NewtekOne Q2 Earnings Call Highlights
Key Points
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- NewtekOne is shifting toward recurring net interest income by retaining more SBA 7(a) and commercial-and-industrial loans on Newtek Bank’s balance sheet, potentially reducing near-term gain-on-sale revenue. Management expects greater clarity on the impact to its outlook within 45–60 days.
- Newtek Bank’s net interest income rose to $25 million from $16.2 million year over year, while deposits reached $2.2 billion, up from $142 million over 14 quarters. Management also expects a $300 million–$400 million bank securitization in the fourth quarter.
- Credit provisions increased despite lower net charge-offs, with 89% of the allowance for credit losses allocated to unguaranteed SBA 7(a) exposure. Management is diversifying the loan portfolio as uninsured SBA 7(a) balances declined to about 42% from nearly 50%.
NewtekOne (NASDAQ:NEWT) reported second-quarter 2026 earnings per share between $0.47 and $0.48 on a diluted and basic basis, respectively, as the company continued shifting more lending and operating activity into Newtek Bank.
President and CEO Barry Sloane said the company is emphasizing recurring net interest income, balance-sheet growth and tangible book value growth as it evolves from a business model more reliant on gain-on-sale revenue. He described the strategy as a move toward holding more loans at the bank, including certain SBA 7(a) loans and commercial-and-industrial long-amortization loans, before potential sale or securitization.
“Going forward as we transform, you will see a little bit less gain on sale, more net interest income, more use of the balance sheet and the portfolio,” Sloane said.
Bank Net Interest Income Rises
Newtek Bank’s net interest income increased to $25 million in the second quarter of 2026 from $16.2 million in the year-earlier period, according to Sloane. He said the bank’s net interest margin benefited from holding more SBA 7(a) loans and C loans on its balance sheet.
The company said it has been moving its C long-amortization lending operation into the bank, where the loans will contribute net interest income while they are accumulated for future securitizations. Sloane said NewtekOne expects to complete a bank securitization of between $300 million and $400 million, though he did not provide a firm timeline beyond identifying the fourth quarter during the discussion.
Chief Financial Officer Frank DeMaria said the holding company’s net interest margin contracted as activities and income-generating operations shifted to the bank. He also cited the impact of holding-company debt and the treatment of interest income from securitized loans.
NewtekOne’s pre-provision net revenue grew in absolute dollars with balance-sheet growth, DeMaria said, although it declined to 4.22% of average assets from 5.25% a year earlier. He said the figure remained above an industry average below 2%.
Deposit Growth and Book Value
Sloane highlighted continued deposit growth through the company’s digital account-opening platform. Deposits have grown from $142 million to $2.2 billion over 14 quarters, he said. Non-affiliate deposits increased by $15 million during the quarter, while core consumer deposits increased by $297 million.
The company reported approximately 40,000 deposit accounts, with 81% of accounts insured below the $250,000 threshold. Its loan-to-deposit ratio was about 90%, according to management.
Sloane said NewtekOne’s tangible book value per share has risen 75.3% over 12 quarters since its conversion to a technology-enabled financial holding company structure. He also pointed to operating leverage, saying assets increased 50% while expenses rose 3.6%.
When asked whether retaining more loans would pressure the company’s deposit-gathering capabilities, Sloane said the bank remained liquid and held more than $500 million of cash at the Federal Reserve. He attributed deposit growth to the company’s digital acquisition model, customer service and low acquisition costs.
Credit Reserves and SBA Loan Activity
Management said provisions for credit losses increased during the quarter while net charge-offs declined. Sloane acknowledged that 30-day past-due loans increased, but said the bank’s portfolio is relatively new and is still progressing through the period in which loans most commonly default.
DeMaria said approximately 89% of the company’s allowance for credit losses was allocated to the unguaranteed portions of SBA 7(a) loans. The allowance coverage ratio for that portion of the portfolio was 8.56%, reflecting the higher expected loss characteristics of those loans.
Sloane said NewtekOne’s allowance for credit losses equaled 5.31% of unguaranteed loans, or 4.14% excluding government-guaranteed loans in nonaccrual status. He said the company is seeking to diversify its portfolio, with uninsured SBA 7(a) balances representing about 42% of the book, down from nearly 50%.
Addressing analyst questions about nonperforming government-guaranteed SBA loans, Sloane said the company has become more aggressive in repurchasing certain guaranteed participation certificates from the secondary market. The government guarantee remains in place on those loans, subject to repairs and denials for which the company maintains reserves, he said.
Outlook Under Review
Sloane said retaining more government-guaranteed SBA loans could reduce near-term gain-on-sale revenue before additional interest income builds over time. He said the company was evaluating the effect of those changes on its outlook and expected to have greater clarity within roughly 45 to 60 days.
Management also said it may expand its use of SBA Express lending, which Sloane said can offer more favorable pricing for smaller loans while retaining a government guarantee.
Separately, DeMaria said elevated other income in the quarter was primarily driven by increased loan payoffs and paydowns in the company’s securitizations. He said he expects that income category to normalize in future periods.
Sloane also said NewtekOne is discussing potential opportunities with financial institutions that could use its technology and digital business-banking capabilities. He said the company’s platforms support digital account opening, payments, lending applications, payroll, merchant services and customer relationship management for small and medium-sized businesses.
About NewtekOne (NASDAQ:NEWT)
NewtekOne, Inc (NASDAQ: NEWT) is a publicly traded business development company that specializes in providing financial and business services to small and medium‐sized enterprises across the United States. Operating under the trade name The Newtek Small Business Finance, the company offers a diversified array of lending solutions designed to meet the working capital, equipment acquisition and growth needs of its clients.
The company's core lending offerings include Small Business Administration (SBA) 7(a) loans, equipment financing, lines of credit and commercial real estate financing.
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