NewtekOne Eliminates Revolving Credit, Shifts Funding to Bank Subsidiary
Event summary
- Newtek ALP Holdings has paid off approximately $185 million in revolving credit facilities from Capital One and Deutsche Bank.
- The debt was extinguished through proceeds from the NALP Business Loan Trust 2026-1 securitization, NewtekOne’s 17th and largest rated securitization.
- Newtek Bank, N.A. will now originate C&I LA loans and fund them with deposits, replacing the previous funding model.
- The company intends to continue securitizing C&I LA loans from the Bank’s balance sheet.
The big picture
NewtekOne’s decision to eliminate its revolving credit facilities and transition to deposit funding represents a significant maturation of its C&I LA loan business. This move reduces financial risk by eliminating reliance on external credit lines and suggests increased confidence in the bank’s ability to fund its loan portfolio. The company's continued reliance on securitization indicates a desire to manage balance sheet size and maintain financial flexibility, but also exposes it to potential market volatility in the ABS market.
What we're watching
- Funding Transition
- The shift to deposit funding for C&I LA loans will be critical; NewtekOne must demonstrate its ability to attract and retain sufficient deposits to support loan growth without impacting margins.
- Securitization Pace
- The frequency and size of future C&I LA loan securitizations will signal NewtekOne’s appetite for growth and its ability to manage asset-liability mismatches.
- Bank Performance
- Newtek Bank’s performance, particularly its net interest margin and asset quality, will be a key indicator of the success of the new funding model and the overall C&I LA loan strategy.
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