NELNET INC

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(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:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts, unless otherwise noted)

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:

(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:

(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:

The following table summarizes annualized net charge-offs as a percentage of average loans for each of the Company's loan portfolios:

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:

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:

(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.

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

Nelnet Bank Consumer and Other Loans

(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.

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.

3. Bonds and Notes Payable

The following tables summarize the Company’s outstanding debt obligations by type of instrument:

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:

(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 wasno 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.

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.

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.

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.

(a) These $25 million notional amount derivatives have forward effective start dates in April 2026 and May 2026, respectively.

(b) This $25 million notional amount derivative has a forward effective start date in February 2027.

(c) This $30 million notional amount derivative has a forward effective start date in May 2028.

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.

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:

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:

5. Investments and Notes Receivable

“Total investments and notes receivable” consisted of the following:

(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.

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:

The following table presents, by remaining contractual maturity, the amortized cost and fair value of debt securities as of March 31, 2026:

(a) The Company's beneficial interest in loan securitizations is not due at a single maturity date.

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:

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, andnone of the unrealized losses were due to credit losses.

The following table summarizes the gross proceeds received and gross realized gains and losses related to sales of available-for-sale asset-backed securities:

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.

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.

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.

7. Intangible Assets

Intangible assets consisted of the following:

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:

8. Goodwill

The change in the carrying amount of goodwill by reportable operating segment was as follows:

9. Bank Deposits

The following table summarizes Nelnet Bank’s deposits, excluding intercompany 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.

The following table presents the remaining maturities of certificates of deposit as of March 31, 2026:

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.

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:

(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.

(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

12. Disaggregated Revenue

The following tables present disaggregated revenue for the Company's fee-based operating segments:

Loan Servicing and Systems

(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

Other Income (Expense)

The following table presents the components of "other, net" in "other income (expense)" on the consolidated statements of income:

13. Reinsurance

The following table presents reinsurance premiums written and earned and loss reserves, commissions, and broker fees:

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 afive-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:

(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.

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.