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 industry averages.

Asset Growth: 50% increase in assets with only a 3.6% rise in expenses.

Book Value Growth: Tangible book value per share grew 75.3% over 12 quarters since transitioning to a technology-enabled financial holding company.

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

Deposits: Total deposits grew to $2.2 billion, with a significant increase in core consumer deposits by $297 million.

2Strategic Updates and Business Highlights

Business Model Evolution: Shifted more operations to Newtek Bank, focusing on net interest income rather than gain-on-sale income.

Technology Integration: Continued emphasis on leveraging technology and AI to enhance customer service and operational efficiency.

SBA Lending: Increased focus on holding guaranteed portions of SBA loans on the balance sheet, aiming for more stable income streams.

Securitization Plans: Plans to securitize loans from the bank, with anticipated sizes between $300 million to $400 million.

3Forward Guidance and Outlook

Earnings Guidance: Adjustments to previous guidance of $0.79 to $0.89 for Q4 due to strategic shifts towards holding more loans on the balance sheet.

Long-term Strategy: Aiming for improved P/E valuations by enhancing net interest income and leveraging technology for operational efficiencies.

4Bad News, Challenges, or Points of Concern

Net Interest Margin (NIM): Declined due to the shift of operations from the holding company to the bank, impacting income generation.

Loan Performance: Increase in non-performing loans (NPLs), particularly in guaranteed loan balances, raising concerns about credit quality.

Market Conditions: Challenges in originating loans due to current interest rate levels, leading to potential reluctance from businesses to take loans.

5Notable Q&A Insights

Loan Strategy: Discussion on the rationale for holding more guaranteed SBA loans on the balance sheet, indicating potential short-term impacts on earnings but aiming for long-term stability.

Securitization and Credit Quality: Insights into the management of problem loans and the rationale for buying back loans to maintain a strong partnership with the SBA.

Technology Opportunities: Potential for Newtek's technology solutions to be adopted by other financial institutions, indicating a growing interest in their innovative approach.

Deposit Strategy: Emphasis on effective deposit acquisition strategies and maintaining a low cost of acquisition, which is crucial for sustaining liquidity. Overall, NewtekOne is navigating a transformative period, focusing on technology integration and strategic shifts in lending practices while facing challenges related to credit quality and market conditions.