Core Viewpoint - NewtekOne, Inc. has completed a transaction with Patriot Financial Partners, resulting in the issuance of 2,307,692 shares of common stock in exchange for 20,000 shares of convertible preferred stock and $10 million in cash, which is expected to enhance the company's capital structure and tangible book value per share [1][2][3]. Group 1: Transaction Details - The transaction involved the exchange of 20,000 shares of Series A Preferred Stock and $10 million in cash for 2,307,692 shares of common stock [1]. - Patriot relinquished the right to convert the preferred stock into 950,800 shares of common stock as part of the deal [1]. - The common shares were issued in a private placement under Section 4(a)(2) of the Securities Act of 1933, with a two-year transfer restriction [1]. Group 2: Capital Impact - The transaction is projected to increase the company's common equity tier one capital (CET1 capital) and tier one capital by $30 million [2]. - Pro forma as of June 30, 2025, CET1 capital will rise from $256 million to $286 million due to this transaction [2]. - When combined with $48.357 million from a previous offering, tier one capital will increase from $256 million to $335 million, and tangible book value per common share will reach approximately $10.74 [2]. Group 3: Management Commentary - Barry Sloane, Chairman and CEO of NewtekOne, expressed satisfaction with the transaction, highlighting the confidence shown by Patriot in the company's strategy and management [3]. - Kirk Wycoff, Managing Partner of Patriot, emphasized the excitement of converting preferred stock to common equity and the additional investment, reflecting confidence in NewtekOne's operational execution and business strategy [3]. Group 4: Company Overview - NewtekOne is a financial holding company providing a range of business and financial solutions to independent business owners across the U.S. since 1999 [5]. - The company's offerings include banking, business lending, electronic payment processing, and technology solutions [6].

Financial Data and Key Metrics Changes - The company reported record earnings of $119.4 million for Q2 2025, translating to $0.60 earnings per share, with a return on assets of 2.08%, compared to $115.2 million and a return on assets of 2.07% in the previous quarter [7][8] - Non-GAAP return on tangible common equity was 18.26%, while GAAP return was 17.68% [7] - Loan loss reserves remained strong at 1.86%, with Tier 1 capital at 15.6% and a leverage ratio of 13.4% [8] Business Line Data and Key Metrics Changes - The Trust, Wealth Management, and Mortgage divisions showed meaningful improvements, contributing positively to the bottom line [16] - CCFG closed approximately $500 million in new commitments for Q2, bringing the year-to-date total to over $800 million, with portfolio growth of CAD 122 million [24] Market Data and Key Metrics Changes - Deposits decreased by $53 million in Q2 due to seasonal tax payments, but balances grew in May and June, indicating a recovery in deposit activity [16] - The company operates in dynamic and growing states such as Arkansas, Texas, Alabama, and Florida, which are contributing to its performance [16] Company Strategy and Development Direction - The company aims to acquire additional assets to enhance income, targeting approximately $450 million in income for the current year and $500 million for the next year [12][11] - Management is actively looking at several acquisition opportunities and intends to make an announcement before the next quarterly report [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the trajectory of margins and expects the third quarter to perform similarly to the first two quarters of 2025 [30] - The company is cautious about potential rapid interest rate cuts, emphasizing the need for a gradual approach to avoid inflation [36] Other Important Information - The company has been aggressive in stock buybacks, purchasing over 3 million shares worth approximately $86 million and paying out about $150 million in dividends [8][10] - A lawsuit settlement resulted in elevated expenses for the quarter, amounting to approximately $3.5 million, but management expects expenses to normalize in the following quarters [81][82] Q&A Session Summary Question: Loan growth and customer base aggressiveness - Management noted that while they are not being more aggressive, they are benefiting from strong markets where their teams are performing well [32][34] Question: M&A opportunities and deal sizes - The company is looking at potential acquisitions in the range of $2 billion to $6 billion, focusing on opportunities that align with their growth strategy [131][132] Question: Deposit pricing and competition - Management indicated that deposit pricing remains competitive but they are able to negotiate slightly lower rates than competitors [56] Question: Impact of sub debt on margin - The removal of sub debt is expected to benefit the net interest margin by about 5 to 6 basis points, with full benefits realized in Q4 [137] Question: Hiring plans - The company does not plan to aggressively hire lenders, preferring to develop talent internally rather than poaching from competitors [120][126] Question: Mortgage banking outlook - The mortgage banking segment has shown variability, with no strong multi-month trends expected until interest rates decrease significantly [90][91]