Despite being down from its comparable quarter last year, Nelnet's base net income beat analysts' estimates and the stock closed up more than 2 percent on Monday, at $13.61.
The Lincoln Journal Star | Posted: Sunday, May 11, 2008 7:00 pm
Nelnet Inc., the Lincoln student loan company, reported Monday that its base net income for the first quarter fell to $15.3 million, or $0.29 a share, compared with $24.7 million, or $0.48 per share, in the first quarter of 2007.
Despite being down from its comparable quarter last year, Nelnet’s base net income beat analysts’ estimates and the stock closed up more than 2 percent on Monday, at $13.56.
Base net income as defined by Nelnet is net income excluding derivative market value adjustments and other special items.
The company had some very large adjustments in the first quarter, and when those were figured in, Nelnet lost $69.8 million, a huge swing from the $14.8 million it earned in the first quarter of 2007 when measured by the same standards.
Those large adjustments included $26.3 million related to Nelnet’s continuing restructuring announced last fall and $47.5 in losses for loans that were either sold or are being held for sale.
“Our results in the first quarter reflect the further deterioration of the financial markets and environment for student loans,” Mike Dunlap, Chairman and Chief Executive Officer of Nelnet, said in a statement. “Fortunately, we have made the strategic transformation from a student loan company to an education services company in recent years to diversify and increase our fee-based revenue and reduce our reliance on net interest income. We are pleased with the performance of our fee-based businesses and the success of our diversification strategy.”
Nelnet reported that fee-based income made up 83 percent of the company’s revenue in the first quarter, up from 65 percent in the fourth quarter of 2007 and 53 percent in the first quarter of last year. Fee-based income comes from such things as loan servicing for others and tuition payment plan administration.
Conversely, Nelnet reported that net interest income dropped by more than three-fourths from $68 million in the first quarter of 2007, to $16.5 million in the first quarter of this year.