NewtekOne, Inc. (NASDAQ: NEWT)

$11.87 ▼ -0.42 (-3.42%)
As of Apr 13, 2026 12:03 PM
Sector: Financial Services Industry: Banks - Regional CIK: 0001587987
P/E 5.00
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About

NewtekOne, Inc. (NEWT) is a financial holding company that operates as a leading business and financial solutions provider to independent business owners and small to medium-sized businesses (SMBs) in the United States. Previously a non-diversified closed-end management investment company, NewtekOne has evolved into a financial holding company, following its acquisition of NBNYC, a national bank regulated by the Office of the Comptroller of the Currency (OCC). The company is now subject to the regulation and supervision of the Federal Reserve and...

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Investment thesis

Bull case

  • The Q4 2025 results underscore a robust deposit expansion strategy, with 9,000 new deposit accounts and 34 million active accounts, a clear signal that the frictionless digital onboarding model is resonating with the target SMB market. This influx of deposits—both business and consumer—provides a low‑cost funding base that can support the company’s projected $1 billion in SBA originations and $500 million in long‑amortization alternative loans for 2026, thereby amplifying future earnings potential. The company’s deposit mix has shifted favorably toward business deposits, which carry a lower risk profile than consumer deposits, and the cost of deposits is expected to remain under 5.3% of net interest margin, further enhancing net interest income.
  • The newly launched triple‑play offering—merging merchant services, payroll, line‑of‑credit, and a core bank account—creates a self‑reinforcing ecosystem where borrowers can fund their own deposits, automatically trigger account approval, and channel loan repayments directly into the bank. This vertical integration increases customer stickiness, reduces acquisition cost, and opens an additional revenue stream from merchant fees, all of which are not fully priced into the current valuation. By eliminating a separate deposit application, the firm lowers friction and reduces the time to deposit, a critical advantage in a market where SMBs prioritize speed and convenience.
  • Technology remains the company’s core competitive moat, as evidenced by the patent‑protected lending operating systems and zero‑fee banking proposition that eliminates “asterisks” and “if‑s.” The absence of traditional branch infrastructure reduces overhead, and the robust data analytics enable a more precise underwriting of long‑amortization loans that align with the cash‑flow profiles of independent business owners. This capability translates into higher credit quality, as demonstrated by the drop in non‑performing loan ratios from 7.3% to 6.9% over two consecutive quarters, suggesting that the technology stack is effectively mitigating credit risk.
  • Securitization has emerged as a powerful catalyst, with the latest C & I loan securitization (ALP) being 10× oversubscribed and drawing interest from new institutional investors. The securitization structure is match‑funded, and the gross spread before servicing fees remains around 6.65–6.70 bps, delivering a net spread of roughly 5.65 bps—a significant margin that supports earnings even in a rising‑rate environment. Because the loans are held for sale, the company can offload credit risk while still earning a sizeable fee, effectively decoupling credit quality from earnings and providing a scalable path to growth.
  • The company’s return metrics are compelling: the holding company’s return on average assets (ROAA) was 2.78% in 2025, and return on tangible common equity (ROTCHE) hovered near 20%. These figures exceed the median for both community and digital banks, underscoring operational efficiency and the ability to generate consistent profits on capital. With a projected EPS range of $2.15 to $2.55 for 2026 and a midpoint of $2.35, the company is positioned to outperform peer valuation multiples, which are typically based on more modest growth expectations for SMB lenders.
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Bear case

  • Regulatory scrutiny of technology‑enabled banks remains a significant and persistent threat, particularly in the wake of recent high‑profile enforcement actions targeting fintech institutions. The company operates under the dual oversight of the Federal Reserve and the OCC, and any tightening of capital or liquidity requirements could necessitate a sudden shift in growth strategy or additional capital raising, potentially diluting existing shareholders and diverting resources from product development. The complexity of operating as a bank holding company, coupled with the relatively new OCC charter, heightens the exposure to regulatory uncertainty that could impede the company’s ability to sustain aggressive expansion plans.
  • Deposit concentration risk is elevated, with a substantial portion of the bank’s deposits coming from the independent business owner segment, which historically exhibits higher volatility than traditional retail depositors. A sudden slowdown in the SMB sector—due to macroeconomic headwinds such as rising input costs, tightening credit conditions, or a shift in consumer spending—could precipitate deposit withdrawals, thereby raising the cost of funds and eroding net interest margins. The company’s deposit growth narrative may be underpinned by a short‑term surge that is not fully priced into the market, leaving room for future reversals that could hurt earnings.
  • While securitizations provide a compelling revenue stream, they also introduce exposure to liquidity risk and counterparty concentration. The company’s ALP securitization relies on a diversified pool of lenders, yet any deterioration in borrower credit quality or a significant drop in secondary market demand could impair the company’s ability to roll over or refinance outstanding securitizations. This risk is amplified by the fact that the loan book is composed of long‑amortization, higher‑interest products that may become unattractive to investors if rates rise or if the company’s credit risk profile changes, potentially forcing a loss on the securities and impacting earnings.
  • The company’s focus on long‑amortization loans (ten to twenty‑five years) and high‑interest rates places it in a sensitive position relative to the macroeconomic cycle. Rising rates will compress net interest margins, and the higher interest charged to borrowers could lead to increased default risk, especially among SMBs that are already operating on thin margins. Although the company’s underwriting models incorporate debt service coverage and lien analysis, the sheer volume of exposure to high‑rate loans could amplify credit losses if an economic downturn triggers a wave of defaults, as indicated by the modest uptick in non‑performing loans on the bank’s balance sheet.
  • The company’s underwriting and credit quality metrics have been questioned in the Q&A, particularly regarding the NSBF loss trajectory and the charge‑off rate for the bank subsidiary. While the loss on the NSBF unit declined to $20 million in 2025, the company remains exposed to a sizable portion of its loan book that has historically underperformed. The lack of transparency about the underlying quality of these loans and the reliance on proprietary risk models that have not yet been externally validated expose the company to potential surprises in future loss provisioning, which could materially depress earnings and erode capital.
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Subsequent Event Type Breakdown of Revenue (2026)

Peer comparison

Companies in the Banks - Regional
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 PNC Pnc Financial Services Group, Inc. 85.65 Bn 13.22 3.71 38.64 Bn
2 DB Deutsche Bank Aktiengesellschaft 71.47 Bn 7.82 1.91 -
3 TFC Truist Financial Corp 62.09 Bn 12.74 3.06 27.84 Bn
4 NU Nu Holdings Ltd. 57.02 Bn 34.39 0.00 1.87 Bn
5 KEY Keycorp /New/ 26.78 Bn 13.93 4.87 0.01 Bn
6 BPOP Popular, Inc. 15.13 Bn 11.70 -101.45 -
7 WTFC Wintrust Financial Corp 9.73 Bn 12.55 3.57 0.30 Bn
8 SSB SouthState Bank Corp 9.59 Bn 12.23 -26,857.57 0.31 Bn