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Nelnet Reports First Quarter 2021 Results ● GAAP net income $ 3.20 per share , $ 2.44 per share excluding adjustments LINCOLN , Neb . , May 10 , 2021 - Nelnet ( NYSE : NNI ) today reported GAAP net income of $ 123.6 million , or $ 3.20 per share , for the first quarter of 2021 , compared with a GAAP net loss of $ 40.5 million , or $ 1.01 per share , for the same period a year ago . GAAP net income increased for the three months ended March 31 , 2021 compared to the same period in 2020 as a result of : An increase in net interest income on the company's loan portfolio ; The recognition of a negative provision for loan losses as a result of improved economic conditions ; An increase in net income contribution from the company's Loan Servicing and Systems and Education Technology , Services , and Payment Processing operating segments ; The recognition of certain expenses in 2020 because of the pandemic ; and A net gain related to the adjustments for changes in fair values of derivative instruments that do not qualify for hedge accounting in 2021 , as compared to a loss in 2020 . Net income , excluding derivative market value adjustments ' , was $ 94.1 million , or $ 2.44 per share , for the first quarter of 2021 , compared with a net loss of $ 24.9 million , or $ 0.62 per share , for the same period in 2020 . The operating results during the first quarter of 2021 were also impacted by the recognition of a $ 22.2 million ( or $ 16.9 million after tax , or $ 0.44 per share ) non - cash loss related to the company's remaining voting membership interests investment in ALLO Communications LLC . " We are excited by the results from the first quarter and the strong start to 2021 for our core businesses and student loan portfolio , " said Jeff Noordhoek , Chief Executive Officer of Nelnet . " Building on this momentum by serving our customers with exceptional experiences and pursuing opportunities for revenue diversification is our priority . " Nelnet currently operates four primary business segments , earning interest income on loans in its Asset Generation and Management ( AGM ) segment and fee - based revenue in its Loan Servicing and Systems and Education Technology , Services , and Payment Processing segments . On November 2 , 2020 , Nelnet Bank launched operations and its financial results are presented by the company as a reportable segment . Asset Generation and Management The AGM operating segment reported net interest income of $ 99.5 million during the first quarter of 2021 , compared with $ 52.7 million for the same period a year ago . The company maintains an overall risk management strategy that incorporates the use of derivative instruments to reduce the economic effect of interest rate volatility . The company recognized expense from derivative settlements of $ 4.3 million during the first quarter of 2021 , compared with income of $ 4.2 million for the same period in 2020. Derivative settlements for each applicable period should be evaluated with the company's net interest income . Net interest income and derivative settlements increased to a net of $ 95.2 million in the first quarter of 2021 , up from a total of $ 56.9 million in the first quarter of 2020 , due to an increase in core loan spread . The increase in spread was partially offset by the expected decrease in the average balance of loans outstanding from $ 20.8 billion in the first quarter of 2020 to $ 19.5 billion for the same period in 2021 . Net interest income during the first quarter of 2021 was also impacted by the company reversing a historical accrued interest liability of $ 23.8 million ( or $ 18.1 million after tax , or $ 0.47 per share ) on certain bonds , which liability the company determined is no longer probable of being required to be paid . The reduction of this liability is reflected in ( a reduction of ) interest expense in the consolidated statements of operations . Core loan spread² , which includes the impact of derivative settlements , increased to 1.45 percent for the quarter ended March 31 , 2021 , compared with 1.02 percent for the same period in 2020. Core loan spread was positively impacted in the first quarter of 2021 by lower interest rates . The company has a portfolio of student loans that are earning interest at a fixed borrower rate and that are financed with variable rate debt . As a result , in a low interest rate environment , the company earns additional spread income that it refers to as floor income . During the three months ended March 31 , 2021 , the company recognized $ 31.3 1 Net income , excluding derivative market value adjustments , is a non - GAAP measure . See " Non - GAAP Performance Measures " at the end of this press release and the " Non GAAP Disclosures " section below for explanatory information and reconciliations of GAAP to non - GAAP financial information . 2 Core loan spread is a non - GAAP measure . See " Non - GAAP Performance Measures " at the end of this press release and the " Non - GAAP Disclosures " section below for explanatory information and reconciliations of GAAP to non - GAAP financial information .