NewtekOne, Inc.

Good day and thank you for standing by. Welcome to the NewTekOne second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question, Please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Barry Sloane, President and CEO of NewTekOne. Please go ahead.

Thank you very much, everyone, and welcome to our second quarter 2026 financial results conference call. We appreciate everybody attending and thank you for tuning in today. I wanted to also let everybody know that presenting, in addition to myself, will be Frank DeMaria, EVP, CFO of NewTekOne, the publicly traded holding company, stock symbol AEWT, and NewTek Bank National Association. We appreciate everyone patching into our call, and we always sort of start off with, why should you care about NewTekOne? The company was established in 1998. I'm the original founder of the company established out of a spare bedroom in a New York City apartment. When you take a look at the business model that we have today and look at metrics such as return on average assets, return on tangible common equity, the dividend yield, the book value growth over time, all things that we'll talk about extensively today, it's a very interesting what I would call a value and a growth story. However, three and a half years into our inception, are still evolving, and we're appreciative of things that are changing in the marketplace today, and we're adopting to all different changing conditions. Obviously, if you take a look at our presentation today and recent presentations, more things are being done out of the bank than in the bank holding company. We recently acquired or merged the payroll solutions business into the bank, We're doing our commercial and industrial long AM loans out of the bank. And one thing that's important to notice, you'll see that our income, our net interest income at the bank is growing, particularly on comparisons. We'll talk about that in the call. So I think going forward as we transform, you'll see a little bit less gain on sale, more net interest income, more use of the balance sheet and the portfolio. I think as we've grown in this particular space. Obviously, we traded at market multiples to earnings of five and a half times to six times where the banking industry is trading at nine or 11. So from our perspective, our goal is to do good credits, do what's best for shareholders. Most importantly, really do a great job for our customers. And let's go to slide number three. New tech's mission statement hasn't changed from 1998. to provide business and financial solutions to this sort of underserved demographic, independent business owners in the United States. Most importantly, we provide real good products and solutions for our customers for the purpose of making them more successful. Many times I am asked, Barry, is there a comp? Is there a company like yours? And I have to say, not really. Sometimes historically that works against you, but from our perspective, We believe we've got the right business model, the right way to handle our customers, work with all of our employees, associates in-house to provide the solution to the client, and really provide a valuable service to the independent business owner community. Which on slide number four, we can see that utilizing technology, which we've done over two decades, is extremely important. Instead of traditional bankers, branches, We use technology to exchange data, analyze the data, put the data in a better decision making mode. We've recently started to use AI when we're analyzing data coming to us from the customer. It reduces friction, increases speed. All these things are extremely valuable. So we look at what we do, which is a technology oriented company there to serve as the independent business community across the United States. We believe we have taken on Some of the tasks in a bank holding company owning a nationally chartered bank that we think most of the market in the industry is interested in adopting to in a very big way, but is slow to adopt. Number one, the high cost infrastructure with branches and traditional bankers. For those of you that haven't used our solutions, you get an executive on camera 24-7, and you also get great software to exchange data that has minimal amounts of friction and important for us, accuracy. Two, and by the way, the existing bank model is extremely costly. We think going forward, the giants of the industry, the top four players, are pouring huge dollars into the space to do what we believe we have done within our confines already. Second, inefficient lending margins from loans that bear very little risk and frankly just really tight on the margins. Deposit products that we're able to offer our business clients with, historically we're competing against zero interest paid and excessive fees for the business client. I think it's important, our goal is to manage risk, not avoid it, put a fair product and price onto our customers, beat the competition like merchant cash advance or daily debit type loans and basically provide our banking solution in a safe and sound manner. Slide number five, these are things that you've heard previously. It pretty much labels all the things that we do. Slide number six, we talk about the importance of our target market, that SMB, SME, independent business owner. There's 36 million of them in the United States. According to the Chamber of Commerce, it's 43% of US GDP. Importantly, over the last six and a half years, according to the SBA statistics, we have supported or created 280,000 jobs, the second highest amongst all SBA lenders in the 7A program. The independent business owner is a huge economic demographic, and even the top four large institutions struggle with acquiring the client, solutioning the client, and therefore what we have built our technology, our infrastructure, and we'll take you through some of those things today. We think it's extremely valuable. We don't believe it's fully reflected in our current stock price, which is mostly driven by the typical analytics of taking the call report, pushing it through a model, and coming out with numbers. By the way, I will comment, the concept of loan loss Provisions and things of that nature. At the end of the day, it's a business expense. That's what it is. Now, you don't want it growing or going out of control. Mind you, it's an organization that's been in this space for over 23 years, lending to SMBs, 17 securitizations, never credit watch, never downgrade. So we're proud of what we've been able to accomplish. Slide number seven talks about the quarterly highlights. Obviously, we came in within the range between basic and diluted, $0.48 and $0.47, respectively. Importantly, book value, we have a slide to address that, continues to grow very nicely. And that's really important. That's value to our shareholders. We continue to capture the operating leverage of growing a business with asset growth of 50% and expenses just up 3.6%. At the holding company, our ROA is 2% compared very favorably to the industry. We recently switched to putting our C&I lending business down in the bank versus doing it up at the holding company. We believe this will pay great dividends going forward. We'll continue to securitize the C&I loans out of the bank. We've had tremendous success in our digital account opening with deposit gathering focusing on business and consumer type deposits. So in 14 quarters since our inception, we've grown from 142 million to 2.2 billion. Non-affiliate deposits increased in the quarter by 15 million. And obviously, the core consumer deposits, which are very sticky, not very transactional, with basically close to zero acquisition costs, climbed by 297 million in the quarter. And we're very proud of how we've been able to get deposit digitally as part of our technological advantage. Slide number eight, we focus on tangible book value per share growth. You can see all the math, and you can see that when you add the dividends in, it's been a nice run since we've gotten into this financial holding company owning a nationally chartered bank structure. And you can see that the tangible book value has grown 75.3% in 12 quarters. since converting to a technology-enabled financial holding company. Extremely important. We're very proud of growing Tangible Book. Obviously, that's the value portion of it. Slide number nine shows the profitability of NewTek One with all these different data points. Slide number 10 really drills down on the deposit growth. We talked about the non-affiliate deposits. We talked about the total deposit changes. Deposit accounts, 1,471 accounts, quarter over quarter. Core consumer, 2,600 accounts. I believe combined, you're looking at about 40,000 depository accounts. Important to note, 81% of our depository accounts are insured under the 250,000 balance. Loan to deposit ratio, about 90%. When we think about deposits, were extremely pleased with how we acquire them, extremely efficient, and we give a great value to consumers and businesses that do business with us. And that's very important for branding and brand loyalty. Slide number 11 talks about the three active CNI long amortization loan securitizations. There's a lot to talk about this. We spent a lot of time in prior calls, which are all archived on our website. I think the important aspect of The CNILA securitization business is what we refer to as the initial overcollateralization. That's more loans versus the bonds. And we hyperamortize the bonds and drive the cash flow to pay the bonds down. So the current overcollateralization, for example, on the 2026-1 deal, which is just done, started off at $47 million. It's grown by $11 million. 2025-1, a little bit more season. started off at $31.6 million. Current OC is $45 million. So you can see it's really nice growth there, about $13 to $14 million. The 2024 deal, also $14 million increase on the OC. You can see that the notes have paid down across all three issues. And obviously, the collateral is paying down, too, at the same time. Let's go to slide number 12. This is NewTek Bank financial highlights. You can see by Putting more of our activity down in the bank we believe will provide much greater efficiencies, much greater value. When you think of things like payments or insurance, those are both eligible. We want to do this slowly. We want to do it methodically.

We want to do it correctly.