8-K: NewtekOne Achieves Record Loan Closings, Demonstrating Strong Growth

NewtekOne reports a 17.3% sequential increase in total loan closings in Q3 2024 compared to Q2 2024, reaching a record $371.8 million.

Summary

• NewtekOne announced record total loan closings of $371.8 million for the third quarter of 2024, a 17.3% increase compared to the second quarter of 2024.
• SBA 7(a) loan closings reached $245.3 million in Q3 2024, a 6.6% increase over the previous quarter and a 12.5% increase year-over-year.
• The company forecasts $935 million in total SBA 7(a) loan closings for 2024, representing a 14.7% increase over 2023.
• Year-to-date through September 30, 2024, NewtekOne has originated over $1 billion in overall business loans.
• NewtekOne anticipates selling between $650 to $700 million of the government-guaranteed portions of SBA 7(a) loans in 2024.
• Total loan originations at the bank and holding company are expected to be approximately $1.5 billion in 2024.
• The company's 504 loan portfolio of approximately $500 million has not experienced any charge-offs from 2019 through the date of the release.
• The alternative loan program has funded approximately $380 million in loans with only $3.0 million in principal value written off since 2019.

Sentiment

Score: 9

Explanation: The document conveys a very positive sentiment due to the record loan closings, strong growth figures, and management's confidence in the company's performance and future outlook. The low charge-off rates and technology advantages further enhance the positive tone.

Positives

• NewtekOne demonstrated strong loan growth, outperforming many financial institutions.
• The company's technology-enabled customer acquisition and loan processing capabilities are highlighted as a key strength.
• The company's proprietary NewTracker system is considered a valuable asset and is protected by a patent.
• NewtekOne has successfully integrated its lending operations into a regulated bank holding company.
• The company's loan programs are designed to provide economic benefits to businesses in a well-capitalized manner.
• The company anticipates continuing to grow its business by double-digits with high returns on average assets and returns on tangible common equity.
• The company's 504 loan portfolio has not experienced any charge-offs since 2019.
• The alternative loan program has a low write-off rate.

Risks

• The document contains forward-looking statements that are subject to risks and uncertainties.
• Actual results may differ from the forward-looking statements.
• The company's performance is subject to changes in economic and banking environments.

Future Outlook

NewtekOne anticipates continuing to grow its business by double-digits with high returns on average assets and returns on tangible common equity. They expect total loan originations to be approximately $1.5 billion in 2024 and anticipate selling between $650 to $700 million of the government-guaranteed portions of SBA 7(a) loans in 2024.

Management Comments

• Barry Sloane, President, Chairman and CEO, stated that NewtekOne is outperforming competitors in a challenging lending environment.
• Mr. Sloane emphasized the company's ability to capture the best credits quickly and efficiently.
• Mr. Sloane highlighted the company's unique and valuable technology, NewTracker, which is protected by a patent.
• Mr. Sloane noted the successful integration of lending operations into a regulated bank holding company.

Industry Context

The announcement highlights NewtekOne's strong performance in a challenging lending environment where many financial institutions are experiencing limited loan growth. The company's focus on technology and efficient processes appears to be a competitive advantage.

Comparison to Industry Standards

• NewtekOne's 17.3% sequential loan growth is significantly higher than the near-zero loan growth reported by many traditional financial institutions.
• The company's ability to maintain a low charge-off rate in its 504 loan portfolio and alternative loan program is a positive indicator of its underwriting quality.
• The company's focus on SBA lending and its technology-driven approach differentiate it from traditional banks.
• While specific competitor data is not provided, the commentary suggests that NewtekOne is outperforming peers in loan origination and processing.

Stakeholder Impact

• Shareholders are likely to view the strong loan growth and positive outlook favorably.
• Employees may be motivated by the company's success and growth trajectory.
• Customers may benefit from the company's efficient loan processing and diverse financial solutions.
• Suppliers and creditors may view the company as a stable and reliable partner.

Next Steps

• The company will report more details on its third quarter 2024 performance in its upcoming earnings conference call on November 7, 2024 at 8:30 am ET.

Key Dates

Keywords

loan closings, SBA 7(a) loans, loan originations, NewtekOne, financial services, business lending, NewTracker, bank holding company