Executive Summary

Q3 2025 EPS of $0.67 diluted beat Wall Street consensus of $0.646; revenue of $99.5M beat consensus $78.3M, driven by strong noninterest income including $29.3M net gain on loans under the fair value option, while efficiency ratio improved to 56.3% and ROAA was 3.06% . EPS and revenue beats vs S&P Global consensus are noted below (Values retrieved from S&P Global)*.
Deposits grew strongly without branches: commercial deposits +17% Q/Q (+$52M) and consumer core deposits +12% (+$95M); insured deposits were 78%, supporting bank NIM of 5.4% and continued funding at below risk‑free rate via Newtek Advantage ecosystem .
Management highlighted upcoming ALP securitization in Q4 2025 of $325–$350M (largest to date), capital raises ($30M CET1; $50M preferred) and refinancing of the Merchant Solutions facility ($95M via Goldman Sachs Alternatives) to bolster growth and simplify capital structure .
Guidance tone: prior Q4 EPS guide ($0.65–$0.80) was not reaffirmed due to the government shutdown affecting SBA processing, though not formally withdrawn; management emphasized model durability, deposit economics, and ALP growth as stock catalysts .

What Went Well and What Went Wrong

What Went Well
- “We are pleased to report basic and diluted EPS of $0.68 and $0.67… with 3Q25 ROAA and ROTCE of 3.06% and 23.7%” reflecting operating leverage (efficiency ratio 56.3% vs 61.8% YoY) .
- Bank unit metrics were robust: ROAA 3.57%, ROTCE 32%, NIM 5.4%, deposits +11% Q/Q, HFI loan growth +9% Q/Q; allowance coverage solid at 5.42% .
- Strategic financing and capital actions: $30M CET1 through Patriot exchange/purchase, $50M Series B preferred issuance, and $95M NMS facility with Goldman Sachs Alternatives to support growth and de‑risk capital stack .
What Went Wrong
- SBA program changes and the government shutdown created origination and timing frictions; management would not affirm prior Q4 EPS guidance because of shutdown uncertainty and potential impact on gain-on-sale timing .
- NSBF legacy non‑bank SBA portfolio remains a headwind (loss trending $18–$20M for 2025), though the drag is declining and non‑accrual inflows have decelerated for five consecutive months .
- NPLs are elevated on a consolidated basis (driven by SBA 7(a) seasoning and legacy NSBF), requiring higher reserves and careful credit selection; management is avoiding volatile sectors (oil & gas, transportation, agriculture) amid macro uncertainty .

Financial Results

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($USD Millions)	83.12*	92.79*	99.48*
Diluted EPS ($USD)	0.45*	0.52*	0.67*
Efficiency Ratio (%)	61.8	60.3	56.3
ROAA (%)	3.06	2.62	3.06
ROTCE (%)	22.7	20.4	23.7

Notes:

Revenue = Interest income + Noninterest income in S&P framework; press release “total revenue” (net interest + noninterest) was $74.9M in Q3 2025 .
Asterisk (*) Values retrieved from S&P Global.

Segment activity and originations:

Segment Originations ($USD Millions)	Q3 2024	Q3 2025
Alternative Loan Program (ALP)	66	104
SBA 7(a) Originations	243	187
SBA 7(a) Guaranteed Sold	—	69
SBA 504 Originations	—	28
SBA 504 Sold	—	19
CRE Loans (HFI)	—	17.8
C&I Loans (HFI)	—	19.3

KPIs and balance sheet:

KPI	Q3 2024	Q2 2025	Q3 2025
Book Value per Share ($)	—	—	11.72
Tangible Book Value per Common Share ($)	8.93	10.55	11.22
Insured Deposits (%)	—	—	78
Deposits ($USD Millions)	—	—	1,177.964

Drivers:

Noninterest income was $60.4M; key contributors: net gain on loans under the fair value option $29.25M and net gains on sales of loans $9.56M; residuals line was a ($1.45M) loss in Q3 (vs +$31.5M in Q2), while servicing income was $6.08M .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
EPS (Diluted)	Q4 2025	$0.65–$0.80 (prior)	Not reaffirmed due to SBA shutdown timing risk	Maintained tone, not affirmed
ALP Securitization Size	Q4 2025	—	$325–$350M (largest to date)	New event sizing
Deposit Cost Target	Ongoing	—	2.0–2.5% long‑term target via Newtek Advantage funnel	Strategic target communicated
Common Dividend	Q4 2025	$0.19 declared Sept 30 (paid Oct 24)	Board discretion; no near‑term increase likely	Maintained
Preferred Dividend	Q4 2025	$0.2361 per NEWTP depositary share (Oct 1)	—	Executed

Context: Management emphasized inability to “live by” the previous Q4 EPS guide given the shutdown but did not withdraw guidance; timing of gain‑on‑sale and securitization close could slide across periods .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025)	Previous Mentions (Q2 2025)	Current Period (Q3 2025)	Trend
SBA Program & Shutdown	Underwriting tightening; reserve build; gain‑on‑sale premium drift (to ~110)	Holding guaranteed pieces longer; $1B 7(a) originations unchanged; premiums ~110.91	Shutdown complicates timing; pulled PLP numbers; bridge financing; avoiding volatile sectors	Tougher near‑term
ALP Program & Securitization	2025‑1 securitization successful; 570bps spread; strong credit metrics	Own 100% residual; $32.4M value; plan another Q4 deal	Largest deal planned for Q4 ($325–$350M); two per year targeted long‑term	Expanding
Deposits & Newtek Advantage	Digital account growth; business deposits strategy	Cost of funds down to ~3.71%; business deposits +$50M; NIM 5.46%	Business deposits +17% Q/Q; insured 78%; target deposits below risk‑free rate	Improving
Credit Quality & NSBF	Elevated NPLs expected from SBA seasoning; NSBF drag declining	Provision managing seasoning; reserve ratio 4.5%–5.5% range discussed	NSBF loss trending $18–$20M; non‑accrual inflows decelerating 5 months	Stabilizing
Capital & Leverage	Efficiency improvements; tangible book growth	Adjusted NIM concept; efficiency gains with asset growth	CET1 +$30M; Tier 1 +$80M; preferred issuance; NMS facility $95M	Strengthening
Fintech/AI Model	Tech‑enabled bank narrative	Digital scaling; lease terminations to cut expense	Emphasis on tech‑enabled deposit gathering and lending OS; “triple play” offering	Advancing

Management Commentary

“We’re growing deposits without the use of branches, bankers, brokers, or BDOs… efficiency ratio declined from 61.8% to 56.3%… ROAA for the quarter was 3.15%” (Holdco), underscoring operating leverage and deposit economics .
“We are currently expecting an ALP securitization in the fourth quarter of 2025… $325 million to $350 million… our largest to date” .
“Allowance for credit losses, 5.42%. We have the reserves that will be able to support higher losses and higher charge‑offs” .
“78% of our deposits are insured… loan‑to‑deposit ratio of 95%” illustrating balance-sheet resilience .
“We’re staying away from… oil and gas, transportation… agriculture” reflecting current credit stance amidst macro uncertainty .

Q&A Highlights

Credit trends: Portfolio seasoning flattening; sector avoidance (oil & gas, transportation, agriculture); consumer side resilient with equity/home values; targeted underwriting continues .
Guidance clarification: Prior Q4 EPS guide ($0.65–$0.80) not reaffirmed due to SBA shutdown timing; management stressed long‑term business model over quarter‑to‑quarter variability .
Fair value and securitization mechanics: Q3 fair value gains included ramp for Q4 ALP securitization inventory; residuals value will “flip” upon closing; continued sales of SBA guarantees post‑reopening .
ALP run‑rate: Target two securitizations per year with larger pools; 2025 calendar ALP originations targeted $350–$400M, with ambition to reach $500–$600M next year (subject to internal approvals) .
Capital and dividend: Holding company leverage ~12.5%; total risk‑based ~16%; near‑term dividend increase unlikely—buybacks would be favored over hikes if capital deployment options considered .

Estimates Context

Q3 2025 vs consensus: EPS $0.67 vs $0.646 (Beat), Revenue $99.5M vs $78.3M (Beat). Drivers: strong noninterest income led by $29.25M net gain on loans under fair value option, plus $9.56M gains on sales; offset by residuals line ($1.45M) and higher operating scale . Asterisk (*) Values retrieved from S&P Global.

Metric	Consensus	Actual	Outcome
Primary EPS	0.6457*	0.67*	Beat
Revenue ($USD)	78.31M*	99.48M*	Beat
EPS # of Estimates	7*	—	—
Revenue # of Estimates	3*	—	—

Estimate path:

Prior quarters: Q2 2025 EPS 0.52 vs 0.525 consensus; Q3 2024 EPS 0.45 vs 0.433 consensus (tracking modest beats/misses over time)*.

Key Takeaways for Investors

Operating leverage and deposit economics remain differentiators: efficiency ratio improved to 56.3%, insured deposits at 78%, and bank NIM at 5.4%, supporting sustained profitability even amid higher SBA seasoning .
Near‑term volatility likely around SBA shutdown timing; management’s unwillingness to reaffirm Q4 EPS reflects timing uncertainty, not structural weakness. Expect gain-on-sale and securitization contributions to move across periods .
ALP program is a critical growth engine: largest securitization planned in Q4 ($325–$350M), with a strategy of two larger deals per year; historical charge‑offs low and spread capture substantial, underpinning earnings durability .
Legacy NSBF drag continues to diminish; non‑accrual inflows decelerating and portfolio aging supports lower default probabilities and future capital release via cleanup calls .
Capital stack strengthened: $30M CET1 plus $50M preferred and $95M NMS financing increase flexibility for 2026 debt repayments and potential buybacks, while dividend policy remains steady at $0.19 per quarter near‑term .
Trading implications: Positive setup from beats, ALP securitization execution, and capital improvements; watch for SBA reopening headlines and Q4 securitization close as potential catalysts.
Medium‑term thesis: Tech‑enabled, branchless model with integrated payments/payroll (“Newtek Advantage”) is driving below risk‑free deposit gathering and scalable loan manufacturing—positioning the bank for outsized ROAA/ROTCE relative to peers .

References:

Q3 2025 8‑K press release and financials .
Q3 2025 earnings call transcript .
Pre‑announcement and Q3 period press releases: NMS facility ($90M term + $5M revolver; $95M cited in call) , common dividend declaration ($0.19) , preferred dividend ($0.2361 per NEWTP) .
Q2 2025 transcript (trend and deposit/NIM context) .
Q1 2025 transcript (seasoning, guidance framework, premium trajectory) .

Footnote: Asterisk (*) Values retrieved from S&P Global.

NewtekOne, Inc. (NEWT)·Q3 2025 Earnings Summary