NEWTG — NewtekOne, Inc. 8.50% Fixed Rate Senior Notes due 2029

Summary of NewtekOne (NEWT) Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Earnings Per Share (EPS): Q3 EPS was $0.68 (basic) and $0.67 (diluted), with a year-to-date EPS of $1.57 (basic) and $1.54 (diluted), reflecting a 47% growth compared to the previous year.
• Revenue Growth: Revenue increased by 19% year-over-year.
• Tangible Book Value: Rose significantly from $6.92 at the start of 2023 to $11.22.
• Dividends: Quarterly dividend of $0.19, totaling $0.76 annually.
• Deposit Growth: Core deposits increased by $147 million (17% for business deposits and 12% for consumer deposits).
• Efficiency Ratio: Improved from 61.8% to 56.3% at the holding company level.
• Return on Average Assets (ROAA): 3.15%, well above industry standards.

2. Strategic Updates and Business Highlights

• Customer Base Expansion: Opened 22,000 depository accounts and serves 10,000 borrowers without traditional banking methods.
• Alternative Loan Program (ALP): Preparing for a significant securitization of $325-$350 million, expected to be the largest to date.
• Technological Integration: Emphasized a technology-oriented approach to banking, enhancing customer service and operational efficiency.
• Diversification Strategy: Plans to increase the proportion of Commercial & Industrial (C&I) and Commercial Real Estate (CRE) loans in the portfolio.

3. Forward Guidance and Outlook

• Q4 2025 Guidance: Maintained previous EPS guidance of $0.65 to $0.80, but noted uncertainty due to potential government shutdown impacts.
• Long-Term Growth: Aiming for continued growth in the ALP and overall deposit gathering, with expectations of $500-$600 million in ALP loans next year.

4. Bad News, Challenges, or Points of Concern

• Non-Performing Loans (NPLs): NPLs rose to 8.1%, higher than typical community banks; however, management indicated that these have been largely written off.
• Credit Quality Concerns: Some pressure in specific sectors (e.g., oil and gas, agriculture) and challenges in the small business lending environment due to rising rates and regulatory changes.
• NSBF Wind-Down: Ongoing losses from the nonbank subsidiary (NSBF), projected to decline from $28.7 million in 2024 to $18-$20 million in 2025.
• Market Competition: Noted that several SBA lenders are exiting the market, which may impact overall lending dynamics.

5. Notable Q&A Insights

• Credit Trends: Management noted a bifurcated economy, with some sectors facing significant stress while others remain strong. They are avoiding volatile industries.
• SBA Loan Processing: Despite the government shutdown, Newtek can still process previously approved loans and provide bridge financing to borrowers.
• Capital Ratios: Tier 1 capital at the holding company is approximately 12.5%, with total risk-based capital just shy of 16%.
• Dividend Policy: While the dividend is well-regarded, management indicated that increasing it in the near term is unlikely, preferring to focus on stock buybacks instead.
• Long-Term Strategy: Emphasis on building a diversified loan portfolio and improving operational metrics to enhance market perception and stock valuation.

Overall, NewtekOne reported strong financial performance in Q3 2025, with significant growth in deposits and earnings, while also facing challenges related to credit quality and market competition. The company remains optimistic about its strategic direction and future growth potential.