NewtekOne(NEWT)2025-05-12 20:15Company 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 9.7 million in the same period of 2024[202]. - The Banking segment reported net income of 9.401 million year-over-year, despite an increase in net interest income to 7.7 million[241]. - Alternative Lending segment saw a significant increase in net income to 9.062 million in the prior year, driven by higher loan originations[240][242]. - NSBF segment experienced a net loss of 920, attributed to the wind-down of operations[240][243]. - Consolidated net income for the three months ended March 31, 2025, was 9.650 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 711.166 million, an increase from 38.649 million (5.4% of total loans) as of March 31, 2025, compared to 38.125 million (5.4%) from 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 27.1 million in Q1 2024, driven by a 24.0 million in Q1 2025, a rise of 32.0% from 4.3 million increase in interest on deposits[207]. - Noninterest income increased to 49.4 million in Q1 2024, reflecting growth in various service fees[203]. - Total noninterest expense remained relatively stable, with a slight increase of 0.81 million, or 4.0%, primarily due to higher benefits costs[234]. Capital and Liquidity - The Company had total liquidity sources of 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 69.6 million received before expenses[250]. - The total cash and restricted cash at the end of the period was 381.4 million at the beginning of the period[274]. - The company has restricted cash of 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].