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Sep 30, 2022
Newtekone Q3 2022 Earnings Report
Announced third quarter 2022 financial results, demonstrating record SBA 7(a) loan fundings and increased total investment income.
Key Takeaways
Newtek Business Services Corp. reported a strong third quarter, with record SBA 7(a) loan fundings of $223.0 million, a 36.0% increase year-over-year. Total investment income increased by 90.0% to $23.6 million. The company raised its full-year 2022 SBA 7(a) loan funding guidance to approximately $775 million.
Total investment income increased by 90.0% to $23.6 million compared to Q3 2021.
Net investment income was $0.2 million, or $0.01 per share, a 103.3% increase on a per share basis compared to Q3 2021.
Adjusted net investment income (ANII) was $15.0 million, or $0.62 per share, a 10.7% increase on a per share basis compared to Q3 2021.
Record SBA 7(a) loan fundings of $223.0 million, a 36.0% increase over the same period last year.
Newtekone
Newtekone
Forward Guidance
Newtek anticipates closing a record number of SBA 504 loans in the fourth quarter of 2022 and achieving record SBA 504 loan closings of $150 million for the full year of 2022. The company reaffirms its forecast for a fourth quarter 2022 distribution of $0.70 per share, bringing total cash dividends and distributions for 2022 to $2.75 per share.
Positive Outlook
- Converting to a bank holding company and owning a bank will enable financing growth with core deposits.
- New SBA 7(a) loan originations will be at Prime plus 300 basis points in accordance with new SBA rules.
- SBA 7(a) portfolio will adjust to a 10% to 10.5% coupon in January 2023.
- Newtek Merchant Solutions and Newtek Technology Solutions are expected to generate approximately a combined $20 million of EBITDA in 2023.
- NBL forecasts closing approximately $150 million of SBA 504 loans for the full year 2022.
Challenges Ahead
- The preparation for the repositioning of the Company in anticipation of converting to a bank holding company.
- Increase in interest rates.
- Impacts of inflation on operating businesses.
- Limited ability to forecast future earnings and dividends beyond 2022 due to the pending Acquisition of NBNYC.
- Turbulent market conditions.