10-Q: NewtekOne Q1 2026 Financial Results

NewtekOne reported Q1 2026 net income of $13.4 million, driven by growth in interest income and gains on securitizations.

Summary

• Net income for the three months ended March 31, 2026, was $13.4 million, or $0.43 per diluted share, compared to $9.4 million, or $0.35 per diluted share, in Q1 2025.
• Total assets increased to $2.9 billion as of March 31, 2026, up from $2.7 billion at year-end 2025.
• Net interest income rose to $17.2 million from $13.9 million in the prior-year period.
• The company successfully closed the NALP Business Loan Trust 2026-1 securitization in January 2026, impacting noninterest income.
• Total deposits grew significantly to $1.9 billion, an increase of $439.5 million during the quarter.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a stable quarter showing successful execution of the company's strategic transition, despite the volatility inherent in fair value accounting for loans and securitizations.

Positives

• Net income increased by approximately 43% year-over-year.
• Strong growth in total deposits, reaching $1.9 billion, reflecting successful deposit-gathering strategies.
• Successful execution of the 2026-1 securitization transaction, providing liquidity and generating a gain on residuals.
• Maintained well-capitalized status for Newtek Bank under regulatory requirements.

Negatives

• Net loss on loan servicing assets increased to $6.2 million from $3.7 million in Q1 2025.
• Net loss on loans under the fair value option was $49.6 million, largely driven by the reversal of previous gains upon the 2026-1 securitization.
• Noninterest expense increased to $44.3 million from $41.2 million in the prior-year period.

Risks

• Sensitivity to interest rate fluctuations and potential impacts on loan prepayment speeds and secondary market premiums.
• Regulatory and compliance costs associated with operating as a national bank and financial holding company.
• Potential for credit losses in the loan portfolio, particularly in the CRE and C&I segments.
• Dependence on the secondary market for SBA 7(a) loan sales to support liquidity and capital recovery.

Future Outlook

The company continues to focus on originating SBA 7(a) and C&I LA loans, managing deposit growth, and utilizing securitization as a primary funding strategy. Management notes that future results remain subject to macroeconomic conditions, interest rate environments, and regulatory requirements.

Management Comments

• Management emphasizes the importance of ethical standards and integrity in all business dealings.
• Management highlights the transition of loan originations to Newtek Bank and the wind-down of legacy NSBF operations.
• Management notes the strategic focus on the Newtek Advantage platform to drive deposit growth and customer engagement.

Industry Context

StockSavvy.ai notes that NewtekOne's transition to a bank-centric model continues to influence its financial profile, shifting from a BDC-like structure to a traditional bank holding company. The company's reliance on noninterest income from loan sales and securitizations remains a key differentiator compared to traditional regional banks.

Comparison to Industry Standards

• NewtekOne's focus on the SMB market aligns with specialized lenders, though its regulatory burden as a national bank is higher.
• The company's use of securitization trusts for unguaranteed loan portions is a common practice among non-bank lenders but is now integrated within a bank holding company structure.
• Capital ratios are maintained to meet 'well-capitalized' standards, consistent with OCC requirements for national banks.

Corporate Governance

Legal Proceedings

• The company is subject to routine legal proceedings in the ordinary course of business.
• NMS continues to operate under a permanent injunction resulting from a 2012 FTC litigation.

Related Party Transactions

• Newtek Bank holds FDIC-insured deposits from company officers, directors, and their associated companies.

Stakeholder Impact

• Shareholders benefit from continued dividend payments and growth in net income.
• Depositors are supported by competitive interest rates and the Newtek Advantage platform.
• Employees are subject to the updated Code of Business Conduct and Ethics.

Next Steps

• Continue monitoring the performance of the 2026-1 securitization trust.
• Execute potential debt repurchases under the newly approved program.
• Manage the integration of the D2 Loan facility.

Key Dates

Recommendation

The company is executing its strategic transition well, but the complexity of its financial reporting and reliance on fair value adjustments for earnings make it a hold for investors seeking more predictable, traditional banking returns.

Keywords

NewtekOne, SBA 7(a) lending, financial holding company, securitization, commercial banking, SMB financing