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Introduction & Market Context
NewtekOne, Inc. (NASDAQ:NEWT) presented its second quarter 2025 financial results on July 28, highlighting strong performance across key metrics and maintaining its full-year guidance. The company, which transformed its business model after acquiring Newtek Bank in January 2023, continues to position itself as a technology-oriented financial solutions provider for independent business owners.
The stock closed at $11.71 on the day of the presentation, up 0.94% from the previous close, according to available market data. Currently trading well above its 52-week low of $9.12 but below its high of $15.49, NewtekOne continues to execute on its strategy of supporting small businesses while improving operational efficiency.
Quarterly Performance Highlights
NewtekOne reported substantial year-over-year growth in key financial metrics for Q2 2025. Diluted earnings per share reached $0.52, a 21% increase from $0.43 in Q2 2024, while net income grew 27% to $13.3 million compared to $10.5 million in the prior year period.
The company’s pre-provision net revenue showed remarkable growth, increasing 35% year-over-year to $27.9 million, demonstrating the strength of NewtekOne’s business model and revenue generation capabilities.
As shown in the following comprehensive financial overview, the company also reported significant improvements in balance sheet metrics, with total deposits growing 78% year-over-year to $1.08 billion and loans held for investment at Newtek Bank increasing 70% to $767.8 million:
The company’s tangible book value per share reached $10.55, representing a 22% increase from Q2 2024 and continuing a consistent growth trend that has seen tangible book value increase by 52% over the past nine quarters:
Strategic Initiatives
A key strategic development in Q2 was the completion of an Alternative Loan Program (ALP) securitization in April. This transaction involved the securitization of $216 million of ALP loans, with the trust issuing and selling $184 million of notes at an 87% advance rate. The securitized loans carry a weighted average coupon of 13.3%, while the notes have a weighted average coupon of 6.6%, creating an attractive spread.
As illustrated in the presentation, this securitization significantly reduced on-balance sheet ALP loans from $294.5 million in Q1 2025 to $138.1 million in Q2 2025, improving capital efficiency:
Another important strategic focus has been the reduction of the legacy NSBF (Newtek Small Business Finance) headwind. The company reported that NSBF losses continue to shrink, with the accruing portfolio down $102 million year-over-year, or approximately 30%. Non-accrual inflows in the NSBF portfolio peaked in Q2 2024 and have decelerated for four consecutive quarters as the portfolio continues to season:
Detailed Financial Analysis
NewtekOne’s efficiency ratio improved significantly, declining from 66.3% in Q2 2024 to 60.3% in Q2 2025, indicating better operational leverage. This improvement came as operating expenses increased just 4.3% year-over-year despite a 37.4% growth in average assets.
The following chart illustrates the company’s improving efficiency ratio trend:
The company’s loan portfolio composition has evolved significantly, with Newtek Bank’s loans held for investment now representing 37% of the total loan mix, followed by off-balance sheet ALP loans at 21%. This diversification helps spread risk while maintaining strong yield potential:
NewtekOne’s pre-provision net revenue as a percentage of average assets remained strong at 5.25% for Q2 2025, compared to 5.33% for Q2 2024. Total (EPA:TTEF) revenue, defined as the sum of net interest income and noninterest income, was $70.2 million for Q2 2025, up 15% from $61.1 million for Q2 2024:
The company also maintained strong premiums on SBA (LON:SBA) 7(a) loan sales, with a weighted average net premium of 111% for Q2 2025. This remains a key revenue driver for NewtekOne:
Forward-Looking Statements
NewtekOne maintained its 2025 annual EPS guidance range of $2.10-$2.50 per share, which implies a 17% annual EPS growth at the midpoint. The company’s detailed forecast shows expected net income of $62.1 million for 2025, up from $50.9 million in 2024, and diluted earnings per share of $2.30, compared to $1.96 in 2024.
The quarterly estimates suggest stronger performance in the second half of 2025, with projected EPS ranges of $0.60-$0.75 for Q3 and $0.65-$0.80 for Q4:
Management expects the market clearing premium of guaranteed portions of SBA 7(a) loans to be approximately 110% for the second half of 2025. Additionally, ALP loan originations for the second half of 2025 are expected to approximate $250 million.
The company also anticipates continued improvement in credit quality metrics as the NSBF portfolio continues to run off and newer loans season. With more than 85% of Newtek Bank’s loan portfolio less than three years old, the company expects credit performance to improve as these loans mature.
NewtekOne’s strategic focus remains on growing business deposits, expanding its technology-oriented banking platform, and continuing to leverage its expertise in SBA lending while developing new revenue streams through its Alternative Loan Program.
Full presentation:
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