Nelnet Locates Internet Bank Headquarters in Salt Lake City, Utah
According to company officials, Nelnet Bank will operate as an internet bank franchise and leverage Nelnet's experience and expertise helping students and families plan and pay for their education.The company’s roots go back more than 40 years as a federal student loan servicer and more than 30 years as a private education loan originator and servicer.
"We are excited to have earned both the FDIC's and UDFI's approval," said Tim Tewes, president of Nelnet. "This is an important milestone and brings us a step closer to launching Nelnet Bank and being able to combine our experience in education and lending to help students and families make informed education funding decisions. With a chartered bank, we will have a better opportunity to bring new borrower-focused solutions to market that leverage our superior customer experience, tuition payment plans, and education lending and servicing."
The company's bank subsidiary will offer a financially secure, experienced, and FDIC-insured lender to the private education loan marketplace, company officials explained. With diversified sources of funding that include deposits and securitizations, Nelnet Bank will act as a reliable and affordable source of funding for creditworthy, education-seeking consumers throughout all credit markets.
"We appreciate the working relationship we have established with the FDIC and UDFI and are eager to continue with the bank formation process," said Andrea Moss, CEO and president of Nelnet Bank. "Our next steps will prepare us to open Nelnet Bank, including fully developing our product suite, technology systems, and operational processes and controls. While we have a lot of work to do, we are excited to launch Nelnet Bank and begin fulfilling our purpose of serving students and families."
The approvals from the FDIC and UDFI are subject to a number of conditions, including a Capital Adequacy and Liquidity Management Agreement and a Parent Company Agreement with the FDIC and compliance with the terms of the orders from the FDIC and UDFI, respectively. Nelnet Bank will have to meet a readiness review by the FDIC and UDFI before commencing operations. Nelnet Bank is also awaiting approval of its Community Reinvestment Act Plan and is committed to the communities in which it will operate. A timeline has not been established for these next steps in the process.
Nelnet Bank will be funded with an initial capital commitment of $100 million from Nelnet. Nelnet Bank will operate as a subsidiary of Nelnet, and the industrial bank charter will allow the company to maintain its other diversified business offerings. Nelnet Bank will be governed by a board of directors that is independent of the parent company, consistent with the requirements of the industrial bank charter.
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