Morning, everybody. We have Barry Sloane here to present NewtekOne.
Thank you very much, I appreciate everyone attending today. Also with me here today is Bryce Rowe. He's in charge of investor relations for NewtekOne. I always start off these presentations, why should you all be here? Why should you care? I think you should care because this is a very interesting company, a company that is very unique and one that you probably haven't seen anything like it before. I say that from the standpoint that NewtekOne has been in existence since 1998 when it started in a spare bedroom in a New York City apartment with myself and two other founders. Today, we have over 600 employees, $3 billion of assets. About three and a quarter years ago, we acquired a nationally chartered bank, we are a financial holding company.
Before you leave for the exits, you're not going to hear the story of a boring financial holding company owning a bank. I think that's important. What you're going to see is actually an organization that is structured in a bank holding company, but also there'll be an explanation why the banking industry actually should be one of the leaders in AI and all the technological developments, in its frankly extremely undervalued sector or segment. I think a lot of the banks are not going to be able to make it, I'll explain why. Their business models are antiquated, archaic. So when you look at our organization, we don't look like a bank, we don't smell like a bank. Everything about NewtekOne, and Newtek Bank, National Association, is nothing like 99% of the banks out there today.
So when you take a look at our returns, our returns on tangible common equity, 20%. Our returns on average assets, over 3%. These are numbers that dwarf the leaders in the banking industry. We are currently paying a 5.5% dividend and have done so historically. In an investment in Newtek, you're going to get value when you take a look at our tangible book value growth, you're going to get growth in earnings per share, growth in asset size, growth in deposits, growth in loans. That's because our approach to the customer is totally unique, it's totally different, and I think you'll find it extremely exciting. This presentation you can find in the investor relations section of our website, newtekone.com. Go to the Investor Relations section. You'll be able to see it. It's in different formats at different presentations.
It's very similar to what we did in our recent earnings call. Let us begin. First of all, the thing that's most important is what is the company about? What's its mission statement? It starts off with the customer. I think our mission statement hasn't changed since the company was formed in 1998. We've been public since September of 2000, we've been a publicly traded company for 26 years. The business that the company is in is providing business and financial solutions to independent business owners across the United States. Most importantly, we help our clients become more successful. We help them grow their revenues, we'll talk about our loan product which is unique from other banks. We help them reduce their expenses and reduce their risk. I think it's extremely important that the market that we serve, it's not consumer. There's no consumer loans.
It's not Fortune 1000. It's the market, what we refer to as independent business owners. I will tell you haven't seen a company like ours, particularly in this particular structure. Why did we acquire a bank? We acquired a bank because most of you in this room, if you are an independent business owner, a small to medium-sized business or yourself, you go to your banking institution three to five times a week, 12 to 20 times a month. That's eyeballs. The banking industry doesn't do anything with it. Why? They're old, they're archaic, they're not disruptors, and they're not innovators, and Newtek is. When you look at how we're set up, we use technology to tackle our mission, and so far, from a marketplace perspective, we have six analysts that follow the company. It's a $400 million market cap stock.
It makes about $70 million after tax. We don't look or smell like a lot of the companies in this particular program today and tomorrow. We're obviously bigger. We make money, we make money after tax, and we've been doing this for 26 to 27 years. But what we've done is we've created these technologies over two decades to acquire customers cost-effectively, to process loans, take deposits, all using the latest and greatest technology. And obviously, we're using AI, and eventually that cost curve will bend down, which it will do for most financial institutions that get with it. Once again, I want to be very clear. Most banks and bank holding companies in the U.S. make all their money on the deposit side.So i If they don't gather deposits at 1.5%, 2% below the risk-free rate, I would say they don't have a business.
We'll spend a lot of time today talking about what we do and what our business model is. First and foremost, we do not have the high-cost infrastructure of our competitors. There's no branches, there's no bankers. Which is why the efficiency ratio with the bank is 40%. The typical efficiency ratio at a financial institution is 60%, and that's just basically your expenses versus your total revenues. Lending margins. The banking industry today, particularly since the great financial crisis, makes low margin, no-risk loans. Their charge-offs are 25 basis points or 50 basis points. Bottom line is there's no margin on the asset side. They all do the same loans. There's no innovation. There's no disruption. And the only way the industry's been able to make money is through consolidation, buying people, squeezing the costs out through acquisitions. Frankly, I believe that trade is dead.
So when you look at what we do, we lend to SMBs. We have higher loan loss provision. It's actually 5% of a loan loss provision. And we make what we call adult loans to small or medium-sized businesses that have 10 to 25-year amortization schedules. The loans don't balloon, and we do real underwriting. So we have higher losses, but net of those losses, we just make more money. That's why at the bank, the return on tangible common equity is north of 30%, and the return on average assets is, I think, 3.5% to 4%. These are numbers that do not exist in the banking industry today. In addition, we believe we've got the best business banking account. We charge zero fees. Now, you see zero fees all the time from other banks. It's not accurate. It's zero fees with a minimum. It's zero fees for six months.
It's zero fees, no asterisks, no exceptions, no way, no how, no fees. No fee for an ACH, no fee for a wire, no monthly statement fee, no fee even for a bounced check. Why can we do that? I don't have it in my back book, I'm not relying upon it. But most importantly, it's because we make assets that have risk-adjusted returns that dwarf the banking industry. We make real loans. We manage risk. The banking industry avoids risk. Entirely different. So we've been able to grow deposits, which we'll talk about. Let's talk about the size of what I call the identifiable market. So our identifiable market is the small to medium-sized business owner, SMB. Some people call them SMEs, small and medium-sized enterprise. We like to call them independent business owners because I don't really know too many people who like to be called small.
But our customer base represents 30 million independent business owners across the U.S., according to the SBA. According to the Chamber of Commerce, it's 43% of GDP. I think everybody woke up during COVID and said, "Oh my God, there's all these small businesses all over the place." They employ a good chunk of the population, which is true. We've known this all along, we've developed a very unique business model to work with this customer base. We lend to them. We move their money on a real-time basis and cost efficiently. We insure them through our insurance agency. We give them a payroll solution that is simply better than all of our competitors. That includes ADP and Paychex, we'll go into that. According to the SBA statistics, we have stabilized or grown 110,000 jobs in the U.S. during the last five years.
We actually do have a very nice purpose in what we do. We help business owners employ people and grow the economy. Once again, this SMB, SME market, this demographic, is very valuable. Bank of America says they're the leading player for SMBs. They don't lend money to them. They just take their deposits. I don't know what they do, but you won't see them in the top 10 or 15% of SBA lenders in the U.S. Here's some of our interesting data, just from an earnings standpoint. So I'm not going to go into the minutia. You're going to need to do a little work yourself and pile into this. There isn't a statistic that isn't double digit. Our EPS had 19% and 23% growth on a Q1 2025 basis versus 2026. We anticipate earning $2.30 at the midpoint.
The stock is trading about 14, you could see it's a fairly ridiculous multiple. It's a ridiculous multiple versus the Russell earnings per share. It's a ridiculous multiple versus the S&P. It's a ridiculous multiple versus most banks, that is because we don't really fit into a bank model. As I said, I've got six analysts that follow the company. We're in the community bank space. We don't look like them. We don't smell like them. 75% of our income is non-interest bearing. So we're not just clipping coupons, which is how most of the banking industry earns its money. I think if you spend a little time, take a look at some of the research reports, listen to how we present the company today and on the conference call. Feel free to follow up with questions directly to Bryce or myself.
We're the easiest people to get to in the company. I think you'll find this to be an extremely interesting story. Technological advancements. We acquire 600 to 800 unique business referrals a day. Over two decades, we've developed relationships with UBS, Morgan Stanley, Stifel Bank, Lunnike, Muffley Trade Association, Navy Federal Credit Union, Anderson Capital Advisors. They bring customers to us because they want a health insurance plan, because they want payroll, because they want a bank account that doesn't rip them off and charge them ridiculous fees and not pay them a rate on their money. They come to us because they want a real adult loan with a 10 to 25-year amortization schedule without a balloon payment attached to it and no covenants. That's why they come to us.
We've used technology through a patented product called NewTracker that tracks the referral and allows the referral partner to watch what we're doing with their customer 24 hours a day, seven days a week. In addition, the way we exchange data is not old school. It's not PDF in an email. It's not going into a bank branch. We give people secure file vaults. They drop and drag, click Documentations, load it in. We are using AI to read tax returns and spread financials. We're using AI to read lease agreements. We're using AI to read operating agreements. We're using AI instead of going to title companies to actually go to the municipalities and get liens on residential real estate, commercial real estate, and equipment. This is all stuff, frankly, the industry isn't doing yet.
We're doing it, that's why in the month of March and April, our loan units were up 40% year-over-year. We're growing very nicely without having to cut into credit. Deposit growth. Banks have a hard time growing deposits. Well, one of the reasons why they have a hard time growing deposits is they don't pay the customer a fair rate on the deposits. So we could pay customers a fair rate on deposits. Our cost of deposit funds is 3.6%, yet, my net interest margins at the bank are north of 5%, with a very healthy 5% allowance for credit losses. So we're covered, that's why our return on tangible common equity, our returns on assets are extremely attractive. So we grew our consumer deposits year-over-year 88%.
When we acquired National Bank of New York City, it was $180 million total asset size bank with $140 million of deposits. Today it's over $2 billion of deposits. Total asset size $2.1 billion. All of our funding is deposit based. Approximately 80% is insured. That's extremely important. You don't have a Silicon Valley Bank problem, where some institution that gives you a huge amount of money all of a sudden decides to pull out. The deposits are covered, they're insured, and these are basically retail deposits. They're not brokered deposits. Our brokered deposits are about 3%. So importantly, we are able to acquire deposits with digital account opening, very attractive, directly with customers. Our alliance partners are driving those deposits to us because they want an attractive bank account, and they also want, and you're going to continue to hear this, the concept of real-time payments.
Real-time payments is all about moving money quickly without a ridiculous charge like people are experiencing with Visa, Mastercard, wire fees, ACH fees. We are able to do that, once again, because we've got the best technologies in place because we understand the customer, the consumer, the business owner. We give them a business portal, the Newtek Advantage, which allows them to all in one place see all their ACH, all their wires, all their batches on their credit cards, refunds, chargebacks, batches of the day. It enables them to make payroll by having the money in the account on Monday and paying all the employees on Monday. Banks don't do that. We do it. By doing it, we reduce the risk of the customer, we reduce their expenses, and we allow them to grow faster. This is our tangible book value. I think this is extremely important.
I will tell you, I prefer not to be valued at book value. That's kind of an old school way of valuing an asset-intensive business, what's the multiple of book. We're trading pretty close to one times book. Look at that growth of book. From $6.92 to in the recent quarter, $11.85. We estimate we'll be over $13 by the end of the year. That's all the while we paid a dividend. So if they had the dividend back in, we'd currently be at $14.26. For shareholders, forget what the analysts say and forget what the market says, you've done pretty well underneath with the business. That's really what we're here to talk about today. If you could take a look at the company, analyze the financials, ask the tough questions.
Most importantly, understand that the technologies that we have in our organization are unbelievably valuable. They're unbelievably valuable to us from an organic growth standpoint. If maybe somebody comes along and pays a ridiculous price at a multiple of earnings, which they should, company's probably going to go to somebody because people say, "Are you for sale?" The answer is no, but we trade on an exchange. We're for sale every day. I mean, that's got a commonplace. So if you pay enough of a premium, you probably can have the company, and that's fine by me. Whatever makes all of you happy, I'm happy. By the way, my interests are aligned. I bought 16,000 shares this week. I filed Form four. You could take a look at it. I'm always a buyer, not a seller. Insiders have bought recently over time.
I've got a great board, great business model, and we're proving all the naysayers wrong. Let's see here. We talked about the technology. I think that's important. The technology is utilized in every facet. It's utilized to acquire customers cost effectively without branches, traditional bankers, brokers, or BDOs. The technology is used to make loans cost effectively and quickly. The best loans trade like that. The basic information is you've got to be able to get the data, put it into a format. I have to say, this is not score and go stuff, which most of our competitors do. This is really five Cs of credit underwriting. Our typical loan over $350,000 has a 20 to 25-page credit write-up. Under $350,000 it's shorter. There's less risk. There's more diversification.
By the way, from a diversification standpoint, in the SBA book, our average loan size is $120,000 per loan. That's diversification. Nobody ever asked me that question, by the way. We are diversified by industry. We're diversified by geography. On an individual unit basis, into the SBA 7(a) program, it's $120,000. I just want to point out for those of you that are not familiar with 7(a), and I realize this is a bit of a different audience. When you make an SBA loan, three-quarters of the loan is government guaranteed. 25% is uninsured but not subordinated. So when we make that loan, we sell the government-guaranteed piece for a 10% or 11% premium. All you could sit here and do the math. Theoretically, I can have a 10% cumulative charge-off on the uninsured piece, which would cost, say, $25,000.
I made $75,000 gain on sale, plus we have 100 basis points of service, and then I've got a coupon on my books at prime plus three, which today is close to nine and a half, nine and three-quarters. All of you could figure the math out. The SBA 7(a) business is extraordinarily profitable. For those of you that don't know Newtek, we are the largest SBA 7(a) lender by number of loan units, second largest by number of volume. Also important to note, we have another program which we'll talk about shortly, which is derived from the SBA space called C&I LA, commercial and industrial loans, LA standing for long Am.
We've taken our 20-plus years of knowledge in understanding that you could make a long amortizing loan, have personal guarantees, which we have from every borrower, joint and several, every 20% equity owner, lien the personal and the business assets, and then we don't need covenants. For those of you that are not lenders, getting financials 45 to 60 days in arrears, getting early principal repayments, we trade that off for PGs and liens. I'll take the PGs and the liens and the higher rate all day long. Why do banks and other entities do this? I don't know. I can't say why this industry doesn't innovate, doesn't disrupt, and is really very slow to react to things. Here's a slide. You could see our deposit growth. Once again, I want to point out, this is on our website. Here's some interesting data.
We've recently stated that when a loan portfolio is maturing, there's a loss curve, and it's flattening now that we're three and a half years in business. So our losses are flattening. The C&I LA program we talked about, these are the types of loans that are in the C&I LA program. The balance is currently $754 million. We've done $1 billion over our life. But you could see, these are low LTVs, high debt service coverage ratios. Look at the coupons, 13.27%. You would say, "Why does somebody borrow money at 13.27%? They must be really crappy credit." It's because I let them distribute 100% of the income. It's because I don't make them give me ridiculous financials that most institutions can't do anything with except charge an extra fee. It's because I allow them the ability to borrow money or to lever the business.
I've got the liens. I've got the guarantees. 20-plus years of experience tells me this works and this makes sense. One other thing, then I'm going to open this up for Q&A. In the C&I LA business, we make the loans, we put them in the bank, and then we securitize them. My spreads after the 1% servicing fee is 586. So for those of you that are not a financial institution, if you went to a bank and they had a 350 basis point NIM, net interest margin, you go, "Oh my God, that's great." They have a huge infrastructure to get the money in on the deposit side. There's huge costs associated. Here, there's no costs. You put the loans on a special purpose vehicle, it's match funded, there's no interest rate risk, and you get those kind of margins.
That's why we're going to keep generating these numbers. We indicated $2.6 in EPS for 2027. I appreciate the opportunity to chat. I'll open it up for Q&A. Thank you. Questions, anybody? Oh, okay. I think another way to take a look at that is how do our earnings look after the charge-offs. The answer to that question is we will make probably $70 million after tax this year, and we have an allowance of 5% for credit losses. We're probably charging off somewhere in the neighborhood of 1.5% to 2% per year as a charge-off, but that NIM does not include the C&I LA business that's now going into the bank. We used to do that at the holding company, and it's structured off-balance sheet.
So I think the point that you're talking about is extremely profitable, but the gain on sale that I told you about in the 7(a), that's not in the NIM because I sell those loans off. The point that you just brought up is what is confusing to people that look at this and compare us to the 7,000 banks and credit unions in the U.S. It's not comparable. Well, that's the loan loss reserve. Right. Yeah, we have a payment processing business that makes about $17 million pre-tax per year. The loan business and the way we make loans currently is the big driver, but we also have a payroll business. We have an insurance agency business. I think you'll see significant growth in non-interest opportunities that don't affect on the lending side.
Clearly, the lending business and the ability to make loans and sell them in the SBA program or to make them in securitizing is the bulk of the business. I would say from a growth perspective, given that there's not a lot of entities that do this, I would say none. It's extremely profitable, and we've developed a reputation, frankly, of being the best in the space. Zero. We are responsible for Community Reinvestment Act. We're in compliance. No, we don't have employees of that ilk. However, we are a community-based lender because we have 10,000 credits that are all SMBs all over the U.S. Next question. Sure.[Inaudible] Sure. First of all, I'd like to say we're an overnight success. It just took 26 years to get here, so that's really important. We put all of this stuff in a bank wrapper, which is unique.
The key to the technology working is drilling down to the customer, understanding the customer's experience, and making it frictionless to exchange the data, put it in a format that you can understand it and analyze it, and make a decision. We're very pleased that over three and a half years, we have great OCC reviews, great Federal Reserve reviews, and you could see from the output on the deposit growth and the loan growth, and the fact that we've been making money net of those losses, that our technology is good and it is superior. The problem in a banking structure, the executives in a bank do not want to change. They do not want to take a risk. They don't want to do anything new. They're not compensated to do it. You'd be shocked.
Now I have to hire some of these people, and the ones that do this and then they show up in 30 or 60 or 90 days later, they don't do it. They're leaving. Thank you very much