Newtek Business Services Corp. Reports Second Quarter 2020 Financial Results
Second Quarter 2020 Financial Highlights
- Total investment income of
$46.7 millionfor the three months ended June 30, 2020; an increase of 230% over total investment income of $14.1 millionfor the three months ended June 30, 2019.
- Net investment income increased to
$29.7 million, or $1.42per share, for the three months ended June 30, 2020compared to a net investment income (loss) of $(1.1) million, or $(0.06)per share, for the three months ended June 30, 2019.
- Adjusted net investment income (“ANII”)1 of
$28.5 million, or $1.37per share, for the three months ended June 30, 2020; an increase of 140.4% compared to ANII of $11.0 million, or $0.57per share, for the three months ended June 30, 2019.
- Net asset value (“NAV”) of
$327.4 million, or $15.66per share, at June 30, 2020; an increase of 4.4% over NAV of $15.00per share at March 31, 2020, and an increase of 2.2% over NAV of $15.33per share at June 30, 2019.
- Debt-to-equity ratio of 1.20x at
June 30, 2020compared to debt-to-equity ratio of 1.44x at March 31, 2020.
- Total investment portfolio increased by 13.1% to
$648.4 millionat June 30, 2020, from $573.5 millionat June 30, 2019.
Financial Highlights - Six Months Ended
- Total investment income of
$62.5 millionfor the six months ended June 30, 2020; an increase of 123.9% over total investment income of $27.9 millionfor the six months ended June 30, 2019.
- Net investment income increased to
$29.5 million, or $1.42per share, for the six months ended June 30, 2020compared to a net investment income (loss) of $(2.1) million, or $(0.11)per share, for the six months ended June 30, 2019.
- ANII of
$32.8 million, or $1.58per share, for the six months ended June 30, 2020; an increase of 56.4% on a per share basis over ANII of $19.3 million, or $1.01per share, for the six months ended June 30, 2019.
2020 Dividend Payments & Declarations
- The Company paid a second quarter 2020 cash dividend of
$0.56per share on July 31, 2020to shareholders of record as of July 15, 2020, which represents a 21.7% increase over the second quarter 2019 cash dividend.
- The Company declared a third quarter 2020 cash dividend of
$0.582per share, which is payable on September 30, 2020to shareholders of record as of September 21, 2020.
- With the payment of the third quarter 2020 dividend, the Company will have paid a total of
$1.58per share for the first three quarters of 2020, which would represent a 9.7% increase over the dividends paid in the first three quarters of 2019 of $1.44per share.
Second Quarter 2020 Lending Highlights
Newtek Small Business Finance, LLC(“NSBF”) funded $1.11 billionof U.S. Small Business Administration(“SBA”) Paycheck Protection Program (PPP) loans during the three months ended June 30, 2020.
- NSBF’s PPP lending activity contributed to record NII and ANII for the three months ended
June 30, 2020.
- NSBF estimates that upwards of 130,000 PPP borrowers’ employees were retained with the funding of the
$1.11 billionin PPP loans.
- NSBF funded
$17.4 millionof SBA 7(a) loans during the three months ended June 30, 2020.
- NSBF forecasts funding
$150.0 millionin SBA 7(a) loans in the second half of 2020.
- NSBF renewed its existing
$150.0 millionline of credit with Capital One Bank N.A.for a period of three years.
Investor Conference Call and Webcast
A conference call to discuss second 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
2Amount and timing of dividends, if any, remain subject to the discretion of the Company’s Board of Directors.
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,
Newtek® and Your Business Solutions Company®, are registered trademarks of
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 / email@example.com
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||648,439||659,044|
|Due from related parties||5,274||2,972|
|Servicing assets, at fair value||25,511||24,411|
|Right of use assets||7,454||7,990|
|Bank notes payable||$||23,640||$||30,000|
|Notes due 2023 (par:
|Notes due 2024 (par:
|Notes payable - Securitization trusts (par:
|Notes payable - related parties||—||12,163|
|Due to related parties||804||131|
|Deferred tax liabilities||9,465||12,405|
|Accounts payable, accrued expenses and other liabilities||22,763||20,824|
|Commitment and contingencies|
|Preferred stock (par value
|Common stock (par value
|Additional paid-in capital||297,836||289,963|
|Accumulated undistributed earnings||29,192||31,852|
|Total net assets||327,446||322,226|
|Total liabilities and net assets||$||766,057||$||797,411|
|Net asset value per common share||$||15.66||$||15.70|
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)|
|(In Thousands, except for Per Share Data)|
|Three Months Ended
||Six Months Ended
|From non-affiliate investments:|
|Interest income - PPP loans||$||34,657||$||—||$||34,657||$||—|
|Interest income - SBA 7(a) loans||6,189||7,034||13,511||14,051|
|Total investment income from non-affiliate investments||43,926||11,103||54,869||21,469|
|From non-control/affiliate investments:|
|From controlled investments:|
|Total investment income from controlled investments||2,748||3,018||7,587||6,385|
|Total investment income||46,694||14,149||62,496||27,913|
|Salaries and benefits||3,740||3,484||7,187||7,072|
|Depreciation and amortization||104||124||219||253|
|Origination and loan processing||2,722||2,128||4,546||3,781|
|Origination and loan processing - related party||3,095||2,471||5,733||4,659|
|Change in fair value of contingent consideration liabilities||—||9||54||55|
|Other general and administrative costs||1,475||1,657||3,333||3,084|
|Net investment income (loss)||29,747||(1,079||)||29,465||(2,065||)|
|Net realized and unrealized gains (losses):|
|Net realized gain (loss) on non-affiliate investments - SBA 7(a) loans||(1,214||)||12,051||3,299||21,395|
|Net unrealized depreciation on SBA guaranteed non-affiliate investments||(200||)||(382||)||(383||)||(312||)|
|Net unrealized (depreciation) appreciation on SBA unguaranteed non-affiliate investments||(1,633||)||(4,572||)||(6,144||)||(1,943||)|
|Net unrealized (depreciation) appreciation on controlled investments||(82||)||4,865||(10,871||)||2,918|
|Change in deferred taxes||29||(1,294||)||2,940||(765||)|
|Net unrealized (depreciation) appreciation on servicing assets||(1,180||)||(911||)||(92||)||(1,467||)|
|Net realized and unrealized gains (losses)||$||(4,280||)||$||9,757||$||(11,251||)||$||19,826|
|Net increase in net assets resulting from operations||$||25,467||$||8,678||$||18,214||$||17,761|
|Net increase in net assets resulting from operations per share||$||1.22||$||0.45||$||0.88||$||0.93|
|Net investment income (loss) per share||$||1.42||$||(0.06||)||$||1.42||$||(0.11||)|
|Dividends and distributions declared per common share||$||0.56||$||0.46||$||1.00||$||0.86|
|Weighted average number of shares outstanding||20,893||19,113||20,815||19,058|
NON-GAAP FINANCIAL MEASURES-
ADJUSTED NET INVESTMENT INCOME RECONCILIATION:
(in thousands, except per share amounts)
|Three months ended
||Per share||Three months ended
|Net investment income (loss)||$||29,747||$||1.42||$||(1,079||)||$||(0.06||)|
|Net realized gain (loss) on non-affiliate investments - SBA 7(a) loans||(1,214||)||(0.06||)||12,051||0.63|
|Loss on lease||-||-||(26||)||(0.00||)|
|Change in fair value of contingent consideration liabilities||-||-||9||0.00|
|Adjusted Net investment income||$||28,533||$||1.37||$||10,955||$||0.57|
(in thousands, except per share amounts)
|Six months ended
||Per share||Six months ended
|Net investment income (loss)||$||29,465||$||1.42||$||(2,065||)||$||(0.11||)|
|Net realized gain (loss) on non-affiliate investments - SBA 7(a) loans||3,299||0.16||21,395||1.12|
|Loss on lease||-||-||(105||)||(0.01||)|
|Change in fair value of contingent consideration liabilities||54||0.00||55||0.00|
|Adjusted Net investment income||$||32,818||$||1.58||$||19,280||$||1.01|
Note: Amounts may not foot due to rounding
Source: Newtek Business Services Corp.