NewtekOne Inc.

11/06/2026 | Press release | Distributed by Public on 11/06/2026 14:21

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward-Looking Statements
The matters discussed in this report, as well as in future oral and written statements by Company management that are forward-looking statements, are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our industry, our beliefs, and our assumptions. Words such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or variations of these words and similar expressions are intended to identify forward-looking statements. Important assumptions include our ability to originate new investments, achieve certain margins and levels of profitability, the availability of additional capital, and the ability to maintain certain debt to asset ratios. In light of these and other uncertainties, including recent economic and market events and declines in depositor confidence in certain types of depository institutions, the inclusion of a projection or forward-looking statement in this report should not be regarded as a representation by us that our plans or objectives will be achieved. The forward-looking statements contained in this report, including the documents we incorporate by reference, involve risks and uncertainties, including statements as to:
•our future operating results;
•our business prospects and the prospects of our subsidiaries;
•our contractual arrangements and relationships with third parties;
•the dependence of our future success on the general economy and its impact on the industries in which we and our borrowers operate;
•the ability of our business to achieve its objectives;
•the impact of a protracted decline in the liquidity of credit markets on our business;
•the adequacy of our cash resources and working capital;
•our ability to operate as a financial holding company and our ability to operate our subsidiary Newtek Bank, a national bank regulated and supervised by the OCC, and the increased compliance and other costs associated with such operations;
•our ability to adequately manage liquidity, deposits, capital levels and interest rate risk;
•our current intent to re-evaluate our business model, which will include holding larger amounts of guaranteed portions of SBA 7(a) loans on our balance sheet and relying less on the income earned from the sale of guaranteed portions of SBA 7(a) loans in the secondary market, could negatively impact our revenues and business;
•the timing of cash flows, if any, from the operations of our subsidiaries;
These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in any and all of the forward-looking statements, including without limitation:
•an economic downturn, which could impair our subsidiaries' ability to continue to operate or repay their borrowings, which could adversely affect our results;
•a contraction of available credit and/or an inability to access the equity markets could impair our lending and business activities;
•impacts to financial markets and the global macroeconomic and geopolitical environment, including higher inflation, tariffs and their impacts;
•higher interest rates and the impacts on macroeconomic conditions and our funding costs;
•changes to the SBA 7(a) loan program, including revisions to SBA Standard Operating Procedure ("SOP"), could materially and adversely affect Newtek Bank's participation in the SBA 7(a) loan program and could negatively impact our revenues;
•Newtek Bank's authority to originate loans under the SBA 7(a) program, maintain PLP status and authority to sell guaranteed portions of SBA 7(a) loans in the Secondary Market; and
•the risks, uncertainties and other factors we identify in "Risk Factors" and elsewhere in this report and in our filings with the SEC, including the documents we incorporate by reference.
The following discussion should be read in conjunction with our consolidated financial statements and related notes and other financial information appearing elsewhere in this report. In addition to historical information, the following discussion and other parts of this report contain forward-looking information that involves risks and uncertainties. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include the ability of Newtek Bank to originate loans under the SBA 7(a) program, maintain PLP status, sell guaranteed portions of SBA 7(a) loans at premiums and grow deposits; our ability to originate new loans; our subsidiaries' ability to generate revenue and obtain and maintain certain margins and levels of profitability; and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this report, including the documents that we incorporate by reference herein, should not be regarded as a representation by us that our plans and objectives will be achieved. Our actual results could differ materially from those anticipated by such forward-looking information due to the factors discussed under Part II "Item 1A. Risk Factors" of this quarterly report on Form 10-Q and "Item 1A. Risk Factors" of our 2025 Form 10-K, and in any subsequent filings we have made with the SEC that are incorporated by reference into this report.
You should not place undue reliance on these forward-looking statements, which apply only as of the date of this report. And while we believe such information forms, or will form, a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely on these statements. Any forward-looking statements made by or on behalf of the Company speak only as to the date they are made, and the Company does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements were made, except as required by applicable law.
Executive Overview
NewtekOne, Inc. is a financial holding company owning Newtek Bank - a branchless nationally chartered bank. Our common shares are currently listed on the Nasdaq Global Market under the symbol "NEWT". We are subject to the regulation and supervision of the Federal Reserve and the Federal Reserve Bank of Atlanta. In addition Newtek Bank is regulated by the OCC and we are required to follow SBA rules and guidelines in the origination, servicing and sale of our SBA loans. Complying with this level of regulation requires investments in technology and process and personnel costs.
Our target market is owners and prospective owners of SMBs and our services are offered online and in some cases delivered and fulfilled by our staff via video and voice calls. We source our business through our NewtekOne.com and NewtekBank.com web sites, our alliance partner network and our marketing database, which is facilitated through our patented NewTracker® platform. Our value proposition centers on delivering a comprehensive suite of integrated business and financial solutions - including business deposits and banking, business lending, electronic payment processing, insurance services, and payroll and benefits solutions - to independent business owners through a single relationship, unified by the Newtek Advantage® platform. We believe this breadth differentiates us from single-product competitors, deepens client relationships, supports deposit retention, and diversifies our revenue.
We support the operations of our subsidiaries by providing access to our proprietary and patented technology platform, including NewTracker®. In addition, we now offer the Newtek Advantage®, the One Dashboard for All of Your Business Needs®, which provides independent business owners with instant access to a team of NewtekOne business and financial solutions experts.
Our loan products include SBA 7(a), SBA 504, traditional C&I loans, C&I LA loans, CRE loans and ABL loans. Newtek Bank is a national bank and, as a nationally licensed SBA lender under the SBA 7(a) Program, originates, sells and services SBA 7(a) loans. Newtek Bank has been granted PLP status and is authorized to place SBA guarantees on loans without seeking prior SBA review and approval. Being a national SBA 7(a) lender with PLP status allows Newtek Bank to expedite the origination of SBA 7(a) loans since Newtek Bank is not required to present applications to the SBA for concurrent review and approval. A government failure to fund the SBA or the loss of the SBA 7(a) lending license or PLP status would adversely impact our marketing efforts and our loan origination volume, which would negatively impact our results of operations. See "ITEM 1A. RISK FACTORS - Risks Related to SBA Lending.
Our process to extend credit to borrowers begins with technology but finishes with credit committee approval. For SBA7(a) loans, we hold the unguaranteed portion and we both sell portions guaranteed by the SBA for premiums and also hold guaranteed portions on our balance sheet to earn interest income. Unlike traditional financial and bank holding companies, the majority of our income has been historically driven and influenced by noninterest income, specifically gains on sales and market value adjustments on loans. Going forward, we intend to rely less on gain on sales and more on recurring interest income. There can be no guarantee that we will continue to earn revenue from the sales of guaranteed portions of SBA 7(a) loans at the historic levels we have in the past. We sell certain loans servicing retained, in which case we record a servicing asset that could increase our gain on sale and provides a stream of future income to the extent the loan balance continues to be outstanding.
From 2012 through December 31, 2022, NSBF was consistently the largest non-bank SBA 7(a) lender in the U.S. based on dollar volume of loan approvals, and, as of December 31, 2022, was the third largest SBA 7(a) lender in the United States. Historically, NSBF structured its loans so that it could sell the government guaranteed portions of SBA 7(a) loans originated and securitize the unguaranteed portions. This structure generally allowed NSBF to recover its capital and earn excess capital on each loan, typically within a year. In connection with our April 2023 acquisition of Newtek Bank, we entered into a Wind-down Agreement with the SBA under which NSBF transitioned its SBA 7(a) loan originations to Newtek Bank. NSBF is winding down its operations and will continue to hold the 7(a) loans in its portfolio until maturity, liquidation, charge-off or - subject to the SBA's prior written approval - sale or transfer. Currently, Newtek Bank is ranked as the second largest SBA 7(a) lender based on dollar volume of loans approved.
Prior to the first quarter of 2026 when we began originating C&I LA loans (formerly referred to as ALP loans) out of Newtek Bank, we offered ALP loans and SBA 504 loans originated by our non-bank subsidiary NALH; and our JVs offered ALP loans. These loans have terms between 10 and 25 years, bear fixed interest rates that reset every five years, and have prepayment penalties. The criteria evaluated in underwriting C&I LA loans and the terms of these loans have been generally consistent over the program's existence. Prior to July 1, 2024, the Company originated ALP loans with the intent to sell the loans to a JV, and during the third quarter of 2024, we made the decision to originate with the intent to securitize ALP loans with our subsidiary NALH as the originator and sponsor. During the second quarter of 2025, NALH closed a securitization backed by $216.6 million of ALP loans and in January 2026, closed the 2026-1 securitization pursuant to which NALH sold $251.9 million of Class A Notes, $35.9 million of Class B Notes, and $6.8 million of a Class C Note issued by NALP Business Loan Trust 2026-1. These non-bank loans were initially funded with capital and lines of credit and hedged until a sufficient volume was attained at which time the loans were securitized. We are required by law to hold risk retention in securitization transactions, and the majority of our interests in securitizations are designed to absorb first loss on the loans held in the securitization trusts.
The migration of our lending activities into Newtek Bank reflects a deliberate transition from capital-markets- and warehouse-funded origination to a deposit-funded model. During the three and nine months ended September 30, 2026 our average cost of total deposits was 3.92% and 3.74%, respectively, compared to an average cost of borrowings of 8.90% and 8.87%. We expect this shift toward lower-cost deposit funding to remain a primary driver of our funding profile as the wind-down of NSBF's legacy portfolio progresses.
Our deposit products primarily include consumer high yield savings accounts, high yield certificates of deposit, zero-fee business checking, and business money market accounts. We offer business and financial solutions under the Newtek® and NewtekOne® brands to the independent business owner (SMB) market. We have also issued bonds in the public and private capital markets.
Following the Acquisition, there can be no assurance regarding our continued lending prospects or operations as a financial holding company. See "ITEM 1A. RISK FACTORS - Risks Related to Operation as a Financial Holding Company - We are subject to extensive regulation and supervision as a financial holding company, which may adversely affect our business."
Economic Developments
We have observed and continue to observe commodity inflation, rising interest rates and declines in depositor confidence in certain types of depository institutions. In addition, the conflicts in the Middle East and the war between Russia and Ukraine, and resulting market volatility and impacts on energy prices, could adversely affect our business, financial condition and results of operations, as well as the financial condition of our borrowers. The ongoing conflicts have negatively affected the global economy and business activity and could have a material adverse effect on our business, financial condition, cash flows and results of operations, as well as those of our borrowers. The severity and duration of conflicts and their impact on global economic and market conditions are impossible to predict. In addition, beginning in 2025, the U.S. has imposed or increased tariffs, including on imports from China, and proposed imposing or increasing tariffs on U.S. trading partners, which could adversely affect markets, the business environment and our business. On July 4, 2025, federal legislation generally referred to as H.R. 1 - One Big Beautiful Bill Act (the "Act" or "OBBBA") was signed into law. The Act includes a variety of tax provisions including permanently extending and modifying certain key aspects of existing federal tax law. U.S. GAAP requires the effects of changes in tax laws and rates to be recognized in its financial statements in the period in which legislation is enacted. The Company evaluated the OBBBA and there is no material impact on its financial position or results of operations in the current year. Any of the above factors, including sanctions, export controls, tariffs, trade wars and other governmental actions, could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline. We monitor developments and seek to manage our investments in a manner consistent with achieving our investment objective, but there can be no assurance that we will be successful in doing so.
Income
For the quarterly period ended September 30, 2026, we generated income in the form of interest and related servicing assets on such sales, dividends, electronic payment processing income, servicing income, other fee income generated by loan originations and by our subsidiaries. In some instances, we received payments on our loans based on scheduled amortization of the outstanding balances. In addition, we received repayments of some of our loans prior to their scheduled maturity date. The frequency or volume of these repayments fluctuate significantly from period to period. There can be no assurance that we will continue to earn revenue from the sales of guaranteed portions of SBA 7(a) loans at the historic levels we have in the past. In addition, we received servicing income related to the guaranteed portions of SBA 7(a) loans which we originated and sold into the secondary market as well as on the portfolios of ALP loans owned and then securitized by NCL JV (dissolved in September 2025), TSO JV and Newtek ALP Holdings. These recurring fees are outlined in servicing agreements and were recorded when earned. In addition, we generated revenue in the form of loan origination fees (packaging and legal fees) as well as loan prepayment and late fees. We recorded such fees related to loans HFS as other income. Distributions of earnings from our joint ventures were evaluated to determine if the distribution was income, return of capital or realized gain.
We recognize realized gains or losses on loans based on the difference between (1) the net proceeds from the disposition and any servicing assets recognized and (2) the cost basis of the loan without regard to unrealized gains or losses previously recognized. We record current period changes in fair value of loans and assets that were measured at fair value as a component of the net change in unrealized appreciation (depreciation) on the loans or servicing assets, as appropriate, as well as amortization and impairment, if any, of LCM servicing rights in the consolidated statements of income.
Expenses
For the quarterly period ended September 30, 2026, our primary operating expenses were salaries and benefits, interest expense including interest on deposits, electronic payment processing expense, loan origination and servicing expenses, and other general and administrative costs, such as professional fees, marketing, referral fees, servicing costs and rent.
Results of Operations
Set forth below is a comparison of the results of operations for the nine months ended September 30, 2026 and 2025.
Summary
For the nine months ended September 30, 2026, the Company reported net income of $38.7 million, or $1.24 per diluted share, compared to net income of $41.0 million, or $1.54 per diluted share, for the nine months ended September 30, 2025, a decrease of 5.5%. The decrease reflects that we are holding more guaranteed portions of SBA 7(a) loans on our balance sheet than we have in the past, which is having the anticipated effect of generating net interest income growth and transitioning the mix of revenue away from gain on sale income to recurring net interest income. Net income in our Banking segment grew to $90.5 million from $35.4 million, total deposits increased $1.1 billion during the nine months ended September 30, 2026 and our subsidiary Newtek ALP Holdings closed the NALP Business Loan Trust 2026-1 securitization backed by $341.8 million of collateral. Net interest income increased to $51.1 million from $42.4 million, and the provision for credit losses increased to $37.1 million from $30.3 million given portfolio growth, individually assessed reserves, and an increase in net charge offs as our portfolio seasons. Noninterest income decreased by $2.3 million and noninterest expense increased by $4.6 million.
The net decrease in net income was attributable to the following items:
Nine Months Ended September 30,
2026 2025 Change
Net interest income $ 51,082 $ 42,405 $ 8,677
Provision for credit losses 37,115 30,334 6,781
Net interest income after provision for credit losses 13,967 12,071 1,896
Noninterest income 166,741 169,061 (2,320)
Noninterest expense 130,252 125,645 4,607
Net income before taxes 50,456 55,487 (5,031)
Income tax expense 11,740 14,516 (2,776)
Net income $ 38,716 $ 40,971 $ (2,255)
Net Interest Income and Margin
Average Balances and Yields. The following table presents information regarding average balances for assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amount of interest expense on average interest-bearing liabilities, and the resulting average yields and costs. The yields and costs for the periods indicated are derived by dividing the income or expense by the average balances for assets or liabilities, respectively, for the periods presented and annualizing that result. Loan fees are included in interest income on loans.
Nine Months Ended September 30,
2026 2025
Average Balance Interest Average Yield / Rate Average Balance Interest Average Yield / Rate
Interest-earning assets:
Other interest-earning assets
$ 632,548 $ 18,782 3.97 % $ 271,996 $ 8,599 4.23 %
Investment securities 19,403 605 4.17 17,485 690 5.28
Loans 2,169,414 126,504 7.80 1,565,654 104,213 8.90
Total interest-earning assets 2,821,365 145,891 6.91 1,855,135 113,502 8.18
Less: Allowance for credit losses on loans (50,888) (35,850)
Noninterest earning assets 237,460 213,246
Total assets $ 3,007,937 $ 2,032,531
Interest-bearing liabilities:
Demand $ 220,806 $ 1,173 0.71 % $ 112,218 $ 788 0.94 %
Savings and NOW 1,082,026 33,441 4.13 404,063 13,409 4.44
Money Market 100,144 2,733 3.65 51,390 1,560 4.06
Time 604,395 18,839 4.17 395,975 14,324 4.84
Total deposits 2,007,371 56,186 3.74 963,646 30,081 4.17
Borrowings 582,259 38,623 8.87 693,298 41,016 7.91
Total interest-bearing liabilities 2,589,630 94,809 4.89 1,656,944 71,097 5.74
Noninterest-bearing deposits - -
Noninterest-bearing liabilities 12,713 80,167
Shareholders' equity 405,594 295,420
Total liabilities and shareholders' equity $ 3,007,937 $ 2,032,531
Net interest income and interest rate spread $ 51,082 2.02 % $ 42,405 2.44 %
Net interest margin 2.42 % 3.06 %
Ratio of average interest-earning assets to average interest bearing liabilities 108.95 % 111.96 %
Rate/Volume Analysis
The following table sets forth the effects of changing rates and volumes on net interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. For purposes of this table, increases or decreases attributable to changes in both rate and volume that cannot be segregated have been allocated proportionally based on the changes due to rate and the changes due to volume.
Nine Months Ended September 30,
2026 vs. 2025
Increase (Decrease) Due to
Rate Volume Total
Interest income:
Other interest-earning assets $ (1,216) $ 11,399 $ 10,183
Investment securities (161) 76 (85)
Loans (17,896) 40,187 22,291
Total interest income (19,273) 51,662 32,389
Interest expense:
Demand (378) 763 385
Savings and NOW (2,466) 22,498 20,032
Money Market (307) 1,480 1,173
Time (3,024) 7,539 4,515
Borrowings 4,176 (6,569) (2,393)
Total interest expense (1,999) 25,711 23,712
Net interest income $ (17,274) $ 25,951 $ 8,677
Net Interest Margin
Net interest margin decreased to 2.42% for the nine months ended September 30, 2026 from 3.06% for the nine months ended September 30, 2025.
Interest income increased by $32.4 million for the nine months ended September 30, 2026 from $113.5 million to $145.9 million when compared to the nine months ended September 30, 2025. The increase was primarily due to an increase in the average balance of interest-earning assets of $966.2 million along with a decrease in the yield on interest earning assets from 8.18% to 6.91%.
Interest expense increased by $23.7 million for the nine months ended September 30, 2026 from $71.1 million to $94.8 million when compared to the nine months ended September 30, 2025. The increase was primarily due to an increase in the average balance of interest-bearing liabilities of $932.7 million along with a decrease in the cost on interest earning liabilities from 5.74% to 4.89%.
Provision for Credit Losses
The provision for loan and lease credit losses represents the amount necessary to be charged against the current period's earnings to maintain the ACL on loans at a level that the Company believes is appropriate in relation to the estimated losses inherent in the loan portfolio.
For the nine months ended September 30, 2026 and 2025, there was a provision for credit losses of $37.1 million and $30.3 million, respectively.
Noninterest Income
Nine months ended September 30, 2026/2025 Increase/(Decrease)
2026 2025 Amount Percent
Dividend income $ 1,940 $ 2,711 $ (771) (28.4) %
Net loss on loan servicing assets (12,788) (12,500) (288) 2.3
Servicing income 16,673 17,655 (982) (5.6)
Net gains on sales of loans 37,940 38,050 (110) (0.3)
Net gain on residuals in securitizations 59,650 30,015 29,635 98.7
Net gain (loss) on loans under the fair value option (8,938) 35,566 (44,504) (125.1)
Electronic payment processing income 31,436 33,401 (1,965) (5.9)
Other noninterest income 40,828 24,163 16,665 69.0
Total noninterest income $ 166,741 $ 169,061 $ (2,320) (1.4) %
The $2.3 million decrease in noninterest income when comparing the nine months ended September 30, 2026 to nine months ended September 30, 2025 was primarily due to additional net losses on loans under the fair value option of $44.5 million and a decrease in electronic payment processing of $2.0 million. These were partially offset by an increase of $29.6 million in gain on residuals in securitization and an increase in other noninterest income of $16.7 million incurred in the nine months ended September 30, 2026.
The increase in net gain on residuals in securitizations was primarily due to the 2026-1 Securitization Trusts, which closed on January 21, 2026. To consummate transaction, $341.8 million of ALP loans HFS at fair value were sold into the securitization trust at par. This resulted in $66.4 million of previously recorded gains on ALP loans under the fair value option to be reversed, which was a large driver of the increase in loss on loans under the fair value option. The residual in the securitization (represented by the ownership certificates) was then valued resulting in a gain that was netted against the transaction costs. Refer to NOTE 3-SECURITIZATIONS AND VARIABLE INTEREST ENTITIES in the accompanying notes to the consolidated financial statements for additional information.
Noninterest Expense
Nine months ended September 30, 2026/2025 Increase/(Decrease)
2026 2025 Amount Percent
Salaries and employee benefits expense $ 67,554 $ 64,424 $ 3,130 4.9 %
Electronic payment processing expense 13,247 13,304 (57) (0.4)
Professional services expense 9,719 11,532 (1,813) (15.7)
Other loan origination and maintenance expense 16,672 14,468 2,204 15.2
Loss on extinguishment of debt - 179 (179) (100.0)
Technology expense 8,835 8,815 20 0.2
Other general and administrative costs 14,225 12,923 1,302 10.1
Total noninterest expense $ 130,252 $ 125,645 $ 4,607 3.7 %
The $4.6 million increase in noninterest expense when comparing the nine months ended September 30, 2026 to the nine months ended September 30, 2025 was primarily due to a $3.1 million increase in salaries and employee benefits expense, a $2.2 million increase in other loan origination and maintenance expense and an increase in other general and administrative costs of $1.3 million, partially offset by a decrease in professional services expense of $1.8 million. The increase in salaries and employee benefits was primarily attributable to higher benefit costs, including medical and other insurance expenses. The increase in other loan origination and maintenance expense was due to the increase in loans originated during the period. The decrease in professional fees period over period is primarily attributable to a decrease in audit and legal fees.
Results of Segment Operations
The Company has four reportable segments Banking, Alternative Lending, NSBF, and Payments. A description of each segment and the methodologies used to measure financial performance is described in NOTE 18-SEGMENTS in the accompanying Notes to the Consolidated Financial Statements. Net income (loss) by operating segment is presented below:
Nine Months Ended 2026/2025 Increase/(Decrease)
September 30, 2026 September 30, 2025 Amount Percent
Banking $ 71,471 $ 30,866 $ 40,605 131.6 %
Alternative Lending 8,846 60,445 (51,599) (85.4) %
NSBF (25,044) (13,612) (11,432) 84.0 %
Payments 10,554 12,556 (2,002) (15.9) %
Corporate & Other 3,617 20,732 (17,115) (82.6) %
Eliminations (30,728) (70,016) 39,288 (56.1) %
Consolidated net income $ 38,716 $ 40,971 $ (2,255) (5.5) %
Banking
The banking segment includes Newtek Bank as well as its consolidated subsidiaries SBL and PMT. The financial results include the origination, sale, and servicing of SBA 7(a) loans, SBA 504 loans, C&I loans, C&I LA loans, CRE loans and ABL loans. In addition, Newtek Bank offers depository services. The results include $67.1 million of net interest income during the nine months ended September 30, 2026 compared to $43.9 million of net interest income during the nine months ended September 30, 2025.
Alternative Lending
Alternative Lending includes Newtek ALP Holdings (NALH) and its subsidiaries. The Company originated loans under its ALP program from 2019 through December 2025. Beginning in the first quarter of 2026, these loans are originated at Newtek Bank under its C&I LA program, and NALH no longer originates loans.
Net income for the segment declined to $8.8 million for the nine months ended September 30, 2026 as compared to $60.4 million for the nine months ended September 30, 2025. The decline in the net income reflects the cessation of loan originations at NALH. Because C&I LA loans are now originated at Newtek Bank, the origination fees associated with those loans are recognized in the Banking segment rather than in Alternative Lending. In addition, loans originated in 2026 are carried at fair value at Newtek Bank, so the segment recognizes no fair value premium on new originations.
NSBF
NSBF relates to NSBF's legacy portfolio of SBA 7(a) loans held outside Newtek Bank. The change in net income is due to the wind-down of NSBF's operations.
Payments
Payments includes NMS, POS and Mobil Money. Within the segment's results are $33.0 million of noninterest income for the nine months ended September 30, 2026 resulting from marketing credit and debit card processing services, check approval services, processing equipment, and software, compared to $35.9 million during the nine months ended September 30, 2025. The net income also included $21.5 million and $23.1 million of noninterest expense for the nine months ended September 30, 2026 and 2025, respectively.
Corporate and Other
Corporate and Other represents operations not considered to be reportable segments and/or general operating expenses of the Company, and includes the parent company, other non-bank subsidiaries including NIA, and elimination adjustments to reconcile the results of the operating segments to the consolidated financial statements prepared in conformity with GAAP.
Results of Operations
Set forth below is a comparison of the results of operations for the three months ended September 30, 2026 and 2025.
Summary
For the three months ended September 30, 2026, the Company reported net income of $10.7 million, or $0.34 per diluted share, compared to net income of $17.9 million, or $0.67 per diluted share, for the three months ended September 30, 2025. Net interest income increased to $18.9 million from $14.5 million, and the provision for credit losses increased to $15.4 million from $7.7 million as our allowance for credit losses stabilized following three years of reserve build associated with our 2023 adoption of CECL. Noninterest income decreased by $7.5 million while noninterest expense remained relatively flat.
The change in net income was attributable to the following items:
Three Months Ended September 30,
2026 2025 Change
Net interest income $ 18,892 $ 14,549 $ 4,343
Provision for credit losses 15,393 7,712 7,681
Net interest income after provision for credit losses 3,499 6,837 (3,338)
Noninterest income 52,893 60,388 (7,495)
Noninterest expense 42,172 42,159 13
Net income before taxes 14,220 25,066 (10,846)
Income tax expense 3,516 7,165 (3,649)
Net income $ 10,704 $ 17,901 $ (7,197)
Net Interest Income and Margin
Average Balances and Yields. The following table presents information regarding average balances for assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amount of interest expense on average interest-bearing liabilities, and the resulting average yields and costs. The yields and costs for the periods indicated are derived by dividing the income or expense by the average balances for assets or liabilities, respectively, for the periods presented and annualizing that result. Loan fees are included in interest income on loans.
Three Months Ended September 30,
2026 2025
Average Balance Interest Average Yield / Rate Average Balance Interest Average Yield / Rate
Interest-earning assets:
Other interest-earning assets $ 616,749 $ 4,717 3.07 % $ 275,885 $ 2,518 3.62 %
Investment securities 15,798 172 4.37 13,015 200 6.10
Loans 2,419,620 48,467 8.03 1,729,885 36,376 8.34
Total interest-earning assets 3,052,167 53,356 7.01 2,018,785 39,094 7.68
Less: Allowance for credit losses on loans (54,517) (42,724)
Noninterest earning assets 273,129 286,617
Total assets $ 3,270,779 $ 2,262,678
Interest-bearing liabilities:
Demand $ 230,416 $ 415 0.72 % $ 157,657 $ 277 0.70 %
Savings and NOW 1,241,308 12,880 4.16 447,058 4,660 4.14
Money Market 108,444 983 3.64 64,113 576 3.56
Time 700,527 8,039 4.60 479,078 5,366 4.44
Total deposits 2,280,695 22,317 3.92 1,147,906 10,879 3.76
Borrowings 547,270 12,147 8.90 674,017 13,666 8.04
Total interest-bearing liabilities 2,827,965 34,464 4.89 1,821,923 24,545 5.34
Noninterest-bearing deposits - -
Noninterest-bearing liabilities 27,066 101,678
Shareholders' equity 415,748 339,077
Total liabilities and shareholders' equity $ 3,270,779 $ 2,262,678
Net interest income and interest rate spread $ 18,892 2.12 % $ 14,549 2.34 %
Net interest margin 2.48 % 2.86 %
Ratio of average interest-earning assets to average interest bearing liabilities 107.93 % 110.81 %
Rate/Volume Analysis
The following table sets forth the effects of changing rates and volumes on net interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. For purposes of this table, increases or decreases attributable to changes in both rate and volume that cannot be segregated have been allocated proportionally based on the changes due to rate and the changes due to volume.
Three Months Ended September 30,
2026 vs. 2025
Increase (Decrease) Due to
Rate Volume Total
Interest income:
Other interest-earning assets $ (912) $ 3,111 $ 2,199
Investment securities (71) 43 (28)
Loans $ (2,413) $ 14,504 $ 12,091
Total interest income (3,396) 17,658 14,262
Interest expense:
Demand 10 128 138
Savings and NOW (59) 8,279 8,220
Money Market 9 398 407
Time 193 2,480 2,673
Borrowings 1,051 (2,570) (1,519)
Total interest expense 1,204 8,715 9,919
Net interest income $ (4,600) $ 8,943 $ 4,343
Net Interest Margin
Net interest margin decreased to 2.48% for the three months ended September 30, 2026 from 2.86% for the three months ended September 30, 2025.
Interest income increased by $14.3 million for the three months ended September 30, 2026 from $39.1 million to $53.4 million when compared to the three months ended September 30, 2025. The increase was primarily due to an increase in the average balance of interest-earning assets of $1.0 billion, partially offset by a decrease in the yield on interest earning assets from 7.68% to 7.01%.
Interest expense increased by $9.9 million for the three months ended September 30, 2026 from $24.5 million to $34.5 million when compared to the three months ended September 30, 2025. The increase was primarily due to an increase in the average balance of interest-bearing liabilities of $1.0 billion, partially offset by a decrease in the cost on interest earning liabilities from 5.34% to 4.89%.
Provision for Credit Losses
The provision for loan and lease credit losses represents the amount necessary to be charged against the current period's earnings to maintain the ACL on loans at a level that the Company believes is appropriate in relation to the estimated losses inherent in the loan portfolio.
For the three months ended September 30, 2026 and 2025 the provision for credit losses was $15.4 million and $7.7 million, respectively. The increase in provision for credit losses was primarily due to increases in net charge-offs, specific reserves on individually evaluated loans, and balances of loans HFI at amortized cost, across all products but specifically SBA 7(a) loans.
Noninterest Income
Three Months Ended September 30, 2026/2025 Increase/(Decrease)
2026 2025 Amount Percent
Dividend income $ 1,005 $ 425 $ 580 136.5 %
Net loss on loan servicing assets (1,342) (4,493) 3,151 (70.1)
Servicing income 5,285 6,076 (791) (13.0)
Net gains on sales of loans 32 9,563 (9,531) (99.7)
Net gain (loss) on residuals in securitizations 1,500 (1,450) 2,950 (203.4)
Net gain (loss) on loans under the fair value option 19,986 29,250 (9,264) (31.7)
Electronic payment processing income 10,180 11,053 (873) (7.9)
Other noninterest income 16,247 9,964 6,283 63.1
Total noninterest income $ 52,893 $ 60,388 $ (7,495) (12.4) %
The $7.5 million decrease in noninterest income when comparing the three months ended September 30, 2026 to three months ended September 30, 2025 was primarily due to a decrease in net gains on sales of loans of $9.5 million and a decrease in net gain on loans under the fair value option of $9.3 million, which were partially offset by an increase in other noninterest income of $6.3 million and a decrease in net loss on loan servicing assets of $3.2 million. The decrease in net gains on sales of loans was primarily due to holding more loans on our balance sheet, which generates recurring interest income growth.
Noninterest Expense
Three Months Ended September 30, 2026/2025 Increase/(Decrease)
September 30, 2026 September 30, 2025 Amount Percent
Salaries and employee benefits expense $ 21,224 $ 19,973 $ 1,251 6.3 %
Electronic payment processing expense 4,407 4,429 (22) (0.5)
Professional services expense 3,935 3,793 142 3.7
Other loan origination and maintenance expense 5,536 6,764 (1,228) (18.2)
Technology expense 2,961 3,092 (131) (4.2)
Loss on extinguishment of debt - 179 (179) (100.0)
Other general and administrative costs 4,109 3,929 180 4.6
Total noninterest expense $ 42,172 $ 42,159 $ 13 - %
Noninterest expense remained relatively flat when comparing the three months ended September 30, 2026 to the three months ended September 30, 2025 primarily due to a $1.3 million increase in salaries and employee benefits expense which was largely offset by a $1.2 million decrease in other loan origination and maintenance expense.
Results of Segment Operations
The Company has four reportable segments Banking, Alternative Lending, NSBF, and Payments. A description of each segment and the methodologies used to measure financial performance is described in NOTE 18-SEGMENTS in the accompanying Notes to the Consolidated Financial Statements. Net income (loss) by operating segment is presented below:
Three Months Ended September 30, 2026/2025 Increase/(Decrease)
2026 2025 Amount Percent
Banking $ 23,261 $ 12,574 $ 10,687 85.0 %
Alternative Lending (215) 22,318 (22,533) (101.0) %
NSBF (8,239) (4,884) (3,355) 68.7 %
Payments 3,387 4,212 (825) (19.6) %
Corporate & Other 7,234 9,062 (1,828) (20.2) %
Eliminations (14,724) (25,381) 10,657 (42.0) %
Consolidated net income $ 10,704 $ 17,901 $ (7,197) (40.2) %
Banking
The banking segment includes Newtek Bank as well as its consolidated subsidiaries SBL and PMT. The financial results include the origination, sale, and servicing of SBA 7(a) loans, SBA 504 loans, C&I loans, C&I LA loans, CRE loans and ABL loans. In addition, Newtek Bank offers depository services. The results include $26.3 million of net interest income during the three months ended September 30, 2026 compared to $16.6 million of net interest income during the three months ended September 30, 2025.
Alternative Lending
Alternative Lending includes NALH (Newtek ALP Holdings) and its subsidiaries. Within the segment's results are $0.4 million of noninterest income for the three months ended September 30, 2026, compared to $22.1 million during the three months ended September 30, 2025. The net income also included $1.2 million and $3.2 million of noninterest expense for the three months ended September 30, 2026 and 2025, respectively. The reduction in income for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025 resulted from loan originations no longer being originated by NALH subsequent to December 31, 2025.
NSBF
NSBF relates to NSBF's legacy portfolio of SBA 7(a) loans held outside Newtek Bank. The change in net income is due to the wind-down of NSBF's operations.
Payments
Payments includes NMS, POS and Mobil Money. Within the segment's results are $10.8 million of noninterest income for the three months ended September 30, 2026, resulting from marketing credit and debit card processing services, check approval services, processing equipment, and software, compared to $11.9 million during the three months ended September 30, 2025. The net income also included $7.0 million and $7.6 million of noninterest expense for the three months ended September 30, 2026 and 2025, respectively.
Corporate and Other
Corporate and Other represents operations not considered to be reportable segments and/or general operating expenses of the Company, and includes the parent company, other non-bank subsidiaries including NIA, and elimination adjustments to reconcile the results of the operating segments to the consolidated financial statements prepared in conformity with GAAP.
Discussion and Analysis of Financial Condition
September 30, 2026 vs. December 31, 2025
ASSETS
Total assets at September 30, 2026 were $3.5 billion, an increase of $781.2 million, or 28.5%, compared to total assets of $2.7 billion at December 31, 2025.
Loans
September 30, 2026 December 31, 2025 Change
Loans HFS, at fair value $ 654,265 $ 971,837 $ (317,572)
Loans HFS, at LCM 18,194 26,532 (8,338)
Loans HFI, at fair value 823,742 281,198 542,544
Loans HFI, at amortized cost, net of deferred fees and costs 1,309,278 896,689 412,589
Allowance for credit losses (57,052) (45,226) (11,826)
Loans HFI, at amortized cost, net 1,252,226 851,463 400,763
Total Loans $ 2,748,427 $ 2,131,030 $ 617,397
Loans HFS
Loans HFS, at fair value decreased $317.6 million during the nine months ended September 30, 2026. The decrease was primarily attributable to the reclassification of $442.6 million of loans from loans HFS, at fair value, to loans HFI, at fair value, in the second quarter of 2026 as a result of certain modifications made with respect to Newtek Bank's participation in the SBA Secondary Market.
September 30, 2026 December 31, 2025
Change
SBA 504 First Lien $ 253,328 $ 201,015 $ 52,313
SBA 504 Second Lien 31,652 31,207 445
SBA 7(a)1
54,323 324,467 (270,144)
Total SBA loans
339,303 556,689 (217,386)
C&I LA2
305,859 - 305,859
ALP
9,103 415,148 (406,045)
Loans HFS, at fair value
$ 654,265 $ 971,837 $ (317,572)
1 As a result of an agreement with the SBA with respect to Newtek Bank's participation in the SBA Secondary Market, $442.6 million of loans HFS, at fair value, as of June 30, 2026, were reclassified to loans HFI, at fair value.
2 C&I LA loans originated by Newtek Bank, which began during the first quarter of 2026.
Loans HFS, at LCM decreased $8.3 million during the same period.
September 30, 2026 December 31, 2025
Change
SBA 504 First Lien $ 15,653 $ 19,075 $ (3,422)
SBA 504 Second Lien 2,541 7,457 (4,916)
Loans HFS, at LCM $ 18,194 $ 26,532 $ (8,338)
Loans held for investment
At Fair value: Loans HFI, at fair value were $823.7 million at September 30, 2026 compared to $281.2 million at December 31, 2025. The increase was primarily driven by the reclassification of $442.6 million of loans from loans HFS, at fair value, to loans HFI, at fair value, as a result an agreement with the SBA with respect to Newtek Bank's participation in the SBA Secondary Market.
At Amortized Cost: Loans HFI, at amortized cost, consist of loans originated at or purchased by Newtek Bank. The $412.6 million increase in loans HFI, at amortized cost, is the result of an increase in originations for the nine months ended September 30, 2026 over 2025.
Credit Quality: The increase in nonperforming loans was primarily driven by the repurchases of $184.1 million of guaranteed portions of SBA 7(a) loans from the secondary market and the SBA since 2025. In accordance with ASC 326, the zero loss exception is applied and no allowance for credit losses has been recorded on the guaranteed portions given these portions of loans are guaranteed by a government-sponsored entity, the SBA guarantees are in full force and the Company expects to collect the guaranteed amounts in full from the SBA in the event of borrower defaults While the allowance coverage ratio to total loans HFI has declined, when considering the zero loss exception previously described, the allowance coverage ratio has remained consistent during 2026. In addition, the increase in nonperforming loans has been driven by current economic conditions, including rising interest rates and inflation. The Company continues to focus on prudent underwriting and portfolio diversification across its lending activities. The following table presents an analysis of loans HFI with credit metrics, including a breakdown by days aged:
Credit Quality Ratios September 30, 2026 December 31, 2025
At Amortized Cost
Current $ 1,016,161 77.8 % $ 794,951 88.9 %
Past Due 30-89 Days and accruing 26,752 2.0 % 20,555 2.3 %
Past Due 90 and more Days and accruing 11,760 0.9 % - - %
Nonaccrual loans 251,980 19.3 % 78,814 8.8 %
Total, at amortized cost
$ 1,306,653 100.0 % $ 894,320 100.0 %
Deferred fees and costs
2,625 2,369
Total, at amortized cost, net of deferred fees and costs
$ 1,309,278 $ 896,689
Allowance for credit losses $ (57,052) 4.4 % $ (45,226) 5.0 %
At Fair Value
Current $ 670,856 81.4 % $ 189,177 67.2 %
Past Due 30-89 Days and accruing 34,550 4.2 % 16,746 6.0 %
Past Due 90 and more Days and accruing 8,905 1.1 % 2,732 1.0 %
Nonaccrual loans 109,431 13.3 % 72,543 25.8 %
Total $ 823,742 100.0 % $ 281,198 100.0 %
Past due and nonaccrual loans as % of Outstanding UPB $ 152,886 18.6 % $ 92,021 32.7 %
Nonperforming Assets, as a percentage of total assets
Loans HFI, at amortized cost
$ 251,980 7.1 % $ 78,814 2.9 %
Loans HFI, at fair value
109,431 3.1 % 72,543 2.6 %
Other real estate owned 12,400 0.4 % 8,856 0.3 %
Total Nonperforming Assets $ 373,811 10.6 % $ 160,213 5.8 %
CRE exposure
The Company's loan portfolio consists of loans to independent business owners (SMBs). The Company's Loans HFI at amortized cost and Loans HFS at LCM include a total of $432.4 million of loans, including unfunded commitments, backed by CRE and considered non-owner occupied as of September 30, 2026. The average loan-to-value for this CRE portfolio was 59.9%. The CRE portfolio is diversified by property type and geography, and management actively monitors concentration levels, loan to value ratios, and debt service coverage metrics as part of its ongoing credit risk management process. Furthermore, there is limited exposure to office space.
The table below presents details of the loans considered non-owner occupied CRE that are not carried at fair value:
September 30, 2026 December 31, 2025
HFI at amortized cost, net of deferred fees and costs HFS at LCM Total LTV
by CRE type 		HFI at amortized cost, net of deferred fees and costs HFS at LCM Total LTV
by CRE type
Loans not backed by NOO CRE $ 961,740 $ - $ 961,740 $ 622,495 $ - $ 622,495
Loans backed by NOO CRE 347,538 18,194 365,732 274,194 26,532 300,726
Total loans $ 1,309,278 $ 18,194 $ 1,327,472 $ 896,689 $ 26,532 $ 923,221
Loans backed by NOO CRE by type:
Retail $ 62,474 $ 10,663 $ 73,137 53.1 % $ 63,013 $ - $ 63,013 54.0 %
1-4 Family 18,331 - 18,331 55.9 % 22,187 - 22,187 54.5 %
Multifamily 161,862 - 161,862 61.4 % 80,263 - 80,263 58.6 %
Industrial 28,861 - 28,861 47.5 % 34,416 - 34,416 50.5 %
Office 40,278 - 40,278 52.0 % 40,638 - 40,638 52.6 %
Construction and land development1
16,744 2,782 19,526 66.9 % 12,869 19,075 31,944 63.7 %
Hotel 8,618 3,267 11,885 47.2 % 7,709 7,457 15,166 48.2 %
Other 10,370 1,482 11,852 66.9 % 13,099 - 13,099 61.8 %
Total NOO CRE $ 347,538 $ 18,194 $ 365,732 59.9 % $ 274,194 $ 26,532 $ 300,726 57.5 %
Unfunded Commitments
Construction and land development1
$ - $ 66,613 $ 66,613 $ - $ 55,149 $ 55,149
Multifamily - 10 10 - - -
Total unfunded commitments - 66,623 66,623 - 55,149 55,149
Total CRE Loans
$ 347,538 $ 84,817 $ 432,355 $ 274,194 $ 81,681 $ 355,875
1 Construction and land development includes SBA 504 first and second lien loans. The LTV on first lien is generally 65%. Second liens are typically taken out by the SBA following project completion and occupancy by the borrower. The LTV calculated is based on total exposure.
Goodwill and Intangibles
The table below presents detail of the Company's Goodwill and intangibles:
September 30, 2026 December 31, 2025
Goodwill Intangible Assets Total Goodwill Intangible Assets Total
Banking segment
$ 271 $ 408 $ 679 $ 271 $ 512 $ 783
Payments segment
13,814 - 13,814 13,814 - 13,814
Total $ 14,085 $ 408 $ 14,493 $ 14,085 $ 512 $ 14,597
The change in intangible assets relates to amortization of intangible assets during the nine months ended September 30, 2026.
Residuals in Securitizations, at Fair Value
Residuals in securitizations, at fair value were $205.5 million as of September 30, 2026 as compared to $76.7 million as of December 31, 2025. The residuals in securitizations as of September 30, 2026 arise from the NALP Business Loan Trust 2025-1 and 2026-1 ALP securitizations. See the "Residuals in Securitizations, at Fair Value" discussion below and NOTE 3-SECURITIZATIONS AND VARIABLE INTEREST ENTITIES for the Company's primary-beneficiary analysis and the basis for not consolidating the Unconsolidated Trusts.
Deferred Taxes
The deferred tax asset, net, represents the cumulative timing differences between book and tax to the extent such assets or liabilities give rise to taxable income or expense in future periods. Within this balance is the deferred tax asset on net operating loss (NOL) carryforwards not expected to be utilized in the current year. The Company evaluated all NOLs for a valuation allowance and determined that none were required.
LIABILITIES
Total liabilities at September 30, 2026, were $3.1 billion, an increase of $760.6 million, or 32.4%, compared to total liabilities of $2.3 billion at December 31, 2025.
Deposits
Total deposits were $2.5 billion at September 30, 2026, consisting of $68.0 million in noninterest bearing deposits and $2.4 billion in interest bearing deposits, a $1.1 billion increase from the balance as of December 31, 2025. The increase in deposits is a result of increases in all of our deposit products due to our competitive interest rates well above the risk free rate and what we view as the "sticky" deposit relationships we foster by providing value to our depositors via the Newtek Advantage, our integrated business and financial management platform. To that end, non-affiliate business deposits increased $13 million, or 4% quarter over quarter, and $109 million, or 48% year over year, while core consumer deposits grew $231 million, or 13% quarter over quarter, and $1.1 billion, or 126% year over year. Furthermore, since the acquisition of Newtek Bank in early 2023, roughly 62% of the Company's business lending clients have opened a business deposit account.We believe the breadth of these relationships - spanning deposits, payments, payroll and lending - supports deposit retention; insured deposits represented 79.4% of total deposits as of September 30, 2026.
Borrowings
Borrowings Outstanding
September 30, 2026 December 31, 2025 Change
Secured Borrowings:
Notes Payable - Securitization Trusts1,2
$ 96,356 $ 127,050 $ (30,694)
NMS Goldman Facility2
87,862 88,352 (490)
SPV I Capital One Facility2,3
- 16,085 (16,085)
SPV II Deutsche Bank Facility2,4
- 169,146 (169,146)
SPV III One Florida Bank Facility2
28,120 33,259 (5,139)
NH6/SPV IV D2 Facility2
19,615 - 19,615
FHLB Advances - 7,349 (7,349)
Total Secured Borrowings
231,953 441,241 (209,288)
Unsecured Borrowings2:
2026 Notes (5.50%)5,7
- 95,000 (95,000)
2027 Notes (8.125%)6
49,990 49,967 23
2028 Notes (8.00%)
39,334 39,073 261
2029 Notes (8.50%)
70,448 70,066 382
2029 Notes (8.625%)
73,513 73,150 363
2030 Notes (8.375%)5
51,498 51,391 107
2031 Notes (8.50%)7
7,841 - 7,841
2033 Notes (8.375%)
14,888 - 14,888
Total Unsecured Borrowings
307,512 378,647 (71,135)
Total Borrowings
$ 539,465 $ 819,888 $ (280,423)
1 Non-recourse.
2 Net of deferred financing costs.
3 On March 25, 2026, the SPV I Capital One Facility was fully repaid and terminated.
4 On May 20, 2026, the SPV II Deutsche Bank Facility was fully repaid and terminated.
5 On October 21, 2025, the Company entered into agreements with two institutional investors that were existing holders of the 2026 Notes to exchange the $20.0 million in total principal amount of the 2026 Notes held by such investors for an equal principal amount of the 2030 Notes. On February 1, 2026, the 2026 Notes matured.
6 Effective December 11, 2024, the Company entered into the Amendment and Exchange Agreements with each of the holders of the 2025 8.125% Notes, pursuant to which the Company and the holders of the 2025 8.125% Notes agreed to exchange the 2025 8.125% Notes for the 2027 Notes, effecting amendments solely to (i) extend the February 1, 2025 maturity date of the 2025 8.125% Notes to the new maturity date of February 1, 2027 (the "New Maturity Date") and (ii) provide that the 2027 Notes will be redeemable in whole, but not in part, at any time, at the option of the Company, from November 1, 2026 to the New Maturity Date, at a redemption price of 100% of the outstanding principal amount being redeemed plus any accrued but unpaid interest, to but excluding the redemption date.
7 On January 28, 2026, $7.9 million of 2026 Notes were tendered and exchanged for 2031 Notes in response to the Company's offer to exchange the 2026 Notes for newly issued 2031 Notes. The 2031 Notes bear interest at a rate of 8.50% per year payable quarterly on February 1, May 1, August 1 and November 1 of each year, and will mature on February 1, 2031. On February 1, 2026, the Company repaid the remaining $87.1 million aggregate principal amount of 2026 Notes outstanding on the 2026 Notes maturity date.
Borrowings were $539.5 million at September 30, 2026, compared to $819.9 million at December 31, 2025. This decrease was primarily due to $190.4 million repayments of borrowings under the SPV I Facility (facility was paid in full and terminated on March 25, 2026),SPV II Facility (facility was paid in full and terminated on May 20, 2026) and III facilities, $95.0 million maturity of the 2026 Notes and $30.7 million reduction in the notes payable on securitization trusts. These decreases were partially offset by the $7.8 million and $14.9 million issuances of the 2031 Notes and 2033 Notes, respectively and $19.6 million in additional borrowing on the NH6/SPV IV D2 Facility.
Liquidity and Capital Resources
Overview
Total liquidity sources increased to $614.9 million as of September 30, 2026 from $386.7 million as of December 31, 2025, driven primarily by establishing discount window borrowing capacity based on pledged collateral via the Federal Reserve Bank of Atlanta's Borrower in Custody Program. Both the Company and Newtek Bank remained above all "well-capitalized" regulatory minimums (Company Total Capital ratio of 15.0%). The Company actively manages liquidity to support business operations and meet obligations through ongoing monitoring of deposit trends and funding sources. In addition, the Company performs stress testing designed to assess our ability to meet both expected and unexpected cash flow needs. Management believes current liquidity and capital levels are sufficient to support planned operations and react to reasonably foreseeable market volatility.
Our liquidity and capital resources are derived from our deposits, Company notes, securitization transactions and earnings and cash flows from operations, including loan sales and repayments. The Company maintains a diversified deposit base across its customers. In the nine months ended September 30, 2026, our primary use of funds from operations included originations of loans and payments of fees, interest, and other operating expenses we incurred. We may raise additional equity or debt capital through both registered offerings off of a shelf registration, including "at-the-market" (ATM), and private offerings of securities. On January 27, 2023, the Company submitted a Form S-3 with the SEC in order to commence the process of re-establishing an effective shelf registration statement. The registration statement on Form S-3 was declared effective by the SEC on July 27, 2023 and was effective for three years; on June 25, 2026 the Company filed a new Form S-3, which was declared effective by the SEC on July 21, 2026. On November 17, 2023, the Company entered into the Original ATM Equity Distribution Agreement, which was amended and restated on June 6, 2025. The Amended and Restated Equity Distribution Agreement provides that the Company may offer and sell up to 5,000,000 shares of Common Stock from time to time through the placement agents. On November 1, 2024, the Company's Board of Directors approved a new stock repurchase program granting the Company authority to repurchase up to 1.0 million shares of Company common stock during the next twelve months. On November 7, 2025, the Company's Board of Directors approved a twelve month extension of the stock repurchase program. In addition, on September 11, 2025, the Board approved a debt repurchase program granting the Company authority to repurchase up to $5.0 million aggregate principal amount of the Company's 2029 Notes during the following six months. On April 24, 2026, the Board approved a debt repurchase program granting the Company authority to repurchase up to $5.0 million aggregate principal amount of the Company's 2028 Notes and 2029 Notes during the following twelve months.
Based on management's assessment as of the reporting date, the Company has not identified trends or uncertainties related to credit quality, liquidity, or capital that are reasonably likely to have a material adverse effect on its financial condition or results of operations.
Regulatory Capital
The Company strives to maintain prudent capital levels to absorb risk and maximizing returns to shareholders. The Company and Newtek Bank are primarily constrained by the Total Capital and Leverage ratios given the mix of assets vis-a-vis capital. The Company and Newtek Bank are subject to various regulatory capital requirements administered by the Federal banking agencies. The Company and the Bank manage their capital to comply with their internal planning targets and regulatory capital standards administered by federal banking agencies.
Capital amounts and ratios for the Company as of September 30, 2026 and December 31, 2025 are presented in the table below:
Actual
For Capital Adequacy Purposes1
For Consideration as Well-Capitalized
NewtekOne, Inc. - September 30, 2026
Amount
Ratio
Amount
Ratio
Amount
Ratio
Tier 1 Capital (to Average Assets) $ 365,096 11.4 % $ 128,104 4.0 % N/A N/A
Common Equity Tier 1 (to Risk-Weighted Assets) 316,915 11.9 % 119,842 4.5 % N/A N/A
Tier 1 Capital (to Risk-Weighted Assets) 365,096 13.7 % 159,896 6.0 % N/A N/A
Total Capital (to Risk-Weighted Assets) 398,669 15.0 % 212,623 8.0 % N/A N/A
NewtekOne, Inc. - December 31, 2025
Tier 1 Capital (to Average Assets) $ 363,935 15.2 % $ 95,588 4.0 % N/A N/A
Common Equity Tier 1 (to Risk-Weighted Assets) 315,754 17.8 % 79,924 4.5 % N/A N/A
Tier 1 Capital (to Risk-Weighted Assets) 363,935 20.5 % 106,565 6.0 % N/A N/A
Total Capital (to Risk-Weighted Assets) 386,428 21.8 % 142,087 8.0 % N/A N/A
1 Exclusive of the capital conservation buffer of 2.5% of risk-weighted assets.
Under the applicable regulatory capital standards, Newtek Bank remained "well-capitalized" under the prompt corrective action measures as of the reporting date, with capital ratios exceeding minimum regulatory requirements and surpassing the capital conservation buffer requirements.
Capital amounts and ratios for Newtek Bank as of September 30, 2026, and December 31, 2025 are presented in the table below.
Actual
For Capital Adequacy Purposes1
For Consideration as Well-Capitalized
Newtek Bank - September 30, 2026
Amount
Ratio
Amount
Ratio
Amount
Ratio
Tier 1 Capital (to Average Assets) $ 214,303 8.4 % $ 102,049 4.0 % $ 127,561 5.0 %
Common Equity Tier 1 (to Risk-Weighted Assets) 214,303 10.6 % 90,978 4.5 % 131,412 6.5 %
Tier 1 Capital (to Risk-Weighted Assets) 214,303 10.6 % 121,304 6.0 % 161,738 8.0 %
Total Capital (to Risk-Weighted Assets) 240,049 11.8 % 162,745 8.0 % 203,431 10.0 %
Newtek Bank - December 31, 2025
Tier 1 Capital (to Average Assets) $ 155,000 10.3 % 60,368 4.0 % $ 75,460 5.0 %
Common Equity Tier 1 (to Risk-Weighted Assets) 155,000 12.1 % 57,528 4.5 % 83,096 6.5 %
Tier 1 Capital (to Risk-Weighted Assets) 155,000 12.1 % 76,704 6.0 % 102,272 8.0 %
Total Capital (to Risk-Weighted Assets) 171,348 13.4 % 102,272 8.0 % 127,840 10.0 %
1 Exclusive of the capital conservation buffer of 2.5% of risk-weighted assets.
Public Offerings
The Company maintains an equity ATM program (up to 5.0 million shares of common stock), a debt ATM program (up to $50.0 million of specified notes and depositary shares, established March 2026), and stock and debt repurchase programs (up to 1.0 million common shares, and up to $5.0 million of 2028/2029 Notes). There was no activity under the equity ATM, stock repurchase, or debt repurchase programs during the nine months ended September 30, 2026. During the nine months ended September 30, 2026 the Company sold 1,747 shares of its 2031 Notes under the debt ATM program, resulting in net proceeds of $44.1 thousand.
Private Placements
NMS Goldman Facility
On September 26, 2025, NMS and its wholly-owned subsidiary, Mobil Money, LLC (collectively, the "Borrowers"), together with NBSH Holdings, LLC, the direct sole member of NMS, as guarantor, entered into a Credit and Guaranty Agreement (the "Goldman Credit Agreement"), with Private Credit at Goldman Sachs Alternatives ("Goldman") as Administrative Agent and Collateral Agent thereunder and the lenders party thereto from time to time (the "Lenders"). Pursuant to the terms of the Goldman Credit Agreement, the Lenders made available to the Borrowers term loans up to an aggregate principal amount of $90.0 million (the "Term Loans") and a revolving facility up to an aggregate principal amount of $5.0 million (together with the Term Loans, collectively the "Goldman Facility"). The Goldman Facility will mature on September 26, 2030. The Company incurred approximately $1.2 million of deferred financing costs in connection with the Goldman Facility.
On September 26, 2025, the Borrowers drew down the full $90.0 million in Term Loans and used the proceeds to repay in full the outstanding amounts under a credit facility with Webster Bank, N.A. dated as of November 8, 2018 and pay transaction expenses related to the closing of the Goldman Facility. In addition, the Borrowers used the proceeds to fund $58.5 million of loans to the Company. The Company used the proceeds of such loans to repay and reduce the Company's outstanding unsecured debt, repurchase Company common shares (subject to market conditions and the terms of existing or any future share repurchase authorizations by the Company's board of directors) and for other general corporate purposes.
Pursuant to the terms of the guaranty under the Goldman Credit Agreement, NBSH has unconditionally guaranteed the prompt and unconditional payment of all of the Borrowers' obligations under the Goldman Credit Agreement.
SPV I, II, III, and IV Facilities
Newtek ALP Holdings' subsidiaries (our indirect subsidiaries) SPV I, II, III, and IV maintain/maintained credit facilities with third party lenders. SPV I had a Capital One facility with maximum borrowings of $100.0 million, which facility was repaid and terminated on March 25, 2026. SPV II had a Deutsche Bank Facility with maximum borrowings of $170.0 million, which facility was repaid and terminated on May 20, 2026. SPV III has a One Florida Bank facility with maximum borrowings of $35.0 million and which matures on August 7, 2028. At September 30, 2026, total principal owed by SPV III was $28.1 million. On April 28, 2026, NH6 and SPV IV (as co-borrowers) entered into a Term Loan Agreement with D2 Asset Services, LLC., with maximum borrowings of $20.0 million and a maturity on April 28, 2029. At September 30, 2026, total principal owed by NH6 and SPV IV was $20.0 million.
Notes Payable - Securitization Trusts
Since 2010, NSBF has engaged in securitizations of the unguaranteed portions of its SBA 7(a) loans. In the securitization, it uses a special purpose entity (the "Trust") which is considered a variable interest entity. Applying the consolidation requirements for VIEs under the accounting rules in ASC Topic 860, Transfers and Servicing, and ASC Topic 810, Consolidation, which became effective January 1, 2010, the Company determined that as the primary beneficiary of the securitization vehicle, based on its power to direct activities through its role as servicer for the Trust and its obligation to absorb losses and right to receive benefits, it needed to consolidate the Trusts. NSBF therefore consolidated the entity using the carrying amounts of the Trust's assets and liabilities. NSBF reflects the assets in SBA 7(a) Unguaranteed Non-Affiliate Investments and reflects the associated financing in Borrowings on the Consolidated Statements of Financial Condition.
Cash Flows and Liquidity
The following table summarizes the Company's available sources of liquidity as of September 30, 2026 and December 31, 2025:
Availability as of
September 30, 2026 December 31, 2025
Unrestricted cash $ 3,785 $ 4,196
Lines of credit at other commercial banks1
7,187 9,591
Newtek Bank:
Interest bearing deposits in banks
277,506 279,618
FHLB borrowing availability1
69,018 63,296
FRB Atlanta borrowing availability1
237,426 -
Lines of credit at other financial institutions 20,000 30,000
Total liquidity sources $ 614,922 $ 386,701
1 Availability as of September 30, 2026 and December 31, 2025 is based on collateral pledged as of that date.
The Company has restricted cash of $23.2 million as of September 30, 2026. NSBF holds a portion of the Company's restricted cash, which includes reserves in the event payments are insufficient to cover interest and/or principal with respect to securitizations and loan principal and interest collected which are due to loan participants. In addition, the Company has funded a $10.0 million account to fund certain of NSBF's potential obligations to the SBA pursuant to the Wind-down Agreement, of which the Company is a guarantor. The majority of the Company's remaining restricted cash is held by the parent company.
The Company generated and used cash as follows:
Nine Months Ended September 30,
2026 2025
Net cash used in operating activities $ (573,235) $ (427,836)
Net cash used in investing activities (495,500) (193,876)
Net cash provided by financing activities 1,062,907 457,269
Net decrease in cash and restricted cash (5,828) (164,443)
Cash and restricted cash-beginning of period (NOTE 2)
310,291 381,374
Cash and restricted cash-end of period (NOTE 2)
$ 304,463 $ 216,931
During the nine months ended September 30, 2026, operating activities used cash of $573.2 million, consisting primarily of $723.3 million of funding loans HFS. The use of cash was partially offset by $246.0 million of proceeds from the sale of loans HFS.
Cash used by investing activities was $495.5 million primarily comprised (i) $116.2 million in the funding of loans HFI, at cost; and (ii) $3.0 million of purchases and repurchases of loans HFI. These uses were partially offset by principal received on loans HFI of $48.4 million.
Net cash provided by financing activities was $1.1 billion consisting primarily of a (i) $1.1 billion net increase in deposits; and (ii) $273.1 million of proceeds related to residuals in securitizations. These sources of cash were partially offset by (i) $211.6 million repayment of bank notes payable.
Contractual Obligations
The Company's obligations and commitments representing required and potential cash outflows include demand deposits, time deposits, unsecured senior notes, notes payable - securitization trusts, short-term and long-term advances from FHLB, other bank borrowings, and operating leases and other commitments as of September 30, 2026. Our material cash requirements over the next 12 months consist primarily of interest payments on our unsecured notes and securitization borrowings, funding of the $144.1 million of unfunded loan commitments outstanding as of September 30, 2026 ($65.2 million SBA 7(a), $73.4 million SBA 504, and $5.4 million commercial and industrial) to the extent drawn, and maturities of time deposits. Longer-term (beyond 12 months) cash requirements consist principally of the scheduled maturities of our unsecured notes (2027 through 2033) and securitization trust notes, and the SPV III, and SPV IV facilities maturing in August 2028 and April 2029, respectively. We expect to satisfy these requirements through deposit growth, cash flows from operations including loan sales and repayments, and, as needed, securitization and capital-markets financing. Refer to "NOTE 10-DEPOSITS," "NOTE 11-BORROWINGS," and "NOTE 13-COMMITMENTS AND CONTINGENCIES."
Guarantees
The Company is a guarantor on several warehouse lines of credit as noted in the above table under Contractual Obligations. Refer to NOTE 11-BORROWINGS to the consolidated financial statements for the amounts outstanding, line availability, and term. The Company is also a guarantor on an NMS term loan facility. As of September 30, 2026, the Company determined that it is not probable that payments would be required to be made under the guarantees. The Company is also a guarantor on certain of NSBF's potential obligations to the SBA pursuant to the Wind-down Agreement. Specifically, pursuant to the Wind-down Agreement, the Company has guaranteed NSBF's obligations to the SBA for post-purchase repairs or denials on the guaranteed portion of 7(a) Loans sold by NSBF on the secondary market or servicing/liquidation post-purchase repairs or denial, and has funded a $10.0 million account to secure these potential obligations.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following items as critical accounting policies for the quarterly period ended September 30, 2026.
Valuation of Loans at Fair Value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date. In determining fair value, management used various valuation approaches. ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels for disclosure purposes. We consider our loans HFI, at fair value and HFS, at fair value to be Level 3, within the fair value hierarchy as described in Note 10. Determining the fair value of the Level 3 loans HFS and loans HFI, which are measured at fair value requires management to make significant judgments about the valuation methodologies and inputs and assumptions used in the fair value calculation, including, but not limited to, historical credit losses, discounts for lack of marketability, underlying cash flows, and the impact of economic conditions.
These measurements are subject to significant estimation uncertainty because they depend on unobservable inputs - principally market yields, cumulative prepayment rates, and cumulative default rates - the ranges of which are disclosed in NOTE 9-FAIR VALUE MEASUREMENTS. A change in these assumptions would change the reported fair values: an increase in the market-yield or default-rate assumptions would reduce the fair value of the Level 3 loan portfolio and the securitization residuals, while a decrease would increase it.
On a quarterly basis, management determines the fair values of the retained guaranteed and unguaranteed portions of SBA 7(a) loans HFI, and unrealized changes in FV are recognized in the income statement. The loans within this portfolio were originated by NSBF and are currently originated by Newtek Bank. NSBF ceased originating new loans in April 2023 when all new SBA 7(a) loan originations were transitioned to Newtek Bank. (See Historical Business Regulation and Taxation, for a discussion of the wind-down of NSBF's operations.)
The Company originated SBA 504 loans HFS prior to the Acquisition through its nonbank subsidiaries. SBA 504 loans HFS held at NALH are accounted for under the FV option. Additionally, the existing government guaranteed portion of SBA 7(a) loans and certain SBA 504 loans held at Newtek Bank are also HFS at FV.
The Company also originates C&I LA loans (formerly referred to as ALP or nonconforming conventional loans), which are HFS, unless management no longer has the intent or ability to sell certain individual loans. Historically, these were originated via our nonbank subsidiary but beginning in the first quarter of 2026 C&I LA loans are originated at Newtek Bank. C&I LA loans are carried at FV.
Allowance for Credit Losses
The allowance for credit losses consists of the allowance for credit losses and the reserve for unfunded commitments. As a result of the Company's Acquisition the adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("CECL") and its related amendments, we developed a methodology for estimating the reserve for credit losses. The standard replaced the "incurred loss" approach with an "expected loss" approach known as current expected credit loss. The CECL approach requires an estimate of the credit losses expected over the life of an exposure (or pool of exposures). It removes the incurred loss approach's threshold that delayed the recognition of a credit loss until it was "probable" a loss event was "incurred." The estimate of expected credit losses under the CECL approach is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. The Company then considers whether the historical loss experience should be adjusted for asset-specific risk characteristics or current conditions at the reporting date that did not exist over the period from which historical experience was used. Finally, the Company considers forecasts about future economic conditions that are reasonable and supportable. The reserve for unfunded commitments represents the expected credit losses on off-balance sheet commitments such as unfunded commitments to extend credit and standby letters of credit. However, a liability is not recognized for commitments unconditionally cancellable by the Company. The reserve for unfunded commitments is determined by estimating future draws and applying the expected loss rates on those draws.
Management of the Company considers the accounting policy relating to the allowance for credit losses to be a critical accounting policy given the uncertainty in evaluating the level of the allowance required to cover management's estimate of all expected credit losses over the expected contractual life of our loan portfolio. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. Subsequent evaluations of the then-existing loan portfolio and other financial assets to which CECL applies, in light of the factors then prevailing, may result in significant changes in the allowance for credit losses in those future periods. While management's current evaluation of the allowance for credit losses indicates that the allowance is appropriate, the allowance may need to be increased under adversely different conditions or assumptions. Going forward, the impact of utilizing the CECL approach to calculate the reserve for credit losses will be significantly influenced by the composition, characteristics, and quality of our loan portfolio, as well as the prevailing economic conditions and forecasts utilized. Material changes to these and other relevant factors may result in greater volatility in the reserve for credit losses, and therefore, greater volatility to our reported earnings.
Consideration of losses occurs when serious doubt regarding the repayment of the loan is present. For real estate loans, current appraisals will aid in determining the amount to be charged off. For commercial loans, collateral valuations and borrower guarantees should be considered; however, weight to these two sources should be limited. Once a deficiency in collateral is determined, a reserve equal to the deficiency should be made immediately to the Allowance for Credit Losses (ACL). A charge off should be made within 90 days if a full analysis confirms the deficiency cannot be covered via additional collateral or resources of the borrower or guarantors.
The estimate is sensitive to the economic forecasts, loss-rate assumptions, and qualitative adjustments applied.
Valuation of Servicing Assets
For the nine months ended September 30, 2026, the Company accounted for servicing assets in accordance with ASC Topic 860-50 - Transfers and Servicing - Servicing Assets and Liabilities. The Company and Newtek Bank earn servicing fees primarily from the guaranteed portions of SBA 7(a), ALP, and SBA 504 loans they originate and sell. Servicing assets for loans originated by the Company's nonbank subsidiaries are measured at FV at each reporting date and the Company reports changes in the FV of servicing assets in earnings in the period in which the changes occur. The valuation model for servicing assets incorporates assumptions including, but not limited to, servicing costs, discount rate, prepayment rate, and default rate. Considerable judgment is required to estimate the fair value of servicing assets and as such these assets are classified as Level 3 in our fair value hierarchy. Servicing assets for loans originated by Newtek Bank are measured at LCM and amortized based on their estimated life and impairment is recorded to the extent the amortized cost exceeds the asset's FV.
Recently Adopted Accounting Pronouncements and New Accounting Standards
Refer to NOTE 2-SIGNIFICANT ACCOUNTING POLICIES for information on recently adopted accounting pronouncements and new accounting standards.
Off Balance Sheet Arrangements
In the normal course of business, the Company enters into various transactions to meet the financing needs of clients, which, in accordance with GAAP, are not included in the consolidated balance sheets. These transactions may include commitments to extend credit, standby letters of credit, and the construction phase of SBA 504 loans, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. The SBA 504 loans are expected to partially draw, if not fully draw. All off-balance sheet commitments are included in the determination of the amount of risk-based capital that the Company and Newtek Bank are required to hold.
The Company's exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit, standby letters of credit, and commercial letters of credit is represented by the contractual or notional amount of those instruments. The Company manages risk of exposure to credit losses under these commitments by subjecting them to credit approval and monitoring procedures. The Company assesses the credit risk associated with certain commitments to extend credit and establishes a liability for credit losses.
Further information related to financial instruments can be found in NOTE 13-COMMITMENTS AND CONTINGENCIES.
Residuals in Securitizations, at Fair Value
On April 23, 2025, the Company's subsidiary Newtek ALP Holdings closed a securitization pursuant to which it sold $155.9 million of Class A Notes, $23.8 million of Class B Notes, and $4.3 million of a Class C Note (collectively, the "2025-1 Notes") issued by NALP Business Loan Trust 2025-1 (the "Securitization Trust"). The 2025-1 Notes were backed by $216.6 million of collateral, consisting of Newtek ALP Holdings originated ALP loans. The Class A Notes received a Morningstar DBRS rating of "A (low) (sf)" and were priced at a yield of 6.338%; the Class B Notes received a Morningstar DBRS rating of "BBB (sf)" and were priced at a yield of 7.838%; and the Class C Note received a Morningstar DBRS rating of "BB (sf)" and was priced at a yield of 10.338%. The 2025-1 Notes had a weighted average yield of 6.62% and an 85% advance rate.
On January 21, 2026, the Company's subsidiary Newtek ALP Holdings closed a securitization pursuant to which it sold $251.9 million of Class A Notes, $35.9 million of Class B Notes, and $6.8 million of a Class C Note (collectively, the "2026-1 Notes") issued by NALP Business Loan Trust 2026-1. The Notes are backed by $341.8 million of collateral, consisting of Company originated ALP loans. The Class A Notes received a Morningstar DBRS rating of "A (low) (sf)" and were priced at a yield of 5.796%; the Class B Notes received a Morningstar DBRS rating of "BBB (sf)" and were priced at a yield of 7.296%; and the Class C Note received a Morningstar DBRS rating of "BB (sf)" and was priced at a yield of 10.146%. The 2026-1 Notes had a weighted average yield of 6.08% and an 86% advance rate.
The 2025-1 and the 2026-1 Trusts (collectively "the Unconsolidated Trusts") meet the definition of a VIE and the Company holds a variable interest in the Unconsolidated Trusts, however, the Company is not considered the primary beneficiary of the Unconsolidated Trusts, because the power over the activities that have the most significant impact on the economic performance of the Unconsolidated Trusts is held by a single noteholder who has the unilateral ability to remove the Company, without cause, as decision maker over the activities that most significantly impact the economic performance of the Unconsolidated Trusts. Consequently, the Company is not required to consolidate the Unconsolidated Trusts. The Company's beneficial interest in the Unconsolidated Trusts is evidenced by NALH's sole ownership of the ownership certificates representing a beneficial interest in the Trusts and its beneficial interest in the credit risk of the securitized ALP Loans. Newtek ALP Holdings, the sponsor of the Unconsolidated Trusts, is a wholly owned subsidiary of the Company, therefore the Company effectively owns 100% of the equity interest in the Unconsolidated Trusts.
Further information related to financial instruments can be found in NOTE 3-SECURITIZATIONS AND VARIABLE INTEREST ENTITIES.
Recent Developments
Repurchase Transaction Agreement
On October 1, 2026, NALH, a wholly-owned subsidiary of the Company and Banco Santander, S.A. ("Santander") entered into a repurchase transaction agreement ("Transaction Agreement"), pursuant to which, NALH sold certain securities to Santander, for $17 million, subject to repurchase by NALH on October 1, 2027.
Private Note Exchange
On October 19, 2026, the Company entered into Note Exchange Agreements (the "Agreements") with holders of $24.0 million of the Company's 8.125% Senior Notes due 2027 (the "Senior Notes"). Pursuant to the Agreements, the Company and holders of the Senior Notes agreed to exchange (the "Exchange") the Senior Notes of each such holder for $24.0 million of the Company's newly issued 8.125% Fixed Rate Senior Notes due February 1, 2029 (the "New Senior Notes"). The New Senior Notes will pay interest at the rate of 8.125% per annum, payable quarterly in arrears on February 1, May 1, August 1 and November 1 of each year, beginning November 1, 2026, and will mature on February 1, 2029. The New Senior Notes are subject to redemption in whole but not in part at any time, at the option of the Company, (i) on or after February 1, 2028, at a redemption price equal to 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accrued to, but excluding, the redemption date or (ii) prior to February 1, 2028, at a redemption price equal to 100% of the outstanding principal amount being redeemed plus any accrued but unpaid interest, to but excluding February 1, 2028, in each case upon giving not less than ten (10), but not more than sixty (60) days' notice to the holder of the New Senior Notes. The Exchange became effective on October 20, 2026. It is expected that the remaining $26.0 million aggregate principal amount of Senior Notes outstanding will be repaid on the February 1, 2027 maturity date.
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