LINCOLN, Neb., May 9, 2024 /PRNewswire/ -- Nelnet (NYSE:NNI) today reported GAAP net income of $73.2 million, or $1.97 per share, for the first quarter of 2024, compared with GAAP net income of $26.5 million, or $0.71 per share, for the same period a year ago. Net income, excluding derivative market value adjustments[1], was $67.2 million, or $1.81 per share, for the first quarter of 2024, compared with $54.9 million, or $1.47 per share, for the same period in 2023. "We are extremely pleased with the results of the first quarter," said Jeff Noordhoek, chief executive officer of Nelnet. "Our core businesses performed well in an uncertain environment. We continue to look for market opportunities to capitalize on our strong liquidity position, including investing in our current businesses, loan acquisitions, strategic acquisitions and investments, and capital management initiatives. Year to date, we have repurchased almost 818,000 shares of our common stock at a price we believe is extremely attractive." Nelnet has four reportable operating segments, earning interest income on loans in its Asset Generation and Management (AGM) and Nelnet Bank segments, both part of the company's Nelnet Financial Services (NFS) division, and fee-based revenue in its Loan Servicing and Systems and Education Technology Services and Payments segments. Other business activities and operating segments that are not reportable and not part of the NFS division are combined and included in Corporate Activities. Asset Generation and Management The AGM operating segment reported loan and investment net interest income of $40.6 million during the first quarter of 2024, compared with $45.5 million for the same period a year ago. The decrease in 2024 was due to the expected runoff of the loan portfolio and a decrease in loan spread[2]. The average balance of loans outstanding decreased from $14.0 billion for the first quarter of 2023 to $11.6 billion for the same period in 2024. AGM recognized a provision for loan losses in the first quarter of 2024 of $6.6 million ($5.0 million after tax), compared with $31.9 million ($24.2 million after tax) in the first quarter of 2023. Provision for loan losses is primarily impacted by loans acquired during the period. AGM acquired $80.7 million in loans in the first quarter of 2024, compared with $253.7 million for the same period in 2023.  AGM recognized income of $5.7 million ($4.3 million after tax) related to changes in the fair value of derivative instruments that do not qualify for hedge accounting during the first quarter of 2024, compared with a loss of $37.4 million ($28.4 million after tax) for the same period in 2023. AGM recognized net income after tax of $25.6 million for the three months ended March 31, 2024, compared with a loss of $0.2 million for the same period in 2023. Nelnet Bank As of March 31, 2024, Nelnet Bank had a $483.7 million loan portfolio and total deposits, including intercompany deposits, of $960.6 million. Nelnet Bank recognized net income after tax for the three months ended March 31, 2024 of $0.9 million, compared with a net loss of $0.1 million for the same period in 2023. Loan Servicing and Systems Revenue from the Loan Servicing and Systems segment was $127.2 million for the first quarter of 2024, compared with $139.2 million for the same period in 2023. As of March 31, 2024, the company was servicing $532.2 billion in government-owned, FFEL Program, private education, and consumer loans for 15.9 million borrowers, compared with $578.6 billion in servicing volume for 17.3 million borrowers as of March 31, 2023. The Loan Servicing and Systems segment reported net income after tax of $12.2 million for the three months ended March 31, 2024, compared with $19.2 million for the same period in 2023. Education Technology Services and Payments For the first quarter of 2024, revenue from the Education Technology Services and Payments operating segment was $143.5 million, an increase from $133.6 million for the same period in 2023. Revenue less direct costs to provide services for the first quarter of 2024 was $94.9 million, compared with $85.9 million for the same period in 2023. Net income after tax for the Education Technology Services and Payments segment was $36.2 million for the three months ended March 31, 2024, compared with $28.7 million for the same period in 2023. Net income for the three months ended March 31, 2024 and 2023 included $7.9 million ($6.0 million after tax) and $6.0 million ($4.6 million after tax) of interest income, respectively. This segment is subject to seasonal fluctuations. Based on the timing of when revenue is recognized and when expenses are incurred, revenue and operating margin are higher in the first quarter compared with the remainder of the year. Corporate Activities Included in corporate activities is the operating results of the company's 45 percent voting membership interest in ALLO Holdings LLC, a holding company for ALLO Communications LLC (ALLO). During the first quarter of 2024, the company recognized a loss on its ALLO voting membership interests investment of $10.7 million ($8.1 million after tax), compared with a loss of $20.2 million ($15.4 million after tax) for the same period in 2023. Absent additional equity contributions, the company will not recognize additional losses for its voting membership interests in ALLO.  Share Repurchases Year to date through May 9, 2024, the company has repurchased 817,826 Class A common shares for $75.3 million (average price of $92.01 per share), including a total of 396,724 Class A common shares for $35.5 million ($89.41 per share) repurchased during the three months ended March 31, 2024. Board of Directors Declares Second Quarter Dividend The Nelnet Board of Directors declared a second-quarter cash dividend on the company's outstanding shares of Class A common stock and Class B common stock of $0.28 per share. The dividend will be paid on June 14, 2024, to shareholders of record at the close of business on May 31, 2024. Forward-Looking and Cautionary Statements This press release contains forward-looking statements within the meaning of federal securities laws. The words "anticipate," "assume," "believe," "continue," "could," "ensure," "estimate," "expect," "forecast," "future," "intend," "may," "plan," "potential," "predict," "scheduled," "should," "will," "would," and similar expressions, as well as statements in future tense, are intended to identify forward-looking statements. These statements are based on management's current expectations as of the date of this release and are subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause the actual results and performance to be materially different from any future results or performance expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to: 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 of Education, risks related to unfavorable contract modifications or interpretations, and risks related to the company's ability to comply with agreements with third-party customers for the servicing of Federal Direct Loan Program, FFEL Program, private education, and consumer loans; loan portfolio risks such as prepayment or default risk, credit risk, interest rate basis and repricing risk, risks related to the use of derivatives to manage exposure to interest rate fluctuations, uncertainties regarding the expected benefits from purchased securitized and unsecuritized FFEL Program, private education, consumer, and other loans, or investment interests therein, and initiatives to purchase additional FFEL Program, private education, consumer, and other loans; financing and liquidity risks, including risks of changes in the interest rate environment; risks from changes in the terms of education loans and in the educational credit and services markets resulting from changes in applicable laws, regulations, and government programs and budgets; risks related to a breach of or failure in the company's operational or information systems or infrastructure, or those of third-party vendors, including disclosure of confidential or personal information and/or damage to reputation resulting from cyber breaches; risks related to use of artificial intelligence; uncertainties inherent in forecasting future cash flows from student loan assets and related asset-backed securitizations; risks related to the ability of Nelnet Bank to achieve its business objectives and effectively deploy loan and deposit strategies and achieve expected market penetration; risks related to the expected benefits to the company from its continuing investment in ALLO and Hudl, and risks related to investments in solar projects, including risks of not being able to realize tax credits which remain subject to recapture by taxing authorities and rising construction costs; risks and uncertainties related to other initiatives to pursue additional strategic investments (and anticipated income therefrom) including venture capital and real estate investments, reinsurance, acquisitions, and other activities (including risks associated with errors that occasionally occur in converting loan servicing portfolios to a new servicing platform), including activities that are intended to diversify the company both within and outside of its historical core education-related businesses; risks from changes in economic conditions and consumer behavior; risks related to the company's ability to adapt to technological change; risks related to the exclusive forum provisions in the company's articles of incorporation; risks related to the company's executive chairman's ability to control matters related to the company through voting rights; risks related to related party transactions; risks and uncertainties associated with climate change; risks related to natural disasters, terrorist activities, or international hostilities; and risks and uncertainties associated with litigation matters and maintaining compliance with the extensive regulatory requirements applicable to the company's businesses, and uncertainties inherent in the estimates and assumptions about future events that management is required to make in the preparation of the company's consolidated financial statements. For more information, see the "Risk Factors" sections and other cautionary discussions of risks and uncertainties included in documents filed or furnished by the company with the Securities and Exchange Commission. All forward-looking statements in this release are as of the date of this release. Although the company may voluntarily update or revise its forward-looking statements from time to time to reflect actual results or changes in the company's expectations, the company disclaims any commitment to do so except as required by law.