NewtekOne, Inc. — Call Transcript 2026

Excellent. Thank you, Jonathan. I wanted to welcome all of you here in Boca Raton, and then those that have joined via the webcast. My name's Bryce Rowe, if you haven't met me. Investor Relations here for NewtekOne. We're very excited to be here today for the Investor Day. Wanted to make a few introductory remarks, and then turn it over to Barry. So today's presenters here for NewtekOne, we've got Barry Sloane, Chairman, CEO, and President. Frank DeMaria, EVP and Chief Financial Officer. We have Peter Downs, who is President of Newtek Bank, N.A., and then Andrew Kaplan, Chief Strategy Officer. Definitely don't want to steal their thunder, but we'll run quickly through some of the logistics for the event. Barry and Frank are going to start with a financial presentation, including a discussion of the 2026 forecast. Andrew will then cover the Newtek Advantage. Peter will then talk about Newtek's technological advantage and how we're using AI. Then we'll go back to Frank and Barry to dive into the ALP securitizations before Barry makes some concluding remarks, and we move to Q&A. As far as Q&A, for those of you here in the room, you're going to have the ability to ask questions. I just ask that you raise your hand. I've got another microphone over there, and that will give those on the webcast the benefit of hearing the question as well. Those of you on the webcast, there is a chat box at the top right corner of that website. You can input questions there, and I'll be monitoring that and can ask those questions for you. That should really cover the logistics. Before I turn it over to Barry, I do want to note slide two in the presentation. That covers some forward-looking statements, and those forward-looking statements could be made during the presentation, so just be aware of those. With that, I will turn it over to Barry. Thank you, everyone. Appreciate you all attending our Investor Day presentation and conference. Obviously, the purpose of doing this today is to really give a better explanation of our organization, what we're about, what the company stands for, and also to give greater exposure to a great management team that I have here between Frank, Peter, and Andrew. For those of you that aren't familiar, the company was founded in 1998 out of a spare bedroom in a New York City apartment, 120 West 18th Street, Apartment 4B. When you go forward to slide number four, Frank, if you could help me with that. Newtek's mission hasn't changed since the company was formed in 1998. I think what's important, particularly as you understand the culture and the DNA of the organization, is the goal of our organization is to build a company that provides business and financial solutions to independent business owners. So we're all about building a company and a business first. Those of you who have followed the long and winding road over 27 years, 25 as a public company, we have taken different forms. We started off as a '33 Act company. We switched to a BDC when it became relevant to do so to grow the business. And then recently, and we are celebrating our three-year anniversary of owning and operating an OCC-chartered bank. But all in all, the important aspect of it is our goal to make our clients more successful has been the primary driver to what really runs this company each and every day. I think it's also important that we've developed a brand. And when I say that, when customers do business with Newtek and they get a 10-25-year amortizing loan, they go, "You know what? That's a real good loan." Sounds like they borrowed $100,000, paid $140,000 back at the end of the year, and said, "Now, what did I do? And who did I do that with? And is there value?" We're creating a real brand. And when people ask me many times, "Why did you buy a bank?" The simple answer, and I keep repeating myself, and maybe more and more people over time will pay attention. I do believe after today, after Peter speaks, Andrew speaks, and Frank speaks, you'll have a better understanding of why we exist, how we help our customers, and why there's really a brand to be built here that is currently built, and that this is a very scalable operation using the technology of which many of you are not familiar with, including artificial intelligence we have used across the different areas of gathering deposit and making loans. Let's go to slide five. So from a technical standpoint, we're a technology-enabled Financial Holding Company regulated by the Fed. In January of 2023, obviously, I mentioned we're celebrating our three-year anniversary of acquiring Newtek Bank and OCC Chartered Bank. Within its five core verticals, we're able to offer to customers depository solutions through banking, making really attractive business loans that are extremely useful to their business growth, payment processing solutions, payroll, and insurance agency. Most importantly, we support independent business owners approximately 80,000 across the United States with one or more of our services. Also important to note, and we'll spend a lot of time on this today, we use proprietary and patented advanced technological solutions to acquire customers cost-effectively. It's extremely important. Importantly, to offer treasury management services through the Newtek Advantage. One of the things that I think is totally misunderstood, I say this sort of tongue-in-cheek, if you want to insult me, say we're an SBA lender. "Oh, yeah, Newtek, I know they're an SBA lender." We are so much more than an SBA lender. It's not funny. Once again, one of the purposes of having this discussion today is to demonstrate all the things that we do for businesses. What I can tell you is the customer base moves money every single day, and we talk about the customer base. We're not talking about consumers. We're not talking about Fortune 1000. We're talking about independent business owners that are identified as approximately 36 million businesses in the United States that have two employees to 2,000, and about $50,000 to a couple hundred thousand a month to $50 million of annualized sales or annualized revenues. I think it's important that when you look at our organization, we have patents on our technology, particularly NewTracker. We have a patent pending on the Newtek Advantage. We offer a full menu, best in class, on-demand solution to a business. Our business clientele doesn't necessarily want to be bothered between 9:00 A.M. and 5:00 P.M. Monday to Friday. They want to be talked to in the evening, maybe on Saturday or Sunday, and they want to be able to not have to leave the comfort of their business or their home. Therefore, our customer-facing staff is on camera and is available. In addition to having great technology to be able to exchange data effortlessly and frictionlessly, we also give the customer a human being to deal with, particularly when they become a customer. Every customer has a customer service rep, whether it's in payroll, whether it's in payment processing, whether it's in servicing a loan, whatever it might be, we service our customers. It's very important to note. When you look at our business model, it's cost-efficient. There's a better client experience. There's less friction to becoming a client. And we believe that our solutions, whether it's a loan, whether it's payroll, whether it's processing payments, whatever it might be, is best in class for the customer. Let's go to slide number six. This is kind of an important slide. Many of you obviously are capital markets participant. I say this with great pain. The most frequently asked question I get is, "What is wrong with your stock price?" Okay? I say that with transparency. I say that with candor. My answer really is nothing. It is what it is. I've had the stock price at $0.50 for periods of time, and we've almost been delisted. I've had it at $0.39. I wasn't euphoric at $0.39. I wasn't despondent when it was at $0.50. We just go out every day and perform great solutions to business clients. And most importantly, we manage risk. That's extremely important in every aspect of these businesses. You can't be in business today without managing risk, whether you're taking in customer data, whether you're helping clients, whether you're giving them a lending solution, taking deposits. You are managing risk. So when we talk about what's misunderstood, or I'll use the word underappreciated, number one, I'll say credit. I'll talk about credit. There's a tremendous misunderstanding of what I'll call SME, SMB, or small and medium-sized business credit. It is fully misunderstood. And I think that when you look at our organization, we have wider lending margins. And for those that are business people, people or businesses that have great margins have the ability to absorb mistakes. Now, thank God, in our period of time, we've made a few, but they've been small, and they haven't been great. So the fact that we have wider lending margins allows us to have larger provisions for credit losses, higher allowance for credit losses. And in our 20 years of this business model, we do a really good job of managing risk. We believe this industry is in a risk avoidance spectrum. In other words, the typical loans that they make have very low margins, and they're typically avoiding risk. They want to have no charge-offs, minimal amounts of allowance for credit losses. But when you look at our returns, which Frank will talk about today, they're extraordinary net of the write-offs, the write-downs, the large allowance for credit losses. Importantly, the assets are marked to market on a regular basis. We have RSM, a top five accounting firm in the United States, evaluating what we're doing. We've had three years of audits from both the OCC and the Fed, and we've been doing this for over two decades. We know how to manage risk on a 10-25-year amortizing portfolio. We have proven that as an SBA lender, and we'll spend a lot of time talking about the ALP business, which is not an SBA credit. The credit is extremely stronger, and we have data to back that up and data to show you. The acquisition of National Bank of New York City rounded out our offering of business solutions because now we're able to push everything into the Newtek Advantage. Andrew will talk about that today and the real benefit of offering a solution and an asset to a customer that basically gives you the ability to take their depository money below the risk-free rate. Why should a customer give a bank money at a non-interest-bearing account or low interest rate if they're not getting anything? An FDIC-insured depository account, it's a commodity. There's probably 4,000 places in the banking industry to get it, and then you can go to credit unions with other forms of government insurance. So if this industry does not prepare to offer a value to the customer for the movement of money, for the holding of money, that money will move. So we are very well positioned for the trend going forward in the business. I also want to talk about an important trend, fair value. I'm very thrilled. LendingClub has announced they use fair value. SoFi uses fair value. My good friends at Grasshopper just merged with Enova. They use fair value. I think we need to start to get used to this. It's not rocket science. It's not that complicated. I realize it doesn't necessarily fit the models out there, and some of you are getting it. We're appreciative of that. But when you look at the map and you look at the numbers, and I think we'll be able to get through some of that today, it's very, very beneficial and valuable. Most importantly, we believe we've solved the three problems that exist in the industry. Number one, cost-effectiveness. Without branches or traditional bankers, we're able to operate the business at a 46%-47% operating ratio, efficiency ratio. That's only going to get better. And you need to use technology. You need to have a human interface, preferably in the United States for the business customer, and you need to be available on demand when the customer wants you. Secondly, being able to put assets on the books that have value. I could argue that a bank standard 65%-70% CRE loan or C&I loan or a car loan, the margins are razor thin. It's a crowded market, and there really is not a big margin forever. God forbid if the cost of funding for banks ever creeps up to where the customer, because they can move money on a phone or very easily, starts to creep up, it's going to be a problem for the industry. It will not be a problem for Newtek. And lastly, Andrew will talk a lot about the Newtek Advantage. We will earn the faith and trust of our customers through the Newtek Advantage to actually give them a business portal that makes them better, makes them more successful. We're constantly polishing it, scrubbing it. Important. We acquired the bank three years ago. This was a single-branch bank in Flushing, Queens, with no technology. So we've had to put this in so we don't get any credit for running this business, making money, putting on 30,000 business accounts digitally, doing $1.5 billion of loans a year using a great lending operating system that Peter Downs will talk about. So many of you will be appalled at the fact that I'm going to shut my mouth for a while and pass the baton. Frank? Thank you, Barry. And good afternoon, everybody. Thanks again for joining us today. Brief background on myself. Prior to joining Newtek in May of 2023, I spent about nine years at KPMG auditing banks of various sizes before transitioning into the industry where I held various roles, including Chief Accounting Officer at a publicly traded Financial Holding Company. That, along with the almost two years that I spent at Newtek prior to my appointment as CFO, has given me, I'd say, quite the unique perspective into our mission as a preeminent small business financial institution. I've titled my portion of the Investor Day presentation, "The Model is Working," which feels like an appropriate title to describe Newtek since transitioning to a technology-enabled Financial Holding Company. I don't think it's a stretch for me to say that many CFOs in the industry would love to put up the graphs on the following five slides to display the constantly or consistently improving fundamental financial trends, consistent growth in revenue and assets, and the stable to increasing capital levels that are comfortably above regulatory thresholds. These include Tangible Book Value per common share growth alongside a hefty Dividend Revenue growth, industry-leading returns, as Barry mentioned, on Assets and a Tangible Common Equity, and again, those regulatory capital ratios that have only increased since the transition to the Financial Holding Company, so the model is absolutely working, and we'll dive into slide eight here. Again, Book Value per common share has grown. It's up 45%. Tangible Book Value per common share is up 62% in less than three years, respectively. In absolute dollars, that's about $4.30 per share, and we've paid a $2.05 per common dividend, which does not include the $0.19 that we paid last week. Bank stock investors and analysts are often screening for Tangible Book Value growth over time. Because we only have that three-year history as a Financial Holding Company, we're not hitting the radar of the longer-term screens, those five-year-plus screens for Tangible Book Growth. But we feel if this trend continues, and we believe it will, we're going to start showing up on those screens likely near or at the top. Go to slide nine. Again, Revenue growing nicely. Note 25 is an annualized figure for the first nine months of 2025. And as you'll see in the next two slides, when we get there, our fourth quarter is typically the strongest quarter of the calendar year. The primary takeaway from this revenue slide is the mix of revenue. Non-interest income comprises roughly 80% of revenue, which is contrary to your typical bank, which is usually seeing 80% of that revenue in Net Interest Income. We do acknowledge, and as Barry mentioned, fair value trends. We do acknowledge that a portion of the non-interest income consists of those fair value marks on loans that are originated to be sold, and we've dedicated a portion of today's presentation to help investors gain a better appreciation for that revenue. Slide 10. This slide, we believe, is the very definition of operating leverage. Our franchise is built to scale. Our efficiency ratio has improved from north of 80% immediately subsequent to the bank acquisition and now sits below 60%, and there's no reason to think that this won't continue and we won't continue to capture that operating leverage as the model continues to work. Our operating infrastructure can support a much larger organization, and not only is that downward trend or improving trend important, but more so is the consistency of it. Slide 11. All the measures of profitability that you see here are, as Barry mentioned, exceptionally strong, so strong that it may give some pause, but if we continue to operate this model as we have and as we plan to do, we believe that this profitability will continue, and that's going to be difficult to ignore. Annual ROAs consistently with two or three handles is uncommon in the industry, and as good as these are, there is potential for even further improvement as we continue to capture incremental operating leverage as provisioning for credit losses stabilize and we move away from some of the tougher vintages of 2023 and 2024 and continue to diversify our loan portfolio, and in addition, as our legacy non-bank lender, NSBF, continues to wind down and becomes an increasingly smaller part of our balance sheet. Slide 12. I also don't believe we get enough credit for how we've managed capital, given the asset growth. Most operators in the industry, the concept of managing capital is a combination of determining how much stock can be bought back and how big of a dividend to pay because there is very little aggregate asset growth in the industry. Our asset base is growing because we've developed that expertise in certain pockets of small business lending over the 20 years that are hard to replicate, especially at scale. We have more than doubled our asset base in less than three years while also strengthening that capital position. So again, I'll say it again, the model is working. Slide 13. We'll shift to the forecast for 2026. We're showing a range of EPS of $2.15-$2.55, 7(a) originations of $1 billion, ALP or C&I loans that we ultimately plan to hold for sale and sell at $500 million, SBA 504 originations of $175 million, and net growth in the more traditional C&I and CRE held or investment portfolio of $150 million. We've tried to layer in a degree of conservatism to these estimates and believe if we continue to execute with growth in EPS and tangible book, we should start to see an expansion in our PE and price to tangible book multiples. And with that, turn it back to Barry. Thank you, Frank. Before I pass the baton to Andrew, I want to give an honorable mention to Nick Young. Nick, thank you for joining us here today. The father of Newtek Bank, N.A. Nick has left us for greener pastures, but we appreciate you being here for, I think it was four and a half years and really set us up in a good spot to pass the baton to Pete. So thank you very much for coming today. And with that, I wanted to introduce Andrew Kaplan. Andrew is somebody I believe I've known for about 15 years. Andrew was an alliance partner. I'll let Andrew go over his background, but he is eminently qualified and a big disciple of our strategy. Once again, that strategy is to basically be the organization that makes our clients more successful, delivers state-of-the-art technology in a frictionless manner, understands the client experience, and delivers a best-in-class solution to help customers grow their revenue, reduce their expense, and reduce their risk. Andrew? Thank you, Barry, and thank you, everybody. I am Andrew Kaplan, Chief Strategy Officer for NewtekOne, and I have the privilege to present the Newtek Advantage to everyone here today. A little bit about me. 30 years plus in the banking space. Prior to joining Newtek, I was with a growing banking organization, was part of a deal team that finished 14 successful banking transactions, and if anybody's been part of a banking transaction, you know to get to 14 transactions, we probably did due diligence on a couple hundred different transactions, so familiar with what the space looks like and what is out there, and what delights me the most about sharing the Newtek Advantage is this is a game changer. In my opinion, nobody else out there has this. This is a best-in-class client experience, which is critically important as we deliver on meeting that mission of growing revenue for our customers, reducing expense, and reducing risk. The Newtek Advantage has been built for business. It is a client-first, client-centric solution, and let me share a little bit more with you. Next slide, please. The financial space, the financial services space is built in a very siloed structure. Payments, banking, lending, payroll, all different verticals, different silos, and if you obtain these products from an organization, from that same organization, we ask clients to go through, or they ask clients to go through a whole new application process, a whole new structure, and then clients interact with these solutions through very fractured solutions, so different logons, different systems. The financial services industry is very, very vertical, but independent business owners manage their financial business in a very horizontal way. It's all interconnected. It's capital, it's payments, it's the movement of money. And what we've done with the Newtek Advantage is we've brought that into a single friendly user experience. Next slide, please. The Newtek Advantage, as a concept, was announced by Newtek in 2012. Cloud-based, web-based solution for independent business owners. Since then, it has been built and layered with additional solutions, practicing the art of what I like to refer to as the Japanese art of Kaizen. It's a system of continuous improvement. How is the world changing? How are our clients changing? And how can we make this experience better? It's top-of-the-line technology. And because of the way that this has been thoughtfully constructed for client experience over time, not easily replicated by anybody. We don't mind sharing what our seven secret spices are to our crispy chicken because nobody can recreate what has been built here over many, many years with absolute service to client. And we'll share that on the next slide. But before we go there, let's talk about what this has delivered for Newtek now with the addition of the banking services to the platform. It's a pleasure. Since the acquisition of the bank, the bank has grown seven times in the past three years. 7X, $1.5 billion in assets. We have opened digitally 30,000 bank accounts. We will originate over $1.4-$1.5 billion in loans in 2025. Our client acquisition tools generate 600 unique opportunities for us to have discussion about financial solutions a day. 600 unique opportunities a day. Over time, we've assembled a marketing database that we communicate with often and we solicit often. 2.5 million names. And using this brilliant technology, efficiency ratio in the mid-50s%. An industry envy. Next slide, please. So let me show you the Newtek Advantage. Within the Newtek Advantage, we have a frictionless environment in which our customers can add payroll services, payment services, their banking, their lending, all with a single stream frictionless wiring of their information. Our customers can then interact with that on a day-to-day basis. As Barry highlighted before, why did we buy a bank? Most people buy banks because they want to drive more cash to the company. But no, this was the missing piece to a financial ecosystem. And the most critical piece, as Barry highlights, people visit their bank account, check on their balances, check on their transactions one time, two times, three times a day. You put this as the cornerstone and then combine this with payments, payroll, insurance. All real-time, all frictionless. Marry that to the bank, you get your payments quicker. You can originate your payments same day, and the entire experience in a single pane of glass, one screen. By the way, we didn't stop there. We also provide free and unlimited document storage. We provide free website analytics, and while most banks will talk about how they integrate their information into a QuickBooks solution, which is the most common accounting solution used by independent business owners, we reverse the flow. You connect your QuickBooks accounts to the Advantage, and we can display for you real-time your balance sheet, your income statement, your revenue, your invoices, your money due, and your balances across whatever other institutions you may choose to do your financial services with. All in the single pane of glass. In the meantime, we don't forget the human part of what is really driving behind all this. As Barry highlighted before, at any time, you can speak to your Newtek representative or a Newtek representative if you're interested in a new solution on camera, 24/7, 365 days a year. The picture above me happens to be Aniseko. Aniseko is in our offices today. On camera, sharing screens, helping customers all day long. This is not only the Newtek Advantage. This is the Newtek Advantage. I can just add one note. As we look at a system of continuous improvement coming soon, you've probably heard a lot about Stablecoin and people looking at things truly quickly as that tool really moves money at real-time. Stay tuned. Our solution not only enables what we do at Newtek and what we do for Newtek clients, but it also helps enable partners. So today, for banks and credit unions, either some or all of our services can be provided to those institutions effectively and efficiently because we are scalable. And later on, our President of the bank, Peter Downs, will talk about the technology that we use and how this technology has been developed under the hood of this. And it's highly scalable, highly efficient so that we can drive more business, part of that kind of 600 opportunities a day that we drive to the organization through a partnership mechanism. And what does that do and why do people come to us? What problems are bankers trying to solve for every day? Grow deposits, grow revenue, retain customers. And we have a model where we can originate loans, and we can do it for their balance sheet and service those loans for their benefit. So we solve not only for ourselves, but for others, which complements our business and creates even more opportunities. That's the Newtek Advantage advantage. The bank piece and the bank acquisition was a critical complementary element to the entire structure. It was an anchoring solution that we looked towards. What we do is embedded. It's financial technology. It's financial technology at the finest, balanced with personal and available solutions, domestic and all Newtek employees. We help our customers consistently grow revenue, cut costs, and reduce risk. And this is a best-in-class solution that cannot be replicated by our competitors. Thank you. Thanks, Andrew. And when Andrew says it can't be replicated, this has been obviously approved in our business plan by the OCC, by the Fed, with Reg W and understanding. And a competitor would have to buy a payroll company, buy a merchant processor, buy an insurance agency, buy a bank, be a long-term amortizing small business lender. I'm telling you, they really don't exist. Put this all in and get the staff to do it at the same time and weave the technology in place. So Pete's going to spend a lot of time talking about the technology. He's done a fabulous job historically with Dan Hendel, our Chief Information Officer. But when we say this, it can't be replicated easily, but it's immeasurably scalable. I think that's important as well. Our ability to scale this, both from deposits, lending, payment processing, payroll, margin pool, it's all there. Unfortunately, most of the market doesn't really understand this and don't value it. And I wouldn't say it's a zero. It's probably a negative. Like, what is that crazy company doing? But hopefully, with what Andrew has talked about today with respect to the Newtek Advantage, which is constantly being polished, honed, and advanced, when Pete talks about what we've done technologically, hopefully, you'll come away with a different viewpoint. In addition to comfort on credit, which we're going to give you today, we believe our credits have stabilized to improve. We'll be reporting in a month. We'll be able to demonstrate that. But this technological aspect of it is, no one asked about it. It's totally misunderstood. I mean, I would like to know how you got to open up 30,000 bank accounts fairly quickly from a single branch bank in Flushing, Queens, that their backup disaster recovery plan was driving a truck up if the power went down with a generator attached to it. And all of this is connected, obviously, to the Fiserv core, to NewTracker, to the Advantage. Pete, take it away. Thank you, Barry. And thank you all for attending today. It's 75 degrees and sunny here in Boca. You all had a choice to do something else, but you chose to come inside and listen to us today. So I do appreciate that. Peter Downs, President of Newtek Bank. I think outside of Barry and maybe John Schmid, who's here today, might be the longest tenured employee at Newtek. Started here in July of 2003. I did start when I was 12. So it's helpful. And Barry is fond of saying I was six foot four, actually, when I started. So a little shorter than that now. But it's been a great 22, going on 23 years at Newtek. I was asked to talk a little bit about our technology, our use of AI, kind of the future and what we're doing and how we do things. But I thought it was important to talk a little bit about history before we talk about the future and what we're doing here today. So July 1st, 2003, I started at Newtek. I asked Barry what he'd like me to do first. He said, "Get your hands around the pipeline of loans that we just started to develop." I said, "Sure." I went out to the one and only underwriter we had, and I asked him to show me the pipeline. He took me into an office, and that office was a whiteboard sitting on a chair. Couldn't even afford to bolt it to the wall yet. We just had a whiteboard on a chair. It had three loans and marker. This is a true story, by the way. I'm not making this one up. I came back about 15 minutes later to Barry, and I said, "What do you want to know?" And he said, "Oh, you've only been gone 15 minutes. What do you need?" I said, "You have a pipeline of three, and they're tracked on a whiteboard with marker." And he's like, "Well, we got to do something about that. Let's go build a pipeline." So I went out and I said, "Let's see how we get referrals in." We had two referral partners. Each of those referral partners had a fax number to fax things to, fax machine. One had green paper, one had yellow paper. When the fax would ring, it would have information about the borrower, how to contact them, what they were looking for. We would take the paper off the fax machine, poke three holes in it, put it in a binder. That was the beginning of NewTracker. When we started to add on more referral partners, we were running out of color for paper. So we had to do something else other than fax machines and taking them in that way. So we developed NewTracker as it exists today. So you've heard Barry talk about NewTracker having a patent on it. You talk about the Newtek Advantage inside of NewTracker. NewTracker started as our ability to communicate with referral partners to accept referrals for the products we offered. At that time was merchant solutions and lending. They would come to us with that information through a username and password-protected login. They'd be able to see that referral and track it through its life. We gave them a window into our back office, was unique back in 2003 and 2004. We put a barcode on that referral. We called it a referral ID, a RID for short. And they were able to track those referrals throughout the process from beginning to end. They could see the comments we made, how many times we reached out to their clients, and what the process was going to be from there going forward. We matured that platform and grew some more referral partners and figured that we would start to focus in on the customer side of the transaction. At that point, we were sending needs lists out, and I'll talk about lending for a moment, needs lists out to clients via an email. They were sending us back a FedEx package with their documents in them, paper. We would push paper around. As we grew and grew in referrals, we realized paper wasn't going to be the long road for us. We built on top of NewTracker a portal, a customer portal, an interface to be able to grab documentation from those potential business owners, those independent business owners. We had to make it easy so that we could track the information coming in as easy as attaching a document would be to an email. We were able to track throughout that process all the information that came in. We developed that and matured that. We went paperless at that point in time. We started to be frictionless to particular business owners in helping smooth out the process. As we grew from there, we started to develop that further for our internal needs so think about NewTracker now going from referral to document gathering and now to our internal processes. How do we complete a credit template? How do we gather information to document your loan and fund it? How do we provide funding documents to you? And then ultimately, when the loan is on the books, how do we service you as a client of ours over the next 5, 10, 15, 20, and 25 years? And so we built the repository for those business owners to be able to transact with us their business, yes, initially, and then ongoing as they became a client of Newtek so that, and I don't know if you can visualize what NewTracker is, but that is the core of what NewTracker is. And we built this. We own this code. This is a CRM. This is a loan operating system. This is a loan servicing system. It is a doc prep system, fully compliant with regulatory needs, audit needs. We'll go into some of that in these slides. But it's our system. We built it. We didn't buy it from someone and adapt our process to how they produced a piece of software. We bought it. We built it. We developed it over years. We own the code. It's ours. And we continue to use it. We have a saying at Newtek, "If it's not in NewTracker, it didn't happen." So it's the core of everything we do, how our business operates, how our employees function, and how we interact with our referral partners. And we take every referral very seriously. They're like gold. We don't expect we're going to get another one tomorrow. Come in every day thinking that today is the day we're going to get a referral. Tomorrow, we're not. So we have to do it well. And that's how NewTracker was built. That's how we developed it over the years and how we integrated into our company. So just wanted to give a little background and history. It really was. If anybody would like to see something, I could show you. We really do have yellow fax paper and green fax paper. And I do have them in a three-ring binder. So we can go to slide 21. Turning to today. Today, we'll talk about. We'll look at this from a lending kind of viewpoint. But keep in mind that what I'm talking about here today works equally well in our payments processing business, in our payroll business, in our insurance business, and in our banking and deposit gathering business. But I'm talking about this in a lending operating system side of the equation. So we're driving scale and efficiency. How are we doing that? Well, scale without hiring, automating workflows to handle growth without increasing headcount. Sounds pretty interesting. Just to give you real numbers, in 2022, we had 31 folks in the closing side of our equation. Those were closers, paralegals, and attorneys. Today, we still have 31 people in that group. We are closing this year three times the number of units we closed in 2022. So no additional headcount since 2022, three times the number of units. That is the development of the technology that we just talked about today. Digital customer access, as we just talked about. Customers and referral partners can give us referrals, but customers apply, track, and manage their loans online through the phone, through their laptop. They all have access to see exactly where they are in the process. And then once they're a customer of ours, be able to manage their loan and their relationship with us online using tools like the Newtek Advantage. Faster decision-making, AI, big ticket today. We're using AI to help streamline the process for quicker approvals. We are not using AI to make decisions. We still make decisions, but the AI is helping us do analytics and streamline processes. I'll give you an example. We have pre-qualification calls. Those are recorded calls between a business owner and a business service specialist. That recorded call is listened to and transcribed by AI, put in a format that starts our credit template as a transaction summary without anybody having to put fingers on a keyboard. Have a conversation on the screen, as Barry was talking about, as we do all our interactions with borrowers, and from that conversation comes the beginning stages of our credit template, transaction summary, and all the foundation without putting fingers on a keyboard. Think about having a conversation with a business owner, not having to take notes, not having to remember what they said, how many employees did they say they have, what was their competitive advantage, what was the use of proceeds. Don't need to do that. Have the conversation, ask the questions, listen as a business service specialist, and then we're going to let AI do the enabling analytics and processing for us. Drives growth, shorter turn times, best-in-class customer experience. Andrew taught me best-in-class. So he uses that a lot. So I figured I'd throw one in. Seamless integrations. We're connecting with core banking systems. All of our NewTracker systems are connected to the cores. So when a customer is boarded, we're not putting fingers on a keyboard. It's going directly from NewTracker into the core. It's taking much of the heartache of boarding clients out of the way. Risk management, integrated tools. We use to monitor credit and risk. Transparency, clear audit trails, internal regulatory. Nick Young didn't explain to me that this was a regulated entity and what that meant. Thank you, Nick. So there's a lot of scrutiny at the bank, as you can imagine, in how we do what we do. NewTracker allows us to be able to do that in a very organized and electronic fashion without having to throw a lot of bodies at it. Clear audit trails, who touched the document, when they touched it, what they did with it, all recorded inside of the system, so very audit-friendly, which is a big deal in a regulated bank environment. Track the application on smartphones and tablets and reducing operating costs. Let me jump in just for a quick second. A couple of things to talk about. One, appointment setting. I think it's important. Pete and the team have built a funnel where we get 600 referrals a day, and you basically want to get back to the best ones first, so we quickly get out of FactFinder. It gets answered. Someone from the comfort of their home or in a business gets a very fast answer. If they've been in business X amount of years, if they have a high credit score, if their revenues are X, they get a secure file vault opportunity, which connects them, and they get an appointment setter and a calendar to speak to a human being. Very different. I think another important part is the funnel. We have one big funnel. Businesses come in for money. They don't know whether it's a line of credit, which we now do. We'll connect it to the core. They don't know if they need a term loan. They don't know if they need an ALP loan, a 504 loan, a 7(a) loan. But we guide them through that process, and the one reason that you all know this is true is because people take merchant cash advance and daily debit like that at 30%-80% rates just because the money's there. The customer experience, I would argue, it might be good for the moment, but at the end of paying that loan off after a year, what do they have? They may need to reborrow again at a 40% rate. It's not a lot of renting. We have a totally different approach to making loans to this customer base. Long terms, no balloons, maximum flexibility, and covenants. I want to bring one other point up before handing the microphone back to Pete. Obviously, we recently heard about fraud. Fraud's the big thing, particularly fraud in Minnesota and moving money. The reality of it is, if you give a customer funding, and I'm not saying it's here today, whatever, the government wants to know, is it any money laundering? Is it BSA? Is it AML? So the reality of this is we are a financially regulated institution that's got fintech inside of it. It's extremely valuable, so we all know that there are issues with banking as a service, lending as a service. In dealing with our organization, you get the best of both worlds, and we've been regulated and examined over three years. It's fully compliant. So for organizations and customers that are looking for a model that's technologically capable, that's scalable, and that's compliant, Pete, Dan Hendel, and many others in the organization have built an incredible way to do business, and I will tell you, we have fairly large core operating platform providers that are interested in our lending operating system and working with us, and that is something that is testament to what Pete's built. Back to you. Thank you. Page 22. We are branchless. We're a unique bank. We had to open up digital deposit accounts for business customers, not consumers, but business customers. Had a lot of work to be done to be able to do that digitally inside of the platform that we've built and that we just described today. So we simplified small business banking to be able to open deposit accounts for business customers very easily and quickly using the tools that we just talked about today. So ease of application. It's a simple, intuitive process for the small business to open up deposit accounts online. We couldn't make it difficult to do. We would lose interest from people integrated with our loan operating system. So all of what we just talked about in gathering data to get a loan in, we had much of the data we needed to also offer a deposit account for you. So rather than ask you to put the information in again to apply for a deposit account, we're able to integrate our loan operating system and our digital account opening process for deposit accounts so that there's no redundant data entry. It sounds easy. It's not. It's difficult. If it was easy, everybody would be doing it right now. They're not. So we worked hard to make it so that it's a single application for a business owner. These are independent business owners running their businesses. Barry said [they] want to communicate at night, weekends. They don't have time to be filling out multiple applications or coming into a branch. They want to be able to do this on their own time in their own place of business. A single Know Your Customer process, KYC. Barry just talked about that. With fraud, money movement, and all sorts of heightened awareness of issues that are out there today, having that process in place easily through our digital account opening process is key. Instant offering with a loan approval. So when we have the loan approved, we instantly offer because we've gathered the information we needed to approve you for a deposit account at the same time you applied for the loan. And we did that single integrated KYC. We're able to instantly offer you a deposit account automatically upon your loan approval. You didn't ask. My mom always said, "Try to do something for somebody when they don't ask you to do it." That's polite. Well, we're trying to be polite. You didn't ask. We're going to offer it anyway. Direct onboarding to the core, as we do on the loan side of the equation. Regulatory compliance built in. As Barry said, we've been fully tested with banking regulations and audit requirements. Then the enhanced customer experience for faster boarding. It's one application. It's a better experience for the client. They don't have to do things multiple times. Page 23. I'll talk a little bit about AI and lending today and what we're going to do in the future. We talked a little bit about the call recording and translation. We do automated review of financial data. So we're reading tax transcripts, bank statements, credit bureau information as they come in and placing that information integrated into our credit templates. We're not sitting here and typing in spreads for tax returns or your average bank balances or what your FICO score was. They're coming in, and they're coming in directly into our template. Speed. Spreading of the tax returns. Spreading of the bank statements. It's not only speed and ease for our underwriting side, but it also makes it a more consistent cash flow analysis as it gets pulled in from the tax returns. And tax returns lend themselves very well to this type of analysis. Line 23 is line 23 on everybody's tax return. So it makes it easy to do, and it gives us some more consistency of cash flow. We look at you use AI to do some summation of documents. Think about leases. Think about operating agreements or business corporate docs. Think about franchise agreements. Somebody would have to read those and pull key terms out of those agreements to see if they matched what we were looking for in our credit approval. I'm making you a 10-year loan. I'd like to know you have a lease in your building for the next 10 years. Somebody's got to read a lease and look to see if it's a 10-year lease and if it's coterminous with the maturity of your loan. AI is reading those, summarizing those instantly as the client is uploading those documents to their portal and giving us back that information so we don't have somebody doing the mundane task of reading and picking out documents. They can actually do what they're paid for, which is make sure it actually fits what we're looking for. So we're taking more mundane tasks and turning them into better and faster processes. Instant access to insurance needed to close loans. Many of our loans would require Key Man Life Insurance as an instance of this bullet point. Inside of our NewTracker portal is a connection to a life insurance option. If you'd like to take life insurance out through Newtek Insurance Agency, it's a click of a button. It's about three minutes' worth of additional questions. Again, we're porting over as much information as we have on the individuals already to the life insurance application. You're filling in a few additional questions. With those questions comes an instant bindable quote. Bindable quote. Not an offer. Not come and talk to us if you're interested, but a bindable quote. Okay. There you go. Thank you. Thank you. I appreciate that. I'm sorry. So you said it wasn't three minutes. It was only a minute and a half. So we had a client in here that held me accountable. Thank you very much for that. They can choose who the beneficiary is, but it's assigned to Newtek. So if there ever were an issue and you needed the insurance to pay off the remaining balance of the loan, you could use that insurance to pay off the balance alone. It's not only assigned simultaneously. And that's the key. That was what I was getting to on the next part of the insurance. It's not only a bindable quote that's instant, but you're delivering the policy with the assignment language back to us as a lender. So that used to take days, if not weeks, to go to carriers to get the actual policy and then the assignment back to us before we could close. This is now instant. So thank you. Within a minute and a half, we were delivered an instant bindable quote with an assignment back. Insurance never delivered assignment. So we had to purchase a second insurance, spend a minute and a half again. And eventually, that was a very successful experience that the client experienced. Thank you. And we're not related in any way. So that's not in the line of. Thank you. Thank you. This is what is emphasizing the position that we have in the market of embedding solutions into a single application. So you come in for a loan, the solutions are embedded. We're about to roll out the P&C policy for the loan. The life is there for the loan. The flood insurance is there for the loan. So it makes the lending process much better. The bank account is there for the loan. So it's one application, and you get multiple solutions all at the same time. That's the benefit. So then crossing back to what Andrew was talking about in the Newtek Advantage, do you think business owners want to go to ADP, want to go to the bank, want to go to their daily debit provider, and their insurance? I mean, this is all in one place. Now, we don't force it. We don't require it, but it's there. It's convenient. It's at the right price. People take it. And that's what we've built. And that's what, frankly, very few people know and understand. I will tell you that the internal teaching, training, and mentoring of our staff to be able to roll these things out is at a very low level, but it's still working, and it's going to grow from here. Pete. Thank you. I want to go to page 24. What's all this going to do for us? Right? It's nice to say that we do all these things, and we have all these things integrated. How do they become tangible offerings? So because of the loan operating system we have, the digital account opening process we just talked about for business deposits, and the AI that we're using today, we're able to look at two offerings that we're focused on and very excited to roll out. Small business term loan launch. That will be apply and pre-qualify in seven minutes, close and fund in seven days with a real term loan. Long-term 10-year amortization, which is going to give you much lower payments. Secured by business and personal assets. Not just a daily deposit loan and hope the money's there to when you want to debit the account to take the money out. These are secured loans. They'll meet SBA eligibility criteria. Competitive interest rates. Talking Prime plus 3, we're not talking about 40% on the daily deposit merchant cash. Underwritten, not score-based. So we keep to our five Cs of credit. And loan size is up to $350,000. This is achievable because of the things that we've built inside of that loan operating system, that digital account opening process, and utilizing AI. In addition. Great pleasure. This is the one area of a hole in our offering just because we're competing against TV ads that says, "Oh, come to me. I'll make you a loan in five minutes. I'll get you the money in five days," or whatever the heck it is. We can basically be able to go out on a secured basis. It's extremely important. It's not daily debit. It's not MCA. And through our technology, I'm not saying it's going to fit everybody, but make a secured offering with liens that'll help us on the credit side where we could do well at Prime Plus 3. And the customer walks away and goes, "I'm not paying a 40% or a 50% VIG for money." So this will be added to it. What are the terms of these companies that hit you up and are proactive and telling us about social media? You could - I don't want to mention names on the call, but the MCA players, and there was a big play in the market with one player that's kind of merging into a private company. They're public, but it's able to deliver the money quickly. I mean, the business owner today, if they want the cash, they want it quick, and they want certainty of funding. They're not discriminating. It's not to say they're happy after they realize that after a year, they paid all the principal back, and they paid a 40%-50% rate on it. They can't be happy. They might be okay, but they're not thrilled. We offer what we refer to as an adult loan. And now we can give them an adult loan. It's not going to fit everybody. We want to basically, we're not in the business of funding businesses leading to the cemetery. We're in the business of funding businesses that should be underwritable. They've been in business a long time. They have a legitimate business. They have good balances in the bank. If they need quick funding, we can do it. We can get security on the loan. So we will have this particular program. Pete. So you're talking about when you get these things to your desk and you see these on a daily basis. We've talked a lot to business owners because we talk to them on a daily basis, hundreds. And it is ease and speed as well as the terms that we offer. So using the tools that we've built to be able to offer something that's easy and quick to be able to be funded and keep us into the types of loans that we make today is really what we're trying to take advantage of. So we had this in place, and we've worked hard to put this all together so that we can offer these things on a quick basis. Offering number two is what we call the Triple Play offering. We talked earlier about having one application to be able to do multiple things. This is the culmination of that work. One application, I'm going to get you three instant offers. The business bank account that we talked about today and our business bank accounts have no fees, no fees, and pay you interest on your balances. We'll give you your earnings credits towards and offset the fees that we charge you so effectively you have no fees. We don't charge you fees. And we pay you interest on your balances. That is actually cash that we put into your account on a monthly basis in interest that you can go and spend and go and do things with it. So this is not earnings credit offsetting your fees that we're charging you so that you think you've got no fee banking. No, this is true no fee banking. Not charging you and paying you interest. We're able to do that because we don't have a back book of fee interest. And when you look at our net interest margin at the bank, what Frank's about, 5.5%, give or take? Give or take. About 5.5% at the bank, give or take. So these are risk-adjusted returns, which is what I talked about previously. So if you're making low-margin, no-risk loans, you can't do this. Matter of fact, most of the bank's entire business model is predicated upon interest way below the discount rate and the fees from the back book. We don't have the back book. So we're able to actually give our customers a really good deal. It's true 100%, no fee banking, no asterisk, no BS. Even if you bounce a check, we don't charge you a fee. We won't let you bounce checks for too long. But even if you bounce a check, there is absolutely no fee, no minimum, no asterisk. And the Triple Play that Pete's talking about probably starts off with a minimum of around $10,000 to get you that instant decision. It's connected to the bank account. You put that and you attach it to the debit card that's on the business that has a cashback capability. It's a pretty powerful offering to a small business. There'll be no fee for the line of credit. There'll be no non-usage fee. So if I want to grow my payroll book or I want to grow my merchant book, at the same time, you could pick up a $10,000 line of credit. It doesn't cost you anything. Extremely attractive. Got it. Some of us bankers would like you to charge a fee on NSFs, even if it's a small one. I'll argue with you after. That's not my question. Frank, 30,000 accounts opened, I think you had up on your sheet or Andrew. What's the average balance in those accounts? Where does it start and what's it grow to when it's normal? It's about 50. Hopefully, somebody up there knows. Barry's not allowed to answer. No, we're just putting the—who's going to answer you? It's about $50,000 in size. And we're not talking CDs, right? Those are transaction accounts of some kind. We don't do consumer checking. It's consumer high-yield savings. Of the 30,000 accounts, those have been open. There's probably about 27,000 that are open today. So some of those were CDs that came in and were rolled off. There's about 7,000 business accounts. Okay. And how many business checking accounts would you open in a month? I would say the utilization of business checking accounts. I would say it's probably around 300-400 in a month. And am I correct today that those are only offered to people that are borrowing money? You have not yet rolled out a program to offer the advantage without the loan to small businesses. We have not aggressively. Yeah. We have not aggressively marketed the advantage as a product to itself. You can get it from our website, but we have not gone out and aggressively marketed the advantage. If you have a merchant account with us, you can access the advantage. If you have a payroll account with us, you can access the advantage. So it's not a requirement. Right. But today, there's a huge opportunity to offer business checking accounts to the millions of businesses that don't borrow money. Absolutely. If it's because of the customer experience. Yeah. And I think, Kirk, it's a good point. We've grown very quickly. I don't think anyone could argue that. I'm not sure I want to grow any faster than we're currently growing, but we're doing it methodically. We're doing it in a compliant manner. And I would say the biggest impediment, which we're spending a lot of time on right now, is teaching, training, mentoring, and educating our staff because we still do believe that outside of having really good software, customers do want to talk to somebody, particularly this particular customer base, so. Yeah. I'd be happy to have you have unlimited growth in business DDA without loans. So you can find a place to put that if you find it. Second question, you're going to do $1 billion in 7A. I think we're shown in $500 million in ALP in 2026. With your customer acquisition strategy, which is very low-cost, unique to the company that you've built, is that strategy sufficient today for you to double those amounts to 2 billion and a billion, or do you need to do something else? More of the same in customer acquisition strategy or new customer acquisition strategies? I think that particularly in the ALP business, where the average loan size is 5 million, it's easy. It'll be relatively easy to grow that business. You go from 100 units to 200 units. You go from 500 million to a billion. We are in discussions with a lot of channel partners that are off the charts, monstrous, and huge. So that's possible to grow the business. It's very easy to expand the distribution strategy through channel, and we're also very interested in growing the direct business as well. So the question was about ALP loans, and we're about to get into that portion of the presentation. They're proven to be well underwritten with good credit quality. The program has existed since 2019. We're currently in the market, as I sit here today. So when I leave here, I'll put my bond hat back on, and we'll be in the market with a $350 million collateralized transaction. The question is, could you put an ALP loan, which I've also called a C&I loan held for sale, into the bank? And the answer is it's a C&I loan. It's a bank-eligible loan, and that is something that could be done. Okay. Pete, you want to finish? You're all done? No, I took enough time, so. Okay. All right. If you can hold questions because I want to get this out of the way, and then we've got a big Q&A at the end. We are ahead of schedule, which I'm very pleased. The next part of the presentation is this underappreciated aspect of NewtekOne. Underappreciated, understood, and it really relates to the alternative loan program. Let's go to slide 26. But before I get into that, I do want to make a comment, and we talked about earlier sort of where we're underappreciated or misunderstood. We do believe that Q2 to Q3, we demonstrated stability both at the bank and at the holding company through the old NSBF portfolio, which is a legacy SBA lender that's winding down. We'll be reporting most likely at the end of January. We haven't given a date out. That'll probably be next week. I believe you'll see stability and improving performance in those credits. I'm not prepared to give out numbers today, but I'm confident and feel pretty good about the economy and our performance in the fourth quarter. So I think that's important. That clearly has been an impediment to market participants looking at the level of non-performing loans, the provisions, and things of that nature. We're fairly adamant that the cost has been absorbed. It's been written off. There's no surprises. It's appropriate. And maybe after another year or two of operating, everyone will get to appreciate that and understand it. But even with that, those numbers we believe will be viewed as positively when we report. So let's go to slide number 26. The alternative loan program, which Kirk Wycoff from Patriot, one of our larger institutional shareholders, brought a question. We also refer to them as C&I loans held for sale. We originate them, and we put them in special purpose vehicles, and we securitize them. We do that because these loans are longer amortizing loans. They have longer durations. They're meant to have longer durations because they're actually attractive capital for the business. Holding back the principal payments, which we think is overrated from a credit perspective. Everybody likes to get their money back. I get it. They really need it back after a year. And we substitute that long amortization for personal guarantees, joint and several, for liens on personal and business assets. And all these loans have very strong debt service coverage ratios. And we'll go into some of those metrics. But important to note, the C&I loans or the ALP loans have much stronger risk profiles than those of SBA 7(a) loans. I think I've had some people say, "Well, are these just loans that have bigger than a $5 million balance?" The answer is no. That's not the purpose of loans going into this particular bucket. The operating history is longer. As a matter of fact, look at the average operating history on the 2025-1 deal. It was 16 years. I think the current deal we have in the market is 10 years or longer. So these are seasoned businesses. We say the loan-to-value is lower. The average LTV on these loans is about 50%. You don't get that in a 7A loan. The guarantors have got stronger liquidity and supporting financials. I would say the average guarantor's net worth is clearly seven figures, and some have eight, and some actually have nine. So then you would say, "Well, why would anybody with those strong financials take a loan as an interest rate that's in the low double digits?" Well, the reason is we give them greater flexibility. We treat them as an adult if they're willing to guarantee their personal and the business assets, if they've been in business a long period of time, if the businesses have debt service coverage ratios of 2 to 1, which is typical for an ALP loan. We'll say you could pay your principal back slower. If you want to borrow money, you can do that without necessarily having to ask us. You don't necessarily need to give us monthly financials, but we have everything tied up, and we're happy about that, and this is the experience that we've learned in being in this space for over two decades. Important to note, every one of these loans has a business appraisal. So these are not little businesses that don't have significant material values. About $850 million of originations across 180 loans since 2018, we've had $23 million of defaults. We've had $6 million of charge-offs. That's a pretty good record. We believe these loans historically in the portfolio will have a 3% cumulative charge-off over the life of the loans, and they're valued that way. Important to note, the asset-liability match is a four- to five-year duration. Why is that? Well, we get very nice margins on these loans. So because we have nice margins, we want these loans to stay on our books. The borrowers are typically willing to accept a 5% prepay penalty in month zero through month 36, meaning if they want to pay the loan off, you got to pay a 5% prepay penalty. In month 36 through 48, it's a 3% prepayment penalty. Typically, these loans do stay on the books unless there's a tremendous liquidity event. Somebody comes in and wants to buy the business. In that case, they'll pay the prepay penalty. But our experience in doing this is these loans typically pay off once they get past the 48th month, and the loans have a floor at the original rate of interest, and then they typically float. They're fixed for five, and then they float at T plus 950. Better client experience versus their competitors offering that quick money because the loan gives them a longer prepayment period, a lower monthly payment. They're not paying yields of 40%-80%. At the end of a year, they have to do it all over again. The ALP securitization that we recently completed in April generated 570 basis points of spread income. We talk about spread income. That is the net coupon on the loans going into the special purpose vehicle versus the yield on the securitized bonds. If you included the 100 basis points of servicing, that would be 670 basis points. So the servicing asset is particularly valuable given the prepayment. So we have the ownership certificates marked at a 14% net yield, and that is a net yield net of a 3% charge-off. If we did it gross, it would probably be 15.5%-16%. So these are the fair values. Obviously, a public accounting firm analyzes these values, as does Frank, our internal audit team. We do have a third-party organization that looks at the valuations on these and will be doing so at the K for this year. These assets are marked to market quarterly, so we're looking at them every single quarter. Fair value is not something that is foreign to us. We did it as a BDC from 2014 to current date, and it works. It makes sense. We see the SoFi's, the LendingClubs who just announced they're going to go to fair value, Enova, other lenders that are in this space being comfortable utilizing this. And by the way, this is no different than CECL. It's just upside down. By the way, you know I've never been asked a question about CECL before? People don't ask about CECL. But oh my God, the question's on fair value. It's the upside down. CECL, you're forecasting what your loans are, and you're putting a charge upfront. That's the same assumption. Effectively, that goes into fair value, except you're theoretically present valuing the income. But given that these assets are going on the books at a 14% yield, we're not taking all the juice out of these things. There's still plenty of juice. So we'll go through this a little bit deeper. You'll see the cash flows. Let's go to slide 27. Okay. So we've been a securitizer since 2010. 13 of the 16 securitizations were backed by 7A loans, and these were the uninsured portions of the 7A loans. We've never had a credit watch of our securitizations. We've never had a downgrade. All the bonds have held up very well. We've done three securitizations backed by ALP loans, and we're currently bringing a fourth transaction that hopefully will be announced next week. If you look at some of the numbers here, and I want to point out the 2026 one is a hypothetical of what the pool looks like, but it should be very similar to the 2025-1. But you could see what the spread income is. And by the way, that's a spread income of 568 basis points. So if that was in a bank, and a bank said, "I have 568 basis points of spread income." By the way, on a bank's liabilities for deposits, they have a tremendous amount of expense in managing that book of business going in and out. In a securitization, it's kind of set it and forget it. Yes, we have to market. The loans are in the SPV. The bonds are sold, and you're just clipping the coupons, right? And we evaluate this every single quarter. So if you said to me, "What's the cost of that liability?" Well, it's fixed. It's fixed based upon the securitization yield on the bonds that are sold. So that's just a nice cash flow that's sitting there. It's coming in. It's held up at the holding company. We've also done this with joint venture partners. And people say, "Well, why do you use a joint venture partner? Why don't you use a joint venture partner?" It's just another alternative form of capital. It's diversification. It also validates the fact that the prices and the yields that we're putting on the books are validated by institutional investors. 2022-1 joint venture partners, BlackRock, Tennenbaum Capital Partners, that deal's come full circle. It's unwound. The bondholders got paid. The joint venture partner got paid. They're very happy. They've moved into the sunset. The 2024-1 deal, TowerBrook are a joint venture partner. And obviously, they're validating these valuations. We have more validation going on than I care to shake a stick at. I've got ungodly amounts of validation, ungodly amounts of cost. The good news is we figured out ways to actually make loans that, on a risk-adjusted basis, drive return on assets north of 3%, return on tangible common equity 25%-30% because we do things differently. We're a disruptor. It may not necessarily neatly fit into the call report, but we're getting there. People are beginning to understand it. I also want to point out being a disruptor in an industry that typically doesn't disrupt. And maybe this is not a great example, but I recently looked up some of the entities that I mentioned, the SoFi's and LendingClubs. They flatlined for a couple of years, and then all of a sudden, people got comfortable with how they were doing things, and the stock price took a different course. And obviously, these traded entirely different multiples than our multiples today. But I looked at a company called Carvana. Maybe it's not the best example because they clearly have got a unique background and a unique past. But what are the similarities? Carvana looked at the used car market, similar to the independent business owner market. Big market, big opportunity, not a lot of people in it. So Carvana did an IPO, I think it was in 2017, and then COVID happened. I think the stock at the IPO was like 15, 16, 17. Then COVID happened. They get traded at $3. I didn't look at Carvana in the last couple of days. The last time I looked, it was over $400 a share. Okay? What does Carvana do that's simple that we do? Well, they put technology in place so that an individual from the comfort of their home can buy and sell a used car and get the car provision and can get all the payments done and get the insurance done. So they use technology to disintermediate an industry that wasn't used to it. But it took a while for the investment community to get comfortable that they can keep on doing what they're doing. So my suggestion to all of you is just keep watching what we're doing. We're through three years. I feel very good and confident about this particular management team. There's probably about 15 other people I'd like to put on stage today, but we'll do this in small bites because I know you're used to hearing me talk. But on slide number 27, this is a good idea of what actually is in these particular portfolios. Let's go to slide number 28. Our equity certificates in ALP securitizations, they're on our balance sheet. They're represented by the balance sheet of Holdco 6, which is a segment. It's held at fair value. It's valued quarterly. And particularly on the 10-K, it'll be evaluated by a third party with expertise in valuations. As I mentioned, the 2024 deal is held by a joint venture with an institutional investor. And we do value these things every quarter. And when we do joint ventures, the partner is approving our financials and obviously our valuations as well. We're using discounted cash flow. It's not that complicated. We're looking at the performance of the underlying loans and the security, our internal accounts, our external accounts. They're looking at these. We're looking at change in interest rates and margin clearing yields and discounted cash flows. It's something that we've been doing, obviously, since 2014. Also important to note, the cash flows of these securitizations are modeled on Intex. So for those people that are not in the ABS securitization market, you can go on to Intex. You could see how the bonds are performing. They're the recognized provider of cash flow models for asset-backed securities in the United States. Slide number 29, we talked about what these loans look like in the securitizations, the spreads, how they're valued. I think it's important to note, and we'll drill down to the last bullet on slide number 29. The way these deals are structured, 90% of the excess spread income is used to pay off the senior bonds. Okay? That's really important. And because of that, the book value, which are just the assets in the special purpose vehicle, less the bonds, grows very quickly. And you can see that on slide number 30. We refer to this as over-collateralization. It could also be referred to as book value. We estimate that in a typical deal in three to three and a half years, the book value, because of the excess cash flow that's coming off of the deals, will prepay the senior notes so that the book value will equal the fair value. So these are things that you could take a look at in the existing deals that are out there, the 2024-1, the 2025-1 deal. These might be information that we start to put into our Ks and Qs, but the reality of this is we're not making this stuff up. This is how the market works. Slide number 31 kind of gives you a hypothetical example of how profitable an ALP deal could look at. Now, so it's important. This is non-GAAP. I want to repeat. This is non-GAAP. I say it's non-GAAP because if you look at the cash flows of $3.325 million and $1.4 million of interest expense, and you look at that January through December, boy, that's a lot of income. Matter of fact, it's approximately $22 million of income on the current securitization, but we don't treat it that way, that excess cash flow is going in to pay down the senior bonds, and we're fair valuing the instrument at a 14% yield net of the 3% charge-offs. By the way, if the charge-offs are coming in at a bigger number, we're going to make the adjustment. We're going to make the adjustment on the valuation of the equity certificates either up or down. And the third parties looking at this are going to make those comments. And our external audit firm, RSM, is going to be looking at it. But you could see by these cash flows, there's tremendous value in this business opportunity. And these are not short-term loans. These loans have call protection with a nice wide spread with really strong credits. So I would say to most bankers in the room, if you had a debt service coverage ratio greater than 2 to 1 and you had an LTV of 50%, isn't that a pretty good loan? So maybe you would allow the business. Maybe I'm creating new competitors in the market. I wish you all good luck and a lot of success doing this. It's extremely painful. But the point is, long-term amortizing loans with no balloons make a lot of sense with personal guarantees and liens on personal and business assets. This is just stuff that we've learned over 20 years of doing this business. A distribution channel is set up to do this. We also have an SBA and securitization track record. So we're able to get the funding to be able to do this at the holding company level. We have investors that keep lining up to buy our bonds on a regular basis. Hopefully, I'm not jinxing our transaction for next week, but we're in pretty good shape. Eric, you want to ask a question? So that's a real number that we've said on calls. And I don't know if it's actually written into the Ks and Qs, but it's a number that I've said in transcripts. It could go to 13 or 12. It could go to 16. It will change based upon the market clearing yield for cost of capital and what's going on in the markets. I mean, when we go to an ABS conference, we typically have 32 meetings in two days. So these are yields that institutional investors subscribe to, whether that's in CLO equity or equity in any part of the ABS market. So we're not making it up. I'm not saying that there's a locked market at 14 or that it shouldn't be 13 and three quarters or 14 and a quarter. But this is the number that we believe is correct. We're comfortable with it. and we actually think that there is an element of conservatism to the mark, particularly given how the cash flows will gravitate so that the book value will achieve the fair value in a reasonable period of time. Right. So you didn't do gain on sale, right? Or you didn't have gain on sale, but instead, you just recognize the cash flow. What would be the yield based on the cost? And in other words, how much of the relative to the cost of creating the residual are you marking it up when it goes into when you do the securitization at that point? So I think the question is, and I get asked this occasionally, would you consider, for example, using CECL for this business? We'll consider anything. This is currently how we do it. I don't see us changing in the near term. We might. We have the ability to make that change. But we think this is clearly consistent with doing securitizations and putting the valuation on the residual. At the end of the day, Ron, at 570 basis points of spread income net of an expected loss, it's a pretty attractive asset. And we mark it as such. And every single quarter, by the way, if it was done in the converse, you'd still have the same quarterly valuation of marking it and figuring out what the loss is. It really isn't any different than the other way of doing the business. Now, one might say, is it really recurring income? Matter of fact, I remember being at a B. Riley conference, and I had an investor say to me, "Oh my God, you're going to have a huge hole in the business next quarter if you don't originate any loans." And my comment was, "Well, gee, if Apple doesn't sell any cell phones next quarter, they're not going to make any money either." So part of this is our business model is to make loans and sell them. We're in the return on equity and return on asset business. We'll continue to do this. By the way, the SoFis of the world and the LendingClubs of the world that are doing this, they're trading at pretty hefty market multiples. And the market seems to be comfortable with them. So that's my answer to your question. Thanks. Chris. Chris Nolan, Ladenburg Thalmann. And first of all, I want to thank you all for this great show, great presentation, all the details, and appreciate hearing from the different management teams. Two-part question. One, the first part is for the securitizations, do the regulators, bank regulators, require you to put more capital against the loans you're going to securitize as opposed to loans that you don't securitize, or it's no difference? I think that when you look at the equity certificate, there's certain capitalization levels, whether it's held at the bank holding company or we haven't done a securitization out of the bank. It is part of our original application. So it's not that we can't do it. It's totally permissible activity. And provided it made sense from a match funding standpoint, we would do it. But there's capitalization requirements for ownership certificates in a securitization that we obviously would follow. Second question. Given everything you said, the attractive spreads and so forth, is a commercial bank the best vehicle for this? The commercial bank is the best vehicle for Newtek because of the NewtekOne platform, the Newtek Advantage. And by owning a federally chartered institution, we've been able to diversify our financing in the 7(a) and 504 business, which is currently done in the bank. And we're actually able to offer the clients a platform of moving money, which they typically do three to five times a week, 12 to 20 times a month. So the question was a great question. And one of the things we're trying to get across today is please don't value us as a lender. That's probably a mistake. Although the money gets the honey, okay? We get a lot of people coming to us because they're interested in using our organization for growth capital. A lot of businesses come to us to get a 10-25-year amortizing loan, but they don't qualify. The best thing that they could do, open up a bank account, process payroll with us, do electronic payment processing so we could charge your sales on a regular basis, make sure that your business is insured and you don't have cancellations on your insurance policy. We are very happy being a bank holding company, owning a bank. We just don't wish to be looked at like a community bank. We like to look at a company that provides business and financial solutions and is really able to help customers and have multiple streams of revenue and recurring income that are incredibly valuable. Also importantly, we are an organization that knows how to manage risk. Thank you. Barry, do you want to move into Q&A? Yeah, let's go right into Q&A. That's great. Thank you. Okay. For those on the webcast, remember you can use that chat box at the top right of the website. I'll go ahead and pass the mic to Crispin Love. Thank you. Crispin Love, Piper Sandler. Barry, I know you want to keep talking about the fair value, so I got one there. Can you just talk a little bit about it? I'm only going to talk about fair value if you ask me a CECL question. I want to do the yin and the yang. Okay. I'll ask you both, and then. Thank you. So first on the fair value mark, how they're impacting the 26 guide, can you just talk a little bit what's implied there for net gains on residuals and securitizations, and then net gains under the fair value option as you look at the total non-interest income or the, what's it, that $330 million in total revenue that you're expecting? I would say you're probably a lot of it depends upon whether we do the ALP business out of joint venture or whether we put it on our books. I would probably say a third might be based on the alternative loan program, but that's conservative and that's subject to change. Okay. Okay. That makes sense. And then because you asked on CECL, if you did carry the ALP loans at cost, like a lot of other balance sheet lenders out there, a lot of banks, and then accrued a loan loss provision consistent with CEC, how would that impact the 26 guide? We'd probably make you very happy because it would fit your model like that. And you'd be looking at the interest income and you'd be forecasting it and you'd see this net interest income line just doing great. And my ROAA and my ROTCE would probably go down. So the CECL reserve probably would be consistent with what we think is a cumulative 3% historical charge-off. So you'd probably put maybe two and change upfront or something of that nature. We get 3.5 points of origination fee. But then you'd have this huge spread income and you'd be clipping coupon and everybody that buys community banks would get all excited. And who knows, maybe we'd get a better valuation than where we currently are. I mean, the reality of this is, and I'm just making a comment, this is not rocket science. This is easy for all of you to figure out. And you could take a position, you think it's aggressive or not. But we've made a lot of changes. This is not one that I particularly see us making in the near term. I think we're just going to continue to do what we're doing, make a lot of money, and we keep originating these loans and doing these deals. We'll be just fine. And could you ever put the ALP business in the bank? And if not, why not? We certainly could because the loans are OCC eligible. They're C&I loans and they're underwritten to federal standards based upon the OCC model for a C&I loan. I would ask the bankers in the audience a question. If you could make a C&I loan that had a 50% LTV, over two-to-one debt service coverage ratio with a personal guarantee, and you got hard collateral against it, they'd be lined up around the block. The important part, in my view, is the asset liability match it through a securitization. So I'm trying to keep this thing as simple as possible for as long as I can before I make another change. But right now, we're doing just fine. It all works. It all works. I appreciate the question, and thank you for this. I was almost going to pass the baton to Frank, but I figured I can answer that one. Hey, Barry. Steve Moss. Hey, Steve. Raymond James. A couple of questions. Maybe one just starting with a three-year anniversary. What changes could we see going forward here now that you've hit the three-year anniversary with the business model, if any? Yeah. I think that from a holding company consolidated basis, I don't see any product changes. I think it's really a lot of, which is thank God. Oh my God, the stress to get the policies and procedures, the software, the compliance, and the rigors of running a bank, in addition to turnover. We've had turnover. I've talked about this on calls. So no, we're really excited about just coming in every day and doing the blocking and tackling. So I don't see any major changes. I will tell you, we do plan on using the bank balance sheet more, particularly diversification. I think about 46% of the bank's balance sheet is in uninsured participations in SBA loans. I think we'd like to get that number down as a percentage, and I think we have ways to do that that are quite interesting. Particularly, we talk about the triple play, the lines of credit, things of that nature, so we feel pretty good about everything that we've got in place, and it's really a lot of blocking and tackling. Okay. Appreciate that color, and then the other thing you mentioned here was with the ALP loans, they typically, I think, you expect them to pay off after about 48 months, if I recall you saying that correctly. So just kind of curious, what's the catalyst that drives that typically for our customer because loans are much longer in terms of permissible life? Yeah, so it's a good question. So if you look at the 2022 deal, which was primarily created by 2018, 2019 originations, then we had COVID. So the world stopped. And we put probably a couple of 2021 originations in there as well. When the loans hit what we perceived as the fourth and fifth-year anniversary, most of them were gone. Now, we were able to take some of them and roll them into this new deal. So that was helpful. But the driver is that they're performing. If you think of the life cycle of a small and medium-sized business owner, many of them sell their businesses. They'll sell the real estate after that period of time too. So there is a tail, but a good chunk of them do tend to go. But the biggest advantage is the flexibility. If you ever dealt with a business owner who complains about a bank, these are the common complaints. Oh, I got to give them regular monthly financials. Oh, I got to give them regular quarterly financials. Oh, they're all over me because I'm tripping a covenant. I mean, they just don't like the oversight due to typical and traditional bank covenants. So for entrepreneurs that are not afraid to PG, have strong guarantees, this gives them a lot of flexibility. They will pay the higher rate because on the AM schedule, because they're not repaying the principals, you're basically giving them equity as well as being able to distribute more freely. A lot of them don't understand, well, why can't I distribute my own money? No, you got to keep half of it if you get a good loan in the bank. So you give them that flexibility. We're because we have the collateral. So it works well from a credit standpoint. It's a different way of looking at credit. Thank you. Hi, everyone. This is Emily Lee stepping in for Tim Switzer at KBW. Thanks for taking my question. So for modeling purposes, what kind of assumptions should we make for the fair value mark upon origination for an ALP loan? I think at the end of Q3, the cumulative mark up on the portfolio was about 9%. And it was super helpful to see all the income statement mechanics laid out. But what would be the net impact to earnings on the day that it goes into the securitization? Is it generally neutral overall or a positive impact because you get the servicing gain? I think what you're going to see going forward is really just valuation on the residual. So we're going to try to eliminate some of that noise in the interim period. So it's really just, are you comfortable valuing the equity certificate in the asset class? Understood. Thank you. And then kind of on the guide, what kind of deposit and loan growth assumptions are embedded within the 2026 guide? I think they're pretty modest, to be frank with you. That's always a fun conversation. I've got the public guidance, and then I've got the stretch goals that I'd like to have the management do and holding people accountable and all that other kinds of stuff. So they're pretty modest, I think, particularly on the deposit side relative to cost of funds reduction. What do we have about? We have like 50 basis points, Frank? Well, that's really sick. Right. So we've improved about 50 basis points this year. So it's a fair disclosure conversation, so that's okay. I don't think we're there next year. I think we're probably a quarter, maybe. And so we've probably dropped our cost of funds by about a quarter. I think that's conservative. But I also believe that banks are not going to be able to drop their rates as easily as they think they would. I think that's going to be fairly sticky. I think that's going to be a surprise. We are rate agnostic, with the exception of the fact lower rates are better for our legacy portfolio and our borrowers from a credit standpoint. But apart from that, we are fairly well asset liability matched. Very helpful. Thank you. And then if I could do one more, do you have any updated thoughts on capital deployment and the decision between dividends and repurchases? No major changes. I think we're in pretty good shape with respect to our capital position, particularly with the securitization coming up, which will free up a lot of liquidity. We did obviously a lot of capital raises and substantially improved our capital base in the second half of this year. This is a tricky one. Obviously, the dividends are only approved by the board. I don't think it's likely you'll see much of the dividend change, but that's subject to change every single quarter. I think we'll stick there. That dividend was set with the stock price significantly higher, and now it's at a level that's just like, wow, and relative to repurchase, we made an announcement. We bought some stock back. I think you'll continue to see us take advantage of that opportunity. We're still trading below, I believe, what is tangible book, where we perceive tangible book going. So yeah, I do think we'll continue. We have an authorization to do that. Blackout period goes away shortly. Time flies pretty quickly. So yeah, I think we'll continue to opportunistically take advantage of the authorization we have. Okay. Great. Thank you, everyone. Thank you. One here from Andrew. Hey, guys. Andrew Scott from Roth and maybe an Andrew for Andrew question. But as you kind of grow, you're looking to grow business deposits, telling clients the advantage of putting their money in Newtek through the Newtek Advantage. Kind of what has resonated with clients so far, maybe friction points that you didn't expect on client feedback, and kind of how is the account opening to deposits in the account conversion rate going, do you think, in your opinion? So what resonates is these. The bank account essentially comes with the loan today. So does the merchant account. So that's there. What we are working on and improving, where I think you'll see lift in the organization, is improving utilization. So today, we don't necessarily say you've got to close your old account, but we need to keep tantalizing folks to bring them into the advantage, be interested in the other solutions that we have to offer. We don't look at this as cross-selling. In fact, we find that phrase to be repugnant. It's not cross-selling. It's not bundling. It's a financial ecosystem. And the more that we introduce customers to that convenience, the more folks become frustrated with their existing depositories, and the more opportunities we have to do one more thing with folks. And that's really what we are marketing heavily at this point. We see the level of engagement picking up, which will create stickier deposits, greater deposits, and greater adoption of the other solutions. All right. I'm going to, Barry, I'm going to ask a question from the webcast and then walk over to Hal and give him the mic. So the question here is, Newtek has a compelling 7A business where loss rates are more than offset by very compelling loan yields. As we look forward, what do you think a good expectation for lifetime default and severity rates might be for 7A? Maybe that's repeat too. Yeah. Historically, we have estimated that the cumulative lifetime charge-off rate or loss rate is about 8% over time. Now, mind you, these are long-term amortizing loans, so that typically gets spread out over time, and there's loss curves on this with humps. Therefore, our CECL reserve is about that's the latest between 6.25%-6.5% present value, but that'll obviously be affected over time with fair value. Price, I'm not sure I see that changing dramatically. I see that it's sticking. I don't see that. I certainly don't see it getting worse. I don't see it getting better. And I will point out that 2021, 2022, and 2023 vintage years in an SBA floating rate loan program, that was the great financial crisis for small and medium-sized businesses. I want to repeat that. The great financial crisis for SMBs was 2021, 2022, 2023. Why? Well, if your rates went up by 3%-5%, your debt payment almost doubled. Put aside the fact that the cost of labor went up, the cost to insure went up, every expense went up. And really, although you could say the economy was good, it wasn't particularly robust. So that the NSBF portfolio, which lost $28.5 million in 2024, is anticipated to lose materially less. I don't want to preempt our call coming up. Then even in 2020, I'm sorry, in 2025, is expected to lose materially less. You could figure it out from the first three quarters. We'll be less next year because that portfolio is burned down. It's a diminishing portfolio. It also has a capitalization of about $200 million, which we would really like to free up. Okay? It's in loans. Okay? But as that pays off and goes away, it turns into cash and has a tremendous amount of usefulness for a lot of lovely things. We look forward to that portfolio continuing to pay off, returning capital back to the holding company, and going from there. How? Yeah. My question relates to slide 18. Does the Newtek Advantage design for deployment by banks and credit unions seeking to modernize their experiences for their clients? Is this something like a platform as a service that you're offering to banks? And could you expand on it a little more? Have you got some banks and credit unions in pilot or explain more on that? Thank you. Yeah. This is an interesting one. So we go to banks and credit unions and make offers to them to help them raise deposits and make loans under the program. So you could say, well, why would you do that? Well, we'll be the payroll provider. We'll be the merchant processor. Or in the lender service provider, they'll pay us a fee to maybe service the loans or to do the kickouts. I will tell you, this is not an easy sale because you've got to cut through. Why am I letting the fox in the henhouse? I will tell you, we've done business with partners like UBS, Morgan Stanley, Raymond James forever, and we do not take their deposits. We don't take their customers. The NewTracker system gives a great audit trail for that. So this program is a great program for depositories to partner with us. It's available, and we've had some that are taking advantage of it, but it's at very early stages. Thank you. If I have one follow-up on that last comment you made about maybe the SMBs from 2020 to 2023 was kind of their great financial crisis, I don't think that view is widely understood. No, and maybe that was. We understand it. Yeah. Yeah. But maybe that was papered over with a lot of PPP loans that helped out quite a bit. But for 2026, 2027, based on what you're seeing now, can you give us maybe a macro outlook that you're seeing right now based on. Praise the Lord, their cost of funds is down about 1.25% to 1.5%. That's helpful. Inflation, although it's still positive, the rate of growth is slower. It's methodical. It's not spiking up in their face. There's a lot of slack in the business. Some of the businesses are having problems with employees and employment, particularly with losing undocumented workers. But I mean, from Q2 to Q3, and I've indicated and will announce it Q3 to Q4, the portfolio has stabilized to improve in NPLs, both in percentages and in absolute dollar amounts. So we are seeing less stress on that portfolio. I think that's an important announcement. I'm sure my chief legal officer will be mad I had said that comment, but this is what my belief is at this point in time. Frank's sweating bullets, and so is Pete. Waiting for the text. Okay. How many? Any else? Thank you very much. Ivan? Yes. Ivan Jimenez, Greenholder Corporation. My question relates to the future as assets are held, particularly there was a cursory mention to digital assets. I'd like to know what I would think the company, the Newtek, would be well-positioned to take advantage of the Genius Act and, let's say, the transition towards alternative and digital assets, particularly stablecoins. So if you could, someone can highlight. There's a cursory mention, but if you could highlight more as to how that could apply to the digital platform of Newtek. Sure. I'll try to differentiate between Bitcoin and I'll call stablecoin. We don't have any interest in Bitcoin. It's stored value. It's not transactional. It's not a currency. We have nothing to do with Bitcoin. Stablecoin is something that has utility. We do plan on having it on the menu. We have a partner that we'll be using. We're not going to be spending ungodly amounts of money creating our own stablecoin, nor are we initially, and maybe forever, going to use stablecoin to gather deposits. Andrew has tremendous experience. He created a stablecoin at Flagstar Bank near Community Bank. Frank also very familiar with it from Signature Bank as well. So we've seen what's good about it and what can possibly be problematic. The value of stablecoin and putting it on the menu is that, personally, for international businesses, it's great. You get rid of the currency risk, and you're able to move money with some level of immediacy, so it's valuable. Two, for businesses that do business on Saturday and Sunday, and for whatever reason, they want to see the asset versus waiting for their Visa or Mastercard to batch out or in the middle of the night, we believe we have customers that would like to have it as a choice. What does it mean? It means their customers are going to have to get an app. The customers are going to have to use the app. So for B2B, it's a lot easier. In other words, if I'm a business and I'm constantly paying this party and it's international, it's not a big deal to use the app. You pay with the app. You get rid of the currency risk. It hits. And then the business easily has the ability to turn that into cash at a finger snap, and they're not waiting, and they're not transferring, and they're getting paid a rate on their money. So there is application there. Our goal, as a provider of the best solutions in the Newtek Advantage, you can move money through credit card, debit card. By the way, we have our own debit card with big interchange because we're not a $10 billion bank. So the utilization of that debit card, which should be a line item and should be something we really push to get utilization, should be valuable to us. ACH and wire, invaluable. So if you're a business, don't you want to go to one place and see every place where you're sending money and receiving money and then get analytics for that as well? The answer is yes. You don't really want to go to three or four places. You don't want to go to Fiserv or your merchant processor. Go to your bank, and then you want to go to one place and see it all. Therein lies the Newtek Advantage. And also, in terms of sending and moving money, it's payroll. It's payroll. You want to be able to have payroll. You want to see your merchant batches in the Advantage. You want to be able to see your ACHs, your wires, all in one place, and be able to get analytics and have it integrate. Today, only QuickBooks, but down the road, it'll be other accounting packages as well. Howdy, everyone. Guys, I just want to thank you guys for doing this. I think it's extremely helpful. Chris Lahiji, LD Micro. Two questions. First, can you, Barry, give us kind of a little bit of color on how the appetite for M&A has changed for Newtek year over year? And then my second question is, do we really have a publicly traded comp that you guys kind of use as a North Star or a guiding light? Thank you, Chris. So first question, relative to the M&A market, it's off the charts. I mean, the bankers that we work closely with that specialize in M&A for banks, they haven't been calling me lately just because their phones are ringing off the hook. Okay? So I mean, they're all lined up to do deals. Everyone's buying, and a lot of people are selling. And by the way, parties that weren't interested in owning a bank, for the obvious reasons, are now interested in owning a bank. The value of an OCC chartered franchise has just gone up through the roof. That's a good thing for us. Secondly, comps. There isn't one. The best comps, I believe, are some of the ones I mentioned: the LendingClubs, the SoFis, Enova/Grasshopper, technology-enabled banks. Some people compare us to Live Oak. The only thing that's consistent between us and Live Oak is we both have a government-guaranteed loan program that we're good at. But apart from that, they don't acquire customers the way we do. By the way, they do an amazing job in creating technology and spinning it off for huge sales and gain on sale. Everyone's happy about that, but God forbid you put a fair value on an ownership interest and like, "Oh, what is this?" But if you sell a business, and I don't blame it. It's a cash sale. I get it. But I think the point is Live Oak is probably not a great comparison of ours. Matter of fact, if you look at their ROAs, ROTCEs, they're just different. By the way, I wish I had their market multiple. So I appreciate the question, but we're going to get there. Steve, another one for you. Thanks, Bryce. So Barry, just maybe following up on SBA originations, your guidance is essentially flat year over year for originations. I noticed you made the comment about shrinking it as a percentage of your balance sheet in future periods. Just kind of curious here, rates have come down, as you mentioned, better economic setup for borrowers. Kind of normally I would think of you maybe originating more in 2026, but maybe is it a change in some of the SBA rules or maybe a change in some of your underwriting just to tighten the box? I noticed the number of originations or daily referrals is at 600. I think it was 800 before. Is there a little bit of change maybe underneath that we should be thinking about with regard to your SBA originations? Yeah. And Steve, I appreciate the question. I think what you will see at the end of January is clearly diminished volume in 7A. Now, we've confirmed our guidance. We're going to deliver the earnings numbers. Part of that is the government shutdown. This was the longest government shutdown in history. Part of it is the SBA regs changed, and they changed in a bigger way than I thought they would have when I got asked this question in July or August. Some of the issues are how the SBA actually does their business. They're now doing their own OFAC and CAIVRS checks, which might be different than how we do them. And then you get discrepancies, and you can't make them go away, even though they may or may not be wrong. In addition to the issue of making sure that every owner, even a 1% owner, has to be a U.S. citizen. That showed up in a more prevalent manner than we would have thought or anticipated, in addition to not being able to utilize an SBA loan to refinance a merchant cash advance. So these things have been problematic. We also have tightened up our credit score guidelines somewhat. And from my perspective, as long as we can satisfy the customer, and the one thing I'm working with Pete for 22 or 23 years, I've never had to worry about him pushing loans out to make numbers. It's not a good thing. It's not what we want to do. It's why we've been around for 22 or 23 years. So you will see diminished 7A loan closures for this year. The projection for next year, we've made a few changes that I think, due to the technology, due to new alliance partners coming on, because that stuff is constantly coming and going. So Steve, for example, if you previously had an alliance partner that was doing business in the categories that you can't do it anymore, all of a sudden, those referrals come down. So it's always coming and going. We're always shifting and making changes in the business. We have a couple of monsters that we're talking to that could be a game changer for all aspects of our business, and we think we feel pretty good about where we are. I mean, the one thing I'm not overly concerned about, at the current market multiple, anything with a two handle is a pretty good EPS. So the key here, keep the car going, keep it on the tracks, don't make bad loans. That's what we've been doing. That's what we've been doing over 25 years, so. But I do think that the dominance of the 7(a) business, it's less and less important to us. It's still important. I'm not throwing the baby out with the bathwater. We're really good in the business, and we're going to continue to be good. We just want to continue to do it at the high level that we've done it over two decades. Barry, there's one more here from the webcast we're at. About 3:10. I don't know if you want to take one. Yeah, let's take one more, and then we'll call it a day. It's similar to Emily's question, but it's around capital allocation and how the board thinks about retaining capital internally, buybacks, dividends. How do you all think about that at the board level? I think the board, obviously, and we meet frequently. My directors earn their fee. They'll probably now be asking me for an increase. But it's pretty hard. I mean, in the past, I would basically say, "I'm paying these people for this." But no, no, they earn it. And I speak to them very frequently, pretty much every weekend on an off basis. Not all of them, but a good chunk of them, and I think that they're cognizant of all the stakeholders: the creditors, the employees, and the shareholders. They're constantly paying attention to that. Obviously, from a stock price, this has been somewhat painful. We're not necessarily the most popular people at a cocktail party when your stock is down. But on the other hand, they've looked at the business performance and opening up depository accounts, making loans, not having any surprises with our regulators from the standpoint of what our expected provisions and charge-offs, so they're extraordinarily pleased. Relative to the concept of, I'm just going to make this, whether you're paying a dividend or buying shares back, that's financial engineering. I mean, if you can buy stock back below your tangible book, it clearly always makes sense. If you can pay a nice dividend, that's really important because if the stock price goes down, people are being rewarded for waiting. So we don't see those things dramatically changing. I think that the most important thing that shareholders can focus on is this a business that I now understand that's got tremendous technological advantages over its competitors in the space. I have a greater appreciation for what they're doing and the accounting and the cash flows. It's a company that's been around for 25, 26 years. There's tremendous insider participation and ownership. That's not changing. It's never changed. And they're good risk managers. So not to say that it could never happen, but the likelihood of us blowing up after doing this for such a period of time and being very, very clearly invested in the business ourselves is less likely than a management team that's typical at our competitors that doesn't have the ownership mentality. So we're very appreciative of everyone attending. We had great attendance here today. People tuning in and really listening. We're not going to hide from the fact that we are not simple. We don't fit the mold, and we are more complicated. On the other hand, all this stuff makes a lot of sense. We're all invested in this. I could tell you there's nobody on this front four here that doesn't work 70-plus hours a week, that gets emails in the middle of the night from some strange person, and works very hard for the purpose of creating a successful business. If you create a successful business and you do right things for the customer, everything follows through. So I can't thank everybody enough for traveling and attending today and also being very appreciative of the patience as well. Thank you. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Speaker 5: Excellent. Thank you, Jonathan. I wanted to welcome all of you here in Boca Raton, and then those that have joined via the webcast. My name's Bryce Rowe, if you haven't met me. Investor Relations here for NewtekOne. We're very excited to be here today for the Investor Day. Wanted to make a few introductory remarks, and then turn it over to Barry. So today's presenters here for NewtekOne, we've got Barry Sloane, Chairman, CEO, and President. Frank DeMaria, EVP and Chief Financial Officer. We have Peter Downs, who is President of Newtek Bank, N.A., and then Andrew Kaplan, Chief Strategy Officer. Definitely don't want to steal their thunder, but we'll run quickly through some of the logistics for the event. Excellent. excellent Thank you, Jonathan. thank you jonathan I wanted to welcome all of you here in Boca Raton, and then those that have joined via the webcast. i wanted to welcome all of you here in boca raton and then those that have joined via the webcast My name's Bryce Rowe, if you haven't met me. my name's bryce rowe if you haven't met me Investor Relations here for NewtekOne. investor relations here for newtekone We're very excited to be here today for the Investor Day. we're very excited to be here today for the investor day Wanted to make a few introductory remarks, and then turn it over to Barry. wanted to make a few introductory remarks and then turn it over to barry So today's presenters here for NewtekOne, we've got Barry Sloane, Chairman, CEO, and President. so today's presenters here for newtekone we've got barry sloane chairman ceo and president Frank DeMaria, EVP and Chief Financial Officer. frank demaria evp and chief financial officer We have Peter Downs, who is President of Newtek Bank, N.A., and then Andrew Kaplan, Chief Strategy Officer. we have peter downs who is president of newtek bank n.a and then andrew kaplan chief strategy officer Definitely don't want to steal their thunder, but we'll run quickly through some of the logistics for the event. definitely don't want to steal their thunder but we'll run quickly through some of the logistics for the event Barry and Frank are going to start with a financial presentation, including a discussion of the 2026 forecast. Andrew will then cover the Newtek Advantage. Peter will then talk about Newtek's technological advantage and how we're using AI. Then we'll go back to Frank and Barry to dive into the ALP securitizations before Barry makes some concluding remarks, and we move to Q&A. As far as Q&A, for those of you here in the room, you're going to have the ability to ask questions. I just ask that you raise your hand. I've got another microphone over there, and that will give those on the webcast the benefit of hearing the question as well. Those of you on the webcast, there is a chat box at the top right corner of that website. Barry and Frank are going to start with a financial presentation, including a discussion of the 2026 forecast. barry and frank are going to start with a financial presentation including a discussion of the 2026 forecast Andrew will then cover the Newtek Advantage. andrew will then cover the newtek advantage Peter will then talk about Newtek's technological advantage and how we're using AI. peter will then talk about newtek's technological advantage and how we're using ai Then we'll go back to Frank and Barry to dive into the ALP securitizations before Barry makes some concluding remarks, and we move to Q&A. then we'll go back to frank and barry to dive into the alp securitizations before barry makes some concluding remarks and we move to q&a As far as Q&A, for those of you here in the room, you're going to have the ability to ask questions. as far as q&a for those of you here in the room you're going to have the ability to ask questions I just ask that you raise your hand. i just ask that you raise your hand I've got another microphone over there, and that will give those on the webcast the benefit of hearing the question as well. i've got another microphone over there and that will give those on the webcast the benefit of hearing the question as well Those of you on the webcast, there is a chat box at the top right corner of that website. those of you on the webcast there is a chat box at the top right corner of that website You can input questions there, and I'll be monitoring that and can ask those questions for you. That should really cover the logistics. Before I turn it over to Barry, I do want to note slide two in the presentation. That covers some forward-looking statements, and those forward-looking statements could be made during the presentation, so just be aware of those. With that, I will turn it over to Barry. You can input questions there, and I'll be monitoring that and can ask those questions for you. you can input questions there and i'll be monitoring that and can ask those questions for you That should really cover the logistics. that should really cover the logistics Before I turn it over to Barry, I do want to note slide two in the presentation. before i turn it over to barry i do want to note slide two in the presentation That covers some forward-looking statements, and those forward-looking statements could be made during the presentation, so just be aware of those. that covers some forward-looking statements and those forward-looking statements could be made during the presentation so just be aware of those With that, I will turn it over to Barry. with that i will turn it over to barry

Speaker 6: Thank you, everyone. Appreciate you all attending our Investor Day presentation and conference. Obviously, the purpose of doing this today is to really give a better explanation of our organization, what we're about, what the company stands for, and also to give greater exposure to a great management team that I have here between Frank, Peter, and Andrew. For those of you that aren't familiar, the company was founded in 1998 out of a spare bedroom in a New York City apartment, 120 West 18th Street, Apartment 4B. When you go forward to slide number four, Frank, if you could help me with that. Newtek's mission hasn't changed since the company was formed in 1998. Thank you, everyone. thank you everyone Appreciate you all attending our Investor Day presentation and conference. appreciate you all attending our investor day presentation and conference Obviously, the purpose of doing this today is to really give a better explanation of our organization, what we're about, what the company stands for, and also to give greater exposure to a great management team that I have here between Frank, Peter, and Andrew. obviously the purpose of doing this today is to really give a better explanation of our organization what we're about what the company stands for and also to give greater exposure to a great management team that i have here between frank peter and andrew For those of you that aren't familiar, the company was founded in 1998 out of a spare bedroom in a New York City apartment, 120 West 18th Street, Apartment 4B. for those of you that aren't familiar the company was founded in 1998 out of a spare bedroom in a new york city apartment 120 west 18th street apartment 4b When you go forward to slide number four, Frank, if you could help me with that. when you go forward to slide number four frank if you could help me with that Newtek's mission hasn't changed since the company was formed in 1998. newtek's mission hasn't changed since the company was formed in 1998 I think what's important, particularly as you understand the culture and the DNA of the organization, is the goal of our organization is to build a company that provides business and financial solutions to independent business owners. So we're all about building a company and a business first. Those of you who have followed the long and winding road over 27 years, 25 as a public company, we have taken different forms. We started off as a '33 Act company. We switched to a BDC when it became relevant to do so to grow the business. And then recently, and we are celebrating our three-year anniversary of owning and operating an OCC-chartered bank. I think what's important, particularly as you understand the culture and the DNA of the organization, is the goal of our organization is to build a company that provides business and financial solutions to independent business owners. i think what's important particularly as you understand the culture and the dna of the organization is the goal of our organization is to build a company that provides business and financial solutions to independent business owners So we're all about building a company and a business first. so we're all about building a company and a business first Those of you who have followed the long and winding road over 27 years, 25 as a public company, we have taken different forms. those of you who have followed the long and winding road over 27 years 25 as a public company we have taken different forms We started off as a '33 Act company. we started off as a '33 act company We switched to a BDC when it became relevant to do so to grow the business. we switched to a bdc when it became relevant to do so to grow the business And then recently, and we are celebrating our three-year anniversary of owning and operating an OCC-chartered bank. and then recently and we are celebrating our three-year anniversary of owning and operating an occ-chartered bank But all in all, the important aspect of it is our goal to make our clients more successful has been the primary driver to what really runs this company each and every day. I think it's also important that we've developed a brand. And when I say that, when customers do business with Newtek and they get a 10-25-year amortizing loan, they go, "You know what? That's a real good loan." Sounds like they borrowed $100,000, paid $140,000 back at the end of the year, and said, "Now, what did I do? And who did I do that with? And is there value?" We're creating a real brand. And when people ask me many times, "Why did you buy a bank?" The simple answer, and I keep repeating myself, and maybe more and more people over time will pay attention. But all in all, the important aspect of it is our goal to make our clients more successful has been the primary driver to what really runs this company each and every day. but all in all the important aspect of it is our goal to make our clients more successful has been the primary driver to what really runs this company each and every day I think it's also important that we've developed a brand. i think it's also important that we've developed a brand And when I say that, when customers do business with Newtek and they get a 10-25-year amortizing loan, they go, "You know what? and when i say that when customers do business with newtek and they get a 10-25-year amortizing loan they go "you know what That's a real good loan." Sounds like they borrowed $100,000, paid $140,000 back at the end of the year, and said, "Now, what did I do? that's a real good loan." sounds like they borrowed $100,000 paid $140,000 back at the end of the year and said "now what did i do And who did I do that with? and who did i do that with And is there value?" We're creating a real brand. and is there value?" we're creating a real brand And when people ask me many times, "Why did you buy a bank?" The simple answer, and I keep repeating myself, and maybe more and more people over time will pay attention. and when people ask me many times "why did you buy a bank?" the simple answer and i keep repeating myself and maybe more and more people over time will pay attention I do believe after today, after Peter speaks, Andrew speaks, and Frank speaks, you'll have a better understanding of why we exist, how we help our customers, and why there's really a brand to be built here that is currently built, and that this is a very scalable operation using the technology of which many of you are not familiar with, including artificial intelligence we have used across the different areas of gathering deposit and making loans. Let's go to slide five. So from a technical standpoint, we're a technology-enabled Financial Holding Company regulated by the Fed. In January of 2023, obviously, I mentioned we're celebrating our three-year anniversary of acquiring Newtek Bank and OCC Chartered Bank. I do believe after today, after Peter speaks, Andrew speaks, and Frank speaks, you'll have a better understanding of why we exist, how we help our customers, and why there's really a brand to be built here that is currently built, and that this is a very scalable operation using the technology of which many of you are not familiar with, including artificial intelligence we have used across the different areas of gathering deposit and making loans. i do believe after today after peter speaks andrew speaks and frank speaks you'll have a better understanding of why we exist how we help our customers and why there's really a brand to be built here that is currently built and that this is a very scalable operation using the technology of which many of you are not familiar with including artificial intelligence we have used across the different areas of gathering deposit and making loans Let's go to slide five. let's go to slide five So from a technical standpoint, we're a technology-enabled Financial Holding Company regulated by the Fed. so from a technical standpoint we're a technology-enabled financial holding company regulated by the fed In January of 2023, obviously, I mentioned we're celebrating our three-year anniversary of acquiring Newtek Bank and OCC Chartered Bank. in january of 2023 obviously i mentioned we're celebrating our three-year anniversary of acquiring newtek bank and occ chartered bank Within its five core verticals, we're able to offer to customers depository solutions through banking, making really attractive business loans that are extremely useful to their business growth, payment processing solutions, payroll, and insurance agency. Most importantly, we support independent business owners approximately 80,000 across the United States with one or more of our services. Also important to note, and we'll spend a lot of time on this today, we use proprietary and patented advanced technological solutions to acquire customers cost-effectively. It's extremely important. Importantly, to offer treasury management services through the Newtek Advantage. One of the things that I think is totally misunderstood, I say this sort of tongue-in-cheek, if you want to insult me, say we're an SBA lender. "Oh, yeah, Newtek, I know they're an SBA lender." Within its five core verticals, we're able to offer to customers depository solutions through banking, making really attractive business loans that are extremely useful to their business growth, payment processing solutions, payroll, and insurance agency. within its five core verticals we're able to offer to customers depository solutions through banking making really attractive business loans that are extremely useful to their business growth payment processing solutions payroll and insurance agency Most importantly, we support independent business owners approximately 80,000 across the United States with one or more of our services. most importantly we support independent business owners approximately 80,000 across the united states with one or more of our services Also important to note, and we'll spend a lot of time on this today, we use proprietary and patented advanced technological solutions to acquire customers cost-effectively. also important to note and we'll spend a lot of time on this today we use proprietary and patented advanced technological solutions to acquire customers cost-effectively It's extremely important. it's extremely important Importantly, to offer treasury management services through the Newtek Advantage. importantly to offer treasury management services through the newtek advantage One of the things that I think is totally misunderstood, I say this sort of tongue-in-cheek, if you want to insult me, say we're an SBA lender. "Oh, yeah, Newtek, I know they're an SBA lender." one of the things that i think is totally misunderstood i say this sort of tongue-in-cheek if you want to insult me say we're an sba lender "oh yeah newtek i know they're an sba lender." We are so much more than an SBA lender. It's not funny. Once again, one of the purposes of having this discussion today is to demonstrate all the things that we do for businesses. What I can tell you is the customer base moves money every single day, and we talk about the customer base. We're not talking about consumers. We're not talking about Fortune 1000. We're talking about independent business owners that are identified as approximately 36 million businesses in the United States that have two employees to 2,000, and about $50,000 to a couple hundred thousand a month to $50 million of annualized sales or annualized revenues. I think it's important that when you look at our organization, we have patents on our technology, particularly NewTracker. We are so much more than an SBA lender. we are so much more than an sba lender It's not funny. it's not funny Once again, one of the purposes of having this discussion today is to demonstrate all the things that we do for businesses. once again one of the purposes of having this discussion today is to demonstrate all the things that we do for businesses What I can tell you is the customer base moves money every single day, and we talk about the customer base. what i can tell you is the customer base moves money every single day and we talk about the customer base We're not talking about consumers. we're not talking about consumers We're not talking about Fortune 1000. we're not talking about fortune 1000 We're talking about independent business owners that are identified as approximately 36 million businesses in the United States that have two employees to 2,000, and about $50,000 to a couple hundred thousand a month to $50 million of annualized sales or annualized revenues. we're talking about independent business owners that are identified as approximately 36 million businesses in the united states that have two employees to 2,000 and about $50,000 to a couple hundred thousand a month to $50 million of annualized sales or annualized revenues I think it's important that when you look at our organization, we have patents on our technology, particularly NewTracker. i think it's important that when you look at our organization we have patents on our technology particularly newtracker We have a patent pending on the Newtek Advantage. We offer a full menu, best in class, on-demand solution to a business. Our business clientele doesn't necessarily want to be bothered between 9:00 A.M. and 5:00 P.M. Monday to Friday. They want to be talked to in the evening, maybe on Saturday or Sunday, and they want to be able to not have to leave the comfort of their business or their home. Therefore, our customer-facing staff is on camera and is available. In addition to having great technology to be able to exchange data effortlessly and frictionlessly, we also give the customer a human being to deal with, particularly when they become a customer. Every customer has a customer service rep, whether it's in payroll, whether it's in payment processing, whether it's in servicing a loan, whatever it might be, we service our customers. We have a patent pending on the Newtek Advantage. we have a patent pending on the newtek advantage We offer a full menu, best in class, on-demand solution to a business. we offer a full menu best in class on-demand solution to a business Our business clientele doesn't necessarily want to be bothered between 9:00 A.M. and 5:00 P.M. our business clientele doesn't necessarily want to be bothered between 9:00 a.m and 5:00 p.m Monday to Friday. monday to friday They want to be talked to in the evening, maybe on Saturday or Sunday, and they want to be able to not have to leave the comfort of their business or their home. they want to be talked to in the evening maybe on saturday or sunday and they want to be able to not have to leave the comfort of their business or their home Therefore, our customer-facing staff is on camera and is available. therefore our customer-facing staff is on camera and is available In addition to having great technology to be able to exchange data effortlessly and frictionlessly, we also give the customer a human being to deal with, particularly when they become a customer. in addition to having great technology to be able to exchange data effortlessly and frictionlessly we also give the customer a human being to deal with particularly when they become a customer Every customer has a customer service rep, whether it's in payroll, whether it's in payment processing, whether it's in servicing a loan, whatever it might be, we service our customers. every customer has a customer service rep whether it's in payroll whether it's in payment processing whether it's in servicing a loan whatever it might be we service our customers It's very important to note. When you look at our business model, it's cost-efficient. There's a better client experience. There's less friction to becoming a client. And we believe that our solutions, whether it's a loan, whether it's payroll, whether it's processing payments, whatever it might be, is best in class for the customer. Let's go to slide number six. This is kind of an important slide. Many of you obviously are capital markets participant. I say this with great pain. The most frequently asked question I get is, "What is wrong with your stock price?" Okay? I say that with transparency. I say that with candor. It's very important to note. it's very important to note When you look at our business model, it's cost-efficient. when you look at our business model it's cost-efficient There's a better client experience. there's a better client experience There's less friction to becoming a client. there's less friction to becoming a client And we believe that our solutions, whether it's a loan, whether it's payroll, whether it's processing payments, whatever it might be, is best in class for the customer. and we believe that our solutions whether it's a loan whether it's payroll whether it's processing payments whatever it might be is best in class for the customer Let's go to slide number six. let's go to slide number six This is kind of an important slide. this is kind of an important slide Many of you obviously are capital markets participant. many of you obviously are capital markets participant I say this with great pain. i say this with great pain The most frequently asked question I get is, "What is wrong with your stock price?" Okay? the most frequently asked question i get is "what is wrong with your stock price?" okay I say that with transparency. i say that with transparency I say that with candor. i say that with candor My answer really is nothing. It is what it is. I've had the stock price at $0.50 for periods of time, and we've almost been delisted. I've had it at $0.39. I wasn't euphoric at $0.39. I wasn't despondent when it was at $0.50. We just go out every day and perform great solutions to business clients. And most importantly, we manage risk. That's extremely important in every aspect of these businesses. You can't be in business today without managing risk, whether you're taking in customer data, whether you're helping clients, whether you're giving them a lending solution, taking deposits. You are managing risk. So when we talk about what's misunderstood, or I'll use the word underappreciated, number one, I'll say credit. My answer really is nothing. my answer really is nothing It is what it is. it is what it is I've had the stock price at $0.50 for periods of time, and we've almost been delisted. i've had the stock price at $0.50 for periods of time and we've almost been delisted I've had it at $0.39. i've had it at $0.39 I wasn't euphoric at $0.39. i wasn't euphoric at $0.39 I wasn't despondent when it was at $0.50. i wasn't despondent when it was at $0.50 We just go out every day and perform great solutions to business clients. we just go out every day and perform great solutions to business clients And most importantly, we manage risk. and most importantly we manage risk That's extremely important in every aspect of these businesses. that's extremely important in every aspect of these businesses You can't be in business today without managing risk, whether you're taking in customer data, whether you're helping clients, whether you're giving them a lending solution, taking deposits. you can't be in business today without managing risk whether you're taking in customer data whether you're helping clients whether you're giving them a lending solution taking deposits You are managing risk. you are managing risk So when we talk about what's misunderstood, or I'll use the word underappreciated, number one, I'll say credit. so when we talk about what's misunderstood or i'll use the word underappreciated number one i'll say credit I'll talk about credit. There's a tremendous misunderstanding of what I'll call SME, SMB, or small and medium-sized business credit. It is fully misunderstood. And I think that when you look at our organization, we have wider lending margins. And for those that are business people, people or businesses that have great margins have the ability to absorb mistakes. Now, thank God, in our period of time, we've made a few, but they've been small, and they haven't been great. I'll talk about credit. i'll talk about credit There's a tremendous misunderstanding of what I'll call SME, SMB, or small and medium-sized business credit. there's a tremendous misunderstanding of what i'll call sme smb or small and medium-sized business credit It is fully misunderstood. it is fully misunderstood And I think that when you look at our organization, we have wider lending margins. and i think that when you look at our organization we have wider lending margins And for those that are business people, people or businesses that have great margins have the ability to absorb mistakes. and for those that are business people people or businesses that have great margins have the ability to absorb mistakes Now, thank God, in our period of time, we've made a few, but they've been small, and they haven't been great. now thank god in our period of time we've made a few but they've been small and they haven't been great So the fact that we have wider lending margins allows us to have larger provisions for credit losses, higher allowance for credit losses. And in our 20 years of this business model, we do a really good job of managing risk. We believe this industry is in a risk avoidance spectrum. In other words, the typical loans that they make have very low margins, and they're typically avoiding risk. They want to have no charge-offs, minimal amounts of allowance for credit losses. But when you look at our returns, which Frank will talk about today, they're extraordinary net of the write-offs, the write-downs, the large allowance for credit losses. Importantly, the assets are marked to market on a regular basis. We have RSM, a top five accounting firm in the United States, evaluating what we're doing. So the fact that we have wider lending margins allows us to have larger provisions for credit losses, higher allowance for credit losses. so the fact that we have wider lending margins allows us to have larger provisions for credit losses higher allowance for credit losses And in our 20 years of this business model, we do a really good job of managing risk. and in our 20 years of this business model we do a really good job of managing risk We believe this industry is in a risk avoidance spectrum. we believe this industry is in a risk avoidance spectrum In other words, the typical loans that they make have very low margins, and they're typically avoiding risk. in other words the typical loans that they make have very low margins and they're typically avoiding risk They want to have no charge-offs, minimal amounts of allowance for credit losses. they want to have no charge-offs minimal amounts of allowance for credit losses But when you look at our returns, which Frank will talk about today, they're extraordinary net of the write-offs, the write-downs, the large allowance for credit losses. but when you look at our returns which frank will talk about today they're extraordinary net of the write-offs the write-downs the large allowance for credit losses Importantly, the assets are marked to market on a regular basis. importantly the assets are marked to market on a regular basis We have RSM, a top five accounting firm in the United States, evaluating what we're doing. we have rsm a top five accounting firm in the united states evaluating what we're doing We've had three years of audits from both the OCC and the Fed, and we've been doing this for over two decades. We know how to manage risk on a 10-25-year amortizing portfolio. We have proven that as an SBA lender, and we'll spend a lot of time talking about the ALP business, which is not an SBA credit. The credit is extremely stronger, and we have data to back that up and data to show you. The acquisition of National Bank of New York City rounded out our offering of business solutions because now we're able to push everything into the Newtek Advantage. Andrew will talk about that today and the real benefit of offering a solution and an asset to a customer that basically gives you the ability to take their depository money below the risk-free rate. We've had three years of audits from both the OCC and the Fed, and we've been doing this for over two decades. we've had three years of audits from both the occ and the fed and we've been doing this for over two decades We know how to manage risk on a 10-25-year amortizing portfolio. we know how to manage risk on a 10-25-year amortizing portfolio We have proven that as an SBA lender, and we'll spend a lot of time talking about the ALP business, which is not an SBA credit. we have proven that as an sba lender and we'll spend a lot of time talking about the alp business which is not an sba credit The credit is extremely stronger, and we have data to back that up and data to show you. the credit is extremely stronger and we have data to back that up and data to show you The acquisition of National Bank of New York City rounded out our offering of business solutions because now we're able to push everything into the Newtek Advantage. the acquisition of national bank of new york city rounded out our offering of business solutions because now we're able to push everything into the newtek advantage Andrew will talk about that today and the real benefit of offering a solution and an asset to a customer that basically gives you the ability to take their depository money below the risk-free rate. andrew will talk about that today and the real benefit of offering a solution and an asset to a customer that basically gives you the ability to take their depository money below the risk-free rate Why should a customer give a bank money at a non-interest-bearing account or low interest rate if they're not getting anything? An FDIC-insured depository account, it's a commodity. There's probably 4,000 places in the banking industry to get it, and then you can go to credit unions with other forms of government insurance. So if this industry does not prepare to offer a value to the customer for the movement of money, for the holding of money, that money will move. So we are very well positioned for the trend going forward in the business. I also want to talk about an important trend, fair value. I'm very thrilled. LendingClub has announced they use fair value. SoFi uses fair value. Why should a customer give a bank money at a non-interest-bearing account or low interest rate if they're not getting anything? why should a customer give a bank money at a non-interest-bearing account or low interest rate if they're not getting anything An FDIC-insured depository account, it's a commodity. an fdic-insured depository account it's a commodity There's probably 4,000 places in the banking industry to get it, and then you can go to credit unions with other forms of government insurance. there's probably 4,000 places in the banking industry to get it and then you can go to credit unions with other forms of government insurance So if this industry does not prepare to offer a value to the customer for the movement of money, for the holding of money, that money will move. so if this industry does not prepare to offer a value to the customer for the movement of money for the holding of money that money will move So we are very well positioned for the trend going forward in the business. so we are very well positioned for the trend going forward in the business I also want to talk about an important trend, fair value. i also want to talk about an important trend fair value I'm very thrilled. i'm very thrilled LendingClub has announced they use fair value. lendingclub has announced they use fair value SoFi uses fair value. sofi uses fair value My good friends at Grasshopper just merged with Enova. They use fair value. I think we need to start to get used to this. It's not rocket science. It's not that complicated. I realize it doesn't necessarily fit the models out there, and some of you are getting it. We're appreciative of that. But when you look at the map and you look at the numbers, and I think we'll be able to get through some of that today, it's very, very beneficial and valuable. Most importantly, we believe we've solved the three problems that exist in the industry. My good friends at Grasshopper just merged with Enova. my good friends at grasshopper just merged with enova They use fair value. they use fair value I think we need to start to get used to this. i think we need to start to get used to this It's not rocket science. it's not rocket science It's not that complicated. it's not that complicated I realize it doesn't necessarily fit the models out there, and some of you are getting it. i realize it doesn't necessarily fit the models out there and some of you are getting it We're appreciative of that. we're appreciative of that But when you look at the map and you look at the numbers, and I think we'll be able to get through some of that today, it's very, very beneficial and valuable. but when you look at the map and you look at the numbers and i think we'll be able to get through some of that today it's very very beneficial and valuable Most importantly, we believe we've solved the three problems that exist in the industry. most importantly we believe we've solved the three problems that exist in the industry Number one, cost-effectiveness. Without branches or traditional bankers, we're able to operate the business at a 46%-47% operating ratio, efficiency ratio. That's only going to get better. And you need to use technology. You need to have a human interface, preferably in the United States for the business customer, and you need to be available on demand when the customer wants you. Secondly, being able to put assets on the books that have value. Number one, cost-effectiveness. number one cost-effectiveness Without branches or traditional bankers, we're able to operate the business at a 46%-47% operating ratio, efficiency ratio. without branches or traditional bankers we're able to operate the business at a 46%-47% operating ratio efficiency ratio That's only going to get better. that's only going to get better And you need to use technology. and you need to use technology You need to have a human interface, preferably in the United States for the business customer, and you need to be available on demand when the customer wants you. you need to have a human interface preferably in the united states for the business customer and you need to be available on demand when the customer wants you Secondly, being able to put assets on the books that have value. secondly being able to put assets on the books that have value I could argue that a bank standard 65%-70% CRE loan or C&I loan or a car loan, the margins are razor thin. It's a crowded market, and there really is not a big margin forever. God forbid if the cost of funding for banks ever creeps up to where the customer, because they can move money on a phone or very easily, starts to creep up, it's going to be a problem for the industry. It will not be a problem for Newtek. And lastly, Andrew will talk a lot about the Newtek Advantage. We will earn the faith and trust of our customers through the Newtek Advantage to actually give them a business portal that makes them better, makes them more successful. We're constantly polishing it, scrubbing it. Important. We acquired the bank three years ago. I could argue that a bank standard 65%-70% CRE loan or C&I loan or a car loan, the margins are razor thin. i could argue that a bank standard 65%-70% cre loan or c&i loan or a car loan the margins are razor thin It's a crowded market, and there really is not a big margin forever. it's a crowded market and there really is not a big margin forever God forbid if the cost of funding for banks ever creeps up to where the customer, because they can move money on a phone or very easily, starts to creep up, it's going to be a problem for the industry. god forbid if the cost of funding for banks ever creeps up to where the customer because they can move money on a phone or very easily starts to creep up it's going to be a problem for the industry It will not be a problem for Newtek. it will not be a problem for newtek And lastly, Andrew will talk a lot about the Newtek Advantage. and lastly andrew will talk a lot about the newtek advantage We will earn the faith and trust of our customers through the Newtek Advantage to actually give them a business portal that makes them better, makes them more successful. we will earn the faith and trust of our customers through the newtek advantage to actually give them a business portal that makes them better makes them more successful We're constantly polishing it, scrubbing it. we're constantly polishing it scrubbing it Important. important We acquired the bank three years ago. we acquired the bank three years ago This was a single-branch bank in Flushing, Queens, with no technology. So we've had to put this in so we don't get any credit for running this business, making money, putting on 30,000 business accounts digitally, doing $1.5 billion of loans a year using a great lending operating system that Peter Downs will talk about. So many of you will be appalled at the fact that I'm going to shut my mouth for a while and pass the baton. Frank? This was a single-branch bank in Flushing, Queens, with no technology. this was a single-branch bank in flushing queens with no technology So we've had to put this in so we don't get any credit for running this business, making money, putting on 30,000 business accounts digitally, doing $1.5 billion of loans a year using a great lending operating system that Peter Downs will talk about. so we've had to put this in so we don't get any credit for running this business making money putting on 30,000 business accounts digitally doing $1.5 billion of loans a year using a great lending operating system that peter downs will talk about So many of you will be appalled at the fact that I'm going to shut my mouth for a while and pass the baton. so many of you will be appalled at the fact that i'm going to shut my mouth for a while and pass the baton Frank? frank

Speaker 11: Thank you, Barry. And good afternoon, everybody. Thanks again for joining us today. Brief background on myself. Prior to joining Newtek in May of 2023, I spent about nine years at KPMG auditing banks of various sizes before transitioning into the industry where I held various roles, including Chief Accounting Officer at a publicly traded Financial Holding Company. Thank you, Barry. thank you barry And good afternoon, everybody. and good afternoon everybody Thanks again for joining us today. thanks again for joining us today Brief background on myself. brief background on myself Prior to joining Newtek in May of 2023, I spent about nine years at KPMG auditing banks of various sizes before transitioning into the industry where I held various roles, including Chief Accounting Officer at a publicly traded Financial Holding Company. prior to joining newtek in may of 2023 i spent about nine years at kpmg auditing banks of various sizes before transitioning into the industry where i held various roles including chief accounting officer at a publicly traded financial holding company That, along with the almost two years that I spent at Newtek prior to my appointment as CFO, has given me, I'd say, quite the unique perspective into our mission as a preeminent small business financial institution. I've titled my portion of the Investor Day presentation, "The Model is Working," which feels like an appropriate title to describe Newtek since transitioning to a technology-enabled Financial Holding Company. I don't think it's a stretch for me to say that many CFOs in the industry would love to put up the graphs on the following five slides to display the constantly or consistently improving fundamental financial trends, consistent growth in revenue and assets, and the stable to increasing capital levels that are comfortably above regulatory thresholds. That, along with the almost two years that I spent at Newtek prior to my appointment as CFO, has given me, I'd say, quite the unique perspective into our mission as a preeminent small business financial institution. that along with the almost two years that i spent at newtek prior to my appointment as cfo has given me i'd say quite the unique perspective into our mission as a preeminent small business financial institution I've titled my portion of the Investor Day presentation, "The Model is Working," which feels like an appropriate title to describe Newtek since transitioning to a technology-enabled Financial Holding Company. i've titled my portion of the investor day presentation "the model is working," which feels like an appropriate title to describe newtek since transitioning to a technology-enabled financial holding company I don't think it's a stretch for me to say that many CFOs in the industry would love to put up the graphs on the following five slides to display the constantly or consistently improving fundamental financial trends, consistent growth in revenue and assets, and the stable to increasing capital levels that are comfortably above regulatory thresholds. i don't think it's a stretch for me to say that many cfos in the industry would love to put up the graphs on the following five slides to display the constantly or consistently improving fundamental financial trends consistent growth in revenue and assets and the stable to increasing capital levels that are comfortably above regulatory thresholds These include Tangible Book Value per common share growth alongside a hefty Dividend Revenue growth, industry-leading returns, as Barry mentioned, on Assets and a Tangible Common Equity, and again, those regulatory capital ratios that have only increased since the transition to the Financial Holding Company, so the model is absolutely working, and we'll dive into slide eight here. Again, Book Value per common share has grown. It's up 45%. Tangible Book Value per common share is up 62% in less than three years, respectively. In absolute dollars, that's about $4.30 per share, and we've paid a $2.05 per common dividend, which does not include the $0.19 that we paid last week. Bank stock investors and analysts are often screening for Tangible Book Value growth over time. These include Tangible Book Value per common share growth alongside a hefty Dividend Revenue growth, industry-leading returns, as Barry mentioned, on Assets and a Tangible Common Equity, and again, those regulatory capital ratios that have only increased since the transition to the Financial Holding Company, so the model is absolutely working, and we'll dive into slide eight here. these include tangible book value per common share growth alongside a hefty dividend revenue growth industry-leading returns as barry mentioned on assets and a tangible common equity and again those regulatory capital ratios that have only increased since the transition to the financial holding company so the model is absolutely working and we'll dive into slide eight here Again, Book Value per common share has grown. again book value per common share has grown It's up 45%. it's up 45% Tangible Book Value per common share is up 62% in less than three years, respectively. tangible book value per common share is up 62% in less than three years respectively In absolute dollars, that's about $4.30 per share, and we've paid a $2.05 per common dividend, which does not include the $0.19 that we paid last week. in absolute dollars that's about $4.30 per share and we've paid a $2.05 per common dividend which does not include the $0.19 that we paid last week Bank stock investors and analysts are often screening for Tangible Book Value growth over time. bank stock investors and analysts are often screening for tangible book value growth over time Because we only have that three-year history as a Financial Holding Company, we're not hitting the radar of the longer-term screens, those five-year-plus screens for Tangible Book Growth. But we feel if this trend continues, and we believe it will, we're going to start showing up on those screens likely near or at the top. Go to slide nine. Again, Revenue growing nicely. Note 25 is an annualized figure for the first nine months of 2025. And as you'll see in the next two slides, when we get there, our fourth quarter is typically the strongest quarter of the calendar year. The primary takeaway from this revenue slide is the mix of revenue. Non-interest income comprises roughly 80% of revenue, which is contrary to your typical bank, which is usually seeing 80% of that revenue in Net Interest Income. Because we only have that three-year history as a Financial Holding Company, we're not hitting the radar of the longer-term screens, those five-year-plus screens for Tangible Book Growth. because we only have that three-year history as a financial holding company we're not hitting the radar of the longer-term screens those five-year-plus screens for tangible book growth But we feel if this trend continues, and we believe it will, we're going to start showing up on those screens likely near or at the top. but we feel if this trend continues and we believe it will we're going to start showing up on those screens likely near or at the top Go to slide nine. go to slide nine Again, Revenue growing nicely. again revenue growing nicely Note 25 is an annualized figure for the first nine months of 2025. note 25 is an annualized figure for the first nine months of 2025 And as you'll see in the next two slides, when we get there, our fourth quarter is typically the strongest quarter of the calendar year. and as you'll see in the next two slides when we get there our fourth quarter is typically the strongest quarter of the calendar year The primary takeaway from this revenue slide is the mix of revenue. the primary takeaway from this revenue slide is the mix of revenue Non-interest income comprises roughly 80% of revenue, which is contrary to your typical bank, which is usually seeing 80% of that revenue in Net Interest Income. non-interest income comprises roughly 80% of revenue which is contrary to your typical bank which is usually seeing 80% of that revenue in net interest income We do acknowledge, and as Barry mentioned, fair value trends. We do acknowledge that a portion of the non-interest income consists of those fair value marks on loans that are originated to be sold, and we've dedicated a portion of today's presentation to help investors gain a better appreciation for that revenue. Slide 10. This slide, we believe, is the very definition of operating leverage. Our franchise is built to scale. Our efficiency ratio has improved from north of 80% immediately subsequent to the bank acquisition and now sits below 60%, and there's no reason to think that this won't continue and we won't continue to capture that operating leverage as the model continues to work. We do acknowledge, and as Barry mentioned, fair value trends. we do acknowledge and as barry mentioned fair value trends We do acknowledge that a portion of the non-interest income consists of those fair value marks on loans that are originated to be sold, and we've dedicated a portion of today's presentation to help investors gain a better appreciation for that revenue. we do acknowledge that a portion of the non-interest income consists of those fair value marks on loans that are originated to be sold and we've dedicated a portion of today's presentation to help investors gain a better appreciation for that revenue Slide 10. slide 10 This slide, we believe, is the very definition of operating leverage. this slide we believe is the very definition of operating leverage Our franchise is built to scale. our franchise is built to scale Our efficiency ratio has improved from north of 80% immediately subsequent to the bank acquisition and now sits below 60%, and there's no reason to think that this won't continue and we won't continue to capture that operating leverage as the model continues to work. our efficiency ratio has improved from north of 80% immediately subsequent to the bank acquisition and now sits below 60% and there's no reason to think that this won't continue and we won't continue to capture that operating leverage as the model continues to work Our operating infrastructure can support a much larger organization, and not only is that downward trend or improving trend important, but more so is the consistency of it. Slide 11. All the measures of profitability that you see here are, as Barry mentioned, exceptionally strong, so strong that it may give some pause, but if we continue to operate this model as we have and as we plan to do, we believe that this profitability will continue, and that's going to be difficult to ignore. Our operating infrastructure can support a much larger organization, and not only is that downward trend or improving trend important, but more so is the consistency of it. our operating infrastructure can support a much larger organization and not only is that downward trend or improving trend important but more so is the consistency of it Slide 11. slide 11 All the measures of profitability that you see here are, as Barry mentioned, exceptionally strong, so strong that it may give some pause, but if we continue to operate this model as we have and as we plan to do, we believe that this profitability will continue, and that's going to be difficult to ignore. all the measures of profitability that you see here are as barry mentioned exceptionally strong so strong that it may give some pause but if we continue to operate this model as we have and as we plan to do we believe that this profitability will continue and that's going to be difficult to ignore Annual ROAs consistently with two or three handles is uncommon in the industry, and as good as these are, there is potential for even further improvement as we continue to capture incremental operating leverage as provisioning for credit losses stabilize and we move away from some of the tougher vintages of 2023 and 2024 and continue to diversify our loan portfolio, and in addition, as our legacy non-bank lender, NSBF, continues to wind down and becomes an increasingly smaller part of our balance sheet. Slide 12. Annual ROAs consistently with two or three handles is uncommon in the industry, and as good as these are, there is potential for even further improvement as we continue to capture incremental operating leverage as provisioning for credit losses stabilize and we move away from some of the tougher vintages of 2023 and 2024 and continue to diversify our loan portfolio, and in addition, as our legacy non-bank lender, NSBF, continues to wind down and becomes an increasingly smaller part of our balance sheet. annual roas consistently with two or three handles is uncommon in the industry and as good as these are there is potential for even further improvement as we continue to capture incremental operating leverage as provisioning for credit losses stabilize and we move away from some of the tougher vintages of 2023 and 2024 and continue to diversify our loan portfolio and in addition as our legacy non-bank lender nsbf continues to wind down and becomes an increasingly smaller part of our balance sheet Slide 12. slide 12 I also don't believe we get enough credit for how we've managed capital, given the asset growth. Most operators in the industry, the concept of managing capital is a combination of determining how much stock can be bought back and how big of a dividend to pay because there is very little aggregate asset growth in the industry. Our asset base is growing because we've developed that expertise in certain pockets of small business lending over the 20 years that are hard to replicate, especially at scale. We have more than doubled our asset base in less than three years while also strengthening that capital position. So again, I'll say it again, the model is working. Slide 13. We'll shift to the forecast for 2026. I also don't believe we get enough credit for how we've managed capital, given the asset growth. i also don't believe we get enough credit for how we've managed capital given the asset growth Most operators in the industry, the concept of managing capital is a combination of determining how much stock can be bought back and how big of a dividend to pay because there is very little aggregate asset growth in the industry. most operators in the industry the concept of managing capital is a combination of determining how much stock can be bought back and how big of a dividend to pay because there is very little aggregate asset growth in the industry Our asset base is growing because we've developed that expertise in certain pockets of small business lending over the 20 years that are hard to replicate, especially at scale. our asset base is growing because we've developed that expertise in certain pockets of small business lending over the 20 years that are hard to replicate especially at scale We have more than doubled our asset base in less than three years while also strengthening that capital position. we have more than doubled our asset base in less than three years while also strengthening that capital position So again, I'll say it again, the model is working. so again i'll say it again the model is working Slide 13. slide 13 We'll shift to the forecast for 2026. we'll shift to the forecast for 2026 We're showing a range of EPS of $2.15-$2.55, 7(a) originations of $1 billion, ALP or C&I loans that we ultimately plan to hold for sale and sell at $500 million, SBA 504 originations of $175 million, and net growth in the more traditional C&I and CRE held or investment portfolio of $150 million. We've tried to layer in a degree of conservatism to these estimates and believe if we continue to execute with growth in EPS and tangible book, we should start to see an expansion in our PE and price to tangible book multiples. And with that, turn it back to Barry. We're showing a range of EPS of $2.15-$2.55, 7(a) originations of $1 billion, ALP or C&I loans that we ultimately plan to hold for sale and sell at $500 million, SBA 504 originations of $175 million, and net growth in the more traditional C&I and CRE held or investment portfolio of $150 million. we're showing a range of eps of $2.15-$2.55 7(a) originations of $1 billion alp or c&i loans that we ultimately plan to hold for sale and sell at $500 million sba 504 originations of $175 million and net growth in the more traditional c&i and cre held or investment portfolio of $150 million We've tried to layer in a degree of conservatism to these estimates and believe if we continue to execute with growth in EPS and tangible book, we should start to see an expansion in our PE and price to tangible book multiples. we've tried to layer in a degree of conservatism to these estimates and believe if we continue to execute with growth in eps and tangible book we should start to see an expansion in our pe and price to tangible book multiples And with that, turn it back to Barry. and with that turn it back to barry

Speaker 6: Thank you, Frank. Before I pass the baton to Andrew, I want to give an honorable mention to Nick Young. Nick, thank you for joining us here today. The father of Newtek Bank, N.A. Thank you, Frank. thank you frank Before I pass the baton to Andrew, I want to give an honorable mention to Nick Young. before i pass the baton to andrew i want to give an honorable mention to nick young Nick, thank you for joining us here today. nick thank you for joining us here today The father of Newtek Bank, N.A. the father of newtek bank n.a Nick has left us for greener pastures, but we appreciate you being here for, I think it was four and a half years and really set us up in a good spot to pass the baton to Pete. So thank you very much for coming today. And with that, I wanted to introduce Andrew Kaplan. Andrew is somebody I believe I've known for about 15 years. Andrew was an alliance partner. I'll let Andrew go over his background, but he is eminently qualified and a big disciple of our strategy. Once again, that strategy is to basically be the organization that makes our clients more successful, delivers state-of-the-art technology in a frictionless manner, understands the client experience, and delivers a best-in-class solution to help customers grow their revenue, reduce their expense, and reduce their risk. Andrew? Nick has left us for greener pastures, but we appreciate you being here for, I think it was four and a half years and really set us up in a good spot to pass the baton to Pete. nick has left us for greener pastures but we appreciate you being here for i think it was four and a half years and really set us up in a good spot to pass the baton to pete So thank you very much for coming today. so thank you very much for coming today And with that, I wanted to introduce Andrew Kaplan. and with that i wanted to introduce andrew kaplan Andrew is somebody I believe I've known for about 15 years. andrew is somebody i believe i've known for about 15 years Andrew was an alliance partner. andrew was an alliance partner I'll let Andrew go over his background, but he is eminently qualified and a big disciple of our strategy. i'll let andrew go over his background but he is eminently qualified and a big disciple of our strategy Once again, that strategy is to basically be the organization that makes our clients more successful, delivers state-of-the-art technology in a frictionless manner, understands the client experience, and delivers a best-in-class solution to help customers grow their revenue, reduce their expense, and reduce their risk. once again that strategy is to basically be the organization that makes our clients more successful delivers state-of-the-art technology in a frictionless manner understands the client experience and delivers a best-in-class solution to help customers grow their revenue reduce their expense and reduce their risk Andrew? andrew

Speaker 8: Thank you, Barry, and thank you, everybody. Thank you, Barry, and thank you, everybody. thank you barry and thank you everybody I am Andrew Kaplan, Chief Strategy Officer for NewtekOne, and I have the privilege to present the Newtek Advantage to everyone here today. A little bit about me. 30 years plus in the banking space. Prior to joining Newtek, I was with a growing banking organization, was part of a deal team that finished 14 successful banking transactions, and if anybody's been part of a banking transaction, you know to get to 14 transactions, we probably did due diligence on a couple hundred different transactions, so familiar with what the space looks like and what is out there, and what delights me the most about sharing the Newtek Advantage is this is a game changer. In my opinion, nobody else out there has this. I am Andrew Kaplan, Chief Strategy Officer for NewtekOne, and I have the privilege to present the Newtek Advantage to everyone here today. i am andrew kaplan chief strategy officer for newtekone and i have the privilege to present the newtek advantage to everyone here today A little bit about me. 30 years plus in the banking space. a little bit about me 30 years plus in the banking space Prior to joining Newtek, I was with a growing banking organization, was part of a deal team that finished 14 successful banking transactions, and if anybody's been part of a banking transaction, you know to get to 14 transactions, we probably did due diligence on a couple hundred different transactions, so familiar with what the space looks like and what is out there, and what delights me the most about sharing the Newtek Advantage is this is a game changer. prior to joining newtek i was with a growing banking organization was part of a deal team that finished 14 successful banking transactions and if anybody's been part of a banking transaction you know to get to 14 transactions we probably did due diligence on a couple hundred different transactions so familiar with what the space looks like and what is out there and what delights me the most about sharing the newtek advantage is this is a game changer In my opinion, nobody else out there has this. in my opinion nobody else out there has this This is a best-in-class client experience, which is critically important as we deliver on meeting that mission of growing revenue for our customers, reducing expense, and reducing risk. The Newtek Advantage has been built for business. It is a client-first, client-centric solution, and let me share a little bit more with you. Next slide, please. The financial space, the financial services space is built in a very siloed structure. Payments, banking, lending, payroll, all different verticals, different silos, and if you obtain these products from an organization, from that same organization, we ask clients to go through, or they ask clients to go through a whole new application process, a whole new structure, and then clients interact with these solutions through very fractured solutions, so different logons, different systems. This is a best-in-class client experience, which is critically important as we deliver on meeting that mission of growing revenue for our customers, reducing expense, and reducing risk. this is a best-in-class client experience which is critically important as we deliver on meeting that mission of growing revenue for our customers reducing expense and reducing risk The Newtek Advantage has been built for business. the newtek advantage has been built for business It is a client-first, client-centric solution, and let me share a little bit more with you. it is a client-first client-centric solution and let me share a little bit more with you Next slide, please. next slide please The financial space, the financial services space is built in a very siloed structure. the financial space the financial services space is built in a very siloed structure Payments, banking, lending, payroll, all different verticals, different silos, and if you obtain these products from an organization, from that same organization, we ask clients to go through, or they ask clients to go through a whole new application process, a whole new structure, and then clients interact with these solutions through very fractured solutions, so different logons, different systems. payments banking lending payroll all different verticals different silos and if you obtain these products from an organization from that same organization we ask clients to go through or they ask clients to go through a whole new application process a whole new structure and then clients interact with these solutions through very fractured solutions so different logons different systems The financial services industry is very, very vertical, but independent business owners manage their financial business in a very horizontal way. It's all interconnected. It's capital, it's payments, it's the movement of money. And what we've done with the Newtek Advantage is we've brought that into a single friendly user experience. Next slide, please. The Newtek Advantage, as a concept, was announced by Newtek in 2012. Cloud-based, web-based solution for independent business owners. Since then, it has been built and layered with additional solutions, practicing the art of what I like to refer to as the Japanese art of Kaizen. It's a system of continuous improvement. How is the world changing? How are our clients changing? And how can we make this experience better? It's top-of-the-line technology. The financial services industry is very, very vertical, but independent business owners manage their financial business in a very horizontal way. the financial services industry is very very vertical but independent business owners manage their financial business in a very horizontal way It's all interconnected. it's all interconnected It's capital, it's payments, it's the movement of money. it's capital it's payments it's the movement of money And what we've done with the Newtek Advantage is we've brought that into a single friendly user experience. and what we've done with the newtek advantage is we've brought that into a single friendly user experience Next slide, please. next slide please The Newtek Advantage, as a concept, was announced by Newtek in 2012. the newtek advantage as a concept was announced by newtek in 2012 Cloud-based, web-based solution for independent business owners. cloud-based web-based solution for independent business owners Since then, it has been built and layered with additional solutions, practicing the art of what I like to refer to as the Japanese art of Kaizen. since then it has been built and layered with additional solutions practicing the art of what i like to refer to as the japanese art of kaizen It's a system of continuous improvement. it's a system of continuous improvement How is the world changing? how is the world changing How are our clients changing? how are our clients changing And how can we make this experience better? and how can we make this experience better It's top-of-the-line technology. it's top-of-the-line technology And because of the way that this has been thoughtfully constructed for client experience over time, not easily replicated by anybody. We don't mind sharing what our seven secret spices are to our crispy chicken because nobody can recreate what has been built here over many, many years with absolute service to client. And we'll share that on the next slide. But before we go there, let's talk about what this has delivered for Newtek now with the addition of the banking services to the platform. And because of the way that this has been thoughtfully constructed for client experience over time, not easily replicated by anybody. and because of the way that this has been thoughtfully constructed for client experience over time not easily replicated by anybody We don't mind sharing what our seven secret spices are to our crispy chicken because nobody can recreate what has been built here over many, many years with absolute service to client. we don't mind sharing what our seven secret spices are to our crispy chicken because nobody can recreate what has been built here over many many years with absolute service to client And we'll share that on the next slide. and we'll share that on the next slide But before we go there, let's talk about what this has delivered for Newtek now with the addition of the banking services to the platform. but before we go there let's talk about what this has delivered for newtek now with the addition of the banking services to the platform It's a pleasure. Since the acquisition of the bank, the bank has grown seven times in the past three years. 7X, $1.5 billion in assets. We have opened digitally 30,000 bank accounts. We will originate over $1.4-$1.5 billion in loans in 2025. Our client acquisition tools generate 600 unique opportunities for us to have discussion about financial solutions a day. 600 unique opportunities a day. Over time, we've assembled a marketing database that we communicate with often and we solicit often. 2.5 million names. It's a pleasure. it's a pleasure Since the acquisition of the bank, the bank has grown seven times in the past three years. 7X, $1.5 billion in assets. since the acquisition of the bank the bank has grown seven times in the past three years 7x $1.5 billion in assets We have opened digitally 30,000 bank accounts. we have opened digitally 30,000 bank accounts We will originate over $1.4-$1.5 billion in loans in 2025. we will originate over $1.4-$1.5 billion in loans in 2025 Our client acquisition tools generate 600 unique opportunities for us to have discussion about financial solutions a day. 600 unique opportunities a day. our client acquisition tools generate 600 unique opportunities for us to have discussion about financial solutions a day 600 unique opportunities a day Over time, we've assembled a marketing database that we communicate with often and we solicit often. 2.5 million names. over time we've assembled a marketing database that we communicate with often and we solicit often 2.5 million names And using this brilliant technology, efficiency ratio in the mid-50s%. An industry envy. Next slide, please. So let me show you the Newtek Advantage. Within the Newtek Advantage, we have a frictionless environment in which our customers can add payroll services, payment services, their banking, their lending, all with a single stream frictionless wiring of their information. Our customers can then interact with that on a day-to-day basis. As Barry highlighted before, why did we buy a bank? And using this brilliant technology, efficiency ratio in the mid-50s%. and using this brilliant technology efficiency ratio in the mid-50s% An industry envy. an industry envy Next slide, please. next slide please So let me show you the Newtek Advantage. so let me show you the newtek advantage Within the Newtek Advantage, we have a frictionless environment in which our customers can add payroll services, payment services, their banking, their lending, all with a single stream frictionless wiring of their information. within the newtek advantage we have a frictionless environment in which our customers can add payroll services payment services their banking their lending all with a single stream frictionless wiring of their information Our customers can then interact with that on a day-to-day basis. our customers can then interact with that on a day-to-day basis As Barry highlighted before, why did we buy a bank? as barry highlighted before why did we buy a bank Most people buy banks because they want to drive more cash to the company. But no, this was the missing piece to a financial ecosystem. And the most critical piece, as Barry highlights, people visit their bank account, check on their balances, check on their transactions one time, two times, three times a day. You put this as the cornerstone and then combine this with payments, payroll, insurance. All real-time, all frictionless. Marry that to the bank, you get your payments quicker. You can originate your payments same day, and the entire experience in a single pane of glass, one screen. By the way, we didn't stop there. We also provide free and unlimited document storage. Most people buy banks because they want to drive more cash to the company. most people buy banks because they want to drive more cash to the company But no, this was the missing piece to a financial ecosystem. but no this was the missing piece to a financial ecosystem And the most critical piece, as Barry highlights, people visit their bank account, check on their balances, check on their transactions one time, two times, three times a day. and the most critical piece as barry highlights people visit their bank account check on their balances check on their transactions one time two times three times a day You put this as the cornerstone and then combine this with payments, payroll, insurance. you put this as the cornerstone and then combine this with payments payroll insurance All real-time, all frictionless. all real-time all frictionless Marry that to the bank, you get your payments quicker. marry that to the bank you get your payments quicker You can originate your payments same day, and the entire experience in a single pane of glass, one screen. you can originate your payments same day and the entire experience in a single pane of glass one screen By the way, we didn't stop there. by the way we didn't stop there We also provide free and unlimited document storage. we also provide free and unlimited document storage We provide free website analytics, and while most banks will talk about how they integrate their information into a QuickBooks solution, which is the most common accounting solution used by independent business owners, we reverse the flow. You connect your QuickBooks accounts to the Advantage, and we can display for you real-time your balance sheet, your income statement, your revenue, your invoices, your money due, and your balances across whatever other institutions you may choose to do your financial services with. All in the single pane of glass. In the meantime, we don't forget the human part of what is really driving behind all this. We provide free website analytics, and while most banks will talk about how they integrate their information into a QuickBooks solution, which is the most common accounting solution used by independent business owners, we reverse the flow. we provide free website analytics and while most banks will talk about how they integrate their information into a quickbooks solution which is the most common accounting solution used by independent business owners we reverse the flow You connect your QuickBooks accounts to the Advantage, and we can display for you real-time your balance sheet, your income statement, your revenue, your invoices, your money due, and your balances across whatever other institutions you may choose to do your financial services with. you connect your quickbooks accounts to the advantage and we can display for you real-time your balance sheet your income statement your revenue your invoices your money due and your balances across whatever other institutions you may choose to do your financial services with All in the single pane of glass. all in the single pane of glass In the meantime, we don't forget the human part of what is really driving behind all this. in the meantime we don't forget the human part of what is really driving behind all this As Barry highlighted before, at any time, you can speak to your Newtek representative or a Newtek representative if you're interested in a new solution on camera, 24/7, 365 days a year. The picture above me happens to be Aniseko. Aniseko is in our offices today. On camera, sharing screens, helping customers all day long. This is not only the Newtek Advantage. This is the Newtek Advantage. I can just add one note. As we look at a system of continuous improvement coming soon, you've probably heard a lot about Stablecoin and people looking at things truly quickly as that tool really moves money at real-time. Stay tuned. Our solution not only enables what we do at Newtek and what we do for Newtek clients, but it also helps enable partners. As Barry highlighted before, at any time, you can speak to your Newtek representative or a Newtek representative if you're interested in a new solution on camera, 24/7, 365 days a year. as barry highlighted before at any time you can speak to your newtek representative or a newtek representative if you're interested in a new solution on camera 24/7 365 days a year The picture above me happens to be Aniseko. the picture above me happens to be aniseko Aniseko is in our offices today. aniseko is in our offices today On camera, sharing screens, helping customers all day long. on camera sharing screens helping customers all day long This is not only the Newtek Advantage. this is not only the newtek advantage This is the Newtek Advantage. this is the newtek advantage I can just add one note. i can just add one note As we look at a system of continuous improvement coming soon, you've probably heard a lot about Stablecoin and people looking at things truly quickly as that tool really moves money at real-time. as we look at a system of continuous improvement coming soon you've probably heard a lot about stablecoin and people looking at things truly quickly as that tool really moves money at real-time Stay tuned. stay tuned Our solution not only enables what we do at Newtek and what we do for Newtek clients, but it also helps enable partners. our solution not only enables what we do at newtek and what we do for newtek clients but it also helps enable partners So today, for banks and credit unions, either some or all of our services can be provided to those institutions effectively and efficiently because we are scalable. And later on, our President of the bank, Peter Downs, will talk about the technology that we use and how this technology has been developed under the hood of this. And it's highly scalable, highly efficient so that we can drive more business, part of that kind of 600 opportunities a day that we drive to the organization through a partnership mechanism. And what does that do and why do people come to us? What problems are bankers trying to solve for every day? Grow deposits, grow revenue, retain customers. So today, for banks and credit unions, either some or all of our services can be provided to those institutions effectively and efficiently because we are scalable. so today for banks and credit unions either some or all of our services can be provided to those institutions effectively and efficiently because we are scalable And later on, our President of the bank, Peter Downs, will talk about the technology that we use and how this technology has been developed under the hood of this. and later on our president of the bank peter downs will talk about the technology that we use and how this technology has been developed under the hood of this And it's highly scalable, highly efficient so that we can drive more business, part of that kind of 600 opportunities a day that we drive to the organization through a partnership mechanism. and it's highly scalable highly efficient so that we can drive more business part of that kind of 600 opportunities a day that we drive to the organization through a partnership mechanism And what does that do and why do people come to us? and what does that do and why do people come to us What problems are bankers trying to solve for every day? what problems are bankers trying to solve for every day Grow deposits, grow revenue, retain customers. grow deposits grow revenue retain customers And we have a model where we can originate loans, and we can do it for their balance sheet and service those loans for their benefit. So we solve not only for ourselves, but for others, which complements our business and creates even more opportunities. That's the Newtek Advantage advantage. The bank piece and the bank acquisition was a critical complementary element to the entire structure. It was an anchoring solution that we looked towards. What we do is embedded. It's financial technology. It's financial technology at the finest, balanced with personal and available solutions, domestic and all Newtek employees. We help our customers consistently grow revenue, cut costs, and reduce risk. And this is a best-in-class solution that cannot be replicated by our competitors. Thank you. And we have a model where we can originate loans, and we can do it for their balance sheet and service those loans for their benefit. and we have a model where we can originate loans and we can do it for their balance sheet and service those loans for their benefit So we solve not only for ourselves, but for others, which complements our business and creates even more opportunities. so we solve not only for ourselves but for others which complements our business and creates even more opportunities That's the Newtek Advantage advantage. that's the newtek advantage advantage The bank piece and the bank acquisition was a critical complementary element to the entire structure. the bank piece and the bank acquisition was a critical complementary element to the entire structure It was an anchoring solution that we looked towards. it was an anchoring solution that we looked towards What we do is embedded. what we do is embedded It's financial technology. it's financial technology It's financial technology at the finest, balanced with personal and available solutions, domestic and all Newtek employees. it's financial technology at the finest balanced with personal and available solutions domestic and all newtek employees We help our customers consistently grow revenue, cut costs, and reduce risk. we help our customers consistently grow revenue cut costs and reduce risk And this is a best-in-class solution that cannot be replicated by our competitors. and this is a best-in-class solution that cannot be replicated by our competitors Thank you. thank you

Speaker 6: Thanks, Andrew. And when Andrew says it can't be replicated, this has been obviously approved in our business plan by the OCC, by the Fed, with Reg W and understanding. And a competitor would have to buy a payroll company, buy a merchant processor, buy an insurance agency, buy a bank, be a long-term amortizing small business lender. I'm telling you, they really don't exist. Put this all in and get the staff to do it at the same time and weave the technology in place. Thanks, Andrew. thanks andrew And when Andrew says it can't be replicated, this has been obviously approved in our business plan by the OCC, by the Fed, with Reg W and understanding. and when andrew says it can't be replicated this has been obviously approved in our business plan by the occ by the fed with reg w and understanding And a competitor would have to buy a payroll company, buy a merchant processor, buy an insurance agency, buy a bank, be a long-term amortizing small business lender. and a competitor would have to buy a payroll company buy a merchant processor buy an insurance agency buy a bank be a long-term amortizing small business lender I'm telling you, they really don't exist. i'm telling you they really don't exist Put this all in and get the staff to do it at the same time and weave the technology in place. put this all in and get the staff to do it at the same time and weave the technology in place So Pete's going to spend a lot of time talking about the technology. He's done a fabulous job historically with Dan Hendel, our Chief Information Officer. But when we say this, it can't be replicated easily, but it's immeasurably scalable. I think that's important as well. Our ability to scale this, both from deposits, lending, payment processing, payroll, margin pool, it's all there. Unfortunately, most of the market doesn't really understand this and don't value it. And I wouldn't say it's a zero. It's probably a negative. Like, what is that crazy company doing? So Pete's going to spend a lot of time talking about the technology. so pete's going to spend a lot of time talking about the technology He's done a fabulous job historically with Dan Hendel, our Chief Information Officer. he's done a fabulous job historically with dan hendel our chief information officer But when we say this, it can't be replicated easily, but it's immeasurably scalable. but when we say this it can't be replicated easily but it's immeasurably scalable I think that's important as well. i think that's important as well Our ability to scale this, both from deposits, lending, payment processing, payroll, margin pool, it's all there. our ability to scale this both from deposits lending payment processing payroll margin pool it's all there Unfortunately, most of the market doesn't really understand this and don't value it. unfortunately most of the market doesn't really understand this and don't value it And I wouldn't say it's a zero. and i wouldn't say it's a zero It's probably a negative. it's probably a negative Like, what is that crazy company doing? like what is that crazy company doing But hopefully, with what Andrew has talked about today with respect to the Newtek Advantage, which is constantly being polished, honed, and advanced, when Pete talks about what we've done technologically, hopefully, you'll come away with a different viewpoint. In addition to comfort on credit, which we're going to give you today, we believe our credits have stabilized to improve. We'll be reporting in a month. We'll be able to demonstrate that. But this technological aspect of it is, no one asked about it. It's totally misunderstood. I mean, I would like to know how you got to open up 30,000 bank accounts fairly quickly from a single branch bank in Flushing, Queens, that their backup disaster recovery plan was driving a truck up if the power went down with a generator attached to it. But hopefully, with what Andrew has talked about today with respect to the Newtek Advantage, which is constantly being polished, honed, and advanced, when Pete talks about what we've done technologically, hopefully, you'll come away with a different viewpoint. but hopefully with what andrew has talked about today with respect to the newtek advantage which is constantly being polished honed and advanced when pete talks about what we've done technologically hopefully you'll come away with a different viewpoint In addition to comfort on credit, which we're going to give you today, we believe our credits have stabilized to improve. in addition to comfort on credit which we're going to give you today we believe our credits have stabilized to improve We'll be reporting in a month. we'll be reporting in a month We'll be able to demonstrate that. we'll be able to demonstrate that But this technological aspect of it is, no one asked about it. but this technological aspect of it is no one asked about it It's totally misunderstood. it's totally misunderstood I mean, I would like to know how you got to open up 30,000 bank accounts fairly quickly from a single branch bank in Flushing, Queens, that their backup disaster recovery plan was driving a truck up if the power went down with a generator attached to it. i mean i would like to know how you got to open up 30,000 bank accounts fairly quickly from a single branch bank in flushing queens that their backup disaster recovery plan was driving a truck up if the power went down with a generator attached to it And all of this is connected, obviously, to the Fiserv core, to NewTracker, to the Advantage. Pete, take it away. And all of this is connected, obviously, to the Fiserv core, to NewTracker, to the Advantage. and all of this is connected obviously to the fiserv core to newtracker to the advantage Pete, take it away. pete take it away

Speaker 12: Thank you, Barry. And thank you all for attending today. It's 75 degrees and sunny here in Boca. You all had a choice to do something else, but you chose to come inside and listen to us today. So I do appreciate that. Peter Downs, President of Newtek Bank. I think outside of Barry and maybe John Schmid, who's here today, might be the longest tenured employee at Newtek. Started here in July of 2003. I did start when I was 12. So it's helpful. And Barry is fond of saying I was six foot four, actually, when I started. So a little shorter than that now. But it's been a great 22, going on 23 years at Newtek. Thank you, Barry. thank you barry And thank you all for attending today. and thank you all for attending today It's 75 degrees and sunny here in Boca. it's 75 degrees and sunny here in boca You all had a choice to do something else, but you chose to come inside and listen to us today. you all had a choice to do something else but you chose to come inside and listen to us today So I do appreciate that. so i do appreciate that Peter Downs, President of Newtek Bank. peter downs president of newtek bank I think outside of Barry and maybe John Schmid, who's here today, might be the longest tenured employee at Newtek. i think outside of barry and maybe john schmid who's here today might be the longest tenured employee at newtek Started here in July of 2003. started here in july of 2003 I did start when I was 12. i did start when i was 12 So it's helpful. so it's helpful And Barry is fond of saying I was six foot four, actually, when I started. and barry is fond of saying i was six foot four actually when i started So a little shorter than that now. so a little shorter than that now But it's been a great 22, going on 23 years at Newtek. but it's been a great 22 going on 23 years at newtek I was asked to talk a little bit about our technology, our use of AI, kind of the future and what we're doing and how we do things. But I thought it was important to talk a little bit about history before we talk about the future and what we're doing here today. So July 1st, 2003, I started at Newtek. I asked Barry what he'd like me to do first. He said, "Get your hands around the pipeline of loans that we just started to develop." I said, "Sure." I went out to the one and only underwriter we had, and I asked him to show me the pipeline. He took me into an office, and that office was a whiteboard sitting on a chair. I was asked to talk a little bit about our technology, our use of AI, kind of the future and what we're doing and how we do things. i was asked to talk a little bit about our technology our use of ai kind of the future and what we're doing and how we do things But I thought it was important to talk a little bit about history before we talk about the future and what we're doing here today. but i thought it was important to talk a little bit about history before we talk about the future and what we're doing here today So July 1st, 2003, I started at Newtek. so july 1st 2003 i started at newtek I asked Barry what he'd like me to do first. i asked barry what he'd like me to do first He said, "Get your hands around the pipeline of loans that we just started to develop." I said, "Sure." I went out to the one and only underwriter we had, and I asked him to show me the pipeline. he said "get your hands around the pipeline of loans that we just started to develop." i said "sure." i went out to the one and only underwriter we had and i asked him to show me the pipeline He took me into an office, and that office was a whiteboard sitting on a chair. he took me into an office and that office was a whiteboard sitting on a chair Couldn't even afford to bolt it to the wall yet. We just had a whiteboard on a chair. It had three loans and marker. This is a true story, by the way. I'm not making this one up. I came back about 15 minutes later to Barry, and I said, "What do you want to know?" And he said, "Oh, you've only been gone 15 minutes. What do you need?" I said, "You have a pipeline of three, and they're tracked on a whiteboard with marker." And he's like, "Well, we got to do something about that. Let's go build a pipeline." So I went out and I said, "Let's see how we get referrals in." We had two referral partners. Each of those referral partners had a fax number to fax things to, fax machine. Couldn't even afford to bolt it to the wall yet. couldn't even afford to bolt it to the wall yet We just had a whiteboard on a chair. we just had a whiteboard on a chair It had three loans and marker. it had three loans and marker This is a true story, by the way. this is a true story by the way I'm not making this one up. i'm not making this one up I came back about 15 minutes later to Barry, and I said, "What do you want to know?" And he said, "Oh, you've only been gone 15 minutes. i came back about 15 minutes later to barry and i said "what do you want to know?" and he said "oh you've only been gone 15 minutes What do you need?" I said, "You have a pipeline of three, and they're tracked on a whiteboard with marker." And he's like, "Well, we got to do something about that. what do you need?" i said "you have a pipeline of three and they're tracked on a whiteboard with marker." and he's like "well we got to do something about that Let's go build a pipeline." So I went out and I said, "Let's see how we get referrals in." We had two referral partners. let's go build a pipeline." so i went out and i said "let's see how we get referrals in." we had two referral partners Each of those referral partners had a fax number to fax things to, fax machine. each of those referral partners had a fax number to fax things to fax machine One had green paper, one had yellow paper. When the fax would ring, it would have information about the borrower, how to contact them, what they were looking for. We would take the paper off the fax machine, poke three holes in it, put it in a binder. That was the beginning of NewTracker. When we started to add on more referral partners, we were running out of color for paper. So we had to do something else other than fax machines and taking them in that way. One had green paper, one had yellow paper. one had green paper one had yellow paper When the fax would ring, it would have information about the borrower, how to contact them, what they were looking for. when the fax would ring it would have information about the borrower how to contact them what they were looking for We would take the paper off the fax machine, poke three holes in it, put it in a binder. we would take the paper off the fax machine poke three holes in it put it in a binder That was the beginning of NewTracker. that was the beginning of newtracker When we started to add on more referral partners, we were running out of color for paper. when we started to add on more referral partners we were running out of color for paper So we had to do something else other than fax machines and taking them in that way. so we had to do something else other than fax machines and taking them in that way So we developed NewTracker as it exists today. So you've heard Barry talk about NewTracker having a patent on it. You talk about the Newtek Advantage inside of NewTracker. NewTracker started as our ability to communicate with referral partners to accept referrals for the products we offered. At that time was merchant solutions and lending. They would come to us with that information through a username and password-protected login. So we developed NewTracker as it exists today. so we developed newtracker as it exists today So you've heard Barry talk about NewTracker having a patent on it. so you've heard barry talk about newtracker having a patent on it You talk about the Newtek Advantage inside of NewTracker. you talk about the newtek advantage inside of newtracker NewTracker started as our ability to communicate with referral partners to accept referrals for the products we offered. newtracker started as our ability to communicate with referral partners to accept referrals for the products we offered At that time was merchant solutions and lending. at that time was merchant solutions and lending They would come to us with that information through a username and password-protected login. they would come to us with that information through a username and password-protected login They'd be able to see that referral and track it through its life. We gave them a window into our back office, was unique back in 2003 and 2004. We put a barcode on that referral. We called it a referral ID, a RID for short. And they were able to track those referrals throughout the process from beginning to end. They could see the comments we made, how many times we reached out to their clients, and what the process was going to be from there going forward. We matured that platform and grew some more referral partners and figured that we would start to focus in on the customer side of the transaction. At that point, we were sending needs lists out, and I'll talk about lending for a moment, needs lists out to clients via an email. They'd be able to see that referral and track it through its life. they'd be able to see that referral and track it through its life We gave them a window into our back office, was unique back in 2003 and 2004. we gave them a window into our back office was unique back in 2003 and 2004 We put a barcode on that referral. we put a barcode on that referral We called it a referral ID, a RID for short. we called it a referral id a rid for short And they were able to track those referrals throughout the process from beginning to end. and they were able to track those referrals throughout the process from beginning to end They could see the comments we made, how many times we reached out to their clients, and what the process was going to be from there going forward. they could see the comments we made how many times we reached out to their clients and what the process was going to be from there going forward We matured that platform and grew some more referral partners and figured that we would start to focus in on the customer side of the transaction. we matured that platform and grew some more referral partners and figured that we would start to focus in on the customer side of the transaction At that point, we were sending needs lists out, and I'll talk about lending for a moment, needs lists out to clients via an email. at that point we were sending needs lists out and i'll talk about lending for a moment needs lists out to clients via an email They were sending us back a FedEx package with their documents in them, paper. We would push paper around. As we grew and grew in referrals, we realized paper wasn't going to be the long road for us. We built on top of NewTracker a portal, a customer portal, an interface to be able to grab documentation from those potential business owners, those independent business owners. We had to make it easy so that we could track the information coming in as easy as attaching a document would be to an email. We were able to track throughout that process all the information that came in. We developed that and matured that. We went paperless at that point in time. We started to be frictionless to particular business owners in helping smooth out the process. They were sending us back a FedEx package with their documents in them, paper. they were sending us back a fedex package with their documents in them paper We would push paper around. we would push paper around As we grew and grew in referrals, we realized paper wasn't going to be the long road for us. as we grew and grew in referrals we realized paper wasn't going to be the long road for us We built on top of NewTracker a portal, a customer portal, an interface to be able to grab documentation from those potential business owners, those independent business owners. we built on top of newtracker a portal a customer portal an interface to be able to grab documentation from those potential business owners those independent business owners We had to make it easy so that we could track the information coming in as easy as attaching a document would be to an email. we had to make it easy so that we could track the information coming in as easy as attaching a document would be to an email We were able to track throughout that process all the information that came in. we were able to track throughout that process all the information that came in We developed that and matured that. we developed that and matured that We went paperless at that point in time. we went paperless at that point in time We started to be frictionless to particular business owners in helping smooth out the process. we started to be frictionless to particular business owners in helping smooth out the process As we grew from there, we started to develop that further for our internal needs so think about NewTracker now going from referral to document gathering and now to our internal processes. How do we complete a credit template? How do we gather information to document your loan and fund it? How do we provide funding documents to you? And then ultimately, when the loan is on the books, how do we service you as a client of ours over the next 5, 10, 15, 20, and 25 years? As we grew from there, we started to develop that further for our internal needs so think about NewTracker now going from referral to document gathering and now to our internal processes. as we grew from there we started to develop that further for our internal needs so think about newtracker now going from referral to document gathering and now to our internal processes How do we complete a credit template? how do we complete a credit template How do we gather information to document your loan and fund it? how do we gather information to document your loan and fund it How do we provide funding documents to you? how do we provide funding documents to you And then ultimately, when the loan is on the books, how do we service you as a client of ours over the next 5, 10, 15, 20, and 25 years? and then ultimately when the loan is on the books how do we service you as a client of ours over the next 5 10 15 20 and 25 years And so we built the repository for those business owners to be able to transact with us their business, yes, initially, and then ongoing as they became a client of Newtek so that, and I don't know if you can visualize what NewTracker is, but that is the core of what NewTracker is. And we built this. We own this code. This is a CRM. This is a loan operating system. This is a loan servicing system. It is a doc prep system, fully compliant with regulatory needs, audit needs. We'll go into some of that in these slides. But it's our system. We built it. We didn't buy it from someone and adapt our process to how they produced a piece of software. We bought it. We built it. We developed it over years. And so we built the repository for those business owners to be able to transact with us their business, yes, initially, and then ongoing as they became a client of Newtek so that, and I don't know if you can visualize what NewTracker is, but that is the core of what NewTracker is. and so we built the repository for those business owners to be able to transact with us their business yes initially and then ongoing as they became a client of newtek so that and i don't know if you can visualize what newtracker is but that is the core of what newtracker is And we built this. and we built this We own this code. we own this code This is a CRM. this is a crm This is a loan operating system. this is a loan operating system This is a loan servicing system. this is a loan servicing system It is a doc prep system, fully compliant with regulatory needs, audit needs. it is a doc prep system fully compliant with regulatory needs audit needs We'll go into some of that in these slides. we'll go into some of that in these slides But it's our system. but it's our system We built it. we built it We didn't buy it from someone and adapt our process to how they produced a piece of software. we didn't buy it from someone and adapt our process to how they produced a piece of software We bought it. we bought it We built it. we built it We developed it over years. we developed it over years We own the code. It's ours. And we continue to use it. We have a saying at Newtek, "If it's not in NewTracker, it didn't happen." So it's the core of everything we do, how our business operates, how our employees function, and how we interact with our referral partners. And we take every referral very seriously. They're like gold. We don't expect we're going to get another one tomorrow. We own the code. we own the code It's ours. it's ours And we continue to use it. and we continue to use it We have a saying at Newtek, "If it's not in NewTracker, it didn't happen." So it's the core of everything we do, how our business operates, how our employees function, and how we interact with our referral partners. we have a saying at newtek "if it's not in newtracker it didn't happen." so it's the core of everything we do how our business operates how our employees function and how we interact with our referral partners And we take every referral very seriously. and we take every referral very seriously They're like gold. they're like gold We don't expect we're going to get another one tomorrow. we don't expect we're going to get another one tomorrow Come in every day thinking that today is the day we're going to get a referral. Tomorrow, we're not. So we have to do it well. And that's how NewTracker was built. That's how we developed it over the years and how we integrated into our company. So just wanted to give a little background and history. It really was. If anybody would like to see something, I could show you. We really do have yellow fax paper and green fax paper. And I do have them in a three-ring binder. So we can go to slide 21. Turning to today. Today, we'll talk about. We'll look at this from a lending kind of viewpoint. Come in every day thinking that today is the day we're going to get a referral. come in every day thinking that today is the day we're going to get a referral Tomorrow, we're not. tomorrow we're not So we have to do it well. so we have to do it well And that's how NewTracker was built. and that's how newtracker was built That's how we developed it over the years and how we integrated into our company. that's how we developed it over the years and how we integrated into our company So just wanted to give a little background and history. so just wanted to give a little background and history It really was. it really was If anybody would like to see something, I could show you. if anybody would like to see something i could show you We really do have yellow fax paper and green fax paper. we really do have yellow fax paper and green fax paper And I do have them in a three-ring binder. and i do have them in a three-ring binder So we can go to slide 21. so we can go to slide 21 Turning to today. turning to today Today, we'll talk about. today we'll talk about We'll look at this from a lending kind of viewpoint. we'll look at this from a lending kind of viewpoint But keep in mind that what I'm talking about here today works equally well in our payments processing business, in our payroll business, in our insurance business, and in our banking and deposit gathering business. But I'm talking about this in a lending operating system side of the equation. So we're driving scale and efficiency. How are we doing that? Well, scale without hiring, automating workflows to handle growth without increasing headcount. Sounds pretty interesting. Just to give you real numbers, in 2022, we had 31 folks in the closing side of our equation. But keep in mind that what I'm talking about here today works equally well in our payments processing business, in our payroll business, in our insurance business, and in our banking and deposit gathering business. but keep in mind that what i'm talking about here today works equally well in our payments processing business in our payroll business in our insurance business and in our banking and deposit gathering business But I'm talking about this in a lending operating system side of the equation. but i'm talking about this in a lending operating system side of the equation So we're driving scale and efficiency. so we're driving scale and efficiency How are we doing that? how are we doing that Well, scale without hiring, automating workflows to handle growth without increasing headcount. well scale without hiring automating workflows to handle growth without increasing headcount Sounds pretty interesting. sounds pretty interesting Just to give you real numbers, in 2022, we had 31 folks in the closing side of our equation. just to give you real numbers in 2022 we had 31 folks in the closing side of our equation Those were closers, paralegals, and attorneys. Today, we still have 31 people in that group. We are closing this year three times the number of units we closed in 2022. So no additional headcount since 2022, three times the number of units. That is the development of the technology that we just talked about today. Those were closers, paralegals, and attorneys. those were closers paralegals and attorneys Today, we still have 31 people in that group. today we still have 31 people in that group We are closing this year three times the number of units we closed in 2022. we are closing this year three times the number of units we closed in 2022 So no additional headcount since 2022, three times the number of units. so no additional headcount since 2022 three times the number of units That is the development of the technology that we just talked about today. that is the development of the technology that we just talked about today Digital customer access, as we just talked about. Customers and referral partners can give us referrals, but customers apply, track, and manage their loans online through the phone, through their laptop. They all have access to see exactly where they are in the process. And then once they're a customer of ours, be able to manage their loan and their relationship with us online using tools like the Newtek Advantage. Faster decision-making, AI, big ticket today. We're using AI to help streamline the process for quicker approvals. We are not using AI to make decisions. We still make decisions, but the AI is helping us do analytics and streamline processes. I'll give you an example. We have pre-qualification calls. Those are recorded calls between a business owner and a business service specialist. Digital customer access, as we just talked about. digital customer access as we just talked about Customers and referral partners can give us referrals, but customers apply, track, and manage their loans online through the phone, through their laptop. customers and referral partners can give us referrals but customers apply track and manage their loans online through the phone through their laptop They all have access to see exactly where they are in the process. they all have access to see exactly where they are in the process And then once they're a customer of ours, be able to manage their loan and their relationship with us online using tools like the Newtek Advantage. and then once they're a customer of ours be able to manage their loan and their relationship with us online using tools like the newtek advantage Faster decision-making, AI, big ticket today. faster decision-making ai big ticket today We're using AI to help streamline the process for quicker approvals. we're using ai to help streamline the process for quicker approvals We are not using AI to make decisions. we are not using ai to make decisions We still make decisions, but the AI is helping us do analytics and streamline processes. we still make decisions but the ai is helping us do analytics and streamline processes I'll give you an example. i'll give you an example We have pre-qualification calls. we have pre-qualification calls Those are recorded calls between a business owner and a business service specialist. those are recorded calls between a business owner and a business service specialist That recorded call is listened to and transcribed by AI, put in a format that starts our credit template as a transaction summary without anybody having to put fingers on a keyboard. Have a conversation on the screen, as Barry was talking about, as we do all our interactions with borrowers, and from that conversation comes the beginning stages of our credit template, transaction summary, and all the foundation without putting fingers on a keyboard. That recorded call is listened to and transcribed by AI, put in a format that starts our credit template as a transaction summary without anybody having to put fingers on a keyboard. that recorded call is listened to and transcribed by ai put in a format that starts our credit template as a transaction summary without anybody having to put fingers on a keyboard Have a conversation on the screen, as Barry was talking about, as we do all our interactions with borrowers, and from that conversation comes the beginning stages of our credit template, transaction summary, and all the foundation without putting fingers on a keyboard. have a conversation on the screen as barry was talking about as we do all our interactions with borrowers and from that conversation comes the beginning stages of our credit template transaction summary and all the foundation without putting fingers on a keyboard Think about having a conversation with a business owner, not having to take notes, not having to remember what they said, how many employees did they say they have, what was their competitive advantage, what was the use of proceeds. Don't need to do that. Have the conversation, ask the questions, listen as a business service specialist, and then we're going to let AI do the enabling analytics and processing for us. Think about having a conversation with a business owner, not having to take notes, not having to remember what they said, how many employees did they say they have, what was their competitive advantage, what was the use of proceeds. think about having a conversation with a business owner not having to take notes not having to remember what they said how many employees did they say they have what was their competitive advantage what was the use of proceeds Don't need to do that. don't need to do that Have the conversation, ask the questions, listen as a business service specialist, and then we're going to let AI do the enabling analytics and processing for us. have the conversation ask the questions listen as a business service specialist and then we're going to let ai do the enabling analytics and processing for us Drives growth, shorter turn times, best-in-class customer experience. Andrew taught me best-in-class. So he uses that a lot. So I figured I'd throw one in. Seamless integrations. We're connecting with core banking systems. All of our NewTracker systems are connected to the cores. So when a customer is boarded, we're not putting fingers on a keyboard. It's going directly from NewTracker into the core. It's taking much of the heartache of boarding clients out of the way. Risk management, integrated tools. We use to monitor credit and risk. Transparency, clear audit trails, internal regulatory. Nick Young didn't explain to me that this was a regulated entity and what that meant. Thank you, Nick. So there's a lot of scrutiny at the bank, as you can imagine, in how we do what we do. Drives growth, shorter turn times, best-in-class customer experience. drives growth shorter turn times best-in-class customer experience Andrew taught me best-in-class. andrew taught me best-in-class So he uses that a lot. so he uses that a lot So I figured I'd throw one in. so i figured i'd throw one in Seamless integrations. seamless integrations We're connecting with core banking systems. we're connecting with core banking systems All of our NewTracker systems are connected to the cores. all of our newtracker systems are connected to the cores So when a customer is boarded, we're not putting fingers on a keyboard. so when a customer is boarded we're not putting fingers on a keyboard It's going directly from NewTracker into the core. it's going directly from newtracker into the core It's taking much of the heartache of boarding clients out of the way. it's taking much of the heartache of boarding clients out of the way Risk management, integrated tools. risk management integrated tools We use to monitor credit and risk. we use to monitor credit and risk Transparency, clear audit trails, internal regulatory. transparency clear audit trails internal regulatory Nick Young didn't explain to me that this was a regulated entity and what that meant. nick young didn't explain to me that this was a regulated entity and what that meant Thank you, Nick. thank you nick So there's a lot of scrutiny at the bank, as you can imagine, in how we do what we do. so there's a lot of scrutiny at the bank as you can imagine in how we do what we do NewTracker allows us to be able to do that in a very organized and electronic fashion without having to throw a lot of bodies at it. Clear audit trails, who touched the document, when they touched it, what they did with it, all recorded inside of the system, so very audit-friendly, which is a big deal in a regulated bank environment. Track the application on smartphones and tablets and reducing operating costs. NewTracker allows us to be able to do that in a very organized and electronic fashion without having to throw a lot of bodies at it. newtracker allows us to be able to do that in a very organized and electronic fashion without having to throw a lot of bodies at it Clear audit trails, who touched the document, when they touched it, what they did with it, all recorded inside of the system, so very audit-friendly, which is a big deal in a regulated bank environment. clear audit trails who touched the document when they touched it what they did with it all recorded inside of the system so very audit-friendly which is a big deal in a regulated bank environment Track the application on smartphones and tablets and reducing operating costs. track the application on smartphones and tablets and reducing operating costs

Speaker 6: Let me jump in just for a quick second. A couple of things to talk about. One, appointment setting. I think it's important. Pete and the team have built a funnel where we get 600 referrals a day, and you basically want to get back to the best ones first, so we quickly get out of FactFinder. It gets answered. Someone from the comfort of their home or in a business gets a very fast answer. If they've been in business X amount of years, if they have a high credit score, if their revenues are X, they get a secure file vault opportunity, which connects them, and they get an appointment setter and a calendar to speak to a human being. Very different. I think another important part is the funnel. Let me jump in just for a quick second. let me jump in just for a quick second A couple of things to talk about. a couple of things to talk about One, appointment setting. one appointment setting I think it's important. i think it's important Pete and the team have built a funnel where we get 600 referrals a day, and you basically want to get back to the best ones first, so we quickly get out of FactFinder. pete and the team have built a funnel where we get 600 referrals a day and you basically want to get back to the best ones first so we quickly get out of factfinder It gets answered. it gets answered Someone from the comfort of their home or in a business gets a very fast answer. someone from the comfort of their home or in a business gets a very fast answer If they've been in business X amount of years, if they have a high credit score, if their revenues are X, they get a secure file vault opportunity, which connects them, and they get an appointment setter and a calendar to speak to a human being. if they've been in business x amount of years if they have a high credit score if their revenues are x they get a secure file vault opportunity which connects them and they get an appointment setter and a calendar to speak to a human being Very different. very different I think another important part is the funnel. i think another important part is the funnel We have one big funnel. Businesses come in for money. They don't know whether it's a line of credit, which we now do. We'll connect it to the core. They don't know if they need a term loan. They don't know if they need an ALP loan, a 504 loan, a 7(a) loan. But we guide them through that process, and the one reason that you all know this is true is because people take merchant cash advance and daily debit like that at 30%-80% rates just because the money's there. The customer experience, I would argue, it might be good for the moment, but at the end of paying that loan off after a year, what do they have? They may need to reborrow again at a 40% rate. It's not a lot of renting. We have one big funnel. we have one big funnel Businesses come in for money. businesses come in for money They don't know whether it's a line of credit, which we now do. they don't know whether it's a line of credit which we now do We'll connect it to the core. we'll connect it to the core They don't know if they need a term loan. they don't know if they need a term loan They don't know if they need an ALP loan, a 504 loan, a 7(a) loan. they don't know if they need an alp loan a 504 loan a 7(a) loan But we guide them through that process, and the one reason that you all know this is true is because people take merchant cash advance and daily debit like that at 30%-80% rates just because the money's there. but we guide them through that process and the one reason that you all know this is true is because people take merchant cash advance and daily debit like that at 30%-80% rates just because the money's there The customer experience, I would argue, it might be good for the moment, but at the end of paying that loan off after a year, what do they have? the customer experience i would argue it might be good for the moment but at the end of paying that loan off after a year what do they have They may need to reborrow again at a 40% rate. they may need to reborrow again at a 40% rate It's not a lot of renting. it's not a lot of renting We have a totally different approach to making loans to this customer base. Long terms, no balloons, maximum flexibility, and covenants. I want to bring one other point up before handing the microphone back to Pete. Obviously, we recently heard about fraud. Fraud's the big thing, particularly fraud in Minnesota and moving money. The reality of it is, if you give a customer funding, and I'm not saying it's here today, whatever, the government wants to know, is it any money laundering? Is it BSA? Is it AML? So the reality of this is we are a financially regulated institution that's got fintech inside of it. We have a totally different approach to making loans to this customer base. we have a totally different approach to making loans to this customer base Long terms, no balloons, maximum flexibility, and covenants. long terms no balloons maximum flexibility and covenants I want to bring one other point up before handing the microphone back to Pete. i want to bring one other point up before handing the microphone back to pete Obviously, we recently heard about fraud. obviously we recently heard about fraud Fraud's the big thing, particularly fraud in Minnesota and moving money. fraud's the big thing particularly fraud in minnesota and moving money The reality of it is, if you give a customer funding, and I'm not saying it's here today, whatever, the government wants to know, is it any money laundering? the reality of it is if you give a customer funding and i'm not saying it's here today whatever the government wants to know is it any money laundering Is it BSA? is it bsa Is it AML? is it aml So the reality of this is we are a financially regulated institution that's got fintech inside of it. so the reality of this is we are a financially regulated institution that's got fintech inside of it It's extremely valuable, so we all know that there are issues with banking as a service, lending as a service. In dealing with our organization, you get the best of both worlds, and we've been regulated and examined over three years. It's fully compliant. So for organizations and customers that are looking for a model that's technologically capable, that's scalable, and that's compliant, Pete, Dan Hendel, and many others in the organization have built an incredible way to do business, and I will tell you, we have fairly large core operating platform providers that are interested in our lending operating system and working with us, and that is something that is testament to what Pete's built. Back to you. It's extremely valuable, so we all know that there are issues with banking as a service, lending as a service. it's extremely valuable so we all know that there are issues with banking as a service lending as a service In dealing with our organization, you get the best of both worlds, and we've been regulated and examined over three years. in dealing with our organization you get the best of both worlds and we've been regulated and examined over three years It's fully compliant. it's fully compliant So for organizations and customers that are looking for a model that's technologically capable, that's scalable, and that's compliant, Pete, Dan Hendel, and many others in the organization have built an incredible way to do business, and I will tell you, we have fairly large core operating platform providers that are interested in our lending operating system and working with us, and that is something that is testament to what Pete's built. so for organizations and customers that are looking for a model that's technologically capable that's scalable and that's compliant pete dan hendel and many others in the organization have built an incredible way to do business and i will tell you we have fairly large core operating platform providers that are interested in our lending operating system and working with us and that is something that is testament to what pete's built Back to you. back to you

Speaker 12: Thank you. Page 22. We are branchless. We're a unique bank. We had to open up digital deposit accounts for business customers, not consumers, but business customers. Thank you. thank you Page 22. page 22 We are branchless. we are branchless We're a unique bank. we're a unique bank We had to open up digital deposit accounts for business customers, not consumers, but business customers. we had to open up digital deposit accounts for business customers not consumers but business customers Had a lot of work to be done to be able to do that digitally inside of the platform that we've built and that we just described today. So we simplified small business banking to be able to open deposit accounts for business customers very easily and quickly using the tools that we just talked about today. So ease of application. It's a simple, intuitive process for the small business to open up deposit accounts online. We couldn't make it difficult to do. We would lose interest from people integrated with our loan operating system. So all of what we just talked about in gathering data to get a loan in, we had much of the data we needed to also offer a deposit account for you. Had a lot of work to be done to be able to do that digitally inside of the platform that we've built and that we just described today. had a lot of work to be done to be able to do that digitally inside of the platform that we've built and that we just described today So we simplified small business banking to be able to open deposit accounts for business customers very easily and quickly using the tools that we just talked about today. so we simplified small business banking to be able to open deposit accounts for business customers very easily and quickly using the tools that we just talked about today So ease of application. so ease of application It's a simple, intuitive process for the small business to open up deposit accounts online. it's a simple intuitive process for the small business to open up deposit accounts online We couldn't make it difficult to do. we couldn't make it difficult to do We would lose interest from people integrated with our loan operating system. we would lose interest from people integrated with our loan operating system So all of what we just talked about in gathering data to get a loan in, we had much of the data we needed to also offer a deposit account for you. so all of what we just talked about in gathering data to get a loan in we had much of the data we needed to also offer a deposit account for you

Speaker 6: So rather than ask you to put the information in again to apply for a deposit account, we're able to integrate our loan operating system and our digital account opening process for deposit accounts so that there's no redundant data entry. It sounds easy. It's not. It's difficult. If it was easy, everybody would be doing it right now. They're not. So we worked hard to make it so that it's a single application for a business owner. These are independent business owners running their businesses. Barry said [they] want to communicate at night, weekends. They don't have time to be filling out multiple applications or coming into a branch. They want to be able to do this on their own time in their own place of business. A single Know Your Customer process, KYC. Barry just talked about that. So rather than ask you to put the information in again to apply for a deposit account, we're able to integrate our loan operating system and our digital account opening process for deposit accounts so that there's no redundant data entry. so rather than ask you to put the information in again to apply for a deposit account we're able to integrate our loan operating system and our digital account opening process for deposit accounts so that there's no redundant data entry It sounds easy. it sounds easy It's not. it's not It's difficult. it's difficult If it was easy, everybody would be doing it right now. if it was easy everybody would be doing it right now They're not. they're not So we worked hard to make it so that it's a single application for a business owner. so we worked hard to make it so that it's a single application for a business owner These are independent business owners running their businesses. these are independent business owners running their businesses Barry said [they] want to communicate at night, weekends. barry said [they] want to communicate at night weekends They don't have time to be filling out multiple applications or coming into a branch. they don't have time to be filling out multiple applications or coming into a branch They want to be able to do this on their own time in their own place of business. they want to be able to do this on their own time in their own place of business A single Know Your Customer process, KYC. a single know your customer process kyc Barry just talked about that. barry just talked about that With fraud, money movement, and all sorts of heightened awareness of issues that are out there today, having that process in place easily through our digital account opening process is key. Instant offering with a loan approval. So when we have the loan approved, we instantly offer because we've gathered the information we needed to approve you for a deposit account at the same time you applied for the loan. And we did that single integrated KYC. We're able to instantly offer you a deposit account automatically upon your loan approval. You didn't ask. My mom always said, "Try to do something for somebody when they don't ask you to do it." That's polite. Well, we're trying to be polite. You didn't ask. With fraud, money movement, and all sorts of heightened awareness of issues that are out there today, having that process in place easily through our digital account opening process is key. with fraud money movement and all sorts of heightened awareness of issues that are out there today having that process in place easily through our digital account opening process is key Instant offering with a loan approval. instant offering with a loan approval So when we have the loan approved, we instantly offer because we've gathered the information we needed to approve you for a deposit account at the same time you applied for the loan. so when we have the loan approved we instantly offer because we've gathered the information we needed to approve you for a deposit account at the same time you applied for the loan And we did that single integrated KYC. and we did that single integrated kyc We're able to instantly offer you a deposit account automatically upon your loan approval. we're able to instantly offer you a deposit account automatically upon your loan approval You didn't ask. you didn't ask My mom always said, "Try to do something for somebody when they don't ask you to do it." That's polite. my mom always said "try to do something for somebody when they don't ask you to do it." that's polite Well, we're trying to be polite. well we're trying to be polite You didn't ask. you didn't ask We're going to offer it anyway. Direct onboarding to the core, as we do on the loan side of the equation. Regulatory compliance built in. As Barry said, we've been fully tested with banking regulations and audit requirements. Then the enhanced customer experience for faster boarding. It's one application. It's a better experience for the client. They don't have to do things multiple times. Page 23. I'll talk a little bit about AI and lending today and what we're going to do in the future. We talked a little bit about the call recording and translation. We do automated review of financial data. We're going to offer it anyway. we're going to offer it anyway Direct onboarding to the core, as we do on the loan side of the equation. direct onboarding to the core as we do on the loan side of the equation Regulatory compliance built in. regulatory compliance built in As Barry said, we've been fully tested with banking regulations and audit requirements. as barry said we've been fully tested with banking regulations and audit requirements Then the enhanced customer experience for faster boarding. then the enhanced customer experience for faster boarding It's one application. it's one application It's a better experience for the client. it's a better experience for the client They don't have to do things multiple times. they don't have to do things multiple times Page 23. page 23 I'll talk a little bit about AI and lending today and what we're going to do in the future. i'll talk a little bit about ai and lending today and what we're going to do in the future We talked a little bit about the call recording and translation. we talked a little bit about the call recording and translation We do automated review of financial data. we do automated review of financial data So we're reading tax transcripts, bank statements, credit bureau information as they come in and placing that information integrated into our credit templates. We're not sitting here and typing in spreads for tax returns or your average bank balances or what your FICO score was. They're coming in, and they're coming in directly into our template. Speed. Spreading of the tax returns. Spreading of the bank statements. It's not only speed and ease for our underwriting side, but it also makes it a more consistent cash flow analysis as it gets pulled in from the tax returns. And tax returns lend themselves very well to this type of analysis. Line 23 is line 23 on everybody's tax return. So we're reading tax transcripts, bank statements, credit bureau information as they come in and placing that information integrated into our credit templates. so we're reading tax transcripts bank statements credit bureau information as they come in and placing that information integrated into our credit templates We're not sitting here and typing in spreads for tax returns or your average bank balances or what your FICO score was. we're not sitting here and typing in spreads for tax returns or your average bank balances or what your fico score was They're coming in, and they're coming in directly into our template. they're coming in and they're coming in directly into our template Speed. speed Spreading of the tax returns. spreading of the tax returns Spreading of the bank statements. spreading of the bank statements It's not only speed and ease for our underwriting side, but it also makes it a more consistent cash flow analysis as it gets pulled in from the tax returns. it's not only speed and ease for our underwriting side but it also makes it a more consistent cash flow analysis as it gets pulled in from the tax returns And tax returns lend themselves very well to this type of analysis. and tax returns lend themselves very well to this type of analysis Line 23 is line 23 on everybody's tax return. line 23 is line 23 on everybody's tax return So it makes it easy to do, and it gives us some more consistency of cash flow. We look at you use AI to do some summation of documents. Think about leases. Think about operating agreements or business corporate docs. Think about franchise agreements. Somebody would have to read those and pull key terms out of those agreements to see if they matched what we were looking for in our credit approval. I'm making you a 10-year loan. I'd like to know you have a lease in your building for the next 10 years. So it makes it easy to do, and it gives us some more consistency of cash flow. so it makes it easy to do and it gives us some more consistency of cash flow We look at you use AI to do some summation of documents. we look at you use ai to do some summation of documents Think about leases. think about leases Think about operating agreements or business corporate docs. think about operating agreements or business corporate docs Think about franchise agreements. think about franchise agreements Somebody would have to read those and pull key terms out of those agreements to see if they matched what we were looking for in our credit approval. somebody would have to read those and pull key terms out of those agreements to see if they matched what we were looking for in our credit approval I'm making you a 10-year loan. i'm making you a 10-year loan I'd like to know you have a lease in your building for the next 10 years. i'd like to know you have a lease in your building for the next 10 years Somebody's got to read a lease and look to see if it's a 10-year lease and if it's coterminous with the maturity of your loan. AI is reading those, summarizing those instantly as the client is uploading those documents to their portal and giving us back that information so we don't have somebody doing the mundane task of reading and picking out documents. They can actually do what they're paid for, which is make sure it actually fits what we're looking for. So we're taking more mundane tasks and turning them into better and faster processes. Instant access to insurance needed to close loans. Many of our loans would require Key Man Life Insurance as an instance of this bullet point. Inside of our NewTracker portal is a connection to a life insurance option. Somebody's got to read a lease and look to see if it's a 10-year lease and if it's coterminous with the maturity of your loan. somebody's got to read a lease and look to see if it's a 10-year lease and if it's coterminous with the maturity of your loan AI is reading those, summarizing those instantly as the client is uploading those documents to their portal and giving us back that information so we don't have somebody doing the mundane task of reading and picking out documents. ai is reading those summarizing those instantly as the client is uploading those documents to their portal and giving us back that information so we don't have somebody doing the mundane task of reading and picking out documents They can actually do what they're paid for, which is make sure it actually fits what we're looking for. they can actually do what they're paid for which is make sure it actually fits what we're looking for So we're taking more mundane tasks and turning them into better and faster processes. so we're taking more mundane tasks and turning them into better and faster processes Instant access to insurance needed to close loans. instant access to insurance needed to close loans Many of our loans would require Key Man Life Insurance as an instance of this bullet point. many of our loans would require key man life insurance as an instance of this bullet point Inside of our NewTracker portal is a connection to a life insurance option. inside of our newtracker portal is a connection to a life insurance option If you'd like to take life insurance out through Newtek Insurance Agency, it's a click of a button. It's about three minutes' worth of additional questions. Again, we're porting over as much information as we have on the individuals already to the life insurance application. You're filling in a few additional questions. With those questions comes an instant bindable quote. Bindable quote. Not an offer. Not come and talk to us if you're interested, but a bindable quote. If you'd like to take life insurance out through Newtek Insurance Agency, it's a click of a button. if you'd like to take life insurance out through newtek insurance agency it's a click of a button It's about three minutes' worth of additional questions. it's about three minutes' worth of additional questions Again, we're porting over as much information as we have on the individuals already to the life insurance application. again we're porting over as much information as we have on the individuals already to the life insurance application You're filling in a few additional questions. you're filling in a few additional questions With those questions comes an instant bindable quote. with those questions comes an instant bindable quote Bindable quote. bindable quote Not an offer. not an offer Not come and talk to us if you're interested, but a bindable quote. not come and talk to us if you're interested but a bindable quote

Speaker 5: Okay. There you go. Thank you. Thank you. I appreciate that. I'm sorry. So you said it wasn't three minutes. It was only a minute and a half. So we had a client in here that held me accountable. Thank you very much for that. They can choose who the beneficiary is, but it's assigned to Newtek. Okay. okay There you go. there you go Thank you. thank you Thank you. thank you I appreciate that. i appreciate that I'm sorry. i'm sorry So you said it wasn't three minutes. so you said it wasn't three minutes It was only a minute and a half. it was only a minute and a half So we had a client in here that held me accountable. so we had a client in here that held me accountable Thank you very much for that. thank you very much for that They can choose who the beneficiary is, but it's assigned to Newtek. they can choose who the beneficiary is but it's assigned to newtek So if there ever were an issue and you needed the insurance to pay off the remaining balance of the loan, you could use that insurance to pay off the balance alone. It's not only assigned simultaneously. And that's the key. That was what I was getting to on the next part of the insurance. It's not only a bindable quote that's instant, but you're delivering the policy with the assignment language back to us as a lender. So that used to take days, if not weeks, to go to carriers to get the actual policy and then the assignment back to us before we could close. This is now instant. So thank you. Within a minute and a half, we were delivered an instant bindable quote with an assignment back. So if there ever were an issue and you needed the insurance to pay off the remaining balance of the loan, you could use that insurance to pay off the balance alone. so if there ever were an issue and you needed the insurance to pay off the remaining balance of the loan you could use that insurance to pay off the balance alone It's not only assigned simultaneously. it's not only assigned simultaneously And that's the key. and that's the key That was what I was getting to on the next part of the insurance. that was what i was getting to on the next part of the insurance It's not only a bindable quote that's instant, but you're delivering the policy with the assignment language back to us as a lender. it's not only a bindable quote that's instant but you're delivering the policy with the assignment language back to us as a lender So that used to take days, if not weeks, to go to carriers to get the actual policy and then the assignment back to us before we could close. so that used to take days if not weeks to go to carriers to get the actual policy and then the assignment back to us before we could close This is now instant. this is now instant So thank you. so thank you Within a minute and a half, we were delivered an instant bindable quote with an assignment back. within a minute and a half we were delivered an instant bindable quote with an assignment back

Speaker 6: Insurance never delivered assignment. So we had to purchase a second insurance, spend a minute and a half again. And eventually, that was a very successful experience that the client experienced. Insurance never delivered assignment. insurance never delivered assignment So we had to purchase a second insurance, spend a minute and a half again. so we had to purchase a second insurance spend a minute and a half again And eventually, that was a very successful experience that the client experienced. and eventually that was a very successful experience that the client experienced

Speaker 5: Thank you. And we're not related in any way. So that's not in the line of. Thank you. Thank you. thank you And we're not related in any way. and we're not related in any way So that's not in the line of. so that's not in the line of Thank you. thank you

Speaker 6: Thank you. This is what is emphasizing the position that we have in the market of embedding solutions into a single application. So you come in for a loan, the solutions are embedded. We're about to roll out the P&C policy for the loan. The life is there for the loan. The flood insurance is there for the loan. So it makes the lending process much better. The bank account is there for the loan. So it's one application, and you get multiple solutions all at the same time. That's the benefit. Thank you. thank you This is what is emphasizing the position that we have in the market of embedding solutions into a single application. this is what is emphasizing the position that we have in the market of embedding solutions into a single application So you come in for a loan, the solutions are embedded. so you come in for a loan the solutions are embedded We're about to roll out the P&C policy for the loan. we're about to roll out the p&c policy for the loan The life is there for the loan. the life is there for the loan The flood insurance is there for the loan. the flood insurance is there for the loan So it makes the lending process much better. so it makes the lending process much better The bank account is there for the loan. the bank account is there for the loan So it's one application, and you get multiple solutions all at the same time. so it's one application and you get multiple solutions all at the same time That's the benefit. that's the benefit So then crossing back to what Andrew was talking about in the Newtek Advantage, do you think business owners want to go to ADP, want to go to the bank, want to go to their daily debit provider, and their insurance? I mean, this is all in one place. Now, we don't force it. We don't require it, but it's there. It's convenient. It's at the right price. People take it. And that's what we've built. And that's what, frankly, very few people know and understand. I will tell you that the internal teaching, training, and mentoring of our staff to be able to roll these things out is at a very low level, but it's still working, and it's going to grow from here. Pete. So then crossing back to what Andrew was talking about in the Newtek Advantage, do you think business owners want to go to ADP, want to go to the bank, want to go to their daily debit provider, and their insurance? so then crossing back to what andrew was talking about in the newtek advantage do you think business owners want to go to adp want to go to the bank want to go to their daily debit provider and their insurance I mean, this is all in one place. i mean this is all in one place Now, we don't force it. now we don't force it We don't require it, but it's there. we don't require it but it's there It's convenient. it's convenient It's at the right price. it's at the right price People take it. people take it And that's what we've built. and that's what we've built And that's what, frankly, very few people know and understand. and that's what frankly very few people know and understand I will tell you that the internal teaching, training, and mentoring of our staff to be able to roll these things out is at a very low level, but it's still working, and it's going to grow from here. i will tell you that the internal teaching training and mentoring of our staff to be able to roll these things out is at a very low level but it's still working and it's going to grow from here Pete. pete

Speaker 12: Thank you. I want to go to page 24. What's all this going to do for us? Right? It's nice to say that we do all these things, and we have all these things integrated. How do they become tangible offerings? So because of the loan operating system we have, the digital account opening process we just talked about for business deposits, and the AI that we're using today, we're able to look at two offerings that we're focused on and very excited to roll out. Small business term loan launch. Thank you. thank you I want to go to page 24. i want to go to page 24 What's all this going to do for us? what's all this going to do for us Right? right It's nice to say that we do all these things, and we have all these things integrated. it's nice to say that we do all these things and we have all these things integrated How do they become tangible offerings? how do they become tangible offerings So because of the loan operating system we have, the digital account opening process we just talked about for business deposits, and the AI that we're using today, we're able to look at two offerings that we're focused on and very excited to roll out. so because of the loan operating system we have the digital account opening process we just talked about for business deposits and the ai that we're using today we're able to look at two offerings that we're focused on and very excited to roll out Small business term loan launch. small business term loan launch That will be apply and pre-qualify in seven minutes, close and fund in seven days with a real term loan. Long-term 10-year amortization, which is going to give you much lower payments. Secured by business and personal assets. Not just a daily deposit loan and hope the money's there to when you want to debit the account to take the money out. These are secured loans. They'll meet SBA eligibility criteria. Competitive interest rates. That will be apply and pre-qualify in seven minutes, close and fund in seven days with a real term loan. that will be apply and pre-qualify in seven minutes close and fund in seven days with a real term loan Long-term 10-year amortization, which is going to give you much lower payments. long-term 10-year amortization which is going to give you much lower payments Secured by business and personal assets. secured by business and personal assets Not just a daily deposit loan and hope the money's there to when you want to debit the account to take the money out. not just a daily deposit loan and hope the money's there to when you want to debit the account to take the money out These are secured loans. these are secured loans They'll meet SBA eligibility criteria. they'll meet sba eligibility criteria Competitive interest rates. competitive interest rates Talking Prime plus 3, we're not talking about 40% on the daily deposit merchant cash. Underwritten, not score-based. So we keep to our five Cs of credit. And loan size is up to $350,000. This is achievable because of the things that we've built inside of that loan operating system, that digital account opening process, and utilizing AI. In addition. Great pleasure. Talking Prime plus 3, we're not talking about 40% on the daily deposit merchant cash. talking prime plus 3 we're not talking about 40% on the daily deposit merchant cash Underwritten, not score-based. underwritten not score-based So we keep to our five Cs of credit. so we keep to our five cs of credit And loan size is up to $350,000. and loan size is up to $350,000 This is achievable because of the things that we've built inside of that loan operating system, that digital account opening process, and utilizing AI. this is achievable because of the things that we've built inside of that loan operating system that digital account opening process and utilizing ai In addition. in addition Great pleasure. great pleasure

Speaker 6: This is the one area of a hole in our offering just because we're competing against TV ads that says, "Oh, come to me. I'll make you a loan in five minutes. I'll get you the money in five days," or whatever the heck it is. We can basically be able to go out on a secured basis. It's extremely important. It's not daily debit. It's not MCA. This is the one area of a hole in our offering just because we're competing against TV ads that says, "Oh, come to me. this is the one area of a hole in our offering just because we're competing against tv ads that says "oh come to me I'll make you a loan in five minutes. i'll make you a loan in five minutes I'll get you the money in five days," or whatever the heck it is. i'll get you the money in five days," or whatever the heck it is We can basically be able to go out on a secured basis. we can basically be able to go out on a secured basis It's extremely important. it's extremely important It's not daily debit. it's not daily debit It's not MCA. it's not mca And through our technology, I'm not saying it's going to fit everybody, but make a secured offering with liens that'll help us on the credit side where we could do well at Prime Plus 3. And the customer walks away and goes, "I'm not paying a 40% or a 50% VIG for money." So this will be added to it. What are the terms of these companies that hit you up and are proactive and telling us about social media? You could - And through our technology, I'm not saying it's going to fit everybody, but make a secured offering with liens that'll help us on the credit side where we could do well at Prime Plus 3. and through our technology i'm not saying it's going to fit everybody but make a secured offering with liens that'll help us on the credit side where we could do well at prime plus 3 And the customer walks away and goes, "I'm not paying a 40% or a 50% VIG for money." So this will be added to it. and the customer walks away and goes "i'm not paying a 40% or a 50% vig for money." so this will be added to it What are the terms of these companies that hit you up and are proactive and telling us about social media? You could - what are the terms of these companies that hit you up and are proactive and telling us about social media? you could -

Speaker 12: I don't want to mention names on the call, but the MCA players, and there was a big play in the market with one player that's kind of merging into a private company. They're public, but it's able to deliver the money quickly. I mean, the business owner today, if they want the cash, they want it quick, and they want certainty of funding. They're not discriminating. I don't want to mention names on the call, but the MCA players, and there was a big play in the market with one player that's kind of merging into a private company. i don't want to mention names on the call but the mca players and there was a big play in the market with one player that's kind of merging into a private company They're public, but it's able to deliver the money quickly. they're public but it's able to deliver the money quickly I mean, the business owner today, if they want the cash, they want it quick, and they want certainty of funding. i mean the business owner today if they want the cash they want it quick and they want certainty of funding They're not discriminating. they're not discriminating

Speaker 6: It's not to say they're happy after they realize that after a year, they paid all the principal back, and they paid a 40%-50% rate on it. They can't be happy. They might be okay, but they're not thrilled. We offer what we refer to as an adult loan. And now we can give them an adult loan. It's not going to fit everybody. We want to basically, we're not in the business of funding businesses leading to the cemetery. We're in the business of funding businesses that should be underwritable. They've been in business a long time. They have a legitimate business. They have good balances in the bank. If they need quick funding, we can do it. We can get security on the loan. So we will have this particular program. Pete. It's not to say they're happy after they realize that after a year, they paid all the principal back, and they paid a 40%-50% rate on it. it's not to say they're happy after they realize that after a year they paid all the principal back and they paid a 40%-50% rate on it They can't be happy. they can't be happy They might be okay, but they're not thrilled. they might be okay but they're not thrilled We offer what we refer to as an adult loan. we offer what we refer to as an adult loan And now we can give them an adult loan. and now we can give them an adult loan It's not going to fit everybody. it's not going to fit everybody We want to basically, we're not in the business of funding businesses leading to the cemetery. we want to basically we're not in the business of funding businesses leading to the cemetery We're in the business of funding businesses that should be underwritable. we're in the business of funding businesses that should be underwritable They've been in business a long time. they've been in business a long time They have a legitimate business. they have a legitimate business They have good balances in the bank. they have good balances in the bank If they need quick funding, we can do it. if they need quick funding we can do it We can get security on the loan. we can get security on the loan So we will have this particular program. so we will have this particular program Pete. pete

Speaker 12: So you're talking about when you get these things to your desk and you see these on a daily basis. We've talked a lot to business owners because we talk to them on a daily basis, hundreds. And it is ease and speed as well as the terms that we offer. So using the tools that we've built to be able to offer something that's easy and quick to be able to be funded and keep us into the types of loans that we make today is really what we're trying to take advantage of. So we had this in place, and we've worked hard to put this all together so that we can offer these things on a quick basis. So you're talking about when you get these things to your desk and you see these on a daily basis. so you're talking about when you get these things to your desk and you see these on a daily basis We've talked a lot to business owners because we talk to them on a daily basis, hundreds. we've talked a lot to business owners because we talk to them on a daily basis hundreds And it is ease and speed as well as the terms that we offer. and it is ease and speed as well as the terms that we offer So using the tools that we've built to be able to offer something that's easy and quick to be able to be funded and keep us into the types of loans that we make today is really what we're trying to take advantage of. so using the tools that we've built to be able to offer something that's easy and quick to be able to be funded and keep us into the types of loans that we make today is really what we're trying to take advantage of So we had this in place, and we've worked hard to put this all together so that we can offer these things on a quick basis. so we had this in place and we've worked hard to put this all together so that we can offer these things on a quick basis Offering number two is what we call the Triple Play offering. We talked earlier about having one application to be able to do multiple things. This is the culmination of that work. One application, I'm going to get you three instant offers. The business bank account that we talked about today and our business bank accounts have no fees, no fees, and pay you interest on your balances. We'll give you your earnings credits towards and offset the fees that we charge you so effectively you have no fees. We don't charge you fees. And we pay you interest on your balances. O f fering number two is what we call the Triple Play offering. o f fering number two is what we call the triple play offering We talked earlier about having one application to be able to do multiple things. we talked earlier about having one application to be able to do multiple things This is the culmination of that work. this is the culmination of that work One application, I'm going to get you three instant offers. one application i'm going to get you three instant offers The business bank account that we talked about today and our business bank accounts have no fees, no fees, and pay you interest on your balances. the business bank account that we talked about today and our business bank accounts have no fees no fees and pay you interest on your balances We'll give you your earnings credits towards and offset the fees that we charge you so effectively you have no fees. we'll give you your earnings credits towards and offset the fees that we charge you so effectively you have no fees We don't charge you fees. we don't charge you fees And we pay you interest on your balances. and we pay you interest on your balances That is actually cash that we put into your account on a monthly basis in interest that you can go and spend and go and do things with it. So this is not earnings credit offsetting your fees that we're charging you so that you think you've got no fee banking. No, this is true no fee banking. Not charging you and paying you interest. We're able to do that because we don't have a back book of fee interest. And when you look at our net interest margin at the bank, what Frank's about, 5.5%, give or take? Give or take. That is actually cash that we put into your account on a monthly basis in interest that you can go and spend and go and do things with it. that is actually cash that we put into your account on a monthly basis in interest that you can go and spend and go and do things with it So this is not earnings credit offsetting your fees that we're charging you so that you think you've got no fee banking. so this is not earnings credit offsetting your fees that we're charging you so that you think you've got no fee banking No, this is true no fee banking. no this is true no fee banking Not charging you and paying you interest. not charging you and paying you interest We're able to do that because we don't have a back book of fee interest. we're able to do that because we don't have a back book of fee interest And when you look at our net interest margin at the bank, what Frank's about, 5.5%, give or take? and when you look at our net interest margin at the bank what frank's about 5.5% give or take Give or take. give or take About 5.5% at the bank, give or take. So these are risk-adjusted returns, which is what I talked about previously. So if you're making low-margin, no-risk loans, you can't do this. Matter of fact, most of the bank's entire business model is predicated upon interest way below the discount rate and the fees from the back book. We don't have the back book. So we're able to actually give our customers a really good deal. It's true 100%, no fee banking, no asterisk, no BS. Even if you bounce a check, we don't charge you a fee. We won't let you bounce checks for too long. But even if you bounce a check, there is absolutely no fee, no minimum, no asterisk. About 5.5% at the bank, give or take. about 5.5% at the bank give or take So these are risk-adjusted returns, which is what I talked about previously. so these are risk-adjusted returns which is what i talked about previously So if you're making low-margin, no-risk loans, you can't do this. so if you're making low-margin no-risk loans you can't do this Matter of fact, most of the bank's entire business model is predicated upon interest way below the discount rate and the fees from the back book. matter of fact most of the bank's entire business model is predicated upon interest way below the discount rate and the fees from the back book We don't have the back book. we don't have the back book So we're able to actually give our customers a really good deal. so we're able to actually give our customers a really good deal It's true 100%, no fee banking, no asterisk, no BS. it's true 100% no fee banking no asterisk no bs Even if you bounce a check, we don't charge you a fee. even if you bounce a check we don't charge you a fee We won't let you bounce checks for too long. we won't let you bounce checks for too long But even if you bounce a check, there is absolutely no fee, no minimum, no asterisk. but even if you bounce a check there is absolutely no fee no minimum no asterisk And the Triple Play that Pete's talking about probably starts off with a minimum of around $10,000 to get you that instant decision. It's connected to the bank account. You put that and you attach it to the debit card that's on the business that has a cashback capability. It's a pretty powerful offering to a small business. There'll be no fee for the line of credit. There'll be no non-usage fee. So if I want to grow my payroll book or I want to grow my merchant book, at the same time, you could pick up a $10,000 line of credit. It doesn't cost you anything. Extremely attractive. Got it. Some of us bankers would like you to charge a fee on NSFs, even if it's a small one. And the Triple Play that Pete's talking about probably starts off with a minimum of around $10,000 to get you that instant decision. and the triple play that pete's talking about probably starts off with a minimum of around $10,000 to get you that instant decision It's connected to the bank account. it's connected to the bank account You put that and you attach it to the debit card that's on the business that has a cashback capability. you put that and you attach it to the debit card that's on the business that has a cashback capability It's a pretty powerful offering to a small business. it's a pretty powerful offering to a small business There'll be no fee for the line of credit. there'll be no fee for the line of credit There'll be no non-usage fee. there'll be no non-usage fee So if I want to grow my payroll book or I want to grow my merchant book, at the same time, you could pick up a $10,000 line of credit. so if i want to grow my payroll book or i want to grow my merchant book at the same time you could pick up a $10,000 line of credit It doesn't cost you anything. it doesn't cost you anything Extremely attractive. extremely attractive Got it. got it Some of us bankers would like you to charge a fee on NSFs, even if it's a small one. some of us bankers would like you to charge a fee on nsfs even if it's a small one I'll argue with you after. That's not my question. Frank, 30,000 accounts opened, I think you had up on your sheet or Andrew. What's the average balance in those accounts? Where does it start and what's it grow to when it's normal? I'll argue with you after. i'll argue with you after That's not my question. that's not my question Frank, 30,000 accounts opened, I think you had up on your sheet or Andrew. frank 30,000 accounts opened i think you had up on your sheet or andrew What's the average balance in those accounts? what's the average balance in those accounts Where does it start and what's it grow to when it's normal? where does it start and what's it grow to when it's normal

Speaker 6: It's about 50. It's about 50. it's about 50 Hopefully, somebody up there knows. Barry's not allowed to answer. Hopefully, somebody up there knows. hopefully somebody up there knows Barry's not allowed to answer. barry's not allowed to answer

Speaker 11: No, we're just putting the—who's going to answer you? It's about $50,000 in size. No, we're just putting the—who's going to answer you? no we're just putting the—who's going to answer you It's about $50,000 in size. it's about $50,000 in size And we're not talking CDs, right? Those are transaction accounts of some kind. And we're not talking CDs, right? and we're not talking cds right Those are transaction accounts of some kind. those are transaction accounts of some kind We don't do consumer checking. It's consumer high-yield savings. Of the 30,000 accounts, those have been open. There's probably about 27,000 that are open today. So some of those were CDs that came in and were rolled off. There's about 7,000 business accounts. We don't do consumer checking. we don't do consumer checking It's consumer high-yield savings. it's consumer high-yield savings Of the 30,000 accounts, those have been open. of the 30,000 accounts those have been open There's probably about 27,000 that are open today. there's probably about 27,000 that are open today So some of those were CDs that came in and were rolled off. so some of those were cds that came in and were rolled off There's about 7,000 business accounts. there's about 7,000 business accounts Okay. And how many business checking accounts would you open in a month? Okay. okay And how many business checking accounts would you open in a month? and how many business checking accounts would you open in a month I would say the utilization of business checking accounts. I would say it's probably around 300-400 in a month. I would say the utilization of business checking accounts. i would say the utilization of business checking accounts I would say it's probably around 300-400 in a month. i would say it's probably around 300-400 in a month And am I correct today that those are only offered to people that are borrowing money? You have not yet rolled out a program to offer the advantage without the loan to small businesses. And am I correct today that those are only offered to people that are borrowing money? and am i correct today that those are only offered to people that are borrowing money You have not yet rolled out a program to offer the advantage without the loan to small businesses. you have not yet rolled out a program to offer the advantage without the loan to small businesses We have not aggressively. Yeah. We have not aggressively marketed the advantage as a product to itself. You can get it from our website, but we have not gone out and aggressively marketed the advantage. If you have a merchant account with us, you can access the advantage. If you have a payroll account with us, you can access the advantage. So it's not a requirement. Right. We have not aggressively. we have not aggressively Yeah. yeah We have not aggressively marketed the advantage as a product to itself. we have not aggressively marketed the advantage as a product to itself You can get it from our website, but we have not gone out and aggressively marketed the advantage. you can get it from our website but we have not gone out and aggressively marketed the advantage If you have a merchant account with us, you can access the advantage. if you have a merchant account with us you can access the advantage If you have a payroll account with us, you can access the advantage. if you have a payroll account with us you can access the advantage So it's not a requirement. so it's not a requirement Right. right But today, there's a huge opportunity to offer business checking accounts to the millions of businesses that don't borrow money. Absolutely. If it's because of the customer experience. But today, there's a huge opportunity to offer business checking accounts to the millions of businesses that don't borrow money. but today there's a huge opportunity to offer business checking accounts to the millions of businesses that don't borrow money Absolutely. absolutely If it's because of the customer experience. if it's because of the customer experience Yeah. And I think, Kirk, it's a good point. We've grown very quickly. I don't think anyone could argue that. I'm not sure I want to grow any faster than we're currently growing, but we're doing it methodically. We're doing it in a compliant manner. And I would say the biggest impediment, which we're spending a lot of time on right now, is teaching, training, mentoring, and educating our staff because we still do believe that outside of having really good software, customers do want to talk to somebody, particularly this particular customer base, so. Yeah. I'd be happy to have you have unlimited growth in business DDA without loans. So you can find a place to put that if you find it. Yeah. yeah And I think, Kirk, it's a good point. and i think kirk it's a good point We've grown very quickly. we've grown very quickly I don't think anyone could argue that. i don't think anyone could argue that I'm not sure I want to grow any faster than we're currently growing, but we're doing it methodically. i'm not sure i want to grow any faster than we're currently growing but we're doing it methodically We're doing it in a compliant manner. we're doing it in a compliant manner And I would say the biggest impediment, which we're spending a lot of time on right now, is teaching, training, mentoring, and educating our staff because we still do believe that outside of having really good software, customers do want to talk to somebody, particularly this particular customer base, so. and i would say the biggest impediment which we're spending a lot of time on right now is teaching training mentoring and educating our staff because we still do believe that outside of having really good software customers do want to talk to somebody particularly this particular customer base so Yeah. yeah I'd be happy to have you have unlimited growth in business DDA without loans. i'd be happy to have you have unlimited growth in business dda without loans So you can find a place to put that if you find it. so you can find a place to put that if you find it Second question, you're going to do $1 billion in 7A. I think we're shown in $500 million in ALP in 2026. Second question, you're going to do $1 billion in 7A. second question you're going to do $1 billion in 7a I think we're shown in $500 million in ALP in 2026. i think we're shown in $500 million in alp in 2026 With your customer acquisition strategy, which is very low-cost, unique to the company that you've built, is that strategy sufficient today for you to double those amounts to 2 billion and a billion, or do you need to do something else? More of the same in customer acquisition strategy or new customer acquisition strategies? With your customer acquisition strategy, which is very low-cost, unique to the company that you've built, is that strategy sufficient today for you to double those amounts to 2 billion and a billion, or do you need to do something else? with your customer acquisition strategy which is very low-cost unique to the company that you've built is that strategy sufficient today for you to double those amounts to 2 billion and a billion or do you need to do something else More of the same in customer acquisition strategy or new customer acquisition strategies? more of the same in customer acquisition strategy or new customer acquisition strategies I think that particularly in the ALP business, where the average loan size is 5 million, it's easy. It'll be relatively easy to grow that business. You go from 100 units to 200 units. You go from 500 million to a billion. We are in discussions with a lot of channel partners that are off the charts, monstrous, and huge. So that's possible to grow the business. It's very easy to expand the distribution strategy through channel, and we're also very interested in growing the direct business as well. I think that particularly in the ALP business, where the average loan size is 5 million, it's easy. i think that particularly in the alp business where the average loan size is 5 million it's easy It'll be relatively easy to grow that business. it'll be relatively easy to grow that business You go from 100 units to 200 units. you go from 100 units to 200 units You go from 500 million to a billion. you go from 500 million to a billion We are in discussions with a lot of channel partners that are off the charts, monstrous, and huge. we are in discussions with a lot of channel partners that are off the charts monstrous and huge So that's possible to grow the business. so that's possible to grow the business It's very easy to expand the distribution strategy through channel, and we're also very interested in growing the direct business as well. it's very easy to expand the distribution strategy through channel and we're also very interested in growing the direct business as well So the question was about ALP loans, and we're about to get into that portion of the presentation. They're proven to be well underwritten with good credit quality. The program has existed since 2019. We're currently in the market, as I sit here today. So when I leave here, I'll put my bond hat back on, and we'll be in the market with a $350 million collateralized transaction. The question is, could you put an ALP loan, which I've also called a C&I loan held for sale, into the bank? And the answer is it's a C&I loan. It's a bank-eligible loan, and that is something that could be done. Okay. Pete, you want to finish? You're all done? No, I took enough time, so. Okay. All right. So the question was about ALP loans, and we're about to get into that portion of the presentation. so the question was about alp loans and we're about to get into that portion of the presentation They're proven to be well underwritten with good credit quality. they're proven to be well underwritten with good credit quality The program has existed since 2019. the program has existed since 2019 We're currently in the market, as I sit here today. we're currently in the market as i sit here today So when I leave here, I'll put my bond hat back on, and we'll be in the market with a $350 million collateralized transaction. so when i leave here i'll put my bond hat back on and we'll be in the market with a $350 million collateralized transaction The question is, could you put an ALP loan, which I've also called a C&I loan held for sale, into the bank? the question is could you put an alp loan which i've also called a c&i loan held for sale into the bank And the answer is it's a C&I loan. and the answer is it's a c&i loan It's a bank-eligible loan, and that is something that could be done. it's a bank-eligible loan and that is something that could be done Okay. okay Pete, you want to finish? pete you want to finish You're all done? you're all done No, I took enough time, so. no i took enough time so Okay. okay All right. all right

Speaker 6: If you can hold questions because I want to get this out of the way, and then we've got a big Q&A at the end. We are ahead of schedule, which I'm very pleased. The next part of the presentation is this underappreciated aspect of NewtekOne. Underappreciated, understood, and it really relates to the alternative loan program. Let's go to slide 26. But before I get into that, I do want to make a comment, and we talked about earlier sort of where we're underappreciated or misunderstood. We do believe that Q2 to Q3, we demonstrated stability both at the bank and at the holding company through the old NSBF portfolio, which is a legacy SBA lender that's winding down. If you can hold questions because I want to get this out of the way, and then we've got a big Q&A at the end. if you can hold questions because i want to get this out of the way and then we've got a big q&a at the end We are ahead of schedule, which I'm very pleased. we are ahead of schedule which i'm very pleased The next part of the presentation is this underappreciated aspect of NewtekOne. the next part of the presentation is this underappreciated aspect of newtekone Underappreciated, understood, and it really relates to the alternative loan program. underappreciated understood and it really relates to the alternative loan program Let's go to slide 26. let's go to slide 26 But before I get into that, I do want to make a comment, and we talked about earlier sort of where we're underappreciated or misunderstood. but before i get into that i do want to make a comment and we talked about earlier sort of where we're underappreciated or misunderstood We do believe that Q2 to Q3, we demonstrated stability both at the bank and at the holding company through the old NSBF portfolio, which is a legacy SBA lender that's winding down. we do believe that q2 to q3 we demonstrated stability both at the bank and at the holding company through the old nsbf portfolio which is a legacy sba lender that's winding down We'll be reporting most likely at the end of January. We haven't given a date out. That'll probably be next week. I believe you'll see stability and improving performance in those credits. I'm not prepared to give out numbers today, but I'm confident and feel pretty good about the economy and our performance in the fourth quarter. So I think that's important. That clearly has been an impediment to market participants looking at the level of non-performing loans, the provisions, and things of that nature. We'll be reporting most likely at the end of January. we'll be reporting most likely at the end of january We haven't given a date out. we haven't given a date out That'll probably be next week. that'll probably be next week I believe you'll see stability and improving performance in those credits. i believe you'll see stability and improving performance in those credits I'm not prepared to give out numbers today, but I'm confident and feel pretty good about the economy and our performance in the fourth quarter. i'm not prepared to give out numbers today but i'm confident and feel pretty good about the economy and our performance in the fourth quarter So I think that's important. so i think that's important That clearly has been an impediment to market participants looking at the level of non-performing loans, the provisions, and things of that nature. that clearly has been an impediment to market participants looking at the level of non-performing loans the provisions and things of that nature We're fairly adamant that the cost has been absorbed. It's been written off. There's no surprises. It's appropriate. And maybe after another year or two of operating, everyone will get to appreciate that and understand it. But even with that, those numbers we believe will be viewed as positively when we report. So let's go to slide number 26. The alternative loan program, which Kirk Wycoff from Patriot, one of our larger institutional shareholders, brought a question. We also refer to them as C&I loans held for sale. We originate them, and we put them in special purpose vehicles, and we securitize them. We're fairly adamant that the cost has been absorbed. we're fairly adamant that the cost has been absorbed It's been written off. it's been written off There's no surprises. there's no surprises It's appropriate. it's appropriate And maybe after another year or two of operating, everyone will get to appreciate that and understand it. and maybe after another year or two of operating everyone will get to appreciate that and understand it But even with that, those numbers we believe will be viewed as positively when we report. but even with that those numbers we believe will be viewed as positively when we report So let's go to slide number 26. so let's go to slide number 26 The alternative loan program, which Kirk Wycoff from Patriot, one of our larger institutional shareholders, brought a question. the alternative loan program which kirk wycoff from patriot one of our larger institutional shareholders brought a question We also refer to them as C&I loans held for sale. we also refer to them as c&i loans held for sale We originate them, and we put them in special purpose vehicles, and we securitize them. we originate them and we put them in special purpose vehicles and we securitize them We do that because these loans are longer amortizing loans. They have longer durations. They're meant to have longer durations because they're actually attractive capital for the business. Holding back the principal payments, which we think is overrated from a credit perspective. Everybody likes to get their money back. I get it. They really need it back after a year. And we substitute that long amortization for personal guarantees, joint and several, for liens on personal and business assets. And all these loans have very strong debt service coverage ratios. And we'll go into some of those metrics. But important to note, the C&I loans or the ALP loans have much stronger risk profiles than those of SBA 7(a) loans. We do that because these loans are longer amortizing loans. we do that because these loans are longer amortizing loans They have longer durations. they have longer durations They're meant to have longer durations because they're actually attractive capital for the business. they're meant to have longer durations because they're actually attractive capital for the business Holding back the principal payments, which we think is overrated from a credit perspective. holding back the principal payments which we think is overrated from a credit perspective Everybody likes to get their money back. everybody likes to get their money back I get it. i get it They really need it back after a year. they really need it back after a year And we substitute that long amortization for personal guarantees, joint and several, for liens on personal and business assets. and we substitute that long amortization for personal guarantees joint and several for liens on personal and business assets And all these loans have very strong debt service coverage ratios. and all these loans have very strong debt service coverage ratios And we'll go into some of those metrics. and we'll go into some of those metrics But important to note, the C&I loans or the ALP loans have much stronger risk profiles than those of SBA 7(a) loans. but important to note the c&i loans or the alp loans have much stronger risk profiles than those of sba 7(a) loans I think I've had some people say, "Well, are these just loans that have bigger than a $5 million balance?" The answer is no. That's not the purpose of loans going into this particular bucket. The operating history is longer. As a matter of fact, look at the average operating history on the 2025-1 deal. It was 16 years. I think the current deal we have in the market is 10 years or longer. So these are seasoned businesses. We say the loan-to-value is lower. The average LTV on these loans is about 50%. You don't get that in a 7A loan. The guarantors have got stronger liquidity and supporting financials. I would say the average guarantor's net worth is clearly seven figures, and some have eight, and some actually have nine. I think I've had some people say, "Well, are these just loans that have bigger than a $5 million balance?" The answer is no. i think i've had some people say "well are these just loans that have bigger than a $5 million balance?" the answer is no That's not the purpose of loans going into this particular bucket. that's not the purpose of loans going into this particular bucket The operating history is longer. the operating history is longer As a matter of fact, look at the average operating history on the 2025-1 deal. as a matter of fact look at the average operating history on the 2025-1 deal It was 16 years. it was 16 years I think the current deal we have in the market is 10 years or longer. i think the current deal we have in the market is 10 years or longer So these are seasoned businesses. so these are seasoned businesses We say the loan-to-value is lower. we say the loan-to-value is lower The average LTV on these loans is about 50%. the average ltv on these loans is about 50% You don't get that in a 7A loan. you don't get that in a 7a loan The guarantors have got stronger liquidity and supporting financials. the guarantors have got stronger liquidity and supporting financials I would say the average guarantor's net worth is clearly seven figures, and some have eight, and some actually have nine. i would say the average guarantor's net worth is clearly seven figures and some have eight and some actually have nine So then you would say, "Well, why would anybody with those strong financials take a loan as an interest rate that's in the low double digits?" Well, the reason is we give them greater flexibility. We treat them as an adult if they're willing to guarantee their personal and the business assets, if they've been in business a long period of time, if the businesses have debt service coverage ratios of 2 to 1, which is typical for an ALP loan. We'll say you could pay your principal back slower. If you want to borrow money, you can do that without necessarily having to ask us. So then you would say, "Well, why would anybody with those strong financials take a loan as an interest rate that's in the low double digits?" Well, the reason is we give them greater flexibility. so then you would say "well why would anybody with those strong financials take a loan as an interest rate that's in the low double digits?" well the reason is we give them greater flexibility We treat them as an adult if they're willing to guarantee their personal and the business assets, if they've been in business a long period of time, if the businesses have debt service coverage ratios of 2 to 1, which is typical for an ALP loan. we treat them as an adult if they're willing to guarantee their personal and the business assets if they've been in business a long period of time if the businesses have debt service coverage ratios of 2 to 1 which is typical for an alp loan We'll say you could pay your principal back slower. we'll say you could pay your principal back slower If you want to borrow money, you can do that without necessarily having to ask us. if you want to borrow money you can do that without necessarily having to ask us You don't necessarily need to give us monthly financials, but we have everything tied up, and we're happy about that, and this is the experience that we've learned in being in this space for over two decades. Important to note, every one of these loans has a business appraisal. So these are not little businesses that don't have significant material values. About $850 million of originations across 180 loans since 2018, we've had $23 million of defaults. We've had $6 million of charge-offs. That's a pretty good record. We believe these loans historically in the portfolio will have a 3% cumulative charge-off over the life of the loans, and they're valued that way. Important to note, the asset-liability match is a four- to five-year duration. You don't necessarily need to give us monthly financials, but we have everything tied up, and we're happy about that, and this is the experience that we've learned in being in this space for over two decades. you don't necessarily need to give us monthly financials but we have everything tied up and we're happy about that and this is the experience that we've learned in being in this space for over two decades Important to note, every one of these loans has a business appraisal. important to note every one of these loans has a business appraisal So these are not little businesses that don't have significant material values. so these are not little businesses that don't have significant material values About $850 million of originations across 180 loans since 2018, we've had $23 million of defaults. about $850 million of originations across 180 loans since 2018 we've had $23 million of defaults We've had $6 million of charge-offs. we've had $6 million of charge-offs That's a pretty good record. that's a pretty good record We believe these loans historically in the portfolio will have a 3% cumulative charge-off over the life of the loans, and they're valued that way. we believe these loans historically in the portfolio will have a 3% cumulative charge-off over the life of the loans and they're valued that way Important to note, the asset-liability match is a four- to five-year duration. important to note the asset-liability match is a four- to five-year duration Why is that? Well, we get very nice margins on these loans. So because we have nice margins, we want these loans to stay on our books. The borrowers are typically willing to accept a 5% prepay penalty in month zero through month 36, meaning if they want to pay the loan off, you got to pay a 5% prepay penalty. In month 36 through 48, it's a 3% prepayment penalty. Typically, these loans do stay on the books unless there's a tremendous liquidity event. Somebody comes in and wants to buy the business. Why is that? why is that Well, we get very nice margins on these loans. well we get very nice margins on these loans So because we have nice margins, we want these loans to stay on our books. so because we have nice margins we want these loans to stay on our books The borrowers are typically willing to accept a 5% prepay penalty in month zero through month 36, meaning if they want to pay the loan off, you got to pay a 5% prepay penalty. the borrowers are typically willing to accept a 5% prepay penalty in month zero through month 36 meaning if they want to pay the loan off you got to pay a 5% prepay penalty In month 36 through 48, it's a 3% prepayment penalty. in month 36 through 48 it's a 3% prepayment penalty Typically, these loans do stay on the books unless there's a tremendous liquidity event. typically these loans do stay on the books unless there's a tremendous liquidity event Somebody comes in and wants to buy the business. somebody comes in and wants to buy the business In that case, they'll pay the prepay penalty. But our experience in doing this is these loans typically pay off once they get past the 48th month, and the loans have a floor at the original rate of interest, and then they typically float. They're fixed for five, and then they float at T plus 950. Better client experience versus their competitors offering that quick money because the loan gives them a longer prepayment period, a lower monthly payment. I n that case, they'll pay the prepay penalty. i n that case they'll pay the prepay penalty But our experience in doing this is these loans typically pay off once they get past the 48th month, and the loans have a floor at the original rate of interest, and then they typically float. but our experience in doing this is these loans typically pay off once they get past the 48th month and the loans have a floor at the original rate of interest and then they typically float They're fixed for five, and then they float at T plus 950. they're fixed for five and then they float at t plus 950 Better client experience versus their competitors offering that quick money because the loan gives them a longer prepayment period, a lower monthly payment. better client experience versus their competitors offering that quick money because the loan gives them a longer prepayment period a lower monthly payment They're not paying yields of 40%-80%. At the end of a year, they have to do it all over again. The ALP securitization that we recently completed in April generated 570 basis points of spread income. We talk about spread income. That is the net coupon on the loans going into the special purpose vehicle versus the yield on the securitized bonds. If you included the 100 basis points of servicing, that would be 670 basis points. They're not paying yields of 40%-80%. they're not paying yields of 40%-80% At the end of a year, they have to do it all over again. at the end of a year they have to do it all over again The ALP securitization that we recently completed in April generated 570 basis points of spread income. the alp securitization that we recently completed in april generated 570 basis points of spread income We talk about spread income. we talk about spread income That is the net coupon on the loans going into the special purpose vehicle versus the yield on the securitized bonds. that is the net coupon on the loans going into the special purpose vehicle versus the yield on the securitized bonds If you included the 100 basis points of servicing, that would be 670 basis points. if you included the 100 basis points of servicing that would be 670 basis points So the servicing asset is particularly valuable given the prepayment. So we have the ownership certificates marked at a 14% net yield, and that is a net yield net of a 3% charge-off. If we did it gross, it would probably be 15.5%-16%. So these are the fair values. Obviously, a public accounting firm analyzes these values, as does Frank, our internal audit team. So the servicing asset is particularly valuable given the prepayment. so the servicing asset is particularly valuable given the prepayment So we have the ownership certificates marked at a 14% net yield, and that is a net yield net of a 3% charge-off. so we have the ownership certificates marked at a 14% net yield and that is a net yield net of a 3% charge-off If we did it gross, it would probably be 15.5%-16%. if we did it gross it would probably be 15.5%-16% So these are the fair values. so these are the fair values Obviously, a public accounting firm analyzes these values, as does Frank, our internal audit team. obviously a public accounting firm analyzes these values as does frank our internal audit team We do have a third-party organization that looks at the valuations on these and will be doing so at the K for this year. These assets are marked to market quarterly, so we're looking at them every single quarter. Fair value is not something that is foreign to us. We did it as a BDC from 2014 to current date, and it works. It makes sense. We see the SoFi's, the LendingClubs who just announced they're going to go to fair value, Enova, other lenders that are in this space being comfortable utilizing this. And by the way, this is no different than CECL. It's just upside down. By the way, you know I've never been asked a question about CECL before? People don't ask about CECL. But oh my God, the question's on fair value. It's the upside down. We do have a third-party organization that looks at the valuations on these and will be doing so at the K for this year. we do have a third-party organization that looks at the valuations on these and will be doing so at the k for this year These assets are marked to market quarterly, so we're looking at them every single quarter. these assets are marked to market quarterly so we're looking at them every single quarter Fair value is not something that is foreign to us. fair value is not something that is foreign to us We did it as a BDC from 2014 to current date, and it works. we did it as a bdc from 2014 to current date and it works It makes sense. it makes sense We see the SoFi's, the LendingClubs who just announced they're going to go to fair value, Enova, other lenders that are in this space being comfortable utilizing this. we see the sofi's the lendingclubs who just announced they're going to go to fair value enova other lenders that are in this space being comfortable utilizing this And by the way, this is no different than CECL. and by the way this is no different than cecl It's just upside down. it's just upside down By the way, you know I've never been asked a question about CECL before? by the way you know i've never been asked a question about cecl before People don't ask about CECL. people don't ask about cecl But oh my God, the question's on fair value. but oh my god the question's on fair value It's the upside down. it's the upside down CECL, you're forecasting what your loans are, and you're putting a charge upfront. That's the same assumption. Effectively, that goes into fair value, except you're theoretically present valuing the income. But given that these assets are going on the books at a 14% yield, we're not taking all the juice out of these things. There's still plenty of juice. So we'll go through this a little bit deeper. You'll see the cash flows. Let's go to slide 27. Okay. So we've been a securitizer since 2010. CECL, you're forecasting what your loans are, and you're putting a charge upfront. cecl you're forecasting what your loans are and you're putting a charge upfront That's the same assumption. that's the same assumption Effectively, that goes into fair value, except you're theoretically present valuing the income. effectively that goes into fair value except you're theoretically present valuing the income But given that these assets are going on the books at a 14% yield, we're not taking all the juice out of these things. but given that these assets are going on the books at a 14% yield we're not taking all the juice out of these things There's still plenty of juice. there's still plenty of juice So we'll go through this a little bit deeper. so we'll go through this a little bit deeper You'll see the cash flows. you'll see the cash flows Let's go to slide 27. let's go to slide 27 Okay. okay So we've been a securitizer since 2010. so we've been a securitizer since 2010 13 of the 16 securitizations were backed by 7A loans, and these were the uninsured portions of the 7A loans. We've never had a credit watch of our securitizations. We've never had a downgrade. All the bonds have held up very well. We've done three securitizations backed by ALP loans, and we're currently bringing a fourth transaction that hopefully will be announced next week. 13 of the 16 securitizations were backed by 7A loans, and these were the uninsured portions of the 7A loans. 13 of the 16 securitizations were backed by 7a loans and these were the uninsured portions of the 7a loans We've never had a credit watch of our securitizations. we've never had a credit watch of our securitizations We've never had a downgrade. we've never had a downgrade All the bonds have held up very well. all the bonds have held up very well We've done three securitizations backed by ALP loans, and we're currently bringing a fourth transaction that hopefully will be announced next week. we've done three securitizations backed by alp loans and we're currently bringing a fourth transaction that hopefully will be announced next week If you look at some of the numbers here, and I want to point out the 2026 one is a hypothetical of what the pool looks like, but it should be very similar to the 2025-1. But you could see what the spread income is. And by the way, that's a spread income of 568 basis points. So if that was in a bank, and a bank said, "I have 568 basis points of spread income." By the way, on a bank's liabilities for deposits, they have a tremendous amount of expense in managing that book of business going in and out. If you look at some of the numbers here, and I want to point out the 2026 one is a hypothetical of what the pool looks like, but it should be very similar to the 2025-1. if you look at some of the numbers here and i want to point out the 2026 one is a hypothetical of what the pool looks like but it should be very similar to the 2025-1 But you could see what the spread income is. but you could see what the spread income is And by the way, that's a spread income of 568 basis points. and by the way that's a spread income of 568 basis points So if that was in a bank, and a bank said, "I have 568 basis points of spread income." By the way, on a bank's liabilities for deposits, they have a tremendous amount of expense in managing that book of business going in and out. so if that was in a bank and a bank said "i have 568 basis points of spread income." by the way on a bank's liabilities for deposits they have a tremendous amount of expense in managing that book of business going in and out In a securitization, it's kind of set it and forget it. Yes, we have to market. The loans are in the SPV. The bonds are sold, and you're just clipping the coupons, right? And we evaluate this every single quarter. In a securitization, it's kind of set it and forget it. in a securitization it's kind of set it and forget it Yes, we have to market. yes we have to market The loans are in the SPV. the loans are in the spv The bonds are sold, and you're just clipping the coupons, right? the bonds are sold and you're just clipping the coupons right And we evaluate this every single quarter. and we evaluate this every single quarter So if you said to me, "What's the cost of that liability?" Well, it's fixed. It's fixed based upon the securitization yield on the bonds that are sold. So that's just a nice cash flow that's sitting there. It's coming in. It's held up at the holding company. We've also done this with joint venture partners. And people say, "Well, why do you use a joint venture partner? Why don't you use a joint venture partner?" It's just another alternative form of capital. It's diversification. So if you said to me, "What's the cost of that liability?" Well, it's fixed. so if you said to me "what's the cost of that liability?" well it's fixed It's fixed based upon the securitization yield on the bonds that are sold. it's fixed based upon the securitization yield on the bonds that are sold So that's just a nice cash flow that's sitting there. so that's just a nice cash flow that's sitting there It's coming in. it's coming in It's held up at the holding company. it's held up at the holding company We've also done this with joint venture partners. we've also done this with joint venture partners And people say, "Well, why do you use a joint venture partner? and people say "well why do you use a joint venture partner Why don't you use a joint venture partner?" It's just another alternative form of capital. why don't you use a joint venture partner?" it's just another alternative form of capital It's diversification. it's diversification It also validates the fact that the prices and the yields that we're putting on the books are validated by institutional investors. 2022-1 joint venture partners, BlackRock, Tennenbaum Capital Partners, that deal's come full circle. It's unwound. The bondholders got paid. The joint venture partner got paid. They're very happy. They've moved into the sunset. The 2024-1 deal, TowerBrook are a joint venture partner. It also validates the fact that the prices and the yields that we're putting on the books are validated by institutional investors. 2022-1 joint venture partners, BlackRock, Tennenbaum Capital Partners, that deal's come full circle. it also validates the fact that the prices and the yields that we're putting on the books are validated by institutional investors 2022-1 joint venture partners blackrock tennenbaum capital partners that deal's come full circle It's unwound. it's unwound The bondholders got paid. the bondholders got paid The joint venture partner got paid. the joint venture partner got paid They're very happy. they're very happy They've moved into the sunset. they've moved into the sunset The 2024-1 deal, TowerBrook are a joint venture partner. the 2024-1 deal towerbrook are a joint venture partner And obviously, they're validating these valuations. We have more validation going on than I care to shake a stick at. I've got ungodly amounts of validation, ungodly amounts of cost. The good news is we figured out ways to actually make loans that, on a risk-adjusted basis, drive return on assets north of 3%, return on tangible common equity 25%-30% because we do things differently. We're a disruptor. It may not necessarily neatly fit into the call report, but we're getting there. People are beginning to understand it. I also want to point out being a disruptor in an industry that typically doesn't disrupt. And maybe this is not a great example, but I recently looked up some of the entities that I mentioned, the SoFi's and LendingClubs. And obviously, they're validating these valuations. and obviously they're validating these valuations We have more validation going on than I care to shake a stick at. we have more validation going on than i care to shake a stick at I've got ungodly amounts of validation, ungodly amounts of cost. i've got ungodly amounts of validation ungodly amounts of cost The good news is we figured out ways to actually make loans that, on a risk-adjusted basis, drive return on assets north of 3%, return on tangible common equity 25%-30% because we do things differently. the good news is we figured out ways to actually make loans that on a risk-adjusted basis drive return on assets north of 3% return on tangible common equity 25%-30% because we do things differently We're a disruptor. we're a disruptor It may not necessarily neatly fit into the call report, but we're getting there. it may not necessarily neatly fit into the call report but we're getting there People are beginning to understand it. people are beginning to understand it I also want to point out being a disruptor in an industry that typically doesn't disrupt. i also want to point out being a disruptor in an industry that typically doesn't disrupt And maybe this is not a great example, but I recently looked up some of the entities that I mentioned, the SoFi's and LendingClubs. and maybe this is not a great example but i recently looked up some of the entities that i mentioned the sofi's and lendingclubs They flatlined for a couple of years, and then all of a sudden, people got comfortable with how they were doing things, and the stock price took a different course. And obviously, these traded entirely different multiples than our multiples today. But I looked at a company called Carvana. Maybe it's not the best example because they clearly have got a unique background and a unique past. But what are the similarities? Carvana looked at the used car market, similar to the independent business owner market. Big market, big opportunity, not a lot of people in it. So Carvana did an IPO, I think it was in 2017, and then COVID happened. I think the stock at the IPO was like 15, 16, 17. Then COVID happened. They flatlined for a couple of years, and then all of a sudden, people got comfortable with how they were doing things, and the stock price took a different course. they flatlined for a couple of years and then all of a sudden people got comfortable with how they were doing things and the stock price took a different course And obviously, these traded entirely different multiples than our multiples today. and obviously these traded entirely different multiples than our multiples today But I looked at a company called Carvana. but i looked at a company called carvana Maybe it's not the best example because they clearly have got a unique background and a unique past. maybe it's not the best example because they clearly have got a unique background and a unique past But what are the similarities? but what are the similarities Carvana looked at the used car market, similar to the independent business owner market. carvana looked at the used car market similar to the independent business owner market Big market, big opportunity, not a lot of people in it. big market big opportunity not a lot of people in it So Carvana did an IPO, I think it was in 2017, and then COVID happened. so carvana did an ipo i think it was in 2017 and then covid happened I think the stock at the IPO was like 15, 16, 17. i think the stock at the ipo was like 15 16 17 Then COVID happened. then covid happened They get traded at $3. I didn't look at Carvana in the last couple of days. The last time I looked, it was over $400 a share. Okay? What does Carvana do that's simple that we do? Well, they put technology in place so that an individual from the comfort of their home can buy and sell a used car and get the car provision and can get all the payments done and get the insurance done. So they use technology to disintermediate an industry that wasn't used to it. But it took a while for the investment community to get comfortable that they can keep on doing what they're doing. So my suggestion to all of you is just keep watching what we're doing. We're through three years. I feel very good and confident about this particular management team. They get traded at $3. they get traded at $3 I didn't look at Carvana in the last couple of days. i didn't look at carvana in the last couple of days The last time I looked, it was over $400 a share. the last time i looked it was over $400 a share Okay? okay What does Carvana do that's simple that we do? what does carvana do that's simple that we do Well, they put technology in place so that an individual from the comfort of their home can buy and sell a used car and get the car provision and can get all the payments done and get the insurance done. well they put technology in place so that an individual from the comfort of their home can buy and sell a used car and get the car provision and can get all the payments done and get the insurance done So they use technology to disintermediate an industry that wasn't used to it. so they use technology to disintermediate an industry that wasn't used to it But it took a while for the investment community to get comfortable that they can keep on doing what they're doing. but it took a while for the investment community to get comfortable that they can keep on doing what they're doing So my suggestion to all of you is just keep watching what we're doing. so my suggestion to all of you is just keep watching what we're doing We're through three years. we're through three years I feel very good and confident about this particular management team. i feel very good and confident about this particular management team There's probably about 15 other people I'd like to put on stage today, but we'll do this in small bites because I know you're used to hearing me talk. But on slide number 27, this is a good idea of what actually is in these particular portfolios. Let's go to slide number 28. Our equity certificates in ALP securitizations, they're on our balance sheet. They're represented by the balance sheet of Holdco 6, which is a segment. It's held at fair value. There's probably about 15 other people I'd like to put on stage today, but we'll do this in small bites because I know you're used to hearing me talk. there's probably about 15 other people i'd like to put on stage today but we'll do this in small bites because i know you're used to hearing me talk But on slide number 27, this is a good idea of what actually is in these particular portfolios. but on slide number 27 this is a good idea of what actually is in these particular portfolios Let's go to slide number 28. let's go to slide number 28 Our equity certificates in ALP securitizations, they're on our balance sheet. our equity certificates in alp securitizations they're on our balance sheet They're represented by the balance sheet of Holdco 6, which is a segment. they're represented by the balance sheet of holdco 6 which is a segment It's held at fair value. it's held at fair value It's valued quarterly. And particularly on the 10-K, it'll be evaluated by a third party with expertise in valuations. As I mentioned, the 2024 deal is held by a joint venture with an institutional investor. And we do value these things every quarter. And when we do joint ventures, the partner is approving our financials and obviously our valuations as well. We're using discounted cash flow. It's not that complicated. It's valued quarterly. it's valued quarterly And particularly on the 10-K, it'll be evaluated by a third party with expertise in valuations. and particularly on the 10-k it'll be evaluated by a third party with expertise in valuations As I mentioned, the 2024 deal is held by a joint venture with an institutional investor. as i mentioned the 2024 deal is held by a joint venture with an institutional investor And we do value these things every quarter. and we do value these things every quarter And when we do joint ventures, the partner is approving our financials and obviously our valuations as well. and when we do joint ventures the partner is approving our financials and obviously our valuations as well We're using discounted cash flow. we're using discounted cash flow It's not that complicated. it's not that complicated We're looking at the performance of the underlying loans and the security, our internal accounts, our external accounts. They're looking at these. We're looking at change in interest rates and margin clearing yields and discounted cash flows. It's something that we've been doing, obviously, since 2014. Also important to note, the cash flows of these securitizations are modeled on Intex. So for those people that are not in the ABS securitization market, you can go on to Intex. You could see how the bonds are performing. They're the recognized provider of cash flow models for asset-backed securities in the United States. Slide number 29, we talked about what these loans look like in the securitizations, the spreads, how they're valued. I think it's important to note, and we'll drill down to the last bullet on slide number 29. We're looking at the performance of the underlying loans and the security, our internal accounts, our external accounts. we're looking at the performance of the underlying loans and the security our internal accounts our external accounts They're looking at these. they're looking at these We're looking at change in interest rates and margin clearing yields and discounted cash flows. we're looking at change in interest rates and margin clearing yields and discounted cash flows It's something that we've been doing, obviously, since 2014. it's something that we've been doing obviously since 2014 Also important to note, the cash flows of these securitizations are modeled on Intex. also important to note the cash flows of these securitizations are modeled on intex So for those people that are not in the ABS securitization market, you can go on to Intex. so for those people that are not in the abs securitization market you can go on to intex You could see how the bonds are performing. you could see how the bonds are performing They're the recognized provider of cash flow models for asset-backed securities in the United States. they're the recognized provider of cash flow models for asset-backed securities in the united states Slide number 29, we talked about what these loans look like in the securitizations, the spreads, how they're valued. slide number 29 we talked about what these loans look like in the securitizations the spreads how they're valued I think it's important to note, and we'll drill down to the last bullet on slide number 29. i think it's important to note and we'll drill down to the last bullet on slide number 29 The way these deals are structured, 90% of the excess spread income is used to pay off the senior bonds. Okay? That's really important. And because of that, the book value, which are just the assets in the special purpose vehicle, less the bonds, grows very quickly. And you can see that on slide number 30. We refer to this as over-collateralization. It could also be referred to as book value. We estimate that in a typical deal in three to three and a half years, the book value, because of the excess cash flow that's coming off of the deals, will prepay the senior notes so that the book value will equal the fair value. So these are things that you could take a look at in the existing deals that are out there, the 2024-1, the 2025-1 deal. The way these deals are structured, 90% of the excess spread income is used to pay off the senior bonds. the way these deals are structured 90% of the excess spread income is used to pay off the senior bonds Okay? okay That's really important. that's really important And because of that, the book value, which are just the assets in the special purpose vehicle, less the bonds, grows very quickly. and because of that the book value which are just the assets in the special purpose vehicle less the bonds grows very quickly And you can see that on slide number 30. and you can see that on slide number 30 We refer to this as over-collateralization. we refer to this as over-collateralization It could also be referred to as book value. it could also be referred to as book value We estimate that in a typical deal in three to three and a half years, the book value, because of the excess cash flow that's coming off of the deals, will prepay the senior notes so that the book value will equal the fair value. we estimate that in a typical deal in three to three and a half years the book value because of the excess cash flow that's coming off of the deals will prepay the senior notes so that the book value will equal the fair value So these are things that you could take a look at in the existing deals that are out there, the 2024-1, the 2025-1 deal. so these are things that you could take a look at in the existing deals that are out there the 2024-1 the 2025-1 deal These might be information that we start to put into our Ks and Qs, but the reality of this is we're not making this stuff up. This is how the market works. Slide number 31 kind of gives you a hypothetical example of how profitable an ALP deal could look at. Now, so it's important. This is non-GAAP. I want to repeat. This is non-GAAP. I say it's non-GAAP because if you look at the cash flows of $3.325 million and $1.4 million of interest expense, and you look at that January through December, boy, that's a lot of income. These might be information that we start to put into our Ks and Qs, but the reality of this is we're not making this stuff up. these might be information that we start to put into our ks and qs but the reality of this is we're not making this stuff up This is how the market works. this is how the market works Slide number 31 kind of gives you a hypothetical example of how profitable an ALP deal could look at. slide number 31 kind of gives you a hypothetical example of how profitable an alp deal could look at Now, so it's important. now so it's important This is non-GAAP. this is non-gaap I want to repeat. i want to repeat This is non-GAAP. this is non-gaap I say it's non-GAAP because if you look at the cash flows of $3.325 million and $1.4 million of interest expense, and you look at that January through December, boy, that's a lot of income. i say it's non-gaap because if you look at the cash flows of $3.325 million and $1.4 million of interest expense and you look at that january through december boy that's a lot of income Matter of fact, it's approximately $22 million of income on the current securitization, but we don't treat it that way, that excess cash flow is going in to pay down the senior bonds, and we're fair valuing the instrument at a 14% yield net of the 3% charge-offs. By the way, if the charge-offs are coming in at a bigger number, we're going to make the adjustment. We're going to make the adjustment on the valuation of the equity certificates either up or down. And the third parties looking at this are going to make those comments. And our external audit firm, RSM, is going to be looking at it. Matter of fact, it's approximately $22 million of income on the current securitization, but we don't treat it that way, that excess cash flow is going in to pay down the senior bonds, and we're fair valuing the instrument at a 14% yield net of the 3% charge-offs. matter of fact it's approximately $22 million of income on the current securitization but we don't treat it that way that excess cash flow is going in to pay down the senior bonds and we're fair valuing the instrument at a 14% yield net of the 3% charge-offs By the way, if the charge-offs are coming in at a bigger number, we're going to make the adjustment. by the way if the charge-offs are coming in at a bigger number we're going to make the adjustment We're going to make the adjustment on the valuation of the equity certificates either up or down. we're going to make the adjustment on the valuation of the equity certificates either up or down And the third parties looking at this are going to make those comments. and the third parties looking at this are going to make those comments And our external audit firm, RSM, is going to be looking at it. and our external audit firm rsm is going to be looking at it But you could see by these cash flows, there's tremendous value in this business opportunity. And these are not short-term loans. These loans have call protection with a nice wide spread with really strong credits. So I would say to most bankers in the room, if you had a debt service coverage ratio greater than 2 to 1 and you had an LTV of 50%, isn't that a pretty good loan? So maybe you would allow the business. Maybe I'm creating new competitors in the market. But you could see by these cash flows, there's tremendous value in this business opportunity. but you could see by these cash flows there's tremendous value in this business opportunity And these are not short-term loans. and these are not short-term loans These loans have call protection with a nice wide spread with really strong credits. these loans have call protection with a nice wide spread with really strong credits So I would say to most bankers in the room, if you had a debt service coverage ratio greater than 2 to 1 and you had an LTV of 50%, isn't that a pretty good loan? so i would say to most bankers in the room if you had a debt service coverage ratio greater than 2 to 1 and you had an ltv of 50% isn't that a pretty good loan So maybe you would allow the business. so maybe you would allow the business Maybe I'm creating new competitors in the market. maybe i'm creating new competitors in the market I wish you all good luck and a lot of success doing this. It's extremely painful. But the point is, long-term amortizing loans with no balloons make a lot of sense with personal guarantees and liens on personal and business assets. This is just stuff that we've learned over 20 years of doing this business. A distribution channel is set up to do this. We also have an SBA and securitization track record. So we're able to get the funding to be able to do this at the holding company level. We have investors that keep lining up to buy our bonds on a regular basis. Hopefully, I'm not jinxing our transaction for next week, but we're in pretty good shape. Eric, you want to ask a question? So that's a real number that we've said on calls. I wish you all good luck and a lot of success doing this. i wish you all good luck and a lot of success doing this It's extremely painful. it's extremely painful But the point is, long-term amortizing loans with no balloons make a lot of sense with personal guarantees and liens on personal and business assets. but the point is long-term amortizing loans with no balloons make a lot of sense with personal guarantees and liens on personal and business assets This is just stuff that we've learned over 20 years of doing this business. this is just stuff that we've learned over 20 years of doing this business A distribution channel is set up to do this. a distribution channel is set up to do this We also have an SBA and securitization track record. we also have an sba and securitization track record So we're able to get the funding to be able to do this at the holding company level. so we're able to get the funding to be able to do this at the holding company level We have investors that keep lining up to buy our bonds on a regular basis. we have investors that keep lining up to buy our bonds on a regular basis Hopefully, I'm not jinxing our transaction for next week, but we're in pretty good shape. hopefully i'm not jinxing our transaction for next week but we're in pretty good shape Eric, you want to ask a question? eric you want to ask a question So that's a real number that we've said on calls. so that's a real number that we've said on calls And I don't know if it's actually written into the Ks and Qs, but it's a number that I've said in transcripts. It could go to 13 or 12. It could go to 16. It will change based upon the market clearing yield for cost of capital and what's going on in the markets. I mean, when we go to an ABS conference, we typically have 32 meetings in two days. So these are yields that institutional investors subscribe to, whether that's in CLO equity or equity in any part of the ABS market. So we're not making it up. I'm not saying that there's a locked market at 14 or that it shouldn't be 13 and three quarters or 14 and a quarter. But this is the number that we believe is correct. We're comfortable with it. And I don't know if it's actually written into the Ks and Qs, but it's a number that I've said in transcripts. and i don't know if it's actually written into the ks and qs but it's a number that i've said in transcripts It could go to 13 or 12. it could go to 13 or 12 It could go to 16. it could go to 16 It will change based upon the market clearing yield for cost of capital and what's going on in the markets. it will change based upon the market clearing yield for cost of capital and what's going on in the markets I mean, when we go to an ABS conference, we typically have 32 meetings in two days. i mean when we go to an abs conference we typically have 32 meetings in two days So these are yields that institutional investors subscribe to, whether that's in CLO equity or equity in any part of the ABS market. so these are yields that institutional investors subscribe to whether that's in clo equity or equity in any part of the abs market So we're not making it up. so we're not making it up I'm not saying that there's a locked market at 14 or that it shouldn't be 13 and three quarters or 14 and a quarter. i'm not saying that there's a locked market at 14 or that it shouldn't be 13 and three quarters or 14 and a quarter But this is the number that we believe is correct. but this is the number that we believe is correct We're comfortable with it. we're comfortable with it and we actually think that there is an element of conservatism to the mark, particularly given how the cash flows will gravitate so that the book value will achieve the fair value in a reasonable period of time. Right. So you didn't do gain on sale, right? Or you didn't have gain on sale, but instead, you just recognize the cash flow. What would be the yield based on the cost? And in other words, how much of the relative to the cost of creating the residual are you marking it up when it goes into when you do the securitization at that point? So I think the question is, and I get asked this occasionally, would you consider, for example, using CECL for this business? and we actually think that there is an element of conservatism to the mark, particularly given how the cash flows will gravitate so that the book value will achieve the fair value in a reasonable period of time. and we actually think that there is an element of conservatism to the mark particularly given how the cash flows will gravitate so that the book value will achieve the fair value in a reasonable period of time Right. right So you didn't do gain on sale, right? so you didn't do gain on sale right Or you didn't have gain on sale, but instead, you just recognize the cash flow. or you didn't have gain on sale but instead you just recognize the cash flow What would be the yield based on the cost? what would be the yield based on the cost And in other words, how much of the relative to the cost of creating the residual are you marking it up when it goes into when you do the securitization at that point? and in other words how much of the relative to the cost of creating the residual are you marking it up when it goes into when you do the securitization at that point So I think the question is, and I get asked this occasionally, would you consider, for example, using CECL for this business? so i think the question is and i get asked this occasionally would you consider for example using cecl for this business We'll consider anything. This is currently how we do it. I don't see us changing in the near term. We might. We have the ability to make that change. But we think this is clearly consistent with doing securitizations and putting the valuation on the residual. At the end of the day, Ron, at 570 basis points of spread income net of an expected loss, it's a pretty attractive asset. And we mark it as such. And every single quarter, by the way, if it was done in the converse, you'd still have the same quarterly valuation of marking it and figuring out what the loss is. It really isn't any different than the other way of doing the business. Now, one might say, is it really recurring income? Matter of fact, I remember being at a B. We'll consider anything. we'll consider anything This is currently how we do it. this is currently how we do it I don't see us changing in the near term. i don't see us changing in the near term We might. we might We have the ability to make that change. we have the ability to make that change But we think this is clearly consistent with doing securitizations and putting the valuation on the residual. but we think this is clearly consistent with doing securitizations and putting the valuation on the residual At the end of the day, Ron, at 570 basis points of spread income net of an expected loss, it's a pretty attractive asset. at the end of the day ron at 570 basis points of spread income net of an expected loss it's a pretty attractive asset And we mark it as such. and we mark it as such And every single quarter, by the way, if it was done in the converse, you'd still have the same quarterly valuation of marking it and figuring out what the loss is. and every single quarter by the way if it was done in the converse you'd still have the same quarterly valuation of marking it and figuring out what the loss is It really isn't any different than the other way of doing the business. it really isn't any different than the other way of doing the business Now, one might say, is it really recurring income? now one might say is it really recurring income Matter of fact, I remember being at a B. matter of fact i remember being at a b Riley conference, and I had an investor say to me, "Oh my God, you're going to have a huge hole in the business next quarter if you don't originate any loans." And my comment was, "Well, gee, if Apple doesn't sell any cell phones next quarter, they're not going to make any money either." So part of this is our business model is to make loans and sell them. We're in the return on equity and return on asset business. We'll continue to do this. By the way, the SoFis of the world and the LendingClubs of the world that are doing this, they're trading at pretty hefty market multiples. And the market seems to be comfortable with them. So that's my answer to your question. Thanks. Chris. Riley conference, and I had an investor say to me, "Oh my God, you're going to have a huge hole in the business next quarter if you don't originate any loans." And my comment was, "Well, gee, if Apple doesn't sell any cell phones next quarter, they're not going to make any money either." So part of this is our business model is to make loans and sell them. riley conference and i had an investor say to me "oh my god you're going to have a huge hole in the business next quarter if you don't originate any loans." and my comment was "well gee if apple doesn't sell any cell phones next quarter they're not going to make any money either." so part of this is our business model is to make loans and sell them We're in the return on equity and return on asset business. we're in the return on equity and return on asset business We'll continue to do this. we'll continue to do this By the way, the SoFis of the world and the LendingClubs of the world that are doing this, they're trading at pretty hefty market multiples. by the way the sofis of the world and the lendingclubs of the world that are doing this they're trading at pretty hefty market multiples And the market seems to be comfortable with them. and the market seems to be comfortable with them So that's my answer to your question. so that's my answer to your question Thanks. thanks Chris. chris

Speaker 1: Chris Nolan, Ladenburg Thalmann. Chris Nolan, Ladenburg Thalmann. chris nolan ladenburg thalmann And first of all, I want to thank you all for this great show, great presentation, all the details, and appreciate hearing from the different management teams. Two-part question. One, the first part is for the securitizations, do the regulators, bank regulators, require you to put more capital against the loans you're going to securitize as opposed to loans that you don't securitize, or it's no difference? I think that when you look at the equity certificate, there's certain capitalization levels, whether it's held at the bank holding company or we haven't done a securitization out of the bank. And first of all, I want to thank you all for this great show, great presentation, all the details, and appreciate hearing from the different management teams. and first of all i want to thank you all for this great show great presentation all the details and appreciate hearing from the different management teams Two-part question. two-part question One, the first part is for the securitizations, do the regulators, bank regulators, require you to put more capital against the loans you're going to securitize as opposed to loans that you don't securitize, or it's no difference? one the first part is for the securitizations do the regulators bank regulators require you to put more capital against the loans you're going to securitize as opposed to loans that you don't securitize or it's no difference I think that when you look at the equity certificate, there's certain capitalization levels, whether it's held at the bank holding company or we haven't done a securitization out of the bank. i think that when you look at the equity certificate there's certain capitalization levels whether it's held at the bank holding company or we haven't done a securitization out of the bank It is part of our original application. So it's not that we can't do it. It's totally permissible activity. And provided it made sense from a match funding standpoint, we would do it. But there's capitalization requirements for ownership certificates in a securitization that we obviously would follow. Second question. Given everything you said, the attractive spreads and so forth, is a commercial bank the best vehicle for this? It is part of our original application. it is part of our original application So it's not that we can't do it. so it's not that we can't do it It's totally permissible activity. it's totally permissible activity And provided it made sense from a match funding standpoint, we would do it. and provided it made sense from a match funding standpoint we would do it But there's capitalization requirements for ownership certificates in a securitization that we obviously would follow. but there's capitalization requirements for ownership certificates in a securitization that we obviously would follow Second question. second question Given everything you said, the attractive spreads and so forth, is a commercial bank the best vehicle for this? given everything you said the attractive spreads and so forth is a commercial bank the best vehicle for this

Speaker 6: The commercial bank is the best vehicle for Newtek because of the NewtekOne platform, the Newtek Advantage. And by owning a federally chartered institution, we've been able to diversify our financing in the 7(a) and 504 business, which is currently done in the bank. And we're actually able to offer the clients a platform of moving money, which they typically do three to five times a week, 12 to 20 times a month. So the question was a great question. And one of the things we're trying to get across today is please don't value us as a lender. That's probably a mistake. Although the money gets the honey, okay? The commercial bank is the best vehicle for Newtek because of the NewtekOne platform, the Newtek Advantage. the commercial bank is the best vehicle for newtek because of the newtekone platform the newtek advantage And by owning a federally chartered institution, we've been able to diversify our financing in the 7(a) and 504 business, which is currently done in the bank. and by owning a federally chartered institution we've been able to diversify our financing in the 7(a) and 504 business which is currently done in the bank And we're actually able to offer the clients a platform of moving money, which they typically do three to five times a week, 12 to 20 times a month. and we're actually able to offer the clients a platform of moving money which they typically do three to five times a week 12 to 20 times a month So the question was a great question. so the question was a great question And one of the things we're trying to get across today is please don't value us as a lender. and one of the things we're trying to get across today is please don't value us as a lender That's probably a mistake. that's probably a mistake Although the money gets the honey, okay? although the money gets the honey okay We get a lot of people coming to us because they're interested in using our organization for growth capital. A lot of businesses come to us to get a 10-25-year amortizing loan, but they don't qualify. The best thing that they could do, open up a bank account, process payroll with us, do electronic payment processing so we could charge your sales on a regular basis, make sure that your business is insured and you don't have cancellations on your insurance policy. We are very happy being a bank holding company, owning a bank. We just don't wish to be looked at like a community bank. We like to look at a company that provides business and financial solutions and is really able to help customers and have multiple streams of revenue and recurring income that are incredibly valuable. We get a lot of people coming to us because they're interested in using our organization for growth capital. we get a lot of people coming to us because they're interested in using our organization for growth capital A lot of businesses come to us to get a 10-25-year amortizing loan, but they don't qualify. a lot of businesses come to us to get a 10-25-year amortizing loan but they don't qualify The best thing that they could do, open up a bank account, process payroll with us, do electronic payment processing so we could charge your sales on a regular basis, make sure that your business is insured and you don't have cancellations on your insurance policy. the best thing that they could do open up a bank account process payroll with us do electronic payment processing so we could charge your sales on a regular basis make sure that your business is insured and you don't have cancellations on your insurance policy We are very happy being a bank holding company, owning a bank. we are very happy being a bank holding company owning a bank We just don't wish to be looked at like a community bank. we just don't wish to be looked at like a community bank We like to look at a company that provides business and financial solutions and is really able to help customers and have multiple streams of revenue and recurring income that are incredibly valuable. we like to look at a company that provides business and financial solutions and is really able to help customers and have multiple streams of revenue and recurring income that are incredibly valuable Also importantly, we are an organization that knows how to manage risk. Also importantly, we are an organization that knows how to manage risk. also importantly we are an organization that knows how to manage risk Thank you. Barry, do you want to move into Q&A? Thank you. thank you Barry, do you want to move into Q&A? barry do you want to move into q&a Yeah, let's go right into Q&A. That's great. Thank you. Yeah, let's go right into Q&A. yeah let's go right into q&a That's great. that's great Thank you. thank you

Speaker 5: Okay. For those on the webcast, remember you can use that chat box at the top right of the website. I'll go ahead and pass the mic to Crispin Love. Okay. okay For those on the webcast, remember you can use that chat box at the top right of the website. for those on the webcast remember you can use that chat box at the top right of the website I'll go ahead and pass the mic to Crispin Love . i'll go ahead and pass the mic to crispin love Thank you. Crispin Love, Piper Sandler. Barry, I know you want to keep talking about the fair value, so I got one there. Can you just talk a little bit about it? I'm only going to talk about fair value if you ask me a CECL question. Thank you. Crispin Love, Piper Sandler. thank you. crispin love piper sandler Barry, I know you want to keep talking about the fair value, so I got one there. barry i know you want to keep talking about the fair value so i got one there Can you just talk a little bit about it? can you just talk a little bit about it I'm only going to talk about fair value if you ask me a CECL question. i'm only going to talk about fair value if you ask me a cecl question

Speaker 6: I want to do the yin and the yang. I want to do the yin and the yang. i want to do the yin and the yang

Speaker 9: Okay. I'll ask you both, and then. Thank you. Okay. okay I'll ask you both, and then. i'll ask you both and then Thank you. thank you

Speaker 6: So first on the fair value mark, how they're impacting the 26 guide, can you just talk a little bit what's implied there for net gains on residuals and securitizations, and then net gains under the fair value option as you look at the total non-interest income or the, what's it, that $330 million in total revenue that you're expecting? So first on the fair value mark, how they're impacting the 26 guide, can you just talk a little bit what's implied there for net gains on residuals and securitizations, and then net gains under the fair value option as you look at the total non-interest income or the, what's it, that $330 million in total revenue that you're expecting? so first on the fair value mark how they're impacting the 26 guide can you just talk a little bit what's implied there for net gains on residuals and securitizations and then net gains under the fair value option as you look at the total non-interest income or the what's it that $330 million in total revenue that you're expecting I would say you're probably a lot of it depends upon whether we do the ALP business out of joint venture or whether we put it on our books. I would probably say a third might be based on the alternative loan program, but that's conservative and that's subject to change. I would say you're probably a lot of it depends upon whether we do the ALP business out of joint venture or whether we put it on our books. i would say you're probably a lot of it depends upon whether we do the alp business out of joint venture or whether we put it on our books I would probably say a third might be based on the alternative loan program, but that's conservative and that's subject to change. i would probably say a third might be based on the alternative loan program but that's conservative and that's subject to change

Speaker 9: Okay. Okay. That makes sense. Okay. okay Okay. okay That makes sense. that makes sense And then because you asked on CECL, if you did carry the ALP loans at cost, like a lot of other balance sheet lenders out there, a lot of banks, and then accrued a loan loss provision consistent with CEC, how would that impact the 26 guide? And then because you asked on CECL, if you did carry the ALP loans at cost, like a lot of other balance sheet lenders out there, a lot of banks, and then accrued a loan loss provision consistent with CEC, how would that impact the 26 guide? and then because you asked on cecl if you did carry the alp loans at cost like a lot of other balance sheet lenders out there a lot of banks and then accrued a loan loss provision consistent with cec how would that impact the 26 guide

Speaker 6: We'd probably make you very happy because it would fit your model like that. And you'd be looking at the interest income and you'd be forecasting it and you'd see this net interest income line just doing great. And my ROAA and my ROTCE would probably go down. So the CECL reserve probably would be consistent with what we think is a cumulative 3% historical charge-off. So you'd probably put maybe two and change upfront or something of that nature. We get 3.5 points of origination fee. We'd probably make you very happy because it would fit your model like that. we'd probably make you very happy because it would fit your model like that And you'd be looking at the interest income and you'd be forecasting it and you'd see this net interest income line just doing great. and you'd be looking at the interest income and you'd be forecasting it and you'd see this net interest income line just doing great And my ROAA and my ROTCE would probably go down. and my roaa and my rotce would probably go down So the CECL reserve probably would be consistent with what we think is a cumulative 3% historical charge-off. so the cecl reserve probably would be consistent with what we think is a cumulative 3% historical charge-off So you'd probably put maybe two and change upfront or something of that nature. so you'd probably put maybe two and change upfront or something of that nature We get 3.5 points of origination fee. we get 3.5 points of origination fee But then you'd have this huge spread income and you'd be clipping coupon and everybody that buys community banks would get all excited. And who knows, maybe we'd get a better valuation than where we currently are. I mean, the reality of this is, and I'm just making a comment, this is not rocket science. This is easy for all of you to figure out. And you could take a position, you think it's aggressive or not. But we've made a lot of changes. This is not one that I particularly see us making in the near term. I think we're just going to continue to do what we're doing, make a lot of money, and we keep originating these loans and doing these deals. We'll be just fine. But then you'd have this huge spread income and you'd be clipping coupon and everybody that buys community banks would get all excited. but then you'd have this huge spread income and you'd be clipping coupon and everybody that buys community banks would get all excited And who knows, maybe we'd get a better valuation than where we currently are. and who knows maybe we'd get a better valuation than where we currently are I mean, the reality of this is, and I'm just making a comment, this is not rocket science. i mean the reality of this is and i'm just making a comment this is not rocket science This is easy for all of you to figure out. this is easy for all of you to figure out And you could take a position, you think it's aggressive or not. and you could take a position you think it's aggressive or not But we've made a lot of changes. but we've made a lot of changes This is not one that I particularly see us making in the near term. this is not one that i particularly see us making in the near term I think we're just going to continue to do what we're doing, make a lot of money, and we keep originating these loans and doing these deals. i think we're just going to continue to do what we're doing make a lot of money and we keep originating these loans and doing these deals We'll be just fine. we'll be just fine

Speaker 9: And could you ever put the ALP business in the bank? And if not, why not? And could you ever put the ALP business in the bank? and could you ever put the alp business in the bank And if not, why not? and if not why not

Speaker 6: We certainly could because the loans are OCC eligible. They're C&I loans and they're underwritten to federal standards based upon the OCC model for a C&I loan. I would ask the bankers in the audience a question. If you could make a C&I loan that had a 50% LTV, over two-to-one debt service coverage ratio with a personal guarantee, and you got hard collateral against it, they'd be lined up around the block. We certainly could because the loans are OCC eligible. we certainly could because the loans are occ eligible They're C&I loans and they're underwritten to federal standards based upon the OCC model for a C&I loan. they're c&i loans and they're underwritten to federal standards based upon the occ model for a c&i loan I would ask the bankers in the audience a question. i would ask the bankers in the audience a question If you could make a C&I loan that had a 50% LTV, over two-to-one debt service coverage ratio with a personal guarantee, and you got hard collateral against it, they'd be lined up around the block. if you could make a c&i loan that had a 50% ltv over two-to-one debt service coverage ratio with a personal guarantee and you got hard collateral against it they'd be lined up around the block The important part, in my view, is the asset liability match it through a securitization. So I'm trying to keep this thing as simple as possible for as long as I can before I make another change. But right now, we're doing just fine. It all works. It all works. I appreciate the question, and thank you for this. I was almost going to pass the baton to Frank, but I figured I can answer that one. The important part, in my view, is the asset liability match it through a securitization. the important part in my view is the asset liability match it through a securitization So I'm trying to keep this thing as simple as possible for as long as I can before I make another change. so i'm trying to keep this thing as simple as possible for as long as i can before i make another change But right now, we're doing just fine. but right now we're doing just fine It all works. it all works It all works. it all works I appreciate the question, and thank you for this. i appreciate the question and thank you for this I was almost going to pass the baton to Frank, but I figured I can answer that one. i was almost going to pass the baton to frank but i figured i can answer that one

Speaker 4: Hey, Barry. Steve Moss. Hey, Steve. Raymond James. A couple of questions. Maybe one just starting with a three-year anniversary. What changes could we see going forward here now that you've hit the three-year anniversary with the business model, if any? Hey, Barry. hey barry Steve Moss. steve moss Hey, Steve. hey steve Raymond James. steve raymond james A couple of questions. a couple of questions Maybe one just starting with a three-year anniversary. maybe one just starting with a three-year anniversary What changes could we see going forward here now that you've hit the three-year anniversary with the business model, if any? what changes could we see going forward here now that you've hit the three-year anniversary with the business model if any

Speaker 6: Yeah. I think that from a holding company consolidated basis, I don't see any product changes. I think it's really a lot of, which is thank God. Oh my God, the stress to get the policies and procedures, the software, the compliance, and the rigors of running a bank, in addition to turnover. We've had turnover. I've talked about this on calls. So no, we're really excited about just coming in every day and doing the blocking and tackling. So I don't see any major changes. I will tell you, we do plan on using the bank balance sheet more, particularly diversification. Yeah. yeah I think that from a holding company consolidated basis, I don't see any product changes. i think that from a holding company consolidated basis i don't see any product changes I think it's really a lot of, which is thank God. i think it's really a lot of which is thank god Oh my God, the stress to get the policies and procedures, the software, the compliance, and the rigors of running a bank, in addition to turnover. oh my god the stress to get the policies and procedures the software the compliance and the rigors of running a bank in addition to turnover We've had turnover. we've had turnover I've talked about this on calls. i've talked about this on calls So no, we're really excited about just coming in every day and doing the blocking and tackling. so no we're really excited about just coming in every day and doing the blocking and tackling So I don't see any major changes. so i don't see any major changes I will tell you, we do plan on using the bank balance sheet more, particularly diversification. i will tell you we do plan on using the bank balance sheet more particularly diversification I think about 46% of the bank's balance sheet is in uninsured participations in SBA loans. I think we'd like to get that number down as a percentage, and I think we have ways to do that that are quite interesting. Particularly, we talk about the triple play, the lines of credit, things of that nature, so we feel pretty good about everything that we've got in place, and it's really a lot of blocking and tackling. I think about 46% of the bank's balance sheet is in uninsured participations in SBA loans. i think about 46% of the bank's balance sheet is in uninsured participations in sba loans I think we'd like to get that number down as a percentage, and I think we have ways to do that that are quite interesting. i think we'd like to get that number down as a percentage and i think we have ways to do that that are quite interesting Particularly, we talk about the triple play, the lines of credit, things of that nature, so we feel pretty good about everything that we've got in place, and it's really a lot of blocking and tackling. particularly we talk about the triple play the lines of credit things of that nature so we feel pretty good about everything that we've got in place and it's really a lot of blocking and tackling

Speaker 4: Okay. Appreciate that color, and then the other thing you mentioned here was with the ALP loans, they typically, I think, you expect them to pay off after about 48 months, if I recall you saying that correctly. So just kind of curious, what's the catalyst that drives that typically for our customer because loans are much longer in terms of permissible life? Okay. okay Appreciate that color, and then the other thing you mentioned here was with the ALP loans, they typically, I think, you expect them to pay off after about 48 months, if I recall you saying that correctly. appreciate that color and then the other thing you mentioned here was with the alp loans they typically i think you expect them to pay off after about 48 months if i recall you saying that correctly So just kind of curious, what's the catalyst that drives that typically for our customer because loans are much longer in terms of permissible life? so just kind of curious what's the catalyst that drives that typically for our customer because loans are much longer in terms of permissible life

Speaker 6: Yeah, so it's a good question. So if you look at the 2022 deal, which was primarily created by 2018, 2019 originations, then we had COVID. So the world stopped. And we put probably a couple of 2021 originations in there as well. When the loans hit what we perceived as the fourth and fifth-year anniversary, most of them were gone. Now, we were able to take some of them and roll them into this new deal. So that was helpful. But the driver is that they're performing. If you think of the life cycle of a small and medium-sized business owner, many of them sell their businesses. Yeah, so it's a good question. yeah so it's a good question So if you look at the 2022 deal, which was primarily created by 2018, 2019 originations, then we had COVID. so if you look at the 2022 deal which was primarily created by 2018 2019 originations then we had covid So the world stopped. so the world stopped And we put probably a couple of 2021 originations in there as well. and we put probably a couple of 2021 originations in there as well When the loans hit what we perceived as the fourth and fifth-year anniversary, most of them were gone. when the loans hit what we perceived as the fourth and fifth-year anniversary most of them were gone Now, we were able to take some of them and roll them into this new deal. now we were able to take some of them and roll them into this new deal So that was helpful. so that was helpful But the driver is that they're performing. but the driver is that they're performing If you think of the life cycle of a small and medium-sized business owner, many of them sell their businesses. if you think of the life cycle of a small and medium-sized business owner many of them sell their businesses They'll sell the real estate after that period of time too. So there is a tail, but a good chunk of them do tend to go. But the biggest advantage is the flexibility. If you ever dealt with a business owner who complains about a bank, these are the common complaints. Oh, I got to give them regular monthly financials. Oh, I got to give them regular quarterly financials. Oh, they're all over me because I'm tripping a covenant. I mean, they just don't like the oversight due to typical and traditional bank covenants. So for entrepreneurs that are not afraid to PG, have strong guarantees, this gives them a lot of flexibility. They'll sell the real estate after that period of time too. they'll sell the real estate after that period of time too So there is a tail, but a good chunk of them do tend to go. so there is a tail but a good chunk of them do tend to go But the biggest advantage is the flexibility. but the biggest advantage is the flexibility If you ever dealt with a business owner who complains about a bank, these are the common complaints. if you ever dealt with a business owner who complains about a bank these are the common complaints Oh, I got to give them regular monthly financials. oh i got to give them regular monthly financials Oh, I got to give them regular quarterly financials. oh i got to give them regular quarterly financials Oh, they're all over me because I'm tripping a covenant. oh they're all over me because i'm tripping a covenant I mean, they just don't like the oversight due to typical and traditional bank covenants. i mean they just don't like the oversight due to typical and traditional bank covenants So for entrepreneurs that are not afraid to PG, have strong guarantees, this gives them a lot of flexibility. so for entrepreneurs that are not afraid to pg have strong guarantees this gives them a lot of flexibility They will pay the higher rate because on the AM schedule, because they're not repaying the principals, you're basically giving them equity as well as being able to distribute more freely. A lot of them don't understand, well, why can't I distribute my own money? No, you got to keep half of it if you get a good loan in the bank. So you give them that flexibility. They will pay the higher rate because on the AM schedule, because they're not repaying the principals, you're basically giving them equity as well as being able to distribute more freely. they will pay the higher rate because on the am schedule because they're not repaying the principals you're basically giving them equity as well as being able to distribute more freely A lot of them don't understand, well, why can't I distribute my own money? a lot of them don't understand well why can't i distribute my own money No, you got to keep half of it if you get a good loan in the bank. no you got to keep half of it if you get a good loan in the bank So you give them that flexibility. so you give them that flexibility We're because we have the collateral. So it works well from a credit standpoint. It's a different way of looking at credit. We're because we have the collateral. we're because we have the collateral So it works well from a credit standpoint. so it works well from a credit standpoint It's a different way of looking at credit. it's a different way of looking at credit

Speaker 4: Thank you. Thank you. thank you

Speaker 10: Hi, everyone. This is Emily Lee stepping in for Tim Switzer at KBW. Thanks for taking my question. So for modeling purposes, what kind of assumptions should we make for the fair value mark upon origination for an ALP loan? I think at the end of Q3, the cumulative mark up on the portfolio was about 9%. And it was super helpful to see all the income statement mechanics laid out. But what would be the net impact to earnings on the day that it goes into the securitization? Is it generally neutral overall or a positive impact because you get the servicing gain? Hi, everyone. hi everyone This is Emily Lee stepping in for Tim Switzer at KBW. this is emily lee stepping in for tim switzer at kbw Thanks for taking my question. thanks for taking my question So for modeling purposes, what kind of assumptions should we make for the fair value mark upon origination for an ALP loan? so for modeling purposes what kind of assumptions should we make for the fair value mark upon origination for an alp loan I think at the end of Q3, the cumulative mark up on the portfolio was about 9%. i think at the end of q3 the cumulative mark up on the portfolio was about 9% And it was super helpful to see all the income statement mechanics laid out. and it was super helpful to see all the income statement mechanics laid out But what would be the net impact to earnings on the day that it goes into the securitization? but what would be the net impact to earnings on the day that it goes into the securitization Is it generally neutral overall or a positive impact because you get the servicing gain? is it generally neutral overall or a positive impact because you get the servicing gain

Speaker 6: I think what you're going to see going forward is really just valuation on the residual. I think what you're going to see going forward is really just valuation on the residual. i think what you're going to see going forward is really just valuation on the residual So we're going to try to eliminate some of that noise in the interim period. So it's really just, are you comfortable valuing the equity certificate in the asset class? So we're going to try to eliminate some of that noise in the interim period. so we're going to try to eliminate some of that noise in the interim period So it's really just, are you comfortable valuing the equity certificate in the asset class? so it's really just are you comfortable valuing the equity certificate in the asset class

Speaker 10: Understood. Thank you. And then kind of on the guide, what kind of deposit and loan growth assumptions are embedded within the 2026 guide? Understood. understood Thank you. thank you And then kind of on the guide, what kind of deposit and loan growth assumptions are embedded within the 2026 guide? and then kind of on the guide what kind of deposit and loan growth assumptions are embedded within the 2026 guide

Speaker 6: I think they're pretty modest, to be frank with you. That's always a fun conversation. I've got the public guidance, and then I've got the stretch goals that I'd like to have the management do and holding people accountable and all that other kinds of stuff. So they're pretty modest, I think, particularly on the deposit side relative to cost of funds reduction. What do we have about? We have like 50 basis points, Frank? Well, that's really sick. Right. So we've improved about 50 basis points this year. I think they're pretty modest, to be frank with you. i think they're pretty modest to be frank with you That's always a fun conversation. that's always a fun conversation I've got the public guidance, and then I've got the stretch goals that I'd like to have the management do and holding people accountable and all that other kinds of stuff. i've got the public guidance and then i've got the stretch goals that i'd like to have the management do and holding people accountable and all that other kinds of stuff So they're pretty modest, I think, particularly on the deposit side relative to cost of funds reduction. so they're pretty modest i think particularly on the deposit side relative to cost of funds reduction What do we have about? what do we have about We have like 50 basis points, Frank? we have like 50 basis points frank Well, that's really sick. well that's really sick Right. right So we've improved about 50 basis points this year. so we've improved about 50 basis points this year So it's a fair disclosure conversation, so that's okay. I don't think we're there next year. I think we're probably a quarter, maybe. And so we've probably dropped our cost of funds by about a quarter. I think that's conservative. But I also believe that banks are not going to be able to drop their rates as easily as they think they would. I think that's going to be fairly sticky. I think that's going to be a surprise. We are rate agnostic, with the exception of the fact lower rates are better for our legacy portfolio and our borrowers from a credit standpoint. But apart from that, we are fairly well asset liability matched. So it's a fair disclosure conversation, so that's okay. so it's a fair disclosure conversation so that's okay I don't think we're there next year. i don't think we're there next year I think we're probably a quarter, maybe. i think we're probably a quarter maybe And so we've probably dropped our cost of funds by about a quarter. and so we've probably dropped our cost of funds by about a quarter I think that's conservative. i think that's conservative But I also believe that banks are not going to be able to drop their rates as easily as they think they would. but i also believe that banks are not going to be able to drop their rates as easily as they think they would I think that's going to be fairly sticky. i think that's going to be fairly sticky I think that's going to be a surprise. i think that's going to be a surprise We are rate agnostic, with the exception of the fact lower rates are better for our legacy portfolio and our borrowers from a credit standpoint. we are rate agnostic with the exception of the fact lower rates are better for our legacy portfolio and our borrowers from a credit standpoint But apart from that, we are fairly well asset liability matched. but apart from that we are fairly well asset liability matched

Speaker 10: Very helpful. Thank you. And then if I could do one more, do you have any updated thoughts on capital deployment and the decision between dividends and repurchases? Very helpful. very helpful Thank you. thank you And then if I could do one more, do you have any updated thoughts on capital deployment and the decision between dividends and repurchases? and then if i could do one more do you have any updated thoughts on capital deployment and the decision between dividends and repurchases

Speaker 6: No major changes. I think we're in pretty good shape with respect to our capital position, particularly with the securitization coming up, which will free up a lot of liquidity. We did obviously a lot of capital raises and substantially improved our capital base in the second half of this year. This is a tricky one. Obviously, the dividends are only approved by the board. I don't think it's likely you'll see much of the dividend change, but that's subject to change every single quarter. I think we'll stick there. No major changes. no major changes I think we're in pretty good shape with respect to our capital position, particularly with the securitization coming up, which will free up a lot of liquidity. i think we're in pretty good shape with respect to our capital position particularly with the securitization coming up which will free up a lot of liquidity We did obviously a lot of capital raises and substantially improved our capital base in the second half of this year. we did obviously a lot of capital raises and substantially improved our capital base in the second half of this year This is a tricky one. this is a tricky one Obviously, the dividends are only approved by the board. obviously the dividends are only approved by the board I don't think it's likely you'll see much of the dividend change, but that's subject to change every single quarter. i don't think it's likely you'll see much of the dividend change but that's subject to change every single quarter I think we'll stick there. i think we'll stick there That dividend was set with the stock price significantly higher, and now it's at a level that's just like, wow, and relative to repurchase, we made an announcement. We bought some stock back. I think you'll continue to see us take advantage of that opportunity. We're still trading below, I believe, what is tangible book, where we perceive tangible book going. So yeah, I do think we'll continue. We have an authorization to do that. Blackout period goes away shortly. Time flies pretty quickly. So yeah, I think we'll continue to opportunistically take advantage of the authorization we have. That dividend was set with the stock price significantly higher, and now it's at a level that's just like, wow, and relative to repurchase, we made an announcement. that dividend was set with the stock price significantly higher and now it's at a level that's just like wow and relative to repurchase we made an announcement We bought some stock back. we bought some stock back I think you'll continue to see us take advantage of that opportunity. i think you'll continue to see us take advantage of that opportunity We're still trading below, I believe, what is tangible book, where we perceive tangible book going. we're still trading below i believe what is tangible book where we perceive tangible book going So yeah, I do think we'll continue. so yeah i do think we'll continue We have an authorization to do that. we have an authorization to do that Blackout period goes away shortly. blackout period goes away shortly Time flies pretty quickly. time flies pretty quickly So yeah, I think we'll continue to opportunistically take advantage of the authorization we have. so yeah i think we'll continue to opportunistically take advantage of the authorization we have

Speaker 10: Okay. Great. Thank you, everyone. Okay. okay Great. great Thank you, everyone. thank you everyone

Speaker 6: Thank you. One here from Andrew. Thank you. thank you One here from Andrew. one here from andrew

Speaker 2: Hey, guys. Andrew Scott from Roth and maybe an Andrew for Andrew question. But as you kind of grow, you're looking to grow business deposits, telling clients the advantage of putting their money in Newtek through the Newtek Advantage. Kind of what has resonated with clients so far, maybe friction points that you didn't expect on client feedback, and kind of how is the account opening to deposits in the account conversion rate going, do you think, in your opinion? Hey, guys. hey guys Andrew Scott from Roth and maybe an Andrew for Andrew question. andrew scott from roth and maybe an andrew for andrew question But as you kind of grow, you're looking to grow business deposits, telling clients the advantage of putting their money in Newtek through the Newtek Advantage. but as you kind of grow you're looking to grow business deposits telling clients the advantage of putting their money in newtek through the newtek advantage Kind of what has resonated with clients so far, maybe friction points that you didn't expect on client feedback, and kind of how is the account opening to deposits in the account conversion rate going, do you think, in your opinion? kind of what has resonated with clients so far maybe friction points that you didn't expect on client feedback and kind of how is the account opening to deposits in the account conversion rate going do you think in your opinion

Speaker 8: So what resonates is these. The bank account essentially comes with the loan today. So does the merchant account. So that's there. What we are working on and improving, where I think you'll see lift in the organization, is improving utilization. So today, we don't necessarily say you've got to close your old account, but we need to keep tantalizing folks to bring them into the advantage, be interested in the other solutions that we have to offer. We don't look at this as cross-selling. In fact, we find that phrase to be repugnant. It's not cross-selling. It's not bundling. It's a financial ecosystem. So what resonates is these. so what resonates is these The bank account essentially comes with the loan today. the bank account essentially comes with the loan today So does the merchant account. so does the merchant account So that's there. so that's there What we are working on and improving, where I think you'll see lift in the organization, is improving utilization. what we are working on and improving where i think you'll see lift in the organization is improving utilization So today, we don't necessarily say you've got to close your old account, but we need to keep tantalizing folks to bring them into the advantage, be interested in the other solutions that we have to offer. so today we don't necessarily say you've got to close your old account but we need to keep tantalizing folks to bring them into the advantage be interested in the other solutions that we have to offer We don't look at this as cross-selling. we don't look at this as cross-selling In fact, we find that phrase to be repugnant. in fact we find that phrase to be repugnant It's not cross-selling. it's not cross-selling It's not bundling. it's not bundling It's a financial ecosystem. it's a financial ecosystem And the more that we introduce customers to that convenience, the more folks become frustrated with their existing depositories, and the more opportunities we have to do one more thing with folks. And that's really what we are marketing heavily at this point. We see the level of engagement picking up, which will create stickier deposits, greater deposits, and greater adoption of the other solutions. And the more that we introduce customers to that convenience, the more folks become frustrated with their existing depositories, and the more opportunities we have to do one more thing with folks. and the more that we introduce customers to that convenience the more folks become frustrated with their existing depositories and the more opportunities we have to do one more thing with folks And that's really what we are marketing heavily at this point. and that's really what we are marketing heavily at this point We see the level of engagement picking up, which will create stickier deposits, greater deposits, and greater adoption of the other solutions. we see the level of engagement picking up which will create stickier deposits greater deposits and greater adoption of the other solutions

Speaker 5: All right. I'm going to, Barry, I'm going to ask a question from the webcast and then walk over to Hal and give him the mic. So the question here is, Newtek has a compelling 7A business where loss rates are more than offset by very compelling loan yields. As we look forward, what do you think a good expectation for lifetime default and severity rates might be for 7A? Maybe that's repeat too. Yeah. All right. all right I'm going to, Barry, I'm going to ask a question from the webcast and then walk over to Hal and give him the mic. i'm going to barry i'm going to ask a question from the webcast and then walk over to hal and give him the mic So the question here is, Newtek has a compelling 7A business where loss rates are more than offset by very compelling loan yields. so the question here is newtek has a compelling 7a business where loss rates are more than offset by very compelling loan yields As we look forward, what do you think a good expectation for lifetime default and severity rates might be for 7A? as we look forward what do you think a good expectation for lifetime default and severity rates might be for 7a Maybe that's repeat too. maybe that's repeat too Yeah. yeah

Speaker 6: Historically, we have estimated that the cumulative lifetime charge-off rate or loss rate is about 8% over time. Now, mind you, these are long-term amortizing loans, so that typically gets spread out over time, and there's loss curves on this with humps. Therefore, our CECL reserve is about that's the latest between 6.25%-6.5% present value, but that'll obviously be affected over time with fair value. Historically, we have estimated that the cumulative lifetime charge-off rate or loss rate is about 8% over time. historically we have estimated that the cumulative lifetime charge-off rate or loss rate is about 8% over time Now, mind you, these are long-term amortizing loans, so that typically gets spread out over time, and there's loss curves on this with humps. now mind you these are long-term amortizing loans so that typically gets spread out over time and there's loss curves on this with humps Therefore, our CECL reserve is about that's the latest between 6.25%-6.5% present value, but that'll obviously be affected over time with fair value. therefore our cecl reserve is about that's the latest between 6.25%-6.5% present value but that'll obviously be affected over time with fair value Price, I'm not sure I see that changing dramatically. I see that it's sticking. I don't see that. I certainly don't see it getting worse. I don't see it getting better. And I will point out that 2021, 2022, and 2023 vintage years in an SBA floating rate loan program, that was the great financial crisis for small and medium-sized businesses. I want to repeat that. The great financial crisis for SMBs was 2021, 2022, 2023. Price, I'm not sure I see that changing dramatically. price i'm not sure i see that changing dramatically I see that it's sticking. i see that it's sticking I don't see that. i don't see that I certainly don't see it getting worse. i certainly don't see it getting worse I don't see it getting better. i don't see it getting better And I will point out that 2021, 2022, and 2023 vintage years in an SBA floating rate loan program, that was the great financial crisis for small and medium-sized businesses. and i will point out that 2021 2022 and 2023 vintage years in an sba floating rate loan program that was the great financial crisis for small and medium-sized businesses I want to repeat that. i want to repeat that The great financial crisis for SMBs was 2021, 2022, 2023. the great financial crisis for smbs was 2021 2022 2023 Why? Well, if your rates went up by 3%-5%, your debt payment almost doubled. Put aside the fact that the cost of labor went up, the cost to insure went up, every expense went up. And really, although you could say the economy was good, it wasn't particularly robust. So that the NSBF portfolio, which lost $28.5 million in 2024, is anticipated to lose materially less. Why? why Well, if your rates went up by 3%-5%, your debt payment almost doubled. well if your rates went up by 3%-5% your debt payment almost doubled Put aside the fact that the cost of labor went up, the cost to insure went up, every expense went up. put aside the fact that the cost of labor went up the cost to insure went up every expense went up And really, although you could say the economy was good, it wasn't particularly robust. and really although you could say the economy was good it wasn't particularly robust So that the NSBF portfolio, which lost $28.5 million in 2024, is anticipated to lose materially less. so that the nsbf portfolio which lost $28.5 million in 2024 is anticipated to lose materially less I don't want to preempt our call coming up. Then even in 2020, I'm sorry, in 2025, is expected to lose materially less. You could figure it out from the first three quarters. We'll be less next year because that portfolio is burned down. It's a diminishing portfolio. It also has a capitalization of about $200 million, which we would really like to free up. Okay? It's in loans. Okay? But as that pays off and goes away, it turns into cash and has a tremendous amount of usefulness for a lot of lovely things. We look forward to that portfolio continuing to pay off, returning capital back to the holding company, and going from there. How? I don't want to preempt our call coming up. i don't want to preempt our call coming up Then even in 2020, I'm sorry, in 2025, is expected to lose materially less. then even in 2020 i'm sorry in 2025 is expected to lose materially less You could figure it out from the first three quarters. you could figure it out from the first three quarters We'll be less next year because that portfolio is burned down. we'll be less next year because that portfolio is burned down It's a diminishing portfolio. it's a diminishing portfolio It also has a capitalization of about $200 million, which we would really like to free up. it also has a capitalization of about $200 million which we would really like to free up Okay? okay It's in loans. it's in loans Okay? okay But as that pays off and goes away, it turns into cash and has a tremendous amount of usefulness for a lot of lovely things. but as that pays off and goes away it turns into cash and has a tremendous amount of usefulness for a lot of lovely things We look forward to that portfolio continuing to pay off, returning capital back to the holding company, and going from there. we look forward to that portfolio continuing to pay off returning capital back to the holding company and going from there How? how Yeah. My question relates to slide 18. Does the Newtek Advantage design for deployment by banks and credit unions seeking to modernize their experiences for their clients? Yeah. yeah My question relates to slide 18. my question relates to slide 18 Does the Newtek Advantage design for deployment by banks and credit unions seeking to modernize their experiences for their clients? does the newtek advantage design for deployment by banks and credit unions seeking to modernize their experiences for their clients Is this something like a platform as a service that you're offering to banks? And could you expand on it a little more? Have you got some banks and credit unions in pilot or explain more on that? Thank you. Is this something like a platform as a service that you're offering to banks? is this something like a platform as a service that you're offering to banks And could you expand on it a little more? and could you expand on it a little more Have you got some banks and credit unions in pilot or explain more on that? have you got some banks and credit unions in pilot or explain more on that Thank you. thank you Yeah. This is an interesting one. So we go to banks and credit unions and make offers to them to help them raise deposits and make loans under the program. So you could say, well, why would you do that? Well, we'll be the payroll provider. We'll be the merchant processor. Or in the lender service provider, they'll pay us a fee to maybe service the loans or to do the kickouts. I will tell you, this is not an easy sale because you've got to cut through. Why am I letting the fox in the henhouse? Yeah. yeah This is an interesting one. this is an interesting one So we go to banks and credit unions and make offers to them to help them raise deposits and make loans under the program. so we go to banks and credit unions and make offers to them to help them raise deposits and make loans under the program So you could say, well, why would you do that? so you could say well why would you do that Well, we'll be the payroll provider. well we'll be the payroll provider We'll be the merchant processor. we'll be the merchant processor Or in the lender service provider, they'll pay us a fee to maybe service the loans or to do the kickouts. or in the lender service provider they'll pay us a fee to maybe service the loans or to do the kickouts I will tell you, this is not an easy sale because you've got to cut through. i will tell you this is not an easy sale because you've got to cut through Why am I letting the fox in the henhouse? why am i letting the fox in the henhouse I will tell you, we've done business with partners like UBS, Morgan Stanley, Raymond James forever, and we do not take their deposits. We don't take their customers. The NewTracker system gives a great audit trail for that. So this program is a great program for depositories to partner with us. It's available, and we've had some that are taking advantage of it, but it's at very early stages. I will tell you, we've done business with partners like UBS, Morgan Stanley, Raymond James forever, and we do not take their deposits. i will tell you we've done business with partners like ubs morgan stanley raymond james forever and we do not take their deposits We don't take their customers. we don't take their customers The NewTracker system gives a great audit trail for that. the newtracker system gives a great audit trail for that So this program is a great program for depositories to partner with us. so this program is a great program for depositories to partner with us It's available, and we've had some that are taking advantage of it, but it's at very early stages. it's available and we've had some that are taking advantage of it but it's at very early stages Thank you. If I have one follow-up on that last comment you made about maybe the SMBs from 2020 to 2023 was kind of their great financial crisis, I don't think that view is widely understood. Thank you. thank you If I have one follow-up on that last comment you made about maybe the SMBs from 2020 to 2023 was kind of their great financial crisis, I don't think that view is widely understood. if i have one follow-up on that last comment you made about maybe the smbs from 2020 to 2023 was kind of their great financial crisis i don't think that view is widely understood No, No, no and maybe that was. and maybe that was. and maybe that was We understand it. We understand it. we understand it Yeah. Yeah. But maybe that was papered over with a lot of PPP loans that helped out quite a bit. But for 2026, 2027, based on what you're seeing now, can you give us maybe a macro outlook that you're seeing right now based on. Yeah. yeah Yeah. yeah But maybe that was papered over with a lot of PPP loans that helped out quite a bit. but maybe that was papered over with a lot of ppp loans that helped out quite a bit But for 2026, 2027, based on what you're seeing now, can you give us maybe a macro outlook that you're seeing right now based on. but for 2026 2027 based on what you're seeing now can you give us maybe a macro outlook that you're seeing right now based on Praise the Lord, their cost of funds is down about 1.25% to 1.5%. That's helpful. Inflation, although it's still positive, the rate of growth is slower. It's methodical. It's not spiking up in their face. There's a lot of slack in the business. Some of the businesses are having problems with employees and employment, particularly with losing undocumented workers. But I mean, from Q2 to Q3, and I've indicated and will announce it Q3 to Q4, the portfolio has stabilized to improve in NPLs, both in percentages and in absolute dollar amounts. So we are seeing less stress on that portfolio. I think that's an important announcement. Praise the Lord, their cost of funds is down about 1.25% to 1.5%. praise the lord their cost of funds is down about 1.25% to 1.5% That's helpful. that's helpful Inflation, although it's still positive, the rate of growth is slower. inflation although it's still positive the rate of growth is slower It's methodical. it's methodical It's not spiking up in their face. it's not spiking up in their face There's a lot of slack in the business. there's a lot of slack in the business Some of the businesses are having problems with employees and employment, particularly with losing undocumented workers. some of the businesses are having problems with employees and employment particularly with losing undocumented workers But I mean, from Q2 to Q3, and I've indicated and will announce it Q3 to Q4, the portfolio has stabilized to improve in NPLs, both in percentages and in absolute dollar amounts. but i mean from q2 to q3 and i've indicated and will announce it q3 to q4 the portfolio has stabilized to improve in npls both in percentages and in absolute dollar amounts So we are seeing less stress on that portfolio. so we are seeing less stress on that portfolio I think that's an important announcement. i think that's an important announcement I'm sure my chief legal officer will be mad I had said that comment, but this is what my belief is at this point in time. Frank's sweating bullets, and so is Pete. Waiting for the text. Okay. How many? Any else? Thank you very much. Ivan? I'm sure my chief legal officer will be mad I had said that comment, but this is what my belief is at this point in time. i'm sure my chief legal officer will be mad i had said that comment but this is what my belief is at this point in time Frank's sweating bullets, and so is Pete. frank's sweating bullets and so is pete Waiting for the text. waiting for the text Okay. okay How many? how many Any else? any else Thank you very much. thank you very much Ivan? ivan

Speaker 3: Yes. Ivan Jimenez, Greenholder Corporation. My question relates to the future as assets are held, particularly there was a cursory mention to digital assets. I'd like to know what I would think the company, the Newtek, would be well-positioned to take advantage of the Genius Act and, let's say, the transition towards alternative and digital assets, particularly stablecoins. So if you could, someone can highlight. There's a cursory mention, but if you could highlight more as to how that could apply to the digital platform of Newtek. Sure. I'll try to differentiate between Bitcoin and I'll call stablecoin. Yes. yes Ivan Jimenez, Greenholder Corporation. ivan jimenez greenholder corporation My question relates to the future as assets are held, particularly there was a cursory mention to digital assets. my question relates to the future as assets are held particularly there was a cursory mention to digital assets I'd like to know what I would think the company, the Newtek, would be well-positioned to take advantage of the Genius Act and, let's say, the transition towards alternative and digital assets, particularly stablecoins. i'd like to know what i would think the company the newtek would be well-positioned to take advantage of the genius act and let's say the transition towards alternative and digital assets particularly stablecoins So if you could, someone can highlight. so if you could someone can highlight There's a cursory mention, but if you could highlight more as to how that could apply to the digital platform of Newtek. there's a cursory mention but if you could highlight more as to how that could apply to the digital platform of newtek Sure. sure I'll try to differentiate between Bitcoin and I'll call stablecoin. i'll try to differentiate between bitcoin and i'll call stablecoin

Speaker 6: We don't have any interest in Bitcoin. It's stored value. It's not transactional. It's not a currency. We have nothing to do with Bitcoin. Stablecoin is something that has utility. We do plan on having it on the menu. We have a partner that we'll be using. We're not going to be spending ungodly amounts of money creating our own stablecoin, nor are we initially, and maybe forever, going to use stablecoin to gather deposits. Andrew has tremendous experience. He created a stablecoin at Flagstar Bank near Community Bank. Frank also very familiar with it from Signature Bank as well. So we've seen what's good about it and what can possibly be problematic. The value of stablecoin and putting it on the menu is that, personally, for international businesses, it's great. We don't have any interest in Bitcoin. we don't have any interest in bitcoin It's stored value. it's stored value It's not transactional. it's not transactional It's not a currency. it's not a currency We have nothing to do with Bitcoin. we have nothing to do with bitcoin Stablecoin is something that has utility. stablecoin is something that has utility We do plan on having it on the menu. we do plan on having it on the menu We have a partner that we'll be using. we have a partner that we'll be using We're not going to be spending ungodly amounts of money creating our own stablecoin, nor are we initially, and maybe forever, going to use stablecoin to gather deposits. we're not going to be spending ungodly amounts of money creating our own stablecoin nor are we initially and maybe forever going to use stablecoin to gather deposits Andrew has tremendous experience. andrew has tremendous experience He created a stablecoin at Flagstar Bank near Community Bank. he created a stablecoin at flagstar bank near community bank Frank also very familiar with it from Signature Bank as well. frank also very familiar with it from signature bank as well So we've seen what's good about it and what can possibly be problematic. so we've seen what's good about it and what can possibly be problematic The value of stablecoin and putting it on the menu is that, personally, for international businesses, it's great. the value of stablecoin and putting it on the menu is that personally for international businesses it's great You get rid of the currency risk, and you're able to move money with some level of immediacy, so it's valuable. Two, for businesses that do business on Saturday and Sunday, and for whatever reason, they want to see the asset versus waiting for their Visa or Mastercard to batch out or in the middle of the night, we believe we have customers that would like to have it as a choice. What does it mean? It means their customers are going to have to get an app. The customers are going to have to use the app. So for B2B, it's a lot easier. In other words, if I'm a business and I'm constantly paying this party and it's international, it's not a big deal to use the app. You pay with the app. You get rid of the currency risk, and you're able to move money with some level of immediacy, so it's valuable. you get rid of the currency risk and you're able to move money with some level of immediacy so it's valuable Two, for businesses that do business on Saturday and Sunday, and for whatever reason, they want to see the asset versus waiting for their Visa or Mastercard to batch out or in the middle of the night, we believe we have customers that would like to have it as a choice. two for businesses that do business on saturday and sunday and for whatever reason they want to see the asset versus waiting for their visa or mastercard to batch out or in the middle of the night we believe we have customers that would like to have it as a choice What does it mean? what does it mean It means their customers are going to have to get an app. it means their customers are going to have to get an app The customers are going to have to use the app. the customers are going to have to use the app So for B2B, it's a lot easier. so for b2b it's a lot easier In other words, if I'm a business and I'm constantly paying this party and it's international, it's not a big deal to use the app. in other words if i'm a business and i'm constantly paying this party and it's international it's not a big deal to use the app You pay with the app. you pay with the app You get rid of the currency risk. It hits. And then the business easily has the ability to turn that into cash at a finger snap, and they're not waiting, and they're not transferring, and they're getting paid a rate on their money. So there is application there. Our goal, as a provider of the best solutions in the Newtek Advantage, you can move money through credit card, debit card. You get rid of the currency risk. you get rid of the currency risk It hits. it hits And then the business easily has the ability to turn that into cash at a finger snap, and they're not waiting, and they're not transferring, and they're getting paid a rate on their money. and then the business easily has the ability to turn that into cash at a finger snap and they're not waiting and they're not transferring and they're getting paid a rate on their money So there is application there. so there is application there Our goal, as a provider of the best solutions in the Newtek Advantage, you can move money through credit card, debit card. our goal as a provider of the best solutions in the newtek advantage you can move money through credit card debit card By the way, we have our own debit card with big interchange because we're not a $10 billion bank. So the utilization of that debit card, which should be a line item and should be something we really push to get utilization, should be valuable to us. ACH and wire, invaluable. So if you're a business, don't you want to go to one place and see every place where you're sending money and receiving money and then get analytics for that as well? The answer is yes. By the way, we have our own debit card with big interchange because we're not a $10 billion bank. by the way we have our own debit card with big interchange because we're not a $10 billion bank So the utilization of that debit card, which should be a line item and should be something we really push to get utilization, should be valuable to us. so the utilization of that debit card which should be a line item and should be something we really push to get utilization should be valuable to us ACH and wire, invaluable. ach and wire invaluable So if you're a business, don't you want to go to one place and see every place where you're sending money and receiving money and then get analytics for that as well? so if you're a business don't you want to go to one place and see every place where you're sending money and receiving money and then get analytics for that as well The answer is yes. the answer is yes You don't really want to go to three or four places. You don't want to go to Fiserv or your merchant processor. Go to your bank, and then you want to go to one place and see it all. Therein lies the Newtek Advantage. And also, in terms of sending and moving money, it's payroll. It's payroll. You want to be able to have payroll. You want to see your merchant batches in the Advantage. You want to be able to see your ACHs, your wires, all in one place, and be able to get analytics and have it integrate. Today, only QuickBooks, but down the road, it'll be other accounting packages as well. You don't really want to go to three or four places. you don't really want to go to three or four places You don't want to go to Fiserv or your merchant processor. you don't want to go to fiserv or your merchant processor Go to your bank, and then you want to go to one place and see it all. go to your bank and then you want to go to one place and see it all Therein lies the Newtek Advantage. therein lies the newtek advantage And also, in terms of sending and moving money, it's payroll. and also in terms of sending and moving money it's payroll It's payroll. it's payroll You want to be able to have payroll. you want to be able to have payroll You want to see your merchant batches in the Advantage. you want to see your merchant batches in the advantage You want to be able to see your ACHs, your wires, all in one place, and be able to get analytics and have it integrate. you want to be able to see your achs your wires all in one place and be able to get analytics and have it integrate Today, only QuickBooks, but down the road, it'll be other accounting packages as well. today only quickbooks but down the road it'll be other accounting packages as well

Speaker 7: Howdy, everyone. Guys, I just want to thank you guys for doing this. I think it's extremely helpful. Chris Lahiji, LD Micro. Two questions. Howdy, everyone. howdy everyone Guys, I just want to thank you guys for doing this. guys i just want to thank you guys for doing this I think it's extremely helpful. i think it's extremely helpful Chris Lahiji, LD Micro. chris lahiji ld micro Two questions. two questions First, can you, Barry, give us kind of a little bit of color on how the appetite for M&A has changed for Newtek year over year? And then my second question is, do we really have a publicly traded comp that you guys kind of use as a North Star or a guiding light? First, can you, Barry, give us kind of a little bit of color on how the appetite for M&A has changed for Newtek year over year? first can you barry give us kind of a little bit of color on how the appetite for m&a has changed for newtek year over year And then my second question is, do we really have a publicly traded comp that you guys kind of use as a North Star or a guiding light? and then my second question is do we really have a publicly traded comp that you guys kind of use as a north star or a guiding light

Speaker 6: Thank you, Chris. So first question, relative to the M&A market, it's off the charts. I mean, the bankers that we work closely with that specialize in M&A for banks, they haven't been calling me lately just because their phones are ringing off the hook. Okay? So I mean, they're all lined up to do deals. Everyone's buying, and a lot of people are selling. And by the way, parties that weren't interested in owning a bank, for the obvious reasons, are now interested in owning a bank. Thank you, Chris. thank you chris So first question, relative to the M&A market, it's off the charts. so first question relative to the m&a market it's off the charts I mean, the bankers that we work closely with that specialize in M&A for banks, they haven't been calling me lately just because their phones are ringing off the hook. i mean the bankers that we work closely with that specialize in m&a for banks they haven't been calling me lately just because their phones are ringing off the hook Okay? okay So I mean, they're all lined up to do deals. so i mean they're all lined up to do deals Everyone's buying, and a lot of people are selling. everyone's buying and a lot of people are selling And by the way, parties that weren't interested in owning a bank, for the obvious reasons, are now interested in owning a bank. and by the way parties that weren't interested in owning a bank for the obvious reasons are now interested in owning a bank The value of an OCC chartered franchise has just gone up through the roof. That's a good thing for us. Secondly, comps. There isn't one. The best comps, I believe, are some of the ones I mentioned: the LendingClubs, the SoFis, Enova/Grasshopper, technology-enabled banks. Some people compare us to Live Oak. The only thing that's consistent between us and Live Oak is we both have a government-guaranteed loan program that we're good at. But apart from that, they don't acquire customers the way we do. By the way, they do an amazing job in creating technology and spinning it off for huge sales and gain on sale. The value of an OCC chartered franchise has just gone up through the roof. the value of an occ chartered franchise has just gone up through the roof That's a good thing for us. that's a good thing for us Secondly, comps. secondly comps There isn't one. there isn't one The best comps, I believe, are some of the ones I mentioned: the LendingClubs, the SoFis, Enova/Grasshopper, technology-enabled banks. the best comps i believe are some of the ones i mentioned the lendingclubs the sofis enova/grasshopper technology-enabled banks Some people compare us to Live Oak. some people compare us to live oak The only thing that's consistent between us and Live Oak is we both have a government-guaranteed loan program that we're good at. the only thing that's consistent between us and live oak is we both have a government-guaranteed loan program that we're good at But apart from that, they don't acquire customers the way we do. but apart from that they don't acquire customers the way we do By the way, they do an amazing job in creating technology and spinning it off for huge sales and gain on sale. by the way they do an amazing job in creating technology and spinning it off for huge sales and gain on sale Everyone's happy about that, but God forbid you put a fair value on an ownership interest and like, "Oh, what is this?" But if you sell a business, and I don't blame it. It's a cash sale. I get it. But I think the point is Live Oak is probably not a great comparison of ours. Matter of fact, if you look at their ROAs, ROTCEs, they're just different. By the way, I wish I had their market multiple. So I appreciate the question, but we're going to get there. Everyone's happy about that, but God forbid you put a fair value on an ownership interest and like, "Oh, what is this?" But if you sell a business, and I don't blame it. everyone's happy about that but god forbid you put a fair value on an ownership interest and like "oh what is this?" but if you sell a business and i don't blame it It's a cash sale. it's a cash sale I get it. i get it But I think the point is Live Oak is probably not a great comparison of ours. but i think the point is live oak is probably not a great comparison of ours Matter of fact, if you look at their ROAs, ROTCEs, they're just different. matter of fact if you look at their roas rotces they're just different By the way, I wish I had their market multiple. by the way i wish i had their market multiple So I appreciate the question, but we're going to get there. so i appreciate the question but we're going to get there

Speaker 5: Steve, another one for you. Steve, another one for you. steve another one for you

Speaker 4: Thanks, Bryce. So Barry, just maybe following up on SBA originations, your guidance is essentially flat year over year for originations. I noticed you made the comment about shrinking it as a percentage of your balance sheet in future periods. Just kind of curious here, rates have come down, as you mentioned, better economic setup for borrowers. Thanks, Bryce. thanks bryce So Barry, just maybe following up on SBA originations, your guidance is essentially flat year over year for originations. so barry just maybe following up on sba originations your guidance is essentially flat year over year for originations I noticed you made the comment about shrinking it as a percentage of your balance sheet in future periods. i noticed you made the comment about shrinking it as a percentage of your balance sheet in future periods Just kind of curious here, rates have come down, as you mentioned, better economic setup for borrowers. just kind of curious here rates have come down as you mentioned better economic setup for borrowers Kind of normally I would think of you maybe originating more in 2026, but maybe is it a change in some of the SBA rules or maybe a change in some of your underwriting just to tighten the box? I noticed the number of originations or daily referrals is at 600. I think it was 800 before. Is there a little bit of change maybe underneath that we should be thinking about with regard to your SBA originations? Kind of normally I would think of you maybe originating more in 2026, but maybe is it a change in some of the SBA rules or maybe a change in some of your underwriting just to tighten the box? kind of normally i would think of you maybe originating more in 2026 but maybe is it a change in some of the sba rules or maybe a change in some of your underwriting just to tighten the box I noticed the number of originations or daily referrals is at 600. i noticed the number of originations or daily referrals is at 600 I think it was 800 before. i think it was 800 before Is there a little bit of change maybe underneath that we should be thinking about with regard to your SBA originations? is there a little bit of change maybe underneath that we should be thinking about with regard to your sba originations

Speaker 6: Yeah. And Steve, I appreciate the question. I think what you will see at the end of January is clearly diminished volume in 7A. Now, we've confirmed our guidance. We're going to deliver the earnings numbers. Part of that is the government shutdown. This was the longest government shutdown in history. Part of it is the SBA regs changed, and they changed in a bigger way than I thought they would have when I got asked this question in July or August. Yeah. yeah And Steve, I appreciate the question. and steve i appreciate the question I think what you will see at the end of January is clearly diminished volume in 7A. i think what you will see at the end of january is clearly diminished volume in 7a Now, we've confirmed our guidance. now we've confirmed our guidance We're going to deliver the earnings numbers. we're going to deliver the earnings numbers Part of that is the government shutdown. part of that is the government shutdown This was the longest government shutdown in history. this was the longest government shutdown in history Part of it is the SBA regs changed, and they changed in a bigger way than I thought they would have when I got asked this question in July or August. part of it is the sba regs changed and they changed in a bigger way than i thought they would have when i got asked this question in july or august Some of the issues are how the SBA actually does their business. They're now doing their own OFAC and CAIVRS checks, which might be different than how we do them. And then you get discrepancies, and you can't make them go away, even though they may or may not be wrong. In addition to the issue of making sure that every owner, even a 1% owner, has to be a U.S. citizen. That showed up in a more prevalent manner than we would have thought or anticipated, in addition to not being able to utilize an SBA loan to refinance a merchant cash advance. So these things have been problematic. Some of the issues are how the SBA actually does their business. some of the issues are how the sba actually does their business They're now doing their own OFAC and CAIVRS checks, which might be different than how we do them. they're now doing their own ofac and caivrs checks which might be different than how we do them And then you get discrepancies, and you can't make them go away, even though they may or may not be wrong. and then you get discrepancies and you can't make them go away even though they may or may not be wrong In addition to the issue of making sure that every owner, even a 1% owner, has to be a U.S. citizen. in addition to the issue of making sure that every owner even a 1% owner has to be a u.s citizen That showed up in a more prevalent manner than we would have thought or anticipated, in addition to not being able to utilize an SBA loan to refinance a merchant cash advance. that showed up in a more prevalent manner than we would have thought or anticipated in addition to not being able to utilize an sba loan to refinance a merchant cash advance So these things have been problematic. so these things have been problematic We also have tightened up our credit score guidelines somewhat. And from my perspective, as long as we can satisfy the customer, and the one thing I'm working with Pete for 22 or 23 years, I've never had to worry about him pushing loans out to make numbers. It's not a good thing. It's not what we want to do. It's why we've been around for 22 or 23 years. So you will see diminished 7A loan closures for this year. The projection for next year, we've made a few changes that I think, due to the technology, due to new alliance partners coming on, because that stuff is constantly coming and going. We also have tightened up our credit score guidelines somewhat. we also have tightened up our credit score guidelines somewhat And from my perspective, as long as we can satisfy the customer, and the one thing I'm working with Pete for 22 or 23 years, I've never had to worry about him pushing loans out to make numbers. and from my perspective as long as we can satisfy the customer and the one thing i'm working with pete for 22 or 23 years i've never had to worry about him pushing loans out to make numbers It's not a good thing. it's not a good thing It's not what we want to do. it's not what we want to do It's why we've been around for 22 or 23 years. it's why we've been around for 22 or 23 years So you will see diminished 7A loan closures for this year. so you will see diminished 7a loan closures for this year The projection for next year, we've made a few changes that I think, due to the technology, due to new alliance partners coming on, because that stuff is constantly coming and going. the projection for next year we've made a few changes that i think due to the technology due to new alliance partners coming on because that stuff is constantly coming and going So Steve, for example, if you previously had an alliance partner that was doing business in the categories that you can't do it anymore, all of a sudden, those referrals come down. So it's always coming and going. We're always shifting and making changes in the business. We have a couple of monsters that we're talking to that could be a game changer for all aspects of our business, and we think we feel pretty good about where we are. I mean, the one thing I'm not overly concerned about, at the current market multiple, anything with a two handle is a pretty good EPS. So Steve, for example, if you previously had an alliance partner that was doing business in the categories that you can't do it anymore, all of a sudden, those referrals come down. so steve for example if you previously had an alliance partner that was doing business in the categories that you can't do it anymore all of a sudden those referrals come down So it's always coming and going. so it's always coming and going We're always shifting and making changes in the business. we're always shifting and making changes in the business We have a couple of monsters that we're talking to that could be a game changer for all aspects of our business, and we think we feel pretty good about where we are. we have a couple of monsters that we're talking to that could be a game changer for all aspects of our business and we think we feel pretty good about where we are I mean, the one thing I'm not overly concerned about, at the current market multiple, anything with a two handle is a pretty good EPS. i mean the one thing i'm not overly concerned about at the current market multiple anything with a two handle is a pretty good eps So the key here, keep the car going, keep it on the tracks, don't make bad loans. That's what we've been doing. That's what we've been doing over 25 years, so. But I do think that the dominance of the 7(a) business, it's less and less important to us. It's still important. I'm not throwing the baby out with the bathwater. We're really good in the business, and we're going to continue to be good. We just want to continue to do it at the high level that we've done it over two decades. So the key here, keep the car going, keep it on the tracks, don't make bad loans. so the key here keep the car going keep it on the tracks don't make bad loans That's what we've been doing. that's what we've been doing That's what we've been doing over 25 years, so. that's what we've been doing over 25 years so But I do think that the dominance of the 7(a) business, it's less and less important to us. but i do think that the dominance of the 7(a) business it's less and less important to us It's still important. it's still important I'm not throwing the baby out with the bathwater. i'm not throwing the baby out with the bathwater We're really good in the business, and we're going to continue to be good. we're really good in the business and we're going to continue to be good We just want to continue to do it at the high level that we've done it over two decades. we just want to continue to do it at the high level that we've done it over two decades

Speaker 5: Barry, there's one more here from the webcast we're at. About 3:10. I don't know if you want to take one. Barry, there's one more here from the webcast we're at. barry there's one more here from the webcast we're at About 3:10. about 3:10 I don't know if you want to take one. i don't know if you want to take one

Speaker 6: Yeah, let's take one more, and then we'll call it a day. Yeah, let's take one more, and then we'll call it a day. yeah let's take one more and then we'll call it a day

Speaker 5: It's similar to Emily's question, but it's around capital allocation and how the board thinks about retaining capital internally, buybacks, dividends. How do you all think about that at the board level? It's similar to Emily's question, but it's around capital allocation and how the board thinks about retaining capital internally, buybacks, dividends. it's similar to emily's question but it's around capital allocation and how the board thinks about retaining capital internally buybacks dividends How do you all think about that at the board level? how do you all think about that at the board level

Speaker 6: I think the board, obviously, and we meet frequently. My directors earn their fee. They'll probably now be asking me for an increase. But it's pretty hard. I mean, in the past, I would basically say, "I'm paying these people for this." But no, no, they earn it. And I speak to them very frequently, pretty much every weekend on an off basis. I think the board, obviously, and we meet frequently. i think the board obviously and we meet frequently My directors earn their fee. my directors earn their fee They'll probably now be asking me for an increase. they'll probably now be asking me for an increase But it's pretty hard. but it's pretty hard I mean, in the past, I would basically say, "I'm paying these people for this." But no, no, they earn it. i mean in the past i would basically say "i'm paying these people for this." but no no they earn it And I speak to them very frequently, pretty much every weekend on an off basis. and i speak to them very frequently pretty much every weekend on an off basis Not all of them, but a good chunk of them, and I think that they're cognizant of all the stakeholders: the creditors, the employees, and the shareholders. They're constantly paying attention to that. Obviously, from a stock price, this has been somewhat painful. We're not necessarily the most popular people at a cocktail party when your stock is down. But on the other hand, they've looked at the business performance and opening up depository accounts, making loans, not having any surprises with our regulators from the standpoint of what our expected provisions and charge-offs, so they're extraordinarily pleased. Relative to the concept of, I'm just going to make this, whether you're paying a dividend or buying shares back, that's financial engineering. I mean, if you can buy stock back below your tangible book, it clearly always makes sense. Not all of them, but a good chunk of them, and I think that they're cognizant of all the stakeholders: the creditors, the employees, and the shareholders. not all of them but a good chunk of them and i think that they're cognizant of all the stakeholders the creditors the employees and the shareholders They're constantly paying attention to that. they're constantly paying attention to that Obviously, from a stock price, this has been somewhat painful. obviously from a stock price this has been somewhat painful We're not necessarily the most popular people at a cocktail party when your stock is down. we're not necessarily the most popular people at a cocktail party when your stock is down But on the other hand, they've looked at the business performance and opening up depository accounts, making loans, not having any surprises with our regulators from the standpoint of what our expected provisions and charge-offs, so they're extraordinarily pleased. but on the other hand they've looked at the business performance and opening up depository accounts making loans not having any surprises with our regulators from the standpoint of what our expected provisions and charge-offs so they're extraordinarily pleased Relative to the concept of, I'm just going to make this, whether you're paying a dividend or buying shares back, that's financial engineering. relative to the concept of i'm just going to make this whether you're paying a dividend or buying shares back that's financial engineering I mean, if you can buy stock back below your tangible book, it clearly always makes sense. i mean if you can buy stock back below your tangible book it clearly always makes sense If you can pay a nice dividend, that's really important because if the stock price goes down, people are being rewarded for waiting. So we don't see those things dramatically changing. I think that the most important thing that shareholders can focus on is this a business that I now understand that's got tremendous technological advantages over its competitors in the space. I have a greater appreciation for what they're doing and the accounting and the cash flows. It's a company that's been around for 25, 26 years. There's tremendous insider participation and ownership. That's not changing. It's never changed. And they're good risk managers. If you can pay a nice dividend, that's really important because if the stock price goes down, people are being rewarded for waiting. if you can pay a nice dividend that's really important because if the stock price goes down people are being rewarded for waiting So we don't see those things dramatically changing. so we don't see those things dramatically changing I think that the most important thing that shareholders can focus on is this a business that I now understand that's got tremendous technological advantages over its competitors in the space. i think that the most important thing that shareholders can focus on is this a business that i now understand that's got tremendous technological advantages over its competitors in the space I have a greater appreciation for what they're doing and the accounting and the cash flows. i have a greater appreciation for what they're doing and the accounting and the cash flows It's a company that's been around for 25, 26 years. it's a company that's been around for 25 26 years There's tremendous insider participation and ownership. there's tremendous insider participation and ownership That's not changing. that's not changing It's never changed. it's never changed And they're good risk managers. and they're good risk managers So not to say that it could never happen, but the likelihood of us blowing up after doing this for such a period of time and being very, very clearly invested in the business ourselves is less likely than a management team that's typical at our competitors that doesn't have the ownership mentality. So we're very appreciative of everyone attending. We had great attendance here today. People tuning in and really listening. We're not going to hide from the fact that we are not simple. We don't fit the mold, and we are more complicated. On the other hand, all this stuff makes a lot of sense. We're all invested in this. So not to say that it could never happen, but the likelihood of us blowing up after doing this for such a period of time and being very, very clearly invested in the business ourselves is less likely than a management team that's typical at our competitors that doesn't have the ownership mentality. so not to say that it could never happen but the likelihood of us blowing up after doing this for such a period of time and being very very clearly invested in the business ourselves is less likely than a management team that's typical at our competitors that doesn't have the ownership mentality So we're very appreciative of everyone attending. so we're very appreciative of everyone attending We had great attendance here today. we had great attendance here today People tuning in and really listening. people tuning in and really listening We're not going to hide from the fact that we are not simple. we're not going to hide from the fact that we are not simple We don't fit the mold, and we are more complicated. we don't fit the mold and we are more complicated On the other hand, all this stuff makes a lot of sense. on the other hand all this stuff makes a lot of sense We're all invested in this. we're all invested in this I could tell you there's nobody on this front four here that doesn't work 70-plus hours a week, that gets emails in the middle of the night from some strange person, and works very hard for the purpose of creating a successful business. If you create a successful business and you do right things for the customer, everything follows through. So I can't thank everybody enough for traveling and attending today and also being very appreciative of the patience as well. Thank you. I could tell you there's nobody on this front four here that doesn't work 70-plus hours a week, that gets emails in the middle of the night from some strange person, and works very hard for the purpose of creating a successful business. i could tell you there's nobody on this front four here that doesn't work 70-plus hours a week that gets emails in the middle of the night from some strange person and works very hard for the purpose of creating a successful business If you create a successful business and you do right things for the customer, everything follows through. if you create a successful business and you do right things for the customer everything follows through So I can't thank everybody enough for traveling and attending today and also being very appreciative of the patience as well. so i can't thank everybody enough for traveling and attending today and also being very appreciative of the patience as well Thank you. thank you

Speaker 13: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day. Thank you, ladies and gentlemen, for your participation in today's conference. thank you ladies and gentlemen for your participation in today's conference This does conclude the program. this does conclude the program You may now disconnect. you may now disconnect Good day. good day