NEWTG Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Earnings Per Share (EPS): Basic EPS of $0.48 and diluted EPS of $0.47.

Return on Average Assets (ROA): 2%, significantly above the industry average.

Tangible Book Value Growth: Increased by 75.3% over 12 quarters since transitioning to a technology-enabled financial holding company.

Net Interest Income: Grew from $16.2 million in Q2 2025 to $25 million in Q2 2026.

Deposits: Total deposits rose to $2.2 billion, with a notable increase of $297 million in core consumer deposits during the quarter.

Loan-to-Deposit Ratio: Approximately 90%.

2Strategic Updates and Business Highlights

Business Model Evolution: Shifted focus to conducting more operations through Newtek Bank, including C&I loans and payroll solutions, aiming for increased net interest income over gain-on-sale income.

Technology Utilization: Continued emphasis on technology for client acquisition and service, including AI for data analysis and automated loan processing.

Market Position: Targeting the underserved SMB sector, which comprises 43% of U.S. GDP and has been a significant job creator.

Securitization Strategy: Ongoing success with C&I loan securitizations, with over-collateralization noted in recent deals.

3Forward Guidance and Outlook

Earnings Guidance: Adjustments anticipated due to a shift towards holding more guaranteed portions of SBA loans, which may impact near-term EPS but is expected to stabilize income streams in the long run.

Securitization Plans: A planned securitization in Q4 is projected to be between $300 million to $400 million.

Future Focus: Emphasis on growing net interest income while managing credit risk effectively.

4Bad News, Challenges, or Points of Concern

NIM Compression: Notable contraction in net interest margin (NIM) due to the transition of operations to the bank, affecting profitability metrics at the holding company level.

Credit Quality Concerns: Increase in non-performing loans (NPLs) and a slight rise in 30-day past due loans, although management believes this is typical for a new bank with a developing portfolio.

Market Competition: Facing competitive pressures from larger institutions, particularly in acquiring clients and offering competitive rates on deposits.

5Notable Q&A Insights

Loan Strategy: Management discussed the rationale for holding more guaranteed SBA loans on the balance sheet, indicating a potential trade-off between gain-on-sale revenue and more stable net interest income.

SBA Loan Challenges: Acknowledgment of challenges in originating loans at current interest rates, but confidence in the quality of underwriting.

Operational Efficiency: Management highlighted their strong deposit acquisition strategy, emphasizing low acquisition costs and high customer satisfaction scores.

Future Technology Partnerships: Potential for licensing their technology (e.g., NewTracker) to other financial institutions, indicating growth opportunities outside their current business model. Overall, NewtekOne demonstrated strong financial growth and strategic evolution in Q2 2026, while also navigating challenges related to credit quality and competitive pressures. The company's focus on technology and customer service remains a cornerstone of its strategy moving forward.