NEWT Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

Earnings Per Share (EPS): Reported at $0.43, beating consensus by $0.01, reflecting a 19% increase in basic EPS and 23% in diluted EPS year-over-year.
Book Value: Ended Q1 2026 at $12.35 per share; tangible book value at $11.84, up from $6.92 in Q1 2023.
Loan Originations: 961 loan units originated, a 40% increase year-over-year, totaling $391 million versus $366 million in Q1 2025.
Deposits: Total deposits reached approximately $2 billion, with significant growth in both business and consumer deposits.
Return on Average Assets: 1.96%, favorable compared to industry standards.
Efficiency Ratio: 40% for Newtek Bank, indicating strong operational efficiency.

2. Strategic Updates and Business Highlights

Technological Advancements: NewtekOne is leveraging technology to enhance client experiences, including real-time payments through FedNow and The Clearing House RTP.
Client Acquisition: Utilizing proprietary tools like NewTracker to receive 600-800 business referrals daily.
C&I Loan Program: Launched new C&I long amortization loans, with $85.7 million originated in Q1 2026, contributing to diversification and improved credit quality.
SBA Lending: Newtek is the largest SBA lender by units and among the top by loan volume, with a focus on supporting independent business owners.

3. Forward Guidance and Outlook

2026 EPS Guidance: Reaffirmed guidance of $2.35 at midpoint; 2027 midpoint guidance set at $2.60.
Loan Growth: Expected to continue at a low double-digit rate, with a focus on diversifying the loan portfolio.
Securitization Plans: Anticipating a fourth-quarter securitization event with a target pool size of $400-$500 million.

4. Bad News, Challenges, or Points of Concern

NIM Compression: Net interest margin compressed due to a shift in earning asset mix, though net interest income remains strong.
Credit Quality Concerns: While delinquencies and non-performing loans (NPLs) are decreasing, net charge-offs have increased as the loan portfolio seasons.
Market Dynamics: Changes in SBA lending regulations have reduced borrower eligibility, potentially impacting future loan volumes.
Competitive Pressures: Increased competition from fintechs and traditional lenders in the small business lending space.

5. Notable Q&A Insights

Loan Growth Trajectory: Management indicated that loan growth will primarily occur within the bank, with expectations for continued strong performance.
Deposit Liquidity: The company plans to maintain a healthy level of liquidity, though current cash levels at the Fed are considered excessive.
SBA Gain-on-Sale Premium: The gain-on-sale premium for SBA loans remains stable at approximately 1.105%, with a net gain on sale of $26.7 million for the quarter.
Borrower Confidence: Management expressed optimism about returning to previous loan volume levels despite recent challenges in the SBA market.

Overall, NewtekOne reported a strong start to 2026, with significant growth in earnings, deposits, and loan originations, while also navigating challenges in credit quality and market dynamics. The company remains focused on leveraging technology to enhance its offerings and maintain competitive advantages in the small business lending sector.

NEWT — NewtekOne, Inc.