8-K: Newtek Bank Surpasses $1 Billion in Deposits, Achieves $884 Million Growth in Two Years

Newtek Bank, a subsidiary of NewtekOne, Inc., has reached over $1 billion in total deposits, marking a significant growth of $884 million since its acquisition two years ago.

Summary

• Newtek Bank, a technology-enabled banking subsidiary of NewtekOne, Inc., has reached $1.03 billion in total deposits as of December 31, 2024.
• This represents a 97% increase in total deposits compared to the end of 2023.
• Since its acquisition in January 2023, the bank has grown its total deposits by $884 million.
• Insured deposits make up approximately 78% of the total deposits.
• Core business deposits reached $216 million, a 96% increase year-over-year.
• The bank added 950 new business checking accounts in the fourth quarter of 2024.
• Newtek Bank's deposit base has grown to approximately 15,000 accounts, up from 1,400 at the time of acquisition.
• The bank's digital account opening process and 24/7 U.S.-based customer service have been key to its growth.
• Commercial deposits account for 28% of total deposits, while consumer deposits make up 72%.

Sentiment

Score: 9

Explanation: The document conveys a very positive sentiment due to the significant deposit growth, low efficiency ratio, and successful transition to a technology-enabled bank. The management's comments are also very optimistic about the future.

Positives

• Newtek Bank has demonstrated significant deposit growth, exceeding $1 billion in total deposits.
• The bank's digital account opening process and 24/7 customer service have contributed to its success.
• The bank has a low efficiency ratio, indicating effective cost management.
• The bank has successfully transitioned from a traditional community bank to a technology-enabled bank.
• The bank has a growing base of business checking accounts, which are more transactional and lower in cost.
• The bank's integrated platform offers multiple business and financial solutions to its clients.

Negatives

• The bank's commercial deposits are currently a smaller portion of the total deposits at 28%, with a goal to increase this percentage.
• The bank's initial two years of operation required significant investment in infrastructure, policies, and staff.

Risks

• The bank's deposit figures are preliminary estimates and subject to change.
• The bank's future success depends on its ability to continue growing its commercial deposit franchise.
• The bank faces competition from other financial institutions offering similar services.
• The bank's reliance on technology and digital processes could expose it to cybersecurity risks.

Future Outlook

Newtek Bank plans to continue increasing deposits from affiliates and referral partners, leveraging its technology and competitive product offerings. The bank aims to grow its commercial deposit franchise and integrate these accounts into its lending, payroll, and payments processing platforms. They also plan to solicit their existing customer base for deposits and loans in 2025.

Management Comments

• Barry Sloane, President, Chairman and CEO, stated that they are excited about the tremendous growth in deposits.
• Mr. Sloane highlighted the bank's industry-leading low efficiency ratio.
• Mr. Sloane emphasized the bank's technological advantages and innovative processes.
• Mr. Sloane noted the importance of growing transaction-based deposits to reduce the cost of funds.
• Mr. Sloane expressed excitement about the bank's growth and prospects moving into 2025.

Industry Context

This announcement highlights the growing trend of technology-enabled banking and the importance of digital account opening processes. Newtek Bank's success in attracting deposits through digital channels positions it well in the competitive banking landscape. The focus on integrating banking services with other business solutions is also a key trend in the industry.

Comparison to Industry Standards

• Newtek Bank's 97% year-over-year deposit growth significantly exceeds the average growth rate of traditional banks, which typically see single-digit growth.
• The bank's efficiency ratio below 40% is notably lower than the industry average, which often ranges between 50% and 60%.
• While specific comparisons to other digital banks are not provided, the rapid growth and low efficiency ratio suggest that Newtek Bank is performing well against its peers.
• Companies like Ally Bank and Discover Bank are known for their digital banking platforms, but Newtek Bank's focus on small business solutions and integration with other services differentiates it.
• The growth from 1,400 to 15,000 accounts in two years is a strong indicator of successful customer acquisition compared to traditional banks.

Stakeholder Impact

• Shareholders will likely view the significant deposit growth and low efficiency ratio positively.
• Employees may benefit from the company's growth and success.
• Customers will have access to a wider range of business and financial solutions.
• Suppliers and creditors may see increased business opportunities with the company.

Next Steps

• Newtek Bank plans to continue increasing deposits from affiliates and referral partners.
• The bank will focus on growing its commercial deposit franchise.
• The bank will integrate its accounts into its lending, payroll, and payments processing platforms.
• The bank plans to solicit its existing customer base for deposits and loans in 2025.

Key Dates

Keywords

Newtek Bank, deposits, digital banking, business checking, financial technology, core deposits, commercial deposits, consumer deposits, efficiency ratio, NewtekOne