Nelnet(US:NNI)2022-02-28 21:22Loan Servicing - As of December 31, 2021, the Company serviced $529.0 billion of loans for 16.4 million borrowers[34]. - Nelnet Servicing was servicing $215.8 billion of student loans for 6.4 million borrowers, while Great Lakes serviced $262.6 billion for 7.8 million borrowers, making the Department the Company's largest customer at 29% of total revenue[35]. - The servicing contracts for Nelnet Servicing and Great Lakes are set to expire on December 14, 2023, with the Department initiating a procurement process for a new servicing framework[36]. - Great Lakes and Nelnet Servicing ranked third and fifth among servicers for the Department, receiving 18% and 12% of new servicing volumes respectively starting September 1, 2021[41]. - The Company serviced FFELP loans on behalf of 120 third-party servicing customers as of December 31, 2021[45]. - The Company believes there are opportunities to service additional FFELP loan portfolios as the program winds down, despite a decline in FFELP servicing revenue due to the discontinuation of new loan originations[46]. - NDS provides backup servicing for 18 entities covering more than 13 million borrowers, ensuring continuity in case of service provider failures[52]. Revenue Growth - FACTS generated $185 million in revenue for the year ended December 31, 2021, up from $142 million in 2020, representing a growth of approximately 30.3%[63]. - Nelnet Campus Commerce generated $99 million in revenue for the year ended December 31, 2021, compared to $97 million in 2020, reflecting a growth of about 2.1%[70]. - PaymentSpring generated $43 million in revenue for the year ended December 31, 2021, an increase from $39 million in 2020, indicating a growth of approximately 10.3%[74]. - Nelnet Community Engagement (NCE) revenue increased to $6 million in 2021 from $2 million in 2020, marking a significant growth of 200%[75]. - Nelnet International generated $7 million in revenue for the year ended December 31, 2021, up from $6 million in 2020, representing a growth of about 16.7%[83]. Investment Activities - AGM's loan portfolio was valued at $17.4 billion as of December 31, 2021, with 98% being federally insured[89]. - The Company purchased $904.1 million of FFELP student loans from various third parties during 2021, indicating active portfolio management[91]. - The Company plans to expand its private education and consumer loan portfolios, having purchased $89.3 million of private education loans and $81.9 million of consumer loans in 2021[91]. - The Company has a total investment portfolio valued at $1.6 billion, which includes $225.4 million in early-stage and emerging growth companies[102][103]. - The Company invested $168.7 million in renewable energy solar partnerships, which provide a federal income tax credit of 26% for eligible projects[105]. - The Company recognized a pre-tax loss of $3.0 million in 2021 and $33.6 million in 2020 from its solar investments under the Hypothetical Liquidation at Book Value method[106]. - The Company has 33 real estate investments with a carrying value of $47.2 million, primarily in commercial properties in Lincoln, Nebraska[104]. - The largest investment in the Company's venture capital portfolio is Hudl, valued at $133.9 million as of December 31, 2021[103]. Banking Operations - Nelnet Bank was funded with an initial capital contribution of $100 million, consisting of $55.9 million in cash and $44.1 million in student loan asset-backed securities[94]. - As of December 31, 2021, Nelnet Bank's loan portfolio was $257.9 million, focusing on private education and unsecured consumer loans[96]. - Nelnet Bank had $425.4 million in deposits as of December 31, 2021, which include brokered CDs and retail savings deposits[97]. - Nelnet Bank plans to serve a niche market in private education and unsecured consumer loans, focusing on underserved needs in the U.S.[98]. - Nelnet Bank is expected to launch consumer deposit products in 2023, subject to Regulation D and the Truth in Savings Act[126]. Regulatory Compliance - The Company is subject to extensive regulatory oversight, including compliance with the Higher Education Act and the Dodd-Frank Act, which impacts its operations and potential fines[108][111]. - The Company is subject to various federal and state laws and regulations affecting its payment processing services, including EFTA and NACHA requirements[118][119]. - The Company is registered with major payment networks like Visa and MasterCard, and must adhere to their respective rules and regulations[120]. - The Company is impacted by the Dodd-Frank Act, which imposes capital and margin requirements on certain swap participants, potentially affecting its ability to hedge interest rate risks[124]. - The Company anticipates additional states adopting laws regulating student loan servicers, which may increase operational costs due to additional licensing fees[116]. - The Company is subject to scrutiny from the Consumer Financial Protection Bureau, which can enforce compliance and impose financial penalties for violations of consumer protection laws[113]. - The Company must comply with the California Consumer Privacy Act, which enhances consumer privacy rights and imposes significant obligations on businesses[127]. - The Company has designed its servicing operations to comply with the Higher Education Act and continuously monitors for potential changes that could impact its business operations[109]. Workforce and Culture - As of December 31, 2021, the total associate headcount was 7,988, with 61.2% in NDS, 29.7% in NBS, and only 0.3% in Nelnet Bank[131]. - In 2021, the company hired approximately 4,400 new associates, including around 800 temporary associates[133]. - The associate engagement score from a culture survey was 80 out of 100, which is five points above the industry benchmark[134]. - The voluntary turnover rate for associates in 2021 was approximately 28%, an increase of 8 percentage points from 2020[135]. - As of December 31, 2021, the workforce was approximately 66% women and 27% people of color, showing an increase from 57% and 20% respectively in 2020[137]. - Women held 52% and people of color held 10% of leadership positions as of December 31, 2021, up from 50% and 8% respectively in 2020[137]. - The company has established a Diversity, Equity, and Inclusion Council with 28 members to enhance diversity initiatives[138]. - Over 70% of open management positions were filled internally during 2021, indicating a strong focus on internal career development[141]. - The Company paid almost $380,000 in tuition assistance for its associates in 2021[143]. - The Company conducted an associate culture survey with a participation rate of 91%, achieving an engagement score of 80 out of 100[134]. - The Company has implemented safety measures in response to the COVID-19 pandemic, allowing associates to choose between remote, in-office, or hybrid work[145].