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

NewtekOne, Inc. (NEWTP) Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Earnings Per Share (EPS): $0.43, beating consensus by $0.01 and reflecting 19% growth year-over-year.
• Book Value per Share: Ended Q1 2026 at $12.35; Tangible Book Value at $11.84, up from $6.92 in Q1 2023.
• Loan Originations: 961 units originated, up 40% year-over-year; $391 million in loans compared to $366 million in Q1 2025.
• Deposits: Total deposits reached $1.9 billion, with 37,000 deposit accounts, more than doubling year-over-year.
• Return on Average Assets: 1.96%, favorable compared to industry standards.
• Efficiency Ratio: 40% for Newtek Bank, indicating strong operational efficiency.

2. Strategic Updates and Business Highlights:

• NewtekOne continues to focus on providing financial solutions to small- and medium-sized businesses (SMBs) using technology to enhance customer experience and operational efficiency.
• The company has adopted real-time payment solutions, now fully integrated with FedNow and The Clearing House RTP.
• Significant growth in the C&I LA loan program, with average loan sizes of $4 million to $5 million, contributing to diversification and improved credit quality.
• The bank has successfully transitioned to funding loans with deposits rather than warehouse facilities, reducing costs and improving margins.

3. Forward Guidance and Outlook:

• Reaffirmed 2026 EPS guidance at a midpoint of $2.35 and established a 2027 midpoint of $2.60.
• Anticipates continued loan growth in the bank, with expectations of maintaining low double-digit growth rates.
• Plans for a potential fourth-quarter securitization event, targeting a collateral pool of $400 million to $500 million.

4. Bad News, Challenges, or Points of Concern:

• The first quarter is typically the weakest for earnings, and the company experienced net interest margin (NIM) compression due to a shift in the earning asset mix.
• There are concerns about the overall health of the SBA market, with recent regulatory changes potentially impacting borrower volumes and confidence.
• The bank's leverage ratio is approaching capitalization constraints, necessitating careful management of growth and securitizations.
• The company holds $390 million in cash at the Fed, which could be seen as excessive liquidity but is viewed as a strategic reserve for future lending opportunities.

5. Notable Q&A Insights:

• Management indicated that loan growth will primarily occur within the bank, with a focus on maintaining liquidity while managing the loan-to-deposit ratio.
• The decrease in loan yields was attributed to timing issues related to securitizations, with expectations for normalization in the upcoming quarters.
• The average deposit account sizes are approximately $10,000 for consumer accounts and $200,000 to $250,000 for business accounts, indicating healthy deposit patterns.
• Competitive pressures in the SBA lending space are noted, but NewtekOne believes its technological advancements provide a significant advantage over competitors struggling with underwriting and loan origination.

This summary encapsulates the key financial metrics, strategic initiatives, forward guidance, and challenges faced by NewtekOne, providing a balanced view of the company's current position and outlook.