NewtekOne closes $295M securitization, largest to date

By Chris Stiles • Thursday, January 22 04:00 • Permanent Link

NewtekOne, Inc. (NASDAQ: NEWT) has successfully closed a $295 million securitization backed by $342 million of alternative loan program (ALP) loans. This marks the company's 17th and largest securitization to date. The securitization, known as NALP Business Loan Trust 2026-1, saw the sale of $251,880,000 of class A notes, $35,880,000 of class B notes, and $6,840,000 of a class C note to 32 institutions. The class A notes received a Morningstar DBRS rating of "A (low) (sf)" and were priced at a yield of 5.796%, while the class B and C notes received ratings of "BBB (sf)" and "BB (sf)" with yields of 7.296% and 10.146% respectively.

The securitization had a weighted average yield of 6.08%, a weighted average spread of 243 basis points, and an advance rate of 86%, slightly higher than the previous period. Furthermore, the gross weighted average coupon of the collateralizing loan portfolio approximates 12.74%, with a net weighted average coupon of 11.74% after servicing fees.

NewtekOne views ALP loans as longer amortizing C&I loans, underwriting them with the understanding that the underlying businesses are the primary sources of repayment. The company has originated roughly $850 million of ALP loans since 2019, experiencing only six loan defaults and one charge-off of $6 million. This low default rate is attributed to the healthier liquidity and stronger guarantors of ALP borrowers compared to those in the SBA 7(a) program.

Barry Sloane, Chairman, President, and CEO of NewtekOne, expressed satisfaction with the completion of the securitization and emphasized the company's commitment to issuing securitizations backed by ALP loans as an essential element of its business and financial solutions. Notably, the excess spread from the securitizations has been used to retire securitization debt, leading to growing book values.

Sloane also highlighted the company's deliberate growth of the NewtekOne® brand, emphasizing its value-creating, patient approach to providing longer-term consistent funding to independent business owners. He credited the technology-enabled financial holding company's ability to deliver this value proposition to clients while diversifying funding sources, reducing financing costs, and generating value for investors.

NewtekOne continues to provide a wide range of business and financial solutions, including banking, business lending, SBA lending solutions, electronic payment processing, insurance solutions, and technology services, to independent business owners across all 50 states.

The market has reacted to these announcements by moving the company's shares 0.34% to a price of $14.64. For the full picture, make sure to review NewtekOne's 8-K report.

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