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): Reported at $0.43, beating consensus by $0.01, reflecting a 19% increase in basic and 23% in diluted EPS 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 loans originated, a 40% increase year-over-year, totaling $391 million.
• Deposits: Total deposits reached $1.9 billion, with significant growth in both business and consumer deposits.
• Return on Average Assets: 1.96%, favorable compared to industry standards.
• Efficiency Ratio: 40%, indicating strong operational efficiency.

2. Strategic Updates and Business Highlights

• Technological Advancements: NewtekOne is leveraging technology to improve client experiences, including real-time payments through FedNow and The Clearing House RTP.
• Market Position: Largest SBA lender by units and among the top by loan volume, supporting over 110,000 jobs in the last five years.
• C&I LA Loans: Introduced a new loan product with average sizes of $4 million to $5 million, offering better margins and improved credit quality.
• Client Acquisition: Utilizes proprietary technology (NewTracker) to acquire 600-800 unique business referrals daily.
• Growth in Deposit Accounts: Increased to 37,000 accounts, more than doubling year-over-year.

3. Forward Guidance and Outlook

• 2026 EPS Guidance: Maintained at a midpoint of $2.35, with a 2027 midpoint guidance of $2.60.
• Loan Growth: Expected to continue at low double-digit rates, with a focus on diversifying the loan portfolio.
• Securitization Plans: Anticipated fourth-quarter securitization of $400 million to $500 million, transitioning loans from the holding company to the bank.

4. Bad News, Challenges, or Points of Concern

• Net Interest Margin Compression: Due to a shift in earning asset mix and increased cash holdings at the Fed, impacting short-term profitability.
• Delinquency Rates: While down, there is a noted increase in net charge-offs as the loan portfolio seasons.
• Market Competition: Increased competition in the SBA lending space, with some fintechs struggling to adapt to regulatory changes.
• SBA Program Changes: Recent changes have reduced borrower eligibility, potentially impacting loan volumes.

5. Notable Q&A Insights

• Balance Sheet Growth: Future loan growth is expected to be primarily from the bank, with controlled growth strategies in place.
• Deposit Liquidity: Management indicated a need to maintain liquidity, although current cash levels at the Fed may be excessive.
• Loan Yields: A decrease in loan yields was attributed to timing issues related to securitizations, with expectations for normalization in future quarters.
• Borrower Confidence: Management expressed optimism about returning to previous loan volumes, despite recent challenges in the SBA market.

Overall, NewtekOne reported a strong start to 2026 with significant growth in earnings and deposits, while navigating challenges in loan pricing and market competition. The company is well-positioned for continued growth through strategic technological advancements and a focus on diversifying its loan portfolio.