NewtekOne Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

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

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

Tangible Book Value Growth:: Increased by 75.3% over 12 quarters since becoming 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 significantly, with non-affiliate deposits increasing by $15 million in the quarter and core consumer deposits climbing by $297 million.

Loan-to-Deposit Ratio:: Approximately 90%.

2Strategic Updates and Business Highlights

Business Model Evolution:: Transitioning more activities to Newtek Bank, including payroll solutions and commercial loans, which is expected to enhance net interest income.

Technological Integration:: Emphasis on using technology and AI to streamline operations and improve customer service, including a digital account opening process and real-time payments.

Target Market Focus:: Continued focus on serving independent business owners, a demographic that constitutes 43% of U.S. GDP.

Securitization Strategy:: Active in securitizing loans, with plans for a $300 million to $400 million securitization in Q4.

3Forward Guidance and Outlook

Guidance Reevaluation:: Management indicated a need to reassess guidance due to strategic shifts, particularly regarding holding more guaranteed portions of SBA loans on the balance sheet, which may impact near-term earnings.

Long-term Strategy:: Aiming for a more stable income stream through increased net interest income, which could improve valuation multiples over time.

4Bad News, Challenges, or Points of Concern

Impact on EPS:: The shift to holding more loans may lead to lower gain-on-sale revenue in the near term, affecting EPS.

Credit Quality Concerns:: While net charge-off rates improved, there was an increase in non-performing loans (NPLs), particularly in guaranteed loan balances, raising questions about credit management.

Market Competition:: Facing competitive pressures from larger institutions that have more established banking infrastructures.

5Notable Q&A Insights

Loan Strategy:: Management discussed the rationale for holding more guaranteed SBA loans, indicating it may affect short-term earnings but aims to provide a more stable income stream in the long run.

Securitization Plans:: Confirmed ongoing plans for securitizations, with a focus on maintaining a healthy loan portfolio.

Technology Opportunities:: Barry Sloane highlighted potential partnerships with other banks to leverage Newtek’s technology, indicating interest from larger players in adopting their innovative solutions.

Deposit Strategy:: Management expressed confidence in their deposit acquisition strategy, citing high customer satisfaction scores and a low cost of acquisition. Overall, NewtekOne's Q2 2026 results reflect a company in transition, focusing on leveraging technology to enhance its banking operations while navigating challenges related to credit quality and market competition.