NewtekOne outlines $325M–$350M alternative loan securitization and sees deposit growth amid business model expansion

Earnings Call Insights: NewtekOne, Inc. (NEWT) Q3 2025

MANAGEMENT VIEW

* Barry R. Sloane, President, Chairman & CEO, stressed the company's focus on technology and efficiency, emphasizing, “We have some outstanding numbers for return on average assets, return on tangible common equity, efficiency ratio.” He highlighted the company’s continued ability to raise deposits below the risk-free rate and the success of NewtekOne’s business model for a technology-enabled bank.
* CEO Sloane detailed the company’s strategic growth, including opening 22,000 depository accounts and servicing 10,000 borrowers remotely without traditional bankers or branches.
* Sloane stated, “We have a very healthy Q3 and 2025 earnings and revenue growth,” highlighting basic and diluted EPS of $0.68 and $0.67 for the quarter, and $1.57 and $1.54 for the first nine months of 2025.
* He announced an upcoming Alternative Loan Program (ALP) securitization for Q4 2025, noting, “The range here of $325 million to $350 million of ALP loans will clearly be our biggest. This will be the 17th securitization in NewtekOne's history and fourth in this particular category.”
* Sloane described capital-raising initiatives, noting the issuance of Series B preferred and common equity, boosting Tier 1 capital and common equity Tier 1 by roughly $80 million and $30 million, respectively.
* Frank DeMaria, Executive VP, CFO & Chief Accounting Officer, reported, “Our efficiency ratio declined from 61.8% to 56.3% at the holding company, even with assets up 43%, but operating expenses only up 8.5%.”

OUTLOOK

* Management reaffirmed the focus on technology-driven deposit and loan growth. Sloane indicated that guidance for Q4 EPS of $0.65 to $0.80 remains, but with caution due to the ongoing government shutdown: “We don’t have a reason to pull the guidance, but hopefully, people invest in us, not necessarily on what happens in the fourth quarter.”
* Sloane noted the business model’s resilience, stating, “We know the ways to be able to get through these shutdowns; over more than 2 decades, we've experienced this, and we have all the tools.”

FINANCIAL RESULTS

* Sloane reported EPS of $0.68 (basic) and $0.67 (diluted) for Q3, with nine-month EPS at $1.57 (basic) and $1.54 (diluted), highlighting a 47% growth rate and 22% year-over-year comparison.
* Tangible book value per share reached $11.22, up from $6.92 in Q1 2023.
* Business deposits grew sequentially by $52 million (17%), and consumer deposits climbed $95 million (12%).
* The upcoming ALP securitization is expected to be the company’s largest, with $325 million to $350 million in loans.
* Operating leverage improved, with the efficiency ratio at the holding company declining to 56.3% and at the bank to about 47%.
* NSBF, the nonbank lender in wind-down, showed a $14 million loss for the first three quarters, trending below the $28.7 million loss in the previous year.

Q&A

* Timothy Switzer, KBW: Asked about credit trends and sectoral pressures. Sloane responded that “we’re staying away from the volatile businesses and volatile industries,” citing commodity-based sectors, oil and gas, transportation, and agriculture.
* Switzer: Inquired about Q4 guidance amid the government shutdown. Sloane stated, “We don’t have a reason to pull the guidance, but... we can’t live by the previous guidance given the basis of the government shutdown.”
* Switzer: Requested capital ratio details. DeMaria answered, “Currently, Tim, we're looking at about 12.5% on leverage at the holding company and just shy of 16% for total risk-based capital.”
* Crispin Love, Piper Sandler: Asked about SBA 7(a) loan pipeline during the shutdown. Sloane noted, “We did pull product, and that's pretty much covering loans... probably covered for half the quarter.”
* Stephen Moss, Raymond James: Asked about customer demand and future loan mix. Sloane discussed market headwinds and diversification, indicating plans for more CRE and C&I lending and stating, “We feel good about our position in the market from a long-term perspective.”
* Harold Goetsch, B. Riley: Inquired about sector exits and ALP performance. Sloane responded, “From an AOP perspective, we were targeting... between $350 million to $400 million in AOP loans for this calendar year.”
* Christopher Nolan, Ladenburg Thalmann: Asked about dividend increases and capital ratios. Sloane said, “It's possible, but unlikely that we'll increase the dividend in the near term.”

SENTIMENT ANALYSIS

* Analysts’ tone was neutral to slightly cautious, with questions focusing on credit quality, the government shutdown’s impact on guidance, loan pipeline, and capital ratios.
* Management maintained a confident tone in prepared remarks, frequently emphasizing the business model’s resilience, technology orientation, and growth metrics. During Q&A, Sloane was forthright about uncertainty due to external factors such as the government shutdown but reiterated, “We're on plan with NPLs, with capital, with, we're on plan.”
* Compared to the previous quarter, current sentiment reflected heightened external uncertainty, particularly regarding the government shutdown’s effect on loan origination and guidance.

QUARTER-OVER-QUARTER COMPARISON

* The current quarter saw continued growth in deposits and tangible book value, sequential improvement in operating leverage, and a further reduction in NSBF losses.
* Management’s tone shifted from strong confidence in the previous quarter to a more cautious stance due to the government shutdown, which was not a concern in Q2.
* The strategic focus broadened from primarily SBA 7(a) lending to increased diversification into CRE and C&I lending.
* Analysts’ questions in the current quarter focused more on external risks, particularly the government shutdown and its potential impact on loan origination and guidance, compared to Q2’s focus on deposit growth, loan sales, and expense trends.

RISKS AND CONCERNS

* The government shutdown presents a material risk to SBA loan originations and gain-on-sale revenue, with Sloane stating, “we can’t live by the previous guidance given the basis of the government shutdown.”
* Nonperforming loans remain elevated at 8.1% of total loans, but Sloane emphasized these have been “written off or written down.”
* ALP securitization, while promising, depends on market receptivity and execution.
* Management is actively diversifying the loan portfolio to mitigate concentration risks and reduce volatility.

FINAL TAKEAWAY

Management emphasized the company’s strong growth in deposits, tangible book value, and efficiency ratios, with a business model built on technology, remote customer acquisition, and diversified lending. While the government shutdown introduces short-term uncertainty, NewtekOne expects continued growth through its upcoming record ALP securitization and strategic focus on both technology and product diversification, positioning the company for long-term value creation for shareholders.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/newt/earnings/transcripts]

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