Newtek Business Services Inc. (NEWT, Financial) filed Quarterly Report for the period ended 2009-06-30.
Newtek Capital Inc. resulted from the combination of the businessespreviously owned by BJB Holdings Inc. and REXX Environmental Corporation and is operating as a holding company for a network of partner companies in a collaborative and coordinated effort to develop successful businesses in a number of existing as well as emerging technological business lines. Newtek Business Services Inc. has a market cap of $15.5 million; its shares were traded at around $0.42 with and P/S ratio of 0.2.
As a result of the dislocation in the secondary market for guaranteed loan sales, the Small business finance segment stopped originating new loans in the fourth quarter of 2008. Improving secondary market conditions and changes to the SBA 7(a) loan program in the 2 nd quarter have permitted us to begin lending again, although the temporary nature of our lending line has caused management to limit the amount of loans we will originate. In June 2009, the Small business finance segment originated and sold a new loan at a premium. As of June 30, 2009, we had approximately $16,327,000 outstanding under the $30,000,000 GE line of credit of which the Company guarantees up to $15,000,000 of the advances. On July 22, 2009 we entered into a Fifth Amendment and Consent (the Fifth Amendment) to the Credit Agreement dated as of August 31, 2005 between NSBF and General Electric Capital Corporation (GECC) which made certain changes in the terms of the warehouse lending facility provided to NSBF. The Fifth Amendment reduces the aggregate total of the credit facility to $15 million from $28 million, adjusts the interest rate and other terms and extends the maturity date from August 31, 2009 to May 31, 2010 based upon progress shown by NSBF in obtaining a commitment for a replacement lender. The effectiveness of the Fifth Amendment is subject to the approval of the United States Small Business Administration. Upon the Fifth Amendment becoming effective the Company will have to partially pay the line down. There can be no assurance that we will be able to renew our credit line with GE, or that we will be able to negotiate an alternate arrangement. Failure to obtain replacement financing will have a material adverse effect on our business.
Excluding electronic payment processing costs, other costs decreased $125,000 or 7% between years. Depreciation and amortization decreased $134,000 between periods. The decrease in depreciation and amortization is principally due to a previously acquired portfolio intangible asset becoming fully amortized during 2009 and the effect between years of a portfolio impairment charge recorded in the fourth quarter of 2008. Remaining costs increased $9,000 between years as the result of an increase in costs related to information technology and sales and marketing related services.
Excluding electronic payment processing costs, other costs decreased $162,000 or 4% between years. Depreciation and amortization cost decreased $236,000 between years. The decrease in depreciation and amortization cost is principally due to a previously acquired portfolio intangible asset becoming fully amortized during 2009 and the effect between years of a portfolio impairment charge recorded in the fourth quarter of 2008. Remaining costs increased $74,000 between years as the result of an increase in the use and cost of services related to information technology and sales and marketing related services.
The segment derives revenue primarily from monthly recurring fees from hosting websites. Web hosting revenue between periods increased $203,000, or 5%, to $4,702,000 for the three months ended June 30, 2009 over the same period in 2008 due to a combination of improved revenue per website offsetting a decrease in the average number of hosted websites. Average monthly revenue per site increased 8% to $23.84 from $21.99. NTS utilized price increases coordinated with service and plan enhancements as well as new higher priced service offerings to help drive growth in revenue.
Total expenses increased 1% or $26,000 to $3,790,000 from $3,764,000 for the three months ended June 30, 2009 as compared to the same period 2008. The increase in total expenses was due to a $27,000 increase in salaries and benefits, a $34,000 increase in other general and administrative costs mainly for marketing, and a $18,000 increase in interest expense relating to the outstanding $2.5 million note, offset in part by a $53,000 decrease in depreciation and amortization.
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Newtek Capital Inc. resulted from the combination of the businessespreviously owned by BJB Holdings Inc. and REXX Environmental Corporation and is operating as a holding company for a network of partner companies in a collaborative and coordinated effort to develop successful businesses in a number of existing as well as emerging technological business lines. Newtek Business Services Inc. has a market cap of $15.5 million; its shares were traded at around $0.42 with and P/S ratio of 0.2.
Highlight of Business Operations:
For the quarter ended June 30, 2009, the Company substantially reduced its loss before benefit for income taxes to $(775,000) from $(2,629,000) in the same quarter of 2008. While this reduction in loss demonstrates improvements in operations with increases in revenue being matched to reductions in salaries and benefits, part of the reduction reflects the recovery of a $1,000,000 related to an investment previously written off and shown in the All other segment. We had a net loss of $(637,000), an improvement of $1,345,000 over 2008, on revenues of $27,077,000. Total revenues increased by $2,447,000 or 10.0%, fromAs a result of the dislocation in the secondary market for guaranteed loan sales, the Small business finance segment stopped originating new loans in the fourth quarter of 2008. Improving secondary market conditions and changes to the SBA 7(a) loan program in the 2 nd quarter have permitted us to begin lending again, although the temporary nature of our lending line has caused management to limit the amount of loans we will originate. In June 2009, the Small business finance segment originated and sold a new loan at a premium. As of June 30, 2009, we had approximately $16,327,000 outstanding under the $30,000,000 GE line of credit of which the Company guarantees up to $15,000,000 of the advances. On July 22, 2009 we entered into a Fifth Amendment and Consent (the Fifth Amendment) to the Credit Agreement dated as of August 31, 2005 between NSBF and General Electric Capital Corporation (GECC) which made certain changes in the terms of the warehouse lending facility provided to NSBF. The Fifth Amendment reduces the aggregate total of the credit facility to $15 million from $28 million, adjusts the interest rate and other terms and extends the maturity date from August 31, 2009 to May 31, 2010 based upon progress shown by NSBF in obtaining a commitment for a replacement lender. The effectiveness of the Fifth Amendment is subject to the approval of the United States Small Business Administration. Upon the Fifth Amendment becoming effective the Company will have to partially pay the line down. There can be no assurance that we will be able to renew our credit line with GE, or that we will be able to negotiate an alternate arrangement. Failure to obtain replacement financing will have a material adverse effect on our business.
Excluding electronic payment processing costs, other costs decreased $125,000 or 7% between years. Depreciation and amortization decreased $134,000 between periods. The decrease in depreciation and amortization is principally due to a previously acquired portfolio intangible asset becoming fully amortized during 2009 and the effect between years of a portfolio impairment charge recorded in the fourth quarter of 2008. Remaining costs increased $9,000 between years as the result of an increase in costs related to information technology and sales and marketing related services.
Excluding electronic payment processing costs, other costs decreased $162,000 or 4% between years. Depreciation and amortization cost decreased $236,000 between years. The decrease in depreciation and amortization cost is principally due to a previously acquired portfolio intangible asset becoming fully amortized during 2009 and the effect between years of a portfolio impairment charge recorded in the fourth quarter of 2008. Remaining costs increased $74,000 between years as the result of an increase in the use and cost of services related to information technology and sales and marketing related services.
The segment derives revenue primarily from monthly recurring fees from hosting websites. Web hosting revenue between periods increased $203,000, or 5%, to $4,702,000 for the three months ended June 30, 2009 over the same period in 2008 due to a combination of improved revenue per website offsetting a decrease in the average number of hosted websites. Average monthly revenue per site increased 8% to $23.84 from $21.99. NTS utilized price increases coordinated with service and plan enhancements as well as new higher priced service offerings to help drive growth in revenue.
Total expenses increased 1% or $26,000 to $3,790,000 from $3,764,000 for the three months ended June 30, 2009 as compared to the same period 2008. The increase in total expenses was due to a $27,000 increase in salaries and benefits, a $34,000 increase in other general and administrative costs mainly for marketing, and a $18,000 increase in interest expense relating to the outstanding $2.5 million note, offset in part by a $53,000 decrease in depreciation and amortization.
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