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    NEWT
    Earnings call· Jun 2026(Q2 FY26)

    NewtekOne Q2 FY26 earnings call NEWT

    Aug 6, 2026 Source

    Executive summary

    NewtekOne Q2 FY26 — Strategic Shift Towards Net Interest Income and Digital Banking Growth

    NewtekOne reported a strong quarter with significant growth in tangible book value and bank net interest income, driven by its technology-enabled digital banking model. The company is strategically shifting to hold more loans on its balance sheet to generate stable net interest income, which will lead to a re-evaluation of near-term guidance. This move aims to align its valuation with traditional banks, leveraging its efficient deposit acquisition and risk management capabilities.

    Highlights

    5

    • Tangible book value grew 75.3% over 12 quarters since converting to a technology-enabled financial holding company.

    • Asset growth of 50% with expenses up only 3.6%, demonstrating operating leverage.

    • Bank's net interest income (NII) increased from $16.2 million in Q2 2025 to $25 million in Q2 2026.

    • Non-affiliate deposits increased by $15 million in the quarter, with core consumer deposits climbing by $297 million.

    • Current overcollateralization for the 2026-1 securitization grew by $11 million from $47 million at inception.

    Concerns

    4

    • Guidance for future quarters is being re-evaluated due to a strategic shift towards holding more loans on the balance sheet, potentially impacting near-term headline EPS.

    • Pre-provision net revenue (PPNR) as a percentage of average assets decreased year-over-year from 5.25% in Q2 2025 to 4.22% in Q2 2026.

    • 30 days past due loans increased somewhat, attributed to the newness of the bank's portfolio and climbing the default curve.

    • Net interest margin (NIM) at the holding company contracted due to the shift of operations into the bank and securitization structures.

    Guidance & targets

    2
    CategoryTargetConfidence
    Securitization size
    $300 million to $400 million
    medium materiality
    Medium
    Future earnings guidance update
    Update in 45-60 days
    high materiality
    High

    Segment performance

    1
    SegmentRevenueYoYQoQMargin
    NewTek Bank
    Putting more activity down in the bank is expected to provide much greater efficiencies and value. The bank's NIM is helped by putting more SBA 7A loans on books and the CNI LA business.
    Net interest income Q2 2026: $25 millionNet interest income Q2 2025: $16.2 millionROAA: Extremely attractiveROTCE: Extremely attractiveCost of deposits Q2 2025 to Q2 2026: FlattishCost of deposits Q1 2026 to Q2 2026: DeclinedNIM: Very niceACL to unguaranteed loans ratio: 5.31%ACL to unguaranteed loans ratio (excluding government guarantees): 4.14%
    		————

    Operational metrics

    26
    Total deposits
    $2.2 billionUp from $142 million (14 quarters ago)
    Q2 FY26

    Growth in total deposits since the company's inception as a financial holding company.

    Overcollateralization growth
    $13 million to $14 million
    Since inception

    Growth in overcollateralization for seasoned CNI LA securitizations.

    SBA loans sold to secondary market
    95%
    Historically

    Historical peak percentage of SBA 7A loans sold to the secondary market.

    Return on average assets
    2%Compared very favorably to industry
    Q2 FY26

    Holding company's ROA.

    Asset growth
    50%
    Q2 FY26

    Asset growth rate.

    Expense growth
    3.6%
    Q2 FY26

    Expense growth rate, demonstrating operating leverage.

    Non-affiliate deposits increase
    $15 million
    Q2 FY26

    Increase in non-affiliate deposits during the quarter.

    Core consumer deposits increase
    $297 million
    Q2 FY26

    Increase in core consumer deposits during the quarter, noted for low acquisition costs and stickiness.

    Tangible book value growth
    75.3%
    Last 12 quarters

    Growth in tangible book value per share over 12 quarters.

    Deposit accounts added
    1,471Quarter over quarter
    Q2 FY26

    Number of non-affiliate deposit accounts added.

    Core consumer deposit accounts added
    2,600Quarter over quarter
    Q2 FY26

    Number of core consumer deposit accounts added.

    Total depository accounts
    40,000Combined
    Q2 FY26

    Approximate total number of depository accounts.

    Insured depository accounts
    81%
    Q2 FY26

    Percentage of depository accounts insured under the $250,000 balance.

    Loan to deposit ratio
    90%
    Q2 FY26
    Overcollateralization (2026-1 deal)
    $11 million
    Since inception

    Growth in overcollateralization for the 2026-1 securitization.

    Net interest income
    $25 millionUp from $16.2 million (Q2 FY25)
    Q2 FY26

    Net interest income at the bank, showing significant year-over-year growth.

    Cost of deposits
    FlattishDeclined from Q1 FY26 to Q2 FY26
    Q2 FY25 to Q2 FY26

    Trend in cost of deposits at the bank.

    ACL to unguaranteed loans ratio
    5.31%
    Q2 FY26

    Allowance for Credit Losses ratio to unguaranteed loans.

    Pre-provision net revenue as % of average assets
    4.22%Down from 5.25% (Q2 FY25)
    Q2 FY26

    PPNR as a percentage of average assets, still well ahead of the industry average (below 2%).

    ACL coverage ratio on unguaranteed SBA 7A loans
    8.56%
    Q2 FY26

    ACL coverage ratio specifically for the unguaranteed SBA 7A loan portfolio, reflecting higher loss characteristics.

    Unique business referrals per day
    600-800
    Daily

    Volume of unique business referrals generated daily, primarily through the NewTracker system.

    Uninsured SBA 7A balances as % of portfolio
    42%Down from close to 50%
    Q2 FY26

    Percentage of uninsured SBA 7A balances in the loan portfolio, reflecting diversification efforts.

    Cash at Federal Reserve
    Over $500 million
    Recent days

    Amount of cash held at the Federal Reserve, indicating high liquidity.

    SBA Express loan rate (small loans)
    Prime + 6.5%
    Current

    Interest rate for very small SBA Express loans.

    SBA Express loan rate (up to $500k)
    Prime + 4.5%
    Current

    Interest rate for SBA Express loans up to $500,000.

    Other income from securitization payoffs
    —Increased quarter-over-quarter and year-over-year
    Q2 FY26

    Increase in other income attributed to increased payoffs and paydowns in securitizations, expected to normalize.

    Industry KPIs

    1
    MetricValueDetails
    Capital returns—

    Product announcements

    1
    ProductTypeDetails
    Real-time payments offeringlaunch

    Deals & partnerships

    1
    Payroll solutions businessMerged into the bank

    The payroll solutions business was recently acquired or merged into NewTek Bank National Association.

    Risks & headwinds

    4
    Impact of strategic shift on near-term EPSNext couple of quarters

    Potential lower headline EPS than previous guidance (79-89 cents for Q4)

    Mitigation: Long-term goal of achieving more stable net interest income and higher PE valuations by holding more loans on balance sheet.

    Increased 30 days past due loansQ2 FY26

    Increased somewhat

    Mitigation: Attributed to the newness of the bank's portfolio and expected to flatten as the portfolio matures; maintaining appropriate reserves with strong underwriting and asset mix.

    NIM contraction at holding companyQ2 FY26

    Contracted significantly

    Mitigation: Due to strategic shift of operations and income-generating activities into the bank, where NIM is expanding; securitization interest income now folded into securitizations.

    Higher rates impacting CNI LA loan originationCurrent environment

    Makes it a little harder

    Mitigation: Loans are well underwritten with good debt service coverage and strong guarantors; fit well in the banking environment.

    What to watch in Q3 FY26

    5

    Updated earnings guidance

    Next 45-60 days
    CurrentPrevious Q4 guidance 79-89 cents; currently under re-evaluation
    TargetNew specific guidance for Q4 FY26 and beyond

    Why it matters

    The re-evaluation of guidance due to a strategic shift will clarify the near-term earnings trajectory and management's outlook.

    I think we're going to be looking at, I'm going to say, a 45-day window, give or take, maybe 60. We have to do a lot of calculation. We've shifted a lot of things around.

    Q&A highlights

    8

    Analyst asked for more color on the strategy to hold more guaranteed portions of SBA loans, its near-term impact on guidance (citing previous 79-89 cents for Q4), and longer-term implications.

    Management confirmed the strategic shift to hold more loans for stable net interest income, acknowledging it would likely affect near-term headline EPS and require a re-evaluation of guidance. They aim for a more stable income stream and higher PE valuations, viewing the change as a long-term benefit despite potential short-term top-line impact.

    “Organizations that do not have our ROAA, ROTCE, and business model that is I wouldn't say focused, but drives a lot of gain on sale income, but basically have net interest income and net margins that they view as more long-term and more stable. has entered into our thinking that we're going to continue to do both.”

    asked by Tim Switzer · answered by Unknown Speaker

    2 min read6 chapters

    Detailed Narrative

    01

    Unique Business Model and Technology Advantage

    NewtekOne, founded in 1998, operates a unique technology-oriented business model serving underserved independent business owners across the US. The company leverages AI and digital platforms to exchange and analyze data, reducing friction and increasing speed in lending and account opening, contrasting with traditional high-cost banking infrastructure. This approach allows for efficient client acquisition and service delivery without physical branches, targeting the 36 million SMBs in the US, which represent 43% of US GDP.

    02

    Strategic Shift to Net Interest Income

    The company is evolving its strategy to conduct more activities through NewTek Bank National Association, including C&I lending and payroll solutions. This shift is expected to result in less gain-on-sale income and more stable net interest income, leveraging the bank's balance sheet and portfolio. Management believes this will lead to a more stable income stream and potentially higher market valuations, aiming to close the valuation gap with traditional banks.

    03

    Strong Deposit Growth and Efficiency

    NewtekOne has demonstrated significant success in digital deposit gathering, growing total deposits from $142 million to $2.2 billion in 14 quarters. Non-affiliate deposits increased by $15 million and core consumer deposits by $297 million in the quarter. The company's low-cost acquisition strategy, high Trustpilot scores, and focus on customer service contribute to strong brand loyalty and efficient deposit growth, with 81% of accounts insured.

    04

    Securitization Performance and Overcollateralization

    The company continues to utilize C&I long amortization loan securitizations, which exhibit strong overcollateralization (OC). For instance, the 2026-1 deal's OC grew by $11 million from its initial $47 million. The 2025-1 and 2024 deals also showed OC growth of $13-14 million. This mechanism drives cash flow to pay down bonds and provides a nice NIM to the bank during the accumulation period for securitization.

    05

    Credit Risk Management and Portfolio Diversification

    NewtekOne emphasizes managing, not avoiding, credit risk, with an Allowance for Credit Losses (ACL) to unguaranteed loans ratio of 5.31% (4.14% excluding government guarantees). While 30 days past due loans increased due to the portfolio's newness, the company is diversifying its book by adding higher-quality C&I LA and CRE loans, reducing uninsured SBA 7A balances from nearly 50% to about 42%.

    06

    Real-Time Payments and Customer Portal

    The company has rolled out real-time payments, enabling businesses to move money quicker and cheaper. Its 'NewTek Advantage' business portal offers clients integrated tools for payroll, credit card batch management, and line of credit access, providing analytics and information to manage their businesses efficiently. The 'NewTracker' system tracks all referrals and opportunities across various services, handling 600-800 unique business referrals daily.

    AI-generated summary of the company’s earnings call. Not investment advice.