NewtekOne(NEWT)2025-05-07 13:30Financial Data and Key Metrics Changes - The first quarter earnings per share (EPS) were reported at 0.36 basic, exceeding the consensus estimate of 0.28 to 2.10 to 1 billion and $10 billion [20] Business Line Data and Key Metrics Changes - The alternative loan program (ALP) has shown significant success, with loans being of higher quality than the SBA loans, and the average FICO score for these loans is around 740 [24][25] - The company reported a successful securitization with a 570 basis point spread between the net yield on the loans and the yield on the bonds [26] - The efficiency ratio for the holding company declined from 71% to 63%, indicating improved operational efficiency [27] Market Data and Key Metrics Changes - Deposits were relatively flat compared to the previous quarter, with a shift towards core deposits in the business and consumer spaces [61] - The average cost of deposits was approximately 4%, expected to decrease to around 3.8% to 3.85% for the full year of 2025 [62] - The net interest margin (NIM) increased year over year by 56%, with a quarter-over-quarter expansion of 24 basis points [64] Company Strategy and Development Direction - The company positions itself as a technology-enabled financial holding company, focusing on providing business and financial solutions to independent business owners, avoiding consumer loans [12][13] - The management emphasized the importance of adapting to market changes and indicated that further personnel changes may occur as the company evolves [78][84] - The company aims to leverage its digital banking capabilities to enhance customer acquisition and operational efficiency [14][19] Management Comments on Operating Environment and Future Outlook - Management acknowledged headwinds in 2025 but expressed confidence in the company's ability to navigate challenges, particularly in loan acquisition [20][21] - The management highlighted that Q1 is typically the weakest quarter, and comparisons with Q4 revenues should be approached with caution [21] - The company is optimistic about the sustainability of its earnings and projections, particularly in the ALP segment [76] Other Important Information - The company has seen a significant reduction in losses from its non-bank SBA lending subsidiary, with a decline of over 50% [22] - The management noted that the company has a unique business model that does not conform to traditional bank metrics, emphasizing its diversified revenue streams [7][48] - The company has a strong focus on maintaining a low-cost structure while providing high-quality financial solutions [15][19] Q&A Session Summary Question: Sustainability of net gains on loans under fair value option - Management indicated that the gains are expected to be sustainable throughout 2025, with specific metrics provided on ALP loans and their pricing [69][70] Question: Rationale behind recent management changes - Management acknowledged that changes are part of adapting to market dynamics and emphasized the importance of having focused leadership in key areas [78][84] Question: Breakdown of fair value gains this quarter - Management clarified that the fair value gains were driven by securitization and market execution, with specific figures provided for SBA loan sales [90][92]