NewtekOne, Inc. (Nasdaq: NEWT), announced today its financial and operating results for the three and nine months ended September 30, 2023.

This is NewtekOne's third quarter reporting, and second full quarter reporting, as a financial holding company following the Company's completion of its acquisition of National Bank of New York City ("NBNYC") (renamed Newtek Bank, N.A.) and the withdrawal of its BDC election, on January 6, 2023. NewtekOne now consolidates the results of its former portfolio companies (now subsidiaries) and no longer uses investment company accounting. As a result, some prior-period and year-over-year comparisons are difficult, and we believe it is important to analyze many of our financial metrics on linked-quarter basis. Additionally, when analyzing NewtekOne, we also believe it is important to consider the Company's time-tested, differentiated business model which has provided multiple streams of income from its various businesses, as well as its operating structure which does not use branches, traditional bankers, brokers or business development officers to source business opportunities and instead relies upon the NewTracker(R) system which provides approximately 1,000 unique business referrals each day.

NewtekOne Third Quarter 2023 Financial Highlights

  • Net income was $10.0 million, or $0.38 per basic common share, for the three months ended September 30, 2023, a 46.2% increase on a per share basis over net income of $6.9 million, or $0.26 per basic common share, for the three months ended June 30, 2023.
  • Net interest income was $8.1 million for the three months ended September 30, 2023; an increase of 42.1% over $5.7 million for the three months ended June 30, 2023.
  • Total assets were $1.4 billion at September 30, 2023, unchanged compared to $1.4 billion at June 30, 2023.
  • Total borrowings were $648.7 million at September 30, 2023; a decrease of 7.0% from $697.4 million million at June 30, 2023.
  • Loans held for investment were $773.9 million at September 30, 2023; an increase of 5.9% over $730.7 million at June 30, 2023.
  • Cash and cash equivalents were $223.7 million, including $68.7 million of restricted cash, at September 30, 2023; a decrease of 12.7% from to $256.3 million, including $66.7 million of restricted cash, at June 30, 2023.
  • Net interest margin2 was 2.71% for the three months ended September 30, 2023; an increase of 29.7% over 2.09% for the three months ended June 30, 2023.
  • Return on average tangible common equity ("ROTCE") of 22.6% for the three months ended September 30, 2023; an increase of 45.8% over 15.5% for the three months ended June 30, 2023.
  • Return on average assets ("ROAA")1,2 of 2.8% for the three months ended September 30, 2023; an increase of 40.0% over 2.0% for the three months ended June 30, 2023.
  • Efficiency ratio2 of 67.8% for the three months ended September 30, 2023; a decrease of 12.1% compared to 77.1% for the three months ended June 30, 2023.
  • Total risk-based capital ratio2 was 17.7% at September 30, 2023; an increase of 17.2% over 15.1% at June 30, 2023.
  • Tier-1 leverage ratio2 was 14.6% at September 30, 2023; an increase of 39.0% over 10.5% at June 30, 2023
  • On October 20, 2023, the Company paid its third quarterly cash dividend as a financial holding company of $0.18 per share to shareholders of record as of October 10, 2023.
  • The Company is forecasting full year 2023 earnings per share in a range of $1.60 to $1.80, and has met or exceeded its previously issued 2023 quarterly earnings forecasts for the first nine months of 2023.
  • The Company is currently forecasting full year 2024 earnings per share in a range of $1.80 to $2.00.

NewtekOne Financial Highlights Nine Months Ended September 30, 2023

  • Net income was $28.5 million, or $1.10 per basic common share, for the nine months ended September 30, 2023.
  • Net interest income was $18.3 million for the nine months ended September 30, 2023.

Newtek Bank, N.A.

  • Total deposits were $432.6 million at September 30, 2023, which represents a 217.4% increase in deposits, compared to $141.6 million in deposits at NBNYC at December 31, 2022.
  • Insured deposits represented approximately 83.7% of total deposits at September 30, 2023.
  • Net interest margin2 was 3.49% for the three months ended September 30, 2023; an increase of 9.4% over 3.19% for the three months ended June 30, 2023.
  • ROTCE1,2 of 39.8% for the three months ended September 30, 2023; an increase of 24.0% over 32.1% for the three months ended June 30, 2023.
  • ROAA1,2 of 5.3% for the three months ended September 30, 2023; an increase of 8.2% over 4.9% for the three months ended June 30, 2023.
  • Efficiency ratio1,2 of 49.1% for the three months ended September 30, 2023; a decrease of 16.4% compared to 58.7% for the three months ended June 30, 2023.
  • Total risk-based capital ratio2 was 25.0% at September 30, 2023, a decrease of 15.0% from 29.4% at June 30, 2023.
  • Tier-1 leverage ratio2 was 14.9% at September 30, 2023; a decrease of 11.8% from 16.9% at June 30, 2023.

Lending Highlights

  • In April 2023, the Company began funding SBA 7(a) loans out of Newtek Bank with Preferred Lender Program (PLP) status.
  • Total SBA 7(a) loan fundings of $209.9 million for the three months ended September 30, 2023; an increase of 7.1% over $195.9 million of SBA 7(a) loans funded for the three months ended June 30, 2023.
  • Total SBA 7(a) loan fundings of $554.3 million for the nine months ended September 30, 2023.
  • The Company forecasts $830 million in total SBA 7(a) loan fundings for 2023, which would represent a 7.0% increase over 2022.
  • Newtek Bank closed $17.7 million of SBA 504 loans for the three months ended September 30, 2023; an increase of 7.9% over $16.4 million SBA 504 loans closed for the three months ended June 30, 2023.
  • Total SBA 504 loan closings of $82.4 million for the nine months ended September 30, 2023.

Barry Sloane, President, Chairman and CEO commented, "After acquiring National Bank of New York City on January 6, 2023, we were able to fully transition our lending operations to the newly named Newtek Bank, National Association, in the second quarter of 2023, and have now demonstrated, through two full quarters of performance, our ability to perform and deliver strong results to our shareholders.   Our unique and forward-thinking business model was able to produce strong results for Newtek Bank, as well as positive performance metrics at NewtekOne, the financial holding company.”

Mr. Sloane continued, “Newtek Bank had a net interest margin of 3.49%; a 9.4% increase from 3.19% from the prior quarter. In addition, return on average assets was 5.3%; a 8.2% increase from 4.9% in the prior quarter, and return on tangible common equity was 39.8%; a 24.0% increase from 32.1% in the prior quarter. The bank’s efficiency ratio for the third quarter 2023 was 49.1%; a 16.4% decrease compared to 58.7% in the second quarter of 2023. We believe all of these metrics demonstrate that Newtek Bank has an extremely bright future based upon its unique business model and opportunities to grow its well-capitalized balance sheet.”

Further commenting on NewtekOne's performance metrics, Mr. Sloane said, “We also demonstrated attractive returns with growth features in NewteOne's non-banking and banking activities. Net interest margin for the third quarter 2023 was 2.71%; a 29.7% increase from 2.09% in the prior quarter, return on average assets was 2.8%; a 40.0% increase from 2.0% in the prior quarter, and return on tangible common equity was 22.6%; a 45.8% increase from 15.5% in the prior quarter.   Furthermore, in the third quarter 2023, NewtekOne demonstrated capital levels that we view as above the norm for bank holding companies for CET1 ratio, total risk-based capital ratio, and Tier 1 leverage ratio at 15.1%, 17.7%, and 14.6%, respectively. We believe these metrics leave us well positioned for continued growth, as they are well in excess of regulatory minimums and we believe are above what is typical for conventional banks and bank holding companies.”

Mr. Sloane further commented, “We also achieved SBA 7(a) loan fundings for the third quarter 2023 of $209.9 million and maintained our level of deposits over the second quarter of 2023 and, as such, we believe Newtek Bank is very well positioned to utilize its excess cash to fund loans in the fourth quarter 2023 and the first quarter 2024. We have clearly communicated that deposit gathering in 2023 was focused on bringing in deposits digitally, primarily through high-yield savings accounts, and that our plan for 2024 will be to bring lower-cost deposits in the commercial demand deposit and commercial money market areas that are more transactional in nature and therefore require additional infrastructure and human talent, which is currently being put in place at Newtek Bank.   Important to note, is that our non-banking, reoccurring revenue activities at our Newtek Payments, Newtek Insurance, Newtek Payroll and Newtek Technology vertical businesses performed well, with profits growing over 2022 levels. Our non-bank subsidiary business verticals act as an anchor for our business portal, the Newtek Advantage®, which provides direct access to our Newtek business and financial solutions and is a true differentiator for our clients. At the end of October 2023, we rolled out the Newtek Advantage, unveiling this offering to 5,000 existing NewtekOne clients that are now aware of the multiple ways in which NewtekOne can help independent business owner customers become more successful by reducing their risk, growing their revenue, and reducing expenses by partnering with NewtekOne to process their business. During tomorrow’s conference call, we will address how we have integrated our offerings into our technology to make our offerings frictionless and seamless, so that clients can experience how we can assist them in their business to achieve higher levels of efficiency."

Mr. Sloane concluded, “In the third quarter 2023, we are also proud to illuminate the completion of a public SEC-registered debt offering of $40 million, the continued payment of a quarterly $0.18 per share dividend to shareholders and earnings per share of $0.38 to our common shareholders. We continue to progress quarter by quarter as we operate as a financial holding company, and believe analysts and investors will become more familiar with our unique model that does not rely on branches, traditional bankers, brokers or business development officers. We look forward to addressing the investment community and analyst community on our conference call tomorrow morning.”

Third Quarter 2023 Conference Call and Webcast

A conference call to discuss the third quarter 2023 financial results will be hosted by Barry Sloane, President, Chairman and Chief Executive Officer, M. Scott Price, Chief Financial Officer, and Nicholas Leger, Chief Accounting Officer, tomorrow, Wednesday, November 8, 2023, 8:30 a.m. ET.

Please note, to attend the conference call or webcast, participants should register online at NewtekOne, Inc. Q3 2023 Financial Results Conference Call. To receive a dial-in number, participants are requested to register at a minimum 15 minutes before the start of the call. The corresponding presentation will be available in the ‘Events & Presentations’ section of the Investor Relations portion of NewtekOne's website at NewtekOne, Inc. Q3 2023 Financial Results Conference Call. A replay of the call with the corresponding presentation will be available on NewtekOne's website shortly following the live presentation and will be available for a period of 90 days.

Note Regarding Dividend Payments

Amount and timing of dividends, if any, remain subject to the discretion of the Company's Board of Directors.

NewtekOne®, Your Business Solutions Company®, is a financial holding company, which along with its bank and non-bank consolidated subsidiaries, provides a wide range of business and financial solutions under the Newtek® brand to the small- and medium-sized business (“SMB”) market. Since 1999, NewtekOne has provided state-of-the-art, cost-efficient products and services and efficient business strategies to SMB relationships across all 50 states to help them grow their sales, control their expenses and reduce their risk.

NewtekOne’s and its subsidiaries’ business and financial solutions include: banking (Newtek Bank, N.A.), Business Lending, SBA Lending Solutions, Electronic Payment Processing, Technology Solutions (Cloud Computing, Data Backup, Storage and Retrieval, IT Consulting), eCommerce, Accounts Receivable Financing & Inventory Financing, Insurance Solutions, Web Services, and Payroll and Benefits Solutions.

Newtek®, NewtekOne®, Newtek Bank, National AssociationTM, Your Business Solutions Company®, Newtek Advantage® and One Solution for All Your Business Needs® are registered trademarks of NewtekOne, Inc.

Note Regarding Forward-Looking StatementsCertain statements in this press release are “forward-looking statements” within the meaning of the rules and regulations of the Private Securities Litigation and Reform Act of 1995. Information regarding the Company’s assets under supervision, capital ratios, risk-weighted assets, supplementary leverage ratio and balance sheet data consists of preliminary estimates. These statements and other forward-looking statements herein are based on the current beliefs and expectations of NewtekOne's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. In addition, earnings per share guidance reflects risks, uncertainties and assumptions with respect to facts and circumstances that are beyond our control, in particular concerning interest rates, monetary policy and prevailing economic conditions (including the impacts from a government shutdown ) during the relevant periods, any of which may differ significantly from our assumptions about the applicable period, causing our actual operating results, including our earnings per share, to differ materially from the stated guidance. See “Note Regarding Forward-Looking Statements” and the sections entitled “Risk Factors” in our filings with the Securities and Exchange Commission and available on NewtekOne's website (https://investor.newtekbusinessservices.com/sec-filings), and on the Securities and Exchange Commission’s website (www.sec.gov). Any forward-looking statements made by or on behalf of NewtekOne speak only as to the date they are made, and NewtekOne does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements were made.

SOURCE: NewtekOne, Inc.

Investor Relations & Public RelationsContact: Jayne Cavuoto Telephone: (212) 273-8179 / jcavuoto@newtekone.com

NEWTEKONE, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF FINANCIAL CONDITION(In Thousands, except for Per Share Data)
  September 30, 2023   December 31, 2022
ASSETS Financial Holding Company (Unaudited)   Investment Company Accounting
Cash and due from banks $ 17,646     $ 53,692
Restricted cash   68,702       71,914
Interest bearing deposits in banks   137,346      
Total cash and cash equivalents   223,694       125,606
Debt securities available-for-sale, at fair value   33,138      
Loans held for sale, at fair value   70,467       19,171
Loans held for sale, at LCM   48,450      
Loans held for investment, at fair value   492,987       505,268
Loans held for investment, at amortized cost, net of deferred fees and costs   280,934      
Allowance for credit losses   (8,209 )    
Loans held for investment, at amortized cost, net   272,725      
Federal Home Loan Bank and Federal Reserve Bank stock   3,657      
Settlement receivable   63,957      
Joint ventures (cost of $37,865 and $23,314), respectively   40,713       23,022
Controlled investments (cost of $0 and $131,495), respectively           —               259,217
Non-control investments (cost of $1,360 and $1,360), respectively   1,360       1,360
Goodwill and intangibles   27,157      
Right of use assets   6,502       6,484
Deferred tax asset, net   8,656      
Servicing assets   36,774       30,268
Other assets   50,697       28,506
Total assets $ 1,380,934     $ 998,902
       
LIABILITIES AND NET ASSETS      
Liabilities:      
Deposits:      
Noninterest-bearing $ 20,316     $
Interest-bearing   412,243      
Total deposits   432,559      
Borrowings   648,700       539,326
Dividends payable   4,769      
Lease liabilities   7,947       7,973
Deferred tax liabilities, net         19,194
Due to participants   21,235       35,627
Accounts payable, accrued expenses and other liabilities   38,691       21,424
Total liabilities   1,153,901       623,544
       
Shareholders' Equity:      
Preferred stock (par value $0.02 per share; authorized 20 shares, 20 and 20 shares issued and outstanding, respectively)   19,738      
Common stock (par value $0.02 per share; authorized 200,000 shares, 24,645 and 24,609 issued and outstanding, respectively)   491       492
Additional paid-in capital   192,712       354,243
Retained earnings   14,276       20,623
Accumulated other comprehensive loss, net of income taxes   (184 )    
Total shareholders' equity   227,033       375,358
Total liabilities and shareholders' equity $ 1,380,934     $ 998,902
 
NEWTEKONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In Thousands, except for Per Share Data)
       
  Three Months Ended September 30,   Nine Months Ended September 30,
  2023Financial Holding Company   2022Investment Company   2023Financial Holding Company   2022Investment Company
Interest income              
Debt securities available-for-sale $ 437     $     $ 1,083     $  
Loans and fees on loans   23,232       8,804       60,341       23,915  
Interest from affiliates         753             2,087  
Other interest earning assets   3,068             6,580        
Total interest income   26,737       9,557       68,004       26,002  
Interest expense              
Deposits   5,211             10,738        
Notes and securitizations   11,005       5,488       28,806       14,433  
Bank and FHLB borrowings   2,443       1,331       10,127       2,695  
Notes payable related party         98             284  
Total interest expense   18,659       6,917       49,671       17,412  
Net interest income   8,078       2,640       18,333       8,590  
Provision for credit losses   3,446             7,339        
Net interest income after provision for credit losses   4,632       2,640       10,994       8,590  
Noninterest income              
Dividend income   388       7,224       1,397       20,051  
Loan servicing asset revaluation   (1,951 )     (1,624 )     (1,566 )     (3,964 )
Servicing income, net of amortization   4,604       3,575       13,304       9,931  
Net gains on sales of loans   12,718       14,767       32,452       49,953  
Net gain (loss) on loans under the fair value option   2,802       (3,908 )     13,069       (12,415 )
Technology and IT support income   5,495             18,667        
Electronic payment processing income   11,192             32,196        
Other noninterest income   7,648       5,264       22,594       9,381  
Total noninterest income   42,896       25,298       132,113       72,937  
Noninterest expense              
Salaries and employee benefits expense   15,300       4,772       53,837       14,380  
Technology services expense   2,738             10,007        
Electronic payment processing expense   4,816             14,159        
Professional services expense   3,168       1,509       9,766       4,322  
Other loan origination and maintenance expense   3,403       8,296       9,791       21,900  
Depreciation and amortization   812       58       2,517       181  
Loss on extinguishment of debt                     417  
Other general and administrative costs   4,308       1,823       13,814       5,619  
Total noninterest expense   34,545       16,458       113,891       46,819  
Net income before taxes   12,983       11,480       29,216       34,708  
Income tax expense   3,011       118       671       175  
Net income   9,972       11,362       28,545       34,533  
Dividends to preferred shareholders   (400 )           (1,049 )      
Net income available to common shareholders $ 9,572     $ 11,362     $ 27,496     $ 34,533  
               
Earnings per share:              
Basic $ 0.38     $ 0.47     $ 1.10     $ 1.43  
Diluted $ 0.38     $ 0.47     $ 1.10     $ 1.43  
                               

Reconciliation of GAAP to Non-GAAP Financial MeasuresThe information provided below presents a reconciliation of each of our non-GAAP financial measures to the most directly comparable GAAP financial measure.

(dollars and number of shares in thousands) As of and for the three months ended
Newtek Bank, N.A. September 30, 2023   June 30, 2023
Return on Average Tangible Common Equity      
Numerator: Net Income (Loss) (GAAP) $ 7,831     $ 5,974  
Average Total Shareholders' Equity (non-GAAP)   81,043       76,838  
Deduct: Average Goodwill and Intangibles (non-GAAP)   2,146       2,195  
Denominator: Tangible Average Common Equity (non-GAAP) $ 78,897     $ 74,643  
Return on Average Tangible Common Equity (non-GAAP)   39.8 %     32.1 %
       
Return on Average Assets      
Numerator: Net Income (GAAP) $ 7,831     $ 5,974  
Denominator: Average Assets (non-GAAP)   584,182       485,633  
Return on Average Assets (non-GAAP)   5.3 %     4.9 %
       
Efficiency Ratio      
Numerator: Non-Interest Expense (GAAP) $ 14,759     $ 16,243  
Net Interest Income (GAAP)   5,089       3,771  
Non-Interest Income (GAAP)   24,984       23,920  
Denominator: Total Income $ 30,073     $ 27,691  
Efficiency Ratio (non-GAAP)   49.1 %     58.7 %
       
(dollars and number of shares in thousands) As of and for the three months ended
NewtekOne, Inc. September 30, 2023   June 30, 2023
Return on Average Tangible Common Equity      
Numerator: Net Income (GAAP) $ 9,972     $ 6,853  
Average Total Shareholders' Equity (non-GAAP)   222,390       224,956  
Deduct: Preferred Stock (GAAP)   19,738       19,738  
Average Common Shareholders' Equity (non-GAAP)   202,652       205,218  
Deduct: Average Goodwill and Intangibles (non-GAAP)   27,445       27,889  
Denominator: Average Tangible Common Equity (non-GAAP) $ 175,207     $ 177,329  
Return on Tangible Common Equity (non-GAAP)   22.6 %     15.5 %
       
Return on Average Assets      
Numerator: Net Income (GAAP) $ 9,972     $ 6,853  
Denominator: Average Assets (non-GAAP)   1,435,365       1,341,534  
Return on Average Assets (non-GAAP)   2.8 %     2.0 %
       
Efficiency Ratio      
Numerator: Non-Interest Expense (GAAP) $ 34,545     $ 40,149  
Net Interest Income (GAAP)   8,078       5,673  
Non-Interest Income (GAAP)   42,896       46,428  
Denominator: Total Income $ 50,974     $ 52,101  
Efficiency Ratio (non-GAAP)   67.8 %     77.1 %
       
Tangible Book Value Per Share      
Total Shareholders' Equity (GAAP) $ 227,033     $ 221,215  
Deduct: Goodwill and Intangibles (GAAP)   27,157       27,595  
Numerator: Total Tangible Book Value (non-GAAP) $ 199,876     $ 193,620  
Denominator: Total Number of Shares Outstanding   24,645       24,615  
Tangible Book Value Per Share (non-GAAP) $ 8.11     $ 7.87  
       
Tangible Book Value Per Common Share      
Total Tangible Book Value (non-GAAP) $ 199,876     $ 193,620  
Deduct: Preferred Stock (GAAP)   19,738       19,738  
Numerator: Tangible Book Value Per Common Share (non-GAAP) $ 180,138     $ 173,882  
Denominator: Total Number of Shares Outstanding   24,645       24,615  
Tangible Book Value Per Common Share (non-GAAP) $ 7.31     $ 7.06  

1 Non-GAAP; reconciliations of non-GAAP financial measures to the most comparable GAAP measures are set forth on the last page of the financial information accompanying this press release.2 Assets under supervision, capital ratios, risk-weighted assets and, supplementary leverage ratio are preliminary data and subject to change prior to filings with applicable regulatory agencies and our Form 10-Q for the quarter ended September 30, 2023.

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