abrooklyn
3 months ago
NewtekOne, Inc. Reports Second Quarter 2024 Financial Results
Source: GlobeNewswire Inc.
NewtekOne, Inc. (Nasdaq: NEWT), reports its financial and operating results for the three and six months ended June 30, 2024.
NewtekOne Financial Highlights for the Three Months ended June 30, 2024
Net income was $10.9 million, and earnings per share (“EPS”) was $0.43 per basic and diluted common share, for the three months ended June 30, 2024; a 13.2% increase, on a per share basis, compared to $9.7 million and $0.38 per basic and diluted common share, for the three months ended March 31, 2024, and a 59.3% increase, on a per share basis, compared to $7.0 million and $0.27 per basic and diluted common share, for the three months ended June 30, 2023.
Net interest income was $9.1 million for the three months ended June 30, 2024; an increase of 2.2% over $8.9 million for the three months ended March 31, 2024, and an increase of 59.6% over $5.7 million for the three months ended June 30, 2023.
Total assets were $1.6 billion at June 30, 2024; an increase of 14.3% from $1.4 billion at December 31, 2023.
Total borrowings were $652.0 million at June 30, 2024; an increase of 1.2% from $644.1 million at December 31, 2023.
NewtekOne completed a registered public offering of $71.875 million aggregate principal amount of its 8.50% Fixed Rate Senior Notes due 2029, listed on the Nasdaq Global Market® under the trading symbol “NEWTG”
Loans held for investment were $867.7 million at June 30, 2024; an increase of 7.6% over $806.1 million at December 31, 2023.
Net interest margin2 was 2.70% for the three months ended June 30, 2024; a decrease of 7.5% compared to 2.92% for the three months ended March 31, 2024, and an increase of 34.3% over 2.01% for the three months ended June 30, 2023.
Return on Tangible Common Equity (“ROTCE”)1 of 21.1% for the three months ended June 30, 2024; an increase of 2.4% over 20.6% for the three months ended March 31, 2024, and an increase of 37.0% over 15.4% for the three months ended June 30, 2023.
Return on Average Assets (“ROAA”)1,2 of 2.8% for the three months ended June 30, 2024; consistent with the 2.8% for the three months ended March 31, 2024, and an increase of 33.3% over 2.1% for the three months ended June 30, 2023.
Efficiency ratio2 of 66.3% for the three months ended June 30, 2024; a decrease of 6.1% compared to 70.6% for the three months ended March 31, 2024, and a decrease of 12.3% compared to 75.6% for the three months ended June 30, 2023.
Total risk-based capital ratio2 was 18.8% at June 30, 2024; a decrease of 1.6% over 19.1% at December 31, 2023.
Tier-1 leverage ratio2 was 13.7% at June 30, 2024; an increase of 0.7% over 13.6% at December 31, 2023.
Post Second Quarter 2024 Highlights
The Company maintains its 2024 annual EPS forecast to a range of $1.85 to $2.05 per basic and diluted common share.
On July 19, 2024, the Company paid a quarterly cash dividend of $0.19 per share on its outstanding common shares.
On July 23, 2024, NewtekOne's joint venture, Newtek-TSO II Conventional Credit Partners, LP, closed a $154.3 million alternative business loan backed securitization rated by Morningstar DBRS.
On August 1, 2024, Newtek Bank sold $3.0 million of past due and non-accrual loans acquired through the acquisition of National Bank of New York City.
NewtekOne Financial Highlights for the Six Months ended June 30, 2024
Net income was $20.6 million and EPS was $0.81 per basic and diluted common share, for the six months ended June 30, 2024, compared to $25.6 million and $1.03 per basic and diluted common share, for the six months ended June 30, 2023. Net income for the six months ended June 30, 2023 was positively impacted by an income tax benefit of $14.2 million, or $0.59 per basic and diluted share. Excluding this income tax benefit, EPS for the six months ended June 30, 2023 would have been $0.44 per basic and diluted share.1
Net interest income was $18.0 million for the six months ended June 30, 2024; an increase of 74.8% over $10.3 million for the three months ended June 30, 2023.
Net interest margin2 was 2.81% for the six months ended June 30, 2024; an increase of 39.8% over 2.01% for the six months ended June 30, 2024.
ROTCE1 of 20.9% for the six months ended June 30, 2024; a decrease of 34.3% compared to 31.8% for the six months ended June 30, 2023. ROTCE for the six months ended June 30, 2023 was positively impacted by the income tax benefit in the first quarter of 2023.
ROAA1,2 of 2.8% for the six months ended June 30, 2024; a decrease of 33.3% compared to 4.2% for the six months ended June 30, 2023. ROAA for the six months ended June 30, 2023 was positively impacted by the income tax benefit in the first quarter of 2023.
Efficiency ratio2 of 68.4% for the six months ended June 30, 2024; a decrease of 13.7% compared to 79.3% for the six months ended June 30, 2023.
Newtek Bank, N.A.
Total deposits3 were $663.7 million at June 30, 2024; an increase of 17.4% over $565.3 million at March 31, 2024 and an increase of 27.9% over $519.1 million in deposits at December 31, 2023.
Insured deposits represented approximately 79.1% of total deposits at June 30, 2024.
Net interest margin was 4.83% for the three months ended June 30, 2024; an increase of 0.2% over 4.82% for the three months ended March 31, 2024, and an increase of 51.9% over 3.18% for the three months ended June 30, 2023.
ROTCE1 of 48.8% for the three months ended June 30, 2024; an increase of 28.8% over 37.9% for the three months ended March 31, 2024, and an increase of 47.4% over 33.1% for the three months ended June 30, 2023.
ROAA1 of 6.4% for the three months ended June 30, 2024; an increase of 10.3% over 5.8% for the three months ended March 31, 2024, and an increase of 25.5% over 5.1% for the three months ended June 30, 2023.
Efficiency ratio1 of 42.3% for the three months ended June 30, 2024; a decrease of 15.6% from 50.1% for the three months ended March 31, 2024, and a decrease of 20.3% from 53.1% for the three months ended June 30, 2023.
Total risk-based capital ratio was 18.3% at June 30, 2024; a decrease of 3.2% from 18.9% at December 31, 2023.
Tier-1 leverage ratio was 13.6% at June 30, 2024; a decrease of 12.3% from 15.5% at December 31, 2023.
Lending Highlights
SBA 7(a) loan closings of $229.8 million for the three months ended June 30, 2024; an increase of 18.06% over $194.7 million of SBA 7(a) loans closings for the three months ended June 30, 2023.
The Company forecasts $935.0 million in total SBA 7(a) loan fundings for 2024, which would represent a 14.7% increase over 2023.
Newtek Bank closed $16.4 million of SBA 504 loans for the three months ended June 30, 2024; an increase of 3.94% over $15.8 million SBA 504 loans closed for the three months ended June 30, 2023.
Newtek Bank and the Company’s non-bank lending subsidiaries closed $316.5 million of loans across all loan products for the three months ended June 30, 2024; a 26.33% increase over $250.5 million of loans closed for the same period in 2023.
________________________
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 with our filings with regulatory agencies and our Form 10-Q for the period ended June 30, 2024.
3 Total deposits as reported include deposits from affiliates held at Newtek Bank, which are eliminated through consolidation on NewtekOne's consolidated financial statements.
Barry Sloane, Chairman, President, and Chief Executive Officer said, "We are pleased to report EPS of $0.43 per basic and diluted common share for the second quarter of 2024. As our industry continues to experience the pains of higher short-term interest rates, an inverted yield curve and slumping commercial real estate prices, we continue to meet and exceed our expectations and have established ourselves as a differentiated and new model for a financial holding company, operating a nationally chartered bank."
Mr. Sloane continued, “In addition, when examining the financial performance of Newtek Bank for the second quarter 2024, we are pleased by its powerful earnings model that has been consistently generating returns through the past six quarters, the term over which Newtek Bank has been owned by NewtekOne, its financial holding company. We want to continue to remind the marketplace that since January 2023, when NewtekOne converted to a financial holding company from a BDC, NewtekOne has met the challenges of operating under a different business model subject to different regulations. In addition, Newtek Bank's predecessor, the National Bank of New York City, was a 60 year old Flushing, New York based bank which required a complete modernization. We are very proud of the excellent job our management team has done in modernizing Newtek Bank to a state-of-the art technology enabled bank, and expect that investors and analysts are watching us grow Newtek Bank and see that we are meeting and beating our expectations. In addition, we believe that our business model, which is unique, can offer outstretched returns compared to a typical bank. For example, in the second quarter of 2024, Newtek Bank had an ROAA of 6.4%, an ROTCE of 48.8% and an efficiency ratio of 42.3%, none of which are typical returns produced by traditional banks. Indeed, we believe that Newtek Bank's returns are driven by its distinctive differentiated business model. Moreover, Newtek Bank's net interest margin continued to expand and reached 4.83% in the second quarter of 2024, while its average rate on deposits remained constant at 4.47%. Newtek Bank also experienced total loan growth of 13% over the first quarter 2024 and growth in deposits of 17% over the first quarter 2024."
Mr. Sloane further commented, "As we have previously communicated to the market, we believe that the two of the most important catalysts to our growth in quality EPS will be our ability to acquire commercial deposits at lower interest rates and to grow our alternative loan program ("ALP") at the holding company. We are grateful that our management team continues to execute on our goals of raising lower-cost commercial deposits as well as originating high-quality loans in the current higher interest rate environment. In addition to a business model that has consistently performed to meet or exceed our expectations, we could not be more pleased with the results that our joint venture Newtek TSO-II Conventional Credit Partners achieved in its July 23, 2024 ALP securitization, NALP Business Loan Trust 2024–1, when it sold $154.3 million of notes rated “A (sf)” and “BBB (high) (sf)” by Morningstar DBRS and collateralized by approximately $191 million of ALP loans originated by NewtekOne's ALP. More information on this deal, can be found through the following link NALP Business Loan Trust 2024-1. When one considers the coupon, both gross and net of servicing (an asset owned by NewtekOne), on the ALP loans that went into the securitization and the cost of the securitized debt, you should be able to see why we view this business as very profitable and a growth opportunity for NewtekOne and its shareholders. In addition, the ALP provides tremendous value for our customers looking for long amortizations, with respect to the principal repayment, and no balloon payments, as well as the desire for smaller monthly principal and interest payments and full flexibility to run their business. The ALP allows us to reach out to and satisfy the financial needs of a larger pool of borrowers, including larger and higher credit-worthy borrowers that come through our NewTracker® referral platform.”
Mr. Sloane concluded, “We ended the second quarter with $136 million of commercial depository accounts, up from $116 million at the end of the first quarter 2024, which represents approximately 20% of our total deposits. We anticipate finishing the calendar year 2024 with between $200 million and $250 million of commercial depository accounts. We look forward to a complete review of our quarterly performance in our conference call tomorrow morning at 8:30am ET. You can register online through the following link NewtekOne Second Quarter 2024 Financial Results.”
Second Quarter 2024 Conference Call and Webcast
A conference call to discuss the second quarter 2024 financial results will be hosted by Barry Sloane, President, Chairman and Chief Executive Officer and M. Scott Price, Chief Financial Officer, tomorrow, Tuesday, August 6, 2024, 8:30 a.m. EDT.
Please note, to attend the conference call or webcast, participants should register online at NewtekOne, Inc. Second Quarter 2024 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. Second Quarter 2024 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 Newtek Bank and NewtekOne's non-bank consolidated subsidiaries, provides a wide range of business and financial solutions under the Newtek® brand to independent business owners. Since 1999, NewtekOne has provided state-of-the-art, cost-efficient products and services and efficient business strategies to our independent business owner 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 Association, Your Business Solutions Company® and One Solution for All Your Business Needs® are registered trademarks of NewtekOne, Inc.
Note Regarding Forward-Looking Statements
Certain 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 and are subject to change with our filings with regulatory agencies and the filing of the Company's Form 10-Q for the quarterly period ended June 30, 2024. 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 which are 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 Relations
Contact: Jayne Cavuoto
Telephone: (212) 273-8179 / jcavuoto@newtekone.com
abrooklyn
6 months ago
NewtekOne, Inc. Reports First Quarter 2024 Financial Results
Source: GlobeNewswire Inc.
NewtekOne, Inc. (Nasdaq: NEWT), announced today its financial and operating results for the three months ended March 31, 2024.
NewtekOne First Quarter 2024 Financial Highlights
Net income was $9.7 million, or $0.38 per basic and diluted common share for the three months ended March 31, 2024, compared to $18.6 million, or $0.76 and $0.74 per basic and diluted common share, respectively, for the three months ended March 31, 2023.
First quarter 2023 earnings per share ("EPS"), as previously restated, was positively impacted by an income tax benefit of $14.2 million, or $0.59 per basic and $0.58 per diluted share, respectively (excluding this income tax benefit, first quarter 2023 core EPS would have been $0.17 and $0.16 per basic and diluted share, respectively).1
The Company is raising its 2024 annual earnings forecast to a range of $1.85 to $2.05 per basic and diluted common share from its previous forecast range of $1.80 to $2.00 per basic and diluted common share.
Net income was $9.7 million, or $0.38 per basic and diluted common share for the three months ended March 31, 2024, compared to $10.8 million, or $0.43 per basic and diluted common share, for the three months ended December 31, 2023.
Net interest income was $8.9 million for the three months ended March 31, 2024; an increase of 7.2% over $8.3 million for the three months ended December 31, 2023, and an increase of 93.5% over $4.6 million for the three months ended March 31, 2023.
Total assets were $1.5 billion at March 31, 2024, an increase of 7.1% from $1.4 billion at December 31, 2023.
Total borrowings were $662.5 million at March 31, 2024; an increase of 2.9% from $644.1 million at December 31, 2023.
Loans held for investment were $840.6 million at March 31, 2024; an increase of 4.3% over $806.1 million at December 31, 2023.
Cash and cash equivalents were $163.2 million, including $35.8 million of restricted cash, at March 31, 2024; a decrease of 11.3% from $184.0 million, including $30.9 million of restricted cash, at December 31, 2023.
Net interest margin2 was 2.92% for the three months ended March 31, 2024; an increase of 5.8% over 2.76% for the three months ended December 31, 2023, and an increase of 46.0% over 2.00% for the three months ended March 31, 2023.
Return on Tangible Common Equity ("ROTCE")1 of 20.6% for the three months ended March 31, 2024; a decrease of 19.8% over 25.7% for the three months ended December 31, 2023, and a decrease of 61.1% over 52.9% for the three months ended March 31, 2023.
Return on Average Assets ("ROAA")1,2 of 2.8% for the three months ended March 31, 2024; a decrease of 9.7% over 3.1% for the three months ended December 31, 2023, and a decrease of 57.6% over 6.6% for the three months ended March 31, 2023.
Efficiency ratio2 of 70.6% for the three months ended March 31, 2024; an increase of 6.0% over 66.6% for the three months ended December 31, 2023, and a decrease of 15.0% compared to 83.1% for the three months ended March 31, 2023.
Total risk-based capital ratio2 was 20.3% at March 31, 2024; an increase of 6.3% over 19.1% at December 31, 2023.
Tier-1 leverage ratio2 was 13.7% at March 31, 2024; an increase of 0.7% compared to 13.6% at December 31, 2023.
On April 15, 2024, the Company paid a quarterly cash dividend of $0.19 per share on its outstanding common shares, which represents a 5.5% increase over the $0.18 per share quarterly dividend declared on December 11, 2023.
Newtek Bank, N.A.
Total deposits3 were $565.3 million at March 31, 2024, which represents an 8.9% sequential increase in deposits, compared to $519.1 million at December 31, 2023 and an increase of 299.2% over $141.6 million in deposits at December 31, 2022.
Insured deposits represented approximately 75.9% of total deposits at March 31, 2024.
Net interest margin was 4.80% for the three months ended March 31, 2024; an increase of 8.4% over 4.43% for the three months ended December 31, 2023, and an increase of 62.7% over 2.95% for the three months ended March 31, 2023.
ROTCE1 of 37.9% for the three months ended March 31, 2024; a decrease of 42.8% over 66.3% for the three months ended December 31, 2023, and an increase of 461.0% over (10.5)% for the three months ended March 31, 2023.
ROAA1 of 5.8% for the three months ended March 31, 2024; a decrease of 41.4% over 9.9% for the three months ended December 31, 2023, and an increase of 314.8% over (2.7)% for the three months ended March 31, 2023.
Efficiency ratio1 of 50.1% for the three months ended March 31, 2024; an increase of 45.6% compared to 34.4% for the three months ended December 31, 2023, and a decrease of 56.3% compared to 114.6% for the three months ended March 31, 2023.
Total risk-based capital ratio was 18.9% at March 31, 2024, a decrease of 17.1% from 22.8% at December 31, 2023.
Tier-1 leverage ratio was 15.5% at March 31, 2024; a decrease of 6.6% from 16.6% at December 31, 2023.
Lending Highlights
Total SBA 7(a) loan closings of $207.1 million for the three months ended March 31, 2024; an increase of 35.9% over $152.5 million of SBA 7(a) loans closings for the three months ended March 31, 2023.
The Company forecasts $925.0 million in total SBA 7(a) loan fundings for 2024, which if achieved, would represent a 13.5% increase over 2023.
Newtek Bank closed $34.4 million of SBA 504 loans for the three months ended March 31, 2024; a decrease of 29.7% over $48.9 million SBA 504 loans closed for the three months ended March 31, 2023.
Newtek Bank and the Company’s non-bank subsidiaries closed $308.0 million of loans across all loan products for the three months ended March 31, 2024; a 35.6% increase over $227.2 million of loans closed for the same period in 2023.
Barry Sloane, Chairman, President, and Chief Executive Officer commented, “We are more than pleased to report our first quarter 2024 financial results. We broke several records this quarter and continue to perform exceptionally well as a financial holding company. We achieved EPS of $0.38, basic and diluted, in the first quarter 2024. as compared to first quarter 2023 EPS basic and diluted of $0.76 and $0.74, respectively, as previously restated, which was positively impacted by an income tax benefit. However, on a core EPS basis, we outperformed first quarter 2023 EPS of $0.17 and $0.16 per basic and diluted share, as well as exceeded the high end of our first quarter 2024 EPS forecast of $0.19 to $0.25 per basic and diluted common share.1 We are modestly increasing our 2024 annual earnings guidance to $1.85 to $2.05 per basic and diluted common share from our previous forecast of $1.80 to $2.00 per basic and diluted common share. Our out performance for the first quarter of 2024 was led by Newtek Bank's SBA 7(a) loan fundings of $207.1 million, a 35.9% increase over $152.5 million SBA 7(a) fundings for the same period last year. Our alternative loan program, through NewtekOne's non-bank subsidiary, generated record closings of $53.8 million during the first quarter 2024, compared to $12.2 million closed in the first quarter 2023. It is important to note that we continue to increase our loan loss reserves and our coverage ratio at Newtek Bank, and as of March 31, 2024, we had approximately 406 basis points of loan loss reserves, which is an increase from 374 basis points at December 31, 2023. We believe this reserve will normalize at approximately 350 basis points as more traditional bank loan products come onto our balance sheet. Having been in the SBA lending business since 2003, we are confident that we fully understand the risk versus reward of being an SBA lender. We weathered the 2008/2009 credit crisis, the COVID-19 pandemic, and have experienced both high and low interest-rate environments. With this history in mind, we continue to give careful consideration to the current economic conditions, and believe that we are maintaining an appropriate level of reserves for our book of loans. We feel good about our practices and where we are, predicated on over two decades of lending history, experience and management, and would expect to be analyzed within this framework.”
Mr. Sloane continued, “In addition to Newtek Bank's strong performance in lending, Newtek Bank continued to raise deposits, growing deposits by approximately 8.9% from the $519.1 million at December 31, 2023 to $565.3 million at March 31, 2024. Our ability to gather deposits against an industry backdrop of U.S commercial banks that only grew deposits by approximately 1.2% from December 27, 2023 to March 27, 2024, according to an April 11, 2024 report by S&P Global Market Intelligence, demonstrates that our strategy of utilizing digital account opening together with our thousands of prospects of independent business owners can enable us to generate this deposit growth at Newtek Bank. Key financial metrics at Newtek Bank also saw sequential growth over the fourth quarter 2023. Newtek Bank's net interest margin expanded from 4.43% during the fourth quarter 2023 to 4.80% during the first quarter 2024; and net interest income increased by 16.7% sequentially to $7.7 million during the first quarter 2024 from $6.6 million during the fourth quarter 2023. Newtek Bank experienced a ROAA of 5.8% and a ROTCE of 37.9%, which was accomplished with an efficiency ratio of 50.1% for Q1 2024. Furthermore, we also continued to deliver strong metrics in key areas on a consolidated basis in the first quarter 2024 with a ROAA of 2.8% and ROTCE of 20.6%. Based on the confidence in our business model, during the first quarter 2024 the board declared a quarterly dividend of $0.19 per share, an increase of 5.6% over the prior quarter's dividend of $0.18 per share.”
Mr. Sloane further stated, “We can't underscore enough the transformative change from a 1940’s Act business development company (BDC) to a 1934 Act financial holding company. This transformation, however, makes it very difficult in many aspects for accurate year-over-year comparisons. Moreover, when looking at a comparison of our EPS for the first quarter 2024 versus the first quarter 2023, we noted that our first quarter 2023 EPS included an income tax benefit of approximately $14.2 million, or $0.59 per basic share and $0.58 per diluted share, respectively. On a core EPS basis, we outperformed in the first quarter of 2024 versus 2023. Additionally, during the first quarter of 2023 our SBA 7(a) loans were originated out of our non-bank lender using fair value accounting with no CECL reserve, which, among other things, reduces current income for the benefit of future income. Therefore, when looking at our first quarter 2024 performance with sharp focus, we clearly had strong quarterly performance on a comparative basis.”
Mr. Sloane added, “We still have room for our returns to improve as we complete our fourth full quarter after transitioning our SBA 7(a) loan production to Newtek Bank in April 2023. Our funding costs continue to be lower at Newtek Bank, versus our funding costs for the first quarter of 2023, when we were still originating our SBA 7(a) loans out of our non-bank lender (NSBF). Our 20- plus-year track record of originating quality loans for sale into the secondary market have demonstrated generous returns for our shareholders. We look forward to continuing to drive funding costs down as we expect to fully roll out our lower-cost business checking accounts to our large client database in our marketing plan. Our business plan requires us to ensure that we have the proper staff, software, policies and procedures, and compliance measures in place to raise deposits in a regulatory-compliant manner, which, in 2023, limited our growth in commercial deposits. We slowly rolled out this product in the first quarter of 2024 to a pilot group of lending clients and firmly believe that we will see growth in this depository area for the remainder of the year. Our commercial demand deposit account pays a 1.0% annual percentage yield (“APY”) and our commercial money market account pays a 3.5% APY while providing our independent business owner customers added benefits, through the Newtek Advantage™. We believe the Newtek Advantage, especially when bundled with our bank and non-bank service offerings, provides a tremendous competitive advantage in comparison to our competitors who offer lower deposit rates, charge higher fees, and do not offer the benefits that we offer through the Newtek Advantage. These benefits include, but are not limited to, free document storage, free web-traffic analytics, merchant services data and payroll execution directly from the client’s business portal. By growing this portion of our deposit base, it will give us additional stability and diversification of core deposits at Newtek Bank as well as lower our cost of funds. It is important to note that our deposits, on a consolidated basis, are made up of approximately 76% insured deposits. This metric is extremely important as it demonstrates our ability to attract smaller balances on a diversified basis versus the more volatile higher-balance deposits that upon which our competitor banks rely.”
Mr. Sloane concluded, “We are very proud of what our management team has been able to accomplish, creating the foundation for a business that leverages technology, manages risk and is scalable and compliant. We continue to be pleased with what we have accomplished as a financial holding company. We expect the capital markets to gain confidence in our business model’s earnings, growth and consistently high returns on equity and assets. Our success is predicated on our unique, progressive state-of-the-art business model, one that does not depend upon branches, traditional bankers, brokers, or expensive business development officers, which has been tested and has succeeded over the last 25 years. Our experience has taught us that the equity markets appreciate growth of earnings and returns no matter what the business model, and we expect to consistently deliver on our expectations."
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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 with our filings with regulatory agencies and our Form 10-Q for the quarterly period ended March 31, 2024.
3 Total deposits as reported include deposits from affiliates held at Newtek Bank, which are eliminated through consolidation on the NewtekOne consolidated financial statements.
First Quarter 2024 Conference Call and Webcast
A conference call to discuss the first quarter 2024 financial results will be hosted by Barry Sloane, President, Chairman and Chief Executive Officer, M. Scott Price, Chief Financial Officer, and Frank M. DeMaria, Chief Accounting Officer, tomorrow, Tuesday, May 7, 2024, 8:30 a.m. EDT.
Please note, to attend the conference call or webcast, participants should register online at NewtekOne, Inc. First Quarter 2024 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. First Quarter 2024 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 independent business owners. Since 1999, NewtekOne has provided state-of-the-art, cost-efficient products and services and efficient business strategies to our independent business owner 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 Statements
Certain 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 and are subject to change prior to any filings with regulatory agencies and filing of the Company's Form 10-Q for the quarterly period ended March 31, 2024. 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 which are 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 Relations
Contact: Jayne Cavuoto
Telephone: (212) 273-8179 / jcavuoto@newtekone.com
NEWTEKONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In Thousands, except for Per Share Data)
ASSETS March 31, 2024 December 31, 2023
Cash and due from banks $ 12,295 $ 15,398
Restricted cash 35,759 30,919
Interest bearing deposits in banks 115,152 137,689
Total cash and cash equivalents 163,206 184,006
Debt securities available-for-sale, at fair value 28,127 32,171
Loans held for sale, at fair value 187,104 118,867
Loans held for sale, at LCM 59,880 56,607
Loans held for investment, at fair value 442,928 469,801
Loans held for investment, at amortized cost, net of deferred fees and costs 397,625 336,305
Allowance for credit losses (16,126 ) (12,574 )
Loans held for investment, at amortized cost, net 381,499 323,731
Federal Home Loan Bank and Federal Reserve Bank stock 3,773 3,635
Settlement receivable 56,890 62,230
Joint ventures, at fair value (cost of $45,108 and $37,864), respectively 48,247 40,859
Non-control investments (cost of $772 and $796), respectively 728 728
Goodwill and intangibles 29,944 30,120
Right of use assets 5,193 5,701
Deferred tax asset, net 2,717 5,230
Servicing assets 41,172 39,725
Other assets 58,169 56,102
Total assets $ 1,509,577 $ 1,429,513
LIABILITIES AND NET ASSETS
Liabilities:
Deposits:
Noninterest-bearing $ 5,466 $ 10,053
Interest-bearing 507,476 453,452
Total deposits 512,942 463,505
Borrowings 662,488 644,122
Dividends payable 5,038 4,792
Lease liabilities 6,344 6,952
Due to participants 26,647 23,796
Accounts payable, accrued expenses and other liabilities 41,986 37,300
Total liabilities 1,255,445 1,180,467
Shareholders' Equity:
Preferred stock (par value $0.02 per share; authorized 20 shares, 20 shares issued and outstanding) 19,738 19,738
Common stock (par value $0.02 per share; authorized 199,980 shares, 24,715 and 24,680 issued and outstanding, respectively) 493 492
Additional paid-in capital 201,431 200,913
Retained earnings 32,611 28,051
Accumulated other comprehensive loss, net of income taxes (141 ) (148 )
Total shareholders' equity 254,132 249,046
Total liabilities and shareholders' equity $ 1,509,577 $ 1,429,513
NEWTEKONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, except for Per Share Data)
Three Months Ended
March 31, 2024 December 31, 2023 March 31, 2023
(as restated)
Interest income
Debt securities available-for-sale $ 460 $ 435 $ 232
Loans and fees on loans 24,985 23,660 17,502
Other interest earning assets 1,622 2,274 981
Total interest income 27,067 26,369 18,715
Interest expense
Deposits 5,576 5,111 1,475
Notes and securitizations 10,827 11,411 8,718
Bank and FHLB borrowings 1,758 1,546 3,939
Total interest expense 18,161 18,068 14,132
Net interest income 8,906 8,301 4,583
Provision for credit losses 4,015 4,365 1,318
Net interest income after provision for credit losses 4,891 3,936 3,265
Noninterest income
Dividend income 386 360 504
Loan servicing asset revaluation (1,735 ) (1,983 ) 919
Servicing income 5,357 4,985 4,403
Net gains on sales of loans 20,292 17,252 6,367
Net gain (loss) on loans under the fair value option 2,798 5,420 5,905
Technology and IT support income 5,770 6,460 6,709
Electronic payment processing income 10,987 10,659 10,328
Other noninterest income 5,512 5,954 7,221
Total noninterest income 49,367 49,107 42,356
Noninterest expense
Salaries and employee benefits expense 20,506 14,535 19,073
Technology services expense 3,408 4,265 3,803
Electronic payment processing expense 4,846 4,168 4,504
Professional services expense 4,565 3,311 3,440
Other loan origination and maintenance expense 2,244 2,503 2,781
Depreciation and amortization 532 613 791
Loss on extinguishment of debt — 271 —
Other general and administrative costs 5,058 8,543 4,631
Total noninterest expense 41,159 38,209 39,023
Net income before taxes 13,099 14,834 6,598
Income tax expense (benefit) 3,449 3,985 (11,952 )
Net income 9,650 10,849 18,550
Dividends to preferred shareholders (400 ) (405 ) (249 )
Net income available to common shareholders $ 9,250 $ 10,444 $ 18,301
Earnings per share:
Basic $ 0.38 $ 0.43 $ 0.76
Diluted $ 0.38 $ 0.43 $ 0.74
Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
The information provided below presents a reconciliation of each of our non-GAAP financial measures to the most directly comparable GAAP financial measure. Ratios for three-month period ended have been annualized based on calendar days.
Reconciliation of Core EPS to GAAP EPS:
Three Months Ended March 31, 2023
GAAP EPS Adjustments Core EPS
Based on Net Income Discrete Tax Benefits on Reorg Based on Adjusted Net Income
Net income before taxes $ 6,598 $ — $ 6,598
Income tax expense (benefit) (11,952 ) 14,244 2,292
Net income 18,550 (14,244 ) 4,306
Dividends to preferred shareholders (249 ) — (249 )
Net income available to common shareholders $ 18,301 $ (14,244 ) $ 4,057
Basic:
Income available to common shareholders $ 18,301 $ (14,244 ) $ 4,057
Weighted-average basic shares outstanding 24,223 — 24,223
Basic $ 0.76 $ 0.59 $ 0.17
Diluted:
Income available to common shareholders $ 18,301 $ (14,244 ) $ 4,057
Total weighted-average diluted shares outstanding 24,881 — 24,881
Diluted $ 0.74 $ 0.58 $ 0.16
Newtek Bank, NA As of and for the three months ended
(in thousands) March 31, 2024 December 31, 2023 March 31, 2023
(as restated)
Return on Average Tangible Common Equity
Numerator: Net Income (Loss) (GAAP) $9,402 $15,064 $(1,921)
Average Total Shareholders' Equity (non-GAAP) 100,792 92,201 76,218
Deduct: Average Goodwill and Intangibles (non-GAAP) 1,100 2,099 2,190
Denominator: Tangible Average Common Equity (non-GAAP) $99,692 $90,102 $74,028
Return on Average Tangible Common Equity (non-GAAP) 37.9% 66.3% (10.5)%
Return on Average Assets
Numerator: Net Income (GAAP) $9,402 $15,064 $(1,921)
Denominator: Average Assets (non-GAAP) 652,604 601,130 285,914
Return on Average Assets (non-GAAP) 5.8% 9.9% (2.7)%
Efficiency Ratio
Numerator: Non-Interest Expense (GAAP) $17,510 $12,796 $13,222
Net Interest Income (GAAP) 7,690 6,589 1,682
Non-Interest Income (GAAP) 27,257 30,621 9,860
Denominator: Total Income $34,947 $37,210 $11,542
Efficiency Ratio (non-GAAP) 50.1% 34.4% 114.6%
NewtekOne Inc. Three months ended
(dollars and number of shares in thousands) March 31, 2024 December 31, 2023 March 31, 2023
(as restated)
Return on Average Tangible Common Equity
Numerator: Net Income (GAAP) $9,650 $10,849 $18,550
Average Total Shareholders' Equity (non-GAAP) 237,831 218,387 194,010
Deduct: Preferred Stock (GAAP) 19,738 19,738 19,738
Average Common Shareholders' Equity (non-GAAP) 218,093 198,649 174,272
Deduct: Average Goodwill and Intangibles (non-GAAP) 30,060 31,250 32,062
Denominator: Average Tangible Common Equity (non-GAAP) $188,033 $167,399 $142,210
Return on Tangible Common Equity (non-GAAP) 20.6% 25.7% 52.9%
Return on Average Assets
Numerator: Net Income (GAAP) $9,650 $10,849 $18,550
Denominator: Average Assets (non-GAAP) 1,401,554 1,382,690 1,124,693
Return on Average Assets (non-GAAP) 2.8% 3.1% 6.6%
Efficiency Ratio
Numerator: Non-Interest Expense (GAAP) $41,159 $38,209 $39,023
Net Interest Income (GAAP) 8,906 8,301 4,583
Non-Interest Income (GAAP) 49,367 49,107 42,356
Denominator: Total Income $58,273 $57,408 $46,939
Efficiency Ratio (non-GAAP) 70.6% 66.6% 83.1%
Tangible Book Value Per Share
Total Shareholders' Equity (GAAP) $254,132 $249,046 $232,586
Deduct: Goodwill and Intangibles (GAAP) 29,944 30,120 32,091
Numerator: Total Tangible Book Value (non-GAAP) $224,188 $218,926 $200,495
Denominator: Total Number of Shares Outstanding 24,715 24,680 24,609
Tangible Book Value Per Share (non-GAAP) $9.07 $8.87 $8.15
Tangible Book Value Per Common Share
Total Tangible Book Value (non-GAAP) $224,188 $218,926 $200,495
Deduct: Preferred Stock (GAAP) 19,738 19,738 19,738
Numerator: Tangible Book Value Per Common Share (non-GAAP) $204,450 $199,188 $180,757
Denominator: Total Number of Shares Outstanding 24,715 24,680 24,609
Tangible Book Value Per Common Share (non-GAAP) $8.27 $8.07 $7.35
Primary Logo
abrooklyn
7 months ago
CORRECTING and REPLACING NewtekOne, Inc. News Release
Source: GlobeNewswire Inc.
Today NewtekOne, Inc. (“NewtekOne”) timely filed its annual report on Form 10-K for the period ended December 31, 2023. The purpose of this press release is to update and replace NewtekOne’s press release dated March 5, 2024, which announced NewtekOne’s unaudited fourth quarter and full year 2023 financial results.
NewtekOne, Inc. Reports Fourth Quarter and Full Year 2023 Financial Results
Full Year 2023 Basic Earnings per Share of $1.89 and Diluted Earnings per Share of $1.88
NewtekOne, Inc. (Nasdaq: NEWT), announced today its audited financial and operating results for the three and twelve months ended December 31, 2023.
This is NewtekOne's fourth quarter reporting, and third full quarter reporting, as a financial holding company following the Company's January 6, 2023 completion of the acquisition of National Bank of New York City ("NBNYC") (renamed Newtek Bank, N.A.) and the withdrawal of NewtekOne's BDC election. NewtekOne now consolidates the balance sheets and results of operations of its former portfolio companies (now consolidated subsidiaries) and no longer applies investment company accounting.
Barry Sloane, CEO, President and Chairman commented, “We are pleased to report our first full year as a financial holding company owning Newtek Bank, a nationally chartered bank. We achieved basic earnings per share (EPS) of $1.89 and diluted EPS of $1.88. We believe that we can achieve EPS growth in today’s environment, given the majority of our net revenue is non-interest-bearing, making our business model unique and valuable. For the full year 2023, Newtek Bank realized return on average assets ("ROAA") of 5.7%, return on tangible common equity ("ROTCE") of 35.7%, and an efficiency ratio of 49.9%. NewtekOne, Newtek Bank's financial holding company, realized ROAA of 3.6%, and ROTCE of 27.6%1. We believe these metrics clearly depict a thriving business; one that serves independent business owners in all 50 states and that is well positioned for financial and operational growth in future quarters, demonstrated by our expanding net interest margin. Our operating structure does not use branches, traditional bankers, brokers, or business development officers to source business opportunities, and instead, relies upon the patented NewTracker(R) system which generates approximately 1,000 unique business referrals each day. Unlike other financial holding companies, we have been able to expand our business during these difficult times in the banking sector, which we attribute to our unique and time-tested business model that utilizes technology to minimize or eliminate the concept of traditional bankers, brokers, branches and business development officers. With NewtekOne’s common equity Tier 1 capital (CET1) ratio of 16.2%, total capital ratio of 19.1%, and 13.6% leverage ratio, we believe we have the equity to continue to grow our business, pay an attractive market dividend and grow retaining earnings.”
Mr. Sloane continued, “With 2023 behind us, we can look back with pride over the year’s multiple accomplishments and building a strong foundation for our future. The conversion from a BDC to a financial holding company resulted in the Company no longer qualifying as a regulated investment company (RIC) for federal income tax purposes and no longer qualifying for accounting treatment as an investment company. Accordingly, we believe prior year and year-over-year comparisons are difficult and it is important to analyze many of our financial metrics on a quarter-over-quarter sequential basis. Additionally, when analyzing NewtekOne, we also believe it is important to consider our time-tested, differentiated business model which has provided multiple streams of income from its lines of business. These changes came with many operational and accounting challenges. We are on a path to realizing our goal of being recognized as the premier business and financial solutions provider for independent business owners in the U.S. By purchasing a nationally chartered bank, we were able to add depository services to our already-robust menu of high-quality business and financial solutions that we believe can enable our clients to operate at a higher level. Most of our clients go to their depository institutions multiple times per week or month. Extremely important to note is that our conversion to a bank holding company in no way implies that NewtekOne and Newtek Bank will look like or operate like the universe of traditional bank holding companies or banks. As a result, we do not think we should be valued like a traditional bank, as our business model offers our investors more than net interest income, and therefore, we believe should garner distinct valuation compared to the universe of traditional banks. We also value this non-interest income as reoccurring income. We firmly believe that our business model can be executed with prudent risk management practices while servicing our clients with multiple solutions that can enhance their business and commercial endeavors. Our operating metrics are built on growth objectives with respect to ROA, ROE, and efficiency ratios, which we believe is distinct from the asset-growth strategies of the traditional banking industry."
NewtekOne Fourth Quarter 2023 Financial Highlight
As noted above, we believe it is important to analyze many of our financial metrics on a quarter-over-quarter sequential basis:
Net income was $10.8 million, or $0.43 per basic and diluted common share, for the three months ended December 31, 2023, compared to net income of $10.9 million, or $0.43 per basic and diluted common share, for the three months ended September 30, 2023.
Net interest income was $8.3 million for the three months ended December 31, 2023; an increase of 2.5% over $8.1 million for the three months ended September 30, 2023.
Total assets were $1.4 billion at December 31, 2023, which remained relatively consistent to the balance at September 30, 2023.
Total borrowings were $644.1 million at December 31, 2023; a decrease of 0.7% from $648.7 million at September 30, 2023.
Loans held for investment were $806.1 million at December 31, 2023; an increase of 4.1% over $774.6 million at September 30, 2023.
Cash and cash equivalents were $184.0 million, including $30.9 million of restricted cash, at December 31, 2023; a decrease of 17.7% from to $223.7 million, including $71.7 million of restricted cash, at September 30, 2023.
Net interest margin2 was 2.76% for the three months ended December 31, 2023; an increase of 6.2% over 2.60% for the three months ended September 30, 2023.
ROTCE of 25.7% for the three months ended December 31, 2023; an increase of 23.6% over 20.8% for the three months ended September 30, 2023.
ROAA1,2 of 3.1% for the three months ended December 31, 2023; an increase of 3.3% over 3.0% for the three months ended September 30, 2023.
Efficiency ratio2 of 66.6% for the three months ended December 31, 2023; an increase of 4.4% compared to 63.8% for the three months ended September 30, 2023.
Total risk-based capital ratio2 was 19.1% at December 31, 2023; an increase of 7.9% over 17.7% at September 30, 2023.
Tier-1 leverage ratio2 was 13.6% at December 31, 2023; a decrease of 6.8% compared to 14.6% at September 30, 2023.
On January 12, 2024, the Company paid its fourth quarterly cash dividend as a financial holding company of $0.18 per share to shareholders of record as of December 29, 2023.
The Company is forecasting full year 2024 EPS in a range of $1.80 to $2.00 per basic and diluted common share and intends to update this forecast when it releases its first quarter 2024 financial results.
NewtekOne Financial Highlights Twelve Months Ended December 31, 2023
Net income was $47.3 million, or $1.89 per basic common share and $1.88 per diluted common share, for the twelve months ended December 31, 2023.
Net interest income was $26.6 million for the twelve months ended December 31, 2023.
Newtek Bank, N.A.
Total deposits were $463.5 million at December 31, 2023, which represents a 227.3% increase in deposits, compared to $141.6 million in deposits at NBNYC at December 31, 2022.
Insured deposits represented approximately 85.8% of total deposits at December 31, 2023.
Net interest margin2 was 4.43% for the three months ended December 31, 2023; an increase of 26.9% over 3.49% for the three months ended September 30, 2023.
ROTCE1,2 of 66.3% for the three months ended December 31, 2023; an increase of 50.7% over 44.0% for the three months ended September 30, 2023.
ROAA1,2 of 9.9% for the three months ended December 31, 2023; an increase of 65.0% over 6.0% for the three months ended September 30, 2023.
Efficiency ratio1,2 of 34.4% for the three months ended December 31, 2023; a decrease of 14.6% compared to 40.3% for the three months ended September 30, 2023.
Total risk-based capital ratio2 was 22.8% at December 31, 2023, a decrease of 8.8% from 25.0% at September 30, 2023.
Tier-1 leverage ratio2 was 16.6% at December 31, 2023; an increase of 11.4% from 14.9% at September 30, 2023.
______________
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 any filings with regulatory agencies and the filing of our Form 10-K for the year ended December 31, 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 $260.7 million for the three months ended December 31, 2023; an increase of 24.2% over $209.9 million of SBA 7(a) loans funded for the three months ended September 30, 2023.
Total SBA 7(a) loan fundings of $815.0 million for the twelve months ended December 31, 2023.
The Company forecasts $925.0 million in total SBA 7(a) loan fundings for 2024, which would represent a 13.5% increase over 2023.
Newtek Bank closed $60.5 million of SBA 504 loans for the three months ended December 31, 2023; an increase of 241.8% over $17.7 million SBA 504 loans closed for the three months ended September 30, 2023.
Total SBA 504 loan closings of $142.9 million for the twelve months ended December 31, 2023.
Newtek Bank and the Company’s non-bank subsidiaries closed a record$1.1 billion of loans, across all loan products, for the twelve months ended December 31, 2023, compared to $923.8 million of loans closed by NewtekOne, its subsidiaries and portfolio companies for the same period in 2022.
The Company’s 2023 prior-period comparative financial statements have been adjusted to correct errors made in the Company’s condensed financial statements previously issued in the first, second, and third quarters of 2023. Amounts referenced in this press release refer to results on an "As Adjusted" basis unless otherwise noted. Specifically, as set forth in the "Summary of Revisions to Prior Period Financial Statements," annexed hereto, which revises certain line items in the Company’s condensed financial information for the first, second, and third quarters of 2023 as previously reported, the Company’s: (i) year-to-date EPS (basic and diluted) reflects an increase of $0.36 per share and $0.36 per share, respectively; (ii) year-to-date Net Income reflects an increase of $7.9 million; and (iii) Total Assets reflects an increase of $15.3 million. The increases in Total Assets was primarily driven by the recognition of net deferred tax assets and income tax receivables as well as intangible assets. The increases in Net Income resulted principally from the after-tax impact of the recognition of servicing assets at Newtek Bank, and the recognition of deferred loan origination costs, net, in connection with accounting for loans originated by Newtek Bank. The revised calculations of EPS are attributed to application of the treasury stock and if-converted methods, as well as revisions to the allocation of undistributed earnings to preferred stock under the two class method, in conjunction with other adjustments to net income. The Company's management continues to assess the effectiveness of the Company’s internal controls over financial reporting (“ICFR”), including any deficiencies in ICFR which led to these accounting errors.
Continuing, Mr. Sloane said, “The goal of owning a nationally chartered bank was driven by recognizing that our client base communicates with their bank digitally with high frequency, so the opportunity and our ability to communicate with our clients through our Newtek Advantage® platform, and assist them on a daily basis to become part of their operating ecosystem, has been our goal and is now closer to reality. We have witnessed the customer traffic to Newtekone.com and Newtekbank.com increase to approximately 18,000 unique digital visitors per month, providing our customers with the opportunity to access the Newtek Advantage®, communicate with us, and see all we have to offer. We seek to employ the most cutting-edge technology and AI in order to enhance the client experience, improve work flow processes, and acquire clients in an environment that has less friction and higher levels of business satisfaction.”
Mr. Sloane concluded, “We spent a good part of 2023 building out our bank infrastructure, continuing to hire top-quality executives and establishing additional policies and procedures, all at a great expense, an investment we believe will provide a great return in the future. Obviously, the investment and upfront expense is to better enable us to safely and soundly grow our business, and develop a lasting infrastructure. Also important to note, is that we have been able to grow our loan-loss reserves dramatically during our first twelve months of operations ending December 31, 2023. We ended 2023 with a 3.7% loan loss reserve to loans held for investment, and we expect to prudently manage credit risk and related reserves as the future conditions of the economy take shape.”
This earnings release should be read in conjunction with NewtekOne's annual report on Form 10-K for the period ended December 31, 2023, filed with the SEC on April 1, 2024.
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 Statements
Certain 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 and are subject to change prior to any filings with regulatory agencies and filing of the Company's Form 10-K for the period ended December 31, 2023. 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 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 Relations
Contact: Jayne Cavuoto
Telephone: (212) 273-8179 / jcavuoto@newtekone.com
abrooklyn
8 months ago
NewtekOne, Inc. Reports Fourth Quarter and Full Year 2023 Financial Results
Source: GlobeNewswire Inc.
NewtekOne, Inc. (Nasdaq: NEWT), announced today its financial and operating results for the three and twelve months ended December 31, 2023.
This is NewtekOne's fourth quarter reporting, and third full quarter reporting, as a financial holding company following the Company's January 6, 2023 completion of the acquisition of National Bank of New York City ("NBNYC") (renamed Newtek Bank, N.A.) and the withdrawal of NewtekOne's BDC election. NewtekOne now consolidates the balance sheets and results of operations of its former portfolio companies (now consolidated subsidiaries) and no longer applies investment company accounting.
Barry Sloane, CEO, President and Chairman commented, “We are pleased to report our first full year as a financial holding company owning Newtek Bank, a nationally chartered bank. We achieved basic earnings per share (EPS) of $1.71 and diluted EPS of $1.70, in line with our previously issued annual earnings guidance of $1.60 to $1.80 per basic and diluted common share. For 2024, we are currently forecasting annual EPS in a range of $1.80 to $2.00 per basic and diluted common share, which would represent an approximate 11% increase from 2023 EPS to the midpoint of the 2024 forecasted range. We believe that we can achieve double-digit controlled EPS growth in today’s environment, given the majority of our net revenue is non-interest-bearing, making our business model unique and valuable. For the full year 2023, Newtek Bank realized return on average assets ("ROAA") of 5.8%, return on tangible common equity ("ROTCE") of 35.8%, and an efficiency ratio of 49.8%. NewtekOne, Newtek Bank's financial holding company, realized ROAA of 3.2%, and ROTCE of 22.7%1. We believe these metrics clearly depict a thriving business; one that serves independent business owners in all 50 states and that is well positioned for financial and operational growth in future quarters, demonstrated by our expanding net interest margin. Our operating structure does not use branches, traditional bankers, brokers, or business development officers to source business opportunities, and instead, relies upon the patented NewTracker(R) system which generates approximately 1,000 unique business referrals each day. Unlike other financial holding companies, we have been able to expand our business during these difficult times in the banking sector, which we attribute to our unique and time-tested business model that utilizes technology to minimize or eliminate the concept of traditional bankers, brokers, branches and business development officers. With NewtekOne’s common equity Tier-1 capital (CET1) ratio of 16.5%, total capital ratio of 19.6%, and 15.6% leverage ratio, we believe we have the equity to continue to grow our business, pay an attractive market dividend and grow retaining earnings.”
Mr. Sloane continued, “With 2023 behind us, we can look back with pride over the year’s multiple accomplishments and building a strong foundation for our future. The conversion from a BDC to a financial holding company resulted in the Company no longer qualifying as a regulated investment company (RIC) for federal income tax purposes and no longer qualifying for accounting treatment as an investment company. Accordingly, we believe prior year and year-over-year comparisons are difficult and it is important to analyze many of our financial metrics on a quarter-over-quarter sequential basis. Additionally, when analyzing NewtekOne, we also believe it is important to consider our time-tested, differentiated business model which has provided multiple streams of income from its lines of business. These changes came with many operational and accounting challenges. We are on a path to realizing our goal of being recognized as the premier business and financial solutions provider for independent business owners in the U.S. By purchasing a nationally chartered bank, we were able to add depository services to our already-robust menu of high-quality business and financial solutions that we believe can enable our clients to operate at a higher level. Most of our clients go to their depository institutions multiple times per week or month. Extremely important to note is that our conversion to a bank holding company in no way implies that NewtekOne and Newtek Bank will look like or operate like the universe of traditional bank holding companies or banks. As a result, we do not think we should be valued like a traditional bank, as our business model offers our investors more than net interest income, and therefore, we believe should garner distinct valuation compared to the universe of traditional banks. We also value this non-interest income as reoccurring income. We firmly believe that our business model can be executed with prudent risk management practices while servicing our clients with multiple solutions that can enhance their business and commercial endeavors. Our operating metrics are built on growth objectives with respect to ROA, ROE, and efficiency ratios, which we believe is distinct from the asset-growth strategies of the traditional banking industry. During our call tomorrow morning, we will illustrate our differentiated model through the discussion of detailed performance metrics.”
NewtekOne Fourth Quarter 2023 Financial Highlights
As noted above, we believe it is important to analyze many of our financial metrics on a quarter-over-quarter sequential basis:
Net income was $13.4 million, or $0.53 per basic and diluted common share, for the three months ended December 31, 2023, a 20.5% increase on a per share basis over net income of $10.9 million, or $0.43 per basic and diluted common share, for the three months ended September 30, 2023.
Net interest income was $8.3 million for the three months ended December 31, 2023; an increase of 2.5% over $8.1 million for the three months ended September 30, 2023.
Total assets were $1.4 billion at December 31, 2023, which remained relatively consistent to the balance at September 30, 2023.
Total borrowings were $644.1 million at December 31, 2023; a decrease of 0.7% from $648.7 million at September 30, 2023.
Loans held for investment were $806.8 million at December 31, 2023; an increase of 4.2% over $774.6 million at September 30, 2023.
Cash and cash equivalents were $184.0 million, including $30.9 million of restricted cash, at December 31, 2023; a decrease of 17.7% from to $223.7 million, including $70.7 million of restricted cash, at September 30, 2023.
Net interest margin2 was 2.83% for the three months ended December 31, 2023; an increase of 4.4% over 2.71% for the three months ended September 30, 2023.
ROTCE of 20.4% for the three months ended December 31, 2023; a decrease of 16.0% over 24.3% for the three months ended September 30, 2023.
ROAA1,2 of 3.7% for the three months ended December 31, 2023; an increase of 19.4% over 3.1% for the three months ended September 30, 2023.
Efficiency ratio2 of 61.2% for the three months ended December 31, 2023; a decrease of 4.1% compared to 63.8% for the three months ended September 30, 2023.
Total risk-based capital ratio2 was 19.6% at December 31, 2023; an increase of 10.7% over 17.7% at September 30, 2023.
Tier-1 leverage ratio2 was 15.6% at December 31, 2023; an increase of 6.8% over 14.6% at September 30, 2023.
On January 12, 2024, the Company paid its fourth quarterly cash dividend as a financial holding company of $0.18 per share to shareholders of record as of December 29, 2023.
The Company is forecasting full year 2024 EPS in a range of $1.80 to $2.00 per basic and diluted common share, which would represent a 13.1% increase from full year 2023 EPS of $1.70 from the midpoint of the full year 2024 forecasted range.
NewtekOne Financial Highlights Twelve Months Ended December 31, 2023
Net income was $43.0 million, or $1.71 per basic common share and $1.70 per diluted common share, for the twelve months ended December 31, 2023, which is line with our previously stated full year earnings guidance of $1.60 to $1.80 per basic and diluted common share.
Net interest income was $26.6 million for the twelve months ended December 31, 2023.
Newtek Bank, N.A.
Total deposits were $463.5 million at December 31, 2023, which represents a 227.3% increase in deposits, compared to $141.6 million in deposits at NBNYC at December 31, 2022.
Insured deposits represented approximately 73.6% of total deposits at December 31, 2023.
Net interest margin2 was 4.43% for the three months ended December 31, 2023; an increase of 26.9% over 3.49% for the three months ended September 30, 2023.
ROTCE1,2 of 66.7% for the three months ended December 31, 2023; an increase of 51.6% over 44.0% for the three months ended September 30, 2023.
ROAA1,2 of 10.0% for the three months ended December 31, 2023; an increase of 66.7% over 6.0% for the three months ended September 30, 2023.
Efficiency ratio1,2 of 34.4% for the three months ended December 31, 2023; a decrease of 14.6% compared to 40.3% for the three months ended September 30, 2023.
Total risk-based capital ratio2 was 22.2% at December 31, 2023, a decrease of 11.2% from 25.0% at September 30, 2023.
Tier-1 leverage ratio2 was 16.4% at December 31, 2023; an increase of 10.1% from 14.9% at September 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 $260.7 million for the three months ended December 31, 2023; an increase of 24.2% over $209.9 million of SBA 7(a) loans funded for the three months ended September 30, 2023.
Total SBA 7(a) loan fundings of $815.0 million for the twelve months ended December 31, 2023.
The Company forecasts $925.0 million in total SBA 7(a) loan fundings for 2024, which would represent a 13.5% increase over 2023.
Newtek Bank closed $60.5 million of SBA 504 loans for the three months ended December 31, 2023; an increase of 241.7% over $17.7 million SBA 504 loans closed for the three months ended September 30, 2023.
Total SBA 504 loan closings of $142.9 million for the twelve months ended December 31, 2023.
Newtek Bank and the Company’s non-bank subsidiaries closed a record $1.1 billion of loans, across all loan products, for the twelve months ended December 31, 2023, compared to $911.5 million of loans closed by NewtekOne, its subsidiaries and portfolio companies for the same period in 2022.
________________________
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 any filings with regulatory agencies and the filing of our Form 10-K for the year ended December 31, 2023.
The Company’s 2023 prior-period comparative financial statements have been adjusted to correct errors made in the Company’s condensed financial statements previously issued in the first, second, and third quarters of 2023. Amounts referenced in this press release refer to results on an "As Adjusted" basis unless otherwise noted. Specifically, as set forth in the "Summary of Revisions to Prior Period Financial Statements," annexed hereto, which revises certain line items in the Company’s condensed financial information for the first, second, and third quarters of 2023 as previously reported, the Company’s: (i) year-to-date EPS (basic and diluted) reflects an increase of $0.08 per share and $0.07 per share, respectively; (ii) year-to-date Net Income reflects an increase of $1.1 million; and (iii) Total Assets reflects an increase of $7.5 million. The increases in Total Assets was primarily driven by the recognition of net deferred tax assets and income tax receivables as well as intangible assets. The increases in Net Income resulted principally from the after-tax impact of the recognition of servicing assets at Newtek Bank, and the recognition of deferred loan origination costs, net, in connection with accounting for loans originated by Newtek Bank. The revised calculations of EPS are attributed to application of the treasury stock and if-converted methods, as well as revisions to the allocation of undistributed earnings to preferred stock under the two class method, in conjunction with other adjustments to net income. The Company's management continues to assess the effectiveness of the Company’s internal controls over financial reporting (“ICFR”), including any deficiencies in ICFR which led to these accounting errors.
Continuing, Mr. Sloane said, “The goal of owning a nationally chartered bank was the recognition that our client base communicates with their bank digitally with high frequency, so the opportunity and our ability to communicate with our clients through our Newtek Advantage® platform, and assist them on a daily basis to become part of their operating ecosystem, has been our goal and is now closer to reality. We have witnessed the customer traffic to Newtekone.com and Newtekbank.com increase to approximately 18,000 unique digital visitors per month, providing our customers with the opportunity to access the Newtek Advantage®, communicate with us, and see all we have to offer. We will discuss these concepts and the value of these impressions on our call tomorrow. We seek to employ the most cutting-edge technology and AI in order to enhance the client experience, improve work flow processes, and acquire clients in an environment that has less friction and higher levels of business satisfaction.”
Mr. Sloane concluded, “We spent a good part of 2023 building out our bank infrastructure, continuing to hire top-quality executives and establishing additional policies and procedures, all at a great expense, an investment we believe will provide a great return in the future. Obviously, the investment and upfront expense is to better enable us to safely and soundly grow our business, and develop a lasting infrastructure. Also important to note, is that we have been able to grow our loan-loss reserves dramatically during our first twelve months of operations ending December 31, 2023. We ended 2023 with a 3.1% loan loss reserve to loans held for investment, and we expect to prudently manage credit risk and related reserves as the future conditions of the economy take shape. We are excited about our results for 2023 and discussing them in greater detail during our conference call scheduled for tomorrow at 8:30am EST. Please visit our website and review our Fourth Quarter and Full Year 2023 Presentation.”
Fourth Quarter and Full Year 2023 Conference Call and Webcast
A conference call to discuss the fourth quarter and full year 2023 financial results will be hosted by Barry Sloane, President, Chairman and Chief Executive Officer, M. Scott Price, Chief Financial Officer, and Nick Leger, Chief Accounting Officer, tomorrow, Wednesday, March 6, 2024, 8:30 a.m. ET.
Please note, to attend the conference call or webcast, participants should register online at NewtekOne, Inc. Q4 and Full Year 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. Q4 and FY 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.
About NewtekOne, Inc.
NewtekOne®, Your Business Solutions Company®, is a financial holding company, which along with its bank and non-bank consolidated subsidiaries, (collectively, “NewtekOne”), 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®, N.A., Your Business Solutions Company® and One Solution for All Your Business Needs® are registered trademarks of NewtekOne, Inc.
Note Regarding Forward-Looking Statements
Certain 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 and are subject to change prior to any filings with regulatory agencies and filing of the Company's Form 10-K for the period ended December 31, 2023. 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 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 Relations
Contact: Jayne Cavuoto
Telephone: (212) 273-8179 / jcavuoto@newtekone.com
abrooklyn
12 months ago
NewtekOne, Inc. Reports Third Quarter 2023 Financial Results
Source: GlobeNewswire Inc.
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 Statements
Certain 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 Relations
Contact: Jayne Cavuoto
Telephone: (212) 273-8179 / jcavuoto@newtekone.com
abrooklyn
1 year ago
https://investor.newtekbusinessservices.com/news-releases/news-release-details/newtekone-inc-reports-second-quarter-2023-financial-results
Newtek Bank, N.A. Achieves Record Deposit Growth and Loan Fundings
BOCA RATON, Fla., Aug. 02, 2023 (GLOBE NEWSWIRE) -- NewtekOne, Inc. (Nasdaq: NEWT), announced today its financial and operating results for the three and six months ended June 30, 2023.
This is NewtekOne's second quarter reporting, and first 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 comparisons on both a sequential and year-over-year basis are difficult. When analyzing NewtekOne, we believe it is important to consider the Company's time-tested differentiated business model which can provide multiple streams of income from its various businesses, as well as its operating structure which does not use brokers or business development officers to source loan originations.
NewtekOne Second Quarter 2023 Financial Highlights
Net income was $6.9 million, or $0.26 per basic common share, for the three months ended June 30, 2023, which met the Company's previously issued forecast.
Net interest income was $5.7 million for the three months ended June 30, 2023, compared to $4.6 million at March 31, 2023.
Total assets were $1.4 billion at June 30, 2023, compared to $1.2 billion at March 31, 2023.
Total borrowings were $697.4 million at June 30, 2023, which was unchanged from March 31, 2023.
Loans held for investment were $730.7 million at June 30, 2023, compared to $699.6 million at March 31, 2023.
Cash and cash equivalents were $256.3 million, including $66.7 million of restricted cash at June 30, 2023, compared to $197.1 million, including $72.6 million of restricted cash at March 31, 2023.
Total risk-based capital ratio was 16.4% at June 30, 2023.
Tier-1 leverage ratio was 12.8% at June 30, 2023.
On July 21, 2023, the Company paid its second quarterly cash dividend as a financial holding company of $0.18 per share to shareholders of record as of July 10, 2023.
The Company is reiterating its previously issued earnings forecast for the full year 2023 in a range of $1.70 to $2.00 of earnings per share, and has met or exceeded its previously issued 2023 quarterly earnings forecasts.
NewtekOne Financial Highlights Six Months Ended June 30, 2023
Net income was $18.6 million, or $0.72 per basic common share, for the six months ended June 30, 2023.
Net interest income was $10.3 million for the six months ended June 30, 2023.
Newtek Bank, N.A.
Total deposits were $447.4 million at June 30, 2023, which represents a 220.6% increase in deposits, compared to $140 million in deposits at NBNYC at December 31, 2022.
Insured deposits represented approximately 90.3% of total deposits at June 30, 2023.
Return on average tangible common equity ("ROTCE")1 of 32.1% for the three months ended June 30, 2023.
Return on average assets ("ROAA")1 of 4.9% for the three months ended June 30, 2023.
Efficiency ratio1 of 58.7% for the three months ended June 30, 2023.
Total risk-based capital ratio was 29.4% at June 30, 2023.
Tier-1 leverage ratio was 16.9% at June 30, 2023.
Lending Highlights
Total commercial loan closings were $251.2 million for the three months ended June 30, 2023; a 6.4% increase over the three months ended June 30, 2022.
As of April 2023, the Company began funding SBA 7(a) loans out of Newtek Bank with Preferred Lenders Program (PLP) status.
Total SBA 7(a) loan fundings of $195.9 million for the three months ended June 30, 2023; a 2.3% decrease over the $200.6 million of SBA 7(a) loans funded by Newtek Small Business Finance, LLC ("NSBF") for the three months ended June 30, 2022.
Total SBA 7(a) loan fundings of $344.3 million for the six months ended June 30, 2023; a 5.4% decrease over the $363.9 million of SBA 7(a) loans funded by NSBF for the six months ended June 30, 2022.
The Company forecasts $875 million in total SBA 7(a) loan fundings in 2023, which would represent a 12.8% increase over 2022.
Newtek Bank closed $16.4 million of SBA 504 loans for the three months ended June 30, 2023; an increase of 7.4% over $15.3 million of SBA 504 loans closed by Newtek Business Lending ("NBL") during the same period in 2022.
Total SBA 504 loan fundings of $65.3 million for the six months ended June 30, 2023; an increase of 39.8% over $46.7 million of SBA 504 loans closed by NBL during the same period in 2022.
Barry Sloane, President, Chairman and CEO commented, "We couldn’t be more thrilled to report such a successful first six months of our transition to a financial holding company, owning Newtek Bank, a nationally chartered technologically enabled bank. It is important to note, that we view ourselves as distinct from our peers in the bank holding company space as we position NewtekOne as the One Company for all of Your Business Needs®, the one company that can make you more successful, and the one company that provides independent business owners with business and financial solutions, all in addition to offering depository services to its clients. We pride ourselves on the level of our 24/7/365 customer service, the ability to offer our clients access to multiple experienced professional service providers through the Newtek Advantage®, and to receive state-of-the-art business and financial solutions that are not readily available at typical financial and business solutions companies. We are extremely excited about the beginning of our journey as a financial holding company and building on our over 20-year history of being able to deliver business and financial solutions to our client base of independent business owners, as well are providing returns to our shareholders. Furthermore, we are very pleased to be able to deliver results for the first and second quarters of 2023 that meet or exceed previously forecasted metrics from the management team.We are maintaining our 2023 earnings guidance of a $1.70 to $2.00 earnings per share, and anticipate our results for the second half of 2023 to exceed our results of the first six months of 2023; a trend that we have historically experienced.”
Discussing Newtek Bank, Mr. Sloane said, “Newtek Bank has been able to achieve very strong metrics through the first six months of 2023, that we believe sets it apart in the banking sector, as well as can help foster the investment community’s understanding that Newtek Bank is unique and has been established to be a disruptor as a technology-oriented organization that serves its business clientele without the use of brokers and business development officers. In fact, Newtek Bank achieved what we believe to be above-average industry returns for the second quarter of 2023 with ROAA of approximately 4.9%, ROTCE of approximately 32.1%, and an efficiency ratio of 58.7%. Additionally, Newtek Bank grew its deposits from $140.0 million at December 31, 2022 to $447.4 million at June 30, 2023, and we feel very comfortable that we will be able to continue to maintain this level of deposits to finance our business lending platform, and if needed, grow the deposit base from levels at end of the second quarter. We also increased our deposit base by 4,500 client accounts through our digital-account-opening initiatives through the first six months of this year, of which the vast majority were opened between March 2023 and June 2023. We believe we will be able to further grow our deposit account openings, albeit at a slower pace going forward, as we have an ample amount of liquidity on hand to fund our lending business and balance sheet growth throughout 2023. Specifically, we currently have in excess of $250 million invested at the Federal Reserve as well as ample capital at Newtek Bank, both of which are earning a diminished spread and represent a potential drag on our earnings ability. However, we plan on deploying this capital in the future, which we believe will enable us to further grow our earnings per share.”
Mr. Sloane further commented, “In the second quarter, we accomplished another important milestone when we shifted our lending operation from NSBF, our legacy non-bank SBA lender, into Newtek Bank. Newtek Bank was granted PLP status by the SBA, enabling it to originate SBA 7(a) loans under PLP-delegated authority without having to go to the SBA for approvals. When combining Newtek Bank and NSBF, we ranked as the second largest SBA 7(a) lender based on dollar volume of loans approved as of June 30, 2023, according to the SBA, through the first nine months of the SBA's fiscal year, which ends September 30, 2023. In addition to SBA 7(a) loans and SBA 504 loans, we have started funding conforming commercial and industrial business loans and non-owner-occupied conforming investor-owned commercial real estate loans. Newtek Bank aims to have a portfolio of these loans to a diversified borrower pool across all 50 states.”
Mr. Sloane continued, “Our subsidiaries Newtek Merchant Solutions, Newtek Technology Solutions, Newtek Insurance Agency and Newtek Payroll Solutions all contributed cash flow and earnings to NewtekOne during the second quarter 2023, and we have tremendous growth aspirations for our non-bank subsidiaries. We also continued to build out our senior management team, announcing the key hires of M. Scott Price as Chief Financial Officer of NewtekOne and Newtek Bank, and Burt Chandler as Director of Operations for Newtek Bank, among other executives. Finally, the investment community has assigned bank research coverage from Keefe, Bruyette & Woods, B. Riley Securities, and Ladenburg Thalmann, which along with Piper Sandler, results in four analysts in the banking space currently covering NewtekOne as a technology-enabled financial holding company."
Mr. Sloane concluded, "When analyzing the quarterly results from NewtekOne and Newtek Bank, we believe that it is critical to understand that we were able to achieve strong second quarter 2023 results during an overall difficult operating market environment as well as operational challenges that came with our very recent change in structure. We believe the market environment will improve and operational challenges will diminish over the next several quarters and years, which we believe will result in further growth. Specifically, the following factors detail some of what we have encountered and persevered through during the first six months of 2023, including but not limited to the repositioning of a 59-year old bank for future deposit and loan growth, having underutilized capital and liquidity at Newtek Bank to reduce risk due to current market conditions, staff and policy and procedure changes as a result of shifting loan fundings from NSBF to Newtek Bank, new hires at executive levels in the C-suite over the past 12 months, the full build out of digital account opening and online banking, repositioning of Newtek Bank’s manual deposit gathering and adaptation to new loan offerings, and capital markets headwinds affecting most financial institutions. Our strong results in the face of what we view as a challenging environment is a true testament to our fortitude, acumen and adaptability that has served us well throughout our entire operating history and we believe will continue to do as we continue to build and grow NewtekOne and Newtek Bank. That said, we are extremely pleased with the shape and direction our new structure is taking, and believe the best is yet to come. We look forward to providing more detail on the quarter and our growth initiatives during our earnings conference call tomorrow morning, which we welcome you all to attend.”
Second Quarter 2023 Conference Call and Webcast
A conference call to discuss the second 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, Thursday, August 3, 2023, 8:30 a.m. ET.
Please note, to attend the conference call or webcast, participants should register online at NewtekOne, Inc. Q2 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. Q2 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 Statements
Certain 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. These statements 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. Factors that could cause NewtekOne's actual results to differ materially from those described in the forward-looking statements can be found in NewtekOne's Annual Report on Form 10-K for the year ended December 31, 2022, which has been filed with the Securities and Exchange Commission and are 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 Relations
Contact: Jayne Cavuoto
Telephone: (212) 273-8179 / jcavuoto@newtekone.com
abrooklyn
1 year ago
UPDATE -- NewtekOne, Inc. Reports First Quarter 2023 Net Income of $11.7 million, or $0.46 per Basic Share
Source: GlobeNewswire Inc.
NewtekOne, Inc. (Nasdaq: NEWT), announced today its financial and operating results for the three months ended March 31, 2023.
This is NewtekOne's first 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. As a result, prior-period comparisons on both a sequential and year-over-year basis are difficult. NewtekOne now consolidates its results and no longer uses investment company accounting. When analyzing NewtekOne, we believe it is important to consider the Company's time-tested differentiated business model which can provide multiple streams of income from its various businesses, as well as its operating structure which does not use brokers or business development officers to source business.
NewtekOne First Quarter 2023 Financial Highlights
The Company is reiterating previously issued earnings forecast for the full year 2023 in a range of $1.70 to $2.00 of earnings per share.
Net Income was $11.7 million, or $0.46 per basic common share, for the three months ended March 31, 2023, which exceeded its previously stated forecast of $0.41 per basic common share.
Net interest income was $4.6 million for the three months ended March 31, 2023.
Total assets were $1.2 billion at March 31, 2023.
Total borrowings were $697.4 million at March 31, 2023.
Cash and cash equivalents was $197.1 million, including $72.6 million of restricted cash at March 31, 2023.
Loans held for investment were $699.6 million at March 31, 2023.
Total risk-based capital ratio was 17.7% at March 31, 2023.
Tier-1 leverage ratio was 14.0.% at March 31, 2023.
On April 14, 2023, the Company paid its first quarterly cash dividend as a financial holding company of $0.18 per share to shareholders of record as of April 4, 2023, which exceeded the Company’s previously forecast dividend projection of $0.16 per share.
Newtek Bank, N.A.
Total deposits were $247.6 million at March 31, 2023.
Total deposits as of April 28, 2023 were approximately $310 million, which represents a 121% increase in deposits, compared to $140 million in deposits at NBNYC at December 31, 2022.
The amount of insured deposits was approximately 94.5% at March 31, 2023.
Total risk-based capital ratio was 35.1% at March 31, 2023.
Tier-1 leverage ratio was 27.4% at March 31, 2023.
Lending Highlights
Total commercial loan closings were $228.9 million for the three months ended March 31, 2023; a 12.5% increase over the three months ended March 31, 2022.
Newtek Small Business Finance, LLC (“NSBF”) and Newtek Bank funded $147.9 million of SBA 7(a) loans during the three months ended March 31, 2023; a 9.1% decrease over the $163.3 million of SBA 7(a) loans funded for the three months ended March 31, 2022.
The Company forecasts $875 million in SBA 7(a) loan fundings in 2023, which would represent a 12.8% increase over 2022.
Newtek Bank closed $48.9 million of SBA 504 loans for the three months ended March 31, 2023; an increase of 55.7% over $31.4 million of SBA 504 loans closed by Newtek Business Lending during the same period in 2022.
As of April 2023, SBA 7(a) loans are being funded by Newtek Bank with Preferred Lenders Program (PLP) status.
Barry Sloane, President, Chairman and CEO commented, “We are pleased to report our first quarter 2023 financial results - our first quarterly report as a financial holding company that owns Newtek Bank, a nationally chartered technology-enabled bank. Despite extremely volatile industry and market conditions in the first quarter of 2023, the Company was able to successfully navigate its business plan and model. We delivered basic earnings per share of $0.46, which exceeded our previous forecast of $0.41. We are reiterating our previously issued earnings forecast for the full year 2023 in a range of $1.70 per share to $2.00 per share. We are particularly proud to have been able to accomplish all of this at a time when financial institutions were losing deposits, facing difficulties with asset and liability management and pressure on their net interest margins. We believe that our first quarter 2023 results help demonstrate that the problems that are currently plaguing the banking industry do not exist within our business model and strategic plan. Credit risk and duration risk are exceptionally well managed in our business model and strategy, and we look forward to explaining this in detail during our earnings conference call tomorrow morning. In addition, the types of assets that we are able to generate, and have done so for over two decades, can produce generous risk-adjusted margins on a floating-rate basis (for example Prime plus 3.00% on SBA 7(a) originations as of today is approximately 11.25%, floating-rate quarterly adjusting). We look forward to continuing to execute our business plan and goals.”
Mr. Sloane continued, “We are particularly proud of the growth Newtek Bank has accomplished in its deposit base. Newtek Bank increased its deposit base by 121% from December 31, 2022 to approximately $310 million year to date through April 28, 2023, and, since the January 6, 2023 close of the acquisition, has gained over 3,300 new client relationships as of April 28, 2023. We believe this is a significant achievement as many financial institutions have lost or had stagnant deposit growth during this period. Moreover, when other lenders may be scaling back on loan originations, we have increased our total commercial loan originations by 12.5% to $228.9 million in the first quarter of 2023, compared to the first quarter of 2022, on a consolidated basis. In addition, and a critical part of NewtekOne’s differentiated financial holding company business model, is our diversified streams of income that can emanate from our consolidated non-bank subsidiaries, which offer business and financial solutions, including Newtek Merchant Solutions, Newtek Technology Solutions, Newtek Insurance Solutions, and non-bank C&I lending, all of which can provide cash flows to the financial holding company. These diversified streams of income can be viewed in our segment reporting on a going-forward basis, as the new financial structure, despite being taxable, offers greater transparency to our subsidiaries operations and cash flows, as well as the business and financial solutions that we provide to our clients and all stakeholders.”
Mr. Sloane further commented, “We firmly believe operating our legacy businesses in this new structure marks the beginning of our ability to demonstrate to the marketplace what NewtekOne has built over the course of 20 years in the way of offering multiple business and financial solutions to business clientele, which is aptly demonstrated through the Newtek Advantage™, our state-of-the-art technology solutions platform for business clients. Developing and growing an organization of this size and scope takes time, energy, effort, and exceptional devotion and patience to be able to get the software and operational performance to work in tandem, which enables us to offer what we believe to be the highest level of quality service to our clients. The Newtek Advantage™, which exists today on our website, will be further polished and positioned and will be aggressively rolled out during the third and fourth quarters of 2023, to deliver the type of asset that our business clients deserve and expect from the newly positioned, technologically enabled bank and financial holding company of the future.”
Mr. Sloane concluded, “We couldn’t be more excited about the opportunity to explain and demonstrate why we believe NewtekOne is well positioned and has a completely different business model and approach to clients than what analysts and investors have become familiar with over the last 30 to 40 years. Simply put, the market has changed, and client behavior has changed. A 40-year decline in interest rates has been reversed and we believe that the same business model of low-cost deposits, fostered by bankers, brokers and branches with assets that aren't matched by duration will not work well going forward. We prefer to be viewed and analyzed as a business and financial solutions company that owns a depository institution, and delivers, what we believe to be, the highest-quality solutions for businesses to be more successful and enhance their future with a partnership and business relationship with NewtekOne. Our newly launched website and branding strategy clearly depicts this strategy, and we welcome you to visit our sites at www.newtekone.com and www.newtekbank.com. We pride ourselves on the ability to originate loans on a scalable basis without the use of brokers and business development officers, but rather through a model that predicates itself on relationship and solutions specialists available in real-time, on camera, 24 hours a day, seven days a week, 365 days a year. In addition, we would like to call attention to our net interest margins, which have been stable and we believe can expand based upon our business model, which is in contrast to the traditional banking model, which appears to be experiencing headwinds due to increasing deposit costs. Our model has been purposefully developed over the span of two decades, and we are now excited to showcase it in our new financial and operational structure. We greatly look forward to our earnings conference call tomorrow morning at 8:30 am ET, and welcome your participation.”
First Quarter 2023 Conference Call and Webcast
A conference call to discuss the first 2023 financial results will be hosted by Barry Sloane, President, Chairman and Chief Executive Officer, and Nicholas Leger, Chief Accounting Officer, tomorrow, Tuesday, May 9, 2023, 8:30 a.m. ET.
Please note, to attend the conference call or webcast, participants should register online at http://investor.newtekbusinessservices.com/events-and-presentations. 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 http://investor.newtekbusinessservices.com/events-and-presentations. 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® and One Solution for All Your Business Needs® are registered trademarks of NewtekOne, Inc.
Note Regarding Forward-Looking Statements
Certain 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. These statements 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. Factors that could cause NewtekOne's actual results to differ materially from those described in the forward-looking statements can be found in NewtekOne's Annual Report on Form 10-K for the year ended December 31, 2022, which has been filed with the Securities and Exchange Commission and are 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.
abrooklyn
2 years ago
NewtekOne, Inc. Reports Fourth Quarter and Full Year 2022 Financial Results
Source: GlobeNewswire Inc.
NewtekOne, Inc. (Nasdaq: NEWT) (the "Company"), announced today its financial and operating results for the three and twelve months ended December 31, 2022.
On January 6, 2023, the Company completed the acquisition of National Bank of New York City ("NBNYC"), withdrew its BDC election, and became a financial holding company. On January 13, 2023, Newtek Business Services Corp. changed its name to NewtekOne® and NBNYC, the 59-year-old nationally chartered bank, was renamed Newtek Bank, National Association, a wholly owned subsidiary of NewtekOne. As a result, NewtekOne, a financial holding company, no longer qualifies as a regulated investment company for federal income tax purposes and will no longer qualify for accounting treatment as an investment company. Going forward, Newtek Bank, N.A. and NewtekOne's former portfolio companies and other subsidiaries will be consolidated in the Company’s financial statements. As a result, NewtekOne's financial reporting metrics will change beginning with the first quarter 2023 quarterly report. NewtekOne's fourth quarter and full year 2022 results were recorded as a BDC and metrics such as net investment income (loss), adjusted net investment income (ANII), total investment income and leverage ratios will have diminished relevancy going forward. In addition, the financial results for the twelve months ended December 31, 2021, included $50.0 million of fee income from the Paycheck Protection Program ("PPP"), which, as previously disclosed, is not recurring. As of today, NewtekOne is a well-positioned financial holding company that owns a well-capitalized nationally chartered bank, Newtek Bank, N.A.
Barry Sloane, Chairman, President and Chief Executive Officer said, “Our future of becoming the market leader as an owner of a technology-enabled bank is not only within our grasp, it has begun, with the rollout of the first version of the Newtek Advantage® as well as our rebranding strategy and our redesigned website www.Newtekone.com. Our mobile account opening and online banking capability is now functional and clients can open a commercial and/or consumer deposit accounts in a frictionless manner by going to www.newtekbank.com. Our bank has already begun to open new bank accounts, take deposits and to fund loan originations. We project our balance sheet and earnings in 2023 and 2024 with optimism based on our 22 years of experience as a publicly traded company, in addition to our historical growth of revenues, earnings, and client footprint. We are updating our EPS projections to a range of $1.70 to $2.00 per share in 2023 and to a range of $2.80 to $3.20 per share in 2024. Given our market leadership in various segments of our business, we feel comfortable with these forecasts. In addition, today NewtekOne’s board of directors declared our first dividend as a financial holding company of $0.18 per share payable on April 14, 2023 to shareholders of record on April 4, 2023, which is above our previously forecasted guidance of $0.16 per share. We believe that our strong balance sheet and forward-thinking business strategy and plan has energized the entire Company and client base.”
Mr. Sloane continued, "Today's results and tomorrow's conference call will feature our final quarterly and annual earnings report as a BDC, While we are proud of what we have accomplished over our eight-year tenure as a BDC, we are also very excited about embarking on our new path as a financial holding company. This quarter and full year’s reported financial performance will be the last time we report as an investment company with 1940’s Act accounting. We are pleased to report our adjusted net investment income for the three and twelve months ended December 31, 2022 was $0.06 per share and $2.14 per share, respectively. Going forward, as a financial holding company we will be consolidating all subsidiaries in our financial statements and no longer qualify for accounting treatment as an investment company or tax treatment as a regulated investment company (RIC) under the IRS Code.”
Mr. Sloane continued, “Notably, throughout our tenure as a BDC since 2015, we paid out nearly $330 million in dividends and distributions and historically traded at a premium to NAV for the majority of our history. We grew our market capitalization prior to converting to a BDC from approximately $90 million to over $800 million at our highest share price. We move forward with a proud history of accomplishments for the fourth quarter and full year 2022, achieving record annual SBA 7(a) loan fundings, and selling debt and preferred shares in January and February 2023 as a financial holding company. We were able to accomplish all of this while preparing to open up our bank while our regulatory banking applications were pending approval, which was a challenge that we met admirably and efficiently.”
Fourth Quarter 2022 Financial Highlights
Total investment income of $23.1 million for the three months ended December 31, 2022; a decrease of (6.9)% compared to total investment income of $24.8 million for the three months ended December 31, 2021.
Net investment income (loss) of $(5.4) million, or $(0.22) per share, for the three months ended December 31, 2022, which represents a (414.3)% decrease, on a per share basis, compared to net investment income (loss) of $1.6 million, or $0.07 per share, for the three months ended December 31, 2021.
Adjusted net investment income ("ANII")1 of $1.5 million, or $0.06 per share, for the three months ended December 31, 2022; a decrease of (90.9)%, on a per share basis, compared to ANII of $16.0 million, or $0.66 per share, for the three months ended December 31, 2021.
Debt-to-equity ratio of 1.46x at December 31, 2022.
Total investment portfolio increased by 6.5% to $808.0 million at December 31, 2022, from $758.8 million at December 31, 2021.
Net asset value (“NAV”) of $375.4 million, or $15.25 per share, at December 31, 2022 compared to NAV of $16.72 per share at December 31, 2021.
Full Year 2022 Financial Highlights
Total investment income of $86.2 million for the twelve months ended December 31, 2022; a decrease of (20.5)% compared to total investment income of $108.5 million for the twelve months ended December 31, 2021, which included $50.0 million of fee income from the PPP, which, as previously disclosed, is not recurring.
Net investment loss of $(6.5) million, or $(0.27) per share, for the twelve months ended December 31, 2022, which represents a (123.0)% decrease, on a per share basis, compared to net investment income of $25.7 million, or $1.13 per share, for the twelve months ended December 31, 2021, which included $50.0 million of fee income from the PPP which, as previously disclosed, is not recurring.
ANII1 of $51.9 million, or $2.14 per share, for the twelve months ended December 31, 2022; a decrease of (34.5)%, on a per share basis, compared to ANII of $79.1 million, or $3.47 per share, for the twelve months ended December 31, 2021, which included $50.0 million of fee income from the PPP which, as previously disclosed, is not recurring.
2022 Dividends and Distributions/2023 Declaration
On December 30, 2022, the Company paid a fourth quarter 2022 cash distribution of $0.70 per share to shareholders of record as of December 20, 2022.
The Company paid $2.75 per share in dividends and distributions in 2022.
Throughout the Company's tenure as a BDC since 2015, it paid out nearly $330 million in dividends and distributions.
NewtekOne’s board of directors declared a dividend of $0.18 per share2 today, which exceeds the Company’s previously forecasted dividend projection of $0.16 per share. The dividend is payable on April 14, 2023 to shareholders of record as of April 4, 2023, and is the Company's first dividend declared as a financial holding company.
Lending Highlights
Newtek Small Business Finance, LLC (“NSBF”) funded a record $775.6 million in SBA 7(a) loans for the twelve months ended December 31, 2022, meeting its previously stated full year 2022 SBA 7(a) loan funding guidance of $775 million, which represents an 38.4% increase over $560.6 million SBA 7(a) loan fundings for the twelve months ended December 31, 2021.
NSBF funded $188.7 million of SBA 7(a) loans during the three months ended December 31, 2022; a (4.7)% decrease over the $198.0 million of SBA 7(a) loans funded for the three months ended December 31, 2021.
NewtekOne forecasts $875 million in SBA 7(a) loan fundings in 2023, which would represent a 12.9% increase over 2022
Newtek Business Lending ("NBL"), closed a record $111.6 million of SBA 504 loans for the twelve months ended December 31, 2022; an increase of 23.9% over $90.1 million of SBA 504 loans closed during the same period in 2021.
Mr. Sloane concluded, “I want to reiterate that the analysis of our final financials as a BDC, in particular with respect to NAV, net investment income, ANII and leverage ratios, although important, we believe has diminished relevance in analyzing NewtekOne on a going forward basis as a result of our change in accounting as a financial holding company in 2023 and emphasis going forward on after-tax net income. As a business solutions company with forecasted returns on average assets (ROA) and forecasted returns on tangible common equity (ROTCE), which we do not believe are typically found in bank holding companies or banks, differentiates us in the market. During our conference call tomorrow morning at 8:30 a.m., we will focus on our financial holding company projections for 2023 and 2024. Our accompanying financial results presentation for tomorrow’s conference call can be found on our website in the investor relations section at http://investor.newtekbusinessservices.com/events-and-presentations. The presentation will highlight our exit as a BDC and focus on our forward-looking updated projections and forecasts of the publicly traded financial holding company as well as the wholly owned bank subsidiary.”
Fourth Quarter and Full Year 2022 Conference Call and Webcast
A conference call to discuss the fourth quarter and full year 2022 financial results will be hosted by Barry Sloane, President, Chairman and Chief Executive Officer, and Nicholas Leger, Chief Accounting Officer, tomorrow, Tuesday, February 28, 2023 8:30 a.m. ET.
Please note, to attend the conference call or webcast, participants should register online at http://investor.newtekbusinessservices.com/events-and-presentations. 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 http://investor.newtekbusinessservices.com/events-and-presentations. 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.
1Use of Non-GAAP Financial Measures - NewtekOne, Inc. and Subsidiaries
In evaluating its business, Newtek considers and uses ANII as a measure of its operating performance. ANII includes short-term capital gains from the sale of the guaranteed portions of SBA 7(a) loans and conventional loans, and beginning in 2016, capital gain distributions from controlled portfolio companies, which are reoccurring events. The Company defines ANII as net investment income (loss) plus net realized gains recognized from the sale of guaranteed portions of SBA 7(a) loan investments, less realized losses on non-affiliate investments, plus the net realized gains on controlled investments, plus or minus the change in fair value of contingent consideration liabilities, plus loss on extinguishment of debt, plus or minus an adjustment for gains or losses on derivative transactions.
We do not designate derivatives as hedges to qualify for hedge accounting and therefore any net payments under, or fluctuations in the fair value of, our derivatives are recognized currently in our GAAP income statement. However, fluctuations in the fair value of the related assets are not included in our income statement. We consider the gain or loss on our hedging positions related to assets that we still own as of the reporting date to be “open hedging positions.” While recognized for GAAP purposes, we exclude the results on the hedges from ANII until the related asset is sold and/or the hedge position is “closed,” whereupon they would then be included in ANII in that period. These are reflected as “adjustment for realized gain/(loss) on derivatives” for purposes of computing ANII for the period. Management believes that excluding these specifically identified gains and losses associated with the open hedging positions adjusts for timing differences between when we recognize changes in the fair values of our assets and changes in the fair value of the derivatives used to hedge such assets.
The term ANII is not defined under U.S. generally accepted accounting principles, or U.S. GAAP, and is not a measure of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. ANII has limitations as an analytical tool and, when assessing the Company’s operating performance, investors should not consider ANII in isolation, or as a substitute for net investment income, or other consolidated income statement data prepared in accordance with U.S. GAAP. Among other things, ANII does not reflect the Company’s actual cash expenditures. Other companies may calculate similar measures differently than Newtek, limiting their usefulness as comparative tools. The Company compensates for these limitations by relying primarily on its GAAP results supplemented by ANII. Reconciliation tables showing the adjustments made to net investment income to determine NII are attached to this press release.
2 Note Regarding Dividend Payments
Amount and timing of dividends, if any, remain subject to the discretion of the Company's Board of Directors. The determination of the tax attributes of the Company's 2022 distributions as a BDC is made as of the end of the Company's 2022 fiscal year based upon its taxable income for the full year and distributions paid for the full year.
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, 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® and One Solution for All Your Business Needs® are registered trademarks of NewtekOne, Inc.
Note Regarding Forward-Looking Statements
Certain 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. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. These statements are not guarantees of future results or occurrences. Actual results and capital and other financial conditions may differ materially from those included in these statements due to a variety of factors. These factors include, among others: macroeconomic and other challenges and uncertainties related to the COVID-19 pandemic, such as the impacts to the U.S. and global economies, as well as the broader impacts to financial markets and the global macroeconomic and geopolitical environments; higher inflation and its impacts; higher interest rates and the impacts on macroeconomic conditions, and NewtekOne, Inc.’s funding costs; NewtekOne, Inc’s conversion to a financial holding company, consummation of the acquisition of Newtek Bank, N.A. and Newtek One’s limited experience as a financial holding company and owning and operating a bank; and the precautionary statements included in this release. Factors that could cause NewtekOne, Inc’s actual results to differ materially from those described in the forward-looking statements can be found in NewtekOne, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2021 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022, June 30, 2022, and September 30, 2022, filed May 9, 2022, August 8, 2022, and November 8, 2022, with the Securities and Exchange Commission and are available on NewtekOne, Inc’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, Inc. speak only as to the date they are made, and NewtekOne, Inc. 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 Relations
Contact: Jayne Cavuoto
Telephone: (212) 273-8179 / jcavuoto@newtekone.com
NEWTEKONE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(In Thousands, except for Per Share Data)
December 31, 2022 December 31, 2021
ASSETS (Unaudited)
Investments, at fair value
SBA unguaranteed non-affiliate investments (cost of $532,793 and $431,970, respectively; includes $423,686 and $344,266, respectively, related to securitization trusts) $ 505,268 $ 424,417
SBA guaranteed non-affiliate investments (cost of $18,460 and $65,728, respectively) 19,171 72,970
Controlled investments (cost of $154,809 and $157,289, respectively) 282,239 260,398
Non-control investments (cost of $1,360 and $1,000, respectively) 1,360 1,000
Total investments, at fair value 808,038 758,785
Cash 53,692 2,397
Restricted cash 71,914 184,463
Broker receivable — 44,537
Due from related parties 1,338 4,395
Servicing assets, at fair value 30,268 28,008
Right of use assets 6,484 7,310
Other assets 27,168 26,666
Total assets $ 998,902 $ 1,056,561
LIABILITIES AND NET ASSETS
Liabilities:
Bank notes payable $ 55,885 $ 50,000
2024 Notes (par: $38,250 and $38,250 as of December 31, 2022 and December 31, 2021) 37,903 37,679
2025 6.85% Notes (par: $0 and $15,000 as of December 31, 2022 and December 31, 2021) — 14,545
2025 5.00% Notes (par: $30,000 and $0 as of December 31, 2022 and December 31, 2021) 29,306 —
2026 Notes (par: $115,000 and $115,000 as of December 31, 2022 and December 31, 2021) 112,846 112,128
Notes payable - Securitization trusts (par: $283,143 and $249,750 as of December 31, 2022 and December 31, 2021) 279,136 246,250
Notes payable - related parties 24,250 11,450
Due to related parties 1,211 1,490
Lease liabilities 7,973 9,056
Deferred tax liabilities 19,194 12,733
Due to participants 35,627 146,225
Derivative instruments — 183
Accounts payable, accrued expenses and other liabilities 20,213 10,935
Total liabilities 623,544 652,674
Commitment and contingencies
Net assets:
Preferred stock (par value $0.02 per share; authorized 1,000 shares, no shares issued and outstanding) — —
Common stock (par value $0.02 per share; authorized 200,000 shares, 24,609 and 24,159 issued and outstanding, respectively) 492 483
Additional paid-in capital 354,243 367,663
Accumulated undistributed earnings 20,623 35,741
Total net assets 375,358 403,887
Total liabilities and net assets $ 998,902 $ 1,056,561
Net asset value per common share $ 15.25 $ 16.72
NEWTEKONE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except for Per Share Data)
Year Ended December 31,
2022 2021 2020
Investment income
From non-affiliate investments:
Interest income - PPP loans $ — $ 49,989 $ 37,743
Interest income - SBA 7(a) loans 35,696 25,951 24,719
Servicing income 13,698 11,307 11,154
Other income 8,600 5,696 2,693
Total investment income from non-affiliate investments 57,994 92,943 76,309
From non-control investments:
Interest income — 428 403
Dividend income 83 95 104
Total investment income from non-control investments 83 523 507
From controlled investments:
Interest income 2,921 2,598 1,933
Dividend income 24,574 9,801 13,452
Other income 672 2,629 —
Total investment income from controlled investments 28,167 15,028 15,385
Total investment income 86,244 108,494 92,201
Expenses:
Salaries and benefits 20,186 17,866 14,211
Interest 26,325 20,515 17,877
Depreciation and amortization 239 304 402
Professional fees 7,134 5,610 3,718
Origination and loan processing 11,606 10,234 8,431
Origination and loan processing - related party 19,140 19,272 9,855
Change in fair value of contingent consideration liabilities — — 54
Loss on extinguishment of debt 417 1,552 —
Other general and administrative costs 7,673 7,454 5,668
Total expenses 92,720 82,807 60,216
Net investment (loss) income (6,476 ) 25,687 31,985
Net realized and unrealized gains (losses):
Net realized gain on non-affiliate investments - SBA 7(a) loans 56,901 53,113 11,368
Net realized loss on controlled investments — (1,266 ) —
Net realized gain on derivative transactions 445 590 —
Net unrealized (depreciation) appreciation on SBA guaranteed non-affiliate investments (6,532 ) 6,380 (795 )
Net unrealized (depreciation) appreciation on SBA unguaranteed non-affiliate investments (19,972 ) 5,097 (176 )
Net unrealized appreciation (depreciation) on controlled investments 24,321 2,829 (8,237 )
Change in deferred taxes (6,464 ) (1,327 ) 999
Net unrealized appreciation (depreciation) on derivative transactions 183 (183 ) —
Net unrealized depreciation on servicing assets (10,095 ) (6,778 ) (1,525 )
Net realized and unrealized gains $ 38,787 $ 58,455 $ 1,634
Net increase in net assets resulting from operations $ 32,311 $ 84,142 $ 33,619
Net increase in net assets resulting from operations per share $ 1.34 $ 3.69 $ 1.59
Net investment (loss) income per share $ (0.27 ) $ 1.13 $ 1.51
Dividends and distributions declared per common share $ 2.75 $ 3.15 $ 2.05
Weighted average number of shares outstanding 24,198 22,795 21,146
NEWTEKONE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except for Per Share Data)
Quarter Ended December 31,
2022 2021 2020
Investment income
From non-affiliate investments:
Interest income - PPP loans $ — $ — $ 1
Interest income 11,781 6,623 5,337
Servicing income 3,767 2,961 2,787
Other income 2,101 1,867 1,244
Total investment income from non-affiliate investments 17,649 11,451 9,369
From Non-control/affiliate investments
Interest income — 54 296
Dividend income 21 25 33
Total investment income from non-control/affiliate investments 21 79 329
From controlled investments:
Interest income 834 895 510
Dividend income 4,585 9,750 4,568
Other income — 2,629 —
Total investment income from controlled investments 5,419 13,274 5,078
Total investment income 23,089 24,804 14,776
Expenses:
Salaries and benefits 5,806 5,139 3,355
Interest 8,913 5,298 4,150
Depreciation and amortization 58 68 90
Professional fees 2,812 2,145 896
Origination and servicing 4,404 (321 ) 2,765
Origination and servicing - related party 4,442 8,442 1,417
Loss on extinguishment of debt — 597 —
Other general and administrative costs 2,054 1,791 1,253
Total expenses 28,489 23,159 13,926
Net investment (loss) income (5,400 ) 1,645 850
Net realized and unrealized gains (losses):
Net realized gain on non-affiliate investments - SBA 7(a) loans 6,948 15,034 8,791
Net realized loss on controlled investments — (1,266 ) —
Net realized gain on derivative transactions — 858 —
Net unrealized (depreciation) appreciation on SBA guaranteed non-affiliate investments (590 ) 3,847 (301 )
Net unrealized (depreciation) appreciation on SBA unguaranteed non-affiliate investments (13,499 ) 2,514 5,836
Net unrealized appreciation on controlled investments 22,739 1,069 2,919
Change in provision for deferred taxes on unrealized (appreciation) depreciation on investments (6,289 ) 793 (2,011 )
Net unrealized depreciation on non-control/non-affiliate investments — (521 ) —
Net unrealized depreciation on servicing assets (6,131 ) (3,456 ) (226 )
Net unrealized loss on derivative transactions — (487 ) —
Net realized and unrealized gains $ 3,178 $ 18,385 $ 15,008
Net (decrease) increase in net assets $ (2,222 ) $ 20,030 $ 15,858
Net (decrease) increase in net assets per share $ (0.09 ) $ 0.84 $ 0.73
Net investment (loss) gain per share $ (0.22 ) $ 0.07 $ 0.04
Dividends and distributions declared per common share $ 0.70 $ 1.05 $ 0.47
Weighted-average number of shares used in per share calculations 24,425 23,764 21,747
NEWTEKONE INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES-
ADJUSTED NET INVESTMENT INCOME RECONCILIATION:
Year ended Year ended
(in thousands, except per share amounts) December 31, 2022 Per share December 31, 2021 Per share
Net investment (loss) income $ (6,476 ) $ (0.27 ) $ 25,687 $ 1.13
Net realized gain on non-affiliate investments - SBA 7(a) loans 56,901 2.35 53,113 2.33
Net realized loss on controlled investments — — (1,266 ) (0.06 )
Adjustment for realized gain on derivatives (1) 1,010 0.04 25 0.00
Loss on debt extinguishment 417 0.02 1,552 0.07
Adjusted net investment income $ 51,852 $ 2.14 $ 79,111 $ 3.47
Note: Amounts may not foot due to rounding
(1) The following is a reconciliation of GAAP net realized gain/(loss) on derivative transactions to our adjustment for realized gain/(loss) on derivatives on closed transactions presented in the computation of ANII in the preceding table:
Year ended Year ended
(in thousands, except per share amounts) December 31, 2022 Per share December 31, 2021 Per share
Net realized gain on derivatives $ 445 $ 0.02 $ 590 $ 0.03
Hedging realized result on open hedging positions — — (565 ) (0.02 )
Hedging realized adjustment on hedging positions closed during current period 565 0.02 — —
Adjustment for realized gain on derivatives $ 1,010 $ 0.04 $ 25 $ 0.00
Note: Amounts may not foot due to rounding
NEWTEKONE, INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES-
ADJUSTED NET INVESTMENT INCOME RECONCILIATION:
Three months ended Three months ended
(in thousands, except per share amounts) December 31, 2022 Per share December 31, 2021 Per share
Net investment (loss) income $ (5,400 ) $ (0.22 ) $ 1,645 $ 0.07
Net realized gain on non-affiliate investments - SBA 7(a) loans 6,948 0.28 15,034 0.63
Net realized loss on controlled investments — — (1,266 ) (0.06 )
Adjustment for realized gain on derivatives (1) — — 32 0.00
Loss on debt extinguishment — — 597 0.03
Adjusted net investment income $ 1,548 $ 0.06 $ 16,042 $ 0.66
Note: Amounts may not foot due to rounding
(1) The following is a reconciliation of GAAP net realized gain/(loss) on derivative transactions to our adjustment for realized gain/(loss) on derivatives on closed transactions presented in the computation of ANII in the preceding table:
Three months ended Three months ended
(in thousands, except per share amounts) December 31, 2022 Per share December 31, 2021 Per share
Net realized gain on derivatives $ — $ — $ 858 $ 0.04
Hedging realized result on open hedging positions — — (826 ) (0.03 )
Adjustment for realized gain on derivatives $ — $ — $ 32 $ 0.00
Note: Amounts may not foot due to rounding
Primary Logo
abrooklyn
2 years ago
Newtek Business Services Corp. Completes Acquisition of National Bank of New York City
Source: GlobeNewswire Inc.
Newtek Business Services Corp. (NASDAQ: NEWT) (“Newtek”) announced that on January 6, 2023, it completed its acquisition of the National Bank of New York City (“NBNYC”), a 59-year-old national bank regulated and supervised by the Office of the Comptroller of the Currency, and converted to a financial holding company. NBNYC has been renamed Newtek Bank, National Association™ (“Newtek Bank, N.A.”) and has become a wholly owned subsidiary of the Company. In addition, Newtek has filed with the Securities and Exchange Commission its notification of withdrawal of election to be subject to the Investment Company Act of 1940, and has ceased to be a business development company as of January 6, 2023. Within the next two weeks, Newtek will change its name from Newtek Business Services Corp. to NewtekOne, Inc.® and will retain its trading symbol (Nasdaq: NEWT). Additionally, in the coming weeks, Newtek will finalize its rebranding initiative, and will relaunch its redesigned corporate website. The Company intends to host conference calls in the coming weeks to discuss these initiatives and financial and operational targets in greater detail.
Barry Sloane, President, Chairman and CEO commented, “We are beyond thrilled to be announcing this momentous and much-anticipated occasion for Newtek, which we believe will benefit the Company’s growth in a significant way, in contrast to the limiting structure of operating as a BDC. Under our new financial holding company structure, we plan to capitalize on our long-standing business model, better serve our independent-business-owner clientele and enhance shareholder value in the marketplace as the One Solution for All of Your Business Needs®. NewtekOne® will position itself as a business solutions company offering a multitude of solutions to its clientele to enable them to become incrementally more successful and, as the parent of Newtek Bank, N.A., also offering our clientele depository services and solutions. As NewtekOne®, we plan to offer banking as a service and banking on demand, providing a unique offering to our independent business owner clientele who will be able to access their depository functions and money movement capabilities any time they need, as well as develop an invaluable partnership with NewtekOne® through which they can cultivate business relationships, as well as access advice, consultation, analytics and transactional capability. In addition, as NewtekOne® we believe we will be able to increase our ability to finance our growth, lower our cost of capital and retain earnings in contrast to our former structure as a business development company.”
Mr. Sloane continued, “We firmly believe that our ability to deliver superior products as a financial holding company and bank, as well as satisfy our client’s needs, will be materially enhanced, helping us improve the business prospects of independent business owners through our technology-enabled bank in a significant way. We plan to leverage NewtekOne’s patented technologies, including NewTracker® and The Newtek Advantage™ (patent pending). NewTracker®, our proprietary web-based referral system, enables us to cost effectively and remotely acquire customers through strategic alliance partnerships without the traditional use of branches, brokers, or business development officers. Furthermore, we believe The Newtek Advantage™ will allow us to offer our future banking clientele the relationships, analytics, software, and transactional capability that other banks simply do not offer. The Newtek Advantage™ will also allow Newtek clients to easily interact with six unique Newtek subject matter experts in the areas of banking, lending, payment processing, technology, payroll and insurance. These relationship managers will advise and consult with each client on their individual needs, and will be available via video conference, telephone, and email. We believe the Newtek Advantage™ through choice of an a la carte solution set and the ability to margin pool will enable us to grow core retail deposits and provide a tremendous advantage to our existing and new clients. In fact, we will evaluate licensing NewTracker®, the Newtek Advantage™ and other Newtek technologies that have been developed across all product lines to other financial institutions under their brand on a white-label basis. Newtek plans to provide a demonstration of the Newtek Advantage™, in conjunction with its rebranding strategy, during a conference call on Wednesday, January 18, 2023 at 8:30 am ET.”
Mr. Sloane concluded, “While we are proud of all we accomplished as a BDC, we believe converting to a financial holding company and owning a nationally chartered bank better fits the market landscape, both financially and operationally, for our clients and can provide increased opportunities for the Company to grow. With all the above-mentioned reasons, we believe this new structure can accelerate the Company’s future growth, enhance shareholder value and total return, and enable us to stand apart with our unique model and state-of-the-art technology. We look forward to continuing to capture the plethora of opportunities offered by the 32.5 million small businesses in the U.S, on a much larger scale in our new structure.”
Newtek Business Services Corp., 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, Newtek 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.
Newtek’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® and One Solution for All Your Business Needs® are registered trademarks of Newtek Business Services Corp.
Note Regarding Forward Looking Statements
This press release contains certain forward-looking statements. Words such as “believes,” “intends,” “expects,” “projects,” “anticipates,” “forecasts,” “goal” and “future” or similar expressions are intended to identify forward-looking statements. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Such risks and uncertainties include, among others, our ability to operate a bank and as a financial holding company, projections concerning or considering the pending Transaction, the timing of our ability to originate new investments, achieve certain margins and levels of profitability, the availability of additional capital and the ability to maintain certain debt to asset ratios, intensified competition, operating problems and their impact on revenues and profit margins, anticipated future business strategies and financial performance, anticipated future number of customers, business prospects, legislative developments and similar matters. Risk factors, cautionary statements and other conditions, which could cause Newtek’s actual results to differ from management’s current expectations, are contained in Newtek’s filings with the Securities and Exchange Commission and available through http://www.sec.gov/. Newtek cautions you that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected or implied in these statements.
SOURCE: Newtek Business Services Corp.
Investor Relations & Public Relations
Contact: Jayne Cavuoto
Telephone: (212) 273-8179 / jcavuoto@newtekone.com
Primary Logo
abrooklyn
2 years ago
Newtek Business Services Corp. Reports Second Quarter 2022 Financial Results
Source: GlobeNewswire Inc.
Newtek Business Services Corp. (“Newtek” or the “Company”) (Nasdaq: NEWT), an internally managed business development company (“BDC”), announced today its financial and operating results for three and six months ended June 30, 2022.
Barry Sloane, Chairman, President and Chief Executive Officer said, “We are very pleased to report our results for the second quarter 2022. We are proud to have been able to deliver what we believe are strong results that meet our earnings and dividends forecasts. Furthermore, we were able to grow SBA 7(a) loan fundings by 112.8%, to a record $200.6 million, and increase loan units funded by 154%, for the three months ended June 30, 2022. In addition, we funded $62.0 million of SBA 7(a) loans in July 2022. We are particularly proud because we believe that these record loan fundings were accomplished without reducing the credit quality of our borrowers; to the contrary, we believe that we tightened credit standards which resulted in a reduced approval-rate percentage of loans presented to the loan committee. Our year-over-year comparables across some of our metrics, however, were down, even though we posted strong results. We believe this decline was primarily attributable to the fact the first two quarters of 2021 earnings materially benefited from Paycheck Protection Program ("PPP") fee income. As previously stated, this PPP fee income is non-recurring, and has since been replaced with earnings from our core and growing business lines and activities. We firmly believe that our trajectory and growth will allow us to ultimately surpass the earnings achieved during the PPP and pandemic-affected environment, and that our business operations and strategy, including the pending acquisition of the National Bank of New York City ("NBNYC"), which remains subject to regulatory approvals, and becoming a publicly traded bank holding company, is occurring at an advantageous time."
Second Quarter 2022 Financial Highlights
Total investment income of $19.2 million for the three months ended June 30, 2022; a decrease of (47.5)% compared to total investment income of $36.6 million for the three months ended June 30, 2021. Second quarter 2021 total investment income included $25.5 million of fee income from the PPP which, as previously disclosed, is not recurring.
Net investment income (loss) of $(2.3) million, or $(0.09) per share, for the three months ended June 30, 2022, which represents a (113.0)% decrease, on a per share basis, compared to net investment income of $15.5 million, or $0.69 per share, for the three months ended June 30, 2021. Second quarter 2021 net investment income included $25.5 million of fee income from the PPP which, as previously disclosed, is not recurring.
Adjusted net investment income ("ANII")1 of $18.1 million, or $0.75 per share, for the three months ended June 30, 2022; a decrease of (37.5)%, on a per share basis, compared to ANII of $27.0 million, or $1.20 per share, for the three months ended June 30, 2021. Second quarter 2021 ANII included $25.5 million of fee income from the PPP which, as previously disclosed, is not recurring.
Debt-to-equity ratio of 1.31x at June 30, 2022; proforma debt-to-equity ratio was 1.15x after taking into account the sales of government-guaranteed portions of SBA 7(a) loans prior to June 30, 2022, which sales settled subsequent to the balance sheet date.
Total investment portfolio increased by 8.8% to $757.1 million at June 30, 2022, from $696.1 million at June 30, 2021.
Net asset value (“NAV”) of $394.5 million, or $16.31 per share, at June 30, 2022 compared to NAV of $16.38 per share at June 30, 2021.
2022 Financial Highlights For the Six Months Ended June 30, 2022
Total investment income of $39.6 million for the six months ended June 30, 2022; a decrease of (44.5)% over total investment income of $71.3 million for the six months ended June 30, 2021 which included $49.7 million of fee income from the PPP, which, as previously disclosed, is not recurring.
Net investment income (loss) of $(1.3) million, or $(0.05) per share, for the six months ended June 30, 2022, which represents a (103.6)% decrease, on a per share basis, compared to net investment income of $30.7 million, or $1.37 per share, for the six months ended June 30, 2021, which included $49.7 million of fee income from the PPP which, as previously disclosed, is not recurring.
ANII1 of $35.3 million, or $1.46 per share, for the six months ended June 30, 2022; a decrease of (35.1)%, on a per share basis, compared to ANII of $50.5 million, or $2.25 per share, for the six months ended June 30, 2021, which included $49.7 million of fee income from the PPP which, as previously disclosed, is not recurring.
ANII of $1.46 per share for the six months ended June 30, 2022 was greater than the midpoint of our previously issued ANII forecast, for the six months ended June 30, 2022, of $1.40 per share to $1.50 per share.
Additional Second Quarter Highlights
On June 1, 2022, at a special meeting of shareholders, Newtek shareholders overwhelmingly approved a proposal authorizing the Company’s Board of Directors to discontinue the Company’s election to be regulated as a BDC under the Investment Company Act of 1940, as amended (subject to certain regulatory approvals and closing conditions described in the Company’s Proxy Statement dated May 2, 2022) (the “Proposal”). As previously disclosed in a Form 8-K, 89% of the votes cast at the Special Meeting were in favor of the Proposal.
2022 Dividend Declarations & Payments
On June 30, 2022, the Company paid a second quarter 2022 cash dividend of $0.75 per share to shareholders of record as of June 20, 2022, which represented a 7.1% increase over the second quarter 2021 dividend of $0.70 per share.
The Company has paid and declared dividends totaling $1.40 per share for the first and second quarters of 2022, which represents a 16.7% increase over dividends paid in the first and second quarters of 2021.
The Company forecasts paying a third quarter 2022 and fourth quarter 2022 total dividend in a range of $1.00 per share to $1.50 per share, which dividends are expected to be paid by December 31, 2022, subject to Board approval, and is currently forecasting a full year 2022 dividend of between $2.40 per share and $2.90 per share.2
Lending Highlights
Newtek Small Business Finance, LLC (“NSBF”) funded a record $200.6 million of SBA 7(a) loans during the three months ended June 30, 2022; a 112.8% increase over the $94.3 million of SBA 7(a) loans funded for the three months ended June 30, 2021.
NSBF funded a record $363.9 million in SBA 7(a) loans for the six months ended June 30, 2022, which represents an 83.2% increase over $198.6 million SBA 7(a) loan fundings for the six months ended June 30, 2021.
NSBF funded $62.0 million SBA 7(a) loans during July 2022.
NSBF forecasts funding approximately $750 million of SBA 7(a) loans for the full year 2022, which would represent a 33.8% increase over $560.6 million of SBA 7(a) loans funded in 2021.
Newtek Business Lending ("NBL"), forecasts closing approximately $150 million SBA 504 loans for the full year 2022, which would represent a 66.5% increase over $90.1 million of SBA 504 closings in 2021.
Mr. Sloane continued, “We are exceptionally pleased with our quarterly and first half of 2022 performance, in particular given the market headwinds that publicly traded companies are facing, which are out of anyone's control. Our weighted average net gain-on-sale price for the second quarter 2022, which reflects lagging prime rate increases and other capital market pressures, decreased by 2.5% over the first quarter of 2022, however our core business operations were able to make up for the decline by NSBF funding 330 SBA 7(a) loan units in the second quarter 2022, compared to 130 SBA 7(a) loan units in the same period last year. Over our 24-year operating history, we believe that Newtek has demonstrated its ability to push itself through high-rate, low-rate, good credit and poor credit environments, and we believe that it has been able to outperform market participants and competitors. Being able to meet and exceed the midpoint of our ANII targets, even with a 2.5% reduction in weighted average net gain-on-sale pricing for the quarter, is evidence of such resilience. Moreover, we are pleased to report that our borrowers are currently above a 98% currency ratio in our accrual loan portfolio as of June 30, 2022, and remain confident in the manner in which we manage our relationships with our borrowers and work with them to offer the best business and finance solutions available in the market. In addition, I want to commend Newtek’s senior management team and all staff for being able to deliver these strong results while simultaneously positioning the Company for what we believe will be a transition into owning a federally chartered bank, NBNYC (subject to regulatory approvals and closing conditions), which we contracted to purchase slightly over one year ago, and converting Newtek into a bank holding company. We recently received what we believe is an overwhelming shareholder response at our special meeting of shareholders where 89% of Newtek’s shareholders voting at the meeting gave Newtek’s board of directors authorization to discontinue Newtek’s election as a BDC. I have a tremendous appreciation for all of the work our staff has done during the ongoing regulatory application process and to prepare for the closing of the NBNYC acquisition, while simultaneously working tirelessly to deliver above-average results to shareholders during one of the most challenging market environments we have experienced in the last decade. We continue to believe that the required regulatory approvals will be forthcoming within the third quarter of 2022.”
Mr. Sloane further commented, “In a separate press release, issued today, we forecasted our total dividends for the second half of 2022 in a range of $1.00 per share to $1.50 per share, which are expected to be paid by December 31, 2022, and out of taxable income as they always have been paid, subject to Board approval. Newtek has paid a total of $1.40 per share in dividends year to date through June 30, 2022, and we are currently forecasting a full year 2022 dividend of between $2.40 per share and $2.90 per share. We also provided the markets with an illustration of certain financial targets for Newtek for 2023 as a bank holding company, including from an earnings projection and capital-level basis, if we were to receive regulatory approvals and close the acquisition. This illustration can be found on our corporate website at www.newtekone.com in the ‘Investor Relations’ section under ‘Events and Presentations’ and is titled ‘July 2022 Illustration of the NBNYC Acquisition and Conversion of Newtek Business Services Corp. to a Bank Holding Company’. We would like to note that management is even more confident in its decision to acquire a bank and convert to a bank holding company given the change in climate for interest rates, commercial finance, quality spreads, and the hopeful and anticipated targets for capitalization and earnings.”
Mr. Sloane concluded, “Through this new pending structure, in addition to lowering our cost of capital and supporting our overall growth, we believe our ability to deliver superior products as a bank holding company and bank, and satisfy our client’s needs, will be materially enhanced, helping us improve the business prospects of independent business owners through our technology-enabled bank in a significant way. We believe the process of acquiring NBNYC has illuminated how advanced our two-decade-long history of establishing people, processes, and technology is, and may allow us to unlock shareholder value by potentially creating joint ventures with, and licensing our technology to, other market participants and distributing our technology to other financial institutions, including but not limited to community banks, regional banks and credit unions, which we believe could place us in an position to monetize our technological assets and processes. During our earnings conference call we will discuss the NewtekOne DashboardTM, which we will be positioning as “The Newtek AdvantageTM”, which we believe will allow us to offer our future banking clientele the relationships, analytics, software, and transactional capability that other banks simply do not offer. We will discuss this and our financial and operating results on our earnings conference call tomorrow morning at 8:30 am ET, along with what we believe are a plethora of opportunities ahead for our organization.”
Second Quarter 2022 Conference Call and Webcast
A conference call to discuss second quarter 2022 results will be hosted by Barry Sloane, President, Chairman and Chief Executive Officer, and Nicholas Leger, Chief Accounting Officer, tomorrow, Thursday, August 4, 2022 at 8:30 a.m. ET.
Please note, to attend the conference call or webcast, participants should register online at http://investor.newtekbusinessservices.com/events-and-presentations. To receive a dial-in number, participants are requested to register one day in advance or 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 Newtek’s website at http://investor.newtekbusinessservices.com/events-and-presentations. A replay of the call with the corresponding presentation will be available on Newtek’s website shortly following the live presentation and will be available for a period of 90 days.
1Use of Non-GAAP Financial Measures - Newtek Business Services Corp. and Subsidiaries
In evaluating its business, Newtek considers and uses ANII as a measure of its operating performance. ANII includes short-term capital gains from the sale of the guaranteed portions of SBA 7(a) loans and conventional loans, and beginning in 2016, capital gain distributions from controlled portfolio companies, which are reoccurring events. The Company defines ANII as net investment income (loss) plus net realized gains recognized from the sale of guaranteed portions of SBA 7(a) loan investments, less realized losses on non-affiliate investments, plus the net realized gains on controlled investments, plus or minus the change in fair value of contingent consideration liabilities, plus loss on extinguishment of debt, plus or minus an adjustment for gains or losses on derivative transactions.
We do not designate derivatives as hedges to qualify for hedge accounting and therefore any net payments under, or fluctuations in the fair value of, our derivatives are recognized currently in our GAAP income statement. However, fluctuations in the fair value of the related assets are not included in our income statement. We consider the gain or loss on our hedging positions related to assets that we still own as of the reporting date to be “open hedging positions.” While recognized for GAAP purposes, we exclude the results on the hedges from ANII until the related asset is sold and/or the hedge position is “closed,” whereupon they would then be included in ANII in that period. These are reflected as “adjustment for realized gain/(loss) on derivatives” for purposes of computing ANII for the period. Management believes that excluding these specifically identified gains and losses associated with the open hedging positions adjusts for timing differences between when we recognize changes in the fair values of our assets and changes in the fair value of the derivatives used to hedge such assets.
The term ANII is not defined under U.S. generally accepted accounting principles, or U.S. GAAP, and is not a measure of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. ANII has limitations as an analytical tool and, when assessing the Company’s operating performance, investors should not consider ANII in isolation, or as a substitute for net investment income, or other consolidated income statement data prepared in accordance with U.S. GAAP. Among other things, ANII does not reflect the Company’s actual cash expenditures. Other companies may calculate similar measures differently than Newtek, limiting their usefulness as comparative tools. The Company compensates for these limitations by relying primarily on its GAAP results supplemented by ANII. Reconciliation tables showing the adjustments made to net investment income to determine NII are attached to this press release.
2 Note Regarding Dividend Payments
Amount and timing of dividends, if any, remain subject to the discretion of the Company's Board of Directors. The Company's Board of Directors expects that it will maintain its status as a BDC and regulated investment company ("RIC") in the near term, and therefore expects to maintain a dividend policy with the objective of making quarterly distributions in an amount that approximates 90 - 100% of the Company's annual taxable income. The determination of the tax attributes of the Company's distributions is made annually as of the end of the Company's fiscal year based upon its taxable income for the full year and distributions paid for the full year.
Newtek Business Services Corp., Your Business Solutions Company®, is an internally managed BDC, which along with its controlled portfolio companies, provides a wide range of business and financial solutions under the Newtek® brand to the small- and medium-sized business (“SMB”) market. Since 1999, Newtek 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.
Newtek’s and its portfolio companies’ products and services include: 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® and Your Business Solutions Company®, are registered trademarks of Newtek Business Services Corp.
Note Regarding Forward Looking Statements
This press release contains certain forward-looking statements. Words such as “believes,” “intends,” “expects,” “projects,” “anticipates,” “forecasts,” “goal” and “future” or similar expressions are intended to identify forward-looking statements. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Such risks and uncertainties include, among others, include our ability to close the pending acquisition of the National Bank of New York City (the “Transaction”), obtain required regulatory approvals for the pending Transaction, the timing of the closing of the Transaction, the timing of the Company’s discontinuance from regulation as a BDC under the 1940 Act, projections concerning or considering the pending Transaction, the timing of our our ability to originate new investments, achieve certain margins and levels of profitability, the availability of additional capital and the ability to maintain certain debt to asset ratios, intensified competition, operating problems and their impact on revenues and profit margins, anticipated future business strategies and financial performance, anticipated future number of customers, business prospects, legislative developments and similar matters. Risk factors, cautionary statements and other conditions, which could cause Newtek’s actual results to differ from management’s current expectations, are contained in Newtek’s filings with the Securities and Exchange Commission and available through http://www.sec.gov/. Newtek cautions you that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected or implied in these statements.
SOURCE: Newtek Business Services Corp.
Investor Relations & Public Relations
Contact: Jayne Cavuoto
Telephone: (212) 273-8179 / jcavuoto@newtekone.com
NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(In Thousands, except for Per Share Data)
June 30, 2022 December 31, 2021
ASSETS (Unaudited)
Investments, at fair value
SBA unguaranteed non-affiliate investments (cost of $470,399 and $431,970, respectively; includes $312,677 and $344,266, respectively, related to securitization trusts) $ 459,981 $ 424,417
SBA guaranteed non-affiliate investments (cost of $26,595 and $65,728, respectively) 28,192 72,970
Controlled investments (cost of $165,273 and $157,289, respectively) 267,924 260,398
Non-control investments (cost of $1,000 and $1,000, respectively) 1,000 1,000
Total investments at fair value 757,097 758,785
Cash 4,165 2,397
Restricted cash 121,861 184,463
Broker receivable 78,721 44,537
Due from related parties 841 4,395
Servicing assets, at fair value 31,820 28,008
Right of use assets 6,695 7,310
Other assets 25,097 26,666
Total assets $ 1,026,297 $ 1,056,561
LIABILITIES AND NET ASSETS
Liabilities:
Bank notes payable $ 127,414 $ 50,000
2024 Notes (par: $38,250 and $38,250 as of June 30, 2022 and December 31, 2021) 37,790 37,679
2025 6.85% Notes (par: $0 and $15,000 as of June 30, 2022 and December 31, 2021) — 14,545
2025 5.00% Notes (par: $30,000 and $0 as of June 30, 2022 and December 31, 2021) 29,187 —
2026 Notes (par: $115,000 and $115,000 as of June 30, 2022 and December 31, 2021) 112,487 112,128
Notes payable - Securitization trusts (par: $207,582 and $249,750 as of June 30, 2022 and December 31, 2021) 204,690 246,250
Notes payable - related parties 200 11,450
Due to related parties 855 1,490
Lease liabilities 8,323 9,056
Deferred tax liabilities 12,793 12,733
Due to participants 83,050 146,225
Derivative instruments — 183
Accounts payable, accrued expenses and other liabilities 14,976 10,935
Total liabilities 631,765 652,674
Commitment and contingencies
Net assets:
Preferred stock (par value $0.02 per share; authorized 1,000 shares, no shares issued and outstanding) — —
Common stock (par value $0.02 per share; authorized 200,000 shares, 24,187 and 24,159 issued and outstanding, respectively) 480 483
Additional paid-in capital 368,934 367,663
Accumulated undistributed earnings 25,118 35,741
Total net assets 394,532 403,887
Total liabilities and net assets $ 1,026,297 $ 1,056,561
Net asset value per common share $ 16.31 $ 16.72
NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In Thousands, except for Per Share Data)
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Investment income
From non-affiliate investments:
Interest income - PPP loans $ — $ 25,512 $ — $ 49,720
Interest income - SBA 7(a) loans 8,032 6,248 15,111 12,197
Servicing income 3,175 2,787 6,356 5,527
Other income 2,368 1,269 3,947 2,383
Total investment income from non-affiliate investments 13,575 35,816 25,414 69,827
From non-control investments:
Interest income — 124 — 248
Dividend income 21 21 43 47
Total investment income from non-control investments 21 145 43 295
From controlled investments:
Interest income 670 576 1,334 1,109
Dividend income 4,960 51 12,784 51
Total investment income from controlled investments 5,630 627 14,118 1,160
Total investment income 19,226 36,588 39,575 71,282
Expenses:
Salaries and benefits 4,499 5,926 9,608 10,376
Interest 5,828 4,968 10,495 10,040
Depreciation and amortization 60 79 123 164
Professional fees 1,512 859 2,813 2,047
Origination and loan processing 1,882 2,998 4,336 5,969
Origination and loan processing - related party 5,239 4,510 9,268 7,653
Loss on extinguishment of debt 417 — 417 955
Other general and administrative costs 2,043 1,706 3,796 3,341
Total expenses 21,480 21,046 40,856 40,545
Net investment income (loss) (2,254 ) 15,542 (1,281 ) 30,737
Net realized and unrealized gains (losses):
Net realized gain on non-affiliate investments - SBA 7(a) loans 19,891 11,414 35,186 18,807
Net realized gain on derivative transactions — — 445 —
Net unrealized appreciation (depreciation) on SBA guaranteed non-affiliate investments (4,917 ) (1,983 ) (5,645 ) 2,410
Net unrealized appreciation (depreciation) on SBA unguaranteed non-affiliate investments (872 ) 198 (2,862 ) 1,585
Net unrealized appreciation (depreciation) on controlled investments 1,566 (7,920 ) (458 ) (5,545 )
Change in deferred taxes 886 1,356 (57 ) 723
Net unrealized appreciation (depreciation) on non-control investments — (3 ) — 524
Net unrealized appreciation (depreciation) on derivative transactions — (37 ) 183 (37 )
Net unrealized depreciation on servicing assets (781 ) (1,193 ) (2,340 ) (1,706 )
Net realized and unrealized gains $ 15,773 $ 1,832 $ 24,452 $ 16,761
Net increase in net assets resulting from operations $ 13,519 $ 17,374 $ 23,171 $ 47,498
Net increase in net assets resulting from operations per share $ 0.56 $ 0.77 $ 0.96 $ 2.12
Net investment income (loss) per share $ (0.09 ) $ 0.69 $ (0.05 ) $ 1.37
Dividends and distributions declared per common share $ 0.75 $ 0.70 $ 1.40 $ 1.20
Weighted average number of shares outstanding 24,157 22,524 24,156 22,431
NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES-
ADJUSTED NET INVESTMENT INCOME RECONCILIATION:
Six months ended Six months ended
(in thousands, except per share amounts) June 30, 2022 Per share June 30, 2021 Per share
Net investment income (loss) $ (1,281 ) $ (0.05 ) $ 30,737 $ 1.37
Net realized gain on non-affiliate investments - SBA 7(a) loans 35,186 1.46 18,807 0.84
Adjustment for realized gain on derivatives (1) 1,010 0.04 — —
Loss on debt extinguishment 417 0.02 955 0.04
Adjusted Net investment income $ 35,332 $ 1.46 $ 50,499 $ 2.25
Note: Amounts may not foot due to rounding
(1) The following is a reconciliation of GAAP net realized gain/(loss) on derivative transactions to our adjustment for realized gain/(loss) on derivatives on closed transactions presented in the computation of ANII in the preceding tables:
Six months ended Six months ended
(in thousands, except per share amounts) June 30, 2022 Per share June 30, 2021 Per share
Net realized gain on derivatives $ 445 $ 0.02 $ — $ —
Hedging realized adjustment on hedging positions closed during current period 565 0.02 — —
Adjustment for realized gain on derivatives $ 1,010 $ 0.04 $ — $ —
Note: Amounts may not foot due to rounding
NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES-
ADJUSTED NET INVESTMENT INCOME RECONCILIATION:
Three months ended Three months ended
(in thousands, except per share amounts) June 30, 2022 Per share June 30, 2021 Per share
Net investment income (loss) (2,254 ) (0.09 ) $ 15,542 $ 0.69
Net realized gain on non-affiliate investments - SBA 7(a) loans 19,891 0.82 11,414 0.51
Loss on debt extinguishment 417 0.02 — —
Adjusted Net investment income $ 18,054 $ 0.75 $ 26,956 $ 1.20
Note: Amounts may not foot due to rounding
NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
DEBT-TO-EQUITY RATIO - ACTUAL AT JUNE 30, 2022
(in thousands):
Actual Debt-to-Equity Ratio at June 30, 2022
Total senior debt $ 518,446
Total equity $ 394,532
Debt-to-equity ratio - actual 1.31x
NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
DEBT-TO-EQUITY RATIO - PROFORMA AT JUNE 30, 2022
(in thousands):
Broker receivable, including premium income receivable $ 78,721
Less: realized gain on sale included in broker receivable (6,589 )
Broker receivable 72,132
90% advance rate on SBA guaranteed non-affiliate portions of loans sold, not settled $ 64,919
Proforma debt adjustments at June 30, 2022:
Total senior debt $ 518,446
Proforma adjustment for broker receivable (64,919 )
Total proforma debt $ 453,527
Proforma Debt-to-Equity ratio at June 30, 2022:
Total proforma debt $ 453,527
Total equity $ 394,532
Debt-to-equity ratio - proforma 1.15x
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abrooklyn
3 years ago
Newtek Business Services Corp. Reports Third Quarter 2021 Financial Results
Source: GlobeNewswire Inc.
Newtek Business Services Corp. (“Newtek” or the “Company”) (Nasdaq: NEWT), an internally managed business development company (“BDC”), announced today its financial and operating results for the three and nine months ended September 30, 2021.
Third Quarter 2021 Financial Highlights
Total investment income of $12.4 million for the three months ended September 30, 2021; a decrease of 16.7% compared to total investment income of $14.9 million for the three months ended September 30, 2020.
Net investment income/(loss) of $(6.7) million, or $(0.30) per share, for the three months ended September 30, 2021; a decrease of $(0.38) per share compared to net investment income of $1.7 million, or $0.08 per share, for the three months ended September 30, 2020.
Adjusted net investment income (“ANII”)1 of $12.6 million, or $0.56 per share, for the three months ended September 30, 2021; an increase of 1300.0%, on a per share basis, compared to ANII of $0.9 million, or $0.04 per share, for the three months ended September 30, 2020.
Debt-to-equity ratio of 1.37x at September 30, 2021; proforma debt-to-equity ratio was 1.24x after taking into account the sales of government-guaranteed portions of SBA 7(a) loans prior to September 30, 2021, which sales settled subsequent to the balance sheet date.
Total investment portfolio increased by 11.7% to $712.5 million at September 30, 2021, from $637.6 million at September 30, 2020.
Net asset value (“NAV”) of $366.0 million, or $16.23 per share, at September 30, 2021; an increase of 5.0%, on a per share basis, compared to NAV of $15.45 per share at December 31, 2020.
On August 2, 2021, the Company announced that it entered into an agreement to acquire National Bank of New York City (“NBNYC”), a nationally chartered bank, subject to certain regulatory and shareholder approvals.
Nine Months Ended September 30, 2021 Financial Highlights
Total investment income of $83.7 million for the nine months ended September 30, 2021; an increase of 8.1% over total investment income of $77.4 million for the nine months ended September 30, 2020.
Net investment income of $24.0 million, or $1.07 per share, for the nine months ended September 30, 2021, which represents a 28.2% decrease, on a per share basis, compared to net investment income of $31.1 million, or $1.49 per share, for the nine months ended September 30, 2020.
ANII of $63.1 million, or $2.81 per share, for the nine months ended September 30, 2021; an increase of 74.5%, on a per share basis, compared to ANII of $33.8 million, or $1.61 per share, for the nine months ended September 30, 2020.
2021 Dividend Payments & 2022 Forecast
On October 20, 2021, the Company's board of directors declared a fourth quarter 2021 cash dividend of $1.05 per share payable on December 30, 2021 to shareholders of record as of December 20, 2021.
The payment of the fourth quarter 2021 dividend would represent a 123.4% increase over the fourth quarter 2020 dividend of $0.47 per share.
With the payment of the fourth quarter 2021 dividend, the Company will have paid $3.15 per share in dividends in 2021, which would represent a 53.7% increase over dividends paid in 2020.
The Company forecasts a first quarter 2022 dividend of $0.652 per share.
On September 30, 2021, the Company paid a third quarter 2021 cash dividend of $0.90 per share to shareholders of record as of September 20, 2021, which represented a 55.2% increase over the third quarter 2020 dividend of $0.58 per share.
Lending Highlights
Newtek Small Business Finance, LLC (“NSBF”) funded $163.9 million of SBA 7(a) loans during the three months ended September 30, 2021, a 1160.8% increase over the $13.0 million of SBA 7(a) loans funded for the three months ended September 30, 2020, and an increase of 43.4% over the $114.3 million of SBA 7(a) loans for the three months ended September 30, 2019.
NSBF funded $362.6 million of SBA 7(a) loans during the nine months ended September 30, 2021, an increase of 336.3% over $83.1 million of SBA 7(a) loans funded for the nine months ended September 30, 2020, and an increase of 8.3% over $334.7 million of SBA 7(a) loans during the nine months ended September 30, 2019.
NSBF increased the lower end of its full year 2021 SBA 7(a) loan funding forecast range, and updated the forecast range to between $560 million to $600 million.
Newtek Business Lending ("NBL"), the Company's wholly owned portfolio company, funded and/or closed $100.1 million SBA 504 loans during the nine months ended September 30, 2021, compared to $21.8 million SBA 504 loans during the nine months ended September 30, 2020.
NBL forecasts closing and/or funding approximately $125 million to $150 million SBA 504 loans for the full year 2021, which would represent an increase over $87.2 million of closed and/or funded SBA 504 loans in 2020, which would represent an 57.7% increase over the midpoint of the 2021 forecasted range.
NSBF funded a total of $1.9 billion PPP loans from 2020 through the nine months ended September 30, 2021.
Barry Sloane, Chairman, President and Chief Executive Officer said, “We are extremely pleased to report our third quarter 2021 financial results. We believe we are emerging from the pandemic with momentum from our core lending operations due to technological efficiencies in lending and a robust pipeline of opportunities brought to us by our NewTracker(R) referral system. We are encouraged by the upward trajectory of our business model, and we look forward to further progress in upcoming quarters. We want to note that we do not believe that the year-over-year comparisons of loan origination volumes of 2021 to 2020 are as meaningful due to the pandemic effects on our lending platforms in 2020. As a result, we are providing the loan origination comparisons between 2021 and 2019, which was a pandemic-free business environment, and which we feel provides a more meaningful depiction of the growth of our core lending platform during this period. During tomorrow's conference call we will discuss the growth in our SBA 7(a) lending pipeline, third quarter 2021 SBA 7(a) loan fundings, and loans approved pending closing in the month of October 2021, as well as fourth quarter 2021 projected loan fundings. In addition, we plan to discuss our ability to project growth and higher-trending results in 2022. Our conference call presentation will be available this afternoon in advance of our call and can be found through the following link Newtek Third Quarter 2021 Earnings Presentation. We recently declared our fourth quarter 2021 dividend of $1.05 per share payable on December 30, 2021. With the payment of the fourth quarter 2021 dividend, the Company will have paid $3.15 per share in dividends in 2021, which would represent a 53.7% increase over dividends paid in 2020. Additionally, we are reconfirming our forecasted 2021 full year 2021 NII of $0.80 per share and ANII of $3.40 per share. We believe these metrics underscore our success in 2021.”
Mr. Sloane continued, “We believe that our level of SBA 7(a) loan fundings of $163.9 million in the third quarter of 2021, compared to $13.0 million and $114.3 million of SBA 7(a) loan fundings, in the third quarters of 2020 and 2019, respectively, demonstrates that one of our core lending products and programs has strong momentum going forward. The 43.4% increase in SBA 7(a) loan fundings in the third quarter of 2021, compared to the third quarter of 2019, demonstrates our efforts to rebuild our SBA 7(a) loan pipeline from 2020 levels, which were materially impacted by the pandemic and resulting national shutdowns. In addition, we are comfortable with the upper portion of our previously forecasted range for 2021 SBA 7(a) loan fundings and have increased the lower band, and currently expect to fund between $560 million and $600 million of SBA 7(a) loans in 2021. In addition, NBL is forecasting a record amount of SBA 504 fundings and/or closings of between $125 and $150 million in 2021. For the nine months ended September 30, 2021, NBL has closed $100.1 million of SBA 504 loans, compared to $21.8 million and $26.3 million of SBA 504 loans during the same periods in 2020 and 2019, respectively. Our non-conforming conventional loan program has experienced a slow start, however we remain confident in the joint venture business model of originating non-conforming commercial loans and issuing securitized financing as part of our business plan. The Company will address its options to refinance more expensive debt and lower our cost of capital.during tomorrow's conference call.”
Mr. Sloane concluded, “Our portfolio companies in payment processing and technology solutions continue to track well, delivering non-credit related reoccurring income streams. We forecast that our payment processing and technology solutions portfolio companies will generate previously forecasted 2021 EBITDA. We look forward to a more detailed discussion of our financial results and expectations during our third quarter 2021 earnings conference call scheduled for tomorrow morning at 8:30 am EST.”
Third Quarter 2021 Conference Call and Webcast
A conference call to discuss third quarter 2021 results will be hosted by Barry Sloane, President, Chairman and Chief Executive Officer, and Nicholas Leger, Chief Accounting Officer, tomorrow, Tuesday, November 9, 2021 at 8:30 a.m. ET. The live conference call can be accessed by dialing (877) 303-6993 or (760) 666-3611.
In addition, a live audio webcast of the call with the corresponding presentation will be available in the ‘Events & Presentations’ section of the Investor Relations portion of Newtek’s website at
http://investor.newtekbusinessservices.com/events-and-presentations. A replay of the webcast with the corresponding presentation will be available on Newtek’s website shortly following the live presentation and will remain available for 90 days.
1Use of Non-GAAP Financial Measures - Newtek Business Services Corp. and Subsidiaries
In evaluating its business, Newtek considers and uses ANII as a measure of its operating performance. ANII includes short-term capital gains from the sale of the guaranteed portions of SBA 7(a) loans and conventional loans, and beginning in 2016, capital gain distributions from controlled portfolio companies, which are reoccurring events. The Company defines ANII as Net investment income (loss) plus Net realized gains recognized from the sale of guaranteed portions of SBA 7(a) loan investments, less realized losses on non-affiliate investments, plus the net realized gains on controlled investments, plus or minus the change in fair value of contingent consideration liabilities, plus loss on extinguishment of debt, plus or minus an adjustment for gains or losses on derivative transactions.
We do not designate derivatives as hedges to qualify for hedge accounting and therefore any net payments under, or fluctuations in the fair value of, our derivatives are recognized currently in our GAAP income statement. However, fluctuations in the fair value of the related assets are not included in our income statement. We consider the gain or loss on our hedging positions related to assets that we still own as of the reporting date to be “open hedging positions.” While recognized for GAAP purposes, we exclude the results on the hedges from ANII until the related asset is sold and/or the hedge position is “closed,” whereupon they would then be included in ANII in that period. These are reflected as “Adjustment for realized gain/(loss) on derivatives” for purposes of computing ANII for the period. We believe that excluding these specifically identified gains and losses associated with the open hedging positions adjusts for timing differences between when we recognize changes in the fair values of our assets and changes in the fair value of the derivatives used to hedge such assets.
The term ANII is not defined under U.S. generally accepted accounting principles, or U.S. GAAP, and is not a measure of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. ANII has limitations as an analytical tool and, when assessing the Company’s operating performance, investors should not consider ANII in isolation, or as a substitute for net investment income, or other consolidated income statement data prepared in accordance with U.S. GAAP. Among other things, ANII does not reflect the Company’s actual cash expenditures. Other companies may calculate similar measures differently than Newtek, limiting their usefulness as comparative tools. The Company compensates for these limitations by relying primarily on its GAAP results supplemented by ANII.
2 Note Regarding Dividend Payments
Amount and timing of dividends, if any, remain subject to the discretion of the Company's Board of Directors. The Company's Board of Directors expects to maintain a dividend policy with the objective of making quarterly distributions in an amount that approximates 90 - 100% of the Company's annual taxable income. The determination of the tax attributes of the Company's distributions is made annually as of the end of the Company's fiscal year based upon its taxable income for the full year and distributions paid for the full year.
Note Regarding PPP Income
The Company's financial results for 2020 and the nine months ended September 30, 2021, includes income generated from NSBF's origination of loans under the Paycheck Protection Program (PPP), which ended during the third quarter of 2021, and should not be viewed as recurring.
Newtek Business Services Corp., Your Business Solutions Company®, is an internally managed BDC, which along with its controlled portfolio companies, provides a wide range of business and financial solutions under the Newtek® brand to the small- and medium-sized business (“SMB”) market. Since 1999, Newtek 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.
Newtek’s and its portfolio companies’ products and services include: 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® and Your Business Solutions Company®, are registered trademarks of Newtek Business Services Corp.
Note Regarding Forward Looking Statements
This press release contains certain forward-looking statements. Words such as “believes,” “intends,” “expects,” “projects,” “anticipates,” “forecasts,” “goal” and “future” or similar expressions are intended to identify forward-looking statements. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Such risks and uncertainties include, among others, intensified competition, operating problems and their impact on revenues and profit margins, anticipated future business strategies and financial performance, anticipated future number of customers, business prospects, legislative developments and similar matters. Risk factors, cautionary statements and other conditions, which could cause Newtek’s actual results to differ from management’s current expectations, are contained in Newtek’s filings with the Securities and Exchange Commission and available through http://www.sec.gov/. Newtek cautions you that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected or implied in these statements.
SOURCE: Newtek Business Services Corp.
Investor Relations & Public Relations
Contact: Jayne Cavuoto
Telephone: (212) 273-8179 / jcavuoto@newtekone.com
NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(In Thousands, except for Per Share Data)
September 30, 2021 December 31, 2020
ASSETS (Unaudited)
Investments, at fair value
SBA unguaranteed non-affiliate investments (cost of $416,652 and $420,400, respectively; includes $276,186 and $312,649, respectively, related to securitization trusts) $ 406,581 $ 407,748
SBA guaranteed non-affiliate investments (cost of $32,646 and $16,964, respectively) 36,041 17,822
Controlled investments (cost of $160,495 and $138,891, respectively) 262,916 239,171
Non-control investments (cost of $6,400 and $6,447, respectively) 6,921 6,447
Total investments at fair value 712,459 671,188
Cash 20,193 2,073
Restricted cash 182,913 49,352
Broker receivable 60,950 52,730
Due from related parties 5,768 6,112
Servicing assets, at fair value 28,899 26,061
Right of use assets 7,611 6,933
Derivative instruments 304 —
Other assets 24,210 26,530
Total assets $ 1,043,307 $ 840,979
LIABILITIES AND NET ASSETS
Liabilities:
Bank notes payable $ 114,986 $ 86,339
Notes due 2023 (par: $0 and $57,500 as of September 30, 2021 and December 31, 2020) — 56,505
Notes due 2024 (par: $78,250 and $63,250 as of September 30, 2021 and December 31, 2020) 76,993 61,774
Notes due 2025 (par: $15,000 and $5,000 as of September 30, 2021 and December 31, 2020) 14,516 4,735
Notes due 2026 (par: $115,000 and $0 as of September 30, 2021 and December 31, 2020) 111,948 —
Notes payable - Securitization trusts (par: $177,602 and $221,752 as of September 30, 2021 and December 31, 2020) 174,876 218,339
Notes payable - related parties — 24,090
Due to related parties 4,242 2,133
Lease liabilities 9,410 8,697
Deferred tax liabilities 13,526 11,406
Due to participants 146,637 17,885
Accounts payable, accrued expenses and other liabilities 10,152 9,723
Total liabilities 677,286 501,626
Commitment and contingencies
Net assets:
Preferred stock (par value $0.02 per share; authorized 1,000 shares, no shares issued and outstanding) — —
Common stock (par value $0.02 per share; authorized 200,000 shares, 22,559 and 21,970 issued and outstanding, respectively) 451 439
Additional paid-in capital 326,354 316,629
Accumulated undistributed earnings 39,215 22,285
Total net assets 366,020 339,353
Total liabilities and net assets $ 1,043,306 $ 840,979
Net asset value per common share $ 16.23 $ 15.45
NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In Thousands, except for Per Share Data)
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Investment income
From non-affiliate investments:
Interest income - PPP loans $ 269 $ 3,085 $ 49,989 $ 37,742
Interest income - SBA 7(a) loans 7,131 5,871 19,328 19,382
Servicing income 2,819 2,875 8,346 8,367
Other income 1,446 240 3,829 1,449
Total investment income from non-affiliate investments 11,665 12,071 81,492 66,940
From non-control investments:
Interest income 126 107 374 107
Dividend income 23 31 70 71
Total investment income from non-control investments 149 138 444 178
From controlled investments:
Interest income 594 486 1,703 1,423
Dividend income — 2,234 51 8,884
Total investment income from controlled investments 594 2,720 1,754 10,307
Total investment income 12,408 14,929 83,690 77,425
Expenses:
Salaries and benefits 2,351 3,669 12,727 10,856
Interest 5,177 3,939 15,217 13,727
Depreciation and amortization 72 93 236 312
Professional fees 1,418 651 3,465 2,822
Origination and loan processing 4,586 1,120 10,555 5,666
Origination and loan processing - related party 3,177 2,705 10,830 8,438
Change in fair value of contingent consideration liabilities — — — 54
Loss on extinguishment of debt — — 955 —
Other general and administrative costs 2,322 1,082 5,663 4,415
Total expenses 19,103 13,259 59,648 46,290
Net investment income (loss) (6,695 ) 1,670 24,042 31,135
Net realized and unrealized gains (losses):
Net realized gain (loss) on non-affiliate investments - SBA 7(a) loans 19,272 (722 ) 38,079 2,577
Net realized gain (loss) on derivative transactions (268 ) — (268 ) —
Net unrealized appreciation (depreciation) on SBA guaranteed non-affiliate investments 123 (111 ) 2,533 (494 )
Net unrealized appreciation (depreciation) on SBA unguaranteed non-affiliate investments 998 132 2,583 (6,012 )
Net unrealized appreciation (depreciation) on controlled investments 7,305 (285 ) 1,760 (11,156 )
Change in deferred taxes (2,843 ) 70 (2,120 ) 3,010
Net unrealized appreciation (depreciation) on non-control investments (3 ) — 521 —
Net unrealized appreciation on derivative transactions 341 — 304 —
Net unrealized depreciation on servicing assets (1,616 ) (1,207 ) (3,322 ) (1,299 )
Net realized and unrealized gains (losses) $ 23,309 $ (2,123 ) $ 40,070 $ (13,374 )
Net increase (decrease) in net assets resulting from operations $ 16,614 $ (453 ) $ 64,112 $ 17,761
Net increase (decrease) in net assets resulting from operations per share $ 0.74 $ (0.02 ) $ 2.85 $ 0.85
Net investment income (loss) per share $ (0.30 ) $ 0.08 $ 1.07 $ 1.49
Dividends and distributions declared per common share $ 0.90 $ 0.58 $ 2.10 $ 1.58
Weighted average number of shares outstanding 22,541 21,192 22,468 20,942
NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES-
ADJUSTED NET INVESTMENT INCOME RECONCILIATION:
Three months ended Three months ended
(in thousands, except per share amounts) September 30, 2021 Per share September 30, 2020 Per share
Net investment income (loss) $ (6,695 ) (0.30 ) $ 1,670 0.08
Net realized gain (loss) on non-affiliate investments - SBA 7(a) loans 19,272 0.85 (722 ) (0.03 )
Adjustment for realized gain/(loss) on derivatives (1) (7 ) 0.00 — —
Adjusted Net investment income $ 12,570 $ 0.56 $ 948 $ 0.04
Nine months ended Nine months ended
(in thousands, except per share amounts) September 30, 2021 Per share September 30, 2020 Per share
Net investment income (loss) $ 24,042 $ 1.07 $ 31,135 $ 1.49
Net realized gain on non-affiliate investments - SBA 7(a) loans 38,079 1.69 2,577 0.12
Adjustment for realized gain/(loss) on derivatives (1) (7 ) 0.00 — —
Change in fair value of contingent consideration liabilities — — 54 0.00
Loss on debt extinguishment 955 0.04 — —
Adjusted Net investment income $ 63,069 $ 2.81 $ 33,766 $ 1.61
Note: Amounts may not foot due to rounding
(1) The following is a reconciliation of GAAP net realized gain/(loss) on derivative transactions to our adjustment for realized gain/(loss) on derivatives on closed transactions presented in the computation of ANII in the preceding tables:
Three months ended Three months ended
(in thousands, except per share amounts) September 30, 2021 Per share September 30, 2020 Per share
Net realized gain/(loss) on derivatives $ (268 ) $ (0.01 ) $ — $ —
Hedging realized result on open hedging positions 261 0.01 — —
Adjustment for realized gain/(loss) on derivatives $ (7 ) $ 0.00 $ — $ —
Nine months ended Nine months ended
(in thousands, except per share amounts) September 30, 2021 Per share September 30, 2020 Per share
Net realized gain/(loss) on derivatives $ (268 ) $ (0.01 ) $ — $ —
Hedging realized result on open hedging positions 261 0.01 — —
Adjustment for realized gain/(loss) on derivatives $ (7 ) $ 0.00 $ — $ —
NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
DEBT-TO-EQUITY RATIO - ACTUAL AT SEPTEMBER 30, 2021
(in thousands):
Actual Debt-to-Equity Ratio at September 30, 2021
Total senior debt $ 500,838
Total equity $ 366,020
Debt-to-equity ratio - actual 1.37
x
NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES
DEBT-TO-EQUITY RATIO - PROFORMA AT SEPTEMBER 30, 2021
(in thousands):
Broker receivable, including premium income receivable $ 60,950
Less: realized gain on sale included in broker receivable (6,836 )
Broker receivable 54,114
90% advance rate on SBA guaranteed non-affiliate portions of loans sold, not settled $ 48,703
Proforma debt adjustments at September 30, 2021:
Total senior debt $ 500,838
Proforma adjustment for broker receivable (48,703 )
Total proforma debt $ 452,135
Proforma Debt-to-Equity ratio at September 30, 2021:
Total proforma debt $ 452,135
Total equity $ 366,020
Debt-to-equity ratio - proforma 1.24x
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