Q2 2025 NewtekOne Inc Earnings Call

Operator: Welcome to the NewTek One Inc. second quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode.

Good day, and thank you for standing by.

Welcome to the new tech War Inc. Second Quarter 2025 earnings conference call.

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At this time, all participants are in a listen-only mode.

After the speaker's presentation, there will be a question-and-answer session.

To ask a question during the session, you will need to press *1 on your telephone. You will then hear an automated message advising that your hand is raised to withdraw your question. Please press *1 1 again.

Barry Sloane: I would now like to hand the conference over to your speaker today, President and Chief Executive Officer Barry Sloane. Please go ahead. Thank you, operator, and welcome, everyone, to the NewTek One. NASDAQ NEWT, Second Quarter 2025 Financial Results Conference Call.

Please be advised that today's conference is being recorded.

I would like to hand the conference over to our speaker today, President and Chief Executive Officer Barry Sloane. Please go ahead.

Thank you, operator. And welcome, everyone, to the new Tech 1.

Barry Sloane: My name is Barry Sloane, CEO and President of Newtek One.

Barry Sloane: Joining me here today on the call will be Frank DeMaria, Chief Financial Officer of Newtek One, and Scott Price, the CFO of Newtek Bank National Association.

Barry Sloane: I also want to introduce Bryce Rowe, who is not on the call, in charge of investor relations. Bryce joined the organization recently from the firm of B. Reilly, where he represented us. Bryce, while he was there, was the equity analyst for BDCs and banks, and very helpful and instrumental in shaping our presentation and deck to make it a little bit more digestible and understandable.

I also want to introduce.

Ice road was not in the call in charge of Investor Relations.

<unk> joined the organization recently.

From a firm with B Riley where he represented.

Price well he was there was the equity analysts for Bdcs and thanks very helpful and instrumental in shaping our presentation deck to make it a little bit more digestible and understandable I also want to give a couple of shout outs to some additional new hires.

Barry Sloane: I also want to give a couple of shout-outs to some additional new hires. Kathleen, our Chief Strategy Officer, joins us from Flagstaff Bank, has been incredibly instrumental in helping us with various... near future of our digital account opening and merchant instant merchant account opening simultaneous as well as the reverse opening up an instant merchant account getting I also want to announce Dick Mahajanin has joined us recently. Dick has had a long-term career as an M&A banker and was our banker at Credit Suisse and Deutsche Bank. Dick is the Chief Investment Officer of the bank and has been working very closely with the bank president, Peter Downs, in buying and selling loans and particularly developing a process for moving non-performing loans off the books in the balance sheet.

One our chief strategy Officer joined US from Flagstar Bank has been incredibly instrumental in helping us with variation.

Near future of our digital account opening and merchant.

Merchant account opening simultaneous as well as the reverse opening up an instant merchant account getting them.

I also want to announce.

Aegean has joined US recently, but has.

Had a long term career as an M&A banker it up and what's our banker it.

Credit Suisse, and Deutsche Bank take as Chief investment Officer of the Bank, there's gonna working.

Closely with the bank, President, Peter Downs, and buying and selling allowance in particularly developing a process for moving.

Nonperforming loans off the books from the balance sheet with that.

Barry Sloane: With that, I'd like to mention everybody to follow along on today's presentation. Please go to Newtek1.com, go to the Investor Relations section, and the PowerPoint is hung there. On slide number two of the PowerPoint is our note regarding forward-looking statements. Please ask everybody to familiarize yourself with that note. On slide number three, an important part of our discussion today is really looking and focusing on what is Newtek and what does it do, what's our mission statement and what's our purpose. Well, it all starts off with the customer. We provide business and financial solutions to a target market of over 33 million independent business owners in the U.S.

Like to mentioned everybody to follow along on today's presentation. Please go to a new tech one dot com go to the Investor Relations section and the Powerpoint is hung in there.

Slide number two of the Powerpoint is our note regarding forward looking statements. Please ask everybody to familiarize yourself with that note.

On slide number three.

And part of our discussion today is really looking and focusing on what is new tech on what does it do what's our mission statement and what's their purpose well it all starts off with the customer.

We provide business and financial solutions to a target market over 33 billion independent business owners in the U S.

Barry Sloane: Some participants refer to them as SMEs, SMBs, subject small, medium-sized enterprises, small and medium-sized businesses. And recently, we acquired a federally insured deposit. It's important we choose and prefer not to be looked at just like a bank holding company, a bank, because as you go through this presentation, we really don't look like most of the bank holding companies and banks. We're different in a variety of different ways in terms of how we approach the customer, how do we provide a frictionless opportunity for the client, the type of revenues, earnings that come through our system.

Participants refer to them as SME SMB subject small medium sized enterprises small and medium sized businesses and recently.

You acquired a federally insured depository, it's important we choose and prefer not to be looked at just like a bank holding company and bank because you go through this presentation. We really don't look like most of the bank holding companies and banks with different in a variety of different ways in terms of how we approach the customer how do we provide a frictionless opportune.

For the client.

Revenues earnings.

Barry Sloane: So we look forward to discussing that presentation with you here today. Relative to the importance of the SMB, SME, or independent business owner class in the United States, according to the U.S. Chamber of Commerce, small businesses employ almost half of the American workforce, and we do think as things go forward, particularly artificial intelligence, they'll continue to be a very prominent part of the employment opportunity in the U.S. SMBs represent 43% of U.S. GDP, and 99% of the business in the United States identify themselves as small. Also important to note, according to the SBA's data, over the last five and a half years, Newtek won as one of the more active 7A lenders through its non-bank and bank subsidiary has supported and stabilized over 110,000 jobs.

They come through our system. So we look forward to discussing net presentation with you here today relative to the importance of the SMB SMB or independent business on a class in the United States. According to the U S Chamber of Commerce small businesses employ almost half of the American workforce and we do think as things go forward, particularly of artificial intelligence.

We will continue to be a very prominent.

Part of the employee deployment opportunity in the U S.

Smbs represent 43% of U S GDP and 99% of the business in the United States identify themselves as small.

Also important to note. According to the SBA data over the last five and a half years New Tech. One is one of the more active <unk> lenders through its nonbanking Bank subsidiary has supported and stabilized over 110000 jobs I think its important to note that we do serve a public purpose that a public good we're not just an SBA.

Barry Sloane: I think it's important to note that we do serve a public purpose and a public good. We're not just an SBA lender, as you'll see throughout this presentation. We do all types of loans to this particular demographic. But in being an SBA lender, and the definition of an SBA 7A loan is a loan that is not available under normal bank circumstances. As a matter of fact, there's a test called the credit elsewhere test that says these types of loans do not Qualified for a normal bank loan, it's important to note that we therefore have greater losses and greater provisions but mid of those losses and provisions and expense, we provide greater returns.

Lender as you'll see throughout this presentation, we do all types of loans to this particular demographics, but in meeting an SBA lender in the definition of an SBA seven loan is alone that is not available.

Under normal bank circumstances as a matter of fact, there is any SaaS called credit elsewhere test that says these types of loans do not.

Qualified for a normal bank loans. It is important to note that we therefore have greater losses in greater provisions, but net of those losses and provisions and expense we provide greater returns. So when we're comparing us to the rest of the banking industry. There are certain metrics that compare is in an unfavorable light.

Barry Sloane: So when we're comparing us to the rest of the banking industry, there are certain metrics that compare us in an unfavorable light.

Barry Sloane: Newtek One is a financial holding company regulated by the Fed. We focus on using proprietary and patented advanced technological solutions to acquire customers and to solution them cost effectively. Also important to note, most bank holding companies don't have a lot of assets in them. We're extremely active as a bank holding. Evidence, Newtek Merchant Solutions that does about $17 million of pre-tax income and even up and our alternative loan program business which has a balance sheet or I should say loans that are made in joint ventures and in various structures that are about $450 to $500 million.

<unk> one is the financial holding company regulated by the fed we focus on using proprietary and patented advanced technological solutions to acquire customers and to solution them cost effectively also important to note. Most bank holding companies don't have a lot of assets in them, we're extremely active as a bank holding company.

Evidence you take margin solution that does about $17 million of pre tax income in EBITDA and our alternative loan program business, which has a balance sheet.

Say loans that are made in joint ventures, and in various structures that about $450 million to $500 million.

Barry Sloane: We do provide a full menu of best-in-class, on-demand solutions to its independent business owner clientele without using traditional bankers, branches, brokers, or BDOs. Through this methodology, we picked up 19,000 depository accounts since its inception. We do loans digitally and remotely, and we also handle our clients' ability to send money, receive money, payment processing solutions, payroll solutions, and insurance.

We do provide a full menu of best in class on demand solutions to its independent business owner clientele without using traditional bankers branches brokers or videos through just about the <unk>. We picked up 19000 depository accounts since its inception, we do.

Allowance digitally and remotely and we also handle our clients' ability to send money received money.

Payment payment processing solutions payroll solutions and insurance.

Barry Sloane: In a nutshell, we are a technology-oriented financial holding company operating and owning a digital bank that operates exclusively using an online banking platform without what you traditionally see in a bank holding company and a bank. We believe that going forward, the banking industry will tremendously benefit from technology and artificial intelligence, which we are currently embracing and utilizing. It's important to note we think that many of the institutions that you're familiar with will not look like the current bank of today. Frankly, from our perspective, we have a belief that we are already doing which is what they want to do.

Shell, we are technology oriented financial holding company operating and owning a digital bank that operates exclusively using online banking platform without what you traditionally see.

Bank holding company and a bank, we believe that going forward the banking industry will tremendously benefit from technology and artificial intelligence, which we are currently embracing and utilizing its important to note. We think that many of the institutions that you are familiar with we will not look like the current bank of today frankly.

From our perspective, we have a belief that we are already doing which is what they want to do they want to acquire customers remotely they want to.

Barry Sloane: They want to acquire customers remotely. They want to really automate their business. They want to use AI. These are things as you go through the presentation that we're already in the process of doing.

Really automate their business they want to use AI. These things as you go through the presentation.

Already in the process of doing slide number for.

Barry Sloane: Slide number four. Q2 financial and operational successes. First off, we're maintaining our earnings per share guidance of $2.10 on the low to $2.50 at the high. That's for calendar year 2024. Also important to note, one of the things we really don't talk enough about is revenue growth. We have 15% revenue growth in Q2 2025, $78.2 million versus $61 million in Q2 2024. Some of the other operational and financial highlights, and an important part, is growth in business deposits. Business deposits come in on a less expensive basis. They're more transactional. But in order to get business deposits, and we believe the non-interest bearing depository account will begin to go away over time.

Q2 financial and operational successes first off we're maintaining.

Our earnings per share guidance of $2 10 on the low to $2 50 at the high that's for calendar year 2024 also important to note one of the things we really don't talk enough about is revenue growth with 15% revenue growth in Q2, 2025, $78 2 million versus 60.

$1 million in Q2 2020 for some of the other operational and financial highlights and an important part is growth in business deposits business deposits come in on a less expensive basis theyre more transactional but in order to get business deposits and we believe the noninterest bearing depository account.

Barry Sloane: As a matter of fact, if you go to Coinbase and you own a stable coin, you probably get 2% to 3% on your money. We were very pleased that we were able to grow business deposits at the bank by $50 million sequentially, with most of the money coming in the DDA account. The reason why we're able to do that is we're getting opportunities for lending, merchant services, and payroll, all in an integrated solution. With that, our cost of funds at the bank declined dramatically, and is forecast to continue to come down. The best is yet to come.

We'll begin to go away over time as a matter of fact, if you've got a coinbase and you're only stable coin you'd probably get 2% to 3% on your money. So we were very pleased that we were able to grow business deposits at the bank by $50 million sequentially with most of the money coming in and the DDA account. The reason why we're able to do that.

As we are getting opportunities for lending merchant services and payroll or a integrated solution with that our cost of funds at the bank declined dramatically and is forecast to continue to come down the best is yet to come.

Barry Sloane: We had a 28 basis point decline in our cost of funds. I think it came in about 3.71. The net interest margin at the bank increased by 56 basis points. Once again, we're very pleased with what we've had at the bank with respect to our cost of funds. That's extremely important going forward. We're just beginning to get deposits below that risk-free rate, which I talk about, which is the bill rate or NAV of a government-guaranteed money mark. Importantly, we'll discuss this on one of the slides going forward.

We had a 28 basis point.

Decline in our cost of funds I think came in about $3 seven one the net interest margin at the bank increased by 56 basis points. So once again, we're very pleased with what we've had at the bank with respect to our cost of funds. That's extremely important going forward that we're just beginning to get depart.

That's below that risk free rate, which I talked about which is the bill rate or <unk> of our government.

Guaranteed money market fund.

Fortunately, we'll discuss this on one of the slides going forward losses continue to shrink and you take small business finance.

Barry Sloane: Losses continue to shrink in Newtek Small Business Finance. In the recent quarters, we went from a $10.7 million loss to a $4.9 million loss to a $3.7 million loss. And Newtek Small Business Finance was the prior non-bank SBA lender that is in a rundown mode and it's held up at the holding company, no longer lending.

Recent quarters with about $10 $7 million loss to a <unk>.

$4 $9 million loss to a $3 $7 million loss and.

You take small business finance was the prior.

Non bank SBA lender that has been a run down mode and it shows up at the holding company no longer lending.

Barry Sloane: The Alternative Loan Program will spend a lot of time on this today, and hopefully we'll be able to position this in a better light so people can understand the value of ALP, not just to our business customers, but to all our stakeholders, including shareholders. It's extremely important to note that our Alternative Loan Program, which has now completed three securitizations successfully, is growing, has high-quality loans, and is very accretive to earnings per share. We're going to talk about our operating leverage being captured and really supporting above-average profitability. When you take a look at our ROAAs, ROTCEs, the expense ratio is really extremely favorable on a comparative basis.

The alternative loan program will spend a lot of time on this today and hopefully we'll be able to position us in a better way. So people can understand the value of the LP not just to our business customers put to all our stakeholders, including shareholders. It's extremely important to note that our alternative loan program, which is now completed three securitizations.

<unk> successfully.

Is growing has high quality loans and is very accretive to earnings per share.

We're going to talk about our operating leverage being captured and really supporting above average profitability. When you take a look at our ROI as rotc's. The expense ratio is really extremely favorable on a comparative basis last bullet.

Barry Sloane: Last bullet, a portion of the $18 million of the unrealized gain in Q1 did cause some of our investors some level of confusion. I think it's important to note that from Q1 2025 to Q2, when we sold the government-guaranteed loans and moved the ALP loans off the balance sheet into the securitization, that actually got eliminated. The government-guaranteed 7A loans were sold for cash, and the ALP loans were written down at full value to par to go into the equity stake in the securitization. I think it's important to note, we make loans and sell them. Most banks make loans, not at the growth rates that we do, and they hold them.

Portion of the $18 million.

The unrealized gain in Q1 did cause some of our investors some level of confusion I think it is important to note that from Q1 2025 to Q2, when we sold the government guaranteed loans and move the ILP loans.

Off the balance sheet.

The securitization that actually got eliminated.

Government guaranteed seven loans were sold for cash and the LP loans were written down at book value to par to go into the equity stake in the securitization.

I think it's important to note, we make loans and sell them most banks make loans not at the growth rates that we do and they hold them. We believe we're different than 95% of the other banks out there and we're very very excited about our business model now operating through.

Barry Sloane: We believe we're different than 95% of the other banks out there, and we're very, very excited about our business model now operating through 10 quarters of success. We're going to talk a lot on this particular presentation about what we're doing in the ALP business in future slides, which I think should develop a better understanding of what we're doing. I think important to note, we'll come back to this, the residual interest in the ALP recent securitization in the 2025 deal is marked at a 14% yield, including a loss of severity and frequency or charge-off rate historically over the life of the loans at 3%.

10 quarters of success.

We're going to talk a lot on this particular presentation about what we're doing in the AARP business in future slides, which I think should develop a better understanding of what we're doing I think important to note we'll come back to this.

Residual interest in the LP recent securitization in 2025 deal is marked at a 14% yield, including our loss severity and frequency or charge off rate historically over the life of the loans at 3% and this is something that we've consistently done as we've done three securitizations one.

Barry Sloane: And this is something that we've consistently done as we've done three securitizations, one in 2022, one in 2024, and the more recent one, 2025-1.

In 2022, one and 2024 and the more recent one.

2025 dash, one moving to slide number five second quarter CEO highlights.

Barry Sloane: Moving to slide number five, second quarter, CEO highlights. For the earnings picture, basic and diluted EPS of 53 and 52 cents, respectively. The first half basic and diluted EPS of 89.87 are above the midpoint of our guidance, which is 78 to 92 cents. We're leaving that annual 210 to 250 share EPS unchanged, and the midpoint implies an EPS growth rate of 17 percent, typically something you don't see in most bank or bank holding. We talked about success in growing core deposits. We talked about the reduced headwinds from our SBA non-bank lender, Newtek Small Business Finance, with a first half 25 loss of 8.7 of the 2024 loss for the full calendar year was 28.7.

For the earnings picture basic and diluted EPS of <unk>, 53, and 52 cents, respectively. The first half basic and diluted EPS of <unk> 80, 987% are above the midpoint of our guidance of 78 to 92.

We're leaving that.

Annual $2 10 to $2 50 share EPS unchanged at the midpoint implies EPS growth rate of 17% typically.

See in most bank or bank holding companies, we talked about our success in growing core deposits.

We talked about the reduced.

Headwinds from our SBA.

Non bank lender <unk> small business finance.

For the first half 'twenty five loss of $8 seven of.

The 2020 for a loss for the full calendar year with $28 seven so clearly you could see that we're trending in the right direction. We have a slide to cover this and important to note non accruals within Mcs actually declined quarter over quarter.

Barry Sloane: So clearly you could see that we're trending in the right direction. We have a slide to cover this and important to note, non-accruals within MSBF actually declined quarter over quarter. Bryce is SB and that's 2024 versus 2025. Price of SBA 7A loans were consistent with our fair value marks. So the 7A loans that we held on an unrealized basis for Q1 sold into the second quarter. There was actually a non-existent gain transfer. We had to recognize an unrealized loss to wipe out the unrealized gain. And then we had a realized gain for cash. So this offsets one another.

Price of SB, and Thats 2004, 2024 versus 2025.

Price of SBA seven loans were consistent with our fair value marks so the 700 <unk> loans that we held on an unrealized basis for Q1 sold into the second quarter there was actually.

A nonexistent.

<unk> gained transfer we had to recognize that unrealized loss to wipe out the unrealized gain and then we had a realized gain for cash so just offsets one another.

Barry Sloane: We actually sold approximately 22 to 23 million of 504 loans at a price of $104.75, with 40 basis points of servicing. Also extremely profitable. Important to note, and we talked about why we're keeping some of the government's guaranteed 7A loans on our books, we're actually able to pick up a Prime Plus 3 or a 10.5% coupon. That was one of the factors that helped the name at the bank. The Alternative Loan Program performed exceptionally well. In June and July, both Deutsche Bank and Capital One, we closed the Capital One deal today, we're pleased to say, upsized our credit facilities, which we used to fund and warehouse ALP loans before securitizations.

We actually sold approximately 22% to 23 504 loans at a price of 104 and three quarters with 40 basis points of servicing also extremely profitable important to note and we talked about why we're keeping some of the government guaranteed seven loans on our books, we're actually able.

To pick up a prime plus three or a 10, 5% coupon that was one of the factors that helped the NIM at the bank. The alternative loan program performing exceptionally well in June and July both Deutsche Bank and capital one we closed the capital one deal today, we're pleased to say upsize, our credit facilities, which we use to fund and warehouses.

L P loans before Securitizations Deutsche Bank with $120 million to $170 million capital, One bank, which was $60 million to a 100 billion. So we're excited about the ability to continue to grow this business profitability and the operating leverage still look great our efficiency ratio year over year at the Holdco 66.

Barry Sloane: Deutsche Bank went from $120 million to $170 million. Capital One Bank went from $60 million to $100 million.

Barry Sloane: So we're excited about the ability to continue to grow this business. Profitability and operating leverage still look great. Our efficiency ratio year over year at the Holdco, 66.3 to 60.3. And we look at our ROAAs and our RTCEs, exceptionally strong.

3% to 63.

And when you look at our <unk> and our TCE is exceptionally strong slide number six our annual forecasts are rare.

Barry Sloane: Slide number six, our annual forecasts are readily available on this particular slide. As we look at our business model, and you've heard me talk about this in previous presentations, we solve three primary problems in the banking industry. One, we're able to acquire deposits below the risk-free rate because of the new tech advantage. We give the customer analytics, transactional capability, and data. We enable them to send money and receive money. We have integrated solutions between the bank deposit account and a merchant account, with chargebacks, refunds, batches, all in the new tech advantage. In addition to that, you can make payroll from the new tech advantage.

Readily available on this particular slide as we look at our business model and you've heard me talk about this in previous presentations. We saw three primary problems in the banking industry. One we're able to acquire deposits below the risk free rate because of the new tech advantage.

We give the customer analytics transactional capability and data we enable them to send money and received money. We have integrated solutions between the bank deposit account and a merchant account with charge backs refunds batches all in the new Tech advantage in addition to that.

You can make payroll from the new tech advantage the ability to move money.

Barry Sloane: The ability to move money with us owning the payroll business, owning the merchant business, being able to do ACH, being able to do wire, and we will position this organization for stablecoin in the future. We're very excited about that opportunity. We think a lot of money is going to be moved over time, particularly when you're dealing with out-of-country transactions, and we will be able to position ourselves for that. Banking institutions that do not give a real frictionless, seamless opportunity for customers to send money and receive money will be in a tough spot. Once again, you've got to provide value for the customer.

With us owning the payroll business owning the merchant business being able to do ACTH being able to do wire and we will position. This organization for stable point in the future. We're very excited about that opportunity. We think a lot of money is going to be moved over time.

Particularly.

When youre dealing with.

Adam.

Entry transactions, and we will be able to position ourselves for that banking institutions that do not give a real frictionless seamless opportunity for customers to send money and receive money will be in a top spot. Once again, you've got to provide value for the customer I think it's also important to note.

Barry Sloane: I think it's also important to note what other institutions are talking about we are doing. We're completely digital. There's no branches. There's no traditional bankers. We're really doing a great job in acquiring clients.

Other institutions are talking about we are doing we're completely digital there's no branches as our traditional bankers were really doing a great job in acquiring clients. Our loan book, we estimate by the end of the year to be approximately 10000 borrowers and $4 4 billion in servicing.

Barry Sloane: Our loan book, we estimate by the end of the year to be approximately 10,000 borrowers and $4.4 billion in servicing. At the bottom of slide number six, you can see our forecast from here to the rest of the year. Our ROAA for the second quarter, 2.5%, ROTC 19.4%. Look, these are outstretched numbers, and it's based upon our model. I think it's important to note making loans and selling them is what we do. We've been doing it for 20 years. We'll probably do it for another 20 years. It provides great returns. It provides great risk adjustment.

At the bottom of slide number six you can see our forecast from here to the rest of the year.

ROA for the second quarter, two 5% TCE of $19 four.

Look these are outstretched numbers and it's based upon our model I think it's important to note may.

Making loans and selling them is what we do.

<unk> been doing it for 20 years, we'll probably do it for 20 years. It provides great returns and provides great risk adjusted returns suggest everyone go to slide number seven in the deck and you could see once again a lot of our performance metrics.

Barry Sloane: I suggest everyone go to slide number 7 in the deck, and you can see, once again, a lot of our performance metrics, net income, diluted EPS, pre-provisioned net revenue, all the numbers that we talked about, a very, very strong Q2 financial highlight on slide number 7. Also important to note when you look at our capital position, we have more than adequate capital across the whole code, but also importantly, you can see our growth. we have the ability to utilize. A lot of people, or banking institutions, or financial holding companies, they have the capital, but they can't utilize it.

Net income diluted EPS pre provision net revenue all the numbers that we talked about a very very strong Q2 financial highlights on slide number seven.

Also important to note when you look at our capital position, we have more than adequate capital across the Holdco, but also importantly, you can see our growth.

We have the ability to utilize that capital a lot of people or banking institutions or financial holding companies they have the capital and utilize it.

Barry Sloane: We have the ability to do both and to generate those types of returns.

We have the ability to do both and to generate those types of returns on slide number eight you could look at our financial highlights from the bank I would certainly like to point out the cost of deposits declining from $3 99 to $3 71, a lot of that is benefited by being able to pick up the bank deposits net interest margin grew from four.

Barry Sloane: On slide number eight, you could look at our financial highlights from the bank. I'd certainly like to point out the cost of deposits, declining from 3.99 to 3.71. A lot of that's benefited by being able to pick up the bank deposits. That interest margin grew from 4.9 to 5.46. I think a lot of our competitors are dreaming of net interest margins on that type of a basis. Obviously, once again, when you look at our ROAAs, our ROTCs, this is at the bank, 3.94 ROAA, return on tangible common equity, 35%, with more than adequate capital at the bottom of the page on slide number eight.

$9 546.

A lot of our.

Our competitors are dreaming of net interest margins on that type of a basis and obviously once again when you look at our ROA.

<unk> this is at the bank.

Three nine for Aro AA.

Tangible common equity, 35% with more than adequate capital at the bottom of the page on slide number eight on slide number nine another one of our success stories is growing tangible book value per share.

Barry Sloane: On slide number nine, another one of our success stories is growing tangible book value per share, increased 3.7% sequentially, quarter over quarter, and 21% year over year. Extremely important, we were able to increase our tangible book value while paying a very healthy dividend. So we're excited about that. It's a great opportunity for shareholders to get that dividend and watch tangible book growth.

Increased three 7% sequentially quarter over quarter, and 21% year over year extremely important we were able to increase our tangible book value are paying a very healthy dividend. So we're excited about that it's a great opportunity for shareholders to get that dividend and watched tangible book grow.

Barry Sloane: Slide number 10, I think was an important slide.

Slide number 10, I think it was an important slide we appreciate prices contribution here a lot of the investors that we met up with they want to see where all of the assets are in a break out looking at the different buckets.

Barry Sloane: We appreciate Bryce's contribution here. A lot of the investors that we met up with, they wanna see where all the assets are in a breakout, looking at the different buckets. This is extremely important from an evaluation standpoint to see what's on balance sheet, what is technically off balance sheet, on a non-GAAP basis. But a lot of the ALP loans that are in joint ventures or in securitizations or a balance sheet, they matter. We've had historically 1% charge offs in our ALP portfolio. And I think it's important to note that we're a good lender on a risk reward basis.

Is extremely important from an evaluation standpoint to see what's on balance sheet, what is technically off balance sheet and a non-GAAP basis, but a lot of the <unk> loans that are in joint ventures, arent securitizations or balance sheet may matter, we've had historically, 1% charge offs and our LP portfolio.

And I think it's important to note that.

Or a good lender on a risk reward basis, we've been doing this for 20 years, we've historically come out on top.

Barry Sloane: We've been doing this for 20 years. We've historically come out on top.

Barry Sloane: Also important to note, for approximately a little over a billion dollar bank and a little over $2 billion holding company, we have a big operation. We believe, first of all, we do between a billion and a half and $2 billion worth of loans a year. So I think it's because we sell off the government guaranteed piece, we don't get full credit for that quote unquote amount of activity. Once again, we make loans and we sell them. We sell the government guaranteed pieces and on the ALP loans, we create them, we warehouse them, and then they get sold into a special purpose vehicle and create a securitization that is match funded.

Also important to note.

Approximately a little over $1 billion bank and a little over $2 billion holding company, we have a big operation. We believe first of all we do between 1 billion and a half of $2 billion worth of loans a year. So I think it's because we sell off the government guaranteed piece, we don't get full credit for that quote unquote amount of activity.

Again, we make loans and we sell them, we sell the government guaranteed pieces and on the ILP loans, we create them warehouse them and then they get sold into a special purpose vehicle and created securitization that is match funded slide number 11, maybe one of the most important slides in the deck and maybe.

Barry Sloane: Slide number 11, maybe one of the most important slides in the deck and maybe one of the most least understood aspects of our business. Number one, when we do AOP securitizations, the residual interests are valued at a 14% yield with a 15% frequency of default and a 20% severity with a 3% charge-off. We mark these to market as we've done regularly since 2022 every quarter. And basically, whatever premium is associated with it gets amortized. I think it's important to note when you look at the spread income, the securitized AOP loans carry a weighted average coupon in the 2025 deal of 13.3.

One of the most.

Least understood aspects of our business number one when we do A&P securitizations the residual interests are valued at a 14% yield.

With a 15% frequency of default and a 20% severity with a 3% charge off we mark these to market as we've done regularly since 2022 every quarter and basically whatever premiums associated with it gets amortized I think it's important to know.

Note when you look at the spread income.

The securitized loans carry a weighted average coupons in the 2025 deal of $13. Three the notes have a weighted average yield of six six now when you take the 100 basis points out for servicing it as a 570 basis point spread so I would ask everybody on this call.

Barry Sloane: The notes have a weighted average yield of 6.6. Now, when you take the 100 basis points out for servicing, it's a 570 basis point spread.

Barry Sloane: So I would ask everybody on this call, if I was to go to a bank of our size and our stature, and say, you can get 570 basis... match funded, and you need no employees because all those go into a special purpose vehicle. So there's no expense on Isn't that attractive? Well, we just did this, and we put, I think, $218 million of loans, $185 million of bonds, and we created this securitization known as NALP 2025-1. Also, we intend to regularly execute ALP securitizations with the loans on the balance sheet. As a matter of fact, if you like what we did recently, we're about to do it again.

If I was to go to a bank of our size and our stature and say you can get 570 basis points.

Match funded and you need no employees because all of those go into a special purpose vehicle. So theres no expense underneath that isn't that attractive well. We just did this and we put I think 218 million of loans 100, 180 $185 million of bonds and we created this securitization knowing that.

Any LP 2025 Dash. One also we intend to regularly executed LP securitizations with the loans on the balance sheet as a matter of fact, if you like we did recently whereabouts do it again, we've got $138 million of ILP loans currently sitting on our balance sheet I think youll see another securitization again in the fourth quarter.

Barry Sloane: We've got $138 million of loans currently sitting on a balance sheet. I think you'll see another securitization again in the fourth quarter. Once the loans go into that... Special Purpose Vehicle. They get written down, then the residual piece gets valued at the yields that we talked about, which are market-clearing yields. Once again, important to note, this is extremely accretive, very valuable, and this activity is used from the entire overhead of the bank and of the holding company, so we're getting tremendous operating leverage. Also, the ALP business has an average loan size of about $5 million.

<unk> once the loans go into that.

Special purpose vehicle.

They get written down.

Then the residual piece gets valued at the yields that we talked about which are market clearing yields once again important to note. This is extremely accretive.

Valuable and this activity is used from the entire overhead.

The bank and the holding company. So we're getting tremendous operating leverage also the AARP business has an average loan size of about $5 million.

Barry Sloane: In the 7A business, the average loan size is $400,000 to $450,000, so the ability to get to, I'll make up a number, $1 billion of loans, it's 200 units. We'll do probably 2,500 to 2,700 loan units this year. Totally within our capability. And we take the same pipeline that we use for all of our lending programs. 504, 7A, line of credit, which would be C&I loans. both term and revolvers, and CRE. It's that pipeline of six to 900 business calls a day, two and a half million in database that we're able to reach customers and let them know that we will do these types of loans.

And the <unk> business. The average loan size is 400 to 450000.

The ability to get to I'll make up the number of $1 billion of loans, It's 200 units will.

We will do probably 2500 to 2700 loan units this year totally within our capability and we take the same pipeline that we use.

All of our lending programs 504, seven a line of credit, which would be C&I loans, both term and revolvers and CRE.

That pipeline of six to 900 business roles of day.

$2 5 billion of database, we're able to reach customers and let them know that we will do these types of loans.

Barry Sloane: On slide number 11, we have detailed the mechanics to make sure that the market understands how these assets are flowing through the income statement and the balance sheet. The gains on securitized loans that appeared in Q1 were reversed when those loans went into the securitization. to the Unrealized Gain on the Retained Residual Book, of which. about 87% of the principal value went into rated debt instruments, the 13% is the equity Servicing asset that was created also shows up. That's a hundred basis points I talked about. Also, important to note, these loans have pre-payment penalties, which keeps the loan on the books.

Slide number 11, we have detailed the mechanics to make sure that the market understands how these assets are flowing through the income statement and the balance sheet the unrealized gain.

Gain on securitized loans that appear in Q1 were reversed when those loans when into the securitization.

So the unrealized gain on the retain residual book of which.

About 87% of the principle value went into rated debt instruments. The 13% is the equity piece.

Servicing asset that was created also shows up that's the 100 basis points I talked about also important to note. These loans have prepayment penalties, which keeps alone on.

Barry Sloane: It keeps the high coupon, and it keeps the borrower from pre-paying. It's a 5% penalty in year one, 5% in year two, 5% in year three, and 3% in year four. The duration of these particular loans in the portfolio is between four to five years.

Books keeps the high coupon and it keeps the borrower from prepay.

It's a 5% penalty in year, one 5% in year, two 5% year, three and 3% and year for the duration of these particular loans in our portfolio is between four to five years all important data to think about when youre looking at.

Barry Sloane: All important data to think about when you're looking at our ALP business, particularly with this information on slide number 11. If you look at the net income in the securitization, it's probably priced at about five and a half times cash flow. So I ask everybody on this call, would you like creating assets and valuing them at five and a half times cash flow in a business that's growing without expense associated with it once it's put into the securitization? We like the business a lot.

Our ARLP business, particularly with this information on slide number 11, if you look at the net income in the securitization is probably priced at about five five times cash flow.

Everybody on this call would you like creating assets and valuing them at five five times cash flow and a business that's growing without expense associated with it once its put into the securitization we like the business a lot. Let's go to slide number 12 credit quality. We've talked about this is a slide that you've seen.

Barry Sloane: Let's go to slide number 12, credit quality. We've talked about this. It's a slide that you've seen in the past. The non-accrual increase in NSBF is slowing. We put some numbers around it. I think this is an important bullet, number three. As a non-bank lender, we generally retain the loans that are in the fold and liquidated them. We didn't sell them. Well, now that we're in this business and people are very hypersensitive to non-accruals, even though they get marked to the market, the hit's been taken and they ultimately get turned into cash. We are in the process of selling non-performing loans, both at NSBF and in the bank.

In the past.

The non accrual increase that NSP up is slowing we put some numbers around that.

I think this is an important bullet number three as a non bank lender, we generally retain the loans that are in default and liquidated there we didn't sell them well now that were in this business and people are very hypersensitive to non accrual, even though they get mark to the market that has been taken.

And you ultimately get turned into cash we are in the process of selling nonperforming loans. Both at NSP happened in the bank I think youll start to see some activity on this in the near future, which will validate our valuations with most importantly return capital to us and maybe put us in more normal types of ratios and metrics.

Barry Sloane: I think you'll start to see some activity on this in the near future, which will validate our valuations, but most importantly, return capital to us, and maybe put us in more normal types of ratios and metrics that we all hold onto in our hands. Once again, important to note, the ALP loans are performing well. Using the on and off balance sheet, ALP balances, we have a 1% historic charge off rate as of And some of the data that you see on the chart here is important, not to exaggerate the NSBF portfolio, which frankly, when I get asked questions about the great financial crisis The great financial crisis, in my opinion, was 21, 22, and 23 for SBA lending, where rates basically rose between 3% to 5% on loans that originated in that year.

That we all hold onto in our hands once again important to note the ERP launch performing well using the on and off balance sheet LP balances, we have a 1% historic charge off rate as of June 32025, and some of the data that you see on the chart here is important not to exaggerate.

<unk> portfolio, which frankly, when I get to ask questions about the great financial crisis.

The great financial crisis in my opinion was 'twenty, one 'twenty two 'twenty three for SBA lending where rates basically rose between 3% to 5% on loans originated in that vintage year. So we took quite a bit of losses on those on that particular portfolio and I think as you go to.

Barry Sloane: Thank you for watching. So we took quite a bit of losses on that particular portfolio. And I think as you go to the next slide on 13, important to note, the percentage of portfolio-aged loans less than 24 months, zero. So we have a seasoned portfolio in there. We think the real pain of the NSBA portfolio is behind us. The portfolio is paying down quickly. We have approximately $200 million of capital in MSBF that we believe will be freeing up as these securities pay down. And we had cleanup calls, which would be very useful to doing things like paying off debt, buying back stock, paying dividends, all the things that shareholders really like and enjoy.

The next slide on 13 important to note.

Percentage of portfolio as loans less than 24 months.

So we have a seasoned portfolio and there we think.

The real pain at the MSP.

<unk> portfolio is behind US the portfolio is paying down quickly we have approximately $200 million of capital and MSP that we believe will be freeing up as these securities pay down how we had cleanup calls which would be very useful to doing things like.

Paying off debt buying back stock paying dividends all of the things that shareholders really like and enjoy so the anesthesia portfolio continues to pay down it paid off during the last calendar year about 120 $102 million roughly 30%.

Barry Sloane: So the MSBF portfolio continues to pay down. It paid off during the last calendar year about $102 million, roughly 30%. We do believe the nonaccrual inflows in the MSBF hit their peak in Q2 2024, continued to accelerate. And we think that MSBF is going to wind up being an important opportunity for us. Once again, a lot of the remaining loans in MSBF are, I'll use the word, trapped in free securitizations. The 2021 deal, 2022 deal, 2023 deal. prepayments. Loan liquidations are all held for the bondholders. So once those bonds get their cleanup quote or paid off and get released, all this cash flow and the equity will be freed up for a variety of different ways.

You believe that non accrual inflows in the NSP up hit their peak in Q2 2024 continued to accelerate.

And we think that <unk> is going to wind up being an important opportunity for us once again the remaining a lot of the remaining loans in that Sps are I'll use the word trapped in three securitizations. The 2021, VL 2000 22023 deal so pre.

Prepayments.

Loan liquidation oral health for the bondholders. So once those bonds if their cleanup call.

Paid off and get released all this cash flow and the equity will be freed up for a variety of different uses.

Frank DeMaria: I'd now like to have Frank DeMaria present slide number 14 and on. Thanks, Barry. Turning to slide 15, we provide some context around the held for investment loan portfolio at the bank. We account for the bank's held for investment portfolio on a cost basis compared to the fair value accounting that's applied to our other loan portfolios. 61% of the bank's held for investment portfolio consists of unguaranteed SBA 7A loans, which is built from the first half of 23 when the bank began originating 7A loans. Prior to that, the 7A loans were by our non-bank lender.

I'd now like to.

Have frankly Maria present slide number 14.

Thanks, Alright.

Turning to slide 15, we provide some context around the held for investment loan portfolio at the bank we.

Account for the banks held for investment portfolio on a cost basis compared to the fair value accounting that is applied to our other loan portfolios.

61% of the bank's held for investment portfolio consists of on guaranteed SBA seven loans, which is built from the first half of 2003, when the bank began originating seven eight loans prior to that the 70 loans originated by our non bank lender.

Frank DeMaria: The bank's been building an allowance for credit losses against that portfolio. More than 90% of which is related to the unguaranteed 7A book, which currently carries an allowance equal to 8.3% of unguaranteed 7A balance. 70% of the 7A allowance is characterized as collectively assessed, of which less than 5% of the total ACL is related to qualitative adjustments, and 30% of the ACL is held against individually assessed loans. While our ACL continues to build, it's building at a lower rate than in previous quarters, resulting in a sequential decrease in the provision, which continues to more than cover net charge offset.

<unk> been building an allowance for credit losses against that portfolio.

More than 90% of which is related to the UN guaranteed 700 books, which currently carries an allowance equal to eight 3% of on guaranteed 700 balances 70% of the <unk> allowance is characterized as collectively assessed of which less than 5% of the total ACL is related to qualitative adjustments and 30%.

The ACL is held against individually assessed loans.

Our ECL continues to build its building at a lower rate than in previous quarters, resulting in a sequential decrease in the provision which continues to more than cover net charge offs.

Frank DeMaria: Moving to deposits on slide 16, Barry talked about the success we're having on the business deposit front, which were up $50 million sequentially, and now represent almost 30% of deposits. We saw another meaningful move lower in our cost of deposits and believe the cost could continue to decline if we continue to execute on business deposit growth. Our loan to deposit ratio is north of 90% and nearly 80% of our deposits are insured.

Moving to deposits on slide 16, Barry talked about the success, we're having on the business deposit front, which were up $50 million sequentially and now represent almost 30% of deposits. We saw another meaningful move lower in our cost of deposits and believe the costs could continue to decline as we continue to execute on business deposit growth.

Our loan to deposit ratio is north of 90% and nearly 80% of our deposits are insured.

Frank DeMaria: We're using deposits to fund loan growth as the bank's bond portfolio is only $14 million on a $1.3 billion bank balance On slide 17, we highlight Newtek One's strong pre-provision earnings profile, which is a function of the wider lending spreads we capture, our healthy levels of fee income fueled by selling, securitizing, and servicing loans, and the brokerless branchless operating infrastructure that's scalable by design. As we layer on more securitizations and build the ALP business, the already impressive level of pre-provision earnings could improve. Last thing to reiterate on this slide, as Barry mentioned, the year-over-year revenue growth is 15%.

Using deposits to fund loan growth as the bank's bond portfolio was only $14 million on our $1 $3 billion bank balance sheet.

On slide 17, we highlight new Tech one strong pre provision earnings profile, which is a function of the wider lending spreads recapture our healthy levels of fee income fueled by selling securitizing and servicing loans and the broker list branchless operating infrastructure that scalable by design.

As we layer on more securitizations and build the MLP business the already impressive level of pre provision earnings could improve last thing to reiterate on this slide as Barry mentioned the year over year revenue growth is 15%.

Frank DeMaria: Slide 18 supports the scalable operating infrastructure comments I just made. The balance sheet climbed 37% over the last year, while operating expenses were up just 4%, and the efficiency ratio once again improved on a year-over-year basis. We believe we have the infrastructure to manage a much larger balance.

Slide 18 supports the scalable operating infrastructure comments I just made the balance sheet climbed 37% over the last year, while operating expenses were up just 4% in the efficiency ratio once again improved on a year over year basis.

We believe we have the infrastructure to manage a much larger balance sheet.

Barry Sloane: And with that, I'll turn it back to Barry for slide 19.

And with that I'll turn it back to Barry for Slide 19.

Barry Sloane: Thank you. Slide 18 is the average net premium from SBA 7A loans. For second quarter 2025, we averaged 110.91. I think it's important to note that the SBA changed some of its rules and regulations. And we believe that the market-clearing premium government-guaranteed 7As for the rest of the year in the second half will be about $100,000. I think it's important to note we have this in our earnings guidance. That's extremely important. The big differential in price is based upon there's a 55 basis points fee that there's some loans that we have in the pipe that will be available without the 55 basis point fee.

Thank you Chris.

Sure.

Slide 18, if the average net premium from SBA seven loans for our second quarter 2025, we averaged $110 91.

I think it's I think it's important to note that the.

The SBA changed some of its rules and regulations and we believe that the market clean premium government guaranteed seven days for the rest of the year in the second half will be about 110.

I think it's important to note we have this in our earnings guidance that is extremely important.

Differential in price is based upon there's a 50 55 basis points fee that theres. Some loans that we have in the pipe that will be available without the 55 basis point fee the.

Barry Sloane: The SBA put it back in to basically better balance its loss reserves, which, frankly, makes a lot of sense. So I just want to point out we are guiding to a lower gain on sale from approximately $111 to $110, but it's in our numbers and it's in our guidance. I also want to point out the ALP loan originations for the second half of 2025 are expected to approximate $250 million. That is also in our midpoint of 210 to 250.

The SBA put it back in to basically better balance its loss reserves, which frankly it makes a lot of sense. So I just want to point out.

We are guiding to a lower gain on sale from approximately 111 to 110, but it's in our numbers and it's in our guidance I also want to point out the LP loan originations for the second half of 2025 are expected to approximate $250 million.

And that is also in our midpoint of $2 10 to $2 50 on slide number 19.

Barry Sloane: On slide number 19, another Bryce Rowe original, Adjusted Net Margin. This is basically a good analysis of really taking a look at, and obviously it's not a GAAP, but all the loans that we have, both on the balance sheet and off the balance sheet, to basically give us, you know, I guess what I would refer to as an adjusted NIM. So the adjusted NIM, when you start to add on the ALP loans that are in joint ventures, and then the 2025 deal, gets you about 3.51%. We do believe that's gonna continue to grow, particularly as we grow the ALP business, which is on a pretty good growth track right now, and does extremely well for the organization.

Another <unk>.

Bryce Rowe original adjusted net margin. This is basically a good analysis of.

Really taking a look at and obviously, it's non-GAAP, but all the loans that we have both on the balance sheet and off the balance sheet to basically give us I guess, what I would refer to as an adjusted NIM. So the adjusted NIM when you start to add on.

The ILP loans that are in joint ventures, and then the 2025 deal gets you about $3 five 1%. We do believe that's going to continue to grow, particularly as we grow.

<unk> business, which is on a pretty good growth track right now and does extremely well for the organization with that.

Operator: With that, operator, we're now open to Q&A. Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by, we compile our Q&A Ross.

Operator were now open to Q&A.

Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Please standby, we compile our Q&A roster.

Timothy Switzer: And our first question will come from Tim Switzer from KBW. Your line is now open. Hey, good afternoon, guys. How are you doing? Good, Tim. How are you? Thank you, Tim. I think that... with support from our organization. is doing a great business.

And our first question will come from Tim Switzer from <unk>. Your line is now open.

Hey, good afternoon, guys How're you doing.

Tim how are you.

Alright. Thank.

Thanks for taking my questions.

The first question I have is on the deposit trends with the growth in the commercial deposits and lower deposit costs. Overall can you talk about some of the drivers there will help bring in things of about $50 million of growth.

On the commercial deposit side and then what are your expectations going forward for that initiative, and then bringing down deposit costs going forward.

Thank you Tim look I think that.

What's important for our organization.

Great.

Barry Sloane: Our banking account is 1%, our business savings is 3.5%, and it's truly a zero fee. Through the Newtek Advantage, we give our clients a tremendous benefit in merchant services and in payroll, we will be back and forth with a solution. So, you know, I think the days of getting a depository account where it isn't linked to a solution for a business to send and receive money is a problem. We had a lot of success, particularly in the lending arena, where our borrowers are making payments out of a Newtek bank account. To be frank with you, we need to improve the utilization.

And then kind of as 1% of our business statements with <unk> and its truly a zero.

And then we.

Give clients a tremendous benefit.

And merchants.

In payroll.

Okay.

The solution so.

I think the days of getting a depository account, where it isn't linked to a solution for a business that send and receive money is a profitable we had a lot of success, particularly in the lending arena.

Where our borrowers are making payments out of a new Tech bank account to be Frank with you would need to improve the utilization we've opened it up.

Barry Sloane: We've opened up. I think that the total business account portfolio is about 4000.

The total business account portfolio is about 4000 to be perfectly honest and Frank.

Barry Sloane: And to be perfectly honest and frank, there, there's a lower level of utilization on those accounts that we like, but we're going to get there. Also, on the payment side, you know, you're doing payment processing, well, it comes with a bank You're doing payroll. Well, it comes with a bank. Now, in addition to offering the bank account, it's a zero fee account, it's a higher rate account, we are able to take the customer's banking depository information, run it through our software and do an analysis as to where they will save money. Now, from a technological standpoint, when they go to the Newtek Advantage, they could look at the bank information, ACHs, FedWires, They can also see their refund card, their refunds, their chargebacks, their batches from that bank.

There is a lower level of utilization on those accounts that we like but we're going to get there also on the payment side Youre doing payment processing when it comes to the bank account Youre doing payroll when it comes to the bank account.

Dish to offering the bank account.

Zero fee account it is a higher rate accounts, we are able to take the customers.

Banking depository information for through our software and do an analysis as to where they will save money.

Now from a technological standpoint, when they go to the new ticket damage.

Look at the bank information Acha's fed wires maybe.

Have you seem to be stable.

You can also see their REIT on card their refunds theyre charge backs there batches from that day, they can make payroll from the advantage.

Barry Sloane: They can make payroll from the Advantage. And all of this ties in. I also think on a selective basis, we're going to be offering a line of credit and a bank account. That is going to be part of our full arsenal.

And all of this ties in I also think a selective basis, we're going to be offering our line of credit in a bank account that is going to be part of our full arsenal to provide the SMB SME and independent business owner client base. The best of all solutions and that's that's our focus.

Timothy Switzer: provide the SMB, SME, and independent business owner client base, the best of all solutions, and that's our. Okay, great. That was really helpful.

Okay, Great that was really helpful and then.

Timothy Switzer: And then I apologize if I'm missing this somewhere. But what was your total charge off this quarter for your held for investment portfolio? Frank, could you help with that one? Yeah, it was $5 million, Tim. Okay, so pretty flat with last quarter. Yeah, 5.1 to be exact, exactly. Okay. So exactly the same as last quarter.

I apologize if I'm missing this somewhere but what was your total charge offs this quarter.

For your held for investment portfolio.

Frank could you just talk about one.

Yes, it was $5 million Tim.

Okay, so pretty flat with last quarter.

Yes, $5 five to be exact exactly okay.

Okay. So exactly the same as last quarter.

Frank DeMaria: And then the other question I had is, you guys did a really good job of last quarter helping us kind of break down the various drivers that went through that net fair value line item. And obviously it was, you know, a negative $11.8 million this quarter. I know that the Securitized Loans had an impact on that and the reversal from... that held for sale SBA loans last quarter. Can you give us the different pieces of that and particularly what the gain was on ALP loans this quarter? I'm going to let you do that with numbers and the debits and the credits.

And then the other question I had is you guys did a really good job of last quarter, helping us kind of breakdown the various drivers that went through.

That net fair value line item.

I mean, obviously it was.

Negative 11 $8 million this quarter.

I know that securitization or the securitized loans had an impact on that and the reversal from the.

The held for sale SBA loans last quarter.

Can you give us the different pieces of that and particularly what the gain was on a L. P loans this quarter.

I'm going to let you do that.

Number isn't the debits and credits.

Frank DeMaria: Yeah, that's fine. So, Tim, the previous unrealized gains as Barry mentioned earlier on the ALP loans was $35.1 million, so that was reversed, which is the primary component, as you mentioned, of that $11.7 million. By reversed, Frank, you mean written down to zero, right? In other words, the gains were set by the loss. I think it's important to note that I've had a couple of industrious sessions. Sheer double counting, and we're not double counting. That's right. No, that's okay. And they were written down, as Barry mentioned, certain to the securitization, that ultimately results in a net gain that you see about $32.4 million on the value of the equity.

Yes, that's fine so Tim the previous unrealized gains as Mary mentioned earlier on the L. P loans was $35 $1 million so that was reversed.

Which is the primary component as you mentioned of 911 Santa.

<unk> you mean, you mean written down to zero right in other words correctly written down the par will satisfy the loss.

That's right written down the loan.

I've got a couple of investors.

Senior double counting or not double counting.

Got it thanks.

No thats, okay, and they were written down.

I mentioned sold into the securitization.

That ultimately results in a net gain that you see about $32 4 million on the value of the equity interest.

Frank DeMaria: for the for the quarter the ALP loan gains were about 6.3 million so that kind of helps offset that's part of the offset of that loan of that loss as well as the the 7a unguaranteed loans that are also being held on the books before they're before they get Okay, great.

For the for the quarter the ARLP.

Loan gains.

We're about $6 3 million.

So that kind of helps offset part of the offset of that loan of that loss.

As well as the <unk> on guaranteed loans that are also being held on the books before that before they get sold.

Frank DeMaria: Thank you, guys. Thank you. You're welcome.

Okay, great. Thank you guys.

Barry Sloane: And Tim, also, I think if you go to slide number 12. you look across the number, you could see that we've got a lot of stability here. Now, I want to point out, with a good chunk of the bank health and investment portfolio being fairly mature. to pay higher accruals to the Newtek Corporation. Barry, I think we lost you there. You may have to repeat that. And pardon me, please stand by. Mr. Sloane, are you able to hear us? Pardon me, please stand by, your conference will resume momentarily. I think you're back. Operator, are we reconnected?

Thank you Youre welcome and Tim also I think if you go to slide number 12.

If you look across that numbers you could see that.

We've got a lot of stability here.

Point out.

A good chunk of the bank held for investment portfolio being fairly mature.

Pay higher accruals.

Great.

Okay.

Yeah.

Barry I think we lost you there you may have to repeat that.

And pardon me please standby.

Okay.

Mr. Sloane are you able to hear us.

Pardon me please standby your conference will resume momentarily.

Okay.

Hi, Mr. Barry I think you are back.

Operator, we reconnected.

Operator: Yes. Are you able to hear us again? I hear you. Yeah. Okay.

Yes, so are you able to hear us again I.

I hear you yes.

Barry Sloane: So, I don't know if it came through, but I wanted to point out on slide number 12, there's a lot of stability when you run your finger across of NPLs, on and off balance sheet, and ex-NSBF. We ex-NSBF because we do believe that's a runoff portfolio and a tough portfolio. With that said, the provision at the bank for the second quarter was down from the first quarter. And that's just a function of not having non-accruals roll into the book. We do believe that that will pick back up. It's expected. We're reserved for it. The reserves are basically almost capital.

Okay.

<unk>.

I don't know if it came through but I wanted to point out on slide number 12, there is a lot of stability when you run your fingers crossed.

Npls on and off balance sheet annex NSP App, we <unk>, because we do believe that as a run off portfolio in a tough portfolio with that said.

Provision at the bank for the second quarter was down from the first quarter.

And Thats, just a function of not having non accruals roll into the into the book, we do believe that that will pick back up its expected were reserved for at the reserves are basically almost capital.

Barry Sloane: Basically, because if you have a loss, it goes right against the reserve. So we feel good about the business. We're not overly concerned about the credit aspects of the portfolio because of the reserve.

Or is it because if you have a loss it goes right against the reserve. So we feel good about the business, we're not overly concerned about the credit aspects of the portfolio.

Cause of the reserves.

Operator: Next question operator. Thank you.

Next question operator.

Crispin Love: Our next question will come from Crispin Love from Piper Sandler. Your line is now open. Thanks. Good afternoon. I just want to follow up on the net gain and residual and securitizations line. So $32 million in the quarter. I'm just curious on the go forward there. Will those only occur when you do ALP securitizations? Just curious what's changed there and then what we should expect going forward?

You are.

Our next question will come from Crispin Love from Piper Sandler Your line is now open.

Thanks, Good afternoon, guys, just a follow up on the net gain in residual and Securitizations in line.

$32 million in the quarter I'm just curious on the go forward there will those only occur when you do ARLP Securitizations just curious what's changed there and then what we should expect going forward.

Frank DeMaria: Yeah, that is, go ahead, Frank, you can answer the question. Yeah, I was going to say, so which change there is, this is the first time that, Crispin, that we've done this and own 100% of the residual. In contrast, previously, we were doing those through 50-50 joint ventures. So the difference there is those would go through that joint venture and non-controlled interest line. We do, you know, we do anticipate doing these type of structures in the future. But that's the difference there between the two prior ALP securitization. Okay.

Yes that that is quite frankly, you can answer the question <unk>.

So what's changed there is this is the first time that Kristen that we've done this.

And own 100% of the residual in contrast, previously we were doing those through our 50 50 joint ventures. So the difference there is those would go through that joint venture and Noncontrolling interest line.

We do we do anticipate doing these type of structures in the future.

But that's the difference there between the two prior Alp's securitizations.

Barry Sloane: Okay, thanks. And then just on the SBA rule changes that went into effect June 1st, you cited the margin impacts, the gain on sale margin impacts, but I'm curious on volumes, would you expect a drop-off in volumes in the 7A product? I'm curious on just your overall thoughts on the changes and then if you've seen any noticeable differences in the past couple of months since they went into effect. Crispin, it's a good question. I, I don't believe for our purposes, because it's very different than non bank lenders in the space are having a lot of They don't have the staff, they don't have the capability to comply with the new changes.

Okay.

Thanks, and then just on the SBA rule changes that went into effect June 1st you cited there.

The margin impacts of the gain on sale margin impacts, but I am curious on volumes would you expect a drop off in volumes and the 700 product.

I'm curious on just your overall thoughts on the changes and then if you've seen any noticeable differences in the past couple of months since they went into effect Chris.

Chris Matt. It's a good question I don't believe for our purposes, because it's very different than non bank <unk>.

Lenders in this space are having a lot of difficulty.

They don't have the staff they don't have the capability to comply.

With the new.

Barry Sloane: We're very proud of the fact that we are totally comfortable. We're not changing our guidance for a billion dollars of 7As for the year. Now, by the way, when I say we're going to 110, you know, the mix could change between the 10-year paper and a 25-year paper, which could change the game, but right now we're not making a change. We do believe, and I've said this before, it's a harder market to find good credits, as well as tariffs, which clearly were an issue in April and are less of an issue today, I think slowed down the borrowing appetite of a lot of customers, and that's beginning to change when you see these tariff deals, people are more optimistic, so we feel pretty good about the second half of the year.

Changes, we're very proud of the fact that we are totally comfortable we're not changing our guidance for $1 billion of seven days for the year now by the way when I say, we're going to 110.

Mix could change between the 10 year paper at a 25 year paper, which could change the game, but right now we're not making a change we do believe and I've said this before it's a harder market to find good credits.

As well as.

Tariffs, which clearly were an issue in April and a less of an issue today I think slowed down the borrowing appetite of a lot of customers that that's beginning to change when you see these power appeals people are more optimistic so we feel pretty good about the second half of the year.

Crispin Love: Great. Thank you, Barry.

Crispin Love: I appreciate you taking my questions. And Frank, too. Thank you.

Great. Thank you Barry I appreciate taking my questions and frankly, there. Thank you.

Operator: Thank you and as a reminder to ask a question please press star 11.

Thank you and as a reminder to ask a question. Please press star one one our next question will come from Mark Silk from Silk investment Advisors. Your line is open.

Mark Silk: Our next question will come from Mark Silk from Silk Investment Advisors. Your line is open. Please check that your line is not on mute. And again, Mark Silk, your line is now open.

Okay.

Please check that your line is not on mute.

And again Mark Silk your line is now open.

Mark Silk: Thank you.

Steve Moss: We will move on to our next question. Our next question will come from Steve Moss from Raymond James. Your line is now open. Good afternoon. Good afternoon, Steve. Barry. How's it going?

Thank you we'll move on to our next question.

Our next question will come from Steve Moss from Raymond James Your line is now open.

Hi, good afternoon.

Good afternoon, Steve Barry.

Steve Moss: Barry, maybe just starting with the extended holding period for 7A loans, kind of curious, like, you know, how do we think about that? Is that just, you know, a small timing difference? Or is it going to be a little longer in duration? Um, I think you're referring to the NPLs, right? Not the foaming wells? Oh, I thought I, maybe I misread that. I thought I read that there's a little extended period for holding 7A guaranteed. Oh, you're holding them on the balance sheet. Got it. Yeah, we're looking at a holding period of 60 to 75 days, maybe 90, but rolling into the next quarter.

Maybe just starting with the.

The extended holding period for 700 loans, just kind of curious like how do we think about that is that just.

A small timing difference or is it going to be.

Little longer duration.

I think youre, referring to the Npls nonperforming loans.

So I thought maybe I misread that I felt I read that there is a little extended period for holding 708.

Holding on the balance sheet got it yes, you're looking at a holding period or $60 to 75 days, maybe 90%, but rolling into the next quarter, we don't.

Steve Moss: You know, we don't, we still intend on selling them for cash gains. We found that this is a good strategy for us. It's helping our net interest income. So I think you're looking at 60 to 75 days. Okay, gotcha. And then in terms of I'm not sure I heard you correctly, can you say you're still sticking with $1 billion in SBA originations for the current year expectations? Correct. Yes, sir.

Still intend on selling them for cash gains we found that this is a good strategy for us.

Helping our.

Net interest income.

So I think youre looking at 60 to 75 days.

Okay got you and then in terms of.

I'm not sure I heard you correctly did you say, you're still sticking with $1 billion in SBA originations for the current year expectation correct, yes, Sir.

Steve Moss: Okay. DIA.

Okay.

Steve Moss: And then in terms of just thinking about the In terms of just thinking about expenses here, just kind of curious as to what you think for back half expenses, should they be relatively stable or, you know, I know you have investments obviously ongoing, so maybe that drives up expenses, just kind of curious what you think about that. Hopefully, Flattish, I think when we looked at our expenses for Q2 2025 versus Q2 2024, I think it was only a 4% increase. So, it's one of my favorite topics, Steve, when the expense things come to my desk from consultants and staff and things of that nature.

Got you and then in terms of just thinking about the.

In terms of thinking about expenses here just kind of.

Curious as to what you think for back half.

Should they be relatively stable or.

I know you have investments obviously ongoing so maybe that drives up expenses I'm just kind of curious how you think about that.

Hopefully flattish I think when.

When we looked at our expenses for Q2, 2025% versus Q2 2024.

It was only a 4% increase so.

It's one of my favorite topics, Steve when do you expect.

The expense things come to my desk from consultants and staff and things of that nature, but.

Steve Moss: But I would say Flattish would be a good guesstimate. Okay. got here.

I would say flattish would be a good guesstimate.

Okay.

Steve Moss: And Maybe if we could just go back to the net gain on residuals and securitization. So you had $32.4 million, which is You know, as you have, you're holding the entire residual, which to me looks like that was $32 million based on the bullet where you closed $184 million dollar securitization backed by $216 million in outblowns. So basically, in my thinking about this correct is like, you hold the equity interest. You're judging what the cushion is in terms of that $32 million extra cushion and you're putting a 14% discount? Did I hear that correctly? Yeah, 14% discount with a 15% default frequency over the light, and a 20% severity, which will be a 3% charge-off.

Got you and.

Maybe if we could just go back to the net gain on residuals and securitization.

So you had $32 4 million.

Yeah.

As you have you are holding the entire residual which to me it looks like that was $32 million based on the bullet, where you closed $184 million securitization backed by $260 million in ALP loans.

Basically yes.

I figure out this corrected like.

You hold the equity interest you.

Youre judging what the cushion is in terms of that.

$32 million extra cushion and you're putting up 14% discount did I hear that correctly, yes, 14% discount with a <unk>.

15%.

Default frequency over the life.

And a 20% severity, which youll be at 3% charge offs that after that charge off you get to the 14%.

Steve Moss: After that charge-off, you get to the 14%. Okay. And Steve, the book value, I believe, is around $35 million. Okay. And we look at this a variety of different ways. One of the things I think that's important is, as you, as that portfolio seasons, okay, two things are going to happen. You're getting closer to being successful. and Attractive Prepay when the prepay penalties wear off, but you're also getting the cash flow from the interest income less the interest expense. I think what you'll see is when you do the map. It's pretty close. I'm not saying it's positive or negative, but it's pretty close.

Okay.

The book value I believe is around $35 million.

Okay.

And we look at this a variety of different ways. One of the things I think that's important is as you as that portfolio seasoned okay. Two things are going to happen.

Youre getting closer to being.

Unattractive prepay when the prepay penalties wear off but youre also getting the cash flow from the interest income less the interest expense.

What you'll see is when you do the math.

It pretty close I'm, not saying, it's positive or negative, but it's pretty close.

Steve Moss: And if you look at the valuation, it's approximately five and a half times income. Okay.

Okay and.

And if you look at the valuation.

Approximately five five times.

Income.

Steve Moss: Okay, that's everything for now. Thank you very much. Thank you.

Okay.

Okay.

For now thank you very much thank.

Thank you Steve.

Christopher Nolan: Our next question will come from Christopher Nolan from Ladenburg Salomon & Co. Your line is open. Barry, on your comments that you expect the provision to go higher in the second half of the year, if I heard you correctly, where should we expect the reserve ratio? to go, and that's allowance relative to the period. Yeah, that's a good question. Um, you know, and the other thing too, and I do appreciate the question, I, the funny thing about the business, and I'm, you know, not a career banker, but That provision to me, that's like capital. So I like a big provision.

Thank you. Our next question will come from Christopher Nolan from Ladenburg Thalmann <unk> co. Your line is open.

Barry on the comments that you expect the provision to go higher in the second half of the year, if I heard you correctly, yes.

Yes, yes.

Where should we expect the reserve ratio.

To go with it.

And Thats allowance relative to your period end loans, yes, that's a good question.

And the other thing too.

I do appreciate the question.

The funny thing about the business.

Career banker, but.

That provision to me that's like capital so.

Barry Sloane: It breaks out a lot of people just to be frank with you. Matter of fact, when people reduce the provision, in many cases, the stock goes up because people think that people are forecasting bluer skies ahead. I like having the push And also, even with that cushion and that provision, we're still good on our numbers, which I think is attractive performance. I do believe that for the most of the calendar year, we're probably going to be, I'm going to give you a range, four and a half to five and a half. Now, one thing I will tell you, some of that may change as we look to grow the CRE book as a bigger and the CNI book, the traditional bank loans, two and five years, full covenant package, full book.

A big provision it breaks out a lot of people just to be Frank with you matter of fact when people reduce the provision in many cases the stock goes up because people think that people.

People were forecasting bluer skies ahead.

Having the cushion.

And also even with that cushion in that provision were still good on their numbers, which I think is.

Attractive performance.

Do believe that for the most of the calendar year.

You're going to be I'm going to give you a range.

Four five to $5 five but one thing I will tell you some of that May change as we look to grow the CRE book as a bigger percentage and the C&I book to traditional bank loans due in five years full covenant package.

Bob.

Barry Sloane: So those loans have much lower provisions than the 7-8. I think the 7A business currently accounts for about 90% of the total provision. I think it's about 92%. Yeah, in the past, the regulators viewed loan loss provisions as reserve capitals or capital as well. And they put the brakes on banks in terms of not over provisioning. Are you seeing from the regulators that they're giving you more flexibility in terms of how much you're willing to provision? It's another good question. Frankly, you know, we've been in the banking business now for 10 quarters and People said, oh, gee, you know, the regular.

So those wondering have much lower provision than the <unk> business.

I think the <unk> business currently accounts for about 90% of the total provision I think it is about 92%.

Yes in the past.

The regulators viewed loan loss provisions of reserve capitals or capital as well.

Put the brakes on banks in terms of not over provisioning are you seeing from the the.

The regulators that they are giving you more flexibility in terms of how much youre willing to provision.

It's another good question frankly.

We've been in the banking business now for 10 quarters in.

People said, Oh Gee the regular.

Barry Sloane: Listen, it's been a very solid relationship. They haven't, like the three little bears, said it's too hot or too cold. They seem to be comfortable with really where we are. Now, I want to be very clear here. I think that one of the reasons we were an attractive application candidate is because we do the loans that the banking industry, in many cases, doesn't want to do. And that's to SMEs, SMBs with higher provisions and the fact that we've got 20 years worth of experience. So, no. And by the way, great question. We're not. What a lot of banks do is they lower the provision to boost the income up.

It's been a very solid relationship they havent liked the three little bear so it's too hard to call you seem to be comfortable with really where we are.

Now I want to be very clear here I think that one of the reasons. We were an attractive application candidate is because we do the loans that the banking industry. In many cases doesn't want to do and that's to SME smbs with higher provisions and the fact that we've got 20 years worth of experience or no.

And I'd add.

Great question.

But a lot of banks do as they lower the provision to goose the income up.

Barry Sloane: That's not where our heads are at. I mean, we like the provision. After doing this for 20 years, we think this is the right provision. Okay, and given that you're really over-earning the dividend, um... Possibly we could see a little increase in dividends. Um... I don't know. I think we're the Rodney Dangerfield of stocks right now. So, no, I tell you the truth. The dividend is very healthy. And I think we'd be more likely to do other things than increase the dividend at this point. I mean, we're well above where the average bank is. And we're very hopeful that the type of presentation we made today, I've gotten a lot more help, a lot more clarity will get people to better understand what we're trying to do.

Not where our heads are at I mean, we like the provision after doing this for 20 years. We think this is the right provision.

Okay, and given that youre really over earning the dividend.

As the past focus is increasing.

Increase in dividend.

I don't know I think it was a rodney dangerfield of stops right.

So no.

No.

The truth the dividend is very healthy.

And I think we'd be more likely to do other things than increase the dividend at this point I mean, where we.

Well above where the average bank is and we're very hopeful that the type of presentation, we make today.

I've gotten a lot more help a lot more clarity, we will get people to better understand what we're trying to do.

Barry Sloane: And I won't tell you that it's not. complicated as it is, but it makes money. So we do what makes money. Okay, thank you for the answer. Thank you.

And I won't tell you that it is not.

Apple cases, it is but it makes money so we do it makes money.

Okay. Thank you for the answers.

Thank you.

Thank you.

Mark Silk: And our next question will come from Mark Silk from Silk Investment Advisors. Your line is open. Okay, here we go, Barry. You hear me now? Yes, right. Yep, switch from a cell phone to a landline. For question number one, as a shareholder, I'm perplexed that your stock trade to the PE around five or six while the industry trades higher. Can you explain why you think that is? I think we're different. We're unique. We're also getting better at telling our story. We put out a lot of information, but it's just a lot of parts to what we're doing.

And our next question will come from Mark Silk from Silk investment Advisors. Your line is open.

Okay here, we go Barry can you hear me now.

Yes, Brian.

Sure Mark.

Switzerland, some cell phone to a landline.

First question number one is a shareholder.

Flex that your stock trades at a p/e around five or six while the industry trades higher can you explain why you think that is.

Okay.

Sure.

We're also getting better.

Ed.

Telling our story.

We put out a lot of information.

<unk>.

Barry Sloane: Part of it is because we're disruptive. Here's an organization that took over a manual one-branch bank, opened up 19,000 depository accounts, funds 2,500 unique borrowers digitally, has 350 customer-facing people on camera, is using AI to synthesize data into reports instead of manual input. I just think that we don't look like anybody else. People talk about doing this. We're doing it. I mean, I got a comment like, program or private credit, Google private credit, Google alternative loans. Oh, all these money managers are talking about doing it and they're doing deals with banks. They're really doing syndicated bank loans or leveraged bank loans.

So a lot of parts to what we're doing part of it is because.

Or just where uptick.

Here's a organization that took over Emmanuel one branch bank.

And up 19000 depository accounts.

Funds.

500 unique borrowers digitally.

<unk> has 360 customer facing people on camera is using AI to synthesize data two reports instead of manual inputs.

Just think that the market doesn't look like anybody else and the other thing.

People talk about doing this we're doing it.

I've got a comment like.

Program or private credit, Google private credit Google alternative loans.

All these money managers are talking about doing it and they're doing deals with banks. They are really doing syndicated bank loans or leverage bank loans were actually doing it doing it since 2019, so I think that.

Barry Sloane: We're actually doing it. We've been doing it since 2019. So I think that this is just going to take time for people to get comfortable with, look at the accounting, get a better understanding of it. Look at the metrics quarter to quarter. I mean, I went to a conference recently. I had a very sophisticated, extremely bright individual say to me, well, Barry, what if you don't make any loans next quarter? Will you lose money? And I said, yeah, if Apple doesn't sell any iPhones and GM doesn't sell any cars, they're going to lose money too.

This is just going to take time for people to get comfortable with look at the accounting gain a better understanding of it look at the metrics quarter to quarter.

I went to a conference recently I had a very sophisticated extremely bright individuals say to me.

You don't make any loans next quarter will you lose money.

Yes, Apple doesn't sell any iphones and GM doesn't sell any cars, they're going to lose money to we make loans and we sell them. That's the business model that we've done for 20 years and it generates high returns on equity even after loan losses and provisions for that so I think thats part of the problem, which is different we look different.

Barry Sloane: We make loans and we sell them. That's the business model. That's what we've done for 20 years. And it generates high returns in equity, even after loan losses and provisions for that. So I think that's part of the problem, which is different. We look different. People have warned me that this wouldn't be a bed of roses or a bowl of cherries. And they were right, but we're making money. We've got capital and we're going to continue to do this. And if you keep earning money and you keep paying a dividend at some time when people are more comfortable with it, don't jump in and participate.

People have worn me that.

This wouldn't be.

A better roaster of bullet Sherri and then we're right, but we're making money we've got capital and we're going to continue to do this and if it keep my if you keep earning money and you keep paying a dividend at some time when people are more comfortable with it.

Barry Sloane: We're okay with it. The investment group that we're in, which are, you know, community based banks, that's a tough comp for us, particularly if you're looking at the traditional metrics, we don't, we don't score as well as I would like to have. Okay, that's a fair assessment. And then I'm trying to maybe you can give us some color. So are you are you getting your business? So let's break this down. So are you getting your business from your payroll and payment as far as new bank accounts? Are you getting new bank accounts? Because the payroll processing and the payment processing, you know, obviously, you get them both, but maybe give us show us where where a lot of it's coming from.

I've been in participate we're okay with the other thing I would say is.

The investment group that we're in which are community based banks, that's a tough comp for us, particularly if youre looking at the traditional metrics we don't we.

We don't score as well as I would like to have scored.

Okay, that's a fair assessment.

And then.

I'm trying to maybe you can give us some color so.

Are you getting your business. So let's break this down so are you getting your business from your payroll and payment as far as new Bank accounts are you getting new bank accounts because of the payroll processing.

And the payment processing.

Obviously, you get them, both but maybe give us.

<unk>.

Barry Sloane: And then obviously, you're getting some from maybe your high, you know, your high return on checking accounts. So maybe give us some color there is how this mesh of the business is really paying off. So. In the near future, you will see us. announcing and launching the technology. When you open the bank account, you get an approved merchant account, one application, one process, but two accounts. Important to note, we're not charging people, they're no fee, so it's not like we're giving them something that they're not aware of, but now they can do both things and take advantage of the Newtek advantage.

A lot of it is coming from and then obviously youre getting some from maybe your high.

You're a high return on checking accounts.

Maybe give us some color there as how this mesh of the business is really paying off.

So.

In the near future.

See us.

Announcing and launching the technology when you open a bank account you get an approved merchant account one application one process with <unk>.

Important to note, we're not charging people there are no fee. So it's not like we're giving them something that they are not aware of but now that you can do both things and take advantage of the new Tech advantage by the way you can't process on electronic payment without a bank account.

Barry Sloane: By the way, you can't process an electronic payment without a bank. So why not use our budget? That's zero fee and provides better analytics up front. Same thing for payroll. Same thing for lending. So having these things fully integrated, very important, not it's not a Wells Fargo situation where we're charging customers unwittingly or unknowingly. We're giving them an open account to use or not use and not charging it for them. And I say, it's not open without their knowledge. It is open. We then contact them and tell them it's available. They then sign in the application to activate it.

So why not use our bank account that zero fee and provides better analytics upfront same thing for payroll.

Thing for lending so having these things fully integrated very important we're.

We're not it's not a wells Fargo situation, where we're charging customers unwittingly on knowingly.

Giving them, an open account to use or not use and that charge not charging more for them and I would say it's.

It's not open without their knowledge. It is open we then contact them and tell them. It's available. They then signing the application to activate it but now we could show Hey, you don't have to go further it's available here's the great cost here's a great integration, here's the great analytics com.

Barry Sloane: But now we can show, hey, you don't have to go further. It's available. Here's the great cost. Here's the great integration. Here's the great analytics. Come look at the Newtek Advantage. So we give the customer an advantage to putting all these things together. It's a little bit similar to Shopify, where you don't unbundle all the stuff, or frankly, what Amazon does, where everything comes together in one unique integrated model for the customer. Okay, that sounds interesting. Thanks for answering my questions. Thank you.

Look at the new Tech advantage. So we give the customer an advantage to putting all these things together, it's a little bit similar to shopify.

You don't want unbundle, all the stuff.

Frankly, what Amazon does where everything comes together in one unique integrated model for the customer.

Okay that sounds interesting thanks for answering my questions.

Thank you.

Barry Sloane: Thank you and I am showing no further questions from our phone lines and I'd like to turn the conference back over to Barry Sloane for any closing remarks. Thank you very much everybody for attending. I appreciate it. We look forward to reporting our next quarter and continuing to generate the types of earnings and returns that you've now gotten used to. And once again, I want to greatly thank my senior management team. I know I named a few people, but I can't name them all. They do a great job for all of our stakeholders, shareholders, customers, and employees.

Thank you.

I am showing no further questions from our phone lines I would now like to turn the conference back over to Barry Sloane for any closing remarks.

Thank you very much everybody for attending I appreciate it.

We look forward to reporting our next quarter and continuing to generate the types of earnings and returns that you've now gotten used to and once again.

Greatly thank my senior management team I know I named a few people, but I can't name them all they do a great job for all of our stakeholders shareholders customers and employees. Thank you very much have a great day.

Barry Sloane: Thank you very much. Have a great day. Thank you. This does conclude today's conference call. Thank you for your participation. You may now disconnect. Everyone have a great day.

Thank you. This does conclude today's conference call. Thank you for your participation you may now disconnect everyone have a great day.

Okay.

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