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 These ratings were assigned on an unpublished basis on May 14, 2026.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.
As noted, Newtek’s credit quality, measured both by nonperforming assets (NPAs) relative to loans and OREO and net charge-offs (NCOs), tends to skew higher than industry norms due to its inherent business model as well as its legacy loan exposures which are weaker in nature. NPAs were in the 9% range at the holding company at 2Q26 as legacy loans continue to be resolved. At the bank, where most originations are housed now, credit quality is better but still relatively weaker than peers with NPAs ~3%-4% and NCOs ~2%.
Newtek’s funding and liquidity profile reflects its corporate and strategic evolution from a nonbank lender funded primarily through wholesale capital markets, including senior unsecured debt and securitizations, to a deposit-funded banking organization. The company has increased bank deposits to $2 billion+ since its conversion to a bank, driven by strong penetration within its small business customer base as well as attractive savings rates offered to consumer depositors. On a consolidated basis, Newtek has historically relied on wholesale funding sources, most notably securitizations. The company has issued 17 securitizations over its operating history. Going forward, C&I long amortization loans will be originated through the bank, funded with deposits, which are expected to continue growing, and then securitized from the bank. Management believes this approach is operationally simpler and more economically attractive. While we view the increased use of core deposit funding as positive for creditors, we would also want to observe execution of this revised securitization strategy over time before reflecting it in Newtek’s ratings.
Rating Sensitivities
Positive rating momentum could develop over time as the company’s business model, in its current form, matures, resulting in profitability that continues to outpace the industry as a whole. Positive rating action could also occur as holding company double leverage comes down and converges with our rated peer average while the consolidated CET1 level remains appropriate relative to Newtek’s risk profile. Credit quality deterioration that causes earnings to lag historical levels or that results in capitals levels declining could pressure ratings.
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Methodology
Disclosures
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
About KBRA
Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.
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