管理層發言
Good day, and thank you for joining us. Welcome to the NewtekOne, Inc. Second Quarter 2025 Earnings Conference Call. Please note that today's conference is being recorded. I will now turn the call over to your speaker today, President and Chief Executive Officer, Barry Sloane.
Thank you, operator, and welcome, everyone, to the NewtekOne NASDAQ NEWT Second Quarter 2025 Financial Results Conference Call. My name is Barry Sloane, CEO and President of NewtekOne. Joining me here today on the call will be Frank DeMaria, Chief Financial Officer of NewtekOne; and Scott Price, the CFO of Newtek Bank National Association. I also want to introduce Bryce Rowe, who is not on the call, in charge of Investor Relations. Bryce joined the organization recently from the firm of B. Riley, where he represented us. Bryce, when he was there, was the equity analyst for BDCs and banks and has been very helpful and instrumental in shaping our presentation and deck to make it a little bit more digestible and understandable. I also want to give a couple of shout-outs to some additional new hires: Andrew Kaplan, our Chief Strategy Officer, joined us from Flagstar Bank and has been incredibly instrumental in helping us with various critical aspects for the future of our digital account opening, merchant services, and instant merchant account opening.
I also want to announce Vik Mahajan has joined us recently. Vik has had a long-term career as an M&A banker and has been our banker at Credit Suisse and Deutsche Bank. Vik is the Chief Investment Officer of the bank and has been working very closely with the bank President, Peter Downs, in buying and selling loans and particularly developing a process for moving nonperforming loans off the balance sheet. With that, I'd like to mention to everybody to follow along on today's presentation. Please go to newtekone.com, access the Investor Relations section, and the PowerPoint presentation is available there. On Slide #2 of the PowerPoint, you will find our note regarding forward-looking statements. Please familiarize yourself with that note. On Slide #3, an important part of our discussion today is really focusing on what is NewtekOne? What does it do? What's our mission statement and what's our purpose?
Well, it all starts with the customer. We provide business and financial solutions to a target market of over 33 million independent business owners in the U.S. Some participants refer to them as SMEs or SMBs, meaning small and medium-sized enterprises or businesses. We recently acquired a federally insured depository. It's important we choose and prefer not to be looked at just like a bank holding company because as you go through this presentation, we really don't look like most bank holding companies and banks. We're different in a variety of different ways regarding how we approach the customer and the type of revenues and earnings that come through our system. We look forward to discussing that presentation with you today. According to the U.S. Chamber of Commerce, small businesses employ almost half of the American workforce. We believe that as things evolve, particularly with artificial intelligence, this segment will continue to be a very prominent part of employment opportunities in the U.S. SMBs represent 43% of U.S. GDP, and 99% of businesses in the United States identify themselves as small.
Also important to note, according to the SBA's data, over the last 5.5 years, NewtekOne as one of the more active 7(a) lenders through its non-bank and bank subsidiary has supported and stabilized over 110,000 jobs. Our mission serves a public purpose and a public good. We are not just an SBA lender; as you'll see throughout this presentation, we provide various types of loans to this demographic. In being an SBA lender, the definition of an SBA 7(a) loan is a loan that is not available under normal bank circumstances. There's a test called the credit elsewhere test that states these types of loans do not qualify for a normal bank loan. Due to this, we experience greater losses and increased provisions, but net of those losses and provisions and expenses, we provide greater returns. When comparing us to the rest of the banking industry, there are certain metrics that may compare us unfavorably.
NewtekOne is a financial holding company regulated by the Fed. We focus on using proprietary and patented advanced technological solutions to acquire customers and to provide solutions cost-effectively. Additionally, it's important to note that most bank holding companies don't have a lot of assets. We're extremely active as a bank holding company, evidenced by Newtek Merchant Solutions, which generates about $17 million of pretax income and EBITDA. Our alternative loan program business has loans made in joint ventures and in various structures totaling about $450 million to $500 million. We provide a full menu of best-in-class on-demand solutions to our independent business owner clientele without relying on traditional bankers, branches, brokers, or business development officers. Through this methodology, we've acquired 19,000 depository accounts since our inception. We conduct loans digitally and remotely, and we also facilitate our clients' ability to send and receive money, provide payment processing solutions, payroll solutions, and insurance.
In a nutshell, we are a technology-oriented financial holding company operating a digital bank that functions exclusively through an online banking platform, unlike traditional bank holding companies. We believe that going forward, the banking industry will greatly benefit from technology and artificial intelligence, which we are currently embracing and utilizing. We think many institutions you may be familiar with will not resemble today's banks. From our perspective, we are ahead of the curve in doing what they aspire to do, such as acquiring customers remotely and automating their businesses. We are currently in the process of achieving these goals. Slide #4 highlights our Q2 financial and operational successes. First off, we are maintaining our earnings per share guidance at a range of $2.10 on the low end to $2.50 on the high end for calendar year 2024. Another aspect we don't talk about enough is revenue growth.
In Q2 2025, we achieved 15% revenue growth of $70.2 million versus $61 million in Q2 2024. In terms of operational and financial highlights, a key point is the growth in business deposits. Business deposits have a lower cost and are more transactional. However, to grow business deposits, we believe the noninterest-bearing depository account will gradually decline over time. For example, if you visit a platform like Coinbase and own stablecoins, you may receive around 2% to 3% on your money. We were pleased to grow business deposits at the bank by $50 million sequentially, with most of the money coming in through the DDA account. The reason we were able to achieve this is due to opportunities stemming from lending, merchant services, and payroll as integrated solutions. Consequently, our cost of funds at the bank declined significantly and is projected to continue decreasing. The best is yet to come with a 28 basis point decrease in our cost of funds, which is currently at about 3.71%.
The net interest margin at the bank increased by 56 basis points. We are very satisfied with our performance regarding the bank's cost of funds, which is crucial moving forward, especially as we begin attracting deposits below the risk-free rate, which I previously mentioned, typically refers to the bill rate or NAV of a government-guaranteed money market fund. Importantly, we will discuss this on one of the upcoming slides. Losses continue to shrink in Newtek Small Business Finance. Recently, we went from a $10.7 million loss to a $4.9 million loss and then to a $3.7 million loss. Newtek Small Business Finance is no longer lending and is in a rundown mode while still being held at the holding company. We will spend considerable time discussing the alternative loan program today, aiming to present its value not just to our business customers but to all our stakeholders, including shareholders.
Our alternative loan program, which has successfully completed three securitizations, is growing, consisting of high-quality loans, and is very accretive to our earnings per share. We will emphasize our captured operating leverage, which supports above-average profitability. When examining our ROAAs, ROTCEs, and expense ratios, we see exceptionally favorable results on a comparative basis. Lastly, a portion of the $18 million unrealized gain in Q1 caused some confusion among our investors. From Q1 2025 to Q2, we sold government-guaranteed loans and moved the ALP loans off the balance sheet into the securitization. This caused the unrealized gains to disappear. The government-guaranteed 7(a) loans were sold for cash, while the ALP loans were written down at full value to par to integrate them into the equity stake in the securitization. Crucially, while most banks create loans and hold them without the high growth rates we've achieved, we differ significantly from 95% of other banks and are immensely excited about our business model, which has now shown consistent success over ten quarters.
We will delve deeper into our ALP business throughout this presentation to enhance understanding of our operations. Furthermore, the residual interest in the ALP recent securitization for the 2025 deal is marked at a 14% yield, factoring in historical loss severity and frequency or charge-off rate of 3%. This is consistent with our approach across the three securitizations completed to date—one in 2022, one in 2024, and the most recent one in 2025-1. Moving on to Slide #5, second quarter CEO highlights. For the earnings picture, basic and diluted EPS for the quarter were $0.53 and $0.52, respectively. The basic and diluted EPS for the first half were $0.89 and $0.87, surpassing the midpoint of our guidance, which is $0.78 to $0.92. We intend to maintain our annual forecast of $2.10 to $2.50 EPS. The midpoint implies an EPS growth rate of 17%, a strong result not commonly seen among most banks or bank holding companies.
We discussed success in growing core deposits, as well as reduced headwinds stemming from our SBA nonbank lender, Newtek Small Business Finance, which reported a first half '25 loss of $8.7 million—compared to an annual loss of $28.7 million for 2024—indicating a positive trend. We have a slide that will highlight this information. Notably, nonaccruals within NSBF also saw a quarter-over-quarter decline. The prices of the SBA 7(a) loans were consistent with our fair value marks. The 7(a) loans we held on an unrealized basis in Q1 were sold in the second quarter. Moreover, we had to recognize an unrealized loss to negate the unrealized gain, followed by a realized gain for cash. Thus, both of these actions offset one another. During this period, we sold approximately $22 million to $23 million worth of 504 loans at a price of 104.75%, resulting in a significant profit. Importantly, we also mentioned why we are retaining certain government-guaranteed 7(a) loans on our books, which allow us to earn a prime plus 3 or a 10.5% coupon.
This factor was one of the contributors to our net interest margin at the bank. The alternative loan program performed exceptionally well. In June and July, both Deutsche Bank and Capital One increased credit facilities we used to fund and warehouse ALP loans before securitizations. Deutsche Bank's facility increased from $120 million to $170 million, while Capital One Bank's increased from $60 million to $100 million. We are enthusiastic about our ability to continue growing this business. Profitability and operating leverage remain strong. Our efficiency ratio year-over-year at the holding company improved from 66.3% to 60.3%. When comparing our ROAAs and ROTCEs, the figures remain exceptionally robust. Slide #6 presents our annual forecasts, which are readily available. As we review our business model—previously discussed in prior presentations—we tackle three primary problems in the banking industry.
First, we obtain deposits below the risk-free rate due to the Newtek Advantage. We provide customers with analytics, transactional capability, and data access. We enable clients to send and receive money. We have integrated solutions between our bank deposit accounts and merchant accounts, including chargebacks, refunds, and batching—all in the Newtek Advantage. Additionally, our payroll service is included in the Newtek Advantage, enabling money movement—we own the payroll business, the merchant business, and handle ACH and wire transactions. We are also positioning ourselves for stablecoin adoption in the future, which we believe will have significant implications, especially regarding cross-border transactions. Institutions that fail to provide a frictionless experience for customers will face challenges. Importantly, we recognize the need to provide value to our customers. Efficiency is also crucial for us; not only are we completely digital—no branches or traditional bankers—but we are excelling in acquiring clients efficiently.
By the end of the year, we estimate having approximately 10,000 borrowers and $4.4 billion in servicing. At the bottom of Slide #6, you can see our forecasts for the remainder of the year. Our ROAA for the second quarter stands at 2.5%, with a ROTCE of 19.4%. These figures reflect ambitious growth for our model. It's important to remember that making loans and selling them has been our practice for 20 years, and we expect to continue this for another 20 years, delivering solid returns and favorable risk-adjusted returns. Please refer to Slide #7 to view our performance metrics, including net income, diluted EPS, and pre-provision net revenue—showcasing strong Q2 financial highlights. Notably, our capital position remains robust, providing us the ability to utilize capital effectively. Many banking institutions or financial holding companies boast substantial capital but lack the ability to utilize it; we are in a position to do both while generating favorable returns.
On Slide #8, you'll observe our financial highlights from the bank. I'd like to emphasize the decline in the cost of deposits from 3.99% to 3.71%, benefiting from our ability to obtain bank deposits. The net interest margin grew from 4.9% to 5.46%, levels that many competitors can only dream of achieving. Our ROAAs and ROTCEs remain strong at the bank, with ROAA at 3.94% and ROTCE at 35%, alongside sufficient capital levels. On Slide #9, another success story is the growth of tangible book value per share, which increased 3.7% sequentially quarter-over-quarter and 21% year-over-year. This is particularly noteworthy as we managed to enhance our tangible book value while also distributing a healthy dividend. Thus, shareholders benefit from dividends while witnessing tangible book growth. Slide #10 represents valuable information. We appreciate Bryce's contributions here. Many investors we've met want to see the breakdown of assets, illustrating the different buckets.
This is crucial for evaluation purposes to determine what's on and off the balance sheet on a non-GAAP basis. A significant amount of ALP loans reside in joint ventures or securitizations off the balance sheet, and they are of importance as we have historically maintained a 1% charge-off rate in our ALP portfolio. We have built a solid reputation as a reliable lender over the past two decades, consistently navigating the risk-reward landscape effectively. It's important to note, with a little over $1 billion in the bank and approximately $2 billion in the holding company, we are a significant operation. We believe we originate between $1.5 billion and $2 billion worth of loans each year. However, the sale of government-guaranteed pieces means we do not receive full credit for the amount of activity. To clarify, we create loans and subsequently sell them. The government-guaranteed portions are sold, while the ALP loans are created, warehoused, and then sold into a match-funded special purpose vehicle.
Slide #11 is perhaps the most key slide in the presentation, showcasing what may be the least understood aspects of our business. When we conduct ALP securitizations, the residual interests are valued at a 14% yield, factoring in a 15% default frequency and a 20% severity with a 3% charge-off rate. We mark these interests to market on a quarterly basis, amortizing any premium. The securitized ALP loans carry a weighted average coupon in the 2025 deal of 13.3%, while the notes have a weighted average yield of 6.6%. After accounting for servicing, this results in a 570 basis point spread. Imagine discussing this with a bank of our size and stature: being able to achieve a 570 basis point match-funded return with no required employees since all loans enter a special purpose vehicle devoid of operational expenses—isn't that attractive? We recently achieved this, deploying around $218 million in loans and $180 million to $185 million in bonds, leading us to create the securitization known as NALP 2025-1.
We plan to execute ALP securitizations regularly, with assets sitting on our balance sheet. Currently, we have $138 million of ALP loans positioned for another securitization anticipated in the fourth quarter. When loans transition into special purpose vehicles, they are adjusted, and the residual piece is valued according to the previously discussed yields, which represent market-clearing yields. This process is extremely accretive and valuable and derives enormous operating leverage from both the bank and the holding company's entire operation. It's pertinent to highlight that our ALP business features an average loan size of around $5 million, while the average loan size in the 7(a) business is only $400,000 to $450,000. Thus, reaching $1 billion in loans is achievable with roughly 200 units. This year, we will likely process between 2,500 and 2,700 loan units, which we can accommodate through our existing lending pipeline.
Our pipeline encompasses 600 to 900 businesses each day, supported by a $2.5 billion database that enables us to connect with customers and communicate our lending capabilities. Slide #11 details the mechanics to guarantee that the market comprehends how these assets transition through the income statement and balance sheet. The unrealized gains on securitized loans reported in Q1 were reversed when those loans entered the securitization process. Hence, the unrealized gain on the retained residual book—of which roughly 87% of the principal value was allocated into rated debt instruments—while the 13% corresponds to the equity piece. The servicing asset generated also contributes to this figure, reflected in the 100 basis points I mentioned earlier. Lastly, it's crucial to note that these loans are subject to prepayment penalties, deterring early payoff. The penalty structure consists of 5% in Year 1, 5% in Year 2, 5% in Year 3, and 3% in Year 4.
The duration for these loans within our portfolio spans 4 to 5 years. This data is significant when evaluating our ALP business, especially with the information presented on Slide #11. An examination of the net income derived from securitization indicates an approximately 5.5x cash flow valuation. I ask everyone on this call whether you would approve of creating assets and valuing them at 5.5x cash flows in a business that's growing without accompanying operational expenses once securitization occurs. We're genuinely excited about this business. Now let's proceed to Slide #12, discussing credit quality. We've previously shared this slide. The nonaccrual increase in NSBF has shown signs of deceleration. We have put together some numbers to illustrate this. Importantly, as a non-bank lender, we typically retain loans in default and liquidate them rather than selling them. Presently, however, as our business evolves, there is a heightened sensitivity towards non-accruals, which, while marked to market, have already been recognized, resulting in them ultimately being converted into cash.
We anticipate taking action in the near future, selling nonperforming loans both at NSBF and in the bank. This will validate our valuations while returning capital to us, bringing us closer to normalized ratios and metrics. Notably, the ALP loans are performing well, with 1% historic charge-offs as of June 30, 2025. The data presented on the chart is pivotal to understanding the NSBF portfolio, particularly against the backdrop of the financial crisis. In my view, the significant financial crisis occurred in '21, '22, and '23 for SBA lending, where rates surged between 3% to 5% on loans originated that vintage year. We sustained considerable losses on that portfolio. Moving to Slide 13, it's essential to highlight that the portfolio contains seasoned loans; we anticipate that the bulk of the challenges experienced with the NSBF portfolio are behind us. The repayment rate is accelerating; we have roughly $200 million of capital locked in NSBF that we believe could be released as securities pay down.
These cleanup calls serve a critical function, allowing us to undertake actions like debt repayments, stock buybacks, and dividend payouts, all of which shareholders favor. As the NSBF portfolio continues to repay, it paid down approximately $102 million or about 30% in the previous year. We believe nonaccrual inflows in the NSBF have peaked in Q2 2024 and are continuing to decrease. We expect NSBF will ultimately represent a valuable opportunity for us. Much of the remaining loans in NSBF are currently held in three securitizations—the 2021, 2022, and 2023 deals. Consequently, loan repayment and liquidations are secured for the bondholders. When those bonds hit their cleanup call or are paid off, all of the cash flow and equity will be allocated for diverse uses. Now I'll turn the presentation over to Frank DeMaria for Slide #14 and beyond.
Thanks, Barry. Turning to Slide 15, we provide context around the held-for-investment loan portfolio at the bank. We account for the bank's held-for-investment portfolio on a cost basis, in contrast to the fair value accounting utilized for our other loan portfolios. Currently, 61% of the bank's held-for-investment portfolio consists of unguaranteed SBA 7(a) loans, accumulated since the first half of 2023, when the bank commenced originating these loans. Before this, the 7(a) loans were originated by our non-bank lender. The bank has been allocating an allowance for credit losses against that portfolio, primarily related to the unguaranteed 7(a) book, which presently has an allowance amounting to 8.3% of unguaranteed 7(a) balances. Collectively assessed loans constitute 70% of the 7(a) allowance, of which less than 5% of the total ACL pertains to qualitative adjustments. Conversely, 30% of the ACL is allocated against individually assessed loans.
While our ACL continues to grow, it is doing so at a slower rate than previous quarters, leading to a sequential decrease in the provision, which keeps pace with net charge-offs. Moving on to deposits on Slide 16, Barry highlighted our success in growing business deposits by $50 million sequentially, now comprising almost 30% of total deposits. We have observed a significant decline in our cost of deposits, which we believe may further diminish if we continue executing business deposit growth. Our loan-to-deposit ratio exceeds 90%, and nearly 80% of our deposits are fully insured. We are utilizing deposits to fund loan growth, as the bank's bond portfolio stands at only $14 million on a $1.3 billion balance sheet. In Slide 17, we showcase NewtekOne's impressive pre-provision earnings profile, attributed to wider lending spreads we capture, healthy levels of fee income derived from selling, securitizing, and servicing loans, as well as our streamlined operational infrastructure designed for scalability.
As we introduce more securitizations and expand the ALP business, we anticipate our already robust level of pre-provision earnings will further enhance. Lastly, as Barry mentioned, we achieved a year-over-year revenue growth of 15%.
Thank you for that update, Frank. For Slide 18, let’s focus on the average net premium from SBA 7(a) loans. For Q2 2025, we averaged 110.91. It's noteworthy that the SBA has altered some of its rules and regulations, and we anticipate that the market clean premium for government-guaranteed 7(a)s in the latter half of the year will hover around 110. This is critical to our earnings guidance. A significant aspect of this change is a 55 basis point fee on specific loans we have lined up that will be excluded from this fee. The SBA's strategy enhances its loss reserves, which we support. I also want to clarify that we're maintaining a forecast of $1 billion in 7(a) originations for the year. Additionally, our ALP loan originations for H2 2025 are expected to reach approximately $250 million, which is included in our midpoint of $210 million to $250 million. Slide #19 from Bryce Rowe illustrates our adjusted net margin, providing insight into all loans both on and off the balance sheet, giving us what we refer to as adjusted net interest margin (NIM) of about 3.51%. We believe that this will continue to grow, particularly as we scale our ALP business, which is on a positive trajectory and performing exceptionally well for the organization. Operator, we're now ready to open the floor for Q&A.
分析師問答
Our first question will come from Tim Switzer from KBW.
The first question I have is on the deposit trends with the growth in the commercial deposits and lower deposit costs overall. Can you talk about some of the drivers there? What helped bring in, I think it was that $50 million of growth on the commercial deposit side? And then what are your expectations going forward for that initiative and then bringing down deposit costs going forward?
Thank you, Tim. Look, I think that what's important for our organization is to grow the business account; our business savings offers a 1% return, and that is a truly 0 fee opportunity. Through the Newtek Advantage, we provide our clients significant benefits in merchant services and payroll, all as part of an integrated solution. The days of establishing a depository account without it serving a purpose for businesses sending and receiving money are over. We had notable success, notably in lending, where our borrowers are making payments from a Newtek Bank account. To be candid, we need to improve account utilization. We've initiated approximately 4,000 business accounts, but the usage levels remain lower than desired. We're determined to improve this. Additionally, the bank accounts support payments, payroll, and lending solutions, thus positioning our portfolio advantageously. We also plan to offer lines of credit along with our bank accounts as part of our comprehensive offerings directed toward the SMB, SME, and independent business owner demographic.
And then I apologize if I'm missing this somewhere, but what were your total charge-offs this quarter for your held-for-investment portfolio?
Frank, could you help with that one?
Yes, it was $5 million, Tim.
Okay. So pretty flat with last quarter?
Yes, $5.1 million to be exact.
Okay. So exactly the same as last quarter. And then the other question I had is you guys did a really good job of last quarter, helping us kind of break down the various drivers that went through that net fair value line item. Obviously, it was a negative $11.8 million this quarter. I know that the securitized loans had an impact on that and the reversal from the held-for-sale SBA loans last quarter. Can you give us the different pieces of that and particularly what the gain was on ALP loans this quarter?
Frank, I'm going to let you address this with the numbers and the adjustments.
Sure, Tim. The previous unrealized gains on the ALP loans were $35.1 million. That amount was reversed, which is the primary component, as you mentioned, of the negative $11.7 million.
By reverse, Frank, you mean it was written down to zero, correct? Essentially...
Correct. It was marked down to par...
Which results in an offset by the loss.
Exactly. These loans were written down as Barry said, they were sold into the securitization. That ultimately results in a net gain that you see about $32.4 million on the value of the equity interest. For the quarter, the ALP loan gains were approximately $6.3 million. This offsets part of the loss associated with the other loans that are also on the books prior to their sale.
Tim, I also want to point out that on Slide #12, you can see a lot of stability as you run across the metrics, especially regarding non-performing loans on and off balance sheet, excluding NSBF. We exclude NSBF, as we believe it's a runoff and challenging portfolio. That said, the provision at the bank for the second quarter decreased from the first quarter. This is simply attributed to a lack of non-accruals transitioning onto the books. We believe this will eventually increase, as anticipated. We're fully reserved for it. Essentially, our reserves function similarly to capital since any loss counters the reserve. We are confident about our business and do not harbor extensive concerns regarding the credit aspects of the portfolio due to the existing reserves.
Our next question will come from Crispin Love from Piper Sandler.
I just want to follow up on the net gain in residuals and securitizations line. So $32 million in the quarter. I'm just curious about what to expect going forward. Will those only occur when you do ALP securitizations? Just curious what's changed there and then what we should expect looking ahead?
Yes, indeed. Go ahead, Frank, you can respond to that question.
Yes, Crispin, what's changed is that this is the first instance we've executed that gives us 100% ownership of the residual. Previously, these were done through 50-50 joint ventures. Therefore, the gains would be allocated to the joint venture, reflecting non-controlling interests. We anticipate adopting similar structures in the future, but that's a key difference compared to prior ALP securitizations.
And then, regarding the SBA rule changes effective June 1, you've referenced margin impacts and the gain on sale margin implications. I would like to know if you anticipate a drop in volumes within the 7(a) product. What are your overall thoughts on the changes, and have you noted any observable differences in recent months since their implementation?
Crispin, that's a great question. From our perspective, I don't believe it will affect us significantly, as we operate differently. Non-bank lenders are grappling with compliance issues under the new regulations due to limited staffing and capabilities. We are proud to announce that we are completely prepared. Our guidance for $1 billion in 7(a)s for the year will remain intact. When I mentioned our projections of $110 million, the composition of loans may shift between the 10-year and 25-year papers, which may impact the gain. However, we are unchanged in our outlook. It is indeed more challenging to find quality credits, and recent tariffs—an issue in April that has since resided—impacted the borrowing appetite for many customers. However, the sentiment is shifting toward positivity, indicating an optimistic second half.
Our next question will come from Marc Silk from Silk Investment Advisors.
As a shareholder, I'm perplexed that your stock trades at a P/E around 5 or 6, while the industry trades higher. Can you explain why you think that is?
I believe we're becoming progressively better at communicating our story. We release extensive information, but there are many components involved in our operations. Part of the challenge arises from our disruptive model. Here's an organization that transformed a traditional single-branch bank, opened 19,000 depository accounts, funded 2,500 unique borrowers digitally, enlisted 350 customer-facing personnel on camera, and employs AI for data analysis instead of manual input. It appears the market simply does not recognize our distinct approach. Additionally, the investment group we are in—community-based banks—poses a tough benchmark for us, especially when evaluated using traditional metrics. Our performance indicators may not align with those commonly held in high regard; however, we remain focused on delivering strong results. We're operating profitably, maintaining capital, and will persist in pursuing our agenda. Eventually, if we keep generating profits and sustaining dividends, the market will acknowledge our value. We're fine with that.
Could you provide some insight into how you're acquiring new business accounts? Are payroll and payment services driving most of the new accounts? Can you explain where a large part of this growth is originating from? Is it from the competitive interest rates on checking accounts?
In the near future, we will unveil new technology enabling clients to open a bank account and simultaneously get an approved merchant account through a single application process. There are no associated fees making this an attractive offer. Consequently, many businesses we acquire will thrive from our bank account tied to both our payroll and payment processing solutions. Importantly, customers cannot make electronic payments without a bank account, and we're providing an account merging cutting-edge analytics. We're integrating both payroll and lending services into the banking solution. This aligns with our aim to enhance overall customer advantage by bundling our services. We're not imposing hidden or unexpected fees like some large banks do. Everything we offer is transparent and beneficial for customers. You can't open an account without their consent; they have to sign an application to activate the account.
I am showing no further questions from our phone lines. I'd now like to turn the conference back over to Barry Sloane for any closing remarks.
Thank you very much, everybody, for attending. I appreciate it. We look forward to reporting our next quarter and continuing to generate the types of earnings and returns you've now come to expect. I also want to express gratitude to my senior management team. While I named a few, I cannot name them all, but they do an excellent job serving all of our stakeholders: shareholders, customers, and employees. Thank you very much. Have a great day.
Thank you. This does conclude today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a great day.