Newtek Business Services Corp. Reports Second Quarter 2017 Financial Results

LAKE SUCCESS, N.Y., Aug. 02, 2017 (GLOBE NEWSWIRE) -- Newtek Business Services Corp. ("Newtek" or the "Company") (Nasdaq:NEWT), an internally managed business development company ("BDC"), announced today its financial results for the three and six months ended June 30, 2017.  

Second Quarter 2017 Financial Highlights
  • Net asset value ("NAV") of $250.2 million, or $14.36 per share, at June 30, 2017; an increase of 22.4% and 19.7%, respectively, over NAV at June 30, 2016, and December 31, 2016.
  • Net investment loss of $(1.7) million, or $(0.10) per share, for the three months ended June 30, 2017, compared to a net investment loss of $(4.1) million, or $(0.28) per share, for the three months ended June 30, 2016.
  • Adjusted Net Investment Income ("ANII") 1 of $7.2 million, or $0.41 per share, for the three months ended June 30, 2017; an increase of 44.9% over ANII of $4.9 million, or $0.34 per share, for the three months ended June 30, 2016.
  • Total investment income of $9.9 million for the three months ended June 30, 2017; an increase of 37.1% over total investment income of $7.2 million for the three months ended June 30, 2016.
  • Debt-to-equity ratio of 81.4% at June 30, 2017.
  • Total investment portfolio increased by 13.6% to $392.3 million at June 30, 2017, from $345.2 million at December 31, 2016.

Financial Highlights - Six Months Ended June 30, 2017
  • Net investment loss of $(3.8) million, or $(0.22) per share for the six months ended June 30, 2017, compared to a net investment loss of $(5.5) million, or $(0.38) per share, for the six months ended June 30, 2016.
  • ANII of $13.7 million, or $0.81 per share, for the six months ended June 30, 2017; an increase of 38.6% over ANII of $9.8 million, or $0.68 per share, for the six months ended June 30, 2016.
  • Total investment income of $18.9 million for the six months ended June 30, 2017; an increase of 34.8% over total investment income of $14.0 million for the six months ended June 30, 2016.

Additional Second Quarter 2017 Highlights
  • The Company closed its investment in a new wholly owned controlled portfolio company, IPM, an information technology consulting company.
  • Certain of Newtek's wholly owned controlled portfolio companies increased the aggregate principal amount of the term loan facility with Goldman Sachs Bank USA to $50.0 million from $38.0 million and received a reduction in the interest rate of between 1.0% and 2.0%.
  • Newtek Small Business Finance, LLC ("NSBF") increased its existing revolving credit facility through Capital One, National Association, by $50.0 million to $100.0 million and received a reduction in the interest rate of 1.125% to fund the unguaranteed portion of SBA 7(a) loans and 1.25% to fund the guaranteed portion of SBA 7(a) loans.
  • S&P Global Ratings raised its rating on the Company's SBA 7(a) loan securitization Class A Notes issued by  Newtek Small Business Loan Trust 2014-1, from A to A+.
  • NSBF's servicing portfolio was approximately $1.1 billion at June 30, 2017, an increase of 24.8% over the same period one year ago.
  • The Company launched its newly redesigned website, www.newtekone.com, with enhanced user experience, expanded content, new features and improved navigation.    

SBA Loan Origination Highlights
  • NSBF originated $159.2 million of SBA 7(a) loans during the six months ended June 30, 2017; an increase of 20.7% compared to $131.9 million for the six months ended June 30, 2016.
  • Newtek Business Credit Solutions ("NBC"), a controlled portfolio company, originated $4.8 million of SBA 504 loans for the six months ended June 30, 2017.
  • Increased 2017 SBA loan origination guidance to approximately $415.0 million in SBA 7(a) loans (by NSBF) and SBA 504 loans (by NBC), which would represent an approximate 31% increase in total SBA loan originations over 2016.

2017 Dividend Forecast and Payments
  • Paid a second quarter 2017 cash dividend of $0.40 per share on June 30, 2017 to shareholders of record as of May 31, 2017.
  • Forecast paying an annual cash dividend of $1.57 2 per share in 2017.

Barry Sloane, Chairman and Chief Executive Officer said, "We are extremely pleased with our financial performance, completing the first half of 2017 with double-digit percentage growth across multiple key metrics. Of note, our Adjusted Net Investment Income and investment income for the first six months of 2017 increased approximately 39% and 35%, respectively, compared to the same period last year. Additionally, we have raised our total SBA loan origination guidance for 2017 by approximately 4% to $415 million, which would represent an approximate 31% increase over total SBA loan originations in 2016. We remain positive about our continued growth and expect the second half of the year to follow our historical trend of yielding stronger results than the first half of the year." Mr. Sloane continued, "We are also proud to report that we have been able to continue to secure capital with more attractive financing terms, a testament to the market's recognition of our strong track record and continued growth.  Certain of our portfolio companies were able to increase the aggregate principal amount of the term loan facility with Goldman Sachs Bank USA to $50.0 million from $38.0 million with a reduction in the interest rate of between 1.0% and 2.0%.  Additionally, NSBF increased its existing revolving credit facility through Capital One, from $50.0 million to $100.0 million, and received a reduction in the interest rate of 1.125% to fund the unguaranteed portion of SBA 7(a) loans and 1.25% to fund the guaranteed portion of SBA 7(a) loans. Together with our use of at-the-money (ATM) equity offerings during the second quarter, which allows us to access equity capital at a significantly lower underwriting cost than with a typical equity offering, we believe we are well capitalized as of the date of this release."

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