NewtekOne (NEWT) Q3 2025: ALP Securitization Surges to $350M, Driving Non-Bank Lending Scale
NewtekOne’s technology-driven model delivered standout growth in Q3, with its Alternative Loan Program (ALP) on track for a record $350 million securitization, fueling asset and deposit expansion far outpacing traditional banks. Credit normalization and segment diversification are stabilizing risk, while management signals further balance sheet leverage and operational scale into 2026.
Summary
- ALP Securitization Sets Scale: Largest-ever $350M ALP deal signals maturing non-bank lending engine.
- Deposit Growth Outpaces Peers: Tech-enabled deposit gathering continues to beat branch-based models on cost and scale.
- Balance Sheet Leverage Ahead: Management eyes increased leverage and franchise diversification post-anniversary.
Performance Analysis
NewtekOne’s Q3 results underscore the scalability of its technology-first, branchless banking model, with both business and consumer deposits expanding at double-digit sequential rates. The company’s efficiency ratio improved sharply, reflecting operating leverage as assets grew 43% while expenses rose just 8.5%.
Deposit acquisition remains a core advantage, with business deposits up 17% and consumer deposits up 12% sequentially, all without traditional branches or bankers. ALP (Alternative Loan Program, Newtek’s proprietary non-SBA lending platform) is now positioned for its largest securitization to date, at $325 to $350 million, more than doubling the volume of prior deals and cementing a recurring fee and spread income stream.
- Non-Branch Deposit Engine: Deposit cost at 3.72% continues to trend lower, with 78% insured and a loan-to-deposit ratio of 95%, providing funding flexibility and resilience.
- ALP Expansion: Securitizations now drive scale, with $720M originated since inception and historical charge-offs below 1%, leveraging high FICO, low LTV credits.
- Legacy Wind-Down: NSBF non-bank lender losses continue to shrink, now just 16% of the consolidated balance sheet, with non-accrual inflows decelerating.
Despite higher NPLs (non-performing loans), robust reserves and net profitability validate the risk-adjusted approach, with management highlighting stabilization and improved forward credit trends.
Executive Commentary
"What we really do well, acquire customers cost-effectively, service their needs with great margin, and make loans on a risk-adjusted basis. We manage credit risk. We don't avoid it. So if you look at our financial statements, we typically have higher reserves. We also have higher non-accruals. But on a net basis, after that expense, we're still extraordinarily profitable."
Barry Sloan, President, Founder & CEO
"We're ramping up for the next securitization. As you saw in that slide, we're looking at somewhere between $325 million and $350 million in capital. So a lot of that this quarter is related to that. And similar to what you saw last quarter, you will see kind of that whole of that flips in the fair value line as we, you know, close the securitization and pull the residual onto the balance sheet."
Frank DiMaria, Chief Financial Officer
Strategic Positioning
1. Technology-Enabled Deposit and Lending Model
NewtekOne’s core differentiator is its technology-driven, branchless platform, enabling it to acquire and service over 22,000 depository accounts and 10,000 borrowers without traditional cost structure. This model supports rapid scale and lower deposit costs, with proprietary systems driving over 600 business referrals daily.
2. ALP Securitization and Product Diversification
The Alternative Loan Program (ALP) is now a cornerstone of NewtekOne’s growth, offering 10-25 year fully amortizing loans to higher-credit SMBs. Securitizations provide asset-liability matching and recurring fee streams, with the latest deal set to be the largest yet. Management plans to further increase ALP’s contribution and run two larger deals annually, supporting non-SBA lending scale.
3. Balance Sheet and Capital Flexibility
Recent capital raises and preferred issuances have bolstered Tier 1 and total capital, giving NewtekOne the flexibility to grow assets and leverage up post its three-year bank holding company anniversary. Management signals intent to use more leverage and balance sheet capacity, with strong capital ratios providing a cushion for growth and risk management.
4. Credit Normalization and Risk Management
While NPL ratios remain elevated compared to peers, credit quality is stabilizing, with legacy NSBF portfolio losses shrinking and new portfolios showing improved seasoning and reserve coverage. The company’s risk-adjusted lending model, supported by higher reserves, is designed for profitability even in volatile cycles.
5. Ancillary Revenue Streams and Product Bundling
Complementary businesses in payments, payroll, and insurance are increasingly additive to both earnings and deposit gathering. The upcoming “Triple Play” bundled offering (unsecured line of credit, bank account, and merchant or payroll account) aims to further embed customers and drive cross-sell efficiency.
Key Considerations
NewtekOne’s Q3 marks an inflection in non-bank lending scale and funding strategy, as the company leverages its tech-enabled platform to outpace traditional peers and diversify away from legacy risks.
Key Considerations:
- Deposit Cost and Mix: Continued ability to gather low-cost, insured deposits without branches is central to funding advantage and margin preservation.
- ALP Securitization Execution: Success of the $350M ALP deal will be a key proof point for recurring fee income and risk transfer.
- Balance Sheet Leverage: Management’s plan to increase leverage post-anniversary could drive higher returns but also raises sensitivity to credit and funding cycles.
- Credit Quality Stabilization: Ongoing normalization in NPLs and charge-offs is crucial for sustaining confidence in the risk-adjusted model.
- Product and Segment Diversification: Expansion into CNI (Commercial & Industrial) and CRE (Commercial Real Estate) loans, plus bundled treasury offerings, will test the platform’s ability to scale beyond the core SBA/ALP niche.
Risks
Key risks center on credit cycle volatility, especially as economic uncertainty persists for small businesses, and the company’s NPL ratios remain above industry norms. Government shutdowns and SBA program disruptions create near-term origination and gain-on-sale timing risk, while increased leverage and securitization reliance could amplify exposure to market and liquidity shocks. Regulatory scrutiny may also intensify as the business model further diverges from traditional banks.
Forward Outlook
For Q4 2025, NewtekOne management referenced prior guidance of $0.65 to $0.80 EPS, but withheld formal affirmation due to government shutdown uncertainty. Management expects:
- ALP securitization of $325M to $350M to close in Q4, providing a large boost to fee and spread income.
- Stable to improving credit trends as legacy portfolios season and new originations diversify.
For full-year 2025, management did not provide updated formal guidance, citing macro and SBA program unpredictability. However, leadership emphasized confidence in the business model’s durability and long-term earnings trajectory, and signaled further product, deposit, and balance sheet expansion into 2026.
Takeaways
NewtekOne’s Q3 demonstrates the power of a tech-driven, non-traditional banking model, with ALP scale and deposit growth outpacing peers and legacy risks receding.
- ALP Securitization as Growth Engine: Record $350M deal validates non-bank lending scale, recurring fee model, and risk transfer, supporting future volume and margin expansion.
- Deposit and Efficiency Advantage: Branchless deposit gathering and operating leverage are translating into industry-leading profitability metrics and funding flexibility.
- Watch for Leverage and Diversification: As management increases balance sheet leverage and expands into new product lines, execution on credit quality and segment mix will be critical to sustaining returns and valuation re-rating.
Conclusion
NewtekOne’s Q3 marks a pivotal step in scaling its alternative lending and tech-enabled banking franchise, with robust deposit and ALP growth, improving credit normalization, and clear signals of further balance sheet leverage ahead. Investors should monitor execution on securitization, credit stability, and product diversification as the company matures beyond its legacy SBA lender roots.
Industry Read-Through
NewtekOne’s results highlight a broader shift in SME banking toward technology-driven, branchless models, as legacy banks struggle to match digital acquisition and efficiency. The ALP’s scale and securitization approach provide a template for non-bank lenders seeking recurring fee income and risk transfer, while the ongoing shakeout among SBA lenders points to consolidation and increased barriers to entry. As traditional banks face slow deposit and loan growth, NewtekOne’s trajectory signals that platform scale and funding innovation are becoming key competitive levers in small business finance. The industry should expect further migration of profitable SME customers to digital-first platforms with integrated treasury and lending solutions.