Newtek Business Services Corp. (NASDAQ:NEWT) Q3 2018 Earnings Conference Call Transcript

Nov 08, 2018 • 08:30 am ET

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Newtek Business Services Corp. (NASDAQ:NEWT) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the Newtek Business Services Corporation Q3 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call may be recorded.

I would now like to introduce your host for today's conference, President, Founder and CEO, Mr. Barry Sloane. Sir, you may begin.

Executive
Barry Sloane

Good morning, everyone, and appreciate everybody attending our third quarter financial results conference call. This morning, the call would be hosted by myself as well as Jenny Eddelson, EVP and CAO. For those of you that would like to follow along with the presentation, we have a PowerPoint presentation that exists on our website, newtekone.com, and please go to the Investor Relations section of the website and you'll be able to see and follow along with the presentation that exists in the Presentation section.

I'd like to turn everyone's attention to Slide number 2, and we have onto our historical stock performance over the last five years, according to Bloomberg 220%, 3 years 102%, last year 27.5%. According to a research report issued by Ladenburg on October 10, Newtek ranked in the top 5 performing BDCs with a total return of 21% over the last 12 months, outperforming the S&P 500, the S&P 600 Financials, and the Russell 2000. We are one of the few publicly-traded BDCs that trades at a premium to NAV at approximately 1.3 to NAV that's as of closing price on 11/6/2018. For the last nine months ended September 30, our total return including re-invested dividends, 20.3% year-to-date through November 6, 14.5%, also outperforming the Russell 2000 and the S&P 500.

Moving to Slide number 5, the rationale or reasons for our performance from a stock perspective and business perspective. We continue to have year-over-year increases in SBA 7(a) originated loan volume. We continue to have quarterly and annual growth in loan referral volume. The key, obviously, to our ability to lend without cutting into credit quality is the ability to be selective off of a very high base of loan referrals, which we'll go into later on in the presentation. Our ability to process business, both in the lending arena as well as the other four business areas, extremely important. We continue to invest in our ability to utilize proprietary technology to improve the client experience as well as the worker experience, and overall process business at a much higher rate and better rate, and higher quality rate, than our competitors in these various different business lines.

Our net interest income continues to rise obviously in a rising rate environment with a floating rate loan portfolio that is not highly levered, is extremely attractive. That interest income increased by 29% in the third quarter as compared to the third quarter in the prior year. We've had very steady performance and growth in the payment processing business, it's our second highest valued