Finally.
Just shy of 16 months after Newtek Business Services Corp. announced a $20 million, all-cash deal for the $206 million-asset National Bank of New York City, the Office of Comptroller of the Currency has put its imprimatur on the deal, giving the Boca Raton, Florida-based Newtek the final regulatory approval it needed.
Newtek, a business development company founded in 1998, said Thursday that it had received the OCC approval. It expects to close its deal for NBNYC in January, at which time the institution will rebrand as Newtek Bank, National Association. Newtek
"We are thrilled to see the finish line in completing this corporate transformation which we have been working on over the last 18 months," Newtek CEO Barry Sloane said in a press release. "We could not be more elated to receive the OCC's approval to move forward and close the acquisition and become a bank holding company and a financial holding company."
Sloane said in a subsequent interview that he and his team have quickly turned their attention to ensuring a prompt close to the acquisition of NBNYC. "It's actually a busy time and we are going to be a different type of financial institution. … No time to party yet," Sloan said.
Newtek expects to pay existing investors a dividend of $0.70 per share on Dec. 30 just before its conversion. While Newtek expects to continue paying dividends as a bank, many investors fear the rate will fall significantly. Banks are not required to pay 90% of net income in dividends, as are business development corporations. The skepticism surrounding dividends led many investors to
"We are excited about our future and what we believe is our ability to be a disruptor with a differentiated business model in the bank holding company and bank ownership investment landscape," Sloane said in the press release.
A more efficient Newtek would likely make waves in Small Business Administration lending, where the company is already the nation's third-largest SBA 7(a) lender by dollar volume. Through the first two months of the agency's 2023 fiscal year, which began Oct. 1, Newtek reported approving 293 7(a) loans for $183 million. Newtek plans to integrate two of its biggest business lines — Newtek Business Lending and Newtek Small Business Lending, which includes the SBA operation — into Newtek Bank.
On its own, National Bank of New York City reported income totaling $1 million through the first nine months of 2022, and $1.1 million for all of 2021. NBNYC reported $138.8 million in deposits at Sept. 30, including $23 million in noninterest bearing deposits.
