NewtekOne (NEWT) 17th Annual LD Micro Main Event Conference summary

Strategic positioning and business model

• Acquired an OCC-chartered bank to leverage frequent customer engagement and build a unique market position.

• Focuses on non-interest income streams such as payment processing, tech solutions, and insurance, making up 65%-70% of income.

• Operates without traditional branches, bankers, or brokers, relying on technology and a referral-based client acquisition system.

• Offers a zero-fee business bank account with higher interest and 24/7 professional support, targeting SMBs and SMEs.

• Provides integrated solutions through the Newtek Advantage, including document storage, analytics, payroll, and IT management.

Financial performance and growth

• Achieved a 6.4% return on average assets and 48% return on tangible common equity in Q2, far exceeding industry norms.

• Efficiency ratio stands at 42.3%, significantly lower than typical banks due to a lean, tech-driven model.

• Sequential deposit growth reached 17.4% from March to June 2024, with total bank size around $800 million.

• Loan growth is driven by fully amortizing, personally guaranteed loans, not by loosening credit standards.

• Loan loss reserves are 470 basis points, six to seven times higher than average banks, reflecting a conservative approach.

Operational updates and future outlook

• Staff and infrastructure are in place to support growth up to 10 times current size, with ongoing hiring of top talent.

• Business plan and model are functional but still in early stages; focus is on better integration and staff training.

• No immediate plans for acquisitions; growth will be organic, leveraging existing infrastructure and technology.

• Regulatory compliance is strong, with 30% of loans to minority and women-owned businesses across all 50 states.

• Forecasting $1.95 midpoint EPS for the year, with continued investor outreach and upcoming projections for 2025.