NewtekOne's Capital Restructuring: A Strategic Move to Bolster Shareholder Value and Long-Term Growth

NewtekOne, Inc. (NASDAQ: NEWT) has executed a pivotal capital structure optimization strategy through its recent transaction with Patriot Financial Partners, L.P. By converting 20,000 shares of Series A convertible preferred stock and $10 million in cash into 2,307,692 common shares, the company has fortified its balance sheet while signaling long-term confidence from its largest stakeholders. This move, coupled with a $48.357 million depositary shares offering, has elevated NewtekOne's Tier 1 capital to $335 million and tangible book value per share to $10.74, positioning the firm to capitalize on growth opportunities in the evolving financial services sector Patriot Financial Partners, L.P. Exchanges NewtekOne, Inc.^[1].

Capital Structure Optimization: Strengthening the Foundation

The conversion of preferred shares into common equity represents a strategic shift toward a more resilient capital structure. By exchanging Patriot's preferred stock—previously convertible into 950,800 common shares—for a larger block of common shares, NewtekOne has effectively reduced its reliance on hybrid instruments, which often carry higher regulatory scrutiny and cost. The transaction increased CET1 capital by $30 million, raising it to $286 million on a pro forma basis as of June 30, 2025 NewtekOne: Patriot Converts $20M Preferred Stock, Adds $10M …^[2]. When combined with the depositary shares offering, Tier 1 capital surged by $78.357 million, reflecting a 30.5% year-over-year increase NewtekOne Elevates Tier 1 Capital 19% with $48 Million Preferred ...^[3].

This capital infusion is critical for a company operating in a sector where regulatory requirements for capital adequacy are tightening. According to a report by Bloomberg, financial institutions with robust CET1 ratios are better positioned to withstand economic volatility and pursue strategic acquisitions Bloomberg, “Capital Adequacy and Financial Resilience in a Post-Pandemic Era”^[4]. NewtekOne's management, led by CEO Barry Sloane, emphasized that the restructuring aligns with its goal of maintaining a “strong and flexible capital base to support organic growth and potential accretive opportunities” NewtekOne Completes Transaction with Patriot Financial Partners ...^[5].

Shareholder Value Creation: Balancing Dilution and Long-Term Gains

While the issuance of 2.3 million new common shares may dilute earnings per share (EPS), the company's leadership argues that the capital benefits outweigh this risk. The two-year transfer restriction on the newly issued shares further underscores Patriot's commitment to NewtekOne's long-term success, mitigating short-term volatility and aligning incentives between management and major stakeholders $30M Capital Boost: NewtekOne Strengthens Position as Patriot ...^[6].

Analysts remain cautiously optimistic. A consensus of four analysts covering the stock assigns a “Hold” rating with an average price target of $13, implying an 8.48% upside from current levels NewtekOne (NEWT) Stock Forecast & Analyst Price Targets^[7]. However, B. Riley has taken a more bullish stance, projecting FY2026 EPS of $2.52 and assigning a “Strong-Buy” rating, citing NewtekOne's improved capital position and deleveraging trajectory What is B. Riley's Forecast for NewtekOne FY2026 Earnings?^[8]. The company's recent financial performance—net income of $18.3 million for the three months ended December 2024 and a 50% year-over-year increase in total assets to $2.1 billion—further supports this optimism Newtek Business Services Corp. (NEWT) 10K Annual Reports^[9].

Market Confidence and Strategic Positioning

The Patriot transaction also sends a strong signal to the market. As Kirk Wycoff, Managing Partner of Patriot, noted, the move reflects “confidence in NewtekOne's business strategy and management team” Patriot Financial Partners, L.P. Exchanges NewtekOne, Inc.^[10]. This sentiment is echoed in the company's revised 2025 earnings guidance, which now ranges from $2.10 to $2.50 per share, up from prior expectations newt-20250728 - SEC.gov^[11].

Critically, the capital raise enhances NewtekOne's ability to navigate macroeconomic headwinds. With tangible book value per share at $10.74, the company's equity base is now more resilient to asset quality risks, a key concern for investors in the post-pandemic financial landscape NewtekOne, Inc. Completes Preferred Share Conversion^[12]. According to Reuters, firms with higher tangible book values tend to outperform peers during periods of economic stress, as they retain greater capacity to absorb losses without eroding shareholder equity Reuters, “Tangible Book Value as a Barometer of Financial Resilience”^[13].

Conclusion: A Calculated Path to Sustainable Growth

NewtekOne's restructuring with Patriot Financial Partners is a calculated step toward strengthening its capital position, aligning stakeholder interests, and positioning for long-term growth. While near-term EPS dilution is a valid concern, the strategic benefits—enhanced regulatory compliance, improved liquidity, and a stronger balance sheet—appear to justify the trade-off. For investors, the key question is whether the company can translate its robust capital base into consistent earnings growth and market share expansion. With a revised earnings outlook, a 31.8% Return on Tangible Common Equity (ROTCE) in Q4 2024, and a clear focus on deleveraging, NewtekOne is laying the groundwork for a compelling value proposition in the months ahead Newtek Business Services Corp. (NEWT) 10K Annual Reports^[14].