Newtek Business Services Reports Strong Q3 Growth

Newtek Business Services ((NEWT)) has held its Q3 earnings call. Read on for the main highlights of the call.

Newtek Business Services recently held an earnings call that conveyed a generally positive sentiment, highlighting strong financial growth and an impressive increase in tangible book value. The company demonstrated efficient management of deposits and loans, although challenges such as high non-performing loans (NPLs), losses from the NSBF, and uncertainties due to a potential government shutdown were acknowledged.

Strong Financial Growth

Newtek Business Services reported robust financial growth in Q3 2025, with earnings and revenue showing significant increases. The company achieved basic and diluted earnings per share of $0.68 and $0.67, respectively. Year-over-year growth rates were impressive, with earnings up by 47% and 22%, and revenue growth ranging from 19% to 16%.

Tangible Book Value Increase

The tangible book value of Newtek Business Services saw a substantial increase, rising from $6.92 per share in Q1 2023 to $11.22. This growth was accompanied by a healthy annual dividend of $0.76, reflecting the company’s solid financial foundation.

Deposit Growth Without Traditional Branches

Newtek Business Services achieved remarkable deposit growth without relying on traditional banking methods. Business deposits increased by $52 million or 17%, while consumer deposits rose by $95 million or 12%. This growth was accomplished without the use of traditional bankers, brokers, or branches.

Efficiency Ratio Improvement

The company’s efficiency ratio saw a notable improvement, declining from 61.8% to 56.3% at the holding company level. This was achieved even as operating expenses rose by only 8.5%, despite a 43% increase in assets.

Alternative Loan Program Expansion

Newtek Business Services is expanding its Alternative Loan Program, with the largest securitization to date expected in Q4 2025. The securitization is projected to range from $325 million to $350 million, marking the 17th in the company’s history.

Capital Position Strengthened

The company has strengthened its capital position by issuing Series B preferred and common equity, which boosted Tier 1 capital and common equity Tier 1 by approximately $80 million and $30 million, respectively.

High Non-Performing Loans (NPLs)

Newtek Business Services reported a high level of non-performing loans, with NPLs to total loans at 8.1%. However, when excluding the NSBF portfolio, this figure adjusts to a more manageable 3.8%.

NSBF Losses

The nonbank lender NSBF is currently in wind-down mode, having reported a $14 million loss for the first three quarters of 2025. The losses are expected to trend towards $18 million to $20 million for the year.

SBA Loan Program Challenges

The potential government shutdown poses challenges for Newtek Business Services’ SBA 7(a) loan program, affecting the company’s ability to originate and sell loans.

Forward-Looking Guidance

Newtek Business Services provided robust forward-looking guidance during the earnings call. The company highlighted a significant increase in tangible book value and a healthy dividend. They reported a return on average assets of 3.15% and a return on tangible common equity of 32%. The efficiency ratio improved significantly, even as total assets surged by 43%. The company is advancing its Alternative Loan Program with a major securitization expected in Q4 2025. NewtekOne’s strategy involves leveraging technology and a diversified loan portfolio to enhance profitability while maintaining strong capital ratios.

In summary, Newtek Business Services’ earnings call reflected a strong financial performance with notable growth in key areas such as tangible book value and deposits. Despite facing challenges like high NPLs and NSBF losses, the company remains optimistic about its strategic growth and profitability, as evidenced by its forward-looking guidance.