NewtekOne (NEWT) Q4 2025 earnings review
Growth Pauses on Timing as Key Securitization Slips into 2026
NewtekOne's Q4 headline results showed a surprising slowdown, with Diluted EPS of $0.65 falling short of last year's $0.69. The miss was entirely due to timing: a record-large $295 million securitization of its high-growth Alternative Loan Program (ALP) loans closed in January 2026, pushing the significant gain-on-sale revenue into Q1. For the full year, the company delivered solid 11% EPS growth to $2.18, driven by an accelerating ALP business and improving operating efficiency. However, a clear concern is the ongoing deceleration in the core SBA 7(a) lending business. Management's 2026 guidance calls for 8% EPS growth at the midpoint, implying a slowdown from 2025.
🐂 Bull Case
The Alternative Loan Program is a standout success, with originations accelerating every quarter of 2025. A record $295M securitization that was 10x oversubscribed just closed, validating the platform and providing strong momentum for Q1 2026.
Tangible book value per share grew an impressive 24% YoY to $11.68. The company's tech-focused model is also proving efficient, with the full-year efficiency ratio improving to 58.3% from 63.2% in 2024.
🐻 Bear Case
The core SBA 7(a) lending business saw originations decline every quarter in 2025. Guidance for FY26 requires a significant reversal of this negative trend, posing an execution risk.
The Q4 miss demonstrates the high dependency on the timing of large, lumpy gain-on-sale events. This reduces earnings predictability and can obscure the company's underlying quarterly performance.
⚖️ Verdict: ⚪
Neutral. The weak Q4 headline numbers are misleading due to a major deal slipping into Q1. The accelerating ALP segment and strong book value growth are compelling positives. However, the clear deceleration in the core SBA 7(a) business and slowing overall EPS growth guidance warrant caution.
Key Themes
Alternative Loan Program (ALP) is the New Growth Engine
NewtekOne's ALP has become its primary growth driver. Originations accelerated sequentially through 2025, from $68.5M in Q1 to $113M in Q4. This momentum is set to continue, as the company closed its largest-ever ALP securitization ($295M) in January 2026. The deal was reportedly 10x oversubscribed, validating the asset quality and investor demand. The FY26 guidance for $500M in ALP originations implies a further 38% YoY growth.
SBA 7(a) Lending Deceleration is a Drag on Growth
In direct contrast to the ALP's success, the company's traditional SBA 7(a) lending business is slowing significantly. Originations fell every single quarter in 2025, declining from $213M in Q1 to just $162M in Q4. While management guides for a rebound to $1.0B in FY26, this represents a significant reversal of the current trend and poses a considerable execution risk. This data contradicts the narrative of broad-based momentum.
Tech-Driven Model Proves its Efficiency
Management's narrative that its technology-enabled model provides superior operating leverage is supported by the data. For FY25, total revenue grew 10.6% while operating expenses increased by only 2.1%. This positive leverage drove a significant improvement in the consolidated efficiency ratio, which fell to 58.3% from 63.2% in FY24, boosting profitability.
Earnings Quality Reduced by Lumpy Gains
The Q4 results highlight the company's reliance on the timing of large transactions. The YoY decline in revenue was almost entirely due to 'Net gains on sales of loans' falling from $28.7M to $9.5M. The postponement of the large ALP securitization into Q1 2026 makes Q4 2025 appear weak and will make Q1 2026 appear unusually strong. This volatility makes it difficult to assess the true underlying quarterly earnings power.
Other KPIs
A core measure of shareholder value creation, TBVPS grew an impressive 24.4% YoY from $9.39 at the end of 2024. This consistent and rapid accretion demonstrates the profitability of the business model and effective capital allocation.
NewtekOne generated a strong 19.0% ROTCE for the full year. While this is down from 23.1% in FY24, it remains a high level of profitability and a key indicator that the company's strategy is generating attractive returns on its capital base.
The company repurchased shares at a weighted average price of $10.43. With the stock trading below its tangible book value of $11.68, these buybacks are immediately accretive to remaining shareholders.
Guidance
Decelerating. The midpoint of $2.35 implies 7.8% YoY growth from FY25's $2.18. This represents a slowdown from the 11.2% growth achieved in FY25, suggesting moderating earnings growth ahead.
Reversing. This guidance implies 30% YoY growth and requires a sharp reversal from the negative trend seen throughout 2025, where originations fell each quarter. Achieving this target is critical for the overall growth story and carries significant execution risk.
Accelerating. This target represents 38% YoY growth over the $363 million originated in 2025. This confirms the ALP segment will continue to be the company's primary growth engine.
Key Questions
SBA 7(a) Turnaround Plan
SBA 7(a) loan originations declined every quarter in 2025. What specific market changes or internal initiatives give you the confidence that you can reverse this trend and grow originations by 30% to hit your $1 billion target in 2026?
Cadence of Gain-on-Sale Revenue
The timing of the large ALP securitization significantly impacted Q4 results. How should investors think about the cadence of major loan sales and securitizations in 2026 to better forecast quarterly earnings and avoid surprises?
Capital Allocation Priorities
With the stock recently trading below tangible book value, you repurchased a modest number of shares in Q4. What is the Board's current view on more aggressive buybacks versus reinvesting capital into loan growth, particularly for the accelerating ALP program?