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NewtekOne, Inc. Reports First Quarter 2023 Net Income of $11.7 million, or $0.46 per Basic Share

NewtekOne, Inc.
NewtekOne, Inc.

Reiterated Previously Issued Earnings Forecast for the Full Year 2023 in a Range of $1.70 to $2.00 of Earnings per Share

BOCA RATON, Fla., May 08, 2023 (GLOBE NEWSWIRE) -- 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.

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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 $166.8 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 $224.7 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 SolutionsElectronic Payment ProcessingTechnology Solutions (Cloud Computing, Data Backup, Storage and Retrieval, IT Consulting)eCommerceAccounts Receivable Financing & Inventory FinancingInsurance SolutionsWeb 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. 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


NEWTEKONE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In Thousands, except for Per Share Data)

 

March 31, 2023

 

December 31, 2022

ASSETS

Financial Holding Company Accounting (Unaudited)

 

Investment Company Accounting

Cash and due from banks

$

27,349

 

 

$

53,692

Restricted cash

 

72,599

 

 

 

71,914

Interest bearing deposits in banks

 

97,196

 

 

 

Total cash and cash equivalents

 

197,144

 

 

 

125,606

Debt securities available-for-sale, at fair value

 

32,905

 

 

 

Loans held for sale, at fair value

 

125,639

 

 

 

19,171

Loans held for investment, at fair value

 

532,788

 

 

 

505,268

Loans held for investment, at amortized cost, net of deferred fees and costs

 

166,828

 

 

 

Allowance for credit losses

 

(2,189

)

 

 

Total loans held for investment, at amortized cost, net

 

164,639

 

 

 

Federal Home Loan Bank and Federal Reserve Bank stock

 

1,288

 

 

 

Joint ventures (cost of $23,314 and $23,314), respectively

 

25,022

 

 

 

23,822

Controlled investments (cost of $0 and $131,495), respectively

 

 

 

 

258,417

Non-control investments (cost of $1,360 and $1,360), respectively

 

1,360

 

 

 

1,360

Goodwill and Intangibles

 

28,101

 

 

 

Settlement receivable

 

41,438

 

 

 

Right of use assets

 

7,492

 

 

 

6,484

Deferred tax asset

 

8,225

 

 

 

Servicing assets

 

33,351

 

 

 

30,268

Other assets

 

50,350

 

 

 

28,506

Total assets

$

1,249,742

 

 

$

998,902

 

 

 

 

LIABILITIES AND NET ASSETS

 

 

 

 

 

 

 

Liabilities:

 

 

 

Deposits:

 

 

 

Noninterest-bearing

$

22,878

 

 

$

Interest-bearing

 

224,696

 

 

 

Total deposits

 

247,574

 

 

 

Borrowings

 

697,395

 

 

 

515,076

Derivative instruments

 

624

 

 

 

Lease liabilities

 

9,144

 

 

 

7,973

Deferred tax liabilities

 

3,519

 

 

 

19,194

Due to participants

 

28,188

 

 

 

35,627

Notes payable - related parties

 

 

 

 

24,250

Accounts payable, accrued expenses and other liabilities

 

43,980

 

 

 

21,424

Total liabilities

$

1,030,424

 

 

$

623,544

 

 

 

 

Shareholders' Equity:

 

 

 

Preferred stock (par value $0.02 per share; authorized 20,000 shares, 20,000 shares issued and no shares outstanding)

 

19,738

 

 

 

Common stock (par value $0.02 per share; authorized 200,000 shares, 24,609 and 24,609 issued and outstanding, respectively)

 

488

 

 

 

492

Additional paid-in capital

 

193,330

 

 

 

354,243

Retained earnings

 

6,313

 

 

 

20,623

Accumulated other comprehensive loss, net of income taxes

 

(79

)

 

 

Total NewtekOne shareholders’ equity

 

219,790

 

 

 

375,358

Non-controlling interest

 

(472

)

 

 

Total shareholders' equity

 

219,318

 

 

 

375,358

Total liabilities and shareholders' equity

$

1,249,742

 

 

$

998,902


 

NEWTEKONE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In Thousands, except for Per Share Data)

 

 

 

Three Months Ended March 31,

 

2023
Financial Holding Company Accounting

 

2022
Investment Company Accounting

Interest income

 

 

 

Loans and fees on loans

$

17,502

 

 

$

7,079

 

Debt securities available-for-sale

 

232

 

 

 

 

Interest from affiliates

 

 

 

 

664

 

Other interest earning assets

 

981

 

 

 

 

Total interest income

 

18,715

 

 

 

7,743

 

Interest expense

 

 

 

Notes and securitizations

 

8,718

 

 

 

4,136

 

Bank and FHLB borrowings

 

3,939

 

 

 

425

 

Notes payable related party

 

 

 

 

106

 

Deposits

 

1,475

 

 

 

 

Total interest expense

 

14,132

 

 

 

4,667

 

Net interest income

 

4,583

 

 

 

3,076

 

Provision for loan credit losses

 

1,318

 

 

 

 

Net interest income after provision for loan credit losses

 

3,265

 

 

 

3,076

 

Noninterest income

 

 

 

Dividend income

 

504

 

 

 

7,846

 

Loan servicing asset revaluation

 

919

 

 

 

(1,559

)

Servicing income

 

4,403

 

 

 

3,181

 

Net gains on sales of loans

 

6,526

 

 

 

15,295

 

Net (loss) gain on derivative transactions

 

(495

)

 

 

628

 

Net gain (loss) on loans accounted for under the fair value option

 

5,905

 

 

 

(2,718

)

Net unrealized appreciation (depreciation) on joint ventures

 

2,002

 

 

 

(2,321

)

Net unrealized appreciation on controlled investments

 

 

 

 

297

 

Technology and IT support income

 

6,709

 

 

 

 

Electronic payment processing income

 

10,328

 

 

 

 

Other noninterest income

 

5,986

 

 

 

1,579

 

Total noninterest income

 

42,787

 

 

 

22,228

 

Noninterest expense

 

 

 

Technology services expense

 

3,803

 

 

 

 

Electronic payment processing expense

 

4,504

 

 

 

 

Salaries and employee benefits expense

 

19,119

 

 

 

5,109

 

Professional services expense

 

3,440

 

 

 

1,301

 

Other loan origination and maintenance expense

 

2,827

 

 

 

6,483

 

Depreciation and amortization

 

873

 

 

 

63

 

Other general and administrative costs

 

4,631

 

 

 

1,753

 

Total noninterest expense

 

39,197

 

 

 

14,709

 

Income before taxes

 

6,855

 

 

 

10,595

 

Income tax (benefit) expense

 

(4,828

)

 

 

943

 

Net income

$

11,683

 

 

$

9,652

 

Less dividends to preferred shareholders

 

(249

)

 

 

 

Net income available to common shareholders

 

11,434

 

 

 

9,652

 

Earnings per share:

 

 

 

Basic

$

0.46

 

 

$

0.40

 

Diluted

$

0.45

 

 

$

0.40