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Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

November 19, 2014 (November 19, 2014)

Date of Report (date of Earliest Event Reported)

 

 

NEWTEK BUSINESS SERVICES CORP.

(Exact Name of Company as Specified in its Charter)

 

 

 

MARYLAND   001-36742   46-3755188

(State or Other Jurisdiction of

Incorporation or Organization)

  

(Commission

File No.)

  

(I.R.S. Employer

Identification No.)

212 West 35th Street, Second Floor, New York, NY 10001

(Address of principal executive offices and zip code)

(212) 356-9500

(Company’s telephone number, including area code)

 

(Former name or former address, if changed from last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Forward-Looking Statements

Statements in this Current Report on Form 8-K (including the exhibits), including statements regarding Newtek Business Services Corp.’s (“Newtek” or the “Company”) beliefs, expectations, intentions or strategies for the future, may be “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Such risks and uncertainties include, among others, intensified competition, operating problems and their impact on revenues and profit margins, anticipated future business strategies and financial performance, anticipated future number of customers, business prospects, legislative developments and similar matters. Risk factors, cautionary statements and other conditions which could cause Newtek’s actual results to differ from management’s current expectations are contained in Newtek’s filings with the Securities and Exchange Commission. Newtek undertakes no obligation to update any forward-looking statement to reflect events or circumstances that may arise after the date of this filing.

 

Item 7.01 Regulation FD Disclosure.

On November 19, 2014 Newtek Business Services Corp. (the “Company”) issued a press release entitled “Newtek Business Services to Host Third Quarter 2014 Conference Call Today, Wednesday, November 19, 2014, at 4:15PM EST” (the “Press Release”), a copy of which is furnished as Exhibit 99.1 to this Current Report on Form 8-K. In conjunction with the call, the Company will distribute an investor presentation, a copy of which is furnished as Exhibit 99.2 to this Current Report. The presentation is also available on the Company’s investor relations website at http://investor.newtekbusinessservices.com.

The information contained in this Current Report, including Exhibits 99.1 and 99.2 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, and shall not be incorporated by reference into any registration statement pursuant to the Securities Act of 1933, as amended.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit
Number

   

Description

99.1    Press Release, dated November 19, 2014, entitled “Newtek Business Services to Host Third Quarter 2014 Conference Call Today, Wednesday, November 19, 2014, at 4:15PM EST.”
99.2    Investor Presentation for Conference Call on November 19, 2014.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

      NEWTEK BUSINESS SERVICES CORP.
Date: November 19, 2014      

/s/ Barry Sloane

      Barry Sloane
      Chairman of the Board and Chief Executive Officer

EXHIBIT INDEX

 

Exhibit
Number

   

Description

99.1    Press Release, dated November 19, 2014, entitled “Newtek Business Services to Host Third Quarter 2014 Conference Call Today, Wednesday, November 19, 2014, at 4:15PM EST.”
99.2    Investor Presentation for Conference Call on November 19, 2014.
EX-99.1

Exhibit 99.1

 

LOGO  

FROM:

Newtek Business Services, Inc.

http://www.thesba.com

 

Investor Relations

Contact: Jayne Cavuoto

Telephone: (212) 273-8179 / jcavuoto@thesba.com

Contact: Brett Maas

Telephone: (646) 536-7331 / brett@haydenir.com

 

Public Relations

Contact: Simrita Singh

Telephone: (212) 356-9566 / ssingh@thesba.com

 

 

FOR IMMEDIATE RELEASE

Newtek Business Services to Host Third Quarter 2014 Conference Call Today

Wednesday, November 19, 2014, at 4:15PM EST

NEW YORK – November 19, 2014 – Newtek Business Services Corp. (NASDAQ: NEWT), The Small Business Authority®, announced that it will host a conference call to discuss its financial results for the third quarter 2014, today, Wednesday, November 19, 2014, at 4:15 PM EST. The call will be hosted by Barry Sloane, Chairman, President and Chief Executive Officer, and Jennifer Eddelson, Executive Vice President and Chief Accounting Officer, and can be accessed by dialing (877) 303-6993 or (760) 666-3611.

A live webcast of the call and the corresponding presentation will be available in the ‘Events & Presentations’ section of the Investor Relations portion of Newtek’s website at http://investor.newtekbusinessservices.com/events.cfm. A replay of the webcast with the corresponding presentation will be available on Newtek’s website shortly following the live presentation.

About Newtek Business Services Corp.

Newtek Business Services Corp., The Small Business Authority®, is the Authority for the small- and medium-sized business (SMB) market providing a wide range of business services and financial products under the Newtek® brand. Since 1999, Newtek has provided state-of-the-art, cost-efficient products and services and efficient business strategies to over 100,000 business accounts across all 50 States to help them grow their sales, control their expenses and reduce their risk.

Newtek’s products and services include: The Newtek Advantage™, Electronic Payment Processing, Managed Technology Solutions (Cloud Computing), eCommerce, Business Lending, Insurance Services, Web Services, Data Backup, Storage and Retrieval, Accounts Receivable Financing, Payroll.

The Small Business Authority® is a registered trade mark of Newtek Business Services Corp. and neither are a part of or endorsed by the U.S. Small Business Administration.

Note Regarding Forward Looking Statements

Statements in this press release including statements regarding Newtek’s beliefs, expectations, intentions or strategies for the future, may be “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Such risks and uncertainties include, among others, intensified competition, operating problems and their impact on revenues and profit margins, anticipated future business strategies and financial performance, anticipated future number of customers, business prospects, legislative developments and similar matters. Risk factors, cautionary statements and other conditions, which could cause Newtek’s actual results to differ from management’s current expectations, are contained in Newtek’s filings with the Securities and Exchange Commission and available through http://www.sec.gov.

# # #

EX-99.2
www.thesba.com
Newtek Business Services Corp.
“The Small Business Authority®”
NASDAQ: NEWT
Hosted by:
Barry Sloane, President & CEO         Jennifer Eddelson, EVP & CAO
Investor Relations
Public Relations
Newtek Investor Relations
Hayden Investor Relations
Newtek Public Relations
Jayne Cavuoto
Director of Investor Relations
jcavuoto@thesba.com
(212) 273-8179
Brett Maas
brett@haydenir.com
(646) 536-7331
Simrita Singh
Director of Marketing
ssingh@thesba.com
(212) 356-9566
Third Quarter 2014
Financial Results Conference Call
November 19, 2014 4:15pm ET
Exhibit 99.2

www.thesba.com
1
Safe Harbor Statement
The following discussion of our financial condition and results of operations is intended to assist in the understanding and assessment of
significant changes and trends related to the results of operations and financial position of the Company together with its subsidiaries.
This discussion and analysis should be read in conjunction with the condensed consolidated financial statements and the accompanying
notes contained in the Company’s
Quarterly Report on Form 10-Q for the period ending September 30, 2014.
The statements contained
herein may contain forward-looking statements relating to such matters as anticipated future financial performance, business prospects,
legislative developments and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-
looking statements. In order to comply with the terms of the safe harbor, we note that a variety of factors could cause our actual results
to differ materially from the anticipated results expressed in the forward-looking statements such as intensified competition and/or
operating problems in its operating business projects and their impact on revenues and profit margins or additional factors as described in
the Company’s Annual Report on Form 10-K and other filings with the Securities and Exchange Commission.

www.thesba.com
2
Pretax income was $4.5 million; an increase of 132.0% over $2.0 million in Q3 2013
Net income attributable to Newtek Business Services, Inc. was $2.6 million; an increase of 45.3% over $1.8 million
in Q3 2013
Diluted
EPS
were
$0.34;
an
increase
of
41.7%
over
diluted
EPS
of
$0.24
Q3
2013
Operating
revenue
was
$38.2
million;
an
increase
of
9.8%
over
$34.8
million
in
Q3
2013
Adjusted EBITDA* was $6.7 million; an increase of 52.3% over $4.4 million in Q3 2013
For
the
nine
months
ended
September
30,
2014,
adjusted**
diluted
EPS
were
$0.86;
an
increase
of
26.5%
over
GAAP diluted EPS of $0.68 for the nine months ended September 30, 2013
For the nine months ended September 30, 2014, GAAP diluted EPS were $0.71; an increase of 4.4% over GAAP
diluted EPS of $0.68 for the nine months ended September 30, 2013
Small business finance segment pretax income was $4.2 million; an increase of 145.6% over $1.7 million in Q3
2013
Small business finance segment revenue was $10.9 million; an increase of 44.5% over $7.6 million in Q3 2013
*See slide 21  for definition of Adjusted EBITDA
**GAAP financial results for the nine months ended September 30, 2014 include the impact of a one-time non-cash charge of $1.9 million, which occurred in the second quarter of 2014, related to the
extinguishment of the Company’s mezzanine debt with Summit Partners Credit Advisors, L.P.
NEWT effected a 1 for 5 reverse stock split on October 22, 2014 and all share data has been adjusted to reflect
the
reverse
stock
split;
closing
stock
price
as
of
11/18/14:
$13.12
Q3 2014 Financial Highlights – Newtek Business Services, Inc.

www.thesba.com
3
Q3 2014 Operational Highlights
Originated $48.7 million in loans; an increase of 15.1% over $42.3 million in the Q3 2013
Funded
approximately
$25.0
million
in
loans
during
October
2014;
an
increase
of
approximately
47%
over
$16.9
million in October 2013
Small business finance segment closed an additional $23 million in financing with Capital One, N.A. in October
2014, increasing its existing revolving credit facility to $50 million for the Lender
–
Company's total financing through Capital One N.A. equals $70 million
*According to data published by the U.S. Small Business Administration
Newtek Small Business Finance, Inc. maintained its position as the largest non-bank SBA 7(a) lender by dollar
volume of approved loans for the 12-month period ended September 30, 2014*
Newtek entered into a new partnership with SEQR, by Seamless (OMX: SEAM) which, according to Seamless, is one
of the world’s largest suppliers of payment systems for mobile phones
–
According to Seamless, SEQR is Sweden’s and Europe’s most used mobile payment solution in stores and online
$10 million term loan was used to refinance $10 million of mezzanine debt, which reduced cash interest
expense on an annual basis by more than $1.0 million, or 1000 basis points, for a total of approximately $4.2
million over the remaining term of the retired mezzanine debt
$70 million consists of a $10 million term loan, which will be fully amortized over four years, and up to $60
million in revolving lines of credit

www.thesba.com
4
Reaffirmed 2014 Adjusted* Consolidated Operating Company
Guidance
Operating Revenue: 
Midpoint of $161.0 million, with a range of $154.0 million and $168.0 million
Increase of 12.1% over 2013 revenue of $143.6 million
Adjusted Pretax Income*:
Midpoint of $13.5 million, with a range of $12.5 million and $14.5 million
Increase of 21.6% over 2013 GAAP pretax income $11.1 million
Adjusted Diluted EPS*: 
Midpoint of $1.15, with a range of $1.05 and $1.25 per share
Increase of 15.0% over 2013 GAAP diluted EPS of $1.00
Adjusted EBITDA*:
Midpoint of $26.0 million, with a range of $24.5 million and $27.5 million
Increase of 26.2% over 2013 Adjusted EBITDA* of $20.6 million
*As of 11/19/2014: Adjusted pretax income and Adjusted diluted EPS guidance reflect reversal of $1.9 million one-time non-cash charge.  See slide 21 for definition of Adjusted pretax income, Adjusted diluted
EPS and Adjusted EBITDA
Expect double-digit top-
and bottom-line percentage growth in 2014
–
–
–
–
–
–
–
–

www.thesba.com
5
BDC
Conversion
–
Newtek
Business
Services
Corp.
NEWT converted to a business development company (a “BDC”) which is expected to result in significant tax
efficiencies
and
allow
the
Company
to
pay
an
attractive
dividend
to
shareholders
–
Initial Q1 2015 dividend of $0.38/share
–
Anticipate average quarterly dividend payout for 2015 of $0.45 per share representing a dividend yield of 13.7%*
–
In connection with the conversion, NEWT expects to declare a special dividend to distribute it’s accumulated pre-
conversion taxable earnings
–
Anticipate paying the special dividend 80% in stock and 20% in cash in Q4 2015
Special dividend anticipated to be treated as a “Qualified Dividend”
for tax purposes
–
Internally managed BDC public comparables currently trade at a median price to NAV of approximately 1.5x**
–
Proforma NAV of $15.50 at June 30, 2014 after the capital raise (including the overallotment)
*Based on November 18, 2014 closing price of $13.12
**As of October 30, 2014.  Based on the following public comparable companies: HTGC, KCAP, MAIN, TCAP
As
part
of
the
conversion
to
a
BDC,
Newtek
Business
Services,
Inc.
(the
“Company”
or
“Newtek”)
merged
with
and into Newtek Business Services Corp. (the “Successor Company”) effective as of November 12, 2014
NEWT
is
an
internally
managed
BDC
with
no
base
or
incentive
fees
paid
to
an
external
manager

www.thesba.com
6
Recent Equity Transaction
Sold 2.53 million shares (100% primary shares plus underwriter option) of  common stock
–
Public offering price of $12.50 per share
–
Total gross proceeds of $31.625 million
Plan to use proceeds to expand financing activities and primarily increase activity in SBA 7(a) lending, and
make direct investments in portfolio companies
Syndicate Structure
–
Joint Book-Runners: JMP Securities LLC, Ladenburg Thalmann
–
Co-Manager: Lebenthal & Co., LLC

www.thesba.com
7
The Conversion –
New Business Structure
Newtek Business Services, Inc.: Existing 14-Year Old Publicly Traded Company Merging into Newtek
Business Services Corp.; A Maryland Shell Corporation
Newtek Business Services Corp.
(Business Development Company)
Newtek Small
Business Finance
(Consolidated Subsidiary)
SBA 7(a) Loan
Portfolio
Newtek Business
Credit
(100% Owned)
(CDS Business Services, Inc.)
(Portfolio Company)
Newtek Merchant
Solutions
(100% Owned)
(Universal Processing Services
of Wisconsin, LLC )
(Portfolio Company)
Newtek Managed
Technology Solutions
(100% Owned)
CrystalTech Web Hosting, Inc.
(Portfolio Company)
Other Portfolio
Companies
Newtek Payroll Solutions
(90% Owned)
Newtek Insurance Agency
(100% Owned)

www.thesba.com
8
Newtek Small Business Finance
Q3 2014 SBF pretax income increased by 145.6% to $4.2 million
Q3 2014 SBF revenue increased by 44.5% to $10.9 million
Originated $48.7 million in loans; an increase of 15.1% over $42.3 million in Q3 2013
Funded
approximately
$25.0
million
in
loans
during
October
2014;
an
increase
of
approximately
47%
over
$16.9
million in October 2013
Closed an additional $23 million in financing  with Capital One N.A. in October 2014, which increased our total
revolving credit facility to $50 million for Lender, and total financing to $70 million through Capital One N.A. on a
company-wide basis
Maintained position as largest non-bank SBA 1(a) lender by dollar volume of approved loans for the 12-month
period ended September 30, 2014*
–
10
th
largest SBA 7(a) lender including banks
NEWT
estimates
significant
loan
funding
and
balance
sheet
growth
in
2015,
in
conjunction
with
conversion
to
a
BDC and recent capital raise
New referral partners in pipeline: Union Bank of Switzerland, Randolph-Brooks Credit Union and others
*According to the U.S. Small Business Administration

www.thesba.com
9
Return on Capital
Newtek Small Business Finance, Inc.
For the year ended 12/31/2013
($ thousands)
Total Capital at 12/31/2012
$25,428
2013 Pre-Tax Income
$9,291
Total Pre-Tax Return on Capital
36.5%

www.thesba.com
10
Newtek Small Business Finance
One of 14 Non-Bank SBA Government-Guaranteed Lender Licenses (these licenses are no longer being issued)
Small
balance,
industry
and
geographically
diversified
portfolio
of
732
loans
–
Average loan size is $150K of average Newtek uninsured retained loan balance
Typical $1 million loan is:
–
75% ($750,000) Full Faith and Credit Government Guaranteed Loan Participation
Liquid market netting a 113% premium to par
–
25% ($250,000) Uninsured but not subordinate to government participations
Currently financing at 3.75% through securitization
Floating
rate
at
Prime
plus
2.75%
with
no
caps;
equivalent
to
6%
cost
to
borrower
No origination fees with 7-
to 25-year amortization schedules and are receiving high-quality loan product
Secondary market established for SBA 7(a) government-guaranteed lending for over 61 years and Newtek
establishes liquidity for uninsured portions through securitizations
After securitization of uninsured and sale of government participation, principal in the loan is returned
•
•

www.thesba.com
11
Loan Sale Transaction
(1)
Premiums above 10% split 50/50 with SBA. This example assumes guaranteed balance is sold at 15%. The additional 5% (15%-10%) is split with SBA. Newtek nets 12.5%
(2)
Assumes 12.5% of the Guaranteed balance
(3)
Value determined by GAAP servicing value; a present value of future servicing income
(4)
Net risk-adjusted profit recognized per $1 million of loan originations
(5)
Uninsured piece gets immediately written down at origination to reflect cumulative estimate of default frequency and severity
(6)
Assuming the loan is sold in a securitization in 12 months
(7)
Net cash created pre-tax per $1 million of loan originations
Direct
Revenue
/
Expense
of
a
Loan
Sale
Transaction
–
An
Example
Key Variables in Loan Sale Transaction
Loan Amount
$1,000,000
Guaranteed Balance (75%)
$750,000
Unguaranteed Balance (25%)
$250,000
Premium
(1)
12.5%
Resulting Revenue (Expense)
Associated Premium
(2)
$93,750
Servicing Asset
(3)
$18,630
Total Premium Income
$112,380
Packaging Fee Income
$2,500
FV Non-Cash Discount on Uninsured Loan
Participations
$(12,500)
Referral Fees Paid to Alliance Partners
$(7,500)
Total Direct Expenses
$(20,000)
Net Risk-Adjusted Profit Recognized
(4,5)
$94,880
Net Cash Created Pre-Tax (Post Securitization)
(6,7)
$11,250

www.thesba.com
12
Comparative Loan Portfolio Data
12/31/2010 vs. 9/30/2014
Since 2010, the credit quality and diversification of loan portfolio has steadily improved
Loan Characteristic
As of
12/31/10
As of
9/30/14
Business Type:
Existing Business
53.9%
79.6%
Business Acquisition
25.9%
13.8%
Start-Ups
20.2%
6.6%
Primary Collateral:
Commercial RE
45.3%
58.9%
Machinery &
Equipment
22.8%
20.5%
Residential RE
22.3%
9.8%
Other
9.6%
6.5%
Percentage First Lien on RE:
Commercial RE
84.8%
95.7%
Residential RE
9.9%
19.5%
Loan Characteristic
As of
12/31/10
Loan Characteristic
As of
9/30/14
Industry:
Restaurant
10.6%
Restaurant
7.8%
Hotels & Motels
7.6%
Amusement &
Recreation
5.8%
State Concentration:
Florida
21.6%
New York
11.7%
New York
12.7%
Florida
11.4%
Georgia
14.1%
Connecticut
8.4%
Other:
Total Portfolio ($mm)
$31
$107
Avg. Balance ($mm)
$0.076
$0.165
Wtd. Avg. Mean FICO
675
704
Wtd. Avg. Current LTV
78.2%
73.5%

www.thesba.com
13
Servicing Portfolio
The
SBF
servicing
portfolio
–
Q3
2013
vs.
Q3
2014
–
S&P-rated commercial small balance loan servicer
–
Total servicing portfolio increased by 74.1% to $1.1 billion
•
Newtek portfolio increased by 30.0%
•
Third-party servicing portfolio increased by 186.5%
•
Plan to continue to grow the loan servicing aspect of the business both organically, through growth in loan
originations, as well as through acquisition of third-party loan servicing portfolios
•
Currently have numerous third-party opportunities in the pipeline
Have a 4-year FDIC contract to service and special-service conventional and government-guaranteed loans
including USDA, Department of Energy, Farm Credit, etc.
*Principal balance of loans serviced (dollars in millions)
$444.7
$174.6
$619.3
$578.3
$500.2
$1,078.5
NEWT Loans*
Servicing Other Loans*
Total Loans*
Q3 2013
Q3 2014
–

www.thesba.com
14
Electronic Payment Processing
(1)
Estimates via Bloomberg.
Publicly Traded Comparable Companies
Name (Symbol)
Enterprise Value /
2015E EBITDA
(1)
Heartland Payment Systems (HPY)
9.10x
Vantiv, Inc. (VNTV)
10.24x
Valuation & Financial Performance
Valued at 4.75x EBITDA
Valued at $44 million
2013 Revenue: $89.7 million
2013 Pretax Income: $8.3 million
2013 Adjusted EBITDA: $8.7 million
Q3 2014 pretax income increased by 17.6% to $2.2 million
Increased transaction volumes, July price increase, and the new merchant security programs contributed to Q3
2014 growth in pretax income
Entered into new partnership with SEQR, by Seamless (OMX: SEAM) which, according to Seamless, is one of the
world’s largest suppliers of payment systems for mobile phones
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, CyberScan
15,000 business accounts; realized over $4.5 billion in electronic payment processing volume in 2013
Growth and acquisition story
One-of-a-kind eCommerce capability
Secured mobile wallet

www.thesba.com
15
(1)
Estimates via Bloomberg.
(2)
According to Gartner "...in the next five years enterprises will spend $921 billion on public cloud services (2013-2017)." Excerpt from Gartner Presentation: 
Cloud Computing 2014: ready for real business? Darryl Carlton, October 2013
(3)
"The use of cloud computing is growing, and by 2016 this growth will increase to become the bulk of new IT spend." Excerpt from Gartner Press Release, Oct. 24, 2013; 
Managed Technology Solutions
http://www.gartner.com/newsroom/id/2613015      
We have 100% owned and operated this business since mid-2004
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 solutions of hardware and software for business clients; manage over
77,000 domain names
Q3 2014 MTS pretax income decreased by 8.7% to $804 thousand
This segment is being transformed to take advantage of shift to cloud-based business trends including:
eCommerce, Payroll and Insurance
According to Gartner
2,3
, cloud computing is expected to have a very promising future and experience significant
growth; enterprises will spend $921 billion on public cloud services over the five-year period (2013-2017)
Implementing cost-reduction measures and new product introductions as part of repositioning strategy
Several changes with MTS senior management team
Publicly Traded Comparable Companies
Name (Symbol)
Enterprise Value /
2015E EBITDA
(1)
Endurance (EIGI)
12.07x
Rackspace Holdings, Inc. (RAX)
7.12x
Valuation & Financial Performance
Valued at 3.75x EBITDA
Valued at $22 million
2013 Revenue: $17.6 million
2013 Pretax Income: $3.6 million
2013 Adjusted EBITDA: $5.0 million

www.thesba.com
16
Internally Managed BDC Public Comparables
Internally managed BDC public comparables currently trade at a median price to NAV of approximately 1.5x*
–
Hercules Technology Growth Capital (NASDAQ: HTGC)
–
KCAP Financial (NASDAQ: KCAP)
–
Main Street Capital (NASDAQ: MAIN)
–
Triangle Capital (NASDAQ: TCAP)
*As of October 30, 2014.  Based on the following public comparable companies: HTGC, KCAP, MAIN, TCAP

www.thesba.com
17
Key Statistics: NASDAQ-NEWT
Stock Price                         $13.12
52-Week Range                $11.30-$17.15
Common Shares O/S
10.2M
Market Cap                        $133.9M
Share Statistics
1
(USD)
……………………….................
2014 Adjusted Consolidated Operating
Company Guidance
2
……………………….....................
Revenue
$161.0M
Adjusted Pre-tax Income
3
$13.5M
Adjusted Diluted EPS
4
$1.15
Adjusted EBITDA
4
$26.0M
(1)  As of close of trading on 11/18/2014
(2)  As of 11/19/2014. Represents midpoint of expected range. Adjusted pretax income and  Adjusted diluted EPS  guidance reflect reversal of $1.9 million one-time non-cash charge
(3)  See slide 21 for definition of Adjusted pretax income, Adjusted diluted EPS and Adjusted EBITDA

www.thesba.com
18
Investment Highlights
(1)
As of September 30, 2014
(2)
As of August 13, 2014.
(3)
Based on November 18, 2014 closing price of $13.12.  Based on expected average quarterly distributions during NEWT’s first full year of operations as a BDC. No assurance can be
provided that such results will be achieved
(4)
As of October 30, 2014. Based on the following public comparable companies: HTGC, KCAP, MAIN, TCAP
Largest Non-Bank
SBA Lender in U.S.
NEWT is 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)
10
th
largest
SBA
7(a)
lender
including
banks
(1)
ROI in SBA 7(a) lending in excess of 30%
Following this capital raise and BDC conversion, NEWT is estimating significant loan funding and balance sheet growth in 2015
Proven
Track Record
Established in 1998
Publically traded since September 2000
National SBA 7(a) lender to small business since 2003; 11-year history of loan default frequency and severity statistics
Issued four S&P Rated AA & A Securitizations since 2010
Highly Experienced
Management Team
Management’s interests aligned with shareholders
CEO
alone
owns
approximately
13.4%
of
outstanding
shares
(2)
Founders,
Management
and
Board
combined
own
over
25%
of
outstanding
shares
(2)
Attractive
Pro Forma
Dividend Yield
Initial Q1 2015 dividend of $0.38 / share
The
Company
currently
anticipates
the
average
quarterly
dividend
payout
for
2015
to
be
$0.45
per
share
representing a dividend
yield of 13.7%
(3)
Internally
Managed
NEWT is internally managed with no base or incentive fees paid to an external manager
Internally
managed
BDC
public
comparables
currently
trade
at
a
median
price
to
NAV
of
approximately
1.5x
(4)
–
–

www.thesba.com
19
Investment Highlights (Cont.)
Loan Portfolio
Characteristics:
SBA 7(a) loans
S&P-Rated
Servicer
Large, Attractive
Market
Opportunity
Unique Financial
Technology
Platform
Portfolio
Companies
Small balance (average loan size is $150K of average Newtek uninsured retained loan balance), industry and
geographically diversified portfolio of 732 loans
All SBA 7(a) loans are floating rate, indexed to Prime and have no caps
Borrowers pay a current maximum 6% interest rate; no origination fees with 7- to 25-year amortization schedules and
are receiving a high-quality loan product
Secondary market established for SBA 7(a) government-guaranteed lending for over 61 years and Newtek establishes
liquidity for uninsured portions through securitizations
S&P Rated Commercial Small Balance Loan Servicer
Servicing over $1 billion of small business loans as of September 30, 2014
Newtek Business Services has a 4 year FDIC contract to service and special-service conventional and government-
guaranteed loans including USDA, Department of Energy, Farm Credit, etc.
Currently over 27 million SMBs in the U.S.
We believe the market is largely underserved and searching for alternative financing solutions
NEWT’s proprietary NewTracker referral system is a key differentiating component of its business model
NewTracker allows the processing of new business by utilizing a web-based, centralized processing point
Significantly lowers cost of client acquisition
Processes lending business much more efficiently with better credits at lower cost
Helps market payment processing, payroll, cloud computing at the same time, allowing partners and
borrowers to cross-sell other products
We 100% own and have operated our electronic payment processing, cloud computing and insurance businesses for
over 10 years
We own 90% and have operated our payroll business for over 4 years

www.thesba.com
Financial Review –
Jennifer C. Eddelson, Chief Accounting Officer

www.thesba.com
21
Non-GAAP Financial Measures
In evaluating its business, Newtek considers and uses adjusted EBITDA as a supplemental measure of its operating
performance.  The Company defines adjusted EBITDA as earnings before income from tax credits, interest expense, taxes,
depreciation
and
amortization,
stock
compensation
expense,
other
than
temporary
decline
in
value
of
investments,
Capco
fair
value change and the amortization of the 2011 accrued loss on the lease restructure.  Newtek uses adjusted EBITDA as a
supplemental measure to review and assess its operating performance.  The Company also presents adjusted EBITDA because
it believes it is frequently used by securities analysts, investors and other interested parties as a measure of financial
performance.
The terms Adjusted EBITDA, Adjusted pretax income and Adjusted diluted EPS are not defined under U.S. generally accepted
accounting principles, or U.S. GAAP, and is not a measure of operating income, operating performance or liquidity presented
in accordance with U.S. GAAP.  Adjusted EBITDA, Adjusted pretax income and Adjusted diluted EPS have limitations as
analytical tools and, when assessing the Company’s operating performance, investors should not consider Adjusted EBITDA,
Adjusted
pretax
income
and
Adjusted
diluted
EPS
in
isolation,
or
as
a
substitute
for
net
income
(loss)
or
other
consolidated
income statement data prepared in accordance with U.S. GAAP.  Among other things, Adjusted EBITDA, does not reflect the
Company’s actual cash expenditures.  Other companies may calculate similar measures differently than Newtek, limiting their
usefulness as comparative tools.  The Company compensates for these limitations by relying primarily on its GAAP results
supplemented by Adjusted EBITDA, Adjusted pretax income and Adjusted diluted EPS.
Beginning in the second quarter of 2014, the Company included two new non-GAAP financial measures, Adjusted pretax
income and Adjusted diluted EPS, to reflect the Company’s pretax earnings and diluted EPS as adjusted for a non-recurring
charge to income related to the refinancing of debt.  The Company incurred a one time, non-cash charge to income of $1.9
million
which
represented
the
remaining
deferred
financing
costs
and
debt
discount.
Our
Capcos
operate
under
a
different
set
of
rules
in
each
of
the
7
jurisdictions
and
these
place
varying
requirements
on
the
structure of our investments. In some cases, particularly in Louisiana or in certain situations in New York, we do not control
the equity or management of a qualified business, but that cannot always be presented orally or in written presentations.

www.thesba.com
22
Q3 2014 vs. Q3 2013 Actual Results
Revenue For
The Quarter
Ended
September 30,
2014
Revenue For
The Quarter
Ended
September 30,
2013
Pretax Income
(Loss) For The
Quarter Ended
September 30,
2014
Pretax Income
(Loss) For The
Quarter Ended
September 30,
2013
ADJUSTED EBITDA
For The Quarter
Ended
September 30,
2014
ADJUSTED EBITDA
For The Quarter
Ended
September  30,
2013
Electronic
Payment
Processing
22.777
22.177
2.210
1.879
2.283
1.972
Small
Business
Finance
10.949
7.575
4.244
1.728
5.776
3.472
Managed
Technology
Solutions
3.818
4.455
0.804
0.881
1.149
1.267
All Other
0.739
0.689
(0.368)
(0.311)
(0.313)
(0.251)
Corporate
Activities
0.272
0.250
(2.037)
(1.847)
(1.810)
(1.722)
CAPCO
0.102
0.042
(0.229)
(0.377)
(0.219)
(0.366)
Interco
Eliminations
(0.491)
(0.414)
(0.101)
–
(0.100)
–
Total
38.166
34.774
4.523
1.953
6.766
4.372
In millions of dollars

www.thesba.com
23
2014 Adjusted* Operating Company Segment Guidance
Electronic
Small
Managed
Total
Inter-
Payment
Business
Technology
All
Corporate
Business
CAPCO
Company
Processing
Finance
Solutions
Other
Activities
Segments
Segment
Eliminations
Total
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
2014 Full Year
Revenue
90.2
99.2
44.0
47.0
17.4
19.2
2.6
2.8
0.8
0.8
155.0
169.0
0.2
0.2
(1.2)
154.0
168.0
Pretax Income (Loss)
8.3
9.2
14.2
14.7
3.3
3.7
(1.1)
(1.1)
(10.9)
(10.7)
13.8
15.8
(1.3)
(1.3)
-
12.5
14.5
Income from tax credits
-
-
-
-
-
-
-
-
-
-
-
-
(0.1)
(0.1)
-
(0.1)
(0.1)
Net change in fair value
of credits in lieu of cash
and notes payable in
credits in lieu of cash
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Deferred compensation
expense
-
-
0.1
0.1
0.1
-
-
-
0.6
0.5
0.9
0.7
-
-
-
0.9
0.7
Lease loss amortization
-
-
-
-
-
-
-
-
(0.3)
(0.3)
(0.3)
(0.3)
-
-
-
(0.3)
(0.3)
Interest Expense
-
-
8.5
8.3
0.1 
0.1
-
-
-
-
8.6
8.4
0.2
0.2
-
8.8  
8.6
Depreciation and
Amortization
0.4
0.4
1.5
1.5
1.3
1.3
0.2  
0.2  
0.1
0.1
3.5
3.5
-
-
-
3.5
3.5
Adjusted EBITDA
8.7
9.5
23.8
25.1
4.8
5.2
(0.9)
(0.8)
(10.5)
(10.2)
26.8
28.8
(1.4)
(1.2)
-
24.5
27.5
Note: totals may not add due to rounding
*As of 11/19/2014; consolidated pretax income guidance adjusted to reflect reversal of $1.9 million one-time non-cash charge 
In millions of dollars

www.thesba.com
Appendix

www.thesba.com
25
Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation from Pretax Income (Loss)
For the three months ended September 30, 2014
Note: totals may not add due to rounding
In millions of dollars
Pretax
Income
(Loss)
Income
from Tax
Credits
Net Change
in Fair Value
of Credits in
Lieu of Cash
and Notes
Payable in
Credits in
Lieu of Cash
Deferred
Comp
Expense
Amortization of
2011 Lease
Restructuring
Charge
Interest
Expense
Depreciation
and
Amortization
Third
Quarter
2014
Adjusted
EBITDA
Electronic Payment
Processing
2.210
-
-
-
-
-
0.073
2.283
Small Business Finance
4.244
-
-
0.013
-
1.100
0.419
5.776
Managed Technology
Solutions
0.804
-
-
0.003
-
0.006
0.336
1.149
All Other
(0.368)
-
-
0.004
-
-
0.051
(0.313)
Corporate Activities
(2.037)
-
-
0.058
(0.073)
0.205
0.037
(1.810)
CAPCO
(0.229)
(0.011)
0.002
-
-
0.019
-
(0.219)
Eliminations
(0.100)
(0.100)
Total
4.523
(0.011)
0.002
0.078
(0.073)
1.33
0.916
6.766

www.thesba.com
26
Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation from Pretax Income (Loss)
For the three months ended September 30, 2013
Pretax
Income
(Loss)
Income
from Tax
Credits
Net Change
in Fair Value
of Credits in
Lieu of Cash
and Notes
Payable in
Credits in
Lieu of Cash
Deferred
Comp
Expense
Amortization of
2011 Lease
Restructuring
Charge
Interest
Expense
Depreciation
and
Amortization
Third
Quarter
2013
Adjusted
EBITDA
Electronic Payment
Processing
1.879
-
-
0.009
-
-
0.084
1.972
Small Business Finance
1.728
-
-
0.028
-
1.387
0.329
3.472
Managed Technology
Solutions
0.881
-
-
0.015
-
0.044
0.327
1.267
All Other
(0.311)
-
-
0.010
-
-
0.050
(0.251)
Corporate Activities
(1.847)
-
-
0.152
(0.073)
0.007
0.039
(1.722)
CAPCO
(0.377)
(0.031)
-
-
-
0.041
0.001
(0.366)
Total
1.953
(0.031)
-
0.214
(0.073)
1.479
0.830
4.372
Note: totals may not add due to rounding
In millions of dollars

www.thesba.com
27
Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation from Pretax Income (Loss)
For the year ended December 31, 2013
Pretax
Income
(Loss)
Income
from Tax
Credits
Net Change
in Fair Value
of Credits in
Lieu of Cash
and Notes
Payable in
Credits in
Lieu of Cash
Other than
Temporary
Decline in
Value of
Investments
Deferred
Comp
Expense
Amortization
of 2011 Lease
Restructuring
Charge
Interest
Expense
Depreciation
and
Amortization
2013
Adjusted
EBITDA
Electronic Payment
Processing
8.304
-
-
-
0.019
-
-
0.358
8.681
Small Business Finance
10.143      
-
-
-
0.103
-
5.568
1.242
17.055
Managed Technology
Solutions
3.564
-
-
-
0.051
-
0.094
1.316
5.025
All Other
(1.606)
-
-
-
0.035
-
-
0.202
(1.366)
Corporate Activities
(8.002)
-
-
-
0.575
(0.291)
0.027
0.161
(7.529)
CAPCO
(1.284)
(0.113)
(0.021)
0.017
-
-
0.174
0.005
(1.222)
Interco Eliminations
(0.050)
(0.051)
Total
11.069
(0.113)
(0.021)
0.017
0.784
(0.291)
5.863
3.284
20.593
In millions of dollars
Note: totals may not add due to rounding

www.thesba.com
28
Adjusted Earnings Reconciliation
NEWTEK BUSINESS SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED PRETAX INCOME AND DILUTED EPS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014
(In Thousands, except for Per Share Data)
For the three
months ended
September 30,
2014
For the nine
months ended
September 30,
2014
Pretax
income
reconciliation:
GAAP pretax income
$
4,523
$
9,028
Add:  Interest expense charge related to repayment of Summit debt
-
1,905
Adjusted pretax income
$
4,523
$
10,933
Diluted
EPS
reconciliation:
Net income attributable to Newtek
$
2,644
$
5,429
Add:  Interest expense charge related to repayment of Summit debt
-
1,905
Deduct:  Tax effect of interest expense charge related to repayment of Summit debt
-
(744)
Adjusted net income attributable to Newtek Business Services, Inc.
$
2,644
$
6,590
Weighted
average
common
shares
outstanding
–
diluted
7,699
7,688
Adjusted EPS –
diluted
$
0.34
$
0.86