Nelnet Reports Third Quarter 2024 Results

Core Points - Nelnet reported a significant decline in GAAP net income for Q3 2024, with net income of $2.4 million ($0.07 per share), down from $44.4 million ($1.18 per share) in Q3 2023 [1][2] - Excluding derivative market value adjustments, net income was $12.4 million ($0.34 per share) for Q3 2024, compared to $42.0 million ($1.12 per share) in the same period last year [2][30] Financial Performance - The company incurred a non-cash provision expense of $29.0 million related to loan securitizations, reflecting changes in future cash flow estimates due to increased cumulative net loss rates [3][10] - A non-cash expense of $5.6 million was recorded for writing off unamortized debt discount costs from early redemption of higher-cost debt securities [4] - Losses of $11.2 million were reported from tax equity investments in solar projects, with the accounting method accelerating losses in initial years but not affecting long-term return expectations [5] - Estimated losses of $8.8 million were recognized on legacy solar construction projects, although the company is optimistic about repositioning its solar EPC business for future profitability [6] Operating Segments - The Asset Generation and Management (AGM) segment reported net interest income of $38.4 million, down from $51.5 million in Q3 2023, primarily due to the runoff of the Federal Family Education Loan Program (FFELP) portfolio [9][10] - Nelnet Bank reported a net loss after tax of $3.6 million for Q3 2024, compared to net income of $1.7 million in Q3 2023, with a provision for loan losses of $6.1 million [12] - The Loan Servicing and Systems segment generated revenue of $108.2 million, down from $127.9 million in the same period last year, attributed to the transition to a new servicing contract [13][16] - The Education Technology Services and Payments segment saw revenue increase to $118.2 million, up from $113.8 million in Q3 2023, with net income after tax rising to $20.4 million [17][18] Corporate Activities - The company declared a fourth-quarter cash dividend of $0.28 per share, payable on December 16, 2024, to shareholders of record as of December 2, 2024 [21] - The company recognized a loss of $10.1 million in its solar EPC business for Q3 2024, compared to a loss of $4.9 million in Q3 2023, reflecting ongoing challenges in legacy construction projects [20]