SBA Hot Topic Tuesday – Newtek Bank Receives Approval to Acquire the National Bank of New York City

December 6, 2022

Delaney Sexton
Contributing Editor

SBA Hot Topic Tuesday – Newtek Bank Receives Approval to Acquire the National Bank of New York City

“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 financial holding company,” Barry Sloane, Chairman, President, and CEO of Newtek, says. “With a national bank charter, we believe Newtek will be able to enhance the business and financial solutions offered to our customers to include personalized digital commercial banking and the Newtek Advantage dashboard and truly become NewtekOne – the One Solution for All Your Business Needs.”

Newtek Business Services received conditional approval from the Office of the Comptroller of Currency (OCC) to complete the National Bank of New York City acquisition. The bank acquisition is expected to close in January 2023, subject to completion or waiver of the remaining closing conditions, and once the acquisition is closed, NBNYC will be renamed Newtek BankTM, National Association. Newtek Bank, N.A. must enter into an operating agreement with the OCC upon the acquisition’s close. The operating agreement contains customary provisions regarding capital, liquidity, and concentration limits and memorializes the business plan submitted to the OCC.

Last week, Newtek also announced that it received approval from the Federal Reserve to become a bank holding company and financial holding company through the acquisition of NBNYC.

Mr. Sloane further comments, “We look forward to paying our recently declared distribution of $0.70 per share for the fourth quarter 2022 on December 30, 2022, to shareholders of record as of December 20, 2022. This distribution will likely be Newtek’s final distribution as a BDC. Upon the closing of the Acquisition, Newtek will discontinue its election to be regulated under the Investment Company Act of 1940, will no longer qualify as a regulated investment company (“RIC”) for federal income tax purposes and will no longer qualify for accounting treatment as an investment company. Newtek has previously stated that subject to Newtek board approval, compliance with regulatory requirements and Newtek achieving its operational and financial goals, it anticipates that Newtek will continue to pay dividends as a bank holding company. We would like to note that if dividends are paid from the Newtek bank holding company, we expect they will be treated as qualified dividends versus the pass-through status of dividend treatment in the BDC/RIC structure.”

Mr. Sloane concludes, “We are thrilled to see the finish line in completing this corporate transformation, which we have been working on over the last 18 months. 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.”

Source:
Street Insider Article