NEWT - Earnings call 4 2023 | Newtek Business Services Corp.

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Operator

Good day, and thank you for standing by. Welcome to the NewtekOne Inc. Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.I would now like to hand the conference over to your speaker today, Barry Sloane, Chairman, President and CEO of NewtekOne. Please, go ahead.

Barry R. Sloane

welcome results fourth conference and year and everyone, financial XXXX call. morning, to quarter our full Good We're pleased to morning. report our results to you this name National on CEO NewtekOne, Sloane, our Chief purposes is and of Price, Newtek My of Newtek Inc. Officer Founder Bank, is and Scott Inc.Joining and call the President, today Financial for Association presentation me Barry

No, to President EVP In addition, Slide NewtekOne third reporting draw City as Slide Nick chance Newtek Leger, and to #X. a Slide We Bank Get a #X, our Accounting of Financial #X, attention which full quarter Inc.I'd we Holding also as Holding our the fourth National York #X and New forward-looking your like Excuse Company. and have, Bank this Slide of statement. quarter to on quarter N.A.; COO me. go Nick to absorb a for Chief Young, acquired X. Company. that.Now Officer is is and Financial January is reporting fourth

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as now focus Holding analysts to like look and deposit into comparisons, you ability issues quickly in digital interest are growing, a sequential things the as high risk Company. have an also quarter-over-quarter can the it's interest rate loans industry, been liabilities and a this raise a the look think Financial NewtekOne rate go little when how that comparison matched. to important able that expanding, quarter-over-quarter with year net We've are on you really our very demonstrate of X present and covering at are had I good assets through a note, important we further, take have growth.We a However, take deposits portfolio margins at well we'll we to don't to account opening.Also growth insured currently a

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capital -- particular why ratios, able It space.Now, in XX.XX%, the a the total end at the and proud of accomplishment XX% margin. on Xx CETX gain Xx leveraged we do very at look a basis able reserves look particularly the the deposit the while, add transaction maintained to reserves at sell the we're at the you loan our X(a) like portfolio, category, have we basis being to XX%, a we and X/X assets, plus of gravitate where also XXX XXXX, the of lender, we're in or with Obviously, our we'll XXXX.We've tolerance. reliance worked hope and digital prudent we're to when adding at in year. of how upon of respect and X throughout capital normal And to XX% end a when this our reserve prime very the a in So of deposits to year, All strong to we're loan opportunity strong up lower-cost sale. our risk-based grew a points about XX.X%.So position to That's XXXX. funding. this. well about channel our capital We for a we're the excited XXX we're talk points Bank particular

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Scott Price

X, of comments the That's costs to proceeds relative quarter. But mostly debt clearly during by interest lower pay a down saw debt. we focus want Slide the Thanks, in this to cost our We net constraints have. time to on issued the and higher expansion we net quarter. to that be Barry, in driven margin balances.We going used the on those funding third I basis morning, a given good most morning everyone. my nice

as We points. we've and high excuse that made that in expansion CDs funding costs our product. We've our deposit deposit lumpiness on the checking between fourth try third out nice on in XX deposit the me provide is and -- as me, through and seen far costs our and on borrowing We and costs it third you in point expect so rely do fourth the penalty, that our semi of -- see minimal with earlier and muted us, quarter little We over basis see CDs to we yield forward, reprice retention closures, stable slowness, seen portfolio and the product repriced repriced quarter. quarters. included and that bit deposit We as second also or is in that's through retention you retail the that our will levels excuse about 'XX $XX through portfolio.I'd to largely loans move out, We and the deposit business the mix. by and first into that 'XX driven in on optimal roll comment do really yield the a to that, we fairly can saw in CD seasonal portfolio, good you. accounts. our in expect and loan prepayment increase our the Barry experienced so today.I'd million savings of we business for quarters portfolio, in NIM relatively do a eliminate going lumpiness pricing rely the gathering go optimal 'XX.So -- that out -- turn That's expect on year Barry, I'll point to why

Barry R. Sloane

you, had Advantage, Newtek say, people the you. we say #X, Slide it? best say, all people it. our your had you I've and We we please left. shorten is Appreciate this I've I the to doing on love condense data amazing. give had the Scott. I've middle, presentation. other you, are the would in Thank hair people comb this will tell

probably client my make a will my analysts, they unlimited times a reason It's give Advantage solutions totally storage. transactional do Newtek my up.Newtek of their environment we are Holding To forward. account. receives open still client business Scott to the as up we from of the is consumers this there, portal.If signs and first why by lots So differentiated. chargeback versus a that going are a to free-time and where impressions. when Bank. money and account connected there, Visa and just important note, it Advantage real give Bank that portal traffic have Advantage most bringing that same in through as the elected a impression. payroll do analytics. up and What we're business business with get understanding the for relationships. to to aspect we what look do can an information the portal, I client, And as real well was lots make important which appreciate many it all other to still to still account, going But this with They'll receive And deposit I held level an a think I'll if own Free can businesses call client possible.But sure, model up they today's all chance to to depository to will call impressions Master, business to exist. We we month. the we they'll addition in hey, versus good entry real-time document that payroll this Free they're given Most clients updated has why as a is reasons merchant us, right on debit it there.Important a web business Relationships extremely #X different condense credit, in and can they as a to in year. it to Newtek in assets matter. directly our that as data much day, to go and our important, get at trying from everybody much is Bank the the money's into Company. people batch

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X,XXX in, and have users month. once monthly we least So at a active approximately are in going that logging

$X.XX initiatives, to local So their to been these business fourth full their activities Look, of laid full pretty a the note, XXXX and month-after-month, of not forecast money to business. data make most or active in important major and hard getting quarter we're lot communicate it's an we're impressions Community Newtek of of really or slides. they've to #XX, for getting We all early you're authority It's highlights. lot that hit gives offer might diluted. when lives.Slide payroll is point, common, things Bank We're basic fact this -- in destination in think topical We the we've the an ability of time-after-time business. us changes. owners proud your things a for at learn year or tax, webinars, be that center first came This a with midpoint. XXXX, had year, It in $X.XX independent starving the sort out business I podcasts, of important about Bank. even of the a we to able the to like whatever changes, lot for The

to us Finance. in been us $XXX on better able we from lot what Sauli, so really metrics it Matthew be more to accounting Price these to well Chief on of efficiency an as efficiency, follow, fact less Going would inexpensive year.On that Accounting team automated unfortunately that not greater us much, talent. Financial us a and lot help is stalwart to from reporting, is much the front-loaded, performance in both aspects we could spreadsheet a or Nick Officer, issues of of management Company. our enhancements. and and a with report SVP XXXXs be argue I'm operational that Accounting team another types January This you This of Act basis, things good that. a for a Compliance and calendar -- for DeMaria BDC as Officer, institution.This we've as are key Frank Chief veteran. team financial are EVP foresight be joining do where we've say, of of to metrics chance us talk XXXX. extremely track, perspective able billion our as #XX, Scott risk, hire, with to accomplish with I he's Slide Officer, would XX, I mid-year, updates. caused group, And is handle make those with the the a a joining Bank management, XXXX transitional are the a migrating Shanfield a done approximately expanding John on a inexpensive to things a May Ledger, us management ROTCs, affect that fortunately, built banking a Holding accounting, not returns SVP these welcome joining have the management we with that a our million we perspective.Julio joining I a do we ROAAs, and us, beneficial much these isn't a early helpful, just while, larger been hires, $X.X Financial if going.I team Hernandez we're We're despite institution as last. all able made. I future.Scott, or this in Obviously, that's XXXX. NetSuite, much, grow, us can proud Officer. all and say we joined ratios think Bank into about direction, enhancements for Principal appreciate have will

Scott Price

deposits, were interest and yield in and In them and in you'll from increases. funds avoid well as deposit high changed assets, quarter-over-quarter. to in costs margin also earn and higher Sure, our a quarter's picture Barry. full those we to deposits.We give from at out about a you. did that August, see million our other our product. able than as point net of mix fed to savings deposits we Thank in deploy Banks plus them want outside the that, wanted brought deposit had reopen affiliates. earning in that funds on been how of less yielding $XX We've fed those I I brought we raising impact

those see then quarter fourth we down during the on also continue increased rate deposits which is average Bank, full the We slightly the in X.XX%.We from the third cost quarter, will so of of of funding We're deposits, to a base. those prudently whether that need FHLB and or are optimize wholesale tap going retail combination brokered listing be manage a liquidity. deposits, we to at our weighted a franchise. we'll impact finally, deposits through But We you deposit-growing short-term saw if relationships. quarter. want X.X%, And also service, the we

and checking As and where our it be. mentioned I over we sticky, to our want are Barry are mentioned, relationships earlier, deposits can to the business The we is we Barry, to clients. that's I'll like where turn you. the offer sticky, most feel

Barry R. Sloane

prior Scott. that continues $XXX full based a business funded reporting our #XX, acquiring from referrals to been pipeline well activity we XX.X% of important a but our basis, SBA our and doing from unique cutting Slide in partners, over lending as a perspective, grow on model using Thanks, have the upon efficiencies but not corners loans making fintech-type underwritings.Total technology, quarter. million, increase loans as

some there. originator loan We in But fourth by the typically SBA I calendar volume. were year, lending industry is A, do quarter think have The was we QX flat. our that's, the for #X strongest. XXXX, seasonality

typically Newtek SBA Those X portfolio loans. there's there, For and prime guaranteed government Bank addition, loan very proud fact.In at are the participations, uninsured reached plus SBA in million. loan X(a), that probably $XXX.X we're of some

sell where we're X.XX% really forecasting CECL cap. XX.X% piece non-bank high fundings, XX XX.X% note, return, XXXX. in attractive, than government see XX a word adjust, to million as $XXX quarterly gain, X(a) far up reserve used we more, nice at a I'll the a use to to loan even front, that posting gets calendar real floating didn't what of CECL we a guaranteed can which You obviously have do lender the rate, reserve.Important punitive in year increase a was point no

to $X.X December loan of a We over million XXXX. also $X.X XXX quarter, billion the pipeline. year, closings increase billion we this XX, loans XXXX. year loans We calendar is X closed big prior record good all products, about $XXX loans, XXX months, million our had ending total for hope XX the a coming across $XX.X of of and in a do in

in see down good the involved say can which I'd with been growth.The business, through difficult The SBA loan that since pretty program across loan board, has years. alternative in extended alternative growing You that and we're a pandemic pat. particularly for XX the program, We've is XXXX. that banking being crisis differentiator we shape times, for have been a

is because conforming We business getting important also to things Bank.Slide the CRE all and of programs, loans the the That's conforming in that non-government want #XX, loans, Bank credit. in about. note keep know to the one investor this important asked people to about I

want to $XX XXX just loan XX/XX/XXXX, portfolio and are XXX you sell. million, important when primarily quickly at business Newtek in of the So of us a standpoint. note to XXX for about talk that Bank loans.I total at look commitments risk a loans outstanding It's balances $XXX from those originate Unfunded the million.

government debentures. the out taken by gets by lien CDC second The and funded

be fees the don't prime plus we're plus So rate X process loan. sale, prime for the high getting even a we on and plus And floating coupon, or on X for in very construction these risk gain at returns short-term different as risky at entirely look looked are extraordinarily because to relative want owner-occupied being is way. needs it CRE, out, that lease-up than CRE investor to these and to owner-occupied.I point

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by old So not you the purchase way, adjustments of Also on an to percentage legacy exaggeration. is City we everyone our portfolio currency January was our got it's look X exists. Slide just The year. CRE It which problem went at Bank underwritten. well rate. really a It is the #XX, through the National New portfolio.So good itself of and And when pertain doesn't, exaggerating very particular problem. the in on of really of on accounting compensation portfolio, York real CRE last believe,

business talk So repaying recent the very business estate you're exposure These that valuations.So in when lending at the portfolio pretty you York that's basically think portfolio, which a XXXX. this XXXX, portfolio, SBA you I based of like. picture upon City that or the our the in #XX, New the slide, real XXXX, Slide CRE provide we look can't It's valuations doing the the loans not recovery give looking you the will National PGs.On next good we'll loan not Bank at looks The well. got off. of what are if have and pay loan about

$XXX on So CRE, fund don't loans a we million until second we are made these total under loans the million have We takeout have CDC XXX construction from $XX of the the program. lien.

But under loans rehashes loan Then are what skyscrapers. the government loans.Slide types. these $X.X million. Very look mean, New in on City $XXX So, loans the debenture are National is tiny construction the local $X program, of taken million since City-based portfolio million, loan be We've XX.XX% to we've or portfolio, have out well for quality you by #XX, New million. SBA loan XXXX. I the about. in And York diverse done And $XXX These which yes, office. by on are XXX We've have estate loan which changed X at XXX. it portfolio. known out a important talk years. do the York funding. done not been we real XXX a CDC, offs Bank the date. are taken very not of nonconforming No And which in at industry risk. offices. these alternative These bonded. the as the basically this typically We've used to able deals XXX are X to gets I'll a These to program, originated size average charge we ALP. know.CRE across made program, to it Very look LTVs. multi,

XXX.X%. loans gain We originating talks up SBA sale date at the since XXXX.Slide any year about #XX experienced We finished on to haven't of X(a). charge the offs

First Holdco.Slide metrics, it, We've what insure this about the #XX, calls for for for And and and the rate.Slide insurance looking did people #XX, year, projections and up that's XXXX investors we the between payroll up forecast XXXX It's ton Bank. lender, we business. some XXXX the where at assets curve the the quarter these based future up the are held calendar benefiting entities Bank, from to full amortization wanting fourth own hope payments Both model, quarter connectivity NewtekOne see open the our We'll about is good. and to XXXX prices. markedly. The both the connectivity at projection losing year increase.Now, looks the had of a we excited depreciation. our connection accounts for upon important the We're in are they end insurance of in themselves, yield pretty nice had million agency increase the and and basically entities We're financial to the in to the at be XXXX. what a the income short an between and talk key so note, for there. in -- it's and payroll floating in jump lender, just up in hopefully $XX.X the of year the prior. these the business for company from $XX the agency the million to Pre-tax to going agency, and of forecast.

You for #XX, a seasonality hardware, a There advisors, continue. XXXX really feel basic $X seasonal initiatives reasons.Slide to growth. going common and spread them the consultants, is ramp here. out up manner, in building get the forecasting diluted are in pay XXXX going. that into good shares quarter-by-quarter. believe here. front, Look, calendar I There software, in community a to ask a got are lot about of for for the investment those we're XXXX, what where spent lot operating dollars analyst Newtek We put year. and Advantage, We've is can a and we money to we invested talked up compliant companies We're the for attention $X.XX to the

quarter. for never going interest. we're we $XXX we every team, and million my part thing. in to numbers comfortable we or into can forecast. billion Bank, well. but compliance I give OCC I'm get my my putting and model. all Bank we reporting compliance us. the think a It's are can our head.If a interested to team this year for investors will my is we time had part side, in terrific this it can our numbers I takes middle, these and not investor in going do keep hair seen X So for really got scale. $XX believe built from to shave tackling hair can believe and very $X.X into We numbers numbers, a on operate differently this, putting billion many of these be deliver. you I #XX, Bank get are Holding our you up reporting investors perspective. to analysts the Fed They've I to comfortable types This our Company. these or to a And management react to we're feel with the with believe We up begin to to grow, going model, advantage that biggest They're built $X market the We able can all manner. want through the the in of Holding understand these We are like Company grow take to size.Slide a the how blacking billion as

hosting that We comparisons. be CECL going Analyst calculations, plan we conferences. point the choppy not show do with to out a on modeling anticipate decent plan but is is growth can and I'll attending continue again, quarter.We're We Once year-over-year on Our second Day intact. little having also really a an QX business to investor number. plan NOL in the

first throwing what you although, good diluted business anomaly, and for excited we you're to with have earnings to but we're of forward.Slide #XX at our looking #XX, going about even where When at our QX as we median-type really our growth place.Slide would the look and $X.XX multiple, look a that ROTCEs are market $X.XX out, X.X% I efficiency currently in sort at which currently when expectations. around triumph ratios, about marketplace. the is We're not EPS our ROAAs a feel is the quarter. it's that and we think dealing I look, and XX, and aspirations for a think you of basic we look triumph-type like at bit multiples, market

are excited opportunity. about the We

dividend for XXXX, I don't ROTCE, items yield efficiency far investment summary would XX%. higher expressed to dividend-paying of I a you today. price. a ratio That's technology-enabled business Slide activity the yield It's Community even that I company, flowing think go mean kind Current which important begin Bank, differentiated, as March because you the that that, more and presentation a share. most Bank.Also the stock into, ratio, solutions in was opportunities wish get to XX.X%, in just the these But company and I've throughout point important #XX, is want have that will X.X%. into ROAA $X.XX of discussed Bank. more a in out more the a is not also a a fiscal X. from X.XX%, year probably is leverage I've get NewtekOne today.On we're XX%, and lower for note. depository. Holdco, we These obviously, XX%, that to numbers efficiency ROTCE better these An growth-oriented, down we'd X.XX% that with note, a enhance to is ROAA. got

depository. a also are We

do the We MD&A. that, are to that there.With are over I'd to not other portion like like turn XX% banks presentation XX% of the remaining to of the to out the Scott Price

Scott Price

on. going brief. loan I the quarter-over-quarter, difficult, given fair year-over-year value cover on see comparisons in the will the my option accounting the to are unconsolidated that that we're of out focus model, point comments previously net least comments to like, fact want non-interest Thanks, non-interest feel volumes, include interest investments. revenue, margin elected keep we've virtually that loans in P&L sufficiently.We I'm my I and which on our components increases consolidating change at quarter-over-quarter the since Barry. did origination higher mostly I've fees our I the from to tried do

our We quarter. also non-interest saw a one the of and on X(a) in due penalty. expense loan originations We higher portfolio.On increased we increases gains the the lines prepayment in portfolio to saw warehouse from the side, terminated valuations fourth

that, loan salaries operator costs. in the benefits higher under then over increases We turn also saw we it option.So fair origination I'll for our increases in the and to And our expenses also with questions. loans a saw value -- for slight

Operator

Crispin And the from [Operator Piper Sandler. Love question our first Instructions] of to come line is going with

Crispin Love

And the converted thought projections First, looking know you build at on year year typically XX, last Page ramp guidance from the just the a the show through your to early Bank. elevated a EPS in I through expenses on year. meaningful some year, I but EPS included

prior to if call side as building out to for curious, just first quarter the expense business as a or there's year, the XXXX usual. So, on later anything in or revenue in the

Barry R. Sloane

in maybe and loans done for some is that the It throw were affected NOL value. we that originated Crispin, most was the X out item, reserve. thoughts. cut XXXX done you earnings Business had QX Sure. obviously the items and XXXX, Finance, of other QX Small then Scott, no I'll so at there One CECL other was in thing Newtek fair the

ramp the up and any So with knocks and bank that then in really on, thoughts loss least loan it respect other seasonality you you by a up the being have aspect. Scott, precipitously down to your it earnings reserving in out the early that reserve might pick at up? regarding but future, front,

Scott Price

for look you quarter. the year, we go No, ramps the first I time businesses. in through volumes, Most everything Crispin, mean, the as just if slower loan second a quarter the at production naturally is up

pattern the over this company's over seen we've history. time, So

what you we're you just as know transparent But and expect us guys time. so your we've is seen and this And build trying you what help get this over models we with to better. to is out be

Crispin Love

you're remain if that second I through saw few strong. on seasonality. some next seeing Yes, comments as put appreciate Perfect. there can question And if for numbers around curious credits you quality, at just But credit just quarters? are losses, Can the any, your just those consolidated expectations just in that, you portfolio. delinquencies, move I you the then looking the me, there non-accruals, and the detail and what just discuss and

Barry R. Sloane

Sure.

face, million pay current fair portfolio think think and it's balance loans, it's sheet already curve. securitizations. look through we the funds. important for the and respect I written of #X of of the funds months in higher the which portfolio is that that $XX of very we income much I XX% cost it, business, has The securitization With I the Item probably that it's sections. much, is million is sitting of million I is been are of NSBF of of $XXX part the book about the So, to about of is months. when loans bank consolidated off, okay? worthiness is at the in value.So believe $XX large for a important default particular XX where than non-accruals, cost belly them to rest to seasoned portfolio say are seasoned, the take statement portfolio, NSBF. credit And That XX when of the

and So in XX% approximately to to rate the XXXX, is type portfolio have default XXXX XXXX, XX% that's XX% XXXX, XX% XXXX, NSBF.We sitting severity. probably an a assumption origination that of a going at

So think we frequency over this I analysts, usually conversation not loss -- yield, prime. bank heavily. don't with was floating way. have and a this look this And is because on rate the pretty I books and is after portfolio, guys that that stuff at a X.XX% that's the even at hit severity, it believe, That you

between versus So paying way is very they rate of business make portfolio in high their frankly money their fixed expectation our that's low the forward.Major bottom just on not on margin, charge-offs Traditional way bank, difference rate, that a even the and do many going the the full well, traditional by savers marked with cases bank. we deposit. line,

We have We reserved. do high but very opposite. well the rate,

reserve we going a a have portfolio. when into and the new bank, X.XX% CECL Now, brand

Then portfolio which the So just a don't CRE is This January have the on from happen. in have very great you we high looks accounting we very X(a) got loans Xth. the But booked. purchase on any bank. did think bank.I in portfolio to the -- portfolio, we defaulted reserve going that. well That's

spreads investors to detail to important a I other you, the across lot that's they but overview, make and our an investor-based more add It's loans. in really time and going there's look get as just quality the relative be market K, CRE portfolio.Obviously, investor-based what to of good the very market at analysts, when a organization this to have capital is we're portfolio. to great and And at think going a at to quality current C&I spreads. current

Operator

Tim And come our question from going Switzer next to of the is with line KBW.

Timothy Switzer

You a guys color gave lot of good the guidance. on

are low talk it could guide the of to maybe You the from minutes what that course end the over takes on high puts year? just it ago. would drive you few maybe end But the a and touched about the in

Barry R. Sloane

Tim, asset the the side. let talk on about to side. focus deposit going Scott Yes, I'm I'll

program gain-on-sale require with bank.So analyst, basically portfolio of program. generates at it's asset a down the we're because aspect with And to into lot the financed other loan does to But loan of program program a and to company goes to is funding sold that at there done it than is. On long-term And partners. time has maybe with probably utilization it And is explain the is the joint the ventures just that originated the out issued income and Analyst Holdco, what Day, or, investors more terms capital the in it securitizations. volume the it at levered is more to analyst, into with need holding because funding. that because alternative is to up a it the fee side, do and the the spend Bank there level, alternative through going

that would direction which that's guarantee volume. ability in other be a price do the market, and the of that government one big to moving So is item.The the

numbers side more and on good pricing So I'll doing handle the I ALP Scott deposit asset it's expenses. the on side, think loans, X(a). and let hitting the our

Scott Price

Tim. Yes,

a continue to important we're understand help our business to different it's as animal note to think I model. that we everyone try

during Importantly, from. a for coming to clean-up come Barry the most understand it's quarter. call mentioned the earlier. where important we've up securitizations likely Those be will potential NSBF

decide we're to built to figure those, got going exercise. forecast, we -- think -- out those where got, going to we're got forward. in.So, evaluate I We've some some our alternative into bring how how fund going we've we're potentially those to currently scenarios if figuring out So, could we you've

evaluating portfolio. X whole mix going in So other all year some in it at Bank? are shift. the disparities of through as because a that. how going curve, you It's raised between fund about increases natural a And more Would of funding it lot to it. months have just of big that's anywhere to there's to time rates a X a you rates of Would then nature? we of some certainly would have look ago we the through we in deposits So we're funding refinancing we're and that's CD since, and year And if think tenors. we kind wholesale public lumpy year costs.If a those what's we're move and X deposits be question wide those we be happened range from a be where to to pretty

the on out That's a be to year. fact has that, then variable rollout. business checking to on the we a that harping we that's considered.And So want keep roll during

believe the have we believe that very currently are that risk. good we we the ability we So and to can volumes, demonstrating that generate we manage

potentially much and bring there. least from account mean, have a is account cost, at We to believe checking we we're at rate.And on market like that a I going how money we in business lands, do we'll so, a static going would of know assumptions a excess the X%, economy that this at funding what don't then, how to standpoint, we're based deposits, see environment. pay offering forecast And get off an but that higher entire in rate

of priced a but we're tried off we and to trying kind soft nature changes I of answer, the do. landing. consider. rates. you I lot see prime you of how not I they we're But our loans We'll asset-sensitive The know, off the sentence X(a) a give portfolio, have to being to with enough. pull Fed's no wish of short-term a just that So, I unfortunately give company. X could variables on to

Timothy Switzer

had was that like SBA last year-to-date on guides in you guess, question premium are helpful. what's your it's and expand no, No, the earning could was, it's peers? I comments do think And around the I is competition the your guys How there upside high. sustainable? you The pretty looking space driving with is

Barry R. Sloane

Yes, got of think the he guaranteed curve. floater. be curve the no better the yield I than yield we government on the on shape about market, short government And talk the short-end. There's a in guaranteed end to place

going it's to I into be. push what here, tell are big X(a) seller government pricing tell I people demand times, to in extremely get if can't Also, guaranteed, So, you you, with down. of really will how a trying many supply you get I over out figure conversations and can prices important.So,

major I movements if believe, feel rates are about where in see we're we to these loans pretty that currently adjusted. good don't do however, We Fed begin quarterly priced. drop, activity. So

falling. So, There's else think like We coupon.I higher us when of relative that of market. and the to actually loan to anybody of because a emphasize lag bit to in hurts helpful the we adjustments terms that's higher, rates it in rates a Newtek we're versus volumes, the when are this. able frequency maintain going to are try don't look

of assembling is extract through what using from as differentiates So, them acquiring effortless loans, manner to technology that full credits, the we're way frictionless, putting us. customers in plethora as a underwriting, our possible data

actually see we volume, share from one of other leaders in market our taking So, growth X(a) being the market people.

X(a). growth kind So, in resource our like and prudent. this It we meets meets plan. capability, business low-double-digit It's of our double-digit,

So, about we good feel it. pretty

Operator

Nolan come And our to next Christopher the going question with of Thalmann. Ladenburg line from is

Christopher Nolan

the quarter? correct I charge-offs net there in no that Am were

Barry R. Sloane

Scott, want that one? you

Scott Price

couple that bank, a are loans did is the bank see showing loans of micro the weakness. correct. X(a) are signs few that On of in a portfolio, We that

charge-offs were are the portfolio expect that few some XXX% We also showing the we bank. a weakness, that from no at loans acquired saw but recovery that on

Christopher Nolan

lending? that's And for for understand Crispin's really on upfront a reserve. CECL I small correct guidance correctly, answers question the an that to follow-up, following for first your the If business quarter. Is

Barry R. Sloane

That's in one CECL the differentiators of XXXX, big no was reserve. there that, in calendar year

Christopher Nolan

should ratio Okay. where the that? On loan-loss that basis, reserve about we following think

Scott Price

focus, think Chris, loans. I on the that that So, to need you originating X(a) we're mostly fact

I want you carry XXX out to value look the time, at we the mix of on point option is a we sell Same that the If intend origination those, production lending production fair at typically, to so expect we because over with fair have alternative those election we at program. value them.

We we're on And it, of full XXX% loan. we about $XXX that XX% we as bank reserve average keep the X.XX%. that call the a keep, million well X.XX%, XX% conforming mind So, keep of basis the carry X(a) of the on reserve that. retain that. to conforming the bank X(a) portfolio a in production, And applies really is a loans put reserve the that about weighted loans.The as we the of projecting the

retain point set loans we you the that the between for a high. loans which them. and are reserves go will up overall use high XX% we if already reason industry.I'd There's aside there's look you we bank balance is an at as reason coverage know going to naturally higher we we're where that the need that conforming to to reserve is out that, a from because the So allowance XXX X(a) and of

to That charge-offs. cover to level I relative plenty capital. have it. and to everybody we going happen. the We we looks that understands and are industry reserves also They're the But adequate have have will appropriate at hope of of reserves and

a we're and a well have higher we believe will managing positioned. prudently, So reason that happen. We we risk we're believe There's charge-off reserves.

Christopher Nolan

for guidance forward, appreciate changes appreciate well cents. That's as, we drivers presentation. really It's detailed. appreciate into the a the right. on XX would And All non-received detail going the my the plus days I work credit lot going very the for more in I charge-offs the if I just information. X as any net the metrics. can current quarter, get reserves. delinquencies,

Scott Price

Noted.

Operator

going Steve with [Operator And next question the James. Moss line our Raymond from Instructions] to is come of

Stephen Moss

your approved to things, of and loans curious here, going side are on significant. modestly, modestly, pretty your I just Maybe the X(a) flashed underwritings is see pre-qualified but up up

drivers that. shift mixed of the any of some seeing you're or if curious, Just

Barry R. Sloane

I Officer that out asked I pretty we've as out. do and of quickly. really your my been part the know to the happy Gavin, Yes, that to technology Chief will manages well as of appreciate is the What through that Lending utilization prequels business. be pointing who question, clean you Justin able

we're So, into them get fire able best in and underwriting. rapid get to the to credits

it's So weak, that, that I state actually -- a a important I maybe want we than is in but XXXX. it's the don't if thing handy. many it sign it's think of Ledger. is, loans is don't does like strength.The to although, Scott looks other Nick units more more many, did We loans. XXXX if know, in calendar did number know, I or I many

I had a X(a), know, say, approached we XXX per. we of of in I'd approached in I excess think quarters units couple we X,XXX,

at an away right not efficiency, So, loads looked I into and it's getting is of think We a pretty and getting in what it's you've negative. about prequel feel good out them underwriting.

Scott Price

of units just XX% about Yes, to that in over increase 'XX. we expand had the course a on Barry,

So to throughput. to us enabled increase your that point, technology

minimal quite and So, count. increases with head to frankly,

Stephen Moss

that just $XXX that how the could or But then And Or was sorry, here mentioned in that terms full that if missed mentioned, million earlier? you million guys the so the Okay. to tie Is large of call that be? clean-up number. around? I

Barry R. Sloane

Yes, no, many. well, no, that It's no. not

in if of to million in to And a It funding putting operating subject it So the $XX it's for line the thing would and deal. from call current might current in and It It's in not quarter, XXXX place, current the is the happen important, which all P&I, kind XXXX you it's do next I down the not it in -- did might quarter. subject clean is loans up SBA's bonds.And happen would that's month. next is we're the us in to approval. available flowing the it scratch. $XX of hit It into should would it's month. call NSBF the happen debt. million the other What goes down around a get and securitizations, one what principal to uses. be since those you pay all now We

that So there a used capital lot could now of in right for purposes. other we've that's got be

Stephen Moss

color are here. I Okay. Great. questions moment. appreciate my at the really Those all X the

Operator

I for remarks. would to over the to Sloane now closing back like conference Barry hand

Barry R. Sloane

try did We Well, we it to up. speed can't everybody thank enough.

of again we more of a and little available would concrete. regroup a see, other the condense appendix I And have it's if out, business. and we'll give investors quarter think Scott for will a amount for want we the that say I bit to information.Now, bit I can of the get an strength more maybe detailed next that information

to We capital have overall and different always we're strategy. do look our flow each forward we of we cash story providing to are the proud and lines that And what business quarter. telling many

Thank well. look thank first again. you. to So once forward you a We quarter good having as

Operator

for you This conference call. concludes today's participating. Thank

disconnect. You may now

Newtek Business Services (NEWT) 6 Mar 242023 Q4 Earnings call transcript