8-K: NewtekOne Announces Strong Q1 2025 Balance Sheet Metrics and Reaffirms EPS Guidance

NewtekOne reports positive loan and deposit growth for Q1 2025 and reiterates its full-year EPS guidance.

Summary

• NewtekOne, Inc. announced its preliminary loan and deposit metrics for the first quarter of 2025.
• The company originated 580 SBA 7(a) loans totaling $213 million in 1Q25, compared to 489 loans totaling $212 million in 1Q24.
• SBA 7(a) loans held for investment in Newtek Bank stood at approximately $407 million as of March 31, 2025, up 7% from December 31, 2024, and 90% from March 31, 2024.
• NewtekOne projects $1 billion in SBA 7(a) originations for 2025.
• The company originated $41 million of CRE and $23 million of C&I loans in 1Q25.
• CRE and C&I loans HFI totaled $231 million and $51 million, respectively, at March 31, 2025.
• The company expects $225 million growth in CRE and C&I balances in 2025, implying a year-end combined portfolio of roughly $464 million.
• NewtekOne originated $17 million of SBA 504 loans and executed $13 million of SBA 504 loan sales in 1Q25 and anticipates $250 million of SBA 504 loan originations in 2025.
• The company originated $68.5 million of ALP loans in 1Q25 and continues to estimate $500 million of ALP originations in 2025.
• Newtek Bank ended 1Q25 with approximately $1.06 billion in deposits, a 2% sequential increase and an 88% year-over-year increase.
• Business deposits increased 8.9%, core consumer deposit balances grew 2.5%, and wholesale deposits declined 32% on a Q/Q basis.
• The company projects Newtek Bank's deposits to grow by $245 million in 2025.
• NewtekOne reaffirms its 2025 EPS guidance of $2.10-$2.50 per share.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong growth metrics and reaffirmed guidance, indicating a healthy financial position and confident management.

Positives

• Strong growth in SBA 7(a) loans held for investment, indicating increased lending activity.
• Significant year-over-year deposit growth at Newtek Bank, reflecting increased customer confidence.
• Reaffirmation of 2025 EPS guidance, suggesting management's confidence in the company's performance.
• Growth in CRE and C&I loan portfolios adds diversification to Newtek Bank's total loan portfolio.
• The company's technology-enabled platform, NewTracker, generates 600-900 referrals per day at no incremental cost.

Negatives

• Preliminary estimates are subject to change with regulatory filings.
• Wholesale deposits declined 32% on a Q/Q basis.

Risks

• The forward-looking statements are subject to significant risks and uncertainties.
• Actual results may differ materially from those set forth in the forward-looking statements.
• Information regarding loan and deposit metrics consist of preliminary estimates and are subject to change with the Company's filings with regulatory agencies and the filing of the Company's Form 10-Q for the period ended March 31, 2025.

Future Outlook

NewtekOne projects $1 billion in SBA 7(a) originations, $250 million in SBA 504 loan originations, and $500 million in ALP originations for 2025; they also anticipate $225 million growth in CRE and C&I balances and $245 million growth in deposits for 2025, and reaffirm EPS guidance of $2.10-$2.50 per share.

Management Comments

• Barry Sloane, CEO, President and Chairman, said that loan and deposit volumes are tracking at or above projections, and the company remains comfortable with 2025 EPS guidance of $2.10-$2.50 per share.
• Mr. Sloane continued, 'We are encouraged by our ability to continue to originate loans and to grow deposits.'

Industry Context

The announcement highlights NewtekOne's focus on serving independent business owners through a range of financial solutions, including SBA lending, commercial real estate lending, and deposit services; this aligns with the broader trend of financial institutions catering to the specific needs of small and medium-sized enterprises (SMEs).

Comparison to Industry Standards

• NewtekOne's technology-enabled platform and focus on efficiency are differentiating factors compared to traditional banks.
• The company's 2024 efficiency ratio at Newtek Bank of approximately 43% is competitive within the banking industry.
• Comparing NewtekOne's growth rates and profitability metrics to those of other small business lenders and community banks would provide a more comprehensive assessment of its performance relative to industry standards; companies like Live Oak Bancshares and Customers Bancorp could be considered for comparison due to their focus on SBA lending and commercial banking.

Stakeholder Impact

• Shareholders: The positive results and reaffirmed EPS guidance are likely to be viewed favorably by shareholders.
• Employees: The company's growth and success could lead to increased job security and opportunities for advancement.
• Customers: The company's continued focus on providing business and financial solutions benefits independent business owners.
• Suppliers: Increased lending activity and deposit growth could lead to increased business for suppliers.
• Creditors: The company's strong financial performance reduces credit risk for creditors.

Next Steps

• The company will share 1Q25 results with the investment community on May 6.

Key Dates

Keywords

NewtekOne, SBA 7(a) loans, CRE loans, C&I loans, Deposits, EPS guidance, Loan originations, Newtek Bank, Financial results