(Mark One)
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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2017
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or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
.
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NEBRASKA
(State or other jurisdiction of incorporation or organization)
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84-0748903
(I.R.S. Employer Identification No.)
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121 SOUTH 13TH STREET, SUITE 100
LINCOLN, NEBRASKA
(Address of principal executive offices)
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68508
(Zip Code)
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•
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loan portfolio risks such as interest rate basis and repricing risk resulting from the fact that the interest rate characteristics of the student loan assets do not match the interest rate characteristics of the funding for those assets, the risk of loss of floor income on certain student loans originated under the Federal Family Education Loan Program (the "FFEL Program" or "FFELP"), risks related to the use of derivatives to manage exposure to interest rate fluctuations, uncertainties regarding the expected benefits from purchased securitized and unsecuritized FFELP, private education, and consumer loans and initiatives to purchase additional FFELP, private education, and consumer loans, and risks from changes in levels of loan prepayment or default rates;
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•
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financing and liquidity risks, including risks of changes in the general interest rate environment and in the securitization and other financing markets for loans, including adverse changes resulting from slower than expected payments on student loans in FFELP securitization trusts, which may increase the costs or limit the availability of financings necessary to purchase, refinance, or continue to hold student loans;
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•
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risks from changes in the educational credit and services markets resulting from changes in applicable laws, regulations, and government programs and budgets, such as the expected decline over time in FFELP loan interest income and fee-based revenues due to the discontinuation of new FFELP loan originations in 2010 and potential government initiatives or legislative proposals to consolidate existing FFELP loans to the Federal Direct Loan Program or otherwise allow FFELP loans to be refinanced with Federal Direct Loan Program loans;
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•
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the uncertain nature of the expected benefits from the acquisition of Great Lakes Educational Loan Services, Inc. ("Great Lakes") on February 7, 2018 and the ability to successfully integrate technology, shared services, and other activities and successfully maintain and increase allocated volumes of student loans serviced under existing and any future servicing contracts with the U.S. Department of Education (the "Department"), which current contract between the Company and the Department accounted for
21 percent
of the Company's revenue in 2017, risks to the Company related to the Department's initiative to procure new contracts for federal student loan servicing, including the risk that the Company on a post-Great Lakes acquisition basis may not be awarded a contract, risks related to the development by the Company and Great Lakes of a new student loan servicing platform, including risks as to whether the expected benefits from the new platform will be realized, and risks related to the Company's ability to comply with agreements with third-party customers for the servicing of FFELP, Federal Direct Loan Program, and private education and consumer loans;
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•
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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 cybersecurity risks related to the potential disclosure of confidential student loan borrower and other customer information;
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•
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uncertainties inherent in forecasting future cash flows from student loan assets and related asset-backed securitizations;
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•
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the uncertain nature of the expected benefits from the acquisition of ALLO Communications LLC on December 31, 2015 and the ability to integrate its communications operations and successfully expand its fiber network in existing service areas and additional communities and manage related construction risks;
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•
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risks and uncertainties related to initiatives to pursue additional strategic investments and acquisitions, including investments and acquisitions that are intended to diversify the Company both within and outside of its historical core education-related businesses; and
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•
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risks and uncertainties associated with litigation matters and with maintaining compliance with the extensive regulatory requirements applicable to the Company's businesses, reputational and other risks, including the risk of increased regulatory costs, resulting from the recent politicization of student loan servicing, 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.
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•
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Referred to as Nelnet Diversified Solutions (“NDS”)
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•
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Focuses on student loan servicing, consumer loan origination and servicing, student loan servicing-related technology solutions, and outsourcing services for lenders and other entities
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•
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Includes the brands Nelnet Loan Servicing, Firstmark Services, GreatNet Solutions, and Proxi
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•
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Referred to as Nelnet Business Solutions (“NBS”)
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•
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Focuses on tuition payment plans and billings, financial needs assessment services, online payment and refund processing, school information system software, payment technologies, and professional development and educational instruction services
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•
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Includes the brands FACTS Management, Nelnet Campus Commerce, RenWeb, PaymentSpring, and FACTS Education Solutions
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•
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Includes the operations of ALLO Communications LLC ("ALLO")
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•
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Focuses on providing fiber optic service directly to homes and businesses for internet, broadband, telephone, and television services
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•
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Includes the acquisition and management of the Company's student and other loan assets
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•
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Servicing federally-owned student loans for the Department
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•
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Servicing FFELP loans
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•
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Originating and servicing private education and consumer loans
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•
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Providing student loan servicing software and other information technology products and services
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•
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Providing outsourced services including call center, processing, and marketing services
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•
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Component A: Enterprise-wide digital platform and related middleware
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•
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Component B: Enterprise-wide contact center platform, customer relationship management (CRM), and related middleware
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•
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Component C: Solution 3.0 (core processing, related middleware, and rules engine)
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•
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Component D: Solution 2.0 (core processing, related middleware, and rules engine)
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•
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Component E: Solution 3.0 business process operations
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•
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Component F: Solution 2.0 business process operations
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•
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Component G: Enterprise-wide data management platform
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•
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Component H: Enterprise-wide identity and access management (IAM)
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•
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Component I: Cybersecurity and data protection
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•
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Two metrics measure the satisfaction among separate customer groups, including borrowers (35 percent) and Federal Student Aid personnel who work with the servicers (5 percent).
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•
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Three metrics measure the success of keeping borrowers in an on-time repayment status and helping borrowers avoid default as reflected by the percentage of borrowers in current repayment status (30 percent), percentage of borrowers more than 90 days but fewer than 271 days delinquent (15 percent), and percentage of borrowers over 270 days and fewer than 361 days delinquent (15 percent). The loans are evaluated in 15 different loan portfolio stratifications to account for differences in portfolios.
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Initial Metrics (a)
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Revised Metrics, NFPs received 25% of volume (b)
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Current Metrics
(Common Metrics for TIVAS and NFPs)
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||||||||||||||||
Performance Evaluation Period
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1
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2
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3
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4
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5
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6
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7
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8
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9
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10
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11
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Defaulted borrower #
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4
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4
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1
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1
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2
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Borrower survey
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2
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2
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1
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4
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2
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2
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Defaulted borrower $
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4
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4
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1
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1
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2
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FSA survey
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2
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2
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2
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4
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4
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3
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Borrower survey
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4
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4
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3
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2
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2
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Current repay %
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4
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4
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10
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3
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7
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6
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School survey
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2
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2
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2
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3
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2
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91-270 Repay %
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4
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4
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10
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6
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7
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7
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FSA survey
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3
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3
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3
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3
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4
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271-360 Repay %
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4
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4
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10
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9
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7
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8
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Overall ranking
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4
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4
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1
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1
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2
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4
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4
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8
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5
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5
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4
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Allocation
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16%
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16%
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30%
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30%
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26%
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14%
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13%
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8%
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12%
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11%
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11%
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Allocation period
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August 15, 2010 - August 14, 2011
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August 15, 2011 - August 14, 2012
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August 15, 2012 - August 14, 2013
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August 15, 2013 - August 14, 2014
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August 15, 2014 - February 28, 2015
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March 1, 2015 - August 31, 2015
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September 1, 2015 - February 29, 2016
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March 1,
2016 -
June 30, 2016
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July 1,
2016 - February 28, 2017
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March 1, 2017 - August 31, 2017
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September 1, 2017 - February 28, 2018
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(a)
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During the first five years of the servicing contract, the Department allocated 100 percent of new loan volume among the four TIVAS based on the following performance metrics:
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◦
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Two performance metrics measured the success of default prevention efforts as reflected by the percentage of borrowers (20 percent) and percentage of dollars (20 percent) in each servicer's portfolio that went into default.
|
◦
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Three metrics measured the satisfaction among separate borrower groups, including borrowers (20 percent), financial aid personnel at postsecondary schools participating in federal student loan programs (20 percent), and Federal Student Aid and other federal agency personnel or contractors who worked with the servicers (20 percent).
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(b)
|
For these performance evaluation periods (6 and 7 in the above table), the numerical rankings are among the four TIVAS, since the NFPs received a fixed 25 percent of the overall new loan volume. Prior to these evaluation periods, the NFPs serviced loans for up to 100,000 borrower accounts and were not subject to allocations based on performance.
|
•
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Administration of the Total and Permanent Disability (TPD) Discharge program
. The Company processes applications for the TPD discharge program and is responsible for discharge, monitoring, and servicing TPD loans. Individuals who are totally and permanently disabled may qualify for a discharge of their federal student loans, and the Company processes applications under the program and receives a fee from the Department on a per application basis, as well as a monthly servicing fee during the monitoring period. The Company is the exclusive provider of this service to the Department.
|
•
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Origination of consolidation loans.
Beginning in 2014, the Department implemented a process to outsource the origination of consolidation loans whereby each of the four TIVAS, and beginning in December 2017, each of the NFP servicers, receives Federal Direct Loan consolidation origination volume based on borrower choice. The Department pays the Company a fee for each completed consolidation loan application it processes. The Company services the consolidation volume it originates.
|
•
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Promoting the advantages of an all-fiber network connected directly to homes and businesses capable of delivering synchronous internet speeds of over one gigabit per second
|
•
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Building complete fiber communities by passing all homes and businesses within its network
|
•
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Organizing sales and marketing activities around consumer, enterprise, and carrier customers
|
•
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Positioning ALLO as a single point of contact for customers’ communications needs
|
•
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Providing customers with a broad array of internet, broadband, television, and telephone services and bundling these services whenever possible
|
•
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Providing excellent local customer service, including 24/7/365 customer support to coordinate installation of new services, repair, and maintenance functions
|
•
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Developing and delivering new services to meet evolving customer needs and market demands
|
•
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Utilizing proven modern technology to deliver services
|
•
|
The Higher Education Act, which establishes financial responsibility and administrative capability that govern all third-party servicers of federally insured student loans
|
•
|
The Telephone Consumer Protection Act (“TCPA”), which governs communication methods that may be used to contact customers
|
•
|
The Truth-In-Lending Act and Regulation Z, which governs disclosures of credit terms to consumer borrowers
|
•
|
The Fair Credit Reporting Act and Regulation V, which governs the use and provision of information to consumer reporting agencies
|
•
|
The Equal Credit Opportunity Act and Regulation B, which prohibits discrimination on the basis of race, creed, or other prohibited factors in extending credit
|
•
|
The Servicemembers Civil Relief Act (“SCRA”), which applies to all debts incurred prior to commencement of active military service and limits the amount of interest, including certain fees or charges that are related to the obligation or liability
|
•
|
The Electronic Funds Transfer Act (“EFTA”) and Regulation E, which protects individual consumers engaged in electronic fund transfers (“EFTs”)
|
•
|
The Gramm-Leach-Bliley Act (“GLBA”) and Regulation P, which governs a financial institution’s treatment of nonpublic personal information about consumers and requires that an institution, under certain circumstances, notify consumers about its privacy policies and practices
|
•
|
Laws prohibiting unfair, deceptive, or abusive acts or practices
|
•
|
Various laws, regulations, and standards that govern government contractors
|
Location
|
|
Primary function or segment
|
|
Approximate square feet
|
|
Lease expiration date
|
||
|
|
|
|
|
|
|
|
|
Lincoln, NE
|
|
Corporate Headquarters, Loan Systems and Servicing, Tuition Payment Processing and Campus Commerce
|
|
192,000
|
|
(a)
|
|
—
|
|
|
|
|
|
|
|
|
|
Highlands Ranch, CO
|
|
Loan Systems and Servicing
|
|
67,000
|
|
|
|
October 2020
|
|
|
|
|
|
|
|
|
|
Lincoln, NE
|
|
Loan Systems and Servicing
|
|
65,000
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Omaha, NE
|
|
Loan Systems and Servicing, Tuition Payment Processing and Campus Commerce
|
|
56,000
|
|
|
|
December 2020 and December 2025
|
|
|
|
|
|
|
|
|
|
Lincoln, NE
|
|
Loan Systems and Servicing, Asset Generation and Management
|
|
51,000
|
|
|
|
November 2023 and March 2024
|
|
|
|
|
|
|
|
|
|
Aurora, CO
|
|
Loan Systems and Servicing
|
|
37,000
|
|
|
|
September 2019
|
|
|
|
|
|
|
|
|
|
Lincoln, NE
|
|
Communications
|
|
29,000
|
|
|
|
Month-to-month
|
|
|
|
|
|
|
|
|
|
Lincoln, NE
|
|
Communications
|
|
28,000
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Lincoln, NE
|
|
Loan Systems and Servicing, Asset Generation and Management, Tuition Payment Processing and Campus Commerce
|
|
22,000
|
|
|
|
Month-to-month and October 2018
|
|
|
|
|
|
|
|
|
|
Lincoln, NE
|
|
Corporate Activities
|
|
21,000
|
|
|
|
October 2027
|
|
|
|
|
|
|
|
|
|
Burleson, TX
|
|
Tuition Payment Processing and Campus Commerce
|
|
17,000
|
|
|
|
October 2021
|
|
|
|
|
|
|
|
|
|
Scottsbluff, NE
|
|
Communications
|
|
15,000
|
|
|
|
April 2019
|
|
|
|
|
|
|
|
|
|
North Platte, NE
|
|
Communications
|
|
11,000
|
|
|
|
August 2026
|
|
|
|
|
|
|
|
|
|
Alliance, NE
|
|
Communications
|
|
6,000
|
|
|
|
May 2022
|
|
|
|
|
|
|
|
|
|
Imperial, NE
|
|
Communications
|
|
6,000
|
|
|
|
—
|
(a)
|
Excludes a total of approximately 22,000 square feet of owned office space that the Company leases to third parties.
|
|
2016
|
|
2017
|
||||||||||||||||||||||||||||
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
||||||||||||||||
High
|
$
|
37.28
|
|
|
$
|
38.19
|
|
|
$
|
44.92
|
|
|
$
|
44.08
|
|
|
$
|
52.24
|
|
|
$
|
47.60
|
|
|
$
|
52.26
|
|
|
$
|
59.68
|
|
Low
|
26.15
|
|
|
35.05
|
|
|
37.06
|
|
|
38.24
|
|
|
41.19
|
|
|
38.72
|
|
|
43.92
|
|
|
49.60
|
|
|
2016
|
|
2017
|
|||||||||||||||||||||
Record date
|
3/1/16
|
|
|
6/1/16
|
|
|
9/1/16
|
|
|
12/1/16
|
|
|
3/1/17
|
|
|
6/1/17
|
|
|
9/1/17
|
|
|
12/1/17
|
|
|
Payment date
|
3/15/16
|
|
|
6/15/16
|
|
|
9/15/16
|
|
|
12/15/16
|
|
|
3/15/17
|
|
|
6/15/17
|
|
|
9/15/17
|
|
|
12/15/17
|
|
|
Dividend amount per share
|
$
|
0.12
|
|
|
0.12
|
|
|
0.12
|
|
|
0.14
|
|
|
0.14
|
|
|
0.14
|
|
|
0.14
|
|
|
0.16
|
|
Company/Index
|
12/31/2012
|
|
|
12/31/2013
|
|
|
12/31/2014
|
|
|
12/31/2015
|
|
|
12/31/2016
|
|
|
12/31/2017
|
|
||||||
Nelnet, Inc.
|
$
|
100.00
|
|
|
$
|
142.94
|
|
|
$
|
158.68
|
|
|
$
|
116.23
|
|
|
$
|
177.96
|
|
|
$
|
194.45
|
|
S&P 500
|
100.00
|
|
|
132.39
|
|
|
150.51
|
|
|
152.59
|
|
|
170.84
|
|
|
208.14
|
|
||||||
S&P 500 Financials
|
100.00
|
|
|
135.63
|
|
|
156.25
|
|
|
153.86
|
|
|
188.94
|
|
|
230.85
|
|
Period
|
|
Total number of shares purchased (a)
|
|
Average price paid per share
|
|
Total number of shares purchased as part of publicly announced plans or programs (b)
|
|
Maximum number of shares that may yet be purchased under the plans or programs (b)
|
|||||
October 1 - October 31, 2017
|
|
69,981
|
|
|
$
|
50.45
|
|
|
69,541
|
|
|
3,179,339
|
|
November 1 - November 30, 2017
|
|
37,239
|
|
|
51.26
|
|
|
36,932
|
|
|
3,142,407
|
|
|
December 1 - December 31, 2017
|
|
2,263
|
|
|
55.61
|
|
|
—
|
|
|
3,142,407
|
|
|
Total
|
|
109,483
|
|
|
$
|
50.83
|
|
|
106,473
|
|
|
|
|
(a)
|
The total number of shares includes: (i) shares repurchased pursuant to the stock repurchase program discussed in footnote (b) below; and (ii) shares owned and tendered by employees to satisfy tax withholding obligations upon the vesting of restricted shares. Shares of Class A common stock tendered by employees to satisfy tax withholding obligations included
440
shares,
307
shares, and
2,263
shares in October, November, and December, respectively. Unless otherwise indicated, shares owned and tendered by employees to satisfy tax withholding obligations were purchased at the closing price of the Company’s shares on the date of vesting.
|
(b)
|
On August 4, 2016, the Company announced that its Board of Directors authorized a new stock repurchase program in May 2016 to repurchase up to a total of five million shares of the Company's Class A common stock during the three-year period ending May 25, 2019.
|
|
Year ended December 31,
|
||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
(Dollars in thousands, except share data)
|
||||||||||||||
Operating Data:
|
|
|
|
|
|
|
|
|
|
||||||
Net interest income
|
$
|
305,238
|
|
|
372,563
|
|
|
431,899
|
|
|
436,563
|
|
|
413,875
|
|
Loan systems and servicing revenue
|
223,000
|
|
|
214,846
|
|
|
239,858
|
|
|
240,414
|
|
|
243,428
|
|
|
Tuition payment processing, school information, and campus commerce revenue
|
145,751
|
|
|
132,730
|
|
|
120,365
|
|
|
98,156
|
|
|
80,682
|
|
|
Communications revenue
|
25,700
|
|
|
17,659
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Enrollment services revenue
|
—
|
|
|
4,326
|
|
|
51,073
|
|
|
62,949
|
|
|
79,275
|
|
|
Other income
|
52,826
|
|
|
53,929
|
|
|
47,262
|
|
|
73,936
|
|
|
65,101
|
|
|
Gain on sale of loans and debt repurchases, net
|
2,902
|
|
|
7,981
|
|
|
5,153
|
|
|
3,651
|
|
|
11,699
|
|
|
Net income attributable to Nelnet, Inc.
|
173,166
|
|
|
256,751
|
|
|
267,979
|
|
|
307,610
|
|
|
302,672
|
|
|
Earnings per common share attributable to Nelnet, Inc. shareholders - basic and diluted:
|
4.14
|
|
|
6.02
|
|
|
5.89
|
|
|
6.62
|
|
|
6.50
|
|
|
Dividends per common share
|
0.58
|
|
|
0.50
|
|
|
0.42
|
|
|
0.40
|
|
|
0.40
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other Data:
|
|
|
|
|
|
|
|
|
|
||||||
Fixed rate floor income, net of derivative settlements
|
$
|
117,272
|
|
|
152,336
|
|
|
184,746
|
|
|
179,870
|
|
|
148,431
|
|
Core loan spread
|
1.23
|
%
|
|
1.28
|
%
|
|
1.43
|
%
|
|
1.48
|
%
|
|
1.54
|
%
|
|
Acquisition of loans (par value)
|
$
|
330,251
|
|
|
356,110
|
|
|
4,036,333
|
|
|
6,099,249
|
|
|
4,058,997
|
|
Loans serviced (at end of period)
|
211,413,959
|
|
|
194,821,646
|
|
|
176,436,497
|
|
|
161,642,254
|
|
|
138,208,897
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
As of December 31,
|
||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||
Balance Sheet Data:
|
(Dollars in thousands, except share data)
|
||||||||||||||
Cash and cash equivalents
|
$
|
66,752
|
|
|
69,654
|
|
|
63,529
|
|
|
130,481
|
|
|
63,267
|
|
Loans receivable, net
|
21,814,507
|
|
|
24,903,724
|
|
|
28,324,552
|
|
|
28,005,195
|
|
|
25,907,589
|
|
|
Goodwill and intangible assets, net
|
177,186
|
|
|
195,125
|
|
|
197,062
|
|
|
168,782
|
|
|
123,250
|
|
|
Total assets
|
23,964,435
|
|
|
27,193,095
|
|
|
30,419,144
|
|
|
30,027,739
|
|
|
27,704,028
|
|
|
Bonds and notes payable
|
21,356,573
|
|
|
24,668,490
|
|
|
28,105,921
|
|
|
27,956,946
|
|
|
25,888,468
|
|
|
Nelnet, Inc. shareholders' equity
|
2,149,529
|
|
|
2,061,655
|
|
|
1,884,432
|
|
|
1,725,448
|
|
|
1,443,662
|
|
|
Tangible Nelnet, Inc. shareholders' equity (a)
|
1,972,343
|
|
|
1,866,530
|
|
|
1,687,370
|
|
|
1,556,666
|
|
|
1,320,412
|
|
|
Outstanding common shares
|
40,810,104
|
|
|
42,105,044
|
|
|
43,953,460
|
|
|
46,243,316
|
|
|
46,376,715
|
|
|
Book value per common share
|
52.67
|
|
|
48.96
|
|
|
42.87
|
|
|
37.31
|
|
|
31.13
|
|
|
Tangible book value per common share (a)
|
48.33
|
|
|
44.33
|
|
|
38.39
|
|
|
33.66
|
|
|
28.47
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Ratios:
|
|
|
|
|
|
|
|
|
|
||||||
Shareholders' equity to total assets
|
8.97
|
%
|
|
7.58
|
%
|
|
6.19
|
%
|
|
5.75
|
%
|
|
5.21
|
%
|
(a)
|
Tangible Nelnet, Inc. shareholders' equity, a non-GAAP measure, equals "Nelnet, Inc. shareholders' equity" less "Goodwill and intangible assets, net." Management believes tangible shareholders' equity and the corresponding tangible book value per common share are useful supplemental non-GAAP measures to evaluate the strength of the Company's capital position and facilitate comparisons with other companies in the financial services industry. However, there is no comprehensive authoritative guidance for the presentation of these measures, and similarly titled measures may be calculated differently by other companies.
|
|
Year ended December 31,
|
||||||||
|
2017
|
|
2016
|
|
2015
|
||||
GAAP net income attributable to Nelnet, Inc.
|
$
|
173,166
|
|
|
256,751
|
|
|
267,979
|
|
Realized and unrealized derivative market value adjustments
|
(26,379
|
)
|
|
(59,895
|
)
|
|
15,150
|
|
|
Unrealized foreign currency transaction adjustments
|
45,600
|
|
|
(11,849
|
)
|
|
(43,801
|
)
|
|
Net tax effect (a)
|
(7,304
|
)
|
|
27,263
|
|
|
10,887
|
|
|
Net income, excluding derivative market value and foreign currency transaction adjustments (b)
|
$
|
185,083
|
|
|
212,270
|
|
|
250,215
|
|
|
|
|
|
|
|
||||
Earnings per share:
|
|
|
|
|
|
||||
GAAP net income attributable to Nelnet, Inc.
|
$
|
4.14
|
|
|
6.02
|
|
|
5.89
|
|
Realized and unrealized derivative market value adjustments
|
(0.63
|
)
|
|
(1.40
|
)
|
|
0.33
|
|
|
Unrealized foreign currency transaction adjustments
|
1.09
|
|
|
(0.28
|
)
|
|
(0.96
|
)
|
|
Net tax effect (a)
|
(0.17
|
)
|
|
0.63
|
|
|
0.24
|
|
|
Net income, excluding derivative market value and foreign currency transaction adjustments (b)
|
$
|
4.43
|
|
|
4.97
|
|
|
5.50
|
|
(a)
|
The tax effects are calculated by multiplying the realized and unrealized derivative market value adjustments and unrealized foreign currency transaction adjustments by the applicable statutory income tax rate.
|
(b)
|
"Derivative market value and foreign currency transaction adjustments" include (i) both the realized portion of gains and losses (corresponding to variation margin received or paid on derivative instruments that are settled daily at a central clearinghouse under new rules effective January 3, 2017) and the unrealized portion of gains and losses that are caused by changes in fair values of derivatives which do not qualify for "hedge treatment" under GAAP; and (ii) the unrealized foreign currency transaction gains or losses caused by the re-measurement of the Company's Euro-denominated bonds to U.S. dollars. "Derivative market value and foreign currency transaction adjustments" does not include "derivative settlements" that represent the cash paid or received during the current period to settle with derivative instrument counterparties the economic effect of the Company's derivative instruments based on their contractual terms.
|
•
|
Loan Systems and Servicing ("LSS") - referred to as Nelnet Diversified Solutions ("NDS")
|
•
|
Tuition Payment Processing and Campus Commerce ("TPP&CC") - referred to as Nelnet Business Solutions ("NBS")
|
•
|
Communications - referred to as ALLO Communications ("ALLO")
|
(a)
|
Revenue includes intersegment revenue earned by LSS as a result of servicing loans for AGM.
|
(b)
|
Total revenue includes "net interest income after provision for loan losses" and "total other income" from the Company's segment statements of income, excluding the impact from changes in fair values of derivatives and foreign currency transaction adjustments. Net income excludes changes in fair values of derivatives and foreign currency transaction adjustments, net of tax. For information regarding the exclusion of the impact from changes in fair values of derivatives and foreign currency transaction adjustments, see "GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above.
|
•
|
The Company and Great Lakes continue to develop a new, state-of-the-art servicing system for government-owned student loans through their GreatNet joint venture. The servicing platform under development will utilize modern technology to effectively scale for additional volume, protect customer information, and support enhanced borrower experience initiatives. The Company’s share of costs incurred in 2017 to develop this platform was $12.6 million (pre-tax), which decreased the operating margin of this business from historical periods.
|
•
|
The Company continues to make investments in new payment products and services, primarily under the PaymentSpring brand name, that will create additional card processing solutions for the Company's customers. The Company currently offers payment services including electronic transfer and credit card processing, reporting, billing and invoicing, mobile and virtual terminal solutions, and specialized integrations to business software. The Company incurred $5.7 million in net operating costs related to providing and developing these products and services in 2017. The Company currently anticipates making additional investments in payment products and services which will impact this segment’s operating results over the next several years.
|
•
|
In the fourth quarter of 2017, ALLO announced plans to expand its network to make services available in Hastings, Nebraska and Fort Morgan, Colorado. This will expand total households in ALLO’s current markets from 137,500 to over 152,000. In December 2017, the Fort Morgan city council approved a 40-year agreement with ALLO for ALLO to provide broadband service over a fiber network that the city will build and own, and ALLO will lease and operate to provide services to subscribers. ALLO plans to continue expansion to additional communities in Nebraska and Colorado over the next several years.
|
•
|
The Company currently anticipates ALLO's operating results will be dilutive to the Company's consolidated earnings as it continues to build its network in Lincoln, Nebraska, and other communities, due to large upfront capital expenditures and associated depreciation and upfront customer acquisition costs.
|
•
|
During 2017, the Company began to purchase consumer loans. As the Company’s FFELP loans continue to amortize, the Company is actively expanding its private education and consumer loan portfolios.
|
•
|
As of December 31, 2017, Whitetail Rock Capital Management, LLC (“WRCM”), the Company’s SEC-registered investment advisor subsidiary, had $874.3 million in asset-backed security assets, consisting primarily of student loan asset-backed securities, under management for third-party customers. WRCM earns annual management fees of 25 basis points for assets under management and up to 50 percent of the gains from the sale of securities or securities being called prior to the full contractual maturity for which it provides advisory services. During 2017, WRCM traded almost $1.3 billion for their customers, generating $10.1 million in performance fees. Assuming assets under management remain at their current levels, management fees should be relatively stable in future years. However, the Company currently anticipates that opportunities for WRCM to earn performance fees could be limited in future years.
|
•
|
On December 31, 2017, the Company sold Peterson’s, its college planning, digital marketing, and content solutions subsidiary. Peterson’s revenue in 2017 was $12.6 million, a decrease from $14.3 million in 2016 and $19.6 million in 2015. During the fourth quarter of 2017, the Company recognized an impairment charge of $3.6 million (pre-tax) related to goodwill initially recorded upon the acquisition of Peterson’s in 2006.
|
•
|
The Tax Cuts and Jobs Act (the “Act”), signed into law on December 22, 2017, reduced the corporate statutory federal tax rate from 35 percent to 21 percent. As a result of the Act, in December 2017, the Company re-measured its net deferred tax liabilities to reflect the new statutory rate, resulting in a decrease to income tax expense of $19.3 million, resulting in a 2017 effective tax rate of 27.25 percent. The Company currently anticipates its effective tax rate will range between 23 to 24 percent in 2018 and future periods, as compared to its historical effective tax rate that ranged between 35 to 38 percent.
|
•
|
The Company has historically generated positive cash flow from operations. For the year ended December 31, 2017, the Company’s net cash provided by operating activities was
$227.5 million
.
|
•
|
The majority of the Company’s portfolio of student loans is funded in asset-backed securitizations that will generate significant earnings and cash flow over the life of these transactions. As of December 31, 2017, the Company currently expects future undiscounted cash flows from its securitization portfolio to be approximately
$1.92 billion
, of which approximately
$1.34 billion
will be generated over the next five years.
|
•
|
The Company intends to use its liquidity position to capitalize on market opportunities, including FFELP, private education, and consumer loan acquisitions; strategic acquisitions and investments; expansion of ALLO’s telecommunications network; and capital management initiatives, including stock repurchases, debt repurchases, and dividend distributions. The timing and size of these opportunities will vary and will have a direct impact on the Company’s cash and investment balances.
|
•
|
On February 7, 2018, the Company acquired 100 percent of the outstanding stock of Great Lakes for a purchase price of $150.0 million in cash. The Company and Great Lakes are two of the four large private sector companies (referred to as Title IV Additional Servicers, or “TIVAS”) that have student loan servicing contracts awarded by the Department in June 2009 to provide servicing for loans owned by the Department. These contracts are currently scheduled to expire on June 16, 2019.
|
•
|
On February 20, 2018, the Department’s Office of Federal Student Aid ("FSA") released information regarding a new contract procurement process to service all student loans owned by the Department. The contract solicitation process is divided into two phases. Responses for Phase One are due on April 6, 2018. The contract solicitation requests responses from interested vendors for nine components, including:
|
•
|
Component A: Enterprise-wide digital platform and related middleware
|
•
|
Component B: Enterprise-wide contact center platform, customer relationship management (CRM), and related middleware
|
•
|
Component C: Solution 3.0 (core processing, related middleware, and rules engine)
|
•
|
Component D: Solution 2.0 (core processing, related middleware, and rules engine)
|
•
|
Component E: Solution 3.0 business process operations
|
•
|
Component F: Solution 2.0 business process operations
|
•
|
Component G: Enterprise-wide data management platform
|
•
|
Component H: Enterprise-wide identity and access management (IAM)
|
•
|
Component I: Cybersecurity and data protection
|
|
|
|
|
|
|
|
|
||||
Additional information:
|
|
|
|
|
|
|
|
||||
Net income attributable to Nelnet, Inc.
|
$
|
173,166
|
|
|
256,751
|
|
|
267,979
|
|
|
See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional information about non-GAAP net income, excluding derivative market value and foreign currency adjustments.
|
Derivative market value and foreign currency transaction adjustments, net
|
19,221
|
|
|
(71,744
|
)
|
|
(28,651
|
)
|
|
||
Net tax effect
|
(7,304
|
)
|
|
27,263
|
|
|
10,887
|
|
|
||
Net income attributable to Nelnet, Inc., excluding derivative market value and foreign currency transaction adjustments
|
$
|
185,083
|
|
|
212,270
|
|
|
250,215
|
|
|
|
Year ended December 31,
|
||||||||
|
2017
|
|
2016
|
|
2015
|
||||
Investment advisory fees (a)
|
$
|
12,723
|
|
|
6,129
|
|
|
4,302
|
|
Peterson's revenue (b)
|
12,572
|
|
|
14,254
|
|
|
19,632
|
|
|
Borrower late fee income
|
11,604
|
|
|
12,838
|
|
|
14,693
|
|
|
Realized and unrealized gains on investments classified as available-for-sale and trading, net
|
2,514
|
|
|
2,773
|
|
|
143
|
|
|
Other (c)
|
13,413
|
|
|
17,935
|
|
|
8,492
|
|
|
Other income
|
$
|
52,826
|
|
|
53,929
|
|
|
47,262
|
|
(a)
|
The Company provides investment advisory services through WRCM under various arrangements and earns annual fees of 25 basis points on the outstanding balance of investments and up to 50 percent of the gains from the sale of securities or securities being called prior to the full contractual maturity for which it provides advisory services. As of
December 31, 2017
, the outstanding balance of investments subject to these arrangements was $874.3 million.
|
(b)
|
The year over year decrease in revenue was due to the loss of rights to a certain publication. On December 31, 2017, the Company sold Peterson's.
|
(c)
|
The operating results for the year ended December 31, 2016 include a gain of approximately $3.0 million related to the Company's sale of Sparkroom, LLC in February 2016.
|
Company owned
|
|
$21,397
|
|
$19,742
|
|
$18,886
|
|
$18,433
|
|
$18,079
|
|
$17,429
|
|
$16,962
|
|
$16,352
|
|
$15,789
|
|
$18,403
|
|
$17,827
|
|||||||||||
% of total
|
|
15.5%
|
|
12.2%
|
|
10.7%
|
|
10.1%
|
|
9.8%
|
|
9.0%
|
|
8.7%
|
|
8.2%
|
|
7.9%
|
|
8.9%
|
|
8.4%
|
|||||||||||
Number of servicing borrowers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Government servicing
|
|
5,305,498
|
|
|
5,915,449
|
|
|
5,842,163
|
|
|
5,786,545
|
|
|
5,726,828
|
|
|
6,009,433
|
|
|
5,972,619
|
|
|
5,924,099
|
|
|
5,849,283
|
|
|
5,906,404
|
|
5,877,414
|
||
FFELP servicing
|
|
1,462,122
|
|
|
1,397,295
|
|
|
1,335,538
|
|
|
1,298,407
|
|
|
1,296,198
|
|
|
1,357,412
|
|
|
1,312,192
|
|
|
1,263,785
|
|
|
1,218,706
|
|
|
1,317,552
|
|
1,420,311
|
||
Private education and consumer loan servicing
|
|
195,580
|
|
|
202,529
|
|
|
245,737
|
|
|
250,666
|
|
|
267,073
|
|
|
292,989
|
|
|
355,096
|
|
|
389,010
|
|
|
454,182
|
|
|
478,150
|
|
502,114
|
||
Total:
|
|
6,963,200
|
|
|
7,515,273
|
|
|
7,423,438
|
|
|
7,335,618
|
|
|
7,290,099
|
|
|
7,659,834
|
|
|
7,639,907
|
|
|
7,576,894
|
|
|
7,522,171
|
|
|
7,702,106
|
|
7,799,839
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Number of remote hosted borrowers
|
|
1,915,203
|
|
|
1,611,654
|
|
|
1,755,341
|
|
|
1,796,783
|
|
|
1,842,961
|
|
|
2,103,989
|
|
|
2,230,019
|
|
|
2,305,991
|
|
|
2,317,151
|
|
|
2,714,588
|
|
|
2,812,713
|
|
|
Year ended December 31,
|
|
|
||||||||
|
2017
|
|
2016
|
|
2015
|
|
Additional information
|
||||
Net interest income
|
$
|
510
|
|
|
111
|
|
|
49
|
|
|
|
Loan systems and servicing revenue
|
223,000
|
|
|
214,846
|
|
|
239,858
|
|
|
See table below for additional analysis.
|
|
Intersegment servicing revenue
|
41,674
|
|
|
45,381
|
|
|
50,354
|
|
|
Represents revenue earned by the LSS operating segment as a result of servicing loans for the AGM operating segment. Decrease was due to a decrease in loans serviced for the AGM segment during the comparable periods due to portfolio run-off. In August 2017, the AGM operating segment converted $3.1 billion of loans from a third-party servicer to the LSS operating segment's servicing platform, which partially offset the decrease in revenue in 2017 compared to 2016.
|
|
Total other income
|
264,674
|
|
|
260,227
|
|
|
290,212
|
|
|
|
|
Salaries and benefits
|
156,256
|
|
|
132,072
|
|
|
134,635
|
|
|
Increase in 2017 compared to 2016 due to contract programming related to GreatNet and an increase in personnel to support the increase in volume of loans serviced for the government entering repayment status and the increase in private education and consumer loan servicing volume. Decrease in 2016 compared to 2015 due primarily to a decrease in personnel as a result of the loss of guaranty servicing and collection clients discussed below and improved operational efficiencies, partially offset by additional personnel to support the increase in volume of loans serviced for the government entering repayment status and the increase in private education and consumer loan servicing volume.
|
|
Depreciation and amortization
|
2,864
|
|
|
1,980
|
|
|
1,931
|
|
|
Increase in 2017 compared to 2016 due to infrastructure spend for GreatNet.
|
|
Other expenses
|
39,126
|
|
|
40,715
|
|
|
57,799
|
|
|
Year over year decreases were due primarily to the elimination of FFELP guaranty collection costs directly related to the loss of FFELP guaranty collection revenue. There were no collection costs in 2017, and $3.5 million and $19.2 million in 2016 and 2015, respectively. Excluding collection costs, other expenses were $39.1 million, $37.2 million, and $38.6 million in 2017, 2016, and 2015, respectively. Increase in these amounts from 2016 to 2017 due to an increase in operating expenses related to GreatNet. See additional information below regarding the decrease in FFELP guaranty collection revenue.
|
|
Intersegment expenses, net
|
31,871
|
|
|
24,204
|
|
|
29,706
|
|
|
Intersegment expenses represent costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
|
|
Total operating expenses
|
230,117
|
|
|
198,971
|
|
|
224,071
|
|
|
|
|
Income before income taxes
|
35,067
|
|
|
61,367
|
|
|
66,190
|
|
|
|
|
Income tax expense
|
(18,128
|
)
|
|
(23,319
|
)
|
|
(25,153
|
)
|
|
Reflects income tax expense based on 38% of income before taxes and the net loss attributable to noncontrolling interest.
|
|
Net income
|
16,939
|
|
|
38,048
|
|
|
41,037
|
|
|
|
|
Net loss attributable to noncontrolling interest
|
12,640
|
|
|
—
|
|
|
20
|
|
|
Represents 50 percent of the net loss of GreatNet that is attributable to Great Lakes. See note 3 ("Summary of Significant Accounting Policies and Practices - Noncontrolling Interests") of the notes to consolidated financial statements included in this report.
|
|
Net income attributable to Nelnet, Inc.
|
$
|
29,579
|
|
|
38,048
|
|
|
41,057
|
|
|
|
Before tax operating margin
|
13.2
|
%
|
|
23.6
|
%
|
|
22.8
|
%
|
|
Decrease in margin in 2017 compared to 2016 due to increases in salaries and benefits and other operating expenses as described above (including costs incurred related to GreatNet) and the loss of the guaranty business which had higher margin than the remaining segment services.
|
|
Year ended December 31,
|
|
|
||||||||
|
2017
|
|
2016
|
|
2015
|
|
Additional information
|
||||
Government servicing
|
$
|
155,829
|
|
|
151,728
|
|
|
133,189
|
|
|
Year over year increases were due to an increase in application volume for the TPD program, which the Company exclusively administers for the Department, the transfer of borrowers from a NFP servicer who exited the loan servicing business in August 2016, and the shift in the portfolio of loans serviced to a greater portion of loans in higher paying repayment statuses.
|
FFELP servicing
|
15,542
|
|
|
15,948
|
|
|
14,248
|
|
|
Decrease in 2017 compared to 2016 due to conversion revenue recognized during the third quarter of 2016. Increase in 2016 compared to 2015 due to an increase in third-party servicing volume as a result of conversions to the Company's servicing platform. Over time, FFELP servicing revenue will decrease as third-party customers' FFELP portfolios run off.
|
|
Private education and consumer loan servicing
|
28,060
|
|
|
15,600
|
|
|
12,040
|
|
|
Increase due to growth in private loan servicing volume from existing and new clients.
|
|
FFELP guaranty servicing
|
—
|
|
|
2,349
|
|
|
9,318
|
|
|
The Company’s guaranty servicing revenue was earned from two guaranty servicing clients. A contract with one client expired on October 31, 2015, and was not renewed. Guaranty servicing revenue from this customer was $4.9 million in 2015. The remaining guaranty servicing client exited the FFELP guaranty business at the end of their contract term on June 30, 2016. Guaranty servicing revenue from this customer was $2.3 million and $4.4 million in 2016 and 2015, respectively. Effective June 30, 2016, the Company has no remaining guaranty servicing revenue.
|
|
FFELP guaranty collection
|
—
|
|
|
7,211
|
|
|
47,597
|
|
|
The Company’s guaranty collection revenue was earned from two guaranty collection clients. A contract with one client expired on October 31, 2015, and was not renewed. Guaranty collection revenue from this customer was $32.5 million in 2015. The remaining guaranty collection client exited the FFELP guaranty business at the end of their contract term on June 30, 2016. Guaranty collection revenue from this customer was $7.2 million and $15.1 million in 2016 and 2015, respectively. The Company incurred collection costs that were directly related to guaranty collection revenue. Effective June 30, 2016, the Company has no remaining guaranty collection revenue.
|
|
Software services
|
17,782
|
|
|
18,132
|
|
|
19,492
|
|
|
The majority of software services revenue relates to providing hosted student loan servicing. The year over year decreases were due to a decrease in revenue from other software service products, partially offset by an increase in the number of remote hosted borrowers.
|
|
Other
|
5,787
|
|
|
3,878
|
|
|
3,974
|
|
|
The majority of this revenue relates to providing contact center outsourcing activities.
|
|
Loan systems and servicing revenue
|
$
|
223,000
|
|
|
214,846
|
|
|
239,858
|
|
|
|
|
Year ended December 31,
|
|
|
||||||||
|
2017
|
|
2016
|
|
2015
|
|
Additional information
|
||||
Net interest income
|
$
|
17
|
|
|
9
|
|
|
3
|
|
|
|
Tuition payment processing, school information, and campus commerce revenue
|
145,751
|
|
|
132,730
|
|
|
120,365
|
|
|
Year over year increases were due to an increase in the number of managed tuition payment plans, campus commerce customer transactions and payments volume, and new school customers.
|
|
Other income (expense)
|
—
|
|
|
—
|
|
|
(925
|
)
|
|
Amount represents the remeasurement of contingent consideration to fair value related to the acquisition of RenWeb.
|
|
Total other income
|
145,751
|
|
|
132,730
|
|
|
119,440
|
|
|
|
|
Salaries and benefits
|
69,500
|
|
|
62,329
|
|
|
55,523
|
|
|
Year over year increases were due to additional personnel to support the increase in payment plans and campus commerce activity and continued investments in and enhancements of existing payment plan and campus commerce systems and products and new payment products and services.
|
|
Depreciation and amortization
|
9,424
|
|
|
10,595
|
|
|
8,992
|
|
|
Amortization of intangible assets for 2017, 2016, and 2015 related to business acquisitions was $8.5 million, $9.2 million, and $8.9 million, respectively.
|
|
Other expenses
|
19,138
|
|
|
18,486
|
|
|
15,161
|
|
|
Year over year increases were due to additional costs to support the increase in payment plans and campus commerce activity and continued investments in and enhancements of existing payment plan and campus commerce systems and products and new payment products and services.
|
|
Intersegment expenses, net
|
9,079
|
|
|
6,615
|
|
|
8,617
|
|
|
Intersegment expenses represent costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
|
|
Total operating expenses
|
107,141
|
|
|
98,025
|
|
|
88,293
|
|
|
|
|
Income before income taxes
|
38,627
|
|
|
34,714
|
|
|
31,150
|
|
|
|
|
Income tax expense
|
(14,678
|
)
|
|
(13,191
|
)
|
|
(11,838
|
)
|
|
|
|
Net income
|
$
|
23,949
|
|
|
21,523
|
|
|
19,312
|
|
|
|
Before tax operating margin
|
26.5
|
%
|
|
26.2
|
%
|
|
26.1
|
%
|
|
|
|
Year ended December 31,
|
|
|
|||||
|
2017
|
|
2016
|
|
Additional information
|
|||
Net interest income (expense)
|
$
|
(5,424
|
)
|
|
(1,270
|
)
|
|
ALLO had a line of credit with Nelnet, Inc. (parent company). The interest expense incurred by ALLO and related interest income earned by Nelnet, Inc. was eliminated for the Company's consolidated financial statements. The average outstanding balance on this line of credit during 2017 and 2016 was $116.4 million and $30.1 million, respectively. The proceeds from debt were used by ALLO for network capital expenditures and related expenses.
|
Communications revenue
|
25,700
|
|
|
17,659
|
|
|
Communications revenue is derived primarily from the sale of pure fiber optic services to residential and business customers in Nebraska, including internet, television, and telephone services. Year over year increases were primarily due to additional residential households served. See additional financial and operating data for ALLO in the tables below.
|
|
Salaries and benefits
|
14,947
|
|
|
7,649
|
|
|
Since the acquisition of ALLO on December 31, 2015, there has been a significant increase in personnel to support the Lincoln, Nebraska network expansion. As of December 31, 2015, 2016, and 2017, ALLO had 97, 318, and 508 employees, respectively, including part-time employees. ALLO also uses temporary employees in the normal course of business. Certain costs qualify for capitalization as ALLO builds its network.
|
|
Depreciation and amortization
|
11,835
|
|
|
6,060
|
|
|
Depreciation reflects the allocation of the costs of ALLO's property and equipment over the period in which such assets are used. Since the acquisition of ALLO on December 31, 2015, there has been a significant amount of property and equipment purchases to support the Lincoln, Nebraska network expansion. The gross property and equipment balances related to this segment as of December 31, 2015, 2016, and 2017 were $32.5 million $71.3 million and $186.4 million, respectively. Amortization reflects the allocation of costs related to intangible assets recorded at fair value as of the date the Company acquired ALLO over their estimated useful lives.
|
|
Cost to provide communications services
|
9,950
|
|
|
6,866
|
|
|
Cost of services and products primarily associated with television programming costs.
|
|
Other expenses
|
8,074
|
|
|
4,370
|
|
|
Other operating expenses include selling, general, and administrative expenses necessary for operations, such as advertising, occupancy, professional services, construction materials, personal property taxes, and provision for losses on accounts receivable. Year over year increases were due to expansion of the Lincoln, Nebraska network and number of households served.
|
|
Intersegment expenses, net
|
2,101
|
|
|
958
|
|
|
Intersegment expenses represent costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
|
|
Total operating expenses
|
46,907
|
|
|
25,903
|
|
|
|
|
Loss before income taxes
|
(26,631
|
)
|
|
(9,514
|
)
|
|
|
|
Income tax benefit
|
10,120
|
|
|
3,615
|
|
|
|
|
Net loss
|
$
|
(16,511
|
)
|
|
(5,899
|
)
|
|
The Company anticipates this operating segment will be dilutive to consolidated earnings as it continues to build its network in Lincoln, Nebraska and other communities, due to large upfront capital expenditures and associated depreciation and upfront customer acquisition costs.
|
|
|
|
|
|
|
|||
Additional Information:
|
|
|
|
|
|
|||
Net loss
|
$
|
(16,511
|
)
|
|
(5,899
|
)
|
|
|
Net interest expense
|
5,424
|
|
|
1,270
|
|
|
|
|
Income tax benefit
|
(10,120
|
)
|
|
(3,615
|
)
|
|
|
|
Depreciation and amortization
|
11,835
|
|
|
6,060
|
|
|
|
|
Earnings (loss) before interest, income taxes, depreciation, and amortization (EBITDA)
|
$
|
(9,372
|
)
|
|
(2,184
|
)
|
|
For additional information regarding this non-GAAP measure, see the table below.
|
|
|
Year ended December 31,
|
||||
|
|
2017
|
|
2016
|
||
Residential revenue
|
$
|
17,705
|
|
|
10,480
|
|
Business revenue
|
|
7,735
|
|
|
6,362
|
|
Other revenue
|
|
260
|
|
|
817
|
|
Total revenue
|
$
|
25,700
|
|
|
17,659
|
|
|
|
|
|
|
||
Net (loss) income
|
$
|
(16,511
|
)
|
|
(5,899
|
)
|
EBITDA (a)
|
|
(9,372
|
)
|
|
(2,184
|
)
|
|
|
|
|
|
||
Capital expenditures
|
|
115,102
|
|
|
38,817
|
|
|
|
|
|
|
||
Revenue contribution:
|
|
|
|
|
||
Internet
|
|
45.8
|
%
|
|
38.8
|
%
|
Television
|
|
30.7
|
|
|
32.1
|
|
Telephone
|
|
21.5
|
|
|
26.5
|
|
Other
|
|
2.0
|
|
|
2.6
|
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
As of
December 31, 2017 |
|
As of September 30, 2017
|
|
As of
June 30, 2017 |
|
As of
March 31, 2017 |
|
As of
December 31, 2016
|
|
As of September 30, 2016
|
|
As of
June 30, 2016
|
|
As of
March 31, 2016 |
|
As of
December 31, 2015
|
|||||||||
Residential customer information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Households served
|
20,428
|
|
|
16,394
|
|
|
12,460
|
|
|
10,524
|
|
|
9,814
|
|
|
8,745
|
|
|
8,314
|
|
|
7,909
|
|
|
7,600
|
|
Households passed (b)
|
71,426
|
|
|
54,815
|
|
|
45,880
|
|
|
34,925
|
|
|
30,962
|
|
|
22,977
|
|
|
22,977
|
|
|
21,274
|
|
|
21,274
|
|
Total households in current markets
|
137,500
|
|
|
137,500
|
|
|
137,500
|
|
|
137,500
|
|
|
137,500
|
|
|
137,500
|
|
|
137,500
|
|
|
137,500
|
|
|
28,874
|
|
Total households in current markets and new markets announced (c)
|
152,626
|
|
|
137,500
|
|
|
137,500
|
|
|
137,500
|
|
|
137,500
|
|
|
137,500
|
|
|
137,500
|
|
|
137,500
|
|
|
137,500
|
|
(a)
|
Earnings (loss) before interest, income taxes, depreciation, and amortization ("EBITDA") is a supplemental non-GAAP performance measure that is frequently used in capital-intensive industries such as telecommunications. ALLO's management uses EBITDA to compare ALLO's performance to that of its competitors and to eliminate certain non-cash and non-operating items in order to consistently measure performance from period to period. EBITDA excludes interest and income taxes because these items are associated with a company's particular capitalization and tax structures. EBITDA also excludes depreciation and amortization expense because these non-cash expenses primarily reflect the impact of historical capital investments, as opposed to the cash impacts of capital expenditures made in recent periods, which may be evaluated through cash flow measures. The Company reports EBITDA for ALLO because the Company believes that it provides useful additional information for investors regarding a key metric used by management to assess ALLO's performance. There are limitations to using EBITDA as a performance measure, including the difficulty associated with comparing companies that use similar performance measures whose calculations may differ from ALLO's calculations. In addition, EBITDA should not be considered a substitute for other measures of financial performance, such as net income or any other performance measures derived in accordance with GAAP. A reconciliation of EBITDA from net income (loss) under GAAP is presented under "Summary and Comparison of Operating Results" in the table above.
|
(b)
|
Represents the number of single residence homes, apartments, and condominiums that ALLO already serves and those in which ALLO has the capacity to connect to its network distribution system without further material extensions to the transmission lines, but have not been connected.
|
(c)
|
In November 2015, ALLO announced plans to expand its network to make services available to substantially all commercial and residential premises in Lincoln, Nebraska. During the fourth quarter of 2017, ALLO announced plans to expand its network to make services available in Hastings, Nebraska and Fort Morgan, Colorado. ALLO plans to expand to additional communities in Nebraska and Colorado over the next several years.
|
|
Year ended December 31,
|
||||||||
|
2017
|
|
2016
|
|
2015
|
||||
Beginning balance
|
$
|
25,103,643
|
|
|
28,555,749
|
|
|
28,223,908
|
|
Loan acquisitions:
|
|
|
|
|
|
||||
Federally insured student loans
|
254,740
|
|
|
295,443
|
|
|
3,862,388
|
|
|
Private education loans
|
3,785
|
|
|
60,667
|
|
|
173,945
|
|
|
Consumer loans
|
71,726
|
|
|
—
|
|
|
—
|
|
|
Total loan acquisitions
|
330,251
|
|
|
356,110
|
|
|
4,036,333
|
|
|
Repayments, claims, capitalized interest, and other
|
(2,257,450
|
)
|
|
(2,520,835
|
)
|
|
(2,466,378
|
)
|
|
Consolidation loans lost to external parties
|
(1,127,364
|
)
|
|
(1,242,621
|
)
|
|
(1,234,118
|
)
|
|
Loans sold
|
(53,203
|
)
|
|
(44,760
|
)
|
|
(3,996
|
)
|
|
Ending balance
|
$
|
21,995,877
|
|
|
25,103,643
|
|
|
28,555,749
|
|
|
Year ended December 31,
|
||||||||
|
2017
|
|
2016
|
|
2015
|
||||
Variable loan yield, gross
|
3.53
|
%
|
|
2.90
|
%
|
|
2.59
|
%
|
|
Consolidation rebate fees
|
(0.84
|
)
|
|
(0.83
|
)
|
|
(0.83
|
)
|
|
Discount accretion, net of premium and deferred origination costs amortization (a)
|
0.07
|
|
|
0.06
|
|
|
0.05
|
|
|
Variable loan yield, net
|
2.76
|
|
|
2.13
|
|
|
1.81
|
|
|
Loan cost of funds - interest expense (b)
|
(1.99
|
)
|
|
(1.41
|
)
|
|
(1.02
|
)
|
|
Loan cost of funds - derivative settlements (c) (d)
|
(0.04
|
)
|
|
(0.01
|
)
|
|
—
|
|
|
Variable loan spread
|
0.73
|
|
|
0.71
|
|
|
0.79
|
|
|
Fixed rate floor income, gross
|
0.45
|
|
|
0.63
|
|
|
0.72
|
|
|
Fixed rate floor income - derivative settlements (c) (e)
|
0.05
|
|
|
(0.06
|
)
|
|
(0.08
|
)
|
|
Fixed rate floor income, net of settlements on derivatives
|
0.50
|
|
|
0.57
|
|
|
0.64
|
|
|
Core loan spread
|
1.23
|
%
|
|
1.28
|
%
|
|
1.43
|
%
|
|
|
|
|
|
|
|
||||
Average balance of loans
|
$
|
23,560,412
|
|
|
26,863,526
|
|
|
28,647,108
|
|
Average balance of debt outstanding
|
23,250,268
|
|
|
26,729,196
|
|
|
28,687,086
|
|
(a)
|
In the third quarter of 2016, the Company revised its policy to correct for an error in its method of applying the interest method used to amortize premiums and accrete discounts on its student loan portfolio. Under the Company's revised policy, as of September 30, 2016, the constant prepayment rate used by the Company to amortize/accrete student loan premiums/discounts was decreased. During the third quarter of 2016, the Company recorded an adjustment to reflect the net impact on prior periods for the correction of this error that resulted in an $8.2 million reduction to the Company's net loan discount balance and a corresponding increase in interest income. The impact of this adjustment was excluded from the above table.
|
(b)
|
In the fourth quarter of 2016, the Company redeemed certain debt securities prior to their legal maturity and recognized $7.4 million in interest expense to write off the remaining debt discount associated with these bonds. The impact of this expense was excluded from the above table.
|
(c)
|
Derivative settlements represent the cash paid or received during the current period to settle with derivative instrument counterparties the economic effect of the Company's derivative instruments based on their contractual terms. Derivative accounting requires that net settlements with respect to derivatives that do not qualify for "hedge treatment" under GAAP be recorded in a separate income statement line item below net interest income. The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate volatility. As such, management believes derivative settlements for each applicable period should be evaluated with the Company’s net interest income (loan spread) as presented in this table. The Company reports this non-GAAP information because it believes that it provides additional information regarding operational and performance indicators that are closely assessed by management. There is no comprehensive, authoritative guidance for the presentation of such non-GAAP information, which is only meant to supplement GAAP results by providing additional information that management utilizes to assess performance. See note 6 of the notes to consolidated financial statements included in this report for additional information on the Company's derivative instruments, including the net settlement activity recognized by the Company for each type of derivative for the periods presented in the table under the caption "Income Statement" in note 6 and in this table.
|
(d)
|
Derivative settlements include the net settlements paid/received related to the Company’s 1:3 basis swaps and cross-currency interest rate swap.
|
(e)
|
Derivative settlements include the net settlements paid/received related to the Company’s floor income interest rate swaps.
|
(a)
|
The interest earned on a large portion of the Company's FFELP student loan assets is indexed to the one-month LIBOR rate. The Company funds the majority of its assets with three-month LIBOR indexed floating rate securities. The relationship between the indices in which the Company earns interest on its loans and fu
nds such loans has a significant impact on loan spread. This table (the right axis) shows the difference between the Company's liability base rate and the one-month LIBOR rate by quarter. See Item 7A, “Quantitative and Qualitative Disclosures About Market Risk - Interest Rate Risk,” which provides additional detail on the Company’s FFELP student loan assets and related funding for those assets.
|
|
Year ended December 31,
|
||||||||
|
2017
|
|
2016
|
|
2015
|
||||
Fixed rate floor income, gross
|
$
|
106,434
|
|
|
169,979
|
|
|
207,787
|
|
Derivative settlements (a)
|
10,838
|
|
|
(17,643
|
)
|
|
(23,041
|
)
|
|
Fixed rate floor income, net
|
$
|
117,272
|
|
|
152,336
|
|
|
184,746
|
|
Fixed rate floor income contribution to spread, net
|
0.50
|
%
|
|
0.57
|
%
|
|
0.64
|
%
|
(a)
|
Includes settlement payments on derivatives used to hedge student loans earning fixed rate floor income.
|
|
Year ended December 31,
|
|
|
||||||||
|
2017
|
|
2016
|
|
2015
|
|
Additional information
|
||||
Net interest income after provision for loan losses
|
$
|
285,519
|
|
|
355,375
|
|
|
420,424
|
|
|
See table below for additional analysis.
|
Other income
|
13,424
|
|
|
15,709
|
|
|
15,939
|
|
|
The primary component of other income is borrower late fees, which were $11.6 million, $12.8 million, and $14.7 million in 2017, 2016, and 2015, respectively.
|
|
(Loss) gain on sale of loans and debt repurchases, net
|
(1,567
|
)
|
|
5,846
|
|
|
2,034
|
|
|
Historically, the Company has recorded gains from repurchasing its own asset-backed debt securities at less than par. In 2017, the Company paid a $2.7 million premium, and recorded a loss, to repurchase certain asset-backed debt securities that had above market interest rates. The underlying collateral was refinanced with a significantly lower cost of funds.
|
|
Derivative settlements, net
|
1,448
|
|
|
(21,034
|
)
|
|
(23,238
|
)
|
|
The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate volatility. Derivative settlements for each applicable period should be evaluated with the Company’s net interest income as reflected in the table below.
|
|
Derivative market value and foreign currency transaction adjustments, net
|
(19,357
|
)
|
|
70,368
|
|
|
27,216
|
|
|
Includes (i) the realized and unrealized gains and losses that are caused by changes in fair values of derivatives which do not qualify for "hedge treatment" under GAAP; and (ii) the unrealized foreign currency transaction gains or losses caused by the re-measurement of the Company's Euro-denominated bonds to U.S. dollars.
|
|
Total other income
|
(6,052
|
)
|
|
70,889
|
|
|
21,951
|
|
|
|
|
Salaries and benefits
|
1,548
|
|
|
1,985
|
|
|
2,172
|
|
|
|
|
Loan servicing fees
|
22,734
|
|
|
25,750
|
|
|
30,213
|
|
|
Third party loan servicing fees decreased year over year due to runoff of the Company's student loan portfolio and a decrease in delinquent loans. The Company pays higher servicing fees on delinquent loans. In addition, third party loan servicing fees decreased in 2017 compared to 2016 due to transfers of loans in August 2017 and June 2016 from third-party servicers to the LSS operating segment's servicing platform, partially offset by a payment of $2.8 million in conversion fees related to the August 2017 transfer of loans.
|
|
Other expenses
|
3,900
|
|
|
6,005
|
|
|
5,083
|
|
|
|
|
Intersegment expenses, net
|
42,830
|
|
|
46,494
|
|
|
50,899
|
|
|
Amount includes fees paid to the LSS operating segment for the servicing of the Company's loan portfolio. These amounts exceed the actual cost of servicing the loans. Decrease due to a decrease in loans serviced by the LSS operating segment during the comparable periods due to portfolio runoff. In addition, intersegment expenses represent costs for certain corporate activities and services that are allocated to each operating segment based on estimated use of such activities and services.
|
|
Total operating expenses
|
71,012
|
|
|
80,234
|
|
|
88,367
|
|
|
Total operating expenses were 30, 30, and 31 basis points of the average balance of student loans for 2017, 2016, and 2015, respectively.
|
|
Income before income taxes
|
208,455
|
|
|
346,030
|
|
|
354,008
|
|
|
|
|
Income tax expense
|
(79,213
|
)
|
|
(131,492
|
)
|
|
(134,522
|
)
|
|
|
|
Net income
|
$
|
129,242
|
|
|
214,538
|
|
|
219,486
|
|
|
|
|
|
|
|
|
|
|
|
||||
Additional information:
|
|
|
|
|
|
|
|
||||
Net income
|
$
|
129,242
|
|
|
214,538
|
|
|
219,486
|
|
|
See "Overview - GAAP Net Income and Non-GAAP Net Income, Excluding Adjustments" above for additional information about non-GAAP net income, excluding derivative market value and foreign currency adjustments. Net income, excluding derivative market value and foreign currency adjustments, decreased year over year primarily due to a decrease in the Company's loan portfolio and a decrease in core loan spread.
|
Derivative market value and foreign currency transaction adjustments, net
|
19,357
|
|
|
(70,368
|
)
|
|
(27,216
|
)
|
|
||
Net tax effect
|
(7,356
|
)
|
|
26,740
|
|
|
10,342
|
|
|
||
Net income, excluding derivative market value and foreign currency transaction adjustments
|
$
|
141,243
|
|
|
170,910
|
|
|
202,612
|
|
|
|
Year ended December 31,
|
|
|
||||||||
|
2017
|
|
2016
|
|
2015
|
|
Additional Information
|
||||
Variable interest income, gross
|
$
|
833,318
|
|
|
780,314
|
|
|
740,975
|
|
|
Increase due to an increase in the gross yield earned on student loans, partially offset by a decrease in the average balance of student loans.
|
Consolidation rebate fees
|
(199,108
|
)
|
|
(223,911
|
)
|
|
(237,233
|
)
|
|
Decrease due to a decrease in the average consolidation loan balance.
|
|
Discount accretion, net of premium and deferred origination costs amortization
|
17,087
|
|
|
24,900
|
|
|
14,731
|
|
|
Net discount accretion is due to the Company's purchases of loans at a net discount over the last several years. In the third quarter of 2016, the Company revised its policy to correct for an error in its method of applying the interest method used to amortize premiums and accrete discounts on its loan portfolio. Under the Company's revised policy, as of September 30, 2016, the constant prepayment rate used by the Company to amortize/accrete loan premiums/discounts was decreased. During the third quarter of 2016, the Company recorded an adjustment to reflect the net impact on prior periods for the correction of this error that resulted in an $8.2 million reduction to the Company's net loan discount balance and a corresponding increase in interest income.
|
|
Variable interest income, net
|
651,297
|
|
|
581,303
|
|
|
518,473
|
|
|
|
|
Interest on bonds and notes payable
|
(461,703
|
)
|
|
(382,088
|
)
|
|
(295,797
|
)
|
|
Increase due to an increase in cost of funds, partially offset by a decrease in the average balance of debt outstanding.
|
|
Derivative settlements, net (a)
|
(9,390
|
)
|
|
(3,392
|
)
|
|
(197
|
)
|
|
Derivative settlements include the net settlements paid/received related to the Company’s 1:3 basis swaps and cross-currency interest rate swap.
|
|
Variable loan interest margin, net of settlements on derivatives (a)
|
180,204
|
|
|
195,823
|
|
|
222,479
|
|
|
|
|
Fixed rate floor income, gross
|
106,434
|
|
|
169,979
|
|
|
207,787
|
|
|
The high levels of fixed rate floor income earned are due to historically low interest rates. Fixed rate floor income has decreased due to the rising interest rate environment.
|
|
Derivative settlements, net (a)
|
10,838
|
|
|
(17,643
|
)
|
|
(23,041
|
)
|
|
Derivative settlements include the net settlements paid/received related to the Company's floor income interest rate swaps.
|
|
Fixed rate floor income, net of settlements on derivatives
|
117,272
|
|
|
152,336
|
|
|
184,746
|
|
|
|
|
Core loan interest income (a)
|
297,476
|
|
|
348,159
|
|
|
407,225
|
|
|
|
|
Investment interest
|
6,494
|
|
|
3,507
|
|
|
1,939
|
|
|
Increase due to a higher balance of interest-earning investments and an increase in interest rates.
|
|
Intercompany interest
|
(2,553
|
)
|
|
(3,825
|
)
|
|
(1,828
|
)
|
|
|
|
Provision for loan losses - federally insured loans
|
(13,000
|
)
|
|
(14,000
|
)
|
|
(8,000
|
)
|
|
See "Allowance for Loan Losses and Loan Delinquencies" included above under "Asset Generation and Management Operating Segment - Results of Operations."
|
|
Negative provision (provision) for loan losses - private education loans
|
2,000
|
|
|
500
|
|
|
(2,150
|
)
|
|
||
Provision for loan losses - consumer loans
|
(3,450
|
)
|
|
—
|
|
|
—
|
|
|
|
|
Net interest income after provision for loan losses (net of settlements on derivatives) (a)
|
$
|
286,967
|
|
|
334,341
|
|
|
397,186
|
|
|
|
(a)
|
Derivative settlements represent the cash paid or received during the current period to settle with derivative instrument counterparties the economic effect of the Company's derivative instruments based on their contractual terms. Derivative accounting requires that net settlements on derivatives that do not qualify for "hedge treatment" under GAAP be recorded in a separate income statement line item below net interest income. The Company maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate volatility. As such, management believes derivative settlements for each applicable period should be evaluated with the Company’s net interest income as presented in this table. Core loan interest income and net interest income after provision for loan losses (net of settlements on derivatives) are non-GAAP financial measures, and the Company reports this non-GAAP information because the Company believes that it provides additional information regarding operational and performance indicators that are closely assessed by management. There is no comprehensive, authoritative guidance for the presentation of such non-GAAP information, which is only meant to supplement GAAP results by providing additional information that management utilizes to assess performance. See note 6 of the notes to consolidated financial statements included in this report for additional information on the Company's derivative instruments, including the net settlement activity recognized by the Company for each type of derivative referred to in the "Additional information" column of this table, for the periods presented in the table under the caption "Income Statement" in note 6 and in this table.
|
|
As of December 31, 2017
|
||||
|
Carrying
amount
|
|
Final maturity
|
||
Bonds and notes issued in asset-backed securitizations
|
$
|
21,290,238
|
|
|
8/25/21 - 2/25/66
|
FFELP warehouse facilities
|
335,992
|
|
|
11/19/19 / 5/31/20
|
|
|
$
|
21,626,230
|
|
|
|
Issue
date
|
|
Debt
outstanding
|
|
Maturity
date
|
|
Interest
rate
|
||
December 30, 2015
|
|
$
|
12,000
|
|
|
March 31, 2023
|
|
3.38% - fixed
|
December 30, 2015
|
|
6,355
|
|
|
December 15, 2045
|
|
3.38% - fixed
|
|
October 31, 2017
|
|
1,743
|
|
|
March 31, 2023
|
|
1-month LIBOR plus 2.00%
|
|
Total shares repurchased
|
|
Purchase price (in thousands)
|
|
Average price of shares repurchased (per share)
|
|||||
|
|
|
||||||||
Year ended December 31, 2017
|
1,473,054
|
|
|
$
|
68,896
|
|
|
$
|
46.77
|
|
Year ended December 31, 2016
|
2,038,368
|
|
|
69,091
|
|
|
33.90
|
|
||
Year ended December 31, 2015
|
2,449,159
|
|
|
96,169
|
|
|
39.27
|
|
|
As of December 31, 2017
|
||||||||||||||
|
Total
|
|
Less than 1 year
|
|
1 to 3 years
|
|
3 to 5 years
|
|
More than 5 years
|
||||||
Bonds and notes payable (a)
|
$
|
21,727,127
|
|
|
50,418
|
|
|
335,992
|
|
|
33,410
|
|
|
21,307,307
|
|
Operating lease obligations
|
21,750
|
|
|
5,277
|
|
|
7,965
|
|
|
3,651
|
|
|
4,857
|
|
|
Total
|
$
|
21,748,877
|
|
|
55,695
|
|
|
343,957
|
|
|
37,061
|
|
|
21,312,164
|
|
(a)
|
Amounts exclude interest as substantially all bonds and notes payable carry variable rates of interest.
|
|
As of December 31, 2017
|
|
As of December 31, 2016
|
||||||||||
|
Dollars
|
|
Percent
|
|
Dollars
|
|
Percent
|
||||||
Fixed-rate loan assets
|
$
|
4,966,125
|
|
|
22.6
|
%
|
|
$
|
8,585,283
|
|
|
34.2
|
%
|
Variable-rate loan assets
|
17,029,752
|
|
|
77.4
|
|
|
16,518,360
|
|
|
65.8
|
|
||
Total
|
$
|
21,995,877
|
|
|
100.0
|
%
|
|
$
|
25,103,643
|
|
|
100.0
|
%
|
|
|||||||||||||
Fixed-rate debt instruments
|
$
|
101,002
|
|
|
0.5
|
%
|
|
$
|
131,733
|
|
|
0.5
|
%
|
Variable-rate debt instruments
|
21,626,125
|
|
|
99.5
|
|
|
24,968,687
|
|
|
99.5
|
|
||
Total
|
$
|
21,727,127
|
|
|
100.0
|
%
|
|
$
|
25,100,420
|
|
|
100.0
|
%
|
|
Year ended December 31,
|
||||||||
|
2017
|
|
2016
|
|
2015
|
||||
Fixed rate floor income, gross
|
$
|
106,434
|
|
|
169,979
|
|
|
207,787
|
|
Derivative settlements (a)
|
10,838
|
|
|
(17,643
|
)
|
|
(23,041
|
)
|
|
Fixed rate floor income, net
|
$
|
117,272
|
|
|
152,336
|
|
|
184,746
|
|
(a)
|
Includes settlement payments on derivatives used to hedge student loans earning fixed rate floor income.
|
Fixed interest rate range
|
|
Borrower/lender weighted average yield
|
|
Estimated variable conversion rate (a)
|
|
Loan balance
|
||
|
|
|
||||||
4.0 - 4.49%
|
|
4.24%
|
|
1.60%
|
|
$
|
1,122,268
|
|
4.5 - 4.99%
|
|
4.71%
|
|
2.07%
|
|
844,518
|
|
|
5.0 - 5.49%
|
|
5.22%
|
|
2.58%
|
|
525,738
|
|
|
5.5 - 5.99%
|
|
5.67%
|
|
3.03%
|
|
369,930
|
|
|
6.0 - 6.49%
|
|
6.19%
|
|
3.55%
|
|
424,652
|
|
|
6.5 - 6.99%
|
|
6.70%
|
|
4.06%
|
|
407,146
|
|
|
7.0 - 7.49%
|
|
7.17%
|
|
4.53%
|
|
146,457
|
|
|
7.5 - 7.99%
|
|
7.71%
|
|
5.07%
|
|
243,926
|
|
|
8.0 - 8.99%
|
|
8.18%
|
|
5.54%
|
|
542,818
|
|
|
> 9.0%
|
|
9.05%
|
|
6.41%
|
|
184,513
|
|
|
|
|
|
|
|
|
$
|
4,811,966
|
|
(a)
|
The estimated variable conversion rate is the estimated short-term interest rate at which loans would convert to a variable rate. As of
December 31, 2017
, the weighted average estimated variable conversion rate was
3.17%
and the short-term interest rate was
136
basis points.
|
|
Maturity
|
|
Notional amount
|
|
Weighted average fixed rate paid by the Company (a)
|
|||
|
|
|
||||||
|
2018
|
|
$
|
1,350,000
|
|
|
1.07
|
%
|
|
2019
|
|
3,250,000
|
|
|
0.97
|
|
|
|
2020
|
|
1,500,000
|
|
|
1.01
|
|
|
|
2023
|
|
750,000
|
|
|
2.28
|
|
|
|
2024
|
|
300,000
|
|
|
2.28
|
|
|
|
2025
|
|
100,000
|
|
|
2.32
|
|
|
|
2027
|
|
50,000
|
|
|
2.32
|
|
|
|
|
|
$
|
7,300,000
|
|
|
1.21
|
%
|
(a)
|
For all interest rate derivatives, the Company receives discrete three-month LIBOR.
|
Index
|
|
Frequency of variable resets
|
|
Assets
|
|
Funding of student loan assets
|
|||
1 month LIBOR (a)
|
|
Daily
|
|
$
|
20,007,358
|
|
|
—
|
|
3 month H15 financial commercial paper
|
|
Daily
|
|
1,109,621
|
|
|
—
|
|
|
3 month Treasury bill
|
|
Daily
|
|
604,627
|
|
|
—
|
|
|
3 month LIBOR (a)
|
|
Quarterly
|
|
—
|
|
|
11,727,486
|
|
|
1 month LIBOR
|
|
Monthly
|
|
—
|
|
|
8,624,559
|
|
|
Auction-rate (b)
|
|
Varies
|
|
—
|
|
|
780,829
|
|
|
Asset-backed commercial paper (c)
|
|
Varies
|
|
—
|
|
|
335,992
|
|
|
Other (d)
|
|
|
|
1,064,530
|
|
|
1,317,270
|
|
|
|
|
|
|
$
|
22,786,136
|
|
|
22,786,136
|
|
(a)
|
The Company has certain basis swaps outstanding in which the Company receives three-month LIBOR and pays one-month LIBOR plus or minus a spread as defined in the agreements (the "1:3 Basis Swaps"). The Company entered into these derivative instruments to better match the interest rate characteristics on its student loan assets and the debt funding such assets. The following table summarizes the 1:3 Basis Swaps outstanding as of
December 31, 2017
.
|
Maturity
|
|
Notional amount
|
||
2018
|
|
$
|
4,250,000
|
|
2019
|
|
3,500,000
|
|
|
2022
|
|
1,000,000
|
|
|
2024
|
|
250,000
|
|
|
2026
|
|
1,150,000
|
|
|
2027
|
|
375,000
|
|
|
2028
|
|
325,000
|
|
|
2029
|
|
100,000
|
|
|
2031
|
|
300,000
|
|
|
|
|
$
|
11,250,000
|
|
(b)
|
As of
December 31, 2017
, the Company was sponsor for
$780.8 million
of asset-backed securities that are set and periodically reset via a "dutch auction" ("Auction Rate Securities"). The Auction Rate Securities generally pay interest to the holder at a maximum rate as defined by the indenture. While these rates will vary, they will generally be based on a spread to LIBOR or Treasury Securities, or the Net Loan Rate as defined in the financing documents.
|
(c)
|
The interest rates on certain of the Company's warehouse facilities are indexed to asset-backed commercial paper rates.
|
(d)
|
Assets include accrued interest receivable and restricted cash. Funding represents overcollateralization (equity) and other liabilities included in FFELP asset-backed securitizations and warehouse facilities.
|
|
Interest rates
|
|
Asset and funding index mismatches
|
||||||||||||||||||||||||
|
Change from increase of 100 basis points
|
|
Change from increase of 300 basis points
|
|
Increase of 10 basis points
|
|
Increase of 30 basis points
|
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
|
Dollars
|
|
Percent
|
|
Dollars
|
|
Percent
|
|
Dollars
|
|
Percent
|
|
Dollars
|
|
Percent
|
||||||||||||
|
Year ended December 31, 2017
|
||||||||||||||||||||||||||
Effect on earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Decrease in pre-tax net income before impact of derivative settlements
|
$
|
(39,894
|
)
|
|
(17.6
|
)%
|
|
$
|
(73,999
|
)
|
|
(32.5
|
)%
|
|
$
|
(13,423
|
)
|
|
(5.9
|
)%
|
|
$
|
(40,271
|
)
|
|
(17.8
|
)%
|
Impact of derivative settlements
|
59,639
|
|
|
26.3
|
|
|
178,911
|
|
|
79.0
|
|
|
6,408
|
|
|
2.8
|
|
|
19,226
|
|
|
8.5
|
|
||||
Increase (decrease) in net income before taxes
|
$
|
19,745
|
|
|
8.7
|
%
|
|
$
|
104,912
|
|
|
46.5
|
%
|
|
$
|
(7,015
|
)
|
|
(3.1
|
)%
|
|
$
|
(21,045
|
)
|
|
(9.3
|
)%
|
Increase (decrease) in basic and diluted earnings per share
|
$
|
0.29
|
|
|
|
|
$
|
1.55
|
|
|
|
|
$
|
(0.09
|
)
|
|
|
|
$
|
(0.30
|
)
|
|
|
||||
|
Year ended December 31, 2016
|
||||||||||||||||||||||||||
Effect on earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Decrease in pre-tax net income before impact of derivative settlements
|
$
|
(67,877
|
)
|
|
(17.0
|
)%
|
|
$
|
(124,818
|
)
|
|
(31.3
|
)%
|
|
$
|
(16,033
|
)
|
|
(4.1
|
)%
|
|
$
|
(48,098
|
)
|
|
(12.1
|
)%
|
Impact of derivative settlements
|
59,847
|
|
|
15.0
|
|
|
179,541
|
|
|
45.0
|
|
|
3,052
|
|
|
0.8
|
|
|
9,155
|
|
|
2.3
|
|
||||
Increase (decrease) in net income before taxes
|
$
|
(8,030
|
)
|
|
(2.0
|
)%
|
|
$
|
54,723
|
|
|
13.7
|
%
|
|
$
|
(12,981
|
)
|
|
(3.3
|
)%
|
|
$
|
(38,943
|
)
|
|
(9.8
|
)%
|
Increase (decrease) in basic and diluted earnings per share
|
$
|
(0.12
|
)
|
|
|
|
$
|
0.80
|
|
|
|
|
$
|
(0.19
|
)
|
|
|
|
$
|
(0.57
|
)
|
|
|
||||
|
Year ended December 31, 2015
|
||||||||||||||||||||||||||
Effect on earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Decrease in pre-tax net income before impact of derivative settlements
|
$
|
(83,412
|
)
|
|
(19.8
|
)%
|
|
$
|
(151,492
|
)
|
|
(36.0
|
)%
|
|
$
|
(17,079
|
)
|
|
(4.1
|
)%
|
|
$
|
(51,238
|
)
|
|
(12.2
|
)%
|
Impact of derivative settlements
|
38,439
|
|
|
9.1
|
|
|
115,315
|
|
|
27.4
|
|
|
6,161
|
|
|
1.5
|
|
|
18,484
|
|
|
4.4
|
|
||||
Increase (decrease) in net income before taxes
|
$
|
(44,973
|
)
|
|
(10.7
|
)%
|
|
$
|
(36,177
|
)
|
|
(8.6
|
)%
|
|
$
|
(10,918
|
)
|
|
(2.6
|
)%
|
|
$
|
(32,754
|
)
|
|
(7.8
|
)%
|
Increase (decrease) in basic and diluted earnings per share
|
$
|
(0.61
|
)
|
|
|
|
$
|
(0.49
|
)
|
|
|
|
$
|
(0.16
|
)
|
|
|
|
$
|
(0.46
|
)
|
|
|
|
|
As of December 31, 2017
|
||||||||
Plan category
|
|
Number of shares to be issued upon exercise of outstanding options, warrants, and rights (a)
|
|
Weighted-average exercise price of outstanding options, warrants, and rights (b)
|
|
Number of shares remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
|
||||
Equity compensation plans approved by shareholders
|
|
—
|
|
|
—
|
|
|
2,329,017
|
|
(1)
|
Equity compensation plans not approved by shareholders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
—
|
|
|
—
|
|
|
2,329,017
|
|
|
(1)
|
Includes
1,800,188
,
37,207
, and
491,622
shares of Class A Common Stock remaining available for future issuance under the Nelnet, Inc. Restricted Stock Plan, Nelnet, Inc. Directors Stock Compensation Plan, and Nelnet, Inc. Employee Share Purchase Plan, respectively.
|
(a)
|
1. Consolidated Financial Statements
|
|
|
Page
|
Report of Independent Registered Public Accounting Firm
|
|
F-2
|
|
F-3
|
|
|
F-4
|
|
|
F-5
|
|
|
F-6
|
|
|
F-7
|
|
Notes to Consolidated Financial Statements
|
|
F-8
|
(b)
|
Exhibits
|
Exhibit Index
|
|
Exhibit No.
|
Description
|
|
|
|
|
2.1* ++
|
|
|
|
2.2*
|
|
|
|
2.3*
|
|
|
|
3.1
|
|
|
|
3.2
|
|
|
|
4.1
|
|
|
|
4.2
|
Certain instruments, including indentures of trust, defining the rights of holders of long-term debt of the registrant and its consolidated subsidiaries, none of which instruments authorizes a total amount of indebtedness thereunder in excess of 10 percent of the total assets of the registrant and its subsidiaries on a consolidated basis, are omitted from this Exhibit Index pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. Many of such instruments have been previously filed with the Securities and Exchange Commission, and the registrant hereby agrees to furnish a copy of any such instrument to the Commission upon request.
|
|
|
4.3
|
|
|
|
10.1
|
|
|
|
10.2
|
|
|
|
10.3
|
|
|
|
10.4
|
|
|
|
Exhibit Index
|
|
10.23
|
|
|
|
10.24
|
|
|
|
10.25
|
|
|
|
10.26
|
|
|
|
10.27
|
|
|
|
10.28
|
|
|
|
10.29
|
|
|
|
10.30
|
|
|
|
10.31
|
|
|
|
10.32
|
|
|
|
10.33
|
|
|
|
10.34
|
|
|
|
10.35
|
|
|
|
10.36
|
|
|
|
10.37
|
|
|
|
Exhibit Index
|
|
10.38
|
|
|
|
10.39
|
|
|
|
10.40
|
|
|
|
10.41
|
|
|
|
10.42
|
|
|
|
10.43
|
|
|
|
10.44
|
|
|
|
10.45
|
|
|
|
10.46
|
|
|
|
10.47±
|
|
|
|
10.48±
|
|
|
|
10.49±
|
|
|
|
10.50±
|
|
|
|
10.51
|
|
|
|
10.52
|
|
|
|
10.53
|
|
|
|
10.54*
|
|
|
|
Dated:
|
February 27, 2018
|
|
|
|
|
NELNET, INC
|
|
|
|
|
|
|
|
By:
|
/s/ JEFFREY R. NOORDHOEK
|
|
|
Name: Jeffrey R. Noordhoek
|
|
|
|
Title: Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ JEFFREY R. NOORDHOEK
|
|
Chief Executive Officer (Principal Executive Officer)
|
|
February 27, 2018
|
Jeffrey R. Noordhoek
|
|
|
|
|
|
|
|
|
|
/s/ JAMES D. KRUGER
|
|
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|
|
February 27, 2018
|
James D. Kruger
|
|
|
|
|
|
|
|
|
|
/s/ MICHAEL S. DUNLAP
|
|
Executive Chairman
|
|
February 27, 2018
|
Michael S. Dunlap
|
|
|
|
|
|
|
|
|
|
/s/ STEPHEN F. BUTTERFIELD
|
|
Vice Chairman
|
|
February 27, 2018
|
Stephen F. Butterfield
|
|
|
|
|
|
|
|
|
|
/s/ JAMES P. ABEL
|
|
Director
|
|
February 27, 2018
|
James P. Abel
|
|
|
|
|
|
|
|
|
|
/s/ WILLIAM R. CINTANI
|
|
Director
|
|
February 27, 2018
|
William R. Cintani
|
|
|
|
|
|
|
|
|
|
/s/ KATHLEEN A. FARRELL
|
|
Director
|
|
February 27, 2018
|
Kathleen A. Farrell
|
|
|
|
|
|
|
|
|
|
/s/ DAVID S. GRAFF
|
|
Director
|
|
February 27, 2018
|
David S. Graff
|
|
|
|
|
|
|
|
|
|
/s/ THOMAS E. HENNING
|
|
Director
|
|
February 27, 2018
|
Thomas E. Henning
|
|
|
|
|
|
|
|
|
|
/s/ KIMBERLY K. RATH
|
|
Director
|
|
February 27, 2018
|
Kimberly K. Rath
|
|
|
|
|
|
|
|
|
|
/s/ MICHAEL D. REARDON
|
|
Director
|
|
February 27, 2018
|
Michael D. Reardon
|
|
|
|
|
Page
|
F-2
|
|
F-3
|
|
F-4
|
|
F-5
|
|
F-6
|
|
F-7
|
|
F-8
|
NELNET, INC. AND SUBSIDIARIES
|
||||||
Consolidated Balance Sheets
|
||||||
December 31, 2017 and 2016
|
||||||
|
2017
|
|
2016
|
|||
|
(Dollars in thousands, except share data)
|
|||||
Assets:
|
|
|
|
|||
Loans receivable (net of allowance for loan losses of $54,590 and $51,842, respectively)
|
$
|
21,814,507
|
|
|
24,903,724
|
|
Cash and cash equivalents:
|
|
|
|
|
|
|
Cash and cash equivalents - not held at a related party
|
6,982
|
|
|
7,841
|
|
|
Cash and cash equivalents - held at a related party
|
59,770
|
|
|
61,813
|
|
|
Total cash and cash equivalents
|
66,752
|
|
|
69,654
|
|
|
Investments and notes receivable
|
240,538
|
|
|
254,144
|
|
|
Restricted cash
|
688,193
|
|
|
980,961
|
|
|
Restricted cash - due to customers
|
187,121
|
|
|
119,702
|
|
|
Loan accrued interest receivable
|
430,385
|
|
|
391,264
|
|
|
Accounts receivable (net of allowance for doubtful accounts of $1,436 and $1,549, respectively)
|
54,410
|
|
|
43,972
|
|
|
Goodwill
|
138,759
|
|
|
147,312
|
|
|
Intangible assets, net
|
38,427
|
|
|
47,813
|
|
|
Property and equipment, net
|
248,051
|
|
|
123,786
|
|
|
Other assets
|
56,474
|
|
|
23,232
|
|
|
Fair value of derivative instruments
|
818
|
|
|
87,531
|
|
|
Total assets
|
$
|
23,964,435
|
|
|
27,193,095
|
|
Liabilities:
|
|
|
|
|
|
|
Bonds and notes payable
|
$
|
21,356,573
|
|
|
24,668,490
|
|
Accrued interest payable
|
50,039
|
|
|
45,677
|
|
|
Other liabilities
|
198,252
|
|
|
210,475
|
|
|
Due to customers
|
187,121
|
|
|
119,702
|
|
|
Fair value of derivative instruments
|
7,063
|
|
|
77,826
|
|
|
Total liabilities
|
21,799,048
|
|
|
25,122,170
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
Equity:
|
|
|
|
|||
Nelnet, Inc. shareholders' equity:
|
|
|
|
|
|
|
Preferred stock, $0.01 par value. Authorized 50,000,000 shares; no shares issued or outstanding
|
—
|
|
|
—
|
|
|
Common stock:
|
|
|
|
|||
Class A, $0.01 par value. Authorized 600,000,000 shares; issued and outstanding 29,341,517 shares and 30,628,112 shares, respectively
|
293
|
|
|
306
|
|
|
Class B, convertible, $0.01 par value. Authorized 60,000,000 shares; issued and outstanding 11,468,587 shares and 11,476,932 shares, respectively
|
115
|
|
|
115
|
|
|
Additional paid-in capital
|
521
|
|
|
420
|
|
|
Retained earnings
|
2,143,983
|
|
|
2,056,084
|
|
|
Accumulated other comprehensive earnings
|
4,617
|
|
|
4,730
|
|
|
Total Nelnet, Inc. shareholders' equity
|
2,149,529
|
|
|
2,061,655
|
|
|
Noncontrolling interests
|
15,858
|
|
|
9,270
|
|
|
Total equity
|
2,165,387
|
|
|
2,070,925
|
|
|
Total liabilities and equity
|
$
|
23,964,435
|
|
|
27,193,095
|
|
|
|
|
|
|||
Supplemental information - assets and liabilities of consolidated education lending variable interest entities:
|
|
|
|
|||
Student loans receivable
|
$
|
21,909,476
|
|
|
25,090,530
|
|
Restricted cash
|
641,994
|
|
|
970,306
|
|
|
Accrued interest receivable and other assets
|
431,934
|
|
|
390,504
|
|
|
Bonds and notes payable
|
(21,702,298
|
)
|
|
(25,105,704
|
)
|
|
Accrued interest payable and other liabilities
|
(168,637
|
)
|
|
(290,996
|
)
|
|
Fair value of derivative instruments, net
|
—
|
|
|
(66,453
|
)
|
|
Net assets of consolidated education lending variable interest entities
|
$
|
1,112,469
|
|
|
988,187
|
|
NELNET, INC. AND SUBSIDIARIES
|
|||||||||
Consolidated Statements of Income
|
|||||||||
Years ended December 31, 2017, 2016, and 2015
|
|||||||||
|
|
|
|
|
|
||||
|
2017
|
|
2016
|
|
2015
|
||||
|
(Dollars in thousands, except share data)
|
||||||||
Interest income:
|
|
|
|
|
|
||||
Loan interest
|
$
|
757,731
|
|
|
751,280
|
|
|
726,258
|
|
Investment interest
|
12,695
|
|
|
9,466
|
|
|
7,851
|
|
|
Total interest income
|
770,426
|
|
|
760,746
|
|
|
734,109
|
|
|
Interest expense:
|
|
|
|
|
|
|
|
|
|
Interest on bonds and notes payable
|
465,188
|
|
|
388,183
|
|
|
302,210
|
|
|
Net interest income
|
305,238
|
|
|
372,563
|
|
|
431,899
|
|
|
Less provision for loan losses
|
14,450
|
|
|
13,500
|
|
|
10,150
|
|
|
Net interest income after provision for loan losses
|
290,788
|
|
|
359,063
|
|
|
421,749
|
|
|
Other income:
|
|
|
|
|
|
|
|
|
|
Loan systems and servicing revenue
|
223,000
|
|
|
214,846
|
|
|
239,858
|
|
|
Tuition payment processing, school information, and campus commerce revenue
|
145,751
|
|
|
132,730
|
|
|
120,365
|
|
|
Communications revenue
|
25,700
|
|
|
17,659
|
|
|
—
|
|
|
Enrollment services revenue
|
—
|
|
|
4,326
|
|
|
51,073
|
|
|
Other income
|
52,826
|
|
|
53,929
|
|
|
47,262
|
|
|
Gain on sale of loans and debt repurchases, net
|
2,902
|
|
|
7,981
|
|
|
5,153
|
|
|
Derivative market value and foreign currency transaction adjustments and derivative settlements, net
|
(18,554
|
)
|
|
49,795
|
|
|
4,401
|
|
|
Total other income
|
431,625
|
|
|
481,266
|
|
|
468,112
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
|
301,885
|
|
|
255,924
|
|
|
247,914
|
|
|
Depreciation and amortization
|
39,541
|
|
|
33,933
|
|
|
26,343
|
|
|
Loan servicing fees
|
22,734
|
|
|
25,750
|
|
|
30,213
|
|
|
Cost to provide communications services
|
9,950
|
|
|
6,866
|
|
|
—
|
|
|
Cost to provide enrollment services
|
—
|
|
|
3,623
|
|
|
41,733
|
|
|
Other expenses
|
121,619
|
|
|
115,419
|
|
|
123,014
|
|
|
Total operating expenses
|
495,729
|
|
|
441,515
|
|
|
469,217
|
|
|
Income before income taxes
|
226,684
|
|
|
398,814
|
|
|
420,644
|
|
|
Income tax expense
|
64,863
|
|
|
141,313
|
|
|
152,380
|
|
|
Net income
|
161,821
|
|
|
257,501
|
|
|
268,264
|
|
|
Net loss (income) attributable to noncontrolling interests
|
11,345
|
|
|
(750
|
)
|
|
(285
|
)
|
|
Net income attributable to Nelnet, Inc.
|
$
|
173,166
|
|
|
256,751
|
|
|
267,979
|
|
Earnings per common share:
|
|
|
|
|
|
||||
Net income attributable to Nelnet, Inc. shareholders - basic and diluted
|
$
|
4.14
|
|
|
6.02
|
|
|
5.89
|
|
Weighted average common shares outstanding - basic and diluted
|
41,791,941
|
|
|
42,669,070
|
|
|
45,529,340
|
|
NELNET, INC. AND SUBSIDIARIES
|
|||||||||
Consolidated Statements of Comprehensive Income
|
|||||||||
Years ended December 31, 2017, 2016, and 2015
|
|||||||||
|
2017
|
|
2016
|
|
2015
|
||||
|
(Dollars in thousands)
|
||||||||
Net income
|
$
|
161,821
|
|
|
257,501
|
|
|
268,264
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||||
Available-for-sale securities:
|
|
|
|
|
|
||||
Unrealized holding gains (losses) arising during period, net
|
2,349
|
|
|
5,789
|
|
|
(1,570
|
)
|
|
Reclassification adjustment for gains recognized in net income, net of losses
|
(2,528
|
)
|
|
(1,907
|
)
|
|
(2,955
|
)
|
|
Income tax effect
|
66
|
|
|
(1,436
|
)
|
|
1,674
|
|
|
Total other comprehensive (loss) income
|
(113
|
)
|
|
2,446
|
|
|
(2,851
|
)
|
|
Comprehensive income
|
161,708
|
|
|
259,947
|
|
|
265,413
|
|
|
Comprehensive loss (income) attributable to noncontrolling interests
|
11,345
|
|
|
(750
|
)
|
|
(285
|
)
|
|
Comprehensive income attributable to Nelnet, Inc.
|
$
|
173,053
|
|
|
259,197
|
|
|
265,128
|
|
NELNET, INC. AND SUBSIDIARIES
|
|||||||||||||||||||||||||||||||||
Consolidated Statements of Shareholders' Equity
|
|||||||||||||||||||||||||||||||||
Years ended December 31, 2017, 2016, and 2015
|
|||||||||||||||||||||||||||||||||
|
Nelnet, Inc. Shareholders
|
|
|
|
|||||||||||||||||||||||||||||
|
Preferred stock shares
|
|
Common stock shares
|
|
Preferred stock
|
|
Class A common stock
|
|
Class B common stock
|
|
Additional paid-in capital
|
|
Retained earnings
|
|
Accumulated other comprehensive earnings
|
|
Noncontrolling interests
|
|
Total equity
|
||||||||||||||
|
|
Class A
|
|
Class B
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
(Dollars in thousands, except share data)
|
||||||||||||||||||||||||||||||||
Balance as of December 31, 2014
|
—
|
|
|
34,756,384
|
|
|
11,486,932
|
|
|
$
|
—
|
|
|
348
|
|
|
115
|
|
|
17,290
|
|
|
1,702,560
|
|
|
5,135
|
|
|
230
|
|
|
1,725,678
|
|
Issuance of noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,443
|
|
|
7,443
|
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
267,979
|
|
|
—
|
|
|
285
|
|
|
268,264
|
|
|
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,851
|
)
|
|
—
|
|
|
(2,851
|
)
|
|
Distribution to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(232
|
)
|
|
(232
|
)
|
|
Cash dividends on Class A and Class B common stock - $0.42 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19,025
|
)
|
|
—
|
|
|
—
|
|
|
(19,025
|
)
|
|
Issuance of common stock, net of forfeitures
|
—
|
|
|
159,303
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
3,860
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,862
|
|
|
Compensation expense for stock based awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,188
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,188
|
|
|
Repurchase of common stock
|
—
|
|
|
(2,449,159
|
)
|
|
—
|
|
|
—
|
|
|
(25
|
)
|
|
—
|
|
|
(26,338
|
)
|
|
(69,806
|
)
|
|
—
|
|
|
—
|
|
|
(96,169
|
)
|
|
Conversion of common stock
|
—
|
|
|
10,000
|
|
|
(10,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Balance as of December 31, 2015
|
—
|
|
|
32,476,528
|
|
|
11,476,932
|
|
|
—
|
|
|
325
|
|
|
115
|
|
|
—
|
|
|
1,881,708
|
|
|
2,284
|
|
|
7,726
|
|
|
1,892,158
|
|
|
Issuance of noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,366
|
|
|
1,366
|
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
256,751
|
|
|
—
|
|
|
750
|
|
|
257,501
|
|
|
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,446
|
|
|
—
|
|
|
2,446
|
|
|
Distribution to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(572
|
)
|
|
(572
|
)
|
|
Cash dividends on Class A and Class B common stock - $0.50 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,188
|
)
|
|
—
|
|
|
—
|
|
|
(21,188
|
)
|
|
Issuance of common stock, net of forfeitures
|
—
|
|
|
189,952
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
4,218
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,219
|
|
|
Compensation expense for stock based awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,086
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,086
|
|
|
Repurchase of common stock
|
—
|
|
|
(2,038,368
|
)
|
|
—
|
|
|
—
|
|
|
(20
|
)
|
|
—
|
|
|
(7,884
|
)
|
|
(61,187
|
)
|
|
—
|
|
|
—
|
|
|
(69,091
|
)
|
|
Balance as of December 31, 2016
|
—
|
|
|
30,628,112
|
|
|
11,476,932
|
|
|
—
|
|
|
306
|
|
|
115
|
|
|
420
|
|
|
2,056,084
|
|
|
4,730
|
|
|
9,270
|
|
|
2,070,925
|
|
|
Issuance of noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,578
|
|
|
19,578
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
173,166
|
|
|
—
|
|
|
(11,345
|
)
|
|
161,821
|
|
|
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(113
|
)
|
|
—
|
|
|
(113
|
)
|
|
Distribution to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,645
|
)
|
|
(1,645
|
)
|
|
Cash dividends on Class A and Class B common stock - $0.58 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,097
|
)
|
|
—
|
|
|
—
|
|
|
(24,097
|
)
|
|
Issuance of common stock, net of forfeitures
|
—
|
|
|
178,114
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
3,619
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,621
|
|
|
Compensation expense for stock based awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,193
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,193
|
|
|
Repurchase of common stock
|
—
|
|
|
(1,473,054
|
)
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
(7,711
|
)
|
|
(61,170
|
)
|
|
—
|
|
|
—
|
|
|
(68,896
|
)
|
|
Conversion of common stock
|
—
|
|
|
8,345
|
|
|
(8,345
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Balance as of December 31, 2017
|
—
|
|
|
29,341,517
|
|
|
11,468,587
|
|
|
$
|
—
|
|
|
293
|
|
|
115
|
|
|
521
|
|
|
2,143,983
|
|
|
4,617
|
|
|
15,858
|
|
|
2,165,387
|
|
NELNET, INC. AND SUBSIDIARIES
|
||||||||||
Consolidated Statements of Cash Flows
|
||||||||||
Years ended December 31, 2017, 2016, and 2015
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||
|
|
(Dollars in thousands)
|
||||||||
Net income attributable to Nelnet, Inc.
|
|
$
|
173,166
|
|
|
256,751
|
|
|
267,979
|
|
Net (loss) income attributable to noncontrolling interests
|
|
(11,345
|
)
|
|
750
|
|
|
285
|
|
|
Net income
|
|
161,821
|
|
|
257,501
|
|
|
268,264
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities, net of acquisitions:
|
|
|
|
|
|
|
|
|
||
Depreciation and amortization, including debt discounts and loan premiums and deferred origination costs
|
|
137,823
|
|
|
122,547
|
|
|
123,736
|
|
|
Loan discount accretion
|
|
(44,812
|
)
|
|
(40,617
|
)
|
|
(43,766
|
)
|
|
Provision for loan losses
|
|
14,450
|
|
|
13,500
|
|
|
10,150
|
|
|
Derivative market value adjustment
|
|
(26,379
|
)
|
|
(59,895
|
)
|
|
15,150
|
|
|
Unrealized foreign currency transaction adjustment
|
|
45,600
|
|
|
(11,849
|
)
|
|
(43,801
|
)
|
|
(Payments) proceeds from termination of derivative instruments, net
|
|
(30,382
|
)
|
|
3,999
|
|
|
65,527
|
|
|
Payments to enter into derivative instruments
|
|
(929
|
)
|
|
—
|
|
|
(2,936
|
)
|
|
Proceeds from clearinghouse to settle variation margin, net
|
|
48,985
|
|
|
—
|
|
|
—
|
|
|
Gain on sale of loans, net
|
|
—
|
|
|
—
|
|
|
(351
|
)
|
|
Gain from debt repurchases, net
|
|
(2,902
|
)
|
|
(7,981
|
)
|
|
(4,802
|
)
|
|
Gain from sales of available-for-sale securities, net of losses
|
|
(2,528
|
)
|
|
(1,907
|
)
|
|
(2,955
|
)
|
|
Deferred income tax (benefit) expense
|
|
(1,544
|
)
|
|
27,005
|
|
|
7,049
|
|
|
Non-cash compensation expense
|
|
4,416
|
|
|
4,348
|
|
|
5,347
|
|
|
Impairment expense
|
|
3,626
|
|
|
—
|
|
|
—
|
|
|
Other
|
|
3,948
|
|
|
4,215
|
|
|
755
|
|
|
Increase in loan accrued interest receivable
|
|
(39,203
|
)
|
|
(7,439
|
)
|
|
(3,819
|
)
|
|
(Increase) decrease in accounts receivable
|
|
(12,046
|
)
|
|
7,454
|
|
|
1,061
|
|
|
(Increase) decrease in other assets
|
|
(34,457
|
)
|
|
(2,203
|
)
|
|
375
|
|
|
Increase in accrued interest payable
|
|
4,362
|
|
|
14,170
|
|
|
5,117
|
|
|
(Decrease) increase in other liabilities
|
|
(2,341
|
)
|
|
2,409
|
|
|
(8,736
|
)
|
|
Net cash provided by operating activities
|
|
227,508
|
|
|
325,257
|
|
|
391,365
|
|
|
Cash flows from investing activities, net of acquisitions:
|
|
|
|
|
|
|
|
|
||
Purchases of loans
|
|
(325,476
|
)
|
|
(349,144
|
)
|
|
(2,189,450
|
)
|
|
Net proceeds from loan repayments, claims, capitalized interest, and other
|
|
3,363,526
|
|
|
3,735,772
|
|
|
3,668,302
|
|
|
Proceeds from sale of loans
|
|
53,203
|
|
|
44,760
|
|
|
3,996
|
|
|
Purchases of available-for-sale securities
|
|
(128,523
|
)
|
|
(94,673
|
)
|
|
(100,476
|
)
|
|
Proceeds from sales of available-for-sale securities
|
|
156,540
|
|
|
144,252
|
|
|
95,758
|
|
|
Purchases of investments and issuance of notes receivable
|
|
(29,339
|
)
|
|
(22,361
|
)
|
|
(93,948
|
)
|
|
Proceeds from investments and notes receivable
|
|
11,545
|
|
|
15,898
|
|
|
29,799
|
|
|
Purchases of property and equipment
|
|
(156,005
|
)
|
|
(67,602
|
)
|
|
(16,761
|
)
|
|
Decrease (increase) in restricted cash, net
|
|
320,108
|
|
|
(147,487
|
)
|
|
67,108
|
|
|
Business and asset acquisitions, net of cash acquired
|
|
—
|
|
|
—
|
|
|
(46,966
|
)
|
|
Proceeds from sale of business, net
|
|
4,511
|
|
|
—
|
|
|
—
|
|
|
Net cash provided by investing activities
|
|
3,270,090
|
|
|
3,259,415
|
|
|
1,417,362
|
|
|
Cash flows from financing activities, net of borrowings assumed:
|
|
|
|
|
|
|
|
|
||
Payments on bonds and notes payable
|
|
(5,403,224
|
)
|
|
(4,134,890
|
)
|
|
(4,368,180
|
)
|
|
Proceeds from issuance of bonds and notes payable
|
|
1,984,558
|
|
|
650,909
|
|
|
2,614,595
|
|
|
Payments of debt issuance costs
|
|
(6,497
|
)
|
|
(5,845
|
)
|
|
(11,162
|
)
|
|
Payment of contingent consideration
|
|
(850
|
)
|
|
—
|
|
|
—
|
|
|
Dividends paid
|
|
(24,097
|
)
|
|
(21,188
|
)
|
|
(19,025
|
)
|
|
Repurchases of common stock
|
|
(68,896
|
)
|
|
(69,091
|
)
|
|
(96,169
|
)
|
|
Proceeds from issuance of common stock
|
|
678
|
|
|
889
|
|
|
801
|
|
|
Issuance of noncontrolling interests
|
|
19,473
|
|
|
1,241
|
|
|
3,693
|
|
|
Distribution to noncontrolling interests
|
|
(1,645
|
)
|
|
(572
|
)
|
|
(232
|
)
|
|
Net cash used in financing activities
|
|
(3,500,500
|
)
|
|
(3,578,547
|
)
|
|
(1,875,679
|
)
|
|
Net (decrease) increase in cash and cash equivalents
|
|
(2,902
|
)
|
|
6,125
|
|
|
(66,952
|
)
|
|
Cash and cash equivalents, beginning of year
|
|
69,654
|
|
|
63,529
|
|
|
130,481
|
|
|
Cash and cash equivalents, end of year
|
|
$
|
66,752
|
|
|
69,654
|
|
|
63,529
|
|
|
|
|
|
|
|
|
||||
Cash disbursements made for:
|
|
|
|
|
|
|
|
|
||
Interest
|
|
$
|
390,278
|
|
|
301,118
|
|
|
228,248
|
|
Income taxes, net of refunds
|
|
$
|
96,721
|
|
|
115,415
|
|
|
147,235
|
|
Noncash investing and financing activities:
|
|
|
|
|
|
|
||||
Loans and other assets acquired
|
|
$
|
—
|
|
|
—
|
|
|
2,025,453
|
|
Borrowings and other liabilities assumed in acquisition of loans
|
|
$
|
—
|
|
|
—
|
|
|
1,885,453
|
|
Issuance of noncontrolling interest
|
|
$
|
—
|
|
|
20
|
|
|
3,750
|
|
•
|
Servicing federally-owned student loans for the Department of Education
|
•
|
Servicing FFELP loans
|
•
|
Originating and servicing private education and consumer loans
|
•
|
Providing student loan servicing software and other information technology products and services
|
•
|
Providing outsourced services including call center, processing, and marketing services
|
•
|
The operating results of Whitetail Rock Capital Management, LLC ("WRCM"), the Company's SEC-registered investment advisor subsidiary
|
•
|
Income earned on certain investment activities, including real estate and start-up ventures
|
•
|
Interest expense incurred on unsecured debt transactions
|
•
|
Other product and service offerings that are not considered reportable operating segments
|
•
|
Whitetail Rock Capital Management, LLC - WRCM is the Company’s SEC-registered investment advisor subsidiary. WRCM issued
10 percent
minority membership interests on January 1, 2012.
|
•
|
ALLO Communications LLC - On December 31, 2015, the Company purchased
92.5 percent
of the ownership interests of ALLO. On January 1, 2016, the Company sold a
1.0 percent
ownership interest in ALLO to a non-related third-party. The remaining
7.5 percent
of the ownership interests of ALLO is owned by ALLO management, who has the opportunity to earn an additional
11.5 percent
(up to
19 percent
) of the total ownership interests based on the financial performance of ALLO.
|
•
|
401 Building, LLC (“401 Building”) - 401 Building is an entity established on October 19, 2015 for the sole purpose of acquiring, developing, and operating a commercial building. The Company owns
50 percent
of 401 Building.
|
•
|
TDP Phase Three, LLC (“TDP”) and TDP Phase Three-NMTC ("TDP-NMTC") - TDP and TDP-NMTC are entities that were established in October 2015 for the sole purpose of developing and operating the new headquarters of Hudl. The Company owns
25 percent
of each TDP and TDP-NMTC.
|
•
|
330-333 Building, LLC ("330-333 Building") - 330-333 Building is an entity established on January 14, 2016 for the sole purpose of acquiring, developing, and operating a commercial building. The Company owns
50 percent
of 330-333 Building.
|
•
|
GreatNet Solutions, LLC ("GreatNet") - GreatNet is a joint venture created to respond to an initiative by the Department for the procurement of a contract for federal student loan servicing. As of December 31, 2017, Nelnet Servicing, LLC ("Nelnet Servicing"), a subsidiary of the Company, and Great Lakes each owned
50 percent
of the ownership interests in GreatNet. For financial reporting purposes, the balance sheet and operating results of GreatNet are included in the Company's consolidated financial statements and presented in the Company's Loan Systems and Servicing operating segment. On February 7, 2018, the Company purchased
100
percent of the outstanding stock of Great Lakes. See note 2, “Recent Developments” for additional information on this business acquisition.
|
•
|
Level 1: Quoted prices for
identical
instruments in active markets. The types of financial instruments included in Level 1 are highly liquid instruments with quoted prices.
|
•
|
Level 2: Quoted prices for
similar
instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose primary value drivers are observable.
|
•
|
Level 3: Instruments whose primary value drivers are
unobservable
. Inputs are developed based on the best information available; however, significant judgment is required by management in developing the inputs.
|
•
|
Loan and guaranty servicing fees
– Loan servicing fees are determined according to individual agreements with customers and are calculated based on the dollar value of loans, number of loans, or number of borrowers serviced for each customer. Guaranty servicing fees were generally calculated based on the number of loans serviced, volume of loans serviced, or amounts collected. Revenue is recognized over the period in which services are provided to customers, and when ultimate collection is assured.
|
•
|
Software services revenue
– Software services revenue is determined from individual agreements with customers and includes license and maintenance fees associated with student loan software products. Computer and software consulting and remote hosting revenues are recognized over the period in which services are provided to customers.
|
•
|
Outsourced services revenue
- Outsourced services revenue is determined from individual agreements with customers and generally recognized over the period in which services are provided to customers.
|
•
|
Guaranty collections revenue
– Guaranty collections revenue was earned when collected. Collection costs paid to third parties associated with this revenue was expensed upon successful collection.
|
•
|
Realized and unrealized gains and losses on investments
|
•
|
Borrower late fee income
- Late fee income is earned by the education lending subsidiaries and is recognized when payments are collected from the borrower.
|
•
|
Investment advisory income
- Investment advisory services are provided by the Company through an SEC-registered investment advisor subsidiary under various arrangements. The Company earns annual fees based on the outstanding balance of investments and certain performance measures, which are recognized monthly as earned.
|
•
|
Digital marketing and content solutions
- The Company earned revenue related to digital marketing and content solution products and services under the brand name Peterson's. These products and services included test preparation study guides, school directories and databases, career exploration guides, on-line courses and test preparation, scholarship search and selection data, career planning information and guides, and on-line information about colleges and universities. Several content solutions services included services to connect students to colleges and universities, and were sold based on subscriptions. Revenue from sales of subscription services was recognized ratably over the term of the contract as it was earned. Subscription revenue received or receivable in advance of the delivery of services was included in deferred revenue. Revenue from the sale of print products was generally earned and recognized, net of estimated returns, upon shipment or delivery. All other digital marketing and content solutions revenue was recognized over the period in which services were provided to customers. On December 31, 2017, the Company sold Peterson's. See note 10 for additional information regarding this sale.
|
|
As of December 31,
|
|||||
|
2017
|
|
2016
|
|||
Federally insured student loans:
|
|
|
|
|||
Stafford and other
|
$
|
4,418,881
|
|
|
5,186,047
|
|
Consolidation
|
17,302,725
|
|
|
19,643,937
|
|
|
Total
|
21,721,606
|
|
|
24,829,984
|
|
|
Private education loans
|
212,160
|
|
|
273,659
|
|
|
Consumer loans
|
62,111
|
|
|
—
|
|
|
|
21,995,877
|
|
|
25,103,643
|
|
|
Loan discount, net of unamortized loan premiums and deferred origination costs
|
(113,695
|
)
|
|
(129,507
|
)
|
|
Non-accretable discount (a)
|
(13,085
|
)
|
|
(18,570
|
)
|
|
Allowance for loan losses:
|
|
|
|
|||
Federally insured loans
|
(38,706
|
)
|
|
(37,268
|
)
|
|
Private education loans
|
(12,629
|
)
|
|
(14,574
|
)
|
|
Consumer loans
|
(3,255
|
)
|
|
—
|
|
|
|
$
|
21,814,507
|
|
|
24,903,724
|
|
(a)
|
At December 31, 2017 and 2016, the non-accretable discount related to purchased loan portfolios of
$5.8 billion
and
$8.3 billion
, respectively.
|
|
Year ended December 31,
|
||||||||
|
2017
|
|
2016
|
|
2015
|
||||
Balance at beginning of period
|
$
|
51,842
|
|
|
50,498
|
|
|
48,900
|
|
Provision for loan losses:
|
|
|
|
|
|
||||
Federally insured loans
|
13,000
|
|
|
14,000
|
|
|
8,000
|
|
|
Private education loans
|
(2,000
|
)
|
|
(500
|
)
|
|
2,150
|
|
|
Consumer loans
|
3,450
|
|
|
—
|
|
|
—
|
|
|
Total provision for loan losses
|
14,450
|
|
|
13,500
|
|
|
10,150
|
|
|
Charge-offs:
|
|
|
|
|
|
|
|
||
Federally insured loans
|
(11,562
|
)
|
|
(12,292
|
)
|
|
(11,730
|
)
|
|
Private education loans
|
(1,313
|
)
|
|
(1,728
|
)
|
|
(2,414
|
)
|
|
Consumer loans
|
(195
|
)
|
|
—
|
|
|
—
|
|
|
Total charge-offs
|
(13,070
|
)
|
|
(14,020
|
)
|
|
(14,144
|
)
|
|
Recoveries - private education loans
|
768
|
|
|
954
|
|
|
1,050
|
|
|
Purchase (sale) of loans, net:
|
|
|
|
|
|
||||
Federally insured loans
|
—
|
|
|
70
|
|
|
50
|
|
|
Private education loans
|
—
|
|
|
480
|
|
|
(140
|
)
|
|
Transfer from repurchase obligation related to private education loans repurchased, net (a)
|
600
|
|
|
360
|
|
|
4,632
|
|
|
Balance at end of period
|
$
|
54,590
|
|
|
51,842
|
|
|
50,498
|
|
|
|
|
|
|
|
||||
Allocation of the allowance for loan losses:
|
|
|
|
|
|
|
|
||
Federally insured loans
|
$
|
38,706
|
|
|
37,268
|
|
|
35,490
|
|
Private education loans
|
12,629
|
|
|
14,574
|
|
|
15,008
|
|
|
Consumer loans
|
3,255
|
|
|
—
|
|
|
—
|
|
|
Total allowance for loan losses
|
$
|
54,590
|
|
|
51,842
|
|
|
50,498
|
|
|
As of December 31,
|
|||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
Federally insured loans:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Loans in-school/grace/deferment (a)
|
$
|
1,260,394
|
|
|
|
|
$
|
1,606,468
|
|
|
|
|
$
|
2,292,941
|
|
|
|
|||
Loans in forbearance (b)
|
1,774,405
|
|
|
|
|
2,295,367
|
|
|
|
|
2,979,357
|
|
|
|
||||||
Loans in repayment status:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Loans current
|
16,477,004
|
|
|
88.2
|
%
|
|
18,125,768
|
|
|
86.6
|
%
|
|
19,447,541
|
|
|
84.4
|
%
|
|||
Loans delinquent 31-60 days (c)
|
682,586
|
|
|
3.7
|
|
|
818,976
|
|
|
3.9
|
|
|
1,028,396
|
|
|
4.5
|
|
|||
Loans delinquent 61-90 days (c)
|
374,534
|
|
|
2.0
|
|
|
487,647
|
|
|
2.3
|
|
|
566,953
|
|
|
2.5
|
|
|||
Loans delinquent 91-120 days (c)
|
287,922
|
|
|
1.5
|
|
|
335,291
|
|
|
1.6
|
|
|
415,747
|
|
|
1.8
|
|
|||
Loans delinquent 121-270 days (c)
|
629,480
|
|
|
3.4
|
|
|
854,432
|
|
|
4.1
|
|
|
1,166,940
|
|
|
5.1
|
|
|||
Loans delinquent 271 days or greater (c)(d)
|
235,281
|
|
|
1.2
|
|
|
306,035
|
|
|
1.5
|
|
|
390,232
|
|
|
1.7
|
|
|||
Total loans in repayment
|
18,686,807
|
|
|
100.0
|
%
|
|
20,928,149
|
|
|
100.0
|
%
|
|
23,015,809
|
|
|
100.0
|
%
|
|||
Total federally insured loans
|
$
|
21,721,606
|
|
|
|
|
|
$
|
24,829,984
|
|
|
|
|
|
$
|
28,288,107
|
|
|
|
|
Private education loans:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Loans in-school/grace/deferment (a)
|
$
|
6,053
|
|
|
|
|
$
|
35,146
|
|
|
|
|
$
|
30,795
|
|
|
|
|||
Loans in forbearance (b)
|
2,237
|
|
|
|
|
3,448
|
|
|
|
|
350
|
|
|
|
||||||
Loans in repayment status:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Loans current
|
196,720
|
|
|
96.5
|
%
|
|
228,612
|
|
|
97.2
|
%
|
|
228,464
|
|
|
96.7
|
%
|
|||
Loans delinquent 31-60 days (c)
|
1,867
|
|
|
0.9
|
|
|
1,677
|
|
|
0.7
|
|
|
1,771
|
|
|
0.7
|
|
|||
Loans delinquent 61-90 days (c)
|
1,052
|
|
|
0.5
|
|
|
1,110
|
|
|
0.5
|
|
|
1,283
|
|
|
0.5
|
|
|||
Loans delinquent 91 days or greater (c)
|
4,231
|
|
|
2.1
|
|
|
3,666
|
|
|
1.6
|
|
|
4,979
|
|
|
2.1
|
|
|||
Total loans in repayment
|
203,870
|
|
|
100.0
|
%
|
|
235,065
|
|
|
100.0
|
%
|
|
236,497
|
|
|
100.0
|
%
|
|||
Total private education loans
|
$
|
212,160
|
|
|
|
|
|
$
|
273,659
|
|
|
|
|
|
$
|
267,642
|
|
|
|
(a)
|
Loans for borrowers who still may be attending school or engaging in other permitted educational activities and are not yet required to make payments on the loans,
e.g.
, residency periods for medical students or a grace period for bar exam preparation for law students.
|
(b)
|
Loans for borrowers who have temporarily ceased making full payments due to hardship or other factors, according to a schedule approved by the servicer consistent with the established loan program servicing procedures and policies.
|
(c)
|
The period of delinquency is based on the number of days scheduled payments are contractually past due and relate to repayment loans, that is, receivables not charged off, and not in school, grace, deferment, or forbearance.
|
(d)
|
A portion of loans included in loans delinquent 271 days or greater includes loans in claim status, which are loans that have gone into default and have been submitted to the guaranty agency.
|
|
As of December 31, 2017
|
||||||
|
Carrying
amount
|
|
Interest rate
range
|
|
Final maturity
|
||
Variable-rate bonds and notes issued in FFELP loan asset-backed securitizations:
|
|
|
|
|
|
||
Bonds and notes based on indices
|
$
|
20,352,045
|
|
|
1.47% - 3.37%
|
|
8/25/21 - 2/25/66
|
Bonds and notes based on auction
|
780,829
|
|
|
2.09% - 2.69%
|
|
3/22/32 - 11/26/46
|
|
Total FFELP variable-rate bonds and notes
|
21,132,874
|
|
|
|
|
|
|
FFELP warehouse facilities
|
335,992
|
|
|
1.55% / 1.56%
|
|
11/19/19 / 5/31/20
|
|
Variable-rate bonds and notes issued in private education loan asset-backed securitization
|
74,717
|
|
|
3.30%
|
|
12/26/40
|
|
Fixed-rate bonds and notes issued in private education loan asset-backed securitization
|
82,647
|
|
|
3.60% / 5.35%
|
|
12/26/40 / 12/28/43
|
|
Unsecured line of credit
|
10,000
|
|
|
2.98%
|
|
12/12/21
|
|
Unsecured debt - Junior Subordinated Hybrid Securities
|
20,381
|
|
|
5.07%
|
|
9/15/61
|
|
Other borrowings
|
70,516
|
|
|
2.44% - 3.38%
|
|
1/12/18 - 12/15/45
|
|
|
21,727,127
|
|
|
|
|
|
|
Discount on bonds and notes payable and debt issuance costs
|
(370,554
|
)
|
|
|
|
|
|
Total
|
$
|
21,356,573
|
|
|
|
|
|
|
As of December 31, 2016
|
||||||
|
Carrying
amount
|
|
Interest rate
range
|
|
Final maturity
|
||
Variable-rate bonds and notes issued in FFELP loan asset-backed securitizations:
|
|
|
|
|
|
||
Bonds and notes based on indices
|
$
|
22,130,063
|
|
|
0.24% - 6.90%
|
|
6/25/21 - 9/25/65
|
Bonds and notes based on auction
|
998,415
|
|
|
1.61% - 2.28%
|
|
3/22/32 - 11/26/46
|
|
Total FFELP variable-rate bonds and notes
|
23,128,478
|
|
|
|
|
|
|
FFELP warehouse facilities
|
1,677,443
|
|
|
0.63% - 1.09%
|
|
9/7/18 - 12/13/19
|
|
Variable-rate bonds and notes issued in private education loan asset-backed securitization
|
112,582
|
|
|
2.60%
|
|
12/26/40
|
|
Fixed-rate bonds and notes issued in private education loan asset-backed securitization
|
113,378
|
|
|
3.60% / 5.35%
|
|
12/26/40 / 12/28/43
|
|
Unsecured line of credit
|
—
|
|
|
—
|
|
12/12/21
|
|
Unsecured debt - Junior Subordinated Hybrid Securities
|
50,184
|
|
|
4.37%
|
|
9/15/61
|
|
Other borrowings
|
18,355
|
|
|
3.38%
|
|
3/31/23 / 12/15/45
|
|
|
25,100,420
|
|
|
|
|
|
|
Discount on bonds and notes payable and debt issuance costs
|
(431,930
|
)
|
|
|
|
|
|
Total
|
$
|
24,668,490
|
|
|
|
|
|
|
NFSLW-I
|
|
NHELP-II
|
|
Total
|
||||
Maximum financing amount
|
$
|
500,000
|
|
|
500,000
|
|
|
1,000,000
|
|
Amount outstanding
|
189,502
|
|
|
146,490
|
|
|
335,992
|
|
|
Amount available
|
$
|
310,498
|
|
|
353,510
|
|
|
664,008
|
|
Expiration of liquidity provisions
|
September 20, 2019
|
|
|
May 31, 2018
|
|
|
|||
Final maturity date
|
November 19, 2019
|
|
|
May 31, 2020
|
|
|
|||
Maximum advance rates
|
92.0 - 98.0%
|
|
|
85.0 - 95.0%
|
|
|
|
||
Minimum advance rates
|
84.0 - 90.0%
|
|
|
85.0 - 95.0%
|
|
|
|
||
Advanced as equity support
|
$
|
9,513
|
|
|
12,876
|
|
|
22,389
|
|
|
|
Securitizations completed during the year ended December 31, 2017
|
|||||||||||||
|
|
NSLT 2017-1
|
|
NSLT 2017-2
|
|
NSLT 2017-3
|
|
|
|
Total
|
|||||
Date securities issued
|
|
5/24/17
|
|
7/26/17
|
|
12/14/17
|
|
|
|
|
|||||
Total original principal amount
|
|
$
|
535,000
|
|
|
399,390
|
|
|
539,400
|
|
|
|
|
1,473,790
|
|
Bond discount
|
|
—
|
|
|
(2,002
|
)
|
|
—
|
|
|
|
|
(2,002
|
)
|
|
Issue price
|
|
$
|
535,000
|
|
|
397,388
|
|
|
539,400
|
|
|
|
|
1,471,788
|
|
Cost of funds:
|
|
1-month LIBOR plus 0.78%
|
|
1-month LIBOR plus 0.77%
|
|
1-month LIBOR plus 0.85%
|
|
|
|
|
|||||
Final maturity date
|
|
6/25/65
|
|
9/25/65
|
|
2/25/66
|
|
|
|
|
|
|
Securitizations completed during the year ended December 31, 2016
|
||||||||||||||||
|
|
FFELP 2016-1
|
|
Private education loan 2016-A (a)
|
|
Total
|
||||||||||||
|
|
|
|
Class A-1A notes
|
|
Class A-1B notes
|
|
2016-A total
|
|
|
||||||||
Date securities issued
|
|
10/12/16
|
|
12/21/16
|
|
12/21/16
|
|
12/21/16
|
|
|
||||||||
Total original principal amount
|
|
$
|
426,000
|
|
|
112,582
|
|
|
91,378
|
|
|
225,960
|
|
|
$
|
651,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Class A senior notes:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total original principal amount
|
|
$
|
426,000
|
|
|
112,582
|
|
|
91,378
|
|
|
203,960
|
|
|
629,960
|
|
||
Bond discount
|
|
—
|
|
|
—
|
|
|
(609
|
)
|
|
(609
|
)
|
|
(609
|
)
|
|||
Issue price
|
|
$
|
426,000
|
|
|
112,582
|
|
|
90,769
|
|
|
203,351
|
|
|
629,351
|
|
||
Cost of funds:
|
|
1-month LIBOR plus 0.80%
|
|
1-month LIBOR plus 1.75%
|
|
3.60%
|
|
|
|
|
||||||||
Final maturity date
|
|
9/25/65
|
|
12/26/40
|
|
12/26/40
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Class B subordinated notes:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total original principal amount
|
|
|
|
|
|
|
|
$
|
22,000
|
|
|
22,000
|
|
|||||
Bond discount
|
|
|
|
|
|
|
|
(285
|
)
|
|
(285
|
)
|
||||||
Issue price
|
|
|
|
|
|
|
|
$
|
21,715
|
|
|
21,715
|
|
|||||
Cost of funds:
|
|
|
|
|
|
|
|
5.35
|
%
|
|
|
|||||||
Final maturity date
|
|
|
|
|
|
|
|
12/28/43
|
|
|
|
(a)
|
On June 26, 2015, the Company entered into a
$275.0 million
private education loan warehouse facility. The Company funded all loans that were included in this warehouse in the Private Education Loan 2016-A securitization and terminated the private education loan warehouse facility on December 21, 2016.
|
•
|
A minimum consolidated net worth
|
•
|
A minimum adjusted EBITDA to corporate debt interest (over the last four rolling quarters)
|
•
|
A limitation on recourse indebtedness
|
•
|
A limitation on the amount of unsecuritized private education and consumer loans in the Company’s portfolio
|
•
|
A limitation on permitted investments, including business acquisitions that are not in one of the Company's existing lines of business
|
Issue
date
|
|
Debt
outstanding
|
|
Maturity
date
|
|
Interest
rate
|
||
December 30, 2015
|
|
$
|
12,000
|
|
|
March 31, 2023
|
|
3.38% - fixed
|
December 30, 2015
|
|
6,355
|
|
|
December 15, 2045
|
|
3.38% - fixed
|
|
October 31, 2017
|
|
1,743
|
|
|
March 31, 2023
|
|
1-month LIBOR plus 2.00%
|
2018
|
|
$
|
50,418
|
|
2019
|
|
189,502
|
|
|
2020
|
|
146,490
|
|
|
2021
|
|
33,410
|
|
|
2022
|
|
—
|
|
|
2023 and thereafter
|
|
21,307,307
|
|
|
|
|
$
|
21,727,127
|
|
|
Par value
|
|
Purchase price
|
|
Gain (loss)
|
|
Par value
|
|
Purchase price
|
|
Gain (loss)
|
|
Par value
|
|
Purchase price
|
|
Gain (loss)
|
||||||||||
|
Year ended December 31,
|
||||||||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||||||||||||||||||
Unsecured debt - Hybrid Securities
|
$
|
29,803
|
|
|
25,357
|
|
|
4,446
|
|
|
7,000
|
|
|
4,865
|
|
|
2,135
|
|
|
14,504
|
|
|
11,374
|
|
|
3,130
|
|
Asset-backed securities
|
154,407
|
|
|
155,951
|
|
|
(1,544
|
)
|
|
78,412
|
|
|
72,566
|
|
|
5,846
|
|
|
32,026
|
|
|
30,354
|
|
|
1,672
|
|
|
|
$
|
184,210
|
|
|
181,308
|
|
|
2,902
|
|
|
85,412
|
|
|
77,431
|
|
|
7,981
|
|
|
46,530
|
|
|
41,728
|
|
|
4,802
|
|
|
|
|
As of December 31, 2017
|
|
As of December 31, 2016
|
||||||||||
|
Maturity
|
|
Notional amount
|
|
Weighted average fixed rate paid by the Company (a)
|
|
Notional amount
|
|
Weighted average fixed rate paid by the Company (a)
|
||||||
|
|
|
|
|
|||||||||||
|
2017
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
750,000
|
|
|
0.99
|
%
|
|
2018
|
|
1,350,000
|
|
|
1.07
|
|
|
1,350,000
|
|
|
1.07
|
|
||
|
2019
|
|
3,250,000
|
|
|
0.97
|
|
|
3,250,000
|
|
|
0.97
|
|
||
|
2020
|
|
1,500,000
|
|
|
1.01
|
|
|
1,500,000
|
|
|
1.01
|
|
||
|
2023
|
|
750,000
|
|
|
2.28
|
|
|
—
|
|
|
—
|
|
||
|
2024
|
|
300,000
|
|
|
2.28
|
|
|
—
|
|
|
—
|
|
||
|
2025
|
|
100,000
|
|
|
2.32
|
|
|
100,000
|
|
|
2.32
|
|
||
|
2027
|
|
50,000
|
|
|
2.32
|
|
|
—
|
|
|
—
|
|
||
|
|
|
$
|
7,300,000
|
|
|
1.21
|
%
|
|
$
|
6,950,000
|
|
|
1.02
|
%
|
(a)
|
For all interest rate derivatives, the Company receives discrete three-month LIBOR.
|
Maturity
|
|
Notional amount
|
|
Weighted average fixed rate paid by the Company (a)
|
||
2036
|
|
$
|
25,000
|
|
|
4.28%
|
(a)
|
For all interest rate derivatives, the Company receives discrete three-month LIBOR.
|
|
Year ended December 31,
|
||||||||
|
2017
|
|
2016
|
|
2015
|
||||
Re-measurement of Euro Notes
|
$
|
(45,600
|
)
|
|
11,849
|
|
|
43,801
|
|
Change in fair value of cross currency interest rate swap
|
34,208
|
|
|
(1,954
|
)
|
|
(45,195
|
)
|
|
Total impact to consolidated statements of income - (expense) income (a)
|
$
|
(11,392
|
)
|
|
9,895
|
|
|
(1,394
|
)
|
(a)
|
The financial statement impact of the above items is included in "Derivative market value and foreign currency adjustments and derivative settlements, net" in the Company's consolidated statements of income.
|
|
Fair value of asset derivatives
|
|
Fair value of liability derivatives
|
|||||||||
|
As of
|
|
As of
|
|
As of
|
|
As of
|
|||||
|
December 31, 2017
|
|
December 31, 2016
|
|
December 31, 2017
|
|
December 31, 2016
|
|||||
1:3 basis swaps
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
2,624
|
|
Interest rate swaps - floor income hedges
|
—
|
|
|
81,159
|
|
|
—
|
|
|
256
|
|
|
Interest rate swap option - floor income hedge
|
543
|
|
|
2,977
|
|
|
—
|
|
|
—
|
|
|
Interest rate caps
|
275
|
|
|
1,152
|
|
|
—
|
|
|
—
|
|
|
Interest rate swaps - hybrid debt hedges
|
—
|
|
|
—
|
|
|
7,063
|
|
|
7,341
|
|
|
Cross-currency interest rate swap
|
—
|
|
|
—
|
|
|
—
|
|
|
67,605
|
|
|
Other
|
—
|
|
|
2,243
|
|
|
—
|
|
|
—
|
|
|
Total
|
$
|
818
|
|
|
87,531
|
|
|
7,063
|
|
|
77,826
|
|
|
|
|
|
Gross amounts not offset in the consolidated balance sheets
|
|
|
|||||||
Derivative assets
|
|
Gross amounts of recognized assets presented in the consolidated balance sheets
|
|
Derivatives subject to enforceable master netting arrangement
|
|
Cash collateral pledged
|
|
Net asset (liability)
|
|||||
Balance as of December 31, 2017
|
|
$
|
818
|
|
|
—
|
|
|
—
|
|
|
818
|
|
Balance as of December 31, 2016
|
|
87,531
|
|
|
(2,880
|
)
|
|
475
|
|
|
85,126
|
|
|
|
|
|
Gross amounts not offset in the consolidated balance sheets
|
|
|
|||||||
Derivative liabilities
|
|
Gross amounts of recognized liabilities presented in the consolidated balance sheets
|
|
Derivatives subject to enforceable master netting arrangement
|
|
Cash collateral pledged
|
|
Net asset (liability)
|
|||||
Balance as of December 31, 2017
|
|
$
|
(7,063
|
)
|
|
—
|
|
|
8,520
|
|
|
1,457
|
|
Balance as of December 31, 2016
|
|
(77,826
|
)
|
|
2,880
|
|
|
7,292
|
|
|
(67,654
|
)
|
|
|
Year ended December 31,
|
||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||
Settlements:
|
|
|
|
|
|
|
|
|
||
1:3 basis swaps
|
|
$
|
(3,069
|
)
|
|
1,493
|
|
|
1,058
|
|
Interest rate swaps - floor income hedges
|
|
10,838
|
|
|
(17,643
|
)
|
|
(23,041
|
)
|
|
Interest rate swaps - hybrid debt hedges
|
|
(781
|
)
|
|
(915
|
)
|
|
(1,012
|
)
|
|
Cross-currency interest rate swap
|
|
(6,321
|
)
|
|
(4,884
|
)
|
|
(1,255
|
)
|
|
Total settlements - income (expense)
|
|
667
|
|
|
(21,949
|
)
|
|
(24,250
|
)
|
|
Change in fair value:
|
|
|
|
|
|
|
|
|
|
|
1:3 basis swaps
|
|
(8,224
|
)
|
|
(2,938
|
)
|
|
12,292
|
|
|
Interest rate swaps - floor income hedges
|
|
3,585
|
|
|
64,111
|
|
|
20,103
|
|
|
Interest rate swap option - floor income hedge
|
|
(2,433
|
)
|
|
(281
|
)
|
|
(2,420
|
)
|
|
Interest rate caps
|
|
(893
|
)
|
|
(419
|
)
|
|
(1,365
|
)
|
|
Interest rate swaps - hybrid debt hedges
|
|
279
|
|
|
304
|
|
|
(295
|
)
|
|
Cross-currency interest rate swap
|
|
34,208
|
|
|
(1,954
|
)
|
|
(45,195
|
)
|
|
Other
|
|
(143
|
)
|
|
1,072
|
|
|
1,730
|
|
|
Total change in fair value - income (expense)
|
|
26,379
|
|
|
59,895
|
|
|
(15,150
|
)
|
|
Re-measurement of Euro Notes (foreign currency transaction adjustment) - income (expense)
|
|
(45,600
|
)
|
|
11,849
|
|
|
43,801
|
|
|
Derivative market value and foreign currency transaction adjustments and derivative settlements, net - income (expense)
|
|
$
|
(18,554
|
)
|
|
49,795
|
|
|
4,401
|
|
|
As of December 31, 2017
|
|
As of December 31, 2016
|
||||||||||||||||||||||
|
Amortized cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses (a)
|
|
Fair value
|
|
Amortized cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Fair value
|
||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||
Investments (at fair value):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Available-for-sale investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Student loan asset-backed and other debt securities (b)
|
$
|
71,943
|
|
|
5,056
|
|
|
(25
|
)
|
|
76,974
|
|
|
98,260
|
|
|
6,280
|
|
|
(641
|
)
|
|
103,899
|
|
|
Equity securities
|
1,630
|
|
|
2,298
|
|
|
—
|
|
|
3,928
|
|
|
720
|
|
|
1,930
|
|
|
(61
|
)
|
|
2,589
|
|
||
Total available-for-sale investments
|
$
|
73,573
|
|
|
7,354
|
|
|
(25
|
)
|
|
80,902
|
|
|
98,980
|
|
|
8,210
|
|
|
(702
|
)
|
|
106,488
|
|
|
Trading investments - equity securities
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
105
|
|
||||||||
Total available-for-sale and trading investments
|
|
|
|
|
|
|
80,902
|
|
|
|
|
|
|
|
|
106,593
|
|
||||||||
Other Investments and Notes Receivable (not measured at fair value):
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Venture capital and funds
|
|
|
|
|
|
|
84,752
|
|
|
|
|
|
|
|
|
69,789
|
|
||||||||
Real estate
|
|
|
|
|
|
|
49,464
|
|
|
|
|
|
|
|
|
48,379
|
|
||||||||
Notes receivable
|
|
|
|
|
|
|
16,393
|
|
|
|
|
|
|
|
|
17,031
|
|
||||||||
Tax liens and affordable housing
|
|
|
|
|
|
|
9,027
|
|
|
|
|
|
|
|
|
12,352
|
|
||||||||
Total investments and notes receivable
|
|
|
|
|
|
|
$
|
240,538
|
|
|
|
|
|
|
|
|
254,144
|
|
(a)
|
As of December 31,
2017
, the aggregate fair value of available-for-sale investments with unrealized losses was
$12.3 million
of which none had been in a continuous unrealized loss position for greater than 12 months. Because the Company currently has the intent and ability to retain these investments for an anticipated recovery in fair value, as of
December 31, 2017
, the Company considered the decline in market value of its available-for-sale investments to be temporary in nature and did not consider any of its investments other-than-temporarily impaired.
|
(b)
|
As of
December 31, 2017
, the stated maturities of substantially all of the Company's student loan asset-backed securities and other debt securities classified as available-for-sale were greater than 10 years.
|
|
|
Year ended December 31,
|
||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||
Available-for-sale securities:
|
|
|
|
|
|
|
||||
Gross realized gains
|
|
$
|
3,767
|
|
|
3,099
|
|
|
3,402
|
|
Gross realized losses
|
|
(1,239
|
)
|
|
(1,192
|
)
|
|
(447
|
)
|
|
Trading securities:
|
|
|
|
|
|
|
||||
Unrealized gains (losses), net
|
|
(14
|
)
|
|
525
|
|
|
(715
|
)
|
|
Realized gains (losses), net
|
|
—
|
|
|
341
|
|
|
(2,097
|
)
|
|
|
|
$
|
2,514
|
|
|
2,773
|
|
|
143
|
|
Cash and cash equivalents
|
|
$
|
334
|
|
Restricted cash
|
|
850
|
|
|
Accounts receivable
|
|
1,935
|
|
|
Property and equipment
|
|
32,479
|
|
|
Other assets
|
|
371
|
|
|
Intangible assets
|
|
11,410
|
|
|
Excess cost over fair value of net assets acquired (goodwill)
|
|
21,112
|
|
|
Other liabilities
|
|
(4,587
|
)
|
|
Bonds and notes payable
|
|
(13,904
|
)
|
|
Net assets acquired
|
|
50,000
|
|
|
Minority interest
|
|
(3,750
|
)
|
|
Total consideration paid by the Company
|
|
$
|
46,250
|
|
|
Weighted average remaining useful life as of December 31, 2017 (months)
|
|
As of December 31, 2017
|
|
As of December 31, 2016
|
|||
|
|
|
||||||
Amortizable intangible assets, net:
|
|
|
|
|
|
|||
Customer relationships (net of accumulated amortization of $12,715 and $8,548, respectively)
|
160
|
|
$
|
24,168
|
|
|
28,335
|
|
Trade names (net of accumulated amortization of $2,498 and $1,653, respectively)
|
89
|
|
9,074
|
|
|
9,919
|
|
|
Computer software (net of accumulated amortization of $10,013 and $5,675, respectively)
|
14
|
|
4,958
|
|
|
9,296
|
|
|
Covenants not to compete (net of accumulated amortization of $127 and $91, respectively)
|
77
|
|
227
|
|
|
263
|
|
|
Total - amortizable intangible assets, net
|
124
|
|
$
|
38,427
|
|
|
47,813
|
|
2018
|
$
|
10,428
|
|
2019
|
6,990
|
|
|
2020
|
3,789
|
|
|
2021
|
3,077
|
|
|
2022
|
2,474
|
|
|
2023 and thereafter
|
11,669
|
|
|
|
$
|
38,427
|
|
|
Loan Systems and Servicing
|
|
Tuition Payment Processing and Campus Commerce
|
|
Communications
|
|
Asset Generation and Management (a)
|
|
Corporate and Other Activities
|
|
Total
|
|||||||
Balance as of December 31, 2015
|
$
|
8,596
|
|
|
67,168
|
|
|
19,800
|
|
|
41,883
|
|
|
8,553
|
|
|
146,000
|
|
ALLO purchase price adjustment
|
—
|
|
|
—
|
|
|
1,312
|
|
|
—
|
|
|
—
|
|
|
1,312
|
|
|
Balance as of December 31, 2016
|
8,596
|
|
|
67,168
|
|
|
21,112
|
|
|
41,883
|
|
|
8,553
|
|
|
147,312
|
|
|
Impairment expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,626
|
)
|
|
(3,626
|
)
|
|
Sale of Peterson's
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,927
|
)
|
|
(4,927
|
)
|
|
Balance as of December 31, 2017
|
$
|
8,596
|
|
|
67,168
|
|
|
21,112
|
|
|
41,883
|
|
|
—
|
|
|
138,759
|
|
(a)
|
As a result of the Reconciliation Act of 2010, the Company no longer originates new FFELP loans, and net interest income from the Company's existing FFELP loan portfolio will decline over time as the Company's portfolio pays down. As a result, as this revenue stream winds down, goodwill impairment will be triggered for the Asset Generation and Management reporting unit due to the passage of time and depletion of projected cash flows stemming from its FFELP student loan portfolio. Management believes the elimination of new FFELP loan originations will not have an adverse impact on the fair value of the Company's other reporting units.
|
|
|
|
As of December 31,
|
|||||
|
Useful life
|
|
2017
|
|
2016
|
|||
Non-communications:
|
|
|
|
|
|
|||
Computer equipment and software
|
1-5 years
|
|
$
|
124,708
|
|
|
97,317
|
|
Building and building improvements
|
5-39 years
|
|
24,003
|
|
|
13,363
|
|
|
Office furniture and equipment
|
3-7 years
|
|
15,210
|
|
|
12,344
|
|
|
Leasehold improvements
|
5-15 years
|
|
7,759
|
|
|
3,579
|
|
|
Transportation equipment
|
4-10 years
|
|
3,813
|
|
|
3,809
|
|
|
Land
|
—
|
|
2,628
|
|
|
1,682
|
|
|
Construction in progress
|
—
|
|
4,127
|
|
|
16,346
|
|
|
|
|
|
182,248
|
|
|
148,440
|
|
|
Accumulated depreciation - non-communications
|
|
|
105,017
|
|
|
91,285
|
|
|
Non-communications, net property and equipment
|
|
|
77,231
|
|
|
57,155
|
|
|
|
|
|
|
|
|
|||
Communications:
|
|
|
|
|
|
|||
Network plant and fiber
|
5-15 years
|
|
138,122
|
|
|
40,844
|
|
|
Customer located property
|
5-10 years
|
|
13,767
|
|
|
5,138
|
|
|
Central office
|
5-15 years
|
|
10,754
|
|
|
6,448
|
|
|
Transportation equipment
|
4-10 years
|
|
5,759
|
|
|
2,966
|
|
|
Computer equipment and software
|
1-5 years
|
|
3,790
|
|
|
2,026
|
|
|
Other
|
1-39 years
|
|
2,516
|
|
|
1,268
|
|
|
Land
|
—
|
|
70
|
|
|
70
|
|
|
Construction in progress
|
—
|
|
11,620
|
|
|
12,537
|
|
|
|
|
|
186,398
|
|
|
71,297
|
|
|
Accumulated depreciation - communications
|
|
|
15,578
|
|
|
4,666
|
|
|
Communications, net property and equipment
|
|
|
170,820
|
|
|
66,631
|
|
|
Total property and equipment, net
|
|
|
$
|
248,051
|
|
|
123,786
|
|
|
|
Total shares repurchased
|
|
Purchase price (in thousands)
|
|
Average price of shares repurchased (per share)
|
|||||
Year ended December 31, 2017
|
|
1,473,054
|
|
|
$
|
68,896
|
|
|
$
|
46.77
|
|
Year ended December 31, 2016
|
|
2,038,368
|
|
|
69,091
|
|
|
33.90
|
|
||
Year ended December 31, 2015
|
|
2,449,159
|
|
|
96,169
|
|
|
39.27
|
|
|
Year ended December 31,
|
||||||||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||||||||||||||||||
|
Common shareholders
|
|
Unvested restricted stock shareholders
|
|
Total
|
|
Common shareholders
|
|
Unvested restricted stock shareholders
|
|
Total
|
|
Common shareholders
|
|
Unvested restricted stock shareholders
|
|
Total
|
||||||||||
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income attributable to Nelnet, Inc.
|
$
|
171,442
|
|
|
1,724
|
|
|
173,166
|
|
|
254,063
|
|
|
2,688
|
|
|
256,751
|
|
|
265,129
|
|
|
2,850
|
|
|
267,979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted-average common shares outstanding - basic and diluted
|
41,375,964
|
|
|
415,977
|
|
|
41,791,941
|
|
|
42,222,335
|
|
|
446,735
|
|
|
42,669,070
|
|
|
45,045,199
|
|
|
484,141
|
|
|
45,529,340
|
|
|
Earnings per share - basic and diluted
|
$
|
4.14
|
|
|
4.14
|
|
|
4.14
|
|
|
6.02
|
|
|
6.02
|
|
|
6.02
|
|
|
5.89
|
|
|
5.89
|
|
|
5.89
|
|
|
Year ended December 31,
|
|||||
|
2017
|
|
2016
|
|||
Gross balance - beginning of year
|
$
|
28,004
|
|
|
27,688
|
|
Additions based on tax positions of prior years
|
145
|
|
|
904
|
|
|
Additions based on tax positions related to the current year
|
2,903
|
|
|
4,347
|
|
|
Settlements with taxing authorities
|
—
|
|
|
—
|
|
|
Reductions for tax positions of prior years
|
(356
|
)
|
|
(3,088
|
)
|
|
Reductions based on tax positions related to the current year
|
—
|
|
|
—
|
|
|
Reductions due to lapse of applicable statutes of limitations
|
(2,275
|
)
|
|
(1,847
|
)
|
|
Gross balance - end of year
|
$
|
28,421
|
|
|
28,004
|
|
|
Year ended December 31,
|
||||||||
|
2017
|
|
2016
|
|
2015
|
||||
Current:
|
|
|
|
|
|
||||
Federal
|
$
|
65,196
|
|
|
111,302
|
|
|
140,778
|
|
State
|
1,246
|
|
|
3,019
|
|
|
4,530
|
|
|
Foreign
|
(35
|
)
|
|
(13
|
)
|
|
23
|
|
|
Total current provision
|
66,407
|
|
|
114,308
|
|
|
145,331
|
|
|
|
|
|
|
|
|
||||
Deferred:
|
|
|
|
|
|
||||
Federal
|
(8,270
|
)
|
|
25,423
|
|
|
3,572
|
|
|
State
|
6,618
|
|
|
1,976
|
|
|
3,875
|
|
|
Foreign
|
108
|
|
|
(394
|
)
|
|
(398
|
)
|
|
Total deferred provision
|
(1,544
|
)
|
|
27,005
|
|
|
7,049
|
|
|
Provision for income tax expense
|
$
|
64,863
|
|
|
141,313
|
|
|
152,380
|
|
|
Year ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Tax expense at federal rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Increase (decrease) resulting from:
|
|
|
|
|
|
|||
Reduction of statutory federal rate (a)
|
(8.0
|
)
|
|
—
|
|
|
—
|
|
State tax, net of federal income tax benefit
|
1.6
|
|
|
1.1
|
|
|
1.0
|
|
Provision for uncertain federal and state tax matters
|
—
|
|
|
—
|
|
|
0.9
|
|
Tax credits
|
(1.3
|
)
|
|
(0.6
|
)
|
|
(0.5
|
)
|
Other
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
Effective tax rate
|
27.3
|
%
|
|
35.5
|
%
|
|
36.3
|
%
|
(a)
|
The Tax Cuts and Jobs Act (the “Tax Act”), signed into law on December 22, 2017, changes existing United States tax law and includes numerous provisions that affect businesses, including the Company. The Tax Act, for instance, introduces changes that impact U.S. corporate tax rates, business-related exclusions, and deductions and credits.
|
|
As of December 31,
|
|||||
|
2017
|
|
2016
|
|||
Deferred tax assets:
|
|
|
|
|||
Student loans
|
$
|
13,532
|
|
|
20,980
|
|
Deferred revenue
|
3,246
|
|
|
2,699
|
|
|
Securitizations
|
2,970
|
|
|
5,675
|
|
|
Intangible assets
|
2,899
|
|
|
4,821
|
|
|
Accrued expenses
|
2,246
|
|
|
3,533
|
|
|
Stock compensation
|
1,744
|
|
|
2,948
|
|
|
Total gross deferred tax assets
|
26,637
|
|
|
40,656
|
|
|
Less valuation allowance
|
(254
|
)
|
|
(264
|
)
|
|
Net deferred tax assets
|
26,383
|
|
|
40,392
|
|
|
Deferred tax liabilities:
|
|
|
|
|||
Basis in certain derivative contracts
|
23,051
|
|
|
46,636
|
|
|
Partnership basis
|
21,474
|
|
|
4,976
|
|
|
Loan origination services
|
8,001
|
|
|
13,019
|
|
|
Depreciation
|
4,958
|
|
|
5,128
|
|
|
Debt repurchases
|
3,856
|
|
|
12,457
|
|
|
Debt and equity investments
|
1,767
|
|
|
3,246
|
|
|
Other
|
823
|
|
|
360
|
|
|
Total gross deferred tax liabilities
|
63,930
|
|
|
85,822
|
|
|
Net deferred tax liability
|
$
|
(37,547
|
)
|
|
(45,430
|
)
|
•
|
Income earned on certain investment activities
|
•
|
Interest expense incurred on unsecured debt transactions
|
•
|
Other product and service offerings that are not considered reportable operating segments including, but not limited to, WRCM, the SEC-registered investment advisor subsidiary
|
|
Year ended December 31, 2017
|
||||||||||||||||||||
|
Loan Systems and Servicing
|
|
Tuition Payment Processing and Campus Commerce
|
|
Communications
|
|
Asset
Generation and Management |
|
Corporate and Other Activities
|
|
Eliminations
|
|
Total
|
||||||||
Total interest income
|
$
|
513
|
|
|
17
|
|
|
3
|
|
|
764,225
|
|
|
13,643
|
|
|
(7,976
|
)
|
|
770,426
|
|
Interest expense
|
3
|
|
|
—
|
|
|
5,427
|
|
|
464,256
|
|
|
3,477
|
|
|
(7,976
|
)
|
|
465,188
|
|
|
Net interest income
|
510
|
|
|
17
|
|
|
(5,424
|
)
|
|
299,969
|
|
|
10,166
|
|
|
—
|
|
|
305,238
|
|
|
Less provision for loan losses
|
—
|
|
|
—
|
|
|
—
|
|
|
14,450
|
|
|
—
|
|
|
—
|
|
|
14,450
|
|
|
Net interest income (loss) after provision for loan losses
|
510
|
|
|
17
|
|
|
(5,424
|
)
|
|
285,519
|
|
|
10,166
|
|
|
—
|
|
|
290,788
|
|
|
Other income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Loan systems and servicing revenue
|
223,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
223,000
|
|
|
Intersegment servicing revenue
|
41,674
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(41,674
|
)
|
|
—
|
|
|
Tuition payment processing, school information, and campus commerce revenue
|
—
|
|
|
145,751
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
145,751
|
|
|
Communications revenue
|
—
|
|
|
—
|
|
|
25,700
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,700
|
|
|
Other income
|
—
|
|
|
—
|
|
|
—
|
|
|
13,424
|
|
|
39,402
|
|
|
—
|
|
|
52,826
|
|
|
Gain on sale of loans and debt repurchases, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,567
|
)
|
|
4,469
|
|
|
—
|
|
|
2,902
|
|
|
Derivative settlements, net
|
—
|
|
|
—
|
|
|
—
|
|
|
1,448
|
|
|
(781
|
)
|
|
—
|
|
|
667
|
|
|
Derivative market value and foreign currency transaction adjustments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(19,357
|
)
|
|
136
|
|
|
—
|
|
|
(19,221
|
)
|
|
Total other income
|
264,674
|
|
|
145,751
|
|
|
25,700
|
|
|
(6,052
|
)
|
|
43,226
|
|
|
(41,674
|
)
|
|
431,625
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Salaries and benefits
|
156,256
|
|
|
69,500
|
|
|
14,947
|
|
|
1,548
|
|
|
59,633
|
|
|
—
|
|
|
301,885
|
|
|
Depreciation and amortization
|
2,864
|
|
|
9,424
|
|
|
11,835
|
|
|
—
|
|
|
15,418
|
|
|
—
|
|
|
39,541
|
|
|
Loan servicing fees
|
—
|
|
|
—
|
|
|
—
|
|
|
22,734
|
|
|
—
|
|
|
—
|
|
|
22,734
|
|
|
Cost to provide communications services
|
—
|
|
|
—
|
|
|
9,950
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,950
|
|
|
Other expenses
|
39,126
|
|
|
19,138
|
|
|
8,074
|
|
|
3,900
|
|
|
51,381
|
|
|
—
|
|
|
121,619
|
|
|
Intersegment expenses, net
|
31,871
|
|
|
9,079
|
|
|
2,101
|
|
|
42,830
|
|
|
(44,208
|
)
|
|
(41,674
|
)
|
|
—
|
|
|
Total operating expenses
|
230,117
|
|
|
107,141
|
|
|
46,907
|
|
|
71,012
|
|
|
82,224
|
|
|
(41,674
|
)
|
|
495,729
|
|
|
Income (loss) before income taxes
|
35,067
|
|
|
38,627
|
|
|
(26,631
|
)
|
|
208,455
|
|
|
(28,832
|
)
|
|
—
|
|
|
226,684
|
|
|
Income tax (expense) benefit
|
(18,128
|
)
|
|
(14,678
|
)
|
|
10,120
|
|
|
(79,213
|
)
|
|
37,036
|
|
|
—
|
|
|
(64,863
|
)
|
|
Net income (loss)
|
16,939
|
|
|
23,949
|
|
|
(16,511
|
)
|
|
129,242
|
|
|
8,204
|
|
|
—
|
|
|
161,821
|
|
|
Net loss (income) attributable to noncontrolling interests
|
12,640
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,295
|
)
|
|
—
|
|
|
11,345
|
|
|
Net income (loss) attributable to Nelnet, Inc.
|
$
|
29,579
|
|
|
23,949
|
|
|
(16,511
|
)
|
|
129,242
|
|
|
6,909
|
|
|
—
|
|
|
173,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total assets as of December 31, 2017
|
$
|
122,330
|
|
|
250,351
|
|
|
214,336
|
|
|
22,910,974
|
|
|
877,859
|
|
|
(411,415
|
)
|
|
23,964,435
|
|
|
Year ended December 31, 2016
|
||||||||||||||||||||
|
Loan Systems and Servicing
|
|
Tuition Payment Processing and Campus Commerce
|
|
Communications
|
|
Asset
Generation and Management |
|
Corporate and Other Activities
|
|
Eliminations
|
|
Total
|
||||||||
Total interest income
|
$
|
111
|
|
|
9
|
|
|
1
|
|
|
754,788
|
|
|
10,913
|
|
|
(5,076
|
)
|
|
760,746
|
|
Interest expense
|
—
|
|
|
—
|
|
|
1,271
|
|
|
385,913
|
|
|
6,076
|
|
|
(5,076
|
)
|
|
388,183
|
|
|
Net interest income
|
111
|
|
|
9
|
|
|
(1,270
|
)
|
|
368,875
|
|
|
4,837
|
|
|
—
|
|
|
372,563
|
|
|
Less provision for loan losses
|
—
|
|
|
—
|
|
|
—
|
|
|
13,500
|
|
|
—
|
|
|
—
|
|
|
13,500
|
|
|
Net interest income (loss) after provision for loan losses
|
111
|
|
|
9
|
|
|
(1,270
|
)
|
|
355,375
|
|
|
4,837
|
|
|
—
|
|
|
359,063
|
|
|
Other income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Loan systems and servicing revenue
|
214,846
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
214,846
|
|
|
Intersegment servicing revenue
|
45,381
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(45,381
|
)
|
|
—
|
|
|
Tuition payment processing, school information, and campus commerce revenue
|
—
|
|
|
132,730
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
132,730
|
|
|
Communications revenue
|
—
|
|
|
—
|
|
|
17,659
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,659
|
|
|
Enrollment services revenue
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,326
|
|
|
—
|
|
|
4,326
|
|
|
Other income
|
—
|
|
|
—
|
|
|
—
|
|
|
15,709
|
|
|
38,221
|
|
|
—
|
|
|
53,929
|
|
|
Gain on sale of loans and debt repurchases, net
|
—
|
|
|
—
|
|
|
—
|
|
|
5,846
|
|
|
2,135
|
|
|
—
|
|
|
7,981
|
|
|
Derivative settlements, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,034
|
)
|
|
(915
|
)
|
|
—
|
|
|
(21,949
|
)
|
|
Derivative market value and foreign currency transaction adjustments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
70,368
|
|
|
1,376
|
|
|
—
|
|
|
71,744
|
|
|
Total other income
|
260,227
|
|
|
132,730
|
|
|
17,659
|
|
|
70,889
|
|
|
45,143
|
|
|
(45,381
|
)
|
|
481,266
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Salaries and benefits
|
132,072
|
|
|
62,329
|
|
|
7,649
|
|
|
1,985
|
|
|
51,889
|
|
|
—
|
|
|
255,924
|
|
|
Depreciation and amortization
|
1,980
|
|
|
10,595
|
|
|
6,060
|
|
|
—
|
|
|
15,298
|
|
|
—
|
|
|
33,933
|
|
|
Loan servicing fees
|
—
|
|
|
—
|
|
|
—
|
|
|
25,750
|
|
|
—
|
|
|
—
|
|
|
25,750
|
|
|
Cost to provide communications services
|
—
|
|
|
—
|
|
|
6,866
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,866
|
|
|
Cost to provide enrollment services
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,623
|
|
|
—
|
|
|
3,623
|
|
|
Other expenses
|
40,715
|
|
|
18,486
|
|
|
4,370
|
|
|
6,005
|
|
|
45,843
|
|
|
—
|
|
|
115,419
|
|
|
Intersegment expenses, net
|
24,204
|
|
|
6,615
|
|
|
958
|
|
|
46,494
|
|
|
(32,889
|
)
|
|
(45,381
|
)
|
|
—
|
|
|
Total operating expenses
|
198,971
|
|
|
98,025
|
|
|
25,903
|
|
|
80,234
|
|
|
83,764
|
|
|
(45,381
|
)
|
|
441,515
|
|
|
Income (loss) before income taxes
|
61,367
|
|
|
34,714
|
|
|
(9,514
|
)
|
|
346,030
|
|
|
(33,784
|
)
|
|
—
|
|
|
398,814
|
|
|
Income tax (expense) benefit
|
(23,319
|
)
|
|
(13,191
|
)
|
|
3,615
|
|
|
(131,492
|
)
|
|
23,074
|
|
|
—
|
|
|
(141,313
|
)
|
|
Net income (loss)
|
38,048
|
|
|
21,523
|
|
|
(5,899
|
)
|
|
214,538
|
|
|
(10,710
|
)
|
|
—
|
|
|
257,501
|
|
|
Net loss (income) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(750
|
)
|
|
—
|
|
|
(750
|
)
|
|
Net income (loss) attributable to Nelnet, Inc.
|
$
|
38,048
|
|
|
21,523
|
|
|
(5,899
|
)
|
|
214,538
|
|
|
(11,460
|
)
|
|
—
|
|
|
256,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total assets as of December 31, 2016
|
$
|
55,469
|
|
|
230,283
|
|
|
103,104
|
|
|
26,378,467
|
|
|
682,459
|
|
|
(256,687
|
)
|
|
27,193,095
|
|
|
Year ended December 31, 2015 (a)
|
||||||||||||||||||||
|
Loan Systems and Servicing
|
|
Tuition Payment Processing and Campus Commerce
|
|
Communications
|
|
Asset
Generation and Management |
|
Corporate and Other Activities
|
|
Eliminations
|
|
Total
|
||||||||
Total interest income
|
$
|
49
|
|
|
3
|
|
|
—
|
|
|
728,199
|
|
|
7,686
|
|
|
(1,828
|
)
|
|
734,109
|
|
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
297,625
|
|
|
6,413
|
|
|
(1,828
|
)
|
|
302,210
|
|
|
Net interest income
|
49
|
|
|
3
|
|
|
—
|
|
|
430,574
|
|
|
1,273
|
|
|
—
|
|
|
431,899
|
|
|
Less provision for loan losses
|
—
|
|
|
—
|
|
|
—
|
|
|
10,150
|
|
|
—
|
|
|
—
|
|
|
10,150
|
|
|
Net interest income (loss) after provision for loan losses
|
49
|
|
|
3
|
|
|
—
|
|
|
420,424
|
|
|
1,273
|
|
|
—
|
|
|
421,749
|
|
|
Other income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Loan systems and servicing revenue
|
239,858
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
239,858
|
|
|
Intersegment servicing revenue
|
50,354
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50,354
|
)
|
|
—
|
|
|
Tuition payment processing, school information, and campus commerce revenue
|
—
|
|
|
120,365
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
120,365
|
|
|
Enrollment services revenue
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51,073
|
|
|
—
|
|
|
51,073
|
|
|
Other income
|
—
|
|
|
(925
|
)
|
|
—
|
|
|
15,939
|
|
|
32,248
|
|
|
—
|
|
|
47,262
|
|
|
Gain on sale of loans and debt repurchases, net
|
—
|
|
|
—
|
|
|
—
|
|
|
2,034
|
|
|
3,119
|
|
|
—
|
|
|
5,153
|
|
|
Derivative settlements, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,238
|
)
|
|
(1,012
|
)
|
|
—
|
|
|
(24,250
|
)
|
|
Derivative market value and foreign currency transaction adjustments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
27,216
|
|
|
1,435
|
|
|
—
|
|
|
28,651
|
|
|
Total other income
|
290,212
|
|
|
119,440
|
|
|
—
|
|
|
21,951
|
|
|
86,863
|
|
|
(50,354
|
)
|
|
468,112
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Salaries and benefits
|
134,635
|
|
|
55,523
|
|
|
—
|
|
|
2,172
|
|
|
55,585
|
|
|
—
|
|
|
247,914
|
|
|
Depreciation and amortization
|
1,931
|
|
|
8,992
|
|
|
—
|
|
|
—
|
|
|
15,420
|
|
|
—
|
|
|
26,343
|
|
|
Loan servicing fees
|
—
|
|
|
—
|
|
|
—
|
|
|
30,213
|
|
|
—
|
|
|
—
|
|
|
30,213
|
|
|
Cost to provide enrollment services
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41,733
|
|
|
—
|
|
|
41,733
|
|
|
Other expenses
|
57,799
|
|
|
15,161
|
|
|
—
|
|
|
5,083
|
|
|
44,971
|
|
|
—
|
|
|
123,014
|
|
|
Intersegment expenses, net
|
29,706
|
|
|
8,617
|
|
|
—
|
|
|
50,899
|
|
|
(38,868
|
)
|
|
(50,354
|
)
|
|
—
|
|
|
Total operating expenses
|
224,071
|
|
|
88,293
|
|
|
—
|
|
|
88,367
|
|
|
118,841
|
|
|
(50,354
|
)
|
|
469,217
|
|
|
Income (loss) before income taxes
|
66,190
|
|
|
31,150
|
|
|
—
|
|
|
354,008
|
|
|
(30,705
|
)
|
|
—
|
|
|
420,644
|
|
|
Income tax (expense) benefit
|
(25,153
|
)
|
|
(11,838
|
)
|
|
—
|
|
|
(134,522
|
)
|
|
19,132
|
|
|
—
|
|
|
(152,380
|
)
|
|
Net income (loss)
|
41,037
|
|
|
19,312
|
|
|
—
|
|
|
219,486
|
|
|
(11,573
|
)
|
|
—
|
|
|
268,264
|
|
|
Net loss (income) attributable to noncontrolling interests
|
20
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(305
|
)
|
|
—
|
|
|
(285
|
)
|
|
Net income (loss) attributable to Nelnet, Inc.
|
$
|
41,057
|
|
|
19,312
|
|
|
—
|
|
|
219,486
|
|
|
(11,878
|
)
|
|
—
|
|
|
267,979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total assets as of December 31, 2015
|
$
|
80,459
|
|
|
229,615
|
|
|
68,760
|
|
|
29,634,280
|
|
|
624,953
|
|
|
(218,923
|
)
|
|
30,419,144
|
|
2018
|
$
|
5,277
|
|
2019
|
4,337
|
|
|
2020
|
3,628
|
|
|
2021
|
2,002
|
|
|
2022
|
1,649
|
|
|
2023 and thereafter
|
4,857
|
|
|
Total minimum lease payments
|
$
|
21,750
|
|
|
Year ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Non-vested shares at beginning of year
|
447,380
|
|
|
471,597
|
|
|
499,463
|
|
Granted
|
107,237
|
|
|
123,181
|
|
|
126,946
|
|
Vested
|
(131,988
|
)
|
|
(113,507
|
)
|
|
(108,424
|
)
|
Canceled
|
(24,419
|
)
|
|
(33,891
|
)
|
|
(46,388
|
)
|
Non-vested shares at end of year
|
398,210
|
|
|
447,380
|
|
|
471,597
|
|
2018
|
$
|
3,211
|
|
2019
|
1,960
|
|
|
2020
|
1,211
|
|
|
2021
|
731
|
|
|
2022
|
439
|
|
|
2023 and thereafter
|
596
|
|
|
|
$
|
8,148
|
|
|
Shares issued - not deferred
|
|
Shares- deferred
|
|
Total
|
|||
Year ended December 31, 2017
|
6,855
|
|
|
10,974
|
|
|
17,829
|
|
Year ended December 31, 2016
|
10,799
|
|
|
13,644
|
|
|
24,443
|
|
Year ended December 31, 2015
|
8,164
|
|
|
10,406
|
|
|
18,570
|
|
20.
|
Related Parties
|
|
As of December 31, 2017
|
|
As of December 31, 2016
|
|||||||||||||||
|
Level 1
|
|
Level 2
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Total
|
|||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Investments (available-for-sale and trading): (a)
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Student loan and other asset-backed securities
|
$
|
—
|
|
|
76,866
|
|
|
76,866
|
|
|
—
|
|
|
103,780
|
|
|
103,780
|
|
Equity securities
|
3,928
|
|
|
—
|
|
|
3,928
|
|
|
2,694
|
|
|
—
|
|
|
2,694
|
|
|
Debt securities
|
108
|
|
|
—
|
|
|
108
|
|
|
119
|
|
|
—
|
|
|
119
|
|
|
Total investments (available-for-sale and trading)
|
4,036
|
|
|
76,866
|
|
|
80,902
|
|
|
2,813
|
|
|
103,780
|
|
|
106,593
|
|
|
Derivative instruments (b)
|
—
|
|
|
818
|
|
|
818
|
|
|
—
|
|
|
87,531
|
|
|
87,531
|
|
|
Total assets
|
$
|
4,036
|
|
|
77,684
|
|
|
81,720
|
|
|
2,813
|
|
|
191,311
|
|
|
194,124
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Derivative instruments (b):
|
$
|
—
|
|
|
7,063
|
|
|
7,063
|
|
|
—
|
|
|
77,826
|
|
|
77,826
|
|
Total liabilities
|
$
|
—
|
|
|
7,063
|
|
|
7,063
|
|
|
—
|
|
|
77,826
|
|
|
77,826
|
|
(a)
|
Investments represent investments recorded at fair value on a recurring basis. Level 1 investments are measured based upon quoted prices and include investments traded on an active exchange, such as the New York Stock Exchange, and corporate bonds, mortgage-backed securities, U.S. government bonds, and U.S. Treasury securities that trade in active markets. Level 2 investments include student loan asset-backed securities. The fair value for the student loan asset-backed securities is determined using indicative quotes from broker-dealers or an income approach valuation technique (present value using the discount rate adjustment technique) that considers, among other things, rates currently observed in publicly traded debt markets for debt of similar terms issued by companies with comparable credit risk.
|
(b)
|
All derivatives are accounted for at fair value on a recurring basis. The fair value of derivative financial instruments is determined using a market approach in which derivative pricing models use the stated terms of the contracts and observable yield curves, forward foreign currency exchange rates, and volatilities from active markets.
|
|
As of December 31, 2017
|
||||||||||||||
|
Fair value
|
|
Carrying value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
||||||
Loans receivable
|
$
|
23,106,440
|
|
|
21,814,507
|
|
|
—
|
|
|
—
|
|
|
23,106,440
|
|
Cash and cash equivalents
|
66,752
|
|
|
66,752
|
|
|
66,752
|
|
|
—
|
|
|
—
|
|
|
Investments (available-for-sale)
|
80,902
|
|
|
80,902
|
|
|
4,036
|
|
|
76,866
|
|
|
—
|
|
|
Notes receivable
|
16,393
|
|
|
16,393
|
|
|
—
|
|
|
16,393
|
|
|
—
|
|
|
Restricted cash
|
688,193
|
|
|
688,193
|
|
|
688,193
|
|
|
—
|
|
|
—
|
|
|
Restricted cash – due to customers
|
187,121
|
|
|
187,121
|
|
|
187,121
|
|
|
—
|
|
|
—
|
|
|
Accrued interest receivable
|
430,385
|
|
|
430,385
|
|
|
—
|
|
|
430,385
|
|
|
—
|
|
|
Derivative instruments
|
818
|
|
|
818
|
|
|
—
|
|
|
818
|
|
|
—
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Bonds and notes payable
|
21,521,463
|
|
|
21,356,573
|
|
|
—
|
|
|
21,521,463
|
|
|
—
|
|
|
Accrued interest payable
|
50,039
|
|
|
50,039
|
|
|
—
|
|
|
50,039
|
|
|
—
|
|
|
Due to customers
|
187,121
|
|
|
187,121
|
|
|
187,121
|
|
|
—
|
|
|
—
|
|
|
Derivative instruments
|
7,063
|
|
|
7,063
|
|
|
—
|
|
|
7,063
|
|
|
—
|
|
|
As of December 31, 2016
|
||||||||||||||
|
Fair value
|
|
Carrying value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
||||||
Loans receivable
|
$
|
25,653,581
|
|
|
24,903,724
|
|
|
—
|
|
|
—
|
|
|
25,653,581
|
|
Cash and cash equivalents
|
69,654
|
|
|
69,654
|
|
|
69,654
|
|
|
—
|
|
|
—
|
|
|
Investments (available-for-sale and trading)
|
106,593
|
|
|
106,593
|
|
|
2,813
|
|
|
103,780
|
|
|
—
|
|
|
Notes receivable
|
17,031
|
|
|
17,031
|
|
|
—
|
|
|
17,031
|
|
|
—
|
|
|
Restricted cash
|
980,961
|
|
|
980,961
|
|
|
980,961
|
|
|
—
|
|
|
—
|
|
|
Restricted cash – due to customers
|
119,702
|
|
|
119,702
|
|
|
119,702
|
|
|
—
|
|
|
—
|
|
|
Accrued interest receivable
|
391,264
|
|
|
391,264
|
|
|
—
|
|
|
391,264
|
|
|
—
|
|
|
Derivative instruments
|
87,531
|
|
|
87,531
|
|
|
—
|
|
|
87,531
|
|
|
—
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Bonds and notes payable
|
24,220,996
|
|
|
24,668,490
|
|
|
—
|
|
|
24,220,996
|
|
|
—
|
|
|
Accrued interest payable
|
45,677
|
|
|
45,677
|
|
|
—
|
|
|
45,677
|
|
|
—
|
|
|
Due to customers
|
119,702
|
|
|
119,702
|
|
|
119,702
|
|
|
—
|
|
|
—
|
|
|
Derivative instruments
|
77,826
|
|
|
77,826
|
|
|
—
|
|
|
77,826
|
|
|
—
|
|
|
2017
|
|||||||||||
|
First quarter
|
|
Second quarter
|
|
Third quarter
|
|
Fourth quarter
|
|||||
Net interest income
|
$
|
76,925
|
|
|
79,842
|
|
|
75,237
|
|
|
73,235
|
|
Less provision for loan losses
|
1,000
|
|
|
3,000
|
|
|
6,700
|
|
|
3,750
|
|
|
Net interest income after provision for loan losses
|
75,925
|
|
|
76,842
|
|
|
68,537
|
|
|
69,485
|
|
|
Loan systems and servicing revenue
|
54,229
|
|
|
56,899
|
|
|
55,950
|
|
|
55,921
|
|
|
Tuition payment processing, school information, and campus commerce revenue
|
43,620
|
|
|
34,224
|
|
|
35,450
|
|
|
32,457
|
|
|
Communications revenue
|
5,106
|
|
|
5,719
|
|
|
6,751
|
|
|
8,122
|
|
|
Other income
|
12,632
|
|
|
12,485
|
|
|
19,756
|
|
|
7,952
|
|
|
Gain on sale of loans and debt repurchases, net
|
4,980
|
|
|
442
|
|
|
116
|
|
|
(2,635
|
)
|
|
Derivative market value and foreign currency transaction adjustments and derivative settlements, net
|
(4,830
|
)
|
|
(27,910
|
)
|
|
7,173
|
|
|
7,014
|
|
|
Salaries and benefits
|
(71,863
|
)
|
|
(74,628
|
)
|
|
(74,193
|
)
|
|
(81,201
|
)
|
|
Depreciation and amortization
|
(8,598
|
)
|
|
(9,038
|
)
|
|
(10,051
|
)
|
|
(11,854
|
)
|
|
Loan servicing fees
|
(6,025
|
)
|
|
(5,628
|
)
|
|
(8,017
|
)
|
|
(3,064
|
)
|
|
Cost to provide communications services
|
(1,954
|
)
|
|
(2,203
|
)
|
|
(2,632
|
)
|
|
(3,160
|
)
|
|
Operating expenses
|
(26,547
|
)
|
|
(26,521
|
)
|
|
(29,743
|
)
|
|
(38,809
|
)
|
|
Income tax (expense) benefit
|
(28,755
|
)
|
|
(16,032
|
)
|
|
(25,562
|
)
|
|
5,486
|
|
|
Net income
|
47,920
|
|
|
24,651
|
|
|
43,535
|
|
|
45,714
|
|
|
Net loss (income) attributable to noncontrolling interests
|
2,106
|
|
|
4,086
|
|
|
2,768
|
|
|
2,386
|
|
|
Net income attributable to Nelnet, Inc.
|
$
|
50,026
|
|
|
28,737
|
|
|
46,303
|
|
|
48,100
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|||||
Net income attributable to Nelnet, Inc. shareholders - basic and diluted
|
$
|
1.18
|
|
|
0.68
|
|
|
1.11
|
|
|
1.17
|
|
|
2016
|
|||||||||||
|
First quarter
|
|
Second quarter
|
|
Third quarter
|
|
Fourth quarter
|
|||||
Net interest income
|
$
|
101,609
|
|
|
92,200
|
|
|
99,795
|
|
|
78,960
|
|
Less provision for loan losses
|
2,500
|
|
|
2,000
|
|
|
6,000
|
|
|
3,000
|
|
|
Net interest income after provision for loan losses
|
99,109
|
|
|
90,200
|
|
|
93,795
|
|
|
75,960
|
|
|
Loan systems and servicing revenue
|
52,330
|
|
|
54,402
|
|
|
54,350
|
|
|
53,764
|
|
|
Tuition payment processing, school information, and campus commerce revenue
|
38,657
|
|
|
30,483
|
|
|
33,071
|
|
|
30,519
|
|
|
Communications revenue
|
4,346
|
|
|
4,478
|
|
|
4,343
|
|
|
4,492
|
|
|
Enrollment services revenue
|
4,326
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other income
|
13,796
|
|
|
9,765
|
|
|
15,150
|
|
|
15,218
|
|
|
Gain on sale of loans and debt repurchases, net
|
101
|
|
|
—
|
|
|
2,160
|
|
|
5,720
|
|
|
Derivative market value and foreign currency transaction adjustments and derivative settlements, net
|
(28,691
|
)
|
|
(40,702
|
)
|
|
36,001
|
|
|
83,187
|
|
|
Salaries and benefits
|
(63,242
|
)
|
|
(60,923
|
)
|
|
(63,743
|
)
|
|
(68,017
|
)
|
|
Depreciation and amortization
|
(7,640
|
)
|
|
(8,183
|
)
|
|
(8,994
|
)
|
|
(9,116
|
)
|
|
Loan servicing fees
|
(6,928
|
)
|
|
(7,216
|
)
|
|
(5,880
|
)
|
|
(5,726
|
)
|
|
Cost to provide communications services
|
(1,703
|
)
|
|
(1,681
|
)
|
|
(1,784
|
)
|
|
(1,697
|
)
|
|
Cost to provide enrollment services
|
(3,623
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Operating expenses
|
(28,376
|
)
|
|
(29,409
|
)
|
|
(26,391
|
)
|
|
(31,245
|
)
|
|
Income tax (expense) benefit
|
(24,433
|
)
|
|
(15,036
|
)
|
|
(47,715
|
)
|
|
(54,128
|
)
|
|
Net income
|
48,029
|
|
|
26,178
|
|
|
84,363
|
|
|
98,931
|
|
|
Net loss (income) attributable to noncontrolling interests
|
(68
|
)
|
|
(28
|
)
|
|
(69
|
)
|
|
(585
|
)
|
|
Net income attributable to Nelnet, Inc.
|
$
|
47,961
|
|
|
26,150
|
|
|
84,294
|
|
|
98,346
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|||||
Net income attributable to Nelnet, Inc. shareholders - basic and diluted
|
$
|
1.11
|
|
|
0.61
|
|
|
1.98
|
|
|
2.32
|
|
Statements of Income
|
|||||||||
(Parent Company Only)
|
|||||||||
Years ended December 31, 2017, 2016, and 2015
|
|||||||||
|
2017
|
|
2016
|
|
2015
|
||||
Investment interest income
|
$
|
13,060
|
|
|
9,794
|
|
|
5,776
|
|
Interest expense on bonds and notes payable
|
3,315
|
|
|
6,049
|
|
|
6,242
|
|
|
Net interest income (expense)
|
9,745
|
|
|
3,745
|
|
|
(466
|
)
|
|
Other income:
|
|
|
|
|
|
|
|
|
|
Other income
|
3,483
|
|
|
7,037
|
|
|
4,012
|
|
|
Gain from debt repurchases, net
|
2,964
|
|
|
8,083
|
|
|
4,904
|
|
|
Equity in subsidiaries income
|
170,897
|
|
|
239,405
|
|
|
276,825
|
|
|
Derivative market value adjustments and derivative settlements, net
|
(603
|
)
|
|
45,203
|
|
|
8,416
|
|
|
Total other income
|
176,741
|
|
|
299,728
|
|
|
294,157
|
|
|
Operating expenses
|
6,117
|
|
|
8,183
|
|
|
5,057
|
|
|
Income before income taxes
|
180,369
|
|
|
295,290
|
|
|
288,634
|
|
|
Income tax expense
|
7,491
|
|
|
38,642
|
|
|
20,655
|
|
|
Net income
|
172,878
|
|
|
256,648
|
|
|
267,979
|
|
|
Net loss attributable to noncontrolling interest
|
288
|
|
|
103
|
|
|
—
|
|
|
Net income attributable to Nelnet, Inc.
|
$
|
173,166
|
|
|
256,751
|
|
|
267,979
|
|
Statements of Comprehensive Income
|
|||||||||
(Parent Company Only)
|
|||||||||
Years ended December 31, 2017, 2016, and 2015
|
|||||||||
|
2017
|
|
2016
|
|
2015
|
||||
Net income
|
$
|
172,878
|
|
|
256,648
|
|
|
267,979
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||||
Available-for-sale securities:
|
|
|
|
|
|
||||
Unrealized holding gains (losses) arising during period, net
|
2,349
|
|
|
5,789
|
|
|
(1,570
|
)
|
|
Reclassification adjustment for gains recognized in net income, net of losses
|
(2,528
|
)
|
|
(1,907
|
)
|
|
(2,955
|
)
|
|
Income tax effect
|
66
|
|
|
(1,436
|
)
|
|
1,674
|
|
|
Total other comprehensive (loss) income
|
(113
|
)
|
|
2,446
|
|
|
(2,851
|
)
|
|
Comprehensive income
|
172,765
|
|
|
259,094
|
|
|
265,128
|
|
|
Comprehensive loss attributable to noncontrolling interest
|
288
|
|
|
103
|
|
|
—
|
|
|
Comprehensive income attributable to Nelnet, Inc.
|
$
|
173,053
|
|
|
259,197
|
|
|
265,128
|
|
Statements of Cash Flows
|
|||||||||
(Parent Company Only)
|
|||||||||
Years ended December 31, 2017, 2016, and 2015
|
|||||||||
|
2017
|
|
2016
|
|
2015
|
||||
Net income attributable to Nelnet, Inc.
|
$
|
173,166
|
|
|
256,751
|
|
|
267,979
|
|
Net loss attributable to noncontrolling interest
|
(288
|
)
|
|
(103
|
)
|
|
—
|
|
|
Net income
|
172,878
|
|
|
256,648
|
|
|
267,979
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||
Depreciation and amortization
|
420
|
|
|
391
|
|
|
327
|
|
|
Derivative market value adjustment
|
7,591
|
|
|
(62,268
|
)
|
|
(31,411
|
)
|
|
Proceeds from termination of derivative instruments, net of payments
|
2,100
|
|
|
3,999
|
|
|
65,527
|
|
|
Payment to enter into derivative instrument
|
(929
|
)
|
|
—
|
|
|
—
|
|
|
Proceeds from clearinghouse to settle variation margin, net
|
48,985
|
|
|
—
|
|
|
—
|
|
|
Equity in earnings of subsidiaries
|
(170,897
|
)
|
|
(239,405
|
)
|
|
(276,825
|
)
|
|
Gain from sales of available-for-sale securities, net of losses
|
(2,528
|
)
|
|
(1,907
|
)
|
|
(2,955
|
)
|
|
Gain from debt repurchases, net
|
(2,964
|
)
|
|
(8,083
|
)
|
|
(4,904
|
)
|
|
Deferred income tax (benefit) expense
|
(8,056
|
)
|
|
20,071
|
|
|
3,228
|
|
|
Non-cash compensation expense
|
4,416
|
|
|
4,348
|
|
|
5,347
|
|
|
Other
|
2,967
|
|
|
1,117
|
|
|
1,946
|
|
|
Decrease (increase) in other assets
|
4,171
|
|
|
32,262
|
|
|
(8,541
|
)
|
|
Increase (decrease) in other liabilities
|
10,104
|
|
|
(594
|
)
|
|
6,597
|
|
|
Net cash provided by operating activities
|
68,258
|
|
|
6,579
|
|
|
26,315
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
||||
(Increase) decrease in restricted cash
|
(9,004
|
)
|
|
6,997
|
|
|
(13,825
|
)
|
|
Purchases of available-for-sale securities
|
(127,567
|
)
|
|
(94,920
|
)
|
|
(98,332
|
)
|
|
Proceeds from sales of available-for-sale securities
|
156,727
|
|
|
139,427
|
|
|
94,722
|
|
|
Capital contributions/distributions to/from subsidiaries, net
|
29,426
|
|
|
223,386
|
|
|
120,291
|
|
|
(Increase) decrease in notes receivable from subsidiaries
|
(50,793
|
)
|
|
8,561
|
|
|
(84,061
|
)
|
|
Proceeds from investments and notes receivable
|
4,823
|
|
|
9,952
|
|
|
12,253
|
|
|
(Purchases of) proceeds from subsidiary debt, net
|
(3,844
|
)
|
|
(13,800
|
)
|
|
72,125
|
|
|
Purchases of investments and issuances of notes receivable
|
(18,023
|
)
|
|
(4,365
|
)
|
|
(53,388
|
)
|
|
Business acquisition, net of cash acquired
|
—
|
|
|
—
|
|
|
(45,916
|
)
|
|
Net cash (used in) provided by investing activities
|
(18,255
|
)
|
|
275,238
|
|
|
3,869
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
||||
Payments on notes payable
|
(27,480
|
)
|
|
(412,000
|
)
|
|
(42,541
|
)
|
|
Proceeds from issuance of notes payable
|
61,059
|
|
|
230,000
|
|
|
116,460
|
|
|
Payments of debt issuance costs
|
—
|
|
|
(613
|
)
|
|
(773
|
)
|
|
Dividends paid
|
(24,097
|
)
|
|
(21,188
|
)
|
|
(19,025
|
)
|
|
Repurchases of common stock
|
(68,896
|
)
|
|
(69,091
|
)
|
|
(96,169
|
)
|
|
Proceeds from issuance of common stock
|
678
|
|
|
889
|
|
|
801
|
|
|
Issuance of noncontrolling interest
|
—
|
|
|
501
|
|
|
—
|
|
|
Distribution to noncontrolling interest
|
—
|
|
|
—
|
|
|
(230
|
)
|
|
Net cash used in financing activities
|
(58,736
|
)
|
|
(271,502
|
)
|
|
(41,477
|
)
|
|
Net (decrease) increase in cash and cash equivalents
|
(8,733
|
)
|
|
10,315
|
|
|
(11,293
|
)
|
|
Cash and cash equivalents, beginning of period
|
29,734
|
|
|
19,419
|
|
|
30,712
|
|
|
Cash and cash equivalents, end of period
|
$
|
21,001
|
|
|
29,734
|
|
|
19,419
|
|
|
|
|
|
|
|
||||
Cash disbursements made for:
|
|
|
|
|
|
||||
Interest
|
$
|
2,882
|
|
|
5,533
|
|
|
5,914
|
|
Income taxes, net of refunds
|
$
|
96,721
|
|
|
115,415
|
|
|
147,130
|
|
|
|
|
|
|
|
||||
Noncash investing and financing activities:
|
|
|
|
|
|
||||
Issuance of noncontrolling interest
|
$
|
—
|
|
|
—
|
|
|
3,750
|
|
Contributions of investments to subsidiaries, net
|
$
|
2,092
|
|
|
1,884
|
|
|
—
|
|
•
|
Had been accepted for enrollment or was enrolled in good standing at an eligible institution of higher education;
|
•
|
Was carrying or planning to carry at least one-half the normal full-time workload, as determined by the institution, for the course of study the student was pursuing;
|
•
|
Was not in default on any federal education loans;
|
•
|
Had not committed a crime involving fraud in obtaining funds under the Higher Education Act which funds had not been fully repaid; and
|
•
|
Met other applicable eligibility requirements.
|
•
|
Subsidized Stafford Loans
|
•
|
Unsubsidized Stafford Loans
|
•
|
PLUS Loans
|
•
|
Consolidation Loans
|
•
|
Original fixed interest rate of 8% for the first 48 months of repayment. Beginning on the first day of the 49
th
month of repayment, the interest rate increased to a fixed rate of 10% thereafter. Loans in this category were subject to excess interest rebates and have been converted to a variable interest rate based on the bond equivalent rate of the 91-day Treasury bill auctioned at the final auction before the preceding June 1, plus 3.25%. The variable interest rate is adjusted annually on July 1. The maximum interest rate for loans in this category is 10%.
|
•
|
When the borrower is in school, in grace, or in an authorized period of deferment, the applicable interest rate is variable and is based on the bond equivalent rate of the 91-day Treasury bill auctioned at the final auction before the preceding June 1, plus 2.5%. The variable interest rate is adjusted annually on July 1. The maximum interest rate is 8.25%.
|
•
|
When the borrower is in repayment or in a period of forbearance, the applicable interest rate is variable and is based on the bond equivalent rate of the 91-day Treasury bill auctioned at the final auction before the preceding June 1, plus 3.1%. The variable interest rate is adjusted annually on July 1. The maximum interest rate is 8.25%.
|
•
|
When the borrower is in school, in grace, or in an authorized period of deferment, the applicable interest rate is variable and is based on the bond equivalent rate of the 91-day Treasury bill auctioned at the final auction before the preceding June 1, plus 1.7%. The variable interest rate is adjusted annually on July 1. The maximum interest rate is 8.25%.
|
•
|
When the borrower is in repayment or in a period of forbearance, the applicable interest rate is variable and is based on the bond equivalent rate of the 91-day Treasury bill auctioned at the final auction before the preceding June 1, plus 2.3%. The variable interest rate is adjusted annually on July 1. The maximum interest rate is 8.25%.
|
•
|
July 1, 2008 and before July 1, 2009, the applicable interest rate is fixed at 6.00%,
|
•
|
July 1, 2009 and before July 1, 2010, the applicable interest rate is fixed at 5.60%.
|
•
|
Beginning July 1, 2001, the applicable interest rate is variable and is based on the weekly average one-year constant maturity Treasury yield for the last calendar week ending on or before June 26 preceding July 1 of each year, plus 3.1%. The variable interest rate is adjusted annually on July 1. The maximum interest rate is 11%. Prior to July 1, 2001, SLS Loans in this category had interest rates which were based on the 52-week Treasury bill auctioned at the final auction held prior to the preceding June 1, plus 3.1%. The annual (July 1) variable interest rate adjustment was applicable prior to July 1, 2001, as was the maximum interest rate of 11%.
|
•
|
Have outstanding indebtedness on student loans made under the Federal Family Education Loan Program and/or certain other federal student loan programs; and
|
•
|
Be in repayment status or in a grace period on loans to be consolidated.
|
•
|
9%, or
|
•
|
The weighted average of the interest rates on the loans consolidated, rounded to the nearest whole percent.
|
•
|
For the portion of the Consolidation Loan which is comprised of FFELP, Direct, FISL, Perkins, HPSL, or NSL loans, the variable interest rate is based on the bond equivalent rate of the 91-day Treasury bills auctioned at the final auction before the preceding June 1, plus 3.1%. The variable interest rate for this portion of the Consolidation Loan is adjusted annually on July 1. The maximum interest rate for this portion of the Consolidation Loan is 8.25%.
|
•
|
For the portion of the Consolidation Loan which is attributable to HEAL Loans (if applicable), the variable interest rate is based on the average of the bond equivalent rates of the 91-day Treasury bills auctioned for the quarter ending
|
•
|
For the portion of the Consolidation Loan which is comprised of FFELP, Direct, FISL, Perkins, HPSL, or NSL loans, the applicable interest rate is fixed and is based on the weighted average of the interest rates on the non-HEAL loans being consolidated, rounded up to the nearest one-eighth of one percent. The maximum interest rate for this portion of the Consolidation Loan is 8.25%.
|
•
|
For the portion of the Consolidation Loan which is attributable to HEAL Loans (if applicable), the applicable interest rate is variable and is based on the average of the bond equivalent rates of the 91-day Treasury bills auctioned for the quarter ending June 30, plus 3.0%. The variable interest rate for this portion of the Consolidation Loan is adjusted annually on July 1. There is no maximum interest rate for the portion of the Consolidation Loan that is represented by HEAL Loans.
|
•
|
During a period not exceeding three years while the borrower is a member of the Armed Forces, an officer in the Commissioned Corps of the Public Health Service or, with respect to a borrower who first obtained a student loan disbursed on or after July 1, 1987, or a student loan for a period of enrollment beginning on or after July 1, 1987, an active duty member of the National Oceanic and Atmospheric Administration Corps;
|
•
|
During a period not exceeding three years while the borrower is a volunteer under the Peace Corps Act;
|
•
|
During a period not exceeding three years while the borrower is a full-time paid volunteer under the Domestic Volunteer Act of 1973;
|
•
|
During a period not exceeding three years while the borrower is a full-time volunteer in service which the Secretary of Education has determined is comparable to service in the Peace Corp or under the Domestic Volunteer Act of 1970 with an organization which is exempt from taxation under Section 501(c)(3) of the Internal Revenue Code;
|
•
|
During a period not exceeding two years while the borrower is serving an internship necessary to receive professional recognition required to begin professional practice or service, or a qualified internship or residency program;
|
•
|
During a period not exceeding three years while the borrower is temporarily totally disabled, as established by sworn affidavit of a qualified physician, or while the borrower is unable to secure employment because of caring for a dependent who is so disabled;
|
•
|
During a period not exceeding two years while the borrower is seeking and unable to find full-time employment;
|
•
|
During any period that the borrower is pursuing a full-time course of study at an eligible institution (or, with respect to a borrower who first obtained a student loan disbursed on or after July 1, 1987, or a student loan for a period of enrollment beginning on or after July 1, 1987, is pursuing at least a half-time course of study);
|
•
|
During any period that the borrower is pursuing a course of study in a graduate fellowship program;
|
•
|
During any period the borrower is receiving rehabilitation training services for qualified individuals, as defined by the Secretary of Education;
|
•
|
During a period not exceeding six months per request while the borrower is on parental leave; and
|
•
|
Only with respect to a borrower who first obtained a student loan disbursed on or after July 1, 1987, or a student loan for a period of enrollment beginning on or after July 1, 1987, during a period not exceeding three years while the borrower is a full-time teacher in a public or nonprofit private elementary or secondary school in a “teacher shortage area” (as prescribed by the Secretary of Education), and during a period not exceeding one year for mothers, with preschool age children, who are entering or re-entering the work force and who are paid at a rate of no more than $1 per hour more than the federal minimum wage.
|
•
|
During any period that the borrower is pursuing at least a half-time course of study at an eligible institution;
|
•
|
During any period that the borrower is pursuing a course of study in a graduate fellowship program;
|
•
|
During any period the borrower is receiving rehabilitation training services for qualified individuals, as defined by the Secretary of Education;
|
•
|
During a period not exceeding three years while the borrower is seeking and unable to find full-time employment; and
|
•
|
During a period not exceeding three years for any reason which has caused or will cause the borrower economic hardship. Economic hardship includes working full-time and earning an amount that does not exceed the greater of the federal minimum wage or 150% of the poverty line applicable to a borrower's family size and state of residence. Additional categories of economic hardship are based on the receipt of payments from a state or federal public assistance program, service in the Peace Corps, or until July 1, 2009, the relationship between a borrower's educational debt burden and his or her income.
|
•
|
Is a National Guard member, Armed Forces reserves member, or retired member of the Armed Forces;
|
•
|
Is called or ordered to active duty; and
|
•
|
Is enrolled at the time of, or was enrolled within six months prior to, the activation in a program at an eligible institution.
|
•
|
A parent PLUS borrower, upon request, may defer the repayment of the loan during any period during which the student for whom the loan was borrowed is enrolled at least half time. Also upon request, the borrower can defer the loan for the six-month period immediately following the date on which the student for whom the loan was borrowed ceases to be enrolled at least half time, or if the parent borrower is also a student, the date after he or she ceases to be enrolled at least half time.
|
•
|
A graduate or professional student PLUS borrower may defer the loan for the six-month period immediately following the date on which he or she ceases to be enrolled at least half time. This option does not require a request and may be granted each time the borrower ceases to be enrolled at least half time.
|
•
|
1.5% with respect to loans for which the first disbursement was made on or after July 1, 2007, and before July 1, 2008;
|
•
|
1.0% with respect to loans for which the first disbursement was made on or after July 1, 2008, and before July 1, 2009; and
|
•
|
0.5% with respect to loans for which the first disbursement was made on or after July 1, 2009, and before July 1, 2010.
|
Date of Loans
|
Annualized SAP Rate
|
On or after October 1, 1981
|
T-Bill Rate less Applicable Interest Rate + 3.5%
|
On or after November 16, 1986
|
T-Bill Rate less Applicable Interest Rate + 3.25%
|
On or after October 1, 1992
|
T-Bill Rate less Applicable Interest Rate + 3.1%
|
On or after July 1, 1995
|
T-Bill Rate less Applicable Interest Rate + 3.1%
(1)
|
On or after July 1, 1998
|
T-Bill Rate less Applicable Interest Rate + 2.8%
(2)
|
On or after January 1, 2000
|
3 Month Commercial Paper Rate less Applicable Interest Rate + 2.34%
(3)(6)
|
On or after October 1, 2007 and held by a Department of Education certified not-for-profit holder or Eligible Lender Trustee holding on behalf of a Department of Education certified not-for-profit entity
|
3 Month Commercial Paper Rate less Applicable Interest Rate + 1.94%
(4)(6)
|
All other loans on or after October 1, 2007
|
3 Month Commercial Paper Rate less Applicable Interest Rate + 1.79%
(5)(6)
|
•
|
The applicable interest rate minus the special allowance support level for the loan, multiplied by
|
•
|
The average daily principal balance of the loan during the quarter, divided by
|
•
|
Four.
|
•
|
Originated or acquired with funds obtained from the refunding of tax-exempt obligations issued prior to October 1, 1993, or
|
•
|
Originated or acquired with funds obtained from collections on other loans made or purchased with funds obtained from tax-exempt obligations initially issued prior to October 1, 1993.
|
|
Name
|
Organized in
|
Relationship to Nelnet Inc.
|
Percentage Ownership
|
||
1
|
|
5280 Solutions LLC (d/b/a Idaho Financial Associates, Charter Account Systems and 5280 Solutions)
|
Colorado
|
Indirect Subsidiary
|
100
|
%
|
2
|
|
ACM F Acquisition, LLC
|
Nebraska
|
Indirect Subsidiary
|
100
|
%
|
3
|
|
Class Bundl Apparel, LLC
|
Nebraska
|
Indirect Subsidiary
|
100
|
%
|
4
|
|
Class Bundl, LLC
|
Nebraska
|
Indirect Subsidiary
|
100
|
%
|
5
|
|
Education Funding Capital I, LLC
|
Delaware
|
Indirect Subsidiary
|
100
|
%
|
6
|
|
Education Lending Services, Inc.
|
Delaware
|
Indirect Subsidiary
|
100
|
%
|
7
|
|
EFS Finance Co., LLC
|
Nebraska
|
Indirect Subsidiary
|
100
|
%
|
8
|
|
Euclid Boulder Investment, LLC
|
Nebraska
|
Indirect Subsidiary
|
100
|
%
|
9
|
|
FACTS Education Corporation
|
Nebraska
|
Indirect Subsidiary
|
100
|
%
|
10
|
|
FACTS Education Solutions, LLC (formerly known as Mind Streams Education, LLC)
|
Arizona
|
Indirect Subsidiary
|
100
|
%
|
11
|
|
First National Life Insurance Company of the USA, Inc.
|
Nebraska
|
Indirect Subsidiary
|
100
|
%
|
12
|
|
Gigabit, LLC
|
Nebraska
|
Indirect Subsidiary
|
100
|
%
|
13
|
|
Merchant Preservation Services, LLC
|
Nebraska
|
Indirect Subsidiary
|
100
|
%
|
14
|
|
Municipal Tax Investment, LLC
|
Nebraska
|
Direct Subsidiary
|
100
|
%
|
15
|
|
Municipal Tax Property, LLC
|
Nebraska
|
Indirect Subsidiary
|
100
|
%
|
16
|
|
National Education Loan Network, Inc.
|
Nevada
|
Direct Subsidiary
|
100
|
%
|
17
|
|
Nelnet Academic Services, LLC
|
Nebraska
|
Direct Subsidiary
|
100
|
%
|
18
|
|
Nelnet Business Solutions - Canada, Inc. (formerly known as Nelnet Canada, Inc.)
|
Canada
|
Indirect Subsidiary
|
100
|
%
|
19
|
|
Nelnet Business Solutions, Inc. (d/b/a FACTS Management and infiNET Integrated Solutions)
|
Nebraska
|
Indirect Subsidiary
|
100
|
%
|
20
|
|
Nelnet Captive Insurance Company, Inc.
|
Delaware
|
Direct Subsidiary
|
100
|
%
|
21
|
|
Nelnet Consumer Finance, Inc.
|
Nebraska
|
Indirect Subsidiary
|
100
|
%
|
22
|
|
Nelnet Diversified Solutions, LLC
|
Nebraska
|
Direct Subsidiary
|
100
|
%
|
23
|
|
Nelnet Education Loan Funding, Inc.
|
Nebraska
|
Indirect Subsidiary
|
100
|
%
|
24
|
|
Nelnet FFELP Student Loan Warehouse-I, LLC
|
Delaware
|
Indirect Subsidiary
|
100
|
%
|
25
|
|
Nelnet Finance Corp.
|
Nebraska
|
Indirect Subsidiary
|
100
|
%
|
26
|
|
Nelnet Fund Management, LLC
|
Nebraska
|
Direct Subsidiary
|
100
|
%
|
27
|
|
Nelnet Loan Acquisition Corporation
|
Nebraska
|
Indirect Subsidiary
|
100
|
%
|
28
|
|
Nelnet Management Corporation-1
|
Nevada
|
Indirect Subsidiary
|
100
|
%
|
29
|
|
Nelnet Private Education Loan Funding, LLC
|
Delaware
|
Indirect Subsidiary
|
100
|
%
|
30
|
|
Nelnet Private Student Loan Financing Corporation
|
Nebraska
|
Indirect Subsidiary
|
100
|
%
|
31
|
|
Nelnet Private Student Loan Warehouse-I, LLC
|
Delaware
|
Indirect Subsidiary
|
100
|
%
|
32
|
|
Nelnet Real Estate Ventures, Inc.
|
Florida
|
Indirect Subsidiary
|
100
|
%
|
33
|
|
Nelnet Sales Co. LLC
|
Nebraska
|
Indirect Subsidiary
|
100
|
%
|
34
|
|
Nelnet Servicing, LLC
|
Nebraska
|
Indirect Subsidiary
|
100
|
%
|
35
|
|
Nelnet Student Loan Funding II Management Corporation
|
Nebraska
|
Indirect Subsidiary
|
100
|
%
|
36
|
|
Nelnet Student Loan Funding II, LLC
|
Delaware
|
Indirect Subsidiary
|
100
|
%
|
37
|
|
Nelnet Student Loan Funding III, LLC
|
Delaware
|
Indirect Subsidiary
|
100
|
%
|
38
|
|
Nelnet Student Loan Funding Management Corporation
|
Nevada
|
Indirect Subsidiary
|
100
|
%
|
39
|
|
Nelnet Student Loan Funding, LLC
|
Delaware
|
Indirect Subsidiary
|
100
|
%
|
40
|
|
Nelnet UNL Alliance, LLC
|
Nebraska
|
Direct Subsidiary
|
100
|
%
|
41
|
|
NHELP-II, LLC
|
Delaware
|
Indirect Subsidiary
|
100
|
%
|
42
|
|
NHELP-III, LLC
|
Delaware
|
Indirect Subsidiary
|
100
|
%
|
43
|
|
NTS - Renweb Jamaica, Ltd.
|
Jamaica
|
Indirect Subsidiary
|
100
|
%
|
44
|
|
PaymentSpring, LLC
|
Nebraska
|
Indirect Subsidiary
|
100.0
|
%
|
45
|
|
Propelr, LLC
|
Nebraska
|
Direct Subsidiary
|
100.0
|
%
|
46
|
|
Rally Workspace, LLC
|
Nebraska
|
Indirect Subsidiary
|
100
|
%
|
47
|
|
Unilink Data Systems Pty Ltd
|
Australia
|
Indirect Subsidiary
|
100
|
%
|
48
|
|
Wachovia Education Loan Funding LLC
|
Delaware
|
Indirect Subsidiary
|
100
|
%
|
49
|
|
Wilcomp Software, LLC
|
Texas
|
Indirect Subsidiary
|
100
|
%
|
50
|
|
Nelnet B2B Services, LLC
|
Nebraska
|
Direct Subsidiary
|
99
|
%
|
51
|
|
Allo Communications, LLC
|
Nebraska
|
Direct Subsidiary
|
91.5
|
%
|
52
|
|
Whitetail Rock Capital Management, LLC
|
Nebraska
|
Indirect Subsidiary
|
90
|
%
|
53
|
|
Whitetail Rock Fund Management, LLC
|
Nebraska
|
Indirect Subsidiary
|
90
|
%
|
54
|
|
Timberline Suntree Associates, LLC
|
Kansas
|
Direct Subsidiary
|
56.7
|
%
|
55
|
|
Harvest 960, LP
|
Pennsylvania
|
Indirect Subsidiary
|
56.6
|
%
|
56
|
|
151 Building, LLC
|
Nebraska
|
Indirect Subsidiary
|
50
|
%
|
57
|
|
330-333 Building Acquisition Corporation
|
Nebraska
|
Indirect Subsidiary
|
50
|
%
|
58
|
|
330-333 Building, LLC
|
Nebraska
|
Indirect Subsidiary
|
50
|
%
|
59
|
|
401 Building Acquisition Corporation
|
Nebraska
|
Indirect Subsidiary
|
50
|
%
|
60
|
|
401 Building LLC
|
Nebraska
|
Indirect Subsidiary
|
50
|
%
|
61
|
|
7200 WorldCom, LLC
|
Nebraska
|
Indirect Subsidiary
|
50
|
%
|
62
|
|
BenefitEd, LLC
|
Nebraska
|
Indirect Subsidiary
|
50
|
%
|
63
|
|
EADO Acquisition Corporation
|
Nebraska
|
Indirect Subsidiary
|
50
|
%
|
64
|
|
EADO, LLC
|
Nebraska
|
Indirect Subsidiary
|
50
|
%
|
65
|
|
GreatNet Solutions, LLC
|
Nebraska
|
Indirect Subsidiary
|
50
|
%
|
66
|
|
Invite Education, LLC
|
Delaware
|
Direct Subsidiary
|
50
|
%
|
67
|
|
Lincoln Lodging, LLC
|
Nebraska
|
Indirect Subsidiary
|
50
|
%
|
68
|
|
Lincoln Workspace, LLC
|
Nebraska
|
Indirect Subsidiary
|
50
|
%
|
69
|
|
Lumberworks Lofts Acquisition Corporation
|
Nebraska
|
Indirect Subsidiary
|
50
|
%
|
70
|
|
Lumberworks Lofts, LLC
|
Nebraska
|
Indirect Subsidiary
|
50
|
%
|
71
|
|
Next Gen Web Solutions, LLC
|
Nebraska
|
Indirect Subsidiary
|
50
|
%
|
72
|
|
StudioCode, LLC
|
Nebraska
|
Indirect Subsidiary
|
50
|
%
|
73
|
|
Vosaic France, LLC
|
France
|
Indirect Subsidiary
|
50
|
%
|
1.
|
I have reviewed this
annual
report on Form
10-K
of Nelnet, Inc. (the “Company”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
February 27, 2018
|
/s/ JEFFREY R. NOORDHOEK
|
|
|
Jeffrey R. Noordhoek Chief Executive Officer
Principal Executive Officer |
1.
|
I have reviewed this
annual
report on Form
10-K
of Nelnet, Inc. (the “Company”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
February 27, 2018
|
/s/ JAMES D. KRUGER
|
|
|
James D. Kruger
Chief Financial Officer
Principal Financial Officer and Principal Accounting Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
February 27, 2018
|
By:
/s/ JEFFREY R. NOORDHOEK
|
|
|
Name: Jeffrey R. Noordhoek
Title: Chief Executive Officer
Principal Executive Officer
|
|
|
|
|
|
By:
/s/ JAMES D. KRUGER
|
|
|
Name: James D. Kruger
Title: Chief Financial Officer
Principal Financial Officer and Principal Accounting Officer
|