| SEGMENTS |
NOTE 18—SEGMENTS:
The Company's management reporting process measures the performance of its operating segments based on internal operating structure, which is subject to change from time to time. The Company's segment reporting process begins with the assignment of all loans directly to the segments where these products are originated and/or serviced. All deposit accounts are allocated to the Banking segment as our wholly owned FDIC insured depository is included within the Banking segment. Equity capital is assigned to each segment based on the risk profile of their assets and liabilities. With the exception of goodwill, which is assigned a 100% weighting, equity capital allocations ranged from 0% to 25% during the year. Any excess or deficient equity not allocated to segments based on risk is assigned to Corporate & Other.
Net interest income, provision for credit losses, and noninterest expense amounts are recorded in their respective segments to the extent the amounts are directly attributable to those segments. The net income amount for each reportable segment is further derived by the use of expense allocations. Certain expenses not directly attributable to a specific segment are allocated across all segments based on key metrics, such as number of employees. These types of expenses include information technology, operations, human resources, finance, risk management, credit administration, legal, and marketing.
The assignment and allocation methodologies used in the segment reporting process discussed above change from time to time as systems are enhanced, methods for evaluating segment performance or product lines change or as business segments are realigned.
The Company operates four reportable segments for management reporting purposes with their operating and financial results reviewed by the chief operating decision maker, which is the Chief Executive Officer of the Company. The CODM assesses overall segment performance based on pre-tax income and uses this metric to allocate resources for each segment, focusing on budgeting and forecasting. The Company has four segments, as discussed below:
Banking
Newtek Bank originates, services and sells SBA 7(a) loans in a similar manner to NSBF’s historic business model (see NSBF below) and originates and services SBA 504 loans, C&I loans, CRE loans and ABL loans. Beginning in the first quarter of 2026, Newtek Bank began originating C&I LA Loans. In addition, Newtek Bank offers depository services.
Alternative Lending
Alternative Lending includes NALH (Newtek ALP Holdings) and its subsidiaries. The Company originated loans under its Alternative Lending Program (ALP) from 2019 to December 2025. Prior to July 1, 2024, the Company originated ALP loans with the intent to sell to a JV, and from 2024 until December 2025, NALH originated ALP loans HFS with the intent to securitize its ALP loan portfolio, e.g., the NALP Business Loan Trust 2025-1 securitization transaction that closed in April 2025 and the NALP Business Loan Trust 2026-1 securitization transaction that closed in January 2026. Beginning in January 2026, all ALP (C&I LA) loan originations have been moved to the Bank; no new loan originations are anticipated in this segment,
NSBF
NSBF relates to NSBF’s legacy portfolio of SBA 7(a) loans held outside Newtek Bank; no new loan origination activity takes place. A material portion of NSBF’s legacy portfolio of SBA 7(a) loans reside in three securitization trusts. Payments
Payments includes NMS, POS and Mobil Money. NMS markets credit and debit card processing services, check approval services, processing equipment, and software and:
–Assist merchants with initial installation of equipment and on-going service, as well as any other special processing needs that they may have. –Handles payment processing for Mobil Money’s merchant portfolio of taxi cabs and related licensed payment processing software. –POS is a provider of a cloud based Point of Sale (POS) system for a variety of restaurant, retail, assisted living, parks and golf course businesses, which provides not only payments and purchase technology solutions, but also inventory, customer management, reporting, employee time clock, table and menu layouts, and ecommerce solutions as the central operating system for an SMB. Corporate and Other
The information provided under the caption “Corporate and Other” represents operations not considered to be reportable segments and/or general operating expenses of the Company, and includes the parent company, other non-bank subsidiaries including NIA and PMT, and elimination adjustments to reconcile the results of the operating segments to the condensed consolidated financial statements prepared in conformity with GAAP. The following tables provide financial information for the Company's segments:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of and for the six months ended June 30, 2026 | | Banking | | Alternative Lending | | NSBF | | Payments | | Corporate & Other | | Consolidated | | Segment | Elim | | Segment | Elim | | Segment | Elim | | Segment | Elim | | Segment | Elim | | | | Interest income | $ | 75,349 | | $ | — | | | $ | 9,796 | | $ | (110) | | | $ | 7,526 | | $ | (227) | | | $ | 3,624 | | $ | (3,624) | | | $ | 444 | | $ | (243) | | | $ | 92,535 | | | Interest expense | 34,475 | | (516) | | | 3,838 | | — | | | 4,053 | | — | | | 4,300 | | — | | | 17,882 | | (3,687) | | | 60,345 | | Net interest income/(loss) | 40,874 | | 516 | | | 5,958 | | (110) | | | 3,473 | | (227) | | | (676) | | (3,624) | | | (17,438) | | 3,444 | | | 32,190 | | | Provision for loan credit losses | 21,722 | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | 21,722 | | | Net interest income after provision for loan credit losses | 19,152 | | 516 | | | 5,958 | | (110) | | | 3,473 | | (227) | | | (676) | | (3,624) | | | (17,438) | | 3,444 | | | 10,468 | | | Noninterest income | 97,548 | | (7,705) | | | 6,222 | | — | | | (6,959) | | — | | | 22,299 | | (725) | | | 19,957 | | (16,789) | | | 113,848 | | | Salaries and employee benefits expense | 33,049 | | (2,540) | | | 391 | | (391) | | | 250 | | (250) | | | 3,852 | | (699) | | | 8,788 | | 3,880 | | | 46,330 | | | Electronic payment processing expense | — | | — | | | — | | — | | | — | | — | | | 9,483 | | (725) | | | 82 | | — | | | 8,840 | | | Professional services expense | 2,110 | | — | | | 191 | | — | | | 533 | | — | | | 198 | | — | | | 2,752 | | — | | | 5,784 | | | Other loan origination and maintenance expense | 7,813 | | — | | | 1,667 | | (1,045) | | | 9,305 | | (6,626) | | | — | | — | | | 45 | | (23) | | | 11,136 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Technology expense | 2,900 | | — | | | 737 | | — | | | 587 | | — | | | 219 | | — | | | 1,431 | | — | | | 5,874 | | | Other general and administrative costs | 6,796 | | (1,838) | | | 131 | | — | | | 2,646 | | — | | | 702 | | (157) | | | 641 | | 1,195 | | | 10,116 | | Income before taxes | 64,032 | | (2,811) | | | 9,063 | | 1,326 | | | (16,807) | | 6,649 | | | 7,169 | | (2,768) | | | (11,220) | | (18,397) | | | 36,236 | | | Income tax expense (benefit) | 16,256 | | (16,256) | | | — | | — | | | — | | — | | | — | | — | | | (8,032) | | 16,256 | | | 8,224 | | Net income | $ | 47,776 | | $ | 13,445 | | | $ | 9,063 | | $ | 1,326 | | | $ | (16,807) | | $ | 6,649 | | | $ | 7,169 | | $ | (2,768) | | | $ | (3,188) | | $ | (34,653) | | | $ | 28,012 | | | | | | | | | | | | | | | | | | | | | Assets | $ | 2,476,045 | | $ | (11,358) | | | $ | 372,916 | | $ | (22,952) | | | $ | 347,955 | | $ | (46,595) | | | $ | 125,063 | | $ | (99,412) | | | $ | 643,060 | | $ | (599,841) | | | $ | 3,184,881 | | Goodwill & intangible assets | $ | 713 | | $ | — | | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | 13,813 | | $ | — | | | $ | — | | $ | — | | | $ | 14,526 | | Amortization of intangible assets | $ | 71 | | $ | — | | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | 71 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of and for the six months ended June 30, 2025 | | Banking | | Alternative Lending | | NSBF | | Payments | | Corporate & Other | | Consolidated | | Segment | Elim | | Segment | Elim | | Segment | Elim | | Segment | Elim | | Segment | Elim | | | | Interest income | $ | 47,091 | | $ | (4) | | | $ | 14,037 | | $ | (33) | | | $ | 13,350 | | $ | (256) | | | $ | 1,135 | | $ | (1,108) | | | $ | 714 | | $ | (518) | | | $ | 74,408 | | | Interest expense | 19,789 | | (399) | | | 4,031 | | — | | | 6,547 | | — | | | 1,282 | | (33) | | | 16,822 | | (1,487) | | | 46,552 | | Net interest income/(loss) | 27,302 | | 395 | | | 10,006 | | (33) | | | 6,803 | | (256) | | | (147) | | (1,075) | | | (16,108) | | 969 | | | 27,856 | | | Provision for loan credit losses | 22,622 | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | 22,622 | | | Net interest income after provision for loan credit losses | 4,680 | | 395 | | | 10,006 | | (33) | | | 6,803 | | (256) | | | (147) | | (1,075) | | | (16,108) | | 969 | | | 5,234 | | | Noninterest income | 70,491 | | (14,310) | | | 33,458 | | — | | | (5,283) | | — | | | 24,028 | | (1,274) | | | 46,442 | | (44,879) | | | 108,673 | | | Salaries and employee benefits expense | 29,199 | | (2,311) | | | 656 | | (656) | | | 242 | | 231 | | | 4,501 | | (717) | | | 9,854 | | 3,452 | | | 44,451 | | | Electronic payment processing expense | — | | — | | | — | | — | | | — | | — | | | 9,566 | | (775) | | | 84 | | — | | | 8,875 | | | Professional services expense | 2,567 | | — | | | 166 | | — | | | 967 | | — | | | 182 | | — | | | 3,857 | | — | | | 7,739 | | | Other loan origination and maintenance expense | 12,104 | | (7,459) | | | 2,954 | | (2,181) | | | 6,725 | | (4,620) | | | — | | — | | | 225 | | (44) | | | 7,704 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Technology expense | 2,524 | | — | | | 1,414 | | — | | | 501 | | — | | | 407 | | — | | | 878 | | — | | | 5,724 | | | Other general and administrative costs | 4,840 | | (197) | | | 147 | | (43) | | | 1,813 | | (3) | | | 884 | | (182) | | | 2,057 | | (323) | | | 8,993 | | Income before taxes | 23,937 | | (3,948) | | | 38,127 | | 2,847 | | | (8,728) | | 4,136 | | | 8,341 | | (675) | | | 13,379 | | (46,995) | | | 30,421 | | | Income tax expense (benefit) | 5,645 | | (5,645) | | | — | | — | | | — | | — | | | (3) | | — | | | 1,709 | | 5,645 | | | 7,351 | | Net income | $ | 18,292 | | $ | 1,697 | | | $ | 38,127 | | $ | 2,847 | | | $ | (8,728) | | $ | 4,136 | | | $ | 8,344 | | $ | (675) | | | $ | 11,670 | | $ | (52,640) | | | $ | 23,070 | | | | | | | | | | | | | | | | | | | Other Segment Disclosures: | | Assets | $ | 1,372,995 | | $ | (38,485) | | | $ | 413,702 | | $ | (69,549) | | | $ | 438,939 | | $ | (61,517) | | | $ | 72,685 | | $ | (45,364) | | | $ | 654,543 | | $ | (611,732) | | | $ | 2,126,217 | | Goodwill & intangible assets | $ | 858 | | $ | — | | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | 13,814 | | $ | — | | | $ | — | | $ | — | | | $ | 14,672 | | Amortization of intangible assets | $ | 86 | | $ | — | | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | 86 | |
The following tables provide financial information for the Company's segments:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of and for the three months ended June 30, 2026 | | Banking | | Alternative Lending | | NSBF | | Payments | | Corporate & Other | | Consolidated | | Segment | Elim | | Segment | Elim | | Segment | Elim | | Segment | Elim | | Segment | Elim | | | | Interest income | $ | 41,803 | | $ | 2 | | | $ | 1,230 | | $ | (68) | | | $ | 3,326 | | $ | (105) | | | $ | 1,822 | | $ | (1,822) | | | $ | 221 | | $ | (115) | | | $ | 46,294 | | | Interest expense | 18,897 | | (255) | | | 1,689 | | — | | | 1,928 | | — | | | 2,153 | | — | | | 8,772 | | (1,854) | | | 31,330 | | Net interest income/(loss) | 22,906 | | 257 | | | (459) | | (68) | | | 1,398 | | (105) | | | (331) | | (1,822) | | | (8,551) | | 1,739 | | | 14,964 | | | Provision for loan credit losses | 12,114 | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | 12,114 | | | Net interest income after provision for loan credit losses | 10,792 | | 257 | | | (459) | | (68) | | | 1,398 | | (105) | | | (331) | | (1,822) | | | (8,551) | | 1,739 | | | 2,850 | | | Noninterest income | 53,255 | | (5,189) | | | 2,319 | | — | | | (3,374) | | — | | | 11,417 | | (383) | | | 12,931 | | (10,859) | | | 60,117 | | | Salaries and employee benefits expense | 17,804 | | (1,436) | | | 84 | | (82) | | | 125 | | (125) | | | 1,985 | | (343) | | | 3,237 | | 1,985 | | | 23,234 | | | Electronic payment processing expense | — | | — | | | — | | — | | | — | | — | | | 5,034 | | (384) | | | 69 | | — | | | 4,719 | | | Professional services expense | 1,374 | | — | | | 77 | | — | | | 227 | | — | | | 96 | | — | | | 1,407 | | — | | | 3,181 | | | Other loan origination and maintenance expense | 3,632 | | — | | | 786 | | (524) | | | 5,661 | | (4,658) | | | — | | — | | | 16 | | (4) | | | 4,909 | | Technology expense | 1,479 | | — | | | 258 | | — | | | 310 | | — | | | 121 | | — | | | 753 | | — | | | 2,921 | | | Other general and administrative costs | 3,461 | | (910) | | | 53 | | — | | | 1,039 | | — | | | 319 | | (85) | | | 396 | | 580 | | | 4,853 | | Income before taxes | 36,297 | | (2,586) | | | 602 | | 538 | | | (9,338) | | 4,678 | | | 3,531 | | (1,393) | | | (1,498) | | (11,681) | | | 19,150 | | | Income tax expense (benefit) | 8,722 | | (8,722) | | | — | | — | | | — | | — | | | — | | — | | | (4,183) | | 8,722 | | | 4,539 | | Net income | $ | 27,575 | | $ | 6,136 | | | $ | 602 | | $ | 538 | | | $ | (9,338) | | $ | 4,678 | | | $ | 3,531 | | $ | (1,393) | | | $ | 2,685 | | $ | (20,403) | | | $ | 14,611 | | | | | | | | | | | | | | | | | | | | | Assets | $ | 2,476,045 | | $ | (11,358) | | | $ | 372,916 | | $ | (22,952) | | | $ | 347,955 | | $ | (46,595) | | | $ | 125,063 | | $ | (99,412) | | | $ | 643,060 | | $ | (599,841) | | | $ | 3,184,881 | | Goodwill & intangible assets | $ | 713 | | $ | — | | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | 13,813 | | $ | — | | | $ | — | | $ | — | | | $ | 14,526 | | Amortization of intangible assets | $ | 35 | | $ | — | | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | 35 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of and for the three months ended June 30, 2025 | | Banking | | Alternative Lending | | NSBF | | Payments | | Corporate & Other | | Consolidated | | Segment | Elim | | Segment | Elim | | Segment | Elim | | Segment | Elim | | Segment | Elim | | | | Interest income | $ | 24,213 | | $ | (2) | | | $ | 5,960 | | $ | (23) | | | $ | 6,390 | | $ | (134) | | | $ | 569 | | $ | (555) | | | $ | 203 | | $ | (103) | | | $ | 36,518 | | | Interest expense | 9,651 | | (211) | | | 1,610 | | — | | | 3,181 | | — | | | 653 | | (16) | | | 8,316 | | (589) | | | 22,595 | | Net interest income/(loss) | 14,562 | | 209 | | | 4,350 | | (23) | | | 3,209 | | (134) | | | (84) | | (539) | | | (8,113) | | 486 | | | 13,923 | | | Provision for loan credit losses | 9,117 | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | 9,117 | | | Net interest income after provision for loan credit losses | 5,445 | | 209 | | | 4,350 | | (23) | | | 3,209 | | (134) | | | (84) | | (539) | | | (8,113) | | 486 | | | 4,806 | | | Noninterest income | 37,685 | | (6,999) | | | 13,147 | | — | | | (2,035) | | — | | | 12,616 | | (671) | | | 23,497 | | (20,965) | | | 56,275 | | | Salaries and employee benefits expense | 16,350 | | (1,525) | | | 250 | | (250) | | | 155 | | 61 | | | 2,755 | | (717) | | | 3,626 | | 2,430 | | | 23,135 | | | Electronic payment processing expense | — | | — | | | — | | — | | | — | | — | | | 4,765 | | (421) | | | 84 | | — | | | 4,428 | | | Professional services expense | 1,824 | | — | | | 99 | | — | | | 365 | | — | | | 144 | | — | | | 1,872 | | — | | | 4,304 | | | Other loan origination and maintenance expense | 5,520 | | (3,671) | | | 1,321 | | (1,045) | | | 3,468 | | (2,261) | | | — | | — | | | (23) | | (22) | | | 3,287 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Technology expense | 1,330 | | — | | | 776 | | — | | | 218 | | — | | | 228 | | — | | | 444 | | — | | | 2,996 | | | Other general and administrative costs | 2,290 | | (107) | | | 53 | | — | | | 742 | | (1) | | | 474 | | (90) | | | 967 | | (169) | | | 4,159 | | Income before taxes | 15,816 | | (1,487) | | | 14,998 | | 1,272 | | | (3,774) | | 2,067 | | | 4,166 | | 18 | | | 8,414 | | (22,718) | | | 18,772 | | | Income tax expense (benefit) | 3,551 | | — | | | — | | — | | | — | | — | | | — | | — | | | 1,518 | | — | | | 5,069 | | Net income | $ | 12,265 | | $ | (1,487) | | | $ | 14,998 | | $ | 1,272 | | | $ | (3,774) | | $ | 2,067 | | | $ | 4,166 | | $ | 18 | | | $ | 6,896 | | $ | (22,718) | | | $ | 13,703 | | | | | | | | | | | | | | | | | | | Other Segment Disclosures: | | Assets | $ | 1,372,995 | | $ | (38,485) | | | $ | 413,702 | | $ | (69,549) | | | $ | 438,939 | | $ | (61,517) | | | $ | 72,685 | | $ | (45,364) | | | $ | 654,543 | | $ | (611,732) | | | $ | 2,126,217 | | Goodwill & intangible assets | $ | 858 | | $ | — | | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | 13,814 | | $ | — | | | $ | — | | $ | — | | | $ | 14,672 | | Amortization of intangible assets | $ | 43 | | $ | — | | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | 43 | |
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