NEWTP — NewtekOne, Inc. Depositary Shares, Non-Cumulative Perpetual Preferred Stock, Series B

Summary of NewtekOne (NEWTP) Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Earnings Per Share (EPS): Basic EPS of $0.68 and diluted EPS of $0.67 for Q3 2025; year-to-date EPS of $1.57 (47% growth) and $1.54 (22% growth) respectively.
• Revenue Growth: Revenue growth of 19% year-over-year.
• Tangible Book Value: Increased from $6.92 in Q1 2023 to $11.22 in Q3 2025.
• Dividends: Quarterly dividend of $0.19, totaling $0.76 for the year.
• Deposit Growth: Core deposits increased significantly, with business deposits up 17% ($52 million) and consumer deposits up 12% ($95 million).
• Efficiency Ratio: Improved from 61.8% to 56.3%, indicating better operational efficiency.
• Return on Average Assets (ROAA): 3.15% for the quarter, well above industry standards.
• Non-Performing Loans (NPLs): NPLs at 8.1%, with a net adjusted figure of 3.8% when excluding the NSBF portfolio.

2. Strategic Updates and Business Highlights

• Customer Acquisition: Opened 22,000 depository accounts and have 10,000 borrowers without traditional banking methods.
• Alternative Loan Program (ALP): Anticipating a significant securitization of $325 million to $350 million in Q4 2025, marking the largest to date.
• Technological Focus: Emphasized a technology-enabled banking model to efficiently acquire customers and manage loans.
• Diversification Strategy: Plans to diversify the loan portfolio by increasing Commercial & Industrial (C&I) and Commercial Real Estate (CRE) loans alongside traditional SBA loans.

3. Forward Guidance and Outlook

• Q4 2025 Guidance: Maintained previous guidance of $0.65 to $0.80 EPS, though acknowledged uncertainty due to potential government shutdown impacts on SBA loan processing.
• Long-Term Growth: Plans to continue leveraging the balance sheet and increasing deposit gathering capabilities while maintaining a focus on profitability.

4. Challenges and Points of Concern

• Credit Quality: Higher NPLs compared to traditional banks, with concerns about the impact of economic conditions on small businesses.
• Market Volatility: The ongoing government shutdown poses risks to SBA loan processing and overall lending activity.
• Competitive Pressures: Other SBA lenders exiting the market could create opportunities, but also highlight the challenges in maintaining loan volumes in a tighter lending environment.
• NSBF Losses: Continuing losses from the nonbank subsidiary, projected to be between $18 million to $20 million for 2025, although these are declining.

5. Notable Q&A Insights

• Credit Trends: Management indicated a bifurcated economy, with stress in certain sectors (e.g., oil, gas, agriculture) while consumer spending remains strong.
• SBA Loan Processing: Despite the government shutdown, the company is still processing loans that were approved prior to the shutdown and has mechanisms to bridge financing for borrowers.
• Dividend Strategy: While the company has a strong dividend history, management indicated that increasing the dividend is unlikely in the near term, with a preference for stock buybacks.
• Future Securitizations: Management expressed a desire to maintain a steady pace of securitizations, aiming for two per year with increasing sizes to enhance investor interest.

This summary encapsulates the key points from the earnings call, providing an overview of NewtekOne's financial performance, strategic direction, and the challenges it faces in the current economic landscape.