Company Structure and Operations - In 2023, the company converted to a financial holding company from a BDC and a non-bank lender, acquiring NBNYC, which has been renamed Newtek Bank[167]. - Newtek Bank is currently the second largest SBA 7(a) lender in the U.S. based on dollar volume of loans approved, following a transition of SBA 7(a) loan originations from NSBF[173]. - The company offers a range of financial products including SBA 7(a), ALP, SBA 504 loans, and various deposit products such as high yield savings accounts and business checking accounts[167]. - The company sources its business through an alliance partner network and a marketing database facilitated by its patented NewTracker® platform[167]. - The company no longer qualifies as a RIC for U.S. federal income tax purposes and filed a consolidated U.S. federal income tax return beginning with the 2023 fiscal year[172]. Financial Performance - For the three months ended March 31, 2025, the company reported net income of $9.4 million, a decrease of 3.1% from $9.7 million in the same period of 2024[202]. - The Banking segment reported net income of $6.027 million, down 36% from $9.401 million year-over-year, despite an increase in net interest income to $12.7 million from $7.7 million[241]. - Alternative Lending segment saw a significant increase in net income to $23.129 million, up 155% from $9.062 million in the prior year, driven by higher loan originations[240][242]. - NSBF segment experienced a net loss of $4.954 million, a 438% increase in losses compared to a loss of $920, attributed to the wind-down of operations[240][243]. - Consolidated net income for the three months ended March 31, 2025, was $9.367 million, a decrease of 3% from $9.650 million in the same period of 2024[240]. Loan and Asset Management - The company holds CECL reserves on loans held for investment at amortized cost, with unguaranteed SBA 7(a) loans exceeding 6%[167]. - Loans held for investment at amortized cost increased by $89.5 million, reflecting higher originations in Q1 2025 compared to the same period in 2024[190]. - As of March 31, 2025, total loans held for investment (HFI) at amortized cost were $711.166 million, an increase from $621.651 million as of December 31, 2024, representing a growth of 14.4%[191]. - The allowance for credit losses increased to $38.649 million (5.4% of total loans) as of March 31, 2025, compared to $30.233 million (4.9%) at the end of 2024[191]. - Nonaccrual loans at amortized cost rose to $38.125 million (5.4%) from $24.341 million (3.9%) in the previous quarter, indicating a deterioration in credit quality[191]. Regulatory Compliance and Risk Management - The company is subject to regulation and supervision by the Federal Reserve and the OCC, requiring investments in technology and personnel to comply with regulatory standards[169]. - The company has guaranteed certain obligations of NSBF to the SBA and funded a $10.0 million account to secure these potential obligations[170]. - The company has established an Asset/Liability Committee to oversee risk management related to interest rate and liquidity risks[321]. - The company’s interest rate risk profile may transition between asset sensitivity and liability sensitivity depending on the scenario and timing of anticipated rate changes[324]. Income and Expenses - Total interest income rose to $37.9 million in Q1 2025, up 40.0% from $27.1 million in Q1 2024, driven by a $9.5 million increase in interest income on loans[204]. - Interest expense increased to $24.0 million in Q1 2025, a rise of 32.0% from $18.2 million in Q1 2024, primarily due to a $4.3 million increase in interest on deposits[207]. - Noninterest income increased to $52.4 million in Q1 2025, up 6.1% from $49.4 million in Q1 2024, reflecting growth in various service fees[203]. - Total noninterest expense remained relatively stable, with a slight increase of $18, or less than 0.1%, compared to the previous year[234]. - Salaries and employee benefits expense increased by $0.81 million, or 4.0%, primarily due to higher benefits costs[234]. Capital and Liquidity - The Company had total liquidity sources of $341.2 million as of March 31, 2025, down from $483.8 million as of December 31, 2024[272]. - The Company’s Tier 1 Capital to Average Assets ratio was 12.2% as of March 31, 2025, compared to 13.7% as of March 31, 2024[270]. - The Company completed a registered offering of $71.9 million in 2029 8.50% Notes, with proceeds of $69.6 million received before expenses[250]. - The total cash and restricted cash at the end of the period was $294.1 million, down from $381.4 million at the beginning of the period[274]. - The company has restricted cash of $24.2 million as of March 31, 2025, including $5.0 million held by NSBF for securitization obligations[273]. Market and Economic Factors - The estimated percentage change in Economic Value of Equity (EVE) for a +200 basis point change is 0.6% as of March 31, 2025[326]. - A -100 basis point change in interest rates is projected to decrease NII by 5.5% for the 12 months beginning March 31, 2025[326]. - The EVE analysis indicates that the company would modestly increase market value in a rising rate environment due to its asset sensitivity[327]. - The company regularly models various forecasted rate projections to assess and manage potential risks from interest rate shifts[324].

Core Viewpoint - NewtekOne, Inc. held its First Quarter 2025 Earnings Conference Call, highlighting key financial results and company updates. Group 1: Company Overview - Barry Sloane serves as the Chairman, President, and CEO of NewtekOne, Inc. [2] - The conference call included participation from CFOs Scott Price and Frank DeMaria, representing Newtek Bank National Association and NewtekOne, respectively [3]. Group 2: Conference Call Details - The conference call was recorded and included a presentation available on the company's website for investors [3]. - The company acknowledged the contributions of Bryce Rowe, the new VP of Investor Relations, for his efforts in preparing the presentation and press release [4].

Financial Data and Key Metrics Changes - The first quarter earnings per share (EPS) were reported at $0.35 diluted and $0.36 basic, exceeding the consensus estimate of $0.31, with a previous forecast range of $0.28 to $0.32 [18][20] - The company maintained its annual EPS growth projection range of $2.10 to $2.50, indicating a projected growth of 17% using the midpoint [19][20] - Return on assets for the first quarter was reported at 1.18%, compared to the average of 90 basis points for banks with assets between $1 billion and $10 billion [21] Business Line Data and Key Metrics Changes - The alternative loan program (ALP) has shown significant success, with loans being of better quality than the SBA loans, and the average FICO score for these loans is around 740 [25][26] - The company reported a successful securitization with a 570 basis point spread between the net yield on the loans and the yield on the bonds [27] - The efficiency ratio for the holding company improved from 71% to 63%, indicating better operational efficiency [28] Market Data and Key Metrics Changes - Deposits were relatively flat compared to the previous quarter, with a shift towards core deposits in the business and consumer spaces [64] - The average cost of deposits was approximately 4%, expected to decrease to around 3.8% to 3.85% for the full year of 2025 [65] - The net interest margin (NIM) expanded year over year, with net interest income increasing by 56% compared to the previous year [67] Company Strategy and Development Direction - The company positions itself as a technology-enabled financial holding company, focusing on providing business and financial solutions to independent business owners, avoiding consumer loans [13][14] - The management emphasized the importance of adapting to market changes and indicated that further personnel changes may occur to align with strategic goals [82][84] - The company aims to leverage its digital banking capabilities to enhance customer acquisition and operational efficiency [15][19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged headwinds in 2025 but expressed confidence in the company's ability to navigate challenges, particularly in loan acquisition [20][22] - The management highlighted that the first quarter is typically the weakest quarter, and historical trends indicate stronger performance in subsequent quarters [22] - The company is focused on maintaining profitability despite credit concerns and emphasized the importance of understanding its unique business model [21][11] Other Important Information - The company has seen a significant increase in shareholder equity, growing from $6.92 to $10.16 over two years, despite paying dividends [36] - The management noted that the merchant solutions business generates substantial EBITDA, contributing to overall profitability [39] - The company has a unique position in the market, with more capital deployed in activities outside of the bank than within it, which differentiates it from traditional banks [50] Q&A Session Summary Question: Sustainability of net gain on loans under fair value option - Management indicated that the gains from ALP loans are expected to be sustainable, with detailed calculations available in the upcoming reports [72][74] Question: Rationale behind recent management changes - Management acknowledged that changes are part of adapting to market dynamics and emphasized the importance of having focused leadership in key areas [82][84] Question: Breakdown of fair value gains this quarter - Management clarified that the fair value gains were influenced by securitization strategies and market conditions, with specific figures to be detailed in future reports [96][98]

Financial Data and Key Metrics Changes - The first quarter earnings per share (EPS) were reported at $0.35 diluted and $0.36 basic, exceeding the consensus estimate of $0.31, with a previous forecast range of $0.28 to $0.32 [17][18] - The company maintained its annual EPS growth projection range of $2.10 to $2.50, indicating a projected growth of 17% using the midpoint [18] - Return on assets for the first quarter was reported at 1.18%, compared to the average of 90 basis points for banks with assets between $1 billion and $10 billion [20] Business Line Data and Key Metrics Changes - The alternative loan program (ALP) has shown significant success, with loans being of higher quality than the SBA loans, and the average FICO score for these loans is around 740 [24][25] - The company reported a successful securitization with a 570 basis point spread between the net yield on the loans and the yield on the bonds [26] - The efficiency ratio for the holding company declined from 71% to 63%, indicating improved operational efficiency [27] Market Data and Key Metrics Changes - Deposits were relatively flat compared to the previous quarter, with a shift towards core deposits in the business and consumer spaces [61] - The average cost of deposits was approximately 4%, expected to decrease to around 3.8% to 3.85% for the full year of 2025 [62] - The net interest margin (NIM) increased year over year by 56%, with a quarter-over-quarter expansion of 24 basis points [64] Company Strategy and Development Direction - The company positions itself as a technology-enabled financial holding company, focusing on providing business and financial solutions to independent business owners, avoiding consumer loans [12][13] - The management emphasized the importance of adapting to market changes and indicated that further personnel changes may occur as the company evolves [78][84] - The company aims to leverage its digital banking capabilities to enhance customer acquisition and operational efficiency [14][19] Management Comments on Operating Environment and Future Outlook - Management acknowledged headwinds in 2025 but expressed confidence in the company's ability to navigate challenges, particularly in loan acquisition [20][21] - The management highlighted that Q1 is typically the weakest quarter, and comparisons with Q4 revenues should be approached with caution [21] - The company is optimistic about the sustainability of its earnings and projections, particularly in the ALP segment [76] Other Important Information - The company has seen a significant reduction in losses from its non-bank SBA lending subsidiary, with a decline of over 50% [22] - The management noted that the company has a unique business model that does not conform to traditional bank metrics, emphasizing its diversified revenue streams [7][48] - The company has a strong focus on maintaining a low-cost structure while providing high-quality financial solutions [15][19] Q&A Session Summary Question: Sustainability of net gains on loans under fair value option - Management indicated that the gains are expected to be sustainable throughout 2025, with specific metrics provided on ALP loans and their pricing [69][70] Question: Rationale behind recent management changes - Management acknowledged that changes are part of adapting to market dynamics and emphasized the importance of having focused leadership in key areas [78][84] Question: Breakdown of fair value gains this quarter - Management clarified that the fair value gains were driven by securitization and market execution, with specific figures provided for SBA loan sales [90][92]

Core Insights - NewtekOne (NEWT) reported revenue of $66.33 million for Q1 2025, a year-over-year increase of 13.8% [1] - The EPS for the same period was $0.35, down from $0.38 a year ago, with a surprise of +2.94% compared to the consensus estimate of $0.34 [1] - The reported revenue exceeded the Zacks Consensus Estimate of $64.67 million, resulting in a surprise of +2.58% [1] Financial Performance Metrics - Efficiency Ratio was 62.1%, better than the average estimate of 67.6% from two analysts [4] - Net Interest Margin remained stable at 3%, matching the average estimate [4] - Noninterest income from Dividend income was $1.69 million, significantly higher than the average estimate of $0.40 million [4] - Noninterest income from Loan servicing asset revaluation was -$3.65 million, worse than the average estimate of -$1.80 million [4] - Noninterest income from Servicing income was $5.53 million, exceeding the average estimate of $4.98 million [4] - Net interest income was reported at $13.93 million, surpassing the average estimate of $13.15 million [4] - Noninterest income from Electronic payment processing income was $10.61 million, slightly below the average estimate of $11.47 million [4] - Noninterest income from Other noninterest income was $7.19 million, lower than the average estimate of $11.42 million [4] - Total noninterest income reached $52.40 million, above the average estimate of $51.52 million [4] - Noninterest income from Net gains on sales of loans was $12.96 million, significantly lower than the average estimate of $20.48 million [4] Stock Performance - NewtekOne shares returned -0.3% over the past month, while the Zacks S&P 500 composite increased by +11.5% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market [3]

Group 1 - NewtekOne (NEWT) reported quarterly earnings of $0.35 per share, exceeding the Zacks Consensus Estimate of $0.34 per share, but down from $0.38 per share a year ago [1] - The company achieved a revenue of $66.33 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.58% and up from $58.27 million year-over-year [3] - Over the last four quarters, NewtekOne has consistently surpassed consensus EPS and revenue estimates [2][3] Group 2 - The stock has underperformed, losing approximately 22.9% since the beginning of the year, compared to a decline of 3.9% for the S&P 500 [4] - The current consensus EPS estimate for the upcoming quarter is $0.52 on revenues of $72.27 million, and for the current fiscal year, it is $2.20 on revenues of $293.85 million [8] - The Financial - Miscellaneous Services industry, to which NewtekOne belongs, is currently ranked in the top 36% of over 250 Zacks industries, indicating a favorable outlook [9]

NASDAQ: NEWT First Quarter 2025 Financial Results Conference Call May 7, 2025 Hosted and Presented by: Barry Sloane, CEO & President Frank M. DeMaria, CFO, NewtekOne, Inc. Scott Price, CFO, Newtek Bank, N.A. Investor Relations Bryce Rowe, CFA browe@newtekone.com (212) 273-8292 www.newtekone.com Note Regarding Forward-Looking Statements Certain statements in this presentation and made during this conference call include statements about our plans and future prospects for the Company and our industry that are ...

Core Viewpoint - NewtekOne, Inc. reported strong financial results for the first quarter of 2025, with diluted earnings per share (EPS) of $0.35, exceeding the projected range of $0.28 to $0.32, despite a challenging economic environment and increased loan loss provisions [1][4]. Financial Highlights for 1Q25 - Basic EPS was $0.36 and diluted EPS was $0.35, compared to $0.38 for both in 1Q24 [5]. - Book value per common share increased to $10.73, reflecting a year-over-year growth of 13.2% and a quarter-over-quarter growth of 2.0% [5]. - Tangible book value per common share rose to $10.17, up 23.0% year-over-year and 8.3% quarter-over-quarter [5]. - Net income before taxes for 1Q25 was approximately $11.6 million, down 11.1% from $13.1 million in 1Q24 [5]. - Pre-provision net revenue (PPNR) was approximately $25.2 million, an increase of 47.0% year-over-year from $17.1 million in 1Q24 [5]. - The efficiency ratio improved to 62.1%, down from 70.6% in 1Q24 [5]. - Return on average assets (ROAA) was 1.81%, with EPS guidance implying a 2025 ROAA range of 2.2%-2.7% [5]. - Return on average equity (ROAE) was 12.7%, with guidance suggesting a 2025 ROAE range of 17.2%-20.2% [5]. - Return on average tangible common equity (ROTCE) was 13.9%, with guidance indicating a 2025 ROTCE range of 18.7%-22.0% [5]. Lending and Other Select Highlights for 1Q25 - SBA 7(a) loan originations were approximately $213.4 million, compared to $211.5 million in 1Q24 [5]. - Alternative Loan Program (ALP) loan originations totaled $68.5 million for 1Q25 [5]. - SBA 504 loan originations were roughly $16.9 million, with $12.9 million in SBA 504 loan sales executed [5]. - Newtek Bank originated $41.2 million in commercial real estate (CRE) loans and $22.7 million in commercial and industrial (C&I) loans held for investment in 1Q25 [5]. - Commercial deposits at Newtek Bank increased by $28 million, or 12% quarter-over-quarter, while core consumer deposits grew by $17 million, or 2% quarter-over-quarter [5]. Post 1Q25 Highlights and 2025 Forecasts - The company forecasts annual EPS in a range of $2.10 to $2.50 for 2025, implying a 17% growth in EPS despite a projected near-doubling of the loan loss provision [4]. - The company continues to expect a material reduction in the drag from its Newtek Small Business Finance (NSBF) subsidiary, with losses decreasing more than 50% quarter-over-quarter [6]. - The NSBF portfolio now constitutes 21% of total loans, down from 41% a year ago, indicating a positive trend in loan quality [6]. - The company emphasizes its unique approach as a financial holding company, leveraging non-bank subsidiaries to generate significant earnings [6].

Group 1 - NewtekOne, Inc. (NASDAQ: NEWT) shares have decreased by approximately two-thirds since the announcement in 2021 regarding its reorganization from a business development company to its current structure [2] - The company no longer yields around 9% as it did previously, indicating a significant change in its financial performance [2] - The Insiders Forum focuses on small and mid-cap stocks with recent insider purchases, aiming to outperform the Russell 2000 benchmark over time [2] Group 2 - The Insiders Forum portfolio consists of 12-25 top stocks across various market sectors that are attractively valued [2] - The portfolio has more than doubled the return of its benchmark, the Russell 2000, since its launch [1]

Transaction Marks NewtekOne’s 16th SecuritizationBOCA RATON, Fla., April 23, 2025 (GLOBE NEWSWIRE) -- NewtekOne, Inc. (the “Company”) (NASDAQ: NEWT) announced today that it has closed a $184 million securitization backed by $216 million of Alternative Loan Program (“ALP”) loans. This securitization, NALP Business Loan Trust 2025-1, represents the Company’s third asset-backed securitization secured by ALP loans, the first two of which were executed out of NewtekOne joint ventures, and is the Company’s 16th r ...