About NewtekOne

NewtekOne, Inc., a financial holding company, provides a range of business and financial solutions to the small- and medium-sized business market. NewtekOne and its subsidiaries provide SMBs with the following Newtek branded business and financial solutions: Newtek Bank, National Association (Newtek Bank), Newtek Lending, Newtek Payments, Newtek Insurance, Newtek Payroll and Newtek Technology. The company has an established and reliable platform that is not limited by client size, industry type, or location. The company has developed a financial and technology based business model that enables it to acquire and process its SMB clients. This capability is supported in large part by NewTracker, the company’s patented prospect management technology software, which is similar to, but better suited for its needs than, the system popularized by Salesforce.com and similar providers. In addition, the company has launched the Newtek Advantage (patent pending) dashboard for its depository and non-depository clients. The Newtek Advantage offers NewtekOne’s clients a single online dashboard to access all of NewtekOne’s business and financial solutions. The Newtek Advantage will allow NewtekOne clients to easily interact with NewtekOne subject matter experts in the areas of Banking, Lending, Payments, Technology, Payroll and Insurance. The Newtek Advantage will enable the company to grow core retail deposits and provide an advantage to its existing and new clients. Newtek Bank is a national bank regulated and supervised by the OCC, and filed with the U.S. Securities and Exchange Commission (SEC) a Form N-54C, Notification of Withdrawal of Election to be Subject to the 1940 Act, following approval from its shareholders, and ceased to be a Business Development Company under the 1940 Act (BDC). The company is a financial holding company subject to the regulation and supervision of the Federal Reserve and the Federal Reserve Bank of Atlanta. Newtek Lending SBA 7(a) Lending The company’s Newtek Lending platform includes loans originated under the federal Section 7(a) loan program, i.e., SBA 7(a) loans. The SBA is an independent government agency that facilitates one of the nation’s largest sources of SMB financing by providing credit guarantees for its loan programs. SBA 7(a) loans are partially guaranteed by the SBA, with SBA guarantees typically ranging between 50% and 90% of the principal and interest due. NewtekOne has a dedicated capital markets team that sells the guaranteed portions of its SBA 7(a) loans and has securitized the unguaranteed portions of its SBA 7(a) loans. Historically, Newtek Small Business Finance, LLC (NSBF) has sold the guaranteed portions of its originated SBA 7(a) loans shortly after origination and retained the unguaranteed portions until accumulating sufficient loans for a securitization. NSBF has historically sold SBA guaranteed portions of SBA 7(a) loans at premiums ranging from 106% to 123% of par value, and in market conditions, approximately 108% to 113% of par, and any portion of the premium that is above 110% of par value is shared equally between NSBF and the United States Small Business Administration (SBA). The company has focused on making smaller SBA 7(a) loans. Specifically, as of December 31, 2022, NSBF’s loan portfolio consisted of 3,538 loans originated across 50 states in 78 different industries as defined by the North American Industry Classification System (NAICS). In addition to SBA 7(a) lending, the company’s Newtek Lending ecosystem includes the following loan products to be originated by Newtek Bank: SBA 504 loans, C&I loans, CRE lending and ABL. In addition, non-conforming conventional loans will be originated by NewtekOne nonbank subsidiaries and joint ventures. Commercial Banking – Newtek Bank NewtekOne intends to centralize its Newtek Lending ecosystem within Newtek Bank (except for the company’s nonconforming conventional lending business, discussed herein), its newly acquired commercial bank. In addition, the company offers depository services and solutions through Newtek Bank. Newtek Bank's business lines include: SBA 7(a) Lending NSBF's SBA 7(a) loan business is being transitioned to Newtek Bank. NewtekOne's dedicated Senior Lending Team, which supports Newtek Bank, and NSBF's management team and employees who are part of the Newtek Bank, will originate and service SBA 7(a) loans to qualifying SMBs and will follow the NewtekOne SBA 7(a) loan business model. Any delays in Newtek Bank obtaining PLP status may negatively impact Newtek Bank's SBA 7(a) loan origination volumes and revenues to be generated from the sale of guaranteed portions of SBA 7(a) loans. SBA 504 Lending Historically, NewtekOne’s SBA 504 loan origination business line was conducted by NBL, its former portfolio company which has become a subsidiary of Newtek Bank. SBA 504 loans provide financing of fixed assets, such as real estate or equipment. NBL will continue to provide loan origination services to other parts of the Newtek Lending platform, including NewtekOne subsidiaries and joint ventures. C&I Lending, CRE Lending and ABL Lending The Newtek Lending ecosystem also includes C&I Lending, CRE Lending and ABL. Newtek Bank will continue to provide C&I loans and CRE loans to its commercial customers and will originate ABL loans. In addition, NewtekOne’s subsidiary, NBC provided receivables financing, inventory financing and health care receivables financing to SMBs, which obtained $10,000 to $2.0 million per month through the sale of their trade receivables or the financing of their inventories. NBC will not originate new ABL loans and will manage its portfolio in runoff mode Third Party Loan Servicing SBL, which is a subsidiary of Newtek Bank provides third-parties with loan servicing for SBA and non-SBA loans and provides lending institutions with outsourced solutions for the entire SBA lending process, including credit analysis, structuring and eligibility, packaging, closing compliance and servicing. SBL provides loan servicing solutions to NSBF and also provides loan origination and servicing solutions to NewtekOne subsidiaries and affiliates, and has provided loan servicing solutions to banks, credit unions and government agencies, including the FDIC. Non-Conforming Conventional Commercial Loans On May 20, 2019, the company and its joint venture partner launched Newtek Conventional Lending, LLC (NCL JV) to provide non-conforming conventional commercial and industrial term loans to U.S. middle-market companies and small businesses. NCL JV is a 50/50 joint venture between NCL, a wholly-owned subsidiary of NewtekOne, and Conventional Lending TCP Holding, LLC, a wholly-owned, indirect subsidiary of BlackRock TCP Capital Corp. (Nasdaq:TCPC). NCL JV ceased funding new non-conventional conforming loans during 2020. On August 5, 2022, NewtekOne launched its second joint venture to invest in non-conforming conventional commercial loans, Newtek-TSO JV. NCL and TSO II each committed to contribute an equal share of equity funding to the Newtek-TSO JV and each have equal voting rights on all material matters. Newtek-TSO JV intends to deploy capital over the course of time with additional leverage supported by a warehouse line of credit. The intended purpose of Newtek-TSO JV is to invest in non-conforming conventional commercial and industrial term loans made to middle-market companies as well as small businesses. Newtek-TSO JV began making investments during the fourth quarter of 2022. Newtek Payments NewtekOne’s business and financial solutions ecosystem also includes its Newtek Payments businesses. Newtek Payments businesses include NewtekOne’s subsidiaries NMS, Mobil Money and POS. NMS markets credit and debit card processing services, check approval services, processing equipment, and software. NMS utilizes a multi-pronged sales approach of both direct and indirect sales. NMS’ primary sales efforts focus on direct sales through the company’s Your Business Solutions Company brand. NMS maintains its principal customer service and sales support offices in Lake Success, New York. NMS’s personnel assist merchants with initial installation of equipment and on-going service, as well as any other special processing needs that they may have. NMS’ development and growth are focused on selling NMS’ services to internally generated referrals, merchant referrals identified by NewtekOne alliance partners and by independent sales representatives. Mobil Money provides payment processing for a merchant portfolio of taxi cabs and related licensed payment processing software. NPS is a majority owned subsidiary of NewtekOne which provides a cloud based Point of Sale (POS) system for a variety of restaurant, retail, assisted living, parks and golf course businesses, which provides not only payments and purchase technology solutions, but also inventory, customer management, reporting, employee time clock, table and menu layouts, and ecommerce solutions as the central operating system for an SMB. Newtek Insurance NIA is a wholly-owned subsidiary which is a retail and wholesale brokerage insurance agency licensed in all 50 states, specializing in the sale of commercial and health/benefits lines insurance products to the SMB market as well as various personal lines of insurance. Newtek Payroll PMT is a wholly-owned subsidiary which offers an array of industry standard and competitively priced payroll management, and related payment and tax reporting services to SMBs. Newtek Technology NTS is a wholly-owned subsidiary, which along with its subsidiary SIDCO (SIDCO, LLC, doing business as Cloud Nine Services, a wholly-owned subsidiary of NTS), provides website hosting, dedicated server hosting, cloud hosting, web design and development, internet marketing, ecommerce, data storage, backup and disaster recovery, and other related services including consulting and implementing technology solutions for enterprise and commercial clients across the U.S. In addition, Excel WebSolutions, LLC (Excel), a wholly owned subsidiary, provides website design services to SMBs. As a result of commitments made to the Federal Reserve, the Company will divest or otherwise terminate the activities conducted by Excel, NTS and SIDCO, within two years of becoming a financial holding company, subject to any extension of the two-year period. Newtek Branding The company has developed its branded line of business products and financial solutions to offer a full service suite of business and financial solutions for the SMB market in the United States. SMB market. NewtekOne reaches potential customers through its integrated multi-channel approach featuring direct, indirect and direct outbound solicitation efforts. The company continues to utilize and grow its primary marketing channel of strategic alliance partners as well as a direct marketing strategy to SMB customers through its go to market brand, Your Business Solutions Company and One Solution for All Your Business Needs. Through its web presence, www.newtekone.com, the company is establishing itself as a preferred go-to provider for SMB financing and business solutions offered by NewtekOne and its subsidiaries, including Newtek Bank. The company’s patented NewTracker system provides for transparency between NewtekOne and referring parties and has been material in its ability to obtain referrals from a wide variety of sources. The NewTracker system allows the company and its alliance partners to review in real time the status of any referral, as well as to provide real time compliance oversight by the respective alliance partner. The company owns the NewTracker patent, as well as all trademarks and other patented intellectual property used by it and ots subsidiaries. Additional referrals are obtained from individual professionals in geographic markets that have signed up to provide referrals and earn commissions through the company’s BizExec and TechExec Programs. The Newtek Advantage will allow clients to access the entire suite of the NewtekOne business and financial solutions, and provide clients analytics, relationships and transactional capability that other banks do not offer. Competition The company’s electronic payment processing subsidiaries compete with entities, including Global Payments, First National Bank of Omaha and Paymentech, L.P. Regulation The Sarbanes-Oxley Act of 2002 requires the company to review its policies and procedures to determine whether the company complies with the Sarbanes-Oxley Act of 2002 and the regulations promulgated thereunder. As a bank holding company electing financial holding company status, the company is subject to the BHCA and is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the Federal Reserve. As a national bank, Newtek Bank is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the OCC. The OCC charges fees to national banks, including Newtek Bank, in connection with its supervisory activities. Newtek Bank’s deposits are insured by the DIF up to applicable legal limits. As an FDIC-insured depository institution, Newtek Bank is subject under certain circumstances to supervision, regulation and examination by the FDIC. The FDIC charges deposit insurance assessments to FDIC-insured institutions, including Newtek Bank, to fund and support the DIF. The company is subject to the disclosure and regulatory requirements of the Securities Act and the Exchange Act, both as administered by the SEC. The company’s common stock is listed on the Nasdaq Global Market under the ticker symbol NEWT and therefore it is also subject to the rules of Nasdaq Global Market for listed companies. The company has adopted certain policies and procedures intended to comply with the Nasdaq Global Market’s corporate governance rules. Newtek Bank is a member of the FHLB, which consists of 11 regional Federal Home Loan Banks. The FHLB provides a central credit facility primarily for member institutions. Newtek Bank, as a member of the FHLB, is required to acquire and hold shares of capital stock in the FHLB. Newtek Bank is in compliance with this requirement with an investment in FHLB capital stock of $120,300.00 on January 18, 2023. The company is subject to a wide range of laws related to anti-money laundering, economic sanctions and prevention of financial crime, including the Bank Secrecy Act, the USA PATRIOT Act and economic sanctions programs. The company is required to, among other things, maintain an effective anti-money laundering and counter-terrorist compliance program, identify and file suspicious activity and currency transaction reports, and block transactions with sanctioned persons or jurisdictions. Compliance with these laws requires significant investment of management attention and resources. These laws are enforced by a number of regulatory authorities, including the Federal Reserve, OCC, Office of Foreign Assets Control, the Financial Crimes Enforcement Network, the U.S. Department of Justice, Drug Enforcement Administration, and Internal Revenue Service. The company’s wholly-owned subsidiary, NSBF, is licensed by the SBA as an SBLC that originates loans through the SBA 7(a) Program. However, as discussed above, as a result of the Acquisition, all SBA 7(a) loan originations are being transitioned to Newtek Bank, and NSBF will cease origination of SBA 7(a) loans, relinquish its Preferred Lender Program (PLP) status and wind-down its operations. History NewtekOne, Inc. was founded in 1998. The company was incorporated in 1998.