Asia FX weakens slightly, rupee recovers from record low as RBI holds rates
Introduction & Market Context
NewtekOne, Inc. (NASDAQ:NEWT) presented its first quarter 2025 financial results on May 7, 2025, reporting earnings that exceeded both company guidance and analyst expectations. The financial technology company, which operates as a bank holding company, posted diluted earnings per share (EPS) of $0.35, surpassing its previously announced guidance range of $0.28-$0.32.
The company’s stock, which closed at $9.54 on May 6, gained 5.77% in after-hours trading following the earnings announcement, reflecting positive investor sentiment toward the results.
As shown in the following summary of key highlights from the CEO’s message:
Quarterly Performance Highlights
NewtekOne reported strong financial performance for the first quarter of 2025, with several metrics showing significant improvement. The company maintained its full-year 2025 EPS guidance range of $2.10-$2.50 per share, which represents a projected 17% growth over 2024 despite increased provisions for credit losses.
The company’s return on average assets (ROAA) reached 1.81% in Q1 2025, approximately double the peer average of 90 basis points. This superior profitability metric underscores NewtekOne’s efficient business model as a technology-oriented financial holding company.
The detailed financial highlights for Q1 2025 compared to the same period last year reveal the company’s strong performance across multiple metrics:
Pre-Provision Net Revenue (PPNR) increased by 47% year-over-year to $25.2 million, while the efficiency ratio improved from 71% in Q1 2024 to 62.1% in Q1 2025, demonstrating the company’s ability to grow assets while controlling expenses. Total (EPA:TTEF) assets grew by 42% year-over-year with operating expenses remaining flat, highlighting the scalability of NewtekOne’s business model.
Detailed Financial Analysis
NewtekOne’s loan portfolio showed significant growth and diversification. The company’s Alternative Loan Program (ALP) loans reached approximately $535 million by the end of Q1 2025, more than doubling from $221 million in Q1 2024. Meanwhile, losses from Newtek Small Business Finance (NSBF), the company’s legacy non-bank subsidiary which is in wind-down mode, declined by more than 50% quarter-over-quarter.
The company’s tangible book value per share has shown consistent growth, increasing by 8% quarter-over-quarter, 23% year-over-year, and an impressive 47% since NewtekOne transitioned to a financial holding company.
As illustrated in the following chart of tangible book value growth:
The company’s loan portfolio is increasingly diversified, with 50% of total loans held at Newtek Bank, 37% on the holding company’s balance sheet at non-bank subsidiaries, and 13% in joint ventures as of March 31, 2025. This diversification strategy helps mitigate risk while allowing for growth in multiple lending segments.
The following breakdown shows the distribution of NewtekOne’s $1.9 billion loan portfolio:
On the deposit side, NewtekOne reported strong growth in business deposits, which increased 12% quarter-over-quarter, while consumer deposits grew by 2%. The company’s loan-to-deposit ratio at Newtek Bank was 84%, with insured deposits accounting for 79% of the total.
Forward-Looking Statements
NewtekOne maintained its full-year 2025 financial forecast, projecting significant growth across key metrics compared to 2024. The company expects net interest income to increase from $40.3 million in 2024 to $67.1 million in 2025, while net income is forecast to grow from $50.9 million to $62.1 million.
The detailed forecast for 2025, including quarterly projections, is presented below:
For loan originations, NewtekOne projects $1 billion in SBA (LON:SBA) 7(a) loans, $250 million in SBA 504 loans, and $500 million in Alternative Loan Program loans for 2025. The company also forecasts $225 million in growth for commercial real estate and commercial and industrial loans, along with $150 million in business deposit growth and $180 million in consumer deposit growth.
The following chart details the company’s origination and growth forecast:
Competitive Industry Position
NewtekOne’s business model continues to demonstrate superior profitability compared to peers. The company’s Pre-Provision Net Revenue (PPNR) to average assets ratio of 4.86% in Q1 2025 was 3.4 times the average of $1-10 billion banks (1.43%). This outperformance is attributed to wider lending margins, various sources of "capital-light" non-interest income, and a lower-cost expense infrastructure.
As shown in the following chart highlighting the company’s industry-leading PPNR:
The company’s robust PPNR has enabled it to absorb provisions for credit losses as its SBA 7(a) loan portfolio seasons. Newtek Bank’s PPNR was 13.2% of average loans for Q1 2025 and has averaged 18.7% over the last year, compared to peer averages of 2.1% for Q1 2025 and 2.0% for the last twelve months.
When compared to peers, NewtekOne’s financial metrics demonstrate its strong competitive position. The following comparison table illustrates how the company stacks up against similar financial institutions:
CEO Barry Sloane emphasized the company’s technology-driven approach, positioning NewtekOne as a "technology-oriented financial holding company operating a digital bank (neobank) without traditional branch networks." This strategy allows for efficient customer acquisition and service delivery through proprietary technology platforms.
The company’s focus on providing business and financial solutions to independent business owners in the United States, coupled with its technological capabilities, continues to drive its differentiated market position and superior financial performance relative to peers.
Full presentation:
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.