Newtek Business Services Corp. Reports Full Year 2020 Financial Results
Full Year 2020 Financial Highlights
- Net investment income of
$32.0 million, or $1.51per share, for the twelve months ended December 31, 2020; an increase of 620.7%, on a per share basis, compared to net investment loss of $(5.6) million, or $(0.29)per share, for the twelve months ended December 31, 2019.
- Adjusted net investment income (“ANII”)1 of
$43.4 million, or $2.05per share, for the twelve months ended December 31, 2020; a decrease of 12.0%, on a per share basis, compared to ANII of $45.0 million, or $2.33per share, for the twelve months ended December 31, 2019.
- Total investment income of
$92.2 million for the twelve months ended December 31, 2020; an increase of 55.5% over total investment income of $59.3 million for the twelve months ended December 31, 2019.
- Debt-to-equity ratio of 1.35x at
December 31, 2020.
- Total investment portfolio increased by 1.8% to
$671.2 million at December 31, 2020, from $659.0 million at December 31, 2019.
- Net asset value (“NAV”) of
$339.4 million, or $15.45per share, at December 31, 2020; a decrease of 1.6%, on a per share basis, compared to NAV of $15.70per share at December 31, 2019.
Subsequent Full Year 2020 Highlights
January 2021, the Company closed on a $115 millionpublic offering of 5.50% Notes due 2026, which trade on the Nasdaq Global Market under the symbol “NEWTZ.”
March 2021, Newtek Business Lending, LLC(“NBL”), Newtek’s wholly owned portfolio company that originates and funds SBA 504 loans, closed a $100 millioncredit facility with Deutsche Bank AG.
2020 Dividend Payments and 2021 Dividend Payments & Forecast
- The Company paid a fourth quarter 2020 cash dividend of
$0.47per share on December 30, 2020to shareholders of record as of December 18, 2020.
- The Company paid a 2020 annual dividend of
$2.05per share out of taxable income.
- The Company declared a first quarter 2021 cash dividend of
$0.50per share, payable on March 31, 2021to shareholders of record as of March 22, 2021. The payment of the first quarter 2021 dividend will represent a 13.6% increase over the first quarter 2020 dividend of $0.44per share, and a 25% increase over the first quarter 2019 dividend of $0.40per share.
- The Company revised its 2021 annual dividend forecast to a range of
$2.40per share to $2.90per share2; an increase from the previous range of $2.00per share to $2.50per share. The midpoint of the 2021 annual dividend forecast range would represent an approximate 29% increase over the 2020 annual dividend.
Newtek Small Business Finance, LLC(“NSBF”) funded $1.2 billionof Paycheck Protection Program (“PPP”) loans, totaling approximately 10,500 loan units, for the twelve months ended December 31, 2020.
January 15, 2021, NSBF began submitting first- and second-draw PPP loan applications to the SBA, in accordance with the government’s third stimulus package.
- NSBF funded
$113.6 millionof SBA 7(a) loans during the three months ended December 31, 2020; compared to $183.0 millionof SBA 7(a) loans funded for the three months ended December 31, 2019.
- NSBF funded
$196.8 millionof SBA 7(a) loans during the twelve months ended December 31, 2020; compared to $517.7 millionof SBA 7(a) loans funded for the twelve months ended December 31, 2019. The decline was due to NSBF suspending SBA 7(a) lending activities and shifting of resources from originating SBA 7(a) loans, beginning March 2020through June 30, 2020, due to the pandemic’s effects on economic uncertainty, to originating PPP loans, which resulted in the origination of approximately $1.2 billionof PPP loans during 2020.
- NSBF forecasts full year 2021 SBA 7(a) loan fundings of approximately
- NBL funded and/or closed
$87.2 millionSBA 504 loans during the twelve months ended December 31, 2020.
- NBL forecasts closing and/or funding between
$35.0 millionand $40.0 millionSBA 504 loans in the first quarter of 2021.
- NBL forecasts closing and/or funding approximately
$125.0 millionSBA 504 loans for the full year 2021.
- NBL contributed
$1.6 millionin dividend income to the Company for the three months ended December 31, 2020.
For the twelve months ended
Investor Conference Call and Webcast
A conference call to discuss full year 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.
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 beginning in 2016, 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
2 Note Regarding Dividend Payments
Amount and timing of dividends, if any, remain subject to the discretion of the Company's Board of Directors. The Company's Board of Directors expects to maintain a dividend policy with the objective of making quarterly distributions in an amount that approximates 90 - 100% of the Company's annual taxable income. The determination of the tax attributes of the Company's distributions is made annually as of the end of the Company's fiscal year based upon its taxable income for the full year and distributions paid for the full year.
3 We note that income earned in connection with the PPP during 2020, and forecasted to be earned in 2021, should not be viewed as recurring, as future PPP earnings would be predicated on future Congressional action. Resources used to generate PPP loans will be focused on other more traditional activities. SBA 7(a) originations produce interest income, servicing income, and capital gains income, which is treated differently, from an accounting standpoint, than income created from the origination of PPP loans. Both the income from originating PPP loans and SBA 7(a) loans are considered qualified forms of income for a BDC.
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
Investor Relations & Public Relations
Telephone: (212) 273-8179 / firstname.lastname@example.org
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 investments (cost of
|Total investments at fair value||671,188||659,044|
|Due from related parties||6,112||2,972|
|Servicing assets, at fair value||26,061||24,411|
|Right of use assets||6,933||7,990|
|Bank notes payable||$||86,339||$||30,000|
|Notes due 2023 (par:
|Notes due 2024 (par:
|Notes due 2025 (par:
|Notes payable - Securitization trusts (par:
|Notes payable - related parties||24,090||12,163|
|Due to related parties||2,133||131|
|Deferred tax liabilities||11,406||12,405|
|Accounts payable, accrued expenses and other liabilities||27,608||20,824|
|Commitment and contingencies|
|Preferred stock (par value
|Common stock (par value
|Additional paid-in capital||317,041||289,963|
|Accumulated undistributed earnings||21,873||31,852|
|Total net assets||339,353||322,226|
|Total liabilities and net assets||$||840,979||$||797,411|
|Net asset value per common share||$||15.45||$||15.70|
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except for Per Share Data)
|From non-affiliate investments:|
|Interest income - PPP loans||$||37,743||$||—||$||—|
|Interest income - SBA 7(a) loans||24,719||28,467||23,067|
|Total investment income from non-affiliate investments||76,309||43,873||36,145|
|From non-control investments:|
|Total investment income from non-control investments||507||111||65|
|From controlled investments:|
|Total investment income from controlled investments||15,385||15,311||13,305|
|Total investment income||92,201||59,295||49,515|
|Salaries and benefits||14,211||14,305||21,082|
|Depreciation and amortization||402||501||484|
|Origination and loan processing||8,431||9,215||8,362|
|Origination and loan processing - related party||9,855||9,944||—|
|Change in fair value of contingent consideration liabilities||54||42||(51||)|
|Loss on extinguishment of debt||—||251||1,059|
|Other general and administrative costs||5,668||6,427||6,907|
|Net investment income (loss)||31,985||(5,619||)||(7,488||)|
|Net realized and unrealized gains (losses):|
|Net realized gain on non-affiliate investments - SBA 7(a) loans||11,368||47,816||42,845|
|Net realized gain on non-affiliate investments - conventional loan||—||—||278|
|Net realized gain on controlled investments||—||2,585||52|
|Net unrealized depreciation on SBA guaranteed non-affiliate investments||(795||)||(225||)||(766||)|
|Net unrealized appreciation (depreciation) on SBA unguaranteed non-affiliate investments||(176||)||(6,291||)||3,471|
|Net unrealized appreciation (depreciation) on controlled investments||(8,237||)||11,211||4,048|
|Change in deferred taxes||999||(3,164||)||(1,077||)|
|Net unrealized depreciation on servicing assets||(1,525||)||(5,178||)||(5,685||)|
|Net realized and unrealized gains||$||1,634||$||46,755||$||43,166|
|Net increase in net assets resulting from operations
|Net increase in net assets resulting from operations per share||$||1.59||$||2.13||$||1.91|
|Net investment income (loss) per share||$||1.51||$||(0.29||)||$||(0.40||)|
|Dividends and distributions declared per common share||$||2.05||$||2.15||$||1.80|
|Weighted average number of shares outstanding||21,146||19,326||18,714|
NON-GAAP FINANCIAL MEASURES-
ADJUSTED NET INVESTMENT INCOME RECONCILIATION:
|Year ended||Year ended|
|(in thousands, except per share amounts)||Per share||Per share|
|Net investment income (loss)||$||31,985||$||1.51||$||(5,619||)||$||(0.29||)|
|Net realized gain on non-affiliate investments - SBA 7(a) loans||11,368||0.54||47,816||2.47|
|Net realized gain on controlled investments||—||—||2,585||0.13|
|Loss on lease||—||—||(105||)||(0.00||)|
|Change in fair value of contingent consideration liabilities||54||0.00||42||0.00|
|Loss on debt extinguishment||—||—||251||0.01|
|Adjusted Net investment income||$||43,407||$||2.05||$||44,970||$||2.33|
Note: Amounts may not foot due to rounding
Source: Newtek Business Services Corp.