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NewtekOne, Inc. (NEWT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered strong results: diluted EPS $0.69 and basic $0.70, with consolidated total income $75.4M and total “revenue” (interest income + noninterest income) $97.8M; EPS and revenue exceeded Wall Street consensus materially. Guidance was raised for FY 2025 EPS to $2.10–$2.50, with quarterly cadence provided and confidence backed by ALP growth and deposit momentum .
  • Net interest margin contracted sequentially at the holdco to 2.80%, while noninterest income surged ($64.1M) driven by gains on 7(a) sales and favorable ALP marks; bank-level metrics remained robust (ROAA 6.3%, ROTCE ~49% FY), supported by deposit expansion to $1.04B (80% insured) .
  • Credit costs rose as expected with bank net charge-offs of $5.1M (154 bps annualized) and a ($7.3M) servicing asset revaluation, but management stressed stress-tested profitability and modeled default curves normalizing; tax rate guided to ~26% for 2025 .
  • Catalysts: raised FY25 EPS guidance, ALP originations outlook ($500M) and planned securitization, lower-cost CDs repricing, and QuickBooks integration in Newtek Advantage (deepening deposit stickiness) .

What Went Well and What Went Wrong

What Went Well

  • EPS beat and revenue strength: Q4 diluted EPS $0.69 and basic $0.70; noninterest income rose $12M QoQ on higher gains from 7(a) sales and ALP growth. “We came in at $0.70 per basic, $0.69 per diluted… a 43% improvement” QoQ; and raised FY25 EPS guidance to $2.10–$2.50 .
  • Deposits passed $1.0B with strong insured mix and commercial focus: total deposits $1.04B (80.3% insured); added 950 new business checking accounts in Q4 and grew core business deposits to $216M .
  • ALP momentum and mark-ups: ALP loan closings $91.4M in Q4; loans marked up by ~$9.4M under fair value option; management expects ~$500M ALP originations and a first-half 2025 securitization .

What Went Wrong

  • Credit costs stepped up: bank net charge-offs $5.1M (154 bps annualized), higher vs Q3; servicing asset revaluation negative $7.3M on runoff at NSBF; nonaccrual migration continued as the new bank portfolio seasons .
  • NIM contraction: consolidated NIM fell to 2.80% (from 3.08% in Q3) on higher average Fed cash balances and full-quarter impact of rate cuts on 7(a) yields; management expects relief as high-cost CDs roll down and business deposits grow .
  • Lumpy credit events: occasional larger loans outside typical 7(a) average size caused quarterly lumpiness; management reiterated diversified vintages and plans to water down 7(a) mix with conventional CRE/C&I .

Financial Results

Headline Results – Actuals by Quarter (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
EPS (Basic)$0.43 $0.45 $0.70
EPS (Diluted)$0.43 $0.45 $0.69
Total Revenue (Interest income + Noninterest income, $USD Millions)$81.4*$83.1*$97.8*
Net Interest Income ($USD Millions)$9.1 $11.0 $11.3
Noninterest Income ($USD Millions)$52.0 $51.9 $64.1
Net Interest Margin (Holdco)2.70% 3.08% 2.80%
ROAA (Holdco)2.8% 2.9% 4.1%
Efficiency Ratio (Holdco)66.3% 61.8% 55.9%

*Values retrieved from S&P Global.

Estimate Comparison – Actual vs Wall Street Consensus (S&P Global)

MetricQ2 2024Q3 2024Q4 2024
EPS (Consensus Mean)$0.415*$0.433*$0.663*
EPS (Actual)$0.43 (Beat)*$0.45 (Beat)*$0.69 (Beat)*
Revenue (Consensus Mean, $USD Millions)$59.9*$62.2*$69.5*
Revenue (Actual, $USD Millions)$81.4 (Beat)*$83.1 (Beat)*$97.8 (Beat)*
EPS – # of Estimates6*6*6*
Revenue – # of Estimates2*3*3*

*Values retrieved from S&P Global.

YoY – Q4 2024 vs Q4 2023 (Holdco)

MetricQ4 2023Q4 2024
EPS (Basic / Diluted)$0.43 / $0.43 $0.70 / $0.69
Total Income (Net interest + Noninterest, $USD Millions)$57.4 $75.4
Net Interest Margin2.76% 2.80%
ROAA3.2% 4.1%
Efficiency Ratio66.6% 55.9%

Segment and KPI Summary

ItemQ4 2024Notes
ALP Loan Closings ($USD Millions)$91.4 ALP mark-up ~$9.4M in quarter
Newtek Payments Pretax Income ($USD Millions)$3.5 +2.9% YoY
Total Deposits ($USD Millions)$1,040.0 ~80.3% insured
Business Checking Accounts Added950 Q4 adds
Core Business Deposits ($USD Millions)$216 +96% YoY
Consolidated Shareholders’ Equity ($USD Millions)$296.3 +19% YoY per call

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
EPS (Basic/Diluted)FY 2025$2.00–$2.25 $2.10–$2.50 Raised
Quarterly EPS cadenceFY 2025N/AQ1: $0.28–$0.32; Q2: $0.55–$0.65; Q3: $0.52–$0.64; Q4: $0.75–$0.89 New detail
SBA 7(a) Loan ClosingsFY 2025$0.935B (2024 forecast) $1.0B (2025 forecast) Raised vs 2024
ALP OriginationsFY 2025N/A~$500M; securitization targeted 1H25 New
Tax Rate (Holdco)FY 2025N/A~26% New
CD Repricing (Avg Rate)1H 2025N/A~5% CDs maturing; new offers <4.45% Cost down
DividendOngoing$0.19/quarter declared Dec 2024 $0.19 paid Jan 13, 2025; objective to maintain Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
Credit/default curveQ2: ramp-up from seasoning, CECL high by design ; Q3: nonaccruals peaked in Q2; declining in Q3/Q4 at NSBF Bank charge-offs $5.1M (154 bps annualized); <2% bank charge-off guide; stress case at 3% still ~$1.80 EPS Stabilizing/flattening into 2025
ALP programQ2: securitization (DBRS), ALP explanatory slides ; Q3: pipeline growing; JV/balance-sheet mix ~$500M originations guided; ALP fair value gains ~$9.4M Ramping
Deposits/commercialQ2: business deposits +17% QoQ ; Q3: push to zero-fee, hand-to-hand sales $1.04B deposits; 950 business accounts added Q4; core business deposits $216M Accelerating
NIM / funding costsQ2: consolidated NIM 2.70%; CDs repricing Q3/Q4 ; Q3: bank NIM 5.29% Consolidated NIM 2.80% with plan to lower CD costs and grow business deposits Mixed near term, improving setup
Newtek Advantage & techQ2: portal features; integration plan ; Q3: value prop in portal QuickBooks integration finalized Feb 18, 2025 Strengthening
Regulatory / structureQ3: post-SVB scrutiny, non-crypto/BaaS, CRE risks NTS sale closed Jan 2, 2025 to IPM De-risking
Capital returnQ3: buyback authorization (1M shares) Dividend maintained; Board-driven view on increases Stable dividend, opportunistic buybacks

Management Commentary

  • Strategy and model: “NewtekOne is a technology-enabled disruptive company… gather liabilities and deposits that are stickier… provide best-in-class solutions… without traditional bankers or branch network” .
  • Profitability resilience: “Because of the margins in our business, we're able to manage credit risk… absorb unanticipated movements… and still remain profitable” .
  • Guidance confidence: “We bumped up our prior forecast of $2… to $2.10–$2.50… we’re really comfortable with” .
  • Deposit franchise and Advantage: “We added 950 new business checking accounts… core business deposits grew to $216M… customers will win loyalty because we’re providing value” .
  • Funding/mismatch clarity: “We have $350M of cash on hand at year-end which needs to be deployed… ALP funded via lines and securitizations… fairly rate agnostic” .

Q&A Highlights

  • Quarterly EPS cadence: Q1 guided to $0.28–$0.32 (typo corrected), with stronger Q4 seasonality; production/pricing tracking ahead of Q4 levels .
  • Credit/loss outlook: Bank charge-offs <2% guide on ~$1B loans; lumpy larger loans can create quarterly volatility; vintage analysis embedded in forecasts .
  • ALP and fair value: ~$9.4M fair value gains from ALP; securitization economics discussed (net coupon vs ABS yields) .
  • Servicing asset revaluation: ($7.3M) tied to NSBF portfolio runoff; noncash effects from servicing write-downs and premiums .
  • Funding structure: Deposit growth plus ABS match-funding; steepening yield curve broadly positive but model positioned to be rate agnostic .

Estimates Context

  • Q4 2024 EPS and revenue beat consensus meaningfully; Q3 and Q2 also beat. Consistent outperformance, combined with raised FY25 EPS guidance and ALP growth outlook, suggests estimates should move higher for FY25 and for quarterly cadence, particularly in Q2–Q4 as CD repricing lowers funding costs and ALP securitization contributes. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Strong execution: EPS and revenue beat for Q4, with robust noninterest drivers (7(a) gains, ALP marks) and improving efficiency; narrative supports multiple expansion .
  • Credit is manageable within a high-margin model: bank charge-off guide <2% with stress-tested profitability; vintage seasoning and diversification toward conventional CRE/C&I should moderate volatility .
  • Funding tailwinds ahead: ~$170M+ CDs to reprice and business deposits scaling, supporting NIM stabilization; $350M cash deployment adds flexibility .
  • ALP as GTM catalyst: ~$500M originations and planned 1H25 securitization can drive noninterest income and residual values, reinforcing guidance .
  • Sticky deposit strategy: Newtek Advantage (now with QuickBooks integration) deepens client engagement and lowers cost of funds over time; 950 new business accounts in Q4 .
  • Guidance upgrade: FY25 EPS raised to $2.10–$2.50; quarterly cadence shared—sets expectations and reduces surprise risk .
  • Trading implications: Near-term—expect focus on credit prints and NIM trend; medium-term—ALP scale, deposit mix shift, and repeat beats are likely positive catalysts for re-rating.
Notes: 
- “Total revenue” reflects S&P methodology (interest income + noninterest income). 
- All consensus values marked with * are from S&P Global.

References:

  • Q4 press release and financials:
  • Q4 earnings call transcript:
  • Deposit milestone press release:
  • Q3 earnings call:
  • Q2 2024 8-K/press release & transcript:
  • Record loan closings press release (Q3):