Call Start: 08:30 January 1, 0000 9:34 AM ET NewtekOne, Inc. (NASDAQ:NEWT) Q4 2024 Earnings Conference Call February 27, 2025 08:30 AM ET Company Participants Barry Sloane - Founder, President & CEO Scott Price - CFO, NewtekOne & Newtek Bank National Association Conference Call Participants Crispin Love - Piper Sandler Steve Moss - Raymond James Tim Switzer - KBW Christopher Nolan - Ladenburg Thalmann Operator Good day, and thank you for standing by. Welcome to the NewtekOne, Inc. Fourth Quarter 2024 Earnin ...

Core Insights - NewtekOne (NEWT) reported revenue of $75.37 million for Q4 2024, a 31% year-over-year increase, with an EPS of $0.69 compared to $0.53 a year ago, exceeding Zacks Consensus Estimates for both revenue and EPS [1] Financial Performance - Total noninterest income was $64.07 million, surpassing the average estimate of $57.53 million from three analysts [4] - Net interest income was $11.29 million, slightly below the average estimate of $12.30 million from three analysts [4] - Noninterest income from servicing was $5.17 million, exceeding the two-analyst average estimate of $4.92 million [4] - Electronic payment processing income was $10.64 million, below the average estimate of $13.33 million from two analysts [4] - Other noninterest income was $11.74 million, compared to the two-analyst average estimate of $14.31 million [4] - Loan servicing asset revaluation resulted in a loss of $7.28 million, significantly worse than the estimated loss of $1.80 million [4] - Dividend income was $0.39 million, slightly below the average estimate of $0.42 million from two analysts [4] - Net gains on sales of loans were $28.65 million, exceeding the average estimate of $22.26 million from two analysts [4] Stock Performance - NewtekOne shares have returned -6.7% over the past month, compared to a -2.3% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Insights - NewtekOne (NEWT) reported quarterly earnings of $0.69 per share, exceeding the Zacks Consensus Estimate of $0.66 per share, and up from $0.53 per share a year ago [1] - The company achieved revenues of $75.37 million for the quarter, surpassing the Zacks Consensus Estimate by 7.93%, compared to $57.53 million in the same quarter last year [3] Earnings Performance - The earnings surprise for the recent quarter was 4.55%, following a previous surprise of 9.76% when earnings were $0.45 per share against an expectation of $0.41 [2] - NewtekOne has consistently surpassed consensus EPS estimates over the last four quarters [2] Revenue Insights - The company has also exceeded consensus revenue estimates in each of the last four quarters [3] - The current consensus EPS estimate for the upcoming quarter is $0.40 on revenues of $63.32 million, and for the current fiscal year, it is $2.12 on revenues of $276.51 million [8] Market Performance - NewtekOne shares have declined approximately 4.5% since the beginning of the year, while the S&P 500 has gained 1.3% [4] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [7] Industry Context - The Financial - Miscellaneous Services industry, to which NewtekOne belongs, is currently ranked in the top 16% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [9]

Core Viewpoint - NewtekOne, Inc. has raised its full-year 2025 earnings per share (EPS) forecast range to $2.10 to $2.50, reflecting strong financial performance and growth in various segments [1][10]. Financial Highlights for Q4 2024 - Net income for Q4 2024 was $18.3 million, with EPS of $0.70 per basic and $0.69 per diluted share, marking a 55.6% increase from Q3 2024 and a 62.8% increase from Q4 2023 [5]. - Net interest income was $11.3 million, up 2.7% from Q3 2024 and 36.1% from Q4 2023 [5]. - Total assets reached $2.1 billion, a 50.0% increase from $1.4 billion at the end of 2023 [5]. - Loans held for investment increased by 23.0% year-over-year to $991.4 million [5]. - Total borrowings were $708.0 million, a 9.9% increase from the previous year [5]. - The net interest margin was 2.80%, down 9.1% from Q3 2024 but up 1.4% from Q4 2023 [5]. - Return on Tangible Common Equity (ROTCE) was 31.8%, up 49.3% from Q3 2024 and 20.5% from Q4 2023 [5]. - Return on Average Assets (ROAA) was 4.1%, an increase of 41.4% from Q3 2024 and 28.1% from Q4 2023 [5]. - The efficiency ratio improved to 55.9%, down from 61.8% in Q3 2024 and 66.6% in Q4 2023 [5]. Financial Highlights for Full Year 2024 - Net income for the full year 2024 was $50.9 million, with EPS of $1.97 per basic and $1.96 per diluted share, compared to $47.3 million and $1.89 per basic and $1.88 per diluted share in 2023 [8]. - Net interest income for the year was $40.3 million, a 51.5% increase from $26.6 million in 2023 [8]. - The net interest margin for the year was 2.87%, up 21.1% from 2.37% in 2023 [8]. - ROTCE for the year was 24.1%, down from 28.0% in 2023, impacted by a prior year's tax benefit [8]. - ROAA for the year was 3.2%, down from 3.6% in 2023, also affected by the tax benefit [8]. - The efficiency ratio improved to 63.2%, down from 71.9% in 2023 [8]. - ALP loan closings for the year were $269.6 million, a 224.9% increase from $83.0 million in 2023 [8]. Strategic Developments - The company completed the sale of its subsidiary Newtek Technology Solutions, Inc. on January 2, 2025 [5]. - The Newtek Advantage now integrates with Intuit QuickBooks, enhancing financial management for independent business owners [5][9]. - The company anticipates $1.0 billion in total SBA 7(a) loan closings for 2025, representing a 6.0% increase over 2024 [8]. Market Position and Future Outlook - The company aims to maintain its current dividend payout, with a yield tracking between 5% and 6% [10]. - The management believes in the ability to generate profits and maintain strong performance metrics, focusing on deposit and loan growth [9][10].

Core Insights - NewtekOne (NEWT) is expected to report quarterly earnings of $0.65 per share, reflecting a 22.6% increase year-over-year [1] - Analysts forecast revenues of $68.63 million, indicating a 19.3% year-over-year growth [1] - The consensus EPS estimate has remained unchanged over the last 30 days, suggesting stability in analyst projections [1] Earnings Estimates and Projections - Revisions to earnings estimates are crucial for predicting investor actions and have a strong correlation with short-term stock performance [2] - Consensus estimates for key metrics provide a comprehensive view of the company's performance beyond just earnings and revenue [3] Key Financial Metrics - Analysts estimate 'Net interest income' at $12.31 million, up from $8.30 million in the same quarter last year [4] - The consensus for 'Noninterest income- Servicing income' is $4.93 million, slightly down from $4.99 million year-over-year [4] - 'Noninterest income- Electronic payment processing income' is projected to reach $13.33 million, compared to $10.66 million a year ago [5] - 'Noninterest income- Other noninterest income' is expected to be $14.31 million, significantly up from $6.08 million year-over-year [5] - Estimated 'Noninterest income- Net gains on sales of loans' is $20.44 million, compared to $17.25 million in the same quarter last year [6] Stock Performance - NewtekOne shares have decreased by 4.2% over the past month, while the Zacks S&P 500 composite has seen a decline of 0.5% [7] - The company holds a Zacks Rank 3 (Hold), indicating it is expected to closely follow overall market performance in the near term [7]

Core Insights - NewtekOne, Inc. has announced the integration of Newtek Advantage with Intuit QuickBooks, enhancing financial management for independent business owners [1][2] - This integration provides real-time access to essential financial data, allowing users to filter information by day, month, or year [2][4] - The Newtek Advantage platform aims to simplify financial operations by consolidating various financial tools into a single dashboard [5] Group 1: Integration Features - The integration allows business owners to view key financial metrics such as revenue, gross profits, net profits, account balances, invoices, and bills in real time [2][4] - Users can access a comprehensive financial solution that includes credit card payment tracking, access to Newtek Bank, payroll services, document storage, and website analytics [2][3] - The platform aggregates data from both QuickBooks Online and QuickBooks Desktop, providing a holistic view of financial operations [4][5] Group 2: Company Overview - NewtekOne, Inc. is a financial holding company that offers a wide range of business and financial solutions to independent business owners across the United States [5][6] - The company has been providing cost-efficient products and services since 1999, focusing on helping businesses grow, control expenses, and reduce risk [5][6] - NewtekOne's offerings include banking, business lending, electronic payment processing, insurance solutions, and technology solutions [6]

Core Viewpoint - NewtekOne, Inc. will report its fourth quarter and full year 2024 financial results on February 26, 2025, with a conference call scheduled for February 27, 2025, at 8:30 am ET [1][2]. Company Overview - NewtekOne, Inc. 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 aims to help businesses grow sales, control expenses, and reduce risk through state-of-the-art, cost-efficient products and services [3]. Business Solutions Offered - NewtekOne's offerings include banking services through Newtek Bank, business lending, SBA lending solutions, electronic payment processing, accounts receivable and inventory financing, insurance solutions, and payroll and benefits solutions [4]. - Additionally, the company provides technology solutions such as cloud computing, data backup, IT consulting, and web services through its subsidiary Intelligent Protection Management Corp. [4].

Core Viewpoint - NewtekOne (NEWT) has been upgraded to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in a company's earnings picture, which is a powerful determinant of near-term stock price movements [2][4]. - Rising earnings estimates for NewtekOne indicate an improvement in the company's underlying business, suggesting that investors may respond positively by pushing the stock price higher [5][8]. Zacks Rank System - The Zacks Rank stock-rating system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have generated an average annual return of +25% since 1988 [7][9]. - NewtekOne's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10]. Earnings Estimate Revisions - For the fiscal year ending December 2024, NewtekOne is expected to earn $1.93 per share, reflecting a year-over-year increase of 13.5% [8]. - Over the past three months, the Zacks Consensus Estimate for NewtekOne has increased by 2.9%, indicating a positive trend in earnings estimates [8].

Core Insights - NewtekOne, Inc. reported significant growth in deposits at its banking subsidiary, Newtek Bank, with total deposits reaching $1.03 billion as of December 31, 2024, marking a 97% increase from the previous year and an increase of $884 million since its acquisition in January 2023 [2][3] Deposit Metrics - Total deposits at Newtek Bank as of December 31, 2024, were $1.03 billion, with insured deposits comprising approximately 78% of this total [2] - Core business deposits increased to $216 million, reflecting a 96% growth compared to the same period in 2023 [2] - The bank added 950 new business checking accounts in the fourth quarter of 2024, bringing the total number of accounts to approximately 15,000, up from about 1,400 at the time of acquisition [2][3] Operational Efficiency - Newtek Bank achieved an industry-leading efficiency ratio below 40% for the quarter ended September 30, 2024, indicating successful streamlining of the deposit-taking process [1] - The bank's digital account opening process has been pivotal in acquiring new accounts, supported by U.S.-based representatives available 24/7 [3] Strategic Focus - The company aims to grow its commercial deposit franchise, which is more transactional and lower in cost, while integrating these accounts into its lending and payment processing platforms [1][3] - Newtek Bank plans to leverage its technological advantages and competitive product offerings to continue increasing deposits from affiliates and referral partners in 2025 [3] Business Model Transformation - Since acquiring Newtek Bank, the company has transformed it from a traditional community bank into a technology-enabled bank that acquires deposits digitally [1][3] - The bank's operational model now includes a fully developed back-office operation to support anticipated growth and compliance [3] Future Outlook - The company expresses optimism about its growth prospects moving into 2025, emphasizing the importance of growing transaction-based deposits to reduce funding costs and enhance deposit duration [3]

Business Model Overview - The company operates in the shadow banking industry, focusing on individual investors with specific interests in investment opportunities [1]. Investment Focus - The primary interests of the company include Business Development Companies (BDCs), banks, and firms within low-competition oligopolies [1].