Newtek Business Services Corp. Reports First Quarter 2020 Financial Results
First Quarter 2020 Financial Highlights
- Net investment income (loss) (“NII”) of
$(0.28) million, or $(0.01)per share, for the three months ended March 31, 2020; an improvement of 80%, on a per share basis, over net investment loss of $(0.99) million, or $(0.05)per share, for the three months ended March 31, 2019.
- Total investment income of
$15.8 millionfor the three months ended March 31, 2020; an increase of 14.8% over total investment income of $13.8 millionfor the three months ended March 31, 2019.
- Adjusted net investment income (“ANII”)1 of
$4.3 million, or $0.21per share, for the three months ended March 31, 2020; a decrease of 52.3%, on a per share basis, over ANII of $8.3 million, or $0.44per share, for the three months ended March 31, 2019.
- Net asset value (“NAV”) of
$312.5 million, or $15.00per share, at March 31, 2020; a decrease of 4.5%, on a per share basis, over NAV of $15.70per share at December 31, 2019.
- Debt-to-equity ratio of 1.44x at
March 31, 2020.
- Total investment portfolio increased by 18.8% to
$662.4 millionat March 31, 2020, from $557.7 millionat March 31, 2019.
- The Company paid a first quarter 2020 cash dividend of
$0.44per share on March 31, 2020to shareholders of record as of March 18, 2020
First Quarter 2020 Lending Highlights
Newtek Small Business Finance, LLC(“NSBF”) funded $52.8 millionof U.S. Small Business Administration(“SBA”) 7(a) loans during the three months ended March 31, 2020; compared to $97.8 millionof SBA 7(a) loans funded for the three months ended March 31, 2019.
- Newtek announced Congress’ approval of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), highlighting NSBF’s position as a nationally licensed SBA lender to originate Paycheck Protection Action (“PPP”) loans and thereby support American small businesses in these challenging times
Subsequent First Quarter 2020 Loan Highlights
- NSBF has obtained SBA loan (E-Tran) numbers for
$1.1 billionof PPP loans.
- NSBF estimates that its PPP lending activity will contribute to record NII and ANII for the second quarter of 2020.
- NSBF estimates that upwards of 130,000 PPP borrowers’ employees could be retained if NSBF’s total potential funding of the
$1.1 billionin PPP loans is reached.
- In April, NSBF received approximately
$17.7 millionfrom the U.S. Treasurypursuant to the CARES Act, to pay the principal and interest on its SBA 7(a) loan portfolio in regular servicing (accrual) status, which, as a result, is 98.6% current on all payments as of April 30, 2020.
Investor Conference Call and Webcast
A conference call to discuss first quarter 2020 results will be hosted by
In addition, a live audio webcast of the call with 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-and-presentations. A replay of the webcast with the corresponding presentation will be available on Newtek’s website shortly following the live presentation and will remain available for 90 days following the live presentation.
1Use of Non-GAAP Financial Measures -
In evaluating its business, Newtek considers and uses ANII as a measure of its operating performance. ANII includes short-term capital gains from the sale of the guaranteed portions of SBA 7(a) loans and conventional loans, and capital gain distributions from controlled portfolio companies, which are reoccurring events. The Company defines ANII as net investment income (loss) plus net realized gains recognized from the sale of guaranteed portions of SBA 7(a) loan investments, less realized losses on non-affiliate investments, plus or minus loss on lease adjustment, plus the net realized gains on controlled investments, plus or minus the change in fair value of contingent consideration liabilities, plus loss on extinguishment of debt.
The term ANII is not defined under
Newtek’s and its portfolio companies’ products and services include: Business Lending, SBA Lending Solutions, Electronic Payment Processing, Technology Solutions (Cloud Computing, Data Backup, Storage and Retrieval,
Note Regarding Forward Looking Statements
This press release contains certain forward-looking statements. Words such as “believes,” “intends,” “expects,” “projects,” “anticipates,” “forecasts,” “goal” and “future” or similar expressions are intended to identify forward-looking statements. 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
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CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(In Thousands, except for Per Share Data)
|Investments, at fair value|
|SBA unguaranteed non-affiliate investments (cost of
|SBA guaranteed non-affiliate investments (cost of
|Controlled investments (cost of
|Non-control/affiliate investments (cost of
|Total investments at fair value||662,361||659,044|
|Due from related parties||3,853||2,972|
|Servicing assets, at fair value||26,309||24,411|
|Right of use assets||7,724||7,990|
|Bank notes payable||$||44,069||$||30,000|
|Notes due 2023 (par:
|Notes due 2024 (par:
|Notes payable - Securitization trusts (par:
|Notes payable - related parties||24,213||12,163|
|Due to related parties||338||131|
|Deferred tax liabilities||9,494||12,405|
|Accounts payable, accrued expenses and other liabilities||16,634||20,824|
|Commitment and contingencies|
|Preferred stock (par value
|Common stock (par value
|Additional paid-in capital||296,577||289,963|
|Accumulated undistributed earnings||15,471||31,852|
|Total net assets||312,465||322,226|
|Total liabilities and net assets||$||791,477||$||797,411|
|Net asset value per common share||$||15.00||$||15.70|
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)|
|(In Thousands, except for Per Share Data)|
|Three Months Ended
|From non-affiliate investments:|
|Total investment income from non-affiliate investments||10,943||10,366|
|From non-control/affiliate investments:|
|From controlled investments:|
|Total investment income from controlled investments||4,839||3,367|
|Total investment income||15,802||13,764|
|Salaries and benefits||3,447||3,588|
|Depreciation and amortization||115||129|
|Origination and loan processing||1,824||1,653|
|Origination and loan processing - related party||2,638||2,188|
|Change in fair value of contingent consideration liabilities||54||46|
|Other general and administrative costs||1,858||1,427|
|Net investment loss||(282||)||(986||)|
|Net realized and unrealized gains (losses):|
|Net realized gain on non-affiliate investments - SBA 7(a) loans||4,513||9,344|
|Net unrealized (depreciation) appreciation on SBA guaranteed non-affiliate investments||(183||)||70|
|Net unrealized (depreciation) appreciation on SBA unguaranteed non-affiliate investments||(4,511||)||2,629|
|Net unrealized (depreciation) appreciation on controlled investments||(10,789||)||(1,947||)|
|Change in deferred taxes||2,911||529|
|Net unrealized (depreciation) appreciation on servicing assets||1,088||(556||)|
|Net realized and unrealized gains (losses)||$||(6,971||)||$||10,069|
|Net (decrease) increase in net assets resulting from operations||$||(7,253||)||$||9,083|
|Net (decrease) increase in net assets resulting from operations per share||$||(0.35||)||$||0.48|
|Net investment loss per share||$||(0.01||)||$||(0.05||)|
|Dividends and distributions declared per common share||$||0.44||$||0.40|
|Weighted average number of shares outstanding||20,738||19,003|
NON-GAAP FINANCIAL MEASURES-
ADJUSTED NET INVESTMENT INCOME RECONCILIATION:
|(in thousands, except per share amounts)||Three months ended
||Per share||Three months ended
|Net investment loss||$||(282||)||$||(0.01||)||$||(986||)||$||(0.05||)|
|Net realized gain on non-affiliate investments - SBA 7(a) loans||4,513||0.22||9,344||0.49|
|Loss on lease||-||-||(78||)||(0.00||)|
|Change in fair value of contingent consideration liabilities||54||0.00||46||0.00|
|Adjusted Net investment income||$||4,285||$||0.21||$||8,326||$||0.44|
Source: Newtek Business Services Corp.