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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One) | | | | | |
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2022
or | | | | | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File Number: 001-31924
NELNET, INC.
(Exact name of registrant as specified in its charter) | | | | | | | | | | | |
Nebraska | 84-0748903 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| | | |
121 South 13th Street, Suite 100 | | |
Lincoln, | Nebraska | 68508 |
(Address of principal executive offices) | (Zip Code) |
(402) 458-2370
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
Title of each class | Trading Symbol | Name of each exchange on which registered |
Class A Common Stock, Par Value $0.01 per Share | NNI | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of April 30, 2022, there were 26,994,698 and 10,674,892 shares of Class A Common Stock and Class B Common Stock, par value $0.01 per share, outstanding, respectively (excluding a total of 11,305,731 shares of Class A Common Stock held by wholly owned subsidiaries).
NELNET, INC.
FORM 10-Q
INDEX
March 31, 2022
| | | | | | | | | | | |
| |
| Item 1. | | |
| Item 2. | | |
| Item 3. | | |
| Item 4. | | |
| | | |
| |
| Item 1. | | |
| Item 1A. | | |
| Item 2. | | |
| Item 6. | | |
| | | |
| | |
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
| | | | | | | | | | | |
NELNET, INC. AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
(Dollars in thousands, except share data) |
(unaudited) |
| As of | | As of |
| March 31, 2022 | | December 31, 2021 |
Assets: | | | |
Loans and accrued interest receivable (net of allowance for loan losses of $117,825 and $127,113, respectively) | $ | 17,621,576 | | | 18,335,197 | |
Cash and cash equivalents: | | | |
Cash and cash equivalents - not held at a related party | 36,111 | | | 30,128 | |
Cash and cash equivalents - held at a related party | 126,674 | | | 95,435 | |
Total cash and cash equivalents | 162,785 | | | 125,563 | |
Investments | 1,649,578 | | | 1,588,919 | |
Restricted cash | 757,954 | | | 741,981 | |
Restricted cash - due to customers | 256,927 | | | 326,645 | |
Accounts receivable (net of allowance for doubtful accounts of $1,098 and $1,160, respectively) | 144,902 | | | 163,315 | |
Goodwill | 142,092 | | | 142,092 | |
Intangible assets, net | 49,544 | | | 52,029 | |
Property and equipment, net | 120,779 | | | 119,413 | |
Other assets | 83,604 | | | 82,887 | |
| | | |
Total assets | $ | 20,989,741 | | | 21,678,041 | |
Liabilities: | | | |
Bonds and notes payable | $ | 16,736,701 | | | 17,631,089 | |
Accrued interest payable | 7,216 | | | 4,566 | |
Bank deposits | 484,047 | | | 344,315 | |
Other liabilities | 400,523 | | | 379,231 | |
Due to customers | 276,191 | | | 366,002 | |
| | | |
Total liabilities | 17,904,678 | | | 18,725,203 | |
Commitments and contingencies | | | |
Equity: | | | |
Nelnet, Inc. shareholders' equity: | | | |
Preferred stock, $0.01 par value. Authorized 50,000,000 shares; no shares issued or outstanding | — | | | — | |
Common stock: | | | |
Class A, $0.01 par value. Authorized 600,000,000 shares; issued and outstanding 27,151,270 shares and 27,239,654 shares, respectively | 272 | | | 272 | |
Class B, convertible, $0.01 par value. Authorized 60,000,000 shares; issued and outstanding 10,674,892 shares and 10,676,642 shares, respectively | 107 | | | 107 | |
Additional paid-in capital | 1,208 | | | 1,000 | |
Retained earnings | 3,092,226 | | | 2,940,523 | |
Accumulated other comprehensive (loss) earnings, net | (5,500) | | | 9,304 | |
Total Nelnet, Inc. shareholders' equity | 3,088,313 | | | 2,951,206 | |
Noncontrolling interests | (3,250) | | | 1,632 | |
Total equity | 3,085,063 | | | 2,952,838 | |
Total liabilities and equity | $ | 20,989,741 | | | 21,678,041 | |
| | | |
Supplemental information - assets and liabilities of consolidated education and other lending variable interest entities: | | | |
Loans and accrued interest receivable | $ | 17,162,119 | | | 17,981,414 | |
Restricted cash | 666,369 | | | 674,073 | |
| | | |
Bonds and notes payable | (16,660,541) | | | (17,462,456) | |
Accrued interest payable and other liabilities | (48,267) | | | (36,276) | |
| | | |
Net assets of consolidated education and other lending variable interest entities | $ | 1,119,680 | | | 1,156,755 | |
See accompanying notes to consolidated financial statements.
| | | | | | | | | | | | | | | |
NELNET, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF INCOME |
(Dollars in thousands, except share data) |
(unaudited) |
| Three months ended | | |
| March 31, | | |
| 2022 | | 2021 | | | | |
Interest income: | | | | | | | |
Loan interest | $ | 111,377 | | | 124,117 | | | | | |
Investment interest | 13,819 | | | 4,986 | | | | | |
Total interest income | 125,196 | | | 129,103 | | | | | |
Interest expense on bonds and notes payable and bank deposits | 48,079 | | | 27,773 | | | | | |
Net interest income | 77,117 | | | 101,330 | | | | | |
Less negative provision for loan losses | (435) | | | (17,048) | | | | | |
Net interest income after provision for loan losses | 77,552 | | | 118,378 | | | | | |
Other income/expense: | | | | | | | |
Loan servicing and systems revenue | 136,368 | | | 111,517 | | | | | |
Education technology, services, and payment processing revenue | 112,286 | | | 95,258 | | | | | |
| | | | | | | |
Other | 9,877 | | | (2,168) | | | | | |
Gain on sale of loans | 2,989 | | | — | | | | | |
| | | | | | | |
| | | | | | | |
Derivative market value adjustments and derivative settlements, net | 142,925 | | | 34,505 | | | | | |
Total other income/expense | 404,445 | | | 239,112 | | | | | |
Cost to provide education technology, services, and payment processing services | 35,545 | | | 27,052 | | | | | |
| | | | | | | |
| | | | | | | |
Operating expenses: | | | | | | | |
Salaries and benefits | 149,414 | | | 115,791 | | | | | |
Depreciation and amortization | 16,956 | | | 20,184 | | | | | |
| | | | | | | |
| | | | | | | |
Other expenses | 39,499 | | | 36,698 | | | | | |
Total operating expenses | 205,869 | | | 172,673 | | | | | |
Income before income taxes | 240,583 | | | 157,765 | | | | | |
Income tax expense | 55,697 | | | 34,861 | | | | | |
Net income | 184,886 | | | 122,904 | | | | | |
Net loss attributable to noncontrolling interests | 1,761 | | | 694 | | | | | |
Net income attributable to Nelnet, Inc. | $ | 186,647 | | | 123,598 | | | | | |
Earnings per common share: | | | | | | | |
Net income attributable to Nelnet, Inc. shareholders - basic and diluted | $ | 4.91 | | | 3.20 | | | | | |
Weighted average common shares outstanding - basic and diluted | 38,041,834 | | | 38,603,555 | | | | | |
See accompanying notes to consolidated financial statements.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NELNET, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
(Dollars in thousands) |
(unaudited) |
| Three months ended March 31, | | |
| 2022 | | 2021 | | | | |
Net income | | | $ | 184,886 | | | | | 122,904 | | | | | | | | | |
Other comprehensive (loss) income: | | | | | | | | | | | | | | | |
Net changes related to foreign currency translation adjustments | $ | | 9 | | | | | 1 | | | | | | | | | |
Net changes related to available-for-sale debt securities: | | | | | | | | | | | | | | | |
Unrealized holding (losses) gains arising during period, net | (16,698) | | | | | 4,349 | | | | | | | | | | | |
Reclassification of gains recognized in net income, net of losses | (2,793) | | | | | (508) | | | | | | | | | | | |
Income tax effect | 4,678 | | | (14,813) | | | (922) | | | 2,919 | | | | | | | | | |
Other comprehensive (loss) income | | | (14,804) | | | | | 2,920 | | | | | | | | | |
Comprehensive income | | | 170,082 | | | | | 125,824 | | | | | | | | | |
Comprehensive loss attributable to noncontrolling interests | | | 1,761 | | | | | 694 | | | | | | | | | |
Comprehensive income attributable to Nelnet, Inc. | | | $ | 171,843 | | | | | 126,518 | | | | | | | | | |
See accompanying notes to consolidated financial statements.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NELNET, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY |
(Dollars in thousands, except share data) |
(unaudited) |
| Nelnet, Inc. Shareholders | | | |
| Preferred stock shares | | Common stock shares | | Preferred stock | | Class A common stock | | Class B common stock | | Additional paid-in capital | | Retained earnings | | Accumulated other comprehensive (loss) earnings | | Noncontrolling interests | | Total equity |
| | Class A | | Class B | | | | | | | | |
Balance as of December 31, 2020 | — | | | 27,193,154 | | | 11,155,571 | | | $ | — | | | 272 | | | 112 | | | 3,794 | | | 2,621,762 | | | 6,102 | | | (3,693) | | | 2,628,349 | |
Issuance of noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 1,400 | | | 1,400 | |
Net income (loss) | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 123,598 | | | — | | | (694) | | | 122,904 | |
Other comprehensive income | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 2,920 | | | — | | | 2,920 | |
Distribution to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (102) | | | (102) | |
Cash dividends on Class A and Class B common stock - $0.22 per share | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (8,437) | | | — | | | — | | | (8,437) | |
Issuance of common stock, net of forfeitures | — | | | 199,442 | | | — | | | — | | | 2 | | | — | | | 2,089 | | | — | | | — | | | — | | | 2,091 | |
Compensation expense for stock based awards | — | | | — | | | — | | | — | | | — | | | — | | | 1,985 | | | — | | | — | | | — | | | 1,985 | |
Repurchase of common stock | — | | | (26,199) | | | — | | | — | | | — | | | — | | | (2,009) | | | — | | | — | | | — | | | (2,009) | |
| | | | | | | | | | | | | | | | | | | | | |
Conversion of common stock | — | | | 1,400 | | | (1,400) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Balance as of March 31, 2021 | — | | | 27,367,797 | | | 11,154,171 | | | $ | — | | | 274 | | | 112 | | | 5,859 | | | 2,736,923 | | | 9,022 | | | (3,089) | | | 2,749,101 | |
| | | | | | | | | | | | | | | | | | | | | |
Balance as of December 31, 2021 | — | | | 27,239,654 | | | 10,676,642 | | | $ | — | | | 272 | | | 107 | | | 1,000 | | | 2,940,523 | | | 9,304 | | | 1,632 | | | 2,952,838 | |
Issuance of noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 2,004 | | | 2,004 | |
Net income (loss) | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 186,647 | | | — | | | (1,761) | | | 184,886 | |
Other comprehensive loss | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (14,804) | | | — | | | (14,804) | |
Distribution to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (5,125) | | | (5,125) | |
Cash dividends on Class A and Class B common stock - $0.24 per share | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (9,063) | | | — | | | — | | | (9,063) | |
Issuance of common stock, net of forfeitures | — | | | 289,919 | | | — | | | — | | | 3 | | | — | | | 4,382 | | | — | | | — | | | — | | | 4,385 | |
Compensation expense for stock based awards | — | | | — | | | — | | | — | | | — | | | — | | | 2,841 | | | — | | | — | | | — | | | 2,841 | |
Repurchase of common stock | — | | | (380,053) | | | — | | | — | | | (3) | | | — | | | (7,015) | | | (25,881) | | | — | | | — | | | (32,899) | |
| | | | | | | | | | | | | | | | | | | | | |
Conversion of common stock | — | | | 1,750 | | | (1,750) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Balance as of March 31, 2022 | — | | | 27,151,270 | | | 10,674,892 | | | $ | — | | | 272 | | | 107 | | | 1,208 | | | 3,092,226 | | | (5,500) | | | (3,250) | | | 3,085,063 | |
See accompanying notes to consolidated financial statements.
| | | | | | | | | | | |
NELNET, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Dollars in thousands) |
(unaudited) |
| Three months ended |
| March 31, |
| 2022 | | 2021 |
Net income attributable to Nelnet, Inc. | $ | 186,647 | | | 123,598 | |
Net loss attributable to noncontrolling interests | (1,761) | | | (694) | |
Net income | 184,886 | | | 122,904 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | |
Depreciation and amortization, including debt discounts and loan premiums and deferred origination costs | 36,335 | | | 38,415 | |
Loan discount accretion | (9,927) | | | (7,218) | |
Negative provision for loan losses | (435) | | | (17,048) | |
Derivative market value adjustments | (145,734) | | | (38,809) | |
| | | |
| | | |
| | | |
Proceeds from clearinghouse - initial and variation margin, net of payments | 149,649 | | | 38,081 | |
| | | |
Gain on sale of loans | (2,989) | | | — | |
| | | |
| | | |
Loss on investments, net | 2,801 | | | 13,849 | |
| | | |
Proceeds from sale (purchases) of equity securities, net | 572 | | | (13,512) | |
Deferred income tax expense | 39,443 | | | 15,405 | |
Non-cash compensation expense | 2,920 | | | 2,052 | |
Negative provision for beneficial interests | — | | | (2,436) | |
Decrease (increase) in loan and investment accrued interest receivable | 10,694 | | | (114) | |
Decrease (increase) in accounts receivable | 18,442 | | | (3,831) | |
(Increase) decrease in other assets, net | (1,963) | | | 5,147 | |
Decrease in the carrying amount of ROU asset, net | 1,439 | | | 1,418 | |
Increase (decrease) in accrued interest payable | 2,650 | | | (23,174) | |
Decrease in other liabilities, net | (11,824) | | | (10,375) | |
Decrease in the carrying amount of lease liability | (1,500) | | | (1,247) | |
Decrease in due to customers | (89,884) | | | (70,849) | |
Other | (110) | | | — | |
Net cash provided by operating activities | 185,465 | | | 48,658 | |
Cash flows from investing activities: | | | |
Purchases and originations of loans | (161,334) | | | (152,329) | |
Purchases of loans from a related party | (1,049) | | | (19,731) | |
Net proceeds from loan repayments, claims, and capitalized interest | 848,188 | | | 637,275 | |
Proceeds from sale of loans | 15,170 | | | — | |
Purchases of available-for-sale securities | (139,195) | | | (44,335) | |
Proceeds from sales of available-for-sale securities | 113,980 | | | 18,077 | |
Proceeds from beneficial interest in loan securitizations | 7,271 | | | 8,603 | |
Purchases of other investments | (73,944) | | | (71,590) | |
Proceeds from other investments | 9,776 | | | 110,290 | |
Purchases of property and equipment | (15,794) | | | (17,898) | |
| | | |
| | | |
| | | |
Net cash provided by investing activities | 603,069 | | | 468,362 | |
| | | |
| | | | | | | | | | | |
NELNET, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) |
| Three months ended |
| March 31, |
| 2022 | | 2021 |
Cash flows from financing activities: | | | |
Payments on bonds and notes payable | $ | (918,270) | | | (584,303) | |
Proceeds from issuance of bonds and notes payable | 13,512 | | | 7,800 | |
Payments of debt issuance costs | (312) | | | (614) | |
| | | |
| | | |
Increase in bank deposits, net | 139,732 | | | 57,197 | |
Dividends paid | (9,063) | | | (8,437) | |
Repurchases of common stock | (32,899) | | | (2,009) | |
Proceeds from issuance of common stock | 435 | | | 381 | |
| | | |
Issuance of noncontrolling interests | 2,004 | | | 1,940 | |
Distribution to noncontrolling interests | (365) | | | (102) | |
Net cash used in financing activities | (805,226) | | | (528,147) | |
Effect of exchange rate changes on cash | 169 | | | (77) | |
Net decrease in cash, cash equivalents, and restricted cash | (16,523) | | | (11,204) | |
Cash, cash equivalents, and restricted cash, beginning of period | 1,194,189 | | | 958,395 | |
Cash, cash equivalents, and restricted cash, end of period | $ | 1,177,666 | | | 947,191 | |
| | | | | | | | | | | |
Supplemental disclosures of cash flow information: | | | |
Cash disbursements made for interest | $ | 33,895 | | | 39,686 | |
Cash disbursements made for income taxes, net of refunds and credits received (a) | $ | 466 | | | 199 | |
Cash disbursements made for operating leases | $ | 1,887 | | | 2,098 | |
Non-cash operating, investing, and financing activity: | | | |
ROU assets obtained in exchange for lease obligations | $ | 746 | | | 740 | |
Receipt of beneficial interest in consumer loan securitization | $ | 3,660 | | | — | |
Distribution to noncontrolling interests | $ | 4,760 | | | — | |
Issuance of noncontrolling interests | $ | — | | | 540 | |
(a) The Company utilized $1.1 million and $2.0 million of federal and state tax credits related primarily to renewable energy during the three months ended March 31, 2022 and 2021, respectively.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets to the total of the amounts reported in the consolidated statements of cash flows.
| | | | | | | | | | | | | | | | | | | | | | | |
| As of | | As of | | As of | | As of |
| March 31, 2022 | | December 31, 2021 | | March 31, 2021 | | December 31, 2020 |
Total cash and cash equivalents | $ | 162,785 | | | 125,563 | | | 144,229 | | | 121,249 | |
Restricted cash | 757,954 | | | 741,981 | | | 609,881 | | | 553,175 | |
Restricted cash - due to customers | 256,927 | | | 326,645 | | | 193,081 | | | 283,971 | |
Cash, cash equivalents, and restricted cash | $ | 1,177,666 | | | 1,194,189 | | | 947,191 | | | 958,395 | |
See accompanying notes to consolidated financial statements.
NELNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts, unless otherwise noted)
(unaudited)
1. Basis of Financial Reporting
The accompanying unaudited consolidated financial statements of Nelnet, Inc. and subsidiaries (the “Company”) as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 have been prepared on the same basis as the audited consolidated financial statements for the year ended December 31, 2021 and, in the opinion of the Company’s management, the unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results of operations for the interim periods presented. The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results for the year ending December 31, 2022. The unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the "2021 Annual Report").
2. Loans and Accrued Interest Receivable and Allowance for Loan Losses
Loans and accrued interest receivable consisted of the following:
| | | | | | | | | | | |
| As of | | As of |
| March 31, 2022 | | December 31, 2021 |
Non-Nelnet Bank: | | | |
Federally insured student loans: | | | |
Stafford and other | $ | 3,741,495 | | | 3,904,000 | |
Consolidation | 12,553,882 | | | 13,187,047 | |
Total | 16,295,377 | | | 17,091,047 | |
Private education loans | 278,537 | | | 299,442 | |
Consumer loans | 44,713 | | | 51,301 | |
Non-Nelnet Bank loans | 16,618,627 | | | 17,441,790 | |
Nelnet Bank: | | | |
Federally insured student loans | 82,789 | | | 88,011 | |
| | | |
| | | |
| | | |
Private education loans | 285,468 | | | 169,890 | |
| | | |
Nelnet Bank loans | 368,257 | | | 257,901 | |
| | | |
Accrued interest receivable | 774,774 | | | 788,552 | |
Loan discount, net of unamortized loan premiums and deferred origination costs | (22,257) | | | (25,933) | |
| | | |
Allowance for loan losses: | | | |
Non-Nelnet Bank: | | | |
Federally insured loans | (95,995) | | | (103,381) | |
Private education loans | (14,622) | | | (16,143) | |
Consumer loans | (5,710) | | | (6,481) | |
Non-Nelnet Bank allowance for loan losses | (116,327) | | | (126,005) | |
Nelnet Bank: | | | |
Federally insured loans | (247) | | | (268) | |
Private education loans | (1,251) | | | (840) | |
| | | |
Nelnet Bank allowance for loan losses | (1,498) | | | (1,108) | |
| $ | 17,621,576 | | | 18,335,197 | |
The following table summarizes the allowance for loan losses as a percentage of the ending loan balance for each of the Company's loan portfolios.
| | | | | | | | | | | |
| As of | | As of |
| March 31, 2022 | | December 31, 2021 |
Non-Nelnet Bank: | | | |
Federally insured student loans (a) | 0.59 | % | | 0.60 | % |
Private education loans | 5.25 | % | | 5.39 | % |
Consumer loans | 12.77 | % | | 12.63 | % |
Nelnet Bank: | | | |
Federally insured student loans (a) | 0.30 | % | | 0.30 | % |
Private education loans | 0.44 | % | | 0.49 | % |
| | | |
(a) As of March 31, 2022 and December 31, 2021, the allowance for loan losses as a percent of the risk sharing component of federally insured student loans not covered by the federal guaranty for non-Nelnet Bank was 21.6% and 22.2%, respectively, and for Nelnet Bank was 11.8% and 12.1%, respectively.
Gain on Sale of Loans
On January 26, 2022, the Company sold $18.1 million (par value) of consumer loans to an unrelated third party who securitized such loans. The Company recognized a gain of $3.0 million (pre-tax) as part of this transaction. As partial consideration received for the consumer loans sold, the Company received a 6.6 percent residual interest in the consumer loan securitization, which is included in "investments" on the Company's consolidated balance sheet.
Activity in the Allowance for Loan Losses
The following table presents the activity in the allowance for loan losses by portfolio segment.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at beginning of period | | | | Provision (negative provision) for loan losses | | Charge-offs | | Recoveries | | Initial allowance on loans purchased with credit deterioration (a) | | Loan sales | | Balance at end of period |
| Three months ended March 31, 2022 |
Non-Nelnet Bank: | | | | | | | | | | | | | | | |
Federally insured loans | $ | 103,381 | | | | | (2,748) | | | (4,761) | | | — | | | 123 | | | — | | | 95,995 | |
Private education loans | 16,143 | | | | | (400) | | | (1,299) | | | 176 | | | — | | | 2 | | | 14,622 | |
Consumer loans | 6,481 | | | | | 2,284 | | | (937) | | | 166 | | | — | | | (2,284) | | | 5,710 | |
Nelnet Bank: | | | | | | | | | | | | | | | |
Federally insured loans | 268 | | | | | (21) | | | — | | | — | | | — | | | — | | | 247 | |
Private education loans | 840 | | | | | 426 | | | (13) | | | — | | | — | | | (2) | | | 1,251 | |
| | | | | | | | | | | | | | | |
| $ | 127,113 | | | | | (459) | | | (7,010) | | | 342 | | | 123 | | | (2,284) | | | 117,825 | |
| | | | | | | | | | | | | | | |
| Three months ended March 31, 2021 |
Non-Nelnet Bank: | | | | | | | | | | | | | | | |
Federally insured loans | $ | 128,590 | | | | | (7,483) | | | |