Newtek Business Services Corp. (NASDAQ:NEWT) Q4 2022 Earnings Call Transcript

Unidentified Analyst : Okay. I hope this isn’t too low level for this discussion. Back in January for the bank savings account was supposed to be 4.15% and then gradual increases and CDs. And what it ended up with was the savings account is 4.5%, which is the same interest rate on the shorter-term CDs, 1, 3 and 6 months and then the 9, 12 2-year €“ 1 and 2-year CDs all have a 4.6% interest. And I don’t know, did it just become an accounting nightmare to have all the different interest rates. I was just kind of interested in knowing why the change?

Barry Sloane: Appreciate it. And look, it’s a very competitive environment right now for deposits. So at the moment, we want to make sure that we can compete. Those deposit rates are for consumer high-yield savings and consumer CDs. Our high-yield savings for commercial accounts is 3.5. And the CD rates, I think you’ll see are going up. Now on a relative basis, it’s still a heck of a lot better than the commercial finance rates that we’ve historically paid, which are currently 8.25, probably going up to 8 3/4 with the Fed’s next rate increase. So I think from our standpoint, no, it’s not — thank god we’ve got a great CFO in John McCaffrey in the bank and Nick Leger as the President and the COO, keeping an eye on things. We’ve got the right software in place for the purchases coming on stream. So we’re able to manage it’s not a problem at all.

Unidentified Analyst : Okay. I guess I was just interested as to why they’re all the same rate, though. It kind of didn’t make sense to me when the change — the plan was for them to gradually increase with the length of the CD. Maybe I didn’t pose that very well?

Barry Sloane: No, I think you posed it well, and one might also look at the market and go, it doesn’t make any sense either because the yield curve is inverted. And the overnight rate for banks is 4.5 or greater. 1-year treasury bills right now, I think you can get a 5% yield. So the only thing I can tell you is those rates are very much pegged to where the competition is in the competitive market for bank financing, not necessarily pegged to what you think a normalized yield curve should be.

Operator: Thank you. At this time, I’d like to hand the conference back over to Mr. Barry Sloane for closing remarks.

Barry Sloane: Well, I appreciate all the analysts we had. We are hopeful that we’ll pick up coverage maybe 4 to 6 over time with bank analysts. And I think that’s going to really help tell a story of a bank that’s different, a financial holding company that’s different and a company that’s positioned to take advantage of the future, providing financial and business solutions to this particular important demographic. And I say that to be able to service independent business owners with feet on the Street sales force with branches, with commercial bankers. Business owners today, they want their solution on demand. They want to go online if they wake up late in the evening or on a weekend. They want to get somebody they could talk to on a camera.