Newtekone, Inc. · NASDAQ:NEWT
Newtekone — Newtek Business Services — FY2014 Earnings Presentation
30 slides from Newtekone's earnings presentation, Mar 27, 2015
Slide 1: Full Year 2014 Financial Results Conference Call
Newtek Business Services Corp. “The Small Business Authority®” NASDAQ: NEWT Full Year 2014 Financial Results Conference Call March 26, 2015 4:15pm ET Hosted by: Barry Sloane, President & CEO Jennifer Eddelson, EVP & CAO Investor Relations Public Relations Newtek Investor Relations Newtek Public Rela
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements in this presentation including statements regarding Newtek's beliefs, expectations, intentions or strategies for the future, and discussion of our financial condition and results of operations, is intended to assist in the understanding and assessment of significant
Slide 3: Company Highlights
Company Highlights Conversion to a BDC on November 12, 2014 NEWT closing price 3/25/2014: $19.64 Market capitalization at 3/25/2014: $200.3 million 11/12/2014 3/25/2015 NEWT Close $12.65 $19.64 Market Capitalization $129.0 million $200.3 million Dividend declared Since conversion, institutional owne
Slide 4: BDC Conversion Financial Comparison Note
BDC ConversionFinancial – Comparison Note OnNovember12, 2014,NewtekBusinessServicesInc. successfullycompletedits conversionfrom an operatingcompanyto an internally managedBDCandmergedwith and into Newtek BusinessServices Corp.(the “Company”). Asa result of this conversion,the Companyis reporting GAA
Slide 5: BDC Conversion
BDC Conversion October22,2014:NEWTeffecteda 1 for5 reversestocksplit andall sharedatahasbeenadjustedto reflectthe reversestocksplit; closingstockpriceasof 03/25/15:$19.64 November12,2014:successfullycompletedconversionfrom anoperatingcompanyto aninternallymanagedBDC andmergedwith andinto NewtekBusin
Slide 6: BDC Conversion Unlocking Shareholder Value
BDC ConversionUnlocking – Shareholder Value Net Asset Value (“NAV”) of $16.31 per share at December 31, 2014; higher than previously announced June 30, 2014 pro forma NAV of $15.50 per share Currently forecasting annual cash dividend of $1.81 in 2015, subject to Board approval Expect significant loa
Slide 7: CapitalOne, N.A., Bank Line
CapitalOne, N.A., Bank Line Restructured $50 million CapitalOne, N.A., bank line of credit (subject to approval by the Small Business Administration) – Holding-company only guarantee – Ability to distribute dividend Prior line of credit collateralized by: – Newtek Merchant Solutions – Newtek Managed
Slide 8: Net Asset Value
Net Asset Value NAV of $16.31 per share at December 31, 2014 – An increase from previously reported June 30, 2014 pro forma NAV of $15.50 per share – An increase of approximately 50% over book value at December 31, 2013 of $10.88 per share – Over 2x the book value at December 31, 2010 of $7.79 per s
Slide 9: Dividend Highlights
Dividend Highlights March 19, 2015, declared first cash dividend of $0.39 per share; $0.01 higher than previously announced – Q1 2015 dividend payable on April 13, 2015 to shareholders of record on March 30, 2015 Currently forecast paying an annual cash dividend of approximately $1.81 in 2015, subje
Slide 10: Financial Highlights Newtek Small Business Finance (NSBF)
Financial HighlightsNewtek - Small Business Finance (“NSBF”) For the full year ended December 31, 2014, originated $202.3 million of loans; an increase of approximately 13.7% over December 31, 2013 Originated $65.2 million in loans in Q4 2014; an increase of 12.4% over $58.0 million in Q4 2013 Origi
Slide 11: Valuation Metrics
Valuation Metrics Net assetvalue(“NAV”):$16.31pershareat December31,2014 – Above the Company's previously reported June 30, 2014 pro forma NAV of $15.50 per share – Anincreaseof approximately50%over bookvalueat December31,2013of $10.88per share Adjusted Net Investment Income (Loss) – AdjustedNet Inv
Slide 12: NEWT Historical Stock Performance Comparison
NEWT Historical Stock Performance Comparison Newtek Business Services Corp. Indexed Price Performance Prices indexed to 100 12/31/2009-12/31/2014 NEWT has outperformed the S&P 500 and NASDAQ Composite Indices over the 5-year period from December 31, 2009 through December 31, 2014 NEWT: – December 31
Slide 13: Gain-on-Sale Premium Trend
Gain-on-Sale Premium Trend Loan Sale Premium Income Trend $ in millions 2010 2011 2012 2013 2014 $2,428 $12,468 $12,367 $19,456 $19,493 . In December 2014, Company decided to hold approximately $30 million in loans originated in December 2014 . If these loans were sold in 2014, they would have gener
Slide 14: Guaranteed Loan Pricing Comparison
Guaranteed Loan Pricing Comparison All Loans 10-Year Term Loans 25-Year Term Loans Weighted Weighted Weighted Weighted Weighted Weighted Weighted Average SaleAverage Net Average LoanAverage Sale Average NetAverage SaleAverage Net Qtr Price Price to NSBFTerm (Yrs) Price Price to NSBF Price Price to N
Slide 15: Current Loan Pipeline
Current Loan Pipeline Current Loan Pipeline Prequalified Loans $32,975,192 Loans In Underwriting $39,625,149 Approved Pending Closing $43,434,400 Open Referrals $203,938,380 Total Loan Pipeline $319,973,129 www.thesba.com 14
Slide 16: Lower Cost of Debt and Equity Capital
Lower Cost of Debt and Equity Capital Improved terms on warehouse lines of credit – CapitalOne, N.A. $50 million line of credit to finance SBA 7(a) business . – Releases significant amount of other collateral in the form of portfolio companies on a go-forward basis Subject to approval by the Small B
Slide 17: Newtek Small Business Finance
Newtek Small Business Finance One of 14 Non-Bank SBA Government-Guaranteed Lender Licenses (these licenses are no longer being issued) Smallbalance,industryandgeographicallydiversifiedportfolio of 768loans – Average loan size is $171K of average Newtek uninsured retained loan balance Typical $1 mill
Slide 18: Loan Sale Transaction
Loan Sale Transaction NetCashCreatedin LoanSaleTransaction– AnExample Key Variables in Loan Sale Transaction Net Cash Created Pretax Loan Amount $1,000,000 Guaranteed Balance $750,000 Guaranteed Balance (75%) $750,000 Premium Received on Guaranteed Balance (2) $93,750 Unguaranteed Balance (25%) $250
Slide 19: Loan Sale Transaction
Loan Sale Transaction DirectRevenue/ Expenseof a LoanSaleTransaction– AnExample Key Variables in Loan Sale Transaction Resulting Revenue (Expense) Loan Amount $1,000,000 Associated Premium (2) $93,750 Guaranteed Balance (75%) $750,000 Servicing Asset(3) $18,630 Unguaranteed Balance (25%) $250,000 To
Slide 20: Comparative Loan Portfolio Data
Comparative Loan Portfolio Data 12/31/2010 vs. 12/31/2014 Since 2010, the credit quality and diversification of the loan portfolio has steadily improved As of As of As of As of Loan Characteristic 12/31/10 12/31/14 Loan Characteristic 12/31/10 Loan Characteristic 12/31/14 Business Type: Industry: Ex
Slide 21: Expanding Senior Management Team
Expanding Senior Management Team Michael W. Campbell Over 20 years’experience in merchant bankcard operations with expertise in credit and risk management Chief Credit Officer & Chief RiskBrings extensive and diversified experience in areas of merchant operations, bankcard credit, risk Officer, Newt
Slide 22: Expanding Senior Management Team
Expanding Senior Management Team John Raven Over 20 years’experience in information technology space Chief Operating Officer, Brings a broad array of expertise in areas of cloud technology, information technology and, security and Managed Technology Solutions data center and storage solutions as wel
Slide 23: Portfolio Company Electronic Payment Processing
Portfolio Company Electronic - Payment Processing We have wholly owned and managed this business for over 10 years We are a registered Independent Sales Organization (ISO) with Visa and MasterCard We are the “State-of-the-Art Merchant Processor” Point of sale (POS) in the Cloud, Gateway and Switch,
Slide 24: Portfolio Company Managed Technology Solutions
Portfolio Company Managed - Technology Solutions We have wholly owned and managed this business for over 10 years We host and manage SMBs computer hardware, software and their technology solutions in our Level-4, 5,000 square foot data center in Phoenix, Arizona Over 106,000 business accounts manage
Slide 25: Internally Managed BDC Public Comparables
Internally Managed BDC Public Comparables Newtek currently trading at 1.20x* NAV Internally managed BDC public comparables currently trade at a median price to NAV of approximately 1.4x** – Hercules Technology Growth Capital (NASDAQ: HTGC) – KCAP Financial (NASDAQ: KCAP) – Main Street Capital (NASDA
Slide 26: Comparable Company Statistics
Comparable Company Statistics On Deck Capital (NYSE: ONDK) – Operates an online platform for small business lending – Raised $200 million in IPO on 12/17/14 – $1.3 billion market valuation Lending Club (NYSE: LC) – Operates as an online marketplace that facilitates loans to consumers and businesses
Slide 27: Investment Summary
Investment Summary NAV of $16.31 per share at December 31, 2014; higher than the previously announced June 30, 2014 pro forma NAV of $15.50 per share – December 31, 2014 NAV over 2x the book value at December 31, 2010 of $7.79 per share Company is better suited for investors as BDC vs. a C-corp Fore
Slide 28: Additional Investment Highlights
Additional Investment Highlights Currently the largest non-bank institution U.S. Small Business Administration (SBA) licensed lender under the federal Section 7(a) loan program based on annual origination volume (national PLP status) 9 th largest SBA 7(a) lender including banks (1) Largest Non-Bank
Slide 29: Financial Review
Financial Review Jennifer – C. Eddelson, Chief Accounting Officer www.thesba.com
Slide 30: GAAP Financial Results
GAAP Financial Results At December 31, 2014: – NetAssetValue(“NAV”) was$166.4million,or $16.31persharehigherthan previouslyannounced – Investment portfolio of $233.5 million – Total liquidity of $30.8 million – Asset coverage for borrowed amounts was 222.9% For the period of November 12, 2014 throug
Newtek Business Services — FY2014 Earnings Presentation on 6ix