NewtekOne (NasdaqGM:NEWT) Q4 2025 Earnings call January 29, 2026 04:30 PM ET Speaker1Thank you for standing by and welcome to NewtekOne, Inc.'s Fourth Quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press Star 11 on your telephone. To remove yourself from the queue, you may press Star 11 again. I would now like to hand the call o ...

Financial Data and Key Metrics Changes - The company reported basic and diluted earnings per share of $0.68 and $0.67 for Q3 2025, with year-to-date earnings of $1.57 and $1.54, reflecting a growth rate of 47% and 22% respectively compared to the previous year [11][12] - Revenue growth was reported at 19% for the quarter, with a tangible book value increase from $6.92 to $11.22 per share [12][20] - The efficiency ratio improved from 61.8% to 56.3%, while return on average assets was 3.15%, significantly ahead of industry standards [14][17] Business Line Data and Key Metrics Changes - Core deposits increased, with business deposits rising by $52 million (17%) and consumer deposits by $95 million (12%) [12][20] - The alternative loan program (ALP) is expected to see its largest securitization to date, ranging from $325 million to $350 million, indicating strong growth potential [13][22] - The company has opened 22,000 depository accounts and has 10,000 borrowers in its database, showcasing its ability to operate without traditional banking methods [8][9] Market Data and Key Metrics Changes - The company is focusing on independent business owners, a market that represents 43% of U.S. GDP, with over 36 million business owners in the U.S. [10] - The company has stabilized its credit quality, with non-performing loans (NPLs) at 8.1%, which is high compared to community banks but has been written off or written down [17][19] - The company is avoiding volatile industries such as oil and gas, transportation, and agriculture, while maintaining a strong consumer side [40][41] Company Strategy and Development Direction - The company aims to leverage technology and efficiency to create a future-oriented business model for a technology-enabled bank [3][4] - There is a strategic focus on diversifying the loan portfolio by adding more commercial and industrial (C&I) and commercial real estate (CRE) loans [59] - The company plans to continue its growth trajectory while managing risks effectively, with a goal to enhance transparency and provide better insights into its operations [63][64] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the current economic environment, despite challenges such as a government shutdown [42][44] - The company anticipates that the current credit cycle will stabilize, with expectations of lower provisions and a more favorable lending environment [18][41] - Management highlighted the importance of maintaining a strong capital position and the potential for increased leverage in the future [64] Other Important Information - The company has raised significant capital, including $80 million in Tier 1 capital and $30 million in common equity, to support its growth [13][35] - The company is also focusing on enhancing its payment processing, payroll, and insurance services, which are expected to contribute positively to its overall business model [33] Q&A Session Summary Question: Update on credit trends and market pressures - Management noted that the economy is experiencing a divide, with stress in small businesses due to rising rates, but the consumer side remains strong [40][41] Question: Guidance for Q4 amidst government shutdown - Management did not pull guidance but acknowledged the uncertainty due to the government shutdown, indicating that it could impact loan originations [42][44] Question: Impact of government shutdown on loan processing - Management confirmed that they are still able to process loans that were approved before the shutdown and have provisions to bridge borrowers through this period [43][44] Question: Tier 1 and total capital risk-based ratios - The company reported a Tier 1 capital ratio of about 12.5% and total risk-based capital just shy of 16% [45] Question: SBA lenders leaving the market - Management highlighted that some SBA lenders are exiting due to regulatory changes and increased competition, but the company remains well-positioned to capture market share [70]

Core Viewpoint - NewtekOne, Inc. has announced significant management changes, including the appointment of Peter Downs as President of Newtek Bank and Frank M. DeMaria as Chief Financial Officer, to support the company's growth strategy and enhance its technology-enabled banking services [1][2]. Management Changes - Peter Downs has been appointed as President of Newtek Bank, N.A. [1] - Frank M. DeMaria has been named Chief Financial Officer of NewtekOne, while Scott Price continues as CFO of Newtek Bank [1] - Thomas Soucy has been promoted to Chief Credit Officer of the Bank, and Nicholas Leger has been appointed CFO of several non-bank subsidiaries [2] Company Performance - NewtekOne acquired National Bank of New York City on January 6, 2023, and has successfully transformed it into a technology-enabled digital bank with a national presence [2] - The Bank reported a 42% efficiency ratio, 6% return on assets, and over 40% return on tangible common equity for 2024 [2] Strategic Focus - The company emphasizes the importance of technology in providing financial solutions to independent business owners, utilizing in-house developed applications such as The Newtek Advantage and NewTracker [2] - NewtekOne aims to continue its growth trajectory by embracing technology and enhancing its service offerings [2] Business Solutions Offered - NewtekOne provides a wide range of business and financial solutions, including banking, business lending, SBA lending solutions, electronic payment processing, and technology solutions [3][4]

Core Insights - NewtekOne, Inc. has appointed Peter Downs as President of Newtek Bank, N.A. and Frank M. DeMaria as Chief Financial Officer of the Company, with Scott Price continuing as CFO of Newtek Bank [1][2] - The Company has successfully transformed the National Bank of New York City into a technology-enabled digital bank with a national presence, achieving a 42% efficiency ratio, 6% return on assets, and over 40% return on tangible common equity for 2024 [2] - Management changes are aimed at preparing NewtekOne for future growth, leveraging in-house developed applications to provide superior business and financial solutions to independent business owners [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 all 50 states [3] - The Company provides state-of-the-art, cost-efficient products and services, including banking, business lending, electronic payment processing, and technology solutions [4] Management Changes - In addition to the appointments of Peter Downs and Frank DeMaria, Thomas Soucy has been promoted to Chief Credit Officer, and Nicholas Leger has been appointed CFO of several non-bank subsidiaries [2] - Andrew Kaplan, the Chief Strategy Officer, has also been added to the board of Newtek Bank [2] Financial Performance - The Bank's efficiency ratio stands at 42%, with a return on assets of 6% and a return on tangible common equity exceeding 40% for the year 2024 [2]

Financial Data and Key Metrics Changes - NewtekOne reported earnings of $0.70 per basic share and $0.69 per diluted share, representing a 43% improvement over the previous year and quarter [11] - Net interest income increased by 36% compared to the same three-month period a year earlier [12] - Shareholders' equity rose to $296 million, a 19% increase [13] Business Line Data and Key Metrics Changes - The Alternative Loan Program (ALP) saw $269 million in loans for the year, with over $83 million in ALP loans for the 12 months [14] - The bank's core business deposits grew to $216 million, an increase of approximately $106 million from the previous year [27] Market Data and Key Metrics Changes - Newtek Bank achieved a Return on Average Assets (ROAA) of 6.3% and a Return on Tangible Common Equity (ROTCE) of 48% [28] - The efficiency ratio for Newtek Bank was reported at 42% [28] Company Strategy and Development Direction - NewtekOne aims to provide technology-enabled financial solutions to over 30 million independent business owners in the U.S. [9] - The company is transitioning from a Business Development Corporation to a financial holding company, focusing on depository solutions and real-time payments [3][10] - NewtekOne positions itself as a disruptor in the banking industry, similar to companies like Uber and Amazon [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage credit risk and maintain profitability despite potential increases in charge-offs [40][41] - The company anticipates a range of $2.10 to $2.50 in earnings per share for 2025, with a midpoint of $2.30 [31][36] - Management noted that the first quarter is typically the lowest quarter for earnings, with expectations for a ramp-up throughout the year [78] Other Important Information - NewtekOne's deposits are primarily in the insured category, with 75% to 80% of deposits insured [18] - The company has a significant amount of cash on hand, with over $300 million in deposits at the end of 2024 [58] Q&A Session Summary Question: Can you provide detail on the cadence of earnings throughout 2025? - Management noted that the first quarter is typically lower due to seasonal factors, with expectations for a ramp-up in subsequent quarters [78][80] Question: What drove the markup on loans accounted for under fair value options? - The markup was primarily driven by the fair value of ALP loans, which are securitized with high margins [84] Question: How are charge-off expectations modeled for the bank portfolio? - Charge-off expectations are based on historical patterns, with a projected increase from 1.5% to 2% for 2025 [92][94] Question: What are the drivers of expenses for 2025? - Management indicated plans for continued investment in resources to support growth, including accounting, compliance, and risk management [108]