Q3 2026 NewtekOne Inc Earnings Call

October 28, 2026

Operator: Good day, and thank you for standing by. Welcome to the NewtekOne, Inc. Q3 2026 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Barry Sloane, Chairman, President, and Chief Executive Officer. Please go ahead.

Speaker #1: Later, we will conduct a question and answer session. To ask a question during the session, you will need to press *11 on your telephone.

Speaker #1: You will then hear an automated message advising that your hand is raised. To withdraw your question, please press *11 again. Please be advised that today’s conference is being recorded.

Speaker #1: I would now like to hand the conference over to your speaker, Barry Sloane, Chairman, President, and Chief Executive Officer. Please go ahead.

Barry Sloane: Thank you very much, operator, and good afternoon, everyone, and welcome to the Q3 2026 financial results conference call for NewtekOne, stock symbol NEWT on the Nasdaq. Joining me today on today's call is Frank DeMaria, the Chief Financial Officer of NewtekOne, as well as the CFO of Newtek Bank, N.A. I wanted to thank Bryce Rowe, in charge of investor relations for NewtekOne, for helping put the presentation together, and also the management team of all the Newtek entities for helping deliver a real solid quarter for us. For those of you that want to follow the PowerPoint presentation along, please go to newtekone.com, go to the investor relations section, and you'll be able to follow along with this presentation, in that particular area under presentations. I'd like to bring everyone's attention to slide number 2 in that presentation.

Speaker #2: Thank you very much, operator, and good afternoon, everyone. Welcome to the third quarter 2026 financial results conference call for NewtekOne, stock symbol NEWT on the NASDAQ.

Speaker #2: Joining me today on today's call is Frank DeMaria, the Chief Financial Officer of NewtekOne, as well as the CFO of Newtek Bank, National Association.

Speaker #2: I wanted to thank Bryce Roe, in charge of investor relations for NewtekOne, for helping put the presentation together, and also the management team of all the Newtek entities for helping deliver a real solid quarter for us.

Barry Sloane: For those of you that want to follow the PowerPoint presentation along, please go to newtekone.com, go to the investor relations section, and you'll be able to follow along with this presentation, in that particular area under presentations. I'd like to bring everyone's attention to slide number 2 in that presentation.

Speaker #2: For those of you that want to follow the PowerPoint presentation along, please go to newtekone.com, go to the Investor Relations section, and you'll be able to follow along with this presentation in that particular area under Presentations.

Speaker #2: I'd like to bring everyone's attention to slide number 2 in that presentation. Please note the note that is in the document regarding forward-looking statements.

Barry Sloane: Please note the note that is in the document regarding forward-looking statements. Let us go to slide number 3. Q3 2026 highlights. We delivered basic and diluted earnings per share of $0.34. We are able to reiterate the 2026 earnings per share guidance range of $1.70 to $1.80 for the full calendar year. That is maintained. Important to note, up and to the right pattern in growth in book value and tangible value continues to be maintained intact. As a matter of fact, our book value came in at $12.80, tangible book, $12.30 respectively. The tangible book value growth was up 10% year over year and 78% since we took over the bank in January of 2023 and converted the publicly traded NewtekOne into a financial holding company.

Speaker #2: Let us go to slide number 3: third quarter 2026 highlights. We delivered basic and diluted earnings per share of $0.34. We are able to reiterate the 2026 earnings per share guidance range of $1.70 to $1.80 for the full calendar year; that is maintained.

Speaker #2: Important to note, up until the right pattern in growth and book value and tangible value continues to be maintained intact. Matter of fact, our book value came in at 1,280, tangible book $12.30, respectively.

Speaker #2: The tangible book value growth was up 10% year over year and 78% since we took over the bank in January 2023 and converted the publicly traded NewtekOne into a financial holding company.

Barry Sloane: Also important to note that we are able to continue to grow earnings with real good operating leverage on a year-over-year basis. Our Q3 2026 operating expenses were flat and 3.7% respectively on asset growth of 47%, and 3.7% is on a year-over-year comparison. Important to note the company, since acquiring the nationally chartered bank, has had good experience in growing deposits, and they have more than doubled for the second consecutive quarter. In 15 quarters, we have grown Newtek Bank's deposits from $142 million when we took over the bank to $2.6 billion. Non-affiliate business deposits increased quarter over quarter and year over year by $13 million, $109 million respectively.

Speaker #2: Also important to note that we are able to continue to grow earnings with real good operating leverage. On a year-over-year basis, our Q3 2026 operating expenses were flat, and a 3.7%, respectively, on asset growth of 47%.

Speaker #2: The 3.7% is on a year-over-year comparison. It's important to note, the company, since acquiring the nationally chartered bank, has had good experience in growing deposits—they have more than doubled for the second consecutive quarter.

Speaker #2: In 15 quarters, we have grown Newtek Bank's deposits from $142 million when we took over the bank to $2.6 billion. Non-affiliated business deposits increased quarter over quarter and year over year, by $13.109 million, respectively.

Barry Sloane: Core consumer deposits climbed $231 million quarter over quarter and $1.1 billion year over year, with loan originations also growing with deposits fueling that growth and year-to-date loan originations of $1.2 billion or up 12% year over year. Also important to note for the SBA's fiscal year ending 30 September 2026, Newtek Bank ranked number 1 by volume, excuse me, number 1 in units of SBA loans approved and number 2 by dollars. Slide number 4. In focusing on NewtekOne, I think the important aspect of our organization as we look at the market and the economy, clearly the concept of how are businesses going to grow going forward with the marketplace really embracing artificial intelligence, or as the president calls it, super intelligence.

Speaker #2: And core consumer deposits climbed 231 million quarter over quarter and 1.1 billion year over year, with loan originations also growing with deposits fueling that growth, and year-to-date loan originations of 1.2 billion were up 12% year over year.

Speaker #2: Also important to note, for the SBA's fiscal year ending September 30 of 2026, Newtek Bank ranked number 1 by volume—excuse me, number 1 in units of SBA loans approved and number 2 by dollars.

Speaker #2: Slide number 4. In focusing on NewtekOne, I think the important aspect of our organization as we look at the market and the economy clearly, the concept of how our business is going to grow going forward with the marketplace really embracing artificial intelligence or as a president calls it superintelligence.

Barry Sloane: We have built one integrated platform over the course of 28 years to serve the 36 million demographic that are defined as US SMBs through five digital solutions without the use of traditional bankers, brokers, or BDOs. We think this is extremely important because as the marketplace starts to move towards the use of super intelligence or artificial intelligence, organizations that embrace that, particularly financial institutions and banks, are going to be extremely important and viable going forward. We do have concerns over an industry that is primarily focused on traditional bankers and traditional branch network to acquire customers. On slide number 4, our NewTracker system, you could see, is able to acquire 600 to 800 unique business referrals per day, and the cost per referral is zero. We manage that through alliance partners. It's all in our public documentation and our K's and Q's.

Speaker #2: We have built one integrated platform over the course of 28 years to serve the 36 million demographic that are defined as US, SMBs through five digital solutions without the use of traditional bankers, brokers, or BDOs.

Speaker #2: We think this is extremely important, because as the marketplace starts to move towards the use of superintelligence or artificial intelligence, organizations that embrace that—particularly financial institutions and banks—are going to be extremely important and viable going forward.

Barry Sloane: We do have concerns over an industry that is primarily focused on traditional bankers and traditional branch network to acquire customers. On slide number 4, our NewTracker system, you could see, is able to acquire 600 to 800 unique business referrals per day, and the cost per referral is zero. We manage that through alliance partners. It's all in our public documentation and our K's and Q's.

Speaker #2: We do have concerns over an industry that is primarily focused on traditional bankers and traditional branch network to acquire customers. On slide number 4, our new tracker system—you can see—is able to acquire 6 to 800 unique business referrals per day.

Speaker #2: And the cost per referral is zero. We manage that through Alliance Partners. It's all in our public documentation and our K's and Q's. Organizations like UBS and Morgan Stanley and Raymond James might have came up with trade association that don't make these types of loans aren't depositories.

Barry Sloane: Organizations like UBS and Morgan Stanley and Raymond James, Money came up with a trade association, that don't make these types of loans, aren't depositories, don't do payroll, don't do insurance, don't do real-time payments, refer their customers to us to provide them solution and enhance the overall benefit to the relationship they have with the customer. I think it's important to note that over 28 years and three and a half years operating as a digital direct bank, we have excelled in banking, lending, insurance, real-time payments, and payroll. The patented NewTracker system, which I think is extremely important to our business model, and its proprietary capabilities are extremely valuable.

Speaker #2: Don't do payroll. Don't do insurance. Don't do real-time payments for further customers to provide them solutions and enhance the overall benefit to the relationship they have with the customer.

Speaker #2: So I think it's important to note that over 28 years and 3 and a half years operating as a digital direct bank, we have excelled in banking, lending, insurance, real-time payments, and payroll.

Speaker #2: The patented new tracker system, which I think is extremely important to our business model, and is proprietary capabilities, are extremely valuable. The Newtek advantage, which is the business portal, which is on our website, that gives the client a real advantage of doing business with us over other financial institutions, offers a single pane of glass delivering a full product suite to the customers.

Barry Sloane: The Newtek Advantage, which is the business portal which is on our website that gives the client a real advantage of doing business with us over other financial institutions, offers a single pane of glass delivering a full product suite to the customers. It gives them transactional capability, analytics, and data that our competitors simply do not. Looking at our organization further, we are an S&P-rated servicer. We are currently servicing over $5 billion worth of loans, and this is a business that we excel in. We service for the FDIC. We service for NCUA. NCUA is the credit union regulator. We have a nice reputation in servicing small and medium-sized business owners and loans that are made to that particular investor group. Also important to note, we have a frictionless digital account opening infrastructure that continues to gain momentum.

Speaker #2: It gives them transactional capability, analytics, and data that our competitors simply do not have. Looking at our organization further, we are an S&P-rated servicer. We're currently servicing over $5 billion worth of loans.

Barry Sloane: Looking at our organization further, we are an S&P-rated servicer. We are currently servicing over $5 billion worth of loans, and this is a business that we excel in. We service for the FDIC. We service for NCUA. NCUA is the credit union regulator. We have a nice reputation in servicing small and medium-sized business owners and loans that are made to that particular investor group. Also important to note, we have a frictionless digital account opening infrastructure that continues to gain momentum.

Speaker #2: And this is a business that we excel in. We service for the FDIC, we service for an ACUA, and ACUA is a credit union regulator.

Speaker #2: We have a nice reputation in servicing small and medium-sized business owners and loans that are made to that particular investor group. Also important to note, we have a frictionless digital account opening infrastructure that continues to gain momentum.

Barry Sloane: Now, a lot of banks have digital account opening, but it is primarily for consumer checking or consumer high-yield savings. There are very few financial institutions, and particularly even the biggest banks in the United States, that in order to open up a banking account for business, you have to go into the branch and fill out the paperwork. We have done a very good job in this particular area. We have approximately 47,000 depository accounts with no traditional bankers, with zero branches that basically are assisted by business service specialists on camera in the United States 24 hours a day, seven days a week. We are very proud of our operating history and have really delivered robust, flexible, and financial returns both for ROAA, ROTCE, revenue growth, and our last 12 months of trailing net income.

Speaker #2: Now, a lot of banks have digital account opening, but it's primarily for consumer checking or consumer high-yield savings. There are very few financial institutions in particular, even the biggest banks in the United States, that in order to open up a banking account for business, you have to go into the branch and fill out the paperwork.

Barry Sloane: We have done a very good job in this particular area. We have approximately 47,000 depository accounts with no traditional bankers, with zero branches that basically are assisted by business service specialists on camera in the United States 24 hours a day, seven days a week. We are very proud of our operating history and have really delivered robust, flexible, and financial returns both for ROAA, ROTCE, revenue growth, and our last 12 months of trailing net income.

Speaker #2: We've done a very good job in this particular area. We have 40 approximately 47,000 depository accounts with no traditional bankers, with zero branches. That basically are assisted by business service specialists on camera in the United States 24 hours a day, 7 days a week.

Speaker #2: We're very proud of our operating history and have really delivered robust, flexible, and financial returns. Both for ROAA, ROTCE, revenue growth, and our last 12 months of trailing net income.

Barry Sloane: On slide number 5, we talk about our ecosystem for the customer, where there are five solutions built around the SMB. Banking, lending, insurance, payments, and payroll. All necessary and important functions for business owners that instead of dealing with us, if they do not deal with us, they are going to ADP and Paychex. They are going to a local insurance agency. They go to a fintech for their loan and their bank for deposits. Regarding real-time payments, they just do not have it. So we are very proud of the ecosystem that we have built for our customers and think it is very much of a hidden value in our organization. Historically, we have expensed the intellectual property and the IT off of our balance sheet and income statement. Slide number 6. NewtekOne's ecosystem, once again, focusing on that SMB value proposition.

Speaker #2: On slide number 5, we talk about our ecosystem for the customer, where there are five solutions built around the SMB: banking, lending, insurance, payments, and payroll.

Speaker #2: All necessary and important functions for business owners that instead of dealing with us, if they don't deal with us, they're going to an ADP and paychecks.

Speaker #2: They're going to a local insurance agency. They may go to a fintech for their loan, and their bank for deposits. And, regarding real-time payments, they just don't have it.

Barry Sloane: So we are very proud of the ecosystem that we have built for our customers and think it is very much of a hidden value in our organization. Historically, we have expensed the intellectual property and the IT off of our balance sheet and income statement. Slide number 6. NewtekOne's ecosystem, once again, focusing on that SMB value proposition.

Speaker #2: So we're very proud of the ecosystem that we have built for our customers, and think it is very much a hidden value in our organization.

Speaker #2: Historically, we have expensed the intellectual property and IT off of our balance sheet and income statement. Slide number 6: NewtekOne’s ecosystem, once again focusing on that SMB value proposition.

Barry Sloane: It all relates to the customer, helping them grow their business and their revenues, reduce business owner risk, reduces business owner expenses, and give them one platform, the Newtek Advantage, for real-time data, which enables us to onboard them in a frictionless manner very quickly. Give the customer a real-time view of their balances, card batches, chargebacks, ACH, Fedwires visible in the Newtek Advantage, as well as an invoicing system. As well as full analytics capturing historic transaction information and a lot of information that exists in the Advantage, including document storage and QuickBooks integration, as well as QuickBooks analytics. On slide number 7, there is a nice diagram on slide 7, which really discusses how clients approach us with a referral through the NewTracker system. So you have this very big funnel, some coming from financial institutions for referrals, trade associations, CPAs, law firms, and alliance partners.

Speaker #2: It all relates to the customer, helping them grow their business and their revenues reduce business owner risk, reduces business owner expenses, and give them one platform.

Speaker #2: The Newtek Advantage for real-time data enables us to onboard them in a frictionless manner, very quickly, give the customer a real-time view of their balances, card batches, chargebacks, ACH, Fed Wires visible in the Newtek Advantage, as well as an invoicing system, and full analytics capturing historic transaction information and a lot of information that exists in the Advantage, including document storage and QuickBooks integration, as well as QuickBooks analytics.

Barry Sloane: As well as full analytics capturing historic transaction information and a lot of information that exists in the Advantage, including document storage and QuickBooks integration, as well as QuickBooks analytics. On slide number 7, there is a nice diagram on slide 7, which really discusses how clients approach us with a referral through the NewTracker system. So you have this very big funnel, some coming from financial institutions for referrals, trade associations, CPAs, law firms, and alliance partners.

Speaker #2: On slide number 7, there's a nice diagram on slide 7, which really discusses how clients approach us with a referral through the new tracker system.

Speaker #2: So you have this very big funnel. Some coming from financial institutions for referrals, trade associations, CPAs, law firms, and Alliance Partners. And we get these unique referrals.

Barry Sloane: We get these unique referrals. We do not pay for them. We do pay a success fee if we provide a solution, some upfront in the case of lending and ongoing reoccurring income, usually on the other solutions. We are able to do this without branches, traditional bankers, or brokers. We say hundreds of alliance partners. It is actually in excess of 1,000 that we have contracts with. These referrals come in on a regular basis. When customers come to us for a loan, we do not look at the client saying, "You are applying for an SBA loan. You are applying for a commercial and industrial loan or a line of credit." We look at the customer and fit them with the best solution. If you actually go to our website, we do not advertise on the website that we are an SBA lender.

Speaker #2: We don't pay for them. We do pay a success fee. If we provide a solution. Some upfront in the case of lending and ongoing reoccurring income, usually on the other solutions.

Speaker #2: And we're able to do this without branches, traditional bankers, or brokers. We say hundreds of Alliance Partners; it's actually in excess of 1,000 that we have contracts with.

Barry Sloane: These referrals come in on a regular basis. When customers come to us for a loan, we do not look at the client saying, "You are applying for an SBA loan. You are applying for a commercial and industrial loan or a line of credit." We look at the customer and fit them with the best solution. If you actually go to our website, we do not advertise on the website that we are an SBA lender.

Speaker #2: And these referrals come in on a regular basis. But when customers come to us for a loan, we don't look at the client saying, "You're applying for an SBA loan."

Speaker #2: You're applying for a commercial and industrial loan. Or a line of credit." We look at the customer and fit them with the best solution.

Speaker #2: So if they actually go to our website, we don't advertise on the website there were an SBA lender. In many cases, they get an SBA loan, but we wind up giving them the best product at an attractive price and a low monthly payment to fit their needs.

Barry Sloane: In many cases, they get an SBA loan, but we wind up giving them the best product at an attractive price and a low monthly payment to fit their needs. NewTracker is our patented engine. It is one application. It is one CRM. It gives us tremendous intake, particularly using artificial intelligence, to examine tax returns and spread financials, to examine lease agreements, to examine operating agreements, as well as using AI to go to municipalities and get liens. This is how we are able to make loans on a completed loan package within 7 days from having all the information in one particular area. We also offer real-time tracking to our alliance partners 24/7/365, as well as giving them nightly reports. Our underwriting and compliance check, it is terrific. We have complete data on the interaction with the customer, whether it is a text, whether it is an email or a telephonic conversation.

Speaker #2: NewTracker is our patented engine. It's one application. It's one CRM. It gives us tremendous intake, particularly using artificial intelligence, to examine tax returns and spread financials, to examine lease agreements, to examine operating agreements, as well as using AI to go to municipalities and get liens.

Barry Sloane: This is how we are able to make loans on a completed loan package within 7 days from having all the information in one particular area. We also offer real-time tracking to our alliance partners 24/7/365, as well as giving them nightly reports. Our underwriting and compliance check, it is terrific. We have complete data on the interaction with the customer, whether it is a text, whether it is an email or a telephonic conversation.

Speaker #2: This is how we're able to make loans on a completed loan package within seven days from having all the information in one particular area.

Speaker #2: We also offer real-time tracking to our Alliance Partners, 24/7, 365 days a year, as well as giving them nightly reports. Underwriting and compliance check—it's terrific. We have complete data on the interaction with the customer, whether it's a text, an email, or a telephonic conversation.

Barry Sloane: Let us go to slide number 8. The Newtek Advantage, that single pane of glass. Extremely important is the quality of service. As a matter of fact, when you look at our Trustpilot scores, NewtekOne on Trustpilot, 4.9 out of 5. Newtek Bank, 4.5 out of 5. When you go to entities like DepositAccounts.com and you compare us against some of the top banks, which are below 2. They are like 1.8, 1.7, 1.6. We are 4.0 on DepositAccounts.com. We are very proud of the fact that Trustpilot has us positioned as the number one payroll provider for service and number two in real-time payments. The Newtek Advantage snapshot on slide number 8 gives you an idea of the view that the client gets when signing up for one or many of our Newtek products. It is a digital-first entry.

Speaker #2: Let's go to slide number 8. The Newtek advantage—that single pane of glass. Extremely important is the quality of service. As a matter of fact, when you look at our Trustpilot scores, NewtekOne on Trustpilot: 4.9 out of 5.

Speaker #2: Newtek Bank, 4.5 out of 5. When you go to entities like deposit.com and you compare us against some of the top banks, which are below 2—they're like 1.8, 1.7, 1.6.

Speaker #2: We're 4.0 on deposit.com. We're very proud of the fact that trust pilot has us positioned as the number one payroll provider for service and number 2 in real-time payments.

Barry Sloane: We are very proud of the fact that Trustpilot has us positioned as the number one payroll provider for service and number two in real-time payments. The Newtek Advantage snapshot on slide number 8 gives you an idea of the view that the client gets when signing up for one or many of our Newtek products. It is a digital-first entry.

Speaker #2: The Newtek Advantage snapshot on slide number eight gives you an idea of the view that the client gets when signing up for one or many of our Newtek products.

Speaker #2: It's a digital-first entry. It gives them real-time payments clarity, whether it's a wire, whether it's making payroll with the money going in on Monday and paying employees on Monday, or whether it's having a batch of Visa or MasterCard receivables actually hitting the same day that we're able to process the transaction.

Barry Sloane: It gives them real-time payments clarity, whether it is a wire, whether it is making payroll with the money going in on Monday and paying employees on Monday. Whether it is having a batch of a Visa, MasterCard receivable actually hitting the same day that we are able to process the transaction. Showing the client in the banking portal what their batches are, refunds, chargebacks, everything right in the portal. We really give the client a live view of cash flow, payments, loans, banking, and payroll. Importantly, it is on-demand. On-camera access 24/7. Individuals in the United States that can help the customer. It is really tremendous value beyond traditional banking. Particularly, we give clients unlimited document storage, web traffic analytics, and two-way QuickBooks integration. On slide number 9, this is what NewTracker does. It does many things, not only for the client or the alliance partner, but for our organization.

Speaker #2: Showing the client in the banking portal what their batches are—refunds, chargebacks, everything—right in the portal. We really give the client a live view of cash flow, payments, loans, banking, and payroll, and importantly, it's on demand.

Barry Sloane: We really give the client a live view of cash flow, payments, loans, banking, and payroll. Importantly, it is on-demand. On-camera access 24/7. Individuals in the United States that can help the customer. It is really tremendous value beyond traditional banking. Particularly, we give clients unlimited document storage, web traffic analytics, and two-way QuickBooks integration. On slide number 9, this is what NewTracker does. It does many things, not only for the client or the alliance partner, but for our organization.

Speaker #2: On camera, access to 24/7 individuals in the United States that can help the customer. It's really tremendous value beyond traditional banking, particularly when you give clients unlimited document storage, web traffic analytics, and two-way QuickBooks integration.

Speaker #2: On slide number 9, this is what NewTracker does. It does many, many things not only for the client, or the Alliance Partner, but for our organization.

Barry Sloane: And those Trustpilot scores that we get are not by happenstance. It is a live check on the operational efficiencies of our business service specialists and our CSRs in the field each and every day, every a.m., every p.m., every day, every week, and every quarter. Slide 10, which we talked about a little earlier, demonstrates the tangible book value per share. It has a nice depiction of the dividends on top. It shows the growth from the time we bought the bank to today. $12.30 in tangible book. With dividends, $15.11. Slide 11 shows the deposit growth and the success that we talked about. 11,646 business accounts for checking and business savings. Core deposits, 35,000 accounts. Slide 12. We talk about this product quite a bit. It is an important product to us. It is a growth product for us.

Speaker #2: And those Trustpilot scores that we get are not by happenstance. It's a live check on the operational efficiencies of our business service specialists and our CSRs in the field, each and every day—every AM, every PM, every day, every week, and every quarter.

Speaker #2: Slide number 10, which we talked about a little earlier, demonstrates the tangible book value per share, has a nice depiction of the dividends on top.

Barry Sloane: It has a nice depiction of the dividends on top. It shows the growth from the time we bought the bank to today. $12.30 in tangible book. With dividends, $15.11. Slide 11 shows the deposit growth and the success that we talked about. 11,646 business accounts for checking and business savings. Core deposits, 35,000 accounts. Slide 12. We talk about this product quite a bit. It is an important product to us. It is a growth product for us.

Speaker #2: It shows the growth from the time we bought the bank to today. $12.30 in tangible book, with dividends $15.11. Slide number 11 shows the deposit growth and the success that we talked about.

Speaker #2: 11,646 business accounts for checking and business savings. Core deposits, 35,000 accounts. Slide number 12, we talk about this product quite a bit. It's an important product to us.

Speaker #2: It's a growth product for us. We refer to it as commercial and industrial. Acronym CNILA, LA standing for Long Am Loan Securitizations. What we've learned over the course of 23 years is clients strongly prefer to amortize loans without a balloon payment over 10 to 25 years.

Barry Sloane: We refer to it as commercial and industrial, acronym C&I LA. LA standing for long amortizing loan securitizations. What we have learned over the course of 23 years is clients strongly prefer amortized loans without a balloon payment over 10 to 25 years. We do require personal guarantees, joint and several, and every 20% equity owner or greater at a minimum. We also lien personal and business assets when obviously, the business assets required, personal when applicable. But you could see when we put these loans on our balance sheet, we then put them into securitization. We are now doing these loans out of Newtek Bank, N.A. So we talk about initial overcollateralization and current overcollateralization. That is the ownership certificates in these securitizations as they are done off-balance sheet. Important to note, look at the current OC versus initial.

Speaker #2: We do require personal guarantees, joint and several, and every 20% equity owner or greater at a minimum. And we also lien personal and business assets—when obviously the business assets are required, and personal when applicable.

Barry Sloane: But you could see when we put these loans on our balance sheet, we then put them into securitization. We are now doing these loans out of Newtek Bank, N.A. So we talk about initial overcollateralization and current overcollateralization. That is the ownership certificates in these securitizations as they are done off-balance sheet. Important to note, look at the current OC versus initial.

Speaker #2: But you could see, when we put these loans on our balance sheet, we then put them into securitization. We're now doing these loans out of Newtek Bank, National Association.

Speaker #2: So we talk about initial over collateralization and current over collateralization. That is the ownership certificates in these securitizations as they're done off balance sheet.

Speaker #2: It's important to note: look at the current OC versus the initial. You can see that the excess cash flow we get from these loans is amortizing the senior debt in the securitization.

Barry Sloane: You could see the excess cash flow that we get from these loans is amortizing the senior debt in the securitization. So it grows the ownership certificates and the book fairly rapidly over the course of time. I think this is indicative of the power of the excess cash flow coming off of loans that are put on the books at Treasuries +950 over the five-year. When you look at our securitization spreads, which are things that we have talked about in past presentations, they are typically 660 off the five-year Treasury. The loan is typically fixed for five years. There is 100 basis points of servicing, which we keep. Then we have a spread historically of 560 to where the bonds are yielding in the marketplace. Slide 13 is an important slide. That is Newtek Bank, N.A.

Speaker #2: So it grows the ownership certificates and the book fairly rapidly over the course of time. I think this is indicative of the power of the excess cash flow coming off of loans that are put on the books at Treasuries plus 950 over the five years.

Barry Sloane: When you look at our securitization spreads, which are things that we have talked about in past presentations, they are typically 660 off the five-year Treasury. The loan is typically fixed for five years. There is 100 basis points of servicing, which we keep. Then we have a spread historically of 560 to where the bonds are yielding in the marketplace. Slide 13 is an important slide. That is Newtek Bank, N.A.

Speaker #2: When you look at our securitization spreads, which are things that we've talked about in past presentations, they're typically 660 off the five-year Treasury the loan is typically fixed for five years.

Speaker #2: There's 100 basis points of servicing, which we keep. And then we have a spread historically of 560 to where the bonds are yielding in the marketplace.

Speaker #2: Slide number 13 is an important slide that's Newtek Bank in A. You could see that at the bank, and we're looking to do more and more of our business at the bank and less and less of our business at the holding company.

Barry Sloane: You could see that at the bank, and we are looking to do more and more of our business at the bank and less and less of our business at the holding company. We have fairly high ROAAs, ROEs. Efficiency ratios are low. NIMs are high. Cost of deposits, so market rate. I continue to say this on conference calls. If you are paying the consumer 1% or you are paying them 3.8%, and I use the consumer, whether it is a business or whether it is actually an individual, what is more likely to move? Paying them a market rate of interest or a rate that is materially below what the two-year Treasury or T-bills are currently paying. We think it is the latter. We think we give our customers a good deal.

Speaker #2: We have fairly high ROIs as ROEs, efficiency ratios are low. NIMs are high. Cost of deposits—so market rate. I continue to say this on conference calls.

Barry Sloane: If you are paying the consumer 1% or you are paying them 3.8%, and I use the consumer, whether it is a business or whether it is actually an individual, what is more likely to move? Paying them a market rate of interest or a rate that is materially below what the two-year Treasury or T-bills are currently paying. We think it is the latter. We think we give our customers a good deal.

Speaker #2: If you're paying the consumer 1%, or you're paying them 3.8%, and I use the consumer—whether it's a business or whether it's actually an individual—what's more likely to move?

Speaker #2: Paying them a market rate of interest or a rate that is materially below with a two-year Treasury? Or T-bills are currently paying. We think it's the latter.

Speaker #2: We think we give our customers a good deal. And through the Newtek advantage, we actually are able to do more things for the customer where we're typically able to pay them 1% for business checking, 3.5% on savings.

Barry Sloane: Through the Newtek Advantage, we actually are able to do more things for the customer where we are typically able to pay them 1% for business checking, 3.5% on savings. Why should they give us their deposits below the risk-free rate? Because we give them value. Because we give them real-time payroll. Because we give them real-time payments. Because we give them analytics and transactional capability and data that they simply cannot get at the top four big banks, who historically love this customer base because they can grab their deposits at 2% to 3% below the risk-free rate. One other important note when you look at our organization relative to capital and credit. We are utilizing more of our capital at the bank and at the holding company. Non-accruals, I think this is extremely important.

Speaker #2: And so why should they give us their deposits below the risk-free rate? Because we give them value. Because we give them real-time payroll. Because we give them real-time payments.

Barry Sloane: Because we give them analytics and transactional capability and data that they simply cannot get at the top four big banks, who historically love this customer base because they can grab their deposits at 2% to 3% below the risk-free rate. One other important note when you look at our organization relative to capital and credit. We are utilizing more of our capital at the bank and at the holding company. Non-accruals, I think this is extremely important.

Speaker #2: Because we give them analytics and transactional capability, and data that they simply can't get at the top four big banks, who historically love this customer base because they can grab their deposits at 2% to 3% below the risk-free rate.

Speaker #2: One other important note: when you look at our organization relative to capital and credit, we're utilizing more of our capital at the bank and at the holding company.

Speaker #2: Non-accruals, and I think this is extremely important. Excluding government guarantees, that the SBA prefers, and it's SOP, that we buy out of the secondary versus them, 3.9% non-accruals.

Barry Sloane: Excluding government guarantees that the SBA prefers and it is SOP that we buy out of the secondary versus them, 3.9% non-accruals. Obviously, when you include the government guarantees, and the guarantees are still intact, it is a much higher number. As market participants and analysts take the call report data, jam it into their AI models, and they come out and go, "Wow, this is really high," that is where we are running into issues. For those of you that are following the company, paying attention to what we are doing, we believe we have historically done a good job over 23 years managing risk and reward, and you are getting compensated for the risk that is being taken.

Speaker #2: Obviously, when you include the government guarantees and the guarantees are still intact, it's a much higher number. So as a market participant and analyst take the core report data jam it into their AA models, and they come out and go, "Wow, this is really high." That's where we're running into issues.

Speaker #2: For those of you that are following the company, paying attention to what we're doing, we believe we've historically done a good job over 23 years managing risk and reward, and you're getting compensated for the risk that's being taken.

Barry Sloane: Slide number 14 provides further evidence of the fact that we are working very hard in improving the quality of the portfolio with enhanced hires in the servicing department, managing our ACL to loans held for investment, excluding the guarantees. This is important data and statistics that we look at and manage on a regular basis. Slide number 15 addresses our returns that we are providing our shareholders. With that, I would like to turn the presentation over to Frank DeMaria, and then we will go to Q&A. Frank?

Speaker #2: Slide number 14 provides further evidence of the fact that we are working very hard in improving the quality of the portfolio with enhanced hires in the servicing department, managing our ACL to loans held for investment, excluding the guarantees.

Speaker #2: And this is important data and statistics that we look at and manage on a regular basis. Slide number 15 addresses our returns that we're providing to our shareholders.

Speaker #2: And with that, I'd like to turn the presentation over to Frank DeMaria and then we'll go to Q&A. Frank?

Frank DeMaria: Thanks, Barry. Barry covered most of the relevant metrics for Q3, but I wanted to touch on a couple of topics, namely net interest income and the bank's held-for-investment loan portfolio. Moving to slide 17, Q3 net interest income of $18.9 million is the highest quarterly net interest income that we have generated in the almost four years as a financial holding company. Quarterly net interest income was up 26% quarter-over-quarter and 30% year-over-year. The quarter-over-quarter increase reflects a full quarter of interest income from long amortizing C&I loans that were originated in Q2, as well as the impact of holding the government guaranteed portions of SBA 7(a) loans on the balance sheet for longer than we have historically. Similarly, we expect Q3 C&I LA originations should benefit net interest income in Q4.

Speaker #3: Thanks, Barry. Barry covered most of the relevant metrics for the third quarter. But I wanted to touch on a couple of topics, namely net interest income and the bank's health or investment loan portfolio.

Speaker #3: Moving to slide 17, third quarter net interest income of 18.9 million dollars is the highest quarterly net interest income that we've generated in the almost four years as a financial holding company.

Frank DeMaria: Quarterly net interest income was up 26% quarter-over-quarter and 30% year-over-year. The quarter-over-quarter increase reflects a full quarter of interest income from long amortizing C&I loans that were originated in Q2, as well as the impact of holding the government guaranteed portions of SBA 7(a) loans on the balance sheet for longer than we have historically. Similarly, we expect Q3 C&I LA originations should benefit net interest income in Q4.

Speaker #3: Quarterly net interest income was up 26%, quarter over quarter, and 30% year over year. The quarter over quarter increase reflects a full quarter of interest income from long amortizing CNI loans that were originated in the second

Speaker #4: quarter, as well as the impact of holding the government-guaranteed portions of SBA 7(a) loans on the balance sheet for longer than we have historically.

Speaker #4: Similarly, we expect third-quarter C&I loan originations should benefit net interest income in the fourth quarter. Year-to-date net interest income climbed 20% versus the first nine months of 2025, and the revenue mix is also shifting to net interest income, with third quarter and year-to-date at 26% and 23% of revenue, respectively, versus 19% and 20% for the comparable periods of 2025.

Frank DeMaria: Year to date, net interest income climbed 20% versus the first 9 months of 2025, and the revenue mix is also shifting to net interest income with Q3 and year to date at 26% and 23% of revenue respectively, versus 19% and 20% for the comparable periods of 2025. I would also note a favorable net interest margin trend with a mix shift on both the earning asset and liability sides, with the earning asset yield increasing with higher short and medium-term interest rates and funding costs moving lower with deposit costs flat and the cost of borrowings down overall. Moving to slide 18. Slide 18 describes the bank's held-for-investment loans at cost, which are subject to CECL.

Speaker #4: I'd also note a favorable net interest margin trend, with a mix shift on both the earning asset and liability sides, and the earning asset yield increasing with higher short- and medium-term interest rates.

Speaker #4: And funding costs moving lower with deposit costs flat and the cost of borrowings down overall. Moving to slide 18, slide 18 describes the bank's held-for-investment loans at cost, which are subject to CECL.

Frank DeMaria: The primary point of this slide is that the $57 million allowance for credit losses is largely comprised of reserves against a portfolio of unguaranteed SBA 7(a) loans, which accounts for almost 90% of the bank's ACL. The $51 million portion of the ACL on the SBA unguaranteed book is 8.1% of the SBA unguaranteed balances. With that, I will turn it back to Barry for closing remarks before we get into Q&A.

Speaker #4: The primary point of this slide is that the $57 million allowance for credit losses is largely comprised of reserves against a portfolio of unguaranteed SBA 7(a) loans, which accounts for almost 90% of the bank's ACL.

Speaker #4: The $51 million portion of the ACL on the SBA 7(a) loans SBA unguaranteed book is 8.1% of the SBA unguaranteed balances. With that, I'll turn it back to Barry for closing remarks before we get into Q&A.

Barry Sloane: Thank you. I would like to draw everyone's attention to slide number 19. Recently, we saw a transaction in the capital markets where BlueVine, a fintech that acquires deposits and also acquires loan lending opportunities for third parties, agreed to be acquired by Valley National Bank for approximately $340 million. When I look at their technology versus ours, and we have intangible and goodwill assets on our books of $14 million because we have written off our IP over the course of time. I think that there is a lot of value in NewtekOne, and slide number 19 reflects that. We have a proprietary, internally developed technology stack. The NewTracker system is patented. It is a digital account opening. It is automated. It is a frictionless loan origination platform. It is automated lead generation offering real-time payments and a tremendous value proposition for the customer through the Newtek Advantage®.

Speaker #5: Thank you. I'd like to draw everyone's attention to slide 19. Slide number 19. Recently, we saw a transaction in the capital markets where BlueVine, a fintech that acquires deposits, and also acquires lending opportunities for third parties, agreed to be acquired by Valley National Bank for approximately $340 million.

Speaker #5: When I look at their technology versus ours, and we have intangible and goodwill assets on our books at $14 million because we've written off our IP over the course of time.

Barry Sloane: I think that there is a lot of value in NewtekOne, and slide number 19 reflects that. We have a proprietary, internally developed technology stack. The NewTracker system is patented. It is a digital account opening. It is automated. It is a frictionless loan origination platform. It is automated lead generation offering real-time payments and a tremendous value proposition for the customer through the Newtek Advantage®.

Speaker #5: I think that there's a lot of value in NewtekOne, and slide number 19 reflects that. We have a proprietary, internally developed technology stack. The new tracker system is patented.

Speaker #5: It's digital account opening. It's automated. It's a frictionless loan origination platform. It's automated lead generation, offering real-time payments and a tremendous value proposition for the customer through the Newtek Advantage.

Barry Sloane: It is a differentiated origination engine at a much lower cost and incredibly scalable. It is a closed-loop customer funnel. Borrowers are required to make payments from the Newtek Bank account in lending, and there is a tremendous cross-service opportunity where one customer application feeds multiple applications across multiple solutions. We think that the banking industry, which has feasted on deposits below the risk-free rate and low margin riskless loans with low charge loss. We do believe that AI will change that over the course of time. And depositors and savers, particularly with higher rates, are really going to push for higher rates for what basically, through FDIC insurance, is essentially some form of a treasury account. We have a very scalable operating infrastructure and platform, and we have a complete offering of solutions for SMBs.

Speaker #5: It is a differentiated origination engine at a much lower cost and incredibly scalable. It's a closed-loop customer funnel. Borrowers are required to make payments from the Newtek bank account in lending, and there's a tremendous cross-service opportunity where one customer application feeds multiple applications across multiple solutions.

Barry Sloane: We think that the banking industry, which has feasted on deposits below the risk-free rate and low margin riskless loans with low charge loss. We do believe that AI will change that over the course of time. And depositors and savers, particularly with higher rates, are really going to push for higher rates for what basically, through FDIC insurance, is essentially some form of a treasury account. We have a very scalable operating infrastructure and platform, and we have a complete offering of solutions for SMBs.

Speaker #5: We think that the banking industry, which has feasted on deposits below the risk-free rate and low-margin, riskless loans with low charge-offs—we do believe that SI or AI will change that over the course of time. Depositors and savers, particularly with higher rates, are really going to push for higher rates for what, basically through FDIC insurance, is essentially some form of a Treasury account.

Speaker #5: We have a very scalable operating infrastructure and platform, and we have a complete offering of solutions for SMBs. And once again, there's no— I'd say, real markup given the low value of the intangibles and the goodwill.

Barry Sloane: Once again, there is no, I would say, real markup given the low value of the intangibles and the goodwill. We welcome offering demos of the NewTracker system and the Newtek Advantage to the six analysts that follow our stock. Learn more about our company. Learn how we do the business. Understand the scalability. We welcome that opportunity and offer it on a regular basis. Hopefully, we will get some takers after this call today. With that, operator, I would like to turn it over to Q&A.

Speaker #5: We welcome offering demos of the new tracker system and the Newtek Advantage to the six analysts who follow our stock. Learn more about our company, learn how we do business, and understand the scalability.

Speaker #5: And we welcome that opportunity and offer it on a regular basis. Hopefully, we'll get some takers after this call today. So with that, Operator, I'd like to turn it over to Q&A.

Operator: As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile our Q&A roster. Our first question will be coming from the line of Elizabeth Waner of Raymond James. Your line is open.

Speaker #6: As a reminder, to ask a question, please press star 1, 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1, 1 again.

Speaker #6: Please stand by while we compile our Q&A roster. Our first question will be coming from the line of Elizabeth Wainer of Raymond James.

Speaker #6: Your line is open. Hi everyone, this is Elizabeth Wainer on for Joey and Junious. Thanks for taking my questions. Thank you, Elizabeth. In the prepared remarks, you reiterated your 2026 EPS guidance of $1.70 to $1.80, which implies a step-up in 4Q earnings.

Elizabeth Waner: Hi, everyone. This is Elizabeth Waner on for Joseph Yanchunis. Thanks for taking my questions.

Barry Sloane: Thank you, Elizabeth.

Elizabeth Waner: In the prepared remarks, you reiterated your 2026 EPS guidance of $1.70 to $1.80, which implies a step-up in Q4 earnings. Could you walk us through the primary drivers of that improvement, particularly given the sharp decline in gain on sale income? Should we expect the improvement to come primarily from continued NII growth, or are there other revenue or expense items that should contribute?

Speaker #6: Could you walk us through the primary drivers of that improvement, particularly given

Speaker #7: Given the sharp decline in gain-on-sale income, should we expect the improvement to come primarily from continued NII growth, or are there other revenue or expense items that should contribute?

Barry Sloane: Thanks, Elizabeth. I appreciate that. I think that if you go back and look at the company's history as a bank and as a BDC, there clearly is a seasonal lift to Q4, particularly for lending originations, which do drive the P&L. I think the concept of us doing more loans in the fourth quarter, as well as the growth in net interest income, which our press release indicated probably is growing somewhere around 20% sequentially. Certainly bigger numbers on a year-over-year basis. That is going to start to compound. Matter of fact, if you look at an SBA loan, we are typically a prime plus 3 lender, which today would get you to about 10% coupon. With our cost of funds, I would call it 3.6% or 3.65%. So that is about 640 basis points of spread income.

Speaker #5: Thanks, Elizabeth. I appreciate that. And I think that if you go back and look at the company's history as a bank, both as a bank and as a BDC, there clearly is a seasonal lift to Q4, particularly for lending originations, which do drive the P&L.

Speaker #5: So I think, you know, the concept of us doing more loans in the 4th quarter, as well as the growth in net interest income, which our press release indicated, probably is growing somewhere around 20% sequentially, and certainly bigger numbers on a year-over-year basis.

Barry Sloane: Certainly bigger numbers on a year-over-year basis. That is going to start to compound. Matter of fact, if you look at an SBA loan, we are typically a prime plus 3 lender, which today would get you to about 10% coupon. With our cost of funds, I would call it 3.6% or 3.65%. So that is about 640 basis points of spread income.

Speaker #5: And that's going to start to compound. Matter of fact, if you look at an SBA loan, we are typically a prime-plus-3 lender, which today would get you to about a 10% coupon.

Speaker #5: With our cost of funds, I'd call it 3.6 or 3.65. So that's about 640 basis points of spread income. So you could sell it for a gain on sale, or you could hold it for a 4 or 5-year duration, and over the course of time, you'll probably do better holding it.

Barry Sloane: You could sell it for a gain on sale, or you could hold it for a 4 or 5-year duration. Over the course of time, you will probably do better holding it. It does affect the current income and the current quarters. After running the bank and bank holding company model for 3 and a half years, we are looking to diversify that a little bit, and I think you will see that split up going forward. I do appreciate the question. Thank you.

Speaker #5: It does affect the current income in the current quarters. You know, after running the bank and bank holding company model for three and a half years, we're looking to diversify that a little bit, and I think you'll see that split up going forward.

Speaker #5: So I do appreciate the question. Thank you.

Elizabeth Waner: Yeah. Thank you. That was helpful. We have seen some softer small business confidence data recently with inflation and labor costs continuing to pressure business owners. Are you seeing that translate at all into any weaker demand for SBA loans or any change in borrower performance? Are there any particular industries or borrower vintages where you are seeing more stress?

Speaker #7: Yeah, thank you. That was helpful. And then we've seen some softer small business confidence data recently with inflation and labor costs continuing to pressure business owners.

Speaker #7: Are you seeing that translate at all into any weaker demand for SBA loans, or any change in borrower performance? Are there any particular industries or borrower vintages where you're seeing more stress?

Barry Sloane: Yeah, to be frank and transparent, we believe that, and we have adjusted for that in our risk models, in our CECL calculations, and in our business valuations, that the uptrend in rates, particularly post-COVID, of 3% to 5%. Now we are off of the highs of 5%, but we are still pretty high. The fact that we have had fairly stubborn inflation for a window of four or five years has been difficult on us. It has been difficult on older vintage loans. Look, I do not have a crystal ball. I do not necessarily have a forecast. We just had the Fed governor, who really only controls short rates and not long rates, pretty much left the short rate environment flattish, but they are looking at it. He has some concerns about inflation. I do think that there has been stress on the historic portfolio.

Speaker #5: Yeah, to be frank and transparent, we believe that, and we have adjusted for that, you know, in our risk models, in our CECL calculations, and in our business valuations, that the uptrend in rates you know, particularly post-COVID, of 3 to 5%.

Speaker #5: Now we're off the highs of 5%, but we're still pretty high. And the fact that we've had fairly stubborn inflation for a window of four or five years has been difficult on us.

Speaker #5: It's been difficult on older vintage loans. Look, I'm not a— I don't have a crystal ball. I don't necessarily have a forecast. We just had the Fed governor, who really only controls short rates and not long rates, pretty much left the short rate environment flattish, but they're looking at it.

Barry Sloane: Look, I do not have a crystal ball. I do not necessarily have a forecast. We just had the Fed governor, who really only controls short rates and not long rates, pretty much left the short rate environment flattish, but they are looking at it. He has some concerns about inflation. I do think that there has been stress on the historic portfolio.

Speaker #5: He has some concerns about inflation. And I do think that there has been stress on the historic portfolio. I do believe that once we get through these midterms, I think that oil—which has been the primary driver of inflation—these are all risk factors that are in our Ks and Qs.

Barry Sloane: I do believe that once we get through these midterms, I think that oil, which has been the primary driver of inflation. These are all risk factors that are in our K's and Q's. I point out to please read those risk factors. Will hopefully move in the right direction. Reduce rates, reduce inflation, and give us a lift. We are seeing that at these higher level of rates, it is more challenging to make loans. It is more challenging to grow the business. Therefore, we have muted our origination volumes with the guidance that we have given recently and going forward. We have also tightened underwriting guidelines historically and are doing so as we speak right now.

Speaker #5: I point out to please, please read those risk factors. will hopefully move in the right direction, reduce rates, reduce inflation, and give us a lift.

Speaker #5: We are seeing that, at these higher levels of rates, it is more challenging to make loans, it's more challenging to grow the business, and therefore we have muted our origination volumes with the guidance that we've given recently and going forward.

Speaker #5: And we've also tightened underwriting guidelines historically and are doing so as we speak right now.

Elizabeth Waner: Understood. Thank you for answering my question.

Speaker #7: Understood. Thank you for answering my question. Thank you.

Barry Sloane: Thank you.

Operator: And our next question will come from the line of Emily Lee of Keefe, Bruyette & Woods. Your line is open, Emily.

Speaker #6: And our next question will come from the line of Emily Lee. Of Keefe. Briette in Woods, your line is open, Emily.

Emily Lee: Hey, everyone. This is Emily Lee on for Tim Switzer. Thanks for taking my questions.

Speaker #8: Hey everyone, this is Emily Lee on for Tim Switzer. Thanks for taking my questions.

Barry Sloane: Hey, thank you, Emily.

Speaker #5: Thank you, Emily.

Emily Lee: I was wondering if you could provide some details on the size and economics of the securitization expected to occur in Q1 2027.

Speaker #8: So I was wondering if you could provide some details just on the size and economics of the securitization expected to occur in 1Q '27.

Barry Sloane: Yeah. We are looking to hopefully do a financing with about $350 to $400 million of collateral. I think it will be closer to the $400. We will be looking to issue bonds in the month of January.

Speaker #5: Yeah, we're looking to hopefully do financing with about $350 to $400 million of collateral. I think it'll be closer to the $400, and we'll be looking to issue bonds in the month of January.

Emily Lee: Great. Thank you. Could you just elaborate on some of your comments in the release and the prepared remarks regarding exploring all strategic alternatives to help the market recognize Newtek's value? What exactly strategies are under consideration here?

Speaker #8: Great, thank you. And then also, could you just elaborate on some of your comments in the release and the prepared remarks regarding exploring all strategic alternatives?

Speaker #8: to help the market recognize Newtek's value. What exactly strategies are under consideration here?

Barry Sloane: Well, I think that from our standpoint, we are in the market every single day. I wake up with a clear head and a clear vision, and that has been true since we became a public company in September of 2000. We clearly think that there are opportunities within our organization. We have regular conversations with strategic alliance partners. We have regular conversations with technology solutions providers that are interested in our technology. From time to time, we have people that look at different components of our organization. We will always be opportunistic to recognize value and reduce risk for our shareholders, depending upon where the market is at at a given point in time, and conditions which frankly are pretty volatile and constantly changing.

Speaker #5: Well, I think that, you know, from our standpoint, we're in the market every single day. And, you know, I wake up with a clear head and a clear vision.

Speaker #5: That's been true since we became a public company in September of 2000. We clearly think that there are opportunities within our organization, and we have regular conversations with strategic alliance partners.

Speaker #5: We have regular conversations with technology solutions providers that are interested in our technology. From time to time, we have people that look at different components of our organization, and we will always be opportunistic to recognize value and reduce risk for our shareholders depending upon, you know, where the market is at a given point in time and conditions which frankly are pretty volatile and constantly changing.

Speaker #5: So, you know, without putting my finger on any one particular item, I think it just says we are open to having conversations with people about our business, our business model.

Barry Sloane: Without putting my finger on any one particular item, I think it just says we are open to having conversations with people about our business, our business model, how it works, and where we could derive value and get better value, frankly, than where we are currently receiving in the marketplace. We think we are dramatically misunderstood, particularly when it comes to the technology platform that we have.

Speaker #5: How it works, and where we could derive value and get better value, frankly, than where we're currently receiving in the marketplace, where we think we are dramatically misunderstood, particularly when it comes to the technology platform that we have.

Emily Lee: Understood. Well, thank you, Barry, and thank you, everyone. Thanks for taking my questions.

Speaker #8: Understood. Well, thank you, Barry, and thank you, everyone. Thanks for taking my questions. Thank you.

Barry Sloane: Thank you.

Operator: Our next question will be coming from the line of Christopher Nolan of Ladenburg Thalmann. Your line is open.

Speaker #6: And our next question will be coming from the line of Christopher Nolan of Ladenburg Thalmann. Your line is open.

Christopher Nolan: Barry, I will take you up on the tech demo at some point.

Speaker #5: Barry, I'll take you up on the tech demo at some point. Um, would love to do that, and we'll call you and schedule something right after your earnings season, okay?

Barry Sloane: Would love to do that, and we will call you and schedule something right after your earnings season. Okay?

Speaker #5: Sounds good. Um, your capital ratios seem to be at a point now where— should we expect balance sheet growth to slow in the 4th quarter pending the rate resecuritization?

Christopher Nolan: Sounds good. Your capital ratios seem to be at a point now where should we expect balance sheet growth to slow in Q4 pending the securitization?

Barry Sloane: Yeah, Chris, good question. When we do the securitization in January, whatever is on the balance sheet will come off the balance sheet. So that will be helpful just from a ratio perspective. And we obviously have to have the right capitalization on the ownership certificate that we will be holding. I think that we are pretty much where a normal organization would be, a bank of our size relative to these ratios. And I think from our standpoint, we are going to take it one quarter at a time, manage the capital, manage the risk, and look to continue to be well-capitalized given the risk that we have in the marketplace.

Speaker #5: Yeah, Chris, good question. So when we do the securitization in January, whatever's on the balance sheet will come off the balance sheet. So that will be That'll be helpful, um, just from a ratio perspective.

Speaker #5: And we obviously have to have the right capitalization, um, on the ownership certificate that would be— that we'll be holding. I think that, you know, we're pretty much where a normal organization would be, a bank of our size.

Speaker #5: Relative to these ratios. And I think from our standpoint, you know, we're going to take it, you know, one quarter at a time, manage the capital, manage the risk.

Speaker #5: And look to continue to, you know, be well capitalized given the risk that we have in the marketplace. Great. And then the boost in the holdco net interest margin, that was related to the strategy of moving more of the 7(a) business to to the bank.

Christopher Nolan: Great. The boost in the hold co net interest margin, that was related to the strategy of moving more of the 7(a) business to the bank?

Barry Sloane: Yes. Moving them to the bank. While they are in that accumulation phase, they are on balance sheets that expand the NIM. The reality of it is, in the appendix, we have a slide which we refer to NIM and adjusted NIM. Adjusted NIM would bring them back on the balance sheet. We have a much larger adjusted NIM at the hold co rather than what I would call the non-adjusted NIM because you do not have your balance sheet loans as part of that calculation. If I can quickly go forward here. I think we will have to dig it out, but it is one of the slides. I do not know, Frank, if you know what that slide is. There is an adjusted NIM calculation, I believe, in the appendix somewhere.

Speaker #5: Yes, moving them to the bank and while they're in that accumulation phase, they're on balance sheets that expands the NIM. I mean, the reality of it is in the appendix we have a slide which we refer to NIM and adjusted NIM.

Speaker #5: Adjusted NIM would bring them back on the balance sheet. So we've got a much larger adjusted NIM at the holdco rather than what I would call the non-adjusted NIM, because you don't have— you have balance sheet loans as part of that calculation.

Speaker #5: So, if I can quickly go forward here, I think it's— We'll have to dig it out, but it's one of the slides. I don't know, Frank, if you know what that slide is, but there's an adjusted NIM calculation, I believe, in the appendix somewhere.

Frank DeMaria: Yeah. Slide 28. To that too, Chris, we did have a full quarter of the C&I LA loans that were originated in Q2. Then cost of borrowings as we bring that down. The overall cost of borrowings came down too at the holding company. That also helped.

Speaker #5: Yeah, slide 28.

Speaker #4: And to that, Chris, we did have a full quarter of the CNILA loans, you know, that were originated in Q2, and then You know, cost of borrowings, as we, you know, bring that down, the overall cost of borrowings came down too at the holding company.

Speaker #4: So that also helped.

Christopher Nolan: Okay. Thanks, Frank. Final question talks on deposits. One of the issues that you. Not an issue. Just growth challenges that you guys experienced is growing your low-cost core deposit base. Over year to date, based on the last Q, it seems like growing that as a percentage of total deposits seems to have stalled. Excluding savings accounts and CDs and stuff. I was just trying to get an idea as to obviously you want more core deposits, but is it one of those things where we are going to probably have to wait till back half of 2027 or something?

Speaker #5: Okay, thanks, Frank. And then final question talks on deposits. You know, one of the issues that you— not issue, you know, just growth challenges that you guys experience is growing your low-cost core deposit base.

Speaker #5: And, you know, over year-to-date, I mean, based on the last Q, you know, it seems like, you know, growing that percent— that as a percentage of total deposits seemed to have stalled, you know, excluding savings accounts and CDs and stuff.

Christopher Nolan: Over year to date, based on the last Q, it seems like growing that as a percentage of total deposits seems to have stalled. Excluding savings accounts and CDs and stuff. I was just trying to get an idea as to obviously you want more core deposits, but is it one of those things where we are going to probably have to wait till back half of 2027 or something?

Speaker #5: And I was just trying to get an idea as to, you know, obviously you want more core deposits, but is it one of those things where we're going to probably have to wait until the back half of 2027 or something?

Barry Sloane: Chris, it is a good question. For all my presidents and COOs and operators who are on the phone, get moving.

Speaker #5: Chris, it's a good question. So for all my presidents and COOs and operators who are on the phone, get moving. There you go, Barry, crack the whip.

Christopher Nolan: There you go, Barry. Crack the whip.

Speaker #5: I owe you a high five on that. So, from real-time payments, insurance, payroll—it's ham and eggs. You can't have a payroll account without a depository account.

Barry Sloane: I owe you a high five on that. From real-time payments, insurance, payroll. Ham and eggs. You cannot have a payroll account without a depository account. You cannot have a merchant account without a depository account. Insurance, buying and moving the premiums right out of the account, particularly as it connects to payroll. I wish we could move sort of in this really straight line with a lovely slope. We work on trying to put this into the software and make it more of a function that just kind of goes with the whole thing. Today, when you go into Dunkin' Donuts, they jam the hash browns in your bag whether you want them or not. I think that, A, through better mentoring, management, and training, and we have recently made some hires.

Speaker #5: You can't have a merchant account without a depository account. Insurance: buying and moving the premiums right out of the account, particularly as it connects to payroll.

Speaker #5: So I wish we could move sort of in this really straight line with a lovely slope. And we work on trying to put this into the software and make it more of a function that just kind of goes with the whole thing.

Barry Sloane: I wish we could move sort of in this really straight line with a lovely slope. We work on trying to put this into the software and make it more of a function that just kind of goes with the whole thing. Today, when you go into Dunkin' Donuts, they jam the hash browns in your bag whether you want them or not. I think that, A, through better mentoring, management, and training, and we have recently made some hires. Going forward, through the use of agentic AI robots, we are going to get this done. It is all there, and it is to be taken. However, it is slower than I would like, and it is a good point. Yes, we are on the team.

Speaker #5: I mean, you know, today when you go into Dunkin' Donuts, they jam the hash browns in your bag whether you want them or not.

Speaker #5: And I think that, A—through better mentoring, management, and training, and we've recently made some hires—and going forward, through the use of agentic AI robots, we're gonna get this done.

Barry Sloane: Going forward, through the use of agentic AI robots, we are going to get this done. It is all there, and it is to be taken. However, it is slower than I would like, and it is a good point. Yes, we are on the team.

Speaker #5: It's all there and it's to be taken. However, it's slower than I'd like, and it's a good point. And yes, we're on the team.

Christopher Nolan: Okay. Thank you, Barry. Thanks, Frank.

Speaker #5: Okay, thank you, Barry. Thanks, Frank. You made my job easier, Chris. Thank you. Hey, thanks, Chris. My day. Thank you. Jeffrey.

Barry Sloane: You made my job easier, Chris. Thank you.

Christopher Nolan: Hey.

Frank DeMaria: Thanks, Chris.

Christopher Nolan: Made my day. Thank you.

Barry Sloane: Okay.

Operator: As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. Our next question will be coming from the line of Crispin Love of Piper Sandler. Your line is open.

Speaker #6: As a reminder, to ask a question, please press star 1, 1 on your telephone and wait for your name to be announced. Our next question will be coming from the line of Crispin Love of Piper Sandler.

Speaker #6: Your line is open.

Ben Graham: Hey, good afternoon. This is Ben Graham in for Crispin Love. Thanks so much for taking my question. Just looking at the slide deck where you highlight the C&I LA loan metrics, non-performers increased to $82 million from $46 million last quarter. Just wondering if you could discuss a little deeper the drivers of that increase, and is it concentrated in any type of industry or type of borrower? What is your sort of general outlook for credit in the C&I LA loan book in the current environment? Thank you.

Speaker #9: Hey, good afternoon. This is Ben Graham for Crispin Love. Thanks so much for taking my question. Just looking at the slide deck where you highlight the CNI

Speaker #5: LA loan metrics, nonperformers increased to $82 million from $46 million last quarter. Just wondering if you could discuss a little deeper the drivers of that increase and

Speaker #9: is it concentrated in any type of industry or type of borrower? And then what's your sort of general outlook for credit in the CNI LA loan book in the current environment?

Speaker #9: Thank you.

Barry Sloane: It is over a billion-dollar portfolio. As you ramp up the default curve for business loans, that starts to come into place. We actually have embedded in our calculations historic cumulative severity and charge-off number. I would say there is no specific industry where that might be coming from. It is hard to predict a pandemic. It is hard to predict, not that we have these issues on like taxicab medallions, where all of a sudden, overnight, an industry gets obliterated by Uber. It is a diversified portfolio. When you are charging borrowers a T + 950 off the curve, the excess servicing spread and the collateral that you get for these loans and the personal guarantees offset that.

Speaker #5: It's, it's over a billion-dollar portfolio and you know, as you ramp up the default curve for business loans, that's— that starts to come into place.

Speaker #5: And we actually have embedded in our calculations, historic cumulative severity and charge-off number. So I would say there's no, specific industry where that might be coming from.

Speaker #5: You know, it's hard to predict a pandemic. It's hard to predict not that we have these issues on like taxicab medallions, where all of a sudden overnight an industry gets obliterated by Uber, but it's a diversified portfolio.

Speaker #5: And when you're charging borrowers a T+950 off the curve, the excess servicing spread and the collateral that you get for these loans and the personal guarantees offsets that.

Barry Sloane: This is not similar to a bank portfolio where you are doing residential mortgage loans that might have a 10 or 12-year duration at 120 to the curve, and you really do not know what your duration is, or car paper, which is really short in duration. You wind up getting the benefit from huge spread with longer duration over time. You get that on the 7(a) portfolio, and you get that on the C&I LA loans. That actually compounds and offsets that. This has been where this becomes really difficult for the community and investors to look at a traditional bank model, take the stuff put it in a computer on a call report, bang out a report, and that is kind of where we have heartburn. We will get through it, and we will continue to produce the good returns. There is nothing specific.

Speaker #5: Now that— this is not similar to a bank portfolio where you're doing residential mortgage loans that might have a 10 or 12-year duration at 120 to the curve, and you really don't know what your duration is, or car paper, which is really short in duration.

Speaker #5: So, you wind up getting the benefit from a huge spread with longer duration over time. You get that on the 7(a) portfolio, and you get that on the C&I LA loans, and that actually compounds and offsets that.

Speaker #5: So this has been where this becomes really difficult for the community and investors to look at a traditional bank model, take the stuff, put it in a computer, on a call report, bang out a report.

Barry Sloane: This has been where this becomes really difficult for the community and investors to look at a traditional bank model, take the stuff put it in a computer on a call report, bang out a report, and that is kind of where we have heartburn. We will get through it, and we will continue to produce the good returns. There is nothing specific. We have talked about as a portfolio seasons over the course of time, you are going to have these issues.

Speaker #5: And that's, that's kind of where we have, we have heartburn, but we'll get through it and we'll continue to produce the good returns. But no, there's nothing specific.

Barry Sloane: We have talked about as a portfolio seasons over the course of time, you are going to have these issues.

Speaker #5: And, you know, we've talked about As a portfolio seasons over the course of time, you're gonna have these issues. Got it. I appreciate the color there.

Ben Graham: Got it. I appreciate the color there. I will step back, Bud. Thank you so much.

Speaker #5: I'll step back, but thank you so much. Thank you.

Barry Sloane: Thank you.

Operator: I would now like to hand the call back to Barry for closing remarks.

Speaker #6: I would now like to hand the call back to Barry for closing remarks.

Barry Sloane: Great. Thank you, operator. Greatly appreciate all the analysts' activity and the questions, and paying attention to our organization. Once again, I want to thank the management team for delivering a really good quarter, and also to Bryce Rowe and Frank for putting together a real strong investor deck. It is not easy. We put a lot of time and effort into this. Also for all the investors for listening in today. Thank you very much. Have a good rest of the afternoon. Take care.

Speaker #5: Great. Thank you, operator. I greatly appreciate all the analysts' activity and the questions, and your attention to our organization. Once again, I want to thank the management team.

Speaker #5: for delivering a really good quarter, and also to Bryce Rowe and Frank for putting together a real strong investor deck. It's not easy. We put a lot of time and effort into this.

Speaker #5: So And also for all the investors for listening in today. Thank you very much. Have a good rest of the afternoon. Take care.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.