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• | Servicing federally-owned student loans for the Department |
• | 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 advisory subsidiary |
• | The operating results of the Enrollment Services business |
• | 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 |
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• | In April 2015, the Financial Accounting Standards Board ("FASB") issued accounting guidance regarding the presentation of debt issuance costs. The new guidance requires that entities present debt issuance costs related to a debt liability as a direct deduction from that liability on the balance sheet. This guidance became effective for the Company beginning January 1, 2016. As a result of this standard, the Company reclassified its debt issuance costs, which were previously included in "other assets" on the consolidated balance sheet, to "bonds and notes payable." |
• | On February 1, 2016, the Company sold 100 percent of the membership interests in Sparkroom LLC, which includes the majority of the Company's inquiry management products and services within Nelnet Enrollment Services. The Company retained the digital marketing and content solution products and services under the brand name Peterson's within the Nelnet Enrollment Services business, which include test preparation study guides, school directories and databases, career exploration guides, on-line courses, scholarship search and selection data, career planning information and guides, and on-line information about colleges and universities. The Company reclassified the revenue and cost of goods sold attributable to the Peterson's products and services from "enrollment services revenue" and "cost to provide enrollment services" to "other income" and "other expenses," respectively, on the consolidated statements of income. After this reclassification, "enrollment services revenue" and "cost to provide enrollment services" include the operating results of the products and services sold as part of the Sparkroom disposition for all periods presented. These reclassifications had no effect on consolidated net income. |
• | Whitetail Rock Capital Management, LLC - WRCM is the Company’s SEC-registered investment advisory 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 a commercial building. 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. |
• | 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 are 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 is earned when collected. Collection costs paid to third parties associated with this revenue is 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 on the outstanding balance of investments and certain performance measures, which are recognized monthly as earned. |
• | Digital marketing and content solutions - The Company earns revenue related to digital marketing and content solution products and services under the brand name Peterson's. These products and services include 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, including services to connect students to colleges and universities, are sold based on subscriptions. Revenue from sales of subscription services is recognized ratably over the term of the contract as earned. Subscription revenue received or receivable in advance of the delivery of services is included in deferred revenue. Revenue from the sale of print products is generally earned and recognized, net of estimated returns, upon shipment or delivery. All other digital marketing and content solutions revenue is recognized over the period in which services are provided to customers. |
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As of December 31, | ||||||
2016 | 2015 | |||||
Federally insured loans | ||||||
Stafford and other | $ | 5,186,047 | 6,202,064 | |||
Consolidation | 19,643,937 | 22,086,043 | ||||
Total | 24,829,984 | 28,288,107 | ||||
Private education loans | 273,659 | 267,642 | ||||
25,103,643 | 28,555,749 | |||||
Loan discount, net of unamortized loan premiums and deferred origination costs (a) | (148,077 | ) | (180,699 | ) | ||
Allowance for loan losses – federally insured loans | (37,268 | ) | (35,490 | ) | ||
Allowance for loan losses – private education loans | (14,574 | ) | (15,008 | ) | ||
$ | 24,903,724 | 28,324,552 |
Year ended December 31, | |||||||||
2016 | 2015 | 2014 | |||||||
Balance at beginning of period | $ | 50,498 | 48,900 | 55,122 | |||||
Provision for loan losses: | |||||||||
Federally insured loans | 14,000 | 8,000 | 11,000 | ||||||
Private education loans | (500 | ) | 2,150 | (1,500 | ) | ||||
Total provision for loan losses | 13,500 | 10,150 | 9,500 | ||||||
Charge-offs: | |||||||||
Federally insured loans | (12,292 | ) | (11,730 | ) | (15,260 | ) | |||
Private education loans | (1,728 | ) | (2,414 | ) | (2,332 | ) | |||
Total charge-offs | (14,020 | ) | (14,144 | ) | (17,592 | ) | |||
Recoveries - private education loans | 954 | 1,050 | 1,315 | ||||||
Purchase (sale) of federally insured loans, net | 70 | 50 | (10 | ) | |||||
Purchase (sale) of private education loans, net | 480 | (140 | ) | (1,620 | ) | ||||
Transfer from repurchase obligation related to private education loans repurchased, net | 360 | 4,632 | 2,185 | ||||||
Balance at end of period | $ | 51,842 | 50,498 | 48,900 | |||||
Allocation of the allowance for loan losses: | |||||||||
Federally insured loans | $ | 37,268 | 35,490 | 39,170 | |||||
Private education loans | 14,574 | 15,008 | 9,730 | ||||||
Total allowance for loan losses | $ | 51,842 | 50,498 | 48,900 |
As of December 31, | ||||||||||||||||||||
2016 | 2015 | 2014 | ||||||||||||||||||
Federally insured loans: | ||||||||||||||||||||
Loans in-school/grace/deferment (a) | $ | 1,606,468 | $ | 2,292,941 | $ | 2,805,228 | ||||||||||||||
Loans in forbearance (b) | 2,295,367 | 2,979,357 | 3,288,412 | |||||||||||||||||
Loans in repayment status: | ||||||||||||||||||||
Loans current | 18,125,768 | 86.6 | % | 19,447,541 | 84.4 | % | 18,460,279 | 83.5 | % | |||||||||||
Loans delinquent 31-60 days (c) | 818,976 | 3.9 | 1,028,396 | 4.5 | 1,043,119 | 4.8 | ||||||||||||||
Loans delinquent 61-90 days (c) | 487,647 | 2.3 | 566,953 | 2.5 | 588,777 | 2.7 | ||||||||||||||
Loans delinquent 91-120 days (c) | 335,291 | 1.6 | 415,747 | 1.8 | 404,905 | 1.8 | ||||||||||||||
Loans delinquent 121-270 days (c) | 854,432 | 4.1 | 1,166,940 | 5.1 | 1,204,405 | 5.4 | ||||||||||||||
Loans delinquent 271 days or greater (c)(d) | 306,035 | 1.5 | 390,232 | 1.7 | 401,305 | 1.8 | ||||||||||||||
Total loans in repayment | 20,928,149 | 100.0 | % | 23,015,809 | 100.0 | % | 22,102,790 | 100.0 | % | |||||||||||
Total federally insured loans | $ | 24,829,984 | $ | 28,288,107 | $ | 28,196,430 | ||||||||||||||
Private education loans: | ||||||||||||||||||||
Loans in-school/grace/deferment (a) | $ | 35,146 | $ | 30,795 | $ | 905 | ||||||||||||||
Loans in forbearance (b) | 3,448 | 350 | — | |||||||||||||||||
Loans in repayment status: | ||||||||||||||||||||
Loans current | 228,612 | 97.2 | % | 228,464 | 96.7 | % | 18,390 | 69.2 | % | |||||||||||
Loans delinquent 31-60 days (c) | 1,677 | 0.7 | 1,771 | 0.7 | 1,078 | 4.1 | ||||||||||||||
Loans delinquent 61-90 days (c) | 1,110 | 0.5 | 1,283 | 0.5 | 1,035 | 3.9 | ||||||||||||||
Loans delinquent 91 days or greater (c) | 3,666 | 1.6 | 4,979 | 2.1 | 6,070 | 22.8 | ||||||||||||||
Total loans in repayment | 235,065 | 100.0 | % | 236,497 | 100.0 | % | 26,573 | 100.0 | % | |||||||||||
Total private education loans | $ | 273,659 | $ | 267,642 | $ | 27,478 |
(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. |
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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 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 |
As of December 31, 2015 | |||||||
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 | $ | 25,155,336 | 0.05% - 6.90% | 8/26/19 - 8/26/52 | |||
Bonds and notes based on auction | 1,160,365 | 0.88% - 2.17% | 3/22/32 - 11/26/46 | ||||
Total variable-rate bonds and notes | 26,315,701 | ||||||
FFELP warehouse facilities | 1,855,907 | 0.27% - 0.56% | 4/29/18 - 12/14/18 | ||||
Private education loan warehouse facility | 181,184 | 0.57% | 12/26/16 | ||||
Unsecured line of credit | 100,000 | 1.79% - 1.92% | 10/30/20 | ||||
Unsecured debt - Junior Subordinated Hybrid Securities | 57,184 | 3.99% | 9/15/61 | ||||
Other borrowings | 93,355 | 1.93% / 3.38% | 10/31/16 - 12/15/45 | ||||
28,603,331 | |||||||
Discount on bonds and notes payable and debt issuance costs | (497,410 | ) | |||||
Total | $ | 28,105,921 |
NFSLW-I | NHELP-III | NHELP-II | Total | |||||||||
Maximum financing amount | $ | 875,000 | 750,000 | 500,000 | 2,125,000 | |||||||
Amount outstanding | 656,253 | 605,420 | 415,770 | 1,677,443 | ||||||||
Amount available | $ | 218,747 | 144,580 | 84,230 | 447,557 | |||||||
Expiration of liquidity provisions | July 10, 2018 | April 28, 2017 | December 15, 2017 | |||||||||
Final maturity date | September 7, 2018 | April 26, 2019 | December 13, 2019 | |||||||||
Maximum advance rates | 92.0 - 98.0% | 92.2 - 95.0% | 85.0 - 95.0% | |||||||||
Minimum advance rates | 84.0 - 90.0% | 92.2 - 95.0% | 85.0 - 95.0% | |||||||||
Advanced as equity support | $ | 20,256 | 32,521 | 31,014 | 83,791 |
Securitizations completed during the year ended December 31, 2016 | ||||||||||||||||||
FFELP 2016-1 | Private education loan 2016-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 |
Securitizations completed during the year ended December 31, 2015 | |||||||||||||||||||||||||||||
FFELP 2015-1 | FFELP 2015-2 | FFELP 2015-3 | Total | ||||||||||||||||||||||||||
Class A-1 notes | Class A-2 notes | 2015-2 total | Class A-1 notes | Class A-2 notes | Class A-3 notes | 2015-3 total | |||||||||||||||||||||||
Date securities issued | 2/27/15 | 3/26/15 | 3/26/15 | 3/26/15 | 5/21/15 | 5/21/15 | 5/21/15 | 5/21/15 | |||||||||||||||||||||
Total original principal amount | $ | 566,346 | 122,500 | 584,500 | 722,000 | 82,500 | 270,000 | 41,400 | 401,400 | $ | 1,689,746 | ||||||||||||||||||
Class A senior notes: | |||||||||||||||||||||||||||||
Total original principal amount | $ | 553,232 | 122,500 | 584,500 | 707,000 | 82,500 | 270,000 | 41,400 | 393,900 | 1,654,132 | |||||||||||||||||||
Bond discount | — | — | — | — | — | (380 | ) | (1,095 | ) | (1,475 | ) | (1,475 | ) | ||||||||||||||||
Issue price | $ | 553,232 | 122,500 | 584,500 | 707,000 | 82,500 | 269,620 | 40,305 | 392,425 | 1,652,657 | |||||||||||||||||||
Cost of funds (1-month LIBOR plus): | 0.59 | % | 0.27 | % | 0.60 | % | 0.30 | % | 0.60 | % | 0.90 | % | |||||||||||||||||
Final maturity date | 4/25/41 | 3/25/20 | 9/25/42 | 1/27/25 | 2/26/46 | 6/25/49 | |||||||||||||||||||||||
Class B subordinated notes: | |||||||||||||||||||||||||||||
Total original principal amount | $ | 13,114 | 15,000 | 7,500 | 35,614 | ||||||||||||||||||||||||
Bond discount | (1,157 | ) | (1,793 | ) | (968 | ) | (3,918 | ) | |||||||||||||||||||||
Issue price | $ | 11,957 | 13,207 | 6,532 | 31,696 | ||||||||||||||||||||||||
Cost of funds (1-month LIBOR plus): | 1.50 | % | 1.50 | % | 1.50 | % | |||||||||||||||||||||||
Final maturity date | 6/25/46 | 5/25/49 | 6/27/50 |
• | 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 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 |
2017 | $ | — | ||
2018 | 656,254 | |||
2019 | 1,021,189 | |||
2020 | — | |||
2021 | 163,267 | |||
2022 and thereafter | 23,259,710 | |||
$ | 25,100,420 |
Par value | Purchase price | Gain | Par value | Purchase price | Gain | Par value | Purchase price | Gain | |||||||||||||||||||
Year ended December 31, | |||||||||||||||||||||||||||
2016 | 2015 | 2014 | |||||||||||||||||||||||||
Unsecured debt - Hybrid Securities | $ | 7,000 | 4,865 | 2,135 | 14,504 | 11,374 | 3,130 | 24,769 | 19,761 | 5,008 | |||||||||||||||||
Asset-backed securities | 78,412 | 72,566 | 5,846 | 32,026 | 30,354 | 1,672 | 29,243 | 27,636 | 1,607 | ||||||||||||||||||
$ | 85,412 | 77,431 | 7,981 | 46,530 | 41,728 | 4,802 | 54,012 | 47,397 | 6,615 |
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As of December 31, | |||||||||
2016 | 2015 | ||||||||
Maturity | Notional amount | Notional amount | |||||||
2016 | $ | — | 7,500,000 | ||||||
2026 | 1,150,000 | — | |||||||
2028 | 325,000 | — | |||||||
2031 | 300,000 | — | |||||||
$ | 1,775,000 | 7,500,000 |
As of December 31, 2016 | As of December 31, 2015 | ||||||||||||||
Maturity | Notional amount | Weighted average fixed rate paid by the Company (a) | Notional amount | Weighted average fixed rate paid by the Company (a) | |||||||||||
2016 | $ | — | — | % | $ | 1,000,000 | 0.76 | % | |||||||
2017 | 750,000 | 0.99 | 2,100,000 | 0.84 | |||||||||||
2018 | 1,350,000 | 1.07 | 1,600,000 | 1.08 | |||||||||||
2019 | 3,250,000 | 0.97 | 500,000 | 1.12 | |||||||||||
2020 | 1,500,000 | 1.01 | — | — | |||||||||||
2025 | 100,000 | 2.32 | 100,000 | 2.32 | |||||||||||
$ | 6,950,000 | 1.02 | % | $ | 5,300,000 | 0.95 | % |
(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, | |||||||||
2016 | 2015 | 2014 | |||||||
Re-measurement of Euro Notes | $ | 11,849 | 43,801 | 58,013 | |||||
Change in fair value of cross currency interest rate swaps | (1,954 | ) | (45,195 | ) | (57,289 | ) | |||
Total impact to consolidated statements of income - (expense) income (a) | $ | 9,895 | (1,394 | ) | 724 |
(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, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | |||||||||
1:3 basis swaps | $ | — | 724 | 2,624 | 410 | |||||||
Interest rate swaps - floor income hedges | 81,159 | 21,408 | 256 | 1,175 | ||||||||
Interest rate swap option - floor income hedge | 2,977 | 3,257 | — | — | ||||||||
Interest rate swaps - hybrid debt hedges | — | — | 7,341 | 7,646 | ||||||||
Interest rate caps | 1,152 | 1,570 | — | — | ||||||||
Cross-currency interest rate swap | — | — | 67,605 | 65,650 | ||||||||
Other | 2,243 | 1,731 | — | — | ||||||||
Total | $ | 87,531 | 28,690 | 77,826 | 74,881 |
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, 2016 | $ | 87,531 | (2,880 | ) | 475 | 85,126 | |||||||
Balance as of December 31, 2015 | 28,690 | (851 | ) | 1,632 | 29,471 |
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, 2016 | $ | (77,826 | ) | 2,880 | 7,292 | (67,654 | ) | ||||||
Balance as of December 31, 2015 | (74,881 | ) | 851 | 13,168 | (60,862 | ) |
Year ended December 31, | ||||||||||
2016 | 2015 | 2014 | ||||||||
Settlements: | ||||||||||
1:3 basis swaps | $ | 1,493 | 1,058 | 3,389 | ||||||
Interest rate swaps - floor income hedges | (17,643 | ) | (23,041 | ) | (24,380 | ) | ||||
Interest rate swaps - hybrid debt hedges | (915 | ) | (1,012 | ) | (1,025 | ) | ||||
Cross-currency interest rate swaps | (4,884 | ) | (1,255 | ) | 173 | |||||
Total settlements - (expense) income | (21,949 | ) | (24,250 | ) | (21,843 | ) | ||||
Change in fair value: | ||||||||||
1:3 basis swaps | (2,938 | ) | 12,292 | 36,824 | ||||||
Interest rate swaps - floor income hedges | 64,111 | 20,103 | 8,797 | |||||||
Interest rate swap option - floor income hedge | (281 | ) | (2,420 | ) | (3,409 | ) | ||||
Interest rate swaps - hybrid debt hedges | 304 | (295 | ) | (5,233 | ) | |||||
Interest rate caps | (419 | ) | (1,365 | ) | — | |||||
Cross-currency interest rate swaps | (1,954 | ) | (45,195 | ) | (57,289 | ) | ||||
Other | 1,072 | 1,730 | — | |||||||
Total change in fair value - income (expense) | 59,895 | (15,150 | ) | (20,310 | ) | |||||
Re-measurement of Euro Notes (foreign currency transaction adjustment) - income (expense) | 11,849 | 43,801 | 58,013 | |||||||
Derivative market value and foreign currency adjustments and derivative settlements, net - income (expense) | $ | 49,795 | 4,401 | 15,860 |
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As of December 31, 2016 | As of December 31, 2015 | ||||||||||||||||||||||||
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) | $ | 98,260 | 6,280 | (641 | ) | 103,899 | 139,970 | 3,402 | (1,362 | ) | 142,010 | ||||||||||||||
Equity securities | 720 | 1,930 | (61 | ) | 2,589 | 846 | 1,686 | (100 | ) | 2,432 | |||||||||||||||
Total available-for-sale investments | $ | 98,980 | 8,210 | (702 | ) | 106,488 | 140,816 | 5,088 | (1,462 | ) | 144,442 | ||||||||||||||
Trading investments: | |||||||||||||||||||||||||
Student loan asset-backed securities | — | 6,045 | |||||||||||||||||||||||
Equity securities | 105 | 4,905 | |||||||||||||||||||||||
Total trading investments | 105 | 10,950 | |||||||||||||||||||||||
Total available-for-sale and trading investments | 106,593 | 155,392 | |||||||||||||||||||||||
Other Investments and Notes Receivable (not measured at fair value): | |||||||||||||||||||||||||
Venture capital and funds (c) | 69,789 | 63,323 | |||||||||||||||||||||||
Real estate | 48,379 | 50,463 | |||||||||||||||||||||||
Notes receivable | 17,031 | 18,473 | |||||||||||||||||||||||
Tax liens and affordable housing | 12,352 | 16,030 | |||||||||||||||||||||||
Total investments and notes receivable | $ | 254,144 | 303,681 |
(a) | As of December 31, 2016, the aggregate fair value of available-for-sale investments with unrealized losses was $11.0 million of which substantially all 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, 2016, 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, 2016, 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. |
(c) | As of December 31, 2016 and 2015, "Venture capital and funds" included $41.4 million of the Company's equity investment in Hudl. See note 19 for further information. |
Year ended December 31, | ||||||||||
2016 | 2015 | 2014 | ||||||||
Available-for-sale securities: | ||||||||||
Gross realized gains | $ | 3,099 | 3,402 | 8,581 | ||||||
Gross realized losses | (1,192 | ) | (447 | ) | (75 | ) | ||||
Trading securities: | ||||||||||
Unrealized gains (losses), net | 525 | (715 | ) | (135 | ) | |||||
Realized gains (losses), net | 341 | (2,097 | ) | (1,082 | ) | |||||
$ | 2,773 | 143 | 7,289 |
|
Cash and cash equivalents | $ | 326 | ||
Accounts receivable | 961 | |||
Property and equipment | 105 | |||
Other assets | 22 | |||
Intangible assets | 37,188 | |||
Excess cost over fair value of net assets acquired (goodwill) | 9,082 | |||
Other liabilities | (1,341 | ) | ||
Net assets acquired | $ | 46,343 |
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, 2016 (months) | As of December 31, 2016 | As of December 31, 2015 | |||||||
Amortizable intangible assets: | |||||||||
Customer relationships (net of accumulated amortization of $8,548 and $23,195, respectively) | 168 | $ | 28,335 | 27,576 | |||||
Computer software (net of accumulated amortization of $9,652 and $4,397, respectively) | 26 | 9,296 | 11,601 | ||||||
Trade names (net of accumulated amortization of $1,653 and $795, respectively) | 189 | 9,919 | 10,687 | ||||||
Content (net of accumulated amortization of $1,800 and $900, respectively) | — | — | 900 | ||||||
Covenants not to compete (net of accumulated amortization of $91 and $56, respectively) | 89 | 263 | 298 | ||||||
Total - amortizable intangible assets | 144 | $ | 47,813 | 51,062 |
2017 | $ | 9,386 | |
2018 | 8,605 | ||
2019 | 5,147 | ||
2020 | 4,231 | ||
2021 | 3,480 | ||
2022 and thereafter | 16,964 | ||
$ | 47,813 |
|
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, 2014 | $ | 8,596 | 67,168 | — | 41,883 | 8,553 | 126,200 | |||||||||||
Goodwill acquired during the period | — | — | 19,800 | — | — | 19,800 | ||||||||||||
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 |
(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 | 2016 | 2015 | ||||||
Non-communications: | ||||||||
Computer equipment and software | 1-5 years | $ | 97,317 | 89,093 | ||||
Office furniture and equipment | 3-7 years | 12,344 | 12,638 | |||||
Building and building improvements | 5-39 years | 13,363 | 12,239 | |||||
Transportation equipment | 4-10 years | 3,809 | 3,868 | |||||
Leasehold improvements | 5-20 years | 3,579 | 3,545 | |||||
Land | — | 1,682 | 700 | |||||
Construction in progress | — | 16,346 | 1,210 | |||||
148,440 | 123,293 | |||||||
Accumulated depreciation - non-communications | 91,285 | 77,188 | ||||||
Non-communications, net property and equipment | 57,155 | 46,105 | ||||||
Communications: | ||||||||
Network plant and fiber | 5-15 years | 40,844 | 25,669 | |||||
Central office | 5-15 years | 6,448 | 909 | |||||
Customer located property | 5-10 years | 5,138 | 6,912 | |||||
Transportation equipment | 4-10 years | 2,966 | 470 | |||||
Computer equipment and software | 1-5 years | 2,026 | 74 | |||||
Other | 1-39 years | 1,268 | 343 | |||||
Land | — | 70 | — | |||||
Construction in progress | — | 12,537 | — | |||||
71,297 | 34,377 | |||||||
Accumulated depreciation - communications | 4,666 | — | ||||||
Communications, net property and equipment | 66,631 | 34,377 | ||||||
Total property and equipment, net | $ | 123,786 | 80,482 |
|
Year ended December 31, | ||||||
2016 | 2015 | |||||
Gross balance - beginning of year | $ | 27,688 | 21,336 | |||
Additions based on tax positions of prior years | 904 | 4,749 | ||||
Additions based on tax positions related to the current year | 4,347 | 5,096 | ||||
Settlements with taxing authorities | — | — | ||||
Reductions for tax positions of prior years | (3,088 | ) | (1,327 | ) | ||
Reductions based on tax positions related to the current year | — | — | ||||
Reductions due to lapse of applicable statutes of limitations | (1,847 | ) | (2,166 | ) | ||
Gross balance - end of year | $ | 28,004 | 27,688 |
Year ended December 31, | |||||||||
2016 | 2015 | 2014 | |||||||
Current: | |||||||||
Federal | $ | 111,302 | 140,778 | 138,269 | |||||
State | 3,019 | 4,530 | 2,545 | ||||||
Foreign | (13 | ) | 23 | (235 | ) | ||||
Total current provision | 114,308 | 145,331 | 140,579 | ||||||
Deferred: | |||||||||
Federal | 25,423 | 3,572 | 16,598 | ||||||
State | 1,976 | 3,875 | 3,464 | ||||||
Foreign | (394 | ) | (398 | ) | (403 | ) | |||
Total deferred provision | 27,005 | 7,049 | 19,659 | ||||||
Provision for income tax expense | $ | 141,313 | 152,380 | 160,238 |
Year ended December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Tax expense at federal rate | 35.0 | % | 35.0 | % | 35.0 | % | ||
Increase (decrease) resulting from: | ||||||||
State tax, net of federal income tax benefit | 1.1 | 1.0 | 0.7 | |||||
Provision for uncertain federal and state tax matters | — | 0.9 | 0.4 | |||||
Tax credits | (0.6) | (0.5) | (0.4) | |||||
Other | — | (0.1) | (1.4) | |||||
Effective tax rate | 35.5 | % | 36.3 | % | 34.3 | % |
As of December 31, | ||||||
2016 | 2015 | |||||
Deferred tax assets: | ||||||
Student loans | $ | 20,980 | 20,711 | |||
Securitizations | 5,675 | 6,684 | ||||
Intangible assets | 4,821 | 10,482 | ||||
Accrued expenses | 3,533 | 3,034 | ||||
Stock compensation | 2,948 | 2,882 | ||||
Deferred revenue | 2,699 | 2,220 | ||||
Capital loss carry-back | — | 4,169 | ||||
Total gross deferred tax assets | 40,656 | 50,182 | ||||
Less valuation allowance | (264 | ) | (222 | ) | ||
Net deferred tax assets | 40,392 | 49,960 | ||||
Deferred tax liabilities: | ||||||
Basis in certain derivative contracts | 46,636 | 24,101 | ||||
Loan origination services | 13,019 | 15,695 | ||||
Debt repurchases | 12,457 | 18,759 | ||||
Depreciation | 5,128 | 5,514 | ||||
Partnership basis | 4,976 | 1,748 | ||||
Unrealized gain on debt and equity securities | 3,246 | 1,400 | ||||
Other | 360 | 47 | ||||
Total gross deferred tax liabilities | 85,822 | 67,264 | ||||
Net deferred tax (liability) asset | $ | (45,430 | ) | (17,304 | ) |
|
• | 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 advisory subsidiary, and the Enrollment Services business |
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 market value and foreign currency adjustments, net | — | — | — | 70,368 | 1,376 | — | 71,744 | ||||||||||||||
Derivative settlements, net | — | — | — | (21,034 | ) | (915 | ) | — | (21,949 | ) | |||||||||||
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 | $ | 55,469 | 230,283 | 103,104 | 26,378,467 | 669,472 | (256,687 | ) | 27,180,108 |
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 market value and foreign currency adjustments, net | — | — | — | 27,216 | 1,435 | — | 28,651 | ||||||||||||||
Derivative settlements, net | — | — | — | (23,238 | ) | (1,012 | ) | — | (24,250 | ) | |||||||||||
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 | $ | 80,459 | 229,615 | 68,760 | 29,634,280 | 624,953 | (218,923 | ) | 30,419,144 |
Year ended December 31, 2014 (a) | ||||||||||||||||||
Loan Systems and Servicing | Tuition Payment Processing and Campus Commerce | Asset Generation and Management | Corporate and Other Activities | Eliminations | Total | |||||||||||||
Total interest income | $ | 30 | 6 | 703,382 | 8,618 | (2,236 | ) | 709,800 | ||||||||||
Interest expense | — | — | 269,742 | 5,731 | (2,236 | ) | 273,237 | |||||||||||
Net interest income | 30 | 6 | 433,640 | 2,887 | — | 436,563 | ||||||||||||
Less provision for loan losses | — | — | 9,500 | — | — | 9,500 | ||||||||||||
Net interest income (loss) after provision for loan losses | 30 | 6 | 424,140 | 2,887 | — | 427,063 | ||||||||||||
Other income: | ||||||||||||||||||
Loan systems and servicing revenue | 240,414 | — | — | — | — | 240,414 | ||||||||||||
Intersegment servicing revenue | 55,139 | — | — | — | (55,139 | ) | — | |||||||||||
Tuition payment processing, school information, and campus commerce revenue | — | 98,156 | — | — | — | 98,156 | ||||||||||||
Enrollment services revenue | — | — | — | 62,949 | — | 62,949 | ||||||||||||
Other income | — | 1,268 | 21,532 | 51,136 | — | 73,936 | ||||||||||||
Gain on sale of loans and debt repurchases, net | — | — | (1,357 | ) | 5,008 | — | 3,651 | |||||||||||
Derivative market value and foreign currency adjustments, net | — | — | 42,936 | (5,233 | ) | — | 37,703 | |||||||||||
Derivative settlements, net | — | — | (20,818 | ) | (1,025 | ) | — | (21,843 | ) | |||||||||
Total other income | 295,553 | 99,424 | 42,293 | 112,835 | (55,139 | ) | 494,966 | |||||||||||
Operating expenses: | ||||||||||||||||||
Salaries and benefits | 125,844 | 48,453 | 2,316 | 51,466 | — | 228,079 | ||||||||||||
Depreciation and amortization | 1,734 | 8,169 | — | 11,231 | — | 21,134 | ||||||||||||
Loan servicing fees | — | — | 27,009 | — | — | 27,009 | ||||||||||||
Cost to provide enrollment services | — | — | — | 49,985 | — | 49,985 | ||||||||||||
Other expenses | 59,521 | 13,006 | 6,602 | 47,174 | — | 126,303 | ||||||||||||
Intersegment expenses, net | 31,956 | 4,769 | 56,325 | (37,912 | ) | (55,139 | ) | — | ||||||||||
Total operating expenses | 219,055 | 74,397 | 92,252 | 121,944 | (55,139 | ) | 452,510 | |||||||||||
Income (loss) before income taxes | 76,528 | 25,033 | 374,181 | (6,222 | ) | — | 469,519 | |||||||||||
Income tax (expense) benefit | (29,081 | ) | (9,513 | ) | (142,189 | ) | 20,544 | — | (160,238 | ) | ||||||||
Net income (loss) | 47,447 | 15,520 | 231,992 | 14,322 | — | 309,281 | ||||||||||||
Net loss (income) attributable to noncontrolling interest | — | — | — | (1,671 | ) | — | (1,671 | ) | ||||||||||
Net income (loss) attributable to Nelnet, Inc. | $ | 47,447 | 15,520 | 231,992 | 12,651 | — | 307,610 | |||||||||||
Total assets | $ | 84,495 | 231,991 | 29,436,466 | 495,716 | (220,929 | ) | 30,027,739 |
|
|
2017 | $ | 5,316 | |
2018 | 4,967 | ||
2019 | 4,143 | ||
2020 | 3,472 | ||
2021 | 1,898 | ||
2022 and thereafter | 6,615 | ||
Total minimum lease payments | $ | 26,411 |
|
|
Year ended December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Non-vested shares at beginning of year | 471,597 | 499,463 | 407,051 | |||||
Granted | 123,181 | 126,946 | 189,716 | |||||
Vested | (113,507 | ) | (108,424 | ) | (77,219 | ) | ||
Canceled | (33,891 | ) | (46,388 | ) | (20,085 | ) | ||
Non-vested shares at end of year | 447,380 | 471,597 | 499,463 |
2017 | $ | 3,265 | |
2018 | 1,989 | ||
2019 | 1,218 | ||
2020 | 720 | ||
2021 | 431 | ||
2022 and thereafter | 623 | ||
$ | 8,246 |
Shares issued - not deferred | Shares- deferred | Total | ||||||
Year ended December 31, 2016 | 10,799 | 13,644 | 24,443 | |||||
Year ended December 31, 2015 | 8,164 | 10,406 | 18,570 | |||||
Year ended December 31, 2014 | 8,067 | 10,175 | 18,242 |
|
|
As of December 31, 2016 | As of December 31, 2015 | |||||||||||||||||
Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | |||||||||||||
Assets: | ||||||||||||||||||
Investments (available-for-sale and trading): (a) | ||||||||||||||||||
Student loan asset-backed securities | $ | — | 103,780 | 103,780 | — | 147,925 | 147,925 | |||||||||||
Equity securities | 2,694 | — | 2,694 | 7,337 | — | 7,337 | ||||||||||||
Debt securities | 119 | — | 119 | 130 | — | 130 | ||||||||||||
Total investments (available-for-sale and trading) | 2,813 | 103,780 | 106,593 | 7,467 | 147,925 | 155,392 | ||||||||||||
Derivative instruments (b) | — | 87,531 | 87,531 | — | 28,690 | 28,690 | ||||||||||||
Total assets | $ | 2,813 | 191,311 | 194,124 | 7,467 | 176,615 | 184,082 | |||||||||||
Liabilities: | ||||||||||||||||||
Derivative instruments (b): | $ | — | 77,826 | 77,826 | — | 74,881 | 74,881 | |||||||||||
Total liabilities | $ | — | 77,826 | 77,826 | — | 74,881 | 74,881 |
(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, 2016 | |||||||||||||||
Fair value | Carrying value | Level 1 | Level 2 | Level 3 | |||||||||||
Financial assets: | |||||||||||||||
Student 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 | — |
As of December 31, 2015 | |||||||||||||||
Fair value | Carrying value | Level 1 | Level 2 | Level 3 | |||||||||||
Financial assets: | |||||||||||||||
Student loans receivable | $ | 28,611,350 | 28,324,552 | — | — | 28,611,350 | |||||||||
Cash and cash equivalents | 63,529 | 63,529 | 63,529 | — | — | ||||||||||
Investments (available-for-sale and trading) | 155,392 | 155,392 | 7,467 | 147,925 | — | ||||||||||
Notes receivable | 18,067 | 18,473 | — | 18,067 | — | ||||||||||
Restricted cash | 832,624 | 832,624 | 832,624 | — | — | ||||||||||
Restricted cash – due to customers | 144,771 | 144,771 | 144,771 | — | — | ||||||||||
Accrued interest receivable | 383,825 | 383,825 | — | 383,825 | — | ||||||||||
Derivative instruments | 28,690 | 28,690 | — | 28,690 | — | ||||||||||
Financial liabilities: | |||||||||||||||
Bonds and notes payable | 27,150,775 | 28,105,921 | — | 27,150,775 | — | ||||||||||
Accrued interest payable | 31,507 | 31,507 | — | 31,507 | — | ||||||||||
Due to customers | 144,771 | 144,771 | 144,771 | — | — | ||||||||||
Derivative instruments | 74,881 | 74,881 | — | 74,881 | — |
|
|
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 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 | (24,433 | ) | (15,036 | ) | (47,715 | ) | (54,128 | ) | ||||
Net income | 48,029 | 26,178 | 84,363 | 98,931 | ||||||||
Net income attributable to noncontrolling interest | 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 |
2015 | ||||||||||||
First quarter | Second quarter | Third quarter | Fourth quarter | |||||||||
Net interest income | $ | 102,595 | 105,096 | 111,993 | 112,215 | |||||||
Less provision for loan losses | 2,000 | 2,150 | 3,000 | 3,000 | ||||||||
Net interest income after provision for loan losses | 100,595 | 102,946 | 108,993 | 109,215 | ||||||||
Loan systems and servicing revenue | 57,811 | 63,833 | 61,520 | 56,694 | ||||||||
Tuition payment processing, school information, and campus commerce revenue | 34,680 | 27,686 | 30,439 | 27,560 | ||||||||
Enrollment services revenue | 13,373 | 12,680 | 13,741 | 11,279 | ||||||||
Other income | 11,408 | 11,985 | 12,282 | 11,587 | ||||||||
Gain on sale of loans and debt repurchases, net | 2,875 | 1,515 | 597 | 166 | ||||||||
Derivative market value and foreign currency adjustments and derivative settlements, net | (3,078 | ) | 6,502 | (30,658 | ) | 31,635 | ||||||
Salaries and benefits | (61,050 | ) | (58,787 | ) | (63,215 | ) | (64,862 | ) | ||||
Depreciation and amortization | (5,662 | ) | (6,501 | ) | (6,977 | ) | (7,203 | ) | ||||
Loan servicing fees | (7,616 | ) | (7,420 | ) | (7,793 | ) | (7,384 | ) | ||||
Cost to provide enrollment services | (10,799 | ) | (10,395 | ) | (11,349 | ) | (9,190 | ) | ||||
Operating expenses | (30,101 | ) | (32,725 | ) | (31,604 | ) | (28,584 | ) | ||||
Income tax expense | (37,630 | ) | (40,356 | ) | (26,999 | ) | (47,395 | ) | ||||
Net income | 64,806 | 70,963 | 48,977 | 83,518 | ||||||||
Net income attributable to noncontrolling interest | 41 | 54 | 22 | 168 | ||||||||
Net income attributable to Nelnet, Inc. | $ | 64,765 | 70,909 | 48,955 | 83,350 | |||||||
Earnings per common share: | ||||||||||||
Net income attributable to Nelnet, Inc. shareholders - basic and diluted | $ | 1.40 | 1.54 | 1.09 | 1.86 |
|
Balance Sheets | ||||||
(Parent Company Only) | ||||||
As of December 31, 2016 and 2015 | ||||||
2016 | 2015 | |||||
Assets: | ||||||
Cash and cash equivalents | $ | 29,734 | 19,419 | |||
Investments and notes receivable | 167,711 | 214,786 | ||||
Investment in subsidiary debt | 71,815 | 49,932 | ||||
Restricted cash | 7,805 | 14,802 | ||||
Investment in subsidiaries | 1,537,507 | 1,519,103 | ||||
Notes receivable from subsidiaries | 161,284 | 169,845 | ||||
Other assets | 136,685 | 168,947 | ||||
Fair value of derivative instruments | 86,379 | 27,120 | ||||
Total assets | $ | 2,198,920 | 2,183,954 | |||
Liabilities: | ||||||
Notes payable | $ | 48,085 | 230,307 | |||
Other liabilities | 74,706 | 56,234 | ||||
Fair value of derivative instruments | 10,221 | 9,231 | ||||
Total liabilities | 133,012 | 295,772 | ||||
Equity: | ||||||
Nelnet, Inc. shareholders' equity: | ||||||
Common stock | 421 | 440 | ||||
Additional paid-in capital | 420 | — | ||||
Retained earnings | 2,056,084 | 1,881,708 | ||||
Accumulated other comprehensive earnings | 4,730 | 2,284 | ||||
Total Nelnet, Inc. shareholders' equity | 2,061,655 | 1,884,432 | ||||
Noncontrolling interest | 4,253 | 3,750 | ||||
Total equity | 2,065,908 | 1,888,182 | ||||
Total liabilities and shareholders' equity | $ | 2,198,920 | 2,183,954 |
Statements of Income | |||||||||
(Parent Company Only) | |||||||||
Years ended December 31, 2016, 2015, and 2014 | |||||||||
2016 | 2015 | 2014 | |||||||
Investment interest income | $ | 9,794 | 5,776 | 6,863 | |||||
Interest expense on bonds and notes payable | 6,049 | 6,242 | 5,492 | ||||||
Net interest (expense) income | 3,745 | (466 | ) | 1,371 | |||||
Other income: | |||||||||
Other income | 7,037 | 4,012 | 8,943 | ||||||
Gain from debt repurchases | 8,083 | 4,904 | 6,685 | ||||||
Equity in subsidiaries income | 239,405 | 276,825 | 316,934 | ||||||
Derivative market value adjustments and derivative settlements, net | 45,203 | 8,416 | 14,963 | ||||||
Total other income | 299,728 | 294,157 | 347,525 | ||||||
Operating expenses | 8,183 | 5,057 | 5,598 | ||||||
Income before income taxes | 295,290 | 288,634 | 343,298 | ||||||
Income tax expense | 38,642 | 20,655 | 34,017 | ||||||
Net income | 256,648 | 267,979 | 309,281 | ||||||
Net (loss) income attributable to noncontrolling interest | (103 | ) | — | 1,671 | |||||
Net income attributable to Nelnet, Inc. | $ | 256,751 | 267,979 | 307,610 |
Statements of Comprehensive Income | |||||||||
(Parent Company Only) | |||||||||
Years ended December 31, 2016, 2015, and 2014 | |||||||||
2016 | 2015 | 2014 | |||||||
Net income | $ | 256,648 | 267,979 | 309,281 | |||||
Other comprehensive income (loss): | |||||||||
Available-for-sale securities: | |||||||||
Unrealized holding gains (losses) arising during period, net | 5,789 | (1,570 | ) | 9,006 | |||||
Less reclassification adjustment for gains recognized in net income, net of losses | (1,907 | ) | (2,955 | ) | (8,506 | ) | |||
Income tax effect | (1,436 | ) | 1,674 | (184 | ) | ||||
Total other comprehensive income (loss) | 2,446 | (2,851 | ) | 316 | |||||
Comprehensive income | 259,094 | 265,128 | 309,597 | ||||||
Comprehensive (loss) income attributable to noncontrolling interest | (103 | ) | — | 1,671 | |||||
Comprehensive income attributable to Nelnet, Inc. | $ | 259,197 | 265,128 | 307,926 |
Statements of Cash Flows | |||||||||
(Parent Company Only) | |||||||||
Years ended December 31, 2016, 2015, and 2014 | |||||||||
2016 | 2015 | 2014 | |||||||
Net income attributable to Nelnet, Inc. | $ | 256,751 | 267,979 | 307,610 | |||||
Net (loss) income attributable to noncontrolling interest | (103 | ) | — | 1,671 | |||||
Net income | 256,648 | 267,979 | 309,281 | ||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||
Depreciation and amortization | 391 | 327 | 303 | ||||||
Derivative market value adjustment | (62,268 | ) | (31,411 | ) | (36,979 | ) | |||
Proceeds to terminate and/or amend derivative instruments, net of payments | 3,999 | 65,527 | 1,765 | ||||||
Payment to enter into derivative instrument | — | — | (9,087 | ) | |||||
Equity in earnings of subsidiaries | (239,405 | ) | (276,825 | ) | (316,934 | ) | |||
Gain from sales of available-for-sale securities, net | (1,907 | ) | (2,955 | ) | (8,506 | ) | |||
Gain from debt repurchases | (8,083 | ) | (4,904 | ) | (6,685 | ) | |||
Proceeds (purchases) related to trading securities, net | 62 | (167 | ) | — | |||||
Deferred income tax expense | 20,071 | 3,228 | 12,397 | ||||||
Non-cash compensation expense | 4,348 | 5,347 | 4,699 | ||||||
Other | 1,055 | 2,113 | 2,576 | ||||||
Decrease (increase) in other assets | 32,262 | (8,541 | ) | (2,211 | ) | ||||
(Decrease) increase in other liabilities | (594 | ) | 6,597 | 115 | |||||
Net cash provided by (used in) operating activities | 6,579 | 26,315 | (49,266 | ) | |||||
Cash flows from investing activities: | |||||||||
Decrease (increase) in restricted cash | 6,997 | (13,825 | ) | 3,636 | |||||
Purchases of available-for-sale securities | (94,920 | ) | (98,332 | ) | (192,315 | ) | |||
Proceeds from sales of available-for-sale securities | 139,427 | 94,722 | 240,371 | ||||||
Capital contributions/distributions to/from subsidiaries, net | 223,386 | 120,291 | (25,017 | ) | |||||
Decrease (increase) in notes receivable from subsidiaries | 8,561 | (84,061 | ) | 12,623 | |||||
Proceeds from investments and notes receivable | 9,952 | 12,253 | 4,163 | ||||||
(Purchases of) proceeds from subsidiary debt, net | (13,800 | ) | 72,125 | 111,038 | |||||
Purchases of investments and issuances of notes receivable | (4,365 | ) | (53,388 | ) | (27,166 | ) | |||
Business acquisition, net of cash acquired | — | (45,916 | ) | — | |||||
Net cash provided by investing activities | 275,238 | 3,869 | 127,333 | ||||||
Cash flows from financing activities: | |||||||||
Payments on notes payable | (412,000 | ) | (42,541 | ) | (63,084 | ) | |||
Proceeds from issuance of notes payable | 230,000 | 116,460 | 27,577 | ||||||
Payments of debt issuance costs | (613 | ) | (773 | ) | (512 | ) | |||
Dividends paid | (21,188 | ) | (19,025 | ) | (18,542 | ) | |||
Repurchases of common stock | (69,091 | ) | (96,169 | ) | (15,713 | ) | |||
Proceeds from issuance of common stock | 889 | 801 | 656 | ||||||
Issuance of noncontrolling interest | 501 | — | 201 | ||||||
Distribution to noncontrolling interest | — | (230 | ) | (1,970 | ) | ||||
Net cash used in financing activities | (271,502 | ) | (41,477 | ) | (71,387 | ) | |||
Net increase (decrease) in cash and cash equivalents | 10,315 | (11,293 | ) | 6,680 | |||||
Cash and cash equivalents, beginning of period | 19,419 | 30,712 | 24,032 | ||||||
Cash and cash equivalents, end of period | $ | 29,734 | 19,419 | 30,712 | |||||
Cash disbursements made for: | |||||||||
Interest | $ | 5,533 | 5,914 | 5,189 | |||||
Income taxes, net of refunds | $ | 115,415 | 147,130 | 155,715 | |||||
Non-cash investing and financing activities: | |||||||||
Issuance of noncontrolling interest | $ | — | 3,750 | — | |||||
Contributions of investments to subsidiaries, net | $ | (1,884 | ) | — | — |
|
• | In April 2015, the Financial Accounting Standards Board ("FASB") issued accounting guidance regarding the presentation of debt issuance costs. The new guidance requires that entities present debt issuance costs related to a debt liability as a direct deduction from that liability on the balance sheet. This guidance became effective for the Company beginning January 1, 2016. As a result of this standard, the Company reclassified its debt issuance costs, which were previously included in "other assets" on the consolidated balance sheet, to "bonds and notes payable." |
• | On February 1, 2016, the Company sold 100 percent of the membership interests in Sparkroom LLC, which includes the majority of the Company's inquiry management products and services within Nelnet Enrollment Services. The Company retained the digital marketing and content solution products and services under the brand name Peterson's within the Nelnet Enrollment Services business, which include test preparation study guides, school directories and databases, career exploration guides, on-line courses, scholarship search and selection data, career planning information and guides, and on-line information about colleges and universities. The Company reclassified the revenue and cost of goods sold attributable to the Peterson's products and services from "enrollment services revenue" and "cost to provide enrollment services" to "other income" and "other expenses," respectively, on the consolidated statements of income. After this reclassification, "enrollment services revenue" and "cost to provide enrollment services" include the operating results of the products and services sold as part of the Sparkroom disposition for all periods presented. These reclassifications had no effect on consolidated net income. |
• | Whitetail Rock Capital Management, LLC - WRCM is the Company’s SEC-registered investment advisory 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 a commercial building. 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. |
• | 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 are 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 is earned when collected. Collection costs paid to third parties associated with this revenue is 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 on the outstanding balance of investments and certain performance measures, which are recognized monthly as earned. |
• | Digital marketing and content solutions - The Company earns revenue related to digital marketing and content solution products and services under the brand name Peterson's. These products and services include 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, including services to connect students to colleges and universities, are sold based on subscriptions. Revenue from sales of subscription services is recognized ratably over the term of the contract as earned. Subscription revenue received or receivable in advance of the delivery of services is included in deferred revenue. Revenue from the sale of print products is generally earned and recognized, net of estimated returns, upon shipment or delivery. All other digital marketing and content solutions revenue is recognized over the period in which services are provided to customers. |
|
As of December 31, | ||||||
2016 | 2015 | |||||
Federally insured loans | ||||||
Stafford and other | $ | 5,186,047 | 6,202,064 | |||
Consolidation | 19,643,937 | 22,086,043 | ||||
Total | 24,829,984 | 28,288,107 | ||||
Private education loans | 273,659 | 267,642 | ||||
25,103,643 | 28,555,749 | |||||
Loan discount, net of unamortized loan premiums and deferred origination costs (a) | (148,077 | ) | (180,699 | ) | ||
Allowance for loan losses – federally insured loans | (37,268 | ) | (35,490 | ) | ||
Allowance for loan losses – private education loans | (14,574 | ) | (15,008 | ) | ||
$ | 24,903,724 | 28,324,552 |
Year ended December 31, | |||||||||
2016 | 2015 | 2014 | |||||||
Balance at beginning of period | $ | 50,498 | 48,900 | 55,122 | |||||
Provision for loan losses: | |||||||||
Federally insured loans | 14,000 | 8,000 | 11,000 | ||||||
Private education loans | (500 | ) | 2,150 | (1,500 | ) | ||||
Total provision for loan losses | 13,500 | 10,150 | 9,500 | ||||||
Charge-offs: | |||||||||
Federally insured loans | (12,292 | ) | (11,730 | ) | (15,260 | ) | |||
Private education loans | (1,728 | ) | (2,414 | ) | (2,332 | ) | |||
Total charge-offs | (14,020 | ) | (14,144 | ) | (17,592 | ) | |||
Recoveries - private education loans | 954 | 1,050 | 1,315 | ||||||
Purchase (sale) of federally insured loans, net | 70 | 50 | (10 | ) | |||||
Purchase (sale) of private education loans, net | 480 | (140 | ) | (1,620 | ) | ||||
Transfer from repurchase obligation related to private education loans repurchased, net | 360 | 4,632 | 2,185 | ||||||
Balance at end of period | $ | 51,842 | 50,498 | 48,900 | |||||
Allocation of the allowance for loan losses: | |||||||||
Federally insured loans | $ | 37,268 | 35,490 | 39,170 | |||||
Private education loans | 14,574 | 15,008 | 9,730 | ||||||
Total allowance for loan losses | $ | 51,842 | 50,498 | 48,900 |
As of December 31, | ||||||||||||||||||||
2016 | 2015 | 2014 | ||||||||||||||||||
Federally insured loans: | ||||||||||||||||||||
Loans in-school/grace/deferment (a) | $ | 1,606,468 | $ | 2,292,941 | $ | 2,805,228 | ||||||||||||||
Loans in forbearance (b) | 2,295,367 | 2,979,357 | 3,288,412 | |||||||||||||||||
Loans in repayment status: | ||||||||||||||||||||
Loans current | 18,125,768 | 86.6 | % | 19,447,541 | 84.4 | % | 18,460,279 | 83.5 | % | |||||||||||
Loans delinquent 31-60 days (c) | 818,976 | 3.9 | 1,028,396 | 4.5 | 1,043,119 | 4.8 | ||||||||||||||
Loans delinquent 61-90 days (c) | 487,647 | 2.3 | 566,953 | 2.5 | 588,777 | 2.7 | ||||||||||||||
Loans delinquent 91-120 days (c) | 335,291 | 1.6 | 415,747 | 1.8 | 404,905 | 1.8 | ||||||||||||||
Loans delinquent 121-270 days (c) | 854,432 | 4.1 | 1,166,940 | 5.1 | 1,204,405 | 5.4 | ||||||||||||||
Loans delinquent 271 days or greater (c)(d) | 306,035 | 1.5 | 390,232 | 1.7 | 401,305 | 1.8 | ||||||||||||||
Total loans in repayment | 20,928,149 | 100.0 | % | 23,015,809 | 100.0 | % | 22,102,790 | 100.0 | % | |||||||||||
Total federally insured loans | $ | 24,829,984 | $ | 28,288,107 | $ | 28,196,430 | ||||||||||||||
Private education loans: | ||||||||||||||||||||
Loans in-school/grace/deferment (a) | $ | 35,146 | $ | 30,795 | $ | 905 | ||||||||||||||
Loans in forbearance (b) | 3,448 | 350 | — | |||||||||||||||||
Loans in repayment status: | ||||||||||||||||||||
Loans current | 228,612 | 97.2 | % | 228,464 | 96.7 | % | 18,390 | 69.2 | % | |||||||||||
Loans delinquent 31-60 days (c) | 1,677 | 0.7 | 1,771 | 0.7 | 1,078 | 4.1 | ||||||||||||||
Loans delinquent 61-90 days (c) | 1,110 | 0.5 | 1,283 | 0.5 | 1,035 | 3.9 | ||||||||||||||
Loans delinquent 91 days or greater (c) | 3,666 | 1.6 | 4,979 | 2.1 | 6,070 | 22.8 | ||||||||||||||
Total loans in repayment | 235,065 | 100.0 | % | 236,497 | 100.0 | % | 26,573 | 100.0 | % | |||||||||||
Total private education loans | $ | 273,659 | $ | 267,642 | $ | 27,478 |
(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, 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 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 |
As of December 31, 2015 | |||||||
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 | $ | 25,155,336 | 0.05% - 6.90% | 8/26/19 - 8/26/52 | |||
Bonds and notes based on auction | 1,160,365 | 0.88% - 2.17% | 3/22/32 - 11/26/46 | ||||
Total variable-rate bonds and notes | 26,315,701 | ||||||
FFELP warehouse facilities | 1,855,907 | 0.27% - 0.56% | 4/29/18 - 12/14/18 | ||||
Private education loan warehouse facility | 181,184 | 0.57% | 12/26/16 | ||||
Unsecured line of credit | 100,000 | 1.79% - 1.92% | 10/30/20 | ||||
Unsecured debt - Junior Subordinated Hybrid Securities | 57,184 | 3.99% | 9/15/61 | ||||
Other borrowings | 93,355 | 1.93% / 3.38% | 10/31/16 - 12/15/45 | ||||
28,603,331 | |||||||
Discount on bonds and notes payable and debt issuance costs | (497,410 | ) | |||||
Total | $ | 28,105,921 |
NFSLW-I | NHELP-III | NHELP-II | Total | |||||||||
Maximum financing amount | $ | 875,000 | 750,000 | 500,000 | 2,125,000 | |||||||
Amount outstanding | 656,253 | 605,420 | 415,770 | 1,677,443 | ||||||||
Amount available | $ | 218,747 | 144,580 | 84,230 | 447,557 | |||||||
Expiration of liquidity provisions | July 10, 2018 | April 28, 2017 | December 15, 2017 | |||||||||
Final maturity date | September 7, 2018 | April 26, 2019 | December 13, 2019 | |||||||||
Maximum advance rates | 92.0 - 98.0% | 92.2 - 95.0% | 85.0 - 95.0% | |||||||||
Minimum advance rates | 84.0 - 90.0% | 92.2 - 95.0% | 85.0 - 95.0% | |||||||||
Advanced as equity support | $ | 20,256 | 32,521 | 31,014 | 83,791 |
Securitizations completed during the year ended December 31, 2016 | ||||||||||||||||||
FFELP 2016-1 | Private education loan 2016-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 |
Securitizations completed during the year ended December 31, 2015 | |||||||||||||||||||||||||||||
FFELP 2015-1 | FFELP 2015-2 | FFELP 2015-3 | Total | ||||||||||||||||||||||||||
Class A-1 notes | Class A-2 notes | 2015-2 total | Class A-1 notes | Class A-2 notes | Class A-3 notes | 2015-3 total | |||||||||||||||||||||||
Date securities issued | 2/27/15 | 3/26/15 | 3/26/15 | 3/26/15 | 5/21/15 | 5/21/15 | 5/21/15 | 5/21/15 | |||||||||||||||||||||
Total original principal amount | $ | 566,346 | 122,500 | 584,500 | 722,000 | 82,500 | 270,000 | 41,400 | 401,400 | $ | 1,689,746 | ||||||||||||||||||
Class A senior notes: | |||||||||||||||||||||||||||||
Total original principal amount | $ | 553,232 | 122,500 | 584,500 | 707,000 | 82,500 | 270,000 | 41,400 | 393,900 | 1,654,132 | |||||||||||||||||||
Bond discount | — | — | — | — | — | (380 | ) | (1,095 | ) | (1,475 | ) | (1,475 | ) | ||||||||||||||||
Issue price | $ | 553,232 | 122,500 | 584,500 | 707,000 | 82,500 | 269,620 | 40,305 | 392,425 | 1,652,657 | |||||||||||||||||||
Cost of funds (1-month LIBOR plus): | 0.59 | % | 0.27 | % | 0.60 | % | 0.30 | % | 0.60 | % | 0.90 | % | |||||||||||||||||
Final maturity date | 4/25/41 | 3/25/20 | 9/25/42 | 1/27/25 | 2/26/46 | 6/25/49 | |||||||||||||||||||||||
Class B subordinated notes: | |||||||||||||||||||||||||||||
Total original principal amount | $ | 13,114 | 15,000 | 7,500 | 35,614 | ||||||||||||||||||||||||
Bond discount | (1,157 | ) | (1,793 | ) | (968 | ) | (3,918 | ) | |||||||||||||||||||||
Issue price | $ | 11,957 | 13,207 | 6,532 | 31,696 | ||||||||||||||||||||||||
Cost of funds (1-month LIBOR plus): | 1.50 | % | 1.50 | % | 1.50 | % | |||||||||||||||||||||||
Final maturity date | 6/25/46 | 5/25/49 | 6/27/50 |
2017 | $ | — | ||
2018 | 656,254 | |||
2019 | 1,021,189 | |||
2020 | — | |||
2021 | 163,267 | |||
2022 and thereafter | 23,259,710 | |||
$ | 25,100,420 |
Par value | Purchase price | Gain | Par value | Purchase price | Gain | Par value | Purchase price | Gain | |||||||||||||||||||
Year ended December 31, | |||||||||||||||||||||||||||
2016 | 2015 | 2014 | |||||||||||||||||||||||||
Unsecured debt - Hybrid Securities | $ | 7,000 | 4,865 | 2,135 | 14,504 | 11,374 | 3,130 | 24,769 | 19,761 | 5,008 | |||||||||||||||||
Asset-backed securities | 78,412 | 72,566 | 5,846 | 32,026 | 30,354 | 1,672 | 29,243 | 27,636 | 1,607 | ||||||||||||||||||
$ | 85,412 | 77,431 | 7,981 | 46,530 | 41,728 | 4,802 | 54,012 | 47,397 | 6,615 |
|
As of December 31, | |||||||||
2016 | 2015 | ||||||||
Maturity | Notional amount | Notional amount | |||||||
2016 | $ | — | 7,500,000 | ||||||
2026 | 1,150,000 | — | |||||||
2028 | 325,000 | — | |||||||
2031 | 300,000 | — | |||||||
$ | 1,775,000 | 7,500,000 |
As of December 31, 2016 | As of December 31, 2015 | ||||||||||||||
Maturity | Notional amount | Weighted average fixed rate paid by the Company (a) | Notional amount | Weighted average fixed rate paid by the Company (a) | |||||||||||
2016 | $ | — | — | % | $ | 1,000,000 | 0.76 | % | |||||||
2017 | 750,000 | 0.99 | 2,100,000 | 0.84 | |||||||||||
2018 | 1,350,000 | 1.07 | 1,600,000 | 1.08 | |||||||||||
2019 | 3,250,000 | 0.97 | 500,000 | 1.12 | |||||||||||
2020 | 1,500,000 | 1.01 | — | — | |||||||||||
2025 | 100,000 | 2.32 | 100,000 | 2.32 | |||||||||||
$ | 6,950,000 | 1.02 | % | $ | 5,300,000 | 0.95 | % |
(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, | |||||||||
2016 | 2015 | 2014 | |||||||
Re-measurement of Euro Notes | $ | 11,849 | 43,801 | 58,013 | |||||
Change in fair value of cross currency interest rate swaps | (1,954 | ) | (45,195 | ) | (57,289 | ) | |||
Total impact to consolidated statements of income - (expense) income (a) | $ | 9,895 | (1,394 | ) | 724 |
(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, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | |||||||||
1:3 basis swaps | $ | — | 724 | 2,624 | 410 | |||||||
Interest rate swaps - floor income hedges | 81,159 | 21,408 | 256 | 1,175 | ||||||||
Interest rate swap option - floor income hedge | 2,977 | 3,257 | — | — | ||||||||
Interest rate swaps - hybrid debt hedges | — | — | 7,341 | 7,646 | ||||||||
Interest rate caps | 1,152 | 1,570 | — | — | ||||||||
Cross-currency interest rate swap | — | — | 67,605 | 65,650 | ||||||||
Other | 2,243 | 1,731 | — | — | ||||||||
Total | $ | 87,531 | 28,690 | 77,826 | 74,881 |
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, 2016 | $ | 87,531 | (2,880 | ) | 475 | 85,126 | |||||||
Balance as of December 31, 2015 | 28,690 | (851 | ) | 1,632 | 29,471 |
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, 2016 | $ | (77,826 | ) | 2,880 | 7,292 | (67,654 | ) | ||||||
Balance as of December 31, 2015 | (74,881 | ) | 851 | 13,168 | (60,862 | ) |
Year ended December 31, | ||||||||||
2016 | 2015 | 2014 | ||||||||
Settlements: | ||||||||||
1:3 basis swaps | $ | 1,493 | 1,058 | 3,389 | ||||||
Interest rate swaps - floor income hedges | (17,643 | ) | (23,041 | ) | (24,380 | ) | ||||
Interest rate swaps - hybrid debt hedges | (915 | ) | (1,012 | ) | (1,025 | ) | ||||
Cross-currency interest rate swaps | (4,884 | ) | (1,255 | ) | 173 | |||||
Total settlements - (expense) income | (21,949 | ) | (24,250 | ) | (21,843 | ) | ||||
Change in fair value: | ||||||||||
1:3 basis swaps | (2,938 | ) | 12,292 | 36,824 | ||||||
Interest rate swaps - floor income hedges | 64,111 | 20,103 | 8,797 | |||||||
Interest rate swap option - floor income hedge | (281 | ) | (2,420 | ) | (3,409 | ) | ||||
Interest rate swaps - hybrid debt hedges | 304 | (295 | ) | (5,233 | ) | |||||
Interest rate caps | (419 | ) | (1,365 | ) | — | |||||
Cross-currency interest rate swaps | (1,954 | ) | (45,195 | ) | (57,289 | ) | ||||
Other | 1,072 | 1,730 | — | |||||||
Total change in fair value - income (expense) | 59,895 | (15,150 | ) | (20,310 | ) | |||||
Re-measurement of Euro Notes (foreign currency transaction adjustment) - income (expense) | 11,849 | 43,801 | 58,013 | |||||||
Derivative market value and foreign currency adjustments and derivative settlements, net - income (expense) | $ | 49,795 | 4,401 | 15,860 |
|
As of December 31, 2016 | As of December 31, 2015 | ||||||||||||||||||||||||
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) | $ | 98,260 | 6,280 | (641 | ) | 103,899 | 139,970 | 3,402 | (1,362 | ) | 142,010 | ||||||||||||||
Equity securities | 720 | 1,930 | (61 | ) | 2,589 | 846 | 1,686 | (100 | ) | 2,432 | |||||||||||||||
Total available-for-sale investments | $ | 98,980 | 8,210 | (702 | ) | 106,488 | 140,816 | 5,088 | (1,462 | ) | 144,442 | ||||||||||||||
Trading investments: | |||||||||||||||||||||||||
Student loan asset-backed securities | — | 6,045 | |||||||||||||||||||||||
Equity securities | 105 | 4,905 | |||||||||||||||||||||||
Total trading investments | 105 | 10,950 | |||||||||||||||||||||||
Total available-for-sale and trading investments | 106,593 | 155,392 | |||||||||||||||||||||||
Other Investments and Notes Receivable (not measured at fair value): | |||||||||||||||||||||||||
Venture capital and funds (c) | 69,789 | 63,323 | |||||||||||||||||||||||
Real estate | 48,379 | 50,463 | |||||||||||||||||||||||
Notes receivable | 17,031 | 18,473 | |||||||||||||||||||||||
Tax liens and affordable housing | 12,352 | 16,030 | |||||||||||||||||||||||
Total investments and notes receivable | $ | 254,144 | 303,681 |
(a) | As of December 31, 2016, the aggregate fair value of available-for-sale investments with unrealized losses was $11.0 million of which substantially all 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, 2016, 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, 2016, 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. |
(c) | As of December 31, 2016 and 2015, "Venture capital and funds" included $41.4 million of the Company's equity investment in Hudl. See note 19 for further information. |
Year ended December 31, | ||||||||||
2016 | 2015 | 2014 | ||||||||
Available-for-sale securities: | ||||||||||
Gross realized gains | $ | 3,099 | 3,402 | 8,581 | ||||||
Gross realized losses | (1,192 | ) | (447 | ) | (75 | ) | ||||
Trading securities: | ||||||||||
Unrealized gains (losses), net | 525 | (715 | ) | (135 | ) | |||||
Realized gains (losses), net | 341 | (2,097 | ) | (1,082 | ) | |||||
$ | 2,773 | 143 | 7,289 |
|
As of December 31, 2016 | |||||||||||||||
Fair value | Carrying value | Level 1 | Level 2 | Level 3 | |||||||||||
Financial assets: | |||||||||||||||
Student 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 | — |
As of December 31, 2015 | |||||||||||||||
Fair value | Carrying value | Level 1 | Level 2 | Level 3 | |||||||||||
Financial assets: | |||||||||||||||
Student loans receivable | $ | 28,611,350 | 28,324,552 | — | — | 28,611,350 | |||||||||
Cash and cash equivalents | 63,529 | 63,529 | 63,529 | — | — | ||||||||||
Investments (available-for-sale and trading) | 155,392 | 155,392 | 7,467 | 147,925 | — | ||||||||||
Notes receivable | 18,067 | 18,473 | — | 18,067 | — | ||||||||||
Restricted cash | 832,624 | 832,624 | 832,624 | — | — | ||||||||||
Restricted cash – due to customers | 144,771 | 144,771 | 144,771 | — | — | ||||||||||
Accrued interest receivable | 383,825 | 383,825 | — | 383,825 | — | ||||||||||
Derivative instruments | 28,690 | 28,690 | — | 28,690 | — | ||||||||||
Financial liabilities: | |||||||||||||||
Bonds and notes payable | 27,150,775 | 28,105,921 | — | 27,150,775 | — | ||||||||||
Accrued interest payable | 31,507 | 31,507 | — | 31,507 | — | ||||||||||
Due to customers | 144,771 | 144,771 | 144,771 | — | — | ||||||||||
Derivative instruments | 74,881 | 74,881 | — | 74,881 | — |
Cash and cash equivalents | $ | 326 | ||
Accounts receivable | 961 | |||
Property and equipment | 105 | |||
Other assets | 22 | |||
Intangible assets | 37,188 | |||
Excess cost over fair value of net assets acquired (goodwill) | 9,082 | |||
Other liabilities | (1,341 | ) | ||
Net assets acquired | $ | 46,343 |
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, 2016 (months) | As of December 31, 2016 | As of December 31, 2015 | |||||||
Amortizable intangible assets: | |||||||||
Customer relationships (net of accumulated amortization of $8,548 and $23,195, respectively) | 168 | $ | 28,335 | 27,576 | |||||
Computer software (net of accumulated amortization of $9,652 and $4,397, respectively) | 26 | 9,296 | 11,601 | ||||||
Trade names (net of accumulated amortization of $1,653 and $795, respectively) | 189 | 9,919 | 10,687 | ||||||
Content (net of accumulated amortization of $1,800 and $900, respectively) | — | — | 900 | ||||||
Covenants not to compete (net of accumulated amortization of $91 and $56, respectively) | 89 | 263 | 298 | ||||||
Total - amortizable intangible assets | 144 | $ | 47,813 | 51,062 |
2017 | $ | 9,386 | |
2018 | 8,605 | ||
2019 | 5,147 | ||
2020 | 4,231 | ||
2021 | 3,480 | ||
2022 and thereafter | 16,964 | ||
$ | 47,813 |
|
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, 2014 | $ | 8,596 | 67,168 | — | 41,883 | 8,553 | 126,200 | |||||||||||
Goodwill acquired during the period | — | — | 19,800 | — | — | 19,800 | ||||||||||||
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 |
(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 | 2016 | 2015 | ||||||
Non-communications: | ||||||||
Computer equipment and software | 1-5 years | $ | 97,317 | 89,093 | ||||
Office furniture and equipment | 3-7 years | 12,344 | 12,638 | |||||
Building and building improvements | 5-39 years | 13,363 | 12,239 | |||||
Transportation equipment | 4-10 years | 3,809 | 3,868 | |||||
Leasehold improvements | 5-20 years | 3,579 | 3,545 | |||||
Land | — | 1,682 | 700 | |||||
Construction in progress | — | 16,346 | 1,210 | |||||
148,440 | 123,293 | |||||||
Accumulated depreciation - non-communications | 91,285 | 77,188 | ||||||
Non-communications, net property and equipment | 57,155 | 46,105 | ||||||
Communications: | ||||||||
Network plant and fiber | 5-15 years | 40,844 | 25,669 | |||||
Central office | 5-15 years | 6,448 | 909 | |||||
Customer located property | 5-10 years | 5,138 | 6,912 | |||||
Transportation equipment | 4-10 years | 2,966 | 470 | |||||
Computer equipment and software | 1-5 years | 2,026 | 74 | |||||
Other | 1-39 years | 1,268 | 343 | |||||
Land | — | 70 | — | |||||
Construction in progress | — | 12,537 | — | |||||
71,297 | 34,377 | |||||||
Accumulated depreciation - communications | 4,666 | — | ||||||
Communications, net property and equipment | 66,631 | 34,377 | ||||||
Total property and equipment, net | $ | 123,786 | 80,482 |
|
Year ended December 31, | ||||||
2016 | 2015 | |||||
Gross balance - beginning of year | $ | 27,688 | 21,336 | |||
Additions based on tax positions of prior years | 904 | 4,749 | ||||
Additions based on tax positions related to the current year | 4,347 | 5,096 | ||||
Settlements with taxing authorities | — | — | ||||
Reductions for tax positions of prior years | (3,088 | ) | (1,327 | ) | ||
Reductions based on tax positions related to the current year | — | — | ||||
Reductions due to lapse of applicable statutes of limitations | (1,847 | ) | (2,166 | ) | ||
Gross balance - end of year | $ | 28,004 | 27,688 |
Year ended December 31, | |||||||||
2016 | 2015 | 2014 | |||||||
Current: | |||||||||
Federal | $ | 111,302 | 140,778 | 138,269 | |||||
State | 3,019 | 4,530 | 2,545 | ||||||
Foreign | (13 | ) | 23 | (235 | ) | ||||
Total current provision | 114,308 | 145,331 | 140,579 | ||||||
Deferred: | |||||||||
Federal | 25,423 | 3,572 | 16,598 | ||||||
State | 1,976 | 3,875 | 3,464 | ||||||
Foreign | (394 | ) | (398 | ) | (403 | ) | |||
Total deferred provision | 27,005 | 7,049 | 19,659 | ||||||
Provision for income tax expense | $ | 141,313 | 152,380 | 160,238 |
Year ended December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Tax expense at federal rate | 35.0 | % | 35.0 | % | 35.0 | % | ||
Increase (decrease) resulting from: | ||||||||
State tax, net of federal income tax benefit | 1.1 | 1.0 | 0.7 | |||||
Provision for uncertain federal and state tax matters | — | 0.9 | 0.4 | |||||
Tax credits | (0.6) | (0.5) | (0.4) | |||||
Other | — | (0.1) | (1.4) | |||||
Effective tax rate | 35.5 | % | 36.3 | % | 34.3 | % |
As of December 31, | ||||||
2016 | 2015 | |||||
Deferred tax assets: | ||||||
Student loans | $ | 20,980 | 20,711 | |||
Securitizations | 5,675 | 6,684 | ||||
Intangible assets | 4,821 | 10,482 | ||||
Accrued expenses | 3,533 | 3,034 | ||||
Stock compensation | 2,948 | 2,882 | ||||
Deferred revenue | 2,699 | 2,220 | ||||
Capital loss carry-back | — | 4,169 | ||||
Total gross deferred tax assets | 40,656 | 50,182 | ||||
Less valuation allowance | (264 | ) | (222 | ) | ||
Net deferred tax assets | 40,392 | 49,960 | ||||
Deferred tax liabilities: | ||||||
Basis in certain derivative contracts | 46,636 | 24,101 | ||||
Loan origination services | 13,019 | 15,695 | ||||
Debt repurchases | 12,457 | 18,759 | ||||
Depreciation | 5,128 | 5,514 | ||||
Partnership basis | 4,976 | 1,748 | ||||
Unrealized gain on debt and equity securities | 3,246 | 1,400 | ||||
Other | 360 | 47 | ||||
Total gross deferred tax liabilities | 85,822 | 67,264 | ||||
Net deferred tax (liability) asset | $ | (45,430 | ) | (17,304 | ) |
|
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 market value and foreign currency adjustments, net | — | — | — | 70,368 | 1,376 | — | 71,744 | ||||||||||||||
Derivative settlements, net | — | — | — | (21,034 | ) | (915 | ) | — | (21,949 | ) | |||||||||||
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 | $ | 55,469 | 230,283 | 103,104 | 26,378,467 | 669,472 | (256,687 | ) | 27,180,108 |
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 market value and foreign currency adjustments, net | — | — | — | 27,216 | 1,435 | — | 28,651 | ||||||||||||||
Derivative settlements, net | — | — | — | (23,238 | ) | (1,012 | ) | — | (24,250 | ) | |||||||||||
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 | $ | 80,459 | 229,615 | 68,760 | 29,634,280 | 624,953 | (218,923 | ) | 30,419,144 |
Year ended December 31, 2014 (a) | ||||||||||||||||||
Loan Systems and Servicing | Tuition Payment Processing and Campus Commerce | Asset Generation and Management | Corporate and Other Activities | Eliminations | Total | |||||||||||||
Total interest income | $ | 30 | 6 | 703,382 | 8,618 | (2,236 | ) | 709,800 | ||||||||||
Interest expense | — | — | 269,742 | 5,731 | (2,236 | ) | 273,237 | |||||||||||
Net interest income | 30 | 6 | 433,640 | 2,887 | — | 436,563 | ||||||||||||
Less provision for loan losses | — | — | 9,500 | — | — | 9,500 | ||||||||||||
Net interest income (loss) after provision for loan losses | 30 | 6 | 424,140 | 2,887 | — | 427,063 | ||||||||||||
Other income: | ||||||||||||||||||
Loan systems and servicing revenue | 240,414 | — | — | — | — | 240,414 | ||||||||||||
Intersegment servicing revenue | 55,139 | — | — | — | (55,139 | ) | — | |||||||||||
Tuition payment processing, school information, and campus commerce revenue | — | 98,156 | — | — | — | 98,156 | ||||||||||||
Enrollment services revenue | — | — | — | 62,949 | — | 62,949 | ||||||||||||
Other income | — | 1,268 | 21,532 | 51,136 | — | 73,936 | ||||||||||||
Gain on sale of loans and debt repurchases, net | — | — | (1,357 | ) | 5,008 | — | 3,651 | |||||||||||
Derivative market value and foreign currency adjustments, net | — | — | 42,936 | (5,233 | ) | — | 37,703 | |||||||||||
Derivative settlements, net | — | — | (20,818 | ) | (1,025 | ) | — | (21,843 | ) | |||||||||
Total other income | 295,553 | 99,424 | 42,293 | 112,835 | (55,139 | ) | 494,966 | |||||||||||
Operating expenses: | ||||||||||||||||||
Salaries and benefits | 125,844 | 48,453 | 2,316 | 51,466 | — | 228,079 | ||||||||||||
Depreciation and amortization | 1,734 | 8,169 | — | 11,231 | — | 21,134 | ||||||||||||
Loan servicing fees | — | — | 27,009 | — | — | 27,009 | ||||||||||||
Cost to provide enrollment services | — | — | — | 49,985 | — | 49,985 | ||||||||||||
Other expenses | 59,521 | 13,006 | 6,602 | 47,174 | — | 126,303 | ||||||||||||
Intersegment expenses, net | 31,956 | 4,769 | 56,325 | (37,912 | ) | (55,139 | ) | — | ||||||||||
Total operating expenses | 219,055 | 74,397 | 92,252 | 121,944 | (55,139 | ) | 452,510 | |||||||||||
Income (loss) before income taxes | 76,528 | 25,033 | 374,181 | (6,222 | ) | — | 469,519 | |||||||||||
Income tax (expense) benefit | (29,081 | ) | (9,513 | ) | (142,189 | ) | 20,544 | — | (160,238 | ) | ||||||||
Net income (loss) | 47,447 | 15,520 | 231,992 | 14,322 | — | 309,281 | ||||||||||||
Net loss (income) attributable to noncontrolling interest | — | — | — | (1,671 | ) | — | (1,671 | ) | ||||||||||
Net income (loss) attributable to Nelnet, Inc. | $ | 47,447 | 15,520 | 231,992 | 12,651 | — | 307,610 | |||||||||||
Total assets | $ | 84,495 | 231,991 | 29,436,466 | 495,716 | (220,929 | ) | 30,027,739 |
|
2017 | $ | 5,316 | |
2018 | 4,967 | ||
2019 | 4,143 | ||
2020 | 3,472 | ||
2021 | 1,898 | ||
2022 and thereafter | 6,615 | ||
Total minimum lease payments | $ | 26,411 |
|
Year ended December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Non-vested shares at beginning of year | 471,597 | 499,463 | 407,051 | |||||
Granted | 123,181 | 126,946 | 189,716 | |||||
Vested | (113,507 | ) | (108,424 | ) | (77,219 | ) | ||
Canceled | (33,891 | ) | (46,388 | ) | (20,085 | ) | ||
Non-vested shares at end of year | 447,380 | 471,597 | 499,463 |
2017 | $ | 3,265 | |
2018 | 1,989 | ||
2019 | 1,218 | ||
2020 | 720 | ||
2021 | 431 | ||
2022 and thereafter | 623 | ||
$ | 8,246 |
Shares issued - not deferred | Shares- deferred | Total | ||||||
Year ended December 31, 2016 | 10,799 | 13,644 | 24,443 | |||||
Year ended December 31, 2015 | 8,164 | 10,406 | 18,570 | |||||
Year ended December 31, 2014 | 8,067 | 10,175 | 18,242 |
|
As of December 31, 2016 | As of December 31, 2015 | |||||||||||||||||
Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | |||||||||||||
Assets: | ||||||||||||||||||
Investments (available-for-sale and trading): (a) | ||||||||||||||||||
Student loan asset-backed securities | $ | — | 103,780 | 103,780 | — | 147,925 | 147,925 | |||||||||||
Equity securities | 2,694 | — | 2,694 | 7,337 | — | 7,337 | ||||||||||||
Debt securities | 119 | — | 119 | 130 | — | 130 | ||||||||||||
Total investments (available-for-sale and trading) | 2,813 | 103,780 | 106,593 | 7,467 | 147,925 | 155,392 | ||||||||||||
Derivative instruments (b) | — | 87,531 | 87,531 | — | 28,690 | 28,690 | ||||||||||||
Total assets | $ | 2,813 | 191,311 | 194,124 | 7,467 | 176,615 | 184,082 | |||||||||||
Liabilities: | ||||||||||||||||||
Derivative instruments (b): | $ | — | 77,826 | 77,826 | — | 74,881 | 74,881 | |||||||||||
Total liabilities | $ | — | 77,826 | 77,826 | — | 74,881 | 74,881 |
(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, 2016 | |||||||||||||||
Fair value | Carrying value | Level 1 | Level 2 | Level 3 | |||||||||||
Financial assets: | |||||||||||||||
Student 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 | — |
As of December 31, 2015 | |||||||||||||||
Fair value | Carrying value | Level 1 | Level 2 | Level 3 | |||||||||||
Financial assets: | |||||||||||||||
Student loans receivable | $ | 28,611,350 | 28,324,552 | — | — | 28,611,350 | |||||||||
Cash and cash equivalents | 63,529 | 63,529 | 63,529 | — | — | ||||||||||
Investments (available-for-sale and trading) | 155,392 | 155,392 | 7,467 | 147,925 | — | ||||||||||
Notes receivable | 18,067 | 18,473 | — | 18,067 | — | ||||||||||
Restricted cash | 832,624 | 832,624 | 832,624 | — | — | ||||||||||
Restricted cash – due to customers | 144,771 | 144,771 | 144,771 | — | — | ||||||||||
Accrued interest receivable | 383,825 | 383,825 | — | 383,825 | — | ||||||||||
Derivative instruments | 28,690 | 28,690 | — | 28,690 | — | ||||||||||
Financial liabilities: | |||||||||||||||
Bonds and notes payable | 27,150,775 | 28,105,921 | — | 27,150,775 | — | ||||||||||
Accrued interest payable | 31,507 | 31,507 | — | 31,507 | — | ||||||||||
Due to customers | 144,771 | 144,771 | 144,771 | — | — | ||||||||||
Derivative instruments | 74,881 | 74,881 | — | 74,881 | — |
|
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 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 | (24,433 | ) | (15,036 | ) | (47,715 | ) | (54,128 | ) | ||||
Net income | 48,029 | 26,178 | 84,363 | 98,931 | ||||||||
Net income attributable to noncontrolling interest | 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 |
2015 | ||||||||||||
First quarter | Second quarter | Third quarter | Fourth quarter | |||||||||
Net interest income | $ | 102,595 | 105,096 | 111,993 | 112,215 | |||||||
Less provision for loan losses | 2,000 | 2,150 | 3,000 | 3,000 | ||||||||
Net interest income after provision for loan losses | 100,595 | 102,946 | 108,993 | 109,215 | ||||||||
Loan systems and servicing revenue | 57,811 | 63,833 | 61,520 | 56,694 | ||||||||
Tuition payment processing, school information, and campus commerce revenue | 34,680 | 27,686 | 30,439 | 27,560 | ||||||||
Enrollment services revenue | 13,373 | 12,680 | 13,741 | 11,279 | ||||||||
Other income | 11,408 | 11,985 | 12,282 | 11,587 | ||||||||
Gain on sale of loans and debt repurchases, net | 2,875 | 1,515 | 597 | 166 | ||||||||
Derivative market value and foreign currency adjustments and derivative settlements, net | (3,078 | ) | 6,502 | (30,658 | ) | 31,635 | ||||||
Salaries and benefits | (61,050 | ) | (58,787 | ) | (63,215 | ) | (64,862 | ) | ||||
Depreciation and amortization | (5,662 | ) | (6,501 | ) | (6,977 | ) | (7,203 | ) | ||||
Loan servicing fees | (7,616 | ) | (7,420 | ) | (7,793 | ) | (7,384 | ) | ||||
Cost to provide enrollment services | (10,799 | ) | (10,395 | ) | (11,349 | ) | (9,190 | ) | ||||
Operating expenses | (30,101 | ) | (32,725 | ) | (31,604 | ) | (28,584 | ) | ||||
Income tax expense | (37,630 | ) | (40,356 | ) | (26,999 | ) | (47,395 | ) | ||||
Net income | 64,806 | 70,963 | 48,977 | 83,518 | ||||||||
Net income attributable to noncontrolling interest | 41 | 54 | 22 | 168 | ||||||||
Net income attributable to Nelnet, Inc. | $ | 64,765 | 70,909 | 48,955 | 83,350 | |||||||
Earnings per common share: | ||||||||||||
Net income attributable to Nelnet, Inc. shareholders - basic and diluted | $ | 1.40 | 1.54 | 1.09 | 1.86 |
|
Balance Sheets | ||||||
(Parent Company Only) | ||||||
As of December 31, 2016 and 2015 | ||||||
2016 | 2015 | |||||
Assets: | ||||||
Cash and cash equivalents | $ | 29,734 | 19,419 | |||
Investments and notes receivable | 167,711 | 214,786 | ||||
Investment in subsidiary debt | 71,815 | 49,932 | ||||
Restricted cash | 7,805 | 14,802 | ||||
Investment in subsidiaries | 1,537,507 | 1,519,103 | ||||
Notes receivable from subsidiaries | 161,284 | 169,845 | ||||
Other assets | 136,685 | 168,947 | ||||
Fair value of derivative instruments | 86,379 | 27,120 | ||||
Total assets | $ | 2,198,920 | 2,183,954 | |||
Liabilities: | ||||||
Notes payable | $ | 48,085 | 230,307 | |||
Other liabilities | 74,706 | 56,234 | ||||
Fair value of derivative instruments | 10,221 | 9,231 | ||||
Total liabilities | 133,012 | 295,772 | ||||
Equity: | ||||||
Nelnet, Inc. shareholders' equity: | ||||||
Common stock | 421 | 440 | ||||
Additional paid-in capital | 420 | — | ||||
Retained earnings | 2,056,084 | 1,881,708 | ||||
Accumulated other comprehensive earnings | 4,730 | 2,284 | ||||
Total Nelnet, Inc. shareholders' equity | 2,061,655 | 1,884,432 | ||||
Noncontrolling interest | 4,253 | 3,750 | ||||
Total equity | 2,065,908 | 1,888,182 | ||||
Total liabilities and shareholders' equity | $ | 2,198,920 | 2,183,954 |
Statements of Income | |||||||||
(Parent Company Only) | |||||||||
Years ended December 31, 2016, 2015, and 2014 | |||||||||
2016 | 2015 | 2014 | |||||||
Investment interest income | $ | 9,794 | 5,776 | 6,863 | |||||
Interest expense on bonds and notes payable | 6,049 | 6,242 | 5,492 | ||||||
Net interest (expense) income | 3,745 | (466 | ) | 1,371 | |||||
Other income: | |||||||||
Other income | 7,037 | 4,012 | 8,943 | ||||||
Gain from debt repurchases | 8,083 | 4,904 | 6,685 | ||||||
Equity in subsidiaries income | 239,405 | 276,825 | 316,934 | ||||||
Derivative market value adjustments and derivative settlements, net | 45,203 | 8,416 | 14,963 | ||||||
Total other income | 299,728 | 294,157 | 347,525 | ||||||
Operating expenses | 8,183 | 5,057 | 5,598 | ||||||
Income before income taxes | 295,290 | 288,634 | 343,298 | ||||||
Income tax expense | 38,642 | 20,655 | 34,017 | ||||||
Net income | 256,648 | 267,979 | 309,281 | ||||||
Net (loss) income attributable to noncontrolling interest | (103 | ) | — | 1,671 | |||||
Net income attributable to Nelnet, Inc. | $ | 256,751 | 267,979 | 307,610 |
Statements of Comprehensive Income | |||||||||
(Parent Company Only) | |||||||||
Years ended December 31, 2016, 2015, and 2014 | |||||||||
2016 | 2015 | 2014 | |||||||
Net income | $ | 256,648 | 267,979 | 309,281 | |||||
Other comprehensive income (loss): | |||||||||
Available-for-sale securities: | |||||||||
Unrealized holding gains (losses) arising during period, net | 5,789 | (1,570 | ) | 9,006 | |||||
Less reclassification adjustment for gains recognized in net income, net of losses | (1,907 | ) | (2,955 | ) | (8,506 | ) | |||
Income tax effect | (1,436 | ) | 1,674 | (184 | ) | ||||
Total other comprehensive income (loss) | 2,446 | (2,851 | ) | 316 | |||||
Comprehensive income | 259,094 | 265,128 | 309,597 | ||||||
Comprehensive (loss) income attributable to noncontrolling interest | (103 | ) | — | 1,671 | |||||
Comprehensive income attributable to Nelnet, Inc. | $ | 259,197 | 265,128 | 307,926 |
Statements of Cash Flows | |||||||||
(Parent Company Only) | |||||||||
Years ended December 31, 2016, 2015, and 2014 | |||||||||
2016 | 2015 | 2014 | |||||||
Net income attributable to Nelnet, Inc. | $ | 256,751 | 267,979 | 307,610 | |||||
Net (loss) income attributable to noncontrolling interest | (103 | ) | — | 1,671 | |||||
Net income | 256,648 | 267,979 | 309,281 | ||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||
Depreciation and amortization | 391 | 327 | 303 | ||||||
Derivative market value adjustment | (62,268 | ) | (31,411 | ) | (36,979 | ) | |||
Proceeds to terminate and/or amend derivative instruments, net of payments | 3,999 | 65,527 | 1,765 | ||||||
Payment to enter into derivative instrument | — | — | (9,087 | ) | |||||
Equity in earnings of subsidiaries | (239,405 | ) | (276,825 | ) | (316,934 | ) | |||
Gain from sales of available-for-sale securities, net | (1,907 | ) | (2,955 | ) | (8,506 | ) | |||
Gain from debt repurchases | (8,083 | ) | (4,904 | ) | (6,685 | ) | |||
Proceeds (purchases) related to trading securities, net | 62 | (167 | ) | — | |||||
Deferred income tax expense | 20,071 | 3,228 | 12,397 | ||||||
Non-cash compensation expense | 4,348 | 5,347 | 4,699 | ||||||
Other | 1,055 | 2,113 | 2,576 | ||||||
Decrease (increase) in other assets | 32,262 | (8,541 | ) | (2,211 | ) | ||||
(Decrease) increase in other liabilities | (594 | ) | 6,597 | 115 | |||||
Net cash provided by (used in) operating activities | 6,579 | 26,315 | (49,266 | ) | |||||
Cash flows from investing activities: | |||||||||
Decrease (increase) in restricted cash | 6,997 | (13,825 | ) | 3,636 | |||||
Purchases of available-for-sale securities | (94,920 | ) | (98,332 | ) | (192,315 | ) | |||
Proceeds from sales of available-for-sale securities | 139,427 | 94,722 | 240,371 | ||||||
Capital contributions/distributions to/from subsidiaries, net | 223,386 | 120,291 | (25,017 | ) | |||||
Decrease (increase) in notes receivable from subsidiaries | 8,561 | (84,061 | ) | 12,623 | |||||
Proceeds from investments and notes receivable | 9,952 | 12,253 | 4,163 | ||||||
(Purchases of) proceeds from subsidiary debt, net | (13,800 | ) | 72,125 | 111,038 | |||||
Purchases of investments and issuances of notes receivable | (4,365 | ) | (53,388 | ) | (27,166 | ) | |||
Business acquisition, net of cash acquired | — | (45,916 | ) | — | |||||
Net cash provided by investing activities | 275,238 | 3,869 | 127,333 | ||||||
Cash flows from financing activities: | |||||||||
Payments on notes payable | (412,000 | ) | (42,541 | ) | (63,084 | ) | |||
Proceeds from issuance of notes payable | 230,000 | 116,460 | 27,577 | ||||||
Payments of debt issuance costs | (613 | ) | (773 | ) | (512 | ) | |||
Dividends paid | (21,188 | ) | (19,025 | ) | (18,542 | ) | |||
Repurchases of common stock | (69,091 | ) | (96,169 | ) | (15,713 | ) | |||
Proceeds from issuance of common stock | 889 | 801 | 656 | ||||||
Issuance of noncontrolling interest | 501 | — | 201 | ||||||
Distribution to noncontrolling interest | — | (230 | ) | (1,970 | ) | ||||
Net cash used in financing activities | (271,502 | ) | (41,477 | ) | (71,387 | ) | |||
Net increase (decrease) in cash and cash equivalents | 10,315 | (11,293 | ) | 6,680 | |||||
Cash and cash equivalents, beginning of period | 19,419 | 30,712 | 24,032 | ||||||
Cash and cash equivalents, end of period | $ | 29,734 | 19,419 | 30,712 | |||||
Cash disbursements made for: | |||||||||
Interest | $ | 5,533 | 5,914 | 5,189 | |||||
Income taxes, net of refunds | $ | 115,415 | 147,130 | 155,715 | |||||
Non-cash investing and financing activities: | |||||||||
Issuance of noncontrolling interest | $ | — | 3,750 | — | |||||
Contributions of investments to subsidiaries, net | $ | (1,884 | ) | — | — |
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