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1. Company Snapshot

1.a. Company Description

Newtek Business Services Corp.is a business development company specializing in providing financial and business services to the small-and medium-sized business market in the United States.The firm also seeks to invest in early stage businesses.


The firm seeks to makes both debt and equity investments.Under debt investments, it focuses on first lien loans, which have terms of 1 to 25 years; second lien loans, which have terms of 5 to 25 years, and unsecured loans, which are provided to meet short-term funding needs and are repaid within 6 to 12 months.It operates through Electronic Payment Processing, Managed Technology Solutions, Small Business Finance, and Capcos segments.


The company originates small business administration loans for the purpose of acquiring commercial real estate, machinery, equipment, and inventory, as well as to refinance debt and fund franchises, working capital, and business acquisitions; and offers small business loan servicing and consulting services to the Federal Deposit Insurance Corporation and various other financial institutions, as well as provides management services.Its electronic payment processing services include credit and debit card processing, check approval, ancillary processing equipment and software to merchants, eCommerce, electronic solutions to accept non-cash payments, check conversion, remote deposit capture, ACH processing, and electronic gift and loyalty card programs.The company also provides Website hosting, dedicated server, and cloud hosting services; Web design and development; Internet marketing; data storage and backup and other related services; and ecommerce services, such as payment processing, online shopping cart tools, Website design and Web related services; Accounts Receivable Financing, and The Secure Gateway.


In addition, it offers Newtek Advantage, a mobile, real-time operating platform enabling a business to access data on a smartphone, tablet, laptop, or PC for eCommerce, credit/debit transactions, Website statistics, payroll, insurance, and business loans.Further, the company sells personal, commercial, and health/benefits lines of insurance products; and payroll management processing and employee tax filing services.It has strategic alliances with American International Group, CTAA, Navy Federal Credit Union, Credit Union National Association, Pershing, and others to provide agent services to small business clients.


The firm seeks to invest in New York and Louisiana area.The firm seeks to invest $0.3 million to $3 million in businesses.It provides small business terms loans ranging from $0.05 million to $10 million.


The firm also provides account receivable financing ranging from $0.05 million to $1.5 million.It also provides $0.05 million to $10 million financing to owner occupied real estate businesses whose average net income over the last 2 years must not exceed $2.5 million.Newtek Business Services Corp.,was founded in 1998 and converted to a BDC company in 2014 and is headquartered in Boca Raton, Florida with additional offices in Lake Success, New York, Garden City, New York; Miami, Florida; Milwaukee, Wisconsin; New Orleans, Louisiana; and New York, New York.

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1.b. Last Insights on NEWT

NewtekOne's recent performance was driven by strong Q2 earnings, with diluted EPS of $0.52, beating estimates. The company's business model, though risky, provides an attractive 7% dividend yield. Recent developments, including the upsize of its warehouse facility to $170 million and an additional $100 million facility with Capital One, position the company for growth. The launch of a real-time, all-in-one business banking and merchant solutions platform is a game-changer for independent business owners.

1.c. Company Highlights

2. NewtekOne's Q3 2025 Earnings: A Strong Performance

NewtekOne reported outstanding financial numbers in Q3 2025, with return on average assets of 3.15% and return on tangible common equity of 32%. The company's efficiency ratio improved to 56.3%, and its earnings per share (EPS) came in at $0.67, beating estimates of $0.63. The company's revenue growth is expected to continue, with analysts estimating a 13.3% increase in revenues for next year.

Publication Date: Nov -12

📋 Highlights
  • Outstanding Financial Metrics:: ROAA of 3.15%, ROTE of 32%, and efficiency ratio of 56.3% highlight strong profitability.
  • Deposit Growth Momentum:: Sequential business deposit growth of 17% and consumer deposits up 12% driven by the Newtek Advantage model.
  • ALP Securitization Expansion:: $325–350 million Q4 2025 securitization (17th overall) with 568 bps spread margin, leveraging low-cost deposits.
  • Balance Sheet Strength:: $1.2 billion deposit base (78% insured) and loan-to-deposit ratio of 95% ensure liquidity stability.
  • Non-Core Revenue Streams:: Payment processing to contribute $16.5M pretax in 2025, and insurance agency policy growth to 10,000 (+34% YoY) with $800K pretax.

Business Model and Financial Highlights

NewtekOne's business model, which combines technology and traditional banking, has been a key driver of its success. The company's Alternative Loan Program (ALP) has been a significant contributor to its growth and profitability, with a securitization expected in Q4 2025. Newtek Bank National Association reported strong financial highlights, including return on assets of 3.57% and return on tangible common equity of 32%. The bank's loan growth was 9% held for investment, and deposits were up 11% quarter-over-quarter.

Valuation and Dividend Yield

At a Price-to-Tangible Book Value (P/TBV) ratio of 0.82, NewtekOne's stock appears to be reasonably valued. The company's Dividend Yield is 7.47%, which is attractive for income investors. With a ROE of 17.89%, NewtekOne is generating strong returns on its equity. The company's capital ratios are healthy, with a total risk-based capital ratio of 16%.

Growth Prospects and Challenges

NewtekOne is targeting $350-400 million in ALP loans for this calendar year and hopes to do materially more than that next year. The company's SBA 7(a) loan portfolio has a concentration, but it is layering in more CRE and C&I into the bank portfolio, which will level off. The company is diversifying its balance sheet and is well-positioned for long-term growth, despite potential challenges in the SBA loan origination space.

Management's Outlook

Management is cautious about the potential pipeline and activity within the SBA lending space, but feels good about the company's long-term position in the market. The company is not planning to increase the dividend in the near term, but may consider buybacks to increase the dividend. With a strong business model and healthy capital ratios, NewtekOne is well-positioned for continued growth and profitability.

3. NewsRoom

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NewtekOne: 7.5% Dividend Yield And 10% Discount To Tangible Book Value

Nov -24

Source: seekingalpha.com

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Newtek Merchant Solutions Hires Justine Martin as Chief Revenue Officer

Nov -05

Source: globenewswire.com

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NewtekOne, Inc. (NEWT) Q3 2025 Earnings Call Transcript

Oct -30

Source: seekingalpha.com

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NewtekOne (NEWT) Q3 Earnings: How Key Metrics Compare to Wall Street Estimates

Oct -30

Source: zacks.com

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NewtekOne (NEWT) Q3 Earnings Surpass Estimates

Oct -29

Source: zacks.com

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NewtekOne, Inc. Reports 3Q25 and Year-to-Date 2025 Basic and Diluted EPS of $0.68 and $0.67 and $1.57 and $1.54

Oct -29

Source: globenewswire.com

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Newtek Business Services Corp. 5.50% Notes Due 2026 (NASDAQ:NEWTZ) Sees Large Increase in Short Interest

Oct -24

Source: defenseworld.net

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NewtekOne (NEWT) Earnings Expected to Grow: Should You Buy?

Oct -22

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.27%)

6. Segments

Lending and Investment

Expected Growth: 10.27%

Newtek Business Services Corp.'s 10.27% growth in Lending and Investment is driven by increasing demand for alternative lending options, expansion of payment processing services, and strategic partnerships. Additionally, the company's focus on technology-enabled lending platforms, diversified loan portfolio, and strong capital position have contributed to its growth momentum.

7. Detailed Products

Payment Processing

Newtek Business Services Corp. offers payment processing solutions that enable businesses to accept credit card payments, manage transactions, and reduce fraud risks.

Web Design and Development

Newtek provides web design and development services to help businesses create a strong online presence, including website design, development, and hosting.

E-commerce Solutions

Newtek offers e-commerce solutions that enable businesses to create and manage online stores, process payments, and manage inventory.

Business Lending

Newtek provides business lending services, offering loans and lines of credit to help businesses finance their operations and growth.

Insurance Services

Newtek offers insurance services, including business insurance, workers' compensation insurance, and liability insurance, to protect businesses from risks.

HR and Payroll Services

Newtek provides HR and payroll services, including payroll processing, benefits administration, and compliance management.

IT and Cybersecurity Solutions

Newtek offers IT and cybersecurity solutions, including network security, data backup, and disaster recovery services, to protect businesses from cyber threats.

8. Newtek Business Services Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Newtek Business Services Corp. operates in a niche market, providing business and financial solutions to small and medium-sized businesses. While there are some substitutes available, they are not a significant threat to the company's operations.

Bargaining Power Of Customers

Newtek Business Services Corp. has a diverse customer base, and no single customer has significant bargaining power. The company's products and services are also tailored to meet the specific needs of its customers, reducing the bargaining power of customers.

Bargaining Power Of Suppliers

Newtek Business Services Corp. relies on a network of suppliers to provide its products and services. While the company has some bargaining power due to its size and scale, suppliers still have some negotiating power, particularly in the provision of specialized services.

Threat Of New Entrants

The financial services industry is heavily regulated, and new entrants would need to meet stringent regulatory requirements to operate. Additionally, Newtek Business Services Corp. has a strong brand and established customer base, making it difficult for new entrants to gain traction.

Intensity Of Rivalry

The financial services industry is highly competitive, with many established players competing for market share. Newtek Business Services Corp. operates in a niche market, but still faces intense competition from other providers of business and financial solutions.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 81.68%
Debt Cost 5.83%
Equity Weight 18.32%
Equity Cost 10.30%
WACC 6.65%
Leverage 445.86%

11. Quality Control: Newtek Business Services Corp. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Investcorp Credit Management BDC

A-Score: 6.5/10

Value: 7.8

Growth: 3.8

Quality: 7.3

Yield: 10.0

Momentum: 3.0

Volatility: 7.0

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Newtek Business Services

A-Score: 6.3/10

Value: 8.2

Growth: 4.2

Quality: 6.1

Yield: 10.0

Momentum: 3.0

Volatility: 6.0

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A-Score: 6.2/10

Value: 6.6

Growth: 3.6

Quality: 8.3

Yield: 10.0

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BNY Mellon Strategic Municipals

A-Score: 6.1/10

Value: 5.4

Growth: 4.1

Quality: 5.5

Yield: 7.0

Momentum: 4.5

Volatility: 10.0

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Silvercrest Asset Management Group

A-Score: 5.8/10

Value: 6.5

Growth: 3.0

Quality: 6.4

Yield: 8.0

Momentum: 3.0

Volatility: 7.7

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BrightSphere

A-Score: 4.6/10

Value: 2.7

Growth: 6.3

Quality: 7.1

Yield: 0.0

Momentum: 5.0

Volatility: 6.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

11.27$

Current Price

11.27$

Potential

-0.00%

Expected Cash-Flows