$6.00
$27.00
bear $6.00
base $17.50
bull $27.00
margin of safety $8.50
market price* $11.01
NewtekOne is a bank holding company (Newtek Bank, N.A.) that lends to small businesses, chiefly through SBA 7(a) loans, where it holds Preferred Lender status. It converted from a business development company to a bank in January 2023, so only the years since then describe the business we are valuing. It earns money three ways: interest on loans it keeps, gains from selling the guaranteed portion of SBA loans, and fees and insurance commissions. How we measure earnings. A bank's operating cash flow is not a useful gauge here: it was negative $579 million in 2025 because the money used to originate loans intended for sale is booked as an operating outflow, even though it is really the bank lending out deposits. We therefore built earnings from net income, stripped out non-cash gains (about $61 million of fair-value gains and $30 million from a securitization residual in 2025), left in gains on loan sales that were realized in cash, deducted stock compensation and preferred dividends, and ignored working-capital swings. Result per diluted share: $1.90 (2023), $3.49 (2024), $1.42 (2025). 2024 was inflated by unusually large loan-sale gains ($97 million). We use the middle year's total earnings, about $46 million, spread over today's roughly 28.7 million diluted shares, or about $1.60 per share. Share count has risen from 24.3 million in 2023 as the company issued stock, which is why we do not use the 2023 per-share figure directly. First-half 2026 net income of $28.0 million versus $23.1 million a year earlier supports the level; it does not lift it. Growth. Earnings fell 59 percent per share in 2025 from the 2024 peak. We assume no growth from the $1.60 level, so nothing is credited above the trailing rate. The company grew deposits by $444 million in 2025 and $509 million in 2024 and its loan book at cost by $313 million in 2025, but that record covers only three years as a bank and has not been through a downturn, so no growth is credited. Base case: about $17.50 per share. Earnings hold at roughly $1.60 per share for ten years, then decline about 8 percent a year, reflecting that small-business credit earnings are cyclical and nothing named guarantees their persistence beyond the franchise as it stands. Bear case: about $6 per share. Credit quality is already deteriorating: the provision for credit losses rose from $11.7 million (2023) to $26.2 million (2024) to $38.7 million (2025), and nonaccrual loans in the bank's own loan book reached 8.8 percent ($78.8 million) at the end of 2025 from 3.9 percent a year earlier, while 25.8 percent of the outstanding balance in the SBA loans it sells and services is nonaccrual. In this case losses keep rising, earnings drop to about $0.70 per share for five years, and then decline about 10 percent a year. Bull case: about $27 per share. Earnings return to about $2.20 per share, near the 2023-2024 average level in total dollars on today's share count, held for ten years and then declining about 5 percent a year. This requires loan-sale gains to stay near recent levels and losses to stop climbing. Accounting judgements. Because the earnings measure removes only non-cash gains and no debt or cash is added or subtracted, leverage is reflected through the bear case rather than the balance sheet. Provision for credit losses is treated as a genuine cost in our reading of the cash earnings; realized gains on loan sales are counted, unrealized fair-value gains are not. We could not reconcile how much of the 2025 securitization residual gain will ultimately turn into cash, so it was left out. What could make this wrong: if the rise in nonaccrual loans reverses quickly, or if loans now held on the balance sheet earn interest at higher margins than assumed, the base case is too low; if defaults on the SBA portfolio keep rising, even the bear case may prove generous.