Stephen Moss's questions to NewtekOne (NEWT) leadership • Q1 2025
Question
Stephen Moss followed up on SBA loans, asking how long the company plans to hold the loans that generated fair value gains. He also questioned what provides comfort that recent loan vintages will perform better than the tougher NSBF portfolio, requested another breakdown of the fair value gain, and asked about the expected earnings ramp through the year.
Answer
Executive Barry R. Sloane stated that the SBA loans held on the balance sheet would not be held for an extended period. He expressed confidence in the credit quality of recent vintages because they are underwritten in a much higher interest rate environment, and he emphasized that the bank is well-provisioned for expected credit migration. CFO Frank DeMaria reiterated that the majority of the fair value gain, outside of the SBA portion, came from ALP loans. Sloane confirmed the projected earnings ramp is driven by the historical seasonality of higher loan origination volumes in the second half of the year.