NewtekOne, Inc. 8.00% Fixed Rate Senior Notes due 2028

What they do

NewtekOne operates as a financial holding company, with Newtek Bank as its primary depository and lending subsidiary, alongside non-bank units offering SBA lending, merchant solutions, payroll, insurance, and other business services. It uses its patented NewTracker referral system to source customers through alliance partners and non-traditional channels, avoiding branches and traditional bankers. The company originates SBA 7(a) and 504 loans, commercial and industrial loans, and commercial real estate loans, holding most on its balance sheet.

Revenue drivers

• Net interest income — Primary revenue source, driven by loan and deposit growth at Newtek Bank; 2Q26 net interest income climbed 24% Q/Q as more loans are held on balance sheet.
• SBA 7(a) loan origination and sale — Originated $208M in SBA 7(a) loans in 2Q26 (vs $206M in 2Q25); historically earned premiums from selling guaranteed portions, but company is retaining more to support net interest income.
• Business services fees — Includes merchant processing, payroll, insurance, and other services marketed to SMB clients; cross-sold through NewTracker and bank relationships.

Recent performance

In 2Q26, basic and diluted EPS were $0.48 and $0.47, down from $0.53 and $0.52 in 2Q25. Book value per share rose to $12.64, up 13.8% Y/Y; tangible book value was $12.13, up 15.0%. Efficiency ratio improved to 58.4% from 60.3%, but ROAA fell to 1.97% from 2.58% and ROAE to 13.3% from 17.4%. Total assets grew almost 50% Y/Y, with operating expenses up just 3.6%.

Strategy

Management is shifting to originate all loans at Newtek Bank and fund them with deposits, reducing reliance on non-bank lenders and secondary market sales. The company is building its deposit base, with non-affiliate business deposits up 47% Y/Y and core consumer deposits up 124% Y/Y in 2Q26. It aims to capture operating leverage through branchless, technology-driven operations and cross-selling services to SMB clients. C&I LA loans are being moved to the bank balance sheet, with most growth occurring late in 2Q26 expected to benefit 3Q26 net interest income.

Risks

• Regulatory risk — As a financial holding company with a national bank, it faces extensive supervision from the Federal Reserve and OCC; noncompliance could lead to enforcement actions.
• SBA program dependence — Changes to SBA 7(a) program rules or SOP could materially hurt revenue, and the company cannot guarantee it will maintain its SBA lending licenses.
• Interest rate and economic risk — Higher rates and economic downturn could impair loan performance, deposit costs, and ability to access capital markets.
• Negative operating cash flow — Operating cash flow was -$579.2M in 2025, indicating heavy cash consumption; the company may need additional capital or deposits to fund growth.

Outlook

Management expects continued profitability with 2Q26 EPS within guidance of $0.42-$0.52. They anticipate 3Q26 net interest income to reflect a full quarter of the C&I LA loan growth and intend to keep holding guaranteed SBA portions on balance sheet to support income. They are focused on deposit growth, with insured deposits at 81% of total deposits, and expect operating leverage from branchless model to sustain efficiency improvements.