NewtekOne, Inc. Closes ALP Loan Securitization with Sale of $295 Million of Rated Notes

Core Viewpoint - NewtekOne, Inc. has successfully closed a $295 million securitization backed by $342 million of Alternative Loan Program (ALP) loans, marking its 17th and largest rated securitization to date [1][2]. Securitization Details - The securitization, named NALP Business Loan Trust 2026-1, involved the sale of $251.88 million in Class A Notes, $35.88 million in Class B Notes, and $6.84 million in a Class C Note, collectively known as the Notes [2]. - The Notes are secured by $341.78 million in collateral, which includes $284.38 million of Company-originated ALP loans and a $57.4 million prefunding account for acquiring additional ALP loans [2]. - The securitization was oversubscribed by approximately ten times, with 32 institutions participating in the purchase of the Notes [2]. ALP Loan Characteristics - ALP loans are characterized as longer amortizing commercial and industrial (C&I) loans, with repayments primarily sourced from the underlying businesses rather than collateral [3]. - The Company mandates that equity owners with 20% or greater stakes personally guarantee the loans, and all business assets are pledged as collateral [3]. - ALP loans typically incur prepayment penalties of 5% for the first three years and 3% for months 36-48, appealing to borrowers seeking long-term amortization [3]. Financial Performance and Strategy - The Company has originated approximately $850 million in ALP loans since 2019, with only six defaults and one charge-off of $6 million, indicating a strong performance in loan origination [4]. - The Class A Notes received a rating of "A (low) (sf)" with a yield of 5.796%, while Class B and Class C Notes received ratings of "BBB (sf)" and "BB (sf)" with yields of 7.296% and 10.146%, respectively [5]. - The weighted average yield of the Notes was 6.08%, with a weighted average spread of 243 basis points, an improvement from the previous year's securitization [5]. Management Commentary - The CEO expressed satisfaction with the completion of the fourth securitization and emphasized the importance of ALP loans in the Company's financial solutions and performance [4]. - The Company aims to continue issuing securitizations backed by ALP loans, highlighting the favorable spreads between loan yields and debt coupons, which support the retirement of securitization debt [4]. - The Company positions itself as a long-term capital provider to independent business owners, contrasting with competitors that offer high-interest, short-term loans [6].