KBRA Publishes Ratings for NewtekOne, Inc.
NEW YORK, October 20, 2026--KBRA publishes the senior unsecured debt rating of BBB-, the subordinated debt rating of BB+, and the short-term debt rating of K3 for NewtekOne, Inc. (NASDAQ: NEWT) ("Newtek" or "the company"). Additionally, KBRA publishes the deposit and senior unsecured debt ratings of BBB, the subordinated debt rating of BBB-, and the short-term deposit and debt ratings of K3 for lead bank subsidiary, Newtek Bank, N.A. ("the bank"). The Outlook for all long-term ratings is Stable. These ratings were assigned on an unpublished basis on May 14, 2026.
Concurrently, KBRA assigns a rating of BBB- to Newtek's $50 million of 8.125% senior unsecured notes maturing February 2029.
Key Credit Considerations
Newtek's ratings are principally driven by strong current and expected earnings performance, reflective of appropriate loan pricing relative to customer credit risk, reasonable gain-on-sale margins on SBA products, solid fee revenue to the company's payments processing business, and the company's efficient operation which is supported by high use of technology in the underwriting and portfolio management. Consolidated earnings, measured by ROA, have ranged between ~2.0% and ~3.5% since becoming a financial holding company, which is higher than rated peers. More recently, management has begun to shift its balance sheet strategy toward retaining a greater proportion of government-guaranteed SBA 7(a) loans and moving additional lending activities into Newtek Bank. This represents an evolution from the company's historical emphasis on loan sales and associated gain-on-sale revenue toward generating a larger proportion of earnings through recurring net interest income. While KBRA views the potential for a more predictable earnings stream favorably, retaining additional loans could pressure near-term profitability as foregone gains on sale are replaced by interest income recognized over time.
Ratings also reflect Newtek's robust consolidated CET1 at ~18% and additional loss absorbing capital via its allowance for credit losses (ACL) at ~2.8% of loans. That said, we believe capital and ACL levels reflect the company's small-and-medium sized business (SMB) banking loan mix which tends to generate higher-than-peer credit losses through the cycle. As such, we expect loss absorbing capital to continue to be managed well-above our rated BHC universe median. Further, we note that capital levels at the bank are much lower (CET1 ~11.5% at 2Q26) given the lack of legacy exposures. This meaningful difference in capital structure and investment in nonbank subsidiaries creates double leverage at the parent of nearly 200% which constrains the company's rating in the near-to-medium term. Given the aforementioned evolution in balance sheet strategy, there will be greater demand for bank-level capital going forward. That said, we expect Newtek and the bank to continue to manage capital well-above peers over the long-term.