NewtekOne (NEWT) Q3 2026 earnings review
NewtekOne doubles its bank deposits, but its quarterly profit halves
NewtekOne, a small-business lender and digital bank, grew its loan book and deposits while its quarterly profit fell by half. The company kept guaranteed small-business loans on its balance sheet instead of selling them, so upfront sale gains vanished and diluted profit per share dropped to $0.34. Net interest income rose 30% to $19 million, but bad-loan expenses doubled and ate almost all of that gain. Chief executive Barry Sloane kept the reset full-year profit outlook, which by our math points to $0.51 per share in the fourth quarter.
| Total revenue | $71.8M -4.2% from a year ago |
|---|---|
| Diluted profit per share | $0.34 -49% from a year ago |
| Net interest income after credit provision | $3.5M -49% from a year ago |
| 2026 profit per share outlook | $1.70–1.80 cut 26% from Q1's $2.15–2.55 plan |
⚖️ Verdict: 🔴 Bearish
The story got worse because rising bad-loan costs are eating the new interest income before it reaches the bottom line, and the full-year profit plan now sits a quarter below the original target. Commercial loan originations also slowed, pushing the next bond deal into early 2027. On the positive side, customer deposits more than doubled from a year ago and flagship government-backed loan volume grew again.
The question now is whether the bank's fast loan growth builds lasting profit or mostly absorbs troubled loans that require heavy loss reserves. If new loans perform, interest income will outgrow credit costs; if repurchased defaulted loans drive the growth, provisions will keep eating the spread. The third-quarter filing's loan-quality footnotes will tell.
🐂 Bull Case
Loans and Deposits Keep Growing Fast
NewtekOne, a financial holding company that lends to small businesses, is moving its lending into Newtek Bank to fund loans with customer deposits instead of debt. Chief executive Barry Sloane said "The deposit gathering engine is crucial to fund the loan growth we are generating", and both sides of the bank balance sheet expanded this quarter.
- Total deposits: $2.51 billion, up 113% from a year ago and up $361 million from last quarter by our math
- Net loans held for investment at amortized cost: $1.25 billion, up 59% from a year ago and up $165 million from last quarter by our math
- Business borrowers with a Newtek Bank deposit account: 62%, up from 54% last quarter
This matters because consumer and business deposits cost the company much less than holding-company credit lines. However, the release does not split out how much of the $165 million loan addition came from new borrowers versus repurchased defaulted loans from the Small Business Administration (SBA), the federal agency that backs its small-business loans.
What to watch: the loan footnote in the third-quarter filing. It will show how much of the $1.25 billion loan book is performing loans versus repurchased defaulted loans that do not pay interest.
SBA Loan Volume Rebounds After Rule Changes
Stricter federal rules on borrower citizenship and refinancing weighed on NewtekOne's flagship SBA 7(a) small-business loan programme over the past year. In the third quarter, the lender originated $215 million of SBA 7(a) loans, up 15.0% from $187 million a year ago and up from $208 million in the second quarter.
Sloane said "we reestablished ourselves as the top originator of SBA 7(a) loans" by approval count for the agency's fiscal year ended September 30. Originations of SBA 504 loans, which fund commercial real estate and heavy equipment, also rose 60.7% from a year ago to $45 million. Because volume grew only one quarter after a 5% drop in the first quarter, the concern over tighter federal rules has eased but is not settled.
What to watch: fourth-quarter SBA 7(a) originations against last year's $162 million. A second quarter of growth would confirm that small-business demand has absorbed the stricter federal lending rules.
🐻 Bear Case
Loan Loss Provisions Eat New Interest Income
NewtekOne wants investors to focus on its rising net interest income, which is the interest it earns on loans minus the interest it pays on deposits and debt. Net interest income climbed 29.9% from a year ago to $18.9 million as the bank held more loans.
However, the provision for credit losses — the expense set aside for bad loans — nearly doubled from $7.7 million a year ago to $15.4 million, taking 21.4% of total revenue versus 10.3% a year earlier by our math. After subtracting that bad-loan expense, net interest income fell 48.8% from a year ago to $3.5 million, while salaries and benefits rose 2.9 percentage points of revenue.
What to watch: non-performing loan balances in the third-quarter filing. A further rise in troubled loans would mean credit costs keep eating the interest income from the bigger bank book.
Holding SBA Loans Cuts the Profit Plan
For years NewtekOne sold the government-guaranteed portion of its SBA 7(a) loans for an immediate cash profit, while bulls view keeping those loans as a way to build steady interest income. Sloane said the bank is "holding more guaranteed portions of SBA 7(a) loans on our balance sheet than we have in the past", and net gains on loan sales dropped to $32 thousand from $11.2 million last quarter.
That shift left a gap in revenue, because interest accrues over years while sale gains arrive at once. After putting its $2.15–2.55 full-year profit per share outlook under review in August, the lender now maintains a $1.70–1.80 range, a 25.5% cut at the middle of the range by our math.
What to watch: net gains on loan sales and net interest income in the fourth quarter. To hit the $0.51 fourth-quarter profit per share implied by the outlook, interest income must grow fast enough to replace the missing sale gains.
Slower Commercial Lending Pushes Deal to 2027
Alongside SBA loans, NewtekOne makes longer-amortizing commercial and industrial (C&I LA) loans and bundles them into bond deals called securitizations. In the third quarter, C&I LA originations fell 27.9% from both a year ago and last quarter to $75 million, down from $104 million in each period.
Because the bank originated fewer of these loans, it is taking longer to gather enough loans for a bond deal. After planning a fourth-quarter deal in August, Sloane said the team now "anticipate bringing a securitization backed by C&I LA loans to market in the first quarter of 2027".
What to watch: fourth-quarter C&I LA loan originations. Another drop would shrink the size of the first-quarter securitization and reduce the upfront valuation gains NewtekOne books on these loans.
Risks This Quarter Didn't Answer
Four standing concerns from last quarter depend on footnote tables that appear in the quarterly filing rather than the earnings release.
- SBA secondary-market agreement: the release does not mention the August agreement with the SBA or how much of the $118 million guaranteed-loan repurchase closed in the third quarter.
- Non-performing loans: total loans not paying interest reached 12.1% of the amortized-cost book in the second quarter; the third-quarter filing's aging table will give the new figure.
- Somad Holdings bankruptcy: the filing's credit footnotes will show whether the lender took a write-down on this $15 million commercial loan.
- Capital ratios: the release notes that bank and holding-company capital ratios are preliminary and will appear in the quarterly filing.
👓 Other Themes
Management Explores Strategic Options and Adds Tech
Sloane said NewtekOne is "exploring all strategic alternatives intended to help the market better recognize that value", pointing to Valley National Bancorp's $340 million deal to buy digital business lender Bluevine. Operationally, the company added an "automated integration of a comprehensive offering of insurance products into our loan origination platform", Glia artificial intelligence tools for customer support, and Zelle real-time payments for small-business accounts.
💲 Other KPIs
Unrealised gains on loans held at fair value ($20.0 million) and on retained slices of past loan securitizations ($1.5 million) fell from $22.7 million last quarter and $27.8 million a year ago by our math. These non-cash valuation marks still provided 30.0% of total revenue this quarter, while securitization residuals on the balance sheet rose to $205.5 million.
Net asset value per common share, excluding goodwill and intangible assets, rose 1.4% from $12.13 last quarter and 9.6% from $11.22 a year ago. Retention of quarterly earnings after paying the $0.19 per share common dividend drove the increase, while common shares outstanding stayed almost unchanged at 28.9 million.
Debt across the holding company and its securitization trusts fell 2.7% from $554.2 million last quarter and 27.9% from $748.5 million a year ago by our math. The lender has paid down holding-company credit lines and securitization notes as it funds more loans with customer deposits at Newtek Bank.
🔮 Guidance
Cut. Sloane said the team is "comfortable with our previously issued 2026 EPS guidance range of $1.70- $1.80", which replaces the $2.15–2.55 plan pulled in August and puts full-year profit per share down 19.7% at the middle of the range by our math. By our math, that leaves $0.51 for the fourth quarter, down 21.5% from a year ago. Holding guaranteed SBA loans instead of selling them for immediate cash gains drove the reset.
❓ Key Questions
What are the terms of the August SBA agreement?
The second-quarter filing disclosed an agreement with the SBA to reclassify $442.6 million of guaranteed loans and repurchase $118 million more. Investors need to know if the agency restricts loan sales and how much of the third-quarter loan growth came from repurchased defaulted loans.
Where did non-performing loans land in the third quarter?
The provision for credit losses nearly doubled from a year ago to $15.4 million, eating most of the quarter's net interest income. The press release does not include the loan aging table, leaving total non-performing loans unread until the quarterly filing.
What bridges profit per share from $0.34 to $0.51?
By our math, the full-year outlook implies $0.51 of diluted profit per share in the fourth quarter, up 50% from the third quarter. With the next commercial loan securitization pushed to early 2027, management has not explained which revenue line drives that jump.
What did strategic alternatives mean in the release?
Chief executive Barry Sloane ended his commentary by saying the company is exploring all strategic alternatives after a rival digital lender was bought for $340 million. Shareholders need to know whether the board has hired advisers or is considering asset sales.