NewtekOne, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES. (a) Evaluation of Disclosure Controls and Procedures: Our management, under the supervision and with the participation of the Chief Executive Officer (who is our principal executive officer) and Chief Financial Officer (who is our principal financial officer), evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of December 31, 2024. The term "disclosure controls and procedures" means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2024, our disclosure controls and procedures were effective. (b) Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process designed by, or under the supervision of, a company’s principal executive and principal financial officers, or persons performing similar functions, and effected by a company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. It includes those policies and procedures that: 1. pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of a company; 2. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of a company are being made only in accordance with authorizations of management and directors of the company; and 3. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company's assets that could have a material effect on the financial statements. Our management conducted an assessment, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, under the oversight of our Board of Directors, of the effectiveness of our internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, our management concluded that our internal control over financial reporting (“ICFR”) was effective at December 31, 2024. Remediation of Previously Reported Material Weaknesses As disclosed in Part II - Item 9A. of the Company's Annual Report on Form 10-K for the year ended December 31, 2023, management identified material weaknesses in ICFR related to Significant Unusual Transactions, SOX Governance, Knowledge, Skills, and Experience of Staff, Information Technology General Controls, Management Review Controls, Completeness and Accuracy of Information Produced by the Entity, NTS System Conversion, and NTS Revenue Cycle. Throughout the year ended December 31, 2024, our management executed upon its previously disclosed remediation plan, which was executed with elevated supervision and oversight of the Audit Committee. • Significant Unusual Transactions – this material weakness relates to the acquisition of National Bank of New York City and the resulting conversion to a financial holding company. This material weakness was remediated as controls were designed and implemented where the Chief Accounting Officer reviews with the identification, accounting, and disclosure of Significant Unusual Transactions; more specifically these controls addressed the accounting for goodwill and intangibles, net deferred tax assets, income taxes receivable, income tax expense, additional paid in capital, non-interest income and expense, and EPS. 99 Table of Contents • SOX Governance Program – this material weakness relates to the compliance and heightened standards required of an SEC registrant under SOX 404. This material weakness was remediated as management established a SOX Governance Program including policies and procedures, along with a management level SOX Steering Committee. • Knowledge, Skills, and Experience of staff – this material weakness relates to the experience of company staff being comprised of individuals without the requisite public company and ICFR experience. This Material Weakness was remediated as management engaged an external consulting firm to test the design and operating effectiveness of ICFR and key hires were made throughout the control environment including six Certified Public Accountants with ICFR experience. • Information Technology General Controls / NTS System Conversion – this material weakness relates to deficiencies identified in all aspects of ITGC including logical access and change management. These Material Weaknesses were remediated as management updated and enhanced the IT policies and relevant internal controls to consider and address ITGCs including access security and change management; limited elevated access profiles in financially relevant IT systems and software to appropriate personnel; developed and enhanced access administration controls over provisioning, deprovisioning, and user access reviews; and enhanced the design of controls over change management and IT operations controls. • Management Review Controls – this material weakness relates to deficiencies in the design and operating effectiveness of management review controls including documentation and level of precision. This material weakness was remediated by redesigning the existing ICFR to enhance management’s documentation supporting all elements of management’s review and the precision in which the controls are designed to operate and provided training to control owners and relevant personnel to understand the components of a management review control and documentation expectations. • Completeness and Accuracy of Information Produced by the Entity (“IPE”) – this material weakness specifically relates to control gaps identified related to the completeness and accuracy of system reports utilized in the execution of key controls. This material weakness was remediated by redesigning existing ICFR to enhance management’s control steps to ascertain the completeness and accuracy of IPE when utilized in the execution of a key control. Further, training was provided to control owners and relevant personnel to understand the concept of IPE and documentation requirements for the completeness and accuracy of system reports. • NTS Revenue Cycle – this material weakness relates to controls over revenue recognition. This material weakness was remediated by redesigning the existing ICFR related to the existence and accuracy of material revenue streams generated from NTS, as well as revenue recognition in accordance with ASC 606. More specifically, these controls covered other assets, retained earnings, technology services expense, and technology and IT support income. Based upon testing of the design and operating effectiveness of the re-designed control environment during the year ended December 31, 2024, management found them to be designed and operating effectively. As a result, management has concluded that the material weaknesses in ICFR have been remediated as of December 31, 2024. Changes in Internal Control Over Financial Reporting Other than the remediation of the material weaknesses described above, there were no changes in our ICFR (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, our ICFR. Limitations on Effectiveness of Controls and Procedures Because of its inherent limitations, management does not expect that our disclosure controls and procedures or our ICFR will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. (c) Audit Report of the Registered Public Accounting Firm. The Company’s independent registered public accounting firm, RSM US LLP, has issued an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024, as stated in its report, which appears below under the heading “Report of Independent Registered Public Accounting Firm.” 100 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of NewtekOne Inc. Opinion on the Internal Control Over Financial Reporting We have audited NewtekOne Inc. and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial condition of the Company as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes to the consolidated financial statements and our report dated March 17, 2025, expressed an unqualified opinion. Basis for Opinion The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ RSM US LLP Hartford, Connecticut March 17, 2025 101 Table of Contents ITEM 9B. OTHER INFORMATION. None . ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not Applicable. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. The information required by Item 10 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2025 Annual Meeting of Shareholders, to be filed with the Securities and Exchange Commission not later than 120 days following the end of our fiscal year. We have adopted an insider trading policy governing the purchase, sale and/or other disposition of our securities by our directors, officers and employees and other covered persons, as well as the Company itself, that we believe is reasonably designed to promote compliance with insider trading laws, rules and regulations and Nasdaq listing standards, as applicable. A copy of our insider trading policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K. ITEM 11. EXECUTIVE COMPENSATION The information required by Item 11 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2025 Annual Meeting of Shareholders, to be filed with the Securities and Exchange Commission not later than 120 days following the end of our fiscal year. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by Item 12 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2025 Annual Meeting of Shareholders, to be filed with the Securities and Exchange Commission not later than 120 days following the end of our fiscal year. ITEM 13. CERTAIN RELATIONSHIPS, RELATED PARTY TRANSACTIONS AND DIRECTOR INDEPENDENCE The information required by Item 13 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2025 Annual Meeting of Shareholders, to be filed with the Securities and Exchange Commission not later than 120 days following the end of our fiscal year. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information required by Item 14 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2025 Annual Meeting of Shareholders, to be filed with the Securities and Exchange Commission not later than 120 days following the end of our fiscal year. PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a)(1) Financial Statements. 102 Table of Contents (a)(2) No financial statement schedules are filed herewith because (1) such schedules are not required or (2) the information has been presented in the aforementioned financial statements. (a)(3) Exhibits. The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the Securities and Exchange Commission. Number Description 3.1 Amended and Restated Articles of Incorporation of Newtek Business Services Corp. (Previously filed in connection with Pre-Effective Amendment No. 3 to the Registrant’s Registration Statement on Form N-2 (File No. 333-191499) filed on November 3, 2014, and incorporated by reference herein). 3.2 Amended Bylaws of NewtekOne, Inc. ( Incorporated by reference to Exhibit 99.1 of NewtekOne, Inc.''s Current Report on Form 8-K, filed January 24, 2023 ). 3.3 Newtek Conventional Lending II, LLC Limited Liability Company Agreement (Incorporated by reference to Exhibit 3.3 to Newtek’s Form 10-Q for the quarter ended March 31, 2021 (File No. 814-01035), filed May 13, 2021. 4.1 Form of Common Stock Certificate (Incorporated by reference to Exhibit 99.5 to Registrant’s Registration Statement on Form N-14 (File No. 333-195998), filed September 24, 2014). 4.2 Description of Securities filed herewith. 4.3 Base Indenture, dated as of September 23, 2015, between Newtek, as issuer, and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit d.2 to Newtek’s Post-Effective Amendment No. 1 to its Registration Statement on Form N-2, No. 333-204915, filed September 23, 2015). 4.4 Fourth Supplemental Indenture, dated as of July 29, 2019, between Newtek, as issuer, and U.S. Bank, National Association, as trustee (Incorporated by reference to Exhibit d.8 to Newtek’s Post-Effective Amendment No. 7 to its Registration Statement on Form N-2, No. 333-224976, filed July 29, 2019). 4.5 Form of Global Note with respect to the 5.75% Notes due 2024 (Incorporated by reference to Exhibit d. 9 to Newtek’s Post-Effective Amendment No. 7 to its Registration Statement on Form N-2, No. 333-224976, filed July 29, 2019). 4.6 Fifth Supplemental Indenture, dated as of November 27, 2020, relating to the 6.85% Notes due 2025, by and between the Company and U.S. Bank, National Association, as trustee (Incorporated by reference to Exhibit 4.2 to Newtek’s Current Report on Form 8-K, filed November 27, 2020). 4.7 Sixth Supplemental Indenture, dated as of January 6, 2021, relating to the 6.85% Notes due 2025, by and between the Company and U.S. Bank, National Association, as trustee (Incorporated by reference to Exhibit 4.3 to Newtek’s Current Report on Form 8-K filed January 6, 2021). 4.8 Seventh Supplemental Indenture dated of January 22, 2021 between Newtek Business Services Corp. and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit 4.1 to Newtek’s Current Report on Form 8-K filed January 22, 2021). 4.9 Form of 5.50 % Notes due 2026 (Incorporated by reference to Exhibit 4.2 to Newtek’s Current Report on Form 8-K filed January 22, 2021). 4.10 Eighth Supplement Indenture dated of February 16, 2021 between Newtek Business Services Corp. and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit 4.3 to Newtek’s Current Report on Form 8-K filed February 16, 2021). 4.11 Form of 5.75 % Notes due 2024 (Incorporated by reference to Exhibit 4.4 to Newtek’s Current Report on Form 8-K filed February 16, 2021). 4.12 Tenth Supplemental Indenture, dated as of March 31, 2022 relating to the 5.00% Notes due 2025, by and between the Company and U.S. Bank, National Association, as trustee (incorporated by reference to Exhibit 4.2 to Newtek’s Current Report on Form 8-K, filed March 31, 2022). 10.1 Form of Dividend Reinvestment Plan (Previously filed in connection with Pre-Effective Amendment No. 3 to the Registrant’s Registration Statement on Form N-2 (File No. 333-191499) filed on November 3, 2014, and incorporated by reference herein). 10. 2 Stock Purchase Agreement by and among Newtek Business Services Corp. and the Sellers named in Schedule A thereto (incorporated by reference to the Company’s Current Report on Form 8-K, filed August 2, 2021). 10. 3 Mortgage Warehouse Loan and Security Agreement, by and between NBL SPV III, LLC and One Florida Bank, dated September 21, 2021 (incorporated by reference to Exhibit 10.1 to Newtek’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 (File No. 814-010305), filed November 12, 2021). 103 Table of Contents 10 .4 Master Repurchase Agreement, by and between NBL SPV II, LLC and Deutsche Bank AG, dated March 18, 2021 (incorporated by reference to Exhibit 10.1 to Newtek’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 (File No. 814-010305), filed November 12, 2021). 10. 5 Newtek Business Services Corp. 2015 Stock Incentive Plan (incorporated by reference to Exhibit 4.4 to Newtek’s Registration Statement on Form S-8 (File No. 333-212679), filed July 26, 2016). 10. 6 Form of Restricted Stock Award Agreement - 2015 Stock Incentive Plan (incorporated by reference to Exhibit 10.19 to Newtek ’ s Annual Report on Form 10-K for the year ended December 31, 2023 (File No. 001-36742) , filed April 1, 2024) . 10. 7 NewtekOne 2023 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to Newtek’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (File No. 001-36742), filed August 7, 2023). 10. 8 Form of Restricted Stock Award Agreement - 2023 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to Newtek’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 (File No. 001-36742), filed November 9, 2023). 10. 9 NewtekOne 2023 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.2 to Newtek’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (File No. 001-36742), filed August 7, 2023). 10. 10 Employment Agreement by and between NewtekOne, Inc., Newtek Bank N.A., and M. Scott Price dated as of May 16, 2023 (incorporated by reference to Exhibit 10.1 to Newtek’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 (File No. 001-36742), filed November 9, 2023). 10. 11 Amendment to Employment Agreement by and between NewtekOne, Inc., Newtek Bank N.A., and M. Scott Price dated as of July 1, 2023 (incorporated by reference to Exhibit 10.2 to Newtek’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 (File No. 001-36742), filed November 9, 2023). 10. 12 Form of Change in Control Agreement (incorporated by reference to Exhibit 10.25 to Newtek’s Annual Report on Form 1 0 -K for the year ended December 31, 2023 (File No. 001- 36742) , filed April 1, 2024) . 1 0.13 Amendment to Employment Agreement by and between NewtekOne, Inc. and Barry Slo ane dated as of January 1 , 202 5 (incorporated by reference to Item 5.02 to Newtek’s Current Report on Form 8-K (File No. 001-36742), filed J anuary 3, 2025) . 14.1 Code of Ethics (Previously filed in connection with Pre-Effective Amendment No. 3 to the Registrant’s Registration Statement on Form N-2 (File No. 333-191499) filed on November 3, 2014, and incorporated by reference herein). 19.1 NewtekOne, Inc. Statement of Policy on Insider Trading 21.1 Subsidiaries of the Registrant filed herewith. 23.1 Consent of Independent Registered Public Accounting Firm. 31.1 Certification by Principal Executive Officer required by Rule 13a-14 under the Securities Exchange Act of 1934, as amended, furnished herewith. 31.2 Certification by Principal Financial Officer required by Rule 13a-14 under the Securities Exchange Act of 1934, as amended, furnished herewith. 31.3 Certification by Principal Accounting Officer required by Rule 13a-14 under the Securities Exchange Act of 1934, as amended, furnished herewith. 32.1 Certification by Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herewith. 32.2 Certification by Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herewith. 32.3 Certification by Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herewith. 97.1 NewtekOne Clawback Polic y (incorporated by reference to Exhibit 97.1 to Newtek’s Annual Report on Form 10-K for the year ended December 31, 2023 (File No. 001-36742), filed April 1, 2024). 104 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NEWTEKONE, INC. Date: March 17, 2025 By: / S / B ARRY S LOANE Barry Sloane Chief Executive Officer, President and Chairman of the Board (Principal Executive Officer) Date: March 17, 2025 By: / S / M. S COTT P RICE M. Scott Price Chief Financial Officer (Principal Financial Officer) Date: March 17, 2025 By: / S / F RANK D E M ARIA Frank DeMaria Chief Accounting Officer (Principal Accounting Officer) In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date / S / B ARRY S LOANE Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) March 17, 2025 Barry Sloane / S / M. S COTT P RICE Chief Financial Officer (Principal Financial Officer) March 17, 2025 M. Scott Price / S / F RANK D E M ARIA Chief Accounting Officer (Principal Accounting Officer) March 17, 2025 Frank DeMaria /S/ RICHARD SALUTE Director March 17, 2025 Richard Salute /S/ SALVATORE MULIA Director March 17, 2025 Salvatore Mulia /S/ GREGORY ZINK Director March 17, 2025 Gregory Zink /S/ CRAIG BRUNET Director March 17, 2025 Craig Brunet /S/ PETER DOWNS Director March 17, 2025 Peter Downs /S/ FERNANDO PEREZ-HICKMAN Director March 17, 2025 Fernando Perez-Hickman /S/ HALLI RAZON-FEINGOLD Director March 17, 2025 Halli Razon-Feingold 105 Table of Contents NEWTEKONE, INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents PAGE NO. Report of Independent Registered Public Accounting Firm (PCAOB ID : 49 ) F- 2 Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting F- 101 Consolidated Statements of Financial Condition as of December 31, 202 4 and 202 3 F- 5 Consolidated Statements of Income for the years ended December 31, 202 4 , 202 3 and 202 2 F- 6 Consolidated Statements of Comprehensive Income for the years ended December 31, 2 02 4 , 202 3 and 202 2 F- 7 Consolidated Statements of Changes in Changes in Shareholders’ Equity for the years ended December 31, 202 4 , 202 3 and 202 2 F- 8 Consolidated Statements of Cash Flows for the years ended December 31, 202 4 , 202 3 and 202 2 F- 11 Notes to Consolidated Financial Statements F- 14 F-1 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of NewtekOne Inc. Opinion on the Financial Statements We have audited the accompanying consolidated statements of financial condition of NewtekOne Inc. and its subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 17, 2025, expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Valuation of loans held for sale and loans held for investment, measured at fair value — Accrual and Non-accrual loans As described in Notes 2, 5, and 10 to the consolidated financial statements, the Company has loans held for sale and loans held for investment, which are measured at fair value using unobservable inputs and assumptions, and as such the Company’s loans held for sale and loans held for investment, which are measured at fair value as of December 31, 2024 are classified as level 3 within the fair value hierarchy as described in Note 10. Determining the fair value of the Level 3 loans held for sale and loans held for investment, which are measured at fair value requires management to make significant judgments about the valuation methodologies and inputs and assumptions used in the fair value calculation, including, but not limited to, historical credit losses, discounts for lack of marketability, underlying cash flows, and the impact of economic conditions. As of December 31, 2024, total Level 3 loans held for sale and loans held for investment, which are measured at fair value had a fair value of $372.3 and $369.7 million, respectively. We identified the valuation of level 3 loans held for sale and loans held for investment, which are measured at fair value as a critical audit matter because of the judgments necessary for management to select and apply valuation techniques and assumptions, the high degree of auditor judgment involved, and the extensive audit effort involved in testing the valuations. Our audit procedures related to the valuation of the Company’s level 3 loans held for sale and loans held for investment, which are measured at fair value included the following, among others: • We obtained an understanding of and evaluated the methods and assumptions management uses to value the loans held for sale and loans held for investment, which are measured at fair value - accrual and non-accrual loans. • We tested the completeness and accuracy of information used in the valuations by agreeing the total amount of schedules to the trial balance. F-2 Table of Contents • With the assistance of our valuation specialists, we evaluated the reasonableness of the methods and assumptions used by management in the valuation of accrual loans (discount rate, default rate, prepayment rate, cost of servicing, etc.) and performed a recalculation for a sample of loans to ensure validity of the valuation model. • With the assistance of our valuation specialists, we evaluated the reasonableness of the methods and assumptions used by management in the valuation of non-accrual loans (prepayment rate, probability of default, time to liquidate and discount rate). • We tested management’s estimates to evaluate the reasonableness of the fair market value of collateral used by management in the valuation of non-accrual loans for a sample of loans, by validating the source of information used by management with the relevant internal or external information from which it was derived. Additionally, we recalculated the present value of expected cashflows and compared it with the value of loans determined by management. Valuation of servicing assets, at fair value As described in Notes 2, 7 and 10 to the consolidated financial statements, servicing assets for loans originated by the Company’s nonbank subsidiaries are measured at fair value at each reporting date and the Company reports changes in the fair value of servicing assets in earnings in the period in which the changes occur. The Company’s servicing assets, at fair value are measured at fair value using unobservable inputs and assumptions. As such the Company’s servicing assets for the nonbank subsidiaries as of December 31, 2024, is classified as Level 3 within the fair value hierarchy as described in Note 10. Determining the fair value of the Level 3 servicing assets, at fair value requires management to make significant judgments about the valuation methodologies and inputs and assumptions used in the fair value calculation, including, but not limited to, discount rate, servicing costs, default rate, prepayment rate, and the impact of economic conditions. As of December 31, 2024, total Level 3 servicing assets recorded at fair value had a balance of $22.1 million. We identified the valuation of servicing assets, at fair value as a critical audit matter because of the judgments necessary for management to select and apply valuation techniques and assumptions, the high degree of auditor judgment involved, and the extensive audit effort involved in testing the valuations. Our audit procedures related to the valuation of the servicing assets included the following, among others: • We obtained an understanding of and evaluated the methods and assumptions management uses to value the servicing assets, at fair value. • We tested the completeness and accuracy of information used in the valuations by agreeing the total principal balance, interest rate, interest type, and maturity date of the loans sold in the schedules to the loan subledger. • With the assistance of valuation specialists, developed an independent estimate of fair value for servicing assets or tested management’s fair value estimates as of December 31, 2024. • We reviewed the significant assumptions (e.g. discount rate, prepayment rate, default rate and servicing cost) used by externally engaged and internal valuation specialist for reasonableness. Allowance for credit losses on loans As described in Notes 2 and 5 to the consolidated financial statements, the allowance for credit losses on loans is established through a provision for credit losses and represents an amount which, in management’s judgment, will be adequate to absorb losses on existing loans. The Company’s consolidated allowance for credit losses on loan balances was $30.2 million at December 31, 2024. The allowance for credit losses on loans is comprised of reserves measured on a collective (pool) basis based on a lifetime loss-rate model when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated on an individual basis. F-3 Table of Contents The Company uses the discounted cash flow method to estimate expected credit losses for all loan portfolio segments measured on a pool basis wherein payment expectations are adjusted for estimated prepayment speeds, probability of default (PD), and loss given default (LGD). The Company uses regression analysis of historical internal and peer data to determine suitable loss drivers to utilize when modeling lifetime PD. This analysis also determines how expected PD and LGD will react to forecasted levels of the loss drivers. Management utilizes various economic indicators such as changes in unemployment rates, gross domestic product (GDP), and other relevant factors as loss drivers and has determined that, due to historical volatility in economic data, four quarters currently represents a reasonable and supportable forecast period, followed by a four-period reversion to historical mean levels for each of the various economic indicators. The allowance evaluation also considers various qualitative factors, such as: (i) changes to lending policies, underwriting standards and/or management personnel performing such functions, (ii) delinquency and other credit quality trends, (iii) credit risk concentrations, if any, (iv) changes to the nature of the Company’s business impacting the loan portfolio, (v) and other external factors, that may include, but are not limited to, results of internal loan reviews, stress testing, examinations by bank regulatory agencies, or other events such as a natural disaster. The development of the loan loss allocation for pools of loans with similar risk characteristics requires a significant amount of judgment by management and the assumptions utilized are subject to changing economic conditions. We identified the Company’s allowance for credit losses on loans as a critical audit matter, specifically the economic forecasts and qualitative factors, because they involved complex auditor judgment in the evaluation of the Company’s assumptions. Additionally, complex auditor judgment was required to examine the methodology that underpins the allowance for credit losses on pools of loans with similar risk characteristics. This includes modeling of PD, LGD, economic forecasts, and qualitative factors. Our audit procedures related to this critical audit matter included the following, among others: • We tested the completeness and accuracy of data used by management in determining inputs to the PD and LGD by agreeing those inputs to internal or external information sources. • We evaluated management’s judgments used in the identification of peer banks for PD and LGD calculations by comparing peer banks to external information sources. • We evaluated management’s forecasts of future economic indicators for reasonableness, which included unemployment, housing price index, and national GDP growth, among others, by comparing these forecasts to external and internal information sources. • We evaluated management’s judgments and assumptions used in the development of the qualitative factors for reasonableness and tested the reliability of the underlying data on which these factors are based, by comparing information to source documents and external information sources. /s/ RSM US LLP We have served as the Company's auditor since 2013. Hartford, Connecticut March 17, 2025 F-4 Table of Contents NEWTEKONE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In Thousands, except for Per Share Data) December 31, 2024 December 31, 2023 ASSETS Cash and due from banks $ 6,941 $ 15,398 Restricted cash 28,226 30,919 Interest bearing deposits in banks 346,207 137,689 Total cash and cash equivalents 381,374 184,006 Debt securities available-for-sale, at fair value 23,916 32,171 Loans held for sale, at fair value 372,286 118,867 Loans held for sale, at LCM 58,803 56,607 Loans held for investment, at fair value 369,746 469,801 Loans held for investment, at amortized cost, net of deferred fees and costs 621,651 336,305 Allowance for credit losses ( 30,233 ) ( 12,574 ) Loans held for investment, at amortized cost, net 591,418 323,731 Federal Home Loan Bank and Federal Reserve Bank stock 3,585 3,635 Settlement receivable 52,465 62,230 Joint ventures and other non-control investments, at fair value (cost of $ 44,039 and $ 38,660 ), respectively 57,678 41,587 Goodwill and intangibles 14,752 30,120 Right of use assets 5,688 5,701 Deferred tax asset, net — 5,230 Servicing assets, at fair value 22,062 29,336 Servicing assets, at LCM 24,195 10,389 Other assets 60,636 56,102 Assets held for sale 21,308 — Total assets $ 2,059,912 $ 1,429,513 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities: Deposits: Noninterest-bearing $ 11,142 $ 10,053 Interest-bearing 961,910 453,452 Total deposits 973,052 463,505 Borrowings 708,041 644,122 Dividends payable 5,233 4,792 Lease liabilities 6,498 6,952 Deferred tax liabilities, net 2,244 — Due to participants 21,532 23,796 Accounts payable, accrued expenses and other liabilities 40,806 37,300 Liabilities directly associated with assets held for sale 6,224 — Total liabilities 1,763,630 1,180,467 Commitment and contingencies (Note 15) Shareholders' Equity: Preferred stock (par value $ 0.02 per share; authorized 20 shares, 20 shares issued and outstanding) 19,738 19,738 Common stock (par value $ 0.02 per share; authorized 199,980 shares, 26,291 and 24,680 shares issued and outstanding, respectively) 526 492 Additional paid-in capital 218,266 200,913 Retained earnings 57,773 28,051 Accumulated other comprehensive income (loss), net of income taxes ( 21 ) ( 148 ) Total shareholders' equity 296,282 249,046 Total liabilities and shareholders' equity $ 2,059,912 $ 1,429,513 F-5 See accompanying notes to consolidated financial statements. Table of Contents NEWTEKONE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, except for Per Share Data) Year Ended December 31, 2024 Financial Holding Company 2023 Financial Holding Company 2022 Investment Company Interest income Debt securities available-for-sale $ 1,482 $ 1,518 $ — Loans and fees on loans 110,892 84,001 35,696 Interest from affiliates — — 2,921 Other interest earning assets 9,044 8,854 — Total interest income 121,418 94,373 38,617 Interest expense Deposits 28,690 15,849 — Notes and securitizations 45,454 40,217 21,780 Bank and FHLB borrowings 6,969 11,673 3,998 Notes payable related parties — — 547 Total interest expense 81,113 67,739 26,325 Net interest income 40,305 26,634 12,292 Provision for credit losses 26,216 11,704 — Net interest income after provision for credit losses 14,089 14,930 12,292 Noninterest income Dividend income 1,519 1,757 24,657 Net loss on loan servicing assets ( 12,665 ) ( 4,282 ) ( 10,095 ) Servicing income 20,087 18,289 13,698 Net gains on sales of loans 97,183 51,467 56,901 Net gain (loss) on loans under the fair value option 5,200 18,008 ( 26,504 ) Technology and IT support income 19,643 24,916 — Electronic payment processing income 46,049 42,855 — Other noninterest income 40,296 23,762 34,221 Total noninterest income 217,312 176,772 92,878 Noninterest expense Salaries and employee benefits expense 77,931 65,708 20,186 Technology services expense 12,261 14,272 — Electronic payment processing expense 19,878 18,327 — Professional services expense 15,813 13,077 7,134 Other loan origination and maintenance expense 13,770 9,433 30,746 Depreciation and amortization 1,784 2,884 239 Loss on extinguishment of debt — 271 417 Other general and administrative costs 21,272 22,357 7,673 Total noninterest expense 162,709 146,329 66,395 Net income before taxes 68,692 45,373 38,775 Income tax expense (benefit) 17,839 ( 1,956 ) 6,464 Net income 50,853 47,329 32,311 Dividends to preferred shareholders ( 1,600 ) ( 1,454 ) — Net income available to common shareholders $ 49,253 $ 45,875 $ 32,311 Earnings per common share: Basic $ 1.97 $ 1.89 $ 1.34 Diluted $ 1.96 $ 1.88 $ 1.34 F-6 See accompanying notes to consolidated financial statements. Table of Contents NEWTEKONE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands, except for Per Share Data) Year Ended December 31, 2024 Financial Holding Company 2023 Financial Holding Company 2022 Investment Company Net income $ 50,853 $ 47,329 $ 32,311 Other comprehensive gain (loss) before tax: Net unrealized gain (loss) on debt securities available-for-sale during the period 183 ( 201 ) — Other comprehensive gain (loss) before tax 183 ( 201 ) — Income tax (benefit) expense ( 56 ) 53 — Other comprehensive income (loss), net of tax 127 ( 148 ) — Comprehensive income $ 50,980 $ 47,181 $ 32,311 F-7 See accompanying notes to consolidated financial statements. Table of Contents NEWTEKONE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (In Thousands, except for Per Share Data) Common stock Preferred stock Additional paid-in capital Accumulated other comprehensive income (loss) Retained earnings Total equity Shares Amount Shares Amount Balance at December 31, 2023 24,680 $ 492 20 $ 19,738 $ 200,913 $ ( 148 ) $ 28,051 $ 249,046 Stock-based compensation expense, net of forfeitures — — — — 4,040 — — 4,040 Dividends declared related to RSA, net of accrued dividends forfeited 33 — — — 420 — ( 420 ) — Purchase of vested stock for employee payroll tax withholding ( 25 ) — — — ( 299 ) — — ( 299 ) Restricted stock awards, net of forfeitures 513 12 — — — — — 12 Retirement of common shares ( 30 ) ( 1 ) — — ( 401 ) — — ( 402 ) ESPP issuances 20 — — — 227 — — 227 Issuance of common stock, net of offering costs 1,100 23 — — 13,366 — — 13,389 Dividends declared common shares ($ 0.38 /share) — — — — — — ( 19,111 ) ( 19,111 ) Dividends declared preferred shares ($ 80.00 /share) — — — — — — ( 1,600 ) ( 1,600 ) Net income (loss) — — — — — — 50,853 50,853 Other comprehensive income, net of tax — — — — — 127 — 127 Balance at December 31, 2024 26,291 $ 526 20 $ 19,738 $ 218,266 $ ( 21 ) $ 57,773 $ 296,282 F-8 See accompanying notes to consolidated financial statements. Table of Contents NEWTEKONE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (As Restated) (In Thousands, except for Per Share Data) Common stock Preferred stock Additional paid-in-capital Accumulated other comprehensive income (loss) Accumulated undistributed earnings Retained earnings Total equity Shares Amount Shares Amount Balance at December 31, 2022 24,609 $ 492 — $ — $ 354,243 $ — $ 20,623 $ — $ 375,358 Conversion from BDC to Bank Holding Company Adjustments: Change in presentation — — — — 20,623 — ( 20,623 ) — — Removal of fair value adjustments — — — — ( 138,043 ) — — — ( 138,043 ) Consolidation of controlled investments — — — 245 ( 57,961 ) — — ( 143 ) ( 57,859 ) Reassessment of deferred tax assets and liabilities — — — — 19,266 — — — 19,266 DRIP shares issued 16 — — — 216 — — — 216 Stock-based compensation expense, net of forfeitures — — — — 2,828 — — — 2,828 Dividends declared related to RSA, net of accrued dividends forfeited 16 — — — 218 — — ( 218 ) — Purchase of vested stock for employee payroll tax withholding ( 17 ) ( 1 ) — — ( 533 ) — — — ( 534 ) Restricted stock awards, net of forfeitures 52 1 — — — — — — 1 ESPP issuances 4 — — — 56 — — — 56 Issuance of preferred stock — — 20 20,000 — — — — 20,000 Preferred stock issuance costs — — — ( 507 ) — — — — ( 507 ) Dividends declared common shares ($ 0.54 /share) — — — — — — — ( 17,463 ) ( 17,463 ) Dividends declared preferred shares ($ 72.44 /share) — — — — — — — ( 1,454 ) ( 1,454 ) Net income (loss) — — — — — — — 47,329 47,329 Other comprehensive loss, net of tax — — — — — ( 148 ) — — ( 148 ) Balance at December 31, 2023 24,680 $ 492 20 $ 19,738 $ 200,913 $ ( 148 ) $ — $ 28,051 $ 249,046 F-9 See accompanying notes to consolidated financial statements. Table of Contents NEWTEKONE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (In Thousands, except for Per Share Data) Common stock Additional paid-in-capital Accumulated undistributed earnings Total equity Shares Amount Balance at December 31, 2021 24,159 $ 483 $ 367,663 $ 35,741 $ 403,887 DRIP shares issued 95 3 1,611 — 1,614 Stock-based compensation expense — — 2,511 — 2,511 Dividends Declared related to RSA — — 646 ( 646 ) — Purchase of vested stock for employee payroll tax withholding ( 38 ) — ( 826 ) — ( 826 ) Issuance of common stock, net of offering costs 107 2 2,017 — 2,019 Restricted stock awards 286 4 ( 4 ) — — Dividends declared common shares — — — ( 66,158 ) ( 66,158 ) RIC tax reclassification — — ( 19,375 ) 19,375 — Net increase resulting from operations: Net investment income — — — ( 6,476 ) ( 6,476 ) Net realized gain on investments — — — 57,346 57,346 Net unrealized depreciation on investments — — — ( 18,559 ) ( 18,559 ) Balance at December 31, 2022 24,609 $ 492 $ 354,243 $ 20,623 $ 375,358 F-10 See accompanying notes to consolidated financial statements. Table of Contents NEWTEKONE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Year Ended December 31, 2024 2023 2022 Financial Holding Company Financial Holding Company Investment Company Cash flows from operating activities: Net income $ 50,853 $ 47,329 $ 32,311 Adjustments to reconcile net income to net cash used in operating activities: Net appreciation on joint ventures and other non-control investments ( 10,712 ) ( 3,219 ) — Net unrealized appreciation on controlled investments — — ( 24,321 ) Net (gain) loss on loans accounted for under the fair value option ( 5,200 ) ( 18,008 ) 26,504 Loan servicing asset revaluation 12,665 4,282 10,095 Net unrealized (appreciation) depreciation on derivative transactions ( 1,344 ) 699 ( 183 ) Unrealized loss on assets classified as held for sale 616 — — Net gain on sales of loans ( 97,183 ) ( 51,467 ) ( 56,901 ) Net accretion of premium/discount ( 836 ) ( 675 ) — Loss on extinguishment of debt — 271 417 Amortization of deferred financing costs 4,564 4,052 2,494 Provision for credit losses 26,216 11,704 — Lower of cost or market adjustment on loans held for sale ( 73 ) — — Bad debt expense, net of recoveries 1,059 3,637 — Stock compensation expense 4,062 2,828 — Deferred income tax expense (benefit) 10,403 ( 4,800 ) 6,464 Depreciation and amortization 1,784 2,884 239 Proceeds from sale of loans held for sale 817,869 695,461 691,219 Purchase of loans held for sale — — ( 2,404 ) Sale (purchase) of loans held for sale from affiliate 140,009 ( 5,279 ) — Funding of loans held for sale ( 1,125,131 ) ( 783,035 ) ( 775,577 ) Funding of controlled investments — — ( 53,198 ) Funding of non-control/affiliate investment — — ( 360 ) Principal received on loans held for sale 18,898 12,235 74,287 Principal received from controlled investments — — 6,970 Return of investments from controlled investments — — 48,709 Other, net ( 230 ) — 3,257 Changes in operating assets and liabilities: Settlement receivable 9,765 ( 62,230 ) 44,537 Income tax payable 19 ( 4,040 ) — Dividends receivable — 493 — Due to/from related parties ( 91 ) ( 165 ) 2,778 Other assets ( 13,660 ) 7,432 1,816 Assets classified as held for sale ( 1,497 ) — — Liabilities directly associated with assets classified as held for sale ( 174 ) — — Dividends payable 441 4,776 — Due to participants ( 2,264 ) ( 11,832 ) ( 110,598 ) Accounts payable, accrued expenses and other liabilities 6,158 ( 22,552 ) 9,021 Other, net — — 6 F-11 See accompanying notes to consolidated financial statements. Table of Contents NEWTEKONE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Year Ended December 31, 2024 2023 2022 Financial Holding Company Financial Holding Company Investment Company Net cash used in operating activities ( 153,014 ) ( 169,219 ) ( 62,418 ) Cash flows from investing activities: Net decrease in loans held for investment, at fair value 66,817 29,349 — Net increase in loans held for investment, at cost ( 278,539 ) ( 169,003 ) — Contributions to joint ventures and other non-control investments ( 25,680 ) ( 14,550 ) — Return of capital from joint ventures and other non-control investments 20,301 564 — Purchase of fixed assets ( 439 ) ( 458 ) ( 11 ) Net decrease (increase) in Federal Home Loan Bank and Federal Reserve Bank stock 50 ( 2,112 ) — Purchases of available-for-sale securities ( 33,021 ) ( 27,167 ) — Maturities of available-for-sale securities 41,460 — — Acquisitions, net of cash acquired — 11,142 — Net cash used in investing activities ( 209,051 ) ( 172,235 ) ( 11 ) Cash flows from financing activities: Net borrowings (paydowns) on bank notes payable 71,613 ( 78,663 ) 5,885 Net increase in deposits 508,577 324,705 — Repayment of Federal Home Loan Bank advances ( 7,959 ) ( 4,895 ) — Proceeds from common shares sold, net of offering costs 13,818 — 2,019 Proceeds from preferred stock, net of offering costs — 19,493 — Net repayments under related party line of credit — — 12,800 Proceeds from 2025 5.00 % Notes — — 30,000 Proceeds from 2025 8.125 % Notes — 50,000 — Proceeds from 2028 8.00 % Notes — 40,000 — Redemption of 2024 Notes ( 38,250 ) — — Redemption of 2025 6.85 % Notes — — ( 15,000 ) Proceeds from 2029 8.50 % Notes 71,875 — Proceeds from 2029 8.625 % Notes 75,000 — Payments on Notes Payable - Securitization Trusts ( 106,992 ) ( 90,780 ) ( 82,817 ) Issuance of Notes Payable - Securitization Trusts — 103,860 116,210 Dividends paid, net of dividend reinvestment plan ( 20,252 ) ( 14,147 ) ( 64,544 ) Payments of deferred financing costs ( 6,039 ) ( 4,650 ) ( 2,552 ) Proceeds from common stock issued under ESPP 207 51 Purchase of vested stock for employee payroll tax withholding ( 299 ) — ( 826 ) Retirement of common shares ( 402 ) — — Net cash provided by financing activities 560,897 344,974 1,175 Net increase in cash and restricted cash 198,832 3,520 ( 61,254 ) Cash and restricted cash—beginning of period (Note 2) 184,006 125,606 186,860 Consolidation/(deconsolidation) of cash and restricted cash from controlled investments related to business combinations and dispositions, net of cash paid ( 1,464 ) 54,880 — Cash and restricted cash—end of period (Note 2) $ 381,374 $ 184,006 $ 125,606 F-12 See accompanying notes to consolidated financial statements. Table of Contents NEWTEKONE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Year Ended December 31, 2024 2023 2022 Financial Holding Company Financial Holding Company Investment Company Non-cash operating, investing and financing activities: Foreclosed real estate acquired $ 4,569 $ 2,978 $ 3,466 Dividends declared but not paid during the period $ 5,237 $ 4,363 $ 2,118 Issuance of common shares under dividend reinvestment plan $ — $ 219 $ 1,614 Supplemental disclosure of cash flow information: (as restated) (as restated) Interest paid $ 79,192 $ 66,471 $ 25,348 Income taxes paid $ 7,429 $ 6,884 $ — F-13 See accompanying notes to consolidated financial statements. Table of Contents NEWTEKONE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION: The Company is a financial holding company that is a leading provider of business and financial solutions to independent business owners (SMBs) and provides SMBs with the following Newtek® branded business and financial solutions: Newtek Banking, Newtek Alternative Lending, Newtek Technology, Newtek Payments, Newtek Insurance, and Newtek Payroll. NewtekOne reports on a consolidated basis the financial condition and results of operations for the following consolidated subsidiaries: Newtek Bank; NSBF; NMS (and its subsidiary Mobil Money); NBC; PMT; NIA; TAM; POS; NALH; NCL; and NTS. Except as otherwise noted, all financial information included in the tables in the following footnotes is stated in thousands, except per share data. Consolidation The consolidated financial statements include the accounts of NewtekOne, its subsidiaries and certain VIEs. Significant intercompany balances and transactions have been eliminated. The Company considers a voting rights entity to be a subsidiary and consolidates it if the Company has a controlling financial interest in the entity. VIEs are consolidated if NewtekOne has the power to direct the activities of the VIE that significantly impact financial performance and has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE (i.e., NewtekOne is the primary beneficiary). The determination of whether the Company is the primary beneficiary of a VIE is reassessed on an ongoing basis. Investments in companies which are not VIEs but in which the Company has more than minor influence over the operating and financial policies are accounted for using the equity method of accounting. Investments in VIEs, where NewtekOne is not the primary beneficiary of a VIE, are accounted for using the equity method of accounting. The maximum potential exposure to losses relative to investments in VIEs is generally limited to the investment balance. Refer to NOTE 4—INVESTMENTS. NTS Sale As a result of the Company’s entry into the NTS Sale Agreement and its completion of the NTS Sale on January 2, 2025 , t he Company reported NTS as Held for Sale as of December 31, 2024. See NOTE 25—SUBSEQUENT EVENTS: Sale of NTS. In addition, as of the date of the NTS Sale, the Company has concluded that the assets, liabilities and operations of NTS do not qualify for Discontinued Operations as of December 31, 2024. See NOTE 9—ASSETS AND LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS HELD FOR SALE. Reclassifications and Restatements Certain prior period amounts, to the extent comparable, have been reclassified to conform to the current period presentation. The supplemental disclosure of cash flow information for interest paid was restated for December 31, 2023 and 2022 as a result of the previously disclosed material weaknesses and restatements described in the 2023 Annual Report on Form 10-K. NOTE 2—SIGNIFICANT ACCOUNTING POLICIES: Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expense during the reporting period. The level of uncertainty in estimates and assumptions increases with the length of time until the underlying transactions are complete. Actual results could differ from those estimates. F-14 Table of Contents Cash and due from banks The Company considers all highly liquid instruments with maturities of three months or less when purchased to be cash equivalents. Invested cash is held exclusively at financial institutions of high credit quality. As of December 31, 2024, cash deposits in excess of insured amounts totaled $ 30.3 million. The Company has not experienced any losses with respect to cash balances in excess of insured amounts and management does not believe there was a significant concentration of risk with respect to cash balances as of December 31, 2024. Restricted cash Restricted cash includes amounts due on SBA loan-related remittance s to third parties, cash reserves established as part of agreements with the SBA, cash reserves associated with consolidated securitization transactions, and cash margin as collateral for derivative instruments. As of December 31, 2024 and 2023, total restricted cash was $ 28.2 million and $ 30.9 million, respectively. Interest bearing deposits in banks The Company’s interest bearing deposits in banks reflects cash held at other financial institutions that earn interest. The following table provides a reconciliation of cash and due from banks, restricted cash, and interest bearing deposits in banks as of December 31, 2024 and 2023: December 31, 2024 December 31, 2023 Cash and due from banks $ 6,941 $ 15,398 Restricted cash 28,226 30,919 Interest bearing deposits in banks 346,207 137,689 Total cash and cash equivalents $ 381,374 $ 184,006 December 31, 2024 December 31, 2023 Cash held at Federal Reserve Bank 1 $ 345,680 $ 137,434 Cash held at other financial institutions 35,694 46,572 Total cash and cash equivalents $ 381,374 $ 184,006 1 Subject to changes in the Federal Funds rate set by the Federal Open Market Committee Debt securities, available for sale, at fair value The Company’s securities portfolio primarily consists of available for sale debt securities held by Newtek Bank that are classified as “available for sale” and carried at their estimated fair value, with any unrealized gains or losses, net of taxes, reported as accumulated other comprehensive income or loss in stockholders’ equity. The fair values of our instruments are affected by changes in market interest rates and credit spreads. In general, as interest rates rise and/or credit spreads widen, the fair value of instruments will decline. As interest rates fall and/or credit spreads tighten, the fair value of instruments will rise. The Company evaluates available-for-sale instruments in unrealized loss positions at least quarterly to determine if an allowance for credit losses is required. Purchases and sales of debt securities are accounted for on a trade-date basis. Loans Held for Investment Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are classified as held for investment. F-15 Table of Contents At amortized cost, net of deferred fees and costs: Loans are reported at their principal amount outstanding, net of charge-offs, deferred origination costs and fees and purchase premiums and discounts. Loan origination and commitment fees and certain direct and indirect costs incurred in connection with loan originations are deferred and amortized to income over the life of the related loans as an adjustment to yield. Premiums or discounts on purchased portfolios are amortized or accreted to income using the level yield method over the remaining period to contractual maturity. Currently, all LHI at amortized cost, net of deferred fees and costs, are originated and carried at Newtek Bank and have a weighted average life of five years . Newtek Bank originates SBA 7(a) loans, under its PLP status, and typically sells the guaranteed portions and holds the unguaranteed portions for investment. Newtek Bank also holds CRE and C&I loans for investment. At fair value: On a quarterly basis, management determines the fair values of the retained unguaranteed portions of SBA 7(a) loans HFI, and unrealized changes in FV are recognized in the income statement. The loans within this portfolio were originated by NSBF. NSBF ceased originating new loans in April 2023 when all new SBA 7(a) loan originations were transitioned to Newtek Bank. (See Historical Business Regulation and Taxation, for a discussion of the wind-down of NSBF’s operations.) Refer to the “Fair Value and the Fair Value Option” section below for further information on loans HFI carried at FV under the FV option. Held for Sale Management designates loans as HFS based on its intent to sell loans, or portions of loans, in established secondary markets or to participant banks and credit unions. Salability requirements of government guaranteed portions include, but are not limited to, full disbursement of the loan commitment amount. The Company occasionally transfers loans between the HFS and HFI classifications based on its intent and ability to hold or sell loans. Management’s intent to sell may be impacted by secondary market conditions, loan credit quality, or other factors. At lower of amortized cost basis or fair value : Both mortgage and non-mortgage loans classified as HFS are carried at the LCM. If the amortized cost basis of a loan exceeds FV, a valuation allowance s hould b e established for the difference. Currently, HFS loans at LCM are carried at Newtek Bank. This includes the government guaranteed portion of SBA 7(a) loans and SBA 504 loans. Management may also make a determination to market for sale certain CRE and C&I loans on a loan by loan basis. At fair value : The Company originates ALP loans (formerly referred to as our nonconforming conventional loans), which are either HFS or HFI, via its nonbank subsidiary and joint ventures. ALP loans are carried at FV. The Company also originated SBA 504 loans HFS prior to the Acquisition through its nonbank subsidiaries. SBA 504 loans HFS held at NALH are accounted for under the FV option. ALP loans are held at NALH, NCL JV, and TSO JV and are also accounted for under the FV option. Additionally, the existing government guaranteed portion of SBA 7(a) loans held at NSBF are also HFS at FV. Refer to the “Fair Value and the Fair Value Option” section below for further information on loans HFS carried at FV under the FV option. Fair Value and the Fair Value Option Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, management used various valuation approaches. In accordance with GAAP, a fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The fair value hierarchy gives the highest priority (Level 1) to quoted prices in active markets for identical assets or liabilities and gives the lowest priority to unobservable inputs (Level 3). The levels of the fair value hierarchy are as follows: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market, as well as certain U.S. Treasury, other U.S. Government and agency mortgage-backed debt securities that are highly liquid and are actively traded in over-the-counter markets. F-16 Table of Contents Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes certain U.S. Government and agency mortgage-backed debt securities, derivative contracts and loans held-for-sale. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This category generally includes certain private equity investments, retained residual interests in securitizations, residential mortgage servicing assets, warrant liabilities, joint ventures, guaranteed loans held at fair value, and highly structured or long-term derivative contracts. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset or a liability’s categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The Company assesses the levels of assets and liabilities at each measurement date. There were no transfers to or from Level 3 of the fair value hierarchy for assets and liabilities during the year ended December 31, 2024 or 2023. Level 1 investments were valued using quoted market prices. Level 2 investments were valued using market consensus prices that are corroborated by observable market data and quoted market prices for similar assets and liabilities. The Company has two joint venture investments, TSO JV and NCL JV. The Company uses a discounted cash flow methodology and adjusts the NAV of the entity by a fair value adjustment for the fixed rate debt liability. Due to the inherent uncertainty of determining the fair value of Level 3 investments that do not have a readily available market value, the fair value of the investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that may ultimately be received or settled. Further, such investments are generally subject to legal and other restrictions or otherwise are less liquid than publicly traded instruments. If the Company were required to liquidate a portfolio investment in a forced or liquidation sale, the Company may realize significantly less than the value at which such investment had previously been recorded. The Company’s investments are subject to market risk. Market risk is the potential for changes in the value due to market changes. Market risk is directly impacted by the volatility and liquidity in the markets in which the investments are traded. In addition recent changes in inflation and base interest rates, supply chain disruptions, significant market volatility, risk of recession, recent economic and market events, unrelated bank failures and declines in depositor confidence in depository institutions, the ongoing war between Russia and Ukraine and general uncertainty surrounding the financial and political stability of the United States, United Kingdom, the European Union and China could further negatively impact the fair value of the Company’s investments after December 31, 2024, in addition to other circumstances and events that are not yet known. The Company applies fair value accounting to certain of its financial instruments in accordance with ASC Topic 820 — Fair Value Measurement (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework used to measure fair value and requires disclosures for fair value measurements. In accordance with ASC Topic 820, the Company has categorized its financial instruments carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy. Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument rather than an entity-specific measure. Therefore, when market assumptions are not readily available, the Company’s own assumptions reflect those that management believe market participants would use in pricing the financial instrument at the measurement date. The availability of observable inputs can vary depending on the financial instrument and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new, whether the product is traded on an active exchange or in the secondary market and the current market conditions. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value was greatest for financial instruments classified as Level 3. F-17 Table of Contents Any changes to the valuation methodology are reviewed by management to confirm that the changes are appropriate. As markets change, new products develop and the pricing for products becomes more or less transparent, the Company will continue to refine its valuation methodologies. See further description of fair value methodology in NOTE 10—FAIR VALUE MEASUREMENTS. Loans for which the FV option were elected are measured at FV and classified as either HFS or HFI, as outlined above. Not electing FV generally results in a larger discount being recorded on the date of the sale. This discount will subsequently be accreted into interest income over the underlying loan’s remaining term using the effective interest method. Management made this election in alignment with its ongoing effort to reduce volatility and drive more predictable revenue. In accordance with accounting standards, any loans for which FV was previously elected continue to be measured as such. Interest income is recognized in the same manner on loans reported at FV as on non-FV loans, except in regard to origination fees and costs which are recognized immediately upon FV election. The changes in FV of loans are reported in noninterest income as Net gain (loss) on loans accounted for under the fair value option. FV of loans includes adjustments for historical credit losses, market liquidity, and economic conditions. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, reflecting assumptions that a market participant would use when pricing an asset or liability. In some cases, the estimation of fair values requires management to make estimates about discount rates, future expected cash flows, market conditions, and other future events that are highly subjective in nature and are subject to change. Allowance for Credit Losses – Loans Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL”) approach requires an estimate of the credit losses expected over the life of a loan (or pool of loans). The allowance for credit losses is a valuation account that is deducted from the loans’ amortized cost basis to present the net, lifetime amount expected to be collected on the loans. Loan losses are charged off against the allowance when management believes a loan balance is uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. The allowance is comprised of reserves measured on a collective (pool) basis based on a lifetime loss-rate model when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated on an individual basis, which generally includes larger non-accruing commercial loans. The discounted cash flow (“DCF”) method is used to estimate expected credit losses for all loan portfolio segments measured on a collective (pool) basis. For each loan segment, cash flow projections are generated at the instrument level wherein payment expectations are adjusted for estimated prepayment speeds, probability of default, and loss given default. The modeling of prepayment speeds is based on a combination of historical internal data and peer data. Regression analysis of historical internal and peer data is used to determine suitable loss drivers to utilize when modeling lifetime probability of default. This analysis also determines how expected probability of default and loss given default will react to forecasted levels of the loss drivers. For all loan pools utilizing the DCF method, management utilizes various economic indicators such as changes in unemployment rates, gross domestic product, real estate values, and other relevant factors as loss drivers. For all DCF models, management has determined that due to historic volatility in economic data, four quarters currently represents a reasonable and supportable forecast period, followed by a four-quarter reversion to historical mean levels for each of the various economic indicators. The combination of adjustments for credit expectations (default and loss) and timing expectations (prepayment, curtailment, and time to recovery) produces an expected cash flow stream at the instrument level. Specific instrument effective yields are calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows are then discounted at that effective yield to produce an instrument-level Net Present Value (“NPV”). An allowance is established for the difference between the instrument’s NPV and amortized cost basis. The allowance evaluation also considers various qualitative factors, such as: (i) changes to lending policies, underwriting standards and/or management personnel performing such functions, (ii) delinquency and other credit quality trends, (iii) credit risk concentrations, if any, (iv) changes to the nature of the Company's business impacting the loan portfolio, and (v) other external factors, that may include, but are not limited to, results of internal loan reviews, stress testing, examinations by bank regulatory agencies, or other events such as a natural disaster. Significant management judgment is required at each point in the measurement process. F-18 Table of Contents Arriving at an appropriate level of allowance involves a high degree of judgment. The determination of the adequacy of the allowance and provisioning for estimated losses is evaluated regularly based on review of loans, with particular emphasis on non-performing and other loans that management believes warrant special consideration. While management uses available information to recognize losses on loans, changing economic conditions and the economic prospects of the borrowers may necessitate future additions or reductions to the allowance. Management estimates the allowance balance using relevant available information, from internal and external sources, related to past events, current conditions, and reasonable and supportable forecasts. The Company’s historical credit loss experience provides the basis for the estimation of expected credit losses, supplemented with peer loss information, and results in expected probabilities of default and expected losses given default. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as changes in environmental conditions, such as changes in unemployment rates, production metrics, property values, or other relevant factors. Expected losses are applied to loans grouped in portfolio segments, which are pools of loans aggregated based on type of borrower and collateral, generally based upon federal call report segmentation. Portfolio segments have been combined or sub-segmented as needed to ensure loans of similar risk profiles are appropriately pooled. These portfolio segments are as follows: CRE: The CRE portfolio is comprised of loans to borrowers on small offices, owner-occupied commercial buildings, industrial/warehouse properties, income producing/investor real estate properties, and multi-family loans secured by first mortgages. The Company’s underwriting standards generally target a loan-to-value ratio of 75 %, depending on the type of collateral, and requires debt service coverage of a minimum of 1.2 times. C&I: The C&I portfolio consists of loans made for general business purposes consisting of short-term working capital loans, equipment loans and unsecured business lines. SBA 7(a): The SBA 7(a) portfolio includes loans originated under the federal SBA 7(a) Program. The SBA is an independent government agency that facilitates one of the nation’s largest sources of SMB financing by providing credit guarantees for its loan programs. SBA 7(a) loans are partially guaranteed by the SBA, with SBA guarantees typically ranging between 50% and 90% of the principal and interest due. Under the SBA’s 7(a) lending program, a bank or other lender licensed by the SBA may underwrite loans between $5.0 thousand and $5.0 million for a variety of general business purposes based on the SBA’s loan program requirements. The guaranteed portion of the loans are HFS and carried at LCM and therefore are not subject to CECL. The unguaranteed portion of the loans that are held on balance sheet at amortized cost are subject to CECL. In the context of CECL, these SBA 7(a) loans are held at Newtek Bank. Individually Evaluated Loans. Loans that do not share risk characteristics with existing pools are evaluated on an individual basis. Management defines these loans as nonaccrual loans with exposure above $50 thousand. For loans that are individually evaluated and collateral dependent, financial loans where management has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and management expects repayment of the financial asset to be provided substantially through the sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date. When repayment is expected to be from the operation of the collateral or going concern, the specific credit loss reserve is calculated as the amount by which the amortized cost basis of the financial asset exceeds the NPV from the operation of the collateral. When repayment is expected to be from the sale of the collateral, the specific credit loss reserve is calculated as the amount by which the amortized costs basis of the financial asset exceeds the fair value of the underlying collateral less estimated cost to sell. The allowance may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the financial asset. Accrued Interest. Upon the Acquisition and adoption of CECL, the Company made the following elections regarding accrued interest receivable: (1) presented accrued interest receivable balances separately within other assets balance sheet line item; (2) excluded interest receivable that is included in amortized cost of financing receivables from related disclosures requirements and (3) continued our policy to write off accrued interest receivable by reversing interest income. For loans, write off typically occurs upon becoming over 90 to 120 days past due. Generally, accrued interest is reversed when a loan is placed on non-accrual or is written-off. Current year accrued interest is reversed through interest income while accrued interest from prior years is written-off through the ACL. Historically, the Company has not experienced uncollectible accrued interest receivable on investment securities. F-19 Table of Contents Allowance for off-balance sheet credit exposures. The exposure is a component of other liabilities in the consolidated balance sheet and represents the estimate for probable credit losses inherent in unfunded commitments to extend credit. Unfunded commitments to extend credit include unused portions of lines of credit and standby and commercial letters of credit. The process used to determine the allowance for these exposures is consistent with the process for determining the allowance for loans, as adjusted for estimated funding probabilities or loan equivalency factors. A charge (credit) to provision for credit losses on the consolidated statements of income is made to account for the change in the allowance on off-balance sheet exposures between reporting periods. Allowance for Credit Losses – Available-fo r Sale (“AFS”) Debt Securities The impairment model for AFS debt securities differs from the CECL approach utilized for financial instruments measured at amortized cost because AFS debt securities are measured at fair value. For AFS debt securities in an unrealized loss position, Newtek Bank first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For debt securities AFS that do not meet the aforementioned criteria, in making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, adverse conditions specifically related to the security, failure of the issuer of the debt security to make scheduled interest or principal payments, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. The cash flows should be estimated using information relevant to the collectability of the security, including information about past events, current conditions and reasonable and supportable forecasts. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance when management believes the AFS security is uncollectible or when either of the criteria regarding intent or requirement to sell is met. As of December 31, 2024 and 2023, the Company det ermined that the unrealized loss positions in the AFS securities were not the result of credit losses, and therefore, an allowance for credit losses was not recorded. Settlement Receivable Settlement receivable represents amounts due from third parties for guaranteed portions of SBA 7(a) loans which have been sold at year-end but have not yet settled. The guaranteed portion of SBA 7(a) principal balances that have been sold but not yet settled as of December 31, 2024 and 2023 was $ 47.4 million and $ 56.5 million, respectively. The settlement receivable also includes $ 5.0 million and $ 5.7 million of premiums, which have been recognized in Net Gains on Sales of Loans as of December 31, 2024 and 2023, respectively. Assets Held for Sale and Liabilities Directly Associated with Assets Held for Sale The Company classifies assets and related liabilities as held for sale when: (i) management has committed to a plan to sell the disposal group, (ii) the disposal group is available for immediate sale, (iii) there is an active program to locate a buyer, (iv) the sale and transfer of the disposal group is probable within one year, (v) the disposal group is being actively marketed for sale at price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes will be made to the plan to sell the disposal group. Assets and liabilities held for sale are presented separately within the consolidated balance sheets with any adjustments necessary to measure the disposal group at the lower of its carrying value or fair value less costs to sell. Depreciation of property and equipment and amortization of intangible and right-of-use assets are not recorded while these assets are classified as held for sale. For each period the disposal group remains classified as held for sale, its recoverability is reassessed and any necessary adjustments are made to its carrying value. Refer to NOTE 9—ASSETS AND LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS HELD FOR SALE for a discussion of assets and liabilities associated with assets held for sale at December 31, 2024. F-20 Table of Contents Goodwill and Intangible Assets Goodwill is an indefinite lived asset, which is not amortized and is instead subject to impairment testing, at least annually. Intangible assets, which are the banking core deposits intangibles, have finite lives are amortized over an estimated useful life of 120 months. (See NOTE 8—GOODWILL AND INTANGIBLE ASSETS.) The Company considers the following to be some examples of indicators that may trigger an impairment review outside of its annual impairment review: (i) significant under-performance or loss of key contracts acquired in an acquisition relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of the acquired assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s fair value for a sustained period of time; and (vi) regulatory changes. In assessing the recoverability of the Company’s goodwill and customer merchant accounts, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. These include estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the Company, the period over which cash flows will occur, and determination of the Company’s cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and conclusions on impairment. Leases - Right of use assets and lease liabilities Under ASC 842, operating lease expense is generally recognized on a straight-line basis over the term of the lease. The Company has entered into operating lease agreements for office space with remaining contractual terms up to fifteen years , some of which include renewal options that extend the leases for up to 10 years. These renewal options are not considered in the remaining lease term unless it is reasonably certain the Company will exercise such options. The operating lease agreements do not contain any material residual value guarantees or material restrictive covenants. As the rate implicit in the leases generally is not readily determinable for our operating leases, the discount rates used to determine the present value of our lease liability are based on our incremental borrowing rate at the lease commencement date and commensurate with the remaining lease term. Our incremental borrowing rate for a lease is the rate of interest we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Leases with an initial term of 12 months or less are not recorded on the balance sheet and are excluded from our weighted-average remaining lease term. Transfers and Servicing of Financial Assets For a transfer of financial assets to be considered a sale, the transfer must meet the sale criteria of ASC 860, which, at the time of the transfer, requires that the transferred assets qualify as recognized financial assets and the Company surrender control over the assets. Such surrender requires that the assets be isolated from the Company, even in bankruptcy or other receivership, the purchaser have the right to pledge or sell the assets transferred and the Company not have an option or obligation to reacquire the assets. Assets related to transactions that do not meet ASC Topic 860 — Transfers and Servicing (“ASC Topic 860”) requirements for accounting sale treatment are reflected in the Company’s consolidated statements of assets and liabilities as investments and the sale proceeds are recognized as a liability. Assets owned by securitization trusts are included in the Company’s consolidated financial statements. The creditors of the special purpose entities have received security interests in such assets and such assets are not intended to be available to the creditors of the Company. From 2010 through December 31, 2024, NSBF engaged in thirteen ( 13 ) securitizations of the unguaranteed portions of its SBA 7(a) loans. A securitization uses a special purpose entity (the “Trust”), which is considered a variable interest entity (VIE). 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 vehicles, based on its power to direct activities through its role as servicer for the Trusts and its obligation to absorb losses and right to receive benefits, it needed to consolidate the Trusts. The Company therefore consolidates the entities using the carrying amounts of the Trusts’ assets and liabilities and reflects the assets in SBA 7(a) Unguaranteed Loans and reflects the associated financing in Notes Payable - Securitization trusts on the Consolidated Statements of Assets and Liabilities. F-21 Table of Contents The Company accounts for servicing assets in accordance with ASC Topic 860-50 - Transfers and Servicing - Servicing Assets and Liabilities. The Company and Newtek Bank earn servicing fees from the guaranteed portions of SBA 7(a) loans they originate and sell. The Company has also recorded servicing assets/liabilities on loans sold where the Company retained an obligation to service the loan sold. Servicing assets for loans originated by the Company’s nonbank subsidiaries are measured at FV at each reporting date and the Company reports changes in the FV of servicing assets in earnings in the period in which the changes occur. The valuation model for servicing assets incorporates assumptions including, but not limited to, servicing costs, discount rate, prepayment rate, and default rate. Considerable judgment is required to estimate the fair value of servicing assets and as such these assets are classified as Level 3 in our fair value hierarchy. Servicing assets for loans originated by Newtek Bank are initially measured at FV and subsequently measured at LCM and amortized based on their estimated life and impairment is recorded to the extent the amortized cost exceeds the asset’s FV. Derivative Instruments The Company uses derivative instruments primarily to economically manage the fair value variability of fixed rate assets and liabilities caused by interest rate fluctuations. Derivative instruments consist of interest rate futures and are held at fair value on the balance sheet. Collateral posted with our futures counterparties is segregated in the Company’s books and records. Interest rate futures are centrally cleared by the Chicago Mercantile Exchange (“CME”) through a futures commission merchant. Interest rate futures that are governed by an ISDA agreement provide for bilateral collateral pledging based on the counterparties’ market value. The counterparties have the right to re-pledge the collateral posted but have the obligation to return the pledged collateral, or, if the Company agrees, substantially the same collateral as the market value of the interest rate futures change. The Company is required to post initial margin and daily variation margin for interest rate futures that are centrally cleared by CME. CME determines the fair value of our centrally cleared futures, including daily variation margin. Effective January 3, 2017, CME amended its rulebooks to legally characterize daily variation margin payments for centrally cleared interest rate futures as settlement rather than collateral. As a result of this rule change, variation margin pledged on the Company’s centrally cleared interest rate futures is settled against the realized results of these futures. Due to Participants Due to participants represents amounts due to third party investors in the SBA guaranteed portion of SBA 7(a) and PPP loans. When the Company receives principal payments, including PPP loan forgiveness, after the loan has been either partially or fully sold to the participant, the remittances received by the Company are either owed in part or in full to the participant and amounts are recorded as a liability on the consolidated statements of financial condition. Dividends to Shareholders Dividends and distributions to the Company's stockholders are recorded on the declaration date. The timing and amount to be paid out as a dividend or distribution is determined by the Company's Board each quarter. Loan Interest Income Recognition and Changes in Fair Value Held for Investment At Amortized Cost, net of deferred loan fees and costs: Interest on loans is generally recognized on a daily accrual basis at the applicable interest rate. Interest is not accrued on loans that are more than 90 days delinquent on payments, and any interest that was accrued but unpaid on such loans is reversed from interest income at that time, or when deemed to be uncollectible. Interest subsequently received on such loans is recorded as interest income or alternatively as a reduction in the amortized cost of the loan if there is significant doubt as to the collectability of the unpaid principal balance. Loans are returned to accrual status when principal and interest amounts contractually due are brought current and future payments are reasonably assured. F-22 Table of Contents At FV: In accordance with accounting standards, any loans for which FV was previously elected continue to be measured as such. Interest income is recognized in the same manner on loans reported at FV as on non-FV loans, except in regard to origination fees and costs which are recognized immediately upon FV election. The changes in FV of loans are reported within noninterest income as Net gain (loss) on loans accounted for under the fair value option. FV of loans includes adjustments for historical credit losses, market liquidity, and economic conditions. The Company values performing accrual loans on a pool basis. Loans that have experienced credit deterioration are valued individually based on resolution plans developed by the Company based on timing and amount of expected future cash flows from all sources of repayment, including both cash flows of the borrower as a going concern as well as the liquidation of collateral and pursuit of personal guarantees. Held for Sale At LCM: Net unrealized losses, if any, on loans without a FV election, are recognized through a valuation allowance and recorded as a charge to Other noninterest income. The cost basis of loans HFS includes unamortized loan origination fees and costs. The pro-rata portion, based on the percent of the total loan sold, of the remaining deferred fees and costs are recognized as an adjustment to the gain on sale. Not electing FV generally results in a larger discount being recorded on the origination date. This discount will subsequently be accreted into interest income over the underlying loan’s remaining term using the effective interest method. Management made this change of election in alignment with its ongoing effort to reduce volatility and drive more predictable revenue. If the transfer is accounted for as a sale, the loans are derecognized from the Company’s consolidated balance sheet and a gain or loss is recognized in net gains on sales of loans line item on the consolidated statements of income. The gain on sale recognized in income is the sum of the premium on the guaranteed loan and the FV of the servicing assets recognized, less the discount recorded on the unguaranteed portion of the loan retained. If the transfer does not satisfy the aforementioned control criteria, the transaction is recorded as a secured borrowing with the transferred loans remaining on the Company’s consolidated balance sheet and proceeds recognized as a liability. At FV: In accordance with accounting standards, any loans for which FV was previously elected continue to be measured as such. Interest income is recognized in the same manner on loans reported at FV as on non-FV loans, except in regard to origination fees and costs which are recognized immediately upon FV election. The changes in FV of loans are reported within noninterest income as Net gain (loss) on loans accounted for under the fair value option. FV of loans includes adjustments for historical credit losses, market liquidity, and economic conditions. Non-Interest Income Dividend income Dividend income is recognized on an accrual basis for equity securities to the extent that such amounts are expected to be collected or realized. In determining the amount of dividend income to recognize, if any, from cash distributions on equity securities, we assess many factors, including the joint ventures’ and other non-controlled equity investments’ cumulative undistributed income and operating cash flow. Cash distributions from equity securities received in excess of such undistributed amounts are recorded first as a reduction of our investment and then as a realized gain on investment. Servicing income The Company earns servicing income related to the guaranteed portions of SBA 7(a) and ALP loans sold into the secondary market. These recurring servicing fees are earned and recorded daily. Servicing income is earned for the full term of the loan or until the loan is repaid. F-23 Table of Contents Technology and IT support income Our technology segment (NTS) sells a range of services and goods, including managed IT services, product and procurement services, professional services, webhosting, secure private cloud hosting, and backup and disaster recovery. Our technology segment sells hardware and software products on both a stand-alone basis without any services and as solutions bundled with services. When our technology segment provides a combination of hardware and software products with the provision of services, it separately identifies its performance obligations under its contract with the customer as the distinct goods (hardware and/or software products) or services that will be provided. The total transaction price for an arrangement with multiple performance obligations is allocated at contract inception to each distinct performance obligation in proportion to its stand-alone selling price. The stand-alone selling price is the price at which it would sell a promised good or service separately to a customer. Our technology segment estimates the price based on observable inputs, including direct labor hours and allocatable costs, or uses observable stand-alone prices when they are available. Our technology segment’s professional services include the design and implementation of a wide range of IT products and services. Such services are typically provided by us or third-party sub-contractor vendors on a stand-alone basis. Revenue is measured based on the consideration specified in a contract with a customer. Our contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. When a cloud-based service includes both on-premises software licenses and cloud services, judgment is required to determine whether the software license is considered distinct and accounted for separately, or not distinct and accounted for together with the cloud service and recognized over time. Certain cloud services depend on a significant level of integration, interdependency, and interrelation between the desktop applications and cloud services, and are accounted for together as one performance obligation. Revenue from such cloud services is recognized ratably over the period in which the cloud services are provided. We otherwise recognize revenue when it satisfies a performance obligation by transferring control of a product or service or by arranging for the sale of a vendor’s products or service to a customer. We recognize revenue from sale of services as we perform the underlying services, typically based on time and materials basis based upon hours incurred for the performance completed to date for which we have the right to consideration. We recognize revenue on sales of goods at a point in time when customer takes control of goods, which typically occurs when title and risk of loss have passed to the customer. We recognize revenue on a gross basis for each of its services and product offerings principally because it is primarily responsible for fulfilling the promise to provide specified goods or service and it has discretion in establishing the price of specified good or service. We classify our right to consideration in exchange for deliverables as either a receivable or a contract asset (unbilled receivable). A receivable is a right to consideration that is unconditional (i.e. only the passage of time is required before payment is due). For example, we recognize a receivable for revenue related to our transaction or volume-based contracts when earned regardless of whether amounts have been billed. We present such receivables in accounts receivable, net in our consolidated balance sheets We maintain an allowance for credit losses to provide for the estimated amount of receivables that may not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables, judgment, and other applicable factors. A contract asset is a right to consideration that is conditional upon factors other than the passage of time. Contract assets are presented in current and other assets in our consolidated balance sheets and primarily relate to unbilled amounts on fixed-price contracts utilizing the output method of revenue recognition. Our contract assets and liabilities are reported at the end of each reporting period. The difference between the opening and closing balances of our contract assets and deferred revenue primarily results from the timing difference between our performance obligations and the customer’s payment. We receive payments from customers based on the terms established in our contracts, which may vary generally by contract type. Our contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. The difference between the opening and closing balances of our contract assets and deferred revenue primarily results from the timing difference between our performance obligations and the customer’s payment. We receive payments from customers based on the terms established in our contracts, which may vary generally by contract type. On January 2, 2025, the Company completed the NTS Sale to Paltalk. Refer to “ NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION ” - Sale of NTS. F-24 Table of Contents Electronic payment processing income Revenues are recognized when control of the promised goods or services is transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. To achieve this core principle, the Company applies the following five steps: 1. Identify the contract with a customer 2. Identify the performance obligations in the contract 3. Determine the transaction price 4. Allocate the transaction price to the performance obligations in the contract 5. Recognize revenue when or as the Company satisfies a performance obligation Revenue is recognized net of taxes collected from customers, which are subsequently remitted to governmental authorities. NMS’s revenue is primarily derived from electronic payment processing and related fee income. Electronic payment processing and fee income is derived from NMS’s electronic processing of credit and debit card transactions that are authorized and captured through third-party networks. Typically, merchants are charged for these processing services by applying a percentage to the dollar amount of each transaction plus a flat fee per transaction. Certain merchant customers are charged miscellaneous fees, including fees for handling charge-backs or returns, monthly minimum fees, statement fees and fees for other miscellaneous services. Revenues derived from the electronic processing of MasterCard®, Visa®, American Express® and Discover® sourced credit and debit card transactions are reported net of certain transaction-related costs. NMS's performance obligations are to stand ready to provide holistic electronic payment processing services consisting of a series of distinct elements that are substantially the same and have the same pattern of transfer over time. NMS’s promise to its customers is to perform an unknown or unspecified quantity of tasks and the consideration received is contingent upon the customers’ use (i.e., number of payment transactions processed, number of cards on file, etc.); as such, the total transaction price is variable. The Company allocates the variable fees charged to the day in which it has the contractual right to bill under the contract. ASU 2014-09, "Revenues from Contracts with Customers (“Topic 606”)" (“ASC 606”) requires that the Company determine for each customer arrangement whether revenue should be recognized at a point in time or over time. For the years ended December 31, 2024 and and 2023, substantially all of the Company’s revenues were recognized at a point in time. ASC 606 requires disclosure of the aggregate amount of the transaction price allocated to unsatisfied performance obligations; however, as permitted by ASC 606, the Company has elected to exclude from this disclosure any contracts with an original duration of one year or less and any variable consideration that meets specified criteria. As described above, the Company’s most significant performance obligations consist of variable consideration under a stand-ready series of distinct days of service. Such variable consideration meets the specified criteria for the disclosure exclusion; therefore, the majority of the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied is variable consideration that is not required for this disclosure. The aggregate fixed consideration portion of customer contracts with an initial contract duration greater than one year is not material. Receivable fees: Receivable fees are derived from the funding (purchase) of receivables from the Company’s finance clients. The Company recognizes revenue on the date receivables are purchased at a percentage of face value as agreed to by the client. The Company also has arrangements with certain of its clients whereby it purchases the client’s receivables and charges a fee at a specified rate based on the amount of funds advanced against such receivables. The funds provided are collateralized and the income is recognized as earned which occurs as time passes. Realized gains or losses on joint ventures: Realized gains or losses on joint ventures are measured by the difference between the net proceeds from the disposition and the cost basis of investment, without regard to unrealized gains or losses previously recognized. The Company reports current period changes in the fair value of joint venture investments as a component of the net change in unrealized appreciation (depreciation) on joint ventures in the consolidated statements of operations. F-25 Table of Contents Non-Interest Expense Electronic Payment Processing Costs Electronic payment processing costs consist principally of costs directly related to the processing of merchant sales volume, bank processing fees, amounts paid to NMS’ sponsoring banks and costs paid to third-party processing networks. Such costs are recognized at the time the merchant transactions are processed or when the services are performed. In addition to costs directly related to the processing of merchant sales volume, electronic payment processing costs also include residual expenses. Residual expenses represent fees paid to third-party sales referral sources. Residual expenses are paid in accordance with contracted terms. These are generally linked to revenues derived from merchants successfully referred to the Company and that begin using the Company for merchant processing services. Such residual expenses are recognized in the Company’s consolidated statements of income. Technology Services Expenses Costs of services and goods sold include product costs, outbound and inbound freight costs, and direct time and materials in delivering service and goods to customers. Selling and administrative expenses include salaries and wages for staff who are not directly associated with delivering services, bonuses and incentives, employee-related expenses, facility-related expenses, marketing and advertising expense, depreciation of property and equipment, professional fees, amortization of intangible assets, provisions for losses on accounts receivable and other operating expenses. Stock – Based Compensation The Company accounts for its equity-based compensation plans using the fair value method, as prescribed by ASC Topic 718 – Stock Compensation. Accordingly, for restricted stock awards, the Company measures the grant date fair value based upon the market price of the Company’s Common Stock on the date of the grant and amortizes this fair value to salaries and benefits ratably over the requisite service period or vesting term on a straight line basis. Forfeitures are recognized as incurred. Income Taxes Deferred tax assets and liabilities are computed based upon the differences between the financial statement and income tax basis of assets and liabilities using the enacted tax rates in effect for the year in which those temporary differences are expected to be realized or settled. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. See NOTE 21—INCOME TAXES . Our income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid. We are subject to income taxes in the United States and its political subdivisions. Significant judgments and estimates are required in determining the consolidated income tax expense. The Company’s U.S. federal and state income tax returns prior to fiscal year 2021 are generally closed, and management continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. Interest and penalties assessed by tax jurisdictions for income tax matters are presented as income tax expense on the consolidated statement of income. Formerly, as a RIC ending with the Company’s December 31, 2022 fiscal year end, the Company was not subject to corporate level income tax. Beginning on January 1, 2023 with the start of the 2023 fiscal year, the Company no longer qualifies as a RIC and is subject to corporate level income tax. See NOTE 21—INCOME TAXES . Segments Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Management has determined that the Company has five reportable operating segments: Banking, NALH, Non-Bank SBA 7(a) Lending, Technology, and Payments as discussed more fully in NOTE 22—SEGMENTS. In determining the appropriateness of a segment definition, the Company considers the criteria of FASB ASC 280, Segment Reporting. F-26 Table of Contents Business Combinations Business combinations are accounted for under the acquisition method, in which the identifiable assets acquired and liabilities assumed are generally measured and recognized at fair value as of the acquisition date, with the excess of the purchase price over the fair value of the net assets acquired recognized as goodwill. Items such as acquired income-tax related balances are recognized in accordance with other applicable GAAP, which may result in measurements that differ from fair value. Business combinations are included in the consolidated financial statements from the respective dates of acquisition. Historical reporting periods reflect only the results of legacy Company operations. Acquisition-related costs are expensed in the period incurred and presented within the applicable non-interest expense category. Additional information regarding the Company’s acquisitions can be found within NOTE 3—BUSINESS COMBINATIONS, which relates to the 2023 acquisition of NBNYC. There were no acquisitions during 2024. Recently Adopted Accounting Pronouncements Current Expected Credit Losses (Topic 326): In June 2016, FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses—Measurement of Credit Losses on Financial Instruments (Topic 326) and in April 2019, the FASB issued ASU 2019-04 Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments (collectively, “CECL”). CECL changed how entities measure potential credit losses for most financial assets and certain other instruments that are not measured at fair value. CECL replaced the “incurred loss” approach under existing guidance with an “expected loss” model for instruments measured at amortized cost. While ASU 2016-13 does not require any particular method for determining the CECL allowance, it does specify the allowance should be based on relevant information about past events, including historical loss experience, current portfolio and market conditions, and reasonable and supportable forecasts for the duration of each respective loan. CECL was effective for the Company beginning January 1, 2023; however, the Company continues to measure NSBF’s SBA 7(a) loan portfolio at fair value and intends to do so until the portfolio is completely runoff. Following the Acquisition on January 6, 2023, the Company owns and consolidates Newtek Bank, which applies CECL. Fair Value Measurement (ASU 2022-03): In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820), which clarifies the guidance in Topic 820 when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The amendments affect all entities that have investments in equity securities measured at fair value that are subject to a contractual sale restriction. ASU 2022-03 is effective for public business entities for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. An entity that qualifies as an investment company under Topic 946 should apply the amendments in ASU No. 2022-03 to an investment in an equity security subject to a contractual sale restriction that is executed or modified on or after the date of adoption. The impact of these amendments was not material. Improvements to Reportable Segment Disclosures (ASU 2023-07): In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The purpose of this guidance is to improve reportable segment disclosure, primarily through enhanced disclosures about significant segment expenses. This ASU requires that an entity disclose, on an interim and annual basis, significant segment expenses that are regularly provided to the CODM and are included within the reported measure of segment profit or loss. This ASU also requires an entity to disclose, on an interim and annual basis, other segment items by reportable segment, including a qualitative description of the composition of those items. This “other” category is defined as the difference between segment profit or loss and segment revenue less significant segment expenses. Entities are also required to disclose the title and position of the individual, or the name of the group or committee, identified as the CODM. The amendments are effective on January 1, 2024, for annual reporting, and January 1, 2025, for interim reporting, with early adoption permitted. The amendments must be applied using a retrospective approach. The Company adopted this guidance as of January 1, 2024 which resulted in enhanced disclosures of segment expenses within the consolidated financial statements beginning with its December 31, 2024 Form 10-K. F-27 Table of Contents New Accounting Standards Improvements to Income Tax Disclosures (ASU 2023-09): In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The purpose of this guidance is to enhance the rate reconciliation and income taxes paid disclosures. This ASU requires that an entity disclose, on an annual basis, specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. For the state and local income tax category of the rate reconciliation, entities must disclose a qualitative description of the states and local jurisdictions that make up the majority (greater than 50 percent) of the category. For the income taxes paid disclosures, entities will be required to disclose, on an annual basis, the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes. The amendments are effective on January 1, 2025, with early adoption permitted. The amendments must be applied using either a prospective or retrospective approach. Management does not expect the impact of these amendments to be material. Compensation—Stock Compensation (ASU 2024-01): In March 2024, the FASB issued ASU 2024-01, Compensation - Stock Compensation (Topic 718), Scope Application of Profits Interest and Similar Awards. This standard provides clarity regarding whether profits interest and similar awards are within the scope of Topic 718 of the Accounting Standards Codification. This standard is effective for fiscal years beginning after December 15, 2024. The amendments should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is permitted. The Company is in the process of evaluating the impact of adopting this standard and, at this time, does not anticipate it will have a material impact on its consolidated financial statements. Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (ASU 2024-03): In November 2024, the FASB issued ASU 2024-03, which requires public business entities to disclose, on an annual and interim basis, disaggregated information about certain income statement expense line items in the notes to the financial statements. Public business entities are required to apply the guidance prospectively and may elect to apply it retrospectively. This ASU is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. The Company is in the process of evaluating the impact of adopting this standard and, at this time, does not anticipate it will have a material impact on its consolidated financial statements. Debt with Conversion and Other Options (Subtopic 470-20) Induced Conversions of Convertible Debt Instruments (ASU 2024-04): In November 2024, the FASB issued ASU 2024-04, which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as induced conversions rather than as debt extinguishments. This update is effective for annual periods beginning after December 15, 2025, including interim periods within those fiscal years, though early adoption is permitted. The Company is in the process of evaluating the impact of adopting this standard and, at this time, does not anticipate it will have a material impact on its consolidated financial statements. NOTE 3—BUSINESS COMBINATIONS: Acquisition of NBNYC On January 6, 2023, the Company completed the Acquisition of NBNYC, a national bank regulated and supervised by the OCC, pursuant to which the Company acquired from the NBNYC shareholders all of the issued and outstanding stock of NBNYC for $ 20 million, in an all-cash transaction. The Company also agreed to pay the seller’s acquisition costs of approximately $ 1.3 million. NBNYC was renamed Newtek Bank and became a wholly owned subsidiary of the Company. In connection with the completion of the Acquisition, the Company contributed to Newtek Bank $ 31 million of cash and two of the Company’s subsidiaries, NBL and SBL (NBL was subsequently merged into SBL). Upon the consummation of the Acquisition, Newtek Bank entered into an operating agreement with the OCC concerning certain matters including capital, liquidity and concentration limits, and memorializing the business plan submitted to the OCC. The NBNYC transaction was accounted for in accordance with ASC 805, Business Combinations, and the Company performed a purchase price allocation under the acquisition method. Under ASC 805, if the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, which shall not exceed one year from the acquisition date, the acquirer shall adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. F-28 Table of Contents The purchase price, including costs incurred by the Company on behalf of the seller directly associated with the Acquisition, was preliminarily allocated to net assets acquired. Final allocation was obtained and the purchase allocations finalized at December 31, 2023. The following table summarizes the allocation of consideration paid for the fair value of assets acquired and liabilities assumed from NBNYC: Purchase price consideration $ 21,281 Fair value of assets acquired: Cash and due from banks 29,138 Interest-bearing deposits in banks 3,284 Total cash and cash equivalents 32,422 Available-for-sale securities (at fair value) 5,004 Other investments 1,226 Loans receivable 159,155 Federal Reserve Bank stock, at cost 54 Federal Home Loan Bank stock, at cost 1,470 Accrued interest receivable 353 Deferred income taxes 495 Goodwill 271 Core deposit intangible 1,040 Other assets 399 Total assets $ 201,889 Fair value of liabilities assumed: Deposits: Demand $ 21,878 Savings and NOW and Money Market 10,975 Certificates of deposit 104,162 Total deposits 137,015 Advances from the Federal Home Loan Bank 27,817 Accrued expenses and other liabilities 15,776 Total liabilities $ 180,608 In connection with the Acquisition, the Company recorded $ 0.3 million of goodwill, which represents the excess of the purchase price over the fair value of the net assets acquired. Goodwill is an asset representing the acquired future economic benefits such as synergies that are not individually identified and separately recognized (i.e., it is measured as a residual). The amount of goodwill recognized is also impacted by measurement differences resulting from certain assets and liabilities not being recorded at fair value (e.g., income taxes, employee benefits). In accordance with ASC 805-30-30-1, the measurement of goodwill occurs on the Acquisition Date and, other than qualifying measurement period adjustments, no adjustments are made to goodwill recognized as of the Acquisition Date until and unless it becomes impaired. ASC 805 provides for a period of time during which the acquirer may adjust provisional amounts recognized at the acquisition date to their subsequently determined acquisition-date fair values, referred to as the “measurement period.” Adjustments during the measurement period are not limited to just those relating to assets acquired and liabilities assumed but apply to all aspects of business combination accounting (e.g., the consideration transferred). Measurement-period adjustments are calculated as if they were known at the acquisition date, but are recognized in the reporting period in which they are determined. Prior period information is not revised, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition date. In accordance with ASC 805, the Company recorded a measurement period adjustment and decreased goodwill by $ 1.0 million related to the finalization of the consideration transferred. Information regarding the allocation of goodwill to the Company’s reportable segments, as well as the carrying amounts and amortization of the core deposit intangible, can be found within NOTE 8—GOODWILL AND INTANGIBLE ASSETS. None of the goodwill is tax deductible. Described below are the methods used to determine the fair values of the significant assets acquired and liabilities assumed in the NBNYC Acquisition. F-29 Table of Contents Cash and cash equivalents. The estimated fair values of cash and cash equivalents approximate their stated face amounts, as these financial instruments are either due on demand or have short-term maturities. Investment securities available-for-sale . Quoted market prices for the securities acquired were used to determine their fair values. If quoted market prices were not available for a specific security, then quoted prices for similar securities in active markets were used to estimate the fair value. Loans. Each loan was assessed individually. The fair values for loans were estimated using a discounted cash flow methodology that considered factors including the type of loan and the related collateral, classification status, fixed or variable interest rate, remaining term, amortization status, and current discount rates. In addition, the probability of default, loss given default, and prepayment assumptions that were derived based on loan characteristics, historical loss experience, comparable market data, and current and forecasted economic conditions were used to estimate expected credit losses. The discount rates used for loans and leases were based on current market rates for new originations or comparable loans and leases and include adjustments for liquidity. The discount rate did not include credit losses as that was included as a reduction to the estimated cash flows. We determined the fair value of the PCD loans using the asset and income approach. We used the income approach for PCD loans where there was evidence that the borrower may be able to continue to service the loan and more likely than not continue to pay. We used the asset approach for PCD loans when the loan is on non-accrual status. Acquired loans were marked to fair value and adjusted for any PCD gross up as of the Acquisition Date. Core Deposit Intangible. CDI is a measure of the value of non-interest-bearing and interest-bearing checking accounts, savings accounts, and money market accounts that are acquired in a business combination. The fair value of the CDI stemming from any given business combination is based on the present value of the expected cost savings attributable to the core deposit funding, relative to an alternative source of funding. The CDI relating to the NBNYC Acquisition will be amortized over an estimated useful life of 10 years using the sum of years digits depreciation method. The Company evaluates such identifiable intangibles for impairment when an indication of impairment exists. Deposit Liabilities. The fair values used for the demand and savings deposits by definition equal the amount payable on demand at the Acquisition date. The fair values for time deposits were estimated using a discounted cash flow methodology that applies interest rates currently being offered to the contractual interest rates on such time deposits. Borrowings . The estimated fair value of borrowed funds is based on bid quotations received from securities dealers or the discounted value of contractual cash flows with interest rates currently in effect for borrowed funds with similar maturities. PCD loans. Purchased loans that reflect a more-than-insignificant deterioration of credit from origination are considered PCD. For PCD loans and leases, the initial estimate of expected credit losses is recognized in the ACL on the date of acquisition using the same methodology as other loans and leases held-for-investment. The following table provides a summary of loans and leases purchased as part of the NBNYC Acquisition with credit deterioration and associated credit loss reserve at acquisition: Par value (unpaid principal balance) $ 42,443 ACL at acquisition ( 870 ) Non-credit (discount) ( 1,559 ) Fair Value $ 40,014 Transaction costs describe the broad category of costs the Company incurs in connection with signed and/or closed acquisitions. Transaction costs include expenses associated with legal, accounting, regulatory, and other transition services rendered in connection with acquisition, travel expense, and other non-recurring direct expenses associated with acquisitions. The Company incurred transaction costs related to the NBNYC Acquisition during the years ended December 31, 2023 and 2022 of $ 0.2 million and $ 2.3 million, respectively. These costs have been included in the Consolidated Statement of Operations in Professional services expense. F-30 Table of Contents NOTE 4—INVESTMENTS: Investments consisted of the following at: December 31, 2024 December 31, 2023 Cost Fair Value Cost Fair Value Joint ventures and other non-control investments, at fair value $ 44,039 $ 57,678 $ 38,660 $ 41,587 Debt securities available-for-sale, at fair value 23,934 23,916 32,372 32,171 Federal Home Loan Bank and Federal Reserve Bank stock 3,585 3,585 3,635 3,635 Total investments $ 71,558 $ 85,179 $ 74,667 $ 77,393 The Company’s Investments in Joint Ventures (JV) and Other Non-Control Investments NCL JV: On May 20, 2019, the Company and its joint venture partner launched NCL JV to provide ALP loans (formerly referred to as non-conforming conventional commercial and industrial term loans) to U.S. middle-market companies and small businesses. NCL JV is a 50 / 50 joint venture between NCL a wholly-owned subsidiary of the Company, and Conventional Lending TCP Holding, LLC, a wholly-owned, indirect subsidiary of BlackRock TCP Capital Corp. (Nasdaq: TCPC). NCL JV ceased funding new ALP loans during 2020. On January 28, 2022, NCL JV closed a securitization with the sale of $ 56.3 million of Class A Notes, NCL Business Loan Trust 2022-1, Business Loan-Backed Notes, Series 2022-1, secured by a segregated asset pool consisting primarily of NCL JV’s portfolio of ALP loans secured by liens on commercial or residential mortgaged properties, originated by NCL JV and NBL. The Notes were rated “A” (sf) by DBRS Morningstar. The Notes were priced at a yield of 3.209 %. The proceeds of the securitization were used, in part, to repay NCL JV’s credit facility and return capital to the NCL JV partners. The following tables show certain summarized financial information for NCL JV: Selected Statements of Assets and Liabilities Information (Unaudited) December 31, 2024 December 31, 2023 Cash $ 587 $ 612 Restricted cash 5,513 3,298 Loans, at FV (amortized cost of $ 52,751 and $ 68,404 , respectively) 53,895 70,083 Other assets 1,737 1,614 Total assets $ 61,732 $ 75,607 Securitization notes payable $ 25,322 $ 38,805 Other liabilities 867 905 Total liabilities 26,189 39,710 Net assets 35,543 35,897 Total liabilities and net assets $ 61,732 $ 75,607 Selected Statements of Operations Information (Unaudited) Year Ended December 31, 2024 2023 2022 Interest and other income $ 4,984 $ 6,160 $ 6,966 Total expenses 1,797 2,524 2,916 Net investment income 3,187 3,636 4,050 Unrealized (depreciation) appreciation on investments ( 536 ) 1,869 ( 4,494 ) Net increase in net assets resulting from operations $ 2,651 $ 5,505 $ ( 444 ) TSO JV: On August 5, 2022, NCL and TSO II Booster Aggregator, L.P. (“TSO II”) entered into a joint venture, TSO JV, governed by the Amended and Restated Limited Partnership Agreement for the TSO JV. TSO JV began making investments in ALP loans during the fourth quarter of 2022. NCL and TSO II each committed to contribute an equal share of equity funding to the TSO JV and each have equal voting rights on all material matters. On July 23, 2024, TSO JV closed a securitization backed by ALP loans, selling $ 137.2 million of Class A Notes and $ 17.2 million of Class B Notes (collectively, the “TSO Notes”) issued by NALP Business Loan Trust 2024-1. The TSO Notes were backed by $ 190.5 million of collateral, consisting of Company originated ALP loans . The Class A and Class B Notes received Morningstar DBRS ratings of “A (sf)” and “BBB (high) (sf),” respectively. TSO JV ceased investing in new ALP loans in July 2023. F-31 Table of Contents The following tables show certain summarized financial information for TSO JV: Selected Statements of Assets and Liabilities Information (Unaudited) December 31, 2024 December 31, 2023 Cash $ 1,780 $ 4,401 Restricted cash 18,399 1,183 Loans, at FV (amortized cost of $ 173,654 and $ 62,695 , respectively) 183,084 66,689 Other assets 5,112 1,374 Total assets $ 208,375 $ 73,647 Bank notes payable $ — $ 29,636 Securitization notes payable 140,224 — Other liabilities 427 1,092 Total liabilities 140,651 30,728 Net assets 67,724 42,919 Total net assets $ 208,375 $ 73,647 Selected Statements of Operations Information (Unaudited) Year Ended December 31, 2024 2023 2022 Interest and other income $ 17,964 $ 3,823 $ 101 Total expenses 9,813 4,430 385 Net investment income 8,151 ( 607 ) ( 284 ) Unrealized appreciation (depreciation) on investments 5,438 2,580 1,412 Realized loss on investments — ( 16 ) — Realized gain (loss) on derivative transactions ( 391 ) 399 — Unrealized (loss) gain on derivative transactions 694 ( 911 ) 218 Net increase in net assets resulting from operations $ 13,892 $ 1,445 $ 1,346 Transactions with Affiliated Companies An affiliated company is an unconsolidated entity in which the Company has an ownership of 5% or more of its voting securities. Transactions related to our joint ventures and other non-controlled investments for the years ended December 31, 2024 and 2023 were as follows: Company Fair Value at December 31, 2023 Purchases (Cost) Return of Investment Net Gains/(Losses) Fair Value at December 31, 2024 Dividend Income Joint Ventures Newtek Conventional Lending, LLC $ 19,400 $ — $ — $ ( 600 ) $ 18,800 $ 1,503 Newtek TSO II Conventional Credit Partners, LP 21,459 25,642 ( 20,185 ) 11,184 38,100 — Total Joint Ventures $ 40,859 $ 25,642 $ ( 20,185 ) $ 10,584 $ 56,900 $ 1,503 Other Non-Control Investments EMCAP Loan Holdings, LLC $ 368 $ — $ ( 116 ) $ 68 $ 320 $ 16 Biller Genie Software, LLC 360 38 — 60 458 — Total Other Non-Control Investments $ 728 $ 38 $ ( 116 ) $ 128 $ 778 $ 16 Total Joint Ventures and Other Non-Control Investments $ 41,587 $ 25,680 $ ( 20,301 ) $ 10,712 $ 57,678 $ 1,519 F-32 Table of Contents Company Fair Value at December 31, 2022 Purchases (Cost) Return of Investment Net Gains/(Losses) Fair Value at December 31, 2023 Dividend Income Joint Ventures Newtek Conventional Lending, LLC $ 16,587 $ 248 $ — $ 2,565 $ 19,400 $ 1,641 Newtek TSO II Conventional Credit Partners, LP 6,435 14,302 — 722 21,459 — Total Joint Ventures $ 23,022 $ 14,550 $ — $ 3,287 $ 40,859 $ 1,641 Other Non-Control Investments EMCAP Loan Holdings, LLC $ 1,000 $ — $ ( 564 ) $ ( 68 ) $ 368 $ 116 Biller Genie Software, LLC 360 — — — 360 — Total Other Non-Control Investments $ 1,360 $ — $ ( 564 ) $ ( 68 ) $ 728 $ 116 Total Joint Ventures and Other Non-Control Investments $ 24,382 $ 14,550 $ ( 564 ) $ 3,219 $ 41,587 $ 1,757 Debt Securities Available-for-Sale The following tables summarize the amortized cost and fair value of debt securities available-for-sale by major type as of December 31, 2024 and 2023: December 31, 2024 December 31, 2023 Amortized Cost Unrealized Gains Unrealized Losses Fair Value Amortized Cost Unrealized Gains Unrealized Losses Fair Value U.S. Treasury notes $ 23,934 $ 11 $ 29 $ 23,916 $ 29,372 $ — $ 67 $ 29,305 Government agency debentures — — 0 3,000 — 134 2,866 Total $ 23,934 $ 11 $ 29 $ 23,916 $ 32,372 $ — $ 201 $ 32,171 As of December 31, 2024 and December 31, 2023, there was $ 30.4 thousand and $ 0.2 million of accrued interest receivable on available-for-sale securities, respectively, included in Other assets in the accompanying Consolidated Statements of Financial Condition. During the years ended December 31, 2024 and 2023, securities sold or settled were as follows: Year Ended December 31, 2024 2023 # $ # $ Securities sold or settled 5 $ 42,500 — $ — Unrealized Losses The following tables summarize the gross unrealized losses and fair value of debt securities available-for-sale by length of time each major security type has been in a continuous unrealized loss position: December 31, 2024 Less Than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Number of Holdings Fair Value Unrealized Losses U.S. Treasury notes $ 12,061 $ 27 $ — $ — 2 $ 12,061 $ 27 Government agency debentures — — — — — — — Total $ 12,061 $ 27 $ — $ — $ 2 $ 12,061 $ 27 F-33 Table of Contents December 31, 2023 Less Than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Number of Holdings Fair Value Unrealized Losses U.S. Treasury notes $ 29,304 $ 67 $ — $ — 1 $ 29,304 $ 67 Government agency debentures 2,867 134 — — 2 2,867 134 Total $ 32,171 $ 201 $ — $ — 3 $ 32,171 $ 201 Management evaluates debt securities available-for-sale debt to determine whether the unrealized loss is due to credit-related factors or non-credit-related factors. The evaluation considers the extent to which the security’s fair value is less than cost, the financial condition and near-term prospects of the issuer, and intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value. These unrealized losses are primarily the result of non-credit-related volatility in the market and market interest rates. Since none of the unrealized losses relate to marketability of the securities or the issuers' ability to honor redemption obligations and the Company has the intent and ability to hold the securities for a sufficient period of time to recover unrealized losses, none of the losses have been recognized in the Company’s Consolidated Statements of Income. Contractual Maturities The following table summarizes the amortized cost and fair value of debt securities available-for-sale by contractual maturity: December 31, 2024 At December 31, 2023 Amortized Cost Fair Value Amortized Cost Fair Value Maturing within 1 year $ 15,833 $ 15,838 $ 32,372 $ 32,171 After 1 year through 5 years 8,101 8,078 — — Total $ 23,934 $ 23,916 $ 32,372 $ 32,171 Other information The following table summarizes Newtek Bank’s debt securities available-for-sale pledged for deposits, borrowings, and other purposes: December 31, 2024 December 31, 2023 Pledged for deposits $ — $ — Pledged for borrowings and other 23,916 30,730 Total pledged $ 23,916 $ 30,730 F-34 Table of Contents NOTE 5—LOANS : Loans held for investment (HFI), at fair value Loans HFI, at fair value includes SBA 7(a) loans originated by NSBF. On occasion, NSBF has distributed loans to NewtekOne that were originated as SBA 7(a) loans by NSBF where the SBA guarantee has been subsequently repurchased by NSBF. The following table shows the Company’s loan portfolio by collateral type for loans HFI, at fair value: Loans HFI, at Fair Value December 31, 2024 December 31, 2023 Cost Fair Value Cost Fair Value CRE $ 162,894 $ 175,353 $ 203,882 $ 218,334 Residential Real Estate 69,667 67,474 94,877 88,051 Machinery and Equipment¹ 60,460 56,454 74,691 67,069 Accounts Receivable and Inventory 59,449 54,267 80,746 74,596 Unsecured 5,643 5,644 6,851 6,898 Other² 13,033 10,554 21,516 14,853 Total $ 371,146 $ 369,746 $ 482,563 $ 469,801 1 Machinery and Equipment includes one loan at NewtekOne of $ 4.7 million Cost and $ 4.6 million Fair value as of December 31, 2024, and $ 5.0 million Cost and $ 3.6 million Fair Value as of December 31, 2023. 2 Other includes one loan at NewtekOne of $ 2.0 million Cost and $ 1.1 million Fair Value as of December 31, 2024, and two loans at $ 2.1 million Cost and $ 1.1 million Fair Value as of December 31, 2023. Loans HFI, at amortized cost, net of deferred fees and costs Loans HFI, at amortized cost, net of deferred fees and costs includes SBA 7(a) loans, CRE, and C&I loans originated and held by Newtek Bank. The following table shows the Company’s loan portfolio by loan type for loans HFI, at amortized cost: Loans HFI, at Amortized Cost December 31, 2024 December 31, 2023 SBA $ 380,981 $ 163,918 CRE 191,831 163,803 C&I 47,558 8,191 Total Loans 620,370 335,912 Deferred fees and costs, net 1,281 393 Loans held for investment, at amortized cost, net of deferred fees and costs $ 621,651 $ 336,305 Past Due and Non-Accrual Loans HFI Loans HFI, at fair value The following tables summarize the aging of accrual and non-accrual loans HFI, at fair value by class: As of December 31, 2024 Past Due and Accruing Non- accrual Total Past Due and Non-accrual Current Total Accounted for Under the FV Option 30-59 Days 60-89 Days 90-119 Days 120+ Days SBA, at fair value $ 23,158 $ 18,400 $ 9,268 $ — $ 67,304 $ 118,130 $ 251,616 $ 369,746 As of December 31, 2023 Past Due and Accruing Non- accrual Total Past Due and Non-accrual Current Total Accounted for Under the FV Option 30-59 Days 60-89 Days 90-119 Days 120+ Days SBA, at fair value $ 20,380 $ 16,075 $ — $ — $ 48,174 $ 84,629 $ 385,172 $ 469,801 F-35 Table of Contents Loans HFI, at amortized cost, net of deferred fees and costs The following tables summarize the aging of accrual and non-accrual loans HFI, at amortized cost by class: As of December 31, 2024 Past Due and Accruing Non- accrual Total Past Due and Non-accrual Current Total Carried at Amortized Cost 30-59 Days 60-89 Days 90-119 Days 120+ Days At amortized cost SBA $ 11,264 $ 9,046 $ — $ — $ 21,706 $ 42,016 $ 338,965 $ 380,981 CRE — — — — 2,635 2,635 189,196 191,831 C&I 275 — — — — 275 47,283 47,558 Total, at amortized cost $ 11,539 $ 9,046 $ — $ — $ 24,341 $ 44,926 $ 575,444 $ 620,370 Deferred fees and costs 1,281 Total, at amortized cost net of deferred fees and costs $ 621,651 Allowance for credit losses ( 30,233 ) Total, at amortized cost, net $ 591,418 As of December 31, 2023 Past Due and Accruing Non- accrual Total Past Due and Non-accrual Current Total Carried at Amortized Cost 30-59 Days 60-89 Days 90-119 Days 120+ Days At amortized cost SBA $ 3,637 $ 311 $ — $ — $ 752 $ 4,700 $ 159,218 $ 163,918 CRE 948 — — — 4,621 5,569 158,234 163,803 C&I — — — — — — 8,191 8,191 Total, at amortized cost $ 4,585 $ 311 $ — $ — $ 5,373 $ 10,269 $ 325,643 $ 335,912 Deferred fees and costs 393 Total, at amortized cost net of deferred fees and costs $ 336,305 Allowance for credit losses ( 12,574 ) Total, at amortized cost, net $ 323,731 Credit Quality Indicators The Company uses internal loan reviews to assess the performance of individual loans. In addition, an independent review of the loan portfolio is performed annually by an external firm. The goal of the Company’s annual review of each borrower’s financial performance is to validate the adequacy of the risk grade assigned. The Company uses a grading system to rank the quality of each loan. The grade is periodically evaluated and adjusted as performance dictates. Loan grades 1 through 4 are passing grades and grade 5 is special mention. Collectively, grades 6 through 7 represent classified loans in Newtek Bank’s portfolio. The following guidelines govern the assignment of these risk grades: Exceptional (1 Rated): These loans are of the highest quality, with strong, well-documented sources of repayment. These loans will typically have multiple demonstrated sources of repayment with no significant identifiable risk to collection, exhibit well-qualified management, and have liquid financial statements relative to both direct and indirect obligations. Quality (2 Rated): These loans are of very high credit quality, with strong, well-documented sources of repayment. These loans exhibit very strong, well defined primary and secondary sources of repayment, with no significant identifiable risk of collection and have internally generated cash flow that more than adequately covers current maturities of long-term debt. Satisfactory (3 Rated): These loans exhibit satisfactory credit risk and have excellent sources of repayment, with no significant identifiable risk of collection. These loans have documented historical cash flow that meets or exceeds required minimum Bank guidelines, or that can be supplemented with verifiable cash flow from other sources. They have adequate secondary sources to liquidate the debt, including combinations of liquidity, liquidation of collateral, or liquidation value to the net worth of the borrower or guarantor. F-36 Table of Contents Acceptable (4 Rated): These loans show signs of weakness in either adequate sources of repayment or collateral but have demonstrated mitigating factors that minimize the risk of delinquency or loss. These loans may have unproved, insufficient or marginal primary sources of repayment that appear sufficient to service the debt at this time. These loans also include loans underwritten using projected and/or proforma financial information provided by the borrower. Repayment weaknesses may be due to minor operational issues, financial trends, or reliance on projected performance. They may also contain marginal or unproven secondary sources to liquidate the debt, including combinations of liquidation of collateral and liquidation value to the net worth of the borrower or guarantor. Special mention (5 Rated): These loans show signs of weaknesses in either adequate sources of repayment or collateral. These loans may contain underwriting guideline tolerances and/or exceptions with no mitigating factors; and/or instances where adverse economic conditions develop subsequent to origination that do not jeopardize liquidation of the debt but substantially increase the level of risk. Substandard (6 Rated): Loans graded Substandard are inadequately protected by current sound net worth, paying capacity of the obligor, or pledged collateral. Loans classified as Substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt; are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. These loans are consistently not meeting the repayment schedule. Doubtful (7 Rated): Loans graded Doubtful have all the weaknesses inherent in those classified as Substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable. The ability of the borrower to service the debt is extremely weak, overdue status is constant, the debt has been placed on non-accrual status, and no definite repayment schedule exists. Once the loss position is determined, the amount is charged off. Loss (8 Rated): Loss rated loans are considered uncollectible and of such little value that their continuance as assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this credit even though partial recovery may be affected in the future. The following tables present asset quality indicators by portfolio class and origination year at December 31, 2024 and December 31, 2023: December 31, 2024 Term Loans HFI by Origination Year 2024 2023 2022 2021 2020 Prior Total SBA, at fair value Risk Grades 1-4 $ — $ 24,061 $ 112,058 $ 40,641 $ 20,379 $ 102,569 $ 299,708 Risk Grades 5-6 — 3,469 18,592 5,365 3,188 39,225 69,839 Risk Grade 7 — — — — — — — Risk Grade 8 — — 144 17 22 16 199 Total $ — $ 27,530 $ 130,794 $ 46,023 $ 23,589 $ 141,810 $ 369,746 SBA, at amortized cost, net of deferred fees and costs Risk Grades 1-4 $ 224,958 $ 110,735 $ — $ — $ — $ — $ 335,693 Risk Grades 5-6 7,475 32,753 — — — — 40,228 Risk Grade 7 588 4,132 — — — — 4,720 Risk Grade 8 85 255 — — — — 340 Total $ 233,106 $ 147,875 $ — $ — $ — $ — $ 380,981 CRE, at amortized cost, net of deferred fees and costs Risk Grades 1-4 $ 51,889 $ 25,697 $ 33,235 $ 15,763 $ 395 $ 60,614 $ 187,593 Risk Grades 5-6 — — — — 883 3,355 4,238 Risk Grade 7 — — — — — — — Total $ 51,889 $ 25,697 $ 33,235 $ 15,763 $ 1,278 $ 63,969 $ 191,831 C&I, at amortized cost, net of deferred fees and costs Risk Grades 1-4 $ 44,251 $ 1,532 $ — $ — $ — $ 1,500 $ 47,283 Risk Grades 5-6 — 275 — — — — 275 Risk Grade 7 — — — — — — — Total $ 44,251 $ 1,807 $ — $ — $ — $ 1,500 $ 47,558 Total $ 329,246 $ 202,909 $ 164,029 $ 61,786 $ 24,867 $ 207,279 $ 990,116 F-37 Table of Contents December 31, 2023 Term Loans HFI by Origination Year 2023 2022 2021 2020 2019 Prior Total SBA, at fair value Risk Grades 1-4 $ 34,289 $ 151,929 $ 53,998 $ 27,870 $ 52,175 $ 94,751 $ 415,012 Risk Grades 5-6 349 8,968 5,813 1,257 11,764 25,727 53,878 Risk Grade 7 — — — — — — — Risk Grade 8 — 149 17 22 16 707 911 Total $ 34,638 $ 161,046 $ 59,828 $ 29,149 $ 63,955 $ 121,185 $ 469,801 SBA, at amortized cost, net of deferred fees and costs Risk Grades 1-4 $ 161,263 $ — $ — $ — $ — $ — $ 161,263 Risk Grades 5-6 2,655 — — — — — 2,655 Risk Grade 7 — — — — — — — Risk Grade 8 — — — — — — — Total $ 163,918 $ — $ — $ — $ — $ — $ 163,918 CRE, at amortized cost, net of deferred fees and costs Risk Grades 1-4 $ 53,567 $ 28,224 $ 14,590 $ — $ 8,888 $ 49,771 $ 155,040 Risk Grades 5-6 — — 948 910 2,284 4,621 8,763 Risk Grade 7 — — — — — — — Total $ 53,567 $ 28,224 $ 15,538 $ 910 $ 11,172 $ 54,392 $ 163,803 C&I, at amortized cost, net of deferred fees and costs Risk Grades 1-4 $ 6,174 $ — $ — $ — $ — $ 2,017 $ 8,191 Risk Grades 5-6 — — — — — — — Risk Grade 7 — — — — — — — Total $ 6,174 $ — $ — $ — $ — $ 2,017 $ 8,191 Total $ 258,297 $ 189,270 $ 75,366 $ 30,059 $ 75,127 $ 177,594 $ 805,713 Allowance for Credit Losses See NOTE 2—SIGNIFICANT ACCOUNTING POLICIES for a description of the methodologies used to estimate the ACL. The following table details activity in the ACL for the years ended December 31, 2024 and December 31, 2023: December 31, 2024 December 31, 2023 CRE C&I SBA Total CRE C&I SBA Total Beginning balance $ 1,408 $ 314 $ 10,852 $ 12,574 $ — $ — $ — $ — Adjustment to beginning balance due to PCD marks 1 — — — — 774 96 — 870 Charge offs ( 236 ) — ( 7,836 ) ( 8,072 ) — — — — Recoveries — — — — — — — Provision for credit losses 2 258 1 25,472 25,731 634 218 10,852 11,704 Ending balance $ 1,430 $ 315 $ 28,488 $ 30,233 $ 1,408 $ 314 $ 10,852 $ 12,574 1 Given the January 6, 2023 transition to a financial holding company, the Company established an ACL with the beginning balance representing the purchased credit deteriorated loans acquired through the NBNYC Acquisition. 2 Excludes $ 0.5 million of Provision for credit losses relating to unfunded commitments for the year ended December 31, 2024, which is recorded within Accounts payable, accrued expenses and other liabilities in accordance with ASC 326. The Company identified 145 and five loans as of December 31, 2024 and December 31, 2023, respectively, that did not share similar risk characteristics with the loan segments identified in NOTE 2—SIGNIFICANT ACCOUNTING POLICIES and evaluated them for impairment individually. F-38 Table of Contents The following table presents the individually evaluated and collectively evaluated ACL by segment: December 31, 2024 December 31, 2023 ACL CRE C&I SBA Total CRE C&I SBA Total Individually Evaluated $ — $ — $ 7,019 $ 7,019 $ — $ — $ 102 $ 102 Collectively Evaluated 1,430 315 21,469 23,214 1,408 314 10,750 12,472 Total $ 1,430 $ 315 $ 28,488 $ 30,233 $ 1,408 $ 314 $ 10,852 $ 12,574 The following table presents the recorded investment in loans individually evaluated and collectively evaluated by segment: December 31, 2024 December 31, 2023 Recorded Investment CRE C&I SBA Total CRE C&I SBA Total Individually Evaluated $ 2,635 $ — $ 21,706 $ 24,341 $ 4,621 $ — $ 727 $ 5,348 Collectively Evaluated 189,196 47,558 359,275 596,029 159,182 8,191 163,191 330,564 Total $ 191,831 $ 47,558 $ 380,981 $ 620,370 $ 163,803 $ 8,191 $ 163,918 $ 335,912 The amortized cost basis of loans on nonaccrual status and the individually assessed ACL are as follows: December 31, 2024 December 31, 2023 Nonaccrual without Allowance Nonaccrual with Allowance ACL Nonaccrual without Allowance Nonaccrual with Allowance ACL SBA $ 7,264 $ 14,444 $ 7,019 $ 625 $ 102 $ 102 CRE 2,635 — — 4,621 — — Total $ 9,899 $ 14,444 $ 7,019 $ 5,246 $ 102 $ 102 The unpaid contractual principal balance and recorded investment for the loans individually assessed is shown in the table below by type: December 31, 2024 December 31, 2023 Real Estate Collateral Non-Real Estate Collateral Total ACL Real Estate Collateral Non-Real Estate Collateral Total ACL SBA $ 19,586 $ 2,120 $ 21,706 $ 7,019 $ 625 $ 102 $ 727 $ 102 CRE 2,635 — 2,635 — 4,621 — 4,621 — Total $ 22,221 2,120 24,341 7,019 $ 5,246 102 5,348 102 Accrued interest on loans totaled $ 15.5 million and $ 10.7 million as of December 31, 2024 and December 31, 2023, respectively, and is excluded from the estimate of credit losses. The Company writes off accrued interest receivable by reversing interest income and typically occurs upon loans becoming 91 to 120 days past due. Loan Modifications Made to Borrowers Experiencing Financial Difficulty The Company did not make any loan modifications to borrowers experiencing financial difficulty that would require disclosure, such as principal forgiveness, term extension, or interest rate reductions during the years ended December 31, 2024 and 2023. Additionally there were no troubled debt restructurings under legacy U.S. GAAP during the years ended December 31, 2024 and 2023. F-39 Table of Contents Loans held for sale, at fair value December 31, 2024 December 31, 2023 SBA 504 First Lien $ 128,255 $ 66,387 SBA 504 Second Lien 26,678 20,757 SBA 7(a) 4,855 262 SBA 7(a) Partials — 104 ALP 212,498 31,357 Loans held for sale, at fair value $ 372,286 $ 118,867 The following tables summarize the aging of accrual and non-accrual loans HFS, at fair value by class: As of December 31, 2024 Past Due and Accruing Non- accrual Total Past Due and Non-accrual Current Total Accounted for Under the FV Option 30-59 Days 60-89 Days 90-119 Days 120+ Days SBA, at fair value $ 29,119 $ 13,367 $ — $ — $ 250 $ 42,736 $ 117,052 $ 159,788 ALP, at fair value — 2,492 — — — 2,492 210,006 212,498 Total $ 29,119 $ 15,859 $ — $ — $ 250 $ 45,228 $ 327,058 $ 372,286 As of December 31, 2023 Past Due and Accruing Non- accrual Total Past Due and Non-accrual Current Total Accounted for Under the FV Option 30-59 Days 60-89 Days 90-119 Days 120+ Days SBA, at fair value $ 8,796 $ 250 $ 9,046 $ 78,464 $ 87,510 ALP, at fair value — — — — — — 31,357 31,357 Total $ 8,796 $ — $ — $ — $ 250 $ 9,046 $ 109,821 $ 118,867 Loans held for sale, at LCM December 31, 2024 December 31, 2023 SBA 504 First Lien $ 36,783 $ 39,565 SBA 504 Second Lien 8,203 5,741 SBA 7(a) — 64 SBA 7(a) Partials 13,817 11,237 Loans held for sale, at LCM 58,803 56,607 The following tables summarize the aging of accrual and non-accrual loans HFS, at LCM by class: As of December 31, 2024 Past Due and Accruing Non- accrual Total Past Due and Non-accrual Current Total Carried at Amortized Cost 30-59 Days 60-89 Days 90-119 Days 120+ Days At LCM SBA $ 2,164 $ 1,099 $ — $ — $ — 3,263 $ 55,540 $ 58,803 Total, at LCM $ 2,164 $ 1,099 $ — $ — $ — $ 3,263 $ 55,540 $ 58,803 As of December 31, 2023 Past Due and Accruing Non- accrual Total Past Due and Non-accrual Current Total Carried at Amortized Cost 30-59 Days 60-89 Days 90-119 Days 120+ Days At LCM SBA $ — $ — $ — $ — $ — $ — $ 56,607 $ 56,607 Total, at LCM $ — $ — $ — $ — $ — $ — $ 56,607 $ 56,607 F-40 Table of Contents NOTE 6—TRANSACTIONS WITH AFFILIATED COMPANIES AND RELATED PARTY TRANSACTIONS: Due to/from affiliated companies The following table summarizes the amounts due to and due from affiliated companies as of December 31, 2024 and 2023: December 31, 2024 December 31, 2023 Due to affiliated companies 1 $ 242 $ 158 Due from affiliated companies 2 — 7 Total due to/due from affiliated companies $ 242 $ 151 1 Included within Accounts payable, accrued expenses, and other liabilities 2 Included within Other assets Transactions with joint ventures and other non-control investments Refer to NOTE 4—INVESTMENTS for a schedule of transactions with our joint ventures and other non-control equity investments. The following table summarizes the income earned from our joint ventures for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 Servicing income $ 1,997 $ 1,240 $ 840 Dividend income 1,503 1,641 339 Total income $ 3,500 $ 2,881 $ 1,179 Newtek Bank Deposits In the normal course of business, Newtek Bank holds FDIC insured deposits from certain of the Company’s officers, directors and their associated companies. The following table summarizes the amounts due of deposits from related parties and their affiliated companies as of December 31, 2024 and 2023: December 31, 2024 December 31, 2023 FDIC insured deposits $ 4,732 $ 4,388 Non-FDIC insured deposits 1,098 1,167 Total deposits from related parties and their affiliated companies $ 5,830 $ 5,555 Other Transactions with Related Parties The nephew of the Chief Executive Officer of the Company is employed by one of the Company’s consolidated subsidiaries and earned annual compensation in excess of $ 125 thousand during 2024, 2023 and 2022. The sister of a Director and the Chief Admin Officer is employed by one of the Company’s consolidated subsidiaries and earned annual compensation in excess of $ 125 thousand during 2024 and 2023. F-41 Table of Contents NOTE 7—SERVICING ASSETS: Servicing assets held by NSBF are measured at fair value and the Company performs valuations on a quarterly basis. Servicing assets held by Newtek Bank, including Newtek Bank’s subsidiary SBL, are measured at lower of cost or market where the assets are initially recorded at fair value, then subsequently amortized, and assessed for impairment each reporting period. The Company earns servicing fees from the guaranteed portions of SBA 7(a) loans it originates and sells and for the portfolios of ALP loans SBL services for NCL JV and TSO JV. The following table summarizes the unpaid principle balance of loans serviced at December 31, 2024 and 2023: December 31, 2024 December 31, 2023 SBA 7(a) $ 1,996,715 $ 1,787,258 ALP 169,842 63,494 504 12,475 — Total loans serviced $ 2,179,032 $ 1,850,752 The following table summarizes the fair value and valuation assumptions related to servicing assets at December 31, 2024 and 2023: December 31, 2024 December 31, 2023 Weighted Range Weighted Range Unobservable Input Amount Average Minimum Maximum Amount Average Minimum Maximum Servicing assets at FV: $ 22,062 $ 29,336 Discount factor 1 12.00 % 12.00 % 12.00 % 13.50 % 13.50 % 13.50 % Cumulative prepayment rate 22.50 % 22.50 % 22.50 % 22.50 % 22.50 % 22.50 % Average cumulative default rate 21.00 % 21.00 % 21.00 % 19.00 % 19.00 % 19.00 % Servicing assets at LCM: 24,195 10,389 Discount factor 1 12.97 % 12.00 % 13.50 % 13.50 % 13.50 % 13.50 % Cumulative prepayment rate 34.65 % 22.50 % 75.00 % 29.76 % 22.50 % 75.00 % Average cumulative default rate 18.90 % 5.00 % 20.00 % 19.14 % 19.00 % 20.00 % Total $ 46,257 $ 39,725 1 Determined based on risk spreads and observable secondary market transactions. Refer to NOTE 10—FAIR VALUE MEASUREMENTS for a rollforward of servicing assets at fair value. The following tables show a rollforward of servicing assets measured at LCM for the years ended December 31, 2024 and 2023: Servicing Assets, at LCM December 31, 2024 December 31, 2023 $ 10,389 Amortization 1 ( 5,378 ) Additions 2 19,184 Impairment assessment — December 31, 2024 $ 24,195 1 Included within Net loss on loan servicing assets in the Consolidated Statements of Income 2 Included within Net gains on sales of loans in the Consolidated Statements of Income F-42 Table of Contents Servicing Assets, at LCM December 31, 2023 December 31, 2022 $ — Additions/(removal) of entities consolidating after Conversion to BHC 486 Amortization 1 ( 733 ) Additions 2 10,636 Impairment assessment — December 31, 2023 $ 10,389 1 Included within Net loss on loan servicing assets in the Consolidated Statements of Income 2 Included within Net gains on sales of loans in the Consolidated Statements of Income Servicing fee income earned for the years ended December 31, 2024, 2023 and 2022 was as follows: Year Ended December 31, 2024 2023 2022 Servicing fee income $ 20,087 $ 18,289 $ 13,698 NOTE 8—GOODWILL AND INTANGIBLE ASSETS: Goodwill The following table summarizes changes in the carrying amount of goodwill: December 31, 2024 December 31, 2023 Banking $ 271 $ 271 Payments 13,814 13,814 Technology 1 — 11,800 Total goodwill $ 14,085 $ 25,885 1 The technology goodwill is classified as Held for Sale in anticipation of the NTS Sale, which was completed on January 2, 2025. Refer to NOTE 9—ASSETS AND LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS HELD FOR SALE. Banking: In connection with the Acquisition, the Company recorded $ 0.3 million of goodwill, which represents the excess of the purchase price over the fair value of the net assets acquired. Goodwill is an asset representing the acquired future economic benefits such as synergies that are not individually identified and separately recognized (i.e., it is measured as a residual). The amount of goodwill recognized is also impacted by measurement differences resulting from certain assets and liabilities not being recorded at fair value (e.g., income taxes, employee benefits). In accordance with ASC 805-30-30-1, the measurement of goodwill occurs on the Acquisition Date and, other than qualifying measurement period adjustments, no adjustments are made to goodwill recognized as of the Acquisition Date until and unless it becomes impaired. Payments and Technology: The goodwill in the payments and technology segments was generated from acquisitions by the legal entities within those segments prior to the consolidation of the those entities into NewtekOne following the Acquisition. F-43 Table of Contents Intangible Assets The following table summarizes intangible assets: At December 31, 2024 At December 31, 2023 Gross carrying Amount Accumulated Amortization Net Carrying amount Gross carrying Amount Accumulated Amortization Net Carrying amount Banking - Core Deposits $ 1,040 $ ( 373 ) $ 667 $ 1,040 $ ( 197 ) $ 843 Payments - Customer Lists — — — 8,575 ( 8,562 ) 13 Technology - Customer Lists¹ — — — 6,525 ( 3,146 ) 3,379 Total intangible assets $ 1,040 $ ( 373 ) $ 667 $ 16,140 $ ( 11,905 ) $ 4,235 1 The technology customer lists are classified as Held for Sale in anticipation of the NTS Sale, which was completed on January 2, 2025. Refer to NOTE 9—ASSETS AND LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS HELD FOR SALE. Core Deposits Intangible. CDI is a measure of the value of non-interest-bearing and interest-bearing checking accounts, savings accounts, and money market accounts that are acquired in a business combination. The fair value of the CDI stemming from any given business combination is based on the present value of the expected cost savings attributable to the core deposit funding, relative to an alternative source of funding. The CDI relating to the NBNYC Acquisition will be amortized over an estimated useful life of 10 years using the sum of years digits depreciation method. The Company evaluates such identifiable intangibles for impairment when an indication of impairment exists. Customer Lists. The intangible asset for customer lists were within the technology and payments segments and existed prior to the consolidation of those segments into NewtekOne following the Acquisition. The payments customer list has been disposed of. The technology customer lists are classified as Assets held for sale as of December 31, 2024. Amortization expense for the years ended December 31, 2024, 2023, and 2022 is as follows and is included in Depreciation and amortization on the Consolidated Statements of Income. There was no amortization expense for the year ended December 31, 2022 since there were no intangible assets prior to the Acquisition. Years Ended December 31, 2024 2023 2022 Amortization expense $ 539 $ 1,468 $ — The remaining estimated aggregate future amortization expense for intangible assets as of December 31, 2024 is as follows: Amortization Expense 2025 $ 156 2026 135 2027 114 2028 94 2029 73 Thereafter 95 Total $ 667 F-44 Table of Contents NOTE 9—ASSETS AND LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS HELD FOR SALE: The net assets of our technology segment, which consisted of NTS, are represented as held-for-sale as of December 31, 2024 a s a result of our entry into the NTS Sale Agreement and our divestiture of NTS on January 2, 2025 (consistent with our commitments to the Federal Reserve). Refer to “ NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION ” - Sale of NTS. The following tables present the assets classified as held for sale and the liabilities directly associated with assets classified as held for sale as of December 31, 2024: ASSETS LIABILITIES Held for Sale Directly Associated with Assets Held for Sale Cash and due from banks $ 325 Lease liabilities $ 685 Goodwill 11,800 Deferred tax liabilities, net 2,975 Intangibles 3,030 Accounts payable, accrued expenses and other liabilities 2,564 Right of use assets 619 Other assets 6,150 Valuation allowance 1 ( 616 ) $ 21,308 $ 6,224 1 The associated expense is included in Other general and administrative costs in the consolidated statements of operations for the year ended December 31, 2024. Goodwill The goodwill in the technology segment was generated from acquisitions by the legal entities within that segment prior to the consolidation of the those entities into NewtekOne following the 2023 Acquisition. Intangibles The intangible asset for customer lists within the technology segment existed prior to the consolidation of the technology segment into NewtekOne following the Acquisition. As of December 31, 2024 Gross carrying Amount Accumulated Amortization Net Carrying amount Technology Customer Lists $ 6,525 $ ( 3,495 ) $ 3,030 Right of use assets and lease liabilities Under ASC 842, operating lease expense is generally recognized on a straight-line basis over the term of the lease. The Company has entered into operating lease agreements for office space with remaining contractual terms up to 0.7 year, some of which include renewal options. These renewal options are not considered in the remaining lease term unless it is reasonably certain the Company will exercise such options. The operating lease agreements do not contain any material residual value guarantees or material restrictive covenants. As the rate implicit in the leases generally is not readily determinable for our operating leases, the discount rates used to determine the present value of our lease liability are based on our incremental borrowing rate at the lease commencement date and commensurate with the remaining lease term. Our incremental borrowing rate for a lease is the rate of interest we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Leases with an initial term of 12 months or less are not recorded on the balance sheet and are excluded from our weighted-average remaining lease term. F-45 Table of Contents NOTE 10—FAIR VALUE MEASUREMENTS: The following tables present fair value measurements of certain of the Company’s assets and liabilities measured at fair value and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair values as of December 31, 2024 and December 31, 2023: Fair Value Measurements at December 31, 2024 Total Level 1 Level 2 Level 3 Assets: Debt securities available-for-sale U.S. Treasury notes $ 23,916 $ 23,916 $ — $ — Loans held for sale, at fair value 372,286 — — 372,286 Loans held for investment, at fair value 369,746 — — 369,746 Other real estate owned 1 3,764 — — 3,764 Servicing assets 2 22,062 — — 22,062 Joint ventures and other non-control investments 57,678 — — 57,678 Assets held for sale 3 21,308 — — 21,308 Derivative instruments 1,4 715 — 715 — Total assets measured at fair value $ 871,475 $ 23,916 $ 715 $ 846,844 Liabilities: Equity warrants 4 $ 133 $ — $ — $ 133 Total liabilities measured at fair value $ 133 $ — $ — $ 133 1 Included in Other assets on the Consolidated Statements of Financial Condition. 2 $ 22.1 million of servicing assets at held at FV and $ 24.2 million of servicing assets are held at LCM. Refer to NOTE 7—SERVICING ASSETS. 3 Non-recurring 4 Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings. Fair Value Measurements at December 31, 2023 Total Level 1 Level 2 Level 3 Assets: Debt securities available-for-sale U.S. Treasury notes $ 29,305 $ 29,305 $ — $ — Government agency debentures 2,866 — 2,866 — Loans held for sale, at fair value 118,867 — — 118,867 Loans held for investment, at fair value 469,801 — — 469,801 Other real estate owned 1 1,110 — — 1,110 Servicing assets, at fair value 2 29,336 — — 29,336 Joint ventures and other non-control investments 41,587 — — 41,587 Total assets measured at fair value $ 692,872 $ 29,305 $ 2,866 $ 660,701 Liabilities: Equity warrants 3 $ 141 $ — $ — $ 141 Derivative instruments 3,4 630 — 630 — Total liabilities measured at fair value $ 771 $ — $ 630 $ 141 1 Included in Other assets on the Consolidated Statements of Financial Condition. 2 $ 29.3 million of servicing assets held at FV and $ 10.4 million of servicing assets are held at LCM. Refer to NOTE 7—SERVICING ASSETS 3 Included in Accounts payable, accrued expenses, and other liabilities on the Consolidated Statements of Financial Condition. 4 Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings. F-46 Table of Contents The following tables represents the changes in the investments, servicing assets and liabilities measured at fair value using Level 3 inputs for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 Loans HFI, at FV Loans HFS, at FV Joint Ventures and Other Non-Control Investments Servicing Assets, at FV Assets HFS Warrant Liabilities 1 Other Real Estate Owned 2 Fair value, December 31, 2023 $ 469,801 $ 118,867 $ 41,587 $ 29,336 $ — $ 141 $ 1,110 Reclasses between loans at FV and LCM 263 4,077 — — — — — Reclasses between loans HFS and HFI — ( 599 ) — — — — — Sales ( 2,586 ) ( 179,949 ) — — — — ( 1,446 ) Principal payments received ( 71,791 ) ( 16,178 ) — — — — — Foreclosed real estate acquired ( 4,569 ) — — — — — 4,569 SBA loans, funded 122 26,863 — — — — — ALP loans, funded — 283,822 — — — — — Mortgage loans, funded — 103,838 — — — — — Additions — — — 14 21,924 — — Purchases and repurchases of loans 4,851 — — — — — — Capital contributions/(distributions) — — 5,379 — — — — Change in valuation due to: Changes in valuation inputs or assumptions 597 31,569 10,712 924 ( 616 ) ( 8 ) ( 469 ) Other factors ( 26,942 ) ( 23 ) — ( 8,212 ) — — — Fair value, December 31, 2024 $ 369,746 $ 372,287 $ 57,678 $ 22,062 $ 21,308 $ 133 $ 3,764 1 Included in Accounts payable, accrued expenses, and other liabilities on the Consolidated Statements of Financial Condition. 2 Included in Other assets on the Consolidated Statements of Financial Condition. Year Ended December 31, 2023 Loans HFI, at FV Loans HFS, at FV Controlled Investments Joint Ventures and Other Non-Control Investments Servicing Assets, at FV Warrant Liabilities 1 Other Real Estate Owned 2 Fair value, December 31, 2022 $ 505,268 $ 19,171 $ 259,217 $ 24,382 $ 30,268 $ — $ 3,529 Additions/(removal) of entities consolidating after Conversion to BHC — 69,745 ( 259,217 ) — — — — Reclasses between loans at FV and LCM 5,879 ( 28,513 ) — — — — — Sales ( 23,783 ) ( 180,784 ) — — — — ( 4,248 ) Principal payments received ( 77,966 ) ( 6,233 ) — — — — — Foreclosed real estate acquired ( 2,978 ) — — — — 2,978 SBA loans, funded 38,889 167,124 — — — — — ALP loans, funded — 69,835 — — — — — Additions — — — — 2,617 311 — Purchases and repurchases of loans 9,728 5,279 — — — — — Capital contributions/(distributions) — — — 13,986 — — — Change in valuation due to: Changes in valuation inputs or assumptions 13,515 3,931 — 3,219 1,847 ( 170 ) — Other factors 1,249 ( 688 ) — — ( 5,396 ) — ( 1,149 ) Fair Value, December 31, 2023 $ 469,801 $ 118,867 $ — $ 41,587 $ 29,336 $ 141 $ 1,110 1 Included in Accounts payable, accrued expenses, and other liabilities on the Consolidated Statements of Financial Condition. 2 Included in Other assets on the Consolidated Statements of Financial Condition. F-47 Table of Contents The following tables provide a summary of quantitative information about the Company’s Level 3 fair value measurements as of December 31, 2024 and December 31, 2023. In addition to the inputs noted in the table below, according to our valuation policy we may also use other valuation techniques and methodologies when determining our fair value measurements. The tables below are not intended to be all-inclusive, but rather provide information on the significant Level 3 inputs as they relate to the Company’s fair value measurements at December 31, 2024 and December 31, 2023. Fair Value as of Weighted Range December 31, 2024 Unobservable Input Average Minimum Maximum Assets: Loans HFI, at FV - accrual $ 302,442 Market yields 6.55 % 6.55 % 6.55 % Cumulative prepayment rate 22.50 % 22.50 % 22.50 % Average cumulative default rate 21.00 % 21.00 % 21.00 % Loans HFI, at FV - non-accrual $ 67,304 Market yields 7.30 % 7.30 % 7.30 % Cumulative prepayment rate — % — % — % Average cumulative default rate 30.00 % 30.00 % 30.00 % Loans HFS, at FV $ 372,286 Market yields 7.62 % 7.08 % 8.18 % Cumulative prepayment rate 59.78 % 50.00 % 70.00 % Average cumulative default rate 9.89 % 5.00 % 15.00 % Joint ventures and other non-control investments $ 57,678 Market yields 8.40 % 8.00 % 12.00 % Cost of equity 11.00 % 8.00 % 14.00 % Weighted average cost of capital 7.72 % 6.00 % 23.98 % Servicing assets, at FV 1 $ 22,062 Market yields 12.00 % 12.00 % 12.00 % Cumulative prepayment rate 22.50 % 22.50 % 22.50 % Average cumulative default rate 21.00 % 21.00 % 21.00 % Assets held for sale $ 21,308 Present value factor 90.70 % 89.50 % 93.20 % Discount rate 10.23 % 7.27 % 11.71 % Other real estate owned $ 3,764 Appraised value N/A N/A N/A Liabilities: Equity warrants $ 133 Expected volatility 48.00 % 48.00 % 48.00 % Dividend yield 6.00 % 6.00 % 6.00 % Risk free rate 4.52 % 4.52 % 4.52 % 1 $ 22.1 million of servicing assets at held at FV and $ 24.2 million of servicing assets are held at LCM. Refer to NOTE 7—SERVICING ASSETS. F-48 Table of Contents Fair Value as of Weighted Range December 31, 2023 Unobservable Input Average Minimum Maximum Assets: Loans HFI, at FV - accrual $ 421,627 Market yields 7.75 % 7.75 % 7.75 % Cumulative prepayment rate 22.50 % 22.50 % 22.50 % Average cumulative default rate 19.00 % 19.00 % 19.00 % Loans HFI, at FV - non-accrual $ 48,174 Market yields 7.39 % 7.39 % 7.39 % Cumulative prepayment rate — % — % — % Average cumulative default rate 30.00 % 30.00 % 30.00 % Loans HFS, at FV $ 118,867 Market yields 6.85 % 6.50 % 7.75 % Cumulative prepayment rate 61.03 % 55.60 % 75.00 % Average cumulative default rate 20.00 % 20.00 % 20.00 % Joint ventures and other non-control investments $ 41,227 Market yields 8.02 % 8.00 % 12.00 % Cost of equity 12.00 % 10.00 % 14.00 % Weighted average cost of capital 8.50 % 7.50 % 9.50 % $ 360 Cost N/A N/A N/A Servicing assets, at FV 1 $ 29,336 Market yields 13.50 % 13.50 % 13.50 % Cumulative prepayment rate 22.50 % 22.50 % 22.50 % Average cumulative default rate 19.00 % 19.00 % 19.00 % Other real estate owned $ 1,110 Appraised value N/A N/A N/A Liabilities: Equity warrants $ 141 Expected volatility 43.00 % 43.00 % 43.00 % Dividend yield 5.20 % 5.20 % 5.20 % Risk free rate 3.88 % 3.88 % 3.88 % 1 $ 29.3 million of servicing assets held at FV and $ 10.4 million of servicing assets are held at LCM. Refer to NOTE 7—SERVICING ASSETS F-49 Table of Contents Estimated Fair Value of Other Financial Instruments GAAP also requires disclosure of the fair value of financial instruments carried at book value on the Consolidated Statements of Financial Condition. The carrying amounts and estimated fair values of the Company’s financial instruments not measured at fair value on a recurring or non-recurring basis are as follows: December 31, 2024 Carrying Amount Fair Value Amount by Level: Total Fair Value Level 1 Level 2 Level 3 Financial Assets: Cash and due from banks $ 6,941 $ 6,941 $ — $ — $ 6,941 Restricted cash 28,226 28,226 — — 28,226 Interest bearing deposits in banks 346,207 346,207 — — 346,207 Debt securities available-for-sale, at FV 23,916 23,916 — — 23,916 Loans HFS, at FV 372,286 — — 372,286 372,286 Loans HFS, at LCM 58,803 — — 58,856 58,856 Loans HFI, at FV 369,746 — — 369,746 369,746 Loans HFI, at amortized cost, net of deferred fees and costs 621,651 — — 668,687 668,687 Federal Home Loan Bank and Federal Reserve Bank stock 3,585 — 3,585 — 3,585 Joint ventures and other non-control investments, at FV 57,678 — — 57,678 57,678 Financial Liabilities: Time deposits 409,251 — 410,442 — 410,442 Borrowings 708,041 — 306,549 413,818 720,367 December 31, 2023 Carrying Amount Fair Value Amount by Level: Total Fair Value Level 1 Level 2 Level 3 Financial Assets: Cash and due from banks $ 15,398 $ 15,398 $ — $ — $ 15,398 Restricted cash 30,919 30,919 — — 30,919 Interest bearing deposits in banks 137,689 137,689 — — 137,689 Debt securities available-for-sale, at FV 32,171 29,305 2,866 — 32,171 Loans HFS, at FV 118,867 — — 118,867 118,867 Loans HFS, at LCM 56,607 — — 56,733 56,733 Loans HFI, at FV 469,801 — — 469,801 469,801 Loans HFI, at amortized cost, net of deferred fees and costs 336,305 — — 337,133 337,133 Federal Home Loan Bank and Federal Reserve Bank stock 3,635 — 3,635 — 3,635 Joint ventures and other non-control investments, at FV 41,587 — — 41,587 41,587 Financial Liabilities: Time deposits 167,041 — 168,542 — 168,542 Borrowings 644,122 — 187,555 454,239 641,794 F-50 Table of Contents The fair values of the components of Borrowings are included in the chart below: December 31, 2024 December 31, 2023 Closing Price Fair Value Closing Price Fair Value Public Parent Company Notes 1 : 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 Notes 2 $ 80,926 $ 79,179 Securitizations 3 186,635 292,112 FHLB Borrowings 3 15,330 23,184 Bank Borrowings 3 130,927 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 11—DEPOSITS: The following table summarizes deposits by type: December 31, 2024 December 31, 2023 Non-interest-bearing: Demand $ 11,142 $ 10,053 Interest-bearing: Checking 103,978 11,456 Money market 62,001 15,803 Savings 386,680 259,152 Time deposits 409,251 167,041 Total interest-bearing 961,910 453,452 Total deposits $ 973,052 $ 463,505 Time deposits, money market, and interest-bearing checking obtained through brokers $ 27,100 $ 53,548 Aggregate amount of deposit accounts that exceeded the FDIC limit $ 140,679 $ 66,511 Demand deposit overdrafts reclassified as loan balances $ 17 $ 53 Certificates of deposit in excess of $0.25 million $ 99,231 $ 20,070 The following table summarizes the scheduled maturities of time deposits: 2025 $ 351,906 2026 36,347 2027 20,180 2028 680 2029 138 Thereafter — Total time deposits $ 409,251 F-51 Table of Contents NOTE 12—ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITES: The following table details the components of accounts payable, accrued expenses and other liabilities at December 31, 2024 and December 31, 2023: December 31, 2024 December 31, 2023 Loan related remittances due to SBA and participants $ 2,203 $ 3,577 Accrued payroll and related payables 332 1,349 Accrued interest 6,035 4,114 Funds in process to PMT's payroll customers 5,700 5,060 Loan processing, servicing and other loan related payables 3,185 3,793 SBA repair & denial reserve 1 3,573 3,063 Good faith deposits 1,499 893 Other 18,279 15,451 Total accounts payable, accrued expenses and other liabilities $ 40,806 37,300 1 The Company may be exposed to repair and denial liability to the SBA for SBA 7(a) loans in its portfolio. The Company established a loss contingency reserve in accordance with ASC 450-20. To determine the reserve the Company utilizes probability of default and loss given default rates, which are consistent with the assumptions used in its cash flow projections when estimating the fair value of loans. These factors are applied to the outstanding balances of guaranteed SBA 7(a) loans as well as a rate of repurchase based on historical experience. NOTE 13—BORROWINGS: At December 31, 2024 and December 31, 2023, the Company had borrowings composed of the following: December 31, 2024 December 31, 2023 Commitments Borrowings Outstanding Weighted Avg Interest Rate Commitments Borrowings Outstanding Weighted Avg Interest Rate Bank Borrowings 1 : NMS Webster Note $ 54,871 $ 32,688 7.30 % $ 54,871 $ 36,628 7.94 % SPV I Capital One Facility 60,000 21,192 7.22 % 60,000 16,080 8.20 % SPV II Deutsche Bank Facility 120,000 54,036 7.57 % 50,000 6,799 10.04 % SPV III One Florida Bank Facility 30,000 23,011 8.50 % 30,000 257 9.50 % FHLB Advances 2 20,000 15,330 2.19 % 113,891 23,184 2.13 % Parent Company Notes 1 : 2024 Notes 3 — — — % 38,250 38,124 5.75 % 2025 Notes 30,000 29,913 5.00 % 30,000 29,563 5.00 % 2025 Notes 4 — — — % 50,000 49,433 8.125 % 2026 Notes 115,000 114,282 5.50 % 115,000 113,564 5.50 % 2027 Notes 4 50,000 49,944 8.125 % — — — % 2028 Notes 40,000 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 Trusts 5 189,231 186,635 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. F-52 Table of Contents 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, 2024 December 31, 2023 Principal balance Unamortized deferred financing costs Net carrying amount 1 Principal balance Unamortized deferred financing costs Net carrying amount 1 Bank Borrowings: NMS Webster Note $ 32,894 $ ( 206 ) $ 32,688 $ 36,881 $ ( 253 ) $ 36,628 SPV I Capital One Facility 21,300 ( 108 ) 21,192 16,300 ( 220 ) 16,080 SPV II Deutsche Bank Facility 54,800 ( 764 ) 54,036 6,900 ( 101 ) 6,799 SPV III One Florida Bank Facility 23,075 ( 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, 2024 2023 2022 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. F-53 Table of Contents 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. F-54 Table of Contents 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. F-55 Table of Contents 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 %. F-56 Table of Contents 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 2026 123,075 2027 132,980 2028 40,000 2029 146,875 Thereafter 189,231 $ 718,505 NOTE 14—DERIVATIVE INSTRUMENTS: The Company historically uses derivative instruments primarily to economically manage the fair value variability of certain fixed rate assets caused by interest rate fluctuations and overall portfolio market risk. The following is a breakdown of the derivatives outstanding as of December 31, 2024 and December 31, 2023: December 31, 2024 December 31, 2023 Fair Value Remaining Fair Value Remaining Contract Type Notional 1 Asset 2 Liability Maturity (years) Notional 1 Asset Liability 3 Maturity (years) 5-year Treasury Futures $ ( 153,049 ) $ 715 $ — 0.25 years $ ( 27,869 ) $ — $ 630 0.25 years 1 Shown as a negative number when the position is sold short. 2 Shown in Other assets in the accompanying Consolidated Statements of Financial Condition. 3 Shown in Accounts payable, accrued expenses, and other liabilities in the accompanying Consolidated Statements of Financial Condition. The following table indicates the net realized gains (losses) and unrealized appreciation (depreciation) on derivatives as included in Other Noninterest Income in the consolidated statements of operations for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 December 31, 2023 December 31, 2022 Contract Type Unrealized Appreciation/(Depreciation) Realized Gain/(Loss) Unrealized Appreciation/(Depreciation) Realized Gain/(Loss) Unrealized Appreciation/(Depreciation) Realized Gain/(Loss) 5-year Treasury Futures $ 1,344 $ ( 51 ) $ ( 699 ) $ 834 $ 183 $ 445 Collateral posted with our futures counterparty is segregated in the Company’s books and records. Historically, the Company’s counterparty has held cash margin as collateral for derivatives, which is included in restricted cash in the consolidated balance sheets. Interest rate futures are centrally cleared by the Chicago Mercantile Exchange (“CME”) through a futures commission merchant. The Company is required to post initial margin and daily variation margin for interest rate futures that are centrally cleared by CME. CME determines the fair value of our centrally cleared futures, including daily variation margin. Variation margin pledged on the Company’s centrally cleared interest rate futures is settled against the realized results of these futures. F-57 Table of Contents NOTE 15—COMMITMENTS AND CONTINGENCIES: Operating and Employment Commitments The Company leases office space and other office equipment in several states under operating lease agreements which expire at various dates through 2027. Those office space leases which are for more than one year generally contain scheduled rent increases or escalation clauses. In addition, during 2024, the Company entered into one-year employment agreements with its named executive officers. The following summarizes the Company’s obligations and commitments, as of December 31, 2024 for future minimum cash payments required under operating lease and employment agreements: Year Operating Leases Employment Agreements 1 Total 2025 $ 2,383 $ 902 $ 3,285 2026 2,355 — 2,355 2027 798 — 798 2028 242 — 242 2029 249 — 249 Thereafter 2,237 — 2,237 Total $ 8,264 $ 902 $ 9,166 1 Employment agreements with certain of the Company’s named executive officers. Legal Matters The Company and its subsidiaries are routinely subject to actual or threatened legal proceedings, including litigation and regulatory matters, arising in the ordinary course of business. Litigation matters range from individual actions involving a single plaintiff to class action lawsuits and can involve claims for substantial or indeterminate alleged damages or for injunctive or other relief. Regulatory investigations and enforcement matters may involve formal or informal proceedings and other inquiries initiated by various governmental agencies, law enforcement authorities, and self-regulatory organizations, and can result in fines, penalties, restitution, changes to the Company’s business practices, and other related costs, including reputational damage. At any given time, these legal proceedings are at varying stages of adjudication, arbitration, or investigation, and may relate to a variety of topics. Assessment of exposure that could result from legal proceedings is complex because these proceedings often involve inherently unpredictable factors, including, but not limited to, the following: whether the proceeding is in early stages; whether damages or the amount of potential fines, penalties, and restitution are unspecified, unsupported, or uncertain; whether there is a potential for punitive or other pecuniary damages; whether the matter involves legal uncertainties, including novel issues of law; whether the matter involves multiple parties and/or jurisdictions; whether discovery or other investigation has begun or is not complete; whether material facts may be disputed or unsubstantiated; whether meaningful settlement discussions have commenced; and whether the matter involves class allegations. As a result of these complexities, the Company may be unable to develop an estimate or range of loss. The Company evaluates legal proceedings based on information currently available, including advice of counsel. The Company establishes accruals for those matters, pursuant to ASC 450, when a loss is considered probable and the related amount is reasonably estimable. While the final outcomes of legal proceedings are inherently unpredictable, management is currently of the opinion that the outcomes of pending and threatened matters will not have a material effect on the Company’s business, consolidated financial position, results of operations or cash flows as a whole. As available information changes, the matters for which the Company is able to estimate, as well as the estimates themselves, will be adjusted accordingly. The Company’s estimates are subject to significant judgment and uncertainties, and the matters underlying the estimates will change from time to time. In the event of unexpected future developments, it is possible that an adverse outcome in any such matter could be material to the Company’s business, consolidated financial position, results of operations, or cash flows as a whole for any particular reporting period of occurrence. In addition. as a result of a litigation brought by the Federal Trade Commission (the “FTC”) in October 2012, NMS voluntarily entered into, and continues to operate under, a permanent injunction with respect to certain of its business practices. F-58 Table of Contents Unfunded Commitments At December 31, 2024 and 2023, the Company had unfunded commitments as follows: December 31, 2024 December 31, 2023 SBA 7(a) loans $ 25,032 $ 20,365 SBA 504 loans 72,557 81,023 C&I loans 9,542 13,150 ALP loans — 10,877 Total unfunded commitments $ 107,132 $ 125,415 The Company anticipates these commitments will be funded from the same sources it used to fund its other loan commitments. NOTE 16—SHAREHOLDERS EQUITY: Preferred Stock On February 3, 2023, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with Patriot Financial Partners IV, L.P., and Patriot Financial Partners Parallel IV, L.P. (collectively, “Patriot”) in respect of 20 thousand shares of the Company’s Series A Convertible Preferred Stock, par value $ 0.02 per share (the “Series A Preferred Stock”), in a private placement transaction. The aggregate purchase price was $ 20.0 million. Each share of Series A Preferred Stock was issued at a price of $ 1.0 thousand per share and is convertible at the holder’s option into 47.54 shares of the Company’s Common Stock. The Company had not issued preferred stock prior to February 3, 2023. Warrants for Common Stock On February 3, 2023, pursuant to the Securities Purchase Agreement, the Company issued warrants to Patriot to purchase, in the aggregate, 47.54 thousand shares of Common Stock for $ 21.03 per share. The Warrants are exercisable in whole or in part until the ten year anniversary of the entry into the Securities Purchase Agreement and may be exercised for cash or on a “net share” basis, with the number of shares withheld determined based on the closing price of the Common Stock on the date of such exercise. Warrants are included in Accounts payable, accrued expenses and other liabilities on the Consolidated Statements of Financial Condition. Common Stock 2023 ATM Program The Company’s shelf registration statement on Form S-3 was declared effective by the SEC on July 27, 2023. On November 17, 2023, the Company entered into the 2023 ATM Equity Distribution Agreement. The 2023 ATM Equity Distribution Agreement provides that the Company may offer and sell up to 3.0 million shares of Common Stock from time to time through the placement agents (the “ATM Program”). The Company may, subject to market conditions, engage in activity under the ATM Program. The following table summarizes the total shares sold and net proceeds received under the 2023 ATM Equity Distribution Agreement: Year Ended December 31, 2024 Year Ended December 31, 2023 Year Ended December 31, 2022 Shares sold 1,100 — — Net weighted average price per share $ 12.56 $ — $ — Net proceeds $ 13,818 $ — $ — Placement agent fees paid $ 282 $ — $ — We used the net proceeds for funding investments in accordance with our investment objective and strategies and for general corporate purposes including repaying outstanding indebtedness and other general corporate purposes. F-59 Table of Contents 2020 ATM Program On June 25, 2020, the Company entered into the 2020 ATM Equity Distribution Agreement. On July 20, 2022, the Company entered into Amendment No. 1 to the 2020 ATM Equity Distribution Agreement. The 2020 ATM Equity Distribution Agreement, as amended, provided that the Company may offer and sell up to 6.4 million shares of common stock from time to time through the placement agents. The ATM program was suspended as of January 6, 2023, when the Company did not have an effective shelf registration statement in place. The following table summarizes the total shares sold and net proceeds received under the 2020 ATM Equity Distribution Agreement: Year Ended December 31, 2024 Year Ended December 31, 2023 Year Ended December 31, 2022 Shares sold — — 107 Net weighted average price per share $ — $ — $ 19.12 Net proceeds $ — $ — $ 2,054 The Company used the net proceeds for funding investments in debt and equity securities in accordance with its investment objective and strategies. Stock Repurchase Program On November 1, 2024, the Company’s Board of Directors approved a new stock repurchase program granting the Company authority to repurchase up to 1.0 million shares of Company common stock during the next twelve months. The actual timing and amount of any repurchases under the plan will be determined by the Company in its discretion, and will depend on a number of factors, including market conditions, applicable legal requirements, the Company's capital needs and whether there is a better alternative use of capital. The Company has no obligation to repurchase any amount of its common stock under its new stock repurchase program. The following table summarizes the total shares repurchased and net proceeds received under the stock repurchase program: Year Ended December 31, 2024 Year Ended December 31, 2023 Year Ended December 31, 2022 Shares repurchased 30 — — Net weighted average price per share $ 13.35 $ — $ — Net proceeds $ 402 $ — $ — Dividends and Distributions The following table summarizes dividend declarations and distributions on the Series A Preferred Stock during the years ended December 31, 2024 and 2023: Date Declared Record Date Payment Date Amount Per Share Cash Distribution Year ended December 31, 2024 March 18, 2024 March 28, 2024 April 1, 2024 $ 20.00 $ 400 June 26, 2024 June 28, 2024 July 1, 2024 $ 20.00 $ 400 September 16, 2024 September 30, 2024 October 1, 2024 $ 20.00 $ 400 December 31, 2024 January 1, 2025 January 2, 2025 $ 20.00 $ 400 Year ended December 31, 2023 April 13, 2023 March 20, 2023 April 14, 2023 $ 12.44 $ 249 June 27, 2023 June 27, 2023 July 1, 2023 $ 20.00 $ 400 September 27, 2023 September 27, 2023 October 2, 2023 $ 20.00 $ 400 December 25, 2023 December 27, 2023 January 2, 2024 $ 20.00 $ 400 F-60 Table of Contents The Company’s dividends and distributions on the Company’s common shares are recorded on the declaration date. Effective December 8, 2023, the Company terminated the DRIP. The following table summarizes the Company’s dividend declarations and distributions, including DRIP shares and dividend shares issued on vested restricted stock awards, during the years ended December 31, 2024 and 2023: Record Date Payment Date Amount Per Share Cash Distribution DRIP Shares Issued Dividend Shares Issued on Unvested RSAs Date Declared # $ # $ Year ended December 31, 2024 March 19, 2024 April 1, 2024 April 15, 2024 $ 0.19 $ 4,617 — $ — 6 $ 71 June 27, 2024 July 9, 2024 July 19, 2024 $ 0.19 $ 4,827 — $ — 5 $ 78 September 16, 2024 October 10, 2024 October 21, 2024 $ 0.19 $ 4,837 — $ — 8 $ 114 December 13, 2024 December 31, 2024 January 13, 2025 $ 0.19 $ 4,833 — $ — 13 $ 155 Year ended December 31, 2023 February 27, 2023 April 4, 2023 April 14, 2023 $ 0.18 $ 4,291 6 $ 72 5 $ 60 June 27, 2023 July 10, 2023 July 21, 2023 $ 0.18 $ 4,293 4 $ 73 3 $ 60 September 27, 2023 October 10, 2023 October 20, 2023 $ 0.18 $ 4,293 6 $ 71 5 $ 63 December 11, 2023 December 29, 2023 January 12, 2024 $ 0.18 $ 4,371 — $ — 6 $ 79 NOTE 17—REGULATORY CAPITAL: The maintenance of appropriate levels of capital is a management priority and is monitored on a regular basis. The Company’s principal goals related to the maintenance of capital are the following: to provide adequate capital to support the Company’s risk profile consistent with the risk appetite approved by the Board of Directors; to provide financial flexibility to support future growth and client needs; comply with relevant laws, regulations, and supervisory guidance; to achieve optimal ratings for the Company and its subsidiaries; and to provide a competitive return to shareholders. Management regularly monitors the capital position of the Company on both a consolidated and bank level basis. Risk-based capital ratios, which include Tier 1 Capital, Total Capital and Common Equity Tier 1 Capital, are calculated based on regulatory guidance related to the measurement of capital and risk-weighted assets. Regulatory capital rules adopted in July 2013 and fully phased in as of January 1, 2019, which are referred to as the Basel III rules, impose minimum capital requirements for bank holding companies and banks. The Basel III rules apply to all national and state banks and savings associations regardless of size and bank holding companies and savings and loan holding companies with consolidated assets of more than $3 billion. In order to avoid restrictions on capital distributions or discretionary bonus payments to executives, a covered banking organization must maintain the fully phased in “capital conservation buffer” of 2.5% on top of its minimum risk-based capital requirements. This buffer must consist solely of common equity Tier 1 risk-based capital, but the buffer applies to all three measurements (common equity Tier 1 risk-based capital, Tier 1 capital and total capital). The capital conservation is equal to 2.5% of risk-weighted assets. Capital amounts and ratios for NewtekOne, Inc. as of December 31, 2024 and 2023 are presented in the table below: Actual For Capital Adequacy Purposes 1 For Consideration as Well-Capitalized NewtekOne, Inc. - December 31, 2024 Amount Ratio Amount Ratio Amount Ratio Tier 1 Capital (to Average Assets) $ 231,899 13.3 % 69,727 4.0 % N/A N/A Common Equity Tier 1 (to Risk-Weighted Assets) 231,899 17.0 % 61,492 4.5 % N/A N/A Tier 1 Capital (to Risk-Weighted Assets) 231,899 17.0 % 81,990 6.0 % N/A N/A Total Capital (to Risk-Weighted Assets) 268,887 19.7 % 109,320 8.0 % N/A N/A NewtekOne, Inc. - December 31, 2023 Tier 1 Capital (to Average Assets) $ 180,829 13.6 % $ 53,363 4.0 % N/A N/A Common Equity Tier 1 (to Risk-Weighted Assets) 180,829 16.2 % 50,153 4.5 % N/A N/A Tier 1 Capital (to Risk-Weighted Assets) 180,829 16.2 % 66,870 6.0 % N/A N/A Total Capital (to Risk-Weighted Assets) 213,141 19.1 % 89,160 8.0 % N/A N/A 1 Exclusive of the capital conservation buffer of 2.5% of risk-weighted assets. F-61 Table of Contents Capital amounts and ratios for Newtek Bank as of December 31, 2024 and 2023, are presented in the table below. As of December 31, 2024 and 2023, Newtek Bank was categorized as “well-capitalized” under the prompt corrective action measures and met the capital conservation buffer requirements. Actual For Capital Adequacy Purposes 1 For Consideration as Well-Capitalized Newtek Bank - December 31, 2024 Amount Ratio Amount Ratio Amount Ratio Tier 1 Capital (to Average Assets) $ 120,078 11.9 % $ 40,197 4.0 % 50,246 5.0 % Common Equity Tier 1 (to Risk-Weighted Assets) 120,078 14.2 % 38,151 4.5 % 55,107 6.5 % Tier 1 Capital (to Risk-Weighted Assets) 120,078 14.2 % 50,868 6.0 % 67,823 8.0 % Total Capital (to Risk-Weighted Assets) 130,924 15.4 % 67,824 8.0 % 84,779 10.0 % Newtek Bank - December 31, 2023 Tier 1 Capital (to Average Assets) $ 99,253 16.6 % 23,893 4.0 % $ 29,866 5.0 % Common Equity Tier 1 (to Risk-Weighted Assets) 99,253 21.5 % 20,787 4.5 % 30,026 6.5 % Tier 1 Capital (to Risk-Weighted Assets) 99,253 21.5 % 27,716 6.0 % 36,955 8.0 % Total Capital (to Risk-Weighted Assets) 105,105 22.8 % 36,954 8.0 % 46,193 10.0 % 1 Exclusive of the capital conservation buffer of 2.5% of risk-weighted assets. NOTE 18—EARNINGS PER SHARE: Basic and diluted earnings per share are computed based on the weighted average number of shares outstanding during each period. Diluted earnings per share reflects the potential dilution that could occur upon the exercise of stock options, to the extent outstanding, or upon the vesting of restricted stock grants, any of which would result in the issuance of common stock that would then share in the net income of the Company. Year Ended December 31, 2024 2023 2022 Financial Holding Company Financial Holding Company Investment Company Basic earnings per share: Net income available to common shareholders $ 49,253 $ 45,875 $ 32,311 Weighted-average basic shares outstanding 24,945 24,263 24,198 Basic earnings per share $ 1.97 $ 1.89 $ 1.34 Diluted earnings per share: Net income, for diluted earnings per share $ 49,253 $ 45,875 $ 32,311 Add: Preferred dividends on dilutive Series A convertible preferred stock¹ — — — Net income, for diluted earnings per share 49,253 45,875 32,311 Total weighted-average basic shares outstanding 24,945 24,263 24,198 Add effect of dilutive restricted stock awards² 241 85 — Total weighted-average diluted shares outstanding³ 25,186 24,348 24,198 Diluted earnings per share $ 1.96 $ 1.88 $ 1.34 Anti-dilutive warrants, restricted stock awards, and Series A convertible preferred stock 998 1,153 — 1 For periods presented, the Series A convertible preferred stock was antidilutive and, therefore, the preferred dividends have not been added back to the numerator of Net income, for diluted earnings per share. 2 Incremental diluted shares from restricted stock awards under the treasury stock method. 3 For the year ended ended December 31, 2024 and December 31, 2023, the Warrants were not included in the diluted share count because the results would have been anti-dilutive under the if-converted method. F-62 NOTE 19—LEASES: Under ASC 842, operating lease expense is generally recognized on a straight-line basis over the term of the lease. The Company has entered into operating lease agreements for office space with remaining contractual terms up to fifteen years , some of which include renewal options that extend the leases for up to 10 years. These renewal options are not considered in the remaining lease term unless it is reasonably certain the Company will exercise such options. The operating lease agreements do not contain any material residual value guarantees or material restrictive covenants. As the rate implicit in the leases generally is not readily determinable for our operating leases, the discount rates used to determine the present value of our lease liability are based on our incremental borrowing rate at the lease commencement date and commensurate with the remaining lease term. Our incremental borrowing rate for a lease is the rate of interest we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Leases with an initial term of 12 months or less are not recorded on the balance sheet and are excluded from our weighted-average remaining lease term. The following table summarizes supplemental cash flow and other information related to our operating leases: Year Ended December 31, 2024 2023 2022 Cash paid for amounts included in the measurement of lease liabilities (operating cash flows) $ 2,874 $ 2,693 $ 1,886 Weighted-average remaining lease term - operating leases 5.87 years 2.88 years 4.41 years Weighted-average discount rate - operating leases 5.94 % 5.50 % 4.73 % Total lease costs 1 $ 3,115 $ 3,124 $ 1,000 1 Included in Other general and administrative costs on the consolidated statements of operations. The following table represents the maturity of the Company’s operating lease liabilities as of December 31, 2024: Maturity of Lease Liabilities 2025 $ 2,383 2026 2,355 2027 798 2028 242 2029 249 Thereafter 2,237 Total future minimum lease payments $ 8,264 Less: Imputed interest ( 1,766 ) Present value of future minimum lease payments $ 6,498 NOTE 20—BENEFIT PLANS: Defined Contribution Plan The Company’s employees participate in a defined contribution 401(k) plan (the “Plan”) adopted in 2004 which covers substantially all employees based on eligibility. The Plan is designed to encourage savings on the part of eligible employees and qualifies under Section 401(k) of the Code. Under the Plan, eligible employees may elect to have a portion of their pay, including overtime and bonuses, reduced each pay period, as pre-tax contributions up to the maximum allowed by law. The Company may elect to make a matching contribution equal to a specified percentage of the participant’s contribution, on their behalf as a pre-tax contribution. For the years ended December 31, 2024, 2023 and 2022, the Company matched 50 % of the first 2 % of employee contributions, resulting in $ 0.5 million, $ 0.4 million and $ 0.1 million in expense, respectively. F-63 Table of Contents Stock-based Compensation Plans Restricted Stock Awards The Company accounts for its stock-based compensation plan using the fair value method, as prescribed by ASC 718, Compensation—Stock Compensation. Accordingly, for restricted stock awards, the Company measures the grant date fair value based upon the market price of its Common Stock on the date of the grant and amortizes the fair value of the awards as stock-based compensation expense over the requisite service period, which is generally the vesting term. The Compensation, Corporate Governance and Nominating Committee of the Board approves the issuance of awards of restricted stock to employees and directors pursuant to the 2023 Stock Incentive Plan, which was approved by the Board in April 2023 and the Company’s shareholders on June 14, 2023. No new awards may be granted under the 2015 Stock Incentive Plan, which was terminated by the Board in April 2023. The following table summarizes the restricted stock issuances under the 2015 and 2023 Stock Incentive Plans, net of shares forfeited, if any: 2023 Plan 2 2015 Plan Restricted Stock authorized under the plan 1 3.0 million 1.5 million Net restricted stock (granted)/forfeited during: Year ended December 31, 2020 and prior — ( 223 ) Year ended December 31, 2021 — ( 215 ) Year ended December 31, 2022 — ( 251 ) Year ended December 31, 2023 ( 82 ) 28 Year ended December 31, 2024 ( 497 ) — Total net restricted stock (granted)/forfeited ( 579 ) ( 661 ) 1 No stock options were granted under the 2015 or 2023 Stock Incentive Plans. 2 The 2023 Stock Incentive Plan provides for an initial share reserve of up to 3.0 million shares of Common Stock. Awards of restricted stock granted under the 2015 and 2023 Stock Incentive Plans generally vest over a one - to three-year periods from the grant date; awards of restricted stock granted under the 2023 Stock Incentive Plan to non-employee directors generally vest over a one -year period. The grant date fair value is expensed over the service period, starting on the grant date. Details of the Company’s outstanding shares related to restricted stock awards as of December 31, 2024 and December 31, 2023 are outlined below: December 31, 2024 December 31, 2023 Shares outstanding related to grants of restricted stock awards 771 345 Weighted average grant date fair value of awards $ 14.51 $ 19.18 Additional shares outstanding related to dividends on awards 59 44 As of December 31, 2024 and December 31, 2023, the Company’s total unrecognized compensation expense related to unvested shares of restricted stock granted was as follows. December 31, 2024 December 31, 2023 Unrecognized compensation expense on unvested awards $ 5,929 $ 3,610 Weighted-average period of unrecognized compensation expense 1.0 year 1.7 years F-64 Table of Contents Employee Stock Purchase Plan (ESPP) On June 14, 2023, the Company's stockholders approved the ESPP. The initial aggregate number of shares of Common Stock that may be purchased under the ESPP will not exceed 0.2 million shares. Under the terms of the ESPP, employees may authorize the withholding of up to 15 % of their eligible compensation to purchase our shares of Common Stock, not to exceed $ 25 thousand of Common Stock for any calendar year. The purchase price per shares acquired under the ESPP will never be less than 85 % of the fair market value of the lesser of our Common Stock on the offering date or purchase date. The Compensation, Corporate Governance and Nominating Committee of our Board of Directors, in its discretion, may terminate the ESPP at any time with respect to any shares for which options have not been granted and has the right to amend the ESPP with stockholder approval within 12 months before or after the adoption of the amendment. The difference between the Common Stock’s fair value and the employee’s discounted purchase price is expensed at the time of purchase. The following table summarizes the Company’s ESPP activity from inception through December 31, 2024: Year Ended December 31, 2024 Year Ended December 31, 2023 Offering Period Total Offering Period Total Commencement date 10/1/2024 4/1/2024 10/1/2023 10/1/2023 End date 12/15/2024 9/15/2024 3/15/2024 12/15/2023 Shares purchased 5 10 5 20 4 4 Weighted average share price $ 11.03 $ 10.21 $ 9.83 $ 10.32 $ 13.05 $ 13.05 Total purchased, net of discount $ 55 $ 101 $ 51 $ 207 $ 51 $ 51 The ESPP share activity is as follows: Shares ESPP shares authorized under the plan 200 ESPP shares purchased during: Year ended December 31, 2023 ( 4 ) Year ended December 31, 2024 ( 20 ) Available for future purchases, December 31, 2024 176 The Company’s total stock-based compensation expense included within Salaries and employee benefits expense in the Consolidated Statements of Income for the years ended December 31, 2024, 2023 and 2022 is summarized below: Year Ended December 31, 2024 2023 2022 Restricted stock awards $ 4,040 $ 2,828 $ 2,511 ESPP 22 — — Total compensation cost recognized for stock-based compensation plans $ 4,062 $ 2,828 $ 2,511 F-65 Table of Contents NOTE 21—INCOME TAXES: The Company elected to be treated as a RIC under the Code beginning with the 2015 tax year and, through the year ended December 31, 2022, operated in a manner so as to continue to qualify for the tax treatment applicable to RICs. The Company filed its final RIC tax return for the year ended December 31, 2022. Beginning with 2023, the Company no longer qualifies as a RIC and instead will file a consolidated U.S. federal income tax return. Financial holding companies are subject to federal and state income taxes in essentially the same manner as other corporations. One of the Company’s wholly owned subsidiaries is undergoing a federal income tax audit for the fiscal year ended December 31, 2022. Effective Tax Rate and Net Operating Losses The effective tax rate was 25.97 % for the year ended December 31, 2024. The effective tax rate differs from the federal tax rate of 21% for the year ended December 31, 2024, due primarily to the addition of estimated state tax. The components of income tax expense for the years ended December 31, 2024 and 2023, were as follows: Years ended December 31, 2024 2023 Current income tax expense/(benefit): Federal $ 4,637 $ 1,251 State 2,799 1,593 Total current expense/(benefit) 7,436 2,844 Deferred income tax expense/(benefit): Federal 9,076 ( 4,318 ) State 1,327 ( 482 ) Total deferred expense/(benefit) 10,403 ( 4,800 ) Total income tax expense/(benefit) $ 17,839 $ ( 1,956 ) For the years ended December 31, 2024 and 2023, income taxes for financial reporting purposes differ from the amount computed by applying the statutory federal income tax rate of 21% as shown in the following table: Years ended December 31, 2024 2023 Tax on income computed at statutory federal income tax rate $ 14,425 9,528 Increase (decrease) in taxes resulting from: State income tax, net of federal tax effect 3,538 911 Non-deductible expenses ( 148 ) 788 Realization of net operating loss carryforwards — ( 7,430 ) DTA realization due to change in taxpayer status — ( 5,550 ) Other, net 24 ( 203 ) Income tax expense/(benefit) $ 17,839 ( 1,956 ) Effective tax rate 25.97 % ( 4.31 ) % F-66 Table of Contents Significant components of the Company’s net deferred tax asset at December 31, 2024 and 2023 are listed below: December 31, 2024 December 31, 2023 Deferred tax assets: Allowance for Credit Losses $ 7,914 $ 3,313 Lease Liabilities 1,737 1,832 Other 2,757 1,669 Purchase Accounting, net 183 331 Stock Compensation 1,134 396 Loans — 2,677 Goodwill and Intangible Assets 217 — Federal and state net operating losses, net of federal tax effect 201 2,428 Total deferred tax assets 14,143 12,646 Deferred tax liabilities: Investments 2,481 650 Servicing Rights 6,234 2,737 Right of Use Assets 1,488 1,502 Goodwill and Intangible Assets — 2,330 Loans 6,069 — Other 115 197 Total deferred tax liabilities 16,387 7,416 Net deferred tax asset (liability) $ ( 2,244 ) $ 5,230 At December 31, 2024, the Company has $ 4.1 million of state net operating loss carryforwards. Of the $ 4.1 million, $ 4.0 million is expected to expire at various dates through 2043 with the remainder of the net operating losses having indefinite lives. If substantial changes in the Company’s ownership occur, there would be an annual limitation on the amount of carryforward(s) that can be utilized. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. The Company files tax returns in federal and certain state and local jurisdictions. The periods subject to examination are generally for tax years ended in 2020 and beyond, including the following major jurisdictions: U.S. Federal, New York, and Florida. However, the Company’s net operating losses continue to be subject to review by tax authorities in the period utilized notwithstanding origination in closed periods. As of December 31, 2024, the Company had no uncertain tax positions. The Company has elected to recognize interest and penalties related to income tax matters as a component of income tax expense, of which no interest or penalties were recorded for the years ended December 31, 2024 and 2023. NOTE 22—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 the Corporate & Other segment. Net interest income, provision for credit losses, and non-interest 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. F-67 Table of Contents 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 five reportable segments for management reporting purposes with their operating and financials results reviewed by the chief operating decision maker (“CODM”), 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 five 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 Non-Bank Lending below) and originates and services SBA 504 loans, C&I loans, CRE loans and ABL loans. In addition, Newtek Bank offers depository services. Alternative Lending Alternative Lending includes NALH and its subsidiaries as well as NH6. The Company has originated loans under its alternative lending program since 2019. Prior to July 1, 2024, the Company originated ALP loans with the intent to sell to a JV. While the Company continues to source JV partners to participate in this program, the Company could also originate ALP loans designated as HFI. The Company does not expect any significant changes to the underwriting or terms of loans in its ALP. 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 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. Technology NTS provides website hosting, web design and development, dedicated server hosting, cloud hosting, internet marketing, ecommerce, data storage, backup and disaster recovery, and other related services including consulting and implementing technology solutions for enterprise and commercial clients across the U.S. As a result of commitments made to the Federal Reserve in connection with the Acquisition, the Company has divested of NTS on January 2, 2025. As a result of the Company’s entry into the NTS Sale Agreement and the Company’s completion of the NTS Sale, t he Company has reported NTS as Held for Sale as of December 31, 2024 and will not be reported as a segment in future filings given the sale of NTS. See NOTE 9—ASSETS AND LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS HELD FOR SALE. See NOTE 25—SUBSEQUENT EVENTS: Sale of NTS. 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. F-68 Table of Contents The following tables provide financial information for the Company's segments: As of and for the year ended December 31, 2024 Banking Alternative Lending Technology NSBF Payments Corporate & Other Consolidated Segment Elim Segment Elim Segment Elim Segment Elim Segment Elim Segment Elim Interest income $ 69,576 $ ( 2 ) $ 15,073 $ ( 12 ) $ 6 $ ( 6 ) $ 36,655 $ ( 421 ) $ 2,362 $ ( 2,310 ) $ 2,364 $ ( 1,867 ) $ 121,418 Interest expense 29,855 ( 643 ) 3,539 — — — 21,097 — 2,984 ( 77 ) 28,256 ( 3,898 ) 81,113 Net interest income/(loss) 39,721 641 11,534 ( 12 ) 6 ( 6 ) 15,558 ( 421 ) ( 622 ) ( 2,233 ) ( 25,892 ) ( 2,233 ) 40,305 Provision for loan credit losses 26,216 — — — — — — — — — — — 26,216 Net interest income after provision for loan credit losses 13,505 641 11,534 ( 12 ) 6 ( 6 ) 15,558 ( 421 ) ( 622 ) ( 2,233 ) ( 25,892 ) ( 2,233 ) 14,089 Noninterest income 136,080 ( 28,068 ) 55,824 — 27,020 ( 7,139 ) ( 23,410 ) — 48,852 ( 2,028 ) 65,242 ( 55,061 ) 217,312 Technology services expense — — — — 12,575 ( 314 ) — — — — — — 12,261 Electronic payment processing expense — — — — — — — — 21,046 ( 1,168 ) — — 19,878 Salaries and employee benefits expense 45,346 ( 2,531 ) 1,202 ( 1,202 ) 8,690 — 219 682 7,188 11 15,285 3,041 77,931 Professional services expense 3,941 — 165 — 678 — 2,482 — 684 — 7,863 — 15,813 Other loan origination and maintenance expense 20,385 ( 14,060 ) 6,095 ( 4,044 ) 38 — 16,069 ( 11,020 ) — — 402 ( 95 ) 13,770 Depreciation and amortization 182 — — — 1,062 — 114 — 356 — 70 — 1,784 Other general and administrative costs 12,426 ( 2,548 ) 172 — 3,794 ( 271 ) 1,948 ( 11 ) 2,757 ( 1,769 ) 7,690 ( 2,916 ) 21,272 Income before taxes 67,305 ( 8,288 ) 59,724 5,234 189 ( 6,560 ) ( 28,684 ) 9,928 16,199 ( 1,335 ) 8,040 ( 57,324 ) 68,692 Income tax expense (benefit) 15,308 ( 15,308 ) — — 103 ( 103 ) — — — — 2,428 15,411 17,839 Net income $ 51,997 $ 7,020 $ 59,724 $ 5,234 $ 86 $ ( 6,457 ) $ ( 28,684 ) $ 9,928 $ 16,199 $ ( 1,335 ) $ 5,612 $ ( 72,735 ) $ 50,853 Other Segment Disclosures: Assets $ 1,238,899 $ ( 29,932 ) $ 439,101 $ ( 97,352 ) $ 23,317 $ ( 1,393 ) $ 479,896 $ ( 55,488 ) $ 60,347 $ ( 36,707 ) $ 644,867 $ ( 605,643 ) $ 2,059,912 Goodwill & intangible assets $ 938 $ — $ — $ — $ 13,814 $ — $ 14,752 Amortization of intangible assets $ 176 $ — $ 350 $ — $ 13 $ — $ 539 F-69 Table of Contents As of and for the year ended December 31, 2023 Banking Alternative Lending Technology NSBF Payments Corporate & Other Consolidated Segment Elim Segment Elim Segment Elim Segment Elim Segment Elim Segment Elim Interest income $ 34,349 $ — $ 8,198 $ ( 3 ) $ — $ — $ 50,823 $ ( 75 ) $ 2,087 $ ( 2,053 ) $ 3,427 $ ( 2,380 ) $ 94,373 Interest expense 16,625 ( 99 ) 4,035 — 246 ( 246 ) 26,796 — 3,577 ( 132 ) 20,971 ( 4,034 ) 67,739 Net interest income/(loss) 17,724 99 4,163 ( 3 ) ( 246 ) 246 24,027 ( 75 ) ( 1,490 ) ( 1,921 ) ( 17,544 ) 1,654 26,634 Provision for loan credit losses 11,704 — — — — — — — — — — — 11,704 Net interest income after provision for loan credit losses 6,020 99 4,163 ( 3 ) ( 246 ) 246 24,027 ( 75 ) ( 1,490 ) ( 1,921 ) ( 17,544 ) 1,654 14,930 Noninterest income 92,129 ( 26,091 ) 12,278 — 31,692 ( 6,660 ) 25,142 — 46,422 ( 2,893 ) 79,781 ( 75,028 ) 176,772 Technology services expense — — — — 14,794 ( 522 ) — — — — — — 14,272 Electronic payment processing expense — — — — — — — — 19,680 ( 1,353 ) — — 18,327 Salaries and employee benefits expense 35,385 — — — 8,989 — 973 — 7,152 — 13,209 — 65,708 Professional services expense 2,903 — 294 — 468 — 1,508 — 660 — 7,244 — 13,077 Other loan origination and maintenance expense 9,373 ( 7,133 ) 2,222 ( 1,469 ) 11 — 24,327 ( 18,100 ) — — 273 ( 71 ) 9,433 Loss on extinguishment of debt — — — — — — 271 — — — — — 271 Depreciation and amortization 208 — — — 1,498 — 123 — 1,021 — 34 — 2,884 Other general and administrative costs 10,506 ( 2,266 ) 117 — 4,090 ( 236 ) 4,906 ( 24 ) 3,087 ( 1,910 ) 5,872 ( 1,785 ) 22,357 Income before taxes 39,774 ( 16,593 ) 13,808 1,466 1,596 ( 5,656 ) 17,061 18,049 13,332 ( 1,551 ) 35,605 ( 71,518 ) 45,373 Income tax expense (benefit) 11,647 — ( 150 ) — 229 — — — 1,178 — ( 14,860 ) — ( 1,956 ) Net income $ 28,127 $ ( 16,593 ) $ 13,958 $ 1,466 $ 1,367 $ ( 5,656 ) $ 17,061 $ 18,049 $ 12,154 $ ( 1,551 ) $ 50,465 $ ( 71,518 ) $ 47,329 Other Segment Disclosures: Assets $ 683,202 $ ( 29,136 ) $ 196,062 $ ( 51,820 ) $ 23,403 $ ( 884 ) $ 633,206 $ ( 97,683 ) $ 51,819 $ ( 27,154 ) $ 529,941 $ ( 481,443 ) $ 1,429,513 Goodwill & intangible assets $ 1,114 $ — $ 15,179 $ — $ 13,827 $ — $ 30,120 Amortization of intangible assets $ 197 $ — $ 466 $ — $ 805 $ — $ 1,468 F-70 Table of Contents NOTE 23—SUPPLEMENTAL FINANCIAL DATA: During the year ended December 31, 2022 when we operated as a BDC, in accordance with the SEC’s Regulation S-X and GAAP, we were not permitted to consolidate any subsidiary or other entity that is not an investment company, including those in which we have a controlling interest. We had two unconsolidated subsidiaries that met at least one of the significance conditions under Rule 1-02(w) of Regulation S-X during certain periods presented for which we were previously required, pursuant to Rule 3-09 of Regulation S-X, to attach separate financial statements as exhibits to the Form 10-K for the year ended December 31, 2022. Refer to our 2022 Form 10-K filed March 15, 2023 and exhibits thereto. NOTE 24—NEWTEKONE, INC. - PARENT COMPANY ONLY: The following statement of financial condition, statement of income and statement of cash flows are for NewtekOne, Inc. and should be read in conjunction with the consolidated financial statements and the notes thereto. Statement of Financial Condition As of December 31, 2024 2023 Assets Cash and balances due from depository institutions: $ 19,123 $ 13,871 Loans and lease financing receivable 5,715 4,786 Investments in and receivables due from subsidiaries and associated companies 699,059 392,519 Premises and fixed assets (including capitalized leases) — 64 Other assets 9,617 20,159 Total assets 733,514 431,399 Liabilities and shareholders' equity Borrowings with a remaining maturity of one year or less: 79,856 38,124 Other borrowed money with a remaining maturity of more than one year 325,418 253,888 Other liabilities 22,083 13,163 Balances due to subsidiaries and related institutions 9,876 46,332 Total liabilities 437,233 351,507 Preferred stock 19,738 19,493 Common stock 525 490 Additional paid in capital 218,266 314,187 Accumulated other comprehensive income ( 21 ) ( 148 ) Retained earnings 57,773 ( 254,130 ) Total shareholders’ equity 296,281 79,892 Total liabilities and shareholder's equity $ 733,514 $ 431,399 F-71 Table of Contents Statement of Income For the year ended December 31, 2024 2023 Interest income $ 1,851 $ 2,319 Interest expense 26,647 18,797 Net interest loss ( 24,796 ) ( 16,478 ) Noninterest income: Dividends 42,107 60,317 All other operating income (loss) 2,970 ( 2,345 ) Total noninterest income 45,077 57,972 Noninterest expense: Salaries and employee benefits 10,476 9,365 Other expenses 13,627 10,962 Total noninterest expense 24,103 20,327 Net Income (loss) before equity in undistributed income of subsidiaries ( 3,822 ) 21,167 Income tax expense (benefit) 2,428 ( 14,837 ) Income (loss) before undistributed income of subsidiaries ( 6,250 ) 36,004 Equity in undistributed income of subsidiaries and associated companies: 57,103 26,813 Net income $ 50,853 $ 62,817 F-72 Table of Contents Statement of Cash Flows For the year ended December 31, 2024 2023 Cash flows from operating activities: Net income $ 50,853 $ 62,817 Provisions for deferred income taxes 13,110 ( 5,814 ) Gain (loss) on sale of assets ( 1,135 ) 539 Equity in Undistributed (earnings) losses of subs ( 57,103 ) ( 26,813 ) Net change in other liabilities ( 35,489 ) ( 40,414 ) Net change in other asset 5,215 ( 10,759 ) Other, net 6,634 7,570 Net cash (used in) operating activities ( 17,915 ) ( 12,874 ) Cash flow from investing activities Purchases of held-to-maturity and available-for-sale securities ( 19,899 ) — Sales and maturities of held-to-maturity and available-for-sale securities 20,000 — Payments for investments in and advances to subsidiaries ( 176,333 ) ( 96,265 ) Sale or repayment of investments in and advances to subsidiaries 95,543 — Outlays for business acquisitions — ( 21,322 ) Other, net 39 14 Net cash (used in) investing activities ( 80,650 ) ( 117,573 ) Cash flow from financing activities Proceeds from issuance of long-term debt 154,050 90,000 Repayment of long-term debt ( 38,250 ) — Proceeds from issuance of common stock 14,036 — Proceeds from issuance of preferred stock — 19,493 Payment to repurchase common stock ( 711 ) — Dividends paid ( 20,252 ) ( 14,147 ) Other, net ( 5,056 ) ( 2,826 ) Net cash provided by financing activities 103,817 92,520 Net (decrease) increase in cash and restricted cash 5,252 ( 37,927 ) Cash and restricted cash - beginning of period 13,871 51,798 Cash and restricted cash - end of period $ 19,123 $ 13,871 Borrowings and Maturities Refer to NOTE 13—BORROWINGS for a schedule of borrowings that includes the notes issued by the parent company. Refer to the Liquidity and Capital Resources section of the MD&A under the Contractual Obligations section for a schedule of maturities. Guarantees The Company is a guarantor on the SPV I Capital One Facility. Maximum borrowings under the SPV I Facility are $ 60.0 million. The lender’s commitments terminate in May 2025, with all amounts due under the SPV I Facility maturing in November 2025. At December 31, 2024, total principal owed by SPV I was $ 21.3 million. At December 31, 2024, the Company determined that it is not probable that payments would be required to be made under the guarantee. F-73 Table of Contents The Company is a guarantor on the SPV II Deutsche Bank Facility. Maximum borrowings under the SPV II Deutsche Bank Facility are $ 120.0 million. The Deutsche Bank Facility matures in December 2027. At December 31, 2024, total principal owed by SPV II was $ 54.8 million. At December 31, 2024, the Company determined that it is not probable that payments would be required to be made under the guarantee. The Company is a guarantor on the SPV III One Florida Bank Facility. Maximum borrowings under the SPV III One Florida Bank Facility are $ 30.0 million. The One Florida Bank Facility matures in May 2025. At December 31, 2024, total principal owed by SPV III was $ 23.1 million. At December 31, 2024, the Company determined that it is not probable that payments would be required to be made under the guarantee. On April 27, 2023, the SPV III One Florida Bank Facility was amended to increase maximum borrowings under the line to $ 30.0 million. The Company is a guarantor on the Webster Facility, a term loan facility between NMS with Webster Bank with an aggregate principal amount up to $ 54.9 million. The Webster Facility matures in November 2027. At December 31, 2024, total principal outstanding was $ 32.7 million. At December 31, 2024, the Company determined that it is not probable that payments would be required to be made under the guarantee. The Company is a guarantor on certain of NSBF’s potential obligations to the SBA pursuant to the Wind-down Agreement. Specifically, pursuant to the Wind-down Agreement, the Company has guaranteed NSBF’s obligations to the SBA for post-purchase repairs or denials on the guaranteed portion of 7(a) Loans sold by NSBF on the secondary market or servicing/liquidation post-purchase repairs or denial, and has funded a $ 10.0 million restricted cash account at Newtek Bank to secure these potential obligations. NOTE 25—SUBSEQUENT EVENTS: Sale of NTS On January 2, 2025, the Company completed the previously announced sale of its wholly owned subsidiary Newtek Technology Solutions, Inc. (“NTS”) to Paltalk, Inc. (“Paltalk,” subsequently renamed Intelligent Protection Management Corp, (Nasdaq: IPM) (the “NTS Sale”), pursuant to the Agreement and Plan of Merger (the “Agreement”), dated as of August 11, 2024, by and among Paltalk, PALT Merger Sub 1, Inc., PALT Merger Sub 2, LLC, NTS and the Company. As previously disclosed, in connection with the Company’s acquisition of Newtek Bank and transition to a financial holding company, the Company made a commitment to the Board of Governors of the Federal Reserve System to divest or terminate the activities of NTS. Under the terms of the Agreement, at the closing of the NTS Sale, Paltalk acquired NTS for a combination of $ 4.0 million in cash, subject to certain purchase price adjustments (the “Cash Consideration”), and 4.0 million shares of a newly created series of Paltalk non-voting preferred stock, the Series A Non-Voting Common Equivalent Stock (the “Preferred Stock”) (the “Stock Consideration” and together with the Cash Consideration, the “Closing Consideration”). Upon the occurrence of certain specified transfers of the Preferred Stock, each share of Preferred Stock will automatically convert into one share of common stock of Paltalk, subject to certain anti-dilution adjustments. In addition to the Closing Consideration, the Company may be entitled to receive an earn-out amount of up to $ 5.0 million, payable in cash, Preferred Stock, or a combination thereof (as determined in Paltalk’s discretion), based on Paltalk's achievement of certain cumulative average Adjusted EBITDA thresholds for the 2025 and 2026 fiscal years. Pursuant to the Agreement, the Company is entitled to appoint one representative to the Paltalk board of directors. The Company will account for our investment in Paltalk under ASC 321 beginning in the first quarter of 2025. F-74