Newtekone, Inc. · NASDAQ:NEWT
Newtekone — Newtek Business Services — Q2 2015 Earnings Presentation
27 slides from Newtekone's earnings presentation, Aug 3, 2015
Slide 1: Second Quarter 2015 Financial Results Conference Call
Exhibit 99.1 Newtek Business Services Corp. “The Small Business Authority®” NASDAQ: NEWT Second Quarter 2015 Financial Results Conference Call July 30, 2015 8:30 am ET Hosted by: Barry Sloane, President & CEO Jennifer Eddelson, EVP & CAO InvestorRelations PublicRelations Newtek InvestorRelations New
Slide 2: Note Regarding Forward Looking Statements
Note Regarding Forward Looking Statements This presentation contains certain forward-looking statements. Words such as “believes,” “expects,” “plans,” “anticipates,” “forecasts” and “future” or similar expressions are intended to identify forward-looking statements. All forward-looking statements in
Slide 3: Second Quarter Financial Highlights
Second Quarter Financial Highlights Second full quarter reporting as a BDC Net asset value (“NAV”) equaled $169.6 million, or $16.62 per share, at June 30, 2015, compared with NAV of $169.6 million, or $16.61 per share, at March 31, 2015 – Increase of 1.9% from NAV of $166.4 million, or $16.31 per s
Slide 4: Portfolio and Investment Company Highlights
Portfolio and Investment Company Highlights Goldman Sachs – In June 2015, Newtek Merchant Solutions and Newtek Technology Solutions, two of The Company's wholly owned portfolio companies, closed a $38.0 million four-year multi-draw term loan with Goldman Sachs Premier Payments LLC – In July 2015, Ne
Slide 5: Acquisition of Portfolio Company Premier Payments LLC
Acquisition of Portfolio CompanyPremier – Payments LLC Acquired Premier Payments LLC on July 23, 2015 Total purchase price was approximately $16.5 million, of which $14.0 million was paid in cash and the remainder was paid in $2.5 million newly issued restricted shares of Newtek Common Stock Premier
Slide 6: Dividend Distributions
Dividend Distributions On July 15, 2015, paid second quarterly dividend of $0.47 per share in cash Paid a total of $0.86 in cash dividends to date in 2015, which represents approximately 85% of the adjusted net investment income of $1.01 per share for the six months ended June 30, 2015 Maintain 2015
Slide 7: Newtek Small Business Finance
Newtek Small Business Finance Currently the largest non-bank institution licensed by the U.S. Small Business Administration (SBA) under the federal Section 7(a) loan program based on annual origination volume (national PLP status) One of 14 Non-Bank SBA Government-Guaranteed Lender Licenses (these l
Slide 8: Comparable Company Statistics
Comparable Company Statistics Live Oak Bancshares, Inc. (NASDAQ: LOB) – Online platform for small business lending – $551 million market capitalization – Raised $81.6 million in IPO on 7/23/15 – Transaction priced at 4.8x tangible book value On Deck Capital (NYSE: ONDK) – Operates an online platform
Slide 9: Current SBA 7(a) Loan Pipeline
Current SBA 7(a) Loan Pipeline SBA 7(a) Loan Pipeline at June 30, 2015 Prequalified Loans $40,921,692 Loans In Underwriting $40,599,318 Approved Pending Closing $29,490,400 Open Referrals $366,053,580 Total Loan Pipeline $491,451,916 Loansin pipelinetotaledapproximately$491.5millionat June30,2015 Ex
Slide 10: SBA 7(a) Loan Sale Transaction
SBA 7(a) Loan Sale Transaction Net Cash Created in SBA 7(a) Loan Sale Transaction – An Example Key Variables in Loan Sale Transaction Net Cash Created Pretax Loan Amount $1,000,000 Guaranteed Balance $750,000 GuaranteedBalance (75%) $750,000 Realized Gains on Guaranteed Balance (2) $93,750 Unguarant
Slide 11: SBA 7(a) Loan Sale Transaction
SBA 7(a) Loan Sale Transaction Direct Revenue / Expense of an SBA 7(a) Loan Sale Transaction – An Example Key Variables in Loan Sale Transaction ResultingRevenue (Expense) Loan Amount $1,000,000 Associated Premium (2) $93,750 GuaranteedBalance (75%) $750,000 Servicing Asset (3) $18,630 UnguaranteedB
Slide 12: 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 NetAverage LoanAverage Sale Average NetAverage SaleAverage Net Qtr Price Price to NSBFTerm (Yrs) Price Price to NSBF Price Price to N
Slide 13: Gain-on-Sale Premium Trend
Gain-on-Sale Premium Trend Loan Sale Premium Income Trend $ in millions 2010 2011 2012 2013 2014 1st half 2015 $2,428 $12,468 $12,367 $19,456 $19,493 $15,438* *Net realized gain on non-affiliate investments. www.thesba.com 12
Slide 14: Comparative Loan Portfolio Data
Comparative Loan Portfolio Data 12/31/2010 vs. 06/30/2015 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 06/30/15 Loan Characteristic 12/31/10 Loan Characteristic 06/30/15 Business Type: Industry: Ex
Slide 15: SBA 504 Loans: A New Focus for Newtek
SBA 504 Loans: A New Focus for Newtek Provide financing for major fixed assets such as equipment or real estate Loans cannot be used for working capital or purchasing inventory (allowed uses under the 7(a) program) The CDC/504 Loan Program is a long-term financing tool that provides growing business
Slide 16: Sample SBA 504 Loan Structure
Sample SBA 504 Loan Structure An example of a typical SBA 504 loan structure is detailed below Real Estate Acquisition Loan Percent $ Amount $ Amount of Total Purchase Price $800,000 1st Mortgage Originated by Newtek $500,000 50% Renovations $150,000 Bridge Loan Originally Funded by Newtek* $400,000
Slide 17: Loan Sale Transaction - SBA 504 Loan
Loan Sale Transaction- SBA 504 Loan Net Cash Created in SBA 504 Loan Sale Transaction – An Example Key Variables in Loan Sale Transaction Net Cash Created Pretax TotalProjected Financing $2,000,000 Total Senior & Junior Debt $1,800,000 Senior Loan Balance $1,000,000 Funded Under Bank Facility $1,620
Slide 18: Portfolio Company Newtek Merchant Solutions
Portfolio Company N – ewtek Merchant Solutions Electronic payment processing business, which we have wholly owned and managed for 10+ years Over 13,000 business accounts; realized over $4.6 billion in electronic payment processing volume in 2014 Q2 2015 Revenue of $25.5 million; an increase of 10% o
Slide 19: Portfolio Company Newtek Technology Solutions
Portfolio Company Newtek - Technology Solutions Managed technology & cloud computing business, which we have wholly owned and managed for 10+ years 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 1
Slide 20: Internally Managed vs. Externally Managed BDCs
Internally Managed vs. Externally Managed BDCs Internally Managed BDCs Externally Managed BDCs No base or incentive fees paid to an external manager Pay expense fees and incentive to a management company Generally a greater percent of revenue becomes dividendNot required to provide shareholders with
Slide 21: Investment Summary
Investment Summary NAV of $16.62 per share at June 30, 2015; a 1.9% increase over NAV per share at December 31, 2014 Companyis better suitedfor investorsas a BDCvs.an operatingcompany Forecasted dividends – Expect to pay an annual cash dividend of approximately $1.82* in 2015 – Anticipate paying spe
Slide 22: Financial Review
Financial Review Jennifer – C. Eddelson, Chief Accounting Officer www.thesba.com
Slide 23: Consolidated Statement of Operations
Consolidated Statement of Operations Newtek Business Services Corp. and Subsidiaries (n thousands) Three Months Ended June 30, 2015 Investment income: From non-controlled/non-affiliate investments Interest income $ 2,231 Servicing income 1,068 Other income 464 Total investment income from non-contro
Slide 24: Change in Net Asset Value
Change in Net Asset Value Newtek Business Services Corp. and Subsidiaries (in thousands, except per share data) As of June 30, 2015 NAV NAV/Share NAV % Change NAV at December 31, 2014 $ 166,418 $ 16.31 Net investment income (loss) (4,771) (0.47) -2.9% Net realized gains - non-affiliate investments 1
Slide 25: Adjusted Net Investment Income Reconciliation
Adjusted Net Investment Income Reconciliation Adjusted Net Investment Income (ANII) In thousands, except per share data For the three months For the three For the six months ended March 31, 2015 Per share months ended June Per share ended June 30, Per share Net investment loss $ (2,476) $ (0.24) $ (
Slide 26: Non-GAAP Financial Measures
Non-GAAP Financial Measures In evaluating its business, Newtek considers and uses adjusted net investment income as a measure of its operating performance. Adjusted net investment income includes short-term capital gains from the sale of the guaranteed portions of SBA 7(a) loans, which is a reoccurr
Slide 27: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Electronic Payment Processing Managed Technology Solutions For the three For the three For the three For the three months ended months ended months ended months ended June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014 (in millions) (in millions) Pretax income $ 2.
Newtek Business Services — Q2 2015 Earnings Presentation on 6ix