Business Context and Reporting Period
NewtekOne, Inc. (NEWT) is a financial holding company and the third-largest SBA 7(a) lender in the U.S. by dollar volume. The company operates through four primary segments: Banking (Newtek Bank), Alternative Lending (ALP), NSBF (legacy SBA portfolio wind-down), and Payments. This 10-K covers the fiscal year ended December 31, 2025. During the period, the company completed the divestiture of its technology subsidiary, Newtek Technology Solutions (NTS), to Intelligent Protection Management Corp. (IPM) on January 2, 2025, as required by Federal Reserve commitments.
Key Financial Metrics
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Net Income | $60.5 million | $50.9 million | +19.0% |
| Diluted EPS | $2.18 | $1.96 | +11.2% |
| Total Assets | $2.74 billion | $2.06 billion | +33.2% |
| Total Loans | $2.13 billion | $1.39 billion | +53.1% |
| Total Deposits | $1.42 billion | $0.97 billion | +45.8% |
| Total Borrowings | $820 million | $708 million | +15.8% |
| Net Interest Margin | 3.01% | 2.87% | +14 bps |
| Allowance for Credit Losses | $45.2 million | $30.2 million | +50.0% |
| Nonperforming Assets | $160.2 million (5.8% of assets) | $95.4 million (4.6% of assets) | +67.9% |
Material Changes vs. Prior Period
- Loan Portfolio Growth: Total loans increased by $739 million, driven by a $397 million increase in SBA loans held for sale and a $275 million increase in loans held for investment at amortized cost. SBA 7(a) originations totaled $767.8 million in 2025, down from $943.0 million in 2024, impacted by the federal government shutdown in Q4 2025.
- Divestiture of NTS: The sale of NTS eliminated the Technology segment. While this removed $19.6 million in technology revenue, it also eliminated $12.3 million in technology service expenses. The company received $4.0 million in cash and 4.0 million shares of IPM preferred stock.
- Provision for Credit Losses: The provision increased by $12.5 million to $38.7 million, reflecting higher net charge-offs and specific reserves, particularly on SBA 7(a) loans. Nonperforming loans held for investment at amortized cost rose to $78.8 million (8.8% of that portfolio) from $24.3 million (3.9%) in 2024.
- Deposit Expansion: Deposits grew by $444 million to $1.42 billion, fueled by competitive rates and the "Newtek Advantage" platform, which helps retain sticky business deposits.
- Securitization Activity: The company closed a new ALP securitization (2025-1 Trust) in April 2025, generating $30.0 million in net gains on residuals. A subsequent securitization (2026-1 Trust) closed in January 2026.
Guidance, Outlook, and Risks
Management Commentary: Management highlighted the successful transition to a financial holding company model and the growth of the deposit base. The company is focused on maintaining its SBA Preferred Lender Program (PLP) status, which is critical for origination speed. The company expects to continue originating SBA 7(a) loans and ALP loans, with a strategy to securitize ALP loans to manage balance sheet growth.
Risks and Contingencies:
- SBA Program Dependency: The company faces risks related to SBA funding, including potential government shutdowns (which occurred in Q4 2025) and changes to SBA Standard Operating Procedures. Loss of PLP status would materially impact origination volumes.
- Credit Quality: Nonperforming assets increased significantly to 5.8% of total assets. The company maintains a $10 million restricted cash account to cover potential SBA repair and denial liabilities from the legacy NSBF portfolio.
- Interest Rate Risk: The company is asset-sensitive; rising rates generally benefit net interest income, but the company faces basis risk as variable-rate loans are partially funded by fixed-rate notes.
- Cybersecurity: Following the NTS divestiture, IT infrastructure is managed by IPM. The company faces risks related to third-party service providers and potential cyber-attacks.
Investor Verification Checklist
- SBA PLP Status: Verify the current status of Newtek Bank's Preferred Lender Program designation and any recent SBA examination results.
- Credit Quality Trends: Monitor the trajectory of nonperforming assets (currently 5.8% of total assets) and the adequacy of the $45.2 million allowance for credit losses.
- NSBF Wind-Down: Review the status of the NSBF legacy portfolio and the utilization of the $10 million restricted cash reserve for SBA repairs/denials.
- Deposit Stability: Assess the cost of deposits and the stability of the $1.42 billion deposit base in a competitive rate environment.
- IPM Investment: Evaluate the fair value and volatility of the 4.0 million shares of IPM preferred stock received in the NTS divestiture.