NEWTI — NewtekOne, Inc. 8.00% Fixed Rate Senior Notes due 2028

Summary of NewtekOne, Inc. Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Earnings Per Share (EPS): Reported at $0.43, exceeding consensus by $0.01 and 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.
• Deposits: Total deposits reached $1.9 billion, with a record 37,000 deposit accounts, more than doubling year-over-year.
• Return on Average Assets (ROAA): 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 customer experience, including the launch of real-time payments through FedNow and The Clearing House RTP.
• C&I LA Loans: Introduced a new lending product with an average loan size of $4 million to $5 million, which is expected to diversify the loan portfolio and improve margins.
• SBA Lending: NewtekOne remains the largest SBA lender by units, with a focus on providing competitive long-term loans to small businesses.
• Customer Service: High customer satisfaction ratings (4.7-4.8 on Trustpilot) are attributed to effective service and technology integration.

3. Forward Guidance and Outlook

• 2026 EPS Guidance: Reaffirmed at a midpoint of $2.35; 2027 midpoint guidance set at $2.60.
• Loan Growth: Expected to continue at a low double-digit rate, with a focus on quality and diversification.
• Securitization Plans: Anticipated to occur in Q4 2026, targeting a pool size of $400 million to $500 million.

4. Bad News, Challenges, or Points of Concern

• NIM Compression: Net interest margin (NIM) has been affected by the shift in loan origination and the high cash balance at the Fed, which may impact short-term profitability.
• Market Volatility: The current economic environment poses risks, particularly with the potential for increased defaults and competition from fintech lenders.
• Loan Size Variability: There are indications that loan sizes may be shrinking, particularly in the SBA segment, which could affect revenue and growth projections.

5. Notable Q&A Insights

• Balance Sheet Growth: Management indicated that future loan growth will primarily occur within the bank, with no new loan origination expected at the holding company.
• Deposit Liquidity: While current liquidity levels are high, management acknowledged that maintaining a good amount of liquidity is essential for future lending capabilities.
• Loan Yield Dynamics: The decrease in loan yields was attributed to timing issues related to securitization, with expectations for normalization in the upcoming quarters.
• Competitive Landscape: Management expressed confidence in their competitive position, particularly against fintechs that may struggle with underwriting and risk assessment.

Overall, NewtekOne reported a strong start to 2026 with significant growth in earnings, deposits, and loan originations, while also navigating challenges related to market conditions and interest margins. The strategic focus remains on leveraging technology to enhance service delivery and maintain a competitive edge in the small business lending market.