expand, with deposits of $1.74 billion and loans of $1.26 billion. Management highlighted non-GAAP net income excluding derivative market value adjustments of $69.9 million, or $1.94 per share, versus $87.4 million, or $2.39, in the prior-year quarter.
Positive
- None.
Negative
- None.
Insights
Nelnet’s Q1 shows solid volume growth but lower earnings as credit provisions rise.
Nelnet grew its balance sheet modestly to $14.18 billion in assets while quarterly net income attributable to shareholders fell to $71.1 million from $82.6 million. Core net interest income improved to $101.6 million, helped by lower interest expense and stable loan yields.
However, the provision for loan losses jumped to $53.2 million from $15.3 million, driven mainly by rapid growth in Pay Later and other consumer receivables. Allowance ratios on these loans increased, but management notes charge-off and delinquency trends remain in line with expectations.
Strategically, acquiring NDS Canada for about $105.8 million adds international servicing scale and lifted goodwill and intangibles. Investors will focus on how quickly the new Canadian operations integrate and whether growing consumer credit exposure and solar tax investments continue to influence earnings volatility in future quarters.
Key Figures
Net income attributable to Nelnet, Inc.: $71.1M
Earnings per share: $1.97
Net interest income: $101.6M
+5 more
8 metrics
Net income attributable to Nelnet, Inc.
$71.1M
Three months ended March 31, 2026
Earnings per share
$1.97
Basic and diluted EPS, Q1 2026
Net interest income
$101.6M
Quarter ended March 31, 2026
Provision for loan losses
$53.2M
Quarter ended March 31, 2026
Loan servicing and systems revenue
$127.8M
Three months ended March 31, 2026
Education technology services and payments revenue
$154.4M
Three months ended March 31, 2026
NDS Canada purchase price
CAD $144.2M (~$105.8M)
Acquisition consideration on February 2, 2026
Total assets
$14.18B
Consolidated assets as of March 31, 2026
Key Terms
provision for loan losses, Pay Later receivables, beneficial interest in loan securitizations, derivative market value adjustments, +2 more
6 terms
provision for loan losses financial
"Less provision for loan losses | 53,244 | 15,337"
An allowance banks and lenders record as an expense to cover loans they expect borrowers may not repay; think of it as money set aside like a household emergency fund for possible unpaid bills. It matters to investors because larger provisions reduce reported profit and can signal rising credit stress or conservative accounting, while smaller provisions can boost earnings but may hide future losses, affecting a lender’s health and capital position.
Pay Later receivables financial
"Included in "consumer loans and other financing receivables" ... Pay Later receivables that the Company began to purchase"
beneficial interest in loan securitizations financial
"Beneficial interest in loan securitizations (b) Consumer and private education loans, net of allowance"
derivative market value adjustments financial
"Derivative market value adjustments and derivative settlements, net | 2,167 | ( 5,578 )"
HLBV accounting financial
"Losses from HLBV accounting (gross) | $ | ( 22,531 )"
HLBV accounting (Hypothetical Liquidation at Book Value) is a method for reporting the value and income from an equity investment that assumes the investee company is sold or wound up at the amounts shown on its books, then allocates the hypothetical proceeds among owners and creditors to determine the investor’s share. It matters to investors because this approach can produce very different reported profits, losses and balance‑sheet values than fair‑value or cost methods, so it affects how performance and financial strength are interpreted—think of dividing a pie as if everyone were paid based on last month’s inventory count rather than today’s market price.
non-GAAP net income financial
"Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments"
Non-GAAP net income is a company's profit figure that excludes certain costs or income that are included in standard accounting methods. Companies often use it to show what their earnings might look like without one-time expenses or other unusual items, helping investors see the company's core performance more clearly.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
For the quarterly period ended March 31, 2026
or
For the transition period from to .
Commission File Number: 001-31924
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) (I.R.S Employer Identification No.)
(Address of principal executive officer) (Zip Code)
(402 ) 458-2370
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of April 30, 2026, there were 25,317,348 and 10,616,675 shares of Class A Common Stock and Class B Common Stock, par value $0.01 per share, outstanding, respectively (excluding 11,305,731 shares of Class A Common Stock held by wholly owned subsidiaries).
NELNET, INC.
FORM 10-Q
INDEX
March 31, 2026
PART I. FINANCIAL INFORMATION | 2 | ||||
Item 1. Financial Statements | 2 | ||||
Item 2. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations | 30 | ||||
Item 3. Quantitative And Qualitative Disclosures About Market Risk | 56 | ||||
Item 4. Controls And Procedures | 60 | ||||
PART II. OTHER INFORMATION | 61 | ||||
Item 1. Legal Proceedings | 61 | ||||
Item 1a. Risk Factors | 61 | ||||
Item 2. Unregistered Sales Of Equity Securities And Use Of Proceeds | 61 | ||||
Item 5. Other Information | 61 | ||||
Item 6. Exhibits | 62 | ||||
SIGNATURES | 63 | ||||
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NELNET, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
(unaudited)
As of | As of | ||||||||||
| March 31, 2026 | December 31, 2025 | ||||||||||
| Assets: | |||||||||||
Loans and accrued interest receivable (net of allowance for loan losses of $ | $ | ||||||||||
| Cash and cash equivalents: | |||||||||||
| Cash and cash equivalents - not held at a related party | |||||||||||
| Cash and cash equivalents - held at a related party | |||||||||||
| Total cash and cash equivalents | |||||||||||
| Investments and notes receivable: | |||||||||||
| Investments at fair value | |||||||||||
| Other investments and notes receivable, net | |||||||||||
| Total investments and notes receivable | |||||||||||
| Restricted cash | |||||||||||
| Restricted cash - due to customers | |||||||||||
Accounts receivable (net of allowance for doubtful accounts of $ | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Property and equipment, net | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | ||||||||||
| Liabilities: | |||||||||||
| Bonds and notes payable | $ | ||||||||||
| Accrued interest payable | |||||||||||
| Bank deposits | |||||||||||
| Other liabilities | |||||||||||
| Due to customers | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Equity: | |||||||||||
| Nelnet, Inc. shareholders' equity: | |||||||||||
Preferred stock, $ | |||||||||||
| Common stock: | |||||||||||
Class A, $ shares and | |||||||||||
Class B, convertible, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive (loss) earnings, net | ( | ||||||||||
| Total Nelnet, Inc. shareholders' equity | |||||||||||
| Noncontrolling interests | ( | ( | |||||||||
| Total equity | |||||||||||
| Total liabilities and equity | $ | ||||||||||
| Supplemental information - assets and liabilities of consolidated education and other lending variable-interest entities: | |||||||||||
| Loans and accrued interest receivable | $ | ||||||||||
| Restricted cash | |||||||||||
| Bonds and notes payable | ( | ( | |||||||||
| Accrued interest payable and other liabilities | ( | ( | |||||||||
| Net assets of consolidated education and other lending variable-interest entities | $ | ||||||||||
See accompanying notes to consolidated financial statements.
2
NELNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except share data)
(unaudited)
| Three months ended | |||||||||||
| March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Interest income: | |||||||||||
| Loan interest | $ | ||||||||||
| Investment interest | |||||||||||
| Total interest income | |||||||||||
| Interest expense on bonds and notes payable and bank deposits | |||||||||||
| Net interest income | |||||||||||
| Less provision for loan losses | |||||||||||
| Less provision for beneficial interests | |||||||||||
| Net interest income after provision | |||||||||||
| Other income (expense): | |||||||||||
| Loan servicing and systems revenue | |||||||||||
| Education technology services and payments revenue | |||||||||||
| Reinsurance premiums earned | |||||||||||
| Solar construction revenue | |||||||||||
| Other, net | |||||||||||
| Derivative market value adjustments and derivative settlements, net | ( | ||||||||||
| Total other income (expense), net | |||||||||||
| Cost of services and expenses: | |||||||||||
| Loan servicing contract fulfillment and acquisition costs | |||||||||||
| Cost to provide education technology services and payments | |||||||||||
| Cost to provide solar construction services | |||||||||||
| Total cost of services | |||||||||||
| Salaries and benefits | |||||||||||
| Depreciation and amortization | |||||||||||
| Reinsurance losses and underwriting expenses | |||||||||||
| Other expenses | |||||||||||
| Total operating expenses | |||||||||||
| Income before income taxes | |||||||||||
| Income tax expense | ( | ( | |||||||||
| Net income | |||||||||||
| Net loss attributable to noncontrolling interests | |||||||||||
| Net income attributable to Nelnet, Inc. | $ | ||||||||||
| Earnings per common share: | |||||||||||
| Net income attributable to Nelnet, Inc. shareholders - basic and diluted | $ | ||||||||||
Weighted-average common shares outstanding - basic and diluted | |||||||||||
See accompanying notes to consolidated financial statements.
3
NELNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(unaudited)
| Three months ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Net income | $ | ||||||||||||||||||||||
| Other comprehensive loss: | |||||||||||||||||||||||
| Net changes related to foreign currency translation adjustments | $ | ( | ( | ||||||||||||||||||||
| Net changes related to available-for-sale debt securities: | |||||||||||||||||||||||
| Unrealized holding losses arising during period, net | ( | ( | |||||||||||||||||||||
| Reclassification of gains recognized in net income, net | ( | ( | |||||||||||||||||||||
| Amortization of net unrealized loss on securities transferred from available-for-sale to held-to-maturity | |||||||||||||||||||||||
| Income tax effect | ( | ( | |||||||||||||||||||||
| Net changes related to cash flow hedges: | |||||||||||||||||||||||
| Fair value adjustments during period, net | |||||||||||||||||||||||
| Income tax effect | ( | ||||||||||||||||||||||
| Net changes related to equity method investee's other comprehensive income: | |||||||||||||||||||||||
| Fair value adjustment during period | |||||||||||||||||||||||
| Income tax effect | ( | ( | |||||||||||||||||||||
| Other comprehensive loss | ( | ( | |||||||||||||||||||||
| Comprehensive income | |||||||||||||||||||||||
| Comprehensive loss attributable to noncontrolling interests | |||||||||||||||||||||||
| Comprehensive income attributable to Nelnet, Inc. | $ | ||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
4
NELNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands, except share data)
(unaudited)
Nelnet, Inc. Shareholders | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock shares | Common stock shares | Preferred stock | Class A common stock | Class B common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive earnings (loss) | Noncontrolling interests | Total equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Class A | Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of noncontrolling interests | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distribution to noncontrolling interests | — | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends on Class A and Class B common stock - $ | — | — | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net of forfeitures | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Compensation expense for stock-based awards | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | ( | — | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2025 | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of noncontrolling interests | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distribution to noncontrolling interests | — | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends on Class A and Class B common stock - $ | — | — | — | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock, net of forfeitures | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Compensation expense for stock-based awards | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | ( | — | — | ( | — | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of | — | — | — | — | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2026 | $ | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
5
NELNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
| Three months ended | |||||||||||
| March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net income attributable to Nelnet, Inc. | $ | ||||||||||
| Net loss attributable to noncontrolling interests | ( | ( | |||||||||
| Net income | |||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities, net of acquisitions: | |||||||||||
| Depreciation and amortization, including debt discounts and loan premiums and deferred origination costs | |||||||||||
| Loan discount and deferred lender fees accretion | ( | ( | |||||||||
| Provision for loan losses | |||||||||||
| Provision for beneficial interests | |||||||||||
| Derivative market value adjustments | ( | ||||||||||
| Loss (gain) on sale of loans, net | ( | ||||||||||
| Loss (gain) on investments, net | ( | ||||||||||
| Deferred income tax (benefit) expense | ( | ||||||||||
| Non-cash compensation expense | |||||||||||
| Other | ( | ||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| (Increase) decrease in loan and investment accrued interest receivable | ( | ||||||||||
| Decrease in accounts receivable | |||||||||||
| Increase in other assets | ( | ( | |||||||||
| Decrease in the carrying amount of ROU asset | |||||||||||
| Decrease in accrued interest payable | ( | ( | |||||||||
| Increase (decrease) in other liabilities | ( | ||||||||||
| Decrease in the carrying amount of lease liability | ( | ( | |||||||||
| Total adjustments | |||||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities, net of acquisitions: | |||||||||||
| Purchases and originations of loans, including cash paid for student loan trusts, net of cash and restricted cash acquired | ( | ( | |||||||||
| Purchases of loans from a related party | ( | ( | |||||||||
| Proceeds from loan repayments, claims, and capitalized interest, net | |||||||||||
| Proceeds from sale of loans | |||||||||||
| Proceeds from sale of loans to a related party | |||||||||||
| Purchases of available-for-sale securities | ( | ( | |||||||||
| Proceeds from sales of available-for-sale securities | |||||||||||
| Proceeds from beneficial interest in loan securitizations | |||||||||||
| Purchases of other investments and issuance of notes receivable | ( | ( | |||||||||
| Proceeds from other investments and repayments of notes receivable | |||||||||||
| Redemption of held-to-maturity debt securities | |||||||||||
| Purchases of property and equipment | ( | ( | |||||||||
| Business acquisitions, net of cash and restricted cash acquired | |||||||||||
| Net cash provided by investing activities | $ | ||||||||||
6
NELNET, INC. AND SUBSIDIARIES | |||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) | |||||||||||
| Three months ended | |||||||||||
| March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from financing activities, net of acquisitions: | |||||||||||
| Payments on bonds and notes payable | $ | ( | ( | ||||||||
| Proceeds from issuance of bonds and notes payable | |||||||||||
| Payments of debt issuance costs | ( | ( | |||||||||
| Increase in bank deposits, net | |||||||||||
| Decrease in due to customers | ( | ( | |||||||||
| Dividends paid | ( | ( | |||||||||
| Repurchases of common stock | ( | ( | |||||||||
| Proceeds from issuance of common stock | |||||||||||
| Redemption of noncontrolling interest | ( | ||||||||||
| Issuance of noncontrolling interests | |||||||||||
| Distribution to noncontrolling interests | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Effect of exchange rate changes on cash and restricted cash | ( | ||||||||||
| Net decrease in cash, cash equivalents, and restricted cash | ( | ( | |||||||||
| Cash, cash equivalents, and restricted cash, beginning of period | |||||||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | ||||||||||
| Supplemental disclosures of cash flow information: | |||||||||||
| Cash disbursements made for interest | $ | ||||||||||
| Cash disbursements made for income taxes, net of refunds and credits received (a) | $ | ||||||||||
| Cash disbursements made for operating leases | $ | ||||||||||
| Non-cash operating, investing and financing activity: | |||||||||||
| ROU assets obtained in exchange for lease obligations | $ | ||||||||||
| Student loans and other assets acquired | $ | ||||||||||
| Borrowings and other liabilities assumed in acquisition of student loans | $ | ||||||||||
| Distribution to noncontrolling interests | $ | ||||||||||
| Issuance of noncontrolling interests | $ | ||||||||||
(a) The Company utilized $19.6 million and $14.1 million of federal and state tax credits related primarily to renewable energy during the three months ended March 31, 2026 and 2025, respectively.
Supplemental disclosures of non-cash activities regarding the Company's business acquisition are contained in note 6.
The following table presents a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets to the total of the amounts reported in the consolidated statements of cash flows:
| As of | As of | As of | As of | ||||||||||||||||||||
| March 31, 2026 | December 31, 2025 | March 31, 2025 | December 31, 2024 | ||||||||||||||||||||
| Total cash and cash equivalents | $ | ||||||||||||||||||||||
| Restricted cash | |||||||||||||||||||||||
| Restricted cash - due to customers | |||||||||||||||||||||||
Cash, cash equivalents, and restricted cash | $ | ||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
7
NELNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts, unless otherwise noted)
(unaudited)
1. Basis of Financial Reporting
The accompanying unaudited consolidated financial statements of Nelnet, Inc. and subsidiaries (the “Company” or "Nelnet") as of March 31, 2026 and for the three months ended March 31, 2026 and 2025 have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 2025 and, in the opinion of the Company’s management, the unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results of operations for the interim periods presented. The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results for the year ending December 31, 2026. The unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Annual Report").
2. Loans and Accrued Interest Receivable and Allowance for Loan Losses
Loans and accrued interest receivable consisted of the following:
| As of | As of | ||||||||||
| March 31, 2026 | December 31, 2025 | ||||||||||
| Non-Nelnet Bank: | |||||||||||
| Federally insured loans (a): | |||||||||||
| Stafford and other | $ | ||||||||||
| Consolidation | |||||||||||
| Total | |||||||||||
| Private education loans | |||||||||||
| Consumer loans and other financing receivables (b) | |||||||||||
| Non-Nelnet Bank loans | |||||||||||
| Nelnet Bank: | |||||||||||
| Federally insured loans (a): | |||||||||||
| Stafford and other | |||||||||||
| Consolidation | |||||||||||
| Total | |||||||||||
| Private education loans | |||||||||||
| Consumer and other loans | |||||||||||
| Nelnet Bank loans | |||||||||||
| Accrued interest receivable | |||||||||||
| Loan discount and deferred lender fees, net of unamortized loan premiums and deferred origination costs | ( | ( | |||||||||
| Allowance for loan losses: | |||||||||||
| Non-Nelnet Bank: | |||||||||||
| Federally insured loans | ( | ( | |||||||||
| Private education loans | ( | ( | |||||||||
| Consumer loans and other financing receivables | ( | ( | |||||||||
| Non-Nelnet Bank allowance for loan losses | ( | ( | |||||||||
| Nelnet Bank: | |||||||||||
| Federally insured loans | ( | ( | |||||||||
| Private education loans | ( | ( | |||||||||
| Consumer and other loans | ( | ( | |||||||||
| Nelnet Bank allowance for loan losses | ( | ( | |||||||||
| $ | |||||||||||
8
(a) During the first quarter of 2026, the Company's Asset Generation and Management operating segment (non-Nelnet Bank) contributed certain student loan securitization trusts to Nelnet Bank that included $296.0 million in federally insured loans.
(b) Included in "consumer loans and other financing receivables" in the above table are Pay Later receivables that the Company began to purchase in the third quarter of 2025. As of March 31, 2026 and December 31, 2025, the balance of Pay Later receivables was $766.2 million and $744.2 million, respectively.
The following table summarizes the allowance for loan losses as a percentage of the ending loan balance for each of the Company's loan portfolios:
| As of | As of | ||||||||||
| March 31, 2026 | December 31, 2025 | ||||||||||
| Non-Nelnet Bank: | |||||||||||
| Federally insured loans (a) | % | % | |||||||||
| Private education loans | % | % | |||||||||
| Consumer loans and other financing receivables (b) | % | % | |||||||||
| Nelnet Bank: | |||||||||||
| Federally insured loans (a) | % | % | |||||||||
| Private education loans | % | % | |||||||||
| Consumer and other loans | % | % | |||||||||
(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 19.6 % and 19.3 %, and for Nelnet Bank was 17.7 % and 17.3 %, as of March 31, 2026 and December 31, 2025, respectively.
(b) The increase in allowance for loan losses as a percentage of the ending loan balance for consumer loans and other financing receivables was driven by the significant growth in the volume of Pay Later receivables acquired since the third quarter of 2025. As loan acquisitions increased, the Company recorded additional allowance at acquisition in accordance with its expected credit loss methodology. The increase in the allowance primarily reflects the cumulative volume of new loans added to the portfolio rather than a deterioration in credit quality.
Activity in the Allowance for Loan Losses
The following table presents the activity in the allowance for loan losses by portfolio segment:
| Balance at beginning of period | Provision (negative provision) for loan losses | Charge-offs | Recoveries | Loan sales/contributions | Balance at end of period | ||||||||||||||||||||||||||||||
| Three months ended March 31, 2026 | |||||||||||||||||||||||||||||||||||
| Non-Nelnet Bank: | |||||||||||||||||||||||||||||||||||
| Federally insured loans | $ | ( | ( | ||||||||||||||||||||||||||||||||
| Private education loans | ( | ( | |||||||||||||||||||||||||||||||||
| Consumer loans and other financing receivables | ( | ||||||||||||||||||||||||||||||||||
| Nelnet Bank: | |||||||||||||||||||||||||||||||||||
| Federally insured loans | ( | ( | |||||||||||||||||||||||||||||||||
| Private education loans | ( | ||||||||||||||||||||||||||||||||||
| Consumer and other loans | ( | ||||||||||||||||||||||||||||||||||
| $ | ( | ||||||||||||||||||||||||||||||||||
| Three months ended March 31, 2025 | |||||||||||||||||||||||||||||||||||
| Non-Nelnet Bank: | |||||||||||||||||||||||||||||||||||
| Federally insured loans | $ | ( | |||||||||||||||||||||||||||||||||
| Private education loans | ( | ||||||||||||||||||||||||||||||||||
| Consumer loans and other financing receivables | ( | ||||||||||||||||||||||||||||||||||
| Nelnet Bank: | |||||||||||||||||||||||||||||||||||
| Federally insured loans | ( | ||||||||||||||||||||||||||||||||||
| Private education loans | ( | ||||||||||||||||||||||||||||||||||
| Consumer and other loans | ( | ||||||||||||||||||||||||||||||||||
| $ | ( | ||||||||||||||||||||||||||||||||||
9
The following table summarizes annualized net charge-offs as a percentage of average loans for each of the Company's loan portfolios:
| Three months ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Non-Nelnet Bank: | |||||||||||
| Federally insured loans | % | % | |||||||||
| Private education loans | % | % | |||||||||
| Consumer loans and other financing receivables | % | % | |||||||||
| Nelnet Bank: | |||||||||||
| Federally insured loans | % | % | |||||||||
| Private education loans | % | % | |||||||||
| Consumer and other loans | % | % | |||||||||
During the periods presented above, the primary item impacting provision for loan losses was the establishment of an initial allowance for loans originated and acquired during the periods.
The increase in provision for loan losses and charge-offs for consumer loans and other financing receivables (non-Nelnet Bank loans) during the three month period ended March 31, 2026 compared with the same period in 2025 was driven by the significant increase in the volume of Pay Later receivables acquired since the third quarter of 2025. The increase in provision expense and charge-offs reflects the volume of new loans added to the portfolio rather than a deterioration in credit quality. Credit performance metrics, including delinquency rates and charge‑offs, remained generally consistent with management’s expectations.
Unfunded Loan Commitments
The Company maintains an allowance for unfunded loan commitments that are not unconditionally cancelable, at a level the Company believes is appropriate as of the balance sheet date, to absorb expected credit losses on this exposure. As of March 31, 2026 and December 31, 2025, Nelnet Bank had a liability of approximately $432,000 and $760,000 , respectively, related to $48.0 million and $76.5 million, respectively, of unfunded private education, consumer, and other loan commitments. Other than the estimation of the probability of funding, this reserve is estimated in a manner similar to the methodology used for determining reserves for loans included on the consolidated balance sheet. When a new loan commitment is made, the Company records an allowance that is included in "other liabilities" on the consolidated balance sheet. Net adjustments to this reserve are included in "provision for loan losses" on the consolidated income statement. Below is a reconciliation of the provision for loan losses reported in the consolidated statements of income:
| Three months ended | |||||||||||
| March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Provision for loan losses from allowance activity table above | $ | ||||||||||
| Provision expense (negative provision) for unfunded loan commitments, net | ( | ( | |||||||||
| Provision for loan losses reported in consolidated statements of income | $ | ||||||||||
10
Key Credit Quality Indicators
Loan Status and Delinquencies
Key credit quality indicators for the Company’s federally insured, private education, consumer, and other loan portfolios are loan status, including delinquencies. The impact of changes in loan status is incorporated into the allowance for loan losses calculation. Delinquencies have the potential to adversely impact the Company’s earnings through increased servicing and collection costs and account charge-offs. Loans in repayment include loans on which borrowers are making interest only or fixed payments, as well as loans that have entered full principal and interest repayment status after any applicable grace period. The following table presents the Company’s loan status and delinquency amounts:
| As of March 31, 2026 | As of December 31, 2025 | As of March 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Federally insured loans - Non-Nelnet Bank: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans in-school/grace/deferment | $ | % | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Loans in forbearance | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans in repayment status: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans current | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 31-60 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 61-90 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 91-120 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 121-270 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 271 days or greater | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loans in repayment | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total federally insured loans | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued interest receivable | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan discount, net of unamortized premiums and deferred origination costs | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for loan losses | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total federally insured loans and accrued interest receivable, net of allowance for loan losses | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Private education loans - Non-Nelnet Bank: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans in-school/grace/deferment | $ | % | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Loans in forbearance | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans in repayment status: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans current | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 31-60 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 61-90 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 91 days or greater | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loans in repayment | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total private education loans | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued interest receivable | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan discount, net of unamortized premiums | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for loan losses | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total private education loans and accrued interest receivable, net of allowance for loan losses | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer loans and other financing receivables - Non-Nelnet Bank: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans in forbearance | $ | % | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Loans in repayment status: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans current | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 31-60 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 61-90 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 91 days or greater | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loans in repayment | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer loans and other financing receivables | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued interest receivable | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan discount and deferred lender fees, net of unamortized premiums | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for loan losses | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer loans and other financing receivables and accrued interest receivable, net of allowance for loan losses | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
11
| As of March 31, 2026 | As of December 31, 2025 | As of March 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Federally insured loans - Nelnet Bank (a): | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans in-school/grace/deferment | $ | % | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Loans in forbearance | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans in repayment status: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans current | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 30-59 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 60-89 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 90-119 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 120-270 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 271 days or greater | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loans in repayment | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total federally insured loans | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued interest receivable | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan premium | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for loan losses | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total federally insured loans and accrued interest receivable, net of allowance for loan losses | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Private education loans - Nelnet Bank (a): | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans in-school/grace/deferment | $ | % | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Loans in forbearance | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans in repayment status: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans current | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 30-59 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 60-89 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 90 days or greater | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loans in repayment | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total private education loans | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued interest receivable | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan discount, net of unamortized premiums and deferred origination costs | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for loan losses | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total private education loans and accrued interest receivable, net of allowance for loan losses | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer and other loans - Nelnet Bank (a): | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans in deferment | $ | % | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Loans in repayment status: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans current | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 30-59 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 60-89 days | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 90 days or greater | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loans in repayment | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer and other loans | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued interest receivable | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan premium, net of unaccreted discount | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for loan losses | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer and other loans and accrued interest receivable, net of allowance for loan losses | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
(a) For the periods presented for Nelnet Bank, the delinquency bucket periods conform with the delinquency bucket periods reflected in Nelnet Bank's Call Reports filed with the Federal Deposit Insurance Corporation.
12
FICO Scores
An additional key credit quality indicator for Nelnet Bank private education and consumer loans is FICO scores at the time of origination or purchase. The following tables highlight the gross principal balance of Nelnet Bank's portfolios, by year of origination, stratified by FICO score at the time of origination or purchase:
Nelnet Bank Private Education Loans
| Loan balance as of March 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended March 31, 2026 | 2025 | 2024 | 2023 | 2022 | Prior years | Total | Percent of total | ||||||||||||||||||||||||||||||||||||||||
| FICO at origination or purchase: | |||||||||||||||||||||||||||||||||||||||||||||||
| Less than 705 | $ | % | |||||||||||||||||||||||||||||||||||||||||||||
| 705 - 734 | |||||||||||||||||||||||||||||||||||||||||||||||
| 735 - 764 | |||||||||||||||||||||||||||||||||||||||||||||||
| 765 - 794 | |||||||||||||||||||||||||||||||||||||||||||||||
| Greater than 794 | |||||||||||||||||||||||||||||||||||||||||||||||
| No FICO score available or required (a) | |||||||||||||||||||||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Loan balance as of December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2022 | 2021 | Prior years | Total | Percent of total | ||||||||||||||||||||||||||||||||||||||||
| FICO at origination or purchase: | |||||||||||||||||||||||||||||||||||||||||||||||
| Less than 705 | $ | % | |||||||||||||||||||||||||||||||||||||||||||||
| 705 - 734 | |||||||||||||||||||||||||||||||||||||||||||||||
| 735 - 764 | |||||||||||||||||||||||||||||||||||||||||||||||
| 765 - 794 | |||||||||||||||||||||||||||||||||||||||||||||||
| Greater than 794 | |||||||||||||||||||||||||||||||||||||||||||||||
| No FICO score available or required (a) | |||||||||||||||||||||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||||||||||||||||||||
Nelnet Bank Consumer and Other Loans
| Loan balance as of March 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended March 31, 2026 | 2025 | 2024 | 2023 | 2022 | Prior years | Total | Percent of total | ||||||||||||||||||||||||||||||||||||||||
| FICO at origination: | |||||||||||||||||||||||||||||||||||||||||||||||
| Less than 720 | $ | % | |||||||||||||||||||||||||||||||||||||||||||||
| 720 - 769 | |||||||||||||||||||||||||||||||||||||||||||||||
| Greater than 769 | |||||||||||||||||||||||||||||||||||||||||||||||
| No FICO score available or required (a) | |||||||||||||||||||||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Loan balance as of December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2022 | 2021 | Prior years | Total | Percent of total | ||||||||||||||||||||||||||||||||||||||||
| FICO at origination: | |||||||||||||||||||||||||||||||||||||||||||||||
| Less than 720 | $ | % | |||||||||||||||||||||||||||||||||||||||||||||
| 720 - 769 | |||||||||||||||||||||||||||||||||||||||||||||||
| Greater than 769 | |||||||||||||||||||||||||||||||||||||||||||||||
| No FICO score available or required (a) | |||||||||||||||||||||||||||||||||||||||||||||||
| $ | % | ||||||||||||||||||||||||||||||||||||||||||||||
(a) Loans with no FICO score available or required refers to loans issued to borrowers for which the Company cannot obtain a FICO score or are not required to under a special purpose credit program. Management proactively assesses the risk and size of this loan category and, when necessary, takes actions to mitigate the credit risk.
13
Nonaccrual Status
The Company does not place federally insured loans on nonaccrual status due to the government guaranty. The amortized cost of private education, consumer, and other loans on nonaccrual status, as well as the allowance for loan losses related to such loans, as of March 31, 2026 and December 31, 2025, was not material.
Amortized Cost Basis by Origination Year
The following table presents the amortized cost of the Company's private education, consumer, and other loans by loan status and delinquency amount as of March 31, 2026 based on year of origination. Effective July 1, 2010, no new loan originations can be made under the Federal Family Education Loan Program (the "FFEL Program" or FFELP) and all new federal loan originations must be made under the Federal Direct Loan Program. As such, all the Company’s federally insured loans were originated prior to July 1, 2010.
| Three months ended March 31, 2026 | 2025 | 2024 | 2023 | 2022 | Prior years | Total | |||||||||||||||||||||||||||||||||||
| Private education loans - Non-Nelnet Bank: | |||||||||||||||||||||||||||||||||||||||||
| Loans in-school/grace/deferment | $ | ||||||||||||||||||||||||||||||||||||||||
| Loans in forbearance | |||||||||||||||||||||||||||||||||||||||||
| Loans in repayment status: | |||||||||||||||||||||||||||||||||||||||||
| Loans current | |||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 31-60 days | |||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 61-90 days | |||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 91 days or greater | |||||||||||||||||||||||||||||||||||||||||
| Total loans in repayment | |||||||||||||||||||||||||||||||||||||||||
| Total private education loans | $ | ||||||||||||||||||||||||||||||||||||||||
| Accrued interest receivable | |||||||||||||||||||||||||||||||||||||||||
| Loan discount, net of unamortized premiums | ( | ||||||||||||||||||||||||||||||||||||||||
| Allowance for loan losses | ( | ||||||||||||||||||||||||||||||||||||||||
| Total private education loans and accrued interest receivable, net of allowance for loan losses | $ | ||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs - three months ended March 31, 2026 | $ | ||||||||||||||||||||||||||||||||||||||||
| Consumer loans and other financing receivables - Non-Nelnet Bank: | |||||||||||||||||||||||||||||||||||||||||
| Loans in forbearance | $ | ||||||||||||||||||||||||||||||||||||||||
| Loans in repayment status: | |||||||||||||||||||||||||||||||||||||||||
| Loans current | |||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 31-60 days | |||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 61-90 days | |||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 91 days or greater | |||||||||||||||||||||||||||||||||||||||||
| Total loans in repayment | |||||||||||||||||||||||||||||||||||||||||
| Total consumer loans and other financing receivables | $ | ||||||||||||||||||||||||||||||||||||||||
| Accrued interest receivable | |||||||||||||||||||||||||||||||||||||||||
| Loan discount and deferred lender fees, net of unamortized premiums | ( | ||||||||||||||||||||||||||||||||||||||||
| Allowance for loan losses | ( | ||||||||||||||||||||||||||||||||||||||||
| Total consumer loans and other financing receivables and accrued interest receivable, net of allowance for loan losses | $ | ||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs - three months ended March 31, 2026 | $ | ||||||||||||||||||||||||||||||||||||||||
14
| Three months ended March 31, 2026 | 2025 | 2024 | 2023 | 2022 | Prior years | Total | |||||||||||||||||||||||||||||||||||
| Private education loans - Nelnet Bank: | |||||||||||||||||||||||||||||||||||||||||
| Loans in-school/grace/deferment | $ | ||||||||||||||||||||||||||||||||||||||||
| Loans in forbearance | |||||||||||||||||||||||||||||||||||||||||
| Loans in repayment status: | |||||||||||||||||||||||||||||||||||||||||
| Loans current | |||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 30-59 days | |||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 60-89 days | |||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 90 days or greater | |||||||||||||||||||||||||||||||||||||||||
| Total loans in repayment | |||||||||||||||||||||||||||||||||||||||||
| Total private education loans | $ | ||||||||||||||||||||||||||||||||||||||||
| Accrued interest receivable | |||||||||||||||||||||||||||||||||||||||||
| Loan discount, net of unamortized premiums and deferred origination costs | ( | ||||||||||||||||||||||||||||||||||||||||
| Allowance for loan losses | ( | ||||||||||||||||||||||||||||||||||||||||
| Total private education loans and accrued interest receivable, net of allowance for loan losses | $ | ||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs - three months ended March 31, 2026 | $ | ||||||||||||||||||||||||||||||||||||||||
| Consumer and other loans - Nelnet Bank: | |||||||||||||||||||||||||||||||||||||||||
| Loans in deferment | $ | ||||||||||||||||||||||||||||||||||||||||
| Loans in repayment status: | |||||||||||||||||||||||||||||||||||||||||
| Loans current | |||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 30-59 days | |||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 60-89 days | |||||||||||||||||||||||||||||||||||||||||
| Loans delinquent 90 days or greater | |||||||||||||||||||||||||||||||||||||||||
| Total loans in repayment | |||||||||||||||||||||||||||||||||||||||||
| Total consumer and other loans | $ | ||||||||||||||||||||||||||||||||||||||||
| Accrued interest receivable | |||||||||||||||||||||||||||||||||||||||||
| Loan premium, net of unaccreted discount | |||||||||||||||||||||||||||||||||||||||||
| Allowance for loan losses | ( | ||||||||||||||||||||||||||||||||||||||||
| Total consumer and other loans and accrued interest receivable, net of allowance for loan losses | $ | ||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs - three months ended March 31, 2026 | $ | ||||||||||||||||||||||||||||||||||||||||
15
3. Bonds and Notes Payable
The following tables summarize the Company’s outstanding debt obligations by type of instrument:
| As of March 31, 2026 | |||||||||||||||||
Carrying amount | Interest rate range | Final maturity | |||||||||||||||
| Variable-rate bonds and notes issued in FFELP loan asset-backed securitizations: | |||||||||||||||||
| Bonds and notes based on indices | $ | 10/25/33 - 11/27/90 | |||||||||||||||
| Bonds and notes based on auction | 3/22/32 - 8/25/37 | ||||||||||||||||
| Total FFELP variable-rate bonds and notes | |||||||||||||||||
| Fixed-rate bonds and notes issued in FFELP loan asset-backed securitizations | 10/25/67 - 8/27/68 | ||||||||||||||||
| FFELP loan warehouse facility | 7/30/27 | ||||||||||||||||
| Consumer loan warehouse and other facilities | 11/13/27 - 2/29/28 | ||||||||||||||||
| Variable-rate bonds and notes issued in private education loan asset-backed securitizations | 6/25/49 / 11/25/53 | ||||||||||||||||
| Fixed-rate bonds and notes issued in private education loan asset-backed securitization | 11/25/53 | ||||||||||||||||
| Unsecured line of credit | 3/31/31 | ||||||||||||||||
| Participation agreements | 5/4/26 / 7/28/32 | ||||||||||||||||
| Discount on bonds and notes payable and debt issuance costs | ( | ||||||||||||||||
| Total | $ | ||||||||||||||||
| As of December 31, 2025 | |||||||||||||||||
Carrying amount | Interest rate range | Final maturity | |||||||||||||||
| Variable-rate bonds and notes issued in FFELP loan asset-backed securitizations: | |||||||||||||||||
| Bonds and notes based on indices | $ | 3/22/32 - 11/27/90 | |||||||||||||||
| Bonds and notes based on auction | 3/22/32 - 8/25/37 | ||||||||||||||||
| Total FFELP variable-rate bonds and notes | |||||||||||||||||
| Fixed-rate bonds and notes issued in FFELP loan asset-backed securitizations | 10/25/67 - 8/27/68 | ||||||||||||||||
| FFELP loan warehouse facility | 1/29/27 | ||||||||||||||||
| Consumer loan warehouse and other facilities | 11/13/27 - 2/29/28 | ||||||||||||||||
| Variable-rate bonds and notes issued in private education loan asset-backed securitizations | 6/25/49 / 11/25/53 | ||||||||||||||||
| Fixed-rate bonds and notes issued in private education loan asset-backed securitization | 11/25/53 | ||||||||||||||||
| Unsecured line of credit | 9/22/26 | ||||||||||||||||
| Participation agreements | 5/4/26 / 7/28/32 | ||||||||||||||||
| Discount on bonds and notes payable and debt issuance costs | ( | ||||||||||||||||
| Total | $ | ||||||||||||||||
16
Warehouse and Other Facilities
The Company funds a portion of its loan acquisitions through the use of warehouse and other secured facilities. Loan warehousing allows the Company to buy and manage loans prior to transferring them into more permanent financing arrangements. The following table summarizes the Company's warehouse and other facilities as of March 31, 2026:
| Type of loans | Maximum financing amount | Amount outstanding | Amount available | Expiration of liquidity provisions | Final maturity date | Advance rate | Advanced as equity support | |||||||||||||||||||||||||||||||||||||
| FFELP (a) | $ | 7/31/2026 | 7/30/2027 | note (b) | $ | |||||||||||||||||||||||||||||||||||||||
| Consumer loans and other financing receivables | $ | 11/13/2026 - 7/31/2027 | 11/13/2027 - 2/29/2028 | $ | ||||||||||||||||||||||||||||||||||||||||
(a) On January 30, 2026, the Company extended the liquidity provisions and final maturity date on this facility to July 31, 2026 and July 30, 2027, respectively.
(b) This facility has a static advance rate until the expiration date of the liquidity provisions. The maximum advance rates for this facility are 90 % to 96 %, and the minimum advance rates are 84 % to 90 %. In the event the liquidity provisions are not extended, the valuation agent has the right to perform a one-time mark to market on the underlying loans funded in this facility, subject to a floor. The loans would then be funded at this new advance rate until the final maturity date of the facility.
Unsecured Line of Credit
On March 31, 2026, the Company entered into a new $435.0 million unsecured line of credit. 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.
Borrowings by the Company under the new line of credit will bear interest at rates that will vary based on market conditions, the Company's credit rating, interest elections by the Company under the agreement, and other factors at the time of the borrowings. The maturity date of the new line of credit is March 31, 2031.
The new line of credit contains affirmative and negative covenants, including, but not limited to, certain financial covenants related to maintenance of a minimum consolidated net worth, a limitation on recourse indebtedness to adjusted EBITDA, a limitation on permitted investments, and an asset quality test related to non-FFELP loans held by the Company and its consolidated subsidiaries. Any violation of these covenants could lead to an event of default under the agreement. The Company's obligations under the agreement are guaranteed by certain subsidiaries of the Company.
As of March 31, 2026, no amount was outstanding on the new line of credit and $435.0 million was available for future use.
Debt Repurchases
The Company has repurchased certain of its own asset-backed securities (bonds and notes payable) in the secondary market or retained such instruments upon initial issuance. 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. As of March 31, 2026, the Company holds $238.1 million (par value) of its own FFELP asset-backed securities. Upon sale, these notes would be shown as "bonds and notes payable" in the Company's consolidated balance sheet.
17
4. Derivative Financial Instruments
The Company uses derivative financial instruments to manage interest rate risk. Derivative instruments used are described in note 6 of the notes to consolidated financial statements included in the 2025 Annual Report.
Non-Nelnet Bank Derivatives
Basis Swaps
The following table summarizes the Company’s Basis Swaps outstanding as of March 31, 2026 and December 31, 2025 used to hedge its basis risk and repricing risk on a portion of its FFELP student loan assets. The Company has entered into basis swaps in which the Company receives payments indexed to three-month SOFR and makes payments based on the one-month SOFR index (plus or minus a spread) as defined in the agreements.
| Maturity | Notional amount | |||||||
| 2026 | $ | |||||||
| 2027 | ||||||||
| $ | ||||||||
Interest Rate Swaps – Floor Income Hedges
The following table summarizes the outstanding derivative instruments used by the Company as of March 31, 2026 and December 31, 2025 to economically hedge loans earning fixed-rate floor income. For these derivative instruments, the Company receives payments based on SOFR, the majority of which reset quarterly.
| Maturity | Notional amount | Weighted-average fixed rate paid by the Company | ||||||||||||
| 2026 | $ | % | ||||||||||||
| 2028 | ||||||||||||||
| 2029 | ||||||||||||||
| 2030 | ||||||||||||||
| $ | % | |||||||||||||
Nelnet Bank Derivatives
Nelnet Bank uses derivative instruments to hedge exposure to variability in cash flows from variable-rate intercompany and third-party deposits to minimize volatility from future changes in interest rates.
Interest Rate Swaps - Intercompany Deposits
Nelnet Bank's derivatives used to hedge intercompany deposits are structured so that each is economically effective; however, because these derivatives are hedging intercompany deposits, the derivative instruments are not eligible for hedge accounting in the consolidated financial statements. The following table summarizes the outstanding derivative instruments used by Nelnet Bank as of March 31, 2026 and December 31, 2025 to hedge intercompany deposits. For these derivatives, the Company receives monthly or quarterly payments based on SOFR that reset daily.
| Maturity | Notional amount | Weighted-average fixed rate paid by the Company | ||||||||||||
| 2028 | $ | % | ||||||||||||
| 2029 | ||||||||||||||
| 2030 (a) | ||||||||||||||
| 2032 (b) | ||||||||||||||
| 2033 | ||||||||||||||
| 2035 (c) | ||||||||||||||
| $ | % | |||||||||||||
(a) These $25
(b) This $25
(c) This $30 million notional amount derivative has a forward effective start date in May 2028.
18
Interest Rate Swaps - Third-Party Deposits
The following table summarizes the outstanding derivative instruments used by Nelnet Bank as of March 31, 2026 and December 31, 2025 to hedge third-party deposits. For these derivative instruments, the Company receives monthly payments based on SOFR that reset monthly.
| Maturity | Notional amount | Weighted-average fixed rate paid by the Company | ||||||||||||
| 2030 | $ | % | ||||||||||||
| 2035 | ||||||||||||||
| $ | % | |||||||||||||
Consolidated Financial Statement Impact Related to Derivatives
Balance Sheets
Nelnet Bank's derivatives are not cleared post-execution at a regulated clearinghouse. As such, the Company records these derivative instruments in the consolidated balance sheets on a gross basis as either an asset (included in "other assets") or liability (included in "other liabilities") measured at fair value. The following table summarizes the fair value of Nelnet Bank's derivatives as reflected in the consolidated balance sheets:
| Fair value of asset derivatives | Fair value of liability derivatives | ||||||||||||||||||||||
| As of March 31, 2026 | As of December 31, 2025 | As of March 31, 2026 | As of December 31, 2025 | ||||||||||||||||||||
| Interest rate swaps - intercompany deposits | $ | ||||||||||||||||||||||
| Interest rate swaps - third-party deposits (cash flow hedges) | |||||||||||||||||||||||
| $ | |||||||||||||||||||||||
Statements of Income
The following table summarizes the components of "derivative market value adjustments and derivative settlements, net" included in the consolidated statements of income related to derivative instruments that do not qualify for hedge accounting:
| Three months ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Settlements: | |||||||||||
| Basis swaps | $ | ||||||||||
| Interest rate swaps - floor income hedges | ( | ||||||||||
| Interest rate swaps - Nelnet Bank intercompany deposits | |||||||||||
| Other derivative instruments | |||||||||||
| Total settlements - income | |||||||||||
| Change in fair value: | |||||||||||
| Basis swaps | ( | ( | |||||||||
| Interest rate swaps - floor income hedges | ( | ||||||||||
| Interest rate swaps - Nelnet Bank intercompany deposits | ( | ||||||||||
| Other derivative instruments | ( | ||||||||||
| ( | |||||||||||
| Derivative market value adjustments and derivative settlements, net - income (expense) | $ | ( | |||||||||
19
5. Investments and Notes Receivable
“Total investments and notes receivable” consisted of the following:
| As of March 31, 2026 | As of December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | ||||||||||||||||||||||||||||||||||||||||
| Investments at fair value: | |||||||||||||||||||||||||||||||||||||||||||||||
| Available-for-sale asset-backed securities | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-Nelnet Bank: | |||||||||||||||||||||||||||||||||||||||||||||||
| FFELP loan | $ | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| FFELP loan and other debt securities - restricted | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Private education loan (a) | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Other debt securities | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Total Non-Nelnet Bank | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Nelnet Bank: | |||||||||||||||||||||||||||||||||||||||||||||||
| FFELP loan | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Private education loan | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Other debt securities | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Total Nelnet Bank | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Total available-for-sale asset-backed securities | $ | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Equity securities and funds measured at net asset value | |||||||||||||||||||||||||||||||||||||||||||||||
| Total investments at fair value | |||||||||||||||||||||||||||||||||||||||||||||||
| Other investments and notes receivable (not measured at fair value): | |||||||||||||||||||||||||||||||||||||||||||||||
| Nelnet Bank: Held-to-maturity asset-backed securities - FFELP loan | |||||||||||||||||||||||||||||||||||||||||||||||
| Venture capital, funds, and other: | |||||||||||||||||||||||||||||||||||||||||||||||
| Measurement alternative | |||||||||||||||||||||||||||||||||||||||||||||||
| Equity method | |||||||||||||||||||||||||||||||||||||||||||||||
| Total venture capital and funds | |||||||||||||||||||||||||||||||||||||||||||||||
| Real estate equity method | |||||||||||||||||||||||||||||||||||||||||||||||
| ALLO: | |||||||||||||||||||||||||||||||||||||||||||||||
| Voting interest/equity method | |||||||||||||||||||||||||||||||||||||||||||||||
| Preferred membership interest and accrued and unpaid preferred return | |||||||||||||||||||||||||||||||||||||||||||||||
| Total interest in ALLO | |||||||||||||||||||||||||||||||||||||||||||||||
| Beneficial interest in loan securitizations (b): | |||||||||||||||||||||||||||||||||||||||||||||||
Consumer and private education loans, net of allowance for credit losses of $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Federally insured student loans | |||||||||||||||||||||||||||||||||||||||||||||||
| Total beneficial interest in loan securitizations, net of allowance | |||||||||||||||||||||||||||||||||||||||||||||||
| Solar (c) | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Notes receivable | |||||||||||||||||||||||||||||||||||||||||||||||
| Tax liens, affordable housing, and other | |||||||||||||||||||||||||||||||||||||||||||||||
| Total other investments and notes receivable (not measured at fair value) | |||||||||||||||||||||||||||||||||||||||||||||||
| Total investments and notes receivable | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||
(a) As sponsor of certain private education loan securitizations, the Company is required to provide a certain level of risk retention, and has purchased bonds issued in such securitizations to satisfy this requirement. The Company must retain these investment securities until the aggregate outstanding loan or bond balances in the securitization are met, at which time the Company can sell its investment securities (bonds) to a third party. The bonds purchased to satisfy the risk retention requirement are included in the above table and as of March 31, 2026, the par value and fair value of these securities was $187.5 million and $172.9 million, respectively.
(b) The Company has partial ownership in certain securitizations. As of the latest remittance reports filed by the various trusts prior to or as of March 31, 2026, the Company's ownership correlates to approximately $990 million, $370 million, and $280 million of consumer, private education, and federally insured student loans, respectively, included in these securitizations.
20
The Company has recorded an allowance for credit losses (and related provision expense) related to certain loan securitizations, due primarily to an increase in cumulative loss expectations, of $4.1 million and $1.5 million during the three months ended March 31, 2026 and 2025, respectively, which is included in “provision for beneficial interests” on the consolidated statements of income.
(c) As of March 31, 2026, the Company has contributed a total of $360.3 million and its third-party partners have contributed $418.7 million in tax equity to renewable energy solar partnerships. The Company's carrying value in a solar project is reduced by tax credits earned when the solar project is placed in service. As of March 31, 2026, the Company and its third-party partners have earned $420.1 million and $456.0 million, respectively, of tax credits on those projects that remain outstanding. The Company’s negative carrying value related to solar tax partnerships on the consolidated balance sheet of $268.5 million as of March 31, 2026 represents the sum of total tax credits earned on solar projects placed in service through March 31, 2026 and the calculated HLBV cumulative net losses being larger than the total contributions made by the Company and its syndication partners on such projects. The negative carrying value as of March 31, 2026, excluding the portion owned by syndication partners that is reflected as "noncontrolling interests" on the consolidated balance sheet, was $123.4 million.
The following table presents (i) HLBV losses recognized by the Company and gains recognized upon the sale of partnership interests, including amounts attributable to third-party noncontrolling interest partners (syndication partners), which are included in “other, net” in "other income (expense)" on the consolidated statements of income, (ii) solar net losses attributed to noncontrolling interest partners included in “net loss attributable to noncontrolling interests” on the consolidated statements of income, and (iii) the recognized pre-tax net (loss) gain attributable to the Company:
| Three months ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Losses from HLBV accounting (gross) | $ | ( | ( | ||||||||
| Gains from sales (gross) | |||||||||||
| (Losses) gains from solar investments, (gross) | ( | ||||||||||
| Less: losses attributable to noncontrolling members, net | ( | ( | |||||||||
| Net (loss) gain attributable to the Company | $ | ( | |||||||||
The following table presents, by remaining contractual maturity, the amortized cost and fair value of debt securities as of March 31, 2026:
| As of March 31, 2026 | |||||||||||||||||||||||||||||
| 1 year or less | After 1 year through 5 years | After 5 years through 10 years | After 10 years | Total | |||||||||||||||||||||||||
| Available-for-sale asset-backed securities | |||||||||||||||||||||||||||||
| Non-Nelnet Bank: | |||||||||||||||||||||||||||||
| FFELP loan | $ | ||||||||||||||||||||||||||||
| FFELP loan and other debt securities - restricted | |||||||||||||||||||||||||||||
| Private education loan | |||||||||||||||||||||||||||||
| Other debt securities | |||||||||||||||||||||||||||||
| Total Non-Nelnet Bank | |||||||||||||||||||||||||||||
| Fair value | |||||||||||||||||||||||||||||
| Nelnet Bank: | |||||||||||||||||||||||||||||
| FFELP loan | |||||||||||||||||||||||||||||
| Private education loan | |||||||||||||||||||||||||||||
| Other debt securities | |||||||||||||||||||||||||||||
| Total Nelnet Bank | |||||||||||||||||||||||||||||
| Fair value | |||||||||||||||||||||||||||||
| Total available-for-sale asset-backed securities at amortized cost | $ | ||||||||||||||||||||||||||||
| Total available-for-sale asset-backed securities at fair value | $ | ||||||||||||||||||||||||||||
| Held-to-maturity asset-backed securities | |||||||||||||||||||||||||||||
| Nelnet Bank: | |||||||||||||||||||||||||||||
| FFELP loan - amortized cost | $ | ||||||||||||||||||||||||||||
| FFELP loan - fair value | $ | ||||||||||||||||||||||||||||
| Beneficial interest in loan securitizations (a): | |||||||||||||||||||||||||||||
| Amortized cost | $ | ||||||||||||||||||||||||||||
| Fair value | $ | ||||||||||||||||||||||||||||
(a) The Company's beneficial interest in loan securitizations is not due at a single maturity date.
21
The following table summarizes the unrealized positions for held-to-maturity asset-backed securities investments and the beneficial interest in loan securitizations as of March 31, 2026:
| Carrying value | Gross unrealized gains | Gross unrealized losses | Fair value | ||||||||||||||||||||
| Asset-backed securities | $ | ( | |||||||||||||||||||||
| Beneficial interest in loan securitizations | ( | ||||||||||||||||||||||
The following table presents securities classified as available-for-sale that have gross unrealized losses as of March 31, 2026 and the fair value of such securities as of March 31, 2026. These securities are segregated between investments that had been in a continuous unrealized loss position for less than twelve months and twelve months or more, based on the point in time that the fair value declined below the amortized cost basis. All securities in the table below have been evaluated to determine if a credit loss exists. As part of that assessment, the Company concluded it currently has the intent and ability to retain these investments, and none of the unrealized losses were due to credit losses.
| As of March 31, 2026 | |||||||||||||||||||||||||||||||||||
| Unrealized loss position less than 12 months | Unrealized loss position 12 months or more | Total | |||||||||||||||||||||||||||||||||
| Unrealized loss | Fair value | Unrealized loss | Fair value | Unrealized loss | Fair value | ||||||||||||||||||||||||||||||
| Available-for-sale asset-backed securities | |||||||||||||||||||||||||||||||||||
| Non-Nelnet Bank: | |||||||||||||||||||||||||||||||||||
| FFELP loan | $ | ( | ( | ( | |||||||||||||||||||||||||||||||
| FFELP loan and other debt securities - restricted | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Private education loan | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Other debt securities | ( | ( | |||||||||||||||||||||||||||||||||
| Total Non-Nelnet Bank | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Nelnet Bank: | |||||||||||||||||||||||||||||||||||
| FFELP loan | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Private education loan | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Other debt securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Total Nelnet Bank | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Total available-for-sale asset-backed securities | $ | ( | ( | ( | |||||||||||||||||||||||||||||||
The following table summarizes the gross proceeds received and gross realized gains and losses related to sales of available-for-sale asset-backed securities:
| Three months ended | |||||||||||
| March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Gross proceeds from sales | $ | ||||||||||
| Gross realized gains | $ | ||||||||||
| Gross realized losses | ( | ( | |||||||||
| Net gains | $ | ||||||||||
22
Equity securities and funds measured at net asset value
The following table summarizes the unrealized gains and losses related to equity securities and funds measured at net asset value held at March 31, 2026 and 2025. Realized and unrealized gains/losses are included in "other, net" in "other income (expense)" on the consolidated statements of income.
| Three months ended | |||||||||||
| March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Unrealized (losses) gains recognized during the period, net | $ | ( | |||||||||
| Less: realized losses on securities sold during the period, net | |||||||||||
| Unrealized (losses) gains on securities still held as of the reporting date, net | $ | ( | |||||||||
6. Business Combination
Nelnet Diversified Services Canada, Inc.
On February 2, 2026, the Company acquired 100 percent of the outstanding stock of a wholly owned subsidiary of DH Corporation for total consideration of CAD $144.2 million (USD $105.8 million). The acquired entity was subsequently renamed Nelnet Diversified Services Canada, Inc. ("NDS Canada"). NDS Canada is a Canadian student loan servicing business that services the Canada Student Loan Program for federal and provincial student financial assistance programs, including loan origination, disbursement, servicing, customer support, delinquency management, and reporting. The acquisition of NDS Canada has expanded the Company's portfolio of loans it services. The operating results of NDS Canada are included in the Loan Servicing and Systems operating segment.
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date. The fair value of the assets and liabilities related to NDS Canada are subject to refinement as the Company completes its analysis relative to the fair values at the date of acquisition.
| Restricted cash - due to customers | $ | ||||
| Accounts receivable | |||||
| Property and equipment | |||||
| Other assets | |||||
| Intangible assets | |||||
| Excess cost over fair value of net assets acquired (goodwill) | |||||
| Other liabilities | ( | ||||
| Due to customers | ( | ||||
| Net assets acquired | $ | ||||
The $69.1 million of acquired intangible assets on the date of acquisition had a weighted-average useful life of approximately 6 years. The intangible assets that made up this amount include customer relationships of $42.8 million (7-year useful life) and software of $26.3 million (5-year useful life).
The $47.0 million of goodwill was assigned to the Loan Servicing and Systems operating segment and is not expected to be deductible for tax purposes. The amount allocated to goodwill was primarily attributed to expected future economic benefits associated with the Company's servicing expertise and scale supporting NDS Canada's ongoing operations, along with the deferred tax liability related to the differences between the carrying amounts and tax bases of acquired identifiable intangible assets.
Nelnet Canada's assets acquired and liabilities assumed were recorded by the Company at their respective fair values at the date of acquisition, and Nelnet Canada's operating results from the date of acquisition forward are included in the Company's consolidating operating results. The pro forma impacts of the Nelnet Canada acquisition on the Company's historical results prior to the acquisition were not material.
23
7. Intangible Assets
Intangible assets consisted of the following:
Weighted-average remaining useful life as of March 31, 2026 (months) | |||||||||||||||||
| As of | As of | ||||||||||||||||
| March 31, 2026 | December 31, 2025 | ||||||||||||||||
| Amortizable intangible assets, net: | |||||||||||||||||
Customer relationships (net of accumulated amortization of $ | $ | ||||||||||||||||
Computer software (net of accumulated amortization of $ | |||||||||||||||||
| Total amortizable intangible assets, net | $ | ||||||||||||||||
The Company recorded amortization expense on its intangible assets of $3.7 million and $1.5 million for the three months ended March 31, 2026 and 2025, respectively. The Company will continue to amortize intangible assets over their remaining useful lives. As of March 31, 2026, the Company estimates it will record amortization expense as follows:
| 2026 (April 1 - December 31) | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| 2031 and thereafter | |||||
| $ | |||||
8. Goodwill
The change in the carrying amount of goodwill by reportable operating segment was as follows:
| Nelnet Financial Services | |||||||||||||||||||||||||||||||||||||||||
| Loan Servicing and Systems | Education Technology Services and Payments | Asset Generation and Management | Nelnet Bank | NFS Other Operating Segments | Corporate and Other Activities | Total | |||||||||||||||||||||||||||||||||||
| Goodwill as of December 31, 2025 | $ | ||||||||||||||||||||||||||||||||||||||||
| Goodwill acquired during the period | |||||||||||||||||||||||||||||||||||||||||
| Effect of foreign currency fluctuations | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Goodwill as of March 31, 2026 | $ | ||||||||||||||||||||||||||||||||||||||||
9. Bank Deposits
The following table summarizes Nelnet Bank’s deposits, excluding intercompany deposits:
| As of | As of | ||||||||||
| March 31, 2026 | December 31, 2025 | ||||||||||
| Retail and other savings | $ | ||||||||||
| Brokered CDs, net of brokered deposit fees | |||||||||||
| Retail and other CDs, net of issuance fees | |||||||||||
| Total interest-bearing deposits | $ | ||||||||||
As of March 31, 2026 and December 31, 2025, Nelnet Bank had intercompany deposits from Nelnet, Inc. and its subsidiaries totaling $212.2 million and $93.8 million, respectively, including a $40.0 million pledged deposit from Nelnet, Inc. as required under a Capital and Liquidity Maintenance Agreement with the FDIC. All intercompany deposits held at Nelnet Bank are eliminated for consolidated financial reporting purposes.
24
The following table presents the remaining maturities of certificates of deposit as of March 31, 2026:
| One year or less | $ | ||||
| After one year to two years | |||||
| After two years to three years | |||||
| After three years to four years | |||||
| After four years to five years | |||||
| After five years | |||||
| Total | $ | ||||
Deposits that exceeded the FDIC insurance limits as of March 31, 2026 were $41.1 million, the majority of which were intercompany deposits from Nelnet, Inc. and its subsidiaries.
10. Earnings per Common Share
The following table presents the components used to calculate basic and diluted earnings per share. The Company applies the two-class method in computing both basic and diluted earnings per share, which requires the calculation of separate earnings per share amounts for common stock and unvested share-based awards. Unvested share-based awards that contain nonforfeitable rights to dividends are considered securities which participate in undistributed earnings with common stock.
| Common shareholders | Unvested restricted stock shareholders | Total | Common shareholders | Unvested restricted stock shareholders | Total | ||||||||||||||||||||||||||||||
| Three months ended March 31, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||||||||||||||
| Net income attributable to Nelnet, Inc. | $ | ||||||||||||||||||||||||||||||||||
| Denominator: | |||||||||||||||||||||||||||||||||||
Weighted-average common shares outstanding - basic and diluted | |||||||||||||||||||||||||||||||||||
| Earnings per share - basic and diluted | $ | ||||||||||||||||||||||||||||||||||
25
11. Segment Reporting
See note 16 of the notes to consolidated financial statements included in the 2025 Annual Report for a description of the Company's operating segments . The following tables present the results of each of the Company's reportable operating segments reconciled to the consolidated financial statements:
| Three months ended March 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reportable Segments | Reconciling Items | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan Servicing and Systems (LSS) | Education Technology Services and Payments (ETSP) | Asset Generation and Management | Nelnet Bank | Total Reportable Segments | NFS Other Operating Segments | Corporate and Other Activities | Eliminations/ Reclassifications | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Interest income: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan interest | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment interest | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest income | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less provision for loan losses | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less provision for beneficial interests | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income after provision | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| LSS revenue | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| ETSP revenue | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intersegment revenue | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reinsurance premiums earned | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Solar construction revenue | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other, net | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative settlements, net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative market value adjustments, net | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total other income (expense), net | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of services and expenses: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total cost of services | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Salaries and benefits | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reinsurance losses and underwriting expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Postage expense | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Servicing fees | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other expenses (a) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intersegment expenses, net | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total operating expenses | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income (loss) before income taxes | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Income tax (expense) benefit | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to Nelnet, Inc. | $ | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets as of March 31, 2026 | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
(a) Other expenses for each reportable segment includes:
LSS - occupancy, professional fees, software, and computer services and subscriptions.
ETSP - advertising, professional fees, analysis fees, computer services and subscriptions, and provision for losses.
AGM - trustee fees, subscriptions and memberships, professional fees, and travel.
Nelnet Bank - occupancy, marketing, consulting and professional fees, software, FDIC insurance, and management fee expense.
26
| Three months ended March 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reportable Segments | Reconciling Items | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan Servicing and Systems (LSS) | Education Technology Services and Payments (ETSP) | Asset Generation and Management | Nelnet Bank | Total Reportable Segments | NFS Other Operating Segments | Corporate and Other Activities | Eliminations/ Reclassifications | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Interest income: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan interest | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment interest | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest income | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less provision for loan losses | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less provision for beneficial interests | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income after provision | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| LSS revenue | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| ETSP revenue | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intersegment revenue | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reinsurance premiums earned | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Solar construction revenue | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other, net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative settlements, net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative market value adjustments, net | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total other income (expense), net | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of services and expenses: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total cost of services | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Salaries and benefits | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reinsurance losses and underwriting expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Postage expense | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Servicing fees | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other expenses (a) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intersegment expenses, net | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total operating expenses | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income (loss) before income taxes | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income tax (expense) benefit | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to Nelnet, Inc. | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets as of March 31, 2025 | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
(a) Other expenses for each reportable segment includes:
LSS - communications, professional fees, collection costs, software, and computer services and subscriptions.
ETSP - advertising, professional fees, analysis fees, computer services and subscriptions, and travel.
AGM - trustee fees and professional fees.
Nelnet Bank - occupancy, marketing, consulting and professional fees, software, FDIC insurance, and management fee expense.
| Three months ended March 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended March 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
27
12. Disaggregated Revenue
The following tables present disaggregated revenue for the Company's fee-based operating segments:
Loan Servicing and Systems
| Three months ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Department of Education loan servicing | $ | ||||||||||
| Canada Student Loan Program loan servicing (a) | |||||||||||
| Private education and consumer loan servicing | |||||||||||
| FFELP loan servicing | |||||||||||
| Software services | |||||||||||
| Outsourced services | |||||||||||
| Loan servicing and systems revenue | $ | ||||||||||
(a) On February 2, 2026, the Company acquired a Canadian student loan servicing business, NDS Canada. The operating results of NDS Canada are included in the Company's consolidated operating results beginning on the acquisition date. See note 6 for additional information.
Education Technology Services and Payments
| Three months ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Tuition payment plan services | $ | ||||||||||
| Payment processing | |||||||||||
| Education technology services | |||||||||||
| Other | |||||||||||
| Education technology services and payments revenue | $ | ||||||||||
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, | |||||||||||
| 2026 | 2025 | ||||||||||
| Investment activity, net | $ | ||||||||||
| Borrower late fee income | |||||||||||
| Administration/sponsor fee income | |||||||||||
| Investment advisory services (WRCM) | |||||||||||
| ALLO preferred return | |||||||||||
| Loss from solar investments, net | ( | ||||||||||
| Other | |||||||||||
| Other, net | $ | ||||||||||
28
13. Reinsurance
The following table presents reinsurance premiums written and earned and loss reserves, commissions, and broker fees:
| Three months ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Premiums written: | |||||||||||
| Assumed | $ | ||||||||||
| Ceded | ( | ( | |||||||||
| Net premiums written | $ | ||||||||||
| Premiums earned: | |||||||||||
| Assumed | $ | ||||||||||
| Ceded | ( | ( | |||||||||
| Net premiums earned | $ | ||||||||||
| Loss reserve, commissions, and broker fees: | |||||||||||
| Assumed | $ | ||||||||||
| Ceded | ( | ( | |||||||||
| Reinsurance losses and underwriting expenses | $ | ||||||||||
The Company’s loss reserve balance, net of amounts ceded to reinsurers, was $78.2 million and $72.3 million as of March 31, 2026 and December 31, 2025, respectively, which is included in "other liabilities" on the consolidated balance sheets.
14. Major Customer
The Company earns loan servicing revenue from a servicing contract with the U.S. Department of Education (the "Department") that became effective in April 2023 and has a five-year base period, with 2 two-year and 1 one-year possible extensions. Revenue earned by the Company related to this contract was $76.1 million and $87.4 million for the three months ended March 31, 2026 and 2025, respectively.
15. Fair Value
The following tables present the Company’s financial assets and liabilities that are measured at fair value on a recurring basis:
| As of March 31, 2026 | As of December 31, 2025 | ||||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | ||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||
| Investments: | |||||||||||||||||||||||||||||||||||
| Asset-backed debt securities - available-for-sale | $ | ||||||||||||||||||||||||||||||||||
| Equity securities | |||||||||||||||||||||||||||||||||||
| Equity securities measured at net asset value (a) | |||||||||||||||||||||||||||||||||||
| Total investments | |||||||||||||||||||||||||||||||||||
| Total assets | $ | ||||||||||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||||||||
| $ | |||||||||||||||||||||||||||||||||||
| Total liabilities | $ | ||||||||||||||||||||||||||||||||||
(a) In accordance with the Fair Value Measurements Topic of the FASB Accounting Standards Codification, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.
29
The following table summarizes the fair values of all of the Company’s financial instruments on the consolidated balance sheets. The methodologies for estimating the fair value of financial assets and liabilities are described in note 24 of the notes to consolidated financial statements included in the 2025 Annual Report.
| As of March 31, 2026 | |||||||||||||||||||||||||||||
| Fair value | Carrying value | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||||||||
| Loans receivable | $ | ||||||||||||||||||||||||||||
| Accrued loan interest receivable | |||||||||||||||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||||||||||||||
| Investments at fair value | |||||||||||||||||||||||||||||
| Investments - held-to-maturity asset-backed securities | |||||||||||||||||||||||||||||
| Notes receivable | |||||||||||||||||||||||||||||
| Beneficial interest in loan securitizations | |||||||||||||||||||||||||||||
| Restricted cash | |||||||||||||||||||||||||||||
| Restricted cash – due to customers | |||||||||||||||||||||||||||||
| Derivative instruments | |||||||||||||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||||||||
| Bonds and notes payable | |||||||||||||||||||||||||||||
| Accrued interest payable | |||||||||||||||||||||||||||||
| Bank deposits | |||||||||||||||||||||||||||||
| Due to customers | |||||||||||||||||||||||||||||
| Derivative instruments | |||||||||||||||||||||||||||||
| As of December 31, 2025 | |||||||||||||||||||||||||||||
| Fair value | Carrying value | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||||||||
| Loans receivable | $ | ||||||||||||||||||||||||||||
| Accrued loan interest receivable | |||||||||||||||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||||||||||||||
| Investments at fair value | |||||||||||||||||||||||||||||
| Investments - held-to-maturity asset-backed securities | |||||||||||||||||||||||||||||
| Notes receivable | |||||||||||||||||||||||||||||
| Beneficial interest in loan securitizations | |||||||||||||||||||||||||||||
| Restricted cash | |||||||||||||||||||||||||||||
| Restricted cash – due to customers | |||||||||||||||||||||||||||||
| Derivative instruments | |||||||||||||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||||||||
| Bonds and notes payable | |||||||||||||||||||||||||||||
| Accrued interest payable | |||||||||||||||||||||||||||||
| Bank deposits | |||||||||||||||||||||||||||||
| Due to customers | |||||||||||||||||||||||||||||
| Derivative instruments | |||||||||||||||||||||||||||||
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Management’s Discussion and Analysis of Financial Condition and Results of Operations is for the three months ended March 31, 2026 and 2025. All dollars are in thousands, except per share amounts, unless otherwise noted.)
The following discussion and analysis provides information that the Company’s management believes is relevant to an assessment and understanding of the consolidated results of operations and financial condition of the Company. The discussion and analysis should be read in conjunction with the Company’s consolidated financial statements included in the 2025 Annual Report.
30
Forward-looking and cautionary statements
This report contains forward-looking statements and information that are based on management's current expectations as of the date of this document. Statements that are not historical facts, including statements about the Company's plans and expectations for future financial condition, results of operations or economic performance, or that address management's plans and objectives for future operations, and statements that assume or are dependent upon future events, are forward-looking statements. The words “anticipate,” “assume,” “believe,” “continue,” “could,” “ensure,” “estimate,” “expect,” "focus," “forecast,” “future,” “intend,” “may,” "objective," “plan,” “potential,” “predict,” "pursue," “scheduled,” “should,” "strategy," “will,” “would,” and similar expressions, as well as statements in future tense, are intended to identify forward-looking statements.
The forward-looking statements are based on assumptions and analyses made by management in light of management's experience and its perception of historical trends, current conditions, expected future developments, and other factors that management believes are appropriate under the circumstances. These statements are subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause the actual results and performance to be materially different from any future results or performance expressed or implied by such forward-looking statements. These factors include, among others, the risks and uncertainties set forth in the “Risk Factors” section of the 2025 Annual Report and include such risks and uncertainties as:
•risks related to the ability to successfully maintain and increase allocated volumes of student loans serviced by the Company under existing and future servicing contracts with the Department, risks related to unfavorable contract modifications or interpretations, risks related to consistently meeting service requirements to avoid the assessment of performance penalties, and risks related to the Company's ability to comply with agreements with third-party customers for the servicing of Federal Direct Loan Program, Canada Student Loan Program, FFEL Program, private education, and consumer loans;
•loan portfolio risks such as credit risk, prepayment risk, interest rate basis and repricing risk, risks related to the use of derivatives to manage exposure to interest rate fluctuations, uncertainties regarding the expected benefits from purchased securitized and unsecuritized FFELP, private education, consumer, and other loans, or residual interests therein, and initiatives to purchase additional FFELP, private education, consumer, and other loans;
•financing and liquidity risks, including risks of changes in the interest rate environment;
•risks from changes in the terms of education loans and in the educational credit and services markets resulting from changes in applicable laws, regulations, and government programs and budgets;
•risks related to a breach of or failure in the Company's operational or information systems or infrastructure, or those of third-party vendors, including disclosure of confidential or personal information and/or damage to reputation resulting from cyber breaches;
•risks related to use of artificial intelligence;
•uncertainties inherent in forecasting future cash flows from student loan assets, including residual interests therein, and related asset-backed securitizations;
•risks related to the ability of Nelnet Bank to achieve its business objectives and effectively deploy loan and deposit strategies and achieve expected market penetration;
•risks related to the Company's solar tax equity partnerships, including risks of not being able to realize tax credits which remain subject to recapture by taxing authorities and risks from the impact of the enactment of the One Big Beautiful Bill that accelerates the expiration and phase out of solar energy credits;
•risks and uncertainties related to other initiatives (and anticipated income therefrom) including venture capital, real estate, reinsurance, acquisitions, and other activities, including activities that are intended to diversify the Company both within and outside of its historical core education-related businesses;
•risks and uncertainties associated with climate change; and
•risks and uncertainties associated with litigation matters, maintaining compliance with the extensive regulatory requirements applicable to the Company's businesses, and uncertainties inherent in the estimates and assumptions about future events that management is required to make in the preparation of the Company’s consolidated financial statements.
All forward-looking statements contained in this report are qualified by these cautionary statements and are made only as of the date of this document. Although the Company may from time to time voluntarily update or revise its prior forward-looking statements to reflect actual results or changes in the Company's expectations, the Company disclaims any commitment to do so except as required by law.
31
OVERVIEW
The Company is an operating holding company with primary businesses in consumer lending, loan servicing, payments, and technology-enabled services, many of which are focused on serving customers in the education sector. The Company conducts these activities both directly and through its wholly owned and majority-owned subsidiaries, and actively manages and operates its businesses on an integrated basis. Nelnet’s largest operating and technology platforms support loan servicing and education-related technology and payment solutions. A significant portion of the Company’s revenue is derived from net interest income earned on a portfolio of federally insured student loans, a substantial portion of which is serviced by the Company.
The Company has also broadened its operating business mix both within and beyond its historical education-focused activities. These businesses include banking and other financial services conducted through the Company’s bank and other subsidiaries, asset management and related customer-facing servicing, real estate development and management, reinsurance operations, renewable energy development, and selected strategic interests in early-stage, emerging growth, and other operating enterprises. The Company actively manages such businesses and holds interests in them for strategic and operational purposes.
GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments
The Company prepares its financial statements and presents its financial results in accordance with GAAP. However, it also provides additional non-GAAP financial information related to specific items management believes to be important in the evaluation of its operating results and performance. A reconciliation of the Company's GAAP net income to Non-GAAP net income excluding derivative market value adjustments, and a discussion of why the Company believes providing this additional information is useful to investors, are provided below.
| Three months ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| GAAP net income attributable to Nelnet, Inc. | $ | 71,126 | 82,560 | ||||||||
| Realized and unrealized derivative market value adjustments (a) | (1,587) | 6,324 | |||||||||
| Tax effect (b) | 381 | (1,519) | |||||||||
| Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments | $ | 69,920 | 87,365 | ||||||||
| Earnings per share: | |||||||||||
| GAAP net income attributable to Nelnet, Inc. | $ | 1.97 | 2.26 | ||||||||
| Realized and unrealized derivative market value adjustments (a) | (0.04) | 0.17 | |||||||||
| Tax effect (b) | 0.01 | (0.04) | |||||||||
| Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments | $ | 1.94 | 2.39 | ||||||||
(a) "Derivative market value adjustments" includes both the realized portion of gains and losses (corresponding to variation margin received or paid on derivative instruments that are settled daily at a central clearinghouse) and the unrealized portion of gains and losses that are caused by changes in fair values of derivatives which do not qualify for "hedge treatment" under GAAP. "Derivative market value adjustments" does not include "derivative settlements" that represent the cash paid or received during the respective period to settle with derivative instrument counterparties the economic effect of the Company's derivative instruments based on their contractual terms.
The accounting for derivatives requires that changes in the fair value of derivative instruments be recognized currently in earnings, with no fair value adjustment of the hedged item, unless specific hedge accounting criteria are met. Management has structured all of the Company’s derivative transactions with the intent that each is economically effective; however, the majority of the Company’s derivative instruments do not qualify for hedge accounting in the consolidated financial statements. As a result, the change in fair value for the derivative instruments that do not qualify for hedge accounting is reported in current period earnings with no consideration for the corresponding change in fair value of the hedged item. Under GAAP, the cumulative net realized and unrealized gain or loss caused by changes in fair values of derivatives in which the Company plans to hold to maturity will generally equal zero over the life of the contract. However, the net realized and unrealized gain or loss during any given reporting period fluctuates significantly from period to period.
The Company believes these point-in-time estimates of asset and liability values related to its derivative instruments that are subject to interest rate fluctuations are subject to volatility mostly due to timing and market factors beyond the control of management, and affect the period-to-period comparability of the results of operations. Accordingly, the Company’s management utilizes operating results excluding these items for comparability purposes when making decisions regarding the Company’s performance and in presentations with credit rating agencies, lenders, and investors. Consequently, the Company reports this non-GAAP information because the Company believes that it provides additional information regarding operational and performance indicators that are closely assessed by management and represents what earnings would have been had these derivatives qualified for hedge accounting. There is no comprehensive, authoritative guidance for the presentation of such non-GAAP information, which is only meant to supplement GAAP results by providing additional information that management utilizes to assess performance.
The accounting for derivatives requires that changes in the fair value of derivative instruments be recognized currently in earnings, with no fair value adjustment of the hedged item, unless specific hedge accounting criteria are met. Management has structured all of the Company’s derivative transactions with the intent that each is economically effective; however, the majority of the Company’s derivative instruments do not qualify for hedge accounting in the consolidated financial statements. As a result, the change in fair value for the derivative instruments that do not qualify for hedge accounting is reported in current period earnings with no consideration for the corresponding change in fair value of the hedged item. Under GAAP, the cumulative net realized and unrealized gain or loss caused by changes in fair values of derivatives in which the Company plans to hold to maturity will generally equal zero over the life of the contract. However, the net realized and unrealized gain or loss during any given reporting period fluctuates significantly from period to period.
The Company believes these point-in-time estimates of asset and liability values related to its derivative instruments that are subject to interest rate fluctuations are subject to volatility mostly due to timing and market factors beyond the control of management, and affect the period-to-period comparability of the results of operations. Accordingly, the Company’s management utilizes operating results excluding these items for comparability purposes when making decisions regarding the Company’s performance and in presentations with credit rating agencies, lenders, and investors. Consequently, the Company reports this non-GAAP information because the Company believes that it provides additional information regarding operational and performance indicators that are closely assessed by management and represents what earnings would have been had these derivatives qualified for hedge accounting. There is no comprehensive, authoritative guidance for the presentation of such non-GAAP information, which is only meant to supplement GAAP results by providing additional information that management utilizes to assess performance.
(b) The tax effects are calculated by multiplying the realized and unrealized derivative market value adjustments by the applicable statutory income tax rate.
32
Operating Segments
The Company's reportable operating segments are described in note 1 of the notes to consolidated financial statements included in the 2025 Annual Report. They include:
•Loan Servicing and Systems (LSS) - referred to as Nelnet Diversified Services (NDS)
•Education Technology Services and Payments (ETSP) - referred to as Nelnet Business Services (NBS)
•Asset Generation and Management (AGM), part of the Nelnet Financial Services (NFS) division
•Nelnet Bank, part of the NFS division
The Company earns fee-based revenue through its NDS and NBS reportable operating segments. The Company earns net interest income on its loan portfolio, consisting primarily of FFELP loans, through its AGM reportable operating segment. This segment is expected to generate significant amounts of cash as the FFELP portfolio amortizes. The Company actively works to maximize the amount and timing of cash flows generated from its FFELP portfolio and seeks to acquire additional loan assets to leverage its servicing scale and expertise to generate incremental earnings and cash flow. Nelnet Bank operates as an internet industrial bank franchise focused on the private education and unsecured consumer loan markets, with a home office in Salt Lake City, Utah.
In addition to AGM and Nelnet Bank being part of the NFS division, NFS's other operating segments that are not reportable include the operating results of:
•Nelnet Insurance Services, which primarily includes multiple reinsurance treaties on property and casualty policies
•Whitetail Rock Capital Management, LLC (WRCM), the Company's U.S. Securities and Exchange Commission (SEC)-registered investment advisor subsidiary
•The Company’s ownership and activities in real estate
•The Company’s ownership and management of its bond portfolio (primarily student loan and other asset-backed securities)
Other business activities and operating segments that are not reportable and not part of the NFS division are combined and included in Corporate and Other Activities ("Corporate"). Corporate includes the following items:
•Shared service activities related to human resources, accounting, legal, enterprise risk management, information technology, occupancy, and marketing. These costs are allocated to each operating segment based on estimated use of such activities and services
•Corporate costs and overhead functions not allocated to operating segments, including executive management, innovation initiatives, and other holding company organizational costs
•The operating results of the Company’s participation in renewable energy solar developments through tax equity structures and administrative and management services provided by the Company on solar tax equity investments made by third parties
•The operating results of Nelnet Renewable Energy (NRE), a solar engineering, procurement, and construction business, which the Company sold during the fourth quarter of 2025, but retained a limited number of construction contracts to complete following the sale
•The operating results of certain of the Company’s investment activities, including its ownership in ALLO and early-stage and emerging growth companies (venture capital)
•Interest income earned on cash balances held at the corporate level
•Other product and service offerings that are not considered reportable operating segments
33
The information below presents the operating results (net income (loss) before taxes) for each of the Company's reportable and certain other operating segments reconciled to the consolidated financial statements. See "Results of Operations" for additional detail regarding each reportable operating segment, the NFS operating segments, and Corporate and Other Activities under this Item 2.
| Three months ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| NDS | $ | 19,801 | 18,512 | ||||||||
| NBS | 47,813 | 47,462 | |||||||||
| Nelnet Financial Services division: | |||||||||||
| AGM | 30,520 | 29,834 | |||||||||
| Nelnet Bank | 9,219 | 1,952 | |||||||||
| NFS other operating segments | (742) | 10,060 | |||||||||
| Corporate: | |||||||||||
| Unallocated shared services and corporate costs | (11,106) | (9,988) | |||||||||
| Solar tax equity | (22,044) | 1,205 | |||||||||
| Other corporate operating segments | 2,200 | 7,104 | |||||||||
| Net income before taxes | 75,661 | 106,140 | |||||||||
| Income tax expense | (20,061) | (25,010) | |||||||||
| Net loss attributable to noncontrolling interests | 15,526 | 1,430 | |||||||||
| Net income | $ | 71,126 | 82,560 | ||||||||
Impact of Transactions on 2026 Operating Results
Operating results for the three months ended March 31, 2026 were influenced by several transactions that significantly affected certain components of income. The impacts of these items are summarized below to provide additional context for the Company’s financial performance during the period.
AGM Operating Segment
Growth in Pay Later receivable volumes contributed to higher loan interest income during the quarter, along with increased provision for loan losses and borrower late fee income. AGM began acquiring Pay Later receivables during the third quarter of 2025; these receivables are generally purchased at a discount and have short expected durations. As of March 31, 2026, the balance of Pay Later receivables was $766.2 million.
In addition, AGM holds interests in certain joint ventures engaged in the acquisition and management of loan portfolios. During the three months ended March 31, 2026, AGM recognized $15.4 million of income from these joint ventures.
Equity Investments
During the three months ended March 31, 2026, the Company recognized $10.8 million of losses related to marketable equity securities with readily determinable fair values. These losses were primarily unrealized and resulted from changes in market values during the period. The majority of these losses are included in “NFS other operating segments” in the table above.
Solar Tax Equity
During the three months ended March 31, 2026, the Company recognized $22.5 million of losses related to its solar tax equity partnerships. These losses reflect the accounting treatment required under the hypothetical liquidation at book value (“HLBV”) method and were influenced by contributions made to these partnerships in recent periods. Losses attributable to noncontrolling interest partners totaled $13.4 million for the quarter and are included in “net loss attributable to noncontrolling interests.”
The Company consolidates its solar tax equity partnerships because it holds management and control rights, with third‑party investor interests reflected as noncontrolling interests. The HLBV method commonly results in the recognition of accelerated losses in the early years of a partnership.
34
CONSOLIDATED RESULTS OF OPERATIONS
An analysis of the Company's consolidated operating results for the three months ended March 31, 2026 compared with the same period in 2025 is provided below.
The Company operates as distinct reportable operating segments as described above. For a reconciliation of the reportable segment operating results to the consolidated results of operations, see note 11 of the notes to consolidated financial statements included under Part I, Item 1 of this report. Since the Company monitors and assesses its operations and results based on these segments, the discussion following the consolidated results of operations is presented on a reportable segment basis.
| Three months ended | |||||||||||||||||
| March 31, | |||||||||||||||||
| 2026 | 2025 | Additional information | |||||||||||||||
| Loan interest | $ | 171,024 | 166,439 | Increase was due to an increase in the average balance of consumer and other loans held within the AGM and Nelnet Bank operating segments, partially offset by a decrease in the average balance of FFELP loans at AGM and gross yield earned on loans. | |||||||||||||
| Investment interest | 40,202 | 41,389 | Includes income from operating cash, investments, and restricted cash in asset-backed securitizations. Decrease was due to a decrease in interest rates and interest earned on restricted cash in asset-backed securitizations due to lower balances. These decreases were partially offset by an increase in the average balance of investments. | ||||||||||||||
| Total interest income | 211,226 | 207,828 | |||||||||||||||
| Interest expense | 109,583 | 125,114 | Decrease was due to a decrease in the average balance of debt outstanding and decrease in cost of funds. These decreases were partially offset by an increase in interest expense on larger deposit balances at Nelnet Bank. | ||||||||||||||
| Net interest income | 101,643 | 82,714 | |||||||||||||||
| Less provision for loan losses | 53,244 | 15,337 | Represents the current period provision to reflect the lifetime expected credit losses related to the Company's loan portfolio. The increase was driven by the significant increase in the volume of Pay Later receivables acquired since the third quarter of 2025. See note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional factors impacting provision for loan losses for the periods presented. | ||||||||||||||
| Less provision for beneficial interests | 4,130 | 1,510 | Represents the current period provision expense related to the Company’s beneficial interest in certain loan securitizations. See note 5 of the notes to consolidated financial statements in this report for additional information. | ||||||||||||||
| Net interest income after provision | 44,269 | 65,867 | |||||||||||||||
| Other income (expense): | |||||||||||||||||
| LSS revenue | 127,842 | 120,741 | See LSS operating segment - results of operations. | ||||||||||||||
| ETSP revenue | 154,436 | 147,330 | See ETSP operating segment - results of operations. | ||||||||||||||
| Reinsurance premiums earned | 22,536 | 24,687 | Represents premiums earned, net of ceded portion, from reinsurance treaties on primarily property and casualty policies. Decrease was primarily due to timing of premium recognition under certain reinsurance treaties. | ||||||||||||||
| Solar construction revenue | — | 3,995 | Represents revenue earned from NRE providing solar construction services. The Company sold NRE in November 2025. | ||||||||||||||
| Other, net | 10,437 | 24,603 | See table below for the components of "other, net." | ||||||||||||||
| Derivative settlements, net | 580 | 746 | The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate volatility. | ||||||||||||||
| Derivative market value adjustments, net | 1,587 | (6,324) | Includes the realized and unrealized gains and losses that are caused by changes in fair values of derivatives which do not qualify for "hedge treatment" under GAAP. | ||||||||||||||
| Total other income (expense), net | 317,418 | 315,778 | |||||||||||||||
| Cost of services and expenses: | |||||||||||||||||
| Loan servicing contract fulfillment and acquisition costs | 2,087 | 1,633 | Represents primarily the amortization of previously capitalized contract fulfillment costs. | ||||||||||||||
| Cost to provide education technology services and payments | 49,953 | 48,047 | Represents direct costs to provide payment processing and instructional services in ETSP. See ETSP operating segment - results of operations. | ||||||||||||||
| Cost to provide solar construction services | — | 7,828 | Represents direct costs related to NRE providing solar construction services. The Company sold NRE in November 2025. | ||||||||||||||
| Total cost of services | 52,040 | 57,508 | |||||||||||||||
| Salaries and benefits | 139,371 | 138,223 | Increase was primarily due to higher headcount at the ETSP operating segment to support the growth of its customer base and the investment in the development of new technologies, as well as increased headcount in the NFS division to support growth. These increases were partially offset by lower headcount in the LSS operating segment, reflecting ongoing cost-efficiency initiatives. | ||||||||||||||
| Depreciation and amortization | 9,170 | 9,255 | Includes depreciation of property and equipment and the amortization of intangibles from prior business acquisitions. Decrease was primarily due to certain information technology activities moved to cloud computing and such expenses classified as other expenses. These decreases were partially offset by an increase in amortization due to the acquisition of NDS Canada during the first quarter of 2026. | ||||||||||||||
| Reinsurance losses and underwriting expenses | 23,605 | 22,212 | Represents case reserve, estimated loss reserve, and amortization of acquisition costs, which consist primarily of commissions and brokerage expenses, net of ceded portion, from reinsurance treaties on primarily property and casualty policies. | ||||||||||||||
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| Other expenses | 61,840 | 48,307 | Includes expenses such as postage and distribution, consulting and professional fees, servicing fees, marketing, travel, communications, and certain information technology-related costs. Increase was primarily due to higher legal and transition service costs related to closing the NDS Canada acquisition and subsequent integration activities, as well as increased expenses related to certain information technology activities moved to cloud computing. | ||||||||||||||
| Total operating expenses | 233,986 | 217,997 | |||||||||||||||
| Income before income taxes | 75,661 | 106,140 | |||||||||||||||
| Income tax expense | (20,061) | (25,010) | The effective tax rate was 22.00% and 23.25% for the three months ended March 31, 2026 and 2025, respectively. The Company expects its effective tax rate will range between 22.0% and 24.5% for the remainder of 2026. | ||||||||||||||
| Net income | 55,600 | 81,130 | |||||||||||||||
| Net loss attributable to noncontrolling interests | 15,526 | 1,430 | Represents the net loss attributable to the holders of noncontrolling membership interests, the majority of which are related to renewable energy solar developments. | ||||||||||||||
| Net income attributable to Nelnet, Inc. | $ | 71,126 | 82,560 | ||||||||||||||
| Additional information: | See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional information about non-GAAP financial information. | ||||||||||||||||
| Net income attributable to Nelnet, Inc. | $ | 71,126 | 82,560 | ||||||||||||||
| Derivative market value adjustments, net | (1,587) | 6,324 | |||||||||||||||
| Tax effect | 381 | (1,519) | |||||||||||||||
| Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments | $ | 69,920 | 87,365 | ||||||||||||||
The following table summarizes the components of "other, net" in "other income (expense)" on the consolidated statements of income:
| Three months ended March 31, | |||||||||||||||||
| 2026 | 2025 | Additional information | |||||||||||||||
| Investment activity, net (a) | $ | 15,169 | 5,161 | See note (b) below for additional information. | |||||||||||||
| Borrower late fee income | 8,457 | 1,587 | See NFS division - results of operations - AGM operating segment. | ||||||||||||||
| Administration/sponsor fee income | 1,549 | 1,305 | See NFS division - results of operations - AGM operating segment. | ||||||||||||||
| Investment advisory services (WRCM) | 1,336 | 1,473 | See NFS division - results of operations - NFS other operating segments. | ||||||||||||||
| ALLO preferred return | 978 | 8,416 | See Corporate - results of operations. | ||||||||||||||
| Loss from solar investments, net | (22,531) | 456 | See Corporate - results of operations and note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report. | ||||||||||||||
| Other | 5,479 | 6,205 | |||||||||||||||
| Other, net | $ | 10,437 | 24,603 | ||||||||||||||
(a) The Company anticipates fluctuations in future periodic earnings resulting from investment purchases, sales, and valuation adjustments.
(b) Investment activity by operating segment and investment type follows:
| Real Estate | Venture Capital and Funds | Equity Securities | Bonds | Total | Real Estate | Venture Capital and Funds | Equity Securities | Bonds | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NFS - AGM | $ | — | 15,361 | — | — | 15,361 | — | 1,047 | — | — | 1,047 | ||||||||||||||||||||||||||||||||||||||||||||||||
| NFS - Nelnet Bank | — | 1,067 | — | 333 | 1,400 | — | (62) | — | 287 | 225 | |||||||||||||||||||||||||||||||||||||||||||||||||
| NFS - Other Operating Segments | 2,733 | — | (9,658) | 1,658 | (5,267) | (1,643) | — | — | 1,040 | (603) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate | — | 4,803 | (1,128) | — | 3,675 | — | 4,492 | — | — | 4,492 | |||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 2,733 | 21,231 | (10,786) | 1,991 | 15,169 | (1,643) | 5,477 | — | 1,327 | 5,161 | |||||||||||||||||||||||||||||||||||||||||||||||||
36
LOAN SERVICING AND SYSTEMS OPERATING SEGMENT – RESULTS OF OPERATIONS
On February 2, 2026, the Company acquired a Canadian student loan servicing business for CAD $144.2 million (USD $105.8 million). The acquired business (“NDS Canada”) delivers technology-enabled student loan servicing for governments and a financial institution, managing 2.7 million borrowers on proprietary platforms. Beginning on the acquisition date, the operating results of NDS Canada are included in the Loan Servicing and Systems reportable operating segment.
Summary and Comparison of Operating Results
| Three months ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Interest income | $ | 591 | 721 | ||||||||
Loan servicing and systems revenue (see disaggregated revenue by service offering below) | 127,842 | 120,741 | |||||||||
| Intersegment servicing revenue | 5,006 | 5,684 | |||||||||
| Other income | (211) | 112 | |||||||||
| Total other income | 132,637 | 126,537 | |||||||||
| Contract fulfillment and acquisition costs | 2,087 | 1,633 | |||||||||
| Salaries and benefits | 67,621 | 69,574 | |||||||||
| Depreciation and amortization | 4,002 | 2,654 | |||||||||
| Postage expense | 8,805 | 7,575 | |||||||||
| Other expenses | 14,193 | 10,832 | |||||||||
| Intersegment expenses | 16,719 | 16,478 | |||||||||
| Total operating expenses | 111,340 | 107,113 | |||||||||
| Income before income taxes | 19,801 | 18,512 | |||||||||
| Income tax expense | (4,752) | (4,443) | |||||||||
| Net income | $ | 15,049 | 14,069 | ||||||||
| GAAP before tax operating margin | 15.2 | % | 14.8 | % | |||||||
| Amortization expense related to acquired intangibles from NDS Canada acquisition | 1.4 | — | |||||||||
| Non-GAAP before tax operating margin, excluding amortization expense (a) | 16.6 | % | 14.8 | % | |||||||
(a) Before tax operating margin, excluding amortization expense, is a non-GAAP measure of before tax operating profitability as a percentage of revenue, and for the LSS segment is calculated as income before income taxes (less amortization expense related to the acquired intangibles from the NDS Canada acquisition that was $1.9 million for the three months ended March 31, 2026) divided by the total of loan servicing and systems revenue (less contract fulfillment and acquisition costs), intersegment servicing revenue, and other income. The Company uses this metric to monitor and assess the segment’s performance, manage operating costs, identify and evaluate business trends affecting the segment, and make strategic decisions, and believes that it provides additional information to facilitate an understanding of the operating performance of the segment and provides a meaningful comparison of the results of operations between periods.
Before‑tax operating margin, excluding amortization expense, improved primarily due to lower salaries and benefits associated with headcount reductions, excluding the impact of employees added through the NDS Canada acquisition, reflecting ongoing cost-efficiency initiatives.
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Loan Servicing Volumes
| As of | |||||||||||||||||||||||||||||||||||
| March 31, 2026 | December 31, 2025 | September 30, 2025 | June 30, 2025 | March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||
| Servicing volume (dollars in millions): | |||||||||||||||||||||||||||||||||||
| Department of Education | $ | 431,049 | 434,479 | 458,679 | 465,689 | 482,786 | 489,877 | ||||||||||||||||||||||||||||
| Canada Student Loan Program | 42,692 | — | — | — | — | — | |||||||||||||||||||||||||||||
| FFELP | 11,195 | 11,594 | 11,982 | 12,386 | 12,826 | 13,260 | |||||||||||||||||||||||||||||
| Private and consumer | 40,785 | 40,088 | 38,060 | 38,018 | 46,728 | 29,226 | |||||||||||||||||||||||||||||
| Total | $ | 525,721 | 486,161 | 508,721 | 516,093 | 542,340 | 532,363 | ||||||||||||||||||||||||||||
| Number of servicing borrowers: | |||||||||||||||||||||||||||||||||||
| Department of Education | 11,048,314 | 11,426,789 | 12,387,665 | 12,694,386 | 13,453,127 | 14,049,550 | |||||||||||||||||||||||||||||
| Canada Student Loan Program | 2,708,392 | — | — | — | — | — | |||||||||||||||||||||||||||||
| FFELP | 443,028 | 463,109 | 482,696 | 502,205 | 524,421 | 549,861 | |||||||||||||||||||||||||||||
| Private and consumer | 1,327,471 | 1,349,414 | 1,325,037 | 1,326,451 | 1,350,999 | 1,168,293 | |||||||||||||||||||||||||||||
| Total | 15,527,205 | 13,239,312 | 14,195,398 | 14,523,042 | 15,328,547 | 15,767,704 | |||||||||||||||||||||||||||||
| Number of remote hosted borrowers: | 2,824,963 | 2,886,458 | 2,839,493 | 2,056,358 | 1,427,800 | 842,200 | |||||||||||||||||||||||||||||
Loan servicing and systems revenue
The following table presents disaggregated revenue by service offering for each reporting period:
| Three months ended March 31, | |||||||||||||||||
| 2026 | 2025 | Additional information | |||||||||||||||
| Department of Education loan servicing | $ | 76,119 | 87,358 | Represents revenue from the Company’s servicing contract with the Department. The decrease was primarily attributable to a reduction in the number of borrowers serviced. Borrower volume declined throughout 2025 as servicing volume was transferred, at the Department’s direction, from the Company to its remote-hosted servicing customer to support the stand‑up of a new servicer. In addition, borrower volume declined beginning in the fourth quarter of 2025 as certain borrowers exiting the CARES Act forbearance period failed to resume payment activity and were transferred to the Department’s Debt Management and Collections System for management of defaulted federal student loans. | |||||||||||||
| Canada Student Loan Program loan servicing | 11,332 | — | Represents revenue from NDS Canada's student loan servicing contract with the Government of Canada, including direct agreements with three provinces and a program administered through a financial institution. NDS Canada earns a monthly servicing fee based on borrower volume. The Company also earns additional revenue for approved change requests related to platform enhancements, achieving delinquency and default performance targets, and certain transactional servicing activities, including disbursements, application processing, and postage. Canada loan servicing revenue was recognized by the Company beginning February 2, 2026, the date the Company acquired NDS Canada. | ||||||||||||||
| Private education and consumer loan servicing | 25,661 | 22,696 | Increase was due to an increase in loan servicing volume from the conversion of Discover Financial Services and SoFi Lending Corp. loan portfolios during the first quarter of 2025. Over time, revenue earned on the Discover Financial Services portfolio will decrease as borrowers pay off their loans. | ||||||||||||||
| FFELP loan servicing | 2,254 | 2,633 | Represents revenue from servicing third-party customers' FFELP portfolios. Over time, FFELP servicing revenue will decrease as third-party customers' FFELP portfolios pay off. | ||||||||||||||
| Software services | 11,763 | 6,992 | Represents revenue from providing remote hosted servicing software, primarily to one of the Department’s servicers, as well as diversified technology services. The increase was driven primarily by higher revenue from the Company's Department remote hosted servicing customer, as the Company transferred borrower volume to this new servicer throughout 2025 at the Department’s direction to establish initial volume. The Company does not expect to transfer additional volume to this servicer in 2026. | ||||||||||||||
| Outsourced services | 713 | 1,062 | Represents revenue from providing contact center and back office operational outsourcing services. | ||||||||||||||
| Loan servicing and systems revenue | $ | 127,842 | 120,741 | ||||||||||||||
38
EDUCATION TECHNOLOGY SERVICES AND PAYMENTS OPERATING SEGMENT – RESULTS OF OPERATIONS
As discussed further in the Company's 2025 Annual Report, this segment of the Company’s business is subject to seasonal fluctuations which correspond, or are related to, the traditional school year. Based on the timing of revenue recognition and when expenses are incurred, revenue and before tax operating margin are higher in the first quarter compared with the remainder of the year.
Summary and Comparison of Operating Results
| Three months ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Interest income | $ | 6,118 | 6,939 | ||||||||
Education technology services and payments revenue (see disaggregated revenue by service offering below) | 154,436 | 147,330 | |||||||||
| Intersegment revenue | 72 | 64 | |||||||||
| Total other income | 154,508 | 147,394 | |||||||||
| Cost of services (see disaggregated revenue by service offering below) | 49,953 | 48,047 | |||||||||
| Salaries and benefits | 42,696 | 41,741 | |||||||||
| Depreciation and amortization | 2,369 | 2,430 | |||||||||
| Other expenses | 11,761 | 9,048 | |||||||||
| Intersegment expenses, net | 6,034 | 5,605 | |||||||||
| Total operating expenses | 62,860 | 58,824 | |||||||||
| Income before income taxes | 47,813 | 47,462 | |||||||||
| Income tax expense | (11,475) | (11,402) | |||||||||
| Net income | 36,338 | 36,060 | |||||||||
| Net loss attributable to noncontrolling interests | — | 45 | |||||||||
| Net income | $ | 36,338 | 36,105 | ||||||||
| GAAP before tax operating margin | 45.8 | % | 47.8 | % | |||||||
| Net interest income | (5.9) | (7.0) | |||||||||
| Non-GAAP before tax operating margin, excluding net interest income (a) | 39.9 | % | 40.8 | % | |||||||
(a) Before tax operating margin, excluding net interest income, is a non-GAAP measure of before tax operating profitability as a percentage of revenue, and for the ETSP segment is calculated as income before income taxes less net interest income divided by net revenue. The Company uses this metric to monitor and assess the segment’s performance, manage operating costs, identify and evaluate business trends affecting the segment, and make strategic decisions, and believes that it facilitates an understanding of the operating performance of the segment and provides a meaningful comparison of the results of operations between periods.
ETSP before tax operating margin decreased due to an increase in operating expenses to support the growth in the customer base and investments in the development of new technologies.
39
Education technology services and payments revenue
The following table presents disaggregated revenue by service offering for each reporting period:
| Three months ended March 31, | |||||||||||||||||
| 2026 | 2025 | Additional information | |||||||||||||||
| Tuition payment plan services | $ | 41,855 | 40,072 | Increase was due to a higher number of payment plans in the K-12 and higher education markets for both new and existing customers. | |||||||||||||
| Payment processing | 55,887 | 51,536 | Increase was due to an increase in payment volumes for both the K-12 and higher education markets due to new customers and an increase in volume from existing customers. | ||||||||||||||
| Education technology services | 56,114 | 55,695 | Increase was primarily driven by growth in student information system revenue. The increase was partially offset by a decline in FACTS education services revenue, reflecting the end of economic aid provided to private schools ("EANS program") in response to the COVID-19 pandemic. Revenue recognized under the EANS program totaled $1.6 million for the first quarter of 2025, which was the last quarter for revenue related to that program. | ||||||||||||||
| Other | 580 | 27 | |||||||||||||||
| Education technology services and payments revenue | 154,436 | 147,330 | |||||||||||||||
| Cost of services | 49,953 | 48,047 | Represents direct costs to provide payment processing revenue and such costs decrease/increase in relationship to payment volumes. Costs to provide instructional services are also a component of this expense and decrease/increase in relationship to instructional services revenues. | ||||||||||||||
| Net revenue | $ | 104,483 | 99,283 | ||||||||||||||
40
NELNET FINANCIAL SERVICES DIVISION - RESULTS OF OPERATIONS
Asset Generation and Management Operating Segment
Loan Portfolio
As of March 31, 2026, the AGM operating segment had an $8.41 billion loan portfolio, consisting primarily of federally insured loans. For a summary of the Company’s loan portfolio as of March 31, 2026 and December 31, 2025, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
Loan Activity
The following table sets forth the activity of loans in the AGM operating segment:
| FFELP | Private | Consumer loans and other financing receivables | Total | ||||||||||||||||||||
| Three months ended March 31, 2026 | |||||||||||||||||||||||
| Balance as of December 31, 2025 | $ | 7,437,243 | 139,209 | 1,122,717 | 8,699,169 | ||||||||||||||||||
| Loan acquisitions (a) | 299,549 | — | 3,035,923 | 3,335,472 | |||||||||||||||||||
| Repayments, claims, capitalized interest, participations, and other, net | (225,321) | (8,247) | (2,944,723) | (3,178,291) | |||||||||||||||||||
| Loans lost to external parties | (42,146) | (745) | — | (42,891) | |||||||||||||||||||
| Loans sold | (107,969) | — | (318) | (108,287) | |||||||||||||||||||
| Loans contributed to Nelnet Bank | (295,993) | — | — | (295,993) | |||||||||||||||||||
| Balance as of March 31, 2026 | $ | 7,065,363 | 130,217 | 1,213,599 | 8,409,179 | ||||||||||||||||||
| Three months ended March 31, 2025 | |||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | 8,388,564 | 221,744 | 345,560 | 8,955,868 | ||||||||||||||||||
| Loan acquisitions | 702,800 | — | 129,787 | 832,587 | |||||||||||||||||||
| Repayments, claims, capitalized interest, participations, and other, net | (230,558) | (12,535) | (93,984) | (337,077) | |||||||||||||||||||
| Loans lost to external parties | (58,764) | (702) | — | (59,466) | |||||||||||||||||||
| Loans sold | (131,758) | — | (148) | (131,906) | |||||||||||||||||||
| Balance as of March 31, 2025 | $ | 8,670,284 | 208,507 | 381,215 | 9,260,006 | ||||||||||||||||||
(a) The Company began to acquire Pay Later receivables during the third quarter of 2025. Consumer loan acquisitions excluding Pay Later receivables was $182.1 million during the three months ended March 31, 2026.
The Company has partial ownership in certain consumer, private education, and federally insured student loan securitizations that are accounted for as held-to-maturity beneficial interest investments and included in "other investments and notes receivable, net" in the Company's consolidated financial statements. As of the latest remittance reports filed by the various trusts prior to or as of March 31, 2026, the Company’s ownership correlates to approximately $1.64 billion of loans included in these securitizations. The loans held in these securitizations are not included in the above table. Investment interest income earned by the Company from the beneficial interest in loan securitizations is included in "investment interest" on the Company's consolidated statements of income and is not a component of the Company's loan interest income.
Allowance for Loan Losses, Loan Delinquencies, and Loan Charge-offs
For a summary of the allowance as a percentage of the ending balance, loan status, delinquency amounts, and other key credit quality indicators for each of AGM’s loan portfolios as of March 31, 2026 and December 31, 2025; and the activity in AGM's allowance for loan losses and net charge-offs as a percentage of average loans for the three months ended March 31, 2026 and 2025, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
Loan Spread Analysis
The following table analyzes the loan spread on AGM’s portfolio of loans, which represents the spread between the yield earned on loan assets and the costs of the liabilities used to fund the assets. The spread amounts included in the following table are calculated by using the notional dollar values found in the table under the caption "Net loan interest income" below, divided by the average balance of loans or debt outstanding.
41
| Three months ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Variable loan yield, gross | 6.77 | % | 7.43 | % | |||||||
| Consolidation rebate fees | (0.79) | (0.79) | |||||||||
| Discount accretion, net of premium and deferred origination costs amortization | 1.23 | (0.13) | |||||||||
| Variable loan yield, net | 7.21 | 6.51 | |||||||||
| Loan cost of funds - interest expense | (4.82) | (5.39) | |||||||||
| Variable loan spread | 2.39 | 1.12 | |||||||||
| Fixed-rate floor income, gross | 0.08 | 0.04 | |||||||||
| Loan spread | 2.47 | % | 1.16 | % | |||||||
| Average balance of AGM's loans | $ | 8,481,420 | 9,544,317 | ||||||||
| Average balance of AGM's debt outstanding | 7,798,205 | 8,451,699 | |||||||||
Variable loan spread was higher during the three months ended March 31, 2026 compared with the same period in 2025 due to an increase in consumer loans as a percentage of AGM’s overall loan portfolio. Consumer loans earn a higher yield than FFELP loans. The difference between variable loan spread and core loan spread is fixed-rate floor income earned on a portion of AGM's federally insured student loan portfolio. See Item 3, “Quantitative and Qualitative Disclosures About Market Risk - Interest Rate Risk - AGM Operating Segment,” which provides additional detail on AGM's federally insured student loans earning fixed-rate floor income.
The relationship between the indices in which AGM earns interest on its loans and funds such loans has a significant impact on loan spread. See Item 3, “Quantitative and Qualitative Disclosures About Market Risk - Interest Rate Risk - AGM Operating Segment,” which provides additional detail on AGM’s FFELP student loan assets and related funding for those assets.
Summary and Comparison of Operating Results
| Three months ended March 31, | |||||||||||||||||
| 2026 | 2025 | Additional information | |||||||||||||||
| Interest income: | |||||||||||||||||
| Loan interest | $ | 152,353 | 154,469 | See table below for additional analysis. | |||||||||||||
| Investment interest: | |||||||||||||||||
| Residual interest | 6,445 | 8,666 | Represents residual interest earned on beneficial interest investments. | ||||||||||||||
| Other investment interest | 4,214 | 4,103 | Represents investment interest earned on restricted cash included in student loan securitizations and other secured borrowings. | ||||||||||||||
| Total investment interest | 10,659 | 12,769 | |||||||||||||||
| Total interest income | 163,012 | 167,238 | |||||||||||||||
| Loan interest expense | 92,552 | 112,411 | See table below for additional analysis. | ||||||||||||||
| Intercompany interest expense | 3,005 | 1,892 | Represents interest paid by AGM to Nelnet, Inc. (parent company) related to (i) internal borrowings to fund equity advances on certain AGM debt facilities; and (ii) AGM-issued bonds held by Nelnet, Inc. Intercompany interest is eliminated for consolidated financial reporting purposes. | ||||||||||||||
| Total interest expense | 95,557 | 114,303 | |||||||||||||||
| Net interest income | 67,455 | 52,935 | |||||||||||||||
| Less provision for loan losses | 48,466 | 13,012 | The increase was driven by the significant increase in the volume of Pay Later receivables acquired since the third quarter of 2025. See note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional factors impacting provision for loan losses for the periods presented. | ||||||||||||||
| Less provision for beneficial interests | 4,130 | 1,510 | During the periods presented, the Company recorded an allowance for credit losses (and related provision expense) related to the Company's beneficial interest in certain loan securitizations. | ||||||||||||||
| Net interest income after provision | 14,859 | 38,413 | |||||||||||||||
| Other income, net | 26,246 | 4,904 | Represents primarily borrower late fees, income from providing administration activities for third parties, sponsor fee income, and income/losses from AGM's investment in joint ventures. Increase in 2026 compared with 2025 was due to an increase in income from AGM's joint ventures and borrower late fee income. See "Overview - Consolidated Results of Operations" for further detail included in other income. | ||||||||||||||
| Derivative settlements, net | 104 | 582 | The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate volatility. | ||||||||||||||
| Derivative market value adjustments, net | 1,494 | (3,795) | Includes the realized and unrealized gains and losses that are caused by changes in fair values of derivatives which do not qualify for "hedge treatment" under GAAP. | ||||||||||||||
| Total other income, net | 27,844 | 1,691 | |||||||||||||||
42
| Salaries and benefits | 1,628 | 1,221 | |||||||||||||||
| Servicing fees | 8,152 | 6,911 | Represents servicing fees paid to third parties and LSS for the servicing of AGM’s loans. Increase was due to an increase in volume of Pay Later receivables the Company began to purchase during the third quarter of 2025, partially offset by the amortization of the FFELP student loan portfolio, the majority of which is serviced by LSS. Intercompany servicing expense of $4.3 million and $4.9 million during the three months ended March 31, 2026 and 2025, respectively, was eliminated for consolidated financial reporting purposes. | ||||||||||||||
| Other expenses | 1,051 | 888 | |||||||||||||||
| Intersegment expenses | 1,352 | 1,250 | Includes costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services. | ||||||||||||||
| Total operating expenses | 12,183 | 10,270 | Total operating expenses were 57 basis points and 43 basis points of the average balance of loans for the three months ended March 31, 2026 and 2025, respectively. The increase in expenses compared to the average balance of loans was due to an increase in costs associated with the Company actively expanding into new asset classes and a decrease in the average balance of loans. | ||||||||||||||
| Income before income taxes | 30,520 | 29,834 | |||||||||||||||
| Income tax expense | (7,321) | (7,156) | Represents income tax expense at an effective tax rate of 24%. | ||||||||||||||
| Net income | 23,199 | 22,678 | |||||||||||||||
| Net income attributable to noncontrolling interests | (18) | (17) | |||||||||||||||
| Net income | $ | 23,181 | 22,661 | ||||||||||||||
| Additional information: | |||||||||||||||||
| GAAP net income | $ | 23,181 | 22,661 | See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional information about non-GAAP financial information. | |||||||||||||
| Derivative market value adjustments, net | (1,494) | 3,795 | |||||||||||||||
| Tax effect | 359 | (911) | |||||||||||||||
| Non-GAAP net income, excluding derivative market value adjustments | $ | 22,046 | 25,545 | ||||||||||||||
Net loan interest income
The following table summarizes the components of "loan interest" and "loan interest expense" from the table above.
| Three months ended March 31, | |||||||||||||||||
| 2026 | 2025 | Additional information | |||||||||||||||
| Variable interest income, gross | $ | 141,852 | 175,306 | Decrease was due to a decrease in the average balance of loans and gross yield earned on loans. | |||||||||||||
| Consolidation rebate fees | (16,717) | (18,748) | Decrease was due to a decrease in the average consolidation loan balance. | ||||||||||||||
| Discount accretion, net of premium and deferred origination costs amortization | 25,655 | (3,064) | Increase in discount accretion was due to a forward flow agreement of Pay Later receivables the Company began to purchase during the third quarter of 2025 at a discount that have a short estimated life. | ||||||||||||||
| Variable interest income, net | 150,790 | 153,494 | |||||||||||||||
| Interest on bonds and notes payable | (92,552) | (112,411) | Decrease was due to a decrease in the average balance of debt outstanding and cost of funds. | ||||||||||||||
| Variable loan interest margin | 58,238 | 41,083 | |||||||||||||||
| Fixed-rate floor income | 1,563 | 975 | Increase was due to lower interest rates. | ||||||||||||||
| Net loan interest income | $ | 59,801 | 42,058 | ||||||||||||||
Factors Affecting Operating Results
•AGM began to acquire Pay Later receivables during the third quarter of 2025. These receivables are generally purchased at a discount and have a short expected duration. As of March 31, 2026, the balance of Pay Later receivables was $766.2 million. Growth in Pay Later receivable volumes contributed to increase in loan interest income, higher provision for loan losses, and increased borrower late fee income.
•AGM holds interests in certain joint ventures engaged in the acquisition and management of loan portfolios. For the three months ended March 31, 2026, AGM recognized $15.4 million of income from these joint ventures, compared with $1.0 million in the comparable period of 2025. Such amounts are included in “Other income, net” in the table above titled “Summary and Comparison of Operating Results.”
43
Nelnet Bank Operating Segment
Loan Portfolio
As of March 31, 2026, Nelnet Bank had a $1.26 billion loan portfolio. For a summary of Nelnet Bank’s loan portfolio as of March 31, 2026 and December 31, 2025, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
Loan Activity
The following table sets forth the activity of loans in the Nelnet Bank operating segment:
| FFELP | Private | Consumer and other | Total | ||||||||||||||||||||
| Three months ended March 31, 2026 | |||||||||||||||||||||||
| Balance as of December 31, 2025 | $ | 172,320 | 518,634 | 266,608 | 957,562 | ||||||||||||||||||
| Loan acquisitions and originations | — | 45,096 | 11,666 | 56,762 | |||||||||||||||||||
| Repayments | (9,742) | (24,349) | (14,776) | (48,867) | |||||||||||||||||||
| Loans contributed from AGM | 295,993 | — | — | 295,993 | |||||||||||||||||||
| Balance as of March 31, 2026 | $ | 458,571 | 539,381 | 263,498 | 1,261,450 | ||||||||||||||||||
| Three months ended March 31, 2025 | |||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | — | 482,445 | 162,152 | 644,597 | ||||||||||||||||||
| Loan acquisitions and originations | 111,002 | 29,041 | 4,555 | 144,598 | |||||||||||||||||||
| Repayments | (815) | (22,035) | (4,712) | (27,562) | |||||||||||||||||||
| Balance as of March 31, 2025 | $ | 110,187 | 489,451 | 161,995 | 761,633 | ||||||||||||||||||
Allowance for Loan Losses, Loan Delinquencies, and Loan Charge-offs
For a summary of the allowance as a percentage of the ending balance, loan status, delinquency amounts, and other key credit quality indicators for each of Nelnet Bank's loan portfolios as of March 31, 2026 and December 31, 2025; and the activity in Nelnet Bank's allowance for loan losses and net charge-offs as a percentage of average loans for the three months ended March 31, 2026 and 2025, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
Investments
As of March 31, 2026, Nelnet Bank had a $1.18 billion investment portfolio, consisting primarily of asset-backed securities. For a summary of Nelnet Bank's asset-backed securities investments as of March 31, 2026 and December 31, 2025, see note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
Deposits
As of March 31, 2026, Nelnet Bank had $1.96 billion of deposits, which included $212.2 million from Nelnet, Inc. (parent company) and its subsidiaries (intercompany), and thus have been eliminated for consolidated financial reporting purposes. For a summary of deposits as of March 31, 2026 and December 31, 2025, see note 9 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
44
Average Balance Sheet
The following table reflects the rates earned on interest-earning assets and paid on interest-bearing liabilities:
Three months ended March 31, (a) | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Balance | Rate | Balance | Rate | ||||||||||||||||||||
| Average assets | |||||||||||||||||||||||
| Federally insured student loans | $ | 270,655 | 5.48 | % | $ | 25,621 | 6.55 | % | |||||||||||||||
| Private education loans | 539,383 | 6.42 | 489,211 | 6.10 | |||||||||||||||||||
| Consumer and other loans | 266,204 | 9.86 | 162,602 | 10.47 | |||||||||||||||||||
| Cash and investments | 1,144,173 | 5.87 | 793,537 | 6.39 | |||||||||||||||||||
| Total interest-earning assets | 2,220,415 | 6.44 | % | 1,470,971 | 6.75 | % | |||||||||||||||||
| Non-interest-earning assets | 57,703 | 14,646 | |||||||||||||||||||||
| Total assets | $ | 2,278,118 | $ | 1,485,617 | |||||||||||||||||||
| Average liabilities and equity | |||||||||||||||||||||||
| Brokered deposits | $ | 303,714 | 2.54 | % | $ | 249,259 | 1.95 | % | |||||||||||||||
| Intercompany deposits | 195,816 | 3.71 | 72,836 | 3.41 | |||||||||||||||||||
| Retail and other deposits | 1,359,995 | 3.80 | 962,954 | 4.21 | |||||||||||||||||||
| Federal funds purchased and other borrowed money | 90,224 | 4.14 | 10,404 | 4.69 | |||||||||||||||||||
| Total interest-bearing liabilities | 1,949,749 | 3.61 | % | 1,295,453 | 3.73 | % | |||||||||||||||||
| Non-interest-bearing liabilities | 15,528 | 8,602 | |||||||||||||||||||||
| Equity | 312,841 | 181,562 | |||||||||||||||||||||
| Total liabilities and equity | $ | 2,278,118 | $ | 1,485,617 | |||||||||||||||||||
| Net interest margin | 3.26 | % | 3.46 | % | |||||||||||||||||||
(a) Calculated using average daily balances.
45
Summary and Comparison of Operating Results
| Three months ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Interest income: | |||||||||||
| Loan interest | $ | 18,671 | 11,971 | ||||||||
| Investment interest | 16,565 | 12,496 | |||||||||
| Total interest income | 35,236 | 24,467 | |||||||||
| Interest expense | 17,407 | 12,077 | |||||||||
| Net interest income | 17,829 | 12,390 | |||||||||
| Provision for loan losses | 4,778 | 2,325 | |||||||||
| Net interest income after provision for loan losses | 13,051 | 10,065 | |||||||||
| Other income, net | 1,558 | 142 | |||||||||
| Derivative settlements, net | 39 | 164 | |||||||||
| Derivative market value adjustments, net | 1,000 | (2,529) | |||||||||
| Total other income, net | 2,597 | (2,223) | |||||||||
| Salaries and benefits | 2,915 | 2,816 | |||||||||
| Depreciation | 352 | 339 | |||||||||
| Servicing fees | 1,227 | 667 | |||||||||
| Other expenses | 1,278 | 1,358 | |||||||||
| Intersegment expenses | 657 | 710 | |||||||||
| Total operating expenses | 6,429 | 5,890 | |||||||||
| Income before income taxes | 9,219 | 1,952 | |||||||||
| Income tax expense | (2,106) | (434) | |||||||||
| Net income | $ | 7,113 | 1,518 | ||||||||
| Additional information: | |||||||||||
| Net income | $ | 7,113 | 1,518 | ||||||||
| Derivative market value adjustments, net | (1,000) | 2,529 | |||||||||
| Tax effect | 240 | (607) | |||||||||
| Net income, excluding derivative market value adjustments | $ | 6,353 | 3,440 | ||||||||
Factors Affecting Operating Results
•Nelnet Bank’s growth was driven by higher loan and investment balances, funded primarily through increased deposit balances. In its early years, Nelnet Bank experienced operating losses as it invested in building the personnel and infrastructure necessary to support future growth. As Nelnet Bank has matured, operating expenses have stabilized while loans and deposits have continued to grow. This operating leverage has driven increased net interest income and net income for the three months ended March 31, 2026 as compared to the same period of 2025.
46
NFS Other Operating Segments
The following table summarizes the operating results of other operating segments included in NFS that are not reportable. Income taxes are allocated based on 24% of income (loss) before taxes for each activity.
Summary and Comparison of Operating Results
| Nelnet Insurance Services | WRCM | Real estate | Bond portfolio | Total | |||||||||||||||||||||||||
| Three months ended March 31, 2026 | |||||||||||||||||||||||||||||
| Investment interest | $ | 2,861 | 4 | — | 5,652 | 8,517 | |||||||||||||||||||||||
| Interest expense | (1,373) | — | — | (1) | (1,374) | ||||||||||||||||||||||||
| Net interest income | 1,488 | 4 | — | 5,651 | 7,143 | ||||||||||||||||||||||||
| Reinsurance premiums earned | 22,536 | — | — | — | 22,536 | ||||||||||||||||||||||||
| Other income, net | 435 | 1,338 | 2,733 | (8,092) | (3,586) | ||||||||||||||||||||||||
| Salaries and benefits | (599) | (34) | (879) | — | (1,512) | ||||||||||||||||||||||||
| Reinsurance losses and underwriting expenses | (23,605) | — | — | — | (23,605) | ||||||||||||||||||||||||
| Other expenses | (1,092) | (93) | (73) | (3) | (1,261) | ||||||||||||||||||||||||
| Intersegment expenses, net | (146) | (5) | (275) | (31) | (457) | ||||||||||||||||||||||||
| (Loss) income before income taxes | (983) | 1,210 | 1,506 | (2,475) | (742) | ||||||||||||||||||||||||
| Income tax benefit (expense) | 236 | (290) | (378) | 594 | 162 | ||||||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests | — | — | 69 | — | 69 | ||||||||||||||||||||||||
| Net (loss) income | $ | (747) | 920 | 1,197 | (1,881) | (511) | |||||||||||||||||||||||
| Three months ended March 31, 2025 | |||||||||||||||||||||||||||||
| Investment interest | $ | 1,994 | 4 | — | 6,822 | 8,820 | |||||||||||||||||||||||
| Interest expense | (769) | — | — | (1) | (770) | ||||||||||||||||||||||||
| Net interest income | 1,225 | 4 | — | 6,821 | 8,050 | ||||||||||||||||||||||||
| Reinsurance premiums earned | 24,687 | — | — | — | 24,687 | ||||||||||||||||||||||||
| Other income, net | 574 | 1,473 | (1,643) | 706 | 1,110 | ||||||||||||||||||||||||
| Salaries and benefits | (249) | (32) | (197) | — | (478) | ||||||||||||||||||||||||
| Reinsurance losses and underwriting expenses | (22,212) | — | — | — | (22,212) | ||||||||||||||||||||||||
| Other expenses | (677) | (63) | (112) | (1) | (853) | ||||||||||||||||||||||||
| Intersegment expenses, net | (109) | (4) | (99) | (32) | (244) | ||||||||||||||||||||||||
| (Loss) income before income taxes | 3,239 | 1,378 | (2,051) | 7,494 | 10,060 | ||||||||||||||||||||||||
| Income tax benefit (expense) | (777) | (298) | 489 | (1,799) | (2,385) | ||||||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests | — | (138) | 14 | — | (124) | ||||||||||||||||||||||||
| Net (loss) income | $ | 2,462 | 942 | (1,548) | 5,695 | 7,551 | |||||||||||||||||||||||
Factors Affecting Operating Results
•During the three months ended March 31, 2026 , the Company recognized an unrealized loss on certain marketable equity securities of $9.7 million that is included under "Bond portfolio" in "other income, net" in the table above. These losses resulted from changes in market values during the period.
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CORPORATE AND OTHER ACTIVITIES – RESULTS OF OPERATIONS
Other business activities and operating segments that are not reportable and not part of the NFS division are combined and included in Corporate and Other Activities (“Corporate”). The following table summarizes the operating results of these activities.
Income taxes are allocated based on 24% of income (loss) before taxes for each activity. The difference between the Corporate income tax expense and the sum of taxes calculated for each activity is included in income taxes in “other” in the table below.
Summary and Comparison of Operating Results
| Shared services | Solar tax equity | Nelnet Renewable Energy (NRE) | ALLO | Venture capital | Other | Total | |||||||||||||||||||||||||||||||||||
| Three months ended March 31, 2026 | |||||||||||||||||||||||||||||||||||||||||
| Investment interest | $ | — | 300 | — | — | — | 2,836 | 3,136 | |||||||||||||||||||||||||||||||||
| Interest expense | — | (2) | — | — | — | (627) | (629) | ||||||||||||||||||||||||||||||||||
| Net interest income (expense) | — | 298 | — | — | — | 2,209 | 2,507 | ||||||||||||||||||||||||||||||||||
| Solar construction revenue | — | 282 | (282) | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Other income, net | 511 | (21,797) | 403 | 978 | 4,803 | 1,524 | (13,578) | ||||||||||||||||||||||||||||||||||
| Derivative settlements | — | — | — | — | — | 437 | 437 | ||||||||||||||||||||||||||||||||||
| Derivative market value adjustments | — | — | — | — | — | (907) | (907) | ||||||||||||||||||||||||||||||||||
| Cost to provide solar construction services | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Salaries and benefits | (20,182) | (563) | (179) | (38) | (205) | (1,848) | (23,015) | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | (2,064) | (11) | (3) | — | — | (369) | (2,447) | ||||||||||||||||||||||||||||||||||
| Other expenses | (15,120) | (163) | (2,386) | (1) | (48) | (1,384) | (19,102) | ||||||||||||||||||||||||||||||||||
| Intersegment expenses, net | 25,749 | (90) | (15) | (2) | (60) | (435) | 25,147 | ||||||||||||||||||||||||||||||||||
| (Loss) income before income taxes | (11,106) | (22,044) | (2,462) | 937 | 4,490 | (773) | (30,958) | ||||||||||||||||||||||||||||||||||
| Income tax benefit (expense) | 2,665 | 1,575 | 591 | (225) | (1,078) | 1,903 | 5,431 | ||||||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling interests | — | 15,483 | — | — | — | — | 15,483 | ||||||||||||||||||||||||||||||||||
| Net (loss) income | $ | (8,441) | (4,986) | (1,871) | 712 | 3,412 | 1,130 | (10,044) | |||||||||||||||||||||||||||||||||
| Three months ended March 31, 2025 | |||||||||||||||||||||||||||||||||||||||||
| Investment interest | $ | — | 5 | — | — | — | 2,307 | 2,312 | |||||||||||||||||||||||||||||||||
| Interest expense | — | — | (2) | — | — | (631) | (633) | ||||||||||||||||||||||||||||||||||
| Net interest income (expense) | — | 5 | (2) | — | — | 1,676 | 1,679 | ||||||||||||||||||||||||||||||||||
| Solar construction revenue | — | — | 3,995 | — | — | — | 3,995 | ||||||||||||||||||||||||||||||||||
| Other income, net | 619 | 1,730 | — | 8,416 | 4,492 | 2,981 | 18,238 | ||||||||||||||||||||||||||||||||||
| Derivative settlements | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Derivative market value adjustments | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Cost to provide solar construction services | — | — | (7,828) | — | — | — | (7,828) | ||||||||||||||||||||||||||||||||||
| Salaries and benefits | (18,720) | (388) | (1,644) | — | (207) | (1,537) | (22,496) | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | (3,519) | — | (276) | — | (1) | (37) | (3,833) | ||||||||||||||||||||||||||||||||||
| Other expenses | (13,184) | (77) | (421) | — | (24) | (1,880) | (15,586) | ||||||||||||||||||||||||||||||||||
| Intersegment expenses, net | 24,816 | (65) | (399) | — | (40) | (257) | 24,055 | ||||||||||||||||||||||||||||||||||
| (Loss) income before income taxes | (9,988) | 1,205 | (6,575) | 8,416 | 4,220 | 946 | (1,776) | ||||||||||||||||||||||||||||||||||
| Income tax benefit (expense) | 2,397 | (678) | 1,578 | (2,020) | (1,013) | 546 | 810 | ||||||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling interests | — | 1,623 | — | — | — | — | 1,623 | ||||||||||||||||||||||||||||||||||
| Net (loss) income | $ | (7,591) | 2,150 | (4,997) | 6,396 | 3,207 | 1,492 | 657 | |||||||||||||||||||||||||||||||||
Factors Affecting Operating Results
•Solar tax equity: The Company holds equity interests in partnerships that invest in solar tax equity projects intended to promote renewable energy generation. Because the Company has management and control over these partnerships, they are consolidated in the Company’s consolidated financial statements, with third-party interests presented as noncontrolling interests. The Company accounts for its solar tax equity interests using the hypothetical liquidation at book value (“HLBV”) method, which commonly results in the recognition of accelerated losses in the early years of a
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partnership. Based on contributions made to these partnerships in recent periods, the Company recognized losses of $22.5 million related to its solar tax equity partnerships during the three months ended March 31, 2026, compared to a gain of $0.5 million for the same period in 2025. These amounts are included in “other income, net” in the table above. Losses attributable to noncontrolling interest partners were $13.4 million and $1.0 million for the three months ended March 31, 2026 and 2025, respectively, and are included in “net loss attributable to noncontrolling interests” in the table above. See note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
•NRE: NRE was the Company’s solar construction subsidiary, providing full‑service engineering, procurement, and construction services. Following its acquisition, NRE experienced low and, in certain cases, negative project margins. In addition, changes in legislation reducing clean energy tax incentives, tariff uncertainty, and rising construction costs adversely affected NRE's revenue and operating results. As a result of these factors, the Company sold NRE in November 2025. Although the Company retained a limited number of construction contracts to complete following the sale, the Company does not expect the operating results from such contracts to be significant in future periods.
•ALLO: In June 2025, ALLO redeemed all of the Company's preferred membership interests that were outstanding at that time. Included in the Company's operating results for the three months ended March 31, 2025 was $8.4 million of ALLO preferred return. In the fourth quarter of 2025 and first quarter of 2026, the Company contributed a total of $23.5 million of additional capital in return for preferred membership interest in ALLO that earns a 20% preferred return. During the first quarter of 2026, the Company recognized $1.0 million of ALLO preferred return related to this new capital.
•Equity securities: During the three months ended March 31, 2026, the Company recognized realized and unrealized losses on a certain marketable equity security of $1.1 million that is included under "Other" in "other income, net" in the table above. These losses resulted from changes in market values during the period.
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LIQUIDITY AND CAPITAL RESOURCES
The Company’s Loan Servicing and Systems, and Education Technology Services and Payments operating segments are non-capital intensive and both produce positive operating cash flows. As such, a minimal amount of debt and equity capital is allocated to these segments and any liquidity or capital needs are satisfied using cash flow from operations.
Therefore, the Liquidity and Capital Resources discussion is concentrated on the Company’s liquidity and capital needs to meet existing debt obligations in the Nelnet Financial Services division, which includes the Asset Generation and Management and Nelnet Bank reportable operating segments, and the Company's other initiatives to pursue additional strategic investments.
Sources of Liquidity
As of March 31, 2026, the Company's sources of liquidity included:
| Cash and cash equivalents | $ | 240,007 | |||
| Less: Cash and cash equivalents held at Nelnet Bank (a) | (19,577) | ||||
| Net cash and cash equivalents | 220,430 | ||||
| Available-for-sale (AFS) debt securities (investments) - at fair value | 1,412,729 | ||||
| Less: AFS debt securities held at Nelnet Bank - at fair value (a) | (949,910) | ||||
| AFS private education and consumer loan debt securities - held as risk retention - at fair value (b) | (179,397) | ||||
| Restricted investments - at fair value (c) | (194,688) | ||||
| Unencumbered AFS debt securities (investments) - at fair value | 88,734 | ||||
| Unencumbered federally insured, private, consumer, and other loans (Non-Nelnet Bank) - at par | 317,598 | ||||
| Unencumbered repurchased Nelnet issued asset-backed debt securities - at par (not included on consolidated financial statements) (d) | 238,148 | ||||
| Unused capacity on unsecured line of credit (e) | 435,000 | ||||
Sources of liquidity as of March 31, 2026 | $ | 1,299,910 | |||
(a) Cash and investments held at Nelnet Bank are generally not available for Company activities outside of Nelnet Bank.
(b) The Company is sponsor for certain private education and consumer loan securitizations and as sponsor, is required to provide a certain level of risk retention. To satisfy this requirement, the Company has purchased bonds issued in the securitizations. The majority of the purchased bonds reflected in the table above relate to private education loan securitizations. For these securitizations, the Company is required to retain these bonds until the latest of (i) the date the aggregate outstanding principal balance of the loans in the securitization is 33% or less of the initial loan balance, and (ii) the date the aggregate outstanding principal balance of the bonds is 33% or less of the aggregate initial outstanding principal balance of the bonds, at which time the Company can sell these bonds to a third party. The Company estimates these bonds will be restricted from trading until approximately the first half of 2027.
(c) The Company is required to hold collateral in third-party trusts related to its reinsurance business.
(d) The Company has repurchased certain of its own asset-backed securities (bonds and notes payable) in the secondary market. For accounting purposes, these notes are eliminated in consolidation and are not included in the Company's consolidated financial statements. However, these securities remain legally outstanding at the trust level and the Company could sell these notes to third parties, redeem the notes at par as cash is generated by the trust estate, or pledge the securities as collateral on repurchase agreements. Upon a sale of these notes to third parties, the Company would obtain cash proceeds equal to the market value of the notes on the date of such sale.
(e) On March 31, 2026, the Company entered into a $435.0 million unsecured line of credit that matures on March 31, 2031. See note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report. As of March 31, 2026, there was no amount outstanding on the unsecured line of credit and $435.0 million was available for future use.
The Company intends to use its current and future liquidity position to capitalize on market opportunities, including FFELP, private education, consumer, and other loan acquisitions (or residual interests therein); strategic acquisitions; and capital management initiatives, including stock repurchases, debt repurchases, and dividend distributions. The timing and size of these opportunities will vary and will have a direct impact on the Company's cash and investment balances.
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Cash Flows
The Company has historically generated positive cash flow from operations. During the three months ended March 31, 2026 and 2025, the Company generated $73.1 million and $91.2 million, respectively, in cash from operating activities. The decrease in 2026 compared with 2025 was due to:
•A decrease in net income;
•Adjustments to net income for certain non-cash items, including loan discount and deferred lender fees accretion and deferred income taxes; and
•The impact of changes to accrued interest receivable, accounts receivable, and other assets during the three months ended March 31, 2026 compared with the same period in 2025.
These factors were partially offset by:
•Adjustments to net income for certain non-cash items, including provision for loan losses and loss on investments; and
•The impact of changes to other liabilities during the three months ended March 31, 2026 compared with the same period in 2025.
The primary items included in the statement of cash flows for investing activities are the purchase, origination, repayment, and sale of loans, the purchase and sale of available-for-sale securities, the purchase and sale of other investments, and business acquisitions. The primary items included in financing activities are the payments on and proceeds from bonds and notes payable and the change in deposits at Nelnet Bank used to fund loans and investment activity, and the change in due to customers. Cash provided by investing activities and used in financing activities for the three months ended March 31, 2026 was $31.1 million and $244.2 million, respectively. Cash provided by investing activities and used in financing activities for the three months ended March 31, 2025 was $136.4 million and $326.4 million, respectively. Investing and financing activities are further addressed in the discussion that follows.
Sources and Needs of Liquidity - AGM Operating Segment
The Company plans to fund additional loan acquisitions (or residual interests therein) through a combination of current cash; cash generated from operating activities and expected future cash flows from loan securitizations; proceeds from the sale of certain investments; borrowings under its unsecured line of credit, Union Bank student loan participation agreement, and Union Bank student loan asset-backed securities participation agreement, or similar secured and unsecured borrowing facilities; utilization of existing warehouse facilities; expansion of capacity under existing and/or establishment of new warehouse facilities; and continued access to the asset-backed securities market.
Sources of Liquidity
Asset-backed Securities Transactions
The Company, through its subsidiaries, has historically funded loans by completing asset-backed securitizations. The majority of AGM’s portfolio of student loans is funded in asset-backed securitizations that are structured to substantially match the maturity of the funded assets, thereby minimizing liquidity risk. Depending on market conditions, the Company anticipates continuing to access the asset-backed securitization market. Such asset-backed securitization transactions would be used to refinance loans included in its warehouse facilities and existing asset-backed securitizations and/or finance loans purchased from third parties and loans that are currently unencumbered.
There were no asset-backed securitization transactions completed during the three months ended March 31, 2026.
Warehouse Facilities
Warehousing allows the Company to buy and manage loans prior to transferring them into more permanent financing arrangements. See note 3 of the notes to consolidated financial statements included under Part I, Item 1 of this report for a discussion of the Company's warehouse facilities outstanding as of March 31, 2026.
Union Bank Participation Agreement
The Company maintains an agreement with Union Bank, a related party, as trustee for various grantor trusts, under which Union Bank has agreed to purchase from the Company participation interests in student loans. The agreement automatically renews annually and is terminable by either party upon five business days' notice. As of March 31, 2026, $659.0 million of
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loans were subject to outstanding participation interests held by Union Bank, as trustee, under this agreement. This agreement provides beneficiaries of Union Bank’s grantor trusts with access to investments in interests in student loans, while providing liquidity to the Company. The Company can sell participation interests in loans to Union Bank to the extent of availability under the grantor trusts, up to $900.0 million or an amount in excess of $900.0 million if mutually agreed to by both parties. Loans participated under this agreement have been accounted for by the Company as loan sales. Accordingly, the participation interests sold are not included on the Company’s consolidated balance sheets.
Liquidity Impact Related to Debt Obligations Secured by Loan Assets and Related Collateral
The following table shows AGM's debt obligations outstanding that are secured by loan assets and related collateral:
| As of March 31, 2026 | |||||||||||
Carrying amount | Final maturity | ||||||||||
| Bonds and notes issued in asset-backed securitizations | $ | 6,420,865 | 10/25/33 - 11/27/90 | ||||||||
| FFELP and consumer loan warehouse and other facilities | 1,237,681 | 7/30/27 - 2/29/28 | |||||||||
| $ | 7,658,546 | ||||||||||
Warehouse Facilities
Upon termination or expiration of the warehouse and other secured facilities, the Company would expect to access the securitization market, obtain replacement facilities, use operating cash, consider the sale of assets, or transfer collateral to satisfy any remaining obligations.
Bonds and Notes Issued in Asset-backed Securitizations
Cash generated from student loans funded in asset-backed securitizations provides the source of liquidity to satisfy all obligations related to the outstanding bonds and notes issued in such securitizations. In addition, due to (i) the difference between the yield AGM receives on the loans and cost of financing within these transactions, and (ii) the servicing and administration fees AGM earns from these transactions, AGM has created a portfolio that the Company expects to generate earnings and significant cash flow over the life of these transactions. As of March 31, 2026, based on cash flow models developed to reflect management’s current estimate of, among other factors, prepayments, defaults, deferment, forbearance, and interest rates, AGM expects future undiscounted cash flows from its portfolio funded in asset-backed securitizations to be approximately $1.00 billion as detailed below. The actual timing of cash flows released from the securitizations could be impacted based on when and if the Company terminates a securitization by exercising clean-up calls on the underlying securities when the assets in such securitization reach a certain threshold.
The forecasted cash flow presented below includes loans funded in asset-backed securitizations as of March 31, 2026, the majority of which are federally insured student loans. As of March 31, 2026, AGM had $6.7 billion of loans included in asset-backed securitizations, which represented 79.6% of its total loan portfolio. The forecasted cash flow does not include cash flows that the Company expects to receive in relation to loans funded in its warehouse facilities, unencumbered federally insured, private education, consumer, and other loans funded with operating cash, its ownership of beneficial interest in loan securitizations (such beneficial interest investments are classified as "other investments and notes receivable, net" on the Company's consolidated balance sheets), loans acquired subsequent to March 31, 2026, and loans owned by Nelnet Bank.
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Asset-backed Securitization Cash Flow Forecast
$1.00 billion
(dollars in millions)
The forecasted future undiscounted cash flows of approximately $1.00 billion include approximately $0.73 billion (as of March 31, 2026) of overcollateralization included in the asset-backed securitizations. These excess net asset positions are included in the consolidated balance sheets in the balances of "loans and accrued interest receivable, net" and "restricted cash." The difference between the total estimated future undiscounted cash flows and the overcollateralization of approximately $0.27 billion, or approximately $0.20 billion after income taxes based on the estimated effective tax rate, represents estimated future net interest income (earnings) from the portfolio and is expected to be accretive to the Company's balance of consolidated shareholders' equity from the March 31, 2026 balance.
The Company uses various assumptions, including prepayments and future interest rates, when preparing its cash flow forecast. These assumptions are further discussed below.
Prepayments: The primary variables in establishing a life of loan estimate are the level and timing of prepayments. Prepayment rates equal the amount of loans that prepay annually as a percentage of the beginning-of-period balance, net of scheduled principal payments. A number of factors can affect estimated prepayment rates, including the level of consolidation activity, borrower default rates, and utilization of debt management options such as income-based repayment, deferments, and forbearance. Should any of these factors change, management may revise its assumptions, which in turn would impact the projected future cash flow. The Company’s cash flow forecast above assumes prepayment rates of 6% for both federally insured consolidation and Stafford loans. Prepayment rates for private education loans range from 11% to 20%.
The following table summarizes the estimated impact to the above forecasted cash flows if prepayments were greater than the prepayment rate assumptions used to calculate the forecasted cash flows:
Increase in prepayment rate | Reduction in forecasted cash flow from table above | Forecasted cash flow using increased prepayment rate | ||||||||||||
| 2x | $0.06 billion | $0.94 billion | ||||||||||||
| 4x | $0.17 billion | $0.83 billion | ||||||||||||
If the entire AGM student loan portfolio was prepaid, the Company would receive the full amount of overcollateralization included in the asset-backed securitizations of approximately $0.73 billion (as of March 31, 2026); however, the Company would not receive the $0.27 billion ($0.20 billion after tax) of estimated future earnings from the portfolio.
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Interest rates: The Company funds a portion of its student loans with variable rate securities that are indexed to 90-day SOFR. Meanwhile, the interest earned on the Company’s student loan assets is indexed primarily to the 30-day average SOFR in effect for each day in a calendar quarter. The different interest rate characteristics of the Company’s loan assets and liabilities funding these assets result in basis risk. The Company’s cash flow forecast assumes, for the life of the portfolio, a relationship between the various SOFR indices that is implied by the current forward SOFR curves. If the forecast is computed assuming a spread of an additional 12 basis points between 3-month Term SOFR and 30-day average SOFR for the life of the portfolio, the cash flow forecast would be reduced by approximately $5 million to $15 million.
The Company uses the current forward interest rate yield curve to forecast cash flows. A change in the forward interest rate curve would impact the future cash flows generated from the portfolio. See Item 3, "Quantitative and Qualitative Disclosures About Market Risk — Interest Rate Risk — AGM Operating Segment" for additional information about various interest rate risks which may impact future cash flows from AGM's loan assets.
Liquidity Impact Related to Beneficial Interest in Loan Securitizations
The Company has partial ownership in consumer, private education, and federally insured student loan third-party securitizations that are classified as "beneficial interest in loan securitizations" and included in "other investments and notes receivable, net" on the Company's consolidated balance sheets. These residual interests were acquired by the Company or have been received by the Company as consideration from selling portfolios of loans to unrelated third parties who securitized such loans. As of the latest remittance reports filed by the various trusts prior to or as of March 31, 2026, the Company's ownership correlates to approximately $1.64 billion of loans included in these securitizations. Investment interest income earned by the Company from the beneficial interest in loan securitizations is included in "investment interest" on the Company's consolidated statements of income and is not a component of the Company's loan interest income.
As of March 31, 2026, the investment balance on the Company's consolidated balance sheet of its beneficial interest in loan securitizations was $197.8 million. For a summary of this investment balance, see note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report.
The Company's partial ownership percentage in each loan securitization grants the Company the right to receive the corresponding percentage of cash flows generated by the securitization. As of March 31, 2026, based on cash flow models developed to reflect management’s current estimate of, among other factors, prepayments, defaults, deferment, forbearance, and interest rates, the Company currently expects future undiscounted cash flows from its partial ownership in these securitizations to be approximately $276.8 million. The vast majority of these cash flows are expected to be received over the next 5 years.
The difference between the total estimated future undiscounted cash flows from these residual interests ($276.8 million) and the investment carrying value ($197.8 million) of $79.0 million, or $60.0 million after income taxes based on the estimated effective tax rate, represents estimated future investment interest income (earnings) from these investments and is expected to be accretive to the Company's balance of consolidated shareholders' equity from the March 31, 2026 balance.
The undiscounted future cash flows from the consumer and private education loan securitizations are highly subject to credit risk (defaults). If defaults are higher than management's current estimate, the forecasted cash flows and estimated future investment interest income (earnings) from these securitizations would be adversely impacted.
Sources and Needs of Liquidity - Nelnet Bank
Nelnet Bank’s growth strategy is supported by a combination of parent company capital support, diversified deposit funding, and access to supplemental liquidity sources. Nelnet Bank’s primary liquidity needs relate to funding loan originations and acquisitions while maintaining appropriate capital and liquidity levels.
Nelnet Bank operates under a capital and liquidity maintenance agreement that requires Nelnet, Inc., Nelnet Bank's parent company, to serve as a source of financial strength to Nelnet Bank. Nelnet, Inc. has provided capital contributions to support Nelnet Bank’s growth since inception and expects to continue to provide equity capital as necessary to support balance sheet growth and to meet regulatory capital requirements. During the first quarter of 2026, Nelnet, Inc. contributed two student loan securitization trusts that included $44.6 million of net assets. Through March 31, 2026, the Company has contributed $322.6 million of initial and ongoing capital to Nelnet Bank (such capital contributions have included cash, investments, loans, and equity in student loan trusts).
Nelnet Bank funds the majority of its assets through a diversified deposit base, including retail, commercial, institutional, and brokered deposits sourced through direct banking platforms and deposit marketplaces. Deposit products include both liquid and term deposits with varying maturities, which provide funding stability and flexibility. Management expects continued deposit growth to be the primary source of funding for future loan growth.
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In addition to deposit funding, Nelnet Bank maintains access to unsecured federal funds lines with correspondent banks and has established borrowing capacity with the Federal Reserve Bank and the Federal Home Loan Bank. These sources provide additional liquidity and funding flexibility as needed.
Other Sources of Liquidity
Unsecured Line of Credit
On March 31, 2026, the Company entered into a new $435.0 million unsecured line of credit with a maturity date of March 31, 2031. In conjunction with entering into the new line of credit, the Company terminated its $495.0 million line of credit which had a scheduled maturity date of September 22, 2026. There was no outstanding balance on the $495.0 million line of credit on the date of termination. As of March 31, 2026, the new unsecured line of credit had no amount outstanding and $435.0 million was available for future use. Upon the maturity date of the new facility, there can be no assurance that the Company will be able to maintain this line of credit, increase or maintain the amount outstanding under the line, or find alternative funding if necessary.
Union Bank Participation Agreement
The Company has an agreement with Union Bank under which Union Bank has agreed to purchase from the Company participation interests in FFELP loan asset-backed securities (bond investments). The agreement automatically renews annually and is terminable by either party upon five business days' notice. The Company can participate FFELP loan asset-backed securities (investments) to Union Bank to the extent of availability under the grantor trusts, up to $400.0 million or an amount in excess of $400.0 million if mutually agreed to by both parties. As of March 31, 2026, $0.1 million (par value) of FFELP loan asset-backed securities were subject to outstanding participation interests held by Union Bank, as trustee, under this agreement.
Stock Repurchases
The Board of Directors authorized a stock repurchase program to repurchase up to a total of five million shares of the Company's Class A common stock during the three-year period ended May 8, 2028. As of March 31, 2026, 4,398,221 shares remained authorized for repurchase under the Company's stock repurchase program. Shares may be repurchased from time to time on the open market, in private transactions (including with related parties), or otherwise, depending on various factors, including share prices and other potential uses of liquidity.
Shares repurchased by the Company during the three months ended March 13, 2026 are shown below. For additional information on stock repurchases during the first quarter of 2026, see "Stock Repurchases" under Part II, Item 2 of this report.
| Total shares repurchased | Purchase price (in thousands) | Average price of shares repurchased (per share) | |||||||||||||||
| Quarter ended March 31, 2026 | 126,319 | $ | 16,280 | 128.88 | |||||||||||||
Dividends
On March 13, 2026, the Company paid a first quarter 2026 cash dividend on the Company's Class A and Class B common stock of $0.33 per share. In addition, the Company's Board of Directors has declared a second quarter 2026 cash dividend on the Company's outstanding shares of Class A and Class B common stock of $0.33 per share. The second quarter cash dividend will be paid on June 15, 2026 to shareholders of record at the close of business on June 1, 2026.
The Company plans to continue making regular quarterly dividend payments, subject to future earnings, capital requirements, financial condition, and other factors.
RECENT ACCOUNTING PRONOUNCEMENTS
In November 2024, the FASB issued accounting guidance to increase disclosure requirements primarily through enhanced disclosures about types of expenses (including employee compensation, depreciation, and amortization) in commonly presented expense captions. This guidance will be effective for the Company for fiscal years beginning after December 15, 2026. The guidance is required to be applied prospectively with the option for retrospective application. Management is currently evaluating the impact this guidance will have on the disclosures included in the notes to the consolidated financial statements.
There are no other recently issued, but not yet adopted, accounting pronouncements which are expected to have a material impact on the Company's consolidated financial statements and related disclosures.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
(All dollars are in thousands, except share amounts, unless otherwise noted)
The Company’s consolidated balance sheets include assets and liabilities whose fair values are subject to market risks, primarily interest rate risk. The following sections address the interest rate risk associated with our relevant business activities.
Interest Rate Risk - AGM Operating Segment
AGM’s primary market risk exposure arises from fluctuations in its lending and borrowing rates, the spread between which could impact AGM due to shifts in market interest rates.
The following table sets forth AGM’s loan assets and debt instruments by rate characteristics:
| As of March 31, 2026 | As of December 31, 2025 | ||||||||||||||||||||||
| Dollars | Percent | Dollars | Percent | ||||||||||||||||||||
| Fixed-rate loan assets | $ | 1,770,383 | 21.1 | % | $ | 1,611,772 | 18.5 | % | |||||||||||||||
| Variable-rate loan assets | 6,638,796 | 78.9 | 7,087,397 | 81.5 | |||||||||||||||||||
| Total | $ | 8,409,179 | 100.0 | % | $ | 8,699,169 | 100.0 | % | |||||||||||||||
| Fixed-rate debt instruments | $ | 317,999 | 4.2 | % | $ | 331,404 | 4.2 | % | |||||||||||||||
| Variable-rate debt instruments | 7,341,475 | 95.8 | 7,490,065 | 95.8 | |||||||||||||||||||
| Total | $ | 7,659,474 | 100.0 | % | $ | 7,821,469 | 100.0 | % | |||||||||||||||
FFELP loans originated prior to April 1, 2006 generally earn interest at the higher of the borrower rate, which is fixed over a period of time, or a floating rate based on the special allowance payment (SAP) formula set by the Department. The SAP rate is based on an applicable index plus a fixed spread that depends on loan type, origination date, and repayment status. The Company generally finances its FFELP student loan portfolio with variable-rate debt. In low and/or declining interest rate environments, when the fixed borrower rate is higher than the SAP rate, the Company’s FFELP student loans earn at a fixed rate while the interest on the variable-rate debt typically continues to reflect the low and/or declining interest rates. In these interest rate environments, the Company may earn additional spread income that it refers to as floor income.
Depending on the type of loan and when it was originated, the borrower rate is either fixed to term or is reset to an annual rate each July 1. As a result, for loans where the borrower rate is fixed to term, the Company may earn floor income for an extended period of time, which the Company refers to as fixed-rate floor income, and for those loans where the borrower rate is reset annually on July 1, the Company may earn floor income to the next reset date, which the Company refers to as variable-rate floor income. All FFELP loans first originated on or after April 1, 2006 effectively earn at the SAP rate, since lenders are required to rebate fixed-rate floor income and variable-rate floor income for those loans to the Department.
The Company earned no variable-rate floor income in 2026 or 2025.
The following table shows AGM’s federally insured student loan assets that were earning fixed-rate floor income as of March 31, 2026:
| Fixed interest rate range | Borrower/lender weighted-average yield | Estimated variable conversion rate (a) | Loan balance | |||||||||||||||||
| 6.5 - 6.99% | 6.71% | 4.07% | $ | 97,565 | ||||||||||||||||
| 7.0 - 7.49% | 7.16% | 4.52% | 40,034 | |||||||||||||||||
| 7.5 - 7.99% | 7.73% | 5.09% | 77,915 | |||||||||||||||||
| 8.0 - 8.99% | 8.18% | 5.54% | 186,142 | |||||||||||||||||
> 9.0% | 9.06% | 6.42% | 79,387 | |||||||||||||||||
| $ | 481,043 | |||||||||||||||||||
(a) The estimated variable conversion rate is the estimated short-term interest rate at which loans would convert to a variable rate. As of March 31, 2026, the weighted-average estimated variable conversion rate was 5.23% and the short-term interest rate was 386 basis points.
Absent the use of derivative instruments, a rise in interest rates will reduce the amount of floor income received and has an impact on earnings due to interest margin compression caused by increasing financing costs, until such time as the federally insured loans earn interest at a variable rate in accordance with their SAP formulas. In higher interest rate environments, where the interest rate rises above the borrower rate and fixed-rate loans effectively become variable-rate loans, the impact of the rate fluctuations is reduced.
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A summary of fixed-rate floor income earned by the AGM operating segment follows:
| Three months ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Fixed-rate floor income, gross | $ | 1,563 | 975 | ||||||||
| Derivative settlements (a) | (49) | 429 | |||||||||
| Fixed-rate floor income, net | $ | 1,514 | 1,404 | ||||||||
(a) Derivative settlements consist of settlements received related to the Company's derivatives used to hedge student loans earning fixed-rate floor income. See note 4 of the notes to consolidated financial statements included in Part I, Item 1 of this report for a summary of fixed-rate floor derivatives.
AGM is also exposed to interest rate risk in the form of repricing risk and basis risk because the interest rate characteristics of AGM’s assets do not match the interest rate characteristics of the funding for those assets. In a decreasing interest rate environment, student loan spread on FFELP loans decreases in the short term because of the timing of interest rate resets on the Company's assets occurring daily in contrast to the timing of the interest rate resets on the Company's debt occurring either monthly or quarterly. This also results in student loan spread increasing in the short term in an increasing interest rate environment. The following table presents AGM’s FFELP student loan assets and related funding for those assets arranged by underlying indices as of March 31, 2026:
| Index | Frequency of variable resets | Assets | Funding of student loan assets | |||||||||||||||||
| 30-day average SOFR (a) | Daily | $ | 6,617,827 | — | ||||||||||||||||
| 3-month Treasury bill | Daily | 227,220 | — | |||||||||||||||||
| 3-month H15 financial commercial paper | Daily | 220,316 | — | |||||||||||||||||
| 30-day average SOFR / 1-month CME Term SOFR | Monthly | — | 4,795,919 | |||||||||||||||||
| 90-day average SOFR / 3-month CME Term SOFR (a) | Quarterly | — | 1,265,503 | |||||||||||||||||
| Asset-backed commercial paper / SOFR (b) | Varies | — | 484,641 | |||||||||||||||||
| Fixed rate | — | — | 293,183 | |||||||||||||||||
| Auction-rate (c) | Varies | — | 10,915 | |||||||||||||||||
| Other (d) | — | 716,863 | 932,065 | |||||||||||||||||
| $ | 7,782,226 | 7,782,226 | ||||||||||||||||||
(a) The Company has certain basis swaps outstanding in which the Company receives payments indexed to three-month SOFR and makes payments based on the one-month SOFR index (plus or minus a spread) as defined in the agreements (the "Basis Swaps"). The Company entered into these derivative instruments to better match the interest rate characteristics on its student loan assets and the debt funding such assets. The following table summarizes the Basis Swaps outstanding as of March 31, 2026:
| Maturity | Notional amount | |||||||
| 2026 | $ | 1,150,000 | ||||||
| 2027 | 250,000 | |||||||
| $ | 1,400,000 | |||||||
(b) The interest rates on the Company's FFELP warehouse facility is indexed to asset-backed commercial paper rates and daily SOFR.
(c) As of March 31, 2026, the Company was sponsor for $10.9 million of outstanding asset-backed securities that were set and provide for interest rates to be periodically reset via a "dutch auction" (the “Auction Rate Securities”). Since the auction feature has essentially been inoperable for substantially all auction rate securities since 2008, the Auction Rate Securities generally pay interest to the holder at a maximum rate as defined by the indenture. While these rates will vary, they will generally be based on a spread to SOFR or Treasury Securities, or the Net Loan Rate as defined in the financing documents.
(d) Assets include accrued interest receivable and restricted cash. Funding represents overcollateralization (equity) and other liabilities included in FFELP loan asset-backed securitizations and warehouse facilities.
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The following table summarizes the effect on the Company’s consolidated earnings based upon a sensitivity analysis performed on AGM’s variable-rate assets (including loans earning fixed-rate floor income) and liabilities. The sensitivity analysis was performed assuming the funding index increases 10 basis points and 30 basis points while holding the asset index constant, if the funding index is different than the asset index.
| Asset and funding index mismatches | |||||||||||||||||||||||||||||||||||||||||||||||
| Increase of 10 basis points | Increase of 30 basis points | Increase of 10 basis points | Increase of 30 basis points | ||||||||||||||||||||||||||||||||||||||||||||
| Dollars | Percent | Dollars | Percent | Dollars | Percent | Dollars | Percent | ||||||||||||||||||||||||||||||||||||||||
| Three months ended March 31, 2026 | Three months ended March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| Effect on earnings: | |||||||||||||||||||||||||||||||||||||||||||||||
| Increase (decrease) in pre-tax net income before impact of derivative settlements | $ | (643) | (0.9) | % | $ | (1,930) | (2.6) | % | $ | (761) | (0.7) | % | $ | (2,282) | (2.1) | % | |||||||||||||||||||||||||||||||
| Impact of derivative settlements | 345 | 0.5 | 1,036 | 1.4 | 345 | 0.3 | 1,036 | 1.0 | |||||||||||||||||||||||||||||||||||||||
| Increase (decrease) in net income before taxes | $ | (298) | (0.4) | % | $ | (894) | (1.2) | % | $ | (416) | (0.4) | % | $ | (1,246) | (1.1) | % | |||||||||||||||||||||||||||||||
| Increase (decrease) in basic and diluted earnings per share | $ | (0.01) | $ | (0.02) | $ | (0.01) | $ | (0.03) | |||||||||||||||||||||||||||||||||||||||
Interest Rate Risk - Nelnet Bank
To manage Nelnet Bank's risk from fluctuations in market interest rates, the Company actively monitors interest rates and other interest sensitive components to minimize the impact that changes in interest rates have on the fair value of assets, net income, and cash flow. To achieve this objective, the Company manages and mitigates Nelnet Bank’s exposure to fluctuations in market interest rates through several techniques, including managing the maturity, repricing, and mix of fixed- and variable-rate assets and liabilities and the use of derivative instruments.
The following table presents Nelnet Bank's loan assets, asset-backed security investments, deposits (including intercompany deposits), and bonds and notes payable (debt) by rate characteristics:
| As of March 31, 2026 | As of December 31, 2025 | ||||||||||||||||||||||
| Dollars | Percent | Dollars | Percent | ||||||||||||||||||||
| Fixed-rate loan assets | $ | 677,615 | $ | 630,570 | |||||||||||||||||||
| Fixed-rate investments | 122,442 | 83,020 | |||||||||||||||||||||
| Total fixed-rate assets | 800,057 | 33.0 | % | 713,590 | 35.4 | % | |||||||||||||||||
| Variable-rate loan assets | 583,835 | 326,992 | |||||||||||||||||||||
| Variable-rate investments | 1,037,612 | 975,268 | |||||||||||||||||||||
| Total variable-rate assets | 1,621,447 | 67.0 | 1,302,260 | 64.6 | |||||||||||||||||||
| Total assets | $ | 2,421,504 | 100.0 | % | $ | 2,015,850 | 100.0 | % | |||||||||||||||
| Fixed-rate deposits | $ | 620,801 | 29.0 | % | $ | 635,293 | 36.0 | % | |||||||||||||||
| Variable-rate deposits (a) | 1,335,953 | 1,127,667 | |||||||||||||||||||||
| Variable-rate debt | 181,663 | — | |||||||||||||||||||||
| Total variable-rate deposits and debt | 1,517,616 | 71.0 | 1,127,667 | 64.0 | |||||||||||||||||||
| Total deposits and debt instruments | $ | 2,138,417 | 100.0 | % | $ | 1,762,960 | 100.0 | % | |||||||||||||||
(a) Nelnet Bank uses derivative instruments to hedge exposure to variability in cash flows of variable-rate deposits to minimize the exposure to volatility in cash flows from future changes in interest rates. The derivatives are not reflected in the above table. See note 4 of the notes to consolidated financial statements included under Part I, Item 1 of this report for a summary of Nelnet Bank's derivatives outstanding as of March 31, 2026.
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Interest Rate and Market Risk - Investments
The following table presents the rates earned on the Company’s available-for-sale debt securities (investments), excluding securities (investments) held by Nelnet Bank.
| Three months ended March 31, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| Average balance | Interest income | Average yield | Average balance | Interest income | Average yield | ||||||||||||||||||||||||||||||
| Asset-backed securities available-for-sale (a) (b) | $ | 700,294 | 8,493 | 4.92 | % | $ | 589,299 | 7,995 | 5.50 | % | |||||||||||||||||||||||||
(a) The Company has repurchased certain of its own asset-backed securities (bonds and notes payable) in the secondary market or retained such instruments upon initial issuance. 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. The table above includes these repurchased bonds.
(b) The majority of the Company’s asset-backed securities earn floating rates with expected returns of approximately SOFR + 50 to 350 basis points to maturity. As of March 31, 2026, $205.8 million (par value) of the Company’s asset-backed securities earn a weighted-average fixed rate of 3.72%.
The Company’s portfolio of asset-backed investment securities has limited liquidity, and the Company could incur a significant loss if the investments were sold prior to maturity at an amount less than the original purchase price. As of March 31, 2026, the gross unrealized loss on the Company’s available-for-sale debt securities (including available-for-sale securities held at Nelnet Bank) was $21.2 million, and the aggregate fair value of available-for-sale debt securities with unrealized losses was $991.1 million. The Company currently has the intent and ability to retain these investments, and none of the unrealized losses were due to credit losses. See note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information.
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Consolidated Sensitivity Analysis
The following table summarizes the effect on the Company’s consolidated earnings, based upon a sensitivity analysis performed on the Company’s significant interest-earning assets and interest-bearing liabilities assuming hypothetical increases and decreases in interest rates of 100 basis points and 300 basis points, while funding spreads remain constant:
| Interest rates | |||||||||||||||||||||||||||||||||||||||||||||||
| Change from increase of 100 basis points | Change from increase of 300 basis points | Change from decrease of 100 basis points | Change from decrease of 300 basis points | ||||||||||||||||||||||||||||||||||||||||||||
| Dollars | Percent | Dollars | Percent | Dollars | Percent | Dollars | Percent | ||||||||||||||||||||||||||||||||||||||||
| Three months ended March 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| Effect on earnings: | |||||||||||||||||||||||||||||||||||||||||||||||
| AGM operating segment (a) | $ | (462) | $ | 1,330 | $ | 1,666 | $ | 7,682 | |||||||||||||||||||||||||||||||||||||||
| Nelnet Bank operating segment (b) | 614 | 1,842 | (614) | (1,842) | |||||||||||||||||||||||||||||||||||||||||||
| NFS other operating segments (c) | 1,172 | 3,517 | (1,172) | (3,517) | |||||||||||||||||||||||||||||||||||||||||||
| ETSP operating segment (d) | 1,601 | 4,802 | (1,601) | (4,802) | |||||||||||||||||||||||||||||||||||||||||||
| Corporate and Other Activities (d) | 697 | 2,091 | (697) | (2,091) | |||||||||||||||||||||||||||||||||||||||||||
| Increase (decrease) in net income before taxes | $ | 3,622 | 4.8 | % | $ | 13,582 | 18.0 | % | $ | (2,418) | (3.2) | % | $ | (4,570) | (6.0) | % | |||||||||||||||||||||||||||||||
| Increase (decrease) in basic and diluted earnings per share | $ | 0.08 | $ | 0.29 | $ | (0.05) | $ | (0.10) | |||||||||||||||||||||||||||||||||||||||
| Three months ended March 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| Effect on earnings: | |||||||||||||||||||||||||||||||||||||||||||||||
| AGM operating segment (a) | $ | 402 | $ | 5,267 | $ | 355 | $ | 3,252 | |||||||||||||||||||||||||||||||||||||||
| Nelnet Bank operating segment (b) | 728 | 2,184 | (728) | (2,184) | |||||||||||||||||||||||||||||||||||||||||||
| NFS other operating segments (c) | 916 | 2,747 | (916) | (2,747) | |||||||||||||||||||||||||||||||||||||||||||
| ETSP operating segment (d) | 1,567 | 4,702 | (1,567) | (4,702) | |||||||||||||||||||||||||||||||||||||||||||
| Corporate and Other Activities (d) | 1,392 | 4,177 | (1,392) | (4,177) | |||||||||||||||||||||||||||||||||||||||||||
| Increase (decrease) in net income before taxes | $ | 5,005 | 4.7 | % | $ | 19,077 | 18.0 | % | $ | (4,248) | (4.0) | % | $ | (10,558) | (9.9) | % | |||||||||||||||||||||||||||||||
| Increase (decrease) in basic and diluted earnings per share | $ | 0.10 | $ | 0.40 | $ | (0.09) | $ | (0.22) | |||||||||||||||||||||||||||||||||||||||
(a)Impact associated with variable-rate restricted cash, variable-rate loans, and variable-rate bonds and notes payable, including the impact of derivative settlements.
(b)Impact associated with variable-rate loans and debt securities (investments) and variable-rate deposits and bonds and notes payable, including the impact of derivative settlements.
(c)Impact associated with variable-rate debt securities (investments).
(d)Impact associated with interest earning operating and restricted cash accounts.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Company’s management, with the participation of the Company's principal executive and principal financial officers, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of March 31, 2026. Based on this evaluation, the Company’s principal executive and principal financial officers concluded that the Company's disclosure controls and procedures were effective as of March 31, 2026.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the fiscal quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no material changes from the information referred to in the Legal Proceedings section of the Company's Annual Report on Form 10-K for the year ended December 31, 2025 under Part I, Item 3 of such Form 10-K.
ITEM 1A. RISK FACTORS
There have been no material changes from the risk factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 in response to Part I, Item 1A of such Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Stock Repurchases
The following table summarizes the repurchases of Class A common stock during the first quarter of 2026 by the Company or any “affiliated purchaser” of the Company, as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934. Certain share repurchases included in the table below were made pursuant to a trading plan adopted by the Company in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934.
| Period | Total number of shares purchased (a) | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs (b) | Maximum number of shares that may yet be purchased under the plans or programs (b) | ||||||||||||||||||||||
| January 1 - January 31, 2026 | — | $ | — | — | 4,488,349 | |||||||||||||||||||||
| February 1 - February 28, 2026 | 10,367 | 128.46 | 10,367 | 4,477,982 | ||||||||||||||||||||||
| March 1 - March 31, 2026 | 115,952 | 128.91 | 79,761 | 4,398,221 | ||||||||||||||||||||||
| Total | 126,319 | $ | 128.88 | 90,128 | ||||||||||||||||||||||
(a) The total number of shares includes: (i) shares repurchased pursuant to the stock repurchase program discussed in footnote (b) below; and (ii) shares owned and tendered by employees to satisfy tax withholding obligations upon the vesting of restricted shares. Shares of Class A common stock tendered by employees to satisfy tax withholding obligations included 36,191 shares in March 2026. Unless otherwise indicated, shares owned and tendered by employees to satisfy tax withholding obligations were purchased at the closing price of the Company’s shares on the date of vesting.
(b) On May 8, 2025, the Company announced that its 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 March 31, 2026, 4,398,221 shares remained authorized for repurchase under the Company's stock repurchase program.
Working capital and dividend restrictions/limitations
The Company's $435.0 million unsecured line of credit, which is available through March 31, 2031, imposes restrictions on the payment of dividends through covenants requiring a minimum consolidated net worth. In addition, trust indentures and other financing agreements governing debt issued by the Company's lending subsidiaries generally have limitations on the amounts of funds that can be transferred to the Company by its subsidiaries through cash dividends at certain times. Further, Nelnet Bank and Nelnet Insurance Services' consolidated captive insurance companies are subject to laws and regulations that restrict the ability to pay dividends to the Company and authorize regulatory authorities to prohibit or limit the payment of dividends by these subsidiaries to the Company. These provisions do not currently materially limit the Company's ability to pay dividends and, based on the Company's current financial condition and recent results of operations, the Company does not currently anticipate that these provisions will materially limit the future payment of dividends.
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Plans
During the first quarter of 2026, none of the Company's officers or directors adopted or terminated any contract, instruction, or written plan for the purchase or sale of the Company's securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c), referred to as Rule 10b5-1 trading plans, or any non-Rule 10b5-1 trading arrangement.
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ITEM 6. EXHIBITS
| 10.1 | Credit Agreement dated as of March 31, 2026, between Nelnet, Inc., U.S. Bank National Association, as Administrative Agent, Wells Fargo Bank, National Association, as Syndication Agent, Royal Bank of Canada, as Documentation Agent, U.S. Bank National Association and Wells Fargo Securities, LLC, as Joint Lead Arrangers and Joint Book Runners, and various lender parties thereto, filed as Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on April 2, 2026 and incorporated herein by reference. | ||||
| 31.1* | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer Jeffrey R. Noordhoek. | ||||
| 31.2* | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Financial Officer James D. Kruger. | ||||
| 32** | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||||
| 101.INS* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | ||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | ||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | ||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | ||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | ||||
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | ||||
| * | Filed herewith | ||||
| ** | Furnished herewith | ||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| NELNET, INC. | ||||||||||||||
| Date: | May 7, 2026 | By: | /s/ JEFFREY R. NOORDHOEK | |||||||||||
| Name: | Jeffrey R. Noordhoek | |||||||||||||
| Title: | Chief Executive Officer Principal Executive Officer | |||||||||||||
| Date: | May 7, 2026 | By: | /s/ JAMES D. KRUGER | |||||||||||
| Name: | James D. Kruger | |||||||||||||
| Title: | Chief Financial Officer Principal Financial Officer and Principal Accounting Officer | |||||||||||||
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FAQ
How did Nelnet (NNI) perform financially in the quarter ended March 31, 2026?
Nelnet reported net income attributable to shareholders of $71.1 million, down from $82.6 million a year earlier. Earnings per diluted share were $1.97 versus $2.26. Net interest income rose to $101.6 million, but higher credit provisions reduced overall profitability.
What drove changes in Nelnet (NNI) loan loss provisions in Q1 2026?
The provision for loan losses increased to $53.2 million from $15.3 million, mainly due to significant growth in Pay Later and other consumer receivables. Management explains the higher allowance primarily reflects the cumulative volume of new loans, with credit performance metrics remaining consistent with expectations.
How important are fee-based businesses to Nelnet (NNI) in Q1 2026?
Fee-based operations remained central, with loan servicing and systems revenue of $127.8 million and education technology services and payments revenue of $154.4 million. These activities provide diversified, recurring revenue alongside interest income from Nelnet’s large student loan and consumer loan portfolios.
What was the impact of the NDS Canada acquisition on Nelnet (NNI)?
Nelnet acquired NDS Canada for approximately CAD $144.2 million (about $105.8 million). The deal added $69.1 million of intangible assets and $47.0 million of goodwill, expanding Nelnet’s loan servicing presence in the Canada Student Loan Program and enhancing its international servicing capabilities.
How is Nelnet Bank contributing to Nelnet (NNI) results in Q1 2026?
Nelnet Bank reported loans of $1.26 billion and deposits of $1.74 billion as of March 31, 2026. It generated interest income of $35.2 million and net interest income after provisions of $13.1 million, reflecting continued growth as part of Nelnet’s financial services strategy.
What non-GAAP earnings measure does Nelnet (NNI) highlight for Q1 2026?
Nelnet presents non-GAAP net income excluding derivative market value adjustments. For Q1 2026, this measure was $69.9 million, or $1.94 per share, compared with $87.4 million, or $2.39, in Q1 2025. Management believes this helps isolate operating performance from interest rate–driven derivative volatility.