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

Summary of NewtekOne, Inc. Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Earnings Per Share (EPS): Reported at $0.43, beating consensus by $0.01, reflecting a 19% increase 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 in loans.
• Deposits: Grew to $1.9 billion, with 37,000 deposit accounts, more than doubling year-over-year.
• 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: Emphasis on real-time payments and AI-driven loan processing, enabling quicker funding for loans under $350,000.
• C&I LA Loans: New C&I long amortization loans introduced, with $85.7 million originated in Q1 2026, enhancing the bank's lending capabilities.
• SBA Lending: Newtek is the largest SBA lender by units and among the top by loan volume, with a focus on supporting small to medium-sized businesses.
• Customer Service: High customer satisfaction ratings (4.7-4.8 on Trustpilot), attributed to effective service and technological integration.

3. Forward Guidance and Outlook

• 2026 EPS Guidance: Reconfirmed at a midpoint of $2.35; 2027 midpoint guidance set at $2.60.
• Loan Growth: Expected to continue at low double-digit rates, with a focus on diversifying the loan portfolio and improving credit metrics.
• Securitization Plans: Anticipated for Q4 2026, targeting a pool size of $400 million to $500 million, which will enhance funding efficiency.

4. Bad News, Challenges, or Points of Concern

• Net Interest Margin (NIM) Compression: Experienced due to a shift in earning asset mix and the timing of loan originations.
• Credit Quality Concerns: While delinquencies and non-performing loans (NPLs) have decreased, there is ongoing scrutiny regarding credit quality as the loan portfolio seasons.
• Market Dynamics: Changes in SBA lending regulations have reduced borrower eligibility, potentially impacting loan volume.
• Operational Risks: The reliance on technology for loan processing poses risks if competitors fail to adapt, but Newtek's technological edge is currently a competitive advantage.

5. Notable Q&A Insights

• Balance Sheet Growth: Barry Sloane indicated that loan growth will primarily occur within the bank, with controlled growth strategies in place.
• Deposit Liquidity: Acknowledged the current excess cash at the Fed, which may be adjusted over time but will maintain a healthy liquidity position.
• Loan Yield Dynamics: A decrease in loan yields was attributed to timing issues related to securitizations, with expectations for normalization in future quarters.
• Borrower Confidence: Despite challenges in the SBA market, Newtek is positioned to capture market share due to its competitive loan offerings and technological capabilities.

Overall, NewtekOne demonstrated strong growth in Q1 2026, with significant advancements in technology and customer service, while also navigating challenges in credit quality and market dynamics. The outlook remains positive with strategic plans for continued growth and innovation.