Good day and thank you for standing by. Welcome to the NewtekOne, Inc. Third Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Barry Sloane, CEO and President. Please go ahead.

Thanks very much, Gerald, and good morning. And welcome to our third quarter 2024 financial results conference call. Today’s call is hosted by myself, Barry Sloane, CEO and Founder of NewtekOne; and Scott Price, the Chief Financial Officer of NewtekOne and Newtek Bank National Association. Also joining on the call is Nicolas Young, President and COO of Newtek Bank. Once again, I want to thank you all for attending. We’re very, very pleased and proud of the results for the third quarter. I want to make a couple of quick additional announcements. We recently put out a press release that we have hired Ron Lay as the Chief Technology Officer for Newtek Bank, N.A. and NewtekOne, the publicly traded holding company. We’ve also added CJ Brunet, who previously was CIO and CTO of the publicly traded Newtek entities and was also the President and CEO of Newtek Technology Solutions. So we’ve clearly added, and will continue to add to our star-studded management team to help us grow and manage risk. We’ll discuss that a lot on this call, particularly with respect to information technology. I wanted to thank the management team for putting up a great performance this year, as well as support from the Board. Today’s presentation will be a little unconventional. We’re clearly working very hard with analysts to better explain what a differentiated organization like ours looks like. We clearly have a differentiated business model and approach to providing business and financial solutions to independent business owners in all 50 states, something that we’ve been doing for over two decades. This unconventional approach leads to unconventional numbers and analysis. We’re going to focus a lot on things you don’t necessarily want to hear, and I will try to stay away from repeating the obvious in our press release. Some of the obvious items were recorded in one of the notes from our analysts this morning. We reported $0.45 of earnings per share for the quarter. I would like to point out that we had a tax charge for deferred tax liability; without that, it would have been $0.47. In fact, Scott will talk about this in the MD&A, without that tax charge, we probably would have had $0.02 better. The street consensus was about $0.43. I’ll also highlight that our return on average assets at the holding company will focus on the bank as well, at 2.8%, which is consistent with recent quarters and almost three times the peer median. For 2025, we provided guidance of $2 to $2.25, with a midpoint of 8% to 12.5%. The street consensus is currently $2.07. We’re extremely appreciative. I also want to emphasize one other important item. The provision was higher than expected; Newtek booked $6.9 million of provision, but we’re going to discuss this and specifically spend time on risk-adjusted returns, which is crucial. Typically, this industry doesn’t focus on risk-adjusted returns. We do. It’s been in our DNA for over 20 years and it really matters. Industry participants tend to invest in very low margin, low charge assets. So, we intend to work hard to get industry participants more comfortable with what our financial numbers actually mean. For those of you following along in the presentation, you can go to our website, newtekone.com, Investor Relations section. We have a PowerPoint prepared for this presentation. I suggest that everyone fast forward to Slide #3, significant events in Q3. We mentioned the earnings beat, and did not want to get into core vs. non-core, which leaves us at $0.45 per basic diluted. Remind you about a $527,000 deferred tax charge. From the merger with NTS, which is a divestiture, that would have added about $0.02 to that number. We confirmed our guidance of $1.85 to $2.05, midpoint of $0.95. We believe we can gravitate more towards the upper end of that range, but that remains to be seen. We’re in an extremely volatile market. We wanted to give ourselves cushion. And at the current stock price, we think there’s tremendous value based on these numbers. The obvious highlights include deposit growth of 12% at the bank, loan growth of 17% at the bank, and a net interest margin at the bank at 5.29%. Loan loss reserve coverage stands at 500 basis points. You don’t see these metrics in this industry; they simply do not exist. We understand the discomfort with these metrics and we’re going to spend substantial time clarifying it. We’re making significant progress visiting with investors and analysts and helping them better understand our model, and we’ll maintain our focus on this. Our Alternative Loan Program has gained traction and that’s critically important in accelerating our EPS into the future. Many of you frequently remind me that we once projected a $3 number, which was based on our ability to grow faster. We throttled that back after the 2023 banking crisis involving Silicon Valley Bank, Signature Bank, Silvergate, etc. We’ll talk about that further in this call. An important note from Slide #3; we completed a registered public offering of $75 million in bonds, symbol NEWTH, with an 8.625% coupon listed on NASDAQ, rated BBB+ by Egan-Jones with a positive outlook. Moving on to Slide #4, we’ll discuss the numbers we’ve emphasized. Looking at Q3 2024, we had ROAA of 6.3%, ROTCE of 49%, efficiency ratio of 39.4%. These metrics are nearly unheard of. NIM is 5.29%, yield on loans is 11.12%, and that does not include the gain on sale income from selling the 7(a) business. This has been our business for 20 years. People may have apprehensions about gains on sale, but we need to emphasize that it's an ongoing business model for us. If we sell a government-guaranteed loan piece, we receive cash for it. This creates excellent capital. The average rate of funding is on the higher side, but as we continue gaining ground in business deposit accounts, that number will decrease. This is an execution matter that requires time to get the right personnel, software, and procedures in place. The third quarter marked an important milestone when we were finally 'all in.' The Wilmington office is established under our Chief Operating Officer for the Digital Bank, Jennifer Merritt, and is staffed with roughly 25 personnel, along with others at the bank. We’ll address staffing further. We’ve structured this organization to prioritize staffing first, followed by addressing questions. We are poised for growth, and I want to emphasize that growth is never the issue. The challenge is managing that growth and mitigating risk. We have an outstanding management team. Should we encounter difficulties, we will scale back; otherwise, I would be remiss in my responsibility during this call. Growth is not the issue; that is a complete misunderstanding. As I read from a report, let’s turn to Slide #5. This is where we stand as holding company. Many competitors ponder if we are better positioned in the technology sector rather than our current segment. However, we are focused here, and we intend to exhibit our superior metrics. Also, it's clear that the holding company holds substantial value, including our ALP business which we will further discuss today and enhance market disclosures. It’s important to note that ROAA for the holding company stands at 2.9%. NIM grew from Q2 2024 to Q3 2024 by 3.08%, partly because we're integrating ALP loans directly onto our books, rather than in joint ventures where they do not consolidate. The average yield on loans is 9.32%. So let's progress to Slide #6 and discuss our forecast for 2025. We feel assured with guidance projecting earnings of $2 to $2.25 EPS for the coming year. The range from the low end to the midpoint represents an 8% to 12.5% increase over 2024. Despite being a contrasting observation, this institution is expanding its bottom-line in double digits. We have confidence that we can achieve this, as we've done historically, firstly as a BDC and now in our seventh quarter of transitioning into a financial holding company. We’ve experienced growth in the ALP business and in business deposits, and we’ll elaborate on our payment processing segment shortly. This is a vital area of diversification for us, which is not directly tied to interest rate fluctuations or credit actions, thus generating reoccurring income that we’ve sustained for over 20 years. Now that we’re part of a bank, this also provides additional advantages for customers. Overall, the primary focus is on our customers - we aim for a frictionless experience similar to what top tech companies like Apple and Amazon offer. We are trying to make this as seamless as possible for our staff through in-house technology developments, resulting in increased transactions which you can visually verify in our numbers. Again, we aim for a midpoint of $2 to $2.25 for 2025, compared to consensus of $2.07. We're clearly constructive about our position. Slide #7 is significant; I’ll leave it for you all to analyze thoroughly. Observing yields on earning assets shows commercial banks with $1 billion to $3 billion assets have yields of 5.53% to 5.65%. In comparison, the Bank yields stand at 8.96% to 8.82%. That's a stark contrast of anywhere from 3 basis points to 350 basis points. This isn’t something you can overlook or disregard, although it does not include gains on sale and servicing income. Additionally, our portfolio is set to expand massively, which signifies further profits. You can see we’re enhancing both traditional banking and bank holding income while progressing with substantial returns on equity and assets as we construct assets and sell them for gains. You can explore our profitability metrics, easily surpassing other institutions; however, we must address credit quality. That is our big challenge. However, we’re confident given our financial standing, as we hold ample reserves, abundant capital, and undergo regular checks by regulators, external auditors, and our internal quality control personnel—all actions being routinely backed by extensive banking experience. While our risk-adjusted parameters may seem ambitious, we maintain a robust strategy. When we consider the risk of traditional CRE loans balanced against our own, our model presents less risk, inherently less risky than banking on short-term assets. Slide #8 offers insights regarding our aspirations to mirror industry leader Live Oak. Their performance is notable; take a moment to review their metrics, especially with respect to their PE ratio. They have successfully amassed $12.5 billion in assets to yield credible net income, contrasting with our $914 million asset base for substantial returns. This disparity merits close examination. Their efficiency ratios stem from technology, hinting at the future pathway of progress. Customers uniformly express satisfaction with our staff; they appreciate our technological advances. It's important to note we are far from perfect, and we acknowledge the necessity for staff training, but we’re seeing the fruits of our labors as we witness increased loan volume and deposits. In this early inning of a lengthy game, we firmly believe in the road ahead. Once again, Live Oak serves as our north star, and we aspire to emulate their success. Despite surface similarities in asset sizes and technology philosophies, they face less scrutiny compared to our loan sales – which we frequently defend. We favor lending and selling over crafting the next tech breakthrough while journeying forward. Slide #9 encapsulates the meat of today’s presentation. I will briefly walk you through these intriguing omissions. Again, I emphasize we should refrain from reiterating press release highlights you can access independently. Let’s shift to Slide #10. I’m perplexed as to why this segment remains overlooked. It has pre-tax income of 32.5% totaling $5.3 million for the quarter and pre-tax income across the nine-month stretch increased 43% to $14.2 million, forecasting pre-tax income of $17.7 million for 2024 and $19.6 million for 2025. A cornerstone of this business growth stems from client satisfaction—we cater to their needs. Our clients now relish the consolidation provided by the Newtek Advantage, a unique feature of our service. The Newtek Advantage has been well articulated on our website, including illustrative videos. This is an undeniable benefit to business clients, as there’s a recognizable client base of approximately 30 million independent business owners identified through the small business administration. With regard to that customer base, business owners seek analytics, data, and transactional capabilities. By integrating our Payments business within the Advantage, clients can view all financial transactions, from balances to payments and refunds. Recently, our services have gained traction—customers enjoy our no-fee business account that eliminates multiple hidden fees. This immediate savings presents a compelling offering compared to the top four banks that provide small rewards. This drives customers towards us. Slide #11 contains well-illustrated charts and graphs; I have received feedback on the length of this presentation. We are exploring how to maintain educative engagement without overwhelming brevity or excess. It’s crucial not to overlook this business as it holds significant value. When we were a BDC, it was valued at fair value. In its status as a holding company, it somewhat disappears from the tangible book. This business holds an estimated $125 million to $150 million valuation. When factoring debt, this equates to an adjusted value of $5 to $6 per share. That’s something pivotal to analyze. Slide #12 discusses our recent press release concerning the early redemption of 2018 and 2019 securitizations involving Newtek Small Business Finance. We noted the $75 million raised, which will be partially allocated to debt repayment in the securitization. Paying off these debts will uncage substantial cash flow. Based on estimates, we foresee considerable cash amounts flowing into NSBF. This cash could be allocated for stock repurchases, funding the ALP, or paying off debts. We possess $280 million in equity residing within NSBF—a figure that should not be dismissed. As we progressively self-liquidate, this equity remains attractive. Although we classify it as an ‘old legacy investment,’ it generates an impressive 11.25% coupon on expensive securitization debt. Onward to Slide #13—we wish to be acknowledged for having been in the banking landscape for seven quarters, as evidenced by our tangible book value growth from $8.65 to $10.07, and from $7.35 to $9.50 in tangible book terms. That demonstrates substantial growth and it doesn’t account for the payment processing sector. Slide 14 covers our insurance agency currently integrated within one of our segments. It’s not detailed here, but we may consider breaking it out next year. Our net active policy count has risen substantially since becoming a bank, thereby demonstrating efficiency and ease in providing key man life and other insurance products to clients acquiring loans. You’ll notice our efforts output many initiatives—we prioritize and streamline as needed. On Slide #15, I'll share about the technology unit divestiture. As we transition to a financial holding company, we committed to the Board of Governors of the Fed to terminate NTS activities. We've signed an agreement to merge into an already-public company called Paltalk. The new entity will focus on outsourced IT, particularly catering to the SMB sector who face increasing cyber threats. The NewCo will function somewhat parallel to AWS or Azure but will employ real individuals, offering direct support. We've been involved here since 2004. This year, we project NTS to generate approximately $25 million to $30 million in revenue with an adjusted EBITDA near $2 million. I suggest you study Paltalk; their balance sheet holds notable cash inflows anticipated from ongoing legal proceedings. We’ll hold 4 million shares in the newly created non-voting preferred and receive $4 million in cash, along with potential earn-out opportunities from the transaction. This should conclude in the coming first quarter. Slide #16 encapsulates our credit thesis as a high-margin loan originator. We specialize in risk-adjusted evaluations, which we have maintained over the last two decades, even through crises like 2008-2009 and the pandemic. Our history of prudent management amidst various economic scenarios functions as a testament to our expertise. We ceased lending during crisis periods and verified low-risk routes to safety while managing to disburse significant PPP loans efficiently during the pandemic. Our approach is centered on prudent credit loss assessments. Please review Slide #7, where banking yields for institutions with $1 billion to $5 billion in assets average 5.53% to 5.65%, significantly lower compared to our yields of 8.96% or higher. The market scrutinizes our high yields rooted in our extensive experience and disciplined underwriting processes. Conversely, we possess sufficient reserves and capital, regularly reviewed by regulatory bodies, auditors, and internal controls. While conventional investors observe deposits and credit fluctuations, we employ a comprehensive outlook on our entire enterprise. Our expertise allows us to manage these factors and secure elevated returns on investment. Our track record affirms our confidence in effectively managing risks occurring from customer deposits. To clarify, the four leading banks bask in favorable locations, but general consumers move money promptly to avoid losses. On Slide #17, as we increase our workforce at Newtek Bank to 360 employees from the company's total of 570, it signifies our commitment to employ a robust team to tackle numerous transactions. The assertion that NewtekOne is simply an assemblage of legacy portfolios is fundamentally misleading; we validate our financial prowess. Our historically high-value bank occupies a strategic position among regional counterparts, fortified by a capable workforce tailored for scalable operations. Further, we’ve confidently transitioned from joint ventures to on-balance sheet funding, demonstrating our adaptability within current market dynamics. Acknowledging our seasoned officers managing the bank’s direction, we can ensure distinct alignment and a diverse product portfolio. Our strategic goal is managing capital resources while fostering the flexibility needed for innovative outcomes. As we turn to Slide #18, we’ve initiated steps to position loans on our balance sheets instead of solely relying on joint ventures. Addressing concerns raised about potential mischaracterization of borrower profiles as ‘last resort’ places, I would posit this perception is misinformed; we pride ourselves on providing advantageous lending solutions tailored for long-term sustainability. Our borrower amenities significantly endorse operational flexibility, while joint venture partners engage with us to hit maximum loan origination values. We’re seeing referrals between 600 and 900 daily, and as we anticipate $200 million in loans through ALP by December 31, 2024, we foresee an ability to generate securitization opportunities. This could yield further profitability shortly. Slide #19 features cumulative SBA 504 and ALP loan origination volumes since 2015—pointing out how critics cite non-performing loans as alarming. Yet, we’ve experienced no losses across our 504 loan programs, totaling $632 million; the ALP loan size hit $394 million cumulatively with just $3 million unrealized losses. This reflects our competency in quality lending practices. Slide #20 is all about alignment of interest; our management stands committed to transparency. I personally have invested heavily, and our employees engage in company stock ownership. Our workforce collectively comprises 570 owners, demonstrating committed alignment across our operations. On Slide #21, I encourage you to read the press release concerning deposits. Zero-fee bank accounts stand out in the market with minimal alternatives available. We aim to cater to small businesses and individuals aiming for straightforward, top-tier banking services. This effort leverages our online convenience, opening pathways for customer engagement. Slide #22 speaks for itself; please take the opportunity to refer back to it. Slide #23 emphasizes substantial pipeline growth illustrated across multiple metrics. By September 30, 2024, we will have accumulated $120 million of ALP loans on our balance sheet, derived mainly from cash funded leveraging. Entity Holdco 6 that delineates our ALP unit will enhance transparency surrounding this segment in future communications. Slide #24 reiterates previous discussions regarding 2025 forecasts. Slide #26 brings attention to guidance confirmation as we refine projections. Slide #27 highlights our nine-month results. Now I'll hand it over to Scott to delve into slides 28 and 29.

Thanks, Barry, and good morning, everyone. Slide 28 shows our yields and rates. We experienced nice margin expansion resulting from lower deposit costs as we continue to bring in lower-cost deposits from business checking and business money market accounts. We raised debt in the public markets for two consecutive quarters to refinance maturing issuance and fund future investments in our ALP loans. I believe you can expect increased balances leading to higher loan volumes as reflected in our guidance. Turning to Slide 29, we lowered our CD rates in July and noticed a decline in retention numbers, which was expected. This was partially offset by increases in business checking and money market accounts as well as growth in high-yield savings accounts, which has continued through October. I will highlight that we managed our average borrowing balances down while keeping costs flat. With that, Barry, I’ll turn it back to you.

Thank you. Let’s go to Slide #31, concerning credit and risk management. A common point of concern is the noted trends between Q1 2024 and Q2 2024. It's important to hear that we've adjusted our positions and made charge-offs as necessary. Fair value has seen modest changes from $5.2 million to $5.3 million, while the prior jump was significantly higher. It's worth noting that our methodology in estimating fair value becomes essential during this phase. We're cognizant that as these loans liquidate, gains are anticipated, influenced by how we manage and track our servicing income and our provision methodologies. These numbers should all fit within the capital structures as we significantly maintain adequate assessments of credit loans, which divided by healthcare investments stand at 5%. Some questions arise regarding fluctuations between non-accrual loans. Slide #32 reports stable allowance for loan losses at around 5%, reaffirming that we appropriately cover our risks. We believe our high capital levels with increased income generation represent lucrative business approaches. In our field providing financial solutions for independent business owners, we will employ technology to offer seamless operations. Slide 33 highlights our diversified earnings. On Slide 34, while understanding high deposit levels may concern you, our income streams ensure adherences to industry standards while emphasizing that our deposits possess enduring tenures. The consistency of our customer loyalty is pivotal; we’ve established sophisticated analytics and transactional options critical to optimizing customer satisfaction. Slide 35 involves our projections for 2024. We're projecting figures between $0.68 and $0.76 with a midpoint of $0.72. You may recall our figures for higher than current markets. We value sound management as we position for growth. Slide 36 covers our strategies aimed at boosting individual investor interactions—Scott and I have engaged with analysts and institutions across various forums, aiding growing awareness of Newtek. The Board of Directors has sanctioned the repurchase of four million shares, responding to market conditions.

Thank you, Barry. Turning to Slide 41, I will focus on linked-quarter changes. Net interest income rose due to a rise in loan volumes. Note we raised debt in public markets for two successive quarters and effectively deployed the proceeds to reduce some leverage on our staging lines. The provision for credit losses faced pressures due to non-accrual loans within the bank, as our portfolio remains relatively new—initially starting at zero, leading to anticipated migration. We also registered a net charge loss of 59 basis points as a percentage of total loans for the quarter. However, I would reiterate that our credit assumptions reflect across our forecasts and guidance; we feel at ease with our placement. Non-interest income remained steady, while the non-interest expense adjustments concerning salary and benefits dipped by roughly $1.9 million—largely due to lower performance-based compensation and the NTS reductions earlier this year. Our professional fees rose due to the NTS disposition and tax returns preparations. Occupancy and marketing expenses each climbed $250,000, while income taxes escalated to approximately $500,000 due to the previously mentioned NTS considerations. As for the balance sheet, we segregated NTS assets and liabilities and classified them as held for sale due to our agreement for upcoming divestitures. Our tangible book value per share stood at $8.93, and depending on further evaluations, the NTS disposition could yield a $0.57 tangible book value enhancement.

Thank you, Gerald. We’re eager to address questions from our audience.

Thank you. Up first, our first question comes from Crispin Love from Piper Sandler. The floor is yours.

Thank you, and good morning, everyone. Just first on the news of the week, can you just discuss some specific ways you believe a Trump presidency can benefit Newtek? Banks rallied yesterday including Newtek. I’m curious if there’s anything specific to Newtek you expect to benefit, related to overall small business growth or any other concerns to point out, and whether there could be any headwinds as well?

Thanks, Crispin. I think the primary factor concerning benefits relates to maintaining the corporate tax rate; it seems likely that any changes regarding tax rates will remain relatively stable. Evaluating potential tariffs could be a risk, but the ongoing interactions about tariffs remain threats rather than certainties. The volatility of uncertain tariffs could impact businesses that primarily engage with China. We maintain a cautious perspective, especially considering risks associated with credit relationships. That said, these discussions can always evolve—one general weapon remains the trajectory of interest rates in our institutions.

Thanks, Barry. All makes sense. I appreciate the differentiation between the near- and long-term. One last question from my end: on Slide 7 of the deck, the net charge-offs at the bank increased to 104 basis points while consolidated numbers declined to 18 basis points. What drove those differences, and how do you project credit moving forward to improve?

Sure. I’ll give a macro overview and Scott will focus on numbers. I’m unsure how to improve risk-adjusted returns at this stage when our ROA and ROTCE reflect significant metrics. I realize that some believe these results cannot be sustained, yet history—for 20 years—shows we can achieve results without deposits using more expensive funding. We did it not just amid high rates but also through earlier crises. The challenge lies in addressing transitions; the uniqueness of our banking situation introduces ample room for operational comfort from internal and external stakeholders. I will defer specifics to Scott for metrics insights.

Thanks, Barry, and hi, Crispin. The charge-off ratio at the consolidated level was around 59 basis points, whereas at the bank's level you witnessed higher numbers because of the accounting model we follow; primarily loans at fair value are recorded on the P&L differently than in the traditional bank accounts where charge-offs show through to the allowance. We began 2024 with minimal non-performing assets, mostly traditional loans that have increased during this period. We anticipated this rise as part of our progression while monitoring intently to ensure our forecasts remain intact as we continue to grow modestly but consistently moving forward.

Great. Thank you for taking my questions.

Thanks, Crispin.

Thank you for your question. One brief moment, please. Next, we have Tim Switzer from KBW. The floor is yours.

Hey. Good morning, guys. Thank you for taking my question.

Thanks, Tim.

I have a follow-up regarding the credit outlook. Specifically about the allowance. I believe you’ve mentioned a good set level historically would be about 350 basis points. When should we see the allowance start moving back towards that level and how quickly can it get there?

Scott, do we anticipate seeing any movement during the fourth quarter, although I don’t foresee a dramatic shift?

I think we could start to see downtrend in allowances developing moving forward; however, it’s contingent on the sales volume and concentrations among our loans. So if production of 7(a) loans rises, we'll witness a pure shift upwards as well. Overall, we expect traditional loans contributing significantly towards the metrics that would steer a downward heading from current allowances. We’ll grab various data points and adjust accurately in the future as needed due to macro economic indications.

Got it. You also enjoyed robust growth in your commercial low-cost business deposits. What drove that inflection and what expectations do you hold for future growth? How quickly can we anticipate that expanding?

That growth results from training efforts to equip our staff in articulating the value proposition of transitioning accounts. Clients can swiftly identify compelling reasons to switch through our advanced calculators providing clear distinctions between services we offer against mainstream banks. Instruction is imperative, and we now have qualified personnel prepared to execute our mission with efficiency. Our Wilmington operations harness compliance, surveillance, and open accounts swiftly; but the face-to-face team drives lodging new lending accounts—reinforcing our approaches where portfolios align with securing deposits.

It’s very hands-on, intense engagement with customers. We're ensuring our sales techniques and processes reflect the compelling reasons clients should switch to us. We've train them effectively to communicate value propositions that are highly attractive when laid next to competitors like ourselves. Our analytics with lenders clarify why prospective customers should align with Newtek; we’re realizing strong traction with our current processes and foresee maintaining our growth trajectory.

Thanks for the insights.

Thank you for your question. One brief moment, please. Our next question comes from Steve Moss from Raymond James. The floor is yours.

Good morning, guys.

Good morning.

Following up on growth regarding demand deposits; is the growth primarily among new originations regarding customer dynamics operationally presented from Wilmington?

Wilmington serves efficiencies for compliance and surveillance, facilitating the opening of accounts and accessing lending. Engaging clients who receive loans concurrently introduces deposit accounts predominantly linked to efficient transactions; thus managing operations properly elevates our outcomes comprehensively. The synergy enhances results by merging lending applications seamlessly with banking needs. How fast this unfolds will largely depend on gradual execution, ongoing training, and aligning personnel that drive these engagements—these elements build continued successes across all sectors.

Okay. Great. Thank you.

We will remain vigilant about managing growth to serve our customer base effectively.

Regarding the insurance business, can you share any revenue quantification from insurance these days?

While not a detailed figure, it’s approximately a $3 million to $4 million annual revenue segment.

$3 million to $4 million yearly?

Yes, exactly.

I appreciate that. What are your thoughts and plans regarding the repurchase authorization, any color there?

It's a nuanced situation. We presently have high returns on equity based on our aggressive growth patterns. We aim to maintain shareholder value communication, aware that we trade below industry comparables. We’ll evaluate market conditions dynamically—exercising discretion around repurchases when warranted, ensuring we buy at opportune times while balancing growth imperatives alongside dividends.

Okay. Great, thank you.

To clarify, marks or losses in fair value portfolios—can these be quantified?

Sure. I can follow up on that later.

Our next question comes from Christopher Nolan of Ladenburg Thalmann & Co. The floor is yours.

Hi. I would like to clarify on Page 7, net charge-off average loans for the holding company show 18 basis points. Is that correct? That does not reflect annualized figures, right?

Correct. I mentioned earlier approximations of 59 basis points.

And on the same line at the bank? Is that not an annualized figure as well?

That’s correct. The bank figures presented are annualized.

I’d appreciate some overarching context if you would, regarding levels of discretion impacting these reserve ratios and in what manner, overall, do you see them established, particularly across various metrics?

I’d assert it’s certainly a mix; our determinations embrace quantitative and qualitative factors. Whereas model structures quantitatively drive assessments, qualitative insights steer your judgment, particularly regarding economic indicators or prevailing trends. As we aim to navigate this continuum of limits, acknowledge that our strategies continually adapt towards a well-balanced spectrum of permitting trades even as external volatility presents challenges.

From the management’s perspective, seeing how Newtek operates under a differentiated model one year in since the events involving Silicon Valley Bank and Signature Bank—are you noticing considerable shifts regarding supervisory regiment for banks in general?

To clarify the divergence—these inquiries typically arise concerning our lending practices concerning crypto or banking-as-a-service footprints. Both trends are broadly seen as increased regulatory scrutiny factors, especially concerning lending based on crypto applications. Concerning commercial real estate portfolios, as indicated, we’re not too involved in that sector, so this does not pose a direct challenge for our business model. Overall, the regulatory body appears alert to the outlined focal points.

Thank you for taking my questions.

Thank you.

Thank you for your participation in today’s conference. This concludes the program. You may now disconnect.