NewtekOne, Inc. is a financial holding company subject to regulation by the Federal Reserve and the Federal Reserve Bank of Atlanta, providing business and financial solutions to independent business owners under the Newtek® and NewtekOne® brands. The company operates as a technology-enabled platform delivering lending, payments, payroll, insurance, and banking services without traditional bank branches or brokers. Its core strategy centers on acquiring clients through…
NewtekOne, Inc. is a financial holding company subject to regulation by the Federal Reserve and the Federal Reserve Bank of Atlanta, providing business and financial solutions to independent business owners under the Newtek® and NewtekOne® brands. The company operates as a technology-enabled platform delivering lending, payments, payroll, insurance, and banking services without traditional bank branches or brokers. Its core strategy centers on acquiring clients through alliance relationships and its patented NewTracker® prospect management technology, which processes referrals and supports end-to-end transaction transparency for partners.
NewtekOne generates revenue primarily through interest income from loan portfolios, gains on sales of guaranteed portions of SBA 7(a) loans in the secondary market, and fee-based income from its financial and business solutions. Key revenue drivers include SBA 7(a) lending via Newtek Bank, alternative lending through Newtek ALP Holdings, merchant processing via Newtek Merchant Solutions and Mobil Money, payroll and benefits services through PMTWorks Payroll, LLC, insurance brokerage via Newtek Insurance Agency, and technology-enabled services such as the Newtek Advantage® platform. The company serves independent business owners across the United States, leveraging digital channels and alliance networks to deliver solutions efficiently and at scale.
The company operates through the following segments:
• Newtek Banking: This segment encompasses Newtek Bank and its subsidiary SBL, which provide depository services, SBA 7(a) and 504 lending, commercial and industrial loans, CRE lending, and third-party loan servicing and origination. Newtek Bank offers business checking, high-yield savings, and retail CD products, and integrates its services through the Newtek Advantage® portal to deepen client relationships. The bank originated $767.8 million of SBA 7(a) loans in 2025 and $943.0 million in 2024, maintaining a diversified portfolio across 50 states and 82 industries as of December 31, 2025.
• Newtek Lending: This segment includes Newtek ALP Holdings, which originates alternative lending program (ALP) loans for independent business owners who may not qualify for SBA 7(a) financing due to eligibility, size, or maturity constraints. ALP loans are typically 10-25 year amortizing C&I loans with no balloon payments, funded through capital contributions and warehouse lines of credit, and have been sold individually or securitized via joint ventures such as Newtek Conventional Lending, LLC and Newtek-TSO II Conventional Credit Partners, LP. The segment also supports SBA 504 lending originated by Newtek ALP Holdings for major fixed asset financing.
• Newtek Payments: This segment comprises Newtek Merchant Solutions, LLC (NMS), its subsidiary Mobil Money, LLC, and POS on Cloud, LLC (d/b/a Newtek Payment Systems), which deliver credit and debit card processing, check approval, ACH services, and point-of-sale solutions. In 2025, NMS processed $5.2 billion in merchant transaction sales volume, leveraging direct and indirect sales channels, alliance partners, and proprietary technology to serve merchants in taxi cabs, restaurants, retail, assisted living, parks, and golf course industries.
• Newtek Payroll and Benefits Solutions: This segment is operated by PMTWorks Payroll, LLC (d/b/a Newtek Payroll and Benefits Solutions), which provides industry-standard payroll management, tax reporting, and payment services to independent business owners. The service enables clients to process payroll directly from the Newtek Advantage® business portal and supports deposit generation for Newtek Bank by offering sticky, business-related accounts.
• Newtek Insurance: This segment is managed by Newtek Insurance Agency, LLC (NIA), a licensed retail and wholesale brokerage in all 50 states, specializing in commercial and health/benefits lines insurance as well as personal lines for independent business owners. NIA uses automated data transfer from loan applications to issue key man life insurance without medical exams and is expanding automation for property and casualty insurance on lending opportunities.
NewtekOne holds a competitive position in the financial services industry as a technology-driven provider of integrated solutions for the underserved small business market, differentiated by its patented NewTracker® referral system and the Newtek Advantage® platform, which offers real-time analytics, transactional capabilities, and expert access via its portal. The company competes with traditional banks, non-bank lenders, and fintech providers in lending; Fiserv, Global Payments, and Worldpay in payments; and various payroll and insurance providers, but believes its alliance-based model, 24/7/365 on-camera client service, and cross-selling ecosystem create sustainable advantages. Its experience as a top SBA 7(a) lender—ranked third in the U. S. by dollar volume of approvals as of February 2026—further strengthens its market standing.
The company serves independent business owners (SMBs) across the United States, targeting privately held enterprises in diverse industries including retail, healthcare, professional services, manufacturing, and hospitality. Its client base is sourced through hundreds of alliance partners such as commercial and community banks, credit unions, trade associations, accounting firms, law firms, and small business aggregators, which refer clients via Referral Promotion or BizExec Agreements. NewtekOne maintains a database of prospects and engages them regularly through email, video, webinars, and outbound calling to nurture relationships and drive conversion.
Sectors:Financial Services · TechnologySector rationaleThe company's primary revenue is generated through interest income from loan portfolios (SBA 7(a) and alternative lending), banking services via Newtek Bank, and insurance brokerage. While it describes itself as a technology-enabled platform and operates a payments and payroll segment, these are integrated business solutions supporting its core financial services model. A secondary sector of Technology is justified because the company develops and sells proprietary technology-enabled services and platforms, such as the Newtek Advantage portal and the patented NewTracker prospect management technology.Industries:+2 moreMoney Center BanksFinancial ServicesPrimaryNewtekOne operates as a financial holding company with Newtek Bank, which provides depository services (checking, savings, CDs) and a wide array of lending products including SBA 7(a), 504, and C&I loans. Its revenue is split across multiple banking and financial business lines, including payments, insurance, and payroll, fitting the multi-segment character of a Money Center Bank.Consumer LendingFinancial ServicesSecondaryThe company operates a Newtek Lending segment via Newtek ALP Holdings, which originates and services alternative lending program (ALP) loans for business owners who do not qualify for SBA financing.Payment ProcessingTechnologySecondaryNewtek Payments, comprising Newtek Merchant Solutions and Mobil Money, provides credit and debit card processing, ACH services, and point-of-sale solutions, processing $5.2 billion in transaction volume in 2025.Classified using BQ-MICSCIK: 0001587987
Investment Thesis
▲ Bull case
NewtekOne Inc (NEWT) possesses a durable competitive advantage through its technology-driven underwriting platform, which enables rapid loan processing and superior risk management for small business loans under $350,000, a segment where competitors struggle due to outdated systems. Management highlighted the use of AI to analyze tax returns, lease agreements, and operating statements — capabilities that allow for accurate debt service coverage calculations and lien perfection without relying on traditional financial covenants. This technological edge translates into faster funding (seven-day loans), higher approval quality, and lower default rates, as evidenced by declining non-performing loans excluding government guarantees for four consecutive quarters. The company’s ability to underwrite these loans efficiently while maintaining strict adherence to the five C’s of credit creates a moat that is difficult for legacy banks or fintech lenders to replicate, particularly as they face mounting pressure to modernize legacy infrastructure. This positions NEWT to capture growing market share in the underserved SMB segment, where traditional lenders either avoid risk or impose prohibitively costly terms, thereby enabling NEWT to grow its loan book with better risk-adjusted returns than peers. The scalability of this tech stack, combined with low customer acquisition costs via the proprietary NewTracker tool generating 600–800 referrals daily, suggests the company can sustain double-digit loan growth without compromising credit quality — a key driver behind management’s confidence in achieving its 2026 EPS guidance of $2.35 and raising the 2027 midpoint to $2.60, well above current Street consensus of ~$2.43.
The strategic shift of originating and funding Commercial and Industrial Long Amortization (C&I LA) loans directly on Newtek Bank’s balance sheet — rather than through costly warehouse lines at the holding company — represents a transformative, underappreciated catalyst for profitability and capital efficiency. Historically, funding these loans via warehouse lines incurred costs of SOFR plus 3.25% and required significant equity capital (e.g., $150 million for a $500 million portfolio at 30% haircut), whereas bank-funded loans utilize core deposits at ~3.6–3.7% cost with near 10:1 leverage, dramatically improving net interest margins and return on assets. Management emphasized that this transition is not merely operational but structural, noting that the bank’s efficiency ratio improved to 40% in Q1 2026 and that moving C&I LA originations to the bank has increased the proportion of total loans held there from 57% in 2025 to 83% in Q1 2026. This shift reduces reliance on external financing, lowers the cost of funds, and enhances the bank’s ability to recycle capital through deposit growth — which has surged from $142 million to $1.9 billion in just 13 quarters. The resulting improvement in net interest income and return on tangible common equity (approaching 15%) is sustainable because it is grounded in core deposit growth and improved asset mix, not temporary market conditions. As the bank continues to scale its C&I LA book — with average loan sizes of $4–5 million enabling efficient scaling — the profitability uplift from this structural shift will compound over time, directly supporting the company’s long-term EPS growth trajectory and tangible book value accretion, which rose from $6.92 in Q1 2023 to $11.84 in Q1 2026 and is projected to reach $13.50 by year-end.
NEWT’s dominance in SBA 7(a) lending — particularly its position as the largest lender by units and top two or three by volume — provides a resilient, government-backed revenue stream that is less sensitive to economic cycles than commonly perceived, especially given recent regulatory changes that have weakened competitors. Management noted that new SBA rules requiring 100% U.S. citizen ownership and prohibiting the use of funds to refinance merchant cash advances (MCAs) or debit loans have disproportionately impacted fintech lenders lacking traditional underwriting capabilities, creating a vacuum that NEWT is uniquely positioned to fill. The company’s deep expertise in underwriting, combined with its ability to offer long-term, amortizing loans (10–25 years) at payments 7% lower than MCA alternatives, allows it to capture borrowers seeking to refinance high-cost debt — a segment representing 65–70% of MCA users with sustainable cash flows. Furthermore, NEWT’s practice of selling the guaranteed portion of SBA loans (75%) while retaining servicing rights generates recurring fee income without balance sheet burden, effectively turning its SBA platform into a high-margin, fee-based business. The non-guaranteed portion, while carrying higher risk, is conservatively underwritten with an average LTV of 47% and debt service coverage above 3x, and the allowance for credit losses has been prudently built via CECL as the portfolio seasoned. This combination of government-backed origination strength, competitor weakness due to regulatory shifts, and NEWT’s superior underwriting technology creates a durable moat in SBA lending that is not fully reflected in current valuations, particularly as the company continues to gain share in a market where traditional banks remain reluctant to lend to small businesses due to perceived complexity and low yields.
NewtekOne Inc (NEWT) possesses a durable competitive advantage through its technology-driven underwriting platform, which enables rapid loan processing and superior risk management for small business loans under $350,000, a segment where competitors struggle due to outdated systems. Management highlighted the use of AI to analyze tax returns, lease agreements, and operating statements — capabilities that allow for accurate debt service coverage calculations and lien perfection without relying on traditional financial covenants. This technological edge translates into faster funding (seven-day loans), higher approval quality, and lower default rates, as evidenced by declining non-performing loans excluding government guarantees for four consecutive quarters. The company’s ability to underwrite these loans efficiently while maintaining strict adherence to the five C’s of credit creates a moat that is difficult for legacy banks or fintech lenders to replicate, particularly as they face mounting pressure to modernize legacy infrastructure. This positions NEWT to capture growing market share in the underserved SMB segment, where traditional lenders either avoid risk or impose prohibitively costly terms, thereby enabling NEWT to grow its loan book with better risk-adjusted returns than peers. The scalability of this tech stack, combined with low customer acquisition costs via the proprietary NewTracker tool generating 600–800 referrals daily, suggests the company can sustain double-digit loan growth without compromising credit quality — a key driver behind management’s confidence in achieving its 2026 EPS guidance of $2.35 and raising the 2027 midpoint to $2.60, well above current Street consensus of ~$2.43.
The strategic shift of originating and funding Commercial and Industrial Long Amortization (C&I LA) loans directly on Newtek Bank’s balance sheet — rather than through costly warehouse lines at the holding company — represents a transformative, underappreciated catalyst for profitability and capital efficiency. Historically, funding these loans via warehouse lines incurred costs of SOFR plus 3.25% and required significant equity capital (e.g., $150 million for a $500 million portfolio at 30% haircut), whereas bank-funded loans utilize core deposits at ~3.6–3.7% cost with near 10:1 leverage, dramatically improving net interest margins and return on assets. Management emphasized that this transition is not merely operational but structural, noting that the bank’s efficiency ratio improved to 40% in Q1 2026 and that moving C&I LA originations to the bank has increased the proportion of total loans held there from 57% in 2025 to 83% in Q1 2026. This shift reduces reliance on external financing, lowers the cost of funds, and enhances the bank’s ability to recycle capital through deposit growth — which has surged from $142 million to $1.9 billion in just 13 quarters. The resulting improvement in net interest income and return on tangible common equity (approaching 15%) is sustainable because it is grounded in core deposit growth and improved asset mix, not temporary market conditions. As the bank continues to scale its C&I LA book — with average loan sizes of $4–5 million enabling efficient scaling — the profitability uplift from this structural shift will compound over time, directly supporting the company’s long-term EPS growth trajectory and tangible book value accretion, which rose from $6.92 in Q1 2023 to $11.84 in Q1 2026 and is projected to reach $13.50 by year-end.
NEWT’s dominance in SBA 7(a) lending — particularly its position as the largest lender by units and top two or three by volume — provides a resilient, government-backed revenue stream that is less sensitive to economic cycles than commonly perceived, especially given recent regulatory changes that have weakened competitors. Management noted that new SBA rules requiring 100% U.S. citizen ownership and prohibiting the use of funds to refinance merchant cash advances (MCAs) or debit loans have disproportionately impacted fintech lenders lacking traditional underwriting capabilities, creating a vacuum that NEWT is uniquely positioned to fill. The company’s deep expertise in underwriting, combined with its ability to offer long-term, amortizing loans (10–25 years) at payments 7% lower than MCA alternatives, allows it to capture borrowers seeking to refinance high-cost debt — a segment representing 65–70% of MCA users with sustainable cash flows. Furthermore, NEWT’s practice of selling the guaranteed portion of SBA loans (75%) while retaining servicing rights generates recurring fee income without balance sheet burden, effectively turning its SBA platform into a high-margin, fee-based business. The non-guaranteed portion, while carrying higher risk, is conservatively underwritten with an average LTV of 47% and debt service coverage above 3x, and the allowance for credit losses has been prudently built via CECL as the portfolio seasoned. This combination of government-backed origination strength, competitor weakness due to regulatory shifts, and NEWT’s superior underwriting technology creates a durable moat in SBA lending that is not fully reflected in current valuations, particularly as the company continues to gain share in a market where traditional banks remain reluctant to lend to small businesses due to perceived complexity and low yields.
NewtekOne Inc (NEWT) faces significant and underappreciated pressure from its exceptionally low loan-to-deposit ratio (LDR), which reflects a structural imbalance where the bank is holding excessive liquidity — approximately $390 million in cash at the Federal Reserve — that is dragging on net interest margin and signaling either weak loan demand or overly conservative underwriting, despite management’s claims of strong pipeline growth. While management characterizes this liquidity as a strategic buffer for future opportunities, the persistence of such high levels — especially after 13 quarters of deposit growth from $142 million to $1.9 billion — suggests that the bank may be struggling to convert deposits into earning assets at a pace commensurate with its funding growth, raising concerns about the sustainability of its deposit-cost advantage. The company’s reliance on non-interest-bearing or low-cost deposits to fund loans is undermined if those funds remain idle, as the opportunity cost of holding cash at the Fed (earning near-zero returns) directly reduces net interest income and return on assets. This imbalance is not merely a timing issue, as CFO Frank DeMaria acknowledged the quarter’s lower yields were partly due to timing of loan bookings, but the scale of excess liquidity implies deeper issues in loan origination velocity or credit appetite. If the bank cannot deploy its growing deposit base efficiently, its much-touted cost-of-funds advantage will erode, forcing it to either accept lower-yielding loans (worsening margins) or increase rates to attract borrowers — both of which would compress profitability and contradict the narrative of improving returns driven by structural shifts in funding.
The company’s growing reliance on securitization as a primary funding mechanism for its C&I LA and SBA loan portfolios introduces hidden complexity and counterparty risk that is not adequately reflected in its reported profitability metrics, particularly as the benefits of securitization — such as improved advance rates and reduced capital requirements — are offset by servicing obligations, retained exposure through owner certificates, and the need to maintain robust infrastructure to manage these structures. While management highlights the economic advantage of moving C&I LA loans from warehouse lines (SOFR + 3.25%) to bank-funded deposits, they simultaneously rely on securitization to take loans off the balance sheet, which reintroduces funding costs through the issuance of securities whose interest expense exceeds that of bank deposits. This creates a contradiction: if bank funding is truly superior, why continue securitizing? The answer lies in capital constraints — the holding company’s leverage ratio of 13.1% (as disclosed by DeMaria) suggests it is nearing internal limits, necessitating securitization to free up capital for new originations. However, this process is not cost-free; the company retains the owner certificate (typically 15% of the deal), which must be permanently financed by the holding company, and servicing fees reduce the net spread (e.g., from 6.6% gross to 5.66% net in the 2026-1 deal). Furthermore, the success of securitization depends on sustained investor demand — evidenced by the 10x oversubscription of the 2026-1 deal — but this demand could reverse if market conditions deteriorate, leaving NEWT with unsold inventory or forced to retain risk on its books. The company’s disclosure that it has paid down two warehouse lines to zero (from Capital One and Deutsche Bank) indicates progress, but the continued use of securitization reveals that the balance sheet optimization is incomplete and introduces refinancing and market timing risks that are not captured in its steady EPS guidance.
NEWT’s exposure to the evolving regulatory and competitive landscape in the SBA 7(a) program presents a material, under-discussed risk that could undermine its historically strong performance in this segment, particularly as the company’s success is increasingly dependent on navigating policy shifts that favor traditional lenders over fintechs — a dynamic that may not persist indefinitely. Management cited recent SBA rule changes — including the 100% U.S. citizen ownership requirement and ban on using funds to refinance MCAs — as having reduced volume by 10–20% and weakened competitors lacking underwriting rigor, thereby creating an opening for NEWT. However, this advantage is contingent on the persistence of these rules and the continued inability of fintechs to adapt their technology to meet SBA’s stringent documentation and cash flow analysis requirements. If competitors successfully upgrade their platforms — particularly those with significant venture capital backing — to incorporate AI-driven tax return analysis, lease scrutiny, and debt service modeling (capabilities NEWT claims as proprietary), NEWT’s technological moat could erode rapidly. Moreover, the company’s reliance on selling the guaranteed portion of SBA loans creates revenue volatility tied to secondary market demand for those securities, which is sensitive to interest rate fluctuations and investor appetite for government-guaranteed assets. A rise in long-term rates could depress gain-on-sale premiums, directly impacting the non-interest income that has been a key contributor to profitability. Finally, the concentration of risk in the non-guaranteed SBA portfolio — which comprises nearly 60% of the held-for-investment book and drives the bulk of the allowance for credit losses — remains a concern, as even conservative underwriting (47% LTV, 3x+ DSCR) may not fully insulate the portfolio from downturns in specific sectors (e.g., retail, hospitality) where small businesses are disproportionately vulnerable. The company’s narrative of being a “leader” in SBA lending assumes continued market share gains, but if regulatory or competitive shifts reverse, this segment could become a source of earnings volatility rather than a stable anchor.
NewtekOne Inc (NEWT) faces significant and underappreciated pressure from its exceptionally low loan-to-deposit ratio (LDR), which reflects a structural imbalance where the bank is holding excessive liquidity — approximately $390 million in cash at the Federal Reserve — that is dragging on net interest margin and signaling either weak loan demand or overly conservative underwriting, despite management’s claims of strong pipeline growth. While management characterizes this liquidity as a strategic buffer for future opportunities, the persistence of such high levels — especially after 13 quarters of deposit growth from $142 million to $1.9 billion — suggests that the bank may be struggling to convert deposits into earning assets at a pace commensurate with its funding growth, raising concerns about the sustainability of its deposit-cost advantage. The company’s reliance on non-interest-bearing or low-cost deposits to fund loans is undermined if those funds remain idle, as the opportunity cost of holding cash at the Fed (earning near-zero returns) directly reduces net interest income and return on assets. This imbalance is not merely a timing issue, as CFO Frank DeMaria acknowledged the quarter’s lower yields were partly due to timing of loan bookings, but the scale of excess liquidity implies deeper issues in loan origination velocity or credit appetite. If the bank cannot deploy its growing deposit base efficiently, its much-touted cost-of-funds advantage will erode, forcing it to either accept lower-yielding loans (worsening margins) or increase rates to attract borrowers — both of which would compress profitability and contradict the narrative of improving returns driven by structural shifts in funding.
The company’s growing reliance on securitization as a primary funding mechanism for its C&I LA and SBA loan portfolios introduces hidden complexity and counterparty risk that is not adequately reflected in its reported profitability metrics, particularly as the benefits of securitization — such as improved advance rates and reduced capital requirements — are offset by servicing obligations, retained exposure through owner certificates, and the need to maintain robust infrastructure to manage these structures. While management highlights the economic advantage of moving C&I LA loans from warehouse lines (SOFR + 3.25%) to bank-funded deposits, they simultaneously rely on securitization to take loans off the balance sheet, which reintroduces funding costs through the issuance of securities whose interest expense exceeds that of bank deposits. This creates a contradiction: if bank funding is truly superior, why continue securitizing? The answer lies in capital constraints — the holding company’s leverage ratio of 13.1% (as disclosed by DeMaria) suggests it is nearing internal limits, necessitating securitization to free up capital for new originations. However, this process is not cost-free; the company retains the owner certificate (typically 15% of the deal), which must be permanently financed by the holding company, and servicing fees reduce the net spread (e.g., from 6.6% gross to 5.66% net in the 2026-1 deal). Furthermore, the success of securitization depends on sustained investor demand — evidenced by the 10x oversubscription of the 2026-1 deal — but this demand could reverse if market conditions deteriorate, leaving NEWT with unsold inventory or forced to retain risk on its books. The company’s disclosure that it has paid down two warehouse lines to zero (from Capital One and Deutsche Bank) indicates progress, but the continued use of securitization reveals that the balance sheet optimization is incomplete and introduces refinancing and market timing risks that are not captured in its steady EPS guidance.
NEWT’s exposure to the evolving regulatory and competitive landscape in the SBA 7(a) program presents a material, under-discussed risk that could undermine its historically strong performance in this segment, particularly as the company’s success is increasingly dependent on navigating policy shifts that favor traditional lenders over fintechs — a dynamic that may not persist indefinitely. Management cited recent SBA rule changes — including the 100% U.S. citizen ownership requirement and ban on using funds to refinance MCAs — as having reduced volume by 10–20% and weakened competitors lacking underwriting rigor, thereby creating an opening for NEWT. However, this advantage is contingent on the persistence of these rules and the continued inability of fintechs to adapt their technology to meet SBA’s stringent documentation and cash flow analysis requirements. If competitors successfully upgrade their platforms — particularly those with significant venture capital backing — to incorporate AI-driven tax return analysis, lease scrutiny, and debt service modeling (capabilities NEWT claims as proprietary), NEWT’s technological moat could erode rapidly. Moreover, the company’s reliance on selling the guaranteed portion of SBA loans creates revenue volatility tied to secondary market demand for those securities, which is sensitive to interest rate fluctuations and investor appetite for government-guaranteed assets. A rise in long-term rates could depress gain-on-sale premiums, directly impacting the non-interest income that has been a key contributor to profitability. Finally, the concentration of risk in the non-guaranteed SBA portfolio — which comprises nearly 60% of the held-for-investment book and drives the bulk of the allowance for credit losses — remains a concern, as even conservative underwriting (47% LTV, 3x+ DSCR) may not fully insulate the portfolio from downturns in specific sectors (e.g., retail, hospitality) where small businesses are disproportionately vulnerable. The company’s narrative of being a “leader” in SBA lending assumes continued market share gains, but if regulatory or competitive shifts reverse, this segment could become a source of earnings volatility rather than a stable anchor.