Thank you, operator, and welcome participants to our Q3 2025 financial results conference call. I'm Barry Sloane, President, Founder and CEO of NewtekOne and Newtek Bank National Association. Joining me on today's call is Frank DeMaria, Chief Financial Officer of NewtekOne, the publicly traded holding company, stock symbol NEWT on the NASDAQ; and Scott Price, our Chief Financial Officer of Newtek Bank National Association. We certainly appreciate everybody attending the call today and the investment that you've made in analyzing and evaluating Newtek as an investment opportunity. We'd like everybody to try to focus today, in addition to the great financial numbers that we put out, really look at the investment in NewtekOne from a business perspective; how we raise deposits, how we make loans, how we're able to do this with low expense ratios in the marketplace and really create what we believe is a business model for the future for a technology-enabled bank. Once again, focusing on technology and efficiency in a market that we clearly see is rapidly changing. Obviously, the focus on credit quality is important. I think we'll be able to demonstrate that; our credits have stabilized, both within the bank and at the holding company through the NSBF results. We have a slide to demonstrate that. And we're also going to be able to focus on raising deposits below the risk-free rate, which we also think there'll be future benefits based upon how we have ourselves situated in the Newtek Advantage by performing payroll for our customers, merchant services for our customers connected with a bank account, which we actually think is rare and unique in the marketplace today. In addition to that, as you could see from the press release, we just put out; we have some outstanding numbers for return on average…

[Operator Instructions] Our first question comes from the line of Tim Switzer of KBW.

First one I have is just on credit trends real quick. Could you guys update us on what you're seeing in the market? There's obviously been some disruption in a bit of a credit cycle. And I'm curious, are there any certain areas where you're seeing more pressure in terms of like industry or geographies relative to others?

Yes. So Tim, I think regarding credit trends, we do believe this is an economy of haves and have-nots. I think that, that's kind of been the case for a while. And I think we've experienced quite a bit of stress and strain and uncertainty in the small business community. With rates spiking up, obviously, we're starting to get that rate relief. We appreciate the drop in rates today as well as the inflation pressures. We are staying away from the volatile businesses and volatile industries where they are commodity-based. Anything that relates to oil and gas, transportation is a difficult category and clearly, agriculture. So, anything that's related to those particular industries, we're staying away from. The consumer side is still pretty strong. As long as we have an equity market and a home real estate market where values are holding or appreciating, we think that spend will continue. And we do believe that our portfolio, primarily driven by the seasoning is flattening out. Mind you, we've been a lender in this space for over 25 years. So, we know it well. We've seen it in high rates, low rates, inflation, deflation. So, we have a pretty good feel for it. We also get a very good sense from our portfolio of customers and payment processing and payroll and things of that nature. So, we have a very good cross-section of credit and see what's working and what's not.

Got it. That's helpful. And then there is no slides on updated guidance this quarter. Are you still confident in the previous guide for $0.65 to $0.80 for Q4?

Yes, that's a good question, Tim. I would say this. Right now, we have a government shutdown. And if the government gets open within 2 weeks, I wouldn't see any dramatic changes. But then again, I can't bet on that. This is a pretty volatile uncertain. So, we don't have a reason to pull the guidance, but hopefully, people invest in us, not necessarily on what happens in the fourth quarter, but from a standpoint of the business model, looking at book and things of that nature. But just to be totally fair, we can't live by the previous guidance given the basis of the government shutdown.

Yes, that's fair enough. Can you maybe elaborate on, I think you're still able to originate or at least process some loans that have already been approved before the SBA shutdown. Can you maybe explain that and then maybe provide a timeline on what's kind of the deadline on when your originations and ability to sell loans would actually start to be more challenged if the shutdown lasted, say, to like Thanksgiving or something?

Sure. So given that we've been doing this for a long period of time, beginning of September, you start to cover your portfolio. So you can estimate what's going to be closing throughout the month of October and maybe even in November. Although you can't get a guarantee number, we are still taking in applications. And there is also a provision in the SBA's SOP that allows you to bridge a borrower through a period of time and then roll it into a 7(a) loan. So it's very hard to predict whether this will affect us or not affect us, but we do know the ways to be able to get through these shutdowns; over more than 2 decades, we've experienced this, and we have all the tools, and we currently are providing bridge financing to borrowers to enable to fund them into a bridge that will get taken out with a 7(a) loan.

Okay. I got it. And then the last question I have is, can you provide the Tier 1 and total capital risk-based ratios for the holding company? I don't believe I saw that in the release or Slide 10.

Frank, could you help with that?

Yes. Currently, Tim, we're looking at about 12.5% on leverage at the holding company and just shy of 16% at the for total risk-based capital.

Our next question comes from the line of Crispin Love of Piper Sandler.

Just first, just following up on the shutdown. Barry, did you pull PLP numbers ahead of the shutdown in September for potential SBA 7(a) loans in your pipeline? And if so, kind of what type of volume could you do from those pulls in the fourth quarter?

I don't have the second number, but we did pull product, and that's pretty much covering loans that we had going forward that probably fund about 45 days from the time we get the PLP number. So I mean, we're probably covered for half the quarter. But I also want to point out, Crispin, that if you look at our mix of loans, it's changing. AOP, we've done more CRE, we've done more C&I. So this is one of these times where I don't really want to predict what Chuck Schumer is going to do or Trump or John Thune or Mike Johnson. So it's, when I say it's a tough time, this is temporary. This too shall pass. It's only a quarter. I know we're all focused on the next quarter, and that's what we do when we look at these things. But this too shall pass. And frankly, it's made of the difficult, a lot of people have dropped out of the 7(a) space. because of the changes in the SBA program. So we're sorry for other people's misfortune, but we've been able to weather these storms over time. We'll be here for many years and many quarters after this one.

Okay. Great. And then just on the $29 million of loans under the fair value option that revenue line item in the quarter. Can you just discuss some of the key drivers there, what you might expect on a go-forward basis as it can be fairly volatile, especially with the large securitization coming in the fourth quarter?

Yes. Frank, I believe that's the mix of governments and ALP, but I'll let you answer that question, Frank.

Yes. No, Crispin, you're spot on. We're ramping up for the next securitization. And as you saw on that slide, we're looking at somewhere between $325 million and $350 million in capital. So a lot of that this quarter is related to that. And similar to what you saw last quarter, you will see kind of that, I'll call it, that flip in the fair value line as we close the securitization and pull the residual onto the balance sheet. So you'll see that again, as you alluded to, in the next quarter. But most of that is related to the originations and backing the inventory for the securitization. And then to Barry's point, some additional 7(a) guarantees that we're holding a little bit longer for sale and obviously, with the shutdown, but we plan to continue to sell those once the government reopens.

Okay. Perfect. And then, yes, just last point on. I just want to make sure I'm thinking about the guidance correctly. So you're not pulling the guidance, but not affirming the prior guidance. Is it really just more of a timing issue, whether that gain on sale revenue hits in 4Q, 1Q or beyond rather than anything more than that?

I can't comment on it. It's very difficult to forecast. And I really can't comment on it at this time. I mean the one thing I could tell you, the stock price with a 10 or 11 handle, does it really make a difference? You don't have to answer that, but that's my view.

Our next question comes from the line of Steve Moss of Raymond James.

Barry, maybe just, maybe on the SBA program from a higher level or just the business activity. Just kind of curious what's your sense of customer demand or customer confidence? I realize maybe the closure of the SBA makes a little harder to get a read, but just kind of curious how you're feeling about the potential pipeline if, or potential activity within the space you land?

Steve, I think it's a great question, and it's pointed to this particular market, which right now, as we know, there are lenders that are leaving the space, and it is harder to do loans. I think when I was asked this question last quarter, and there was a discussion about the changes that the agency had made, whether it would affect originations or not, I didn't believe that it would. It has. It's in a tougher market to do loans. One particular area has to do with merchant cash advance and not being able to refinance a merchant cash advance loan. And the second area has to do with anybody in the ownership chain, even if it's 1%, that cannot prove that their U.S. citizen can't get an SBA loan. And I think you'd be surprised at the amount of participants that would apply that can't do it. Now we've also got customers that are coming to us that insist that they're citizens, they have the documented proof, but the database isn't saying that they are. So, you can't make a loan. I will also tell you; we've got people that were approving for financing. And due to the uncertainty in the marketplace and tariffs and things of that nature, they're not taking it. So, I would just say that on a going-forward basis, it's going to be a much harder business to do business. We feel good about it. We feel good about our position in the market from a long-term perspective. But I think that where it was a very effervescent year from October 1, 2024, to September 30, 2025, I think you're going to see some different numbers in this coming government fiscal year from all originators. We finished up last year second to Live Oak Bank from SBA statistics. But I think that whole top 20 is going to shake up quite a bit. We like the business. We've been in it for a long period of time. We think it's a great program and a great product.

Okay. Great. Appreciate all that color there. And then the other thing I noticed was you're talking about diversifying the bank balance sheet here, adding more C&I and CRE. Just kind of curious what does that look like in the future, the type of loan you're thinking about adding? Could some of the ALF loans end up on the bank balance sheet? Just any color there would be great.

Yes. So, Steve, I think that diversification is extremely important. And there's a lot of good opportunities for us in straight C&I line of credit type lending and CRE type lending. One of the things we're going to, I'm going to suggest to my team, I think we're going to look to do an Analyst Day sometime in December or very early in January right after the new year and be able to reforecast out and give the analyst community, investors some better guidance on a going-forward basis. But I think that when you look at total loan originations across ALP, CRE, C&I, line of credit, clearly, where historically, we were very much well known as an SBA 7(a) lender, it's the furthest thing from the truth. And we like the program. We think it's great, but it's going to be part of a diversified approach to really developing that franchise in the SMB marketplace. But I think SBA, we're right now, the uninsured balance sheet is probably 44% to 45%-ish, not including what is going on in NSBF. We would like that to come down a little bit, and we clearly want to grow the Alternative Loan Program business dramatically from where it is today. It's very profitable. credits are bigger, customers are bigger and the returns equal the 7(a) business.

Okay. And, And maybe on that point, just where I was going to go to my next question is on the business here. It's clearly a big securitization coming. Is this kind of like what you expect to be the more normal run rate in future securitizations kind of in this $300 million plus range? And maybe do we see more than 2 a year?

Good question. I'd like to keep it at 2 a year, and the goal would be to get those numbers bigger. This is the first time we've ever done 2 AOP securitizations in the same calendar year. So I'd like to do 2 a year, get the numbers bigger, bigger pools are better. There's more diversification. You get better receptivity from investors. So Yes, I definitely appreciate the question and would like to do bigger deals. It's an average loan size of $4.5 million to $5 million. So not a lot of credits. I mean we'll do 2,500 to 2,700 credits now, just to do another 200 credits. It takes a lot of effort to do $1 million loan, takes about the same amount of effort to do that bigger loan.

Right. Okay. That's helpful. And then in terms of, you touched on your 3-year anniversary here coming up in January. Kind of curious as to what potential flexibility we may see or we should expect after that 3-year anniversary, if any?

It's a good question, Steve. I think you'll see from a flexible standpoint, I think you'll see the business model, all the things that we talked about. But I think you'll see from my mouth to good, better execution on the deposit side, better execution on the AOP side in terms of more volume, but no change in the product mix, which is important. But I think you'll see a bank and a bank holding company that maybe you're more familiar with in analyzing the metrics than what you've seen to date. That's our goal to just be able to provide more information, better information. We're hopeful that we provided additional information in this deck that will give people a better insight in terms of what we're doing. We want to be as transparent as we possibly can.

There definitely was a lot of information in the deck. I'm still trying to digest it. Maybe put it this way, with the 3-year anniversary, you're 12.5% leverage right now. Would you go down to like a 9% or 10% type number in the next 2 or 3 years?

I think we do plan on using the balance sheet a little bit more and using more leverage. So, I appreciate the question. It's not going to be dramatic. But I think what's important, I think, A, to yourself, investors, regulators, they want to make sure that we have the capability, the management team, the systems, the software, the policy in place to be able to manage the business and manage the growth. We clearly had people that said to me, you can't grow this fast, you can't do what you're doing. Well, we're still here, and our plans are intact. As I've stated in many calls, we're on plan. We're on plan with NPLs, with capital, with, we're on plan. So, with our 3-year anniversary here, we're looking to continue to grow and hopefully get better recognition from the markets for what we've been able to do so far. So yes, I appreciate you focusing in on that time frame because it is important to us.

Our next question comes from the line of Hal Goetsch of B. Riley Securities.

You mentioned on the call, and this is kind of a sector question that some SBA lenders are leaving the market. And I was wondering if you could give us a little color on that, why that is? And you have been taking share. So, I wanted to get your feel on the long-term outlook for SBA lenders, your ability to increase share? And the other question is just on the ALP side, the government shutdown isn't holding up the ALP program, right? So, correct me if I'm wrong, but then if it isn't, like can you give us a little color on originations through the first 3 quarters of the year or the third quarter and your outlook there, if you can because that isn't being impacted.

Sure. I appreciate it. So I mean this is public information. BayFirst, which was a top 20 lender pushed out of the market. I think their business went to an entity called Banesco. There were one of the SBA changes relating to limited underwriting score and go. I think they dropped the cut from like 500 to 350. So a lot of competitors entered the space after PPP that were basically technology providers. And they really didn't provide the fulsome lending that's required, in my opinion, in a regulated environment. So I mean that's the only name that I could openly talk about in the public market because it's out there. But we are familiar with several other lenders right now that basically have got to cut back. We hear this and see this from the interviewing process with people coming to us expressing reservations about what they're doing going forward. This does not affect the AOP business at all. And I think just from a volume standpoint for us, we might have a little bit of a degradation in the next quarter or 2 in 7(a) volume. But we believe we'll be able to deliver good numbers from a market multiple standpoints, and we'll be able to make it up. From an AOP perspective, we were targeting, I think, between $350 million to $400 million in AOP loans for this calendar year, and I believe that's what will hit. We hope to do materially more than that next year. I don't have a number on that, but if I had to come up with a number, I would say $500 million to $600 million, but I haven't really cleared that with my boss. Peter Downs the President and COO of the bank. He's the boss in that area.

Okay. And if I could ask one follow-up. It seems like the loan, the LTVs on the LP loans are quite good, right? And what are the, refresh me on the collateral for those loans, if you could.

Yes. One of the things, how I will do is DBRS is the rating agency, and they put out a nice presale agreement. I'll make sure that we can get you a copy of those, so you can get a description of what the loans look like, how they're underwritten. Anybody that wants that, please let myself or Bryce Rowe. I'm sure DBRS will be happy to provide that. What goes into it is these are businesses that do have a business valuation, so we get a business appraisal. About 65% of our loans typically have commercial real estate liens behind them. If it's not a commercial real estate lien. We're looking at intellectual property. We're looking at machinery, equipment, inventory and most importantly, personal guarantees. So, every 20% equity owner or greater must personally guarantee it. So, in many cases, we're getting things like marketable securities, real estate assets, it could be residences, it could be investment in real estate property to all go into that LTV. The reason why these borrowers subscribe to these types of loans is because of the long amortization, you're basically giving them equity because they get to keep the principal for longer periods of time. And the flexibility in the covenants, which we think I'll take a personal guarantee and lean on personal assets over a covenant that you're dealing with 45 days in arrears after the fact.

Our next question comes from the line of Christopher Nolan of Ladenburg Thalmann & Company.

Barry, what's the thoughts on increasing the dividend?

Good question, but always a tough one. We obviously have one of the best dividend-paying stocks in the market. As a shareholder, I'm a participant in that. I love the dividend. I would say, to be frank with you, we're not getting a tremendous amount of value for its dividend or the increase. I would say, and this is not my decision. It's the Board's decision, who has to declare it. I would say if there was a choice in A or B, and there's a choice C, which is do nothing, by the way. But if there was a choice A or B, we'd probably be more inclined to buy stock back to increase the dividend. But we also might wind up with C, which is do nothing. But I think to answer your question, I would just say it's possible, but unlikely that we'll increase the dividend in the near term.

Got it. Great. And I guess the capital ratios look awfully healthy and kudos to you guys. Do you guys sort of get a nudge from regulators, whatever to pad your capital ratios a little bit just because of the unconventional business model?

I would have thought that would have been the case, but the answer is no. They typically don't tell you what to do. They tell you what you can't do. So no, nothing along those lines, although to be frank with you, that was a management decision that we made during, I guess, what I'll refer to as our maiden voyage currently. So we're comfortable with it. We wanted to demonstrate to the market, we're well capitalized. We've got generous allowance for credit losses, and we know how to run a bank. We, as a nonbanker that's CEO of a bank, so I guess I am a banker now, we brought in really experienced people across the board in every single area. And I think that's been good. And not everybody works out. I've been asked, are we going to have changes and all that stuff. And look, if I was to say, no, I'm not going to change anybody in my management team out, they lose their incentive to work hard and deliver the results. So we're going to continue to work on building this platform together, upgrading it. And I hand it all off to the management team of the company for delivering these results. They've done a terrific job. And we do plan on using the balance sheet more and utilizing more of the capital going forward.

Final question. You guys sort of seem, I mean, you have an unusual business model. It's highly profitable and it works properly. The, but you guys see, while you're a technology bank, you sort of have one foot in technology, one foot in traditional banking. And when you start looking at models like LendingTree, which are much more focused on the user interface, mobile and everything else, less so on the back end, but you guys have the back end down. Is that the direction we you see the model evolving? Or what are your thoughts on, because it, does your stock price values help if you start becoming a FinTech, which actually has a bank behind it?

Yes. So I love the question, Chris. I thank you for it. First of all, I want to put the names aside for the moment. But I look at organizations that are trading at pretty substantial multiples like a LendingClub or Live Oak or SoFi. And SoFi is a little bit different. But some of these companies for the first several years, they flatlined. They didn't move until the market got comfortable with their model and what they were doing and developed a better understanding and then all of a sudden, it started jumping because some people don't feel the multiples match up or make any sense. But when you think of LendingClub, I mean they do, do small business lending, but it's not a huge number. Look at a company like Innova, which doesn't currently own a depository, it's trading at a multiple in the teens and you look at our multiple. So I think that there's not a lot different than they're doing what we're doing relative to the returns on equity, returns on assets. I just think this is a familiarity issue. But I will tell you that the people that I meet with who spend the time and put the work in, they like what we're doing. If you look at our shareholder base, according to NASDAQ, it's 52% of institutional. I'm pretty confident that number is more like 65% or 70%. So if you play around with the math, there's 10 million shares in the float and there's 2.5 million shares short. Something just doesn't make a lot of sense here. But that's for other people to figure out. I mean there are people that like the stock here, and there are people that I that don't like it because there's a big share short. We'll figure this out. But in the meantime, we're building a great business. We got 22,000 digital depository accounts, 10,000 lending customers, 20,000 employees that we do payroll for. We move money quickly, efficiently at lower cost. Someone's got to like what we're doing. And that's why at the beginning of my presentation, I said, please focus on the business. Do you like this business? You like the business; you should like the stock.

Our next question comes from the line of Ivan Jimenez of Greenholder.

My question relates, I just want to understand the math right. You have $1.2 trillion in assets. I correct?

At the bank. At the bank, it's $1.4 billion, I believe, at the holdco, it's $2.4 billion approximately.

And you start...

That's the market cap.

You started with $300 million. Am I correct?

National Bank was $180 million in total assets when we bought it approximately.

So in essence, your model has gone from a BDC that we used to have to raise money every quarter or whatever, whenever you needed money to basically a depository. So that's your primary source of funds now. Am I correct?

Yes, it is.

That's where, 78% of that is guaranteed deposits. So these are deposits of less than the FDIC rate. Am I correct? So you don't have this risk of pull out?

Yes. We have a deposit base, which I think is about $1.2 billion. We still do have other liabilities, but more and more of the liabilities are going to come from deposit gathering. We're going to look to grow the balance sheet and the earnings of the bank.

Okay. That was my question. I just want to make sure that I heard the numbers right.

Yes. No, the growth numbers are numbers that do not exist. And obviously, it's off a low basis, but these are numbers that don't exist in the banking business. I read research reports. People are growing their deposits and loans by like 1% or 2% or 3%. It's like, all this is fantastic. It's great growth, and I'm kind of scratching my head going. Hey, what about me?

That's correct. the numbers, I just want to make sure that I heard right because to me, those numbers were important for what I'm doing.

I'm showing no further questions at this time. I would now like to turn it back to Barry for closing remarks.

I want to thank everybody for attending. I really appreciate the work the analysts have done and the great questions, thoughtful, insightful, forward-thinking both for us and the industry. And Bryce and I are always available along with Frank and Scott to be helpful and answer any questions you might have. So thank you very much.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.