The NewtekOne Incorporated's second quarter 2023 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Mr. Barry Sloane, Chairman and CEO. Please go ahead.
Thank you, operator. Good morning, everyone, and welcome to our second quarter 2023 financial results conference call. Everybody listening in, you can follow along on the PowerPoint presentation by going to our website, newtekone.com, N-E-W-T-E-K-O-N-E dot com. Go to About, go to Investor Relations section, you will see the PowerPoint presented there. Also joining me on today's call is Nick Leger, our Chief Accounting Officer of NewtekOne, Scott Price, our Chief Financial Officer of NewtekOne and Newtek Bank, National Association, and Nick Young, the President and Chief Operating Officer of Newtek Bank. We're pleased to report in the second quarter as a financial holding company. Obviously, for those of you that are somewhat familiar with the story, some of you are not.
We recently converted from a business development corporation with the acquisition of National Bank of New York City on January 6th. Therefore, some of the usual comparisons you'll see in an earnings presentation make it a little bit more difficult. For example, comparing this quarter, this year to this quarter last year, when we were a BDC, given different accounting gyrations is difficult. You could obviously get that information by looking towards our 10-Q, which will be published shortly after this call, as well as some of the financial information that we provided in the press release. I think it's also important to note that we've been now a bank for a little over six months. We acquired National Bank of New York City on January 6th. A 59- 60-year-old financial institution that had a very different business model.
It was a smallish bank, a community bank, lending locally in, in its market. We've had a big hill to climb and a lot of wind in our face, and we are really thrilled that we've been able to hit the ground running with a great management team, a great business model, loyal customers and tremendous vendors and providers that really enabled us to produce tremendous six-month results for our first six months, positioning the company as a financial holding company. We're not a new co. We've been around for almost 25 years, established in 1998, privately, been public since September of 2000. We really look forward to demonstrating that the growth that we've had over our history will continue, and hopefully, you'll be able to glean that from the information that we're gonna provide for you today.
Moving forward to the forward-looking statement on slide one we'd appreciate it if everybody have an opportunity to read that. Now, going to slide two, talking a little bit about our second quarter results as a financial holding company. We talked about completing the acquisition of National Bank of New York City on January 6. Important points of focus for this particular presentation. First of all, we picked up bank analyst coverage within the first six months. Mike Perito has recently picked up coverage from KBW. We appreciate his efforts. Crispin Love, a new analyst for bank coverage from Piper Sandler, Bryce Rowe from B. Riley, also covering banks. Hopefully, Raymond James will transition its coverage over from BDC coverage to a bank analyst. We're hopeful that'll happen in the near future.
Last but not least, Chris Nolan from Ladenburg. We're really appreciative. I think part of the reason why people have become more familiar with the company is the research coverage that we've got from the street, being able to lay out what we look like in this particular mode, getting leaving behind the 40 Act BDC type accounting. Clearly, throughout this presentation, the ability that we've been able to demonstrate to raise insured deposits quickly with a high growth rate. The fact that we believe we do a really good job of interest rate risk management in a very difficult interest rate risk environment, where we don't have long-duration fixed rate bonds or loan portfolios.
Where we do have those types of assets, they're typically matched by time deposits. Our core product is the SBA 7(a) loan, which are prime plus three type coupons, which today would be 11.5. Even as if you're raising money in the fours or fives, it's very attractive. Ask spread floating rate, quarterly adjust, no cap on the loans. We'll also be able to demonstrate today. As a focus, we want investors and analysts to look at the return on average asset and return on tangible common equity ratios that we've been able to produce in the first and second quarters and through the first six months of the year. As a bank in the second quarter, 4.9% return on average assets.
That's, that's an exciting number that we expect to continue given our business model and what we do. Return on tangible common equity, also north of 30%. We're proud of those numbers. Even at the Holdco, which obviously we could talk about, where the Holdco on a consolidated basis isn't quite as attractive, approximately 2% return on average, return on average ssets, a little over 15% return on tangible common equity. On slide number three, we talk about our diversified streams of revenue and income. One of the benefits of an investment in NewtekOne is you get multiple streams. We are not a one-trick pony, not just looking to arbitrage spread income, for example, which is typical in most of the financial institutions, holding companies and banks that one might invest in.
The primary engines for earnings to the Bank, we look forward to declaring our first dividend from the Bank in the near future. We've already declared dividends to our shareholders up at the bank holding company. We did $0.18 in Q1, $0.18 in Q2. Newtek Small Business Finance is the non-bank lender that historically we did our SBA loans out of. That business is in a rundown mode. It is segmented in our queues. That's the legacy portfolio of 7(a) loans. We also have subsidiaries that are owned by the holding company, Newtek Merchant Solutions, MobilMoney, Newtek Payment Solutions, Newtek Insurance Agency, Payroll Solutions, all are profitable. We're excited about the growth opportunities here, the cash flow they provide to the company and the earnings engine. Obviously, our joint ventures in the non-conforming program.
They're a little bit difficult these days, but we'll soon look to get back on track as the economy is stabilizing. An inverted yield curve makes that a little bit more challenging, but we feel very good about our opportunity in the non-conforming loan segment with our joint venture partners, with that activity sitting up at the holding company. On slide number four, we did talk about the comparisons that are difficult between the current NewtekOne year-over-year versus the Newtek that existed in 2022. Obviously difficult to compare the accounting gyrations between a 33 Act accounting and a 40 Act accounting. On slide number five, we view ourselves as a technology-enabled solutions provider, and we're excited about that label because we think it's accurate. We are not just a depository.
The depository is one of the many things that we do for our clients to make them more successful. Clearly, throughout this presentation and our Qs and our information we're providing today, you'll be able to see we had tremendous success in gathering deposits. From $140 million of deposits when we took over over the bank, to $447 million of deposits as of June 30, 2023. Loan originations, moving the SBA 7(a) business with PLP status from Newtek Small Business Finance, a non-bank lender into the bank. We got close to $200 million of 7(a). You know, it sounds easy. Oh, yeah, just move everything over. Quite challenging. You have to move staff, you've got to move software, you've got to move processes, wiring capability, bank accounts, set policies and procedures up.
We're happy that we've been able to demonstrate that we've been able to hit the ground running. When some of these early hills to climb, headwinds come off our back, we believe we'll be able to run faster, jump higher and deliver continued improving results to our shareholders. One of the things we've obviously been able to do is staff and recruit with great talent. Obviously, Nick Young, the President and Chief Operating Officer of the bank, who's here with us today, was a great addition. We've recently been able to bring on Scott Price as Chief Financial Officer of NewtekOne HoldCo, as well as Newtek Bank, National Association. In addition to that, we've recently hired a Director of Bank Operations in Burt Chandler, who'll be helping build out our back office for various different depository functions.
People like Tom Soucy, John Bivona, Brian Lawn, real excited. That's combined with the existing talent pool that we brought over from the Newtek BDC, that we're able to move into the bank. Obviously, we talked about a mantra of no branches, no brokers, no bankers, no BDOs. Sometimes I get taken to task on the concept of no bankers. The reality of it is we do not have traditional bankers or bank BDOs. What do I mean by that? The $250,000-$500,000 a year professionals that exist at most of the 8,000-9,000 financial institutions in the United States that take clients out for breakfast, lunch, dinner, golf, bowling, or whatever they do, bring in deposits and get paid those types of dollars.
Well, we think that as the market transitions to our business model and artificial intelligence and utilization of technology for deposit gathering, these types of things will be less desirable. The good news is we don't have that. We don't have that expense infrastructure. We'll talk about our efficiency ratios and why we'll be able to get better and better as time goes on. The one thing about the drag, we don't have these types of expenses that drag us down. We currently have one branch in Flushing, New York. Our operating headquarters is in Miami, Florida. We look forward to growing our business without the use of branches, brokers, bankers, and BDOs that we currently don't have in the expense structure and our operational processes.
I think it's important that we view ourselves and our staff view ourselves as being able to provide a superior service and products to clients. If we cannot give the customer the Newtek Advantage, which is the benefit of doing business with us, we haven't earned it. We must earn every transaction. We must be better. We must be superior than our competitors. That's the Newtek Advantage. The Newtek Advantage is obviously a technological platform, but just doing business with is a Newtek Advantage. We'll demonstrate that throughout our discussions today and how we deal with our clients every single day. We're also gonna begin to track sign-ups for the Newtek Advantage. We'll talk about how many we have to date and start to track our success in this particular area beginning in Q3 and Q4.
Slide number six, from a capital markets perspective, tracking our stock. For those of you that have hung in there with us, over the years, historically, we've been a very good performer. We obviously transitioned out of the BDC, which was extremely painful. Number one, from the longevity standpoint, transitioning from a dividend-paying stock into a stock that still pays a very nice dividend, but also is relying upon retained earnings and growth in price appreciation. This year to date, new 14.06, the S&P Regional Bank Index, the carry down 15.57. We've outperformed the banking index by almost 30 points. We're very proud of that accomplishment and achievement, and have even outperformed the Russell 2000. For those of our legacy investors in BDCs, you could buy a T-bill today at 5.5%.
I don't know what's so attractive about the 9% ordinary income that a BDC pays without a lot of capital appreciation. I understand that a lot of people like that dividend. We still pay a very nice dividend. It's about a 4% yield. It's also taxed at a qualified rate, and hopefully, we'll be able to get back to the types of performance once we've turned over, continue to turn over the stockholder base. According to the Nasdaq online information that I've received, and it's not completed yet, the institutional ownership of our stock is up to about 31%. That is gonna continue to grow as we get all the filings, through August, but that's where we are as of today, and we're excited about that. On slide number seven, we talked about a differentiated business model.
Some of the things we talked about, obviously, in the former six slide, well-managed asset liability strategy. We do understand that most deposits have zero duration, but on a going-forward basis, the ability to get more deposits on commercial demand deposit accounts with our NewtekOne, 1% account and 3.5% on commercial high yield savings. To be able to work with our payroll business, our payments business, and our lending business to gather in deposits, is something that will start to track beginning Q3 and Q4. That will take a very attractive NIM and make it even more attractive and provide a stickiness to those particular deposits. When you take a look at our net interest margins, these are margins that exceed typical bank and financial institutions. We talked about our ROA and ROTC. We can't say it enough.
This is why we are an interesting opportunity for investors that want to invest in technology-enabled banks, technology-enabled solutions providers to the all-important independent business owner community in the United States. We've obviously done a real good job through the first six months of the year, demonstrating we were able to shift and gather deposits and make loans. We will, going forward, be able to demonstrate the ability to bring in deposits from all these different verticals, as well as the basis and understanding of the Newtek Advantage. On slide number eight, we talk about our second quarter financial highlights. We had our previously issued forecasted guidance of $0.26 per common share, net interest income of $5.7 million. That was an improvement sequentially over the $4.6 million. This is at the NewtekOne level.
Total assets up from $1.2 billion - $1.4 billion. I think it's important to note here, we'll talk about this going forward. We're $1.4 billion of assets, but we've got an infrastructure that we believe actually can be a much, much bigger financial institution without having to add the additional expense to it, and that's where our efficiency ratios are gonna grow. As a matter of fact, you know, when we, when we make loans, even though the balance sheet and the SBA only grows by 25% of the loan, please understand that we think this year we'll probably do about $1.25 billion worth of loans. In the past, with the PPP business going on, we were close to $1.25 billion-$1.5 billion.
We've got an infrastructure that could do a big, big amount of business and can really handle a much bigger financial institution. People, process, software will be able to manage it, which should really help grow our earnings per share for our customer base. Total borrowings flat, $697 million. One of the drags on our business relative to return on tangible common equity and return on assets is the amount of liquidity that we're currently carrying. You could see $256 million, including $66.7 million of restricted cash at June 30. I think we're carrying about $250 million of cash sitting at the Fed. Not much of a margin on that, but we're trying to keep the excess liquidity.
That's the cash that we'll need that'll carry us from a deposit perspective, pretty much through the end of the year. We really have accomplished a lot of our goals relative to deposits. As you can see, we've got really nice risk-based capital ratios and Tier 1 leverage ratios as well. On Slide number nine, those are the financial highlights for the six months, $0.72 for the, for the first six months of the year. We are a second-half company. We have always been that way. Net interest income of $10.3 million for the six months ended June 30th, 2023. Slide number 10 focuses really on Newtek Bank, National Association, just really drilling into the bank. Insured deposits, 90% of total deposits. It's enviable position.
I'm not sure I'll always be able to stay that way because we will have some larger customers coming into us, which we'll have to try to satisfy. We do want to be careful, obviously, because those deposits can move quickly, as we've seen, with the Silicon Valley Bank and Signature Bank issues. We're very proud of our ability to raise deposits without having to rely upon just a few customers. Look at the net interest margin growth. Before we took over the bank, it was 2.7%. Now that we're starting to layer on, our business model is jumping 3.61%. There's not too many banks that could state that their net interest margin grew by 90-100 basis points in the first six months of the year. Most banks are going the other way.
We believe this is going to continue to expand. We'll talk about the National Bank of New York City portfolio, what it looks like, the quality of the portfolio. It was fairly thin margin, not a lot of expenses in the bank. A very simple, small, local community bank. We talked about our ROTCE or our ROA efficiency ratio of 58.7. That's a good number. We do think by the end of the year, that might trend down to as low as 50, and we believe we can get there. Here's our risk-based capital ratio, Tier 1 leverage ratio. Also, it's there on slide number 10. Really good numbers. Slide number 11, we talk about the efficiency ratio again. Operational leverage will help that. Financial leverage will help that. Further technological innovation, which is in process.
We haven't been able to get everything we need to get done in the first six months of the year. I do think we'll have probably another 12 months of building. That's all, all built into our numbers. You know, we're going to have some headwinds until we get this bank exactly to where we need it to be, technologically and from a process standpoint. We're really excited about the ability to capture additional revenue from the non-bank business activities. Very exciting about that. Slide 12, we talked about our ROTC and our ROA and ROAA as well. These are going to be great precursors for growing our EPS down the road. Slide number 13 talks about, you know, our historical lending. Most of our 7(a) lending, I should say, all of it was done in Newtek Small Business Finance.
It's now in a runoff mode at the holding company, where we have a little of our PLP status into the bank. We also began funding SBA 504 and C&I loans in the bank in the first six months of the year. At the close, we infused $79 million in capital. We think the capital at the bank could grow to in excess of $100 million. That's a very nice growth in the first year of owning and operating a bank. Most banks that frankly start up, and obviously we don't view ourselves as a start-up, but we really have to change the business model. We have to change the software of so many things that we have to put in motion, staffing, et cetera. We're, we're obviously good at multitasking.
With the hill to climb, with the headwinds, you know, the markets don't wait for you, we've got greater things ahead of us once we put more of some of these items in place. We were able to raise $70 million of capital in the first quarter, despite a tough market, $50 million of debt, $20 million of convertible preferred shares from an institutional investor. Slide number 14 talks about our efficiencies and lending. Very, very important. Closed 773 loans for the six months, a 29.5% increase in loan units over the year prior. In dollars, it was 11.2%. I think what's really important to note, we use technology, not bankers, brokers, branches, or BDOs to help grow the business. We've been doing this for a long period of time.
We do so efficiently, effectively, and with good risk management. This loan productivity capability, particularly as we look to do more investor-based CRE, more C&I loans, this is going to be valuable that we can demonstrate the ability to grow the balance sheet and gain on sale. Once again, the keys to our growth, technology, people, process, no bankers, brokers, BDOs or branches. Slide number 15 talks about what some people consider our eyesore, our tangible common book value of $7.05 per share, per share. We're not ashamed of it. We just don't think it has that much relevant value, although, you know, most people tell me that it does. Okay, it's fine. This is what it is. I think it's important to note that we've got a lot of assets on our books, Newtek Merchant Solutions, Newtek Tech Solutions, Newtek Insurance Agency, Newtek Payroll.
That as a BDC, had a fair value of $166.7 million. Transferring over into the deconversion, it has a negative tangible book value. However, those businesses generate a lot of cash. Matter of fact, when you look at some of the projections going forward, it generates kind of close to half the income of the business, but yet it doesn't show up in book value. It's because we're different. NewtekOne isn't like other financial institutions that basically almost have one, one trade. We make loans, we have deposits, we clip coupons. That's not us. We have diversified stream of income. We offer a real value and advantage to our customers, so they stay with us and keep coming back and refer friends. This is a different opportunity than investing with other types of bank holding companies, financial holding companies, or banks.
Matter of fact, we look at ourselves as a business and financial solutions provider that also provides depository services to our clients. We're real excited about what we're doing. We're comfortable that in this structure, we'll hopefully, and in anticipation, grow our earnings and dividends over time, and that will drive the stock price, whatever the multiple of book might be. We were able to demonstrate this in the BDC market, where there were points in time, we traded for significant amounts of time over 2:1. I can recall people telling me in the BDC market, "You'll never trade above NAV." Well, we broke that mode by growing dividends and growing earnings and being successful. On slide 16, you could see the deposit growth, you know, over that six-month period of time, 220%.
A lot of these things we covered. Digital account openings in the quarter, 3,600 new client relationships. I believe that was within the quarter. I think we picked up 4,500 depository accounts from the time we picked up and owned the bank. Slide number seven, nice slide, breaking out our bank deposit growth. We'll get a little bit more granular as we go forward in our presentation and our presentation skills going forward. You could see about 21% of brokered CDs. We want to get that number down. We are within our business plan at this point in time. We're comfortable with that. We have an unused line of credit at the Federal Home Loan Bank of Atlanta. I think it's about $70 million.
As we get that number down and we get the Federal Home Loan Bank number, we keep that at zero. We'll always have that nice emergency capability in the event some unforeseen circumstance happens. Importantly, we've been able to raise the non-brokered retail CDs, total savings deposits, and do so in an insured manner. On slide number 18, I think this is important. We are not just an SBA 7(a) lender, although it is our flagship product. For those of you that aren't familiar with 7(a) lending, there's no fee. It's a current coupon at our rates of prime plus three. It's 11.5% loading rate quarterly adjust. In addition to that, 75% of the loan is government guaranteed, and we typically sell it at approximately a 10% premium, plus or minus.
That's what helps drive our return on equity and return on assets. The SBA 504 loan, which we have slides in this presentation that cover the types of return on equity, an important product that goes into the bank today. I use the word conforming commercial and industrial business loans. Conforming relates to conforming to bank underwriting and standards, also conforming investor-owned CRE loans, non-owner-occupied, investor-type deals. We've actually had success putting both of these categories on at spreads of 350 or greater to the curve. Our non-conforming C&I loans are funded at the holding company and joint some of them on our balance sheet, and we exit out via securitizations. This is also a 20%-30% ROE business. Slide number 19. We inherited the National Bank of New York City portfolio. This is a five-borough New York City portfolio.
Brooklyn, Bronx, Queens, Staten Island, Bronx, Brooklyn, Queens, Staten Island. I forgot something, Manhattan. Sorry, Manhattan. One more borough there. You're looking at an average loan size of $1 million-$2 million. The former bank owners and management did a great job. Low loan-to-values, personal guarantees. There's no real imminent balloons coming up. These are gonna roll over the next 12-48 months. They're primarily asset-liability managed with time deposits. This portfolio is marked to the market during purchase accounting in Q1. I think that's important to note. There's one non-performing loan in the crowd. This obviously is skinny margins, but good quality, and we're appreciative of picking this portfolio up, but it's not our business going forward, that low-margin type business.
We think we could do better making these types of loans at wider spreads. Given our investor base and the other things we do for our clients, we do believe that we'll be able to get margin. We're not always out there to win on price. We're out there to win on enabling our clients to be more successful, giving them longer AMs, giving them additional products and services, and giving them the Newtek Advantage. Slide number 20 is a typical slide for us that we've had relative to what you could look at in a portfolio that we're building at the bank and one that currently exists at Newtek Small Business Finance in the bank holding company. Slide number 21 talks about all lending activity. Total commercial loan closings for the three months ended $251 million.
You could see as we're ramping up, we're at a clip of about $1 billion of loans, if you straight line that. Obviously, you could see what we did in 7(a) on slide number 21. You could see what we did on 504. In the quarter, we originated $25 million of non-SBA 7(a) loans for the three months ended June 30th, 2023. For those of you that followed the 7(a) business, our premiums were down from the prior quarter, 10.15. That adds some volatility to our range stream, obviously, but it's just something that we've dealt with for 20 years and have managed it pretty well. The current trend is up, and that's a function of rates rising. Matter of fact, we think we'll get and hope to get a nice kick in the fourth quarter.
The loan increases that you got, got in July, based upon the Fed raising their rate on the existing portfolio, doesn't kick in until October. Everything at NSBF doesn't adjust because it's a quarterly adjust. One of the headwinds I'm talking about is our funds adjust monthly, per se, particularly in the securitization, but the loans adjust quarterly. We'll get a nice bump in Q4 with a more fuller coupon, and new loans that we're putting on the books in the quarter are done at the fuller coupon. That's just how the SBA business works. Suddenly, as rates are going down, you get a little wind at your back and, and. Now the wind, as rates are rising, unfortunately, is in our face.
Slide number 23 is our attempt at putting out what we think are the better market comps for organizations that own financial institutions and really focus on technology enablement, whether it's in the deposit gathering phase or the lending phase. There really isn't an entity that's much like us. The most closest one probably is Live Oak Bank, a terrific institution with a great business model and plan. You could see the types of earnings and multiples that are out there when these organizations are successful. Slide number 24, the importance of payments. Banks do two things effectively. They make loans, and they move money. Most banks do not really move money well for the independent business owner, that's our target, or small to medium-sized business, that's our target. The fact that we own a payments business for over 20 years is really gonna be tremendously helpful.
The legacy business is really as a Super ISO. To be able to do items for our clients, like same-day funding, putting the money into Newtek depository account, e-commerce solutions, our own POS, same-day funding, electronic billing, using bill pay and embedding our debit card in the bill pay. These are things I'd like to be said, say, oh, yeah, they're in place. No, it takes time. It takes time to get them done, get them integrated, get the software providers to get them in place, but these are gonna be amazing value adds to our client base. It's gonna give them a reason to do business with Newtek organizations, allows them to pay their bills more efficiently, more cost-effectively, and it works effectively.
For a commercial enterprise, this is invaluable, and we think that we will rise to the top in this particular area. Our goal in moving money is to make the business more successful, not just take your money and keep a depository account. Slide number 25 talks about some of the math that our merchant solutions business is obviously material. We expect to do about $15.4 million in EBITDA in our payments, units, NMS, MobilMoney, and POS on Cloud. Slide number 26. We talked about why payments are important to NewtekOne and to our clients. We will shortly be announcing the issuance of the Newtek Bank Visa Debit Card, which will give us the ability to access Visa and direct payment rails with that card.
Obviously, these types of businesses are reoccurring fee businesses that can benefit NMS and Newtek Bank and non-capital intensive. Once again, we realize it's extremely important to our business owners to be able to move money quickly, efficiently, with really good reporting mechanisms. Obviously, we're all aware of the products like FedNow. Look, FedNow is not gonna be snap your fingers, and it's all in place. It's gonna take place over time. As these markets grow and move, we are positioned for it with people, process, and software. Slide number 21, Newtek Technology Solutions. There is a typo on this slide. The expectation for EBITDA, $3.7 million for the calendar year, pre-tax income, $2.6 million. This is a great solution.
This will most likely be spun off over the next 18 or so months to shareholders in some way, shape, or form. It's a valuable opportunity for us. We plan on continuing to maintain a relationship with Newtek Technology Solutions. Slide number 28. No charge off to date on this particular portfolio. I will say we have actually had a default recently. However, with the collateral we've got, no charge-off to date. 29 is a typical slide that we've shown for 20 years. Cash gain on sale on 7(a). Slide 30 talks about the revenue and the accounting income off the 7(a) loan. Number 31, how our 504 loans are structured, how the income flows through on a 504 loan on slide number 32. On slide number 33, non-conforming business, originating loans today, 3.5 points in fee.
Obviously, the recent increases in rates were probably at 11.5 gross, 12.5 gross, 13.5 gross. Extremely attractive. We make the loans, we warehouse them with our joint venture partners, put them into securitization. A very attractive business for us, and we do believe that this business will get regened up now as the capital markets are opening to us. This is a capital-intensive business at the holding company. Slide number 34, the Newtek Advantage. We'll be talking more and more about the Advantage in presentations going forward in Q3 and Q4. We'd love to suggest that you go on our website, really learn everything you need to know about the Newtek Advantage. This is why customers, SMBs, independent business owners should do business with us.
We give Newtek's clients analytics, relationships, and transactional capability that other banks just simply do not have. We actually give them an asset day one that they don't have to pay for, that can enhance their business operation and make them more successful. For example, when you go to the Newtek Advantage, you can get a licensed insurance salesperson, a payments person, a depository person, a lending person. All these things are available through the Newtek Advantage and to communicate with them via video. We believe the advantage can be a market-recognized tool. This is one of the things that we will spin off to other community banks, credit unions, and organizations that want to be able to provide these types of solutions in their own brand, to their customers with us behind them. We think this is a tremendous opportunity.
We're also going to talk about, as we have in the past, we look to launch Newtek Accounting, where we'll be able to provide customers a P&L, or an income statement and a balance sheet to them. I think that's important for a business owner to be able to eventually tie deposits, payments, and payroll into an accounting function. This is a progressive institution that's looking to meet and exceed the current needs of businesses, but those needs that are going to be need to be met going forward to compete in the environment. We are forward-thinking. We're putting these things in place. We're excited about our future. We'll be talking about the launch of Newtek Accounting in the near future. To date, we've opened up 280 Newtek Advantage accounts. That is a slow walk.
That'll begin to pick up in Q3 and Q4 as we continue to enhance the Newtek Advantage and market it. We wanted to make sure that we are getting the bugs out, polishing up the software, the people, and the process. Slide number 35, we declared an $0.18 dividend for the second quarter. The dividend was paid on July 21, shareholders of record on July 10. Slide number 36 is some of the key assumptions that are in some of the forward projections that you'll see going forward. At this point, I'd like to turn this portion of the presentation over to Scott Price, Chief Financial Officer of NewtekOne and Newtek Bank, N.A.
Thank you, Barry, and good morning, everyone. I'll start my comments on slide 7. It summarizes our capital position as of June 30th. I'd point out that the regulatory filings for the holding company have not yet been filed, so those numbers are preliminary. As you can see, for both the consolidated group and the bank, we are well capitalized, and the bank successfully deployed capital this quarter and generated nice returns, as Barry has indicated. Slide 38 outlines the summary metrics for the company's forecast for the remainder of 2023, and slides 39 through 44 provide a good amount of detail on the company's expected results for the second half of the year. The forecast assumes that we deploy a portion of our liquidity position.
As you'll notice in our numbers, the asset position is considerably higher. That's mostly due to the defensive cash position we've maintained, given the market turmoil. We plan to better deploy that cash as we move throughout the year and optimize our balance sheet efficiency, particularly as we look to our originate-to-sell model. I would point out that as of, excuse me, that as more of the company's balance sheet composition shifts to the bank and its capital stack, the benefits of lower funding costs should continue to push returns higher, all else equal. Our deposit costs are expected to increase as the recent Fed hike takes effect, lower cost CDs mature, and we continue to leverage our online deposit gathering platform.
The company expects to continue to execute on its business strategy for the remainder of the year, similarly to the way that we executed in the second quarter. While not exact, the seasonal patterns that the company has experienced in prior years from the perspectives of loan originations and gains on sales spreads are expected to continue in the second half of 2023. With that, I'll turn the call back over to Barry. Barry?
Thank you, Scott. Wrapping things up before we turn the call over to Nick Leger, our Chief Accounting Officer. On slide number 38, I think it's important to note that we've got some projections, and obviously, these are not easy to do in a fairly volatile environment, but you can take a look at where we think we're going to wind up for 2023 at the financial holding company at the bank. We'd just like everyone to try to focus on what we believe we can hit for some very lofty goals for return on average assets, return on tangible common equity, both at the holding company as well as efficiency ratio is really moving in our direction. Moving forward to slide number 45.
From an investment summary perspective, you could see where we're looking at relative to our profitability ratios and our efficiency ratios. We're maintaining our projections of $1.70-$2.00. Although, I wouldn't say we're really near the midpoint, we're probably shading to the lower end of that range, but we're very comfortable with that particular number. That could easily change around with respect to movements in rates or gain on sale prices. There's a lot of opportunity here, so we just want to be conservative. The second quarter quarterly dividend of $0.18, we do believe we'll be able to maintain, obviously, given our profitability through the remainder of the year. We do want everyone to focus, this is a growth-oriented, differentiated, technology-enabled financial holding company. We're excited about what we were able to deliver in Q1 and Q2.
I'd now like to turn the rest of the presentation over to Nick Leger, our Chief Accounting Officer.
Thank you, Barry. Good morning, everyone. You can find a summary of our second quarter 2023 results on slide number 48. We're proud to report our second quarter financial results, which is also the first full quarter reporting as a financial holding company. As you will see in the consolidated statement of operations, upon conversion from our previous BDC investment company accounting, where our portfolio companies did not consolidate in the BDC's financials, and those activities would historically be reported as dividend income from the investments of the BDC. As a financial holding company, we are now consolidating those portfolio company operations. As a result of this conversion, there is no comparable prior period consolidated financial statements to refer to with the two different types of accounting. I'd like to start with some of the highlights from our second quarter 2023 consolidated statement of operations.
On a consolidated GAAP basis for NewtekOne, our second quarter results are as follows: Net interest income for the second quarter was $5.7 million, which is up 23.9% from the first quarter net interest income of $4.6 million. Net interest income is comprised of $22.6 million of total interest income on loans and fees on loans, offset by $16.9 million of total interest expense. $9.1 million of interest expense is driven by the interest expense of our notes and securitizations. In addition, $3.7 million is due to the interest from bank and borrowings, and $4.1 million of interest expense on deposits. In the first quarter of 2023, the company previously implemented CECL on the Newtek Bank loans portfolio.
An additional $2.6 million of provision for loan credit losses was recorded in the second quarter. Net interest income after the provision for loan, loan credit losses is $3.1 million for the second quarter of 2023. Focusing on total non-interest income of $46.4 million, $4.3 million is a result of servicing income, $13.2 million of net gains on sale of loans, $6.5 million from technology and IT support income, $10.7 million from electronic payment processing income, $4.4 million of net gain on loans accounted for under the fair value option, and $6.1 million of other non-interest income.
Going back to the $13.2 million of net gains on the sale of loans, which is comprised of the realized gains recognized from the sale of the guaranteed portions of SBA 7(a) loans sold during the 2Q, totaled $18.5 million. In the 2Q of 2023, Newtek Bank and NSBF sold 566 loans for $154.5 million at an average premium of 10.15%. Realized losses on the SBA 7(a) loans for the 2Q of 2023 was $5.3 million. Moving down to non-interest expense of $40.2 million, which is primarily comprised of $19.4 million of salaries and employee benefits for the consolidated financial holding company.
$4.8 million is a result of electronic payment processing expenses, $3.5 million from the technology service expenses, $3.2 million to professional service expenses, and $3.6 million of other loan origination and maintenance expenses, and $4.9 million of other general administrative costs. Pre-tax net income for the second quarter of 2023 is $9.3 million. On an after-tax basis, consolidated net income for the second quarter of 2023 was $6.8 million, or $0.26 per share. I would now like to turn the call back to Barry.
Thank you, Nick. Operator, we would love to open it up to Q&A, as that concludes the presentation portion of the call.
As a reminder, to ask a question, you will need to press star one one on your telephone. Please stand by while we compile the Q&A roster. Your first question comes from the line of Crispin Love from Piper Sandler. Your line is now open.
Thanks, good morning. First, Barry, I was just curious if you could comment on how you view credit quality to be performing in the loan book, loan book and just expectations going forward. Your provision came in below your guide in the second quarter. Then, also, if you could just share what level nonaccruals were as of quarter end, then, if there were any charge-offs in the quarter. Thanks.
Sure. I'll take the first part. I'll see if Scott and Nick can help me on the second. On the first part, you know, relative to the provision, I think in prior calls, we had talked about, you know, a 7% or 8% CECL provision, which frankly, is consistent with what we did. When you take it back to present value terms, it comes in a little bit less than that. We believe we're consistent with what we previously forecasted, but from an accounting standpoint, that's pretty much where it comes in at. You know, relative to the quality, Scott or Nick, you want to pick that one up?
Hey, Barry, this is Scott. I can speak to the allowance and just expand on that. We did make an accounting policy election when we bought the bank and implemented CECL, that we would discount our expected losses. If you think about the Seven A portfolio with an over 11% coupon and you discount that back, you can clearly see that, you know, if you're accustomed to discounting, that kind of interest rate will really reduce the expected losses. We are susceptible to future interest rate moves, and, you know, it's gonna be a very interesting scenario to see play out for the rest of the year. That is the reason that for the discrepancy between the two.
Then for the other question, the NPLs as a percentage of the loan portfolio at fair value was about 6.9%, and the realized losses for the quarter was $5.3 million.
Okay, did you have the NPLs at cost as well, or just at fair value?
At cost, I think it's about 12.8%.
Okay, great. Thanks. Just one other question for me. Just on the cadence of earnings in the back half of the year. I think in the third quarter, you're now expecting $0.37, and EPS previous guide was $0.43, if I'm correct, but kept the fourth quarter pretty steady at $0.69. Just curious on your confidence in the ramp in earnings in the back half of the year, especially the fourth quarter and what the key drivers that you expect to drive that. It seems that loan growth is expected to pick up a lot in the fourth quarter. Curious on why that is, and then what else is at play, driving the acceleration earnings? Thanks.
Chris, I appreciate the question. You're fairly new to us. I think you're about six months old, but over the course of 20 years, the fourth quarter's always been our biggest quarter. We can also tell by the pipeline that we have going, and I think it was important to try to emphasize that we have a day job of growing our business. Our night job was moving over people, staff, policies, procedures, wire instructions, PLP status, regulatory issues with two new regulators, still keeping the... I mean, the headwinds that we've had in the first six months of the year, I cannot describe. It's like having three jobs. I still think we're gonna, gonna probably continue to have three jobs for the rest of this year, and then maybe it'll go down to two, and then maybe it'll go down to one.
We'll be able to focus most of the time going out in the future on the one job where we hope to be able to hit the gold stream and outperform things a little bit better than we are today. We feel pretty good about the numbers, and obviously, you've got also a fairly volatile environment with things changing quite a bit, particularly on the short end of the curve and pricing and things of that nature. We feel pretty good about the numbers. We've historically been a pretty good forecaster.
Thanks, Barry. I appreciate you taking my question. That's all I had.
Thank you.
Once again, to ask a question, please press star one, one on your telephone. Your next question is from the line of Michael Perito from KBW. Your line is now open.
Hey, Barry. Good morning. Thanks for taking my questions.
Thank you, Mike.
Just one quick follow-up on, on the guidance. Just on, on the, the, the margin assumption, the 10.75%. Just wondering if you could take that a layer deeper for us. I mean, it seems like, you know, I've looked around at, at some of the, the banks that, that sell a good amount of this paper, including yourselves, and it, and it seems like, you know, the, the secondary environment was, was pretty stable in the second quarter, you know, after some volatility, the, the two months, the two quarters before that. Just wondering, you know, why, why does that feel like the right level based on what you're seeing today for the back half of the year for, for, for selling the loans, and, and what gives you kind of some, some confidence around that number? you know, a bit below where you've been historically, but obviously a bounce back from, from where you were in, in the second quarter.
Sure, Mike, and I appreciate the question. I'm gonna try to dig out a page in the deck that focuses on our sort of history of gain on sale prices. I think the, the, the major difference between us and other organizations is the fact that we're dealing directly with borrowers. Slide number 22 really goes back and shows sort of the history of our net premium trends. You can see there's not, I mean, there's some volatility there, but it's not like, with the exception of 2021, where the SBA had zero fees in the middle, and we've got up to 13%. I mean, you're really pretty much looking at about, you know, a 1.5 point swing plus or minus.
Relative to, you know, pricing going forward, we feel very good about on a going-forward basis, our loans being priced at prime plus 300. That's the only rate that we do. Unlike a lot of our competitors in the space that have different rates for different people, we have one rate, it's prime plus three. We deal directly with the borrower. There's no broker, there's no expensive banker in the middle of the transaction, we're able to quickly ascertain what the borrower's needs are, we give them a long am schedule, we close the deal, we give them a lot of other things, which is why I believe they do the loan.
I think when you look at where the market is, the current price that we've used is based upon a very recent mix of loans that we sold. I think also, Mike, it's important to note, and maybe people that aren't, you know, day-to-day in the business as we are, a 25-year loan by commercial real estate, getting it sold into the market at $1.14, $1.15, $1.16, of which it gets split, and then a 10-year deal that's not backed by commercial real estate sells at $1.10 or $1.11. When you look at the mix and the blend, the real estate-backed versus non-real estate-backed, that changes things. Big loans versus small loans changes the discount.
It's not that easy a formula to figure out, but we're pretty good at making the guesses, and we obviously look at where the entire market is going, and the market right now seems to be pretty good. The other thing that's really important also is, you know, from a portfolio perspective, when are the rates changing? Our legacy portfolio in NSBF is primarily at prime plus two and three quarters. Our new loan, since the change was put in place, is prime plus three. That's why we're also getting better prices, holding everything else constant. The extra 25 basis points makes a difference. Hopefully, that was helpful.
It, it, it was. Thank you. And then just a few more for me, and I apologize, they're kind of all over the place, but just one last one on, on the guide. The jumping share count in the fourth quarter, I just wanted to, to confirm, is it safe that that's just kind of like equity grant or stock comp related stuff, right? That's just an assumption you guys are making around that, nothing more?
It's a good catch, Mike. You're very thorough, and I appreciate that. I think that is a plug number in terms of something we may or may not do. I'm not sure we need to do it, but no, that, that's not comp. That would prospectively be a raise, but we've got access to debt markets, we've got access to equity markets, and that's kind of how we manage our guidance going forward. I can't tell you that that count will occur. That's just the best guess, and that kind of helps us get to these numbers, if that's helpful. I, I hope, I hope it is helpful. Obviously, our goal...
Yeah. No, I mean, it, it is. I guess so. Is it... I guess maybe that's opens up a broader question then. It's just, I mean, do you guys, as it stands today, do, do you feel you, you need to, to add some type of capital at the bank sub in the fourth quarter, potentially, given?
No.
your growth rates, or?
No. need, need nothing at the bank. Nothing. The holding company. Listen, the other thing, too, is if money is available to you at a fair price, you can make money off of it, you take it. I to be frank with you, I'm less enthusiastic about selling shares. It would be a debt, although the debt markets haven't been really that kind in the last month or so.
Yeah.
You know, it's a really hard thing to do this, which I'm sure you could appreciate. Like, you know, I don't know, or, you know, is bank holding company debt gonna be able to do it at 7.5 or 9.5 in the fourth quarter? I have no idea. It's hard to tell, and I'm not sure we need it. You know, as we do this, what we try to do is put our best guesses out there, and we always want to, you know, never overpromise and underdeliver. Obviously, that's a little bit of a drag, but I, I wouldn't say that that's something that you can absolutely count on at this point.
Okay. From hearing you right, it's, it's, it's a conservative assumption that you might add some capital at the holding company level at some point.
Yes.
That might not happen.
It might not happen. Clearly, I don't need it at the bank. The only capital I need at the holding company would be to do the non-conforming loans, because there's nothing else.
Got it.
that needs or eats capital.
Okay, perfect. Thank you, Barry. Just two more. Just on the, you know, I believe in past conversations, Barry, you've talked a little bit about, you know, the, the, the credit on the, the NSBF portfolio, particularly some of the vintages, you know, that happened during the pandemic. You know, based on where the, the, the kind of gain, gains and losses were on the fee lines around fair value, it didn't really seem like there was any credit deterioration. I was wondering if you could just spend 1 minute talking about any delinquency trends in the SBF book that, that you guys are seeing. I mean, You, you addressed it a little bit in, I think, in the prior question, but just wondering if you can go kind of a layer deeper on that for us.
Sure, I, I think the, the NSBF portfolio we have at fair value. The NSBF portfolio does not have what I would call, you know, a traditional bank loan loss reserve. I believe we've got that portfolio valued at a, from here, and a good chunk of it is seasoned, 20% cumulative, default rate. That's going forward and approximately a 45% there. We've got that portfolio fairly conservatively valued. Nick, was the market clearing yield on that, like, 8.4 net of those charge-offs?
Yes, that's correct, 8.4%.
Okay. Net of, you know, charging off, historically over time, that amount of charge off, and I would say 40% of the portfolio is three to four years old. We think that portfolio is fairly conservatively valued. Now, if you were to ask me, well, gee, you know, what do you think of the environment going forward? The one thing I can almost bank on, it will not be as good as the one we're coming out of. Which means I'm probably wrong, but from a Goldilocks scenario, you couldn't have had a better, you know, economic climate, particularly with our customer base, PPP and EIDL loans, C credits, of which, by the way, we're still working that with customers. I, I just think that it's gonna get a little worse.
The other thing, too, it's a seasoned portfolio, so it's only going to look uglier and uglier as time goes on, and I want to brace you and other people for that. I mean, it doesn't get any better because you're not adding new to it, right? It's only gonna get worse, from a percentage standpoint. I also want to point out, when I look at, like, non-accruals, right? I think this is really important for the 7(a) business. The only thing that really matters is fair value. The original cost is irrelevant. Why do I say it's irrelevant? We already took the charge. Similarly, we already got the gain on sale, and you have a nice high coupon.
You know, I've had people say, "Oh, my God, it's 13%!" Well, first of all, the other thing is we've gone through COVID, where you couldn't foreclose on stuff, and we chase personal guarantees. Unlike a, a, a bank, that when the thing goes bad, they just bang it out. This is a non-bank asset, and it's driven at a non-bank level, so it's gonna look very different than in a bank environment. I just want to point that out because. The other thing is we look at losses over the life of the portfolio, not in any given year. Like, we're very comfortable with CECL, which is sort of similar, but not exactly. I think, I think these things you're pointing out are very important differentiators between NewtekOne and most of the organizations that are in this particular structure.
Got it. Very helpful. You know, sorry to ask so many, but just a couple, couple quick-
Sure.
Other quick ones. Just on the loan portfolio buckets, maybe this is a question for Nick or Scott, but just can you remind us, you know, I know the NSBF, the answer is no. But as we think about the go-forward provisioning costs, do all the other buckets, the loans that amortize costs, the conventional loans, does everything kind of flow through a CECL provision other than the SBF bucket? I apologize, it's kind of a basic question. I just want to make sure I have it right.
Scott, I'll let you take that one.
Yeah. as you think about the portfolio, you've got the traditional NBNYC portfolio. and if you go back to the first quarter, you can see that we reserved about 1.2%, 1.25% on that portfolio. you know, keep in mind that we did have one loan that we were watching. it looks like that loan could be coming to resolution in, in the future, and so we're monitoring that situation, but we don't expect any losses. And in fact, we expect performance better than, than what we had originally projected. That's one item to note. I think as you think about the portfolio going forward, we generated about $48 million of unguaranteed 7(a) loans during the period.
So as you look at, you know, the provisioning on that portfolio, you have to take into account the discounting. I can't, I can't emphasize that enough, particularly in the volatile rate scenarios that we find ourselves in today. As rates move up, our allowance naturally has a propensity to go down, all else equal. That's just the that is the math and the accounting that we've elected. When you look at it, Barry mentioned the 7%-8%. You discount it back, you know, you're looking at, you know, somewhere, anywhere, $650-$675, based prior to the Fed move.
I think you can expect that kind of provisioning, as we move forward, understanding that if rates, rate hikes do go in, we will, you know, that number will, will most likely come down.
Perfect. Thank you. Then just lastly, and this will be quick, but just do you have Scott, do you have the, or Nick, do you have the average earning assets for the quarter? Can you just confirm that what the average kind of full quarter NIM was? I just want to make sure I have it right.
Yeah. We're looking at total interest earning assets for June 30 quarter end at about $1.089 billion.
Do you have the average figure for the quarter, though, by chance?
That's, that is the average.
Oh, okay. Sorry, I thought you said quarter end.
Yeah, sorry. Yeah, for the quarter ended June 30. $1.089 billion, average daily balance for interest earning assets. Net interest margin at 2.09% for the consolidated company.
Perfect. Thank you, guys. Sorry for all the questions, but I appreciate you taking them.
Thank you.
Once again, to ask a question, you may press star one one on your telephone. Your next question comes from the line of Bryce Rowe from B. Riley. Your line is now open.
Thanks, thanks, good morning. Wanted to start maybe on this concept of the guide and, you know, the seasonality that you've seen in the past, Barry. You, you know, you've got forecasted operating expenses consolidated, coming down in the back half of the year. You also are, you know, showing the NTS and NMS pre-tax incomes going up pretty considerably in the back half of the year. Just curious, you know, how you would kind of characterize the seasonality of that or just capturing operating efficiencies as you, you know, move further away from the move from BDC to bank?
NMS is clearly a seasonality, you know, particularly with third and fourth quarter. NTS, I, I think that there were frankly, issues, particularly in technology, where given the economy in Q1 and Q2, a lot of people delayed projects and we think are coming back on stream. Regarding the lending, you know, we're fairly confident about the volumes. Obviously, once again, it's, it, it is hard to forecast, but we feel very good about it. You know, relative to, you know, the operational expenses, we're just getting much more efficient at this particular business. You know, we when you look at it as, you know, as a percentage of things from a efficiency ratio, we're really just getting a lot more leverage out of our operations and our business, putting more-... area that will be a challenge, will be more technology solutions. I'm very confident in the, in the NMS, because we're just looking at the seasonal factors there.
Okay. Okay. That's helpful. Then I, and I think, Barry, in your prepared remarks, you talked about a dividend from the bank to the holding company. Just wanted to make sure I heard that correctly. Can you speak to kind of the dynamic there, especially considering that you, you know, you put equity into the bank, you know, when you close this transaction?
Sure. With my Chief Legal Officer on the right, my right shoulder here, imaginary, the only party that can declare a bank dividend is the Board of Directors, and it has to be approved by the regulators. I, I say with confidence that this is something that we plan to do, and we are in compliance and subject to those two authorities approving it. I think it's something that the market can expect, and I would hope, as somebody that's gonna recommend this, both to the regulatory authorities and the board, that a 50% ratio might be something that one can expect from the bank to the HoldCo, paid out of profits, of course.
The HoldCo dividend, which we said, is, you know, somewhere around, you know, 30%, 30%-ish, 33 and 1/3%. That's kind of what, what our thoughts are there.
Okay. you know, reason for doing that, is to kind of help manage capital at the HoldCo. I mean, you just talked about really not needing incremental capital at the HoldCo. just curious, you know, kind of how you would use that capital at the HoldCo level?
Yeah, it would be used for the non-core business, primarily.
Okay.
That's a big need for it. Could also be used to pay down debt as well.
Okay. Okay. I appreciate, appreciate it, Barry. I, I think all my other questions were, were asked and answered. Thanks.
Okay, thank you.
Your next question comes from the line of Scott Sullivan from Raymond James. Your line is open.
Hey, good morning, Barry, congrats to you and the team on really continuing this transition rather elegantly. So my comments and question, questions come from a slightly different perspective, as I've really been fortunate enough to be an advisor and portfolio manager for clients, and been involved with Newtek since the early BDC days, as you know. You know, frankly, as everyone knows, you've crushed it. You guys have really done a outstanding job, so it's a natural turn towards the banking side now. My question has to do with scalability and perhaps blue sky runway, under some, I think, some exciting assumptions, at least, that I have. You know, I see a lack of financial stress. I see a potential eventual de-inversion of the yield curve.
Obvious, as you talked about, tech developments, AI and other that are, in my opinion, are gonna lead to a huge productivity boom, possibly a decade long. Question after that ramble is, what's a blue sky runway for you guys in terms of growth rate, loan, loan growth, et cetera, with the special sauce that you've proven in terms of your process and under these macro assumptions?
Sure. Well, I think, I think that, if you look at the roadmap, which relates to people, process, and software, no bankers, no brokers, no BDOs, no branches. The market can visualize as the management team can, that we could grow the revenue stream without matching dollar for dollar with expenses, then the, you know, the future is, is pretty bright for us. I want to be real clear about this. A lot of people say, "Well, gee, why did you buy a bank? Do you want to leverage it to keep deposits?" Okay, well, that, that's just a fact of the banking business. To the ability to communicate and deliver bundled services with margin pooling that actually give that customer a tremendous advantage. Like, here's a simple thing: document storage, okay? We've had this and used it to make loans forever.
If you bank with us, you could store your documents and then you take advantage. If you're a consumer, could be your insurance policies, your photos, your driver's license, your rental agreements. If you're a business, it's your articles. That's free. That's free. It's a benefit. You can go to the advantage and look at your web traffic analytics. They're changing every day. That's free. Then you have.... I, I love asking this question to anybody: Who do you know at your bank? Half the time they say, "I don't know anybody." The other half the time, they can name one person, maybe, and that one person can't do anything.... except hand them off to somebody else at the bank to do whatever it is they need to get done. That's not the case with the Newtek Advantage. You get six relationships, so you get the analytics.
I mean, there's so many things. That's why I'm very excited about the model, how we're positioned. It's different and unique, and it's very hard to replicate. Over 20 years, we've owned a payments business, we've owned a tech solutions business, we've owned it. We owned all these things. They're not just stuff slapped together and hoping they work well. That's kind of where I see that blue sky without getting into the numbers or the math. When you look at the ROAA and the ROTCE, that's where people are gonna have to look at this and go, okay, I can actually compute this into numbers.
That's very helpful. Thank you. One last question. Could you speak to any, often talked about now, loan office exposure?
Did you say loan office? Oh, office.
Office. Office space. Yep.
Yeah. God, I, I believe that the National Bank of New York City portfolio might have had maybe $15 million-ish, but these are not- these are not skyscrapers. These are like medical offices, you know, $1 million-$1.5 million balances. There's no... I mean, we're blessed. We don 't have that type of exposure in the portfolio.
Well, that's very helpful. As I said, you know, we don't get many opportunities to sort of get in at the ground floor of a, of a new bank, with new techniques and expertises without all the legacy baggage. Congratulations.
Thank you, Scott. I appreciate it.
There are no further questions. Please go ahead.
No, operator, I appreciate it. Are there any, I don't think there's any other questions that I'm seeing.
We just one have from Christopher Nolan from Ladenburg Thalmann and Company. Your line is now open.
Chris, thank you for being patient, and we'll try to keep this open.
Given that you guys have a very differentiated business model, are you finding more resistance from bank regulators who are having a difficult time getting their hands around your business?
It wouldn't have surprised me if, in fact, the regulators would pause, and so far we haven't seen that at all. I would say we've been blessed that everything we said we're gonna do and our plan, we've done, including excessive amounts of capital, good performance. No, the answer is it wouldn't have surprised me if that occurred. It just has not, and we don't see any hints of that occurring, at least.
Got it. Okay, thank you.
There are no further questions now. You may continue for closing remarks, Mr. Sloane.
I can't thank everybody enough, and I, I appreciate everyone being patient to get on the call and get their questions in. Thank you all very much. Look forward to reporting Q3 and Q4, delivering everything one step at a time. Thank you so much. Have a good day.
This concludes today's conference call. Thank you all for attending. You may now disconnect.