Core Viewpoint - NewtekOne, Inc. has amended its revolving credit facility with Capital One, increasing the facility from $60 million to $100 million and extending its maturity by two years, which supports the origination of Alternative Loan Program loans before securitization [1][2]. Group 1: Company Overview - NewtekOne is a financial holding company that provides a variety of business and financial solutions to independent business owners across all 50 states since 1999 [3]. - The company's offerings include banking, business lending, SBA lending solutions, electronic payment processing, accounts receivable financing, inventory financing, insurance solutions, payroll and benefits solutions, and technology solutions [4]. Group 2: Partnership and Financing - The relationship between NewtekOne and Capital One spans nearly 15 years, with Capital One playing a crucial role in NewtekOne's growth as a non-bank lender and financial holding company [2]. - The recent amendment to the Capital One facility follows a similar amendment to the Deutsche Bank ALP facility, indicating a strategic expansion in financing capabilities [1][2].

Core Viewpoint - NewtekOne (NEWT) reported quarterly earnings of $0.52 per share, exceeding the Zacks Consensus Estimate of $0.50 per share, and showing an increase from $0.43 per share a year ago [1][2]. Financial Performance - The earnings surprise for the quarter was +4.00%, with the company having surpassed consensus EPS estimates in all four of the last quarters [2]. - NewtekOne's revenues for the quarter ended June 2025 were $70.2 million, which fell short of the Zacks Consensus Estimate by 4.75%, compared to $61.15 million in the same quarter last year [3]. - The company has exceeded consensus revenue estimates three times in the last four quarters [3]. Stock Performance and Outlook - NewtekOne shares have declined approximately 8.3% since the beginning of the year, while the S&P 500 has gained 8.6% [4]. - The company's earnings outlook is mixed, with a current Zacks Rank of 3 (Hold), indicating expected performance in line with the market in the near future [7]. - The consensus EPS estimate for the upcoming quarter is $0.62 on revenues of $78.68 million, and for the current fiscal year, it is $2.22 on revenues of $303.41 million [8]. Industry Context - The Financial - Miscellaneous Services industry, to which NewtekOne belongs, is currently ranked in the top 38% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [9].

Financial Data and Key Metrics Changes - The company reported a revenue growth of 15% in Q2 2025, reaching $78.2 million compared to $61 million in Q2 2024 [14] - Earnings per share (EPS) guidance for 2024 is maintained at $2.1 to $2.5, with basic and diluted EPS for Q2 2025 at $0.53 and $0.52 respectively [22][25] - The cost of funds at the bank decreased by 28 basis points to 3.71%, while the net interest margin increased by 56 basis points [16][17] Business Line Data and Key Metrics Changes - Business deposits grew by $50 million sequentially, with most funds coming from demand deposit accounts [16] - Losses in Newtek Small Business Finance decreased from $10.7 million to $3.7 million over recent quarters [18] - The alternative loan program (ALP) has completed three successful securitizations and is growing with high-quality loans [19][20] Market Data and Key Metrics Changes - The company serves over 33 million independent business owners in the U.S., contributing to 43% of U.S. GDP [9] - The company has supported over 110,000 jobs through its lending activities over the past five and a half years [9] Company Strategy and Development Direction - The company aims to leverage technology and artificial intelligence to enhance customer acquisition and service delivery [12][28] - The focus is on providing integrated financial solutions to small and medium-sized businesses, moving away from traditional banking models [7][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining a billion dollars in SBA loan originations for the year despite market challenges [95][104] - The company anticipates an increase in provisions in the second half of the year, reflecting a cautious approach to credit quality [122][123] Other Important Information - The company has a strong pre-provision earnings profile, benefiting from wider lending spreads and healthy fee income [53] - The efficiency ratio improved year-over-year from 66.3% to 60.3% [25] Q&A Session Summary Question: What helped bring in $50 million of growth on the commercial deposit side? - Management attributed the growth to the competitive offerings of business accounts and the integration of banking services with lending and payroll solutions [61][64] Question: What were the total charge-offs this quarter for the held-for-investment portfolio? - Total charge-offs were reported at $5 million, consistent with the previous quarter [65][66] Question: Can you break down the various drivers that went through the net fair value line item? - The primary component of the negative $11.7 million was the reversal of previous unrealized gains on ALP loans, which were written down to par [69][71] Question: Will the net gain in residuals and securitizations only occur with ALP securitizations? - Management confirmed that this is the first time they own 100% of the residual, which differs from previous joint ventures [92] Question: What are the expectations for SBA loan volumes following recent rule changes? - Management does not expect a drop in volumes, maintaining guidance for $1 billion in SBA loans for the year [95][104]

Financial Data and Key Metrics Changes - The company reported a revenue growth of 15% in Q2 2025, reaching $78.2 million compared to $61 million in Q2 2024 [14] - Earnings per share (EPS) guidance for 2024 remains unchanged at $2.1 to $2.5, with a midpoint implying a growth rate of 17% [23][24] - The net interest margin at the bank increased by 56 basis points, reaching 5.46% [34] - The cost of deposits declined from 3.99% to 3.71% [34] Business Line Data and Key Metrics Changes - Business deposits grew by $50 million sequentially, with most coming from demand deposit accounts [16] - Losses in Newtek Small Business Finance decreased from $10.7 million to $3.7 million over recent quarters [18] - The alternative loan program (ALP) has completed three successful securitizations and is growing with high-quality loans [19][21] Market Data and Key Metrics Changes - The company estimates that by the end of the year, its loan book will consist of approximately 10,000 borrowers and $4.4 billion in servicing [30] - The average net premium from SBA 7 loans for Q2 2025 was 110.91, with expectations for a slight decrease to 110 for the second half of the year [56] Company Strategy and Development Direction - The company aims to provide integrated solutions for small and medium-sized businesses (SMBs) and independent business owners, focusing on technology and digital banking [6][12] - The strategy includes acquiring deposits below the risk-free rate and enhancing customer analytics and transactional capabilities [27] - The company is positioning itself for future opportunities in stablecoin transactions [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the second half of the year, despite challenges in finding good credits and tariffs impacting borrowing appetite [92] - The company anticipates a higher provision for the second half of the year, with a reserve ratio expected to be between 4.5% to 5.5% [119] Other Important Information - The company has a historical charge-off rate of 1% in its ALP portfolio [36] - The tangible book value per share increased by 3.7% sequentially and 21% year-over-year [35] Q&A Session Summary Question: What helped bring in $50 million of growth on the commercial deposit side? - Management highlighted the benefits of their banking account offerings and integrated solutions for clients, which have driven deposit growth [63][64] Question: What were the total charge-offs this quarter for the held-for-investment portfolio? - Total charge-offs were reported at $5 million, consistent with the previous quarter [68] Question: Can you break down the various drivers that went through the net fair value line item? - The primary component of the negative $11.7 million was the reversal of previous unrealized gains on ALP loans, which were written down to zero [72][73] Question: Will the net gain in residuals and securitizations only occur with ALP securitizations? - Management confirmed that this is the first time they own 100% of the residual, which differs from previous joint ventures [88] Question: What are the expectations for SBA originations for the current year? - Management confirmed they are sticking with the expectation of $1 billion in SBA originations for the year [99]

Core Insights - NewtekOne reported diluted earnings per share (GAAP) of $0.52 for Q2 2025, matching analyst forecasts, while total revenue was $70.2 million, missing estimates by $3.7 million or about 5% [1][5] - Year-over-year, diluted earnings per share increased by 21%, and revenue rose by 15% [1][5] - The company highlighted improved profitability and cost control, but noted a shortfall in lending volume and revenue as key areas to monitor [1] Financial Performance - Q2 2025 diluted EPS (GAAP) was $0.52, in line with estimates, compared to $0.43 in Q2 2024, reflecting a 21% increase [2] - Total revenue for Q2 2025 was $70.2 million, falling short of the $73.9 million estimate, but up from $61.1 million in Q2 2024, marking a 15% increase [2] - Pre-provision net revenue (Non-GAAP) grew by 35.5% year-over-year to $27.9 million [2] - Efficiency ratio (Non-GAAP) improved to 60.3%, down 6 percentage points from the previous year [2] Lending and Deposits - SBA 7(a) loan originations decreased by 9%, from $226.5 million in Q2 2024 to $205.6 million in Q2 2025, which is critical for NewtekOne's revenue generation [6] - Commercial deposit balances increased by $50 million, or 19% quarter-over-quarter, while core consumer deposits rose by $14 million, or 2% [8] - The proportion of insured deposits was 78%, and net interest margin rose to 5.46% due to falling deposit costs [8] Technology and Operations - NewtekOne has focused on digital channels and proprietary software to enhance customer acquisition and operational efficiency [4][10] - Platforms like NewTracker and Newtek Advantage have been developed to streamline customer management and service delivery [7][10] - AI is utilized in loan underwriting and document review, improving decision-making speed and accuracy [7] Business Model and Strategy - NewtekOne's business model is centered around digital banking, leveraging technology to reduce costs associated with traditional banking [3][10] - The company aims to grow its SBA 7(a) lending program and expand its deposit base while maintaining cost efficiency and regulatory compliance [4] - The Alternative Loan Program (ALP) is also expanding, with $78.3 million in new loans and a $184 million securitization completed in April 2025 [9][11] Outlook and Guidance - Management reaffirmed its EPS outlook for fiscal 2025, targeting a GAAP range of $2.10 to $2.50, with a reported $0.89 per share in the first half of 2025 [12] - Return on average tangible common equity (non-GAAP) is expected to reach 18.7% to 22.0% in 2025 [12] - Investors are advised to monitor trends in loan originations, deposit growth, and efficiency metrics as the year progresses [13]

Financial Performance Highlights - Second quarter earnings per share (EPS) reached $0.53 basic and $0.52 diluted, while first half EPS exceeded the midpoint of guidance at $0.89 basic and $0.87 diluted respectively[9] - NewtekOne maintains its 2025 EPS guidance range of $2.10-$2.50, projecting an annual EPS growth of 17% at the midpoint[9] - Net income increased by 27% year-over-year, from $10.5 million to $13.3 million[11] - Diluted EPS increased by 21% year-over-year, from $0.43 to $0.52[11] - The company's efficiency ratio improved from 66.3% to 60.3% year-over-year[9, 48] Balance Sheet and Loan Portfolio - Business deposits increased by $50 million, a 19% increase quarter-over-quarter[9] - Total loans increased from $1.33 billion to $2.07 billion year-over-year[21] - Newtek Bank's loans held for investment (HFI) increased by 70% year-over-year, from $451.8 million to $767.8 million[11] - Alternative Loan Program (ALP) loans held for sale (HFS) increased by 114% year-over-year, from $64.4 million to $138.0 million[11] Credit Quality and Loan Sales - Newtek Bank sold $23.5 million of SBA 504 loans and $42.1 million of guaranteed portions of SBA 7(a) loans in 2Q25[9] - The company completed a securitization of ALP loans in April, issuing $184 million of notes backed by $216 million of ALP loans[25] - The weighted average net premium received on the sale of guaranteed portions of SBA 7(a) loans was 111%[52]

Core Viewpoint - NewtekOne, Inc. reported strong financial results for the second quarter of 2025, showcasing significant year-over-year growth in earnings, revenue, and key financial metrics, while also emphasizing its digital banking strategy and focus on independent business owners [1][7][9]. Financial Highlights for 2Q25 - Basic and diluted earnings per share (EPS) were $0.53 and $0.52, respectively, reflecting year-over-year increases of 23% and 21% [7]. - Total revenue for 2Q25 was $70.2 million, up 15% from $61.1 million in 2Q24 [7]. - Net income before taxes was approximately $18.8 million, a 27% increase from $14.8 million in 2Q24 [7]. - Pre-provision net revenue (PPNR) for 2Q25 was approximately $27.9 million, an increase of 35.5% from $20.6 million in 2Q24 [7]. - The efficiency ratio improved to 60.3%, down from 66.3% in 2Q24 [7]. - Return on average assets (ROAA) was 2.50%, while return on average equity (ROAE) was 17.4% [7]. Lending and Other Selected Highlights for 2Q25 - SBA 7(a) loan originations were approximately $205.6 million, compared to $226.5 million in 2Q24 [8]. - Alternative Loan Program (ALP) loan originations totaled $78.3 million for 2Q25 [8]. - The company completed a $184 million securitization backed by $216 million of ALP loans in April 2025 [8]. - Commercial deposits at Newtek Bank increased by $50 million, or 19% quarter-over-quarter [8]. - Insured deposits comprised 78% of total deposits [8]. Post 2Q25 Highlights - On July 21, 2025, the company paid a quarterly cash dividend of $0.19 per share on its outstanding common shares [6]. - The company expects to execute another ALP securitization in the fourth quarter of 2025 [9]. Strategic Focus and Future Outlook - The company aims to operate its bank without traditional banking structures, focusing on digital solutions for independent business owners [9]. - The growth in business deposits and the digital strategy contributed to a decline in the cost of deposits and an expansion in net interest margin [9]. - The company anticipates continued growth beyond 2025, supported by tax incentives for independent business owners [9].

Core Viewpoint - NewtekOne, Inc. announced an amendment and increase of its revolving credit facility with Deutsche Bank AG to $170 million, which supports the origination of Alternative Loan Program loans before securitization [1][2] Group 1: Company Developments - Newtek ALP Holdings, a consolidated subsidiary of NewtekOne, has amended its credit facility with Deutsche Bank, which has been a partner since 2019 [1][2] - The company recently closed a $184 million securitization backed by $216 million of ALP loans, marking its third asset-backed securitization secured by ALP loans and the 16th rated securitization overall [1] Group 2: Leadership Commentary - Barry Sloane, Chairman, President, and CEO, expressed appreciation for Deutsche Bank's ongoing support, highlighting its importance to the growth of the ALP business and overall financial performance of the company [2] Group 3: Business Solutions Offered - NewtekOne provides a range of business and financial solutions, including banking, business lending, SBA lending solutions, electronic payment processing, accounts receivable financing, inventory financing, insurance solutions, payroll and benefits solutions, and technology solutions [3]

Group 1 - NewtekOne has an elevated risk profile as a bank due to its chosen business model, which affects its stock performance and equity risk premium [1] - The company faces risks similar to those affecting individual investors with specific interests in investment opportunities [1] Group 2 - The article is primarily aimed at advancing personal understanding and sharing knowledge about investment opportunities [1]

Core Viewpoint - NewtekOne, Inc. is set to report its second quarter 2025 financial results on July 28, 2025, with expectations of continued progress in its business plan [1][2]. Group 1: Financial Results Announcement - The company will release its second quarter 2025 financial results after market close on July 28, 2025 [1]. - A conference call to discuss these results will be hosted by key executives at 4:30 pm ET on the same day [1][2]. - Investors can pre-register for the conference call to receive dial-in information and access the webcast [2]. Group 2: Business Overview - NewtekOne is a financial holding company that provides a variety of business and financial solutions to independent business owners across all 50 states [3]. - The company has been operational since 1999, offering cost-efficient products and services aimed at helping businesses grow sales, control expenses, and reduce risk [3]. Group 3: Services Offered - NewtekOne's services include banking, business lending, SBA lending solutions, electronic payment processing, accounts receivable financing, inventory financing, insurance solutions, and payroll and benefits solutions [4]. - The company also provides technology solutions such as cloud computing, data backup, storage and retrieval, IT consulting, and web services through its subsidiary Intelligent Protection Management Corp. [4].