NNI 10-K & 10-Q changes, risk factors and insider trading

We and our businesses are subject to a variety of risks. This section discusses material risk factors that could adverselyhave affecta material adverse impact on our business, financial condition, results andof condition,operations, liquidity, and an investment in us. Although this section highlights key risk factors, other risks may emerge at any time, and we cannot predict all risks or estimate the extent to which they may affect us.

Our loan portfolios, and investmentresidual interests therein, are subject to credit risk, prepayment risk, and certain risks related to interest rates, and the derivatives we use to manage interest rate risks, each of which could reduce the expected cash flows and earnings on our portfolios.

FutureOur lossesloan dueportfolio is subject to defaultscredit onrisk, loansincluding held by us present creditthe risk whichthat couldborrowers havemay abe material adverse impact on our business, financial condition,unable or resultsunwilling ofto operations.repay Ourtheir estimatedobligations. We estimate our allowance for loan losses isusing baseda on periodic evaluationsrange of thequantitative variousand factorsqualitative impacting credit risk in our loan portfolios,factors, including repayment status;and delinquency status; type of private education or consumer loan program type; historical and current default trends in defaults in the portfolio based on internal experience and industry data; pastprior loss experience; trends in claims rejected by guarantors on federally insured student loan claims rejected for payment by guarantorsloans; changes to federal student loan programs; theborrower FICO scores; of borrowers;and current and forecasted macroeconomic factors,conditions, including unemployment rates,levels, gross domestic product, and consumer price index;inflation, andas well as other relevant qualitative factors.considerations.

TheAs vastof majorityDecember (87.4%)31, 2025, 78.8% of our student loan portfolio is federally guaranteed, limitingwhich substantially limits our lossexposure exposure.to Incredit thelosses eventon ofthose default,loans. weHowever, bearour private education and consumer loan portfolios are unsecured and expose us to the full risk of loss onin ourthe privateevent educationof andborrower consumer loans, which are unsecured.default. We are actively expanding our acquisition of private education and consumer loan portfolios, which increases our overall exposure to credit risk.

If future defaults on loans heldwe by ushold are higher than anticipated, whichwhether coulddue resultto fromadverse aeconomic varietyconditions, of factors such as downturnschanges in the economy, regulatory or operationaloperating changes,environments, andinaccurate underwriting assumptions, or other unforeseen future trends,factors, or if actual credit performance is significantly worse than currentlyour estimated,estimates, we may be required to increase our estimateallowance for loan losses. Many of theour allowanceconsumer loans, including Pay Later receivables, are underwritten, serviced, and collected by third-parties that we do not control. Any increase in defaults would result in higher provisions for loan losses and thecould relatedmaterially provisionand foradversely loan losses inaffect our consolidated statementsresults of incomeoperations wouldand befinancial materially adversely affected.condition.

Our partial ownership percentage in each loan securitization grants us the right to receive the corresponding percentage of cash flows generated by the securitization. The cash flows generated from the securitizations are highly subject to credit risk (defaults). If defaults are higher than management's current estimate, future cash flows and investment interest income (earnings) from these securitizations would be adversely impacted. In addition, the value of the current investment balance may not be recoverable, resulting in an adverse impact to our operating results. During 2024, an increase in cumulative loss expectations on certain securitizations and loan vintages caused aA change in the Company's estimate of future cash flows relatedbased on cumulative loss expectations may result in an increase to certainthe ofCompany's our beneficial interest securitization investments. As a result, we recorded a $39.5 millionestablished allowance for credit losses (and related provision expense) related to these investments.

The Higher Education Act allows borrowers to prepay FFEL Program loans at any time without penalty. Prepayments on our federally insured loan portfolio have resulted and may continue to result from consolidations of student loans by the Department through the Federal Direct Loan Program or by a lending institution through a private education or unsecured consumer loan, which historically tend to occur more frequently in low interest rate environments; from borrower defaults on federally insured loans, which will result in the receipt of a guaranty payment; and from voluntary full or partial prepayments; among other things.

While more unlikely now due tounder the changeTrump in presidential administration,Administration, if the federal government or the Department initiate additional loan forgiveness or cancellation, other repayment options or plans, or consolidation loan programs, such initiatives could further increase prepayments and reduce interest income. Even if a broad debt cancellation program only applied to student loans held by the Department, such program could result in a significant increase in consolidations of FFELP loans to Federal Direct Loan Program loans and a corresponding increase in prepayments with respect to our FFELP loan portfolio, and also a decrease in our third-party FFELP loan servicing revenues.

We cannot predict how or what programs or policies will be impacted by any actions that the Trump-VanceTrump Administration or Congress may take, the timing of when such programs or policies may be implemented, and/or the ultimate outcome thereof. In addition, any changes to government programs or policies may be legally challenged, which may affect the extent and timing of these changes and the resulting impact they may have on our businesses, financial condition, or results of operations. New or modified Government programs or policies may lead to increased call volumes and have a negative effect on the level of service we are able to provide.

Sustained higher prepayment levels and/or a significant increase in prepayment levels could have a material adverse effect on our revenues, cash flows, profitability, and business outlook, and, as a result, could have a material adverse effect on our business, financial condition, or results of operations, including netloan interest income in our AGM segment,and Nelnet Bank segments, investment interest income on our beneficial interest in loan securitizations, FFELP servicing revenue in our LSS segment, investment advisory services revenue earned by WRCM on FFELP loan asset-backed securities under management, and interest income earned on our FFELP loan asset-backed securities investments.

We fund the majority of the FFELP student loan assets in our AGM segment with one-month30-day or three-month90-day Secured Overnight Financing Rate (SOFR) indexed floating rate securities. Meanwhile, the interest earned on our FFELP student loan assets is indexed to 30-day average SOFR, three-month commercial paper, and three-month Treasury bill rates. The differing interest rate characteristics of our loan assets versus the liabilities funding these assets result in basis risk, which impacts the excess spread earned on our loans. We also face repricing risk due to the timing of the interest rate resets on our liabilities, which may occur as infrequently as once a quarter, in contrast to the timing of the interest rate resets on our assets, which generally occur daily. In a declining interest rate environment, this may cause our variable student loan spread to compress, while in a rising interest rate environment, it may cause the variable spread to increase.

We utilizeuse derivative instruments to manage interest rate sensitivity. See note 56 of the notes to consolidated financial statements included in this report for additional information on derivatives used by us to manage interest rate risk. OurMost derivativeof instrumentsthese arederivatives do not eligiblequalify for hedge accounting.accounting, Consequently,and the “mark-to-market” changechanges in their fair value ofare our derivative instruments is includedrecognized in ourearnings. operatingAs results.a Changesresult, ormovements in interest rates and shifts in the forward yield curve can significantlymaterially impact and have impactedaffect the valuation of our derivatives,derivatives and in turn can significantly impact and have impacted our results of operations.

DevelopingInterest anrate effectiverisk strategy for dealing with movements in interest ratesmanagement is complex, and noour strategystrategies canmay completelynot insulatefully usmitigate from risks associated with such fluctuations.exposure. Because many of our non-Nelnet Bankcertain derivatives are not balancefully guaranteedmatched to aspecific particularloan poolpools ofor student loans and we may not elect to fully hedge our riskhedged on a notional and/or duration basis, we aremay subject to the risk of beingbe under or over hedged, which could result in material losses. In addition, our interest rate risk management activities could expose us to substantial mark-to-market losses if interest rates move in a materially different waydifferently than wasexpected, expected based on the environment when theour derivatives were entered into. As a result, our economic hedging activities may notgenerate effectivelysignificant managemark‑to‑market our interest rate sensitivity, may not have the desired beneficial impact on our results of operations or financial condition,losses and mayincrease causeearnings volatilityvolatility, inwhich our results of operations orcould have a material adverse impacteffect on our business, financial condition, orand results of operations.

Our loan portfolios and other assets and operations could experience adverse impacts from natural disasters, widespread health crises similar to the COVID-19 pandemic,crises, terrorist activities, or international hostilities.

Natural disasters, widespread health crises similar to the COVID-19 pandemic,crises, terrorist activities, or international hostilities, including the conflict in Ukraine, the Middle East, and similar conflicts,hostilities could affect the financial markets or the economy in general or in any particular region and could lead, for example, to an increase in loan delinquencies, borrower bankruptcies, or defaults that could result in higher levels of nonperforming assets, net charge-offs, and provisions for credit losses, as well as have adverse effects on our other assets and business operations. We cannot predict specifically when and where such events will occur, or the full nature and extent thereof, and our resiliency planning may not be sufficient to mitigate the adverse consequences of such events. The adverse impact of such events could also be increased to the extent that there is insufficient preparedness on the part of national or regional emergency responders or on the part of other organizations and businesses that we transact with, particularly those that we depend upon but have no control over.

Liquidity risk also arises from our need to maintain sufficient cash flows to meet our financial obligations, including debt maturities, and operational expenses. Holding loan assets that we funded with operating cash on our balance sheet requires us to continually monitor and manage our liquidity position. Adverse market conditions, reduced availability of funding sources, or a downgrade in our credit rating could limit our access to capital and increase our funding costs. Additionally, the illiquid nature of certain loan assets may impede our ability to sell or reallocate assets promptly, potentially resulting in losses or an inability to meet liquidity needs.

We investhave a substantial portion of our excess cashinvestment in student loan and other asset-backed securities that are subject to market fluctuations. As of December 31, 2024,2025, our amortized cost and the fair value of these investments were $1.3$1.5 billion. The majority of our asset-backed securities earn floating interest rates with expected returns of approximately SOFR + 10050 to 350 basis points to maturity. Our portfolio of asset-backed securities has limited liquidity, and we could incur a significant loss if the investments were sold prior to maturity at an amount less than the original purchase price.

Our largest fee-based customer, the Department of Education, represented 26%21% of our revenue in 2024.2025. Our inability to consistently meet service requirements and surpass competitor performance metrics, unfavorable contract modifications or interpretations, or the loss of servicing borrower volume due to broad based debt cancellation by the Department,Department or a decline in borrowing, could significantly lower servicing revenue in our LSS segment, hinder future service opportunities, and have a material adverse impact on our business, financial condition, or results of operations.

Nelnet Servicing provides servicing capabilities for the Department’s student aid recipients under a new USDS contract, which went live on April 1, 2024. Assuming borrower volume remains consistent underUnder the USDS contract, we expect revenue earned on a per borrower blended basis willhas decreasedecreased undercompared this contract versusto our legacy contract with the Department.

New loan volume is allocated among the Department servicers based on certain service level and portfolio performance metrics established by the Department and compared among all loan servicers. The amount of future allocations of new loan volume could be negatively impacted if we are unable to consistently surpass comparable competitor and/or other performance metrics. In addition, if any current or future Department servicing contracts become subject to unfavorable modifications or interpretations by the Department, including adverse pricing changes or assessed performance penalties, servicing revenue would be negatively impacted and could result in potential restructuring charges that may be necessary to re-align our cost structure with our servicing operations. Furthermore, the One Big Beautiful Bill (the "Bill") placed caps on federal lending for graduate students and parents of undergraduates, which could reduce future volumes of federal student loan borrowers, while potentially expanding the market for private student lending. In addition, dueif tothere is a lack of Federal government appropriations the Department may modify its cost under existing contracts with its servicers and accordingly reduce servicers’ required servicing activities, and such modifications could adversely impact the Company’s servicing revenue and operating results, as well as the level of service we are able to provide, that may result in additional scrutiny from federal and state government regulatory agencies and reputation damage.

Further, we are partially dependent on our USDS contract to broaden servicing operations with the Department, other federal and state agencies, and commercial clients. The size and importance of this contract provides us the scale and infrastructure needed to profitably expand into new business opportunities. Loss of existing loan volumevolume, whether due to re-allocation to other Department servicers, or because of widespread or targeted student debt cancellation to borrowers with loans held by the Department (see the risk factor discussion under the caption “Loan Portfolio - Prepayment risk” above for additional information concerning risk of widespreadDepartment, or targeted student loan debt cancellation),otherwise would adversely impact loan servicing revenue and could significantly hinder future opportunities, as well as result in potential restructuring charges that may be necessary to re-align our cost structure with our servicing operations.

The profitability and risk profile of our solar tax equity investmentspartnerships may be impacted by the terms and availability of federal incentives and regulatory uncertainty, including risks of not being able to realize tax credits which remain subject to recapture by taxing authorities. Additionally, we have risks related to solar construction contracts retained in the sale of NRE.

The financial performance of our solar tax equity investmentspartnerships are subject to and dependent upon complex federal, state, and other laws and regulations, including the Inflation Reduction Act (IRA) and the Bill and related guidance from the US Treasury and Internal Revenue Service, which regulate and, in some instances, incentivize the production of renewable energy. Any reductions or adverse modifications to, or the elimination or adverse interpretation of, governmental regulations or incentives that support the energy investment tax credit, including credit percent reductions or earlier sunsetting of policies as currently being reviewed by the new presidential administration, could negatively impact these investments. For example, the Trump-Vance Administration has recently frozen permitting and leasing for wind projects. While we do not invest in or construct wind projects, this executive action may demonstrate the Trump-Vance Administration’s views on renewable energy more broadly.

For the majority of our solar tax equity investments,partnerships, the HLBV method of accounting results in accelerated losses in the initial years of investment. The HLBV method is both complex and subject to differing interpretations in relation to its application, which also creates risk relative to our accounting for these investments. In 20242025 and 2023,2024, we recognized net losses (before income taxes) on our solar tax equity investmentspartnerships of $6.5$29.0 million and $59.6$6.5 million, respectively, that included $4.6$27.9 million and $37.9$4.6 million, respectively, of losses that were attributed to noncontrolling interest investors.partners.

Our solar tax equity investmentspartnerships are designed to generate a return primarily through the realization of federal income tax credits at the time the project is placed in service. We are subject to the risk that tax credits previously recorded by us, which remain subject to recapture by taxing authorities based on compliance features required to be met at the project level, will fail to meet certain government compliance requirements and will not be able to be realized. The inability to realize these tax credits and other tax benefits would have an adverse impact on our financial results. The risk of not realizing the tax credits, other tax benefits, and ongoing cash flow distributions from investment in the projects depends on many factors outside of our control, including changes in tax laws, the ability of the projects to continue operation, and project performance below expected or contracted levels of output or the pricing of output to offtakers being lower than anticipated.

Information technology infrastructure risks continue to increase in part because of the proliferation of new technologies, the increased use of the internet and telecommunications technologies to support and process customer transactions, the increased number and complexity of transactions being processed, and increased instances of employees working from home and/or using personal computing devices. Also, cyberattack techniques change frequently, generally increase in sophistication, including through the use of artificial intelligence, often are not recognized until launched, sometimes go undetected even when successful, and originate from a wide variety of sources, including organized crime, hackers, terrorists, activists, disgruntled customers or consumers, unapproved use of artificial intelligence or machine learning, and hostile foreign governments. Attackers may also attempt to fraudulently induce employees, customers, or other users of our systems to disclose sensitive information to gain access to our data or that of our customers, such as through “phishing” schemes and other social engineering techniques. A breach, or perceived breaches, of our information security systems, or the intentional or unintentional disclosure, alteration, or destruction by an authorized user of confidential information necessary for our operations, could result in serious negative consequences for us.

Our development and usedeployment of artificial intelligence (“AI”) technologies has improved operational performance but these advancements also present risks that could also result in reputational or competitive harm, legal liability, regulatory scrutiny, and other adverse effects on our business.

We have incorporated AI into certain aspects of our business, including assistance with handling customer inquiries, quality assurance monitoring, optical character recognition for processing and handling images, and monitoring network traffic. These advancements have significantly enhanced the efficiency and effectiveness of our operational processes, enabling faster identification and response to unique irregularities while improving our overall customer experience. As we continue to refine and expand our AI-driven initiatives, we expect these technologies to further optimize our operations and drive continued improvements in our performance. Additionally, some of our vendors use AI to enhance their products and services. Our use of AI, as well as the use by our vendors, may increase over time as the technology continues to develop. Our competitors may incorporate AI into their products or operations more quickly and effectively than we do, which could impair our ability to compete effectively. In addition, the pace of innovation in AI technologies is rapid and accelerating, and if we fail to anticipate, respond to, or implement new AI capabilities in a timely and effective manner, our products, services, or internal processes could become less competitive or obsolete.

Our use of AI carries inherent risks related to data privacy and security, such as intended, unintended, or inadvertent transmission of proprietary, personal, or sensitive information, as well as challenges related to implementing and maintaining AI models and tools, such as developing and maintaining appropriate datasets. Ineffective or inadequate use of AI by us or our vendors could produce deficient, inaccurate, or biased analysesoutputs, orimpacting decision making and customer responsesinteractions, and prevent us from detecting quality or network security issues. AnyAdditionally, ofdeveloping theand foregoingmaintaining appropriate datasets, validating models, and ensuring proper oversight are complex and resource intensive. Failing to manage these processes effectively could result in regulatoryoperational action,disruptions lossor ofcompliance confidencefailures. fromOur governmentability clientsto develop, deploy, and othereffectively customers,manage legalAI liability,technologies also depends on our ability to attract, retain, and reputationaltrain harmemployees with specialized technical expertise in AI, data science, and adverselyrelated impactdisciplines. Competition for such talent is intense, and any inability to hire or retain qualified personnel, or to upskill our business,existing financialworkforce, condition,could resultsdelay ofor operations,impair our AI initiatives and prospects.increase our operating costs.

We are also subject to existing legal and regulatory frameworks that apply to AI. In the United States alone, legislatures have advanced an accelerating volume of AI‑specific requirements, in addition to the broader set of traditional privacy, consumer protection, and civil rights laws that increasingly apply to AI systems. Beyond state activity, the federal government may also enact AI‑related legislation or issue executive actions, which could create new compliance obligations or operational impacts across our business lines. Federal regulators, such as the Federal Trade Commission and CFPB, have issued guidance on the ethical use of AI under existing laws, emphasizing the importance of fairness, transparency, and accountability in AI applications. Furthermore, comprehensive privacy laws, such as the California Consumer Privacy Act, include provisions that address regulating automated decision-making and profiling. In addition to existing regulations, there is increased attention to the enactment of new AI-specific laws.laws Forwhich instance,could Colorado’sprevent or limit our use of AI Actand require us to change our business practices. Internationally, jurisdictions are similarly advancing AI governance frameworks, contributing to a growing global patchwork of regulatory requirements that may affect our technology deployment, product development, and Utah’svendor AImanagement Policypractices. ActTogether, establish governance frameworks that address ethical use, accountability, and transparency of certain AI systems. Thesethese developments reflect aan growingincreasingly trendcomplex amongand statesrapidly evolving AI regulatory environment that may require ongoing enhancements to explicitlyour regulateinternal AIcontrols, technologiesrisk‑management practices, and theiroversight applications.of AI‑enabled products and services.

We contract with the Department to administer loans held by the Department in both the FFEL and Federal Direct Loan Program, we own a portfolio of FFELP loans, and we service our FFELP loans as well as FFELP loans for third parties. These loan programs are authorized by the Higher Education Act and are subject to periodic reauthorization and changes to the programs by the Trump-VancePresidential Administration and Congress. Any changes, including the potential for borrowers to refinance loans via Direct Consolidation Loans, or broad loan forgiveness or cancellation,changes could have a material impact on our cash flows from servicing, interest income, and operating margins (see the risk factor discussion under the caption “Loan Portfolio - Prepayment risk” above for additional information about these risks).margins.

The banking industry is highly regulated, and the regulatory framework, together with any future legislative changes, may have a significant adverse effect on Nelnet Bank’s operations. The regulatory landscape surrounding industrial banks continues to be scrutinized and banking policy changes may be difficult to predict in advance. Nelnet Bank’s current product offerings are primarily concentrated in loan products for higher education and unsecured consumer lending. Such concentrations and the competitive environment for those products subject the bank to risks that could adversely affect its financial condition. Consumer access to alternative means of financing, the costs of education, interest rates, economic conditions, and other factors may reduce demand for, or adversely affect Nelnet Bank’s ability to retain, private education loans and the bank’s ability to originate new loans.and/or For example, the recent increase of interest rates has negatively impacted and will continue to negatively impact the origination of refinancedretain private education loans.

In our reinsurance business, in which we assume an agreed percentage of each underlying insurance contract being reinsured, or quota share contracts, we do not separately evaluate each of the original individual risks assumed under these reinsurance contracts. Therefore, we are largely dependent on the original underwriting decisions made by ceding companies. We are subject to the risk that our clientsceding partners may not have adequately evaluated the insured risks and that the premiums ceded may not adequately compensate us for the risks we assume. We also do not separately evaluate each of the individual claims made on the underlying insurance contracts under quota share arrangements, though we maintain rights to audit claim files and practices of the ceding companies. Therefore, we are dependent on the original claims decisions made by our clients.ceding partners.

Our results of operations and financial condition depend upon our ability to accurately assess the potential losses associated with the risks we reinsure. Reserves are estimates at a given time of claims an insurer ultimately expects to pay, generally utilizing actuarial expertise and projection techniques based upon facts and circumstances then known, predictions of future events, estimates of future trends in claim severity, and other variable factors. The process of estimating reserves involves a high degree of judgment and is subject to a number of variables. These variables can be affected by both internal and external events, such as: changes in claims handling procedures,procedures completed by ceding companies, including automation; adverse changes in loss cost trends, including inflationary pressures, technology, or other changes that may impact medical, autoauto, and home repair costs (e.g., more costly technology in vehicles, labor shortages, higher costs of used vehicles and parts, and increased demand and decreased supply for raw materials, all of which results in increased severity of claims); economic conditions, including general and wage inflation; legal trends, including adverse changes in the tort environment that have continued to persist at elevated levels for a number of years (e.g., increased and more aggressive attorney involvement in insurance claims, increased litigation, expanded theories of liability, higher jury awards, lawsuit abuse, and third-party litigation finance, among others); labor shortages, which can result in companies hiring less experienced workers; and legislative changes, among others. The impact of many of these items on ultimate costs for loss reserves could be material and is difficult to estimate, particularly in light of the recent disruptions to the judicial system, supply chain, and labor market.estimate.

(Management’s Discussion and Analysis of Financial Condition and Results of Operations is for the years ended December 31, 20242025 and 2023.2024. All dollars are in thousands, except share data,amounts, unless otherwise noted.)

The Company is aan diversified hybridoperating holding company with primary businesses beingin consumer lending, loan servicing, payments, and technologytechnology-enabled – withservices, many of thesewhich businessesare focused on serving customers in the education space.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 businessesand engagetechnology inplatforms support loan servicing and educationeducation-related technology services and payments.payment solutions. A significant portion of the Company'sCompany’s revenue is derived from net interest income earned on a portfolio of federally insured student loans.loans, Thea Companysubstantial also makes and manages investments to further diversify both within and outsideportion of itswhich historicalis coreserviced education-relatedby businessesthe including, but not limited to, investments in a fiber communications company (ALLO), early-stage and emerging growth companies (venture capital investments), real estate, reinsurance, and renewable energy (solar).Company.

The Reconciliation Act of 2010 discontinued new loan originations under the FFEL Program, effective July 1, 2010, and requires all new federal student loan originations be made directly by the Department through the Federal Direct Loan Program. This law does not alter or affect the terms and conditions of existing FFELP loans. Subsequent to the Reconciliation Act of 2010, the Company no longer originates FFELP loans. However, a significant portion of the Company's income continues to be derived from its existing FFELP student loan portfolio. Interest income on the Company's existing FFELP loan portfolio will decline over time as the portfolio is paid down. To reduce its reliance on interest income from FFELP loans, the Company has expanded its services and products. This expansion has been accomplished through internal growth and innovation as well as business and certain investment acquisitions. The Company is also actively expanding its private education, consumer, and other loan portfolios, or investmentresidual interests therein, and as part of this strategy launched Nelnet Bank in 2020. In addition, the Company has been servicing federally owned student loans for the Department since 2009.

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 offor 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 NFS division was formed to focus on the Company’s key objective to maximize the amount and timing of cash flows generated from its FFELP portfolio and reposition itself for the post-FFELP environment by expanding its private education, consumer, and other loan portfolios. 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:

•The operating results of Whitetail Rock Capital Management, LLC (WRCM), the Company's U.S. Securities and Exchange Commission (SEC)-registered investment advisor subsidiary

•The operatingCompany’s resultsownership and management of theits Company’sbond investment debt securitiesportfolio (primarily student loan and other asset-backed securities) and interest expense incurred on debt used to finance such investments Other business activities and operating segments that are not reportable and not part of the NFS division are combined and included in Corporate and Other Activities ("Corporate"). Corporate includes the following items:

•Shared service activities related to internal audit, 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, investmentsinnovation in innovation,initiatives, and other holding company organizational costs

•The operating results of the Company’s participation in renewable energy solar developments through tax equity investments made by the Companystructures 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, the Company’s solar engineering, procurement, and construction businessbusiness. The Company sold its ownership interest in Nelnet Renewable Energy during the fourth quarter of 2025.

•The operating results of certain of the Company’s investment activities, including its investmentownership in ALLO and early-stage and emerging growth companies (venture capital investments)

•Other product and service offerings that are not considered reportable operating segments The following table 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.statements:

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

The following table presents disaggregated revenue by service offering andfor beforethe taxETSP operating margin for each reporting period.segment.

(Management’s Discussion and Analysis of Financial Condition and Results of Operations is for the three and six months ended MarchJune 31,30, 2026 and 2025. All dollars are in thousands, except per share amounts, unless otherwise noted.)

•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,Canadian, FFEL Program, private education, and consumer loans;

(b) The tax effects are calculated by multiplying the realized and unrealized derivative market value adjustments by the applicable statutory income tax rate.

•The Company’s ownership and management of its bond portfolio (primarily student loan and other asset-backed securities) and certain marketable equity securities Other business activities and operating segments that are not reportable and not part of the NFS division are combined and included in Corporate and Other Activities ("Corporate"). Corporate includes the following items:

•Other product and service offerings that are not considered reportable operating segments 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.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.

Operating results for the three and six months ended MarchJune 31,30, 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.

AGMNFS Other Operating SegmentSegments

During the three and six months ended MarchJune 31,30, 2026, the Company recognized $22.5 million and $45.0 million of losses related to its solar tax equity partnerships.partnerships, respectively. 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. 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 $13.4$19.5 million and $32.9 million for the quarterthree and six months ended June 30, 2026, and are included in “net loss attributable to noncontrolling interests.interests” in the table above. See note 5 of the notes to consolidated financial statements in this report for additional information.

An analysis of the Company's consolidated operating results for the three and six months ended MarchJune 31,30, 2026 compared with the same periodperiods in 2025 is provided below.

On February 2, 2026, the Company acquired a Canadian student loan servicing businessbusiness. 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. See note 6 of the notes to consolidated financial statements included under Part I, Item 1 of this report for additional information.

(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($2.8 wasmillion $1.9and $4.7 million for the three and six months ended MarchJune 31,30, 20262026, respectively), divided by the total of loan servicing and systems revenue (lessnet of contract fulfillment and acquisition costs), intersegment servicing revenue, and other income. The Company uses this metric to monitor and assess the segment’s performance, manage operating costs, identify and evaluate business trends affecting the segment, and make strategic decisions, and believes that it provides additional information to facilitate an understanding of the operating performance of the segment and provides a meaningful comparison of the results of operations between periods.

Before‑tax operating margin, excluding amortization expense, improveddecreased primarilyin 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 associated with headcount reductions, (excluding the impact of employees added through the NDS Canada acquisition,acquisition) reflecting ongoing cost-efficiency initiatives.initiatives and headcount reductions, as well as lower postage expense (which was also driven by a decrease in Department borrowers).

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.

As of MarchJune 31,30, 2026, the AGM operating segment had ana $8.41$7.83 billion loan portfolio, consisting primarily of federally insured loans. For a summary of the Company’s loan portfolio as of MarchJune 31,30, 2026 and December 31, 2025, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

(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$205.5 million and $387.5 million during the three and six months ended MarchJune 31,30, 2026.2026, respectively.

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 MarchJune 31,30, 2026, the Company’s ownership correlates to approximately $1.64$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.

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 MarchJune 31,30, 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 MarchJune 31,30, 2026 and 2025, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

Variable loan spread was higher during the three and six months ended MarchJune 31,30, 2026 compared with the same periodperiods 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 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.

•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 MarchJune 31,30, 2026, the balance of Pay Later receivables was $766.2$699.8 million. Growth in Pay Later receivable volumes contributed to increase inincreased loan interest income, higher provision for loan losses, and increased borrower late fee income.

•AGM holds interests in certain joint ventures engaged in the acquisitionacquisition, ownership, and management of loan portfolios. ForDuring the three and six months ended MarchJune 31,30, 2026, AGM recognized $15.4$8.6 million and $24.0 million of income from these joint ventures, respectively, compared with $1.0$4.2 million and $5.3 million in the comparablesame periodperiods of 2025.2025, respectively. Such amounts are included in “Other income, net” in the above table above titled “Summary and Comparison of Operating Results.”

As of MarchJune 31,30, 2026, Nelnet Bank had a $1.26$1.64 billion loan portfolio. For a summary of Nelnet Bank’s loan portfolio as of MarchJune 31,30, 2026 and December 31, 2025, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

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 MarchJune 31,30, 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 MarchJune 31,30, 2026 and 2025, see note 2 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

As of MarchJune 31,30, 2026, Nelnet Bank had a $1.18$1.29 billion investment portfolio, consisting primarily of asset-backed securities. For a summary of Nelnet Bank's asset-backed securities investments as of MarchJune 31,30, 2026 and December 31, 2025, see note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

As of MarchJune 31,30, 2026, Nelnet Bank had $1.96$2.51 billion of deposits, which included $212.2$285.8 million of intercompany deposits from Nelnet, Inc. (parent company) and its subsidiaries (intercompany),subsidiaries, and thus have been eliminated for consolidated financial reporting purposes. For a summary of deposits as of MarchJune 31,30, 2026 and December 31, 2025, see note 9 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

The following table reflects average daily balances and the annualized rates earned on interest-earning assets and paid on interest-bearing liabilities:

•Nelnet Bank’s growth was driven by higher loan and investment balances, funded primarily through increased deposit balances. In its earlyinitial years, Nelnet Bank experiencedincurred operating losses as it invested in building the personnel and infrastructure necessaryneeded to support future growth. As Nelnetthe Bankbank has matured, operating expenses have stabilized while loansloan and depositsdeposit balances have continued to grow.expand. This operating leverage has drivencontributed to increased net interest income and net income for the three and six months ended MarchJune 31,30, 2026 as2026, compared towith the samecorresponding periodperiods ofin 2025.

•Bond portfolio and marketable equity securities: During the three and six months ended MarchJune 31,30, 2026, the Company recognized an unrealized gain of $8.6 million and an unrealized loss onof $1.1 million, respectively, resulting from changes in the fair value of certain marketable equity securitiessecurities. ofThese $9.7amounts million that isare included under "Bond portfolio" in "other income, net" in the table above. TheseOperating lossesresults resultedmay fromcontinue changesto fluctuate and be impacted in marketfuture valuesperiods duringby thefair period.value adjustments of marketable equity securities.

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 inunder “otherOther” in the table below.

•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 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 MarchJune 31,30, 2026, respectively, compared towith a$1.5 gainmillion ofand $0.5$1.0 million for the same periodperiods in 2025. These amounts are included in “other income, net” in the tabletables above. Losses attributable to noncontrolling interest partners were $13.4$19.5 million and $1.0$32.9 million for the three and six months ended MarchJune 31,30, 20262026, respectively, compared with $3.2 million and 2025,$4.2 respectively,million andfor the same periods in 2025. These amounts are included in “net loss attributable to noncontrolling interests” in the tabletables above. See note 5 of the notes to consolidated financial statements included under Part I, Item 1 of this report.

As of MarchJune 31,30, 2026, the Company's sources of liquidity included:

(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, theThe Company entered intohas 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 MarchJune 31,30, 2026, there was no amount outstanding on the unsecured line of credit and $435.0 million was available for future use.

The Company has historically generated positive cash flow from operations. During the threesix months ended MarchJune 31,30, 2026 and 2025, the Company generated $73.1$151.0 million and $91.2$172.9 million, respectively, in cash from operating activities. The decrease in 2026 compared with 2025 was due to:

•Adjustments to net income for certain non-cash items, including loan discount and deferred lender fees accretionaccretion, derivative market value adjustments, and deferreddepreciation incomeand taxesamortization; and

•The impact of changes to other assets, other liabilities, and accrued interest receivable, accounts receivable, and other assetsreceivable during the threesix months ended MarchJune 31,30, 2026 compared with the same period in 2025.

•Adjustments to net income for certain non-cash items, including the gain on the partial redemption of the Company's ALLO investment, deferred income tax benefit, provision for loan losseslosses, and loss on investments; and