Nelnet Inc 8-K, filed Feb 27, 2020

Nelnet Inc (NNI)

8-K 2020-02-27 For: 2020-02-27

View Original

Added on April 04, 2026

About this 8-K

Nelnet Inc filed this 8-K on February 27, 2020.

Items reported

Item 2.02: Financial results
Item 9.01: Financial statements and exhibits

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock, Par Value $0.01 per Share	NNI	New York Stock Exchange


Exhibit No.						Description

99.1						Press Release dated February 27, 2020 - "Nelnet Reports Fourth Quarter 2019 Results"

99.2						Supplemental Financial Information for the Quarter Ended December 31, 2019

99.3						2019 Letter to Shareholders from the Chief Executive Officer

104						Cover Page Interactive Data File (formatted as Inline XBRL and included as Exhibit 101).


	Three months ended						Year ended
	December 31, 2019		September 30, 2019	December 31, 2018	December 31, 2019	December 31, 2018

Interest income:
Loan interest	$	204,638	229,063	244,252	914,256	897,666
Investment interest	7,720		9,882	8,019	34,421	26,600
Total interest income	212,358		238,945	252,271	948,677	924,266
Interest expense:
Interest on bonds and notes payable	148,106		172,488	182,732	699,327	669,906
Net interest income	64,252		66,457	69,539	249,350	254,360
Less provision for loan losses	13,000		10,000	5,000	39,000	23,000
Net interest income after provision for loan losses	51,252		56,457	64,539	210,350	231,360
Other income:
Loan servicing and systems revenue	113,086		113,286	112,761	455,255	440,027
Education technology, services, and payment processing revenue	63,578		74,251	54,589	277,331	221,962
Communications revenue	17,499		16,470	13,326	64,269	44,653
Other income	26,522		13,439	9,998	65,179	54,805

Derivative market value adjustments and derivative settlements, net	3,170		1,668	(29,843)	(30,789)	71,085
Total other income	223,855		219,114	160,831	831,245	832,532
Cost of services:
Cost to provide education technology, services, and payment processing services	19,002		25,671	15,479	81,603	59,566
Cost to provide communications services	5,327		5,236	5,033	20,423	16,926
Total cost of services	24,329		30,907	20,512	102,026	76,492
Operating expenses:
Salaries and benefits	124,561		116,670	114,247	463,503	436,179
Depreciation and amortization	28,651		27,701	23,953	105,049	86,896

Other expenses	46,710		58,329	49,583	194,272	178,031
Total operating expenses	199,922		202,700	187,783	762,824	701,106
Income before income taxes	50,856		41,964	17,075	176,745	286,294
Income tax (expense) benefit	(9,022)		(8,829)	4,599	(35,451)	(58,770)
Net income	41,834		33,135	21,674	141,294	227,524
Net loss (income) attributable to noncontrolling interests	546		77	(48)	509	389
Net income attributable to Nelnet, Inc.	$	42,380	33,212	21,626	141,803	227,913
Earnings per common share:
Net income attributable to Nelnet, Inc. shareholders - basic and diluted	$	1.06	0.83	0.53	3.54	5.57
Weighted average common shares outstanding - basic and diluted	39,896,232		39,877,129	40,810,636	40,047,402	40,909,022


	As of		As of	As of
	December 31, 2019		September 30, 2019	December 31, 2018

Assets:
Loans receivable, net	$	20,669,371	21,071,441	22,377,142
Cash, cash equivalents, investments, and notes receivable	380,879		373,395	370,717
Restricted cash	1,088,695		977,228	1,071,044
Goodwill and intangible assets, net	238,444		246,411	271,202
Other assets	1,331,581		1,268,244	1,130,863
Total assets	$	23,708,970	23,936,719	25,220,968
Liabilities:
Bonds and notes payable	$	20,529,054	20,910,190	22,218,740
Other liabilities	788,822		671,864	687,449
Total liabilities	21,317,876		21,582,054	22,906,189
Equity:
Total Nelnet, Inc. shareholders' equity	2,386,712		2,350,150	2,304,464
Noncontrolling interests	4,382		4,515	10,315
Total equity	2,391,094		2,354,665	2,314,779
Total liabilities and equity	$	23,708,970	23,936,719	25,220,968


	Three months ended December 31,				Year ended December 31,
	2019		2018	2019	2018
GAAP net income attributable to Nelnet, Inc.	$	42,380	21,626	141,803	227,913
Realized and unrealized derivative market value adjustments (a)	2,930		48,895	76,195	(1,014)
Tax effect (b)	(703)		(11,735)	(18,287)	243
Net income attributable to Nelnet, Inc., excluding derivative market value adjustments	$	44,607	58,786	199,711	227,142

Earnings per share:
GAAP net income attributable to Nelnet, Inc.	$	1.06	0.53	3.54	5.57
Realized and unrealized derivative market value adjustments (a)	0.07		1.20	1.90	(0.02)
Tax effect (b)	(0.01)		(0.29)	(0.45)	—
Net income attributable to Nelnet, Inc., excluding derivative market value adjustments	$	1.12	1.44	4.99	5.55


	Three months ended December 31, 2019
	Loan Servicing and Systems		Education Technology, Services, and Payment Processing	Communications	Asset Generation and Management	Corporate and Other Activities	Eliminations	Total
Total interest income	$	452	2,069	—	208,576	2,062	(801)	212,358
Interest expense	46		14	—	149,056	(208)	(801)	148,106
Net interest income	406		2,055	—	59,520	2,270	—	64,252
Less provision for loan losses	—		—	—	13,000	—	—	13,000
Net interest income (loss) after provision for loan losses	406		2,055	—	46,520	2,270	—	51,252
Other income:
Loan servicing and systems revenue	113,086		—	—	—	—	—	113,086
Intersegment servicing revenue	11,325		—	—	—	—	(11,325)	—
Education technology, services, and payment processing revenue	—		63,578	—	—	—	—	63,578
Communications revenue	—		—	17,499	—	—	—	17,499
Other income	3,094		259	490	18,553	4,127	—	26,522

Derivative settlements, net	—		—	—	6,100	—	—	6,100
Derivative market value adjustments, net	—		—	—	(2,930)	—	—	(2,930)
Total other income	127,505		63,837	17,989	21,723	4,127	(11,325)	223,855
Cost of services:
Cost to provide education technology, services, and payment processing services	—		19,002	—	—	—	—	19,002
Cost to provide communications services	—		—	5,327	—	—	—	5,327
Total cost of services	—		19,002	5,327	—	—	—	24,329
Operating expenses:
Salaries and benefits	74,212		25,010	5,312	392	19,635	—	124,561
Depreciation and amortization	8,519		2,988	11,148	—	5,995	—	28,651

Other expenses	18,332		5,587	3,981	5,346	13,464	—	46,710
Intersegment expenses, net	14,008		3,763	881	11,732	(19,059)	(11,325)	—
Total operating expenses	115,071		37,348	21,322	17,470	20,035	(11,325)	199,922
Income (loss) before income taxes	12,840		9,542	(8,660)	50,773	(13,638)	—	50,856
Income tax (expense) benefit	(3,082)		(2,290)	2,079	(12,186)	6,457	—	(9,022)
Net income (loss)	9,758		7,252	(6,581)	38,587	(7,181)	—	41,834
Net income attributable to noncontrolling interests	—		—	—	—	546	—	546
Net income (loss) attributable to Nelnet, Inc.	$	9,758	7,252	(6,581)	38,587	(6,635)	—	42,380


	Three months ended September 30, 2019
	Loan Servicing and Systems		Education Technology, Services, and Payment Processing	Communications	Asset Generation and Management	Corporate and Other Activities	Eliminations	Total
Total interest income	$	532	3,499	—	233,225	2,859	(1,171)	238,945
Interest expense	51		12	—	171,485	2,110	(1,171)	172,488
Net interest income	481		3,487	—	61,740	749	—	66,457
Less provision for loan losses	—		—	—	10,000	—	—	10,000
Net interest income (loss) after provision for loan losses	481		3,487	—	51,740	749	—	56,457
Other income:
Loan servicing and systems revenue	113,286		—	—	—	—	—	113,286
Intersegment servicing revenue	11,611		—	—	—	—	(11,611)	—
Education technology, services, and payment processing revenue	—		74,251	—	—	—	—	74,251
Communications revenue	—		—	16,470	—	—	—	16,470
Other income	2,291		—	532	3,384	7,231	—	13,439

Derivative settlements, net	—		—	—	7,298	—	—	7,298
Derivative market value adjustments, net	—		—	—	(5,630)	—	—	(5,630)
Total other income	127,188		74,251	17,002	5,052	7,231	(11,611)	219,114
Cost of services:
Cost to provide education technology, services, and payment processing services	—		25,671	—	—	—	—	25,671
Cost to provide communications services	—		—	5,236	—	—	—	5,236
Total cost of services	—		25,671	5,236	—	—	—	30,907
Operating expenses:
Salaries and benefits	69,209		23,826	5,763	394	17,479	—	116,670
Depreciation and amortization	8,565		2,997	10,926	—	5,212	—	27,701

Other expenses	16,686		5,325	3,842	19,054	13,422	—	58,329
Intersegment expenses, net	12,955		3,194	701	11,678	(16,917)	(11,611)	—
Total operating expenses	107,415		35,342	21,232	31,126	19,196	(11,611)	202,700
Income (loss) before income taxes	20,254		16,725	(9,466)	25,666	(11,216)	—	41,964
Income tax (expense) benefit	(4,861)		(4,014)	2,272	(6,160)	3,935	—	(8,829)
Net income (loss)	15,393		12,711	(7,194)	19,506	(7,281)	—	33,135
Net income attributable to noncontrolling interests	—		—	—	—	77	—	77
Net income (loss) attributable to Nelnet, Inc.	$	15,393	12,711	(7,194)	19,506	(7,204)	—	33,212


	Three months ended December 31, 2018
	Loan Servicing and Systems		Education Technology, Services, and Payment Processing	Communications	Asset Generation and Management	Corporate and Other Activities	Eliminations	Total
Total interest income	$	421	1,526	2	248,620	2,271	(569)	252,271
Interest expense	—		5	—	181,632	1,664	(569)	182,732
Net interest income	421		1,521	2	66,988	607	—	69,539
Less provision for loan losses	—		—	—	5,000	—	—	5,000
Net interest income (loss) after provision for loan losses	421		1,521	2	61,988	607	—	64,539
Other income:
Loan servicing and systems revenue	112,761		—	—	—	—	—	112,761
Intersegment servicing revenue	12,412		—	—	—	—	(12,412)	—
Education technology, services, and payment processing revenue	—		54,589	—	—	—	—	54,589
Communications revenue	—		—	13,326	—	—	—	13,326
Other income	2,088		—	125	3,333	4,451	—	9,998

Derivative settlements, net	—		—	—	19,050	2	—	19,052
Derivative market value adjustments, net	—		—	—	(49,229)	334	—	(48,895)
Total other income	127,261		54,589	13,451	(26,846)	4,787	(12,412)	160,831
Cost of services:
Cost to provide education technology, services, and payment processing services	—		15,479	—	—	—	—	15,479
Cost to provide communications services	—		—	5,033	—	—	—	5,033
Total cost of services	—		15,479	5,033	—	—	—	20,512
Operating expenses:
Salaries and benefits	69,046		22,528	5,495	343	16,834	—	114,247
Depreciation and amortization	8,837		3,422	6,792	—	4,902	—	23,953

Other expenses	15,746		13,188	3,089	3,551	14,010	—	49,583
Intersegment expenses, net	15,074		3,051	776	12,927	(19,416)	(12,412)	—
Total operating expenses	108,703		42,189	16,152	16,821	16,330	(12,412)	187,783
Income (loss) before income taxes	18,979		(1,558)	(7,732)	18,321	(10,936)	—	17,075
Income tax (expense) benefit	(4,555)		374	1,856	(4,397)	11,321	—	4,599
Net income (loss)	14,424		(1,184)	(5,876)	13,924	385	—	21,674
Net loss (income) attributable to noncontrolling interests	—		—	—	—	(48)	—	(48)
Net income (loss) attributable to Nelnet, Inc.	$	14,424	(1,184)	(5,876)	13,924	337	—	21,626


	Year ended December 31, 2019
	Loan Servicing and Systems		Education Technology, Services, and Payment Processing	Communications	Asset Generation and Management	Corporate and Other Activities	Eliminations	Total
Total interest income	$	2,031	9,244	3	931,963	9,232	(3,796)	948,677
Interest expense	115		46	—	693,375	9,587	(3,796)	699,327
Net interest income (expense)	1,916		9,198	3	238,588	(355)	—	249,350
Less provision for loan losses	—		—	—	39,000	—	—	39,000
Net interest income (loss) after provision for loan losses	1,916		9,198	3	199,588	(355)	—	210,350
Other income:
Loan servicing and systems revenue	455,255		—	—	—	—	—	455,255
Intersegment servicing revenue	46,751		—	—	—	—	(46,751)	—
Education technology, services, and payment processing revenue	—		277,331	—	—	—	—	277,331
Communications revenue	—		—	64,269	—	—	—	64,269
Other income	9,736		259	1,509	30,349	23,327	—	65,179

Derivative settlements, net	—		—	—	45,406	—	—	45,406
Derivative market value adjustments, net	—		—	—	(76,195)	—	—	(76,195)
Total other income	511,742		277,590	65,778	(440)	23,327	(46,751)	831,245
Cost of services:
Cost to provide education technology, services, and payment processing services	—		81,603	—	—	—	—	81,603
Cost to provide communications services	—		—	20,423	—	—	—	20,423
Total cost of services	—		81,603	20,423	—	—	—	102,026
Operating expenses:
Salaries and benefits	276,136		94,666	21,004	1,545	70,152	—	463,503
Depreciation and amortization	34,755		12,820	37,173	—	20,300	—	105,049

Other expenses	71,064		22,027	15,165	34,445	51,571	—	194,272
Intersegment expenses, net	54,325		13,405	2,962	47,362	(71,303)	(46,751)	—
Total operating expenses	436,280		142,918	76,304	83,352	70,720	(46,751)	762,824
Income (loss) before income taxes	77,378		62,267	(30,946)	115,796	(47,748)	—	176,745
Income tax (expense) benefit	(18,571)		(14,944)	7,427	(27,792)	18,428	—	(35,451)
Net income (loss)	58,807		47,323	(23,519)	88,004	(29,320)	—	141,294
Net loss (income) attributable to noncontrolling interests	—		—	—	—	509	—	509
Net income (loss) attributable to Nelnet, Inc.	$	58,807	47,323	(23,519)	88,004	(28,811)	—	141,803


	Year ended December 31, 2018
	Loan Servicing and Systems		Education Technology, Services, and Payment Processing	Communications	Asset Generation and Management	Corporate and Other Activities	Eliminations	Total
Total interest income	$	1,351	4,453	4	911,502	19,944	(12,989)	924,266
Interest expense	—		9	9,987	662,360	10,540	(12,989)	669,906
Net interest income (expense)	1,351		4,444	(9,983)	249,142	9,404	—	254,360
Less provision for loan losses	—		—	—	23,000	—	—	23,000
Net interest income (loss) after provision for loan losses	1,351		4,444	(9,983)	226,142	9,404	—	231,360
Other income:
Loan servicing and systems revenue	440,027		—	—	—	—	—	440,027
Intersegment servicing revenue	47,082		—	—	—	—	(47,082)	—
Education technology, services, and payment processing revenue	—		221,962	—	—	—	—	221,962
Communications revenue	—		—	44,653	—	—	—	44,653
Other income	7,284		—	1,075	12,723	33,724	—	54,805

Derivative settlements, net	—		—	—	70,478	(407)	—	70,071
Derivative market value adjustments, net	—		—	—	(2,159)	3,173	—	1,014
Total other income	494,393		221,962	45,728	81,042	36,490	(47,082)	832,532
Cost of services:
Cost to provide education technology, services, and payment processing services	—		59,566	—	—	—	—	59,566
Cost to provide communications services	—		—	16,926	—	—	—	16,926
Total cost of services	—		59,566	16,926	—	—	—	76,492
Operating expenses:
Salaries and benefits	267,458		81,080	18,779	1,526	67,336	—	436,179
Depreciation and amortization	32,074		13,484	23,377	—	17,960	—	86,896

Other expenses	67,336		28,137	11,900	15,961	54,697	—	178,031
Intersegment expenses, net	59,042		10,681	2,578	47,870	(73,088)	(47,082)	—
Total operating expenses	425,910		133,382	56,634	65,357	66,905	(47,082)	701,106
Income (loss) before income taxes	69,834		33,458	(37,815)	241,827	(21,011)	—	286,294
Income tax (expense) benefit	(16,954)		(8,030)	9,075	(58,038)	15,177	—	(58,770)
Net income (loss)	52,880		25,428	(28,740)	183,789	(5,834)	—	227,524
Net loss (income) attributable to noncontrolling interests	808		—	—	—	(419)	—	389
Net income (loss) attributable to Nelnet, Inc.	$	53,688	25,428	(28,740)	183,789	(6,253)	—	227,913


	As of
	December 31, 2017		March 31, 2018	June 30, 2018	September 30, 2018	December 31, 2018	March 31, 2019	June 30, 2019	September 30, 2019	December 31, 2019
Servicing volume (dollars in millions):
Nelnet:
Government	$	172,669	176,605	176,179	179,283	179,507	183,093	181,682	184,399	183,790
FFELP	27,262		26,969	37,599	37,459	36,748	35,917	35,003	33,981	33,185
Private and consumer	11,483		12,116	15,016	15,466	15,666	16,065	16,025	16,286	16,033
Great Lakes:
Government	—		242,063	241,902	232,741	232,694	237,050	236,500	240,268	239,980
FFELP (a)	—		11,136	—	—	—	—	—	—	—
Private and consumer (a)	—		1,927	31	—	—	—	—	—	—
Total	$	211,414	470,816	470,727	464,949	464,615	472,125	469,210	474,934	472,988

Number of servicing borrowers:
Nelnet:
Government	5,877,414		5,819,286	5,745,181	5,805,307	5,771,923	5,708,582	5,592,989	5,635,653	5,574,001
FFELP	1,420,311		1,399,280	1,787,419	1,754,247	1,709,853	1,650,785	1,588,530	1,529,392	1,478,703
Private and consumer	502,114		508,750	672,520	692,763	696,933	699,768	693,410	701,299	682,836
Great Lakes:
Government	—		7,456,830	7,378,875	7,486,311	7,458,684	7,385,284	7,300,691	7,430,165	7,396,657
FFELP (a)	—		461,553	—	—	—	—	—	—	—
Private and consumer (a)	—		118,609	3,987	—	—	—	—	—	—
Total	7,799,839		15,764,308	15,587,982	15,738,628	15,637,393	15,444,419	15,175,620	15,296,509	15,132,197

Number of remote hosted borrowers:	2,812,713		6,207,747	6,145,981	6,406,923	6,393,151	6,332,261	6,211,132	6,457,296	6,433,324


	As of December 31, 2019		As of September 30, 2019		As of June 30, 2019		As of March 31, 2019		As of December 31, 2018		As of September 30, 2018		As of June 30, 2018		As of March 31, 2018		As of December 31, 2017
Residential customer information:
Households served	47,744		45,228		42,760		40,338		37,351		32,529		27,643		23,541		20,428
Households passed (b)	140,986		137,269		132,984		127,253		122,396		110,687		98,538		84,475		71,426
Households served/passed	33.9	%	32.9	%	32.2	%	31.7	%	30.5	%	29.4	%	28.1	%	27.9	%	28.6	%
Total households in current markets and new markets announced (c)	160,884		159,974		159,974		152,840		152,840		142,602		137,500		137,500		137,500


Fixed interest rate range	Borrower/lender weighted average yield	Estimated variable conversion rate (a)	Loan balance
4.5 - 4.99%	4.72%	2.08%	$	727,086
5.0 - 5.49%	5.22%	2.58%	470,843
5.5 - 5.99%	5.67%	3.03%	320,031
6.0 - 6.49%	6.19%	3.55%	367,409
6.5 - 6.99%	6.70%	4.06%	357,842
7.0 - 7.49%	7.17%	4.53%	125,674
7.5 - 7.99%	7.71%	5.07%	224,635
8.0 - 8.99%	8.18%	5.54%	525,108
> 9.0%	9.05%	6.41%	197,829
			$	3,316,457


Maturity	Notional amount		Weighted average fixed rate paid by the Company (a)

2020	$	1,500,000	1.01	%
2021	600,000		2.15
2022 (b)	250,000		1.65
2023	150,000		2.25





	$	2,500,000	1.42	%


	Three months ended December 31,
	2019			2018
Variable loan yield, gross	4.36		%	4.89	%
Consolidation rebate fees	(0.83)			(0.84)
Discount accretion, net of premium and deferred origination costs amortization	0.02			0.03
Variable loan yield, net	3.55			4.08
Loan cost of funds - interest expense	(2.83)			(3.24)
Loan cost of funds - derivative settlements (a) (b)	0.04			0.02
Variable loan spread	0.76			0.86
Fixed rate floor income, gross	0.30			0.21
Fixed rate floor income - derivative settlements (a) (c)	0.08			0.32
Fixed rate floor income, net of settlements on derivatives	0.38			0.53
Core loan spread	1.14		%	1.39	%

Average balance of loans	$	21,040,484		22,583,222
Average balance of debt outstanding	20,850,214			22,232,428


	Three months ended December 31,
	2019		2018
Core loan spread	1.14	%	1.39	%
Derivative settlements (1:3 basis swaps)	(0.04)		(0.02)
Derivative settlements (fixed rate floor income)	(0.08)		(0.32)
Loan spread	1.02	%	1.05	%


	Three months ended December 31,
	2019		2018
Variable interest income, gross	$	231,689	278,387
Consolidation rebate fees	(43,846)		(47,258)
Discount accretion, net of premium and deferred origination costs amortization	1,069		1,672
Variable interest income, net	188,912		232,801
Interest on bonds and notes payable	(148,269)		(181,069)
Derivative settlements (basis swaps), net (a)	1,839		901
Variable loan interest margin, net of settlements on derivatives (a)	42,482		52,633
Fixed rate floor income, gross	15,727		11,452
Derivative settlements (interest rate swaps), net (a)	4,261		18,148
Fixed rate floor income, net of settlements on derivatives (a)	19,988		29,600
Core loan interest income (a)	62,470		82,233
Investment interest	3,937		4,367
Intercompany interest	(787)		(563)
Net interest income (net of settlements on derivatives) (a)	$	65,620	86,037


	Three months ended						Year ended
	December 31, 2019		September 30, 2019	December 31, 2018	December 31, 2019	December 31, 2018
Variable loan interest margin	$	40,643	46,051	51,732	174,954	181,488
Settlements on associated derivatives (a)	1,839		234	901	5,214	5,577
Variable loan interest margin, net of settlements on derivatives	42,482		46,285	52,633	180,168	187,065
Fixed rate floor income	15,727		12,685	11,452	49,677	56,811
Settlements on associated derivatives (b)	4,261		7,064	18,148	40,192	64,901
Fixed rate floor income, net of settlements on derivatives	19,988		19,749	29,600	89,869	121,712
Investment interest	7,720		9,882	8,019	34,421	26,600
Corporate debt interest expense	162		(2,161)	(1,664)	(9,702)	(10,539)
Non-portfolio related derivative settlements (c)	—		—	3	—	(407)
Net interest income (net of settlements on derivatives)	$	70,352	73,755	88,591	294,756	324,431