8-K: NewtekOne Issues 8.500% Series B Preferred Stock

NewtekOne, Inc. has established and commenced a public offering of 2,000,000 depositary shares representing its new 8.500% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series B.

Summary

• NewtekOne, Inc. (NEWT) has established a new series of preferred stock, the 8.500% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series B.
• The company is offering 2,000,000 depositary shares, with each depositary share representing a 1/40th interest in one share of Series B Preferred Stock.
• The Series B Preferred Stock has a liquidation preference of $1,000 per share, equivalent to $25.00 per depositary share.
• Dividends are non-cumulative and payable quarterly in arrears, commencing October 1, 2025.
• The dividend rate is fixed at 8.500% per annum until the First Reset Date of October 1, 2030.
• After the First Reset Date, the dividend rate will reset every five years to the Five-Year Treasury Rate plus a spread of 4.735%.
• The Series B Preferred Stock ranks senior to common stock and other junior securities regarding dividends and liquidation, and on parity with Series A Convertible Preferred Stock.

Sentiment

Score: 7

Explanation: The filing describes a standard corporate finance action – the issuance of preferred stock to raise capital. The terms are clearly defined and typical for such an instrument. It indicates the company's ability to access capital markets, which is generally positive, but the non-cumulative nature of dividends and the lack of immediate financial performance details keep the sentiment from being strongly positive.

Positives

• Successful establishment and offering of a new preferred stock series, indicating access to capital markets.
• The fixed dividend rate of 8.500% provides a clear cost of capital for the initial period.
• The preferred stock structure ranks senior to common stock, offering a degree of security for preferred shareholders.

Negatives

• Dividends on the Series B Preferred Stock are non-cumulative, meaning missed dividends are not required to be paid later.
• Restrictions on declaring or paying dividends on junior or parity stock, or repurchasing such stock, if full dividends on Series B Preferred Stock are not paid.

Risks

• Non-Cumulative Dividends: Holders of Series B Preferred Stock will not receive missed dividends if the Board of Directors does not declare them for a dividend period.
• Regulatory Capital Treatment Event: The company may redeem all Series B Preferred Stock within 90 days of a Regulatory Capital Treatment Event, potentially at an unfavorable time for investors.
• Federal Reserve Approval for Redemption: Redemption is subject to prior approval from the Federal Reserve or other Appropriate Federal Banking Agency, which could delay or prevent redemption.
• Limited Voting Rights: Holders generally have no voting rights, except in specific 'Nonpayment Events' where they can elect two directors, which is a reactive rather than proactive control.

Future Outlook

The Series B Preferred Stock is perpetual unless redeemed by the company. The dividend rate will reset every five years after October 1, 2030, based on the Five-Year Treasury Rate plus a fixed spread, providing a mechanism for future dividend adjustments.

Management Comments

• The Corporation has caused these Articles Supplementary to be executed in its name and on its behalf by its Chief Executive Officer, and attested to by its Secretary as of this 19th day of August, 2025.
• I am Chief Legal Officer and Corporate Secretary of NewtekOne, Inc., a Maryland corporation (the Company), in connection with the Registration Statement on Form S-3...
• I am Senior Counsel of NewtekOne, Inc., a Maryland corporation (the Company), in connection with the Registration Statement on Form S-3...

Industry Context

This offering of preferred stock is a common financing strategy for financial institutions or business development companies (BDCs) like NewtekOne, allowing them to raise capital without diluting common equity or incurring traditional debt. The fixed-rate reset feature is typical for preferred securities, adapting to changing interest rate environments while providing a stable income stream for investors. The non-cumulative nature of dividends is a common feature in preferred stock issued by financial institutions, often related to regulatory capital treatment.

Comparison to Industry Standards

• The 8.500% fixed dividend rate for the initial period is competitive within the preferred stock market, especially for non-cumulative issues from financial services companies.
• The liquidation preference of $1,000 per preferred share ($25 per depositary share) is a standard par value for preferred stock offerings.
• The ranking of the Series B Preferred Stock (senior to common, parity with Series A) is a typical capital structure arrangement for preferred securities.
• The inclusion of a 'Regulatory Capital Treatment Event' redemption clause is standard for preferred stock issued by regulated financial entities, allowing the company to redeem the shares if they no longer qualify for favorable capital treatment.

Corporate Governance

Stakeholder Impact

• Shareholders (Common Stock): Common shareholders will be junior to the Series B Preferred Stock in terms of dividend payments and liquidation preference. Their ability to receive dividends or have common stock repurchased may be restricted if preferred dividends are not paid.
• Investors (Series B Preferred Stock): These investors gain a senior claim on dividends and liquidation proceeds compared to common stock, with a fixed-rate reset dividend and limited protective voting rights. However, dividends are non-cumulative.
• Creditors: The preferred stock ranks junior to the company's debt obligations.

Next Steps

• Quarterly dividend payments on Series B Preferred Stock will commence on October 1, 2025.
• The dividend rate will reset on October 1, 2030, and every five years thereafter.
• The company may redeem the Series B Preferred Stock on or after October 1, 2030, or upon a Regulatory Capital Treatment Event, subject to regulatory approval.

Key Dates

Recommendation

This filing details the terms of a preferred stock offering, which is a capital raise. While it provides the company with additional capital, the specific terms of the preferred stock, such as its non-cumulative nature and fixed-rate reset, are standard for this type of instrument and do not inherently suggest a significant positive or negative shift in the company's fundamental outlook or immediate share price trajectory for common stock. The offering itself was previously disclosed, so the detailed terms are an expected follow-up. For common stock investors, the issuance of preferred stock introduces a new layer of seniority in the capital structure, which is a neutral to slightly negative factor, but the capital raised could support growth initiatives. For preferred stock investors, the terms are clear and offer a defined yield, making it a 'hold' for those seeking income, but not a 'buy' or 'sell' based solely on this administrative filing.

Keywords

NewtekOne, Preferred Stock, Series B Preferred Stock, Depositary Shares, Fixed-Rate Reset, Non-Cumulative, Capital Raise, SEC Filing, 8-K, Corporate Finance, Dividends, Equiniti Trust Company