v3.25.1
BORROWINGS
 12 Months Ended
Dec. 31, 2024
Debt Disclosure [Abstract]  
BORROWINGS
The fair values of the components of Borrowings are included in the chart below:
December 31, 2024December 31, 2023
Closing Price
Fair Value
Closing Price
Fair Value
Public Parent Company Notes1:
2024 Notes (5.75%)
$— $— $24.99 $38,235 
2026 Notes (5.50%)
25.21 115,966 23.75 109,250 
2028 Notes (8.00%)
25.28 40,448 25.04 40,070 
2029 Notes (8.50%)
25.32 72,795 — — 
2029 Notes (8.625%)
25.78 77,340 — — 
Subtotal (Level 2)
$306,549 $187,555 
Private Parent Company Notes2
$80,926 $79,179 
Securitizations3
186,635 292,112 
FHLB Borrowings3
15,330 23,184 
Bank Borrowings3
130,927 59,764 
Subtotal (Level 3)
$413,818 $454,239 
Total Borrowings
$720,367 $641,794 
1 Fair values are based on the closing public share price on the date of measurement.
2 Not recorded at fair value on a recurring basis. The fixed rate private Notes are held at par as of December 31, 2024 and December 31, 2023. Fair value calculations are performed based on implied treasury rates as of year end.
3 Fair value is calculated as the Borrowings Outstanding. Refer to NOTE 13—BORROWINGS.
NOTE 13—BORROWINGS:

At December 31, 2024 and December 31, 2023, the Company had borrowings composed of the following:
December 31, 2024December 31, 2023
CommitmentsBorrowings OutstandingWeighted Avg Interest RateCommitmentsBorrowings OutstandingWeighted Avg Interest Rate
Bank Borrowings1:
NMS Webster Note
$54,871 $32,688 7.30 %$54,871 $36,628 7.94 %
SPV I Capital One Facility60,000 21,192 7.22 %60,000 16,080 8.20 %
SPV II Deutsche Bank Facility120,000 54,036 7.57 %50,000 6,799 10.04 %
SPV III One Florida Bank Facility30,000 23,011 8.50 %30,000 257 9.50 %
FHLB Advances2
20,000 15,330 2.19 %113,891 23,184 2.13 %
Parent Company Notes1:
2024 Notes3
— — — %38,250 38,124 5.75 %
2025 Notes
30,000 29,913 5.00 %30,000 29,563 5.00 %
2025 Notes4
— — — %50,000 49,433 8.125 %
2026 Notes115,000 114,282 5.50 %115,000 113,564 5.50 %
2027 Notes4
50,000 49,944 8.125 %— — — %
  2028 Notes40,000 38,726 8.00 %40,000 38,378 8.00 %
  2029 Notes
71,875 69,622 8.50 %— — — %
2029 Notes
75,000 72,662 8.625 %— — — %
Notes payable - Securitization Trusts5
189,231 186,635 7.32 %296,223 292,112 7.84 %
Total borrowings
$855,977 $708,041 7.22 %$878,235 $644,122 7.04 %
1 Net of deferred financing costs.
2 At December 31, 2024 and December 31, 2023, the carrying amount of Newtek Bank’s FHLB borrowings includes a $0.04 million and $0.2 million purchase accounting adjustment, respectively.
3 On August 1, 2024, the 2024 Notes matured.
4    Effective December 11, 2024, the Company extended the maturity date of the 8.125% Senior Notes due 2025 from February 1, 2025 to the new maturity date of February 1, 2027. The notes are redeemable in whole, but not in part, at any time, at the option of the Company, from November 1, 2026 to the New Maturity Date, at a redemption price of 100% of the outstanding principal amount being redeemed plus any accrued but unpaid interest, to but excluding the redemption date.
5 At December 31, 2024 and December 31, 2023, the net assets of the consolidated Trusts totaled $8.9 million and $14.8 million, respectively.

Outstanding borrowings that are presented net of deferred financing costs, which include the bank borrowings, the Parent Company Notes, and the Notes payable - Securitization Trusts, consisted of the following:
December 31, 2024December 31, 2023
Principal balanceUnamortized deferred financing costs
Net carrying amount1
Principal balanceUnamortized deferred financing costs
Net carrying amount1
Bank Borrowings:
NMS Webster Note$32,894 $(206)$32,688 $36,881 $(253)$36,628 
SPV I Capital One Facility21,300 (108)21,192 16,300 (220)16,080 
SPV II Deutsche Bank Facility54,800 (764)54,036 6,900 (101)6,799 
SPV III One Florida Bank Facility23,075 (64)23,011 375 (118)257 
Parent Company Notes:
2024 Notes (5.75%)
— — — 38,250 (126)38,124 
2025 Notes (5.00%)
30,000 (87)29,913 30,000 (437)29,563 
2025 Notes (8.125%)2
— — — 50,000 (567)49,433 
2026 Notes (5.50%)
115,000 (718)114,282 115,000 (1,436)113,564 
2027 Notes (8.125%)2
50,000 (56)49,944 — — — 
2028 Notes (8.00%)
40,000 (1,274)38,726 40,000 (1,622)38,378 
2029 Notes (8.50%)
71,875 (2,253)69,622 — — — 
2029 Notes (8.625%)
75,000 (2,338)72,662 — — — 
Notes Payable - Securitization Trusts
189,231 (2,596)186,635 296,223 (4,111)292,112 
1 Net of deferred financing costs.
2     Effective December 11, 2024, the Company extended the maturity date of the 8.125% Senior Notes due 2025 from February 1, 2025 to the new maturity date of February 1, 2027. The notes are redeemable in whole, but not in part, at any time, at the option of the Company, from November 1, 2026 to the New Maturity Date, at a redemption price of 100% of the outstanding principal amount being redeemed plus any accrued but unpaid interest, to but excluding the redemption date.
Total interest expense including unused line fees and amortization of deferred financing costs related to borrowings for the years ended December 31, 2024, 2023 and 2022 were as follows:
Year Ended December 31,
202420232022
Total interest expense$52,423 $51,890 $26,325
2029 Notes

On May 30, 2024, the Company completed a registered offering of $71.9 million in aggregate principal amount of its 8.50% 2029 Notes, which includes the underwriters’ exercise of the option granted by the Company to purchase an additional $9.4 million in aggregate principal amount of the 2029 8.50% Notes. The Company received $69.6 million in proceeds, before expenses, from the sale of the 2029 8.50% Notes. The 2029 8.50% Notes bear interest at a rate of 8.50% per year payable quarterly on March 1, June 1, September 1 and December 1 of each year, commencing on September 1, 2024, and trade on the Nasdaq Global Market under the trading symbol “NEWTG.” At December 31, 2024, the Company was in compliance with all covenants related to the 2029 8.50% Notes.
On September 16, 2024, the Company completed a public offering of $75.0 million aggregate principal amount of 8.625% notes due 2029. The Notes will mature on October 15, 2029. The Company received $72.8 million in proceeds, before expenses, from the sale of the 2029 Notes. The Notes bear interest at a rate of 8.625% per year, payable quarterly on January 15, April 15, July 15, and October 15 each year, commencing on January 15, 2025. , and trade on the Nasdaq Global Market under the trading symbol “NEWTH.” At December 31, 2024, the Company was in compliance with all covenants related to the 2029 8.625% Notes.

2028 Notes

On August 31, 2023, the Company completed a registered offering of $40.0 million in aggregate principal amount of its 8.00% 2028 Notes, which includes the underwriters’ exercise of the option granted by the Company to purchase an additional $5.0 million in aggregate principal amount of the 2028 Notes. The Company received $38.0 million in proceeds, before expenses, from the sale of the 2028 Notes. The Company intends to use the net proceeds from the sale of the Notes for general corporate purposes. The 2028 Notes bear interest at a rate of 8.00% per year payable quarterly on March 1, June 1, September 1 and December 1 of each year, commencing on December 1, 2023, and trade on the Nasdaq Global Market under the trading symbol “NEWTI.” At December 31, 2024, the Company was in compliance with all covenants related to the 2028 Notes.

For the years ended December 31, 2024 and 2023, interest expense including amortization of related deferred financing costs was $3.5 million and $1.2 million, respectively. No interest expense was incurred during the year ended December 31, 2022.

2026 Notes

In January 2021, the Company closed a public offering of $115.0 million aggregate principal amount of 5.50% Notes due 2026, including $15.0 million in aggregate principal amount sold pursuant to a fully-exercised overallotment option. The sale of the 2026 Notes generated proceeds of approximately $111.3 million, net of underwriter's fees and expenses. The 2026 Notes will mature on February 1, 2026 and may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after February 1, 2022. The 2026 Notes bear interest at a rate of 5.50% per year payable quarterly on February 1, May 1, August 1 and November 1 of each year, commencing on May 1, 2021, and trade on the Nasdaq Global Market under the trading symbol “NEWTZ.”

For the years ended December 31, 2024, 2023 and 2022, interest expense including amortization of related deferred financing costs was $7.0 million, $7.0 million and $7.0 million, respectively.

2025 Notes

On November 27, 2020, the Company closed an exempt offering of $5.0 million in aggregate principal amount of its 2025 6.85% Notes. The offering was consummated pursuant to the terms of a purchase agreement dated November 27, 2020 among the Company and an accredited investor. The purchase agreement provided for the 2025 6.85% Notes to be issued to the Purchaser in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The 2025 6.85% Notes were scheduled to mature on November 30, 2025 and could be redeemed in whole or in part at any time. The 2025 6.85% Notes bear interest at a rate of 6.85% per year payable quarterly on February 28, May 31, August 31 and November 30, of each year, beginning February 28, 2021. Total net proceeds received after deducting structuring fees and estimated offering expenses was $4.8 million. The Company exercised its option to issue up to $10.0 million of additional 2025 6.85% Notes to the purchaser, and issued $10.0 million in additional 2025 6.85% Notes to the purchaser in an exempt offering in January 2021.

On March 31, 2022, the Company caused notices to be issued to the holder of its 2025 6.85% Notes regarding the Company’s exercise of its option to redeem all $15.0 million in aggregate principal amount of the Notes on May 2, 2022. The Notes were redeemed on May 2, 2022 100% of their principal amount ($25 per Note), plus the accrued and unpaid interest thereon from February 28, 2022 through, but excluding, May 2, 2022.

No interest expense was incurred during the years ended December 31, 2024 and 2023. For the year ended December 31, 2022, interest expense including amortization of related deferred financing costs was $0.4 million.

On January 23, 2023 we completed a private placement offering of $50.0 million aggregate principal amount of 8.125% notes due 2025. The net proceeds from the sale of the notes were approximately $48.94 million, after deducting estimated offering expenses payable by the Company.
2024 Notes

On July 25, 2019, the Company closed a public offering of $55.0 million in aggregate principal amount of its 2024 Notes. The 2024 Notes will mature on August 1, 2024 and may be redeemed in whole or in part at any time or from time to time at Newtek’s option on or after August 1, 2021. The 2024 Notes bear interest at a rate of 5.75% per year payable quarterly on August 1, November 1, February 1 and May 1, of each year, beginning November 1, 2019. Total net proceeds received after deducting underwriters’ discount and expenses was $53.3 million. The 2024 Notes are listed on the Nasdaq Global Market under the trading symbol “NEWTL” and were rated “A-“ by Egan-Jones. In August 2019, the underwriters exercised their option to purchase an additional $8.25 million in aggregate principal amount of the 2024 Notes resulting in an additional $8.0 million in net proceeds.

On February 16, 2021 and May 20, 2021, the Company issued an additional $5.0 million and $10.0 million in aggregate principal amount of its 2024 Notes, respectively. The new 2024 Notes are treated as a single series with the prior 2024 Notes and have the same terms as the prior 2024 Notes. The existing 2024 Notes have the same CUSIP number and are fungible and rank equally with the prior 2024 Notes.

On December 29, 2021, the Company redeemed $40.0 million in aggregate principal amount of the $78.25 million in aggregate principal amount of the Notes on the redemption date of December 29, 2021 at 100% of their principal amount ($25 per Note), plus the accrued and unpaid interest thereon from November 1, 2021, through, but excluding, the redemption date. As a result of the partial redemption of the 2024 Notes, the Company recorded a $0.6 million loss on extinguishment of debt during the year ended December 31, 2021, equivalent to the redeemed portion of the remaining balance of unamortized deferred financing costs as of the redemption date.

For the years ended December 31, 2024, 2023 and 2022, interest expense including amortization of related deferred financing costs was $1.4 million, $2.4 million, and $2.4 million, respectively.

Notes Payable - Securitization Trusts

Since 2010, NSBF has engaged in securitizations of the unguaranteed portions of its SBA 7(a) loans. In the securitization, it uses a special purpose entity (the “Trust”) which is considered a variable interest entity. Applying the consolidation requirements for VIEs under the accounting rules in ASC Topic 860, Transfers and Servicing, and ASC Topic 810, Consolidation, which became effective January 1, 2010, the Company determined that as the primary beneficiary of the securitization vehicle, based on its power to direct activities through its role as servicer for the Trust and its obligation to absorb losses and right to receive benefits, it needed to consolidate the Trusts. NSBF therefore consolidated the entity using the carrying amounts of the Trust’s assets and liabilities. NSBF reflects the assets in SBA 7(a) Unguaranteed Non-Affiliate Investments and reflects the associated financing in Notes Payable - Securitization trusts on the Consolidated Statements of Financial Condition.

In December 2017, NSBF completed its eighth securitization which resulted in the transfer of $76.2 million of unguaranteed portions of SBA loans to the 2017-1 Trust. The 2017-1 Trust in turn issued securitization notes for the par amount of $75.4 million, consisting of $58.1 million Class A notes and $17.3 million of Class B notes, against the assets in a private placement. The Class A and Class B notes received an “A” and “BBB-” rating by S&P, respectively, with a final maturity date of the notes is February 2043. On February 27, 2023, the 2017-1 Trust was terminated as a result of NSBF purchasing the 2017-1 Trust assets, with the 2017-1 Trust’s noteholders receiving the redemption price.

In November 2018, NSBF completed its ninth securitization which resulted in the transfer of $108.6 million of unguaranteed portions of SBA loans to the 2018-1 Trust. The 2018-1 Trust in turn issued securitization notes for the par amount of $108.6 million, consisting of $82.9 million Class A notes and $25.7 million of Class B notes, against the assets in a private placement. The Class A and Class B notes received an “A” and “BBB-” rating by S&P, respectively, and the final maturity date of the notes is February 2044. In October 2024, the 2018-1 Trust was terminated as a result of NSBF purchasing the 2018-1 Trust assets, with the 2018-1 Trust’s noteholders receiving the redemption price.

In October 2019, NSBF completed its tenth securitization which resulted in the transfer of $118.9 million of unguaranteed portions of SBA loans to the 2019-1 Trust, The 2019-1 Trust in turn issued securitization notes for the par amount of $118.9 million, consisting of $93.5 million of Class A notes and $25.4 million Class B notes, against the assets in a private placement. The Class A and Class B notes received an “A” and “BBB-” rating by S&P, respectively, and the final maturity date of the notes is December 2044. In October 2024, the 2019-1 Trust was terminated as a result of NSBF purchasing the 2019-1 Trust assets, with the 2019-1 Trust’s noteholders receiving the redemption price.
In December 2021, NSBF completed its eleventh securitization which resulted in the transfer of $103.4 million of unguaranteed portions of SBA loans to the 2021-1 Trust, The 2021-1 Trust in turn issued securitization notes for the par amount of $103.4 million, consisting of $79.7 million of Class A notes and $23.8 million Class B notes, against the assets in a private placement. The Class A and Class B notes received an “A” and “BBB-” rating by S&P, respectively, and the final maturity date of the notes is December 2044. The Class A and Class B notes bear interest at a rate of adjusted SOFR plus 1.92% across both classes. NSBF has the right to call the 2021-1 Class A and B notes at such time as the sum of the principal amount of the Class A Notes and the Class B Notes is less than or equal to 20.00% of the sum of the principal amount of the Class A Notes and Class B Notes as of the closing date of the transaction, with the prior written consent of the SBA.

In September 2022, NSBF completed its twelfth securitization which resulted in the transfer of $116.2 million of unguaranteed portions of SBA loans to the 2022-1 Trust. The 2022-1 Trust in turn issued securitization notes for the par amount of $116.2 million, consisting of $95.4 million of Class A notes and $20.8 million Class B notes, against the 2022-1 Trust assets in a private placement. The Class A and Class B notes received an “A-” and “BBB-” rating by S&P, respectively, and the final maturity date of the notes is October 2049. The Class A and Class B notes bear interest at an average rate of 30-day average compounded SOFR plus 2.97% across both classes. NSBF has the right to call the 2022-1 Class A and B notes at such time as the sum of the principal amount of the Class A Notes and the Class B Notes is less than or equal to 20.00% of the sum of the principal amount of the Class A Notes and Class B Notes as of the closing date of the transaction, with the prior written consent of the SBA.

In June 2023, NSBF completed its thirteenth securitization which resulted in the transfer of $103.9 million of unguaranteed portions of SBA loans to the 2023-1 Trust. The 2023-1 Trust in turn issued securitization notes for the par amount of $103.9 million, consisting of $84.3 million of Class A notes and $19.6 million Class B notes, against the 2023-1 Trust assets in a private placement. The Class A and Class B notes received an “A-” and “BBB-” rating by S&P, respectively, and the final maturity date of the notes is October 2049. The Class A and Class B notes bear interest at an average rate of 30-day average compounded SOFR plus 3.24% across both classes. NSBF has the right to call the 2023-1 Class A and B notes at such time as the sum of the principal amount of the Class A Notes and the Class B Notes is less than or equal to 20.00% of the sum of the principal amount of the Class A Notes and Class B Notes as of the closing date of the transaction, with the prior written consent of the SBA.

For the years ended December 31, 2024, 2023 and 2022, interest expense including amortization of related deferred financing costs and discount was $21.1 million, $23.5 million, and $10.6 million, respectively.

At December 31, 2024 and 2023, the assets of the consolidated Trusts totaled $8.9 million and $14.8 million, respectively. The liabilities of the consolidated Trusts totaled $189.2 million and $296.2 million, respectively.
NSBF Capital One Facility

Prior to October 2023, NSBF maintained a $150 million Capital One facility to finance the origination of the unguaranteed and guaranteed portions of SBA 7(a) loans NSBF originated. The portion of the facility collateralized by the government guaranteed portion of SBA 7(a) loans was Prime minus 0.75% and the interest rate on the portion of the facility collateralized by the non-guaranteed portion of SBA 7(a) loans was Prime plus 0.25%. The facility provided for a 55% advance rate on the non-guaranteed portions of the SBA 7(a) loans NSBF originates and a 90% advance rate on the guaranteed portions of SBA 7(a) loans NSBF originated. The NSBF Capital One facility was paid off and terminated in October of 2023.

No interest expense was incurred during the year ended December 31, 2024. For the years ended December 31, 2023 and 2022, interest expense including amortization of related deferred financing costs was $11.0 million and $4.0 million, respectively.

Note Payable - Related Parties

In June 2015, the Company entered into the Related Party RLOC. Maximum borrowings under the Related Party RLOC were $38.0 million.

In June 2017, the Related Party RLOC was amended to increase maximum borrowings to $50.0 million. The outstanding balance had an interest rate equal to 1 month LIBOR (with a floor of 0.50%) plus 6.0% or a rate equal to the greater of the Prime Rate or 3.5% plus 5.0%. In November 2018, the Related Party RLOC was amended to reduce the interest rate to the lesser of 1 month LIBOR plus 2.5% or the Prime Rate plus 1.5%.
For the years ended December 31, 2024 and 2023, interest expense was eliminated in the consolidated financial statements on related party notes payable. Interest expense for the year ended December 31, 2022 was $0.5 million.
Total expected principal repayments on the Company’s borrowings for the next five fiscal years and thereafter are as follows:
Year Ending December 31,
Borrowings
2025$86,344 
2026123,075 
2027132,980 
202840,000 
2029146,875 
Thereafter189,231 
$718,505