On Thursday, NewtekOne (NASDAQ:NEWT) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
NewtekOne reported strong Q1 2026 financial results with EPS of $0.43, beating street consensus and reflecting growth over Q1 2025.
The company’s total assets have grown significantly, with the bank holding over $2 billion in deposits, a substantial increase since the acquisition of the National Bank of New York City.
NewtekOne emphasized its strategic focus on providing real-time payment solutions and leveraging technology to enhance client experiences.
The company achieved a record number of originated loans and demonstrated growth in both loan units and dollar terms, with a notable increase in deposit accounts.
Management reaffirmed 2026 guidance and provided an EPS range for 2027, indicating confidence in future growth and financial stability.
Technological advancements are supporting increased loan volume and deposit growth, with a focus on utilizing AI for quicker loan processing.
NewtekOne plans to continue funding loans through its bank, reducing reliance on warehouse facilities, and anticipates a securitization event in Q4 2026.
The company’s balance sheet is robust, with strong capital ratios and a focus on diversifying its loan portfolio to manage risk effectively.
Full Transcript
OPERATOR
Good day and thank you for standing by. Welcome to the NewtekOne first quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Barry Sloan, President and CEO. Please go ahead.
Barry Sloan (President, CEO and Founder)
Thank you very much and welcome to our Q1 2026 financial results conference Call. My name is Barry Sloan, President, CEO and Founder of NewtekOne. Also presenting today is Frank DeMaria, Chief Financial Officer of NewtekOne, the financial holding company that’s publicly traded and Frank is also Chief Financial Officer of Newtek Bank National Association. For those who want to follow today’s presentation along please go to newtekone.com, n e w t e k o n e dot com go to the Investor Relations section and the presentation section. We appreciate everyone’s attending today given that this is our 25th year as a publicly traded company and our 13th quarter reporting as a bank holding company. And after acquiring National Bank of New York City, we’ve accomplished quite a lot. From $180 million of total assets in national bank of New York city to over 2 billion. The financial holding company is approximately 2.9 billion of assets and the bank is over $2 billion of deposits, up from 140 million at the time we acquired it approximately three and a quarter years ago. We want to make sure in today’s presentation one of the biggest concerns I think people have, particularly in the current mobile market, is credit quality. I want to point everyone towards slide 21 where we’re able to demonstrate that the bank clearly has stabilized credit NPLs are down as a percentage when we typically take out the government guarantees for both the numerator and the denominator. With that said, let’s go to slide number two under forward looking statements. Absorb that and then let’s go to slide number three. Important always to note when you look at newtekone as its purpose. Our mission hasn’t changed since it was founded in 1998 at 120 W. 18th St. Apartment 4B with three founders. The focus of NewtekOneech One is to provide small to medium sized businesses, small to medium sized enterprises and independent business owners all across the United States to have financial and business solutions that are state of the art. We help our clients become more successful by growing their revenues, reducing their expense and reducing their risk. More importantly, we’re very much involved in the concept of real time payments. We’ll talk about that quite a bit today. Moving money and giving businesses the analytics that they really desire and require, apart from what they typically get from the top four large financial institutions in the United States, regional banks and community banks. On slide number four how do we do this? Newtekone uses Technology to tackle its Mission Statement I think it’s important to point out that although we’ve taken many different sizes and shapes as a publicly traded company, we started off as a 1933 act company, converted in November of 2011 to a 1940s Act BDC company and then converted back into Financial Holding Company. We acquired National Bank of New York City primarily for the purpose of improving our client experiences. Historically, we believe that by using technology we have solved the three primary challenges that the banking industry needs to overcome to be able to help the customer base. 1. The high cost of infrastructure with too many branches and expensive traditional bankers. We are traditional, bankerless and branchless. Take a look at the efficiency ratio at Newtek Bank National Association. For this particular quarter it was 40% insufficient lending margins from riskless loans. We think this particular industry when they’re lending generally is avoiding risk, they’re not managing risk and we think that there’s very little margin in their business and frankly if they aren’t able to acquire deposits materially below the risk free rate, there’s not a lot of margin in their business. Lastly, from a deposit perspective, basically taking in deposits with zero interest paid or non interest bearing deposits and charging excessive fees for the business client is not in the domain of NewtekOneech one or newtek Bank National Association. We have an extremely attractive platform that pays for business clients 1% on checking, 3.5% on business savings and a true no 0 fee bank account. Important to note, we’re a major adopter of real time payments. We can announce today that we are now have FedNow for receiving payments for our client base. We’ve been approved by the Federal Reserve’s FedNow program and the Clearinghouse RTP. So we’re fully approved. This is live and we’re able to benefit our clients today with real time payments appearing in their account on slide number five. Obviously these are things I think many of you are already aware of in terms of our structure. NewtekOne is considered a bank holding company regulated by the Federal Reserve Board of Governors NewtekOneech Bank national association which used to be called National Bank of New York City. It’s a depository offering great solutions, real time payments obviously the lender to the business community through its holding company Investment in NewtekOneech Merchant Solutions provides payment processing solutions, payroll solutions and insurance solutions that support independent business owners all across the United States. We’ve utilized our own proprietary and patented technological solutions to acquire customers cost effectively. We receive 600 to 800 unique business referrals a day through our NewTracker™ client acquisition tool. And we give customers through the NewTek Advantage, a far advanced business portal to help them manage the business, move money on a real time basis, as well as get the types of historic data and analytics that they so rightly deserve. Newtekone provides a full menu of best in class on demand business and financial solutions to independent business owners. Importantly, we don’t leave clients to just software. We have staff over 300 that are available on demand on camera. So in addition to great software and great technology in a frictionless manner, they can also get somebody on camera when they need them. On slide number six, we talk about our target market. I think the relevance of our target market is the SMB SME or independent business owner market is quite large and quite lucrative. It’s estimated that there’s 36 million independent business owners in the United States that identify themselves in this category. According to the US Chamber of Commerce, it’s 43% of US GDP and frankly, we’ve been tremendously supportive of this particular asset class. And According to the SBA, we have stabilized and supported over 110,000 jobs over the last five years, the second highest amongst all SBA lenders. The independent business owner is a huge economic demographic that frankly the existing industry has taken advantage of by basically taking their deposits, not really providing them attractive lending solutions to enable them to grow their business or for that matter, the ability to move money on a real time basis. It’s important to point out that in recent SBA data, new tech1 is the largest SBA lender by units and is top two or three by loan volume. Also important to note that even though the bank’s balance sheet is a little over 2.1 billion, when we make an SBA loan, 75% is government guaranteed. We typically sell it. So even though the bank is 2 billion, we basically, when you look at the government guarantees and the fact that we’re servicing them, it’s a much bigger infrastructure. I would guess over our history, if we kept all the government guarantees in the balance sheet rather than selling them. It would be approximately $4 billion of total assets. On slide number seven, we’re going to focus on the really attractive quarter that we just reported. Really Good start to 2026 EPS of 0.43 cents beating street consensus by about a penny, reflected 19 and 23% growth over Q1, 25 basic and diluted EPS and was within our 37 to 47 cent guidance range. We want to reconfirm our 2026 guidance of 2.35 at a midpoint and establish a $2.60 midpoint for 2027. The current street consensus for 2027 235, 240, 245 and 250 from four of the six analysts to blend at $2.43. Also, for those that follow our stock closely, you’re familiar that we’ve done a very nice job in growing book value and tangible book value. So book value per share ended Q1 2026 $12.35 and tangible book at $11.84. We started off at a tangible book at $6.926.92 in Q1 2023. Quite a substantial growth over the course of time. It’s a technical logical advancements that are supporting a record number of originated loans and tremendous year over year growth in the fourth quarter. In the first quarter of 2026 we originated 961 loan units of 40% year over year with 500 loan units alone originated in March versus 287 in dollar terms 391 million of loans versus 366 millions of loans for Q1 2025. And March’s momentum has continued in April with approximately 10% year over year growth. In addition, we were able to capture the operating leverage. Q1 2026 operating expense was just over, up over 7.5% on year over year asset growth 35% and a return on average assets of 1.96. Very favorable to the industry but also important for those of you that follow the company. The first quarter is clearly our weakest from an earnings perspective. I think it’s important to note using technology on a loan under 350,000, we’re using AI to read tax returns, read lease agreements, read operating agreements as well as alternative valuation methods. So by being able to do this we’re able to really fund small business loans quite quickly. As a matter of fact, we talked about which we’ll do in future slides the seven-day loan. Once the loan application is completed, we can clearly fund that particular application under 350,000 within seven days. Slide number 8 Deposit growth extremely important for banks we had two consecutive quarters of record number of deposit accounts. We ended Q1 2026 with 37,000 deposit accounts more than doubling year over year. In 13 quarters we’ve grown deposits from 142 million to 1.9 billion. Business deposits, which come in at a lower cost, increased Q over Q year over year by 37 million 173 million respectively. Consumer deposits also climbing quarter over quarter and year over year by 392 million and 668 million. Since the acquisition of Newtek bank in 2023, 54% of our lending clients have opened up a business deposit account and Since February of 2024 when we initiated T Man Life to NewTech bank business lending clients, 25% of those clients have purchased T Man Life and do so in in an automatic frictionless basis where they apply once and they can get a bank account T Man Life they can currently get flood insurance in the menu in the very near future we’re also going to be able to offer property and casualty all automated one app frictionless and get that client their funds as quickly as possible for those who qualify Starting we just started in January originating C and I long AM loans nicknamed CI la We used to call them AOP loans and these are being originated at the bank. The CNI LA (Commercial and Industrial Loan) originations approximated 85.7 million versus 68.5 million in the same quarter a year earlier. We are now funding these obviously with bank deposits where historically in 2025 and earlier than that we funded them up at the holding company with warehouse facilities. The cost of those facilities were approximately sold for +325 but the bigger cost which I’ll describe in a second has been not using a warehouse facility but the bank funding. We have historically securitized CNI LA (Commercial and Industrial Loan) loans on a regular basis and we may do so from the bank’s balance sheet. Once again, let’s take an example of say a $500 million portfolio. So a $500 million portfolio which historically was originated at the holding company with a 70% advance rate from a street warehouse line and should note we just paid two of those down to zero one from Capital One, one from Deutsche bank had a 30% equity haircut. So on $500 million worth of loans you need 150 million of capital from the holdco. Once you securitize with a 15% OC or owner certificate meaning that you had three classes of bonds above it, Single A bond, a triple B bond and a double B bond to give you an 85% advance rate. An 85% advance rate on $500 million of collateral is $75 million. All would have to be contributed from the holding company in the event that we securitized off the bank’s balance sheet. It’s dramatically less. You’re funding it with core deposits at approximately a 10 to 1 leverage, much more efficient and much more profitable. On slide number nine, tangible book value per share. One of my favorite slides. So you know, real simple for those people that like to invest based upon tangible book value growing. If you look at this slide, it’s a little dizzy to a certain degree. 6.96 dollars 92 cents in Q1 2023, currently $11.84. Frank DeMaria will talk about where we think we’ll be at the end of the year and it’ll be $13.50 approximately. And then on top of that, you look at the dividends that we paid. So $2.43 of cumulative common dividends declared, $4.92 of tangible book value growth. Since the conversion, we delivered $7.35 of value to shareholders, more than double the Q1 tangible book value of $6.92. Something we’re really proud of. On slide number 10. We touched upon this a little earlier, the technological advances that are supporting increased loan volume. Those advances have also helped us with deposit growth. But once again, it’s important to note we had tremendous unit and dollar growth in the first quarter. We talked about the seven day business loan, we talked about our AI that we use for smaller balance loans with respect to using it to read tax returns which are very important to spreading financials and actually calculating debt service coverage. Some of our competitors in the marketplace, frankly that have been score and going, some of these loans, they can’t do it. They’ve got to change their technology. It’s creating friction. We’ve had several of our competitors in the space reporting problems with …
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