8-K: NewtekOne Reports Strong Q3 2025 EPS Growth, Capital Raises

NewtekOne, Inc. announced robust financial results for the third quarter of 2025, with significant year-over-year EPS growth and successful capital raising initiatives.

Summary

• Basic and diluted earnings per share (EPS) for the three months ended September 30, 2025 (3Q25) were $0.68 and $0.67, respectively, reflecting year-over-year (Y/Y) increases of 51% and 49% from $0.45 in 3Q24.
• Basic and diluted EPS for the nine months ended September 30, 2025 (YTD25) were $1.57 and $1.54, respectively, reflecting Y/Y increases of 25% and 22% from $1.26 in YTD24.
• Book value per common share ended 3Q25 at $11.72, up 16.4% Y/Y and 5.5% quarter-over-quarter (Q/Q).
• Tangible book value per common share ended 3Q25 at $11.22, up 25.6% Y/Y and 6.4% Q/Q.
• Total revenue for 3Q25 was $74.9 million, up 19.3% over $62.8 million for 3Q24; YTD25 total revenue was $211.5 million, up 16.0% over $182.3 million for YTD24.
• Net income before taxes for 3Q25 was approximately $25.1 million, up 47.0% Y/Y from $17.1 million for 3Q24; YTD25 net income before taxes was approximately $55.5 million, up 23.5% from $44.9 million for YTD24.
• Pre-provision net revenue (PPNR) for 3Q25 was approximately $32.8 million, an increase of 36.7% from $24.0 million for 3Q24; YTD25 PPNR was approximately $85.8 million, an increase of 39.1% from $61.7 million for YTD24.
• The efficiency ratio improved to 56.3% for 3Q25 from 61.8% for 3Q24.
• Return on average assets (ROAA) was 3.06% for 3Q25, Return on average equity (ROAE) was 20.4%, and Return on average tangible common equity (ROTCE) was 23.7%.
• Raised $30 million of Common Equity Tier 1 (CET1) capital in a transaction with Patriot Financial Partners, L.P.
• Increased Tier 1 capital by issuing $50 million of depositary shares representing Series B Preferred Stock.
• Refinanced and upsized Newtek Merchant Solutions' borrowing facility with a new $95 million financing solution through Goldman Sachs Alternatives.
• Originated $104 million of Alternative Loan Program (ALP) loans in 3Q25, compared to $66 million for 3Q24.
• Originated $187 million of SBA 7(a) loans in 3Q25, compared to $243 million for 3Q24, and sold $69 million of guaranteed portions of SBA 7(a) loans.
• Originated $28 million of SBA 504 loans and sold $19 million of SBA 504 loans in 3Q25.
• Commercial deposits at Newtek Bank increased $52.0 million, or 17% Q/Q, while core consumer deposits grew $95.0 million, or 12% Q/Q.
• Insured deposits comprised 78% of total deposits.
• Loans and deposits increased approximately 58% and 81%, respectively, compared to September 30, 2024.

Sentiment

Score: 8

Explanation: The company reported strong year-over-year EPS and revenue growth, significant improvements in efficiency and returns, and successful capital raising activities. Management expressed confidence in its digital banking model and future growth prospects, despite some declines in specific loan origination categories and increased provision for credit losses.

Positives

• Basic and diluted EPS for 3Q25 increased by 51% and 49% year-over-year, respectively, demonstrating strong profitability growth.
• Book value per common share grew 16.4% year-over-year to $11.72, and tangible book value per common share increased 25.6% year-over-year to $11.22.
• Total revenue for 3Q25 increased by 19.3% year-over-year to $74.9 million, indicating robust top-line expansion.
• Net income before taxes for 3Q25 surged 47.0% year-over-year to $25.1 million.
• Pre-provision net revenue (PPNR) for 3Q25 increased 36.7% year-over-year to $32.8 million, highlighting strong underlying operational performance.
• The efficiency ratio improved to 56.3% in 3Q25 from 61.8% in 3Q24, reflecting enhanced operating leverage and cost management.
• Achieved high returns with ROAA of 3.06%, ROAE of 20.4%, and ROTCE of 23.7% for 3Q25.
• Successfully raised $30 million of Common Equity Tier 1 (CET1) capital and $50 million of Tier 1 capital through Series B Preferred Stock issuance.
• Refinanced and upsized Newtek Merchant Solutions' borrowing facility to $95 million with Goldman Sachs Alternatives, improving capital structure.
• Alternative Loan Program (ALP) originations increased significantly to $104 million in 3Q25 from $66 million in 3Q24.
• Commercial deposits grew 17% quarter-over-quarter ($52.0 million) and core consumer deposits grew 12% quarter-over-quarter ($95.0 million), indicating strong deposit gathering capabilities.
• Insured deposits represent a high 78% of total deposits, suggesting deposit stability and lower risk.
• Overall loans and deposits increased substantially by approximately 58% and 81% respectively, year-over-year.

Negatives

• SBA 7(a) loan originations decreased to $187 million in 3Q25 from $243 million in 3Q24, a decline of approximately 23%.
• Net gains on sales of loans decreased significantly to $9,563 thousand in 3Q25 from $25,675 thousand in 3Q24.
• Net loss on loan servicing assets increased to $(4,493) thousand in 3Q25 from $(1,786) thousand in 3Q24.
• Net (loss) gain on residuals in securitizations shifted to a loss of $(1,450) thousand in 3Q25, compared to a gain of $31,465 thousand in 2Q25.
• Provision for credit losses increased to $7,712 thousand in 3Q25 from $6,928 thousand in 3Q24.

Risks

• The company's forward-looking statements are subject to significant risks and uncertainties, as detailed in the 'Risk Factors' sections of its filings with the Securities and Exchange Commission, which are not explicitly detailed in this specific filing.

Future Outlook

NewtekOne is preparing for a fourth securitization for its Alternative Lending Program (ALP) in the fourth quarter of 2025, which is expected to be its largest securitization to date. The company plans to continue growing lower cost business deposits to enhance operating leverage and aims to reduce unsecured debt at the holding company by layering in additional equity capital. Management expresses confidence in the company's future, believing it to be "extremely bright," and intends to continue providing attractive risk-adjusted returns to shareholders.

Management Comments

• "We are pleased to report basic and diluted EPS of $0.68 and $0.67 for the third quarter of 2025, which compare favorably to basic and diluted EPS of $0.45 for the third quarter of 2024."
• "Compared to balances as of September 30, 2024, loans and deposits increased approximately 58% and 81%, respectively, and we continue to post what we believe are above-average returns with 3Q25 ROAA and ROTCE of 3.06% and 23.7%."
• "Our business model is structured to capture incremental operating leverage, especially as we execute on plans to continue to grow lower cost business deposits."
• "On the capital front, we were tremendously successful in the third quarter, raising $30 million of CET1 capital and $80 million of Tier 1 capital."
• "In effect, we are improving the complexion of our capital structure by layering in additional equity capital, with the goal of reducing unsecured debt at the holding company."
• "We believe that NewtekOne looks different than the vast majority of our competitors."
• "We believe that NewtekOne is well on its way and ahead of the industry in looking like a financial institution of the future."
• "We have consistently ranked as one of the top three SBA lenders in the United States and currently service over 10,000 borrowers."
• "Our Alternative Lending Program, or ALP, that has completed three securitizations since the ALP was launched in 2019, is preparing a fourth securitization for the fourth quarter of 2025, which we expect to be our largest securitization to date."

Industry Context

NewtekOne's strong performance and strategic focus on a "branchless, bankerless digital bank" model align with broader industry trends towards digital transformation and fintech innovation in financial services. Its emphasis on serving independent business owners, a significant segment of the U.S. economy, positions it within a specialized and growing niche. The company's consistent ranking as a top SBA lender underscores its expertise and market share in government-backed small business financing. The successful capital raises and refinancing activities reflect a favorable environment for well-performing financial institutions to access capital, supporting growth and balance sheet optimization in a competitive landscape.

Comparison to Industry Standards

• Management states that the company continues to post "above-average returns" with a 3Q25 Return on Average Assets (ROAA) of 3.06% and Return on Average Tangible Common Equity (ROTCE) of 23.7%.
• NewtekOne has consistently ranked as "one of the top three SBA lenders in the United States," indicating a leading position in this specific lending segment.
• The company believes its "branchless, bankerless digital bank" model, leveraging state-of-the-art technologies and artificial intelligence, positions it "ahead of the industry" compared to traditional financial institutions.
• The improved efficiency ratio of 56.3% for 3Q25 from 61.8% for 3Q24 demonstrates enhanced operational efficiency, which is a key competitive advantage in the financial sector.

Stakeholder Impact

• Shareholders are positively impacted by strong EPS growth, increased book value, successful capital raises, and continued common share dividends ($0.19 per share).
• Preferred shareholders received an initial dividend payment on Series B Preferred Stock ($9.44 per Preferred Share, or $0.2361 per depositary share).
• Customers (independent business owners) benefit from the continued provision of a wide range of business and financial solutions through a technology-enabled, branchless digital bank model.
• Creditors may be impacted by the refinancing of the Newtek Merchant Solutions' borrowing facility and the company's stated goal of reducing unsecured debt at the holding company.

Next Steps

• Prepare a fourth securitization for the Alternative Lending Program (ALP) in the fourth quarter of 2025, which is expected to be the largest to date.
• Continue to execute on plans to grow lower cost business deposits to capture incremental operating leverage.
• Continue to provide attractive risk-adjusted returns to shareholders.
• Host an earnings conference call on October 29, 2025, at 4:30 p.m. ET to discuss the results.

Key Dates

Recommendation

NewtekOne delivered exceptional financial performance with significant year-over-year EPS and revenue growth, coupled with strong returns on assets and equity. The strategic capital raises and successful refinancing strengthen the balance sheet and provide ample capital for future growth initiatives. The improved efficiency ratio highlights effective operational management and scalability. While SBA 7(a) originations saw a decline, the overall growth in loans and deposits, along with the planned largest-ever ALP securitization, indicates robust business momentum. The company's unique digital-first model for small businesses positions it favorably for long-term growth in a large and underserved market segment. These factors collectively suggest a compelling investment opportunity.

Keywords

NewtekOne, NEWT, financial results, Q3 2025, earnings, EPS, banking, small business lending, SBA loans, capital raise, deposits, financial holding company, digital bank, Alternative Loan Program, ALP, fintech, corporate governance