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NewtekOne, Inc.

NewtekOne, Inc.NEWT決算レポート

Nasdaq · 金融 · 全国商業銀行

NewTek, Inc., is a hardware and software company, based in San Antonio, Texas, that produced live and post-production video tools and visual imaging software for personal computers. The company was founded in 1985 in Topeka, Kansas, United States, by Tim Jenison and Paul Montgomery. On April 1, 2019, it was announced that NewTek would be acquired by Vizrt.

What changed in NewtekOne, Inc.'s 10-K — 2024 vs 2025

Top changes in NewtekOne, Inc.'s 2025 10-K

627 paragraphs added · 1188 removed · 462 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

190 edited+19 added−57 removed201 unchanged
In addition, since the divestiture of NTS to IPM, we offer our our clients the Technology Solutions (Cloud Computing, Data Backup, Storage and Retrieval, IT Consulting and Web Services) provided by Intelligent Protection Management Corp. (IPM.com) (formerly known as NTS).
In addition, since the divestiture of NTS to IPM, we offer our clients the Technology Solutions (Cloud Computing, Data Backup, Storage and Retrieval, IT Consulting and Web Services) provided by Intelligent Protection Management Corp. (IPM.com) (formerly known as NTS).
C&I Lending, CRE Lending and ABL Lending Newtek Bank also originates C&I loans to its commercial customers, which includes ABL loans and owner occupied CRE and investor CRE loans.
C&I Lending, CRE Lending and ABL Lending Newtek Bank also originates C&I loans to its commercial customers, which includes ABL loans; owner occupied CRE loans and investor CRE loans.
The Class A and Class B Notes received Morningstar DBRS ratings of “A (sf)” and “BBB (high) (sf),” respectively. Newtek Payments NewtekOne’s business and financial solutions ecosystem also includes its Newtek Payments businesses, which includes our subsidiaries Newtek Merchant Solutions, LLC (NMS), Mobil Money, LLC (Mobil Money, an NMS subsidiary) and POS on Cloud, LLC, d/b/a Newtek Payment Systems (POS).
The Class A and Class B Notes received Morningstar DBRS ratings of “A (sf)” and “BBB (high) (sf),” respectively. Newtek Payments NewtekOne’s business and financial solutions ecosystem also includes its Newtek Payments businesses, which includes our subsidiaries Newtek Merchant Solutions, LLC (NMS), Mobil Money, LLC (an NMS subsidiary) and POS on Cloud, LLC, d/b/a Newtek Payment Systems (POS).
We reach potential customers through our integrated multi-channel approach featuring direct, indirect and direct outbound solicitation efforts.
We reach potential customers through our integrated multi-channel approach featuring indirect and direct outbound solicitation efforts.
Our Senior Lending Team has developed what we believe to be an extensive underwriting due diligence process, which includes a review of the operational, financial, legal, industry and performance and outlook for the prospective loan, including quantitative and qualitative stress tests and review of industry data.
Our Senior Lending Team has developed what we believe to be an extensive underwriting due diligence process, which includes a review of the operational, financial, legal, industry, performance and outlook for the prospective loan, including quantitative and qualitative stress tests and review of industry data.
For example, we and our subsidiaries are required under federal law periodically to disclose to their retail clients our policies and practices with respect to the sharing of nonpublic client information with their affiliates and others, and the confidentiality and security of that information.
For example, we and our subsidiaries are required under federal law periodically to disclose to their retail clients our policies and practices with respect to the sharing of nonpublic client information with our affiliates and others, and the confidentiality and security of that information.
By making SBA 7(a) guaranteed loans or 504 loans, SBA lenders automatically agree to the terms, conditions, and remedies in SBA Loan Program Requirements, as promulgated or issued from time to time. SBA Lenders further agree that a violation of SBA Loan Program Requirements constitutes default under their respective agreements with SBA.
By making SBA 7(a) guaranteed loans and SBA 504 loans, SBA lenders automatically agree to the terms, conditions, and remedies in SBA Loan Program Requirements, as promulgated or issued from time to time. SBA Lenders further agree that a violation of SBA Loan Program Requirements constitutes default under their respective agreements with SBA.
Additionally, competition for investment opportunities has emerged among alternative investment vehicles, such as collateralized loan obligations, some of which are sponsored by other alternative asset investors, as these entities have begun to focus on making investments in SMBs. As a result of these new entrants, competition for our lending opportunities may intensify.
Additionally, competition has emerged among alternative investment vehicles, such as collateralized loan obligations, some of which are sponsored by other alternative asset investors, as these entities have begun to focus on making investments in SMBs. As a result of these new entrants, competition for our lending opportunities may intensify.
We believe the combination of our alliance relationships, brand, portal, patented NewTracker® technology, and brand presence as Your Business Solutions Company® have created an extensive deal sourcing infrastructure. Although we pay fees for loan originations that are referred to us by our alliance partners, our lending team works directly with the borrower to assemble and underwrite loans.
We believe the combination of our alliance relationships, Newtek brand, lending portal, patented NewTracker® technology, and brand presence as Your Business Solutions Company® have created an extensive deal sourcing infrastructure. Although we pay fees for loan originations that are referred to us by our alliance partners, our lending team works directly with the borrower to assemble and underwrite loans.
Our objective with these companies was to foster the development of the businesses as a part of the integrated operational platform of serving the independent business owner market, so we may have sought to reduce the burden on these companies to enable them to grow faster than they would otherwise as another means of supporting their development and that of the integrated whole.
Our objective with these subsidiaries was to foster the development of the businesses as a part of the integrated operational platform of serving the independent business owner market, so we may have sought to reduce the burden on these companies to enable them to grow faster than they would otherwise as another means of supporting their development and that of the integrated whole.
Any portion of the premium that is above 110% of par value is shared equally with the SBA. However, there is no guarantee that Newtek Bank will be able to continue to earn premiums on future sales of the guaranteed portions of SBA 7(a) loans or will be able to maintain PLP status. See “Item 1A.
Any portion of the premium that is above 110% of par value is shared equally with the SBA. However, there is no guarantee that we will be able to continue to earn premiums on future sales of the guaranteed portions of SBA 7(a) loans or that Newtek Bank will be able to maintain PLP status. See “Item 1A.
The patent for our NewTracker® referral system is a software application patent covering the systems and methods for tracking, reporting and performing processing activities and transactions in association with referral data and related information for a variety of product and service offerings in a business-to-business environment providing further for security and transparency between referring parties.
The patent for our NewTracker® referral system is a software application patent covering the systems and methods for tracking, reporting and performing processing activities and transactions in association with referral data and related information for a variety of product and service offerings in a business-to-business environment providing for security and transparency between referring parties.
Selling the guaranteed portion provides Newtek Bank the ability to efficiently manage its balance sheet and returns, by reducing the funding needed for future originations and recording premiums that typically provide revenue that have more than offset the provision for credit losses on the retained unguaranteed portion.
Selling the guaranteed portion provides Newtek Bank the ability to efficiently manage its balance sheet and returns, by reducing the funding needed for future originations and recording premiums that typically provide revenue that have historically more than offset the provision for credit losses on the retained unguaranteed portion.
We have de-emphasized our Capco business and do not anticipate creating any new Capcos. As the Capcos reach 100% investment we will seek to decertify them as Capcos, liquidate their remaining assets and thereby reduce their operational costs, particularly the legal and accounting costs associated with compliance.
We have de-emphasized our Capco business and do not anticipate creating any new Capcos. As our Capcos reach 100% investment, we seek to decertify them as Capcos, liquidate their remaining assets and thereby reduce their operational costs, particularly the legal and accounting costs associated with compliance.
Newtek Bank’s deposits are insured by the Depositors Insurance Fund (DIF) up to applicable legal limits. As an FDIC-insured depository institution, Newtek Bank is subject under certain circumstances to supervision, regulation and examination by the FDIC. The FDIC charges deposit insurance assessments to FDIC-insured institutions, including Newtek Bank, to fund and support the DIF.
Newtek Bank’s deposits are insured by the DIF up to applicable legal limits. As an FDIC-insured depository institution, Newtek Bank is subject under certain circumstances to supervision, regulation and examination by the FDIC. The FDIC charges deposit insurance assessments to FDIC-insured institutions, including Newtek Bank, to fund and support the DIF.
NSBF is in the process of winding-down its operations and will continue to own the SBA 7(a) loans and PPP Loans currently in its SBA loan portfolio to maturity, liquidation, charge-off or (subject to SBA’s prior written approval) sale or transfer.
NSBF is in the process of winding-down its operations and will continue to own the SBA 7(a) loans currently in its loan portfolio to maturity, liquidation, charge-off or (subject to SBA’s prior written approval) sale or transfer.
TAM has two primary initiatives: (1) telemarketing into our existing database of NewtekOne referrals for the purpose of introducing our business and financial solutions, and (2) monitoring and improving client experience and ensuring any client issues or complaints are tracked and resolved.
TAM has two primary initiatives: (1) telemarketing into our existing database of referrals for the purpose of introducing our business and financial solutions, and (2) monitoring and improving client experience and ensuring any client issues or complaints are tracked and resolved.
Safety and soundness is a broad concept that includes financial, operational, compliance and reputational considerations, including matters such as capital, asset quality, quality of board and management oversight, earnings, liquidity, and sensitivity to market and interest rate risk.
Safety and soundness is a broad concept that includes financial, operational and compliance considerations, including matters such as capital, asset quality, quality of board and management oversight, earnings, liquidity and sensitivity to market and interest rate risk.
Government; • lack of reasonable assurance of ability to repay loan (and other obligations) from earnings; • lack of reasonable assurance that the business can be operated at a rate of profit sufficient to repay the loan (and other obligations) from earnings; • disproportion of loan requested and of debts to tangible net worth before and after the loan; • inadequate working capital after the disbursement of the loan; • the result of granting the financial assistance requested would be to replenish funds distributed to the owners, partners, or shareholders; • the major portion of the loan requested would be to refinance existing indebtedness presently financed through normal lending channels; • credit commensurate with applicant’s tangible net worth is already being provided on terms considered reasonable; • gross disproportion between owner’s actual investment and the loan requested; • lack of reasonable assurance that applicant will comply with the terms of the loan agreement; • unsatisfactory experience on an existing loan; or • economic or physical injury not substantiated.
Government; • lack of reasonable assurance of ability to repay loan (and other obligations) from earnings; 31 Table of Contents • lack of reasonable assurance that the business can be operated at a rate of profit sufficient to repay the loan (and other obligations) from earnings; • disproportion of loan requested and of debts to tangible net worth before and after the loan; • inadequate working capital after the disbursement of the loan; • the result of granting the financial assistance requested would be to replenish funds distributed to the owners, partners, or shareholders; • the major portion of the loan requested would be to refinance existing indebtedness presently financed through normal lending channels; • credit commensurate with applicant’s tangible net worth is already being provided on terms considered reasonable; • gross disproportion between owner’s actual investment and the loan requested; • lack of reasonable assurance that applicant will comply with the terms of the loan agreement; • unsatisfactory experience on an existing loan; or • economic or physical injury not substantiated.
NewTracker® allows us and our alliance partners to review in real time the status of any referral as well as to provide real time compliance oversight by the respective alliance partner, which we believe creates confidence between the referred business client, the referring alliance partner and us. 25 Table of Contents Additional deal sourcing and referrals are obtained from individual professionals in geographic markets that have signed up to provide referrals and earn commissions through our BizExec and TechExec Programs.
NewTracker® allows us and our alliance partners to review in real time the status of any referral as well as to provide real time compliance oversight by the respective alliance partner, which we believe creates confidence between the referred business client, the referring alliance partner and us. 26 Table of Contents Additional deal sourcing and referrals are obtained from individual professionals in geographic markets that have signed up to provide referrals and earn commissions through our BizExec and TechExec Programs.
Our platform also allows us to track the efficiency of our staff by analyzing, among other things, customer connect rates, close rates, and the number of transactions that each BSS can process with a client daily, weekly, monthly and quarterly. 7 Table of Contents Additionally, through NewTracker we maintain a database of what products have been offered to potential clients even if a deal is not closed.
Our platform also allows us to track the efficiency of our staff by analyzing, among other things, customer connect rates, close rates, and the number of transactions that each BSS can process with a client daily, weekly, monthly and quarterly. 8 Table of Contents Additionally, through NewTracker we maintain a database of what products have been offered to potential clients even if a deal is not closed.
We rely on our Senior Lending Team and executive officers, some of whom have worked together for more than twenty years and have decades of experience in finance-related fields.
We rely on our Senior Lending Team and executive officers, some of whom have worked together for more than twenty years and have decades of experience in related fields.
These professionals have screened opportunities, underwritten new loans and investments and managed a portfolios of SMB loans through two recessions, a credit crunch, the dot-com boom and bust, a historic, leverage-fueled asset valuation bubble, and the COVID-19 pandemic. Each member brings a complementary component to a team well-rounded in finance, accounting, operations, strategy, business law and executive management.
These professionals have screened opportunities, underwritten new loans and investments and managed a portfolios of SMB loans through two recessions, a credit crunch, the dot-com boom and bust, a historic, leverage-fueled asset valuation bubble, and the COVID-19 pandemic. Each member brings a complementary component to a team well-rounded in commercial lending, finance, accounting, operations, strategy, business law and executive management.
Through our NewTracker platform, we have historically received hundreds of unique referrals a day from alliance partners which include large commercial banks, community banks, credit unions, trade associations, accounting firms, law firms, and small business client aggregators. We process these referrals using non-traditional bankers that we refer to as Business Service Specialists (“BSS”).
Through our NewTracker platform, we have historically received hundreds of unique referrals a day from alliance partners which include large commercial banks, community banks, credit unions, trade associations, accounting firms, law firms, and small business client aggregators. We process these referrals using non-traditional bankers that we refer to as Business Service Specialists (BSS).
If the NAICS code begins with 457 (gas stations with or without convenience stores), the environmental investigation must begin with a Phase I and the SBA lender must also refer to and, if applicable, comply with “Environmental Investigation Requirements for Gas Station Loans” in the applicable Appendix of SBA SOP 50 10; • If there is not a NAICS code match to an environmentally sensitive industry, or if the property is a unit in a multi-unit building, the SBA lender must proceed as follows: ◦ If the loan amount is up to and including $250,000, the environmental investigation may begin with an environmental questionnaire. 30 Table of Contents ◦ If the loan amount is more than $250,000, the environmental investigation must, at a minimum, begin with an environmental questionnaire and records search with risk assessment.
If the NAICS code begins with 457 (gas stations with or without convenience stores), the environmental investigation must begin with a Phase I and the SBA lender must also refer to and, if applicable, comply with “Environmental Investigation Requirements for Gas Station Loans” in the applicable Appendix of SBA SOP 50 10; • If there is not a NAICS code match to an environmentally sensitive industry, or if the property is a unit in a multi-unit building, the SBA lender must proceed as follows: ◦ If the loan amount is up to and including $250,000, the environmental investigation may begin with an environmental questionnaire. ◦ If the loan amount is more than $250,000, the environmental investigation must, at a minimum, begin with an environmental questionnaire and records search with risk assessment.
In addition, the SEC recently enacted rules, effective as of December 18, 2023, requiring public companies to disclose material cybersecurity incidents that they experience on Form 8-K within four business days of determining that a material cybersecurity incident has occurred and to disclose on annual basis material information regarding their cybersecurity risk management, strategy and governance.
In addition, the SEC enacted rules, effective as of December 18, 2023, requiring public companies to disclose material cybersecurity incidents that they experience on Form 8-K within four business days of determining that a material cybersecurity incident has occurred and to disclose on an annual basis material information regarding their cybersecurity risk management, strategy and governance.
This is maximized through long-standing and extensive relationships with industry contacts, commercial and investment bankers, entrepreneurs, services providers (such as lawyers and accountants), as well as current and former clients and our extensive network of strategic alliance partners. We supplement our relationships by the selective use of advertising aimed primarily at lending to the SMB market.
This is maximized through long-standing and extensive relationships with our referral partners, including industry contacts, commercial and investment bankers, entrepreneurs, services providers (such as lawyers and accountants), as well as current and former clients and our extensive network of strategic alliance partners. We supplement our relationships by the selective use of advertising aimed primarily at lending to the SMB market.
As a result of this rule, the FDIC insurance costs of insured depository institutions, including Newtek Bank, have generally increased. 16 Table of Contents On November 29, 2023, the FDIC issued a final rule that imposes a special deposit insurance assessment on insured depository institutions in order to recover losses that the DIF has incurred in the receiverships of Silicon Valley Bank and Signature Bank.
As a result of this rule, the FDIC insurance costs of insured depository institutions, including Newtek Bank, have generally increased. 17 Table of Contents On November 29, 2023, the FDIC issued a final rule that imposes a special deposit insurance assessment on insured depository institutions in order to recover losses that the DIF has incurred in the receiverships of Silicon Valley Bank and Signature Bank.
In order to comply with these requirements, we maintained a dividend policy of making quarterly distributions in an amount that approximated 90 - 100% of the Company's annual taxable income. Beginning with 2023, the Company and its subsidiaries no longer qualify as a RIC and files a consolidated U.S. federal income tax return.
In order to comply with these requirements, we maintained a dividend policy of making quarterly distributions in an amount that approximated 90 - 100% of the Company's annual taxable income. Beginning with 2023, the Company and its subsidiaries no longer qualify as a RIC and file a consolidated U.S. federal income tax return.
As of December 31, 2024, substantially all of our SBA 7(a) loans consisted of loans that were secured by first or second priority liens on the assets of the business. In all categories we are a business lender and the business, not the collateral, at underwriting must be the primary source of repayment.
As of December 31, 2025, substantially all of our SBA 7(a) loans consisted of loans that were secured by first or second priority liens on the assets of the business. In all categories we are a business lender and the business, not the collateral, at underwriting must be the primary source of repayment.
Under state law, a Capco that has invested in qualified businesses an amount equal to 100% of its initial certified capital is able to decertify (i.e., terminate its status as a Capco) and no longer be subject to any state Capco regulation. Our Capcos have historically invested in SMBs.
Under state laws, a Capco that has invested in qualified businesses in an amount equal to 100% of its initial certified capital, is able to decertify (i.e., terminate its status as a Capco) and no longer be subject to any state Capco regulation. Our Capcos have historically invested in SMBs.
As a result, as of January 2023 we ceased to be subject to regulation as a BDC under the 1940 Act, and no longer qualified for tax treatment as a RIC under the Code. 15 Table of Contents Regulation and Supervision General The U.S. financial services and banking industry is highly regulated.
As a result, as of January 2023 we ceased to be subject to regulation as a BDC under the 1940 Act, and no longer qualified for tax treatment as a RIC under the Code. 16 Table of Contents Regulation and Supervision General The U.S. financial services and banking industry is highly regulated.
Engaging in unsafe or unsound practices or failing to comply with applicable laws, regulations and supervisory agreements (including the Operating Agreement) could subject us and our subsidiaries or their officers, directors and institution-affiliated parties to a broad variety of sanctions or remedies, including those described above. 17 Table of Contents Limits on Activities and Approval Requirements The BHCA generally restricts the Company’s ability, directly or indirectly, to engage in, or acquire more than 5% of any class of voting securities of a company engaged in activities other than those determined by the Federal Reserve to be so closely related to banking as to be a proper incident thereto.
Engaging in unsafe or unsound practices or failing to comply with applicable laws, regulations and supervisory agreements could subject us and our subsidiaries or their officers, directors and institution-affiliated parties to a broad variety of sanctions or remedies, including those described above. 18 Table of Contents Limits on Activities and Approval Requirements The BHCA generally restricts the Company’s ability, directly or indirectly, to engage in, or acquire more than 5% of any class of voting securities of a company engaged in activities other than those determined by the Federal Reserve to be so closely related to banking as to be a proper incident thereto.
In addition, Newtek Bank’s subsidiary SBL, an S&P rated servicer, is a third-party servicer for commercial, SBA 7(a) and other government guaranteed loans, whose exceptional servicing capabilities with compact timelines for loan resolutions and dispositions has attracted various third-party portfolios to SBL for servicing.
In addition, Newtek Bank’s subsidiary SBL, an S&P rated servicer, is a third-party servicer for commercial loans, including SBA 7(a) and other government guaranteed loans, whose exceptional servicing capabilities with compact timelines for loan resolutions and dispositions has attracted third-party portfolios to SBL for servicing.
The Company has elected to become a financial holding company, allowing it to engage in a broader array of financial activities than bank holding companies.
The Company elected to become a financial holding company, allowing it to engage in a broader array of financial activities than bank holding companies.
Risk Factors - Risks Related to Operation as a Financial Holding Company - The banking industry is highly regulated, and the regulatory framework, together with any future legislative or regulatory changes, may have a significant adverse effect on our operations.” Anti-Money Laundering, Sanctions and Financial Crime We are subject to a wide range of laws related to anti-money laundering, economic sanctions and prevention of financial crime, including the Bank Secrecy Act, the USA PATRIOT Act and economic sanctions programs.
Risk Factors - Risks Related to Operation as a Financial Holding Company - The banking industry is highly regulated, and the regulatory framework, together with any future legislative or regulatory changes, may have a significant adverse effect on our operations.” 20 Table of Contents Anti-Money Laundering, Sanctions and Financial Crime We are subject to a wide range of laws related to anti-money laundering, economic sanctions and prevention of financial crime, including the Bank Secrecy Act, the USA PATRIOT Act and economic sanctions programs.
SBA will also evaluate Newtek Bank’s continued participation in the secondary market and may restrict further sale of guaranteed portions into the secondary market until SBA determines that Newtek Bank has provided sufficient documentation for purchases or demonstrates compliance with any requirement imposed by SBA Loan Program Requirements. 22 Table of Contents Pursuant to the SBA’s regulations, the SBA is released from liability on its guaranty of an SBA 7(a) loan and may, in its sole discretion, refuse to honor a guaranty purchase request in full or in part, or recover all or part of the funds already paid in connection with a guaranty purchase, if the lender failed to comply materially with an SBA Loan Program Requirement; failed to make, close, service or liquidate the loan in a prudent manner; placed the SBA at risk through improper action or inaction; failed to disclose a material fact to the SBA in a timely manner; or misrepresented a material fact to the SBA regarding the loan.
SBA will also evaluate Newtek Bank’s continued participation in the secondary market and may restrict sales of guaranteed portions into the secondary market until SBA determines that Newtek Bank has provided sufficient documentation for purchases or demonstrates compliance with any requirement imposed by SBA Loan Program Requirements. 23 Table of Contents Pursuant to the SBA’s regulations, the SBA is released from liability on its guaranty of an SBA 7(a) loan and may, in its sole discretion, refuse to honor a guaranty purchase request in full or in part, or recover all or part of the funds already paid in connection with a guaranty purchase, if the lender failed to comply materially with an SBA Loan Program Requirement; failed to make, close, service or liquidate the loan in a prudent manner; placed the SBA at risk through improper action or inaction; failed to disclose a material fact to the SBA in a timely manner; or misrepresented a material fact to the SBA regarding the loan.
These professionals have worked together to screen opportunities, underwrite new loans and manage a portfolio of loans made to independent business owner through two recessions, a credit crunch, the dot-com boom and bust, a leverage-fueled asset valuation bubble, and the COVID-19 pandemic.
These professionals have worked together to screen opportunities, underwrite new loans and manage a portfolio of loans made to independent business owners through two recessions, a credit crunch, the dot-com boom and bust, a leverage-fueled asset valuation bubble, and the COVID-19 pandemic.
Risk Factors - Risks Related to SBA Lending - We have specific risks associated with our secondary market sales of the guaranteed portions of SBA loans.” 9 Table of Contents We have focused on making smaller SBA 7(a) loans, approximately $1.0 million or less, in order to maintain a diversified pool of loans that are dispersed both geographically and among industries, with a goal of limiting our exposure to regional and industry-specific economic downturns.
Risk Factors - Risks Related to SBA Lending - We have specific risks associated with our secondary market sales of the guaranteed portions of SBA loans.” We have focused on making smaller SBA 7(a) loans, approximately $1.0 million or less, in order to maintain a diversified pool of loans that are dispersed both geographically and among industries, with a goal of limiting our exposure to regional and industry-specific economic downturns.
Although we maintained our status as a BDC and a RIC through the entirety of our 2022 fiscal and tax years, upon completing the Acquisition, we filed with the SEC Form N-54C, Notification of Withdrawal of Election to be Subject to the 1940 Act, and ceased to be a BDC.
Although we maintained our status as a BDC and a RIC through the entirety of our 2022 fiscal and tax years, upon completing the Acquisition of Newtek Bank, we filed with the SEC Form N-54C, Notification of Withdrawal of Election to be Subject to the 1940 Act, and ceased to be a BDC.
The closing of a loan is handled by SBL’s closing and legal department, consisting of loan closer, in-house attorneys and paralegals, whose primary responsibility is to close the loan in accordance with prudent lending standards and in compliance with SBA requirements thereby seeking to preserve SBA’s guaranty of repayment.
The closing of a loan is handled by SBL’s closing and legal department, consisting of loan closers, in-house attorneys and paralegals, whose primary responsibility is to close the loan in accordance with prudent lending standards and in compliance with SBA requirements thereby seeking to preserve SBA’s guaranty of repayment.
See “Risk Factors - Risks Related to SBA Lending - There can be no guarantee that Newtek Bank and NSBF will be able to maintain their SBA 7(a) lending licenses.” During the initial application process for a loan originated under the SBA 7(a) Program, a NewtekOne business service specialist (BSS) assists and guides the applicant through the application process, beginning with the submission of an online form through our customized loan portal.
See “Risk Factors - Risks Related to SBA Lending - There can be no guarantee that Newtek Bank and NSBF will be able to maintain their SBA 7(a) lending licenses.” During the initial application process for a loan originated under the SBA 7(a) Program, a business services specialist (BSS) assists and guides the applicant through the application process, beginning with the submission of an online form through our customized loan portal.
Newtek Payroll, Insurance, and Other PMTWorks Payroll, LLC d/b/a Newtek Payroll and Benefits Solutions (PMT), is a wholly-owned subsidiary which offers an array of industry standard and competitively priced payroll management, and related payment and tax reporting services to independent business owners.
Newtek Payroll, Insurance, and Other PMT d/b/a Newtek Payroll and Benefits Solutions, is a wholly-owned subsidiary which offers an array of industry standard and competitively priced payroll management, and related payment and tax reporting services to independent business owners.
For all quarterly periods from December 31, 2023 through December 31, 2024, Newtek Bank’s estimated amount of uninsured deposits did not exceed $5.0 billion and therefore, Newtek Bank is not required to pay any amount of the special assessment.
For all quarterly periods from December 31, 2023 through December 31, 2025, Newtek Bank’s estimated amount of uninsured deposits did not exceed $5.0 billion and therefore, Newtek Bank is not required to pay any amount of the special assessment.
Sales of Guaranteed Portions of SBA 7(a) Loans in the Secondary Market We have a dedicated capital markets team that sells the guaranteed portions of Newtek Bank’s SBA 7(a) loans shortly after origination and Newtek Bank retains the unguaranteed portions, Historically, NSBF sold SBA guaranteed portions of SBA 7(a) loans at premiums.
Sales of Guaranteed Portions of SBA 7(a) Loans in the Secondary Market We have a dedicated capital markets team that sells the guaranteed portions of Newtek Bank’s SBA 7(a) loans after origination and Newtek Bank retains the unguaranteed portions, Historically, we have sold SBA guaranteed portions of SBA 7(a) loans at premiums.
Following the Acquisition of Newtek Bank and its $137 million deposit portfolio, we launched our High Yield Savings and Retail CD product offerings in March and April of 2023. Since that time, we have grown Newtek Bank’s deposit base rapidly and have offered competitive market rates using an account opening process that is straightforward with limited interaction.
Following the Acquisition of Newtek Bank and its $137 million deposit portfolio, we launched our High Yield Savings and Retail CD product offerings in March and April of 2023. Since that time, we have grown Newtek Bank’s deposit base rapidly and have offered competitive market rates using a digital account opening process that is straightforward with limited interaction.
If the applicant’s debt service coverage ratio decreases to 1:1 or less than 1:1, the loan may only be made as an exception to our Underwriting Guidelines and would require the approval of our credit committee. 27 Table of Contents Required Site Visit No loan will be funded without an authorized representative of Newtek Bank first making a site visit to the business premises.
If the applicant’s debt service coverage ratio decreases to 1:1 or less than 1:1, the loan may only be made as an exception to our Underwriting Guidelines and would require the approval of our credit committee. Required Site Visit No loan will be funded without an authorized representative of Newtek Bank first making a site visit to the business premises.
Each member brings a complementary component to a team well-rounded in lending, finance, accounting, operations, strategy, business law and executive management. Our executive officers also oversee our subsidiaries and, to the extent that we may make additional equity investments in the future, the executive officers will also have primary responsibility for the identification, screening, review and completion of such investments.
Each member brings a complementary component to a team well-rounded in lending, finance, accounting, operations, strategy, business law and executive management. 33 Table of Contents Our executive officers also oversee our subsidiaries and, to the extent that we may make additional equity investments in the future, the executive officers will also have primary responsibility for the identification, screening, review and completion of such investments.
While capital can serve as an important cushion against losses, higher capital requirements can also adversely affect an institution’s ability to grow and/or increase leverage through deposit-gathering or other sources of funding. 18 Table of Contents The Company and Newtek Bank are each subject to generally similar capital requirements adopted by the Federal Reserve and the OCC, respectively.
While capital can serve as an important cushion against losses, higher capital requirements can also adversely affect an institution’s ability to grow and/or increase leverage through deposit-gathering or other sources of funding. The Company and Newtek Bank are each subject to generally similar capital requirements adopted by the Federal Reserve and the OCC, respectively.
As a result, we believe we are well positioned to continue to provide financing to the types of independent business owners that we have historically targeted and we have the technology and infrastructure in place presently to do it cost effectively in all 50 states and across many industries. Increased demand for comprehensive, business-critical SMB solutions .
As a result, we believe we are well positioned to continue to provide financing to the types of independent business owners that we have historically targeted and further, that we have the technology and infrastructure in place presently to do so cost effectively in all 50 states and across many industries. Increased demand for comprehensive, business-critical SMB solutions .
We acquire appraisals on CRE, residential real estate, equipment, and business valuations to assist in underwriting a loan and credit decisioning. These processes continue during the portfolio monitoring process, when we will conduct field examinations, when appropriate, review all compliance certificates and covenants and regularly assess the financial and business conditions and prospects of our borrowers.
We acquire appraisals on CRE, residential real estate, equipment, and business valuations to assist in underwriting a loan and credit decisioning. These processes continue during the portfolio monitoring process, when we will conduct field examinations, when appropriate, review compliance certificates and assess the financial and business conditions and prospects of our borrowers.
We expect this trend of state-level activity in those areas to continue, and are continually monitoring developments in the states in which our clients are located. Limitations on Transactions with Affiliates and Loans to Insiders Banks are subject to restrictions on their ability to conduct transactions with affiliates and other related parties under federal banking laws.
We expect this trend of state-level activity in those areas to continue, and are continually monitoring developments in the states in which our clients are located. 21 Table of Contents Limitations on Transactions with Affiliates and Loans to Insiders Banks are subject to restrictions on their ability to conduct transactions with affiliates and other related parties under federal banking laws.
We market our business and financial solutions through referrals from our alliance partners such as Stifel Bank, Credit Union National Association, ENT Federal Credit Union, Legacy Bank, Morgan Stanley Smith Barney, Flagstar Bank, Raymond James, Randolph Brooks Federal Credit Union, UBS, Meineke Dealers Purchasing Cooperative, Regions Bank, Hartford Insurance, Bank United, US Century Bank, Anderson Capital Advisors, Transworld Business Advisors, Army Navy Federal Credit Union, Teachers Federal Credit Union, Aamco, 1800 Accountants, Henry Schein, Stearns Bank, California Coast Credit Union, and True Value Company, among others using our patented NewTracker® referral system as well as direct referrals from our web presence, www.newtekone.com .
We market our business and financial solutions through referrals from our alliance partners such as Credit Union National Association, ENT Federal Credit Union, Morgan Stanley Smith Barney, Flagstar Bank, Raymond James, Randolph Brooks Federal Credit Union, UBS, Meineke Dealers Purchasing Cooperative, Regions Bank, Hartford Insurance, Bank United, Figure Technology Solutions, US Century Bank, Anderson Capital Advisors, Transworld Business Advisors, Army Navy Federal Credit Union, Teachers Federal Credit Union, Aamco, 1800 Accountants, Henry Schein, Stearns Bank, California Coast Credit Union, and True Value Company, among others using our patented NewTracker® referral system as well as direct referrals from our web presence, www.newtekone.com and newtekbank.com .
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. ” 24 Table of Contents Equity Investments to Expand or Enhance the NewtekOne Business and Financial Solutions Ecosystem While the vast majority of our lending opportunities have been structured as loans, we have in the past and expect in the future to make selective equity investments primarily as either strategic investments to enhance the integrated operating platform or, to a lesser degree, under our Certified Capital Company (“Capco”) programs (see below).
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.” 25 Table of Contents Equity Investments to Expand or Enhance the NewtekOne Business and Financial Solutions Ecosystem While the vast majority of our lending opportunities have been structured as loans, we have in the past and may in the future, make selective equity investments primarily as either strategic investments to enhance the integrated operating platform or, to a lesser degree, under our Certified Capital Company (“Capco”) programs (see below).
In exchange for receiving the tax credits, the Capco is obligated to invest the funds raised in certain qualified businesses, which generally are defined by statute to include only businesses that meet certain criteria. If a Capco fails to comply with the performance requirements of each state’s different Capco program, the tax credits are subject to forfeiture.
In exchange for receiving the tax credits, the Capco is then obligated to invest the funds raised in certain qualified businesses, which generally are defined by statute to include only businesses that meet certain criteria. If a Capco fails to comply with the performance requirements of each state’s different Capco program, the tax credits can be subject to forfeiture.
In addition, SBL provides our affiliates, subsidiaries and third-parties with outsourced solutions for the entire loan origination process, including credit analysis, structuring and eligibility, packaging, closing compliance and servicing. For example, SBL originates and services ALP and 504 loans for our Newtek ALP Holdings subsidiary and ALP loans for our joint ventures (see below).
In addition, SBL provides our affiliates, subsidiaries and third-parties with outsourced solutions for the entire loan origination process, including credit analysis, structuring and eligibility, packaging, closing compliance and servicing. For example, SBL originates and services ALP and 504 loans for our Newtek ALP Holdings subsidiary and has done so for our joint ventures (see below).
In addition, the Newtek Advantage ® , the One Dashboard for All of Your Business Needs ® , provides independent business owners with, among other things, a business tool they can use in one or more areas of their core business operations. including instant access to a team of NewtekOne business and financial solutions experts all of NewtekOne’s business and financial solutions.
In addition, the Newtek Advantage ® , the One Dashboard for All of Your Business Needs ® , provides independent business owners with, among other things, a business tool they can use in one or more areas of their core business operations, including instant access to each of our business and financial solutions and to a team of NewtekOne business and financial solutions experts.
The bank regulatory regime, including through the Operating Agreement, requires that we obtain prior approval of one or more regulators for various initiatives or corporate actions, including acquisitions or minority investments, the establishment of branches, certain dividends or capital distributions, and significant deviations from Newtek Bank’s previously approved business plan.
The bank regulatory regime requires that we obtain prior approval of one or more regulators for various initiatives or corporate actions, including acquisitions or minority investments, the establishment of branches, certain dividends or capital distributions, and significant deviations from Newtek Bank’s previously approved business plan.
Appraisals on a “subject to” basis are not acceptable. 28 Table of Contents Liquidity: Liquidity, as measured by the current ratio, must be in line with the RMA industry average. An assessment of the adequacy of working capital is required. An assessment of the liquidity of a business is essential in determining the ability to meet future obligations.
Appraisals on a “subject to” basis are not acceptable. Liquidity: Liquidity, as measured by the current ratio, must be in line with the RMA industry average. An assessment of the adequacy of working capital is required. An assessment of the liquidity of a business is essential in determining the ability to meet future obligations.
We anticipate that our principal loan origination and other business opportunities will continue to be the same types of independent business owners to which we currently provide financing.
We anticipate that our principal loan originations and other business opportunities will continue to be the same types of independent business owners to which we currently provide financing.
The current and quick ratios and turnover of receivables, payables and inventory are measured against the RMA industry median in determining the adequacy of these liquidity measures. Collateral: We are required to reasonably secure each loan transaction with all worthwhile and available assets.
The current and quick ratios and turnover of receivables, payables and inventory are measured against the RMA industry median in determining the adequacy of these liquidity measures. 29 Table of Contents Collateral: We are required to reasonably secure each loan transaction with all worthwhile and available assets.
Sloane and Downs, have been involved together in the structuring and management of loans and equity investments for the past 20 years. The retention of our Senior Lending Team and executive officers is material to the management of our business. The departure of key management personnel could adversely affect our business.
Sloane and Downs, respectively, have been involved together in the structuring and management of loans and equity investments for over 20 years. The retention of our Senior Lending Team and executive officers is material to the management of our business. The departure of key management personnel could adversely affect our business.
These businesses should be well positioned to capitalize on organic and strategic growth opportunities, and should compete in industries with strong fundamentals and meaningful barriers to entry. We further analyze prospective lending opportunities in order to identify competitive advantages within their industry, which may result in superior operating margins or industry-leading growth. Customer and Supplier Diversification.
These businesses should be well positioned to capitalize on organic and strategic growth opportunities, and should compete in industries with strong fundamentals and meaningful barriers to entry. We further analyze prospective lending opportunities in order to identify competitive advantages within their industry, which may result in superior operating margins or industry-leading growth. 24 Table of Contents Customer and Supplier Diversification.
Newtek Advantage ® In addition, we have begun to offer the Newtek Advantage ® (patent pending), the One Dashboard for All of Your Business Needs ® , which we believe is a differentiating business tool that business owners can use in one or more areas of their core business operations.
Newtek Advantage ® In addition, we offer the Newtek Advantage ® (patent pending), the One Dashboard for All of Your Business Needs ® , which we believe is a differentiating business tool that business owners can use in one or more areas of their core business operations.
In addition, we recently announced that the Newtek Advantage now integrates with Intuit QuickBooks®, providing independent business owners with a real-time snapshot into their finances. We believe the Newtek Advantage can, among other things, enable Newtek Bank to grow core business transactional deposits, and provide our existing and new clients with an “advantage” in successfully running their businesses.
In addition, the Newtek Advantage integrates with Intuit QuickBooks®, providing independent business owners with a real-time snapshot into their finances. We believe the Newtek Advantage can, among other things, enable Newtek Bank to grow core business transactional deposits, and provide our existing and new clients with an “advantage” in successfully running their businesses.
Under the SBA 7(a) program, a bank, such as Newtek Bank, or a nonbank lender licensed by the SBA, such as NSBF, underwrites a loan between $5,000 and $5.0 million for a variety of general business purposes based on the SBA’s loan program requirements.
Under the SBA 7(a) Program, a bank, such as Newtek Bank, or a nonbank lender licensed by the SBA, such as NSBF, underwrites a loan between $2,500 and $5.0 million for a variety of general business purposes based on the SBA’s loan program requirements.
SBA 7(a) loans are typically between ten and 25 years in maturity and bear interest at the prime rate plus a spread from 1.50% to 6.50%. The Company estimates the duration of these loans to be between four and five years.
SBA 7(a) loans are typically between ten and 25 years in maturity and bear interest at the prime rate plus a spread from 3.00% to 6.50%. The Company estimates the duration of these loans to be between four and five years.
Historically, for investments in our subsidiaries, we focused more on tailoring them to the long-term growth needs of the companies than to immediate return.
Historically, for investments in our subsidiaries, we focused more on tailoring them to the long-term growth needs of the subsidiaries, rather than to immediate return.
In December of 2023 we launched our Business Checking product offering and were successful in growing Newtek Bank’s business banking deposit base, which helped us surpass $1 billion in deposits as of December 31, 2024. Newtek Bank has maintained strong customer acquisition and retention rates and expects to continue to drive growth in retail and business banking deposits.
In December of 2023 we launched our Business Checking product offering and were successful in growing Newtek Bank’s business banking deposit base, which helped us surpass $1.4 billion in total deposits as of December 31, 2025. Newtek Bank has maintained strong customer acquisition and retention rates and expects to continue to drive growth in retail and business banking deposits.
NIA has recently experienced success in the area of technological innovation, whereby NIA is now able to provide key man life insurance on our loan products without requiring a medical exam or the client filling out lengthy applications NIA is able to accomplish this by automatically transferring data from loan applications to populate an insurance application.
NIA has experienced success in the area of technological innovation, whereby NIA provides key man life insurance on our loan products without requiring a medical exam or the client filling out lengthy applications. NIA is able to accomplish this by automatically transferring data from loan applications to populate an insurance application.
As a result of the Acquisition, all SBA 7(a) loan originations were transitioned from NSBF to Newtek Bank in April 2023, and NSBF ceased the origination of SBA 7(a) loans, relinquished its PLP status and is winding-down its operations.
Following the acquisition of Newtek Bank, in April 2023 all SBA 7(a) loan originations were transitioned from NSBF to Newtek Bank, and NSBF ceased the origination of SBA 7(a) loans, relinquished its PLP status and is winding-down its operations.
For example, the Federal Financial Institutions Examination Council's (“ FFIEC”), which is a council comprised of the primary federal banking regulators, has issued guidance and supervisory expectations for banking organizations with respect to information technology and cybersecurity.
For example, the Federal Financial Institutions Examination Council's (“FFIEC”), which is a council comprised of the primary federal banking regulators, has issued guidance and supervisory expectations for banking organizations with respect to information technology and cybersecurity.
The Company has guaranteed NSBF’s obligations to the SBA and has funded a $10.0 million account at Newtek Bank to secure these potential obligations. Any future post-purchase denials and repairs demands on NSBF could negatively impact our results of operations. Newtek Bank has been granted PLP status.
The Company has guaranteed NSBF’s obligations to the SBA and has funded a $10.0 million account to secure these potential obligations. Any future post-purchase denials and repairs demands on NSBF could negatively impact our results of operations. Newtek Bank has been granted PLP (SBA Preferred Lender Program) status.
As such, we believe that we offer a competitive compensation and benefits structure that we believe is attractive to our current and prospective professionals. As we hire and develop individuals, we take succession planning into account and have succession plans in place for each of our senior leaders. As of December 31, 2024, our workforce consisted of 591 professionals.
As such, we believe that we offer a competitive compensation and benefits structure that we believe is attractive to our current and prospective professionals. As we hire and develop individuals, we take succession planning into account and have succession plans in place for each of our senior leaders. As of December 31, 2025, our workforce consisted of 572 professionals.
A key consideration is a strong balance sheet and sufficient historical or projected free cash flow to service any debt we may invest. 23 Table of Contents Strong Competitive Position. We seek to lend to businesses that have developed strong, defensible product or service offerings within their respective market segment(s).
A key consideration is a strong balance sheet and sufficient historical or projected free cash flow to service any debt we may invest. Strong Competitive Position. We seek to lend to businesses that have developed strong, defensible product or service offerings within their respective market segment(s).
Collateral and Sources of Repayment. We typically structure our loans with the maximum seniority and collateral along with personal guarantees from business owners, in many cases collateralized by other assets including real estate.
We typically structure our loans with the maximum seniority and collateral along with personal guarantees from business owners, in many cases collateralized by other assets including real estate.
Thirteen of our original eighteen Capcos have reached this stage and been de-certified and liquidated. See “RISKS RELATED TO OUR CAPCO BUSINESS.” Loan Origination Process The following discussion relates to the Company’s loan origination selection process in connection with SBA 7(a) lending.
Twelve of our original seventeen Capcos have reached this stage and been de-certified and liquidated. See “RISKS RELATED TO OUR CAPCO BUSINESS.” Loan Origination Process The following discussion relates to the Company’s loan origination selection process in connection with SBA 7(a) lending.
Human Capital including Senior Lending Team and Executive Officers The long-term success of our Company depends on our people. Our team comprises experienced lending professionals, executive officers and treasury, finance, risk management, administrative support and human resources professionals.
Human Capital including Senior Lending Team and Executive Officers Our long-term success depends on our people. Our team comprises experienced lending professionals, executive officers and treasury, finance, risk management, administrative support and human resources professionals.
While Newtek Bank’s primary focus will be to expand its lending activities by providing a full suite of commercial loans to independent business owners, we also seek to offer independent business owners a variety of attractive financial solutions, as well as cost effective and efficient business solutions, to meet their capital needs through Newtek Bank and our nonbank subsidiaries.
While Newtek Bank’s primary focus is to expand its lending activities by providing a full suite of commercial loans to independent business owners, we also seek to offer independent business owners a variety of attractive cost effective and efficient business and financial solutions to meet their capital needs through Newtek Bank and our nonbank subsidiaries.
We believe that our NewTracker and Newtek Advantage technological innovations supports our business strategy of being a true technology enable financial holding company, without branches, traditional bankers, brokers or business development officers. We believe that our technology and business platform distinguishes us from our competitors.
We believe that our NewTracker and Newtek Advantage technological innovations support our business strategy of being a true technology enabled financial holding company, without branches, traditional bankers, brokers or business development officers. We believe that our technology and business platform distinguishes us from our competitors.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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We continue to devote substantial time and resources to risk management, compliance, regulatory-change management, and cybersecurity and other technology initiatives, each of which—whether successful or not—also may adversely affect our ability to operate profitably or to pursue advantageous business opportunities.
We continue to devote substantial time and resources to risk management, compliance, regulatory-change management, cybersecurity and other technology initiatives, each of which—whether successful or not—also may adversely affect our ability to operate profitably or to pursue advantageous business opportunities.
PLP status allows Newtek Bank to expedite loans since they are not required to present applications to the SBA for concurrent review and approval. There can be no guarantee that Newtek Bank will be able to maintain its SBA 7(a) lending license. The loss Newtek Bank’s SBA 7(a) lending license would negatively impact our results of operations.
PLP status allows Newtek Bank to expedite loans since they are not required to present applications to the SBA for concurrent review and approval. There can be no guarantee that Newtek Bank will be able to maintain its SBA 7(a) lending license. The loss of Newtek Bank’s SBA 7(a) lending license would negatively impact our results of operations.
For example, when a lender such as Newtek Bank sells the guaranteed portion of a SBA 7(a) loan in the secondary market, the lender must perform all necessary servicing and liquidation actions for such loan even after SBA has purchased the guaranteed portion of such loan from a purchaser of a guaranteed portion, i.e., a registered holder.
For example, when a lender such as Newtek Bank sells the guaranteed portion of a SBA 7(a) loan in the secondary market, the lender must perform all necessary servicing and liquidation actions for such loan even after the SBA has purchased the guaranteed portion of such loan from a purchaser of a guaranteed portion, i.e., a registered holder.
RISKS RELATED TO OUR CAPCO BUSINESS The Capco programs and the tax credits they provided were created by state legislation and implemented through regulation, and such laws and rules are subject to possible action to repeal or retroactively revise the programs for political, economic or other reasons.
RISKS RELATED TO OUR CAPCO BUSINESS The Capco programs and the tax credits they provided were created by state legislation and implemented through regulation, and such laws and rules are subject to possible action to repeal or retroactively revise the programs for political, economic or other reasons.
Risks Related to Our Business and Structure • We are dependent upon our Senior Lending Team and our executive officers for our future success, and if we are unable to hire and retain qualified personnel or if we lose any member of our Senior Lending Team or our executive officers our ability to execute on our business plan could be significantly harmed. • We could be adversely affected by the soundness of other financial institutions. • We operate in a highly competitive market for clients, which could reduce returns and result in losses. • If we are unable to acquire and process clients effectively, we may be unable to achieve our business objectives. • Our business may be adversely affected if our risk management framework does not effectively identify, assess and mitigate risk. • Indebtedness could adversely affect our business and financial results. • We may expose ourselves to risks as we engage in hedging transactions. • 37 Table of Contents • An inability to maintain adequate liquidity could jeopardize our business and financial condition. • Our acquisitions and other strategic transactions, including the acquisition of Newtek Bank, may not yield the intended benefits. • Internal control deficiencies could impact the accuracy of our financial results or prevent the detection of fraud.
Risks Related to Our Business and Structure • We are dependent upon our Senior Lending Team and our executive officers for our future success, and if we are unable to hire and retain qualified personnel or if we lose any member of our Senior Lending Team or our executive officers our ability to execute on our business plan could be significantly harmed. • We could be adversely affected by the soundness of other financial institutions. • We operate in a highly competitive market for clients, which could reduce returns and result in losses. • If we are unable to acquire and process clients effectively, we may be unable to achieve our business objectives. • Our business may be adversely affected if our risk management framework does not effectively identify, assess and mitigate risk. • Indebtedness could adversely affect our business and financial results. • We may expose ourselves to risks as we engage in hedging transactions. • The impact of artificial intelligence on our business • An inability to maintain adequate liquidity could jeopardize our business and financial condition. 37 Table of Contents • Our acquisitions and other strategic transactions, including the acquisition of Newtek Bank, may not yield the intended benefits. • Internal control deficiencies could impact the accuracy of our financial results or prevent the detection of fraud.
Risks Related to Newtek Bank • If the credit decisioning, pricing, loss forecasting and scoring models we use contain errors, do not adequately assess risk, or are otherwise ineffective, our reputation and relationships with customers could be harmed, our market share could decline and the value of loans held on our balance sheet may be adversely affected. • If collection efforts on delinquent loans are ineffective or unsuccessful, the return on investment for investors in those loans would be adversely affected and investors may not find investing through our marketplace bank desirable. 38 Table of Contents Risks Related to Payroll Processing • Newtek Payroll and Benefit Solutions (“PMT”) is subject to risks surrounding Automated Clearing House (“ACH”) payments. • PMT could incur unreimbursed costs or damages due to delays in processing inherent in the banking system.
Risks Related to Newtek Bank • If the credit loss forecasting and scoring models we use contain errors, do not adequately assess risk, or are otherwise ineffective, our reputation and relationships with customers could be harmed, our market share could decline and the value of loans held on our balance sheet may be adversely affected. • If collection efforts on delinquent loans are ineffective or unsuccessful, the return on investment for investors in those loans would be adversely affected and investors may not find investing through our marketplace bank desirable. 38 Table of Contents Risks Related to Payroll Processing • Newtek Payroll and Benefit Solutions (“PMT”) is subject to risks surrounding Automated Clearing House (“ACH”) payments. • PMT could incur unreimbursed costs or damages due to delays in processing inherent in the banking system.
In the event that we are unable to maintain or achieve compliance with Section 404 of the SOX and related rules, the market price of our common stock may be adversely affected. 51 Table of Contents During 2023 and 2024, we identified and remediated material weaknesses in our internal controls over financial reporting which, if not remediated, could have adversely affected our ability to report our financial condition and results of operations in a timely and accurate manner, investor confidence in our Company and, as a result, the value of our common stock.
In the event that we are unable to maintain or achieve compliance with Section 404 of the SOX and related rules, the market price of our common stock may be adversely affected. 52 Table of Contents During 2023 and 2024, we identified and remediated material weaknesses in our internal controls over financial reporting which, if not remediated, could have adversely affected our ability to report our financial condition and results of operations in a timely and accurate manner, investor confidence in our Company and, as a result, the value of our common stock.
Recent political developments, including the new U.S. presidential administration, have added additional uncertainty with respect to new laws or regulations or changes in the interpretations or enforcement of existing laws or regulations, including potential deregulation in some areas.
Recent political developments, including the current U.S. presidential administration, have added additional uncertainty with respect to new laws or regulations or changes in the interpretations or enforcement of existing laws or regulations, including potential deregulation in some areas.
If we raise additional funds by issuing more common stock or senior securities convertible into, or exchangeable for, our common stock, then the percentage ownership of our shareholders at that time will decrease, and shareholders may experience dilution. 59 Table of Contents The authorization and issuance of “blank check” preferred shares could have an anti-takeover effect detrimental to the interests of our shareholders.
If we raise additional funds by issuing more common stock or senior securities convertible into, or exchangeable for, our common stock, then the percentage ownership of our shareholders at that time will decrease, and shareholders may experience dilution. 60 Table of Contents The authorization and issuance of “blank check” preferred shares could have an anti-takeover effect detrimental to the interests of our shareholders.
Refer to “Item 7, Management Discussion and Analysis of Financial Results” and “Item 7A, Quantitative and Qualitative Disclosures About Market Risk.” For risks related to SBA lending, see “We have specific risks associated with our secondary market sales of the guaranteed portions of SBA loans.” While the United States and other developed economies have recently experienced higher-than-normal inflation rates, it remains uncertain whether substantial inflation will be sustained over an extended period of time or have a significant effect on the U.S. economy or other economies.
Refer to “Item 7, Management Discussion and Analysis of Financial Results” and “Item 7A, Quantitative and Qualitative Disclosures About Market Risk.” For risks related to SBA lending, see “We have specific risks associated with our secondary market sales of the guaranteed portions of SBA loans.” 45 Table of Contents While the United States and other developed economies have recently experienced higher-than-normal inflation rates, it remains uncertain whether substantial inflation will be sustained over an extended period of time or have a significant effect on the U.S. economy or other economies.
Certain of our subsidiaries rely on Rule 3a-7 to exclude their securitization activities from the definition of an “investment company” under the 1940 Act.
Certain of our subsidiaries rely on Rule 3a-7 under the 1940 Act to exclude their securitization activities from their meeting the definition of an “investment company” under the 1940 Act.
The risks associated with climate change are rapidly changing and evolving in an escalating fashion, making them difficult to assess due to limited data. We, our subsidiaries or our clients may become subject to new or strengthened regulations or legislation, which could increase their operating costs and/or decrease their revenues. 64 Table of Contents
The risks associated with climate change are rapidly changing and evolving in an escalating fashion, making them difficult to assess due to limited data. We, our subsidiaries or our clients may become subject to new or strengthened regulations or legislation, which could increase their operating costs and/or decrease their revenues. 65 Table of Contents
Such litigation could result in substantial costs and diversion of resources. 52 Table of Contents The development and use of Artificial Intelligence (“AI”) present risks and challenges that may adversely impact our business. We or our third-party vendors, clients or counterparties may develop or incorporate AI technology in certain business processes, services or products.
Such litigation could result in substantial costs and diversion of resources. 53 Table of Contents The development and use of Artificial Intelligence (“AI”) present risks and challenges that may adversely impact our business. We or our third-party vendors, clients or counterparties may develop or incorporate AI technology in certain business processes, services or products.
A meaningful rise in inflation during 2021 and through 2022 prompted the Federal Reserve to sharply increase the federal funds rate during 2022 and 2023 before it decreased the rate at the end of 2024. The Federal Reserve may further raise or lower interest rates in response to economic conditions, particularly inflationary pressures and unemployment statistics.
A meaningful rise in inflation during 2021 and through 2022 prompted the Federal Reserve to sharply increase the federal funds rate during 2022 and 2023 before it decreased the rate at the end of 2024 and throughout 2025. The Federal Reserve may further raise or lower interest rates in response to economic conditions, particularly inflationary pressures and unemployment statistics.
As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods. 63 Table of Contents We cannot predict how new tax legislation will affect us, our investments, or our stockholders, and any such legislation could adversely affect our business.
As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods. 64 Table of Contents We cannot predict how new tax legislation will affect us, our investments, or our stockholders, and any such legislation could adversely affect our business.
This can occur if a client of PMT suffers losses, enters into bankruptcy or defrauds PMT. In such an event, PMT could bear the financial burden of settling the customer’s contract. 58 Table of Contents PMT could incur unreimbursed costs or damages due to delays in processing inherent in the banking system.
This can occur if a client of PMT suffers losses, enters into bankruptcy or defrauds PMT. In such an event, PMT could bear the financial burden of settling the customer’s contract. 59 Table of Contents PMT could incur unreimbursed costs or damages due to delays in processing inherent in the banking system.
Legislative or other actions relating to taxes could have a negative effect on us. The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S.
Legislative or other actions relating to taxes could have a negative effect on us. The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department.
Treasury Department.Significant changes to the existing U.S. tax rules have been enacted in recent years, and there are a number of proposals in Congress that would similarly modify the existing U.S. tax rules. The likelihood of any such legislation being enacted is uncertain, but new legislation and any U.S.
Significant changes to the existing U.S. tax rules have been enacted in recent years, and there are a number of proposals in Congress that would similarly modify the existing U.S. tax rules. The likelihood of any such legislation being enacted is uncertain, but new legislation and any U.S.
If the economy is unable to substantially reopen or remain reopened after a public health emergency, and high levels of unemployment continue for an extended period of time, loan delinquencies, loan non-accruals, problem assets, and bankruptcies may increase.
If the economy is unable to substantially reopen or remain open after a public health emergency, and high levels of unemployment continue for an extended period of time, loan delinquencies, loan non-accruals, problem assets, and bankruptcies may increase.
In addition, these tariffs could cause significant economic damage to the specific businesses and industries being targeting with these punitive tariffs, and could in the long run result in higher consumer prices but it could also result in an increase in the cost of manufactured and imported goods.
In addition, these tariffs could cause significant economic damage to the specific businesses and industries being targeted with these punitive tariffs, and could in the long run result in higher consumer prices but it could also result in an increase in the cost of manufactured and imported goods.
The Maryland General Corporation Law and our charter and bylaws contain provisions that may discourage, delay or make more difficult a change in control of Newtek or the removal of our directors. We are subject to the Maryland Business Combination Act.
The Maryland General Corporation Law and our charter and bylaws contain provisions that may discourage, delay or make more difficult a change in control of the Company or the removal of our directors. We are subject to the Maryland Business Combination Act.
Currently, NMS is operating under an order for injunctive relief it voluntarily entered into with the FTC. 57 Table of Contents ADDITIONAL RISKS RELATED TO NEWTEK BANK If the credit decisioning, pricing, loss forecasting and scoring models we use contain errors, do not adequately assess risk, or are otherwise ineffective, our reputation and relationships with customers could be harmed, our market share could decline and the value of loans held on our balance sheet may be adversely affected.
Currently, NMS is operating under an order for injunctive relief it voluntarily entered into with the FTC. 58 Table of Contents ADDITIONAL RISKS RELATED TO NEWTEK BANK If the credit loss forecasting and scoring models we use contain errors, do not adequately assess risk, or are otherwise ineffective, our reputation and relationships with customers could be harmed, our market share could decline and the value of loans held on our balance sheet may be adversely affected.
For example, the new U.S. presidential administration 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.
For example, the current U.S. presidential administration 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.
NMS and the sponsoring bank can require that merchants maintain cash reserves under its control to cover charge-back liabilities but such reserves may not be sufficient to cover the liability or may not even be available to them in the event of a bankruptcy or other legal action. 56 Table of Contents NMS has potential liability for customer or merchant fraud.
NMS and the sponsoring bank can require that merchants maintain cash reserves under its control to cover charge-back liabilities but such reserves may not be sufficient to cover the liability or may not even be available to them in the event of a bankruptcy or other legal action. NMS has potential liability for customer or merchant fraud.
In addition, it may not be possible to hedge fully or perfectly against interest rate fluctuations affecting the value of securities in our portfolio. We are subject to stringent capital and liquidity regulations and requirements. NewtekOne is the parent company of and a separate and distinct legal entity from Newtek Bank.
In addition, it may not be possible to hedge fully or perfectly against interest rate fluctuations affecting the value of securities in our portfolio. 49 Table of Contents We are subject to stringent capital and liquidity regulations and requirements. NewtekOne is the parent company of and a separate and distinct legal entity from Newtek Bank.
Losses from terrorist attacks, global health emergencies and natural disasters are generally uninsurable. A failure or the perceived risk of a failure to raise the statutory debt limit of the U.S. could have a material adverse effect on our business, financial condition and results of operations.
Losses from terrorist attacks, global health emergencies and natural disasters are generally uninsurable. 46 Table of Contents A failure or the perceived risk of a failure to raise the statutory debt limit of the U.S. could have a material adverse effect on our business, financial condition and results of operations.
See also “ITEM I.C Cybersecurity.” In addition, pursuant to the terms of Agreement to sell NTS to IPM, we received $4.0 million in cash and 4.0 million shares of a newly created series of IPM non-voting preferred stock, the Series A Non-Voting Common Equivalent Stock (the “Preferred Stock”).
See also “ITEM I.C Cybersecurity.” In addition, pursuant to the terms of Agreement to sell NTS to IPM, we received $4.0 million in cash and 4.0 million shares of a newly created series of IPM non-voting preferred stock, the Series A Non-Voting Common Equivalent Stock (the “Preferred Stock”). Refer to NOTE 4—INVESTMENTS.
If NMS is not able to pass these fee increases along to merchants through corresponding increases in its processing fees, its profit margins in this line of business will be reduced. NMS is liable if its processing merchants refuse or cannot reimburse charge-backs resolved in favor of their customers.
If NMS is not able to pass these fee increases along to merchants through corresponding increases in its processing fees, its profit margins in this line of business will be reduced. 57 Table of Contents NMS is liable if its processing merchants refuse or cannot reimburse charge-backs resolved in favor of their customers.
This adverse effect can become particularly acute if those events affect our electronic data processing, transmission, storage, and retrieval systems, or impact the availability, integrity, or confidentiality of our data. We and our subsidiaries depend heavily upon computer systems to perform necessary business functions.
This adverse effect can become particularly acute if those events affect our electronic data processing, transmission, storage, and retrieval systems, or impact the availability, integrity, or confidentiality of our data. 62 Table of Contents We and our subsidiaries depend heavily upon computer systems to perform necessary business functions.
We will be required to recognize an estimate of value associated with the IPM Earnout in 2025 and remeasure it value on a recurring basis, which could positively or negatively impact our earnings and further compound the volatility associated with the value of IPM stock referenced above.
We are required to recognize an estimate of value associated with the IPM Earnout in 2025 and remeasure it on a recurring basis, which could positively or negatively impact our earnings and further compound the volatility associated with the value of IPM stock referenced above.
Any such losses could adversely affect our business, financial condition and results of operations. 47 Table of Contents Moreover, we may be adversely affected by the soundness of other financial institutions even when we are not directly exposed to those institutions.
Any such losses could adversely affect our business, financial condition and results of operations. Moreover, we may be adversely affected by the soundness of other financial institutions even when we are not directly exposed to those institutions.
As a result, we may not be able to operate our business as we expect, and our ability to compete could be harmed, which could cause our operating results to suffer. We operate in a highly competitive market for clients, which could reduce returns and result in losses.
As a result, we may not be able to operate our business as we expect, and our ability to compete could be harmed, which could cause our operating results to suffer. 47 Table of Contents We operate in a highly competitive market for clients, which could reduce returns and result in losses.
Additionally, if these models fail to adequately assess the creditworthiness of our borrowers, we may experience higher than forecasted losses. Furthermore, as stated above, we hold loans on our balance sheet. We periodically assess the value of these loans and in doing so we review and incorporate a number of factors including forecasted losses.
Additionally, if these models fail to adequately assess the creditworthiness of our borrowers, that may contribute to higher than forecasted losses. Furthermore, as stated above, we hold loans on our balance sheet. We periodically assess the appropriateness of the carrying value of these loans and in doing so we review and incorporate a number of factors including forecasted losses.
We also may not be able to refinance our indebtedness or take such other actions, if necessary, on commercially reasonable terms, or at all. 48 Table of Contents We may expose ourselves to risks as we engage in hedging transactions.
We also may not be able to refinance our indebtedness or take such other actions, if necessary, on commercially reasonable terms, or at all. We may expose ourselves to risks as we engage in hedging transactions.
NMS is currently sponsored by two banks. If either of the sponsorships is terminated, and NMS is not able to secure or transfer the respective merchant portfolio to a new bank sponsor or sponsors, the business, financial condition, results of operations and cash flows of the electronic payment processing business could be materially adversely affected.
If either of the sponsorships is terminated, and NMS is not able to secure or transfer the respective merchant portfolio to a new bank sponsor or sponsors, the business, financial condition, results of operations and cash flows of the electronic payment processing business could be materially adversely affected.
Risks Related to Operation as a Financial Holding Company • We operate in a highly regulated environment and are subject to extensive regulation and supervision as a financial holding company, and if we are found to be in violation of any of the federal, state or local laws or regulations applicable to us, our business could suffer. • Changes in laws or regulations governing our operations may adversely affect our business or cause us to alter our business strategy. • We are subject to extensive regulation and supervision as a financial holding company, which may adversely affect our business. • We may be adversely affected by increased governmental and regulatory scrutiny or negative publicity. • Failure to comply with applicable laws, regulations or commitments, or to satisfy our regulators’ supervisory expectations, could subject us to, among other things, supervisory or enforcement action, which could adversely affect our business, financial condition and results of operations. • Federal law may discourage certain acquisitions of our common stock which could have a material adverse effect on our shareholders. • The 2023 withdrawal of the Company’s election to be regulated as a BDC resulted in a significant change in our accounting and financial reporting requirements. • If we are deemed to be an investment company under the Investment Company Act of 194, we will not be able to be successfully execute our business strategy.
Risks Related to Operation as a Financial Holding Company • We operate in a highly regulated environment and are subject to extensive regulation and supervision as a financial holding company, and if we are found to be in violation of any of the federal, state or local laws or regulations applicable to us, our business could suffer. • Changes in laws or regulations governing our operations may adversely affect our business or cause us to alter our business strategy. • We are subject to extensive regulation and supervision as a financial holding company, which may adversely affect our business. • We may be adversely affected by increased governmental and regulatory scrutiny or negative publicity. • Failure to comply with applicable laws, regulations or commitments, or to satisfy our regulators’ supervisory expectations, could subject us to, among other things, supervisory or enforcement action, which could adversely affect our business, financial condition and results of operations. • Federal law may discourage certain acquisitions of our common stock which could have a material adverse effect on our shareholders. • If we are deemed to be an investment company under the Investment Company Act of 1940, we will not be able to successfully execute our business strategy.
Terrorist attacks, acts of war, global health emergencies or natural disasters may impact the businesses in which we invest and harm our business, operating results and financial condition.
Terrorist attacks, acts of war, global health emergencies or natural disasters may impact the businesses in which we invest and harm our business, operating results and financial condition. Terrorist attacks, acts of war, global health emergencies or natural disasters, may disrupt our operations, as well as the operations of the businesses in which we invest.
Our Board has the authority, without the action or vote of our shareholders but subject to applicable exchange listing rules , to issue all or part of the approximately 173,709,332 authorized but unissued shares of our common stock. Our business strategy relies in part upon the originations of loans using the resources available to us, including our common stock.
Our Board has the authority, without the action or vote of our shareholders but subject to applicable exchange listing rules, to issue all or part of the approximately 171,342,215 authorized but unissued shares of our common stock. Our business strategy relies in part upon the originations of loans using the resources available to us, including our common stock.
Additionally, we anticipate granting additional options or restricted stock awards to our employees and directors in the future pursuant to the 2023 Stock Incentive Plan, which has reserved a maximum of 3,000,000 shares of common stock for issuance to our employees and directors, and 2,420,966 shares of common stock remain available for issuance as of December 31, 2024.
Additionally, we anticipate granting additional options or restricted stock awards to our employees and directors in the future pursuant to the Company’s 2023 Stock Incentive Plan, which has reserved a maximum of 3,000,000 shares of common stock for issuance to our employees and directors, and 2,439,344 shares of common stock remain available for issuance as of December 31, 2025.
In addition, if we fail to comply with SBA Loan Program Requirements in connection with the origination and servicing of SBA 7(a) loans, the SBA could restrict, in whole or part, our ability to sell the guaranteed portions of the SBA 7(a) loans in the secondary market, which could negatively impact our future results of operations. 54 Table of Contents Curtailment of the government-guaranteed loan programs could adversely affect our results of operations.
In addition, if we fail to comply with SBA Loan Program Requirements in connection with the origination and servicing of SBA 7(a) loans, the SBA could restrict, in whole or part, our ability to sell the guaranteed portions of the SBA 7(a) loans in the secondary market, which could negatively impact our future results of operations.
Accordingly, the risks described above are heightened under current conditions. 62 Table of Contents We and our subsidiaries are subject to risks associated with “phishing” and other cyber-attack. Our business and the business of our subsidiaries relies upon secure information technology systems for data processing, storage and reporting.
Accordingly, the risks described above may be heightened under our remote working environment. 63 Table of Contents We and our subsidiaries are subject to risks associated with “phishing” and other cyber-attack. Our business and the business of our subsidiaries relies upon secure information technology systems for data processing, storage and reporting.
We could be adversely affected by weakness in the residential housing and CRE markets. Weakness in residential home and CRE values could impair our ability to collect on defaulted loans, as real estate is pledged in many of our loans as part of the collateral package.
Weakness in residential home and CRE values could impair our ability to collect on defaulted loans, as real estate is pledged in many of our loans as part of the collateral package.
Policies of extended periods of remote working, whether by us or by our service providers, could strain technology resources, introduce operational risks and otherwise heighten the risks described above. Remote working environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts.
Policies regarding remote working, whether by us or by our service providers, can introduce operational risks and otherwise heighten the risks described above. Remote working environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts.
Similarly, if any of these models contain programming or other errors, are ineffective or the data provided by borrowers or third parties is incorrect or stale, our loan pricing and approval process could be negatively affected, resulting in mispriced or misclassified loans or incorrect approvals or denials of loans.
Similarly, if any of these models contain programming or other errors that are outside of the representations and warranties of our scoring model provider, are ineffective or the data provided by borrowers or third parties is incorrect or stale, our approval process could be negatively affected, resulting in misclassified loans or incorrect approvals or denials of loans.
If we fail to comply with certain of the SBA’s regulations in connection with the origination, servicing, or liquidation of an SBA 7(a) loan, the SBA may be released from liability on its guaranty of a 7(a) loan, and may refuse to honor a guaranty purchase request in full (referred to by SBA as a “denial”) or in part (referred to by SBA as a “repair”), or recover all or part of the funds already paid in connection with a guaranty purchase.
In the event of default on an SBA loan, our pursuit of remedies against a borrower is subject to SBA approval. 55 Table of Contents If we fail to comply with certain of the SBA’s regulations in connection with the origination, servicing, or liquidation of an SBA 7(a) loan, the SBA may be released from liability on its guaranty of a 7(a) loan, and may refuse to honor a guaranty purchase request in full (referred to by SBA as a “denial”) or in part (referred to by SBA as a “repair”), or recover all or part of the funds already paid in connection with a guaranty purchase.
Our models are based on algorithms that evaluate a number of factors, including behavioral data, transactional data, bank data and employment information, which may not effectively predict future loan losses. If we are unable to effectively segment borrowers into relative risk profiles, we may be unable to offer attractive interest rates for borrowers and risk-adjusted returns for investors.
Our models are based on algorithms that evaluate a number of factors, including performance, transactional, bank and employment information, which may not effectively predict future loan losses. If we are unable to effectively segment borrowers into relative risk profiles, this may negatively affect our ability to offer appropriate risk-adjusted returns for our investors.
Although the SBA 7(a) Program has been in existence since 1953, there can be no assurance that the federal government will maintain the SBA 7(a) Program or the SBA 504 loan program, or that it will continue to guarantee loans at current levels.
Curtailment of the government-guaranteed loan programs could adversely affect our results of operations. Although the SBA 7(a) Program has been in existence since 1953, there can be no assurance that the federal government will maintain the SBA 7(a) Program or the SBA 504 loan program, or that it will continue to guarantee loans at current levels.
Controls and Procedures.” We can give no assurance that additional material weaknesses or significant deficiencies in our internal controls over financial reporting will not be identified in the future.
During 2023 and 2024, we identified and remediated material weaknesses in certain of our internal controls over financial reporting. We can give no assurance that additional material weaknesses or significant deficiencies in our internal controls over financial reporting will not be identified in the future.
RISKS RELATED TO THE ECONOMY Global economic, political, social and market conditions, including uncertainty about the financial stability of the United States could have a significant adverse effect on our business, operating results and financial condition The current worldwide financial markets situation, as well as various social, political, economic and other conditions and events (including political tensions in the United States and around the world, wars and other forms of conflict, terrorist acts, security operations and catastrophic events such as natural disasters, epidemics and pandemics) may create uncertainty and have significant impacts on issuers, industries, governments and other systems, including the financial markets, to which companies and their investments are exposed.
Compliance with the 1940 Act, as a registered investment company, would require us to significantly alter our business and could impair our ability to operate as financial holding company, with potential adverse impacts on our business, and, thus, our shareholders. 42 Table of Contents RISKS RELATED TO THE ECONOMY Global economic, political, social and market conditions, including uncertainty about the financial stability of the United States could have a significant adverse effect on our business, operating results and financial condition The current worldwide financial markets situation, as well as various social, political, economic and other conditions and events (including political tensions in the United States and around the world, wars and other forms of conflict, terrorist acts, security operations and catastrophic events such as natural disasters, epidemics and pandemics) may create uncertainty and have significant impacts on issuers, industries, governments and other systems, including the financial markets, to which companies and their investments are exposed.
As a result, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our common stock. • During 2023 and 2024, we identified and remediated material weaknesses in our internal controls over financial reporting which, if not remediated, could have adversely affected our ability to report our financial condition and results of operations in a timely and accurate manner, investor confidence in our Company and, as a result the value of our common stock. • Our business is subject to increasingly complex governance, public disclosure and accounting requirements that are costly and could adversely affect our business and financial results. • Our clients may be concentrated in a limited number of industries, which may subject us to a risk of significant loss if there is a downturn in a particular industry in which a number of our loans are concentrated. • If we and our subsidiaries are unable to protect our intellectual property rights, our business and prospects could be harmed. • The development and use of Artificial Intelligence (“AI”) present risks and challenges that may adversely impact our business.
As a result, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our common stock. • Our business is subject to increasingly complex governance, public disclosure and accounting requirements that are costly and could adversely affect our business and financial results. • Our clients may be concentrated in a limited number of industries, which may subject us to a risk of significant loss if there is a downturn in a particular industry in which a number of our loans are concentrated. • If we and our subsidiaries are unable to protect our intellectual property rights, our business and prospects could be harmed. • The development and use of Artificial Intelligence (“AI”) present risks and challenges that may adversely impact our business.
During this wind down process, NSBF is required to continue to own the SBA 7(a) loans and PPP Loans in its SBA loan portfolio to maturity, liquidation, charge-off, or (subject to SBA’s prior written approval), sale or transfer.
During this wind down process, NSBF is required to continue to own the SBA 7(a) loans in its SBA loan portfolio to maturity, liquidation, charge-off, or (subject to SBA’s prior written approval), sale or transfer. NSBF is required to continue to service and liquidate its SBA Loan Portfolio, pursuant to an SBA approved lender service provider agreement with SBL.
However, there is no guarantee that the credit decisioning, pricing, loss forecasting and scoring models that we use have accurately assessed the creditworthiness of our borrowers, or will be effective in assessing creditworthiness in the future.
However, there is no guarantee that the credit scoring models that we use have and will continue to accurately assist in the assessment of the creditworthiness of our borrowers, or will be effective in assessing creditworthiness in the future.
The SBA regulates an SBA lender’s, including Newtek Bank’s, participation in the secondary market for sales of the guaranteed portions of SBA 7(a) loans.
We have specific risks associated with our secondary market sales of the guaranteed portions of SBA loans. The SBA regulates an SBA lender’s, including Newtek Bank’s, participation in the secondary market for sales of the guaranteed portions of SBA 7(a) loans.
The government could again fail to fund the SBA which would affect Newtek Bank’s ability to originate government guaranteed loans and to sell the government guaranteed portions of those loans in the secondary market. Any failure to fund the SBA could adversely affect Newtek Bank’s SBA 7(a) loan originations and our results of operations.
The government could again fail to fund the SBA which would affect Newtek Bank’s ability to originate government guaranteed loans and to sell the government guaranteed portions of those loans in the secondary market.
Accordingly, if we fail to adequately assess the creditworthiness of our borrowers such that we experience higher than forecasted losses, the value of the loans held on our balance sheet may be adversely affected. We continually refine these algorithms based on new data and changing macroeconomic conditions.
Accordingly, if we fail to adequately assess the creditworthiness of our borrowers such that we experience higher than forecasted losses, the carrying value of the loans held on our balance sheet may be adversely affected.
Any such action could affect us in substantial and unpredictable ways and could have an adverse effect on our anticipated business operations. Our inability to comply with regulatory requirements in a particular jurisdiction could have a material adverse effect on our anticipated operations in that market and on our reputation generally.
Our inability to comply with regulatory requirements in a particular jurisdiction could have a material adverse effect on our anticipated operations in that market and on our reputation generally.
Further, there can be no assurance that Newtek Bank will be able to maintain its status as a PLP. Newtek Bank’s loss of PLP status would adversely impact our marketing efforts and ultimately loan origination volume which would negatively impact our results of operations. NSBF will remain subject to SBA regulation as it winds down its operations.
Newtek Bank’s loss of PLP status would adversely impact our marketing efforts and ultimately loan origination volume which would negatively impact our results of operations. 54 Table of Contents NSBF will remain subject to SBA regulation as it winds down its operations.
Weakness in real estate markets could result in higher net charge-offs, nonperforming assets, provision for credit losses, and losses on loans accounted for at fair value in addition to delayed and/or lower reinvestment of proceeds into earning assets or repayment of debt or other obligations. 55 Table of Contents RISKS RELATED TO PAYMENT PROCESSING We could be adversely affected if any bank sponsorship is terminated.
Weakness in real estate markets could result in higher net charge-offs, nonperforming assets, provision for credit losses, and losses on loans accounted for at fair value in addition to delayed and/or lower reinvestment of proceeds into earning assets or repayment of debt or other obligations.
More recently, the government shut down in January 2018 due to a lapse in appropriations, and the SBA closed all non-disaster related programs and activities, including the SBA 7(a) program.
More recently, the government shut down in January 2018 and for 43 days from October to November 2025 (the longest shutdown in U.S. history) due to a lapse in appropriations, and the SBA closed all non-disaster related programs and activities, including the SBA 7(a) program.
Any inability to maintain an adequate liquidity position could adversely affect our operations, our compliance with applicable regulations and the performance of our business. 49 Table of Contents Further, our ability to raise additional capital, should that be deemed beneficial and/or necessary, depends on conditions in the capital markets, economic conditions and a number of other factors, including investor perceptions regarding the financial services and banking industry, market conditions, governmental activities, and our financial condition and performance.
Further, our ability to raise additional capital, should that be deemed beneficial and/or necessary, depends on conditions in the capital markets, economic conditions and a number of other factors, including investor perceptions regarding the financial services and banking industry, market conditions, governmental activities, and our financial condition and performance.
Any transactions, combinations, acquisitions, dispositions or alliances may also require us to issue additional equity securities, spend our cash, or incur debt (and increased interest expense), liabilities and amortization expenses related to intangible assets or write-offs of goodwill, which could adversely affect our results of operations and dilute the economic and voting rights of our stockholders and the interests of holders of our indebtedness.
Additionally, it may take us longer than expected to fully realize the anticipated benefits and synergies of these transactions, and those benefits and synergies may ultimately be smaller than anticipated or may not be realized at all, which could adversely affect our business and operating results. 50 Table of Contents Any transactions, combinations, acquisitions, dispositions or alliances may also require us to issue additional equity securities, spend our cash, or incur debt (and increased interest expense), liabilities and amortization expenses related to intangible assets or write-offs of goodwill, which could adversely affect our results of operations and dilute the economic and voting rights of our stockholders and the interests of holders of our indebtedness.
Since we sell the guaranteed portion of substantially all of our SBA 7(a) loan portfolio, we retain credit risk on the non-guaranteed portion of the SBA loans. We share pro rata with the SBA in any recoveries. In the event of default on an SBA loan, our pursuit of remedies against a borrower is subject to SBA approval.
Since we sell the guaranteed portion of our SBA 7(a) loan portfolio, we retain credit risk on the non-guaranteed portion of the SBA loans. We share pro rata with the SBA in any recoveries.
Additionally, applicable laws and regulations may restrict what NewtekOne is able to do with the liquidity it does possess, which may adversely affect our business and results of operations.
Applicable laws and regulations, including capital and liquidity requirements could restrict our ability to transfer funds between Newtek Bank and NewtekOne, which could adversely affect our cash flow and financial condition. Additionally, applicable laws and regulations may restrict what NewtekOne is able to do with the liquidity it does possess, which may adversely affect our business and results of operations.
Our business model depends to a significant extent upon strong referral relationships, and our inability to maintain or further develop these relationships, as well as the failure of these relationships to generate investment opportunities, could adversely affect our business.
Failure to manage our future growth effectively could have a material adverse effect on our business, financial condition and results of operations. 48 Table of Contents Our business model depends to a significant extent upon strong referral relationships, and our inability to maintain or further develop these relationships, as well as the failure of these relationships to generate investment opportunities, could adversely affect our business.
Further, pursuant to the Operating Agreement we have made certain commitments to the OCC which requires Newtek Bank to hold capital incremental to the “well capitalized” thresholds under the applicable standards, which could also impact the Company’s ability to invest in and grow assets. From time to time, regulators may implement changes to these capital adequacy and liquidity requirements.
Further, Newtek Bank is required to remain “well capitalized” under the applicable standards, which could impact the Company’s ability to invest in and grow assets. From time to time, regulators may implement changes to these capital adequacy and liquidity requirements.
The severity and duration of conflicts and their impact on global economic and market conditions are impossible to predict. In 2024, numerous elections were held globally, including the recent U.S. presidential election.
The severity and duration of conflicts and their impact on global economic and market conditions are impossible to predict. In 2024, numerous elections were held globally, including the recent U.S. presidential election. The outcomes of the elections could result in changes in policy, which could have adverse effects on us or the business environment in which we operate more generally.
If we fail to comply with the relevant laws and regulations, we could suffer financial losses, a disruption of our businesses, liability to investors, regulatory intervention or reputational damage. We and our service providers continue to be impacted by the increase in remote work.
If we fail to comply with the relevant laws and regulations, we could suffer financial losses, a disruption of our businesses, liability to investors, regulatory intervention or reputational damage. We have adopted a remote working environment for a majority of our employees.
There can be no assurance that continued and more widespread inflation in the United States and/or other economies or the maintenance of higher interest rests in an effort to curb inflation will not become a serious problem in the future and have a material adverse impact on us. 45 Table of Contents In addition, concerns regarding the escalation in protectionist policies, including the imposition of punitive tariffs by the United States on foreign made goods, including those imported from China, Canada, Mexico, Russia and the EU among other countries, and the retaliatory tariffs imposed or threatened by China, Canada, Mexico, Russia and the EU on U.S. made products could have a significantly negative impact on global trade and on the economic growth and prosperity of the countries involved.
In addition, concerns regarding the escalation in protectionist policies, including the imposition of punitive tariffs by the United States on foreign made goods, including those imported from China, Canada, Mexico, Russia and the EU among other countries, and the retaliatory tariffs imposed or threatened by China, Canada, Mexico, Russia and the EU on U.S. made products could have a significantly negative impact on global trade and on the economic growth and prosperity of the countries involved.
Newtek Merchant Solutions (NMS) relies on bank sponsorships for payment processing. Because NMS is not a bank, it is unable to belong to and directly access the Visa ® and Mastercard ® bankcard associations. The Visa and Mastercard operating regulations require NMS to be sponsored by a bank in order to process bankcard transactions.
RISKS RELATED TO PAYMENT PROCESSING We could be adversely affected if any bank sponsorship is terminated. Newtek Merchant Solutions (NMS) relies on bank sponsorships for payment processing. Because NMS is not a bank, it is unable to belong to and directly access the Visa ® and Mastercard ® bankcard associations.
As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities.
As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities. Although we have insurance in place that covers such incidents, the cost of a breach or cyber-attack could well exceed any such insurance coverage.
The prolonged continuation or worsening of current economic and capital market conditions could have a material adverse effect on our ability to secure financing on favorable terms, if at all. 46 Table of Contents RISKS RELATED TO OUR BUSINESS AND STRUCTURE We are dependent upon our Senior Lending Team and our executive officers for our future success, and if we are unable to hire and retain qualified personnel or if we lose any member of our Senior Lending Team or our executive officers our business could be significantly harmed.
RISKS RELATED TO OUR BUSINESS AND STRUCTURE We are dependent upon our Senior Lending Team and our executive officers for our future success, and if we are unable to hire and retain qualified personnel or if we lose any member of our Senior Lending Team or our executive officers our business could be significantly harmed.
Our ability to attract clients to, and build trust in, Newtek Bank is significantly dependent on our ability to effectively evaluate a borrower’s credit profile and likelihood of default. To conduct this evaluation, we utilize credit decisioning, pricing, loss forecasting and scoring models that assign each loan offered through our marketplace bank a grade and a corresponding interest rate.
Our ability to attract clients and referral partners to, and build trust in, Newtek Bank is significantly dependent on our ability to effectively evaluate a borrower’s credit profile and likelihood of default. One of the tools we use to conduct this evaluation, is a credit scoring model that assigns each loan we originate a score.
Risks Related to Cybersecurity • We could be adversely affected by information security breaches or cyber security attacks. • The failure in cyber-security systems, as well as the occurrence of events unanticipated in our disaster recovery systems and management continuity planning could impair our ability to conduct business effectively. • We and our subsidiaries are subject to risks associated with “phishing” and other cyber-attack.
The failure in cyber-security systems, as well as the occurrence of events unanticipated in our disaster recovery systems and management continuity planning could impair our ability to conduct business effectively.
These provisions, as well as other provisions of our charter and bylaws, may delay, defer or prevent a transaction or a change in control that might otherwise be in the best interests of our shareholders. RISKS RELATED TO OUR OUTSTANDING INDEBTEDNESS We are subject to 150% asset coverage requirements due to covenants contained in certain of our outstanding debt.
These provisions, as well as other provisions of our charter and bylaws, may delay, defer or prevent a transaction or a change in control that might otherwise be in the best interests of our shareholders. 61 Table of Contents RISKS RELATED TO CYBERSECURITY We and our third party IT servicer could be adversely affected by information security breaches or cyber security attacks.
Refer to “Subsequent Events - Sale of NTS.” We currently anticipate retaining the Preferred Stock and our investment in the Preferred Stock will be reflected on our balance sheet and valued on a quarterly basis in accordance with ASC 321, beginning in the first quarter of 2025.
We retain the Preferred Stock and our investment in the Preferred Stock is reflected on our balance sheet and valued on a quarterly basis in accordance with ASC 321.
Newtek Bank is subject to various legal, regulatory and other restrictions on its ability to make distributions and payments to the Company.
Newtek Bank is subject to various legal, regulatory and other restrictions on its ability to make distributions and payments to the Company. Any inability to maintain an adequate liquidity position could adversely affect our operations, our compliance with applicable regulations and the performance of our business.
In the event IPM fails to earn such levels, our earnings and capital could be negatively impacted. 50 Table of Contents Our business may be adversely affected if our risk management framework does not effectively identify, assess and mitigate risk.
An inability to effectively implement AI may negatively impact our business, financial condition and results of operations. 51 Table of Contents Our business may be adversely affected if our risk management framework does not effectively identify, assess and mitigate risk.
Additionally, while we are IPM’s largest customer, there can be no assurances that IPM will earn the levels of Adjusted EBITDA.
Additionally, while we are IPM’s largest customer, there can be no assurances that IPM will earn the levels of Adjusted EBITDA. In the event IPM fails to earn such levels, our earnings and capital could be negatively impacted. Our development and use of AI presents risks that could adversely impact our business, financial condition and results of operations.
These provisions could delay or prevent a third party from acquiring us, despite the possible benefit to our shareholders, or otherwise adversely affect the market price of our common stock. The 2023 withdrawal of the Company’s election to be regulated as a BDC resulted in a significant change in our accounting and financial reporting requirements.
These provisions could delay or prevent a third party from acquiring us, despite the possible benefit to our shareholders, or otherwise adversely affect the market price of our common stock. If we are deemed to be an investment company under the Investment Company Act of 1940, we will not be able to successfully execute our business strategy.
Any post-purchase denials and repairs demands on NSBF could negatively impact our results of operations.
Any post-purchase denials and repairs demands on NSBF could negatively impact our results of operations. In addition, the Company has agreed to guarantee NSBF’s obligations to the SBA and has established a reserve account of $10.0 million to secure NSBF’s potential obligations to the SBA.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Integration into Overall Risk Management System: Our cybersecurity risk management processes are fully integrated into our overall risk management system and corporate governance framework. This integration ensures that cybersecurity considerations are embedded within our strategic decision-making processes and are aligned with our broader business objectives.
Integration into Overall Risk Management System: Our cybersecurity risk management processes are fully integrated into our overall risk management program and corporate governance framework. This integration ensures that cybersecurity considerations are embedded within our strategic decision-making processes and are aligned with our broader business objectives.
The Technology Steering Committee reviews these reports and discusses them with management. The Technology Steering Committee reports to the full Board on key aspects of management’s presentations on cybersecurity and broader technology risks.
The Technology Steering Committee reviews these reports and discusses them with management. The Technology Steering Committee reports to the full Board on key aspects of management’s presentations regarding cybersecurity and broader technology risks.
Our Enterprise Third Party Risk Management (TPRM) Policy establishes requirements and practices used to oversee and manage the activities of third parties with whom we have a relationship, under which we identify, measure, monitor, and manage third-party risk (including information cybersecurity risks) in alignment with our strategic objectives and in compliance with applicable law.
Our Enterprise Third Party Risk Management (“TPRM”) Policy establishes requirements and practices used to oversee and manage the activities of third parties with whom we have a relationship, under which we identify, measure, monitor, and manage third-party risk (including information cybersecurity risks) in alignment with our strategic objectives and in compliance with applicable law.
Any identified threats, vulnerabilities, or cybersecurity incidents are addressed as appropriate through our CTO, CISO and IPM. Governance Our Board oversees material risks facing the Company. For some categories of risk, the Board has empowered committees to provide more focused oversight.
Any identified threats, vulnerabilities, weaknesses, or cybersecurity incidents are addressed as appropriate through our CTO/CISO and IPM, as needed. Governance Our Board oversees material risks facing the Company. For some categories of risk, the Board has empowered committees to provide more focused oversight.
All members of the Board have access to written cybersecurity reports that are provided to the Technology Steering Committee. 66 Table of Contents While our Board and Technology Steering Committee oversee cybersecurity and technology risk, our senior leadership is responsible for identifying, assessing, and managing our exposure to risks from cybersecurity threats.
All members of the Board have access to written cybersecurity reports that are provided to the Technology Steering Committee. 67 Table of Contents While our Board and Technology Steering Committee oversee cybersecurity and technology risk, our senior leadership is responsible for identifying, assessing, and managing our exposure to risks from cybersecurity threats.
By integrating cybersecurity into our overall risk management system, we promote a comprehensive approach to risk mitigation and resilience-building across the organization. 65 Table of Contents Engagement of Assessors, Consultants, and Auditors: 1.
By integrating cybersecurity into our overall risk management system, we promote a comprehensive approach to risk mitigation and resilience-building across the organization. 66 Table of Contents Engagement of Assessors, Consultants, and Auditors: 1.
In addition, we engage assessors, consultants, auditors, and other third-party experts with specialized knowledge in cybersecurity. These external stakeholders conduct independent assessments, penetration testing, vulnerability scans, and audits to evaluate the effectiveness of our cybersecurity controls and identify areas for improvement. 3.
In addition, we engage assessors, consultants, auditors, and other third-party experts with specialized knowledge in cybersecurity to conduct independent assessments, penetration testing, vulnerability scans, and audits to evaluate the effectiveness of our cybersecurity controls and identify areas for improvement. 3.
Our CISO coordinates with the CTO, who coordinates with the Company’s and our subsidiaries’ executive officers relating to potentially material cybersecurity incidents and regularly discusses with the Technology Steering Committee the effectiveness of the Company’s technology security, capabilities for disaster recovery, data protection, cyber threat detection and cyber incident response and management of technology-related compliance risks.
Our CTO/CISO coordinates with our and our subsidiaries’ executive officers relating to potentially material cybersecurity incidents and regularly discusses with the Technology Steering Committee the effectiveness of the Company’s technological security capabilities associated with disaster recovery, data protection, cyber threat detection and response and, management and mitigation of technology-related compliance risks.
The CISO is chiefly responsible for developing, maintaining, and enforcing cybersecurity and cyber risk-related policies; ensuring the Company and its subsidiaries satisfy requirements of relevant regulations, industry standards, and third-party risk assessment requirements; keeping abreast of developing security threats, and helping both the Board and the Technology Steering Committee understand potential security problems that might arise from the changing threat landscape; and overseeing and implementing regular security awareness training of all employees on cybersecurity, and supporting effective communication with users to limit security vulnerabilities.
Our CTO/CISO is chiefly responsible for developing, maintaining, and enforcing cybersecurity and cyber risk-related policies and standards; ensuring the Company and its subsidiaries satisfy requirements of relevant regulations, industry, and third-party risk assessment requirements; keeping abreast of developing security threats, and helping both the Board and the Technology Steering Committee understand potential security concerns that could arise from the changing threat landscape; overseeing and implementing regular security awareness training of all employees on cybersecurity; and supporting effective communication with users to minimize potential security issues.
Accountability of our cybersecurity program is housed within IPM, with oversight by our CTO. Reporting to our CTO is the CISO, the individual who provides day-to-day oversight of our cybersecurity program. Our CISO is responsible for assessing and managing material risks from cybersecurity threats, including monitoring the prevention, detection, mitigation and remediation of cybersecurity threats.
Accountability of our cybersecurity program is housed within IPM, with oversight by our CTO/CISO. Our CTO/CISO is responsible for assessing and managing material risks from cybersecurity threats, including oversight and monitoring of the prevention, detection, mitigation and remediation of cybersecurity threats.
In the case of cybersecurity and technology risk, in 2024 the Board formed the Technology Steering Committee which has that responsibility. The Technology Steering Committee is informed of risks from cybersecurity threats through regular reports from the Company’s management, including our CTO. Our CTO and the CISO, who is employed by IPM, oversee our cybersecurity risk management program.
In the case of cybersecurity and technology risk, in 2024 the Board formed the Technology Steering Committee which has that responsibility. The Technology Steering Committee is informed of risks from cybersecurity threats through regular reports from the Company’s management, including our CTO/CISO, who is responsible for overseeing our cybersecurity risk management program.
The CISO regularly reports to our CTO who reports to the Technology Steering Committee on a quarterly and more frequently as needed, on the state of our cybersecurity risk management program and provides updates on cybersecurity matters. The Technology Steering Committee also receives regular reports on how management identifies, assesses, and manages cybersecurity and broader technology risks.
Our CTO/CISO reports to the Technology Steering Committee on a quarterly basis or more frequently as needed, on the state of our cybersecurity risk management program through updates in connection with cybersecurity matters. The Technology Steering Committee also receives regular reports on how management identifies, assesses, and manages cybersecurity and broader technology risks.
This proactive approach enables us to anticipate potential risks and take preemptive measures to mitigate them. 3. Risk Prioritization: Following the assessment phase, we prioritize identified risks based on their potential impact on our operations, data integrity, confidentiality, and reputation. This risk-based approach allows us to allocate resources effectively and focus on addressing the most significant threats first. 4.
This proactive approach enables us to anticipate potential risks and take preemptive measures for timely mitigation. 3. Risk Prioritization: Following the assessment phase, we prioritize identified risks based on their potential impact on our operations, data integrity, confidentiality, and reputation. This risk-based approach allows us to allocate resources effectively and prioritize remediation efforts. 4.
As of the January 2, 2025, close of our divestiture of NTS to IPM, we and IPM entered into a Master Services Agreement pursuant to which IPM provides us with the same services NTS provided to the Company prior to the divestiture. Our CTO is responsible for overseeing IPM’s provision of the managed technology services, including cybersecurity, to NewtekOne.
As of the January 2, 2025 close of our divestiture of Newtek Technology Services (“NTS”) to IPM, we and IPM entered into a Master Services Agreement pursuant to which IPM provides us with the same services NTS provided to the Company prior to the divestiture.
Comprehensive Risk Assessments: We conduct regular and comprehensive assessments to identify potential cybersecurity risks to our organization. These assessments encompass internal systems, networks, applications, and data repositories, as well as external threats and vulnerabilities within the broader digital ecosystem. 2. Threat Intelligence Monitoring: We continuously monitor threat intelligence sources to stay abreast of emerging cyber threats and trends.
These assessments encompass identification of internal and external threats and vulnerabilities facing our internal systems and applications, networks, and data repositories within our digital ecosystem. 2. Threat Intelligence Monitoring: We continuously monitor threat intelligence sources to stay abreast of emerging cyber threats and trends.
Mitigation Strategies: We develop and implement robust mitigation strategies tailored to address specific cybersecurity risks. These strategies may include the deployment of technical controls, such as firewalls, intrusion detection systems, and encryption protocols, as well as the implementation of policies, procedures, and employee training programs to promote cybersecurity awareness and adherence to best practices.
These strategies may include the deployment of new or enhancement of existing technical controls, such as firewalls, intrusion detection systems, and encryption protocols, as well as the implementation of policies, procedures, and employee training programs to promote cybersecurity awareness and adherence to internal and industry best practices.
Our CISO oversees a team that regularly communicates with respect to the prevention, detection, mitigation and remediation of cybersecurity threats and incidents. The CISO’s team consists of individuals that have knowledge, skills and expertise to respond to a cybersecurity incident.
Our CTO/CISO oversees the IPM team that is responsible for the prevention, detection, mitigation and remediation of cybersecurity threats and incidents. The IPM team consists of individuals that have the requisite knowledge, skills and expertise necessary to appropriately respond to a cybersecurity incident.
Continuous Improvement: The insights and recommendations provided by external assessors and consultants inform our ongoing efforts to strengthen our cybersecurity defenses. We prioritize the implementation of their recommendations, ensuring that our cybersecurity measures remain robust and adaptive to evolving threats. Oversight of Third-Party Service Providers: Our management is actively engaged in overseeing our third-party service providers.
Continuous Improvement: The insights and recommendations provided by external assessors, consultants, and auditors inform our ongoing efforts to strengthen our cybersecurity defenses and continually mature the Program. We prioritize the implementation of their recommendations, to ensure our cybersecurity measures remain robust and adaptive to evolving threats.
Internal Expertise: Our CTO is responsible for overseeing the Company’s IT infrastructure and cybersecurity and reports to our executive management team and the Technology Steering Committee of our Board. 2. External Expertise: We recognize the value of external expertise in assessing and enhancing our cybersecurity posture.
Internal Expertise: Our CTO/CISO is responsible for overseeing the Company’s IT infrastructure and cybersecurity program and reports to our executive management team and the Technology Steering Committee of our Board. Our CTO/CISO has over 25 years of experience in enterprise technology solutions, with expertise in managed services, private cloud, service operations, and security.
We and NTS, and NTS’s successor, IPM, which manages our IT infrastructure and cybersecurity under the direction of our CTO, have developed an enterprise-wide cybersecurity risk management system and strategy to safeguard our assets and operations, including the protection of the confidentiality of nonpublic, sensitive personal and business information and the integrity and security of our information systems, as follows: Assessment, Identification, and Management of Material Risks: 1.
This Program is designed to safeguard our assets and operations, protect the confidentiality of nonpublic, sensitive personal and business information, and ensure the integrity, security, and availability of our information and information systems, as follows: Assessment, Identification, and Management of Material Risks: 1. Comprehensive Risk Assessments: We conduct regular and comprehensive assessments to identify potential cybersecurity risks to our organization.
Our CTO has over 25 years of experience in enterprise technology solutions, with expertise in managed services, private cloud, service operations, and security. He is committed to driving reliability of services while prioritizing robust security measures.
He is committed to driving reliability of services while prioritizing robust security measures. 2. External Expertise: We recognize the value of external expertise in assessing and enhancing our cybersecurity posture.
Removed
Historically, the Company’s subsidiary NTS and its team of professionals, including NTS’ Chief Information Security Officer (“CISO”), who currently serves as our CISO, and CTO, and their team of professionals, have managed the Company’s IT infrastructure, including our dedicated server hosting, managed cybersecurity, backup and disaster recovery, and other related services.
Added
IPM, a third-party provider, manages our IT infrastructure and cybersecurity program under the oversight of our Chief Technology and Chief Information Security Officer (“CTO/CISO”), and collaborates with us to develop and implement our enterprise-wide cybersecurity risk management program (“Program”).
Removed
Our CISO is a Certified Information System Security Professional (CISSP) with decades of experience with technology in security, architecture, infrastructure and support in the financial, education, healthcare and verticals. He is a results driven leader who has managed multimillion dollar projects and solutions to successful completion.
Added
Mitigation Strategies: We develop and implement robust mitigation strategies tailored to address identified cybersecurity risks.
Added
Our CTO/CISO is responsible for overseeing IPM’s provisioning of the managed technology and security services, including cybersecurity, to us and all of our subsidiaries.
Added
Oversight of Third-Party Service Providers: Our management is actively engaged in overseeing our third-party service providers.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed1 unchanged
Below is a list of our leased offices and space as of December 31, 2024, which are material to the conduct of our business: Location Lease expiration Purpose Approximate square feet 4800 T Rex Avenue Boca Raton, FL 33431 April 2026 Corporate headquarters, lending operations and subsidiaries’ offices 7,800 1981 Marcus Avenue Lake Success, NY 11042 April 2027 Newtek Bank, lending operations, corporate operations, NY Capco offices and subsidiaries’ offices 44,800 1985 Marcus Avenue Lake Success, NY 11042 April 2027 Newtek Bank and lending operations 7,300 200 and 250 South Orange Avenue, Orlando, FL 32801 February 2030 Lending operations 5,800 1111 Brickell Avenue, Suite 135 Miami, Florida 33131 February 2027 Main office Newtek Bank 1,800 Wilmington, NC October 2027 Newtek Bank operations 3,000
Below is a list of our leased offices and space as of December 31, 2025, which are material to the conduct of our business: Location Lease expiration Purpose Approximate square feet 4800 T Rex Avenue Boca Raton, FL 33431 June 2029 Corporate headquarters, lending operations and subsidiaries’ offices 7,800 200 and 250 South Orange Avenue, Orlando, FL 32801 February 2030 Lending operations 5,800 1111 Brickell Avenue, Suite 135 Miami, FL 33131 February 2027 Main office of Newtek Bank 1,800 1410 Commonwealth Dr, Ste 201 A Wilmington, NC 28403 October 2027 Newtek Bank operations 3,000

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+12 added−572 removed0 unchanged
Stock Repurchase Program 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.
Issuer Purchases of Equity Securities 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 following twelve months.
NOTE 16—SHAREHOLDERS EQUITY: Preferred Stock On February 3, 2023, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with Patriot Financial Partners IV, L.P., and Patriot Financial Partners Parallel IV, L.P.
Holders As of March 9, 2026, there were approximately 84 holders of record of our common stock. Sales of Unregistered Securities On September 16, 2025, the Company, entered into a Securities Purchase and Exchange Agreement (the “Purchase and Exchange Agreement”) with Patriot Financial Partners IV, L.P. and Patriot Financial Partners Parallel IV, L.P. (together, “Patriot”).
The offering was consummated pursuant to the terms of a purchase agreement dated November 27, 2020 among the Company and an accredited investor. The purchase agreement provided for the 2025 6.85% Notes to be issued to the Purchaser in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).
The Exchange was undertaken as a private placement transaction in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Company relied upon this exemption from registration based in part on representations made by Patriot in the Purchase and Exchange Agreement.
(collectively, “Patriot”) in respect of 20 thousand shares of the Company’s Series A Convertible Preferred Stock, par value $0.02 per share (the “Series A Preferred Stock”), in a private placement transaction. The aggregate purchase price was $20.0 million.
Pursuant to the Purchase and Exchange Agreement, Patriot and the Company agreed that in exchange (the “Exchange”) for (i) all of the 20,000 outstanding shares of the Company’s Series A Convertible Preferred Stock, par value $0.02 per share (the “Series A Preferred Stock”) originally issued to Patriot for an aggregate purchase price of $20 million (the “Original Transaction”) and (ii) $10 million in cash, the Company issued to Patriot 2,307,692 shares (the “Shares”) of the Company’s common stock, par value $0.02 per share (“Common Stock”).
Removed
Item 5.02 to Newtek’s Current Report on Form 8-K (File No. 001-36742), filed J anuary 3, 2025) . 14.1 Code of Ethics (Previously filed in connection with Pre-Effective Amendment No. 3 to the Registrant’s Registration Statement on Form N-2 (File No. 333-191499) filed on November 3, 2014, and incorporated by reference herein). 19.1 NewtekOne, Inc.
Added
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our common stock is traded on the Nasdaq Global Market under the symbol “NEWT.” The last reported price for our common stock on March 9, 2026 was $12.11 per share.
Removed
Statement of Policy on Insider Trading 21.1 Subsidiaries of the Registrant filed herewith. 23.1 Consent of Independent Registered Public Accounting Firm. 31.1 Certification by Principal Executive Officer required by Rule 13a-14 under the Securities Exchange Act of 1934, as amended, furnished herewith. 31.2 Certification by Principal Financial Officer required by Rule 13a-14 under the Securities Exchange Act of 1934, as amended, furnished herewith. 31.3 Certification by Principal Accounting Officer required by Rule 13a-14 under the Securities Exchange Act of 1934, as amended, furnished herewith. 32.1 Certification by Principal Executive Officer pursuant to 18 U.S.C.
Added
The Shares have not been registered under the Securities Act and may not be offered or sold absent registration or an applicable exemption from registration.
Removed
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herewith. 32.2 Certification by Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herewith. 32.3 Certification by Principal Accounting Officer pursuant to 18 U.S.C.
Added
Pursuant to the Purchase and Exchange Agreement, Patriot is subject to restrictions on transferring the Shares for two years following the date of the Purchase and Exchange Agreement without the Company’s consent, subject to certain customary exceptions. The Purchase and Exchange Agreement also contains customary representations, warranties and covenants.
Removed
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herewith. 97.1 NewtekOne Clawback Polic y (incorporated by reference to Exhibit 97.1 to Newtek’s Annual Report on Form 10-K for the year ended December 31, 2023 (File No. 001-36742), filed April 1, 2024). 104 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Added
The Exchange closed concurrently with execution of the Purchase and Exchange Agreement.
Removed
NEWTEKONE, INC. Date: March 17, 2025 By: / S / B ARRY S LOANE Barry Sloane Chief Executive Officer, President and Chairman of the Board (Principal Executive Officer) Date: March 17, 2025 By: / S / M. S COTT P RICE M.
Added
The Purchase and Exchange Agreement also made certain non-substantive amendments to the Investor Rights Agreement, dated as of February 3, 2023, entered into by and between the Company and Patriot (the “Investor Rights Agreement”) and the Registration Rights Agreement, dated as of February 3, 2023, entered into by and between the Company and Patriot (the “Registration Rights Agreement”) in order to reflect the occurrence of the Exchange.
Removed
Scott Price Chief Financial Officer (Principal Financial Officer) Date: March 17, 2025 By: / S / F RANK D E M ARIA Frank DeMaria Chief Accounting Officer (Principal Accounting Officer) In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Added
The Investor Rights Agreement and the Registration Rights Agreement are described in greater detail in Company’s Current Report on Form 8-K filed on February 7, 2023 (the “February 7 8-K”) and exhibits 4.1 and 4.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023.
Removed
Signature Title Date / S / B ARRY S LOANE Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) March 17, 2025 Barry Sloane / S / M. S COTT P RICE Chief Financial Officer (Principal Financial Officer) March 17, 2025 M.
Added
The Exchange had no effect on Patriot’s outstanding warrants to purchase, in the aggregate, 47,540 shares of Common Stock which are also described in greater detail in the February 7 8-K.
Removed
Scott Price / S / F RANK D E M ARIA Chief Accounting Officer (Principal Accounting Officer) March 17, 2025 Frank DeMaria /S/ RICHARD SALUTE Director March 17, 2025 Richard Salute /S/ SALVATORE MULIA Director March 17, 2025 Salvatore Mulia /S/ GREGORY ZINK Director March 17, 2025 Gregory Zink /S/ CRAIG BRUNET Director March 17, 2025 Craig Brunet /S/ PETER DOWNS Director March 17, 2025 Peter Downs /S/ FERNANDO PEREZ-HICKMAN Director March 17, 2025 Fernando Perez-Hickman /S/ HALLI RAZON-FEINGOLD Director March 17, 2025 Halli Razon-Feingold 105 Table of Contents NEWTEKONE, INC.
Added
On November 7, 2025, the Company’s Board of Directors approved a twelve month extension of the stock repurchase program. 69 Table of Contents Period (a) Total Number of Shares Purchased (b) Average Price Paid per Share (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs January 1, 2025 - January 31, 2025 — $ — — 970 February 1, 2025 - February 28, 2025 — — — 970 March 1, 2025 - March 31, 2025 — — — 970 April 1, 2025 - April 30, 2025 — — — 970 May 1, 2025 - May 31, 2025 — — — 970 June 1, 2025 - June 30, 2025 16 10.42 16 954 July 1, 2025 - July 31, 2025 — — — 954 August 1, 2025 - August 31, 2025 — — — 954 September 1, 2025 - September 30, 2025 — — — 954 October 1, 2025 - October 31, 2025 — — — 954 November 1, 2025 - November 30, 2025 101 10.18 101 853 December 1, 2025 - December 31, 2025 26 11.40 26 827 Total 143 $ 10.43 Dividends The Company declared common dividends of $0.19 per share for the first, second, third and fourth quarters of 2025 and 2024.
Removed
AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents PAGE NO.
Added
The Company’s ability to continue to pay common stock dividends is subject to, among other things, Board approval and limitations on capital distributions in the event of a breach of any regulatory capital buffers, with the degree of such restrictions based on the extent to which the buffers are breached.
Removed
Report of Independent Registered Public Accounting Firm (PCAOB ID : 49) F- 2 Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting F- 101 Consolidated Statements of Financial Condition as of December 31, 202 4 and 202 3 F- 5 Consolidated Statements of Income for the years ended December 31, 202 4 , 202 3 and 202 2 F- 6 Consolidated Statements of Comprehensive Income for the years ended December 31, 2 02 4 , 202 3 and 202 2 F- 7 Consolidated Statements of Changes in Changes in Shareholders’ Equity for the years ended December 31, 202 4 , 202 3 and 202 2 F- 8 Consolidated Statements of Cash Flows for the years ended December 31, 202 4 , 202 3 and 202 2 F- 11 Notes to Consolidated Financial Statements F- 14 F-1 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of NewtekOne Inc.
Added
We can offer no assurance that we will achieve results that will permit the payment of any cash distributions. See “Item 1. Business.” Securities Authorized for Issuance Under Equity Compensation Plans The Company has a stock-based compensation plan as discussed in NOTE 20—BENEFIT PLANS.
Removed
Opinion on the Financial Statements We have audited the accompanying consolidated statements of financial condition of NewtekOne Inc. and its subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes to the consolidated financial statements (collectively, the financial statements).
Added
Securities authorized for issuance under equity compensation plans as of December 31, 2025: Plan Category (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights (b) Weighted-average exercise price of outstanding options, warrants and rights (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Equity compensation plans approved by security holders None None 1,783,940 shares Equity compensation plans not approved by security holders None None None 70 Table of Contents Stock Performance Graph The following graph compares the return on our common stock with that of the Standard & Poor’s 500 Stock Index, the NASDAQ Composite Index, the Russell 2000, and S&P Small Cap 600 for the period from December 31, 2020 through December 31, 2025.
Removed
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Added
The graph assumes that, on January 1, 2021, a person invested $100 in each of our common stock, the Nasdaq Composite, S&P 500 Index, Russell 2000 and S&P Small Cap 600. The graph measures total shareholder return, which takes into account both changes in stock price and dividends. It assumes that dividends paid are invested in like securities. Source: Bloomberg
Removed
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 17, 2025, expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.
Removed
Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
Removed
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB.
Removed
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Removed
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Removed
Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.
Removed
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Removed
Valuation of loans held for sale and loans held for investment, measured at fair value — Accrual and Non-accrual loans As described in Notes 2, 5, and 10 to the consolidated financial statements, the Company has loans held for sale and loans held for investment, which are measured at fair value using unobservable inputs and assumptions, and as such the Company’s loans held for sale and loans held for investment, which are measured at fair value as of December 31, 2024 are classified as level 3 within the fair value hierarchy as described in Note 10.
Removed
Determining the fair value of the Level 3 loans held for sale and loans held for investment, 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.
Removed
As of December 31, 2024, total Level 3 loans held for sale and loans held for investment, which are measured at fair value had a fair value of $372.3 and $369.7 million, respectively.
Removed
We identified the valuation of level 3 loans held for sale and loans held for investment, which are measured at fair value as a critical audit matter because of the judgments necessary for management to select and apply valuation techniques and assumptions, the high degree of auditor judgment involved, and the extensive audit effort involved in testing the valuations.
Removed
Our audit procedures related to the valuation of the Company’s level 3 loans held for sale and loans held for investment, which are measured at fair value included the following, among others: • We obtained an understanding of and evaluated the methods and assumptions management uses to value the loans held for sale and loans held for investment, which are measured at fair value - accrual and non-accrual loans. • We tested the completeness and accuracy of information used in the valuations by agreeing the total amount of schedules to the trial balance.
Removed
F-2 Table of Contents • With the assistance of our valuation specialists, we evaluated the reasonableness of the methods and assumptions used by management in the valuation of accrual loans (discount rate, default rate, prepayment rate, cost of servicing, etc.) and performed a recalculation for a sample of loans to ensure validity of the valuation model. • With the assistance of our valuation specialists, we evaluated the reasonableness of the methods and assumptions used by management in the valuation of non-accrual loans (prepayment rate, probability of default, time to liquidate and discount rate). • We tested management’s estimates to evaluate the reasonableness of the fair market value of collateral used by management in the valuation of non-accrual loans for a sample of loans, by validating the source of information used by management with the relevant internal or external information from which it was derived.
Removed
Additionally, we recalculated the present value of expected cashflows and compared it with the value of loans determined by management.
Removed
Valuation of servicing assets, at fair value As described in Notes 2, 7 and 10 to the consolidated financial statements, servicing assets for loans originated by the Company’s nonbank subsidiaries are measured at fair value at each reporting date and the Company reports changes in the fair value of servicing assets in earnings in the period in which the changes occur.
Removed
The Company’s servicing assets, at fair value are measured at fair value using unobservable inputs and assumptions. As such the Company’s servicing assets for the nonbank subsidiaries as of December 31, 2024, is classified as Level 3 within the fair value hierarchy as described in Note 10.
Removed
Determining the fair value of the Level 3 servicing assets, 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, discount rate, servicing costs, default rate, prepayment rate, and the impact of economic conditions.
Removed
As of December 31, 2024, total Level 3 servicing assets recorded at fair value had a balance of $22.1 million.
Removed
We identified the valuation of servicing assets, at fair value as a critical audit matter because of the judgments necessary for management to select and apply valuation techniques and assumptions, the high degree of auditor judgment involved, and the extensive audit effort involved in testing the valuations.
Removed
Our audit procedures related to the valuation of the servicing assets included the following, among others: • We obtained an understanding of and evaluated the methods and assumptions management uses to value the servicing assets, at fair value. • We tested the completeness and accuracy of information used in the valuations by agreeing the total principal balance, interest rate, interest type, and maturity date of the loans sold in the schedules to the loan subledger. • With the assistance of valuation specialists, developed an independent estimate of fair value for servicing assets or tested management’s fair value estimates as of December 31, 2024. • We reviewed the significant assumptions (e.g. discount rate, prepayment rate, default rate and servicing cost) used by externally engaged and internal valuation specialist for reasonableness.
Removed
Allowance for credit losses on loans As described in Notes 2 and 5 to the consolidated financial statements, the allowance for credit losses on loans is established through a provision for credit losses and represents an amount which, in management’s judgment, will be adequate to absorb losses on existing loans.
Removed
The Company’s consolidated allowance for credit losses on loan balances was $30.2 million at December 31, 2024. The allowance for credit losses on loans is comprised of reserves measured on a collective (pool) basis based on a lifetime loss-rate model when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated on an individual basis.
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F-3 Table of Contents The Company uses the discounted cash flow method to estimate expected credit losses for all loan portfolio segments measured on a pool basis wherein payment expectations are adjusted for estimated prepayment speeds, probability of default (PD), and loss given default (LGD).
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The Company uses regression analysis of historical internal and peer data to determine suitable loss drivers to utilize when modeling lifetime PD. This analysis also determines how expected PD and LGD will react to forecasted levels of the loss drivers.
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Management utilizes various economic indicators such as changes in unemployment rates, gross domestic product (GDP), and other relevant factors as loss drivers and has determined that, due to historical volatility in economic data, four quarters currently represents a reasonable and supportable forecast period, followed by a four-period reversion to historical mean levels for each of the various economic indicators.
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The allowance evaluation also considers various qualitative factors, such as: (i) changes to lending policies, underwriting standards and/or management personnel performing such functions, (ii) delinquency and other credit quality trends, (iii) credit risk concentrations, if any, (iv) changes to the nature of the Company’s business impacting the loan portfolio, (v) and other external factors, that may include, but are not limited to, results of internal loan reviews, stress testing, examinations by bank regulatory agencies, or other events such as a natural disaster.
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The development of the loan loss allocation for pools of loans with similar risk characteristics requires a significant amount of judgment by management and the assumptions utilized are subject to changing economic conditions.
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We identified the Company’s allowance for credit losses on loans as a critical audit matter, specifically the economic forecasts and qualitative factors, because they involved complex auditor judgment in the evaluation of the Company’s assumptions. Additionally, complex auditor judgment was required to examine the methodology that underpins the allowance for credit losses on pools of loans with similar risk characteristics.
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This includes modeling of PD, LGD, economic forecasts, and qualitative factors.
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Our audit procedures related to this critical audit matter included the following, among others: • We tested the completeness and accuracy of data used by management in determining inputs to the PD and LGD by agreeing those inputs to internal or external information sources. • We evaluated management’s judgments used in the identification of peer banks for PD and LGD calculations by comparing peer banks to external information sources. • We evaluated management’s forecasts of future economic indicators for reasonableness, which included unemployment, housing price index, and national GDP growth, among others, by comparing these forecasts to external and internal information sources. • We evaluated management’s judgments and assumptions used in the development of the qualitative factors for reasonableness and tested the reliability of the underlying data on which these factors are based, by comparing information to source documents and external information sources. /s/ RSM US LLP We have served as the Company's auditor since 2013.
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Hartford, Connecticut March 17, 2025 F-4 Table of Contents NEWTEKONE, INC.
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AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In Thousands, except for Per Share Data) December 31, 2024 December 31, 2023 ASSETS Cash and due from banks $ 6,941 $ 15,398 Restricted cash 28,226 30,919 Interest bearing deposits in banks 346,207 137,689 Total cash and cash equivalents 381,374 184,006 Debt securities available-for-sale, at fair value 23,916 32,171 Loans held for sale, at fair value 372,286 118,867 Loans held for sale, at LCM 58,803 56,607 Loans held for investment, at fair value 369,746 469,801 Loans held for investment, at amortized cost, net of deferred fees and costs 621,651 336,305 Allowance for credit losses (30,233) (12,574) Loans held for investment, at amortized cost, net 591,418 323,731 Federal Home Loan Bank and Federal Reserve Bank stock 3,585 3,635 Settlement receivable 52,465 62,230 Joint ventures and other non-control investments, at fair value (cost of $44,039 and $38,660), respectively 57,678 41,587 Goodwill and intangibles 14,752 30,120 Right of use assets 5,688 5,701 Deferred tax asset, net — 5,230 Servicing assets, at fair value 22,062 29,336 Servicing assets, at LCM 24,195 10,389 Other assets 60,636 56,102 Assets held for sale 21,308 — Total assets $ 2,059,912 $ 1,429,513 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities: Deposits: Noninterest-bearing $ 11,142 $ 10,053 Interest-bearing 961,910 453,452 Total deposits 973,052 463,505 Borrowings 708,041 644,122 Dividends payable 5,233 4,792 Lease liabilities 6,498 6,952 Deferred tax liabilities, net 2,244 — Due to participants 21,532 23,796 Accounts payable, accrued expenses and other liabilities 40,806 37,300 Liabilities directly associated with assets held for sale 6,224 — Total liabilities 1,763,630 1,180,467 Commitment and contingencies (Note 15) Shareholders' Equity: Preferred stock (par value $0.02 per share; authorized 20 shares, 20 shares issued and outstanding) 19,738 19,738 Common stock (par value $0.02 per share; authorized 199,980 shares, 26,291 and 24,680 shares issued and outstanding, respectively) 526 492 Additional paid-in capital 218,266 200,913 Retained earnings 57,773 28,051 Accumulated other comprehensive income (loss), net of income taxes (21) (148) Total shareholders' equity 296,282 249,046 Total liabilities and shareholders' equity $ 2,059,912 $ 1,429,513 F-5 See accompanying notes to consolidated financial statements.
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AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, except for Per Share Data) Year Ended December 31, 2024 Financial Holding Company 2023 Financial Holding Company 2022 Investment Company Interest income Debt securities available-for-sale $ 1,482 $ 1,518 $ — Loans and fees on loans 110,892 84,001 35,696 Interest from affiliates — — 2,921 Other interest earning assets 9,044 8,854 — Total interest income 121,418 94,373 38,617 Interest expense Deposits 28,690 15,849 — Notes and securitizations 45,454 40,217 21,780 Bank and FHLB borrowings 6,969 11,673 3,998 Notes payable related parties — — 547 Total interest expense 81,113 67,739 26,325 Net interest income 40,305 26,634 12,292 Provision for credit losses 26,216 11,704 — Net interest income after provision for credit losses 14,089 14,930 12,292 Noninterest income Dividend income 1,519 1,757 24,657 Net loss on loan servicing assets (12,665) (4,282) (10,095) Servicing income 20,087 18,289 13,698 Net gains on sales of loans 97,183 51,467 56,901 Net gain (loss) on loans under the fair value option 5,200 18,008 (26,504) Technology and IT support income 19,643 24,916 — Electronic payment processing income 46,049 42,855 — Other noninterest income 40,296 23,762 34,221 Total noninterest income 217,312 176,772 92,878 Noninterest expense Salaries and employee benefits expense 77,931 65,708 20,186 Technology services expense 12,261 14,272 — Electronic payment processing expense 19,878 18,327 — Professional services expense 15,813 13,077 7,134 Other loan origination and maintenance expense 13,770 9,433 30,746 Depreciation and amortization 1,784 2,884 239 Loss on extinguishment of debt — 271 417 Other general and administrative costs 21,272 22,357 7,673 Total noninterest expense 162,709 146,329 66,395 Net income before taxes 68,692 45,373 38,775 Income tax expense (benefit) 17,839 (1,956) 6,464 Net income 50,853 47,329 32,311 Dividends to preferred shareholders (1,600) (1,454) — Net income available to common shareholders $ 49,253 $ 45,875 $ 32,311 Earnings per common share: Basic $ 1.97 $ 1.89 $ 1.34 Diluted $ 1.96 $ 1.88 $ 1.34 F-6 See accompanying notes to consolidated financial statements.
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AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands, except for Per Share Data) Year Ended December 31, 2024 Financial Holding Company 2023 Financial Holding Company 2022 Investment Company Net income $ 50,853 $ 47,329 $ 32,311 Other comprehensive gain (loss) before tax: Net unrealized gain (loss) on debt securities available-for-sale during the period 183 (201) — Other comprehensive gain (loss) before tax 183 (201) — Income tax (benefit) expense (56) 53 — Other comprehensive income (loss), net of tax 127 (148) — Comprehensive income $ 50,980 $ 47,181 $ 32,311 F-7 See accompanying notes to consolidated financial statements.
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AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (In Thousands, except for Per Share Data) Common stock Preferred stock Additional paid-in capital Accumulated other comprehensive income (loss) Retained earnings Total equity Shares Amount Shares Amount Balance at December 31, 2023 24,680 $ 492 20 $ 19,738 $ 200,913 $ (148) $ 28,051 $ 249,046 Stock-based compensation expense, net of forfeitures — — — — 4,040 — — 4,040 Dividends declared related to RSA, net of accrued dividends forfeited 33 — — — 420 — (420) — Purchase of vested stock for employee payroll tax withholding (25) — — — (299) — — (299) Restricted stock awards, net of forfeitures 513 12 — — — — — 12 Retirement of common shares (30) (1) — — (401) — — (402) ESPP issuances 20 — — — 227 — — 227 Issuance of common stock, net of offering costs 1,100 23 — — 13,366 — — 13,389 Dividends declared common shares ($0.38/share) — — — — — — (19,111) (19,111) Dividends declared preferred shares ($80.00/share) — — — — — — (1,600) (1,600) Net income (loss) — — — — — — 50,853 50,853 Other comprehensive income, net of tax — — — — — 127 — 127 Balance at December 31, 2024 26,291 $ 526 20 $ 19,738 $ 218,266 $ (21) $ 57,773 $ 296,282 F-8 See accompanying notes to consolidated financial statements.
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AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (As Restated) (In Thousands, except for Per Share Data) Common stock Preferred stock Additional paid-in-capital Accumulated other comprehensive income (loss) Accumulated undistributed earnings Retained earnings Total equity Shares Amount Shares Amount Balance at December 31, 2022 24,609 $ 492 — $ — $ 354,243 $ — $ 20,623 $ — $ 375,358 Conversion from BDC to Bank Holding Company Adjustments: Change in presentation — — — — 20,623 — (20,623) — — Removal of fair value adjustments — — — — (138,043) — — — (138,043) Consolidation of controlled investments — — — 245 (57,961) — — (143) (57,859) Reassessment of deferred tax assets and liabilities — — — — 19,266 — — — 19,266 DRIP shares issued 16 — — — 216 — — — 216 Stock-based compensation expense, net of forfeitures — — — — 2,828 — — — 2,828 Dividends declared related to RSA, net of accrued dividends forfeited 16 — — — 218 — — (218) — Purchase of vested stock for employee payroll tax withholding (17) (1) — — (533) — — — (534) Restricted stock awards, net of forfeitures 52 1 — — — — — — 1 ESPP issuances 4 — — — 56 — — — 56 Issuance of preferred stock — — 20 20,000 — — — — 20,000 Preferred stock issuance costs — — — (507) — — — — (507) Dividends declared common shares ($0.54/share) — — — — — — — (17,463) (17,463) Dividends declared preferred shares ($72.44/share) — — — — — — — (1,454) (1,454) Net income (loss) — — — — — — — 47,329 47,329 Other comprehensive loss, net of tax — — — — — (148) — — (148) Balance at December 31, 2023 24,680 $ 492 20 $ 19,738 $ 200,913 $ (148) $ — $ 28,051 $ 249,046 F-9 See accompanying notes to consolidated financial statements.
Removed
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (In Thousands, except for Per Share Data) Common stock Additional paid-in-capital Accumulated undistributed earnings Total equity Shares Amount Balance at December 31, 2021 24,159 $ 483 $ 367,663 $ 35,741 $ 403,887 DRIP shares issued 95 3 1,611 — 1,614 Stock-based compensation expense — — 2,511 — 2,511 Dividends Declared related to RSA — — 646 (646) — Purchase of vested stock for employee payroll tax withholding (38) — (826) — (826) Issuance of common stock, net of offering costs 107 2 2,017 — 2,019 Restricted stock awards 286 4 (4) — — Dividends declared common shares — — — (66,158) (66,158) RIC tax reclassification — — (19,375) 19,375 — Net increase resulting from operations: Net investment income — — — (6,476) (6,476) Net realized gain on investments — — — 57,346 57,346 Net unrealized depreciation on investments — — — (18,559) (18,559) Balance at December 31, 2022 24,609 $ 492 $ 354,243 $ 20,623 $ 375,358 F-10 See accompanying notes to consolidated financial statements.
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AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Year Ended December 31, 2024 2023 2022 Financial Holding Company Financial Holding Company Investment Company Cash flows from operating activities: Net income $ 50,853 $ 47,329 $ 32,311 Adjustments to reconcile net income to net cash used in operating activities: Net appreciation on joint ventures and other non-control investments (10,712) (3,219) — Net unrealized appreciation on controlled investments — — (24,321) Net (gain) loss on loans accounted for under the fair value option (5,200) (18,008) 26,504 Loan servicing asset revaluation 12,665 4,282 10,095 Net unrealized (appreciation) depreciation on derivative transactions (1,344) 699 (183) Unrealized loss on assets classified as held for sale 616 — — Net gain on sales of loans (97,183) (51,467) (56,901) Net accretion of premium/discount (836) (675) — Loss on extinguishment of debt — 271 417 Amortization of deferred financing costs 4,564 4,052 2,494 Provision for credit losses 26,216 11,704 — Lower of cost or market adjustment on loans held for sale (73) — — Bad debt expense, net of recoveries 1,059 3,637 — Stock compensation expense 4,062 2,828 — Deferred income tax expense (benefit) 10,403 (4,800) 6,464 Depreciation and amortization 1,784 2,884 239 Proceeds from sale of loans held for sale 817,869 695,461 691,219 Purchase of loans held for sale — — (2,404) Sale (purchase) of loans held for sale from affiliate 140,009 (5,279) — Funding of loans held for sale (1,125,131) (783,035) (775,577) Funding of controlled investments — — (53,198) Funding of non-control/affiliate investment — — (360) Principal received on loans held for sale 18,898 12,235 74,287 Principal received from controlled investments — — 6,970 Return of investments from controlled investments — — 48,709 Other, net (230) — 3,257 Changes in operating assets and liabilities: Settlement receivable 9,765 (62,230) 44,537 Income tax payable 19 (4,040) — Dividends receivable — 493 — Due to/from related parties (91) (165) 2,778 Other assets (13,660) 7,432 1,816 Assets classified as held for sale (1,497) — — Liabilities directly associated with assets classified as held for sale (174) — — Dividends payable 441 4,776 — Due to participants (2,264) (11,832) (110,598) Accounts payable, accrued expenses and other liabilities 6,158 (22,552) 9,021 Other, net — — 6 F-11 See accompanying notes to consolidated financial statements.
Removed
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Year Ended December 31, 2024 2023 2022 Financial Holding Company Financial Holding Company Investment Company Net cash used in operating activities (153,014) (169,219) (62,418) Cash flows from investing activities: Net decrease in loans held for investment, at fair value 66,817 29,349 — Net increase in loans held for investment, at cost (278,539) (169,003) — Contributions to joint ventures and other non-control investments (25,680) (14,550) — Return of capital from joint ventures and other non-control investments 20,301 564 — Purchase of fixed assets (439) (458) (11) Net decrease (increase) in Federal Home Loan Bank and Federal Reserve Bank stock 50 (2,112) — Purchases of available-for-sale securities (33,021) (27,167) — Maturities of available-for-sale securities 41,460 — — Acquisitions, net of cash acquired — 11,142 — Net cash used in investing activities (209,051) (172,235) (11) Cash flows from financing activities: Net borrowings (paydowns) on bank notes payable 71,613 (78,663) 5,885 Net increase in deposits 508,577 324,705 — Repayment of Federal Home Loan Bank advances (7,959) (4,895) — Proceeds from common shares sold, net of offering costs 13,818 — 2,019 Proceeds from preferred stock, net of offering costs — 19,493 — Net repayments under related party line of credit — — 12,800 Proceeds from 2025 5.00% Notes — — 30,000 Proceeds from 2025 8.125% Notes — 50,000 — Proceeds from 2028 8.00% Notes — 40,000 — Redemption of 2024 Notes (38,250) — — Redemption of 2025 6.85% Notes — — (15,000) Proceeds from 2029 8.50% Notes 71,875 — Proceeds from 2029 8.625% Notes 75,000 — Payments on Notes Payable - Securitization Trusts (106,992) (90,780) (82,817) Issuance of Notes Payable - Securitization Trusts — 103,860 116,210 Dividends paid, net of dividend reinvestment plan (20,252) (14,147) (64,544) Payments of deferred financing costs (6,039) (4,650) (2,552) Proceeds from common stock issued under ESPP 207 51 Purchase of vested stock for employee payroll tax withholding (299) — (826) Retirement of common shares (402) — — Net cash provided by financing activities 560,897 344,974 1,175 Net increase in cash and restricted cash 198,832 3,520 (61,254) Cash and restricted cash—beginning of period (Note 2) 184,006 125,606 186,860 Consolidation/(deconsolidation) of cash and restricted cash from controlled investments related to business combinations and dispositions, net of cash paid (1,464) 54,880 — Cash and restricted cash—end of period (Note 2) $ 381,374 $ 184,006 $ 125,606 F-12 See accompanying notes to consolidated financial statements.
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AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Year Ended December 31, 2024 2023 2022 Financial Holding Company Financial Holding Company Investment Company Non-cash operating, investing and financing activities: Foreclosed real estate acquired $ 4,569 $ 2,978 $ 3,466 Dividends declared but not paid during the period $ 5,237 $ 4,363 $ 2,118 Issuance of common shares under dividend reinvestment plan $ — $ 219 $ 1,614 Supplemental disclosure of cash flow information: (as restated) (as restated) Interest paid $ 79,192 $ 66,471 $ 25,348 Income taxes paid $ 7,429 $ 6,884 $ — F-13 See accompanying notes to consolidated financial statements.
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AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION: The Company is a financial holding company that is a leading provider of business and financial solutions to independent business owners (SMBs) and provides SMBs with the following Newtek® branded business and financial solutions: Newtek Banking, Newtek Alternative Lending, Newtek Technology, Newtek Payments, Newtek Insurance, and Newtek Payroll.
Removed
NewtekOne reports on a consolidated basis the financial condition and results of operations for the following consolidated subsidiaries: Newtek Bank; NSBF; NMS (and its subsidiary Mobil Money); NBC; PMT; NIA; TAM; POS; NALH; NCL; and NTS. Except as otherwise noted, all financial information included in the tables in the following footnotes is stated in thousands, except per share data.
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Consolidation The consolidated financial statements include the accounts of NewtekOne, its subsidiaries and certain VIEs. Significant intercompany balances and transactions have been eliminated. The Company considers a voting rights entity to be a subsidiary and consolidates it if the Company has a controlling financial interest in the entity.
Removed
VIEs are consolidated if NewtekOne has the power to direct the activities of the VIE that significantly impact financial performance and has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE (i.e., NewtekOne is the primary beneficiary).
Removed
The determination of whether the Company is the primary beneficiary of a VIE is reassessed on an ongoing basis. Investments in companies which are not VIEs but in which the Company has more than minor influence over the operating and financial policies are accounted for using the equity method of accounting.
Removed
Investments in VIEs, where NewtekOne is not the primary beneficiary of a VIE, are accounted for using the equity method of accounting. The maximum potential exposure to losses relative to investments in VIEs is generally limited to the investment balance. Refer to NOTE 4—INVESTMENTS.
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NTS Sale As a result of the Company’s entry into the NTS Sale Agreement and its completion of the NTS Sale on January 2, 2025 , t he Company reported NTS as Held for Sale as of December 31, 2024. See NOTE 25—SUBSEQUENT EVENTS: Sale of NTS.
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In addition, as of the date of the NTS Sale, the Company has concluded that the assets, liabilities and operations of NTS do not qualify for Discontinued Operations as of December 31, 2024. See NOTE 9—ASSETS AND LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS HELD FOR SALE.
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Reclassifications and Restatements Certain prior period amounts, to the extent comparable, have been reclassified to conform to the current period presentation. The supplemental disclosure of cash flow information for interest paid was restated for December 31, 2023 and 2022 as a result of the previously disclosed material weaknesses and restatements described in the 2023 Annual Report on Form 10-K.
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NOTE 2—SIGNIFICANT ACCOUNTING POLICIES: Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements in conformity with U.S.
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GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expense during the reporting period.
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The level of uncertainty in estimates and assumptions increases with the length of time until the underlying transactions are complete. Actual results could differ from those estimates. F-14 Table of Contents Cash and due from banks The Company considers all highly liquid instruments with maturities of three months or less when purchased to be cash equivalents.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

155 edited+112 added−58 removed61 unchanged
This gain (loss) represents the fair value adjustment of loans . The amount of the unrealized gain (loss) is determined by the quantity of loans held for sale at quarter end, the change in secondary market pricing conditions, and the valuation of the loans that are not held for sale.
This unrealized gain (loss) represents the fair value adjustment of loans . The amount of the unrealized gain (loss) is determined by the quantity of loans held for sale at quarter end, the change in secondary market pricing conditions, and the valuation of the loans that are not held for sale.
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.
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.
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.
The settlement receivable arises from the guaranteed portions of SBA 7(a) loans that were traded in the period but did not settle during the current period end and the cash was not received from the purchasing broker during the current period; the amount varies depending on loan origination volume and timing of sales at quarter end.
The settlement receivable arises from the guaranteed portions of SBA 7(a) loans that were traded in the period but did not settle during the current period end and the cash was not received from the purchasing broker during the current period; the amount varies depending on loan origination volume and timing of sales at period end.
Currently, Newtek Bank is ranked as the largest SBA 7(a) lender based on dollar volume of loans approved. Historically, NSBF structured its loans so that it could both sell the government guaranteed portions of SBA 7(a) loans and securitize the unguaranteed portions.
Currently, Newtek Bank is ranked as the third largest SBA 7(a) lender based on dollar volume of loans approved. Historically, NSBF structured its loans so that it could both sell the government guaranteed portions of SBA 7(a) loans and securitize the unguaranteed portions.
Risk Factors - Risks Related to SBA Lending - There can be no guarantee that Newtek Bank will be able to maintain its SBA 7(a) lending license and PLP status.” and “Item 1A.
See “Item 1A. Risk Factors - Risks Related to SBA Lending - There can be no guarantee that Newtek Bank will be able to maintain its SBA 7(a) lending license and PLP status.” and “Item 1A.
Executive Overview We are a financial holding company owning a branchless OCC nationally chartered bank. In 2023, we converted to a financial holding company from a BDC and a non-bank lender (see below).
Executive Overview We are a financial holding company owning Newtek Bank - a branchless OCC nationally chartered bank. In 2023, we converted to a financial holding company from a BDC and a non-bank lender (see below).
The Company funds these commitments from the same sources it uses to fund its other loan commitments. 93 Table of Contents Guarantees The Company is a guarantor on several warehouse lines of credit as noted in the above table under Contractual Obligations. Refer to NOTE 13—BORROWINGS to the consolidated financial statements for the amounts outstanding, line availability, and term.
The Company funds these commitments from the same sources it uses to fund its other loan commitments. Guarantees The Company is a guarantor on several warehouse lines of credit as noted in the above table under Contractual Obligations. Refer to NOTE 13—BORROWINGS to the consolidated financial statements for the amounts outstanding, line availability, and term.
Moreover, we believe the Newtek Advantage provides our independent business owner clients with analytics on their businesses, as well as transactional capabilities, including free unlimited document storage, free real-time updated traffic analytics, free real-time credit card processing and chargeback batch information for merchant solutions clients and the ability for PMT clients to make payroll directly from the Newtek Advantage business portal.
Moreover, the Newtek Advantage provides our independent business owner clients with analytics on their businesses, as well as transactional capabilities, including free unlimited document storage, free real-time updated traffic analytics, free real-time credit card processing and chargeback batch information for merchant solutions clients and the ability for PMT clients to make payroll directly from the Newtek Advantage business portal.
In the year ended December 31, 2024, 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.
In the year ended December 31, 2025, 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.
The 2026 Notes bear interest at a rate of 5.50% per year payable quarterly on February 1, May 1, August 1 and November 1 of each year, commencing on May 1, 2021, and trade on the Nasdaq Global Market under the trading symbol “NEWTZ.” At December 31, 2024, the Company was in compliance with all covenants related to the 2026 Notes.
The 2026 Notes bear interest at a rate of 5.50% per year payable quarterly on February 1, May 1, August 1 and November 1 of each year, commencing on May 1, 2021, and trade on the Nasdaq Global Market under the trading symbol “NEWTZ.” At December 31, 2025, the Company was in compliance with all covenants related to the 2026 Notes.
During this wind-down process, NSBF continues to own the SBA 7(a) loans and PPP Loans currently in its SBA loan portfolio to maturity, liquidation, charge-off or (subject to SBA’s prior written approval) sale or transfer. SBL is servicing and liquidating NSBF’s SBA loan portfolio pursuant to an SBA approved lender service provider agreement.
During this wind-down process, NSBF continues to own the SBA 7(a) loans in its loan portfolio to maturity, liquidation, charge-off or (subject to SBA’s prior written approval) sale or transfer. SBL is servicing and liquidating NSBF’s SBA loan portfolio pursuant to an SBA approved lender service provider agreement.
We recorded 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 se rvicing assets, as appropriate, as well as amortization and impairment, if any, of LCM servicing rights in the consolidated statements of operations.
We recorded 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 se rvicing assets, as appropriate, as well as amortization and impairment, if any, of LCM servicing rights in the consolidated statements of income.
Theses Notes bear interest at a rate of 8.625% per year, payable quarterly on January 15, April 15, July 15, and October 15 each year, commencing on January 15, 2025. , and trade on the Nasdaq Global Market under the trading symbol “NEWTH.” At December 31, 2024, the Company was in compliance with all covenants related to the 2029 8.625% Notes. 2028 Notes On August 31, 2023, the Company completed a registered offering of $40.0 million in aggregate principal amount of its 8.00% 2028 Notes.
These Notes bear interest at a rate of 8.625% per year, payable quarterly on January 15, April 15, July 15, and October 15 each year, commencing on January 15, 2025. , and trade on the Nasdaq Global Market under the trading symbol “NEWTH.” At December 31, 2025, the Company was in compliance with all covenants related to the 2029 8.625% Notes. 2028 Notes On August 31, 2023, the Company completed a registered offering of $40.0 million in aggregate principal amount of its 8.00% 2028 Notes.
The Company is also a guarantor on an NMS term loan facility. At December 31, 2024, 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.
The Company is also a guarantor on an NMS term loan facility. At December 31, 2025, 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.
The 2026 Notes will mature on February 1, 2026 and may be redeemed in whole or in part at any time or from time to time at the Company’s option upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
The 2026 Notes are scheduled to mature on February 1, 2026 and may be redeemed in whole or in part at any time or from time to time at the Company’s option upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
The frequency or volume of these repayments fluctuated significantly from period to period. Our portfolio activity for the fiscal year ended December 31, 2024, also reflects the proceeds of sales of guaranteed portions of SBA 7(a) loans we originated.
The frequency or volume of these repayments fluctuated significantly from period to period. Our portfolio activity for the fiscal year ended December 31, 2025, also reflects the proceeds of sales of guaranteed portions of SBA 7(a) loans we originated.
Risk Factors - Risks Related to SBA Lending - A governmental failure to fund the SBA could adversely affect Newtek Bank’s SBA 7(a) loan originations and our results of operations.” Economic Developments We have observed and continue to observe commodity inflation, rising interest rates, unrelated bank failures and declines in depositor confidence in certain types of depository institutions.
Risk Factors - Risks Related to SBA Lending - A governmental failure to fund the SBA could adversely affect Newtek Bank’s SBA 7(a) loan originations and our results of operations.” 74 Table of Contents Economic Developments We have observed and continue to observe commodity inflation, rising interest rates, unrelated bank failures and declines in depositor confidence in certain types of depository institutions.
The Company has guaranteed certain of NSBF’s obligations to the SBA and has funded a $10.0 million account at Newtek Bank to secure these potential obligations. Historical Business Regulation and Taxation Prior to January 6, 2023, we operated as an internally managed non-diversified closed-end management investment company that elected to be regulated as a BDC under the 1940 Act.
The Company has guaranteed certain of NSBF’s obligations to the SBA and has funded a $10.0 million account to secure these potential obligations. Historical Business Regulation and Taxation Prior to January 6, 2023, we operated as an internally managed non-diversified closed-end management investment company that elected to be regulated as a BDC under the 1940 Act.
In addition, we have begun to 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 in the areas of Business Lending, Electronic Payment Processing, personal and commercial lines Insurance Services and Payroll and Benefits Solutions.
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 in the areas of Business Lending, Electronic Payment Processing, personal and commercial lines Insurance Services and Payroll and Benefits Solutions.
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 94 Table of Contents unconditionally cancellable by the Company.
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.
As previously discussed, NSBF ceased originating loans during 2023, resulting in the decrease in the balance of loans held for investment from December 31, 2023 to December 31, 2024, primarily due to the principal payments of existing loans held by NSBF. At Amortized Cost: Loans HFI, at amortized cost consists of loans originated at or purchased by Newtek Bank.
As previously discussed, NSBF ceased originating loans during 2023, resulting in the decrease in the balance of loans held for investment from December 31, 2024 to December 31, 2025, primarily due to the principal payments of existing loans held by NSBF. At Amortized Cost: Loans HFI, at amortized cost consist of loans originated at or purchased by Newtek Bank.
The balance consists primarily of SBA 7(a) loans as well as $6.7 million of loans that the Company owns 100% as a result of originating the loan and subsequently repurchasing the guaranteed portion from the SBA.
The balance consists primarily of SBA 7(a) loans as well as $5.7 million of loans that the Company owns 100% as a result of originating the loan and subsequently repurchasing the guaranteed portion from the SBA.
Actual results could materially differ from those estimates. We have identified the following items as critical accounting policies for the fiscal year ended December 31, 2024.
Actual results could materially differ from those estimates. We have identified the following items as critical accounting policies for the fiscal year ended December 31, 2025.
The 2028 Notes bear interest at a rate of 8.00% per year payable quarterly on March 1, June 1, September 1 and December 1 of each year, commencing on December 1, 2023, and trade on the Nasdaq Global Market under the trading symbol “NEWTI.” At December 31, 2024, the Company was in compliance with all covenants related to the 2028 Notes. 2026 Notes In January 2021, the Company completed a registered offering of $115.0 million aggregate principal amount of 5.50% 2026 Notes.
The 2028 Notes bear interest at a rate of 8.00% per year payable quarterly on March 1, June 1, September 1 and December 1 of each year, commencing on December 1, 2023, and trade on the Nasdaq Global Market under the trading symbol “NEWTI.” At December 31, 2025, the Company was in compliance with all covenants related to the 2028 Notes. 93 Table of Contents 2026 Notes In January 2021, the Company completed a registered offering of $115.0 million aggregate principal amount of 5.50% 2026 Notes.
From 2012 through December 31, 2022, NSBF, a wholly-owned subsidiary, 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.
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.
The decrease in net income is due to the wind-down of NSBF’s operations. Payments Payments includes NMS, POS and Mobil Money.
The change in net income is due to the wind-down of NSBF’s operations. Payments Payments includes NMS, POS and Mobil Money.
The following table summarizes the total shares repurchased and net proceeds received under the stock repurchase program: Year Ended December 31, 2024 Year Ended December 31, 2023 Year Ended December 31, 2022 Shares repurchased 30 — — Net weighted average price per share $ 13.35 $ — $ — Net proceeds $ 402 $ — $ — 2029 Notes On May 30, 2024, the Company completed a registered offering of $71.9 million in aggregate principal amount of its 2029 8.50% Notes, which includes the underwriters’ exercise of the option granted by the Company to purchase an additional $9.4 million in aggregate principal amount of the 2029 8.50% Notes.
The following table summarizes the total shares repurchased and net proceeds received under the stock repurchase program: Year Ended December 31, 2025 2024 2023 Shares repurchased 143 30 — Net weighted average price per share $ 10.43 $ 13.35 $ — Net purchase price $ 1,487 $ 402 $ — 2029 Notes On May 30, 2024, the Company completed a registered offering of $71.9 million in aggregate principal amount of its 2029 8.50% Notes, which includes the underwriters’ exercise of the option granted by the Company to purchase an additional $9.4 million in aggregate principal amount of the 2029 8.50% Notes.
Income For the fiscal year ended December 31, 2024, we generated income in the form of interest, net gains on the sales of loans originated (which primarily include sales of SBA 7(a) and ALP loans) and related servicing assets on such sales, dividends, electronic payment processing income, technology and IT support income, servicing income, and other fee income generated by loan originations and by our subsidiaries.
Income For the fiscal year ended December 31, 2025, we generated income in the form of interest, net gains on the sales of loans originated (which primarily include sales of SBA 7(a) and ALP loans) and related servicing assets on such sales, dividends, electronic payment processing income, servicing income, and other fee income generated by loan originations and by our subsidiaries.
The realized gains recognized above reflect amounts net of split with the SBA. For the year ended December 31, 2024, the average sale price on SBA 7(a) loans as a percent of principal balance was 110.97% compared to 110.20% for the prior period. The increase in sales prices in 2024 resulted from higher demand.
The realized gains recognized above reflect amounts net of split with the SBA. For the year ended December 31, 2025, the average sale price on SBA 7(a) loans as a percent of principal balance was 111.05% compared to 110.97% for the prior period. The increase in sales prices in 2025 resulted from higher demand.
Complying with this level of regulation requires investments in technology and process and personnel costs. 70 Table of Contents Conversion to a Financial Holding Company As of January 6, 2023, we are a financial holding company that, together with our consolidated subsidiaries, provides a wide range of business and financial solutions under the Newtek ® and NewtekOne ® brands to the independent business owner (SMB) market.
Complying with this level of regulation requires investments in technology and process and personnel costs. 72 Table of Contents Conversion to a Financial Holding Company As of January 6, 2023, we became a financial holding company that, together with our consolidated subsidiaries, provide a wide range of business and financial solutions under the Newtek ® and NewtekOne ® brands to the independent business owner (SMB) market.
Other Noninterest Income For the year ended December 31, 2024 and 2023, other noninterest income was related primarily to loan origination fees (legal and packaging) on loans sold or carried at fair value. Other items that contributed to the increase included prepayment and late fees earned from SBA 7(a) loans.
Other Noninterest Income For the year ended December 31, 2025 and 2024, other noninterest income was related primarily to loan origination fees (legal and packaging) on loans sold or carried at fair value. Other items that contributed to the $7.3 million decrease included a decrease on prepayment and late fees earned from SBA 7(a) loans.
The 2029, 2028 and 2026 Notes are the Company’s direct unsecured obligations and rank: (i) pari passu with the Company’s other outstanding and future unsecured indebtedness; (ii) senior to any of the Company’s future indebtedness that expressly provides it is subordinated to these Notes; (iii) effectively subordinated to all the Company’s existing and future secured indebtedness (including indebtedness that is initially unsecured to which the Company subsequently grants security), to the extent of the value of the assets securing such indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries.The Base Indenture, and each supplemental indenture thereto, contains certain covenants.
The 2029, 2028 and 2026 Notes are the Company’s direct unsecured obligations and rank: (i) pari passu with the Company’s other outstanding and future unsecured indebtedness; (ii) senior to any of the Company’s future indebtedness that expressly provides it is subordinated to these Notes; (iii) effectively subordinated to all the Company’s existing and future secured indebtedness (including indebtedness that is initially unsecured to which the Company subsequently grants security), to the extent of the value of the assets securing such indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries.
In addition, Newtek Bank management continues to closely monitor market conditions with a focus on its asset liability management policies, as well as closely monitoring, among other things, capital levels, to ensure compliance with regulatory guidelines and the OCC Operating Agreement.
In addition, Newtek Bank management continues to closely monitor market conditions with a focus on its asset liability management policies, as well as closely monitoring, among other things, capital levels, to ensure compliance with regulatory guidelines.
Effective December 11, 2024, the Company entered into Note Amendment and Exchange Agreements (the “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 8.125% 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 8.125% 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.The Notes bear interest at a rate of 8.125% per year payable semiannually on February 1 and August 1 each year, commencing on August 1, 2023.
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.
Within the segment’s results are $48.9 million of noninterest income for the year ended December 31, 2024 resulting from marketing credit and debit card processing services, check approval services, processing equipment, and software, compared to $46.4 million during the year ended December 31, 2023.
Within the segment’s results are $47.2 million of noninterest income for the year ended December 31, 2025 resulting from marketing credit and debit card processing services, check approval services, processing equipment, and software, compared to $48.9 million during the year ended December 31, 2024.
Contemporaneously with withdrawing our election to be regulated as a BDC, on January 6, 2023, we completed the Acquisition of NBNYC, a national bank regulated and supervised by the OCC, pursuant to which we acquired from NBNYC’s shareholders all of the issued and outstanding stock of NBNYC.
Contemporaneously with withdrawing our election to be regulated as a BDC, on January 6, 2023, we completed the Acquisition of NBNYC, a national bank regulated and supervised by the OCC, pursuant to which we acquired from NBNYC’s shareholders all of the issued and outstanding stock of NBNYC. NBNYC was renamed Newtek Bank and became our wholly owned bank subsidiary.
For the year ended December 31, 2024 and 2023, there was a provision for credit losses of $26.2 million and $11.7 million, respectively.
For the year ended December 31, 2025 and 2024, there was a provision for credit losses of $38.7 million and $26.2 million, respectively.
In practice, changes in one assumption generally impact other assumptions, which could increase or lessen the effect of the change. 82 Table of Contents Servicing Income The increase in servicing income was related to an increase of $167.6 million in the average total loan portfolio for which we earn servicing income period over period.
In practice, changes in one assumption generally impact other assumptions, which could increase or lessen the effect of the change. Servicing Income The increase in servicing income was related to an increase of $99.9 million in the average total loan portfolio for which we earn servicing income period over period.
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.
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.
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 ALP loans and the terms of these loans have been generally consistent over the ALP’s existence.
The Company has originated loans under its ALP since 2019. 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 ALP loans and the terms of these loans have been generally consistent over the ALP’s existence.
In addition, SBL will service and liquidate NSBF’s SBA Loan Portfolio, including processing forgiveness and loan reviews for PPP Loans pursuant to an SBA approved lender service provider agreement with SBL. The Company will continue to measure NSBF’s SBA 7(a) loan portfolio at fair value until the portfolio is completely runoff.
In addition, SBL will service and liquidate NSBF’s SBA Loan Portfolio, pursuant to an SBA approved lender service provider agreement with SBL. The Company will continue to measure NSBF’s SBA 7(a) loan portfolio at fair value until the portfolio is completely runoff.
The Company has restricted cash of $28.2 million as of December 31, 2024. NSBF holds $8.2 million 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.
The Company has restricted cash of $26.5 million as of December 31, 2025. NSBF holds $6.7 million 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.
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. On November 17, 2023, the Company entered into the 2023 ATM Equity Distribution Agreement.
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.
We have historically defined independent business owners (SMBs) as companies having revenues of $1 million to $100 million, and we have generally estimated the SMB market to be over 34 million businesses in the United States. We have historically made loans and provided business and financial solutions to the SMB market through NSBF and our controlled portfolio companies (now subsidiaries).
We have historically defined independent business owners (SMBs) as companies having revenues of $1 million to $100 million, and we have generally estimated the SMB market to be over 34 million businesses in the United States. We make loans and provide business and financial solutions to the SMB market through our bank and non-bank subsidiaries.
The results include $39.7 million of net interest income during the year ended December 31, 2024 compared to $17.7 million of net interest income during the year ended December 31, 2023.
The results include $62.2 million of net interest income during the year ended December 31, 2025 compared to $39.7 million of net interest income during the year ended December 31, 2024.
The following table summarizes the total shares sold and net proceeds received under the 2020 and 2023 ATM Equity Distribution Agreement: 2020 ATM Program Year Ended December 31, 2024 Year Ended December 31, 2023 Year Ended December 31, 2022 Shares sold — — 107 Net weighted average price per share $ — $ — $ 19.12 Net proceeds $ — $ — $ 2,054 2023 ATM Program Year Ended December 31, 2024 Year Ended December 31, 2023 Year Ended December 31, 2022 Shares sold 1,100 — — Net weighted average price per share $ 12.56 $ — $ — Net proceeds $ 13,818 $ — $ — Placement agent fees paid $ 282 $ — Stock Repurchase Program 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 following twelve months.
The following table summarizes the total shares sold and net proceeds received under the ATM Equity Distribution Agreement: Year ended December 31, 2023 ATM Program 2025 2024 2023 Shares sold 425 1,100 — Net weighted average price per share $ 12.22 $ 12.56 $ — Net proceeds $ 5,090 $ 13,818 $ — Placement agent fees paid $ 104 $ 282 $ — 92 Table of Contents Stock and Debt Repurchase Programs On November 1, 2024, the Company’s Board approved a new stock repurchase program granting the Company authority to repurchase up to 1.0 million shares of Company common stock during the following twelve months.
While the Company continues to source JV partners to participate in this program, during the third quarter of 2024, we made the decision to originate with the intent to securitize ALP loans with our subsidiary Newtek ALP Holdings as the originator and sponsor. The Company could also originate ALP loans designated as HFI.
While the Company may continue to source JV partners to participate in the ALP, during the third quarter of 2024, we made the decision to originate with the intent to securitize ALP loans with our subsidiary Newtek ALP Holdings as the originator and sponsor. The Company could also originate ALP loans (i.e., long amortizing C&I loans) designated as HFI.
The table below provides selected statistics on the historical net premiums on sales of guaranteed portions of SBA 7(a) loans realized by NewtekOne: SBA 7(a) Sales Price as Percent of Principal Balance (%) Average High Low Median 2022 109.71 % 115.77 % 106.11 % 110.16 % 2023 110.20 % 114.04 % 106.00 % 110.42 % 2024 110.97 % 114.80 % 107.18 % 111.19 % Weighted Average 110.32 % 115.77 % 106.00 % 110.87 % During the wind-down of NSBF’s operations, NSBF is required to continue to own its SBA 7(a) loans and PPP Loans in its SBA loan portfolio to maturity, liquidation, charge-off, or (subject to SBA’s prior written approval) sale or transfer.
The table below provides selected statistics on the historical net premiums on sales of guaranteed portions of SBA 7(a) loans realized by NewtekOne: SBA 7(a) Sales Price as Percent of Principal Balance (%) Average High Low Median Year ended December 31, 2023 110.20 % 114.04 % 106.00 % 110.42 % Year ended December 31, 2024 110.97 % 114.80 % 107.18 % 111.19 % Year ended December 31, 2025 111.05 % 114.06 % 107.80 % 110.46 % Weighted Average 110.58 % 114.80 % 106.00 % 110.76 % During the wind-down of NSBF’s operations, NSBF is required to continue to own its SBA 7(a) loans in its loan portfolio to maturity, liquidation, charge-off, or (subject to SBA’s prior written approval) sale or transfer.
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 and servicing of our SBA loans.
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.
With the divestiture of NTS, we will no longer provide Managed Technology Solutions to our clients, however, we anticipate referring our clients to IPM for its offering of Managed Technology Solutions, and earning a finders fee pursuant to a referral promotion agreement.
With the divestiture of NTS, we no longer provide Managed Technology Solutions to our clients, however, we are currently referring our clients to IPM for its offering of Managed Technology Solutions and can earn a finder’s fee pursuant to a referral promotion agreement.
The 2029 8.50% Notes bear interest at a rate of 8.50% per year payable quarterly on March 1, June 1, September 1 and December 1 of each year, commencing on September 1, 2024, and trade on the Nasdaq Global Market under the trading symbol “NEWTG.” At December 31, 2024, the Company was in compliance with all covenants related to the 2029 8.50% Notes. 88 Table of Contents On September 16, 2024, the Company completed a registered offering of $75.0 million aggregate principal amount of 2029 8.625% Notes.
The 2029 8.50% Notes bear interest at a rate of 8.50% per year payable quarterly on March 1, June 1, September 1 and December 1 of each year, commencing on September 1, 2024, and trade on the Nasdaq Global Market under the trading symbol “NEWTG.” At December 31, 2025, the Company was in compliance with all covenants related to the 2029 8.50% Notes.
While the Company continues to source JV partners to participate in this program, during the third quarter of 2024, the Company made the decision to originate with the intent to securitize ALP loans with our subsidiary Newtek ALP Holdings as the originator and sponsor without a joint venture partner. The Company could also originate ALP loans designated as HFI.
While the Company continues to source JV partners to participate in this program, during the third quarter of 2024, the Company made the decision to originate with the intent to securitize ALP loans with our subsidiary Newtek ALP Holdings as the originator and sponsor without a joint venture partner; the Company’s first such securitization transaction was consummated during the second quarter of 2025.
On a quarterly basis, management determines the fair values of the retained 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. NSBF ceased originating new loans in April 2023 when all new SBA 7(a) loan originations were transitioned to Newtek Bank.
On a quarterly basis, management determines the fair values of the retained 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.
A sensitivity analysis of the loan servicing assets at fair value to adverse changes in significant assumptions as of December 31, 2024 and December 31, 2023 is as follows: December 31, 2024 December 31, 2023 Discount factor Effect on fair value of a 100 basis point adverse change $ (831) $ (1,050) Effect on fair value of a 200 basis point adverse change (1,604) (2,028) Cumulative prepayment rate Effect on fair value of a 100 basis point adverse change $ (85) $ (141) Effect on fair value of a 500 basis point adverse change (423) (706) Average cumulative default rate Effect on fair value of a 100 basis point adverse change $ (72) $ (149) Effect on fair value of a 500 basis point adverse change (358) (744) The sensitivity analysis presents the hypothetical effect on fair value of the servicing assets due to the change in significant assumptions.
A sensitivity analysis of the loan servicing assets at fair value to adverse changes in significant assumptions as of December 31, 2025 and December 31, 2024 is as follows: December 31, 2025 December 31, 2024 Discount factor Effect on fair value of a 100 basis point adverse change $ (588) $ (831) Effect on fair value of a 200 basis point adverse change (1,134) (1,604) Cumulative prepayment rate Effect on fair value of a 100 basis point adverse change $ (54) $ (85) Effect on fair value of a 500 basis point adverse change (269) (423) Average cumulative default rate Effect on fair value of a 100 basis point adverse change $ (34) $ (72) Effect on fair value of a 500 basis point adverse change (168) (358) 85 Table of Contents The sensitivity analysis presents the hypothetical effect on fair value of the servicing assets due to the change in significant assumptions.
The Company received $69.6 million in proceeds, before expenses, from the sale of the 2029 8.50% Notes.
The 2029 8.5% Notes will mature on June 1, 2029. The Company received $69.6 million in proceeds, before expenses, from the sale of the 2029 8.50% Notes.
Cash used by investing activities was $209.1 million primarily comprised (i) $278.5 million in the net increase in loans held for investment, at cost and (ii) $25.7 million in contributions to joint ventures and other non-control investments and (iii) $33.0 million in purchases of available-for-sale securities.
Cash used by investing activities was $245.3 million primarily comprised (i) $313.3 million in the net increase in loans held for investment, at cost; (ii) $0.1 million in contributions to joint ventures and other investments; and (iii) $19.9 million in purchases of available-for-sale securities.
LIABILITIES Total liabilities at December 31, 2024, were $1.8 billion, an increase of $583.2 million, or 49.4%, compared to total liabilities of $1.2 billion at December 31, 2023.
LIABILITIES Total liabilities at December 31, 2025, were $2.3 billion, an increase of $583.6 million, or 33.1%, compared to total liabilities of $1.8 billion at December 31, 2024.
The offering was consummated pursuant to the terms of a purchase agreement among the Company and an accredited investor, which provided for the 2025 6.85% Notes to be issued to the purchaser in a private placement in reliance on Section 4(a)(2) of the Securities Act.
The offering was consummated pursuant to the terms of a purchase agreement dated March 19, 2025 among the Company and 11 institutional accredited investors. The purchase agreement provided for the 2030 Notes to be issued to the Purchaser in a private placement in reliance on Section 4(a)(2) of the Securities Act.
As a result, in addition to Newtek Bank and its consolidated subsidiary SBL, the following former portfolio companies and subsidiaries are consolidated non-bank subsidiaries in our financial statements as of December 31, 2024: NSBF; NMS; Mobil Money; NBC; PMT; NIA; TAM; NALH; NCL; NTS and POS.
As a result, in addition to Newtek Bank and its consolidated subsidiary SBL, the following former portfolio companies and subsidiaries are consolidated non-bank subsidiaries in our financial statements: NSBF; NMS; Mobil Money; NBC; PMT; NIA; TAM; NALH; and POS. In addition, as a result of commitments made to the Federal Reserve, we divested of NTS on January 2, 2025.
Summary For the year ended December 31, 2024, the Company reported net income of $50.9 million, or $1.97 per basic and $1.96 per diluted share, compared to net income of $47.3 million, or $1.89 per basic and $1.88 per diluted share, for the year ended December 31, 2023.
Summary For the year ended December 31, 2025, the Company reported net income of $60.5 million, or $2.21 per basic and $2.18 per diluted share, compared to net income of $50.9 million, or $1.97 per basic and 1.96 per diluted share, for the year ended December 31, 2024.
There can be no assurance as to the actual effective rate because it will be dependent upon the nature and amount of future income and expenses as well as actual investments generating investment tax credits and transactions with discrete tax effects.
There can be no assurance as to the actual effective income tax rates impacting the amounts and timing of cash flows and the amounts of income tax expense recorded by the Company, because such rates will be dependent upon the nature and amount of future income and expenses as well as actual investments generating investment tax credits and transactions with discrete tax effects.
NSBF has the right to call the 2023-1 Class A and B notes at such time as the sum of the principal amount of the Class A Notes and the Class B Notes is less than or equal to 20.00% of the sum of the principal amount of the Class A Notes and Class B Notes as of the closing date of the transaction, with the prior written consent of the SBA.
At such time as the sum of the principal amount of the Class A Notes and the Class B Notes is less than or equal to 20.00% of the sum of the principal amount of the Class A Notes and Class B Notes as of the closing date of the transaction, NSBF has the right, with the consent of the SBA, to terminate the 2023-1 Trust by purchasing the 2023-1 Trust assets, with the Class A and B noteholders receiving the redemption price from the proceeds.
NSBF has the right to call the 2021-1 Class A and B notes at such time as the sum of the principal amount of the Class A Notes and the Class B Notes is less than or equal to 20.00% of the sum of the principal amount of the Class A Notes and Class B Notes as of the closing date of the transaction, with the prior written consent of the SBA.
At such time as the sum of the principal amount of the Class A Notes and the Class B Notes is less than or equal to 20.00% of the sum of the principal amount of the Class A Notes and Class B Notes as of the closing date of the transaction, NSBF has the right, with the consent of the SBA, to terminate the 2021-1 Trust by purchasing the 2021-1 Trust assets, with the Class A and B noteholders receiving the redemption price from the proceeds.
We offer loans outside of our bank (primarily ALP loans) that are initially funded with lines of credit and hedged until a sufficient volume is attained at which time the loans are securitized.
We have also offered loans outside of our bank (primarily ALP loans that have been funded by our JVs and our non-bank subsidiary Newtek ALP Holdings) that have been initially funded with capital and lines of credit and hedged until a sufficient volume is attained at which time the loans are securitized.
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 and TSO JV. These recurring fees are are outlined in servicing agreements and were recorded when earned.
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 .
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.
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. Prior to July 1, 2024, the Company originated ALP loans with the intent to sell the loans to a JV.
Net Gains on Sales of Loans Net gains on sales of loans for the year ended December 31, 2024 and 2023 were as follows: Year Ended December 31, 2024 December 31, 2023 $ Amount $ Amount Gains recognized on sales of loans $ 100,422 $ 75,350 Losses recognized on sales of loans (3,239) (23,883) Net gains on sales of loans $ 97,183 $ 51,467 Year Ended December 31, 2024 December 31, 2023 # of Loans $ Amount # of Loans $ Amount SBA 7(a) loans originated 2,427 $ 943,024 1,812 $ 814,406 SBA 7(a) guaranteed loans sold 2,041 694,750 1,723 607,560 Average sale price as a percent of principal balance 1 110.97 % 110.20 % 1 Realized gains greater than 110.00% must be split 50/50 with the SBA in accordance with SBA regulations.
Net Gains on Sales of Loans Net gains on sales of loans for the year ended December 31, 2025 and 2024 were as follows: Year Ended December 31, 2025 December 31, 2024 Gains recognized on sales of loans $ 47,744 $ 100,422 Losses recognized on sales of loans (189) (3,239) Net gains on sales of loans $ 47,555 $ 97,183 Year Ended December 31, 2025 December 31, 2024 # of Loans $ Amount # of Loans $ Amount SBA 7(a) loans originated 2,269 $ 767,776 2,427 $ 943,024 SBA 7(a) guaranteed loans sold 1,045 290,205 2,041 694,750 Average net sale price as a percent of principal balance 1 111.05 % 110.97 % 1 Realized gains greater than 110.00% must be split 50/50 with the SBA in accordance with SBA regulations.
The Company received $38.0 million in proceeds, before expenses, from the sale of the 2028 Notes.
The 2028 Notes are scheduled to mature on September 1, 2028. The Company received $38.0 million in proceeds, before expenses, from the sale of the 2028 Notes.
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 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.
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.” Our common shares are currently listed on the Nasdaq Global Market under the symbol “NEWT”. 72 Table of Contents Newtek Bank is a national bank and nationally licensed SBA lender under the SBA 7(a) Program, and originates, sells and services SBA 7(a) loans.
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.” Our common shares are currently listed on the Nasdaq Global Market under the symbol “NEWT”.
December 31, 2023 ASSETS Total assets at December 31, 2024 were $2.1 billion, an increase of $630.4 million, or 44.1%, compared to total assets of $1.4 billion at December 31, 2023. As of December 31, 2024, the Company held the assets and liabilities of NTS for sale. Refer to NOTE 9—ASSETS AND LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS HELD FOR SALE.
December 31, 2024 ASSETS Total assets at December 31, 2025 were $2.7 billion, an increase of $684.9 million, or 33.2%, compared to total assets of $2.1 billion at December 31, 2024. As of December 31, 2024, the Company held the assets and liabilities of NTS for sale. Refer to NOTE 4—INVESTMENTS: Intelligent Protection Management Corp .
The Company earns servicing fees from the guaranteed portions of SBA 7(a) loans it originates and sells and from servicing the ALP portfolios of NCL JV and TSO JV.
The Company earns servicing fees from the guaranteed portions of SBA 7(a) loans it originates and sells, from the SBA 7(a) loan securitizations sponsored by NSBF, and from servicing the ALP portfolios in securitizations sponsored by NCL JV (terminated in August 2025) , TSO JV and Newtek ALP Holdings.
During the year ended December 31, 2024, the Company recorded unrealized losses on SBA 7(a) unguaranteed loans accounted for under the fair value option as the portfolio paid down. During the year ended December 31, 2023, the Company originated $158.5 million of SBA 7(a) loans and elected the fair value option on those loans, which led to increased gains.
During the year ended December 31, 2025 and 2024, the Company recorded unrealized losses on SBA 7(a) unguaranteed loans accounted for under the fair value option as the portfolio paid down.
Refer to “Subsequent Events - Sale of NTS.” Other Loan Origination and Maintenance Expense Other loan origination and maintenance expenses during the year ended December 31, 2024, was $13.8 million compared to $9.4 million for the year ended December 31, 2023 due to a larger dollar volume and count of loan originations in 2024 compared to 2023.
Refer to NOTE 4—INVESTMENTS: Intelligent Protection Management Corp . Other Loan Origination and Maintenance Expense Other loan origination and maintenance expenses during the year ended December 31, 2025, was $18.6 million compared to $13.8 million for the year ended December 31, 2024 due to a larger dollar volume and count of loan originations in 2025 compared to 2024.
In addition, the Company has $10.0 million in a restricted cash 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 related to payroll processing by PMT, our subsidiary.
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.
Technology Services Expense The $2.0 million decrease in technology services expenses for the year ended December 31, 2024 corresponded with the $5.3 million decrease in technology and IT support income. Professional Services Expense The increase in professional services expense period over period is primarily attributable to costs associated with the NTS disposition that occurred on January 2, 2025.
Technology Services Expense The $12.3 million decrease in technology services expenses for the year ended December 31, 2025 corresponded with the NTS Sale. Refer to NOTE 4—INVESTMENTS: Intelligent Protection Management Corp . Professional Services Expense The decrease in professional services expense period over period is primarily attributable to costs associated with the NTS disposition that occurred on January 2, 2025.
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.
The reserve for unfunded commitments is determined by estimating future draws and applying the expected loss rates on those draws. 99 Table of Contents 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.
The Company’s Loans HFI at amortized cost and Loans HFS at LCM include a total of $299.1 million of loans, including unfunded commitments, backed by CRE and considered non-owner occupied as of December 31, 2024.
The Company’s Loans HFI at amortized cost and Loans HFS at LCM include a total of $355.9 million of loans, including unfunded commitments, backed by CRE and considered non-owner occupied as of December 31, 2025. The average loan-to-value for this CRE portfolio was 57.5%.
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. Regulatory Capital The Company strives to maintain prudent capital levels to absorb risk and maximizing returns to shareholders.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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The table below sets forth, as of December 31, 2024, the estimated changes in our (i) EVE that would result from the designated instantaneous changes in the forward rate curves; and (ii) NII that would result from the designated instantaneous changes in the U.S. Treasury yield curve, Prime Rate and the Secured Overnight Finance Rate.
The table below sets forth, as of December 31, 2025, the estimated changes in our (i) EVE that would result from the designated instantaneous changes in the forward rate curves; and (ii) NII that would result from the designated instantaneous changes in the U.S. Treasury yield curve, Prime Rate and the Secured Overnight Finance Rate.
A reduction in the price of guaranteed portions of SBA 7(a) loans or disruptions in the markets to which we sell could negatively impact our business. The Company has cash and cash equivalents, which includes cash and due from banks, restricted cash, and interest bearing deposits in banks, of $381.4 million.
A reduction in the price of guaranteed portions of SBA 7(a) loans or disruptions in the markets to which we sell could negatively impact our business. The Company has cash and cash equivalents, which includes cash and due from banks, restricted cash, and interest bearing deposits in banks, of $310.3 million.
We believe that we have placed our cash investments and their equivalents, which include deposits at other institutions, with high credit-quality financial institutions. As of December 31, 2024, cash deposits in excess of insured amounts totaled approximately $30.3 million.
We believe that we have placed our cash investments and their equivalents, which include deposits at other institutions, with high credit-quality financial institutions. As of December 31, 2025, cash deposits in excess of insured amounts totaled approximately $32.5 million.
Basis Point ("bp") Change in Estimated Increase/Decrease in Net Interest Income Estimated Percentage Change in EVE Interest Rates 12 Months Beginning December 31, 2024 12 Months Beginning December 31, 2025 As of December 31, 2024 200 17.7% 17.0% 4.4% 100 8.3 8.0 2.1 -100 (9.6) (9.1) (2.0) -200 (18.6) (17.7) (3.9) Rates are increased instantaneously at the beginning of the projection.
Basis Point ("bp") Change in Estimated Increase/Decrease in Net Interest Income Estimated Percentage Change in EVE Interest Rates 12 Months Beginning December 31, 2025 12 Months Beginning December 31, 2026 As of December 31, 2025 +200 11.7% 12.7% 0.9% +100 5.7 6.1 0.4 -100 (6.8) (7.1) (0.2) -200 (13.4) (14.0) (0.2) Rates are increased instantaneously at the beginning of the projection.
The Company and its non-bank subsidiaries have deposit accounts at Newtek Bank that total $69.4 million, of which $67.7 million is uninsured.
The Company and its non-bank subsidiaries have deposit accounts at Newtek Bank that total $94.5 million, of which $89.5 million is uninsured.
The numerous assumptions used in the simulation process are provided to the ALCO Committee on at least an annual basis. Changes to these assumptions can significantly affect the results of the simulation.
The simulations provide an estimate of the impact of changes in interest rates on equity and net interest income under a range of assumptions. The numerous assumptions used in the simulation process are provided to the ALCO Committee on at least an annual basis. Changes to these assumptions can significantly affect the results of the simulation.
The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest rate sensitive.” An asset or liability is said to be interest rate sensitive within a specific time period if it will mature or reprice within that time period.
The ALCO Committee and Newtek Bank’s board may implement additional policies and procedures relating to these areas in order to manage risk to an appropriate level. 103 Table of Contents The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest rate sensitive.” An asset or liability is said to be interest rate sensitive within a specific time period if it will mature or reprice within that time period.
The results show a theoretical change in the economic value of shareholders’ equity as interest rates change. 97 Table of Contents EVE and NII simulations are completed routinely on Newtek Bank’s balance sheet and presented to the ALCO Committee.
The results show a theoretical change in the economic value of shareholders’ equity as interest rates change. EVE and NII simulations are completed routinely on Newtek Bank’s balance sheet and presented to the ALCO Committee. Other positions outside of Newtek Bank are typically match funded or hedged with instruments that have similar terms and/or interest rate features.
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The ALCO Committee and Newtek Bank’s board may implement additional policies and procedures relating to these areas in order to manage risk to an appropriate level.
Removed
Other positions outside of Newtek Bank are typically match funded or hedged with instruments that have similar terms and/or interest rate features. The simulations provide an estimate of the impact of changes in interest rates on equity and net interest income under a range of assumptions.

Other NEWT 10-K year-over-year comparisons