Key points for investors:
- Business model & strategy: Newtek positions itself as a technology-enabled financial holding company and nationally chartered bank focused on small- and medium-sized business customers (SMBs). The company emphasizes low-cost customer acquisition, integrated payment/payroll/insurance services (the "Newtek Advantage"), and remote lending without traditional branches.
- Financial performance: Strong Q3 2025 operating metrics (ROAA ~3.15% at the holdco; bank ROAA 3.57%; NIM at the bank ~5.4%). Tangible book value per share has grown materially (from $6.92 in Q1 2023 to ~$11.22), and the company continues to pay a quarterly dividend ($0.19 / $0.76 annualized).
- Deposits & funding: Rapid deposit growth (sequential business deposits +17%, consumer +12% in the quarter). Management highlights the ability to "raise deposits below the risk-free rate" and notes ~78% of deposits are FDIC insured. Loan-to-deposit ratio ~95%.
- Credit & reserves: NPLs are elevated (NPLs / total loans ~8.1%) largely driven by legacy assets (NSBF) but management says those portfolios are stabilizing and being wound down. Allowance for credit losses (~5.42% at the bank) and capital buffers were increased to support growth and expected losses.
- Alternative Loan Program (ALP): ALP is a core growth and high-margin product financed primarily via securitizations. Management expects a large ALP securitization in Q4 2025 (~$325M–$350M), the largest to date, and views ALP as very profitable with historical charge-offs low (~3% historical loss metrics in securitized pools). Management plans to continue securitizing and growing ALP volumes (targeting multiple deals per year, larger pools).
- Capital & liquidity: Recent capital raises (preferred and common equity) increased Tier 1 and CET1 capital. Management simplified capital structure and completed a $50M preferred issuance and other refinancings to improve liquidity and pay down other financing in 2026.
- Subsidiaries & cross-sell: Payment processing, payroll, and insurance businesses are additive to earnings and deposit gathering. Management expects these lines will continue to produce sticky deposits and incremental pretax income in 2025.
- Near-term risks: SBA program uncertainty (government shutdown) may impact SBA 7(a) guarantee timing and near-term originations. Management did not revise guidance but noted the shutdown introduces uncertainty for Q4 timing. Legacy nonbank portfolio (NSBF) is in wind-down and continuing to shrink (losses declining year-over-year).
- Execution outlook: Management is confident in execution, plans continued balance-sheet usage (moderate increase in leverage over time), further diversification of the loan book (more CRE and C&I), and improved operating leverage (efficiency ratio improved at holdco and bank).
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