8-K: NewtekOne Reports Strong Q1 2025 Earnings, Exceeding Expectations

NewtekOne announces solid first quarter 2025 results, with diluted EPS of $0.35, surpassing the projected range of $0.28-$0.32.

Summary

• NewtekOne, Inc. reported its financial results for the first quarter of 2025.
• Diluted earnings per share (EPS) reached $0.35, exceeding the company's guidance range of $0.28 to $0.32.
• Basic EPS was $0.36, compared to $0.38 in the same quarter of the previous year.
• Book value per common share increased to $10.73, showing year-over-year and quarter-over-quarter growth of 13.2% and 2.0%, respectively.
• Tangible book value per common share rose to $10.17, up 23.0% year-over-year and 8.3% quarter-over-quarter.
• Net income before taxes was approximately $11.6 million, a decrease of 11.1% compared to $13.1 million in 1Q24.
• Pre-provision net revenue (PPNR) increased by 47.0% year-over-year to approximately $25.2 million.
• The efficiency ratio improved to 62.1% from 70.6% in the first quarter of 2024.
• SBA 7(a) loan originations were approximately $213.4 million, slightly up from $211.5 million in 1Q24.
• The company forecasts annual EPS in the range of $2.10 to $2.50 for 2025.
• They also project $1.0 billion in total SBA 7(a) loan fundings, $250 million in SBA 504 loan closings, and $500 million in ALP loan originations for 2025.
• Newtek Bank's combined C&I and CRE loan portfolios are expected to grow by $225 million, and deposits are projected to increase by $345 million.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, exceeding expectations, and optimistic future forecasts. While there are some negative aspects, the overall tone is confident and upbeat.

Positives

• The company's EPS exceeded its projected range.
• Tangible book value per share showed significant year-over-year growth.
• Pre-provision net revenue increased substantially.
• The efficiency ratio improved, indicating better operational performance.
• The company successfully executed an ALP loan securitization, selling $184 million of rated notes.
• The company paid a quarterly cash dividend of $0.19 per share on its outstanding common shares.
• The loss from Newtek Small Business Finance (NSBF) decreased by more than 50% Q/Q.

Negatives

• Net income before taxes decreased by 11.1% year-over-year.
• Net loss on loan servicing assets was ($3.652) million.
• Wholesale deposits declined $24 million, or 33% Q/Q.

Risks

• The company acknowledges a challenging and fluid economic environment.
• The company's forecasts are subject to risks, uncertainties, and assumptions regarding interest rates, monetary policy, and economic conditions.
• The company's earnings per share guidance reflects risks, uncertainties and assumptions with respect to facts and circumstances that are beyond our control.

Future Outlook

The company forecasts annual EPS in a range of $2.10 to $2.50 for 2025, along with specific targets for SBA 7(a) loan fundings, SBA 504 loan closings, ALP loan originations, and deposit growth.

Management Comments

• Barry Sloane, CEO, President and Chairman, stated that the company is extremely pleased to post solid quarterly results that include diluted earnings per share of $0.35, ahead of the guidance range.
• Mr. Sloane believes that organizations with wider lending margins, lower efficiency ratios, sufficient capital bases, and relevant product offerings are the future of the banking industry.
• Mr. Sloane highlighted the company's unique approach to operating as a financial holding company with meaningful activity by its non-bank subsidiaries.
• Mr. Sloane concluded that the Company is well positioned to deliver value to independent business owners in all 50 states.

Industry Context

The report highlights NewtekOne's focus on serving independent business owners with a range of financial and business solutions, positioning it within the competitive landscape of financial holding companies and commercial banks. The company emphasizes its technology-enabled approach and diverse revenue streams.

Comparison to Industry Standards

• The company claims that its profitability is roughly two times the average profitability of banks with $1 to $10 billion of assets.
• NewtekOne's management believes their unique structure allows them to sustain above-average EPS growth, tangible book value per share growth, and profitability.

Stakeholder Impact

• Shareholders benefit from the increased book value per share and the payment of quarterly dividends.
• Independent business owners gain access to a complete set of financial and business solutions.
• Employees are part of a company that is experiencing growth and profitability.

Next Steps

• A conference call will be held on May 7, 2025, to discuss the first quarter 2025 financial and operating results.
• The company will continue to focus on growing its loan portfolios, deposits, and non-bank subsidiaries.

Key Dates

Keywords

NewtekOne, earnings, financial results, EPS, loan originations, SBA lending, book value, PPNR, efficiency ratio, dividends, ALP loan securitization, Newtek Bank