NewtekOne, and Patriot Financial Partners, L.P. (“Patriot”) announced that they have completed a transaction pursuant to which in exchange for all of Patriot’s 20,000 shares of the Company’s convertible preferred stock, Series A, $0.02 par value per share (the “Series A Preferred Stock”) and $10.0 million in cash, the Company issued to Patriot 2,307,692 shares of its common stock, par value $0.02 per share (the “Common Shares”). With the exchange, Patriot relinquishes the right to convert the 20,000 shares of convertible preferred stock into 950,800 shares of common stock. The Common Shares were issued to Patriot in a private placement transaction in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended. The Common Shares are subject to, among other things, a two-year transfer restriction.
The transaction is expected to boost the Company’s common equity tier one capital (“CET1 capital”) and tier one capital by $30 million. In addition, on a pro forma basis as of June 30, 2025, the transaction grows CET1 capital from $256 million to $286 million. Moreover, the impact of this transaction, when combined with $48.357 million of net proceeds from the offering of depositary shares that closed August 20th, increases, on a pro forma basis as of June 30, 2025, tier one capital by $78.357 million from $256 million to $335 million and tangible book value per common share to approximately $10.74.
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Barry Sloane, NewtekOne’s Chairman, President, and Chief Executive Officer, commented, “We are pleased that one of our longer-term institutional shareholders expressed confidence in our business strategy and management team by exchanging the 20,000 shares of Series A Preferred Stock it originally acquired for $20 million and $10 million in cash for 2.3 million Common Shares, and agreeing to a two-year lock-up of the Common Shares. We believe the boost to capital and to the capital ratios and the accretion to tangible book value per share more than outweighs the EPS dilution associated with the newly issued shares. We appreciate our investment relationship with Patriot that is now approaching three years. Patriot’s knowledge and understanding of NewtekOne is supported by Patriot maintaining a seat on the board of directors of our bank subsidiary, Newtek Bank, N.A.”
Kirk Wycoff, Managing Partner of Patriot Financial Partners, said, “We are excited to exchange our Series A Preferred Stock for NewtekOne common equity, to make an additional $10 million investment in NewtekOne common shares, and to retain our position as a long-term shareholder. We have been impressed with NewtekOne’s operational execution since it converted to a financial holding company in early 2023.”
Mr. Wycoff continued, “We believe that NewtekOne’s business strategy and operating model centered around technology, efficiency, and profitability is ideally situated to become one of the leading players in the industry in a constantly evolving banking environment and that NewtekOne and Newtek Bank have constructed an operating model the banking industry can follow.”
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