NewtekOne, Inc. Reports Fourth Quarter and Full Year 2023 Financial Results
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Insights
From a financial perspective, NewtekOne's transition from a BDC to a financial holding company has been a significant strategic move, impacting its accounting methodologies and operational structure. The reported basic and diluted EPS for the full year 2023 are within the guidance range, indicating management's ability to forecast and achieve targeted earnings, which is a positive signal for investors. The forecasted EPS growth for 2024 suggests confidence in the company's business model and growth trajectory. However, the reliance on non-interest-bearing net revenue to drive EPS growth is an unconventional approach in the banking sector, where traditional interest income is a primary revenue driver. This strategy could be seen as either a diversification of income sources or a potential risk if interest rates rise significantly.
The reported ROAA and ROTCE are substantially higher than industry norms for banks, which typically average below 1% for ROAA and below 10% for ROTCE. Such exceptional performance metrics may attract investor attention, but they also warrant scrutiny to ensure they are sustainable and not the result of aggressive accounting or risk-taking. The efficiency ratio, while improved, is still higher than the traditional banking sector's average of around 50-60%, indicating room for operational efficiency improvements. The capital ratios reported exceed regulatory minimums, suggesting a strong capital position, which is crucial for supporting future growth and withstanding potential economic downturns.
From a market perspective, NewtekOne's patented NewTracker® system represents a significant technological advantage that could disrupt traditional banking business development models. The system's capability to generate approximately 1,000 unique business referrals daily without using traditional banking personnel could lead to lower operating costs and higher scalability. This innovation is particularly relevant as the banking industry is increasingly moving towards digitalization and technology-driven customer acquisition strategies. The focus on non-interest income as recurring revenue is an interesting aspect of NewtekOne's business model, potentially offering a more stable revenue stream less susceptible to interest rate fluctuations.
Investors may find the company's unique business model appealing, as it differentiates NewtekOne from traditional bank holding companies. However, this also means that traditional valuation metrics may not be directly applicable. The company's emphasis on not being valued like a traditional bank could be a double-edged sword, as it may require investors to adopt new valuation frameworks to accurately assess the company's potential. The projected loan fundings growth and the increase in deposits are positive indicators of business growth, but the competitive landscape and economic factors will play a crucial role in whether these projections can be met.
Legally, the transition from a BDC to a financial holding company has implications for regulatory compliance and tax treatment. No longer qualifying as a RIC for federal income tax purposes means that NewtekOne will be subject to corporate income tax, which could impact its net income and cash flows. Additionally, the company's internal control over financial reporting (ICFR) is under scrutiny due to accounting errors made in previous quarters. The management's ongoing assessment of ICFR effectiveness and the implementation of additional policies and procedures are crucial steps in mitigating the risk of future discrepancies and maintaining investor confidence. The legal and regulatory environment for financial holding companies is complex and NewtekOne's ability to navigate these challenges will be critical to its long-term success.
Full Year 2023 Basic Earnings per Share of
Conference Call Tomorrow 8:30 AM ET
BOCA RATON, Fla., March 05, 2024 (GLOBE NEWSWIRE) -- NewtekOne, Inc. (Nasdaq: NEWT), announced today its financial and operating results for the three and twelve months ended December 31, 2023.
This is NewtekOne's fourth quarter reporting, and third full quarter reporting, as a financial holding company following the Company's January 6, 2023 completion of the acquisition of National Bank of New York City ("NBNYC") (renamed Newtek Bank, N.A.) and the withdrawal of NewtekOne's BDC election. NewtekOne now consolidates the balance sheets and results of operations of its former portfolio companies (now consolidated subsidiaries) and no longer applies investment company accounting.
Barry Sloane, CEO, President and Chairman commented, “We are pleased to report our first full year as a financial holding company owning Newtek Bank, a nationally chartered bank. We achieved basic earnings per share (EPS) of
Mr. Sloane continued, “With 2023 behind us, we can look back with pride over the year’s multiple accomplishments and building a strong foundation for our future. The conversion from a BDC to a financial holding company resulted in the Company no longer qualifying as a regulated investment company (RIC) for federal income tax purposes and no longer qualifying for accounting treatment as an investment company. Accordingly, we believe prior year and year-over-year comparisons are difficult and it is important to analyze many of our financial metrics on a quarter-over-quarter sequential basis. Additionally, when analyzing NewtekOne, we also believe it is important to consider our time-tested, differentiated business model which has provided multiple streams of income from its lines of business. These changes came with many operational and accounting challenges. We are on a path to realizing our goal of being recognized as the premier business and financial solutions provider for independent business owners in the U.S. By purchasing a nationally chartered bank, we were able to add depository services to our already-robust menu of high-quality business and financial solutions that we believe can enable our clients to operate at a higher level. Most of our clients go to their depository institutions multiple times per week or month. Extremely important to note is that our conversion to a bank holding company in no way implies that NewtekOne and Newtek Bank will look like or operate like the universe of traditional bank holding companies or banks. As a result, we do not think we should be valued like a traditional bank, as our business model offers our investors more than net interest income, and therefore, we believe should garner distinct valuation compared to the universe of traditional banks. We also value this non-interest income as reoccurring income. We firmly believe that our business model can be executed with prudent risk management practices while servicing our clients with multiple solutions that can enhance their business and commercial endeavors. Our operating metrics are built on growth objectives with respect to ROA, ROE, and efficiency ratios, which we believe is distinct from the asset-growth strategies of the traditional banking industry. During our call tomorrow morning, we will illustrate our differentiated model through the discussion of detailed performance metrics.”
NewtekOne Fourth Quarter 2023 Financial Highlights
As noted above, we believe it is important to analyze many of our financial metrics on a quarter-over-quarter sequential basis:
- Net income was
$13.4 million , or$0.53 per basic and diluted common share, for the three months ended December 31, 2023, a20.5% increase on a per share basis over net income of$10.9 million , or$0.43 per basic and diluted common share, for the three months ended September 30, 2023. - Net interest income was
$8.3 million for the three months ended December 31, 2023; an increase of2.5% over$8.1 million for the three months ended September 30, 2023. - Total assets were
$1.4 billion at December 31, 2023, which remained relatively consistent to the balance at September 30, 2023. - Total borrowings were
$644.1 million at December 31, 2023; a decrease of0.7% from$648.7 million at September 30, 2023. - Loans held for investment were
$806.8 million at December 31, 2023; an increase of4.2% over$774.6 million at September 30, 2023. - Cash and cash equivalents were
$184.0 million , including$30.9 million of restricted cash, at December 31, 2023; a decrease of17.7% from to$223.7 million , including$70.7 million of restricted cash, at September 30, 2023. - Net interest margin2 was
2.83% for the three months ended December 31, 2023; an increase of4.4% over2.71% for the three months ended September 30, 2023. - ROTCE of
20.4% for the three months ended December 31, 2023; a decrease of16.0% over24.3% for the three months ended September 30, 2023. - ROAA1,2 of
3.7% for the three months ended December 31, 2023; an increase of19.4% over3.1% for the three months ended September 30, 2023. - Efficiency ratio2 of
61.2% for the three months ended December 31, 2023; a decrease of4.1% compared to63.8% for the three months ended September 30, 2023. - Total risk-based capital ratio2 was
19.6% at December 31, 2023; an increase of10.7% over17.7% at September 30, 2023. - Tier-1 leverage ratio2 was
15.6% at December 31, 2023; an increase of6.8% over14.6% at September 30, 2023. - On January 12, 2024, the Company paid its fourth quarterly cash dividend as a financial holding company of
$0.18 per share to shareholders of record as of December 29, 2023. - The Company is forecasting full year 2024 EPS in a range of
$1.80 t o$2.00 per basic and diluted common share, which would represent a13.1% increase from full year 2023 EPS of$1.70 from the midpoint of the full year 2024 forecasted range.
NewtekOne Financial Highlights Twelve Months Ended December 31, 2023
- Net income was
$43.0 million , or$1.71 per basic common share and$1.70 per diluted common share, for the twelve months ended December 31, 2023, which is line with our previously stated full year earnings guidance of$1.60 t o$1.80 per basic and diluted common share. - Net interest income was
$26.6 million for the twelve months ended December 31, 2023.
Newtek Bank, N.A.
- Total deposits were
$463.5 million at December 31, 2023, which represents a227.3% increase in deposits, compared to$141.6 million in deposits at NBNYC at December 31, 2022. - Insured deposits represented approximately
73.6% of total deposits at December 31, 2023. - Net interest margin2 was
4.43% for the three months ended December 31, 2023; an increase of26.9% over3.49% for the three months ended September 30, 2023. - ROTCE1,2 of
66.7% for the three months ended December 31, 2023; an increase of51.6% over44.0% for the three months ended September 30, 2023. - ROAA1,2 of
10.0% for the three months ended December 31, 2023; an increase of66.7% over6.0% for the three months ended September 30, 2023. - Efficiency ratio1,2 of
34.4% for the three months ended December 31, 2023; a decrease of14.6% compared to40.3% for the three months ended September 30, 2023. - Total risk-based capital ratio2 was
22.2% at December 31, 2023, a decrease of11.2% from25.0% at September 30, 2023. - Tier-1 leverage ratio2 was
16.4% at December 31, 2023; an increase of10.1% from14.9% at September 30, 2023.
Lending Highlights
- In April 2023, the Company began funding SBA 7(a) loans out of Newtek Bank with Preferred Lender Program (PLP) status.
- Total SBA 7(a) loan fundings of
$260.7 million for the three months ended December 31, 2023; an increase of24.2% over$209.9 million of SBA 7(a) loans funded for the three months ended September 30, 2023. - Total SBA 7(a) loan fundings of
$815.0 million for the twelve months ended December 31, 2023. - The Company forecasts
$925.0 million in total SBA 7(a) loan fundings for 2024, which would represent a13.5% increase over 2023. - Newtek Bank closed
$60.5 million of SBA 504 loans for the three months ended December 31, 2023; an increase of241.7% over$17.7 million SBA 504 loans closed for the three months ended September 30, 2023. - Total SBA 504 loan closings of
$142.9 million for the twelve months ended December 31, 2023. - Newtek Bank and the Company’s non-bank subsidiaries closed a record
$1.1 billion of loans, across all loan products, for the twelve months ended December 31, 2023, compared to$911.5 million of loans closed by NewtekOne, its subsidiaries and portfolio companies for the same period in 2022.
________________________
1 Non-GAAP; reconciliations of non-GAAP financial measures to the most comparable GAAP measures are set forth on the last page of the financial information accompanying this press release.
2 Assets under supervision, capital ratios, risk-weighted assets and supplementary leverage ratio are preliminary data and subject to change prior to any filings with regulatory agencies and the filing of our Form 10-K for the year ended December 31, 2023.
The Company’s 2023 prior-period comparative financial statements have been adjusted to correct errors made in the Company’s condensed financial statements previously issued in the first, second, and third quarters of 2023. Amounts referenced in this press release refer to results on an "As Adjusted" basis unless otherwise noted. Specifically, as set forth in the "Summary of Revisions to Prior Period Financial Statements," annexed hereto, which revises certain line items in the Company’s condensed financial information for the first, second, and third quarters of 2023 as previously reported, the Company’s: (i) year-to-date EPS (basic and diluted) reflects an increase of
Continuing, Mr. Sloane said, “The goal of owning a nationally chartered bank was the recognition that our client base communicates with their bank digitally with high frequency, so the opportunity and our ability to communicate with our clients through our Newtek Advantage® platform, and assist them on a daily basis to become part of their operating ecosystem, has been our goal and is now closer to reality. We have witnessed the customer traffic to Newtekone.com and Newtekbank.com increase to approximately 18,000 unique digital visitors per month, providing our customers with the opportunity to access the Newtek Advantage®, communicate with us, and see all we have to offer. We will discuss these concepts and the value of these impressions on our call tomorrow. We seek to employ the most cutting-edge technology and AI in order to enhance the client experience, improve work flow processes, and acquire clients in an environment that has less friction and higher levels of business satisfaction.”
Mr. Sloane concluded, “We spent a good part of 2023 building out our bank infrastructure, continuing to hire top-quality executives and establishing additional policies and procedures, all at a great expense, an investment we believe will provide a great return in the future. Obviously, the investment and upfront expense is to better enable us to safely and soundly grow our business, and develop a lasting infrastructure. Also important to note, is that we have been able to grow our loan-loss reserves dramatically during our first twelve months of operations ending December 31, 2023. We ended 2023 with a
Fourth Quarter and Full Year 2023 Conference Call and Webcast
A conference call to discuss the fourth quarter and full year 2023 financial results will be hosted by Barry Sloane, President, Chairman and Chief Executive Officer, M. Scott Price, Chief Financial Officer, and Nick Leger, Chief Accounting Officer, tomorrow, Wednesday, March 6, 2024, 8:30 a.m. ET.
Please note, to attend the conference call or webcast, participants should register online at NewtekOne, Inc. Q4 and Full Year 2023 Financial Results Conference Call. To receive a dial-in number, participants are requested to register at a minimum 15 minutes before the start of the call. The corresponding presentation will be available in the ‘Events & Presentations’ section of the Investor Relations portion of NewtekOne's website at NewtekOne, Inc. Q4 and FY 2023 Financial Results Conference Call. A replay of the call with the corresponding presentation will be available on NewtekOne's website shortly following the live presentation and will be available for a period of 90 days.
Note Regarding Dividend Payments
Amount and timing of dividends, if any, remain subject to the discretion of the Company's Board of Directors.
About NewtekOne, Inc.
NewtekOne®, Your Business Solutions Company®, is a financial holding company, which along with its bank and non-bank consolidated subsidiaries, (collectively, “NewtekOne”), provides a wide range of business and financial solutions under the Newtek® brand to the small- and medium-sized business (“SMB”) market. Since 1999, NewtekOne has provided state-of-the-art, cost-efficient products and services and efficient business strategies to SMB relationships across all 50 states to help them grow their sales, control their expenses and reduce their risk.
NewtekOne’s and its subsidiaries’ business and financial solutions include: banking (Newtek Bank, N.A.), Business Lending, SBA Lending Solutions, Electronic Payment Processing, Technology Solutions (Cloud Computing, Data Backup, Storage and Retrieval, IT Consulting), eCommerce, Accounts Receivable Financing & Inventory Financing, Insurance Solutions, Web Services, and Payroll and Benefits Solutions.
Newtek®, NewtekOne®, Newtek Bank®, N.A., Your Business Solutions Company® and One Solution for All Your Business Needs® are registered trademarks of NewtekOne, Inc.
Note Regarding Forward-Looking Statements
Certain statements in this press release are “forward-looking statements” within the meaning of the rules and regulations of the Private Securities Litigation and Reform Act of 1995. Information regarding the Company’s assets under supervision, capital ratios, risk-weighted assets, supplementary leverage ratio and balance sheet data consists of preliminary estimates and are subject to change prior to any filings with regulatory agencies and filing of the Company's Form 10-K for the period ended December 31, 2023. These statements and other forward-looking statements herein are based on the current beliefs and expectations of NewtekOne's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. In addition, earnings per share guidance reflects risks, uncertainties and assumptions with respect to facts and circumstances that are beyond our control, in particular concerning interest rates, monetary policy and prevailing economic conditions (including the impacts from a government shutdown ) during the relevant periods, any of which may differ significantly from our assumptions about the applicable period, causing our actual operating results, including our earnings per share, to differ materially from the stated guidance. See “Note Regarding Forward-Looking Statements” and the sections entitled “Risk Factors” in our filings with the Securities and Exchange Commission available on NewtekOne's website (https://investor.newtekbusinessservices.com/sec-filings) and on the Securities and Exchange Commission’s website (www.sec.gov). Any forward-looking statements made by or on behalf of NewtekOne speak only as to the date they are made, and NewtekOne does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements were made.
SOURCE: NewtekOne, Inc.
Investor Relations & Public Relations
Contact: Jayne Cavuoto
Telephone: (212) 273-8179 / jcavuoto@newtekone.com
Summary of Revisions to Prior Period Consolidated Financial Statements
As of January 6, 2023, the Company is no longer subject to Financial Accounting Standard Board Accounting Standards Codification (FASB) Topic (ASC) 946 Financial Services – Investment Companies, which resulted in a significant change in the Company’s accounting and financial reporting requirements for the year ended December 31, 2023. For example, the Company is required to consolidate the financial statements of what was previously referred to as our controlled or majority-owned investments together with those already consolidated by the Company. In accordance with ASC 946, prior to January 6, 2023, the Company was required to account for investments, loans and other receivables at fair value. For fiscal year ended December 31, 2023, the Company is now required to account for debt securities under ASC 320, loans and other receivables, including modifications and restructurings under ASC 310, and must apply the current expected credit loss model to each of these financial instruments under ASC 326. Additionally, management continues to elect the fair value option of accounting under ASC 825 for certain financial instruments. Finally, as a result of the conversion, the Company no longer qualifies as a RIC for federal income tax purposes, and no longer qualifies for accounting treatment as an investment company, therefore management has been required to expend significant efforts in order to implement these changes in accounting and financial reporting requirements.
The Company’s condensed comparative financial statements have been adjusted to correct errors made in the Company’s financial statements previously issued for the first, second, and third quarters of 2023. These adjustments include the following adjustments for the year-to-date period ended September 30, 2023:
- Accounting for deferred loan origination fees and costs, net, under ASC 310 resulting in a
$5.1 million and$5.7 million decrease in non-interest income and non-interest expense, respectively; - Calculating EPS under ASC 260 to reflect the treasury stock and if-converted methods and adjusting the allocations under the two-class method, in conjunction with other adjustments to net income, all resulting in an increase of
$0.08 and$0.07 per share for basic and diluted EPS, respectively; - Establishing deferred net tax assets and income taxes receivable under ASC 740 in conjunction with the common control transaction, resulting in increased net deferred tax assets and income taxes receivable of
$1.9 million ; - Establishing certain servicing assets under ASC 860 in conjunction with the common control transaction resulting in a
$1.0 million increase in non-interest income and a$1.5 million increase in servicing assets; and - An adjusting opening balance sheet entry in conjunction with common control transaction to correct understatements of goodwill and intangibles and stockholders’ equity resulting in respective increases of
$3.9 million .
The year-to-date and quarterly impact of these adjustments for the periods presented are outlined in the unaudited tables below.
| NewtekOne, Inc. and Subsidiaries Consolidated Statements of Financial Condition (Unaudited) As of the Period Ended: | ||||||||||||||||||||
| (in thousands) | September 30, 2023 | June 30, 2023 | March 31, 2023 | |||||||||||||||||
| As Reported1 | Adjustment | As Adjusted | As Reported1 | Adjustment | As Adjusted | As Reported1 | Adjustment | As Adjusted | ||||||||||||
| Assets | ||||||||||||||||||||
| Goodwill & intangibles | $ | 27,157 | $ | 4,154 | $ | 31,311 | $ | 27,595 | $ | 4,072 | $ | 31,667 | $ | 28,101 | $ | 3,990 | $ | 32,091 | ||
| Servicing assets | 36,774 | 1,517 | 38,291 | 35,754 | 484 | 36,238 | 33,351 | 328 | 33,679 | |||||||||||
| All other assets | 1,314,223 | 1,837 | 1,316,060 | 1,373,503 | 2,007 | 1,375,510 | 1,184,443 | 1,925 | 1,186,368 | |||||||||||
| Total assets | $ | 1,378,154 | $ | 7,508 | $ | 1,385,662 | $ | 1,436,852 | $ | 6,563 | $ | 1,443,415 | $ | 1,245,895 | $ | 6,243 | $ | 1,252,138 | ||
| Liabilities and Shareholders' Equity | ||||||||||||||||||||
| Total liabilities | $ | 1,151,131 | $ | 162 | $ | 1,151,293 | $ | 1,215,637 | $ | 162 | $ | 1,215,799 | $ | 1,027,385 | $ | — | $ | 1,027,385 | ||
| Total shareholders’ equity | 227,023 | 7,346 | 234,369 | 221,215 | 6,401 | 227,616 | 218,510 | 6,243 | 224,753 | |||||||||||
| Total Liabilities & Shareholders Equity | $ | 1,378,154 | 7,508 | 1,385,662 | 1,436,852 | 6,563 | 1,443,415 | 1,245,895 | 6,243 | 1,252,138 | ||||||||||
1Certain amounts labeled "As Reported" have been reclassified to conform to current period presentation.
| NewtekOne, Inc. and Subsidiaries Consolidated Statement of Income (Unaudited) (In Thousands, except for Per Share Data) | |||||||||||||||||||||||||||
| For the nine months ended | For the six months ended | For the three months ended | |||||||||||||||||||||||||
| September 30, 2023 | June 30, 2023 | March 31, 2023 | |||||||||||||||||||||||||
| As Reported1 | Adjustment | As Adjusted | As Reported1 | Adjustment | As Adjusted | As Reported1 | Adjustment | As Adjusted | |||||||||||||||||||
| Net interest income | $ | 18,333 | $ | — | $ | 18,333 | $ | 10,256 | $ | — | $ | 10,256 | $ | 4,583 | $ | — | $ | 4,583 | |||||||||
| Provision for credit losses | 7,339 | — | 7,339 | 3,893 | — | 3,893 | 1,318 | — | 1,318 | ||||||||||||||||||
| Noninterest income | 132,113 | (4,258 | ) | 127,855 | 89,215 | (2,384 | ) | 86,831 | 42,787 | (241 | ) | 42,546 | |||||||||||||||
| Noninterest expense | 113,891 | (5,771 | ) | 108,120 | 79,346 | (2,546 | ) | 76,800 | 39,197 | (174 | ) | 39,023 | |||||||||||||||
| Income tax expense (benefit) | 671 | 454 | 1,125 | (2,339 | ) | 48 | (2,291 | ) | (4,863 | ) | (23 | ) | (4,886 | ) | |||||||||||||
| Net income | $ | 28,545 | $ | 1,059 | $ | 29,604 | $ | 18,571 | $ | 114 | $ | 18,685 | $ | 11,718 | $ | (44 | ) | $ | 11,674 | ||||||||
| Weighted average number of shares outstanding | |||||||||||||||||||||||||||
| Basic | 24,626 | (371 | ) | 24,255 | 24,608 | (364 | ) | 24,244 | 24,609 | (386 | ) | 24,223 | |||||||||||||||
| Diluted | 24,626 | (290 | ) | 24,336 | 25,423 | (1,125 | ) | 24,298 | 25,237 | (356 | ) | 24,881 | |||||||||||||||
| Earnings (loss) per common share | |||||||||||||||||||||||||||
| Basic | $ | 1.10 | $ | 0.08 | $ | 1.18 | $ | 0.72 | $ | 0.02 | $ | 0.74 | $ | 0.46 | $ | 0.01 | $ | 0.47 | |||||||||
| Diluted | $ | 1.10 | $ | 0.07 | $ | 1.17 | $ | 0.72 | $ | 0.02 | $ | 0.74 | $ | 0.46 | $ | — | $ | 0.46 | |||||||||
| For the three months ended | For the three months ended | For the three months ended | ||||||||||||||||||||||||
| September 30, 2023 | June 30, 2023 | March 31, 2023 | ||||||||||||||||||||||||
| As Reported1 | Adjustment | As Adjusted | As Reported1 | Adjustment | As Adjusted | As Reported1 | Adjustment | As Adjusted | ||||||||||||||||||
| Net interest income | $ | 8,077 | $ | — | $ | 8,077 | $ | 5,673 | $ | — | $ | 5,673 | $ | 4,583 | $ | — | $ | 4,583 | ||||||||
| Provision for credit losses | 3,446 | — | 3,446 | 2,575 | — | 2,575 | 1,318 | — | 1,318 | |||||||||||||||||
| Noninterest income | 42,900 | (1,874 | ) | 41,026 | 46,428 | (2,143 | ) | 44,285 | 42,787 | (241 | ) | 42,546 | ||||||||||||||
| Noninterest expense | 34,545 | (3,224 | ) | 31,321 | 40,149 | (2,372 | ) | 37,777 | 39,197 | (174 | ) | 39,023 | ||||||||||||||
| Income tax expense (benefit) | 3,011 | 406 | 3,417 | 2,524 | 71 | 2,595 | (4,863 | ) | (23 | ) | (4,886 | ) | ||||||||||||||
| Net income | $ | 9,975 | $ | 944 | $ | 10,919 | $ | 6,853 | $ | 158 | $ | 7,011 | $ | 11,718 | $ | (44 | ) | $ | 11,674 | |||||||
| Weighted average number of shares outstanding | ||||||||||||||||||||||||||
| Basic | 24,663 | (386 | ) | 24,277 | 24,607 | (343 | ) | 24,264 | 24,609 | (386 | ) | 24,223 | ||||||||||||||
| Diluted | 24,663 | (250 | ) | 24,413 | 25,588 | (1,282 | ) | 24,306 | 25,237 | (356 | ) | 24,881 | ||||||||||||||
| Earnings (loss) per common share | ||||||||||||||||||||||||||
| Basic | $ | 0.38 | $ | 0.05 | $ | 0.43 | $ | 0.26 | $ | 0.01 | $ | 0.27 | $ | 0.46 | $ | 0.01 | $ | 0.47 | ||||||||
| Diluted | $ | 0.38 | $ | 0.05 | $ | 0.43 | $ | 0.26 | $ | 0.01 | $ | 0.27 | $ | 0.46 | $ | — | $ | 0.46 | ||||||||
1Certain amounts labeled "As Reported" have been reclassified to conform to current period presentation.
| NEWTEKONE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In Thousands, except for Per Share Data) | |||||||
| December 31, 2023 | December 31, 2022 | ||||||
| ASSETS | Financial Holding Company (unaudited) | Investment Company1 | |||||
| Cash and due from banks | $ | 13,929 | $ | 53,692 | |||
| Restricted cash | 30,919 | 71,914 | |||||
| Interest bearing deposits in banks | 139,158 | — | |||||
| Total cash and cash equivalents | 184,006 | 125,606 | |||||
| Debt securities available-for-sale, at fair value | 32,171 | — | |||||
| Loans held for sale, at fair value | 118,867 | 19,171 | |||||
| Loans held for sale, at LCM | 55,953 | — | |||||
| Loans held for investment, at fair value | 469,801 | 505,268 | |||||
| Loans held for investment, at amortized cost, net of deferred fees and costs | 336,956 | — | |||||
| Allowance for credit losses | (12,574 | ) | — | ||||
| Loans held for investment, at amortized cost, net | 324,382 | — | |||||
| Federal Home Loan Bank and Federal Reserve Bank stock | 3,635 | — | |||||
| Settlement receivable | 62,230 | — | |||||
| Joint ventures, at fair value (cost of | 40,859 | 23,022 | |||||
| Controlled investments (cost of | — | 259,217 | |||||
| Non-control investments (cost of | 728 | 1,360 | |||||
| Goodwill and intangibles | 31,316 | — | |||||
| Right of use assets | 5,701 | 6,484 | |||||
| Deferred tax asset, net | 461 | — | |||||
| Servicing assets | 39,725 | 30,268 | |||||
| Other assets | 52,657 | 28,506 | |||||
| Total assets | $ | 1,422,492 | $ | 998,902 | |||
| LIABILITIES AND NET ASSETS | |||||||
| Liabilities: | |||||||
| Deposits: | |||||||
| Noninterest-bearing | $ | 10,053 | $ | — | |||
| Interest-bearing | 453,452 | — | |||||
| Total deposits | 463,505 | — | |||||
| Borrowings | 644,122 | 539,326 | |||||
| Dividends payable | 4,792 | — | |||||
| Lease liabilities | 6,952 | 7,973 | |||||
| Deferred tax liabilities, net | — | 19,194 | |||||
| Due to participants | 23,796 | 35,627 | |||||
| Accounts payable, accrued expenses and other liabilities | 35,589 | 21,424 | |||||
| Total liabilities | 1,178,756 | 623,544 | |||||
| Shareholders' Equity: | |||||||
| Preferred stock (par value | 19,738 | — | |||||
| Common stock (par value | 492 | 492 | |||||
| Additional paid-in capital | 199,956 | 354,243 | |||||
| Retained earnings | 23,698 | 20,623 | |||||
| Accumulated other comprehensive loss, net of income taxes | (148 | ) | — | ||||
| Total shareholders' equity | 243,736 | 375,358 | |||||
| Total liabilities and shareholders' equity | $ | 1,422,492 | $ | 998,902 | |||
1The Company’s financial statements as of December 31, 2022, are, and in previous years were, presented and accounted for under the specialized method of accounting applicable to investment companies and excluded many of our consolidated subsidiaries, which were previously treated as portfolio company investments.
| NEWTEKONE, INC. AND SUBSIDIARIES | |||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
| (In Thousands, except for Per Share Data) | |||||||||||
| Year Ended December 31, | |||||||||||
| 2023 Financial Holding Company (unaudited) | 2022 Investment Company1 | 2021 Investment Company1 | |||||||||
| Interest income | |||||||||||
| Debt securities available-for-sale | $ | 1,518 | $ | — | $ | — | |||||
| Loans and fees on loans | 84,001 | 35,696 | 25,951 | ||||||||
| Loans and fees on loans - PPP loans | — | — | 49,989 | ||||||||
| Interest from affiliates | — | 2,921 | 3,026 | ||||||||
| Other interest earning assets | 8,854 | — | — | ||||||||
| Total interest income | 94,373 | 38,617 | 78,966 | ||||||||
| Interest expense | |||||||||||
| Deposits | 15,849 | — | — | ||||||||
| Notes and securitizations | 40,217 | 21,780 | 18,591 | ||||||||
| Bank and FHLB borrowings | 11,673 | 3,998 | 1,536 | ||||||||
| Notes payable related party | — | 547 | 388 | ||||||||
| Total interest expense | 67,739 | 26,325 | 20,515 | ||||||||
| Net interest income | 26,634 | 12,292 | 58,451 | ||||||||
| Provision for credit losses | 11,704 | — | — | ||||||||
| Net interest income after provision for credit losses | 14,930 | 12,292 | 58,451 | ||||||||
| Noninterest income | |||||||||||
| Dividend income | 1,757 | 24,657 | 9,896 | ||||||||
| Loan servicing asset revaluation | (3,549 | ) | (10,095 | ) | (6,778 | ) | |||||
| Servicing income, net of amortization | 18,289 | 13,698 | 11,307 | ||||||||
| Net gains on sales of loans | 50,734 | 56,901 | 53,113 | ||||||||
| Net gain (loss) on loans under the fair value option | 18,008 | (26,504 | ) | 11,477 | |||||||
| Technology and IT support income | 24,916 | — | — | ||||||||
| Electronic payment processing income | 42,855 | — | — | ||||||||
| Other noninterest income | 24,076 | 34,221 | 10,295 | ||||||||
| Total noninterest income | 177,086 | 92,878 | 89,310 | ||||||||
| Noninterest expense | |||||||||||
| Salaries and employee benefits expense | 65,708 | 20,186 | 17,866 | ||||||||
| Technology services expense | 14,272 | — | — | ||||||||
| Electronic payment processing expense | 18,327 | — | — | ||||||||
| Professional services expense | 13,077 | 7,134 | 5,610 | ||||||||
| Other loan origination and maintenance expense | 9,433 | 30,746 | 29,506 | ||||||||
| Depreciation and amortization | 2,884 | 239 | 304 | ||||||||
| Loss on extinguishment of debt | 271 | 417 | 1,552 | ||||||||
| Other general and administrative costs | 19,331 | 7,673 | 7,454 | ||||||||
| Total noninterest expense | 143,303 | 66,395 | 62,292 | ||||||||
| Net income before taxes | 48,713 | 38,775 | 85,469 | ||||||||
| Income tax expense | 5,748 | 6,464 | 1,327 | ||||||||
| Net income | 42,965 | 32,311 | 84,142 | ||||||||
| Dividends to preferred shareholders | (1,454 | ) | — | — | |||||||
| Net income available to common shareholders | $ | 41,511 | $ | 32,311 | $ | 84,142 | |||||
| Earnings per share: | |||||||||||
| Basic | $ | 1.71 | $ | 1.34 | $ | 3.69 | |||||
| Diluted | $ | 1.70 | $ | 1.34 | $ | 3.69 | |||||
1The Company’s financial statements as of December 31, 2022, are, and in previous years were, presented and accounted for under the specialized method of accounting applicable to investment companies and excluded many of our consolidated subsidiaries, which were previously treated as portfolio company investments.
| NEWTEKONE, INC. AND SUBSIDIARIES | |||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
| (In Thousands, except for Per Share Data) | |||||||||||
| Three Months Ended December 31, | |||||||||||
| 2023 Financial Holding Company (unaudited) | 2022 Investment Company1 | 2021 Investment Company1 | |||||||||
| Interest income | |||||||||||
| Debt securities available-for-sale | $ | 435 | $ | — | $ | — | |||||
| Loans and fees on loans | 23,660 | 11,781 | 6,623 | ||||||||
| Loans and fees on loans - PPP loans | — | — | — | ||||||||
| Interest from affiliates | — | 834 | 895 | ||||||||
| Other interest earning assets | 2,274 | — | 54 | ||||||||
| Total interest income | 26,369 | 12,615 | 7,572 | ||||||||
| Interest expense | |||||||||||
| Deposits | 5,111 | — | — | ||||||||
| Notes and securitizations | 11,411 | 7,348 | 4,791 | ||||||||
| Bank and FHLB borrowings | 1,546 | 1,303 | 394 | ||||||||
| Notes payable related party | — | 262 | 112 | ||||||||
| Total interest expense | 18,068 | 8,913 | 5,297 | ||||||||
| Net interest income | 8,301 | 3,702 | 2,275 | ||||||||
| Provision for credit losses | 4,365 | — | — | ||||||||
| Net interest income after provision for credit losses | 3,936 | 3,702 | 2,275 | ||||||||
| Noninterest income | |||||||||||
| Dividend income | 360 | 4,606 | 9,775 | ||||||||
| Loan servicing asset revaluation | (1,983 | ) | (6,131 | ) | (3,456 | ) | |||||
| Servicing income, net of amortization | 4,985 | 3,767 | 2,961 | ||||||||
| Net gains on sales of loans | 17,252 | 6,948 | 15,034 | ||||||||
| Net gain (loss) on loans under the fair value option | 5,420 | (14,089 | ) | 6,361 | |||||||
| Technology and IT support income | 6,460 | — | — | ||||||||
| Electronic payment processing income | 10,659 | — | — | ||||||||
| Other noninterest income | 6,078 | 24,840 | 4,149 | ||||||||
| Total noninterest income | 49,231 | 19,941 | 34,824 | ||||||||
| Noninterest expense | |||||||||||
| Salaries and employee benefits expense | 14,535 | 5,806 | 5,139 | ||||||||
| Technology services expense | 4,265 | — | — | ||||||||
| Electronic payment processing expense | 4,168 | — | — | ||||||||
| Professional services expense | 3,311 | 2,812 | 2,145 | ||||||||
| Other loan origination and maintenance expense | 2,503 | 8,846 | 8,122 | ||||||||
| Depreciation and amortization | 613 | 58 | 68 | ||||||||
| Loss on extinguishment of debt | 271 | — | 597 | ||||||||
| Other general and administrative costs | 5,517 | 2,054 | 1,791 | ||||||||
| Total noninterest expense | 35,183 | 19,576 | 17,862 | ||||||||
| Net income before taxes | 17,984 | 4,067 | 19,237 | ||||||||
| Income tax expense | 4,623 | 6,289 | (793 | ) | |||||||
| Net income | 13,361 | (2,222 | ) | 20,030 | |||||||
| Dividends to preferred shareholders | (405 | ) | — | — | |||||||
| Net income available to common shareholders | $ | 12,956 | $ | (2,222 | ) | $ | 20,030 | ||||
| Earnings per share: | |||||||||||
| Basic | $ | 0.53 | $ | (0.09 | ) | $ | 0.84 | ||||
| Diluted | $ | 0.53 | $ | (0.09 | ) | $ | 0.84 | ||||
1The Company’s financial statements as of December 31, 2022, are, and in previous years were, presented and accounted for under the specialized method of accounting applicable to investment companies and excluded many of our consolidated subsidiaries, which were previously treated as portfolio company investments.
Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
The information provided below presents a reconciliation of each of our non-GAAP financial measures to the most directly comparable GAAP financial measure. Ratios for three-month period ended have been annualized based on calendar days.
| Newtek Bank, NA | As of and for the three months ended | As of and for the year ended | |
| (in thousands) | December 31, 2023 | December 31, 2023 | |
| Return on Average Tangible Common Equity | |||
| Numerator: Net Income (Loss) (GAAP) | |||
| Average Total Shareholders' Equity (non-GAAP) | 92,201 | 81,043 | |
| Deduct: Average Goodwill and Intangibles (non-GAAP) | 2,099 | 2,157 | |
| Denominator: Tangible Average Common Equity (non-GAAP) | |||
| Return on Average Tangible Common Equity (non-GAAP) | |||
| Return on Average Assets | |||
| Numerator: Net Income (GAAP) | |||
| Denominator: Average Assets (non-GAAP) | 601,130 | 490,604 | |
| Return on Average Assets (non-GAAP) | |||
| Efficiency Ratio | |||
| Numerator: Non-Interest Expense (GAAP) | |||
| Net Interest Income (GAAP) | 6,589 | 17,461 | |
| Non-Interest Income (GAAP) | 30,745 | 85,704 | |
| Denominator: Total Income | |||
| Efficiency Ratio (non-GAAP) |
Summary of Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
Newtek Bank’s comparative financial measures have been adjusted to correct errors made in the Company’s financial statements previously-issued in the first, second and third quarters of 2023. The amounts presented below are as of and for the periods ended (in thousands):
| Newtek Bank, NA | As of and for the three months ended | |||||||||||
| (in thousands) | September 30, 2023 | June 30, 2023 | March 31, 2023 | |||||||||
| As Reported1 | Adjustment | As Adjusted | As Reported1 | Adjustment | As Adjusted | As Reported1 | Adjustment | As Adjusted | ||||
| Return on Average Tangible Common Equity | ||||||||||||
| Numerator: Net Income (Loss) (GAAP) | ||||||||||||
| Average Total Shareholders' Equity (non-GAAP) | 81,043 | 558 | 81,601 | 76,838 | 338 | 77,176 | 75,813 | 405 | 76,218 | |||
| Deduct: Average Goodwill and Intangibles (non-GAAP) | 2,146 | — | 2,146 | 2,195 | — | 2,195 | 2,190 | — | 2,190 | |||
| Denominator: Tangible Average Common Equity (non-GAAP) | ||||||||||||
| Return on Average Tangible Common Equity (non-GAAP) | (10.0)% | (10.5)% | ||||||||||
| Return on Average Assets | ||||||||||||
| Numerator: Net Income (GAAP) | ||||||||||||
| Denominator: Average Assets (non-GAAP) | 584,182 | 705 | 584,887 | 485,633 | 330 | 485,963 | 285,455 | 459 | 285,914 | |||
| Return on Average Assets (non-GAAP) | (2.6)% | (2.7)% | ||||||||||
| Efficiency Ratio | ||||||||||||
| Numerator: Non-Interest Expense (GAAP) | ||||||||||||
| Net Interest Income (GAAP) | 5,089 | 279 | 5,368 | 3,771 | 445 | 4,216 | 2,011 | (329) | 1,682 | |||
| Non-Interest Income (GAAP) | 24,984 | (1,751) | 23,233 | 23,920 | (2,055) | 21,865 | 10,101 | (241) | 9,860 | |||
| Denominator: Total Income | ||||||||||||
| Efficiency Ratio (non-GAAP) | ||||||||||||
1Certain amounts labeled "As Reported" have been reclassified to conform to current period presentation.
| NewtekOne Inc. | As of and for the three months ended | As of and for the year ended | |
| (dollars and number of shares in thousands) | December 31, 2023 | December 31, 2023 | |
| Return on Average Tangible Common Equity | |||
| Numerator: Net Income (GAAP) | |||
| Average Total Shareholders' Equity (non-GAAP) | 310,965 | 241,026 | |
| Deduct: Preferred Stock (GAAP) | 19,738 | 19,738 | |
| Average Common Shareholders' Equity (non-GAAP) | 291,227 | 221,288 | |
| Deduct: Average Goodwill and Intangibles (non-GAAP) | 31,409 | 31,746 | |
| Denominator: Average Tangible Common Equity (non-GAAP) | |||
| Return on Tangible Common Equity (non-GAAP) | |||
| Return on Average Assets | |||
| Numerator: Net Income (GAAP) | |||
| Denominator: Average Assets (non-GAAP) | 1,414,414 | 1,323,932 | |
| Return on Average Assets (non-GAAP) | |||
| Efficiency Ratio | |||
| Numerator: Non-Interest Expense (GAAP) | |||
| Net Interest Income (GAAP) | 8,301 | 14,930 | |
| Non-Interest Income (GAAP) | 49,231 | 177,086 | |
| Denominator: Total Income | |||
| Efficiency Ratio (non-GAAP) | |||
| Tangible Book Value Per Share | |||
| Total Shareholders' Equity (GAAP) | |||
| Deduct: Goodwill and Intangibles (GAAP) | 31,316 | 31,316 | |
| Numerator: Total Tangible Book Value (non-GAAP) | |||
| Denominator: Total Number of Shares Outstanding | 24,680 | 24,680 | |
| Tangible Book Value Per Share (non-GAAP) | |||
| Tangible Book Value Per Common Share | |||
| Total Tangible Book Value (non-GAAP) | |||
| Deduct: Preferred Stock (GAAP) | 19,738 | 19,738 | |
| Numerator: Tangible Book Value Per Common Share (non-GAAP) | |||
| Denominator: Total Number of Shares Outstanding | 24,680 | 24,680 | |
| Tangible Book Value Per Common Share (non-GAAP) |
Summary of Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
The Company’s comparative financial statements have been adjusted to correct errors made in the Company’s financial statements previously-issued in the first, second and third quarters of 2023. The amounts presented below are as of and for the periods ended (in thousands, except per share data):
| NewtekOne Inc. | As of and for the three months ended | |||||||||||
| (dollars and number of shares in thousands) | September 30, 2023 | June 30, 2023 | March 31, 2023 | |||||||||
| As Reported1 | Adjustment | As Adjusted | As Reported1 | Adjustment | As Adjusted | As Reported1 | Adjustment | As Adjusted | ||||
| Return on Average Tangible Common Equity | ||||||||||||
| Numerator: Net Income (GAAP) | ||||||||||||
| Average Total Shareholders' Equity (non-GAAP) | 224,119 | 6,874 | 230,993 | 219,863 | 6,322 | 226,185 | 180,707 | 5,900 | 186,607 | |||
| Deduct: Preferred Stock (GAAP) | 19,738 | — | 19,738 | 19,738 | — | 19,738 | 19,738 | — | 19,738 | |||
| Average Common Shareholders' Equity (non-GAAP) | 204,381 | 6,874 | 211,255 | 200,125 | 6,322 | 206,447 | 160,969 | 5,900 | 166,869 | |||
| Deduct: Average Goodwill and Intangibles (non-GAAP) | 29,234 | 4,113 | 33,347 | 29,631 | 4,031 | 33,662 | 28,291 | 3,771 | 32,062 | |||
| Denominator: Average Tangible Common Equity (non-GAAP) | ||||||||||||
| Return on Tangible Common Equity (non-GAAP) | ||||||||||||
| Return on Average Assets | ||||||||||||
| Numerator: Net Income (GAAP) | ||||||||||||
| Denominator: Average Assets (non-GAAP) | 1,409,762 | 7,036 | 1,416,798 | 1,344,425 | 6,403 | 1,350,828 | 1,111,391 | 5,900 | 1,117,291 | |||
| Return on Average Assets (non-GAAP) | ||||||||||||
| Efficiency Ratio | ||||||||||||
| Numerator: Non-Interest Expense (GAAP) | ||||||||||||
| Net Interest Income (GAAP) | 8,077 | — | 8,077 | 5,673 | — | 5,673 | 4,583 | — | 4,583 | |||
| Non-Interest Income (GAAP) | 42,900 | (1,874) | 41,026 | 46,428 | (2,143) | 44,285 | 42,787 | (241) | 42,546 | |||
| Denominator: Total Income | ||||||||||||
| Efficiency Ratio (non-GAAP) | ||||||||||||
| Tangible Book Value Per Share | ||||||||||||
| Total Shareholders' Equity (GAAP) | ||||||||||||
| Deduct: Goodwill and Intangibles (GAAP) | 27,157 | 4,154 | 31,311 | 27,595 | 4,072 | 31,667 | 28,101 | 3,990 | 32,091 | |||
| Numerator: Total Tangible Book Value (non-GAAP) | ||||||||||||
| Denominator: Total Number of Shares Outstanding | 24,645 | — | 24,645 | 24,615 | — | 24,615 | 24,609 | — | 24,609 | |||
| Tangible Book Value Per Share (non-GAAP) | ||||||||||||
| Tangible Book Value Per Common Share | ||||||||||||
| Total Tangible Book Value (non-GAAP) | ||||||||||||
| Deduct: Preferred Stock (GAAP) | 19,738 | — | 19,738 | 19,738 | — | 19,738 | 19,738 | — | 19,738 | |||
| Numerator: Tangible Book Value Per Common Share (non-GAAP) | ||||||||||||
| Denominator: Total Number of Shares Outstanding | 24,645 | — | 24,645 | 24,615 | — | 24,615 | 24,609 | — | 24,609 | |||
| Tangible Book Value Per Common Share (non-GAAP) | ||||||||||||
1Certain amounts labeled "As Reported" have been reclassified to conform to current period presentation.
FAQ
What were NewtekOne's Full Year 2023 Basic and Diluted Earnings per Share?
What were Newtek Bank's ROAA and ROTCE for the Full Year 2023?
What is the forecasted annual EPS range for NewtekOne in 2024?
What type of loans did Newtek Bank begin funding in April 2023?
What was the total SBA 7(a) loan fundings for the twelve months ended December 31, 2023?
