NELNET INC

Previous wording

(Management’s Discussion and Analysis of Financial Condition and Results of Operations is for the three and six months ended June 30, 2026 and 2025. All dollars are in thousands, except per share amounts, unless otherwise noted.)

Current wording

(Management’s Discussion and Analysis of Financial Condition and Results of Operations is for the three and nine months ended September 30, 2026 and 2025. All dollars are in thousands, except per share amounts, unless otherwise noted.)

Previous wording

•risks related to the ability to successfully maintain and increase allocated volumes of student loans serviced by the Company under existing and future servicing contracts with the Department, risks related to unfavorable contract modifications or interpretations, risks related to consistently meeting service requirements to avoid the assessment of performance penalties, and risks related to the Company's ability to comply with agreements with third-party customers for the servicing of Federal Direct Loan Program, Canadian, FFEL Program, private education, and consumer loans;

Current wording

•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, risks related to unfavorable contract modifications or interpretations, risks related to consistently meeting service requirements to avoid the assessment of performance penalties, and risks related to the Company's ability to comply with agreements with third-party customers for the servicing of Federal Direct Loan Program, Canadian, FFEL Program, private education, and consumer loans;

Previous wording

(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.

Current wording

(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.

Previous wording

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:

Current wording

In addition to AGM and Nelnet Bank, the NFS division's other operating segments that are not reportable include the operating results of:

Previous wording

The information below presents the operating results (net income (loss) before taxes) for each of the Company's reportable and certain other operating segments reconciled to the consolidated financial statements for the three and six months ended June 30, 2026 and 2025. See "Results of Operations" for additional detail regarding each reportable operating segment, the NFS operating segments, and Corporate and Other Activities under this Item 2.

Current wording

The information below presents the operating results (net income (loss) before taxes) for each of the Company's reportable and certain other operating segments reconciled to the consolidated financial statements for the three and nine months ended September 30, 2026 and 2025. See "Results of Operations" for additional detail regarding each reportable operating segment, the NFS operating segments, and Corporate and Other Activities under this Item 2.

Previous wording

Impact of Transactions on 2026 Operating Results

Current wording

Impact of Transactions on 2026 Operating Results Compared with 2025

Previous wording

Operating results for the three and six months ended June 30, 2026 compared to the same periods in 2025 were influenced by several transactions that significantly affected certain components of income. The impacts of these items are summarized below to provide additional context for the Company’s financial performance during the period.

Current wording

Operating results for the three and nine months ended September 30, 2026, compared with the same periods in 2025, were significantly affected by several transactions, as summarized below.

Previous wording

In its initial years, Nelnet Bank incurred operating losses as it invested in the personnel and infrastructure needed to support future growth. As the bank has matured, operating expenses have stabilized while loan and deposit balances have continued to expand. This operating leverage has contributed to increased net interest income and net income for the three and six months ended June 30, 2026, compared with the corresponding periods in 2025.

Current wording

In its initial years, Nelnet Bank incurred operating losses as it invested in the personnel and infrastructure needed to support future growth. As the bank has matured, operating expenses have stabilized while loan, investment, and deposit balances have continued to expand. This operating leverage has contributed to increased net interest income and net income for the three and nine months ended September 30, 2026, compared with the corresponding periods in 2025.

Previous wording

During 2026, the Company’s AGM operating segment contributed certain student loan trusts to Nelnet Bank, including $716.3 million of federally insured loans. Following these contributions, Nelnet Bank repaid the related securitization debt and funded the loans with deposits. These transactions were a significant contributor to the increase in Nelnet Bank's loan balance during 2026.

Current wording

During 2026, the Company’s AGM operating segment contributed certain student loan trusts to Nelnet Bank that included $780.7 million of federally insured loans. Following these contributions, Nelnet Bank repaid the related securitization debt and funded the loans with deposits. These transactions were a significant contributor to the increase in Nelnet Bank's loan balance during 2026.

Previous wording

•Bond portfolio and marketable equity securities: During the three and six months ended June 30, 2026, the Company recognized an unrealized gain of $8.6 million and an unrealized loss of $1.1 million, respectively, resulting from changes in the fair value of certain marketable equity securities. These amounts are included in "other income, net" in the table above. Operating results may continue to fluctuate and be impacted in future periods by fair value adjustments of marketable equity securities.

Current wording

During the three and nine months ended September 30, 2026, the Company recognized an unrealized loss of $9.3 million and $10.3 million, respectively, from changes in the fair value of certain marketable equity securities. Operating results may continue to fluctuate and be impacted in future periods by fair value adjustments of marketable equity securities.

Previous wording

During the three and six months ended June 30, 2026, the Company recognized $22.5 million and $45.0 million of losses related to its solar tax equity partnerships, respectively. These losses reflect the accounting treatment required under the HLBV method and were influenced by contributions made to these partnerships in recent periods. The HLBV method commonly results in the recognition of accelerated losses in the early years of a partnership. The Company consolidates its solar tax equity partnerships because it holds management and control rights, with third‑party investor interests reflected as noncontrolling interests. Losses attributable to noncontrolling interest partners totaled $19.5 million and $32.9 million for the three and six months ended June 30, 2026, and are included in “net loss attributable to noncontrolling interests” in the table above. See note 5 of the notes to consolidated financial statements in this report for additional information.

Current wording

During the three and nine months ended September 30, 2026, the Company recognized $18.5 million and $63.6 million, respectively, of net losses related to its solar tax equity partnerships, compared with $10.9 million and $11.9 million for the same periods in 2025. These losses reflect the accounting treatment under the HLBV method, which is influenced by contributions made to these partnerships in recent periods, partially offset by gains on sales of partnership interests. The HLBV method generally results in the recognition of accelerated losses in the early years of a partnership. The Company consolidates its solar tax equity partnerships because it holds management and control rights, with third‑party investor interests reflected as noncontrolling interests. Of the net losses recognized during the three and nine months ended September 30, 2026, $18.5 million and $51.4 million, respectively, were attributed to noncontrolling interest partners, compared with $5.7 million and $9.9 million for the same periods in 2025, and are included in “net loss attributable to noncontrolling interests” in the table above. See note 5 of the notes to consolidated financial statements in this report for additional information.

Previous wording

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.

Current wording

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. Prior to such sale, NRE incurred losses of $6.0 million and $30.2 million during the three and nine months ended September 30, 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.

Previous wording

During the three months ended June 30, 2025, the Company recognized a $175.0 million gain on a partial redemption of the Company's voting membership interests in ALLO. In addition, ALLO redeemed all of the Company's preferred membership interests in ALLO that were outstanding at that time. Included in the Company's operating results for the three and six months ended June 30, 2025 was $6.0 million and $14.4 million of ALLO preferred return, respectively. The operating results from the Company's investment in ALLO is included in "other corporate operating segments" in the table above.

Current wording

During the three months ended June 30, 2025, the Company recognized a $175.0 million gain on a partial redemption of the Company's voting membership interests in ALLO. In addition, ALLO redeemed all of the Company's preferred membership interests in ALLO that were outstanding at that time. Included in the Company's operating results for the nine months ended September 30, 2025 was $14.4 million of ALLO preferred return that was earned prior to redemption.

Previous wording

An analysis of the Company's consolidated operating results for the three and six months ended June 30, 2026 compared with the same periods in 2025 is provided below.

Current wording

An analysis of the Company's consolidated operating results for the three and nine months ended September 30, 2026 compared with the same periods in 2025 is provided below.

Previous wording

On February 2, 2026, the Company acquired a Canadian student loan servicing business. NDS Canada delivers technology-enabled student loan servicing for governments and a financial institution, managing 2.7 million borrowers on proprietary platforms. Beginning on the acquisition date, the operating results of NDS Canada are included in the Loan Servicing and Systems reportable operating segment. See note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information.

Current wording

On February 2, 2026, the Company acquired a Canadian student loan servicing business. NDS Canada delivers technology-enabled student loan servicing for governments and a financial institution, managing 2.8 million borrowers on proprietary platforms. Beginning on the acquisition date, the operating results of NDS Canada are included in the Loan Servicing and Systems reportable operating segment. See note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information.

Previous wording

(a) Before tax operating margin, excluding amortization expense, is a non-GAAP measure of before tax operating profitability as a percentage of revenue, and for the LSS segment is calculated as income before income taxes less amortization expense related to the acquired intangibles from the NDS Canada acquisition ($2.8 million and $4.7 million for the three and six months ended June 30, 2026, respectively), divided by the total of loan servicing and systems revenue (net of contract fulfillment and acquisition costs), intersegment servicing revenue, and other income. The Company uses this metric to monitor and assess the segment’s performance, manage operating costs, identify and evaluate business trends affecting the segment, and make strategic decisions, and believes that it provides additional information to facilitate an understanding of the operating performance of the segment and provides a meaningful comparison of the results of operations between periods.

Current wording

(a) Before tax operating margin, excluding amortization expense and government loan servicing contract modification revenue (as discussed above), 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 the government loan servicing contract modification revenue plus the amortization expense related to the acquired intangibles from the NDS Canada acquisition ($2.8 million and $7.5 million for the three and nine months ended September 30, 2026, respectively), divided by the total of loan servicing and systems revenue (net of contract fulfillment and acquisition costs), intersegment servicing revenue, and other income, less the government loan servicing contract modification 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 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.

Previous wording

Before‑tax operating margin, excluding amortization expense, decreased in 2026 compared with 2025 due to a decrease in Department loan servicing revenue, primarily driven by a decrease in the number of borrowers and further explained in the disaggregated revenue table below. This was partially offset by lower salaries and benefits (excluding the impact of employees added through the NDS Canada acquisition) reflecting ongoing cost-efficiency initiatives and headcount reductions, as well as lower postage expense (which was also driven by a decrease in Department borrowers).

Current wording

Before‑tax operating margin, excluding amortization expense and government loan servicing contract modification revenue, decreased in 2026 compared with 2025 due to investment in the Company's servicing platforms and a decrease in Department loan servicing revenue, primarily driven by a decrease in the number of borrowers which is further explained in the disaggregated revenue table below. This was partially offset by lower salaries and benefits (excluding the impact of employees added through the NDS Canada acquisition) reflecting ongoing cost-efficiency initiatives and headcount reductions.

Previous wording

ETSP before tax operating margin decreased in 2026 compared with 2025 due to an increase in operating expenses to support the growth in the customer base and investments in the development of new technologies.

Current wording

ETSP before tax operating margin decreased for the nine months ended September 30, 2026 compared with the same period in 2025 due to an increase in operating expenses to support the growth in the customer base and investments in the development of new technologies. The timing and amount of investments made for new technologies can impact margin contribution during any given period.

Previous wording

As of June 30, 2026, the AGM operating segment had a $7.83 billion loan portfolio, consisting primarily of federally insured loans. For a summary of the Company’s loan portfolio as of June 30, 2026 and December 31, 2025, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Current wording

As of September 30, 2026, the AGM operating segment had a $7.63 billion loan portfolio, consisting primarily of federally insured loans. For a summary of the Company’s loan portfolio as of September 30, 2026 and December 31, 2025, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Previous wording

(a) The Company began to acquire Pay Later receivables during the third quarter of 2025. Consumer loan acquisitions excluding Pay Later receivables was $205.5 million and $387.5 million during the three and six months ended June 30, 2026, respectively.

Current wording

(a) The Company began to acquire Pay Later receivables in August 2025. Consumer loan acquisitions excluding Pay Later receivables was $169.5 million and $557.1 million during the three and nine months ended September 30, 2026, respectively, compared with $169.9 million and $442.2 million during the same periods in 2025.

Previous wording

The Company has partial ownership in certain consumer, private education, and federally insured student loan securitizations that are accounted for as held-to-maturity beneficial interest investments and included in "other investments and notes receivable, net" in the Company's consolidated financial statements. As of the latest remittance reports filed by the various trusts prior to or as of June 30, 2026, the Company’s ownership correlates to approximately $1.58 billion of loans included in these securitizations. The loans held in these securitizations are not included in the above table. Investment interest income earned by the Company from the beneficial interest in loan securitizations is included in "investment interest" on the Company's consolidated statements of income and is not a component of the Company's loan interest income.

Current wording

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 September 30, 2026, the Company’s ownership correlates to approximately $1.49 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.

Previous wording

The Company also has ownership interests in certain entities whose primary business is to acquire, own, and manage loan assets which are accounted for as equity method investments and included in "other investments and notes receivable, net" in the Company's consolidated financial statements. As of June 30, 2026, the Company's ownership in these entities correlates to approximately $1.20 billion of loans included in these entities. The loans held in these entities are not included in the above table. The ownership interests in these entities are recorded at cost and subsequently increased or decreased by the amount of the Company's proportionate share of the net earnings or losses of each entity. During the three months ended June 30, 2026 and 2025 and six months ended June 30, 2026 and 2025, the Company recognized income of $8.6 million and $4.2 million, respectively, and $24.0 million and $5.3 million, respectively, related to these businesses that is included in "other, net" in "other income (expense)" on the consolidated statements of income and is not a component of the Company's loan interest income.

Current wording

The Company also has ownership interests in certain entities whose primary business is to acquire, own, and manage loan assets which are accounted for as equity method investments and included in "other investments and notes receivable, net" in the Company's consolidated financial statements. As of September 30, 2026, the Company's ownership interests correlates to approximately $1.21 billion of loans included in these entities. The loans held in these entities are not included in the above table. The ownership interests in these entities are recorded at cost and subsequently increased or decreased by the amount of the Company's proportionate share of the net earnings or losses of each entity. The income activity from these ventures is included in "other, net" in "other income (expense)" on the consolidated statements of income and is not a component of the Company's loan interest income.

Previous wording

For a summary of the allowance as a percentage of the ending balance, loan status, delinquency amounts, and other key credit quality indicators for each of AGM’s loan portfolios as of June 30, 2026 and December 31, 2025; and the activity in AGM's allowance for loan losses and net charge-offs as a percentage of average loans for the three and six months ended June 30, 2026 and 2025, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Current wording

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 September 30, 2026 and December 31, 2025; and the activity in AGM's allowance for loan losses and net charge-offs as a percentage of average loans for the three and nine months ended September 30, 2026 and 2025, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Previous wording

Variable loan spread was higher during the three and six months ended June 30, 2026 compared with the same periods in 2025 due to an increase in consumer loans as a percentage of AGM’s overall loan portfolio. Consumer loans earn a higher yield than FFELP loans. Variable loan spread was also impacted by the increase in discount accretion primarily from Pay Later receivables the Company began to purchase during the third quarter of 2025 at a discount that have a short estimated life. The difference between variable loan spread and loan spread is fixed-rate floor income earned on a portion of AGM's federally insured student loan portfolio. See Item 3, “Quantitative and Qualitative Disclosures About Market Risk - Interest Rate Risk - AGM Operating Segment,” which provides additional detail on AGM's federally insured student loans earning fixed-rate floor income.

Current wording

Variable loan spread was higher during the three and nine months ended September 30, 2026 compared with the same periods in 2025 due to an increase in consumer loans as a percentage of AGM’s overall loan portfolio. Consumer loans earn a higher yield than FFELP loans. The increase is also due to an increase in loans funded by the Company with operating cash (versus funded with debt). As of September 30, 2026, AGM had $444.1 million (par value) of unencumbered federally insured, private education, consumer, and other loans (as compared to $328.3 million, $291.9 million, and $253.5 million as of December 31, 2025, September 30, 2025, and December 31, 2024, respectively). The difference between variable loan spread and loan spread is fixed-rate floor income earned on a portion of AGM's federally insured student loan portfolio. See Item 3, “Quantitative and Qualitative Disclosures About Market Risk - Interest Rate Risk - AGM Operating Segment,” which provides additional detail on AGM's federally insured student loans earning fixed-rate floor income.

Previous wording

•AGM began to acquire Pay Later receivables during the third quarter of 2025. These receivables are generally purchased at a discount and have a short expected duration. As of June 30, 2026, the balance of Pay Later receivables was $699.8 million. Growth in Pay Later receivable volumes contributed to increased loan interest income, higher provision for loan losses, and increased borrower late fee income.

Current wording

•AGM began to acquire Pay Later receivables in August 2025. These receivables are generally purchased at a discount and have a short expected duration. As of September 30, 2026, the balance of Pay Later receivables was $775.2 million. Growth in Pay Later receivable volumes contributed to increased loan interest income, higher provision for loan losses, and increased borrower late fee income.

Previous wording

•AGM holds interests in certain joint ventures engaged in the acquisition, ownership, and management of loan portfolios. During the three and six months ended June 30, 2026, AGM recognized $8.6 million and $24.0 million of income from these joint ventures, respectively, compared with $4.2 million and $5.3 million in the same periods of 2025, respectively. Such amounts are included in “Other income, net” in the above table titled “Summary and Comparison of Operating Results.”

Current wording

•AGM holds interests in certain joint ventures engaged in the acquisition, ownership, and management of loan portfolios. During the three and nine months ended September 30, 2026, AGM recognized $12.4 million and $36.4 million of income from these joint ventures, respectively, compared with $4.5 million and $9.6 million in the same periods of 2025, respectively. Such amounts are included in “Other income, net” in the above table titled “Summary and Comparison of Operating Results.”

Previous wording

•During 2026, AGM contributed certain student loan trusts to Nelnet Bank that included $716.3 million of federally insured loans. The contribution of these loans to Nelnet Bank has resulted in a decrease in loan interest income for the three and six months ended June 30, 2026 compared with the same periods in 2025.

Current wording

•During 2026, AGM contributed certain student loan trusts to Nelnet Bank that included $780.7 million of federally insured loans. The contribution of these loans to Nelnet Bank has resulted in a decrease in net interest income in the AGM operating segment for the three and nine months ended September 30, 2026 compared with the same periods in 2025.

Previous wording

As of June 30, 2026, Nelnet Bank had a $1.64 billion loan portfolio. For a summary of Nelnet Bank’s loan portfolio as of June 30, 2026 and December 31, 2025, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Current wording

As of September 30, 2026, Nelnet Bank had a $1.70 billion loan portfolio. For a summary of Nelnet Bank’s loan portfolio as of September 30, 2026 and December 31, 2025, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Previous wording

For a summary of the allowance as a percentage of the ending balance, loan status, delinquency amounts, and other key credit quality indicators for each of Nelnet Bank's loan portfolios as of June 30, 2026 and December 31, 2025; and the activity in Nelnet Bank's allowance for loan losses and net charge-offs as a percentage of average loans for the three and six months ended June 30, 2026 and 2025, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Current wording

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 September 30, 2026 and December 31, 2025; and the activity in Nelnet Bank's allowance for loan losses and net charge-offs as a percentage of average loans for the three and nine months ended September 30, 2026 and 2025, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Previous wording

As of June 30, 2026, Nelnet Bank had a $1.29 billion investment portfolio, consisting primarily of asset-backed securities. For a summary of Nelnet Bank's asset-backed securities investments as of June 30, 2026 and December 31, 2025, see note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Current wording

As of September 30, 2026, Nelnet Bank had a $1.64 billion investment portfolio, consisting primarily of asset-backed securities. For a summary of Nelnet Bank's asset-backed securities investments as of September 30, 2026 and December 31, 2025, see note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Previous wording

As of June 30, 2026, Nelnet Bank had $2.51 billion of deposits, which included $285.8 million of intercompany deposits from Nelnet, Inc. (parent company) and its subsidiaries, and thus have been eliminated for consolidated financial reporting purposes. For a summary of deposits as of June 30, 2026 and December 31, 2025, see note 9 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Current wording

As of September 30, 2026, Nelnet Bank had $2.81 billion of deposits, which included $239.2 million of intercompany deposits from Nelnet, Inc. (parent company) and its subsidiaries, and thus have been eliminated for consolidated financial reporting purposes. For a summary of deposits as of September 30, 2026 and December 31, 2025, see note 9 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Previous wording

•Nelnet Bank’s growth was driven by higher loan and investment balances, funded primarily through increased deposit balances. During 2026, the Company’s Asset Generation and Management operating segment contributed certain student loan trusts to Nelnet Bank that included $716.3 million of federally insured loans. Following these contributions, Nelnet Bank repaid the related securitization debt and funded the loans with deposits. These transactions were a significant contributor to the increase in loan balances during 2026.

Current wording

•Nelnet Bank’s growth was driven by higher loan and investment balances, funded primarily through increased deposit balances. During 2026, the Company’s Asset Generation and Management operating segment contributed certain student loan trusts to Nelnet Bank that included $780.7 million of federally insured loans. Following these contributions, Nelnet Bank repaid the related securitization debt and funded the loans with deposits. These transactions were a significant contributor to the increase in loan balances during 2026.

Previous wording

In its initial years, Nelnet Bank incurred operating losses as it invested in the personnel and infrastructure needed to support future growth. As the bank has matured, operating expenses have stabilized while loan and deposit balances have continued to expand. This operating leverage has contributed to increased net interest income and net income for the three and six months ended June 30, 2026, compared with the corresponding periods in 2025.

Current wording

In its initial years, Nelnet Bank incurred operating losses as it invested in the personnel and infrastructure needed to support future growth. As the bank has matured, operating expenses have stabilized while loan and deposit balances have continued to expand. This operating leverage has contributed to increased net interest income and net income for the three and nine months ended September 30, 2026, compared with the corresponding periods in 2025.

Previous wording

•Nelnet Insurance Services: The increase in reinsurance premiums earned in the three and six months ended June 30, 2026 compared with the same periods in 2025 was primarily due to timing of premium recognition under certain reinsurance treaties. Net income was positively impacted in 2026 as compared to 2025 due to an increase in interest income from the float earned on cash premiums and improved underwriting margins.

Current wording

•Nelnet Insurance Services: The increase in reinsurance premiums earned in the three and nine months ended September 30, 2026 compared with the same periods in 2025 was due to growth of programs with existing carriers and a decrease in the ceded portion of certain treaties. Net income was positively impacted in 2026 as compared with 2025 due to an increase in interest income earned on increased cash and investment balances and improved underwriting margins.

Previous wording

During the three and six months ended June 30, 2026, the Company recognized an unrealized gain of $8.6 million and an unrealized loss of $1.1 million, respectively, from changes in the fair value of certain marketable equity securities. These fair value adjustments were a significant driver of the increase in income before income taxes for the NFS other operating segments in the second quarter of 2026 compared with the prior-year period; however, they had only a limited impact on the year-to-date comparison. Operating results may continue to fluctuate and be impacted in future periods by fair value adjustments of marketable equity securities.

Current wording

•Bond portfolio and marketable equity securities: Decrease in net interest income in the three and nine months ended September 30, 2026 compared with the same periods in 2025 was due to a decrease in both the weighted average bond investment portfolio and interest rates. In addition, during the three and nine months ended September 30, 2026, the Company recognized an unrealized loss of $9.3 million and $10.3 million, respectively, resulting from changes in the fair value of certain marketable equity securities. These amounts are included in "other income, net" in the table above. Operating results may continue to fluctuate and be impacted in future periods by fair value adjustments of marketable equity securities.

Previous wording

•Solar tax equity: The Company holds equity interests in partnerships that invest in solar tax equity projects intended to promote renewable energy generation. Because the Company has management and control over these partnerships, they are consolidated in the Company’s consolidated financial statements, with third-party interests presented as noncontrolling interests. The Company accounts for its solar tax equity interests using the HLBV method, which commonly results in the recognition of accelerated losses in the early years of a partnership. Based on contributions made to these partnerships in recent periods, the Company recognized losses of $22.5 million and $45.0 million related to its solar tax equity partnerships during the three and six months ended June 30, 2026, respectively, compared with $1.5 million and $1.0 million for the same periods in 2025. These amounts are included in “other income, net” in the tables above. Losses attributable to noncontrolling interest partners were $19.5 million and $32.9 million for the three and six months ended June 30, 2026, respectively, compared with $3.2 million and $4.2 million for the same periods in 2025. These amounts are included in “net loss attributable to noncontrolling interests” in the tables above. See note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Current wording

•Solar tax equity: The Company holds equity interests in partnerships that invest in solar tax equity projects designed to promote renewable energy generation. Because the Company has management and control over these partnerships, the partnerships are consolidated in the Company’s consolidated financial statements, with third-party interests presented as noncontrolling interests. The Company accounts for its interests in these partnerships using the HLBV method, which generally results in the recognition of accelerated losses in the early years of a partnership. As a result of contributions made to these partnerships in recent periods, the Company recognized losses of $18.5 million and $63.6 million for the three and nine months ended September 30, 2026, respectively, compared with $10.9 million and $11.9 million for the same periods in 2025. These losses are included in “other income, net” in the tables above. Losses attributable to noncontrolling interest partners were $18.5 million and $51.4 million for the three and nine months ended September 30, 2026, respectively, compared with $5.7 million and $9.9 million for the same periods in 2025. These amounts are included in “net loss attributable to noncontrolling interests” in the tables above. For additional information regarding the impact of solar tax equity partnerships on the Company's results of operations, see note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Previous wording

•Gain from partial redemption of ALLO investment: The operating results from the Company's investment in ALLO is included under "Other" in the tables above. In June 2025, the Company recognized a $175.0 million gain on a partial redemption of the Company's voting membership interests in ALLO. In addition, ALLO redeemed all of the Company's preferred membership interests in ALLO that were outstanding at that time. Included in the Company's operating results for the three and six months ended June 30, 2025 was $6.0 million and $14.4 million of ALLO preferred return, respectively. The preferred return is included in "other income, net" in the tables above.

Current wording

•Gain from partial redemption of ALLO investment: The operating results from the Company's investment in ALLO is included under "Other" in the tables above. In June 2025, the Company recognized a $175.0 million gain on a partial redemption of the Company's voting membership interests in ALLO. In addition, ALLO redeemed all of the Company's preferred membership interests in ALLO that were outstanding at that time. Included in the Company's operating results for the nine months ended September 30, 2025 was $14.4 million of ALLO preferred return that was earned prior to redemption in June 2025. The preferred return is included in "other income, net" in the table above.

Previous wording

(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.

Current wording

(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 that the restrictions on trading these bonds will lapse at various times from March through October 2027, as the applicable retention thresholds are met.

Previous wording

(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.

Current wording

(e)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.

Previous wording

(e)The Company has a $435.0 million unsecured line of credit that matures on March 31, 2031. As of June 30, 2026, there was no amount outstanding on the unsecured line of credit and $435.0 million was available for future use.

Current wording

(f)The Company has a $435.0 million unsecured line of credit that matures on March 31, 2031. As of September 30, 2026, there was no amount outstanding on the unsecured line of credit and $435.0 million was available for future use.