NewtekOne Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Earnings Per Share (EPS): Reported between $0.47 and $0.48.

Return on Average Assets (ROA): 2%, outperforming the industry average.

Tangible Book Value Growth: Increased by 75.3% over 12 quarters since transitioning to a financial holding company.

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

Deposits: Total deposits increased significantly, with non-affiliate deposits rising by $15 million in the quarter and core consumer deposits climbing by $297 million.

Loan-to-Deposit Ratio: Approximately 90%.

2Strategic Updates and Business Highlights

Business Model Evolution: Transitioning more operations from the holding company to the bank, focusing on commercial and industrial loans and payroll solutions.

Technological Integration: Continued emphasis on using technology and AI to streamline operations and enhance customer service, including a digital account opening process.

Securitization Strategy: Active in securitizing loans, with three ongoing C&I long amortization loan securitizations showing positive over-collateralization growth.

Market Position: Positioned as a significant lender in the SBA 7(a) program, with a focus on serving the independent business owner demographic.

3Forward Guidance and Outlook

Earnings Guidance: Adjustments anticipated due to a shift towards holding more guaranteed portions of SBA loans on the balance sheet, which may impact near-term EPS but is expected to stabilize income streams in the long run.

Future Securitizations: Plans to conduct a securitization in Q4, estimated between $300 million to $400 million.

Long-Term Strategy: Aiming to improve P/E valuations by enhancing net interest income and leveraging technological advantages.

4Bad News, Challenges, or Points of Concern

Impact on EPS: The shift to holding more loans may reduce gain-on-sale revenue in the near term, affecting earnings guidance.

Credit Quality Concerns: An increase in non-performing loans (NPLs) was noted, particularly among guaranteed loans, raising questions about credit risk management.

Market Competition: Facing competitive pressures from larger institutions that are investing heavily in technology and customer acquisition.

Operational Challenges: The transition to more bank-based operations may present short-term hurdles, particularly in managing the loan portfolio and deposit gathering.

5Notable Q&A Insights

Loan Strategy: Management indicated a strategic pivot to hold more guaranteed SBA loans, which may impact short-term earnings but aims for long-term stability.

Securitization Insights: Discussion on the benefits and challenges of originating loans through the bank, with a focus on maintaining quality underwriting.

Deposit Acquisition: Emphasized the effectiveness of their digital account opening process and customer service in acquiring deposits, with a high percentage of insured deposits.

Technology Opportunities: Management highlighted potential partnerships with other banks to leverage their technology, indicating a growing interest in their innovative solutions. Overall, NewtekOne demonstrated solid financial performance in Q2 2026, with strategic initiatives aimed at enhancing its market position and operational efficiency, despite facing some challenges related to credit quality and earnings guidance adjustments.