Newtek Business Services (NEWT) 8-K Results of Operations and Financial Condition

www.thesba.com

Newtek Business Services Corp.

“The Small Business Authority®”

NASDAQ: NEWT

Hosted by:

Barry Sloane, President & CEO         Jennifer Eddelson, EVP & CAO

Investor Relations

Public Relations

Newtek Investor Relations

Newtek Public Relations

Jayne Cavuoto

Director of Investor Relations

jcavuoto@thesba.com

(212) 273-8179

Simrita Singh

Director of Marketing

ssingh@thesba.com

(212) 356-9566

First Quarter 2015

Financial Results Conference Call

May 7, 2015 4:15pm ET

Exhibit 99.1

www.thesba.com

1

Note Regarding Forward Looking Statements

This presentation contains certain forward-looking statements. Words such as “believes,”

“expects,”

“plans,”

“anticipates,”

“forecasts”

and “future”

or similar expressions are intended to identify forward-looking statements. All forward-looking statements involve a number

of risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or

suggested by the forward-looking statements. Such risks and uncertainties include, among others, intensified competition, operating

problems and their impact on revenues and profit margins, anticipated future business strategies and financial performance, anticipated

future number of customers, business prospects, legislative developments and similar matters. Risk factors, cautionary statements and

other conditions, which could cause Newtek’s actual results to differ from management’s current expectations, are contained in Newtek’s

filings with the Securities and Exchange Commission and available through http://www.sec.gov/

www.thesba.com

2

First Quarter Financial Highlights

First full quarter reporting as a BDC

Net asset value (“NAV”) equaled $169.6 million, or $16.61 per share, at March 31, 2015, a 1.9% increase from the

NAV of $166.4 million, or $16.31 per share, at December 31, 2014

Adjusted net investment income*

was $5.2 million, or $0.51 per share

–

Adjusted net investment income includes short-term capital gains from loan sales, which is reoccurring event

–

Sale of government-guaranteed loan participation certificates

–

Adjusted Net investment income (loss) =  Net investment income (loss) +  Net realized gain

Total investment income was $4.8 million

Expect

to

fund

between

$240

million

and

$280

million

of

loans

in

2015,

which

represents

an

approximate

29%

increase over 2014

As of today, our total loan servicing portfolio, through NSBF and Small Business Lending (a wholly owned portfolio

company), is in excess of $1.0 billion

JMP Securities initiated research coverage on Newtek (February 23, 2015)

Ladenburg Thalmann & Co. initiated research coverage on Newtek (April 22, 2015)

*See Slide 37 for definition of Adjusted net investment income

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3

Dividend Distributions

On April 13, 2015 paid first quarterly dividend of $0.39 per share in cash, which was $0.01 per share higher

than previously forecasted, and represents 76.5% of the Q1 2015 adjusted net investment income

Increased 2015 annual cash dividend forecast to approximately $1.82* per share, $0.01 per share higher

than previously forecasted

Expect second quarter dividend of approximately $0.47* per share; a 20% increase over the Q1 2015

dividend of $0.39 per share

Plan to declare and pay a special one-time dividend during 2015

–

Special dividend will distribute prior C-corp earnings and profits which is expected to be a mix of Newtek

common stock and cash

–

Newtek’s Board of Directors will take into consideration the timing, amount and composition of this distribution

once the Company has filed its 2014 tax returns and completes its analysis

–

Special

dividend

anticipated

to

be

treated

as

a

“Qualified

Dividend”

for

tax

purposes

* Amount and timing of dividends, if any, remain subject to the discretion of the Company’s board of directors.

www.thesba.com

Total liquidity of $26.6 million at March 31, 2015 which is comprised of:

–

$12.0 million availability through combined Capital One, N.A. facilities

–

$8.6 million of unrestricted cash

–

$6.0 million in money market funds

Adjusted

total

liquidity

of

$37.7

million

at

March

31,

2015

which

is

total

liquidity

plus

–

$5.6 million of government-guaranteed certificates on the balance sheet funded with cash  

plus pending cash premiums

–

$5.5 million in cash in portfolio companies*

4

$ in thousands

Balance

March  31, 2015

Balance

Dec  31, 2014

Total Cash & Cash Equivalents

$8,593

$17,813

Total Assets

$304,975

$301,832

Total Liabilities

$135,411

$135,414

Total Net Assets

$169,566

$166,418

NAV/Share

$16.61

$16.31

Consolidated Balance Sheet Highlights

*

Includes cash from the following portfolio companies:  Small Business Lending, Inc., Universal Processing Services of Wisconsin, LLC , Crystaltech Web Hosting, Inc., and Newtek Insurance

Agency, LLC

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5

Capital One, N.A., Bank Line

Restructured $50 million Capital One, N.A., bank line of credit (subject to approval by the Small Business

Administration)

–

Holding-company only guarantee

–

Ability to distribute dividends

Prior line of credit collateralized by:

–

Newtek Merchant Solutions

–

Newtek Managed Technology Solutions

–

Newtek Insurance Agency

–

Newtek Payroll Solutions

All assets under Newtek Business Services Corp.

All other assets will now be available to re-lever up, subject to $8.8 million of other Capital One, N.A., bank

line debt

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6

Newtek Small Business Finance

Currently the largest non-bank institution U.S. Small Business Administration (SBA) licensed lender under the

federal Section 7(a) loan program based on annual origination volume (national PLP status)

One of 14 Non-Bank SBA Government-Guaranteed Lender Licenses (these licenses are no longer being issued)

9

largest

SBA

7(a)

lender

including

banks

(1)

ROI in SBA 7(a) lending in excess of 30%

National SBA 7(a) lender to small business since 2003; 11-year history of loan default frequency and severity

statistics

Issued 5 S&P Rated AA & A Securitizations since 2010

Small

balance,

industry

and

geographically

diversified

portfolio

of

768

loans

–

Average loan size is $175K of average Newtek uninsured retained loan balance

Floating

rate

at

Prime

plus

2.75%

with

no

caps;

equivalent

to

6%

cost

to

borrower

No origination fees with 7-

to 25-year amortization schedules and are receiving high-quality loan product

Secondary market established for SBA 7(a) government-guaranteed lending for over 61 years and Newtek

establishes liquidity for uninsured portions through securitizations

After

securitization

of

uninsured

portion

and

sale

of

government

insured

portion,

principal

in

the

loan

is

returned

(1)

As of December 31, 2014

th

www.thesba.com

7

Actual & Forecasted 2015 SBA 7(a) Loan Fundings

Expect to fund between $240 million and $280 million of SBA 7 (a) loans in 2015, which represents an approximate

29% increase over 2014

Loans in pipeline totaled approximately $413.6 million at March 31, 2015

$ n Millions

Actual SBA 7(a) Loan Fundings

Q1 2015

$48.3

Quarterly SBA 7(a) Loan Funding Forecast

Q2 2015

$60.0

Q3 2015

$70.0

Q4 2015

$80.0

www.thesba.com

8

Current SBA 7(a) Loan Pipeline

SBA 7(a) Loan Pipeline at March 31, 2015

Prequalified Loans

$40,921,692

Loans In Underwriting

$40,599,318

Approved Pending Closing

$29,490,400

Open Referrals

$302,642,526

Total Loan Pipeline

$413,642,526

www.thesba.com

9

SBA 7(a) Loan Sale Transaction

(1)

Premiums above 10% split 50/50 with SBA. This example assumes guaranteed balance is sold at 15%. The additional 5% (15%-10%) is split with SBA. Newtek nets 12.5%

(2)

Assumes 12.5% of the Guaranteed balance

(3)

Assumes 71% advance rate in securitization on unguaranteed balance

(4)

Assuming the loan is sold in a securitization in 12 months

(5)

Net cash created pre-tax per $1 million of loan originations

Net

Cash

Created

in

SBA

7(a)

Loan

Sale

Transaction

–

An

Example

Key Variables in Loan Sale Transaction

Loan Amount

$1,000,000

Guaranteed Balance (75%)

$750,000

Unguaranteed Balance (25%)

$250,000

Premium

(1)

12.5%

Term

25 years

Net Cash Created Pretax

Guaranteed Balance

$750,000

Premium Received on Guaranteed Balance

(2)

$93,750

Cash Received in Securitization

(3)

$177,500

Total

$1,021,250

Net Cash Created Pre-Tax (Post

Securitization)

(4,5)

$21,250

www.thesba.com

10

SBA 7(a) Loan Sale Transaction

(1)

Premiums above 10% split 50/50 with SBA. This example assumes guaranteed balance is sold at 15%. The additional 5% (15%-10%) is split with SBA. Newtek nets 12.5%

(2)

Assumes 12.5% of the Guaranteed balance

(3)

Value determined by GAAP servicing value; a present value of future servicing income

(4)

Net risk-adjusted profit recognized per $1 million of loan originations

(5)

Uninsured piece gets immediately written down at origination to reflect cumulative estimate of default frequency and severity

Direct Revenue / Expense of an SBA 7(a) Loan Sale Transaction –

An Example

Key Variables in Loan Sale Transaction

Loan Amount

$1,000,000

Guaranteed Balance (75%)

$750,000

Unguaranteed Balance (25%)

$250,000

Premium

(1)

12.5%

Term

25 years

Resulting Revenue (Expense)

Associated Premium

(2)

$93,750

Servicing Asset

(3)

$18,630

Total Premium Income

$112,380

Packaging Fee Income

$2,500

FV Non-Cash Discount on Uninsured Loan

Participations

$(12,500)

Referral Fees Paid to Alliance Partners

$(7,500)

Total Direct Expenses

$(20,000)

Net Risk-Adjusted Profit Recognized

(4,5)

$94,880

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11

Net Realized and Unrealized Gains

In December 2014, the Company held approximately $28.1 million in guaranteed loans originated in

December 2014, and estimated the sale of these loans would have generated $3.4 million of realized gains

During Q1 2015, $24.4 million of these loans were sold, which generated approximately $3.4 million in

realized gains (comparable to premium income pre-BDC conversion)

Retained approximately $13.0 million of guaranteed loans which generated a $1.7 million unrealized gain at

quarter end

In Q1 2015, recognized total net realized gains of $7.7 million;

a reoccurring event

For the 3-month period ended March  31, 2015, sale prices on guaranteed loan sales averaged 112.44%, net

to the Company

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12

Guaranteed Loan Pricing* Comparison

All Loans

10-Year Term Loans

25-Year Term Loans

Qtr

Weighted

Average Sale

Price

Weighted

Average Net

Price to NSBF

Weighted

Average Loan

Term (Yrs)

Weighted

Average Sale

Price

Weighted

Average Net

Price to NSBF

Weighted

Average Sale

Price

Weighted

Average Net

Price to NSBF

Q1 2014

114.49

112.24

15.95

112.19

111.10

118.49

114.25

Q2 2014

115.15

112.57

18.60

112.47

111.23

117.33

113.66

Q3 2014

116.37

113.19

22.32

113.66

111.83

116.89

113.45

Q4 2014

113.62

111.73

17.87

111.40

110.54

115.62

112.81

YTD 2014

115.01

112.49

18.79

112.25

111.09

117.05

113.53

All Loans

10-Year Term Loans

25-Year Term Loans

Qtr

Weighted

Average Sale

Price

Weighted

Average Net

Price to NSBF

Weighted

Average Loan

Term (Yrs)

Weighted

Average Sale

Price

Weighted

Average Net

Price to NSBF

Weighted

Average Sale

Price

Weighted

Average Net

Price to NSBF

Q1 2015

114.87

112.44

18.82

112.73

111.37

116.35

113.18

YTD 2015

114.87

112.44

18.82

112.73

111.37

116.35

113.18

*The above prices are solely indicative of where our SBA government-guaranteed participation certificates are bought and sold in the secondary market.  Other factors include loan seasoning,

loan size, weighted average maturity and collateral securing the loan.

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13

Comparative Loan Portfolio Data

12/31/2010 vs. 03/31/2015

Since 2010, the credit quality and diversification of the loan portfolio has steadily improved

Loan Characteristic

As of

12/31/10

As of

03/31/15

Business Type:

Existing Business

53.9%

78.9%

Business Acquisition

25.9%

15.0%

Start-Ups

20.2%

6.1%

Primary Collateral:

Commercial RE

45.3%

58.2%

Machinery &

Equipment

22.8%

18.4%

Residential RE

22.3%

9.9%

Other

9.6%

7.5%

Percentage First Lien on RE:

Commercial RE

84.8%

96.3%

Residential RE

9.9%

19.6%

Loan Characteristic

As of

12/31/10

Loan Characteristic

As of

03/31/15

Industry:

Restaurant

10.6%

Restaurant

8.6%

Hotels & Motels

7.6%

Amusement &

Recreation

6.8%

State Concentration:

Florida

21.6%

New York

13.3%

New York

12.7%

Florida

10.7%

Georgia

14.1%

Connecticut

6.6%

Other:

Total Portfolio ($mm)

$31

$139

Avg. Balance ($mm)

$0.076

$0.175

Wtd. Avg. Mean FICO

675

704

Wtd. Avg. Current LTV

78.2%

76.5%

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14

Quality Loan Portfolio

Continue to maintain strict underwriting guidelines and the credit quality of our loans, which enabled us to build a

well-balanced loan portfolio of senior-secured floating-rate loan participation certificates with an average loan

balance of approximately $175,000

11-year history of loan default frequency and severity statistics

Total cumulative unrealized losses attributed to the SBA unguaranteed investment portfolio totaled $6.5 million as

of March 31, 2015, which represents a price equivalent to 94.99%

Total cumulative unrealized losses attributed to the SBA non-performing unguaranteed investment portfolio

totaled $3.8 million as of March 31, 2015

In Q1 2015, we realized a diminutive amount of losses totaling approximately $47,000 against our total loan

portfolio

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15

Changes in Newtek Business Credit

Appointed Gary T. Taylor as President and Chief Operating Officer

–

Harold Gartner to move to a sales, marketing and business development role

Signed LOI for a $50 million warehouse line of credit, which represents an increase from the existing credit

facility of $15 million

–

New $50 million line of credit is against accounts receivable, inventory and healthcare receivables and SBA 504

loans

–

Previous $15 million line only against accounts receivable

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16

SBA 504 Loans: A New Focus for Newtek

Provide financing for major fixed assets such as equipment or real estate

Loans

cannot

be

used

for

working

capital

or

purchasing

inventory

(allowed

uses

under

the

7(a)

program)

The CDC/504 Loan Program is a long-term financing tool that provides growing businesses with fixed-rate financing

to acquire assets such as land, buildings, and sizeable purchases of equipment

Loan-to-value (“LTV”) ratio for the borrower of 90%; borrowers contribute 10% equity

Newtek has exposure on only 50% of the LTV

U.S. Government has exposure on 40% of the LTV

Newtek

will

sell

the

senior

loan

participation

at

an

anticipated

3-5

point

premium

SBA 504 loans give borrowers a fixed alternative

Newtek services the senior loan

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17

Sample SBA 504 Loan Structure

An example of a typical SBA 504 loan structure is detailed below

Real Estate Acquisition Loan

$ Amount

$ Amount

Percent

of Total

Purchase Price

$800,000

1st Mortgage Originated by Newtek

$500,000

50%

Renovations

$150,000

Bridge Loan Originally Funded by Newtek*

$400,000

40%

Soft & Closing Costs

$50,000

Borrower Equity Injection

$100,000

10%

Total

$1,000,000

Total

$1,000,000

100%

*Taken out by Certified Development Company (“CDC”) funded second mortgage of $400,00 within 60-90 days of Newtek’s funding

Up to 50% first mortgage

Up to 40% second mortgage provided by Certified Development Company ($250,000 to $4.0 million)

At least 10% equity contribution

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18

Loan Sale Transaction-

SBA 504 Loan

Net Cash Created in SBA 504 Loan Sale Transaction –

An Example

Key Variables in Loan Sale Transaction

Total Projected Financing

$2,000,000

Senior Loan Balance

$1,000,000

Junior Bridge Loan Balance

(1)

$800,000

Borrower Equity

$200,000

Premium

(2)

3.20%

Rate

Fixed

Term

25 Years

Net Cash Created Pretax

Total Senior & Junior Debt

$1,800,000

Funded Under Bank Facility

$1,620,000

Newtek Equity

$180,000

Net Premium Earned

(3)

$32,000

Net Interest Earned Before Sale

(4)

$44,000

Interest Expense

($20,475)

Origination Fees

$14,000

Servicing Fee Income

(5)

$2,500

Total

$1,872,025

Net Cash Created

(6)

$72,025

Return on Investment (Gross Operating

Profit/ Equity)

(7)

40%

(1)

Initially funded by Newtek to be taken out in 90 days by a junior lender through SBA guaranteed debentures

(2)

Assumes 4.00% gross premium with 20% paid to referral source

(3)

Assumes 3.20% net premium paid on Senior Loan Balance

(4)

Assumes Senior and Junior Bridge loans  are outstanding for six months and three months, respectively

(5)

Servicing fee generated over six months

(6)

Net cash created per $1.0 million of loan originations.  Net cash created equals the addition of Net Premium Earned, Net Interest Earned Before Sale, Origination Fees, Servicing Fee Income less Interest Expense

(7)

The

first

year

return

on

investment

is

based

on

net

cash

created

of

$72,025

divided

by

Newtek

equity

of

$180,000.

The

holding

period

for

the

loan

is

actually

6

months

but

the

return

is

based

on

the

full

year

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19

Gaining New Alliance Partners

Newtek has a new partner program that on average has generated 30-50 referrals per day with seemingly

similar quality to referrals from existing referring agents

In May of 2015, entered into a partnership with Lending Club (NYSE: LC)

This partnership will enable Newtek Small Business Finance to further expand its suite of lending products

Will enable Newtek to service clients who are earlier in their business development, do not have significant

collateral to pledge and/or do not have long amortization loan requirements

We have several other significant opportunities in the pipeline

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20

Expanding Senior Management Team

Gary T. Taylor

President & Chief Operating

Officer, Newtek Business Credit

Over 30 years of extensive experience in lending, commercial/investment banking, specialty and

structured finance, process improvement, credit operations, technology integration and portfolio

management

Most recently, Mr. Taylor was the Managing Director and Chief Operating Officer at CIT Bank Small

Business Lending where he managed the department engaged in loan

underwriting and processing,

servicing and business analysis/reporting.  He also managed loan

sales and the securitization process for

more than $200 million of assets

Prior to that, he was Senior Vice President and Chief Credit Officer at Lehman Brothers Bank where he

oversaw all elements of credit risk and evaluated assets for securitizations that comprised of commercial

and residential mortgage-backed securities and other asset-backed classes

Mr. Taylor spent over ten years at Moody’s Investors Service as a Vice President where he assessed

credit, legal and structural risks inherent to asset-backed securities involving consumer and commercial

credit, and assigned appropriate ratings

He was also a frequent speaker at industry conferences and events during his tenure at Moody’s Investor

Service

Mr. Taylor spent over 5 years as Senior Vice President of Credit

and Operations/Business Finance Division

of AT&T Capital Corporation where he directed the credit and operations group of a rapidly growing small

business lender.  While at AT&T Capital Corporation, he also developed and implemented business-

oriented credit policies and procedures to effectively manage risk while steadily increasing volume

Earlier in his career, he held senior positions at FDIC/Resolution Trust Company, The First National Bank

of Chicago and The Chase Manhattan Bank

Mr. Taylor is a graduate of Florida A&M University’s School of Business and Industry, with a BS in Business

with honors

He also completed the Credit Development Program with Chase Manhattan Bank and attended Columbia

University’s Executive Education, Institute of Lease Management

Mr. Taylor will be based in the Company’s West Hempstead, New York office

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21

Expanding Senior Management Team

John Raven

Chief Operating Officer,

Managed Technology Solutions

Over 20 years of experience in information technology space

Brings a broad array of expertise in areas of cloud technology, information technology and, security and

data center and storage solutions as well as sales and marketing, and product development

Mr. Raven is an operations executive offering deep expertise and

proven performance in leading,

developing, managing and delivering complex solutions in support

of a company’s objectives

Most recently, Mr. Raven offered Chief Technology Officer and Chief Operating Officer consulting services

to Looksmart, LTD. and Clickable

Prior to that, he served as a Chief Technology Officer and Chief

Operating Officer consultant for IBM

Global Services and its elite IBM Export Blue Team where he provided information technology architect

services

Prior to that, Mr. Raven was the President, Chief Technology Officer and Chief Operating Officer for

YP.com & LiveDeal, Inc., where he analyzed priority strategic challenges, delivered concepts and

recommendations for course of action to CEO and Board

Throughout his career he has held various senior positions at technology companies including Perot

Systems, Read-Rite Corporation, Southern Texas PCS (T-Mobile) and Viacom, Inc.

Mr. Raven is a graduate of the California Institute of Technology with a B.S. in Computer Science

Mr. Raven spent 12 active years and 10 reserve years with the United States Army, serving as a soldier

and combat veteran in the Infantry and Special Operations

Mr. Raven worked for NASA Jet Propulsion Laboratory for 3 years as a System and Network Engineer for

the 1996 Mission to Mars, Mars Pathfinder

He is an ISC    Certified Information Systems Security Professional (C.I.S.S.P) and Project Management

Institute Project Management Professional (P.M.P)

Has experience with Hypervisor platforms, SQL database environments, network and telecom

environments, datacenter operations, information security systems, storage systems, compliance

standards, leadership and management methodologies, Internet search systems, Internet marketing,

carrier operations and manufacturing systems

Mr. Raven will be based in the Company’s Phoenix, Arizona office

2

www.thesba.com

22

Expanding Senior Management Team

Michael W. Campbell

Chief Credit Officer & Chief Risk

Officer, Newtek Merchant

Solutions

Over 20 years of experience in merchant bankcard operations with

expertise in credit and risk

management

Brings extensive and diversified experience in areas of merchant

operations, bankcard credit, risk

management, card scheme rules, policy, fraud, regulatory, data security and portfolio management

Most recently, Mr. Campbell was the Vice President and Head of Risk for Charge Payment Merchant

Services where he managed all phases of the operation with direct management of all credit, risk, policy,

regulatory and operational matters

Prior to that, he was a senior risk consultant at The Strawhacker Group where he was the business leader

for all acquiring and issuing risk projects providing guidance to investors, issuers and acquirers with

respect to portfolio quality and best practices for credit, risk, policy, regulatory, excessive chargebacks,

PCI and EMV matters

Mr. Campbell spent 5 years as the Head of Credit US, eCommece and Merchant PCI at RBS Worldpay

where he reported to the CEO in areas of credit, Merchant PCI, sponsorship bank relationship and

internal security

Mr. Campbell spent over 10 years at Chase Paymentech Solutions as Vice President of National and Credit

Partner Risk where he established a department to manage credit and risk for CPS’

national portfolio and

ISO partner programs while playing a key role in the integration

of the Chase Merchant Services and

Paymentech’s credit cultures

He also was Head of Credit for Chase Merchant Services where his

primary role was to ensure credit

functions provided by FDC were effectively administered on behalf of Chase Merchant Services

Earlier in his career, for over 5 years, he was a Vice President

and Risk Manager for Barnett Merchant

Services Corporation where he was a member of Barnett’s Merchant senior management team

responsible for all areas of risk

Mr. Campbell is a member of Visa and MasterCard Advisor Committees, Merchant Acquirer’s Committee

(MAC), Fraud Advisory Committee (ETA) and the International Association of Financial Crimes Investigator

Mr. Campbell is a graduate of the University of South Carolina

Mr. Campbell is a US Army Veteran

Mr. Campbell will be based in the Company’s West Allis, Wisconsin office

www.thesba.com

23

Expanding Senior Management Team

Dean Choksi, CFA

Treasurer & Senior Vice

President, Newtek Business

Services Corp.

Over 14 years of experience with financial analysis and equity research and possesses specific expertise in

areas of valuation, financial modeling, capital markets and financing

Most recently, Mr. Choksi was the Executive Director of Finance at Fifth Street Management LLC, an

investment advisor of two publicly traded BDCs, where he played a key role in capital market

transactions, assisting in the raise of over $1.0 billion in public debt and equity, and was the primary

contact for multiple lenders in a multi-hundred million dollar syndicated bank credit facility

Prior to that, he was a Director of U.S. Equity Research at UBS Investment Bank, and the lead analyst

covering consumer finance and specialty finance companies, including BDCs

Mr. Choksi also worked in equity research at Barclays Capital and Lehman Brothers, where he co-covered

nine companies in several financial services sub-sectors, and at RBC Capital Markets where he followed IT

consulting and business services companies

Throughout his career as an equity research analyst, Mr. Choksi built and maintained financial statement

models, analyzing and forecasting key operational and financial metrics, and wrote multiple research

reports on various financial services, IT consulting and business services companies  

Earlier in his career, Mr. Choksi held positions in equity research sales at Wells Fargo Securities and

SoundView Technology Group

Mr. Choksi is a graduate of James Madison University with a Bachelor of Business Administration in

Finance and Economics

He is also CFA

®

charterholder

Mr. Choksi  will be based in the Company’s West Hempstead, New York office

www.thesba.com

24

Portfolio Company -

Electronic Payment Processing

We wholly owned and have managed this business for over 10 years

We are a registered Independent Sales Organization (ISO) with Visa and MasterCard

We are the “State-of-the-Art Merchant Processor”

Point of sale (POS) in the Cloud, Gateway and Switch, CyberScan

15,000 business accounts; realized over $4.6 billion in electronic payment processing volume in 2014

Anticipate $5.0 billion in electronic payment processing volume by end of 2015

Growth and acquisition story

One-of-a-kind eCommerce capability

Secured mobile wallet

Appointed

Mr.

Michael

Campbell

as

Chief

Credit

Officer

and

Chief

Risk

Officer

of

Newtek

Merchant

Solutions

www.thesba.com

25

Portfolio Company -

Electronic Payment Processing

(1)

Estimates via Bloomberg

*See page 37 for definition of Adjusted EBITDA.

Publicly Traded Comparable Companies

Name (Symbol)

Enterprise Value /

2015E EBITDA

(1)

Heartland Payment Systems (HPY)

9.10x

Vantiv, Inc. (VNTV)

10.24x

Valuation & Financial Performance

Valued at 4.75x EBITDA

Valued at $48.1 million

Q1 2015 Revenue of $23.2 million;

an increase of 7.9% over $21.5 million in Q1 2014

Q1 2015 Adjusted EBITDA of $1.9 million;

an increase of 5.6% over $1.8 million in Q1 2014

FY 2015 Forecast:

–

Revenue: $100.2 million

–

Adjusted EBITDA: $9.8 million

www.thesba.com

26

Portfolio Company -

Managed Technology Solutions

(1)

According

to

Gartner

"...in

the

next

five

years

enterprises

will

spend

$921

billion

on

public

cloud

services

(2013-2017)."

Excerpt

from

Gartner

Presentation:

Cloud

Computing

2014:

ready

for

real

business?

Darryl Carlton, October 2013

(2)

"The use of cloud computing is growing, and by 2016 this growth will increase to become the bulk of new IT spend." Excerpt from Gartner Press Release, Oct. 24, 2013;

We have wholly owned and managed this business for over 10 years

We host and manage SMBs computer hardware, software and their technology solutions in our Level-4,

5,000 square foot data center in Phoenix, Arizona

Over 106,000 business accounts manage solutions of hardware and software for business clients; manage

over 77,000 domain names

This segment is being transformed to take advantage of shift to cloud-based business trends including:

eCommerce, Payroll and Insurance

According to Gartner

1,2

, cloud computing is expected to have a very promising future and experience

significant growth; enterprises will spend $921 billion on public cloud services over the five-year period

(2013-2017)

Implementing cost-reduction measures and new product introductions as part of repositioning strategy

Several changes with MTS senior management team

Appointed Mr. John Raven as Chief Operating Officer of MTS

http://www.gartner.com/newsroom/id/2613015

www.thesba.com

27

Portfolio Company -

Managed Technology Solutions

(1)

Estimates via Bloomberg.

*See page 37 for definition of Adjusted EBITDA.

Q1

2015

Revenue

of

$3.6

million;

a

decrease

of

12.2%

over

$4.1

million

in

Q1

2014

Q1

2015

Adjusted

EBITDA

of

$644,000;

a

decrease

of

41.5%

over

$1.1

million

in

Q1

2014

FY 2015 Forecast:

–

Revenue: $17.5 million

–

Adjusted EBITDA: $5.1 million

Publicly Traded Comparable Companies

Name (Symbol)

Enterprise Value /

2015E EBITDA

(1)

Endurance (EIGI)

12.07x

Rackspace Holdings, Inc. (RAX)

7.12x

Valuation & Financial Performance

Valued at 3.75x EBITDA

Valued at $21.5 million

www.thesba.com

28

Managed Technology Solutions –

Subsequent Q1 2015 Events

Restructured IO data center lease, which we anticipate will allow us to realize significant cost savings over

the next 5 years; announcement forthcoming

Between $200,000 -

$250,000 of cost reduction per year

Acquired additional space in London, New Jersey and Phoenix, Arizona, which are fully costed, net of the above

cost savings

This additional space will enable us to offer a more robust international and U.S. cloud-computing offering

Additional cloud offerings in the pipeline

Recently signed new deals totaling $320,000 in net new annualized reoccurring revenue for term

www.thesba.com

29

Other Portfolio Companies

Newtek Business Credit

Newtek Insurance Agency

Newtek Payroll Solutions

Small Business Lending (third-party loan servicing)

www.thesba.com

30

Internally Managed vs. Externally Managed BDCs

Newtek is an internally managed BDC

Internally Managed BDCs

–

No base or incentive fees paid to an external manager

–

Generally a greater percent of revenue becomes dividend income for the shareholder

–

Lower operating expense ratios than externally managed

–

Typically trade at a premium to NAV/share

Externally Managed BDCs

–

Pay expense fees and incentive to a management company

–

Not required to provide shareholders with compensation information

–

Higher operating expense rations than internally managed BDCs

–

Typically trade at a discount to NAV/share

www.thesba.com

31

Internally Managed BDC Public Comparables

Newtek currently trading at 1.04x* NAV

Internally managed BDC public comparables currently trade at a median price to NAV of approximately

1.3x**

–

Hercules Technology Growth Capital (NASDAQ: HTGC)

–

KCAP Financial (NASDAQ: KCAP)

–

Main Street Capital (NASDAQ: MAIN)

–

Triangle Capital (NASDAQ: TCAP)

* As of May 6, 2015 closing price of $17.35

**As of May 2, 2015.  Based on the following public comparable companies: HTGC, KCAP, MAIN, TCAP

www.thesba.com

32

Comparable Company Statistics

On Deck Capital (NYSE: ONDK)

–

Operates an online platform for small business lending

–

Raised $200 million in IPO on 12/17/14

–

$1.3 billion market valuation

Lending Club (NYSE: LC)

–

Operates as an online marketplace that facilitates loans to consumers and businesses in the U.S.

–

Raised over $1.0 billion in IPO 12/11/14

–

$8.9 billion market valuation

BankUnited, Inc. (NYSE: BKU)

–

Acquired Certus’

Small Business Finance Unit in an asset purchase transaction

–

Certus’

loan

portfolio

totaled

approximately

$203

million

as

of

January

31,

2015

–

Purchase

price

for

the

transaction

will

be

a

$20

million

premium

to

the

tangible

NAV

www.thesba.com

33

Investment Summary

NAV of $16.61 per share at March 31, 2015; a 1.9% increase over NAV per share at December 31, 2014

Company is better suited for investors as  a BDC vs. an operating company

Forecasted dividends

–

Expect

Q2

2015

dividend

of

$0.47

per

share;

forecast

paying

an

annual

cash

dividend

of

approximately

$1.82

in

2015,

$0.01 higher than previously forecasted

–

Newtek will declare and pay a one-time special dividend during 2015

Investing in an business without excessive leverage offers attractive returns without excessive risk

Portfolio companies wholly owned and managed, most for over 10 years, by Newtek Business Services Corp.

Newtek Business Services Corp. is an internally managed BDC

Proven Track Record; Established in 1998; publically traded since September 2000

Management’s interests aligned with Shareholders

–

CEO alone owns approximately 10% of outstanding shares; Founders, Management and Board combined own

approximately 20% of outstanding shares

(1)

No derivative securities in BDC

No 2     lien or mezzanine financing as a business line

No direct lending exposure to oil and gas industry

(1)

As of May 6, 2015

nd

www.thesba.com

Financial Review –

Jennifer C. Eddelson, Chief Accounting Officer

www.thesba.com

35

Consolidated Statement of Operations

Newtek Business Services Corp. and Subsidiaries

Three Months Ended

March 31, 2015

Investment income:

From non-controlled/non-affiliate investments

Interest income

$                                          2,125

Servicing income

1,043

Other income

395

Total investment income from non-controlled/non-affiliate investments

3,563

From controlled/affiliate investments

Interest income

88

Dividend income

1,087

Other income

12

Total investment income from controlled/affiliate investments

1,187

Total investment income

4,750

Expenses:

Salaries and benefits

3,023

Interest

1,356

Depreciation and amortization

85

Other general and administrative costs

2,762

Total expenses

7,226

Net investment loss

(2,476)

Net realized and unrealized gains (losses):

Net realized gain on non-affiliate investments

7,699

Net unrealized depreciation on SBA guaranteed non-affiliate investments

(1,698)

Net unrealized depreciation on SBA unguaranteed non-affiliate investments

(666)

Net unrealized appreciation on affiliate investments

7,500

Net unrealized loss on servicing assets

(356)

Net realized and unrealized gains

12,479

Net increase in net assets resulting from operations

$                                        10,003

Net investment loss per share

$                                          (0.24)

Net increase in net assets per share

$                                            0.98

Weighted average shares outstanding

10,206

www.thesba.com

36

NEWT Change in Net Asset Value

(1) Adjusted Net investment income is defined as Net investment income plus Net realized gains.

(in thousands)

NAV

NAV/Share

NAV % Change

NAV at December 31, 2014

166,418

$               

16.31

$                     

Net investment income (loss)

(2,476)

(0.24)

-1.5%

Net realized gains - non-affiliate investments

7,699

0.75

4.6%

Unrealized losses - non-affiliate investments

(3,429)

(0.34)

-2.1%

Unrealized gains - non-affiliate investments

1,731

0.17

1.0%

Net unrealized gain/loss - Portfolio companies

7,500

0.73

4.5%

Net unrealized loss - Unguaranteed SBA 7(a)loans

(666)

(0.07)

-0.4%

Net unrealized loss - Servicing asset

(356)

(0.03)

-0.2%

Net increase in net assets from operations

10,003

0.98

6.0%

Dividend declared

(3,985)

(0.39)

-2.4%

  Net decrease in net assets after dividend

6,018

0.59

3.6%

NAV after dividend

172,436

16.90

Opening balance adjustment to Deferred tax asset

(2,870)

(0.28)

-1.7%

NAV at March 31, 2015

169,566

$               

16.61

$                     

1.9%

Total common shares outstanding:

10,206

Adjusted Net investment income ¹

5,223

$                     

Adjusted Net investment income ¹ per share

0.51

$                       

NAV per share

16.61

$                     

As of March 31, 2015

Newtek Business Services Corp. and Subsidiaries

www.thesba.com

37

Non-GAAP Financial Measures

In evaluating its business, Newtek considers and uses Adjusted net investment income and Adjusted EBITDA as a

supplemental measure of its operating performance. 

Adjusted net investment income includes short-term capital gains from the sale of the guaranteed portions of SBA 7(a)

loans, which is a reoccurring event. The Company defines Adjusted net investment income (loss) as Net investment

income (loss) + Net realized gains.

The

Company

defines

Adjusted

EBITDA

as

earnings

before,

interest

expense,

taxes,

depreciation

and

amortization,

corporate overhead allocation and stock compensation expense.

Newtek uses Adjusted EBITDA as a supplemental

measure to review and assess the operating performance of its portfolio companies.

The Company also presents

the

Adjusted EBITDA of its portfolio companies because it believes it is frequently used by securities analysts, investors

and other interested parties as a measure of financial performance.

The terms Adjusted net investment income and Adjusted EBITDA, are not defined under U.S. generally accepted

accounting principles, or U.S. GAAP, and are not a measure of operating income, operating performance or liquidity

presented in accordance with U.S. GAAP.

Adjusted net investment income and Adjusted EBITDA, have limitations as

analytical tools and, when assessing the Company’s operating performance, investors should not consider Adjusted

net investment income and Adjusted EBITDA in isolation, or as a substitute for net investment income (loss), or other

consolidated

income

statement

data

prepared

in

accordance

with

U.S.

GAAP.

Among

other

things,

Adjusted

net

investment

income

and

Adjusted

EBITDA

do

not

reflect

the

Company’s

actual

cash

expenditures.

Other

companies

may

calculate

similar

measures

differently

than

Newtek,

limiting

their

usefulness

as

comparative

tools.

The Company

compensates for these limitations by relying primarily on its GAAP results supplemented by Adjusted net investment

income and Adjusted EBITDA.

www.thesba.com

38

Adjusted Net Investment Income Reconciliation

$ in Thousands

For the three months

ended March 31, 2015

Per share

Net investment loss

(2,476)

$                           

(0.24)

$    

Net realized gain on non-affiliate investments

7,699

0.75

Adjusted net investment income

5,223

$                             

0.51

$      

Adjusted Net Investment Income