Newtek Business Services Corp. - FORM 10-Q

Attached files

file	filename
EX-32.1 - EXHIBIT 32.1 - Newtek Business Services Corp.	newt-93017xexh321.htm
EX-31.2 - EXHIBIT 31.2 - Newtek Business Services Corp.	newt-93017xexh312.htm
EX-31.1 - EXHIBIT 31.1 - Newtek Business Services Corp.	newt-93017xexh311.htm

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____to_____

Commission file number: 814-01035

NEWTEK BUSINESS SERVICES CORP.

(Exact name of registrant as specified in its charter)



Maryland		46-3755188
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1981 Marcus Avenue, Suite 130, Lake Success, New York		11042
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (212) 356-9500

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company (all as defined in Rule 12b-2 of the Exchange Act).



Large accelerated filer	o	Accelerated filer	x

Non-accelerated filer	o	Smaller reporting company	o

		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial or accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of November 7, 2017 there were 18,004,247 shares issued and outstanding of the registrant’s Common Stock, par value $0.02 per share.

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		Page

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements:

	Condensed Consolidated Statements of Assets and Liabilities as of September 30, 2017 (Unaudited) and December 31, 2016	1

	Condensed Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 30, 2017 and 2016	2

	Condensed Consolidated Statement of Changes in Net Assets (Unaudited) for the nine months ended September 30, 2017	3

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2017 and 2016	4

	Consolidated Schedule of Investments as of September 30, 2017 (Unaudited) and December 31, 2016	6

	Notes to Condensed Consolidated Financial Statements (Unaudited)	150

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	174

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	196

Item 4.	Controls and Procedures	198

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	199

Item 1A.	Risk Factors	199

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	199

Item 3.	Defaults Upon Senior Securities	199

Item 4.	Mine Safety Disclosures	199

Item 5.	Other Information	199

Item 6.	Exhibits	199

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Defined Terms

We have used “we,” “us,” “our”, “our company”, and “the Company” to refer to Newtek Business Services Corp. and its subsidiaries in this report. We also have used several other terms in this report, which are explained or defined below:



Terms
1940 Act	Investment Company Act of 1940, as amended
2016-1 Trust	Newtek Small Business Loan Trust, Series 2016-1
2021 Notes	7% Notes due 2021
2022 Notes	7.5% Notes due 2022
ASC	Accounting Standards Codification, as issued by the FASB
ASU	Accounting Standards Updates, as issued by the FASB
ATM Equity Distribution Agreement	At the Market equity distribution agreement dated March 20, 2017 with JMP Securities, LLC, Compass Point Research & Trading, LLC and Ladenburg Thalman & Co., Inc., each Placement Agents. Amended and restated on September 6, 2017 to include D.A. Davidson as a Placement Agent
BDC	Business Development Company under the 1940 Act
Board	The Company's board of directors
Capital One	Capital One Bank, N.A.
Code	Internal Revenue Code of 1986, as amended
DRIP	Dividend reinvestment plan
EBITDA	Earnings before interest, taxes, depreciation and amortization
Equity Incentive Plan	The Company's 2015 Equity Incentive Plan
Exchange Act	Securities and Exchange Act of 1934, as amended
FASB	Financial Accounting Standards Board
Goldman Facility	Credit and Guaranty Agreement between UPSW and NTS and GS Bank; amended on September 18, to include Premier as a borrower; amended on June 21, 2017 to include BSP and SBL as borrowers
Goldman Sachs	Goldman Sachs Bank
LIBOR	London Interbank Offered Rate
Related Party RLOC	Unsecured revolving line of credit agreement between UPSW, NTS, Premier, BSP and SBL as lenders and Newtek as borrower
PLP	Preferred Lender Program, as authorized by the SBA
RIC	Regulated investment company under the Code
S&P	Standard and Poor's
SBA	United States Small Business Administration
SEC	Securities and Exchange Commission
SMB	Small-and-medium sized businesses
Sterling	Sterling National Bank
Sterling 504 Facility	Loan and Security Agreement between NBCS and Sterling, as lender to fund SBA 504 loans
Sterling Receivable and Inventory Facility	Loan and Security Agreement between NBCS and Sterling, as lender to fund accounts receivable and inventory financing arrangements
Taxable Subsidiaries	Companies formed by Newtek which are taxed as corporations for income tax purposes
Trustee	U.S. Bank, N.A.
U.S. GAAP	Generally accepted accounting principles in the United States

Portfolio Companies and Subsidiaries

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NSBF	Newtek Small Business Finance, LLC, a consolidated subsidiary which operates as a nationally licensed SBA lender under the federal Section 7(a) program with PLP status
UPSW	Universal Processing Services of Wisconsin, LLC dba Newtek Merchant Solutions, a wholly-owned controlled portfolio company which markets credit and debit card processing services, check approval services, processing equipment and software
Premier	Premier Payments LLC, a wholly-owned controlled portfolio company which markets credit and debit card processing services, check approval services, processing equipment and software
NTS	Newtek Technology Solutions, Inc., a wholly-owned controlled portfolio company that provides website hosting, dedicated server hosting, cloud hosting, web design and development, internet marketing, ecommerce, data storage, backup and disaster recovery and other related services
IPM	International Professional Marketing, Inc., a wholly-owned controlled portfolio company which provides consulting, design and implementation of technology solutions for enterprise and commercial clients
SIDCO	SIDCO, LLC dba Cloud Nine, a wholly-owned controlled portfolio company which provides consulting, design and implementation of technology solutions for enterprise and commercial clients
EWS	Excel WebSolutions, LLC, a controlled portfolio company which provides web design services to SMB's
NBCS	CDS Business Services, Inc. dba Newtek Business Credit Solutions, a wholly-owned controlled portfolio company which provides receivable and inventory financing, management services and managerial assistance to SMBs and originates loans under the SBA 504 loan program
SBL	Small Business Lending, LLC, a wholly-owned controlled portfolio company which provides third-party loan services for SBA and non-SBA loans
BSP	ADR Partners, LLC dba banc-serv Partners, LLC, a wholly-owned controlled portfolio company which provides lending institutions with outsourced solutions for the entire SBA lending process, including credit analysis, structuring and eligibility, packaging, closing compliance and servicing
NPS	PMTWorks Payroll, LLC dba Newtek Payroll and Benefits Solutions, a wholly-owned controlled portfolio company which provides payroll management, payment and tax reporting services to SMBs
NIA	Newtek Insurance Agency, LLC, a wholly-owned controlled portfolio company which specializes in the sale of commercial and health/benefits insurance products to the SMB market as well as various personal lines of insurance
TAM	Titanium Asset Management LLC, a wholly-owned controlled portfolio company which provides 24/7 customer service and call center support

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (In Thousands, except for Per Share Data)
	September 30, 2017			December 31, 2016
ASSETS	(Unaudited)			(Note 1)
Investments, at fair value
SBA unguaranteed non-affiliate investments (cost of $265,132 and $219,784, respectively; includes $176,934 and $197,927, respectively, related to securitization trusts)	$	257,136		$	211,471
SBA guaranteed non-affiliate investments (cost of $21,637 and $10,262, respectively)	24,088			11,512
Controlled investments (cost of $58,891 and $41,001, respectively)	136,949			121,302
Non-control/non-affiliate investments (cost of $0 and $904, respectively)	—			904
Investments in money market funds (cost of $9 and $35, respectively)	9			35
Total investments at fair value	418,182			345,224
Cash and cash equivalents	3,915			2,051
Restricted cash	26,602			20,845
Broker receivable	25,003			2,402
Due from related parties	2,553			3,748
Servicing assets, at fair value	19,092			16,246
Other assets	10,980			10,934
Total assets	$	506,327		$	401,450
LIABILITIES AND NET ASSETS
Liabilities:
Bank notes payable	$	66,146		$	5,100
Notes due 2022 (Note 7)	7,915			7,853
Notes due 2021 (Note 7)	39,027			38,767
Notes payable - Securitization trusts (Note 7)	95,376			118,122
Notes payable - related parties	20,541			1,400
Due to related parties	812			1,227
Deferred tax liabilities	5,240			5,983
Accounts payable, accrued expenses and other liabilities	15,658			13,904
Total liabilities	250,715			192,356
Commitments and contingencies (Note 8)
Net Assets:
Preferred stock (par value $0.02 per share; authorized 1,000 shares, no shares issued and outstanding)	—			—
Common stock (par value $0.02 per share; authorized 200,000 shares, 17,730 and 14,624 issued and outstanding, respectively)	355			293
Additional paid-in capital	234,955			188,472
(Distributions in excess of)/undistributed net investment income	(3,069		)	8,092
Net unrealized appreciation, net of deferred taxes	11,347			13,008
Net realized gains/(losses)	12,024			(771		)
Total net assets	255,612			209,094
Total liabilities and net assets	$	506,327		$	401,450
Net asset value per common share	$	14.40		$	14.30

See accompanying notes to unaudited condensed consolidated financial statements.

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In Thousands, except for Per Share Data)
	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
Investment income:
From non-affiliate investments:
Interest income	$	4,363		$	2,583		$	13,233		$	7,404
Servicing income	1,794			1,551			5,163			4,581
Other income	705			692			2,266			1,913
Total investment income from non-affiliate investments	6,862			4,826			20,662			13,898
From controlled investments:
Interest income	188			92			456			251
Dividend income	2,551			2,933			7,326			7,719
Other income	—			—			54			—
Total investment income from controlled investments	2,739			3,025			7,836			7,970
Total investment income	9,601			7,851			28,498			21,868
Expenses:
Salaries and benefits	4,776			3,665			14,407			10,638
Interest	2,986			2,341			8,133			5,804
Depreciation and amortization	107			84			292			209
Professional fees	605			807			2,054			2,519
Origination and servicing	1,433			1,537			4,086			4,190
Change in fair value of contingent consideration liabilities	(748		)	—			(748		)	—
Other general and administrative costs	1,634			1,542			5,239			6,094
Total expenses	10,793			9,976			33,463			29,454
Net investment loss	(1,192		)	(2,125		)	(4,965		)	(7,586		)
Net realized and unrealized gains (losses):
Net realized gain on non-affiliate investments	9,938			8,716			27,537			22,536
Net unrealized appreciation (depreciation) on SBA guaranteed non-affiliate investments	1,151			(78		)	1,201			690
Net unrealized (depreciation) appreciation on SBA unguaranteed non-affiliate investments	(1,023		)	1,418			238			869
Net unrealized (depreciation) appreciation on controlled investments	(500		)	4,638			(2,243		)	10,362
Change in provision for deferred taxes on unrealized depreciation (appreciation) on investments	335			(2,028		)	745			(4,469		)
Net unrealized depreciation on non-control/non-affiliate investments	—			—			—			(43		)
Net unrealized depreciation on servicing assets	(632		)	(500		)	(1,601		)	(1,341		)
Net unrealized depreciation on credits in lieu of cash and notes payable in credits in lieu of cash	—			(1		)	—			(2		)
Net realized and unrealized gains	9,269			12,165			25,877			28,602
Net increase in net assets	$	8,077		$	10,040		$	20,912		$	21,016
Net increase in net assets per share	$	0.46		$	0.69		$	1.22		$	1.45
Net investment loss per share	$	(0.07	)	$	(0.15	)	$	(0.29	)	$	(0.52	)
Dividends declared per common share	$	0.44		$	0.43		$	1.20		$	1.13
Weighted average shares outstanding	17,487			14,556			17,076			14,515

See accompanying notes to unaudited condensed consolidated financial statements.

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)

(In Thousands)



	Nine Months Ended September 30, 2017
Increase in net assets:
Net investment loss	$	(4,965	)
Net realized gains on investments	27,537
Net change in unrealized depreciation on investments	(59		)
Net change in unrealized depreciation on servicing assets	(1,601		)
Net increase in net assets	20,912
Distributions to common stockholders:
Dividends to common stockholders from net investment income	(6,151		)
Distributions to stockholders from net realized gains	(14,686		)
Total distributions to stockholders	(20,837		)
Capital share transactions:
Issuance of common stock under dividend reinvestment plan	475
Stock-based compensation expense	904
Issuance of common stock in connection with investment in International Professional Marketing, Inc.	1,000
Purchase of vested stock for employee payroll tax withholding	(644		)
Issuance of common stock, net of offering costs	44,708
Net increase in net assets from capital share transactions	46,443
Total increase in net assets	46,518
Net assets at beginning of period	209,094
Net assets at end of period (includes $3,069 of distributions in excess of net investment income)	$	255,612
Common shares outstanding at end of period	17,750
Capital share activity:
Shares issued under dividend reinvestment plan	30
Shares issued in connection with public offerings	3,043
Shares issued in connection with investment in International Professional Marketing, Inc.	61
Purchase of vested stock for employee payroll tax withholding	(38		)
Restricted shares issued under Equity Incentive Plan, net of forfeitures	10
Net increase in capital activity	3,106

See accompanying notes to unaudited condensed consolidated financial statements.

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In Thousands)
	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
Cash flows from operating activities:
Net increase in net assets	$	20,912		$	21,016
Adjustments to reconcile net increase in net assets to net cash used in operating activities:
Net unrealized depreciation (appreciation) on controlled investments	2,243			(10,362		)
Net unrealized appreciation on non-affiliate investments	(1,438		)	(1,516		)
Net unrealized depreciation on servicing assets	1,602			1,341
Realized gains on non-affiliate investments	(27,668		)	(23,299		)
Realized losses on non-affiliate investments	131			763
Loss on lease	249			1,335
Amortization of deferred financing costs	1,075			921
Change in fair value of contingent consideration liabilities	748			—
Deferred income taxes	(745		)	4,469
Depreciation and amortization	292			209
Purchase of loan from SBA	(3,821		)	(2,057		)
Purchase of SBA 7(a) loan portfolio	(175		)	—
Funding of controlled investments	(27,000		)	(6,175		)
Funding of non-control/non-affiliate investments	(3,255		)	(1,020		)
Originations of SBA guaranteed non-affiliate investments	(200,620		)	(166,212		)
Principal payments received from controlled investments	12,332			1,800
Principal payments received from non-control/non-affiliate investments	3,255			910
Return of investment from controlled investment	50			—
Proceeds from sale of SBA guaranteed non-affiliate investments	217,016			183,452
Originations of SBA unguaranteed non-affiliate investments	(62,185		)	(51,567		)
Payments received on SBA non-affiliate investments	20,327			15,336
Other, net	1,139			527
Changes in operating assets and liabilities:
Net decrease in investments in money market funds	26			—
Broker receivable	(22,601		)	10,588
Due to/from related parties	780			542
Other assets	437			470
Accounts payable, accrued expenses and other liabilities	(133		)	1,300
Change in restricted cash	(4,585		)	(1,923		)
Capitalized servicing assets	(4,447		)	(3,919		)
Other, net	(80		)	23
Net cash used in operating activities	(76,139		)	(23,048		)
Cash flows from investing activities:
Purchase of fixed assets	(345		)	(294		)
Cash flows from financing activities:
Net borrowings on bank lines of credit	61,046			20,819

See accompanying notes to unaudited condensed consolidated financial statements.

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In Thousands)
	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
Net borrowings on related party line of credit	19,141			1,753
Repurchase of common stock under share repurchase plan	—			(866		)
Proceeds from common shares sold, net of offering costs	44,708			—
Purchase of vested stock for employee payroll tax withholding	(644		)	—
Proceeds from Notes due 2021	—			40,250
Dividends paid	(20,836		)	(22,168		)
Payments on Notes Payable - Securitization Trusts	(23,414		)	(16,297		)
Change in restricted cash related to securitization trusts	(1,172		)	11
Additions to deferred financing costs	(480		)	(1,740		)
Other, net	(1		)	(10		)
Net cash provided by financing activities	78,348			21,752
Net increase (decrease) in cash and cash equivalents	1,864			(1,590		)
Cash and cash equivalents—beginning of period	2,051			4,308
Cash and cash equivalents—end of period	$	3,915		$	2,718

Supplemental disclosure of cash flow activities:
Non-cash operating, investing and financing activities:
Reduction of credits in lieu of cash and notes payable in credits in lieu of cash balances due to delivery of tax credits	$	—		$	652
Foreclosed real estate acquired	$	212		$	387
Issuance of common shares in connection with investment in International Professional Marketing, Inc.	$	1,000		$	—
Issuance of common stock under dividend reinvestment plan	$	477		$	588
Fixed assets acquired from tenant improvement allowance	$	—		$	1,288

See accompanying notes to unaudited condensed consolidated financial statements.

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2017 (UNAUDITED) (In Thousands)
Portfolio Company	Industry	Type of Investment	Interest Rate (2)	Maturity	Principal		Cost		Fair Value		% of Net Assets
Performing SBA Unguaranteed Investments (1)
Dan Cline Transport Inc.	Truck Transportation	Term Loan	Prime plus 2.75%	9/29/2030	$	1,005.5	$	1,005.5	$	895.1	0.35	%
Lone Star Hardware and Home Decor, LLC	Building Material and Garden Equipment and Supplies Dealers	Term Loan	Prime plus 2.75%	9/29/2027	72.5		72.5		62.8		0.02	%
Threads of Time LLC	Sporting Goods, Hobby, Musical Instrument, and Book Stores	Term Loan	Prime plus 2.75%	9/29/2042	137.5		137.5		136.6		0.05	%
Miechella Suzette Decker	Miscellaneous Store Retailers	Term Loan	Prime plus 2.75%	9/29/2042	100.0		100.0		105.6		0.04	%
Harco Metal Products Inc	Primary Metal Manufacturing	Term Loan	Prime plus 2.75%	9/29/2042	489.0		489.0		467.3		0.18	%
SSN GROUP LLC and Dockside Steel Processing LLC	Fabricated Metal Product Manufacturing	Term Loan	Prime plus 2.75%	9/29/2042	1,250.0		1,250.0		1,264.9		0.49	%
Sashshel Corporation	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	9/29/2042	212.5		212.5		224.4		0.09	%
Dr Richard Rolle JR, PLLC dba Rolle Oral & Facial Surgery PLLC	Ambulatory Health Care Services	Term Loan	Prime plus 2.75%	9/29/2042	875.0		875.0		864.0		0.34	%
Cagwin Trucking LLC	Truck Transportation	Term Loan	Prime plus 2.75%	9/29/2042	325.0		325.0		336.8		0.13	%
Pets A Go Go LLC	Personal and Laundry Services	Term Loan	Prime plus 2.75%	9/28/2042	198.1		198.1		202.6		0.08	%
Rhode Island Tennis Management LLC	Amusement, Gambling, and Recreation Industries	Term Loan	Prime plus 2.75%	9/28/2042	550.0		550.0		545.3		0.21	%
Nicholson Lumber Co Inc.	Building Material and Garden Equipment and Supplies Dealers	Term Loan	Prime plus 2.75%	9/28/2030	215.0		215.0		211.5		0.08	%
National Media Services, Inc	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	9/28/2027	18.8		18.8		16.2		0.01	%
Rhode Island Tennis Management LLC	Amusement, Gambling, and Recreation Industries	Term Loan	Prime plus 2.75%	9/28/2042	383.0		383.0		379.7		0.15	%
Moreno Brother's Inc.	Food and Beverage Stores	Term Loan	Prime plus 2.75%	9/28/2027	15.0		15.0		12.9		0.01	%
Complete Care IT LLC	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	9/27/2027	15.0		15.0		12.9		0.01	%
Technologist Inc	Heavy and Civil Engineering Construction	Term Loan	Prime plus 2.75%	9/27/2027	434.5		434.5		411.9		0.16	%
Inspirations Food Design, Inc	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	9/26/2042	466.0		466.0		468.5		0.18	%

See accompanying notes to unaudited condensed consolidated financial statements.

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2017 (UNAUDITED) (In Thousands)
Portfolio Company	Industry	Type of Investment	Interest Rate (2)	Maturity	Principal	Cost	Fair Value	% of Net Assets
Rollins Construction & Trucking LLC	Construction of Buildings	Term Loan	Prime plus 2.75%	9/26/2027	341.3	341.3	332.0	0.13	%
JPS Arthur Kill Rd Bakery Corp dba Aunt Butches of Brooklyn	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	9/22/2027	22.5	22.5	19.6	0.01	%
KB Waterjet Cutting LLC	Fabricated Metal Product Manufacturing	Term Loan	Prime plus 2.75%	9/22/2027	10.2	10.2	9.3	—	%
Magnation Corporation	Utilities	Term Loan	Prime plus 2.75%	9/22/2027	50.0	50.0	50.8	0.02	%
Sallee Pro-Custom Fabrication Shop LLC	Repair and Maintenance	Term Loan	Prime plus 2.75%	9/21/2027	9.0	9.0	9.2	—	%
Excel, RP Inc.	Machinery Manufacturing	Term Loan	Prime plus 2.75%	9/20/2027	100.0	100.0	92.2	0.04	%
Denek Contracting Inc and Denek Leasing LLC	Specialty Trade Contractors	Term Loan	Prime plus 2.75%	9/20/2042	209.8	209.8	221.5	0.09	%
Max Home Deliveries, Inc	Couriers and Messengers	Term Loan	Prime plus 2.75%	9/20/2027	80.8	80.8	73.8	0.03	%
CR Park Incorporated dba Define Body and Mind	Amusement, Gambling, and Recreation Industries	Term Loan	Prime plus 2.75%	9/20/2027	100.0	27.5	26.8	0.01	%
Sound Manufacturing, Inc. & Monster Power Equipment, Inc.	Fabricated Metal Product Manufacturing	Term Loan	Prime plus 2.75%	9/20/2027	200.0	200.0	189.1	0.07	%
Alpha Preparatory Academy LLC	Social Assistance	Term Loan	Prime plus 2.75%	9/20/2042	162.5	162.5	160.7	0.06	%
Montessori Community School	Social Assistance	Term Loan	Prime plus 2.75%	9/20/2042	391.5	391.5	380.8	0.15	%
NY Tent LLC & NY Tent Parent, LLC dba Tent Company of New York	Rental and Leasing Services	Term Loan	Prime plus 2.75%	9/20/2027	1,027.5	1,027.5	978.6	0.38	%
Imagine By Carleen, Inc.	Personal and Laundry Services	Term Loan	Prime plus 2.75%	9/20/2027	7.5	7.5	7.3	—	%
Alexander Pierce Corporation	Fabricated Metal Product Manufacturing	Term Loan	Prime plus 2.75%	9/20/2042	625.0	625.0	621.9	0.24	%
Venus Pizza, Inc.	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	9/20/2042	91.3	91.3	96.3	0.04	%
Insight Diagnostic Technologist Services	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	9/20/2027	302.8	302.8	271.7	0.11	%
Commonwealth Diagnostics International, Inc	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	9/20/2027	1,250.0	1,250.0	1,271.2	0.50	%
Stone's Construction and Remodeling, LLC	Specialty Trade Contractors	Term Loan	Prime plus 2.75%	9/19/2027	5.3	5.3	4.5	—	%
CIS BIG DOG, LLC	Administrative and Support Services	Term Loan	Prime plus 2.75%	9/19/2027	61.3	61.3	61.1	0.02	%

See accompanying notes to unaudited condensed consolidated financial statements.

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2017 (UNAUDITED) (In Thousands)
Portfolio Company	Industry	Type of Investment	Interest Rate (2)	Maturity	Principal	Cost	Fair Value	% of Net Assets
Party By Design Inc.	Personal and Laundry Services	Term Loan	Prime plus 2.75%	9/18/2042	1,205.0	1,205.0	1,188.4	0.46	%
Li Family Spokane LLC	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	9/15/2042	384.5	384.5	395.6	0.15	%
SD Kickboxing LLC dba CKO Kickboxing Dan Diego	Amusement, Gambling, and Recreation Industries	Term Loan	Prime plus 2.75%	9/15/2027	40.0	40.0	36.0	0.01	%
Clark Realty LLC	Real Estate	Term Loan	Prime plus 2.75%	9/15/2027	62.5	62.5	57.3	0.02	%
Inglis Food Mart Inc.	Food and Beverage Stores	Term Loan	Prime plus 2.75%	9/15/2027	22.5	22.5	22.3	0.01	%
Clinton Food Market LLC	Gasoline Stations	Term Loan	Prime plus 2.75%	9/15/2042	262.5	262.5	262.1	0.10	%
Tarleton & Family Landscaping, LLC	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	9/15/2027	83.8	83.8	74.7	0.03	%
Alaska Motor Home Inc	Rental and Leasing Services	Term Loan	Prime plus 2.75%	9/13/2027	331.5	331.5	285.7	0.11	%
Fox Valley Rentals & Investments, LLC	Food Services and Drinking Places	Term Loan	Prime plus 3.75%	9/13/2027	7.5	7.5	7.5	—	%
Nails By Mercede LLC	Personal and Laundry Services	Term Loan	Prime plus 2.75%	9/13/2027	14.3	14.3	13.3	0.01	%
Town & Country Transportation Co. and Popco, LLC.	Transit and Ground Passenger Transportation	Term Loan	Prime plus 2.75%	9/12/2042	168.8	168.8	178.2	0.07	%
Rajbai Maa Inc. dba Nara Lounge	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	9/12/2042	388.1	388.1	375.6	0.15	%
Morgan Lynn Kerstetter dba Catherine School of Dance	Performing Arts, Spectator Sports, and Related Industries	Term Loan	Prime plus 2.75%	9/11/2027	7.5	7.5	7.6	—	%
Health & Performance Center, LLC	Ambulatory Health Care Services	Term Loan	Prime plus 2.75%	9/11/2027	20.4	20.4	17.6	0.01	%
Foxtail, LLC and Tottly New Services Corp	Social Assistance	Term Loan	Prime plus 2.75%	9/8/2042	291.3	291.3	291.8	0.11	%
Desert Ribs, LLC and Famous Charlie, LLC and Famous Freddie, LLC	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	9/8/2042	1,250.0	1,250.0	1,177.4	0.46	%
Echelon Planning Group, LLC dba Echelon Financial Services	Insurance Carriers and Related Activities	Term Loan	Prime plus 2.75%	9/8/2027	7.5	7.5	7.3	—	%
South Fulton Landscape & Nursery, Inc.	Building Material and Garden Equipment and Supplies Dealers	Term Loan	Prime plus 2.75%	9/7/2042	100.0	100.0	105.6	0.04	%
Crazy Beatz Productions LLC	Motion Picture and Sound Recording Industries	Term Loan	Prime plus 3.75%	9/7/2027	5.3	5.3	5.0	—	%

See accompanying notes to unaudited condensed consolidated financial statements.

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2017 (UNAUDITED) (In Thousands)
Portfolio Company	Industry	Type of Investment	Interest Rate (2)	Maturity	Principal	Cost	Fair Value	% of Net Assets
Dreaming Big Learning Center Inc	Social Assistance	Term Loan	Prime plus 2.75%	9/5/2042	367.8	367.8	368.2	0.14	%
Big Coop's Trucking LLC	Truck Transportation	Term Loan	Prime plus 2.75%	9/1/2027	100.0	100.0	93.8	0.04	%
Blue Eagel Transport Inc	Couriers and Messengers	Term Loan	Prime plus 2.75%	8/31/2027	383.5	383.5	330.6	0.13	%
Evernook Valley Milk LLC	Animal Production and Aquaculture	Term Loan	Prime plus 2.75%	8/31/2042	642.5	642.5	639.5	0.25	%
Bark Life, Inc.	Miscellaneous Store Retailers	Term Loan	Prime plus 2.75%	8/31/2027	22.5	22.5	19.4	0.01	%
The Pink Alli, LLC dba The Alli	Miscellaneous Store Retailers	Term Loan	Prime plus 2.75%	8/30/2027	18.0	18.0	16.1	0.01	%
Busby Outdoor LLC	Real Estate	Term Loan	Prime plus 2.75%	8/29/2042	700.0	700.0	631.0	0.25	%
Busby Outdoor LLC	Real Estate	Term Loan	Prime plus 2.75%	8/29/2042	550.0	550.0	495.8	0.19	%
Lake County Tow LLC	Support Activities for Transportation	Term Loan	Prime plus 2.75%	8/25/2042	87.5	87.5	87.0	0.03	%
Parlay Disributors LLC	Educational Services	Term Loan	Prime plus 2.75%	8/25/2027	112.5	112.5	98.5	0.04	%
InUSA Ventures Inc dba InUSA Services	Securities, Commodity Contracts, and Other Financial Investments and Related Activities	Term Loan	Prime plus 2.75%	8/24/2027	25.0	25.0	21.5	0.01	%
Genuine Ventures LLC and Seaweed Ventures LLC	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	8/24/2030	557.8	557.8	521.4	0.20	%
R & R Strength & Conditioning Corp dba Crossfit Light House Point	Amusement, Gambling, and Recreation Industries	Term Loan	Prime plus 2.75%	8/23/2042	82.5	82.5	87.1	0.03	%
Delicias de Minas Restaurant, LLC	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	8/22/2027	206.3	206.3	201.2	0.08	%
The Holder Grooup LLC	Repair and Maintenance	Term Loan	Prime plus 2.75%	8/22/2027	7.5	7.5	6.5	—	%
L&V Auto Sales, Inc.	Motor Vehicle and Parts Dealers	Term Loan	Prime plus 2.75%	8/21/2027	18.0	18.0	18.3	0.01	%
M.E. Interiors LLC	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	8/21/2027	16.5	16.5	14.2	0.01	%
Damiano Global Corp	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	8/21/2027	22.5	22.5	21.1	0.01	%
Tier1Solutions, LLC	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	8/18/2027	18.8	18.8	16.8	0.01	%

See accompanying notes to unaudited condensed consolidated financial statements.

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2017 (UNAUDITED) (In Thousands)
Portfolio Company	Industry	Type of Investment	Interest Rate (2)	Maturity	Principal	Cost	Fair Value	% of Net Assets
Tony Herring & Associates, Inc	Furniture and Home Furnishings Stores	Term Loan	Prime plus 2.75%	8/17/2027	7.5	7.5	6.5	—	%
Chester's World Enterprise LLC	Amusement, Gambling, and Recreation Industries	Term Loan	Prime plus 2.75%	8/16/2027	22.5	22.5	20.3	0.01	%
D'Amato & Sons Construction, Inc.	Specialty Trade Contractors	Term Loan	Prime plus 2.75%	8/11/2027	8.3	8.3	7.5	—	%
HTP LLC dba Hot Tomatoes Pizza	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	8/11/2027	11.3	11.3	10.5	—	%
Roundhay Partners LLC and Roundhay Farming LLC	Crop Production	Term Loan	Prime plus 2.75%	8/8/2042	912.5	912.5	830.5	0.32	%
Splashlight LLC, Splashlight Photographic and Digital Studios, LLC	Management of Companies and Enterprises	Term Loan	Prime plus 2.75%	8/7/2027	500.0	500.0	446.8	0.17	%
L & J Corporate Services Inc	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	8/4/2027	7.5	7.4	6.5	—	%
Furniture Masters Limited Liability Company	Repair and Maintenance	Term Loan	Prime plus 2.75%	8/3/2027	9.0	9.0	7.8	—	%
HMG Strategy LLC,	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	8/2/2027	50.0	50.0	43.1	0.02	%
Hope Health Care, LLC	Nursing and Residential Care Facilities	Term Loan	Prime plus 2.75%	7/31/2027	10.5	10.4	9.0	—	%
Bowl Mor LLC dba Bowl Mor Lanes	Amusement, Gambling, and Recreation Industries	Term Loan	Prime plus 2.75%	7/31/2027	7.5	7.5	6.4	—	%
Royal Blue Investments, Inc. and Cleland Pharmacy LLC	Health and Personal Care Stores	Term Loan	Prime plus 2.75%	7/31/2042	53.0	52.9	54.7	0.02	%
Raffi's Inc dba Atlantic Auto Center	Repair and Maintenance	Term Loan	Prime plus 2.75%	7/31/2027	14.3	14.2	14.1	0.01	%
Sharon G McMillen, MA Psychologist, Inc.	Ambulatory Health Care Services	Term Loan	Prime plus 2.75%	7/28/2027	18.6	18.5	15.9	0.01	%
Work of Heart Inc.dba Little Nest Portraits	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	7/28/2027	50.0	21.4	18.7	0.01	%
HQTRONIC LLC	Merchant Wholesalers, Durable Goods	Term Loan	Prime plus 2.75%	7/27/2027	22.5	22.4	19.3	0.01	%
Oberon IT, Inc.	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	7/26/2027	218.7	217.5	198.7	0.08	%
Gilles Peress Studio LLC	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	7/25/2027	62.5	62.1	53.6	0.02	%
Ocean Trans LLC	Truck Transportation	Term Loan	Prime plus 2.75%	7/21/2027	37.5	37.3	32.1	0.01	%

See accompanying notes to unaudited condensed consolidated financial statements.

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2017 (UNAUDITED) (In Thousands)
Portfolio Company	Industry	Type of Investment	Interest Rate (2)	Maturity	Principal	Cost	Fair Value	% of Net Assets
Obok LLC	Food Manufacturing	Term Loan	Prime plus 2.75%	7/21/2027	12.0	11.9	11.1	—	%
Lil Tots' Learning Center LLC	Social Assistance	Term Loan	Prime plus 2.75%	7/21/2042	47.5	47.4	47.2	0.02	%
Nova Solutions, Inc.	Furniture and Related Product Manufacturing	Term Loan	Prime plus 2.75%	7/19/2027	25.0	24.9	24.3	0.01	%
Webb Eye Associates, PA	Ambulatory Health Care Services	Term Loan	Prime plus 2.75%	7/19/2027	73.8	73.3	69.5	0.03	%
Matrix Z LLC	Nonmetallic Mineral Product Manufacturing	Term Loan	Prime plus 3.75%	7/19/2027	7.5	7.5	7.6	—	%
Aitheras Aviation Group, LLC, Aitheras Aviation Group, LLC	Air Transportation	Term Loan	Prime plus 2.75%	7/18/2027	825.0	819.9	711.5	0.28	%
Wildflour Bakery & Cafe, LLC	Food Manufacturing	Term Loan	Prime plus 2.75%	7/17/2027	22.5	22.4	22.7	0.01	%
Florida Home and Kitchen LLC	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	7/14/2027	12.0	11.9	10.3	—	%
Koep Companies dba Pipestone True value	Building Material and Garden Equipment and Supplies Dealers	Term Loan	Prime plus 2.75%	7/14/2042	326.5	326.1	318.4	0.12	%
Rocks Auto Exchange LLC	Motor Vehicle and Parts Dealers	Term Loan	Prime plus 2.75%	7/13/2027	15.0	14.9	12.9	0.01	%
McCord Holdings, Inc. dba Fast Signs 176101	Administrative and Support Services	Term Loan	Prime plus 2.75%	7/7/2027	18.7	18.6	16.4	0.01	%
Thrifty Market Inc dba Thrifty Foods	Food and Beverage Stores	Term Loan	Prime plus 2.75%	7/6/2027	102.5	101.9	92.1	0.04	%
New Chicago Wholesale Bakery Inc.	Food Manufacturing	Term Loan	Prime plus 2.75%	6/30/2027	15.0	14.8	14.2	0.01	%
The Country House Restaurant, LLC and Pelton Real Estate, LLC	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	6/30/2042	50.0	49.9	51.4	0.02	%
Qycell Corporation	Plastics and Rubber Products Manufacturing	Term Loan	Prime plus 2.75%	6/30/2027	76.3	75.4	76.6	0.03	%
Bone Bar & Grill LLC	Food Services and Drinking Places	Term Loan	Prime plus 2.75%	6/30/2042	73.5	73.4	75.0	0.03	%
J. T. O'Neill Company, L.L.C	Real Estate	Term Loan	Prime plus 2.75%	6/30/2027	15.0	14.8	12.8	0.01	%
Hamilton & Associates Real Estate and Investments Firm LLC	Real Estate	Term Loan	Prime plus 2.75%	6/30/2042	54.0	53.9	54.5	0.02	%
J&M Civil Construction Services LLC	Specialty Trade Contractors	Term Loan	Prime plus 2.75%	6/30/2027	100.0	98.8	85.1	0.03	%
BQRS, Inc. DBA Gresham Meineke Car Care Center	Repair and Maintenance	Term Loan	Prime plus 2.75%	6/30/2027	62.5	61.8	54.3	0.02	%

See accompanying notes to unaudited condensed consolidated financial statements.

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NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF INVESTMENTS SEPTEMBER 30, 2017 (UNAUDITED) (In Thousands)
Portfolio Company	Industry	Type of Investment	Interest Rate (2)	Maturity	Principal	Cost	Fair Value	% of Net Assets
JWH Designs, LLC	Professional, Scientific, and Technical Services	Term Loan	Prime plus 2.75%	6/30/2027	106.3	105.0	90.4	0.04	%
Safeguard Construction Company, Inc.	Construction of Buildings	Term Loan	Prime plus 2.75%	6/30/2027	76.3	75.4	64.9	0.03	%
Veola's Day Spa and Wellness Center Inc.	Ambulatory Health Care Services	Term Loan	Prime plus 2.75%	6/30/2027	9.1	9.0	8.1	—	%
Steigelbauer Associates Inc.	Specialty Trade Contractors	Term Loan	Prime plus 2.75%	6/29/2027	309.0	305.4	310.4	0.12	%
Best Bees Company	Animal Production and Aquaculture	Term Loan	Prime plus 2.75%	6/29/2027	22.5	22.2	19.2	0.01	%
Greensboro Plastic Surgical Associates, PA	Ambulatory Health Care Services	Term Loan	Prime plus 2.75%	6/29/2042	578.0	576.9	572.0	0.22	%

Newtek Business Services Corp. - FORM 10-Q - November 7, 2017

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