NewtekOne, Inc.

Previous wording

We fund our activities at Newtek Bank primarily through the aforementioned deposit products. We also offer loans outside of our bank (primarily ALP loans that have been funded by our JVs and our non-bank subsidiary Newtek ALP Holdings) that are initially funded with lines of credit and hedged until a sufficient volume is attained at which time the loans are securitized. We are required by law to hold risk retention in securitization transactions, and the majority of our interests in securitizations are designed to absorb first loss on the loans held in the securitization trusts. Historically, we have participated in joint ventures as additional sources of funding and risk diversification for our ALP loans, and these joint ventures have also securitized their loans. We have also continued to actively issue bonds in the public and private capital markets.

Current wording

We fund our activities at Newtek Bank primarily through the aforementioned deposit products. We also offer loans outside of our bank (primarily ALP loans that have been funded by our JVs and our non-bank subsidiary Newtek ALP Holdings) that are initially funded with capital and lines of credit and hedged until a sufficient volume is attained at which time the loans are securitized. We are required by law to hold risk retention in securitization transactions, and the majority of our interests in securitizations are designed to absorb first loss on the loans held in the securitization trusts. Historically, we have participated in joint ventures as additional sources of funding and risk diversification for our ALP loans, and these joint ventures have also securitized their loans. We have also continued to actively issue bonds in the public and private capital markets.

Previous wording

As of January 6, 2023, we are a financial holding company that, together with our consolidated subsidiaries, provides a wide range of business and financial solutions under the Newtek® and NewtekOne® brands to the independent business owner (SMB) market. Effective January 6, 2023, following authorization by our shareholders, we withdrew our previous election to be regulated as a BDC under the 1940 Act. Contemporaneously with withdrawing our election to be regulated as a BDC, on January 6, 2023, we completed the Acquisition of NBNYC, a national bank regulated and supervised by the OCC, pursuant to which we acquired from NBNYC’s shareholders all of the issued and outstanding stock of NBNYC. NBNYC has been renamed Newtek Bank and has become our wholly owned bank subsidiary. As a result of the Acquisition, we are now a financial holding company subject to the regulation and supervision of the Federal Reserve and the Federal Reserve Bank of Atlanta. We no longer qualify as a RIC under Subchapter M of the Code for federal income tax purposes and no longer qualify for accounting treatment as an investment company. As a result, in addition to Newtek Bank and its consolidated subsidiary SBL, the following former portfolio companies and subsidiaries have been consolidated non-bank subsidiaries in our financial statements as of March 31, 2023: NSBF; NMS; Mobil Money; NBC; PMT; NIA; TAM; NALH; NCL; and POS. In addition, as a result of commitments made to the Federal Reserve, we divested of NTSon January 2, 2025, and, as a result, the assets, liabilities and operations of NTS were classified as held for sale as of December 31, 2024. See NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION: Sale of NTS.

Current wording

As of January 6, 2023, we became a financial holding company that, together with our consolidated subsidiaries, provide a wide range of business and financial solutions under the Newtek® and NewtekOne® brands to the independent business owner (SMB) market. Effective January 6, 2023, following authorization by our shareholders, we withdrew our previous election to be regulated as a BDC under the 1940 Act. Contemporaneously with withdrawing our election to be regulated as a BDC, on January 6, 2023, we completed the Acquisition of NBNYC, a national bank regulated and supervised by the OCC, pursuant to which we acquired from NBNYC’s shareholders all of the issued and outstanding stock of NBNYC. NBNYC was renamed Newtek Bank and became our wholly owned bank subsidiary. As a result of the Acquisition, we became a financial holding company subject to the regulation and supervision of the Federal Reserve and the Federal Reserve Bank of Atlanta. We no longer qualified as a RIC under Subchapter M of the Code for federal income tax purposes and no longer qualified for accounting treatment as an investment company. As a result, in addition to Newtek Bank and its consolidated subsidiary SBL, the following former portfolio companies and subsidiaries are consolidated non-bank subsidiaries in our financial statements: NSBF; NMS; Mobil Money; NBC; PMT; NIA; TAM; NALH; and POS. In addition, as a result of commitments made to the Federal Reserve, we divested of NTS on January 2, 2025. Refer to NOTE 4—INVESTMENTS: Intelligent Protection Management Corp.

Previous wording

Additionally, we and our subsidiaries provide a wide range of business and financial solutions to independent business owner relationships, including Business Lending, which includes SBA 7(a) loans, SBA 504 loans, ALP loans, C&I loans, CRE loans and ABL loans; Electronic Payment Processing, personal and commercial lines Insurance Services, and Payroll and Benefits Solutions to independent business owner relationships nationwide across all industries. With the divestiture of NTS, we will no longer provide Managed Technology Solutions to our clients, however, we anticipate referring our clients to IPM for its offering of Managed Technology Solutions, and earning a finders fee pursuant to a referral promotion agreement. We support the operations of our subsidiaries by providing access to our proprietary and patented technology platform, including NewTracker®, our patented prospect management software. We have historically defined independent business owners (SMBs) as companies having revenues of $1 million to $100 million, and we have generally estimated the SMB market to be over 34 million businesses in the United States. We make loans and provide business and financial solutions to the SMB market through our bank and non-bank subsidiaries. In addition, we now offer the Newtek Advantage®, the One Dashboard for All of Your Business Needs®, which provides independent business owners with instant access to a team of NewtekOne business and financial solutions experts in the areas of Business Lending, Electronic Payment Processing, personal and commercial lines Insurance Services and Payroll and Benefits Solutions. Moreover, we believe the Newtek Advantage provides our independent business owner clients with analytics on their businesses, as well as transactional capabilities, including free unlimited document storage, free real-time updated traffic analytics, free real-time credit card processing and chargeback batch information for merchant solutions clients and the ability for PMT clients to make payroll directly from the Newtek Advantage business portal.

Current wording

Additionally, we and our subsidiaries provide a wide range of business and financial solutions to independent business owner relationships, including Business Lending, which includes SBA 7(a) loans, SBA 504 loans, ALP loans, C&I loans, CRE loans and ABL loans; Electronic Payment Processing, personal and commercial lines Insurance Services, and Payroll and Benefits Solutions to independent business owner relationships nationwide across all industries. With the divestiture of NTS, we no longer provide Managed Technology Solutions to our clients, however, we are currently referring our clients to IPM for its offering of Managed Technology Solutions and earning a finder’s fee pursuant to a referral promotion agreement. We support the operations of our subsidiaries by providing access to our proprietary and patented technology platform, including NewTracker®, our patented prospect management software. We have historically defined independent business owners (SMBs) as companies having revenues of $1 million to $100 million, and we have generally estimated the SMB market to be over 34 million businesses in the United States. We make loans and provide business and financial solutions to the SMB market through our bank and non-bank subsidiaries. In addition, we now offer the Newtek Advantage®, the One Dashboard for All of Your Business Needs®, which provides independent business owners with instant access to a team of NewtekOne business and financial solutions experts in the areas of Business Lending, Electronic Payment Processing, personal and commercial lines Insurance Services and Payroll and Benefits Solutions. Moreover, the Newtek Advantage provides our independent business owner clients with analytics on their businesses, as well as transactional capabilities, including free unlimited document storage, free real-time updated traffic analytics, free real-time credit card processing and chargeback batch information for merchant solutions clients and the ability for PMT clients to make payroll directly from the Newtek Advantage business portal.

Previous wording

The Company has originated loans under its ALP since 2019. These loans have terms between 10 and 25 years, bear fixed interest rates that reset every five years, and have prepayment penalties. The criteria evaluated in underwriting ALP loans and the terms of these loans have been generally consistent over the ALP’s existence. Prior to July 1, 2024, the Company originated ALP loans with the intent to sell the loans to a JV. While the Company continues to source JV partners to participate in this program, during the third quarter of 2024, we made the decision to originate with the intent to securitize ALP loans with our subsidiary Newtek ALP Holdings as the originator and sponsor. The Company could also originate ALP loans designated as HFI. The Company does not expect any significant changes to the underwriting or terms of loans in its ALP.

Current wording

The Company has originated loans under its ALP since 2019. These loans have terms between 10 and 25 years, bear fixed interest rates that reset every five years, and have prepayment penalties. The criteria evaluated in underwriting ALP loans and the terms of these loans have been generally consistent over the ALP’s existence. Prior to July 1, 2024, the Company originated ALP loans with the intent to sell the loans to a JV. While the Company continues to source JV partners to participate in this program, during the third quarter of 2024, we made the decision to originate with the intent to securitize ALP loans with our subsidiary Newtek ALP Holdings as the originator and sponsor. For example, during the second quarter of 2025, Newtek ALP Holdings closed a securitization backed by $216,564,700 of ALP loans. The Company could also originate ALP loans designated as HFI. The Company does not expect any significant changes to the underwriting or terms of loans in its ALP.

Previous wording

Following the Acquisition, there can be no assurance regarding our continued lending prospects or operations as a financial holding company. See “ITEM 1A. RISK FACTORS – Risks Related to Operation as a Financial Holding Company – We are subject to extensive regulation and supervision as a financial holding company, which may adversely affect our business.”

Current wording

Following the Acquisition, there can be no assurance regarding our continued lending prospects or operations as a financial holding company. See 2024 Form 10-K, “ITEM 1A. RISK FACTORS – Risks Related to Operation as a Financial Holding Company – We are subject to extensive regulation and supervision as a financial holding company, which may adversely affect our business.”

Previous wording

Newtek Bank is a national bank and nationally licensed SBA lender under the SBA 7(a) Program, and originates, sells and services SBA 7(a) loans. Newtek Bank has been granted PLP status and is authorized to place SBA guarantees on loans without seeking prior SBA review and approval. Being a national lender with PLP status allows Newtek Bank to expedite the origination of loans since Newtek Bank is not required to present applications to the SBA for concurrent review and approval. The loss of PLP status would adversely impact our marketing efforts and ultimately our loan origination volume, which would negatively impact our results of operations. See “ITEM 1A. RISK FACTORS - Risks Related to SBA Lending - There can be no guarantee that Newtek Bank will be able to maintain its SBA 7(a) lending license and PLP status.” and “ITEM 1A. RISK FACTORS - Risks Related to SBA Lending - A governmental failure to fund the SBA could adversely affect Newtek Bank’s SBA 7(a) loan originations and our results of operations.”

Current wording

Newtek Bank is a national bank and nationally licensed SBA lender under the SBA 7(a) Program, and originates, sells and services SBA 7(a) loans. Newtek Bank has been granted PLP status and is authorized to place SBA guarantees on loans without seeking prior SBA review and approval. Being a national lender with PLP status allows Newtek Bank to expedite the origination of loans since Newtek Bank is not required to present applications to the SBA for concurrent review and approval. The loss of PLP status would adversely impact our marketing efforts and ultimately our loan origination volume, which would negatively impact our results of operations. See 2024 Form 10-K, “ITEM 1A. RISK FACTORS - Risks Related to SBA Lending - There can be no guarantee that Newtek Bank will be able to maintain its SBA 7(a) lending license and PLP status.” and “ITEM 1A. RISK FACTORS - Risks Related to SBA Lending - A governmental failure to fund the SBA could adversely affect Newtek Bank’s SBA 7(a) loan originations and our results of operations.”

Previous wording

We have observed and continue to observe commodity inflation, rising interest rates, unrelated bank failures and declines in depositor confidence in certain types of depository institutions. In addition, the conflicts in the Middle East and the war between Russia and Ukraine, and resulting market volatility, could adversely affect our business, financial condition or results of operations. The ongoing conflicts have negatively affected the global economy and business activity and could have a material adverse effect on our business, financial condition, cash flows and results of operations. The severity and duration of conflicts and their impact on global economic and market conditions are impossible to predict. In 2024, numerous elections were held globally, including the recent U.S. presidential election. The outcomes of the elections are expected to result in changes in policy, which could also have adverse effects on us or the business environment in which we operate more generally. For example, the new U.S. presidential administration has imposed or increased tariffs, including on imports from China, and proposed imposing or increasing tariffs on U.S. trading partners, which could adversely affect markets, the business environment and our business. Any of the above factors, including sanctions, export controls, tariffs, trade wars and other governmental actions, could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline. We monitor developments and seek to manage our investments in a manner consistent with achieving our investment objective, but there can be no assurance that we will be successful in doing so.

Current wording

We have observed and continue to observe commodity inflation, rising interest rates, unrelated bank failures and declines in depositor confidence in certain types of depository institutions. In addition, the conflicts in the Middle East and the war between Russia and Ukraine, and resulting market volatility, could adversely affect our business, financial condition or results of operations. The ongoing conflicts have negatively affected the global economy and business activity and could have a material adverse effect on our business, financial condition, cash flows and results of operations. The severity and duration of conflicts and their impact on global economic and market conditions are impossible to predict. In 2024, numerous elections were held globally, including the recent U.S. presidential election. The outcomes of the elections are expected to result in changes in policy, which could also have adverse effects on us or the business environment in which we operate more generally. For example, the new U.S. presidential administration has imposed or increased tariffs, including on imports from China, and proposed imposing or increasing tariffs on U.S. trading partners, which could adversely affect markets, the business environment and our business. On July 4, 2025, federal legislation generally referred to as H.R. 1 - One Big Beautiful Bill Act (the “Act”) was signed into law. The Act includes a variety of tax provisions including permanently extending and modifying certain key aspects of existing federal tax law. U.S. GAAP requires the effects of changes in tax laws and rates to be recognized in its financial statements in the period in which legislation is enacted. Any of the above factors, including sanctions, export controls, tariffs, trade wars and other governmental actions, could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline. We monitor developments and seek to manage our investments in a manner consistent with achieving our investment objective, but there can be no assurance that we will be successful in doing so.

Previous wording

For the quarterly period ended March 31, 2025, we generated income in the form of interest, net gains on the sales of loans originated (which primarily include sales of SBA 7(a) and ALP loans) and related servicing assets on such sales, dividends, electronic payment processing income, technology and IT support income, servicing income, and other fee income generated by loan originations and by our subsidiaries. We originated loans that typically have terms of 10 to 25 years and bear interest at prime plus a margin. In some instances, we received payments on our loans based on scheduled amortization of the outstanding balances. In addition, we received repayments of some of our loans prior to their scheduled maturity date. The frequency or volume of these repayments fluctuated significantly from period to period. Our portfolio activity for the quarterly period ended March 31, 2025, also reflects the proceeds of sales of guaranteed portions of SBA 7(a) loans we originated. In addition, we received servicing income related to the guaranteed portions of SBA 7(a) loans which we originated and sold into the secondary market as well as on the portfolios of ALP loans owned and then securitized by NCL JV and TSO JV. These recurring fees are outlined in servicing agreements and were recorded when earned. In addition, we generated revenue in the form of loan origination fees (packaging and legal fees) as well as loan prepayment and late fees. We recorded such fees related to loans held for sale as other income. Distributions of earnings from our joint ventures were evaluated to determine if the distribution was income, return of capital or realized gain.

Current wording

For the quarterly period ended June 30, 2025, we generated income in the form of interest, net gains on the sales of loans originated (which primarily include sales of SBA 7(a) and ALP loans) and related servicing assets on such sales, dividends, electronic payment processing income, technology and IT support income, servicing income, and other fee income generated by loan originations and by our subsidiaries. We originated loans that typically have terms of 10 to 25 years and bear interest at prime plus a margin. In some instances, we received payments on our loans based on scheduled amortization of the outstanding balances. In addition, we received repayments of some of our loans prior to their scheduled maturity date. The frequency or volume of these repayments fluctuated significantly from period to period. Our portfolio activity for the quarterly period ended June 30, 2025, also reflects the proceeds of sales of guaranteed portions of SBA 7(a) loans we originated. In addition, we received servicing income related to the guaranteed portions of SBA 7(a) loans which we originated and sold into the secondary market as well as on the portfolios of ALP loans owned and then securitized by NCL JV, TSO JV and Newtek ALP Holdings. These recurring fees are outlined in servicing agreements and were recorded when earned. In addition, we generated revenue in the form of loan origination fees (packaging and legal fees) as well as loan prepayment and late fees. We recorded such fees related to loans held for sale as other income. Distributions of earnings from our joint ventures were evaluated to determine if the distribution was income, return of capital or realized gain.

Previous wording

Total assets at March 31, 2025 were $2.1 billion, an increase of $76.8 million, or 3.7%, compared to total assets of $2.1 billion at December 31, 2024. As of December 31, 2024, the Company held the assets and liabilities of NTS for sale. Refer to NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION: Sale of NTS.

Current wording

Total assets at June 30, 2025 were $2.1 billion, an increase of $66.3 million, or 3.2%, compared to total assets of $2.1 billion at December 31, 2024. As of December 31, 2024, the Company held the assets and liabilities of NTS for sale. Refer to NOTE 4—INVESTMENTS: Intelligent Protection Management Corp.

Previous wording

Loans HFS, at fair value increased $175.7 million during the three months ended March 31, 2025. The overall increase was primarily the result of holding guaranteed portions of SBA 7(a) loans for longer periods of time as well as new loan originations during the first quarter of 2025, in the amount of $82.0 million for ALP loans and $93.7 million in SBA loans.

Current wording

Loans HFS, at fair value increased $142.3 million during the six months ended June 30, 2025. The overall increase was primarily the result of holding guaranteed portions of SBA 7(a) loans for longer periods of time as well as new loan originations during 2025, in the amount of $216.8 million in SBA loans, partially offset by a decrease of $74.5 million for ALP loans.

Previous wording

1 Reclassified from Loans held for sale, at LCM.

Current wording

1 Reclassified from Loans HFS, at LCM

Previous wording

Loans HFS, at LCM decreased $23.0 million during the same period. The overall decrease was primarily the result of new loan originations during 2025, net of sales.

Current wording

Loans HFS, at LCM decreased $26.5 million during the same period. The overall decrease was primarily the result of new loan originations during 2025, net of sales.

Previous wording

1 Reclassified to Loans held for sale, at fair value.

Current wording

1 Reclassified to Loans HFS, at fair value

Previous wording

At Fair value: Loans HFI, at fair value were $346.8 million at March 31, 2025 compared to $369.7 million at December 31, 2024. The balance consists primarily of SBA 7(a) loans as well as $6.7 million of loans that the Company owns 100% as a result of originating the loan and subsequently repurchasing the guaranteed portion from the SBA. As previously discussed, NSBF ceased originating loans during 2023, resulting in the decrease in the balance of loans held for investment from December 31, 2024 to March 31, 2025, primarily due to the principal payments of existing loans held by NSBF.

Current wording

At Fair value: Loans HFI, at fair value were $326.1 million at June 30, 2025 compared to $369.7 million at December 31, 2024. The balance consists primarily of SBA 7(a) loans as well as $6.2 million of loans that the Company owns 100% as a result of originating the loan and subsequently repurchasing the guaranteed portion from the SBA. As previously discussed, NSBF ceased originating loans during 2023, resulting in the decrease in the balance of loans held for investment from December 31, 2024 to June 30, 2025, primarily due to the principal payments of existing loans held by NSBF.

Previous wording

At Amortized Cost: Loans HFI, at amortized cost consist of loans originated at or purchased by Newtek Bank. The $89.5 million increase in loans HFI, at amortized cost is the result of an increase in originations for the three months ended March 31, 2025 over 2024.

Current wording

At Amortized Cost: Loans HFI, at amortized cost consist of loans originated at or purchased by Newtek Bank. The $146.2 million increase in loans HFI, at amortized cost is the result of an increase in originations for the six months ended June 30, 2025 over 2024.

Previous wording

The Company’s loan portfolio consists of loans to independent business owners (SMBs). The Company’s Loans HFI at amortized cost and Loans HFS at LCM include a total of $315.0 million of loans, including unfunded commitments, backed by CRE and considered non-owner occupied as of March 31, 2025. The average loan-to-value for this CRE portfolio was 57.9%.

Current wording

The Company’s loan portfolio consists of loans to independent business owners (SMBs). The Company’s Loans HFI at amortized cost and Loans HFS at LCM include a total of $330.4 million of loans, including unfunded commitments, backed by CRE and considered non-owner occupied as of June 30, 2025. The average loan-to-value for this CRE portfolio was 57.1%.

Previous wording

The change in goodwill and intangible assets for the Payments segment and NBNYC Acquisition relates to amortization of intangible assets during the three months ended March 31, 2025.

Current wording

The change in goodwill and intangible assets relates to amortization of intangible assets during the six months ended June 30, 2025.

Previous wording

Settlement receivables were $6.1 million as of March 31, 2025, a decrease of $46.4 million compared to December 31, 2024. The settlement receivable arises from the guaranteed portions of SBA 7(a) loans that were traded in the period but did not settle during the current period end and the cash was not received from the purchasing broker during the current period; the amount varies depending on loan origination volume and timing of sales at quarter end. The reduction in the settlement receivable was primarily the result of our holding guaranteed portions of SBA 7(a) loans for longer periods of time.

Current wording

Settlement receivables were $19.7 million as of June 30, 2025, a decrease of $32.8 million compared to December 31, 2024. The settlement receivable arises from the guaranteed portions of SBA 7(a) loans that were traded in the period but did not settle during the current period end and the cash was not received from the purchasing broker during the current period; the amount varies depending on loan origination volume and timing of sales at quarter end. The reduction in the settlement receivable was primarily the result of our holding guaranteed portions of SBA 7(a) loans for longer periods of time.

Previous wording

Total liabilities at March 31, 2025, were $1.8 billion, an increase of $70.8 million, or 4.0%, compared to total liabilities of $1.8 billion at December 31, 2024.

Current wording

Total liabilities at June 30, 2025, were $1.8 billion, an increase of $50.4 million, or 2.9%, compared to total liabilities of $1.8 billion at December 31, 2024.

Previous wording

Total deposits were $966.3 million at March 31, 2025, consisting of $11.9 million in non-interest bearing deposits and $954.4 million in interest bearing deposits, a $7.0 million decrease from the balance as of December 31, 2024. As of March 31, 2025 and December 31, 2024, insured deposits represent 79.1% and 80.3%, respectively.

Current wording

Total deposits were $1.1 billion at June 30, 2025, consisting of $41.0 million in non-interest bearing deposits and $1.0 billion in interest bearing deposits, a $110.2 million increase from the balance as of December 31, 2024. As of June 30, 2025 and December 31, 2024, insured deposits represent 78.3% and 80.3%, respectively, of deposits.

Previous wording

2 At March 31, 2025 and December 31, 2024, the carrying amount of Newtek Bank’s FHLB borrowings includes a $0.03 million and $0.04 million purchase accounting adjustment, respectively.

Current wording

2 At June 30, 2025 and December 31, 2024, the carrying amount of Newtek Bank’s FHLB borrowings includes a $0.02 million and $0.04 million purchase accounting adjustment, respectively.

Previous wording

Borrowings were $774.0 million at March 31, 2025, compared to $708.0 million at December 31, 2024. This increase was primarily due to a $29.3 million issuance of the 2030 Notes and $9.0 million of additional borrowings under the NMS Webster Note, as well as additional borrowings of $73.5 million, and $6.6 million on the SPV II and III facilities, respectively. These increases were partially offset by the maturity of $29.9 million of the 2025 5.00% Notes, $15.8 million reduction in the notes payable on securitization trusts, a $3.7 million repayment of borrowings on the SPV I facility, and $3.5 million in maturities of FHLB advances.

Current wording

Borrowings were $657.3 million at June 30, 2025, compared to $708.0 million at December 31, 2024. This decrease was primarily due to the maturity of $29.9 million of the 2025 5.00% Notes, $29.2 million reduction in the notes payable on securitization trusts, a $13.7 million and $16.3 million repayments of borrowings on the SPV I and SPV II facilities, respectively, and $7.0 million in maturities of FHLB advances. These decreases were partially offset by a $29.3 million issuance of the 2030 Notes and $8.0 million of additional borrowings under the NMS Webster Note, as well as additional borrowings of $7.0 million on the SPV III facility.

Previous wording

The net decrease in net income before taxes was due to a $9.5 million increase of provision for credit losses, a $4.3 million increase of interest expense on deposits, and a $3.0 million decrease in noninterest income primarily related to the sale of NTS (refer to NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION: Sale of NTS), partially offset by a $9.5 million increase of interest income on loans. Below is a summary of changes in the components of Net income:

Current wording

The net increase in net income before taxes was due to a $16.1 million increase of interest income on loans, and a $7.3 million increase in noninterest income, partially offset by a $12.8 million increase of provision for credit losses, a $6.8 million increase of interest expense on deposits. Below is a summary of changes in the components of Net income:

Previous wording

In response to market conditions and consistent with its business plan, Newtek Bank has been focused on increasing its liquidity position by raising additional deposits and maintaining a significant portion of its liquidity in the form of cash held at the Federal Reserve, approximately $259.3 million as of March 31, 2025, as opposed to long-term investments. In addition, Newtek Bank management continues to closely monitor market conditions with a focus on its asset liability management policies, as well as closely monitoring, among other things, capital levels, to ensure compliance with regulatory guidelines and the OCC Operating Agreement.

Current wording

In response to market conditions and consistent with its business plan, Newtek Bank has been focused on increasing its liquidity position by raising additional deposits and maintaining a significant portion of its liquidity in the form of cash held at the Federal Reserve, approximately $179.7 million as of June 30, 2025, as opposed to long-term investments. In addition, Newtek Bank management continues to closely monitor market conditions with a focus on its asset liability management policies, as well as closely monitoring, among other things, capital levels, to ensure compliance with regulatory guidelines and the OCC Operating Agreement.

Previous wording

Loans and fees on loans: The $9.5 million increase in interest income on the Company’s loan portfolio was attributable to increases in the average balances of loans HFI and HFS, which increased $98.2 million and $255.7 million, respectively, as well as the average outstanding accrual portfolio of loans held for investment increasing to $558.8 million from $275.1 million for the three months ended March 31, 2025 and 2024, respectively. The increase in the average balance of loans HFS was attributable to originations of SBA 504 and ALP loans, and the increase in the average outstanding accrual loan portfolio resulted from the origination of new SBA 7(a) loans period over period.

Current wording

Loans and fees on loans: The $16.1 million increase in interest income on the Company’s loan portfolio was attributable to increases in the average balances of loans HFI and HFS, which increased $199.3 million and $167.3 million, respectively, as well as the average outstanding accrual portfolio of loans held for investment increasing to $1.4 billion from $1.1 billion for the six months ended June 30, 2025 and 2024, respectively. The increase in the average balance of loans HFS was attributable to originations of SBA 504 and ALP loans, and the increase in the average outstanding accrual loan portfolio resulted from the origination of new SBA 7(a) loans period over period.

Previous wording

Other interest earning assets: The $1.5 million increase in interest income from other interest earnings assets was attributable to higher interest rates on cash and due from banks, as well as interest bearing deposits in banks, including Newtek Bank earning interest on Federal Reserve Bank cash deposits.

Current wording

Other interest earning assets: The $2.3 million increase in interest income from other interest earnings assets was attributable to higher interest rates on cash and due from banks, as well as interest bearing deposits in banks, including Newtek Bank earning interest on Federal Reserve Bank cash deposits.

Previous wording

The increase in interest expense period over period is primarily from additional interest expense on deposits of $4.3 million. The Company also completed an exempt offering in March 2019, resulting in an additional $0.1 million of interest relating to the 2030 Notes. The increase is partially offset by a $2.6 million reduction in interest due to securitization payoffs, as well as a $1.4 million reduction in interest on bank and FHLB borrowings.

Current wording

The increase in interest expense period over period is primarily from additional interest expense on deposits of $6.8 million, additional interest expense of $1.5 million on bank and FHLB borrowings, and additional interest expense of $2.0 million, $2.7 million, and $3.5 million on the 2027 Notes, 2029 8.50% Notes and the 2029 8.625% Notes, respectively. The increase is partially offset by a $5.1 million reduction in interest due to securitization payoffs, as well as a $2.3 million reduction in interest expense on the 2025 8.125% Notes.

Previous wording

For the three months ended March 31, 2025 and 2024, there was a provision for credit losses of $13.5 million and $4.0 million, respectively. The increase was due to increases in net charge-offs, specific reserves on impaired loans, and balances of loans held for investment at amortized cost, across all products but specifically SBA 7(a) loans.

Current wording

For the six months ended June 30, 2025 and 2024, there was a provision for credit losses of $22.6 million and $9.8 million, respectively. The increase was due to increases in net charge-offs, specific reserves on individually evaluated loans, and balances of loans held for investment at amortized cost, across all products but specifically SBA 7(a) loans.

Previous wording

In response to market conditions and consistent with its business plan, Newtek Bank has been focused on increasing its liquidity position by raising additional deposits and maintaining a significant portion of its liquidity in the form of cash held at the Federal Reserve, approximately $259.3 million as of March 31, 2025, as opposed to long-term investments. In addition, Newtek Bank management continues to closely monitor market conditions with a focus on its asset liability management policies, as well as closely monitoring, among other things, capital levels, to ensure compliance with regulatory guidelines and the OCC Operating Agreement. The increase in the average balance of loans HFS was attributable to originations of SBA 504, SBA 7(a) and ALP loans, and the increase in the average outstanding accrual loan portfolio resulted from the origination of new SBA 7(a) loans period over period.

Current wording

In response to market conditions and consistent with its business plan, Newtek Bank has been focused on increasing its liquidity position by raising additional deposits and maintaining a significant portion of its liquidity in the form of cash held at the Federal Reserve, approximately $179.7 million as of June 30, 2025, as opposed to long-term investments. In addition, Newtek Bank management continues to closely monitor market conditions with a focus on its asset liability management policies, as well as closely monitoring, among other things, capital levels, to ensure compliance with regulatory guidelines and the OCC Operating Agreement. The increase in the average balance of loans HFS was attributable to originations of SBA 504, SBA 7(a) and ALP loans, and the increase in the average outstanding accrual loan portfolio resulted from the origination of new SBA 7(a) loans period over period.

Previous wording

The Company accounts for servicing assets in accordance with ASC Topic 860-50 - Transfers and Servicing - Servicing Assets and Liabilities. The Company earns servicing fees from the guaranteed portions of SBA 7(a) loans it originates and sells, from the SBA 7(a) loan securitizations sponsored by NSBF, and from servicing the ALP portfolios in securitizations sponsored by NCL JV and TSO JV. Servicing assets for loans originated by the Company’s nonbank subsidiaries are measured at FV at each reporting date and the Company reports changes in the FV of servicing assets in earnings in the period in which the changes occur. The valuation model for servicing assets incorporates assumptions including, but not limited to, servicing costs, discount rate, prepayment rate, and default rate. Considerable judgment is required to estimate the fair value of servicing assets and, as such, these assets are classified as Level 3 in our fair value hierarchy. Servicing assets for loans originated by Newtek Bank are measured at LCM and amortized based on their estimated life, and impairment is recorded to the extent the amortized cost exceeds the asset’s FV. Net loss on loan servicing assets is shown net of amortization expense.

Current wording

The Company accounts for servicing assets in accordance with ASC Topic 860-50 - Transfers and Servicing - Servicing Assets and Liabilities. The Company earns servicing fees from the guaranteed portions of SBA 7(a) loans it originates and sells, from the SBA 7(a) loan securitizations sponsored by NSBF, and from servicing the ALP portfolios in securitizations sponsored by NCL JV, TSO JV and Newtek ALP Holdings. Servicing assets for loans originated by the Company’s nonbank subsidiaries are measured at FV at each reporting date and the Company reports changes in the FV of servicing assets in earnings in the period in which the changes occur. The valuation model for servicing assets incorporates assumptions including, but not limited to, servicing costs, discount rate, prepayment rate, and default rate. Considerable judgment is required to estimate the fair value of servicing assets and, as such, these assets are classified as Level 3 in our fair value hierarchy. Servicing assets for loans originated by Newtek Bank are measured at LCM and amortized based on their estimated life, and impairment is recorded to the extent the amortized cost exceeds the asset’s FV. Net loss on loan servicing assets is shown net of amortization expense.

Previous wording

The increase in servicing income was related to an increase of $49.8 million in the average total loan portfolio for which we earn servicing income period over period.

Current wording

The increase in servicing income was related to an increase of $106.4 million in the average total loan portfolio for which we earn servicing income period over period.

Previous wording

Net unrealized gain (loss) on loans accounted for under the fair value option relates to the guaranteed portions of SBA loans made which the Company sells into a secondary market, the unguaranteed portions of SBA loans made which the Company holds, SBA 504 loans that are held for sale, and ALP loans that are held for sale. This gain (loss) represents the fair value adjustment of loans. The amount of the unrealized gain (loss) is determined by the quantity of loans held for sale at quarter end, the change in secondary market pricing conditions, and the valuation of the loans that are not held for sale.

Current wording

Net unrealized gain (loss) on loans accounted for under the fair value option relates to the guaranteed portions of SBA loans made which the Company sells into a secondary market, the unguaranteed portions of SBA loans made which the Company holds, SBA 504 loans that are held for sale, and ALP loans that are held for sale. This unrealized gain (loss) represents the fair value adjustment of loans. The amount of the unrealized gain (loss) is determined by the quantity of loans held for sale at quarter end, the change in secondary market pricing conditions, and the valuation of the loans that are not held for sale.

Previous wording

The decrease in professional services expense period over period is primarily attributable to costs associated with the NTS disposition that occurred on January 2, 2025. Refer to NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION: Sale of NTS.

Current wording

The increase in professional services expense period over period is primarily attributable to costs associated with the NTS disposition that occurred on January 2, 2025. Refer to NOTE 4—INVESTMENTS: Intelligent Protection Management Corp.

Previous wording

Other loan origination and maintenance expenses during the three months ended March 31, 2025, was $4.4 million compared to $2.2 million for the three months ended March 31, 2024 due to a larger dollar volume and count of loan originations in 2025 compared to 2024.

Current wording

Other loan origination and maintenance expenses during the six months ended June 30, 2025, was $7.7 million compared to $5.3 million for the six months ended June 30, 2024 due to a larger dollar volume and count of loan originations in 2025 compared to 2024.

Previous wording

1 As a result of commitments made to the Federal Reserve, the Company divested of NTS on January 2, 2025, and is no longer a reportable segment. See NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION: Sale of NTS.

Current wording

1 As a result of commitments made to the Federal Reserve, the Company divested of NTS on January 2, 2025, and is no longer a reportable segment. See NOTE 4—INVESTMENTS: Intelligent Protection Management Corp.

Previous wording

The banking segment includes Newtek Bank as well as its consolidated subsidiary SBL. The financial results include the origination, sale, and servicing of SBA 7(a) loans, SBA 504 loans, C&I loans, CRE loans and ABL loans. In addition, Newtek Bank offers depository services. The results include $12.7 million of net interest income during the three months ended March 31, 2025 compared to $7.7 million of net interest income during the three months ended March 31, 2024. During 2025, the Company increased the provision for credit losses, resulting in lower net income for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Current wording

The banking segment includes Newtek Bank as well as its consolidated subsidiary SBL. The financial results include the origination, sale, and servicing of SBA 7(a) loans, SBA 504 loans, C&I loans, CRE loans and ABL loans. In addition, Newtek Bank offers depository services. The results include $27.3 million of net interest income during the six months ended June 30, 2025 compared to $17.0 million of net interest income during the six months ended June 30, 2024. During 2025, the Company increased the provision for credit losses, resulting in lower net income for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Previous wording

NSBF includes NSBF’s legacy portfolio of SBA 7(a) loans held outside Newtek Bank. The decrease in net income is due to the wind-down of NSBF’s operations.

Current wording

NSBF includes NSBF’s legacy portfolio of SBA 7(a) loans held outside Newtek Bank. The change in net income is due to the wind-down of NSBF’s operations.

Previous wording

For the three months ended March 31, 2025, the Company reported net income of $9.4 million, or $0.36 per basic and $0.35 per diluted share, compared to net income of $9.7 million, or $0.38 per basic and $0.38 per diluted share, for the three months ended March 31, 2024.

Current wording

For the three months ended June 30, 2025, the Company reported net income of $13.7 million, or $0.53 per basic and $0.52 per diluted share, compared to net income of $10.9 million, or $0.43 per basic and diluted share, for the three months ended June 30, 2024.

Previous wording

For the three months ended March 31, 2025, the average sale price on SBA 7(a) loans as a percent of principal balance was 111.16% compared to 111.23% for the prior period. The decrease in sales prices in 2025 resulted from lower demand. The decrease in overall net gains on sales of loans resulted from lower volumes of sales compared to the prior year at lower market premiums than the prior year. Additionally, the decrease in SBA 7(a) guaranteed loans sold is primarily due to management holding the loans for a longer period of time.

Current wording

For the three months ended June 30, 2025, the average sale price on SBA 7(a) loans as a percent of principal balance was 110.41% compared to 111.02% for the prior period. The decrease in sales prices in 2025 resulted from lower demand. The decrease in overall net gains on sales of loans resulted from lower volumes of sales compared to the prior year at lower market premiums than the prior year. Additionally, the decrease in SBA 7(a) guaranteed loans sold is primarily due to management holding the loans for a longer period of time.

Previous wording

During the three months ended March 31, 2025, the Company recorded unrealized losses on SBA 7(a) unguaranteed loans accounted for under the fair value option as the portfolio paid down. During the three months ended March 31, 2024, the Company recorded unrealized gains on SBA 7(a) guaranteed loans accounted for under the fair value option of $8.0 million primarily due to holding guaranteed portions of SBA 7(a) loans for longer periods of time.

Current wording

During the three months ended June 30, 2025 and 2024, the Company recorded unrealized losses on SBA 7(a) unguaranteed loans accounted for under the fair value option as the portfolio paid down. During the three months ended June 30, 2024, the Company recorded unrealized gains on SBA 7(a) guaranteed loans accounted for under the fair value option primarily due to holding guaranteed portions of SBA 7(a) loans for longer periods of time.