Executive Summary

Q2 2025 delivered solid profitability with diluted EPS of $0.52 (vs. $0.35 in Q1 2025; $0.43 in Q2 2024) on strong fee revenue from an ALP securitization; efficiency improved to 60.3% and ROAA to 2.50% .
Consensus context: EPS was essentially in line (actual $0.52 vs. S&P Global consensus $0.525*), while “Revenue” per S&P was a large beat ($92.8m* actual vs. $74.6m* estimate), driven by a $32.4m gain on residuals in securitizations; company-reported Total Income (NII+noninterest) was $70.2m .
Management maintained 2025 EPS guidance of $2.10–$2.50 and reiterated key volume goals (e.g., ~$1.0B SBA 7(a) fundings), with a lower expected 7(a) GOS premium (~110) embedded in guidance; another ALP securitization is expected in Q4 2025 .
Strategic catalysts: expanding ALP warehouse capacity (Capital One +$40m to $100m; Deutsche Bank +$50m to $170m), integrated bank/merchant onboarding launch, and a $48.4m preferred raise that lifts Tier 1 capital pro forma to 19.2% .

What Went Well and What Went Wrong

What Went Well
- Executed ALP securitization ($184m notes backed by $216m ALP collateral) and recognized $32.4m gain on residuals; management plans another securitization in Q4 2025 .
- Strong bank fundamentals: business deposits +$50m q/q (19%), cost of deposits down 28 bps to 3.71%, bank NIM up 56 bps to 5.46% .
- Strategy/tech narrative resonated; CEO: “We leverage AI…to automate complex document reviews and analyzing sales calls…faster, more consistent…lending decisions,” emphasizing a fully digital, low-cost operating model (Bank efficiency ratio 48.7%) .
What Went Wrong
- Provision remained elevated ($9.1m) with net charge-offs cited at ~$5.1m in the bank HFI portfolio; management guided that provision likely increases in 2H 2025 as the SBA 7(a) portfolio seasons .
- Gain-on-sale dynamics for SBA 7(a) guided lower (~110 vs. 110.91 in Q2) following SBA rule changes; management now holds 7(a) loans 60–75 days pre-sale to support NII .
- Noninterest income had offsets: loan servicing asset revaluation remained a headwind (net loss on servicing assets -$4.4m in Q2) despite securitization gains .

Financial Results

Overall P&L and profitability (company-reported; $USD Millions except per share and %):

Metric	Q4 2024	Q1 2025	Q2 2025
Total Income (NII + Noninterest)	$75.37	$66.33	$70.20
Net Interest Income	$11.29	$13.93	$12.98
Noninterest Income	$64.07	$52.40	$57.21
Net Income	$18.32	$9.37	$13.70
Diluted EPS ($)	$0.69	$0.35	$0.52
Efficiency Ratio (Holdco)	55.9%	62.1%	60.3%
Bank NIM (%)	4.85%	4.90%	5.46%

Consensus vs. actual (S&P Global; $USD Millions except per share):

Metric (Q2 2025)	Consensus	Actual	Beat/Miss
Primary EPS	$0.525*	$0.52	In line/slight miss*
Revenue	$74.57m*	$92.79m*	Beat*

Note: Company’s “Total Income” (NII + noninterest) was $70.20m; S&P “Revenue” definition differs from company’s construct .
Values marked with * retrieved from S&P Global.

Noninterest income components ($USD Millions):

Component	Q2 2024	Q1 2025	Q2 2025
Net gains on sales of loans	$22.56	$12.96	$15.53
Net gain on residuals in securitizations	—	—	$32.40
Net gain (loss) on loans under FVO	$(2.89)	$18.08	$(11.76)
Servicing income	$4.61	$5.53	$6.05
Net loss on loan servicing assets	$(1.86)	$(3.65)	$(4.36)
Electronic payment processing income	$12.65	$10.61	$11.74

Operating KPIs and balance sheet:

KPI	Q2 2025
SBA 7(a) originations	$205.6m
SBA 7(a) guaranteed sales	$42.1m
SBA 504 originations	~$26.0m; sales $23.5m
ALP originations	$78.3m
ALP securitization	$184m notes backed by $216m ALP loans
Business deposit growth (q/q)	+$50m (19% q/q)
Insured deposits	78%
Bank cost of deposits	3.71% (down 28 bps q/q)
Tangible book value per common share	$10.55

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
EPS	FY 2025	$2.10–$2.50 (midpoint $2.30)	$2.10–$2.50 (unchanged)	Maintained
SBA 7(a) fundings	FY 2025	~$1.0B	~$1.0B (reaffirmed)	Maintained
SBA 504 closings	FY 2025	~$250m	Not updated in Q2 materials	—
ALP originations	FY 2025	~$500m	2H25 ~ $250m; full-year plan intact	Maintained trajectory
SBA 7(a) GOS premium	2H 2025	Not explicitly guided; Q2 avg 110.91%	~110% embedded in H2 guidance	Lowered vs. Q2 run-rate
Common dividend	Ongoing	$0.19/qtr paid 4/30/25	$0.19/qtr paid 7/21/25	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
AI/Technology enablement	Emphasized tech-enabled model, automation, digital bank; high ROA/ROTCE from scalable ops	Expanded specifics: AI in loan processing, underwriting, closings, and sales-call analytics to boost speed/compliance	More concrete execution detail
Deposit strategy & cost	Plan to grow business deposits, reduce high-cost CDs; sticky insured deposits emphasized	Business deposits +$50m q/q; cost of deposits -28 bps to 3.71%; bank NIM +56 bps to 5.46%	Positive trajectory
ALP/private credit engine	Entering 2025 with ~$500m FY ALP plan; strong historical charge-off levels	Closed NALP 2025-1; $32.4m residual gain; plan another Q4 2025 securitization	Scaling and recurring
Credit/provisioning	Expected higher charge-offs as portfolios season; resilient PPNR to absorb losses	Provision $9.1m; net charge-offs ~$5.1m; guidance that provision likely higher in 2H25	Still a headwind but managed
SBA 7(a) market dynamics	Seasonality, pricing volatility; guidance incorporated; deposit funding supports origination	GOS premium guided to ~110; holding 7(a) loans 60–75 days pre-sale to support NII	Adjusting tactics
Integrated onboarding (bank + merchant)	Platform integration thesis described (Newtek Advantage)	Launched simultaneous bank+merchant approval, instant merchant account, single data capture	Commercial launch milestone
Regulatory/macro	Tariffs and rate paths noted as borrower headwinds; rate-agnostic model	Tariffs less of an issue vs. April; maintaining $1B 7(a) target	Stabilizing

Management Commentary

“We are very pleased with our…securitization of $216 million of ALP loans at a 670 bps spread…To support continued growth of the ALP business, Deutsche Bank, and Capital One increased our warehouse facilities by a combined $90 million.”
“We leverage AI…to automate complex document reviews and analyzing sales calls…faster, more consistent…lending decisions…enhancing…operational efficiency.”
“Business deposits…added in 2Q25, reflecting a Q/Q increase of 19%…supported a 28 bps sequential decline in the cost of deposits, which fueled 56 bps of net interest margin expansion at the Bank.”
“We are maintaining our $2.10–$2.50 guidance range for 2025…We expect to execute another ALP securitization in the fourth quarter.”

Q&A Highlights

Deposits and costs: Growth driven by integrated solutions (lending, merchant, payroll) feeding deposit acquisition; pushing utilization of ~4,000 business accounts; cost of deposits at 3.71% with further potential declines .
Charge-offs/provision: Bank HFI charge-offs ~$5.1m, flat q/q; management expects provision to increase in 2H as 7(a) seasons; reserve ratio range contemplated 4.5%–5.5% and mix shift to CRE/C&I lowers required ACL vs. 7(a) .
Fair value/securitization accounting: Prior ALP unrealized gains written down to par before securitization; recognized $32.4m gain on residuals; ALP valuation marks assume 14% discount rate, 15% default frequency, 20% severity (~3% lifetime charge-off) .
SBA rule changes and GOS: Expect ~110 GOS margin in H2 (vs. Q2 avg 110.91); holding 7(a) 60–75 days pre-sale to support NII .
Expenses: Aim for “flattish” opex in 2H despite ongoing investments .

Estimates Context

EPS: Q2 2025 actual $0.52 vs. S&P Global consensus $0.525 (6 estimates)* — essentially in line .
Revenue: Q2 2025 S&P “Revenue” actual $92.8m vs. $74.6m consensus (1 estimate)* — beat, primarily reflecting the $32.4m securitization residual gain; note S&P “Revenue” definition differs from company “Total Income” ($70.2m) .
Forward consensus (for context): Q3 2025 EPS $0.646* (7 est.); Revenue $78.31m* (3 est.); Q4 2025 EPS $0.665* (6 est.) [GetEstimates].
Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

Core thesis intact: Digital operating model and integrated solutions continue to compress funding costs and expand NIM, with tangible deposit growth offsetting rate headwinds .
Private-credit engine scaling: ALP securitizations drive episodic but material noninterest income; management signals another deal in Q4, supporting 2H results and capital efficiency .
Near-term modeling: Bake in lower 7(a) gain-on-sale (~110) and a higher 2H provision path as the 7(a) book seasons; the company’s robust PPNR and improving efficiency mitigate credit cost volatility .
Capital and liquidity: Pro forma Tier 1 strengthened by Series B preferred issuance; warehouse lines upsized, supporting origination/securitization cadence without stressing deposits .
Tactical levers: Holding 7(a) 60–75 days pre-sale boosts NII; integrated onboarding should accelerate deposit capture and payments monetization (merchant, payroll), supporting NIM and fee growth .
Stock setup: With guidance maintained and execution milestones delivered, incremental catalysts include Q4 ALP securitization, continued NIM expansion, and further operating leverage progression .

Footnotes:

Values marked with * retrieved from S&P Global.
Company “Total Income” equals Net Interest Income + Noninterest Income and differs from S&P Global “Revenue” construct .

Sources: Q2 2025 press release and 8-K (financial statements, KPIs, guidance) ; Q2 2025 earnings call transcript (management commentary, Q&A, guidance clarifications) ; Q1 2025 press release (prior guidance, comps) ; Q4 2024 transcript (trend themes) ; other Q2-relevant press releases (Capital One ALP line upsizing, integrated onboarding launch, preferred offering) .

NewtekOne, Inc. (NEWT)·Q2 2025 Earnings Summary