NewtekOne Inc (NEWT) 2014 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Newtek Business Services full-year 2014 earnings conference call. (Operator Instructions)

I would like to turn the call over to your host, Barry Sloane, President, Founder, and CEO of Newtek Business Services. Please go ahead.

Thank you, operator. Welcome, investors, to our first call ever as Newtek Business Services Corp., a new business development corporation that was established on November 12, 2014. Our prior Company, Newtek Business Services, Inc., was merged into a Merrill Lynch shell to form Newtek Businesses Services Corp., and that is how we are beginning our new life as a BDC.

What I would like to do is introduce my other presenter and Senior Executive at Newtek, Chief Accounting Officer, Jenny Eddelson, who will be presenting here with me today. Jenny, would you be so kind as to read the Safe Harbor statement?

Sure. Statements in this presentation, including statements regarding Newtek's beliefs, expectations, intentions, or strategies for the future and discussion of our financial condition and results of operations is intended to assist in the understanding and assessment of significant changes and trends related to the results of operations and financial position of the Company together with its subsidiaries and may be forward-looking statements. This discussion and analysis should be read in conjunction with the consolidated financial statement and the accompanying notes, which will be contained in the Company's Form 10-K for the year ended December 31, 2014.

All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions, and expectations reflected in our suggested by the forward-looking statements. Such risks and uncertainties include, among others, intensified competition; operating problems and their impact on revenues and profit margins; anticipated future business strategies and financial performance; anticipated future number of customers, business prospects, legislative developments, and similar matters.

Risk factors, cautionary statements, and other conditions which could cause Newtek's actual results to differ from management's current expectations are contained in Newtek's filings with the Securities and Exchange Commission and available through www.sec.gov.

Thank you, Jenny. I'd like to call everyone's attention, if they are interested in following along with the PowerPoint presentation that is on the Investor Relations section of our website, thesba.com -- go to Investor Relations, and you'll see our PowerPoint presentation for today. We begin on page number 2, Company highlights.

As we had mentioned on November 12, 2014, the Company converted to a business development corp. Yesterday's closing stock price of NEWT was $19.64. Today is the first day that we've actually been trading ex-dividend.

On March 25, 2014, at the market close, we had a $200 million market cap -- quite a milestone. That market cap is achieved on 10.2 million shares outstanding. From the date that the company raised its equity capital and converted to a BDC, our market capitalization went from $129 million to $200 million from November 12, 2014, to March 25, 2015.

On March 19, 2014, the Board of Directors declared its first dividend as a BDC. It had previously issued guidance of $0.38 for the first quarter of 2015, and it increased that dividend to $0.39. The Board and management estimate that that dividend is based upon paying out approximately 90% to 98% on the earnings that will be recognized during the first quarter of 2015.

Since the conversion, for those of you that follow institutional ownership, which we think is important, it's increased by about 40% from September 30, 2014, to December 31, 2015. You can take a look at our holders -- we've now get investors such as Wellington, Perritt, Potomac, Zelman, Royce, and others that are in the stock. We are very proud of our new institutional ownership.

One of the benefits of converting to a business development corp. is that it significantly helps the overall strategy of our Company, which has been in existence as a publicly-traded company for 14-plus years, through a lower cost of capital. We have significantly raised our ability to raise less expensive equity, based upon tax-advantaged structure; being a larger market cap company; having reversed-split the stock; and getting better debt financing costs, which we'll talk about later on in the presentation. Management is extremely hopeful that we will be able to grow our net asset value, our dividend, and business enterprise over the course of time as an internally-managed BDC.

On page number 3 we talk about the specific legal aspects on November 12, converting to a BDC; and as a result of the conversion, the Company is reporting GAAP financial results as an operating company for approximately 10 1/2 months -- from January 1, 2014, through November 11, 2014. The GAAP financial results from the BDC will be reported in the same K from November 12, 2014, through December 31, 2014.

We put our press release out slightly after 4 o'clock today. There is some important financial information in that press release. Some of it, or most of it, or a good chunk of it is going to be repeated in this presentation.

But due to the conversion, the required adoption of new accounting methodologies in the BDC structure, there is no prior-period results to allow year-over-year comparisons. What I am going to strongly suggest to the many thrill seekers that we have on the call in the investment community -- we will have approximately a 187-page 10-K that will be released on or about March 31, 2015. Jenny and I will be able to take calls once that's released, after it's released; go over it with investors whatever is in that particular document.

I will tell you, it's fairly thick. It's two Ks in one. And there's a lot to talk about. Obviously, the change in accounting midstream in November changed a lot about how we would typically approach things. And it just led to some interesting financial results, which we'll talk about today.

I will state that our effective tax rate in 2014 was 55%. As we sit here today, we elected RIC status in 2015. So we pay no corporate tax. We are all happy about that. We certainly -- although we don't have any say in this, $1.00 of earnings in 2015 is clearly better than $1.00 of earnings in 2014.

Moving over to page number 4: prior to doing the conversion and doing the capital raise, Newtek, at the excellent selection of its investment bankers, JMP and Ladenburg, effected a 1 for 5 reverse stock split that gave us a double-digit stock price to be able to approach institutions prior to the roadshow.

We are very happy to say that our stock actually traded pretty well, even subsequent to the split. And all our share data has been adjusted to reflect that reverse stock split.

We went out and solicited a raise of 2 million shares. We were able to upsize the deal to 2.2 million shares. We pulled down the green shoe. The book was oversubscribed. We actually had orders from approximately 4.5 million shares; we are really happy about that. The deal was obviously very well-placed and very well sold. And we offer tremendous compliments to our book-running managers, JMP Securities and Ladenburg and Lebenthal.

We are now an internally-managed BDC. That means we don't pay any incentive fees to an external manager. Management's interests are very much aligned with shareholders. There is no double-dipping. I am a very significant shareholder, and my future is primarily based upon share price appreciation and dividends.

Internally-managed BDCs -- and we look at four of them: Hercules, KCAP, Main Street, and Triangle as comparisons. They are typically trading at a median price to NAV of approximately 1.4 times. We are still underneath that number. And the average dividend yield is slightly under 10% as well.

Another key important point -- we talked about this from a tax perspective -- electing RIC status. That occurred on January 1, 2015, so we are no longer a corporate tax payer. All taxes are paid at the shareholder level.

Moving to slide number 5, NAV: as of December 31, 2014 -- actually, the latest reporting functional date for this call relative to results, $16.31. So when you look at our net asset value in our schedule of investments, we are up to $16.31. Previously had announced on June 30 of 2014 pro forma NAV. So a nice $0.80 increase.

We have historically forecasted a cash dividend of $1.80. We increased that by $0.01, and that was done at the Board level. So that is our current guidance in the market for the full year of 2014. That is a forecast, and the Board will declare dividends going forward based on its discretion on a quarterly basis.

We expect to be able to get loan funding and balance sheet growth in 2015 based upon the additional capital and the value that's afforded to us in our business model. On a positive note, one of the important aspects of being a public company is the currency. Having a currency that is more liquid, trades more frequently, with a higher market cap -- very valuable.

We took a look at our dollar-based average trading volume prior to this transaction. Up to September 2014, you were looking at a $2.00 or $3.00 stock and 50,000 to 60,000 shares trading a day. In dollars for the month of March, we are averaging about $2.2 million. I think yesterday we traded -- I don't know -- 360,000, 380,000 shares, at mostly high $18 to $19. So you can see we are trading a lot more dollars in a given day. We are happy about that. That's great for shareholder liquidity. That's also great for the future movement and potentially using your shares for acquisition opportunities.

We talked about the increased institutional ownership. We certainly encourage all of you to go take a look at our shareholder list. I think it's also important that when you add in insiders -- the second-largest shareholder, Jeff Rubin, the other Founder; Board members; and executives -- between institutions and the insiders, we own about 50%, which I think is pretty constructive for a BDC. We obviously love retail participation, but we also like the strong hands of institutions in our stocks as well as insiders.

We recently had initiation of research coverage by JMP Securities. Singular Research previously had issued research on us, and we are hopeful for additional research coverage from the Street. We were added to the Wells Fargo Business Development Company Index recently, stock symbol WFBDC. At this current market cap it's close, but we are hopeful that we will make the Russell 2000. That obviously remains to be seen.

We clearly talked about our lower cost to debt and equity capital. And I think that's important, because it gives us really a newfound ability to acquire and finance portfolio companies within our own business segments to enhance shareholder value.

So what does that mean? When you look at the portfolio companies in this segment -- the payroll, electronic payment processing, insurance, cloud computing, and things of that nature -- we are hopeful that we are going to be able to do acquisitions at, say, 4 to 8 times EBITDA multiple. If you take a midpoint of 6, that's an 18% cash-on-cash return. You put a little debt on that, and you are high 20s.

Obviously, those entities are taxable. That brings you down to the midteens. The reality of it is: that's extremely accretive to the dividend.

And you keep putting those business opportunities on within the segments, and all of a sudden you get bigger bulk of the payment processing business. You get bigger bulk of an insurance agency business, of a payroll business, of a cloud computing business. And you start to get to bigger valuations that we'll talk about in later parts of the presentation.

On slide number 6 we talk about our capital and bank line. One of the big benefits of the BDC conversion -- obviously, we are better capitalized. Capital One has agreed to and it's subject to the SBA's approval, of which all of our financings need to be ratified and approved by the SBA to basically strip away a lot of the other collateral pieces that collateralized our previous $50 million line.

So going forward, the Capital One bank line will be subject to a Holding-Company-only guarantee. We will also obviously have the ability to distribute earnings out of Newtek's small business finance or SBA 7(a) lender. The prior line had been collateralized by the merchant processing business, the technology business, the insurance agency business, and the payroll solutions business.

The value of being able to reposition that line is: now those other businesses are able to be levered, and currently at the Holding Company, those particular businesses are collateralizing some Holding Company debt. To make a long story short, it's about $8 million or $9 million worth of debt that's paying down.

We think we should be able to get more leverage out of that. And that will reduce our need to raise more equity in the near term versus the long term. So we are actually quite excited about that.

Going to slide number 7, I think this is the most important slide in the entire deck: net asset value. So when you book at the history of the Company from 2010 to current times, we were at $7.79 book value. And today we are sitting at $16.31 NAV.

This is what you are buying. You are buying a company that has a real strategy of positioning itself as a financial and business service provider to independent business owners all across the United States that, according to the Small Business Administration, the number is about 27 million. It's about 50% of GDP.

You are buying into a management team that most of the senior managers here have been with the organization for over 10 years. You are buying into a great market. We think the small- and medium-sized business market, particularly with the trend towards immigration and capital coming into the United States, is going to continue to remain strong.

You are buying into a team where your interests are very much aligned with management. We are major shareholders, and we want to continue that. So when you look at this period of time, without a lot of capital and without much financial leverage in a fairly lousy economy, we've had very good performance. That's what you are buying into.

So I am sure we are going to be having a lot of conversations about different changes in accounting in the fourth quarter; and what does this mean; and what does that mean? We encourage investors on this call to pay attention to the NAV, pay attention to the dividend projections, and look at the business model. That makes a tremendous amount of sense. Importantly in looking at this chart, the Company has been able to deliver value to its shareholders over the course of time.

On page number 8, we talked a little earlier about the declaration of our first cash dividend as a BDC. That is payable on April 13. We are now ex-dividend, and we are looking at $1.81. Obviously, that is subject to Board approval. In connection with the BDC conversion, Newtek will declare and pay a one-time special dividend during 2015.

That special dividend is based upon the fact that we have to distribute all the retained earnings that were in the C Corp. So when we make the RIC election in 2015, those retained earnings have to be distributed. There is a fairly full disclosure in the K on this. There is fairly full disclosure in the prospectus on this.

It was estimated that at the time we did the offering that it's approximately $47 million to $48 million of value. That could change. That was a forecast. The ultimate number is decided by the final tax return, as well as what has occurred -- the tax return of 2014, which will be done in the spring of 2015, as well as what we have finished up here with respect to our earnings.

The Board of Directors will take into consideration the timing, the amount, and the composition of this distribution. It will be most likely in stock and cash, and it will be done once the Company has filed its 2014 return. We believe that the special dividend is anticipated to be treated as a qualified dividend for tax purposes. I would also forecast that it will be predominately be in shares and not cash. The extreme version of that is 20% cash, 80% shares.

Moving to slide number 9, some additional financial highlights: for the full year ended December 31, 2014, we originated $202 million in SBA 7(a) loans, an increase of 13.7% over the prior year. Mind you, we had anticipated this deal closing a little before the November date. So this $31 million of cash came in the middle of November. So that kind of slowed things down a little bit. But even so, we are all happy with that type of good, steady, solid, prudent growth.

We originated $65.2 million worth of loans in Q4 of 2015. That was an increase of 12.4% over the $58 million in Q4 2013. We also originated a record $30 million of loans during the month of December of 2014. We anticipate originating $53 million of loans in Q1 2015, an increase of 16% over Q1 2014. And the range of total originations of 7(a) loans of $240 million to $280 million in 2015 represents approximately a 29% increase.

We completed our fifth securitization, our largest one, in December of 2015. It was about 40 basis points tighter than prior securitizations, based upon level of rates of our quality spreads under securitizations have come in; based upon our real good performance. I think it's important to note: additional capital, bigger debt lines will enable us to do larger securitizations. Larger securitizations will mean tighter spreads; greater, larger institutional participation in those transactions; and potentially, as we do more loans, more deals, greater frequency, greater return on equity.

In the loan servicing portfolio, we had lost a fairly large portfolio of servicing loans for others. At the end of November of 2014, we did announce that we picked up a portfolio of approximately $400 million of loan to service for other. I think we also put on an $80 million portfolio in the first quarter.

We anticipate that we will have with the new portfolio, which has not cleared our books yet, about $1.1 billion of servicing between our own portfolio and others over the next 30 days. As soon as this gets solidified, we will put out an 8-K on it. Also, we believe we are going to have significant loan funding growth and balance sheet growth in 2015, particularly based upon the capital raise.

On slide number 10, we think -- obviously, NAV, a real important metric for us. We reported an increase of about 50% over book value at December 31, 2013. The June number was $15.50, but we are now $16.31 at the end of the year. So it's $10.88 to $16.31 -- a real nice increase that's really indicative of doing a real good transaction converting into a BDC and driving shareholder value.

Going forward, one of the important metrics we are going to be valued on is adjusted net investment income. For BDC investors -- and I realize we've got different types of investors on this call; we've got brand-new investors that don't know the Company very well or its business model, then we've got BDC investors -- it's important for us to talk about NII. The traditional NII is interest income; it's dividend income; it's capital gains, but -- what am I missing?

No capital gains in NII.

No capital gains. No, the capital gains -- okay. Basically, in base NII, correct; there is no capital gains. It's just interest income, dividend income. And that is what is reported.

We are going to need to reports an adjusted net NII, because a significant portion of our income is derived from the gain on sale of SBA 7(a) loans. That is also one of the reasons why, when you look at our adjusted net investment loss of $1.9 million or $0.25 a share, basically the issue there is we decided to hold approximately $30 million of loans originated in December. And those were held over at the end of the year.

So although that affected our net asset value, because it was an unrealized gain, it did not record in income. That will carry over into the first quarter. If those loans were sold, it would have generated approximately $3.3 million of premium income, which would have positively impacted adjusted net investment income. With the addition of the $3.3 million of premium income, adjusted net investment income would have been $1.3 million or $0.18 a share.

I think, once again, it's important to repeat that our preference, obviously -- although we don't make these decisions one way or another -- we would probably prefer to report more income in 2015 than 2014. This was a holdover. And I think some of these vagaries will shake itself out going forward.

What I would like to suggest is to skip slide 11 and to go to slide number 12, which continues this important aspect of becoming familiar with Newtek, and that is gain on sale premiums. So when you look at, over the course of time -- 2010, 2011, 2012, 2013, 2014 -- our loan sale premium income trends obviously continue to go up. 2014 looks a little flat. Obviously, December is our biggest -- I should say the fourth quarter in December is our pretty biggest month, always, for loan originations as well as the payment processing business.

But in the event that we didn't hold those over -- and actually, under C Corp. accounting, that would've gone into the gain. But we had this change in accounting. So therefore, as we talked about, $3.3 million of additional premium income did not show up in the fourth quarter of 2014 or in any of our 2014 results.

Going forward, we will report adjusted NII. You can see that our gain on sale from creating SBA 7(a) loans, in which we sell the government guarantees as soon as we produce them; we get our money back within 10 days -- this is reoccurring income from us. We operate the 7(a) business very similar to how a mortgage banker in the residential business runs their business.

So this is real important to us. And you will be seeing this in our performance. And capital gains income, Jenny, is good income, right?

Right.

The reason why capital gains is excluded from most BDCs is it's random, and it's sort of uneventful based upon interest rates dropping, bond prices going up, and things of that nature. Our capital gains income from 7(a)s is steady and it is reoccurring.

Another important aspect of this is the price of the governments. Slide 13 is a good, important comparison. We'll be giving this data out on a regular quarterly basis to show how the prices are flowing through to us on gain on sale. So year-to-date weighted average net price to Newtek Small Business Finance: Newtek was 112.49%. In the first quarter of this year we are averaging approximately 112.39%, so it's pretty close.

Some of the other factors that are important, which we've tried to depict, is the maturity of the loans. Longer-maturity loans typically trade at significantly higher prices than shorter maturity loans. What we've excluded here is loans that are in between the 10-year and 25-year. We've also excluded size -- smaller loans and larger loans. Believe it or not, larger loans trade at deeper discount than smaller loans do. We will track this on a very diligent basis to investors. This is a very important part of our overall profitability going forward.

On slide number 14, we've got the current loan pipeline. I think it's important to see that we have a total loan pipeline of $319 million. Loans are approved pending closing -- that is a very high close rate, $43 million. Loans in underwriting, $39 million. Pre-call, $32 million; open referrals, $203 million.

We feel real good about our pipeline. We are getting more closes out of the same amount of pipeline. That's because our close rate is higher. We've made some major changes internally in operations. We've added a lot more staff. We have brought the closing process, I'll say, almost entirely in-house, where last year it was almost entirely external. We've added more underwriters. We've added more assemblers. All of these expenses are fully loaded into the internally-managed BDC.

We also plan on opening up an office in Boca Raton, Florida, and we've recently opened up an office in Dallas. These are offices where we are able to bring in the best and brightest staff all across the United States in close proximity to their homes.

I'd like to segue back to slide number 11, if I can, which talks about -- it's a nice picture, so I thought I'd talk about it. It shows Newtek's stock price versus the NASDAQ composite and the S&P over the course of five years. It's nice to see that nice, steady outperformance over the course of time.

Moving forward to slide number 15, we talked a lot about our lower cost of debt and equity capital. I think the one thing that was important to point out with respect to 2014: we refinanced mezzanine debt with Summit Capital Partners. We are very thankful to Summit for providing us mezzanine debt when our model was a little bit less proven.

They had given us, frankly, some very expensive debt to sit underneath our Capital One bank line. That debt did enable us to grow our revenues, but it was expensive. It was in excess of an 18% interest rate. We have refinanced that debt out, and that was done over the course of two years. Unfortunately, the effect of that was to create a charge of -- was it -- what, about $1.9 million? $1.9 million charge that occurred in 2014. That is a non-cash charge.

We talked about the improvement of terms under our Capital One bank line, which is currently sitting at the SBA and is subject to their final approval. We've also talked about a fifth securitization, doing deals with tighter spreads to the Treasury and LIBOR swap curve, as well as a better advance rate on the securitization.

We believe that we'll continue to be able to raise capital. We hope to be able to put some more leverage on our portfolio companies, which will give us nice additional capital that will reduce the amount of shares that we prospectively have to sell in the future to meet our growth expectations.

For those of you that are not real familiar with the Company, I think one of the important aspects of our business is to understand how an SBA 7(a) loan works. So I'm going to try to do this quickly, but we'll certainly be available for calls and conversations subsequent to this particular call or during the week next week.

The typical SBA 7(a) loan is a $1 million loan that we talk about. We are one of 14 non-bank SBA lenders in the United States. These licenses have no longer been recently issued. Our average total loan size is $1 million. The average loan size in our portfolio of uninsured that is on our books is approximately $171,000. In that $1 million typical loan, when you create it, there is a 75% full faith and credit US government guaranteed Loan Participation Certificate. And there is a 25% uninsured but not subordinated Participation Certificate. The loans to the borrowers are floating rate at prime plus 2 3/4%.

So borrowers are taking the money at a 6% current rate with no caps and a long am schedule of 7 to 25 years. This is a significant differentiator to entities like the Lending Club and other peer-to-peer lenders that are typically lending at very high double-digit rates.

In our programs borrowers get a great deal. They get a low interest rate. They get a long am schedule. Obviously, they have to qualify. We are very much of a collateral-based lender. And we are usually -- almost, I would say, exclusively first-lien in one way, shape, or form. We do do some seconds, but it's very far and few between. We do take seconds on second and third pieces of collateral, however.

This business has been around for 61 years. The current amount of originations in this year will be somewhere around $18 billion. And we are successful in this business because after we sell the government-guaranteed piece off at 112.5% premium and we securitize the uninsured piece, we get all of our cash back; and then we are able to redeploy it in the market.

So unlike other BDCs that have to have equities sunk in a loan versus debt arbitrage and clip the coupon, we are actually repatriating our capital and booking significant risk-adjusted gains. I say risk-adjusted, and that's because when we close an SBA 7(a) loan, we take the $250,000 uninsured piece, and we write it down by approximately 5 points. So we take a non-cash write-down. We do that because we believe that the appropriate market valuation on an uninsured loan participation is 95, not par.

When we run it through our discounted cash flow analysis, which is all information that is in our K, it yields about 5.35% risk-adjusted. When I say risk-adjusted, it yields 5.35% after a 25% cumulative default rate, a approximate 30% severity rate.

We will be announcing shortly the hiring of two senior executives. Mike Campbell is going to be joining our organization early next week. Mike will be joining us as Chief Credit and Risk Officer for Newtek Merchant Solutions. His bio and resume is on page 20. Very strong guy -- 30 years' worth of experience.

He's been brought in to complement Tom Harkins, who is our Chief Operating Officer, so Tom can focus more on ops and business development. We are real excited to have Mike join us in our operations.

We are also going to be adding John Ravens (sic - John Raven, see slide 21). John will be joining Rich Rebetti as Chief Operating Officer of Managed Technology Solutions. John has over 20 years of experience in the information technology space -- tremendous, deep expertise. He has been a President, and CTO, and COO of publicly traded companies. He is a graduate of California Institute of Technology.

He spent 12 active years with the US Army, serving as a soldier in Special Operations. He also worked for the NASA Jet Propulsion Laboratory. He and I have difficult conversations, because I don't know what he's talking about. But I am happy to have him on the team. He's brilliant. He will be working very closely with Rich as well as our Chief Information and Chief Technology Officer, CJ Brunet.

I think two important aspects to our business is our portfolio companies. We have a total valuation, between the payments business and a technology business, of around $66 million, which represents a significant part of our NAV. These are important businesses to us. They provide reoccurring cash flow.

In future presentations we will spend more time in looking at this these businesses. We will give some breakouts, and some forecasts, and some guidance, and give you an idea of how we are coming up with these valuations. But you can see where our valuations are versus EBITDA, as well as where the valuations of public comparisons are. We are not as big as those entities, but as we grow and add to the portfolio of these entities at attractive valuations, we think we will get some valuation expansion going forward.

Looking at comparables, we clearly compare ourselves to internally-managed BDCs -- Hercules, KCAP, Main Street, Triangle. Looking at some recent non-bank lenders: On Deck Capital; Lending Club; and recently, BankUnited did a transaction -- I'll focus on that one first.

They acquired a non-bank lender which primarily was not particularly active that I am aware of in the SBA 7(a) business in terms of new originations. They bought a portfolio for $203 million. They paid a 10% premium on that, and that was 10% premium to NAV. So when we look at that and look at how we are looking at things, we are real happy with where we are in the marketplace and how we are doing valuations.

We look at entities like On Deck Capital and Lending Club, and they are getting tremendous valuations as lenders to small business. To my knowledge, neither of these entities have achieved profitability yet; nor do they have 11-year history; nor do they have the infrastructure; nor do they have a real retail distribution capability to direct lend. So we are rooting for these guys in a big way.

Looking at Newtek from an investment summary, before I hand this presentation over to Jenny: we are real happy, finishing up December 31, 2014 at a higher NAV. We are real happy with our forecasted dividends. I'll repeat that we lay these dividends out on the expectation that 90%, 98% of these dividends will be from income. So we're not -- it is clearly our expectation that when we forecast a dividend, that it's not a return of capital.

We will also have that one-time special dividend in 2015, and should be a significant number. We talked about investing in operating businesses. We've owned and operated the 10 operating businesses: payment processing, payroll, insurance agency, managed tax -- actually, payroll we've only owned for four years; the other ones we have owned for in excess of 10, including the lender. These are businesses that we know. We own and we operate them. There has been very little leverage on these businesses, and we've been able to generate great cash-on-cash returns, which fit the BDC model extremely well.

We are an internally-managed BDC. Our management's interests aligns with shareholders. We are not getting these returns through derivative securities or excessive leverage, excessive risk, or tranching of credits. We have zero exposure directly to the oil and gas industry, unless you count convenience store and gas stations, which we do not.

I would like to turn the rest of the presentation and financial review over to Jenny Eddelson. Jenny?

Thank you, Barry. Good afternoon, everyone, and thank you for joining the call. As Barry discussed earlier, the Company completed its conversion to a BDC on November 12, 2014; and as such, our financial reporting structure has changed. As a BDC, a number of our former subsidiaries, including Electronic Payment Processing, Managed Technology Solutions, Newtek Insurance Agency and Newtek Payroll, which were previously consolidated, were deconsolidated on November 11 and are now treated as portfolio companies on our balance sheet and marked-to-market each quarter.

Please refer to the schedule of investments in our 10-K, when filed, which provides a comprehensive list of all of our debt and equity investments at fair value. As a result of the conversion, our statement of income has been bifurcated into two reportable periods: consolidated operating company results from January 1, 2014 through November 11, 2014; and BDC results from November 12 through December 31, 2014.

Based on this reporting requirement, our 2014 results are not comparable to prior period. Our BDC consolidated statement of income includes the results of the parent, Newtek Business Services Corp., and its consolidated subsidiaries: Newtek Small Business Finance, which is our SBA lender, and several wholly-owned holding companies. Also important to note is that our balance sheet as of December 31 is at as a BDC and is also not comparable to the prior-year balance sheet, which included the accounts of all of our formerly consolidated subsidiaries.

A few key items to note -- if you turn to slide 29, we closed the year with NAV of $166.4 million, or $16.31 per share. Our investment portfolio on a fair value basis was $233.5 million. This includes $121.5 million of SBA loans held for investment; $31.5 million of loans held for sale; $77.5 million of equity investments, which includes the businesses that were previously consolidated when we were an operating company; and $3 million in money market funds.

Our total liquidity as of December 31, 2014, was approximately $30.8 million, which included $20.8 million of unrestricted cash and $10 million of availability under our lines of credit. Our asset coverage as of December 31 was 223%.

Moving to our 2014 statements of income, for the BDC period November 12, 2014, through December 31, 2014, we had total investment income of approximately $2 million, which primarily consisted of $1 million of interest earned on our SBA loan portfolio as well as $600,000 of servicing income. Our net realized and unrealized gains for the period equaled $3.2 million. Overall, we had a net increase in net assets resulting from operations for the period of $681,000.

When looking at our operating Company results for the pre-BDC period ended November 11, 2014, we had total revenues of $131.8 million; pretax income of $7.1 million; and EPS of $0.45 per share. Finally, we are confirming our 2015 dividend guidance of $1.81 per share.

With that, I would like to turn the call back to Barry.

Thank you, Jenny. Operator, we'll open up the call for questions.

(Operator Instructions) Adam Morton, RBC.

Jennifer, Barry -- congrats on the first quarter of the BDC. Good work. Stock has been great. I see the reported NAV at $16.31; stock is trading over that. I would be remiss to ask you guys if a capital raise is in the future -- if you guys wouldn't mind commenting on that?

Sure. I think from our perspective right now there is no need for additional capital. We have plenty of equity capital to accomplish our objectives, which would be to primarily use the pre-existing raise to do SBA 7(a) loans and do a securitization.

As we progress through the year and we pay dividends out, and particularly as we get toward the special dividend at the end of the year, there could be a need for that. If we are able to acquire excess leverage from the portfolio companies, which is why the capital bank restructuring is important to us, that could push that out in the future.

I think what's important -- and we said this a lot when we did the roadshow -- the whole question of capital raises being dilutive; and we raised capital at $12.50. And I stood in front of people, and they said, are you going to raise money again? And I said, yes. They said, why?

I said, because we are going to take the money and put it to work and earn a rate of return that is going to be accretive to the dividend that clears the market. I think that's what the market has recognized. So if we could take this capital and deploy it in the SBA 7(a) business, which is generating very high returns on equity; and we can take this capital and do acquisitions in the business services space at those types of EBITDA multiples I talked about earlier, and take the capital and put it into existing operating businesses, and create the best technology and efficiencies and the ability to cross-sell and cross-market, we are going to keep raising capital. We are going to be a much bigger BDC.

The stock is going to trade on a more liquid basis. We are going to show up on the radar screens of investors that can't buy $200 million market cap companies but can buy a $0.25 billion or $0.5 billion and go on from there.

So we've been very prudent. We've been in business for over the course of almost 15 years publicly, longer than that privately. We are not crazy men. I've got a major equity stake in the business. So growing things at an appropriate rate in a controlled manner is sort of where we are at.

So we will be out in the market raising additional capital in the future. But we are going to try to push that off as far as we can.

Fantastic. Thank you.

Robert Brock, West Family Investments.

It's actually Jim Young for Rob. But my question, Barry, is -- you had mentioned acquisitions a couple different times. Could you talk about the pipeline that you are looking that at this stage? And would you consider a strategic acquisition, or must all of your acquisition criteria meet -- that the acquisition would be accretive in its first year?

The first one is going to be a real good one, so -- not that they all won't be good. I think that we've got one in mind that we are looking at that we know pretty well. And it's going to be -- if we get it done, it will be a nice bite size. And we will put a little bit of debt on it and get the types of numbers that we talked about.

To be honest with you it's been a bit of a whirlwind, from the capital raise to getting things in place. We have talked about a lot of things on this call. So I really have not started to get out there and work with the investment banks to get a feel for what is out there. We will start to do that in the near future, so -- but there's not a big pipeline. I don't think you are going to see a lot of them.

Maybe you will see one in 2015, maybe a second one toward the end of the year if we see something interesting. But we are not compelled to do anything. I think that's important. In our business model if it doesn't fit, we will just sit and keep growing it organically. We will be very opportunistic.

And what about the -- about being financially accretive in year one? Or would you be willing to accept dilution in year one?

If you could explain what you mean by financially traded versus dilution? What do you mean?

The price that you pay for the Company -- would it be dilutive to book value? Would it be dilutive to earnings per share?

No. The goal, obviously, is things that will have a -- two things. Number one, to buy things that are greater than -- it's a good question -- that will be accretive to what I'll call the market clearing dividend. Okay. So that's number one.

Number two, when you buy it, you are buying it at a valuation that's going to wind up going on your books. Now, what you hope to be able to do is buy things in certain silos; certain acquisitions might be expense-related. Some of them might be growth-related. Some of them might be synergistic to other portfolio opportunities.

So if I buy a portfolio of payroll opportunities, I now have the ability to sell insurance and payment processing and lending into the book of business. So all of these things are very much accretive to the overall strategy of what we are doing here at Newtek.

I would say currently we do not do a very good job of mining the database, cross-selling and cross-marketing. That's one of the things that we will be focusing on over the next several years, is perfecting the way to call into customers without disturbing them in a professional way.

So put it this way: unlike other CEOs that do not have a major stake in the Company, I have no interest in growing this Company for the sake of growing it. Most CEOs grow companies because bigger companies can get paid bigger bases and bigger bonuses. My reward is in the stock. So one of the guiding principles for the Board, which has to approve every acquisition, is: is this accretive to the dividend? And is this accretive to NAV?

Marc Silk, Silk Investment Advisors.

Hi, Barry. Congratulations on your first quarter as a BDC. I've got a few questions for you. So given that you've changed to a BDC and an RIC, how does that change how you charge off loans?

Thanks, Marc. In the BDC -- okay, in the C Corp. structure, which is actually -- it did have somewhat of an effect in the fourth quarter -- in the C Corp. structure, if you had a loan that went into a nonperforming category, even though it wasn't resolved; you wrote it down and it affected your income -- even though over the course of time you may collect on a personal guarantee, you may collect on reselling the business, or it's -- Marc, we collect on stuff three, four, five years down the road.

I think one of the things we need to do is, frankly, internally we need to do a better job of making sure we could state that case and document it better. I'll say that. In a BDC, going forward, losses occur when they are realized. So we are going to act more like a bank; that's kind of how banks do things.

We think we've got a pretty clean position now going into 2015 relative to the concept of losses, and realization, and things of that nature. But there clearly is a difference. So the big difference in the BDC world is your income is affected when there is realizations. Unrealized losses and unrealized gains do not affect income. They do affect NAV. So that is a bit of a difference. And some of the accounting caused us to look at things differently from November 11 to November 12.

Okay. So that sounds like a net positive for this venue. So you mentioned that on a BDC -- and as you know, I've been a shareholder since 2006, so I'm new to the BDC game. So as far as comps, you basically said a lot of BDCs trade at 1.4 of NAV. So you at $16.31 equals $22.83, so that's one benchmark.

Looking at where your stock closed today and your dividend, not including the special dividend -- so $1.81, $18.27 -- so you are giving off a 9.9% yield versus CDs that are giving basically nothing. Then, if I go very conservative, you have a PE of less than 10. So I'm new to this. How can we rank a BDC as far as -- you know, some people look at dividend yield; some people obviously look at NAV, but also PE ratios?

I think it's a good question. Number one, just to clarify, the 1.4 is internally managed, and I picked four of them. So I think that's an important differential. We are an internally-managed BDC. I'll also tell you: we are not like the other four internally-managed BDCs in the sense that our five business lines -- the lender, the processing business, the payroll business, the insurance agency, and the cloud computing business are all operating businesses that we operate every day.

So they are not like venture capital investments. They are not static pools of loans that are managed by somebody buying loans. Because when you buy a loan, if rates move up and down, it changes in value; or if you pick it great, the credit gets better, or maybe it tightens.

That's not where we get value. So I think it was important to take a look at the growth of our book-to-NAV over the five years, and look how we have created value. So when you look at us, you are going to say, hey -- do I think this Company and this management team, with its strategy, can actually create value?

Creating value would be: number one, growing the cash flow from the dividend. Two, being able to make attractive acquisitions to bulk up within these footprints and get Heartland-type valuations, which is in the presentation; Vantiv-type valuations, Go Daddy-type valuations; Endurance-type valuations -- by being bigger, as well as getting better operating leverage from an expense perspective.

When you look at our lender, our lender is primarily valued on the books based upon the schedule of investments, right? Then go look at and On Deck Capital and go look at the Lending Club -- they are valued at some enterprise or goodwill value based upon the infrastructure that they have created.

Well, we have been doing this for 11 years; they have been doing it for three or four. So I look at what we have in our lending operation, which I think is a real retail ability to acquire business credit -- it's a more controlled growth. We are just not growing by, like, 500%, or 800%, or 900%. Right? I would rather grow 15% to 20% a year, take what I've got. And in the game of Risk, you sort of take one continent at a time.

So I think when you look at us -- yes, we are a BDC, so we have a nice tax-advantaged nature to what we are doing. But you have to look underneath at the underlying businesses and say, do I think this Company can grow the dividend and to grow the total valuation of the businesses that are underlying that?

That's really -- that's how I think you should look at us. So it's a little harder. I went around the Street; I talked to a lot of analysts, talked to investors. Thank God -- I'll be honest with you. We were so pleased at the roadshow and the investor reception of some very smart institutions that have listened to what we said. Listen, it takes a little work to invest in Newtek, but historically, it's been worth it.

True that, my friend. So an industry question: so banks versus Newtek, where Dodd-Frank is obviously hindering these banks -- but also, with interest rates being so low, banks might not want to take the risk of some of these loans at these levels. So kind of what are you seeing in the sense of -- are people not even going to banks; they are going right to you? How will that play out as interest rates start moving up?

I think it was William Tell that said, I cannot tell a lie. Banks are coming back. This is the first time I've said this in a call in three or four years.

So they are coming back. They are forced to put money out in the market, and the regulators have -- all of a sudden saying, hey, you've got to put more loans on the books. So we are seeing banks come back into the market. The market has yet gotten more competitive. We still feel very good about where we are, and our ability to grow the business and get loans, but clearly they are getting more competitive.

Also along those lines, rates rising is not good for anything, except if you have an inverse bond fund. Putting that aside, we have a floating rate portfolio. It's almost exclusively floating rate. We have certain assets and aspects to our business that if the economy heats up, if inflation heats up, if rates rise, we will have less severity when we have a default.

You might have a greater frequency, because borrowers may not be able to pay the higher rate of interest, but most likely there will be other people to take on the business. The collateral value -- most of our loans are backed by real estate -- will be higher. So that is beneficial.

When you look at things like the processing business, inflation is great for the processing business. There is nothing like 5%, 10% inflation in prices. I'm not saying we're going there by the way, and I don't know if anybody on this call believes in the government PPI or CPIs. I don't.

But if you actually look at real inflation out there, our reoccurring revenue stream businesses, frankly, do well in that type of scenario. So we have a nice balance. When you invest in Newtek, yes, there is a credit aspect to it; but unlike most BDCs, which are very heavily weighted in credit, we've also got this reoccurring revenue stream for business services. And it grows very nicely together.

Okay. And my last question: excluding the SBA, in your opinion -- again, this is your opinion -- over the next two or three years, what part of the business or what part of Newtek could pleasantly surprise investors, and why?

Wow, that's a tough question. I think the area that will surprise most is what we do in the acquisition space. We are now an investment company in addition to being an operator; and, frankly, I think we've been a very good operator. And I think what's going to surprise people is we actually know how to acquire other businesses, integrate them into what we are doing.

And I think that will be the surprise, because I think a lot of people look at Newtek right now for the 7(a) business. Just like in 2009 and 2010, when the world was coming to an end, and people would say, what are you doing in lending? You should just grow the payments business and the cloud business -- well, I think the surprise for most people on this call right now is everyone is in love with small business lending. And I am, too.

But there will come a point in time when that is just less attractive, and we will have the other businesses. When you ask me, Barry, do I think the electronic payment processing business has got great growth potential? With mobile payments and the way transactions are going to change, absolutely.

Cloud computing -- I still talk to people about having a server, and most small businesses still have their server in a closet or have no idea where it is. So yes, I think the big surprise will be that three, four, or five years from now, we will be having conversations about the business services units really being equally important to the lending business.

Okay. And my last comment, Barry, is as you look for different investments, it's always good to know that there is a management team that has skin in the game. And you definitely have a lot of skin in the game. So I think when people are making the decision between should I buy stock A or stock B, it definitely weighs in your favor. So keep up the good work, and I look forward to future calls.

Thank you, from the class of 2006. It was a very good year.

Mickey Schleien, Ladenburg.

Good afternoon, Barry. How are you?

Good, Mickey. How are you? You are better in Florida.

So, Barry, one big-picture question, a couple of smaller ones. I think you briefly already talked about a question on my mind, which is: how did your customers on the loan side behave the last time the Fed raised interest rates, which is, what, roughly 10 years ago, given that they're relatively small, and these are floating-rate loans?

It's a great question, Mickey. I think that the key issue with respect to their behavior is, number one, the magnitude of the rise. I hate to say it, but it's been such a long time since rates have risen, I've got to test my memory a little bit.

But we really haven't had major sharp spikes. I'd have to go back and think about -- that probably was -- I think 2006/2007 rates spiked a couple of points.

Listen, I think the good businesses are able to survive that. We stress test our loans to be able to survive 200, 300 basis point spikes in rates. Most of those spikes in rates are also driven by inflation.

From our standpoint, Mickey, one of the reasons why we have been good and lending is we want to lend to businesses that are not devoid of liquidity. So what does that mean? We want businesses that have got hard assets and have got other liquid assets.

So one of the things that's really important when you are lending is you've got to make sure that business has got some dry powder. So our businesses do get stressed. If they were to see a 200 to 300 basis point rise in rates -- I don't particularly see that in the near future, particularly on the short end of the curve -- I just don't see it, at least in the next couple of years that are in front of us.

They do complain -- they do look for the exits. But most of them cannot qualify for a fixed-rate opportunity. Now, one of the things that we'll be looking at going forward is to be more active, maybe, in the 504 loan program. We'll be doing larger bones with a fixed-rate option for new originations.

I think that will be very useful. We are well positioned to do that. But it's not a panic problem for our customers to have a couple hundred basis points rise in rates, based upon most of them having some form of liquid collateral that they can rely upon to be able to make the higher rate increases.

Okay. I understand. Barry, you talked about banks becoming more competitive. And generally, with the more conventional BDCs, we are just not seeing the banks compete -- other than maybe a small revolver collateralized by receivables or inventory. In your world, is a because a large proportion of your loans have real estate as collateral, and that makes the banks more comfortable in lending to this market, and therefore more of a threat to you? Am I understanding that correctly?

It's a good understanding. If you surveyed 2,000 or 3,000 banks and said, how many of you like cash flow loans with no hard collateral? You would get a very small response rate. So the reality of that is just -- from an industry perspective, that exists.

In our market, if we happen to have a situation where the value of the collateral now has given a 20% to 30% equity cushion, that borrower -- and that -- by the way, that's not always happening. That's not like a snap of the fingers. But that borrower can go today to a Community Bank and probably get a fixed-rate loan.

Now, it won't get a long am schedule. They will probably have a loan that's due in three years or five years. Okay? Our loan is with the same collateral at 25-year am. So for a company that's really concerned about the cash flow, we went out on amortization all day long.

And our loans do not have the covenants that, typically, bank loans have. A lot less onerous once the loan is on the books than dealing with a typical bank. As a bank borrower, I could attest to that.

So there are a lot of advantages to the SBA loan. I don't want to exaggerate that this is like a lay-down refi. We have never seen that, even with rates rising or collateral values increasing.

I understand. A couple of more -- questions more on the modeling side. Of the G&A that you are showing for the sort of month and a half that you were a BDC last year, $2.2 million, was there anything nonrecurring in there that we should be aware of?

No.

Okay. And, lastly, could you walk us through the increase in NAV from sort of the middle of the year to the end of the year? Was that being driven by revaluation of the portfolio companies, or something else, just broadly speaking?

It was driven by the cash raise and some very minor revaluations in portfolio companies.

Okay. Thanks for your time this afternoon.

Michael Kitlinski, UBS.

Actually, it was asked and answered. But thank you.

Hannah Kim, JMP Securities.

Good afternoon. Thanks for taking my questions. I am calling in for Chris York this afternoon. So, Barry, I just wanted to ask you if you could provide additional color on why origination volume in November seems to be a lot lighter compared to October and December?

I'm not sure how you draw the conclusion. I think what you might be looking at is the issue of gain on sale. Somewhere around -- I don't know what you're getting --

Sure. So the origination volume -- I think on the last call you mentioned for the month of October it was $25 million. In the press release today it said that the fourth-quarter origination volume was $65.2 million, and also highlighted that December had a record level of roughly $30 million. So this implies that November had an origination volume that was only about $10 million. So I was just trying to maybe -- trying to understand why November origination volume is much lighter compared to October and December?

Hannah, I'm inviting you to my management meetings once a week, when I speak to Peter Downs and Bob Rabuck, because I ask them the same questions. I will tell you that it is somewhat random. I mean, I could tell you -- oh, these are closings. So I could say that it's a Thanksgiving factor; you know, week before, week after -- that's kind of a tough thing, because a lot of people vacation around then. I will tell you -- let me put October aside for the moment. December: everybody has a mad rush to close loans in December. That's --

So that's seasonal.

Yes. There's clearly -- and by the way, I'm glad you are bringing this up, because I know I am not answering your question. We clearly are a seasonal business. Most loans close -- you know, we have a much bigger closing ratio in December and in the fourth quarter, but typically December than any other month.

In the processing business, because of the retail tilt, we have much more processing volume in the fourth quarter. Now, there really shouldn't be a rational reason why November was light. It just was.

Okay. Great. Thank you.

Ralph Torberg, Private Investor.

My question has to do with -- I have really two questions. The first one is: I don't quite understand why the price of the stock dropped $1.50 today when the dividend is like $0.39.

The second question is: there's a special dividend coming out in 2015. And I'm wondering if you can tell me a little bit more about what size that will be? Thank you.

Sure. On the first question, Ralph, I don't really have a good answer for it, either. I try not to predict things. I think you might have a situation where -- my understanding of the BDC market is there are a lot of people that buy the stock leading up to a dividend. Today we are ex-dividend.

So you just could have had -- so do we have an efficient market on a $200 million market cap stock today? I don't know. I have to ask the market makers that. But I think people that are paying attention to this call, looking at a company that does do things for the long-term -- if you think that's wrong, this could be a buying opportunity. But there is no other reason to explain the price action today.

Relative to the concept of the special dividend, the accounting internal and external tax people will do their work to calculate what the tax position of the Company was. It's obviously not an easy thing to do. Because it's not just -- Jenny, correct me if I am wrong -- it's not just tax for 2014. We've got to go back over, like, the history of the Company.

Correct.

And it is a very intense calculation. And it's essentially our distribution of the retained earnings on a tax basis. So it is 14 years of tax work. So we'll come up with a number; the Board will make a decision as to what makes most sense for stockholders in terms of when to declare it, when to distribute it. It must be distributed in calendar year 2015. So no ifs, ands, and buts. That's to maintain our RIC status, I believe.

I appreciate that. Thank you very much. And I look forward to the growth of your Company. I am very excited about it.

I appreciate the call. Thank you.

Gregg Hillman, First Wilshire Securities.

Barry, can you first talk about -- to your businesses, cloud computing and payment processing, and particularly how they are differentiated from the competitors?

Also, for payment processing, can you talk about the risk of MasterCard and Visa being disintermediated and being toasted by other -- you know, people that will charge the merchants less, and how that might affect you?

Sure. I'll do the second one first. The issue with Visa and MasterCard is interesting. Visa and MasterCard stock -- I haven't looked at it in the last quarter or so, but for the last many, many years, it's done very, very well. And they've got a great franchise and great valuation.

Effectively, our payments business, as we sit here today, is very much of a reseller of Visa and MasterCard. There's a Federal Reserve report out there talking about the security of payments business, and it really sort of emphasizes that the Fed is interested in promoting ACHing. I think that we, although we haven't started yet, we've developed a relationship with a company called SEQR.

SEQR is owned by a Swedish company called Seamless that has a very interesting, mobile-based payment solution which is more secure than a Visa/MasterCard, because it doesn't have a Visa/MasterCard number; and it's basically ACH's money from a consumer's account into a business account at about half the cost of debit.

So I think what you are going to see is more electronic money moving in lieu of debit. Debit is a big part of, currently, the Visa/MasterCard system. So we can talk about that off-line. It's a fairly lengthy conversation, but mobile payments is here to stay. People are going to be using phones. They are going to pay that way. And there is going to -- need to be more secure solutions, because the amount of breaches that we are having with credit cards just doesn't really work.

Looking at our businesses, the payments business and people buying things -- it's moving more and more to online. So I would challenge anyone to find a company that is in the hosting business, can design a site, has the payments gateway to the processor. It doesn't exist. We need to do a better job going forward of bundling these services to customers, making that offering, letting people know we are the place to go to get this business done.

The payments business is becoming more and more of a technological solution. Putting that aside, our payments business exists in Wisconsin. It's got its own separate management team. It's got its own -- these are two separate, different entities, but we think we've got significant competitive advantages.

Most importantly, the way in which we acquire a client using financial technology, NewTracker, which you can read about, you can call me about. It's like a salesforce.com for a business referral process.

So we are not using independent agents to acquire businesses. We are not using, typically, feet-on-the-street salesmen. We are using technology. So what makes Newtek different is the ability to acquire customers cost-effectively on a direct basis, and to process the business remotely, and really to be a solutions provider and not just a seller of a product. That's really where we sit sort of in the eco-chain in marketing these different businesses.

Okay. And the cloud business -- how are you differentiated there? Cloud computing?

Well, the cost, basically -- you know, my payments business historically -- if you take a couple of one-timers out there, it's -- call it $8 million or $9 million of pretax or EBITDA. And then you go look at something like a Heartland, that's $90 million or $100 million. It's double the valuation, right?

So I am a believer that just by getting bigger and getting bigger economies, you are going to have multiple expansion in addition to cost reduction and movement to the bottom line. In addition to -- you know, when you do these acquisitions, you pick up better technology; you can pick up better talent. You don't pay for them. You pick up distribution.

So we've been in these businesses 10 years. We know them. We have good management teams. We know how to operate them.

Getting larger -- and, by the way, so if you are buying these with an EBITDA multiple that's accretive to the basic margin-clearing dividend, right? So nobody is going to complain about that. And then you get margin expansion.

So look, I am indicating that we've got a decent chance, right? Because you are trying to figure out whether or not you can invest in this Company and this management team. I think we've got a decent chance at not only of doing things that accretive to the dividend, but also accretive to valuation. That's what we are attempting to do.

Okay. And just on two other notes -- just in the protocol environment, is there a limit to what the government will guarantee for SBA bonds?

The SBA program has been around for 61 years. It typically is a zero-budget item, meaning that the premium that the SBA gets for losses has been offset by the losses that it has incurred. Depending upon the given year or some years, there are no caps. Some year there is budget. We have not had a budgetary issue in six years.

And who is the largest SBA lender in the United States?

Who is the largest? I believe it's either Wells Fargo or JPMorgan Chase. They are, like, $900 million, give or take. Given the size of those entities, this business could never move the needle.

Okay. And Barry, finally, just in marketing, do you have any strategic alliances? Or maybe you can talk about how you go to marketing, and whether you could do any strategic alliances that will have marketing or loan originations accelerate?

Most of our business comes in through strategic alliances with entities like Morgan Stanley, Credit Union National Association, The Hartford, New York Community Bank. We have a lot of them. We need to do a better job penetrating them, and we'll get better growth out of the existing business model as well as bringing on new relationships.

So we are constantly looking to grow the relationship base. We are also looking at to do a better job penetrating existing relationships. We are getting better cooperation from alliance partners.

Okay. Thanks for your comments.

Thank you. We show no other questions in queue. I'll turn it back to management for closing remarks.

Well, I want to thank everybody. That was a terrific call. I really appreciate the participation. Obviously, we have a lot of new investors in the Company, in the stock, both institutionally and in retail that participated today. It's an exciting time.

I guess to reiterate: we finished this call with the last GAAP number being our NAV at $16.31, Jenny? With an expected dividend this year subject to Board approval -- I've been told many times to keep saying that -- so subject to Board approval, of $1.81. Not a lot of leverage on this business. Good cash in the bank to be able to execute on our business strategy and a management team that cares and is incented.

So we have appreciated your participation and certainly welcome the new investors as well as the old ones. Thank you very much.

Ladies and gentlemen, thanks for participating in today's program. This concludes the program. You may all disconnect.

(Operator Instructions) Adam Morton, RBC.

Jennifer, Barry -- congrats on the first quarter of the BDC. Good work. Stock has been great. I see the reported NAV at $16.31; stock is trading over that. I would be remiss to ask you guys if a capital raise is in the future -- if you guys wouldn't mind commenting on that?

Sure. I think from our perspective right now there is no need for additional capital. We have plenty of equity capital to accomplish our objectives, which would be to primarily use the pre-existing raise to do SBA 7(a) loans and do a securitization. As we progress through the year and we pay dividends out, and particularly as we get toward the special dividend at the end of the year, there could be a need for that. If we are able to acquire excess leverage from the portfolio companies, which is why the capital bank restructuring is important to us, that could push that out in the future. I think what's important -- and we said this a lot when we did the roadshow -- the whole question of capital raises being dilutive; and we raised capital at $12.50. And I stood in front of people, and they said, are you going to raise money again? And I said, yes. They said, why? I said, because we are going to take the money and put it to work and earn a rate of return that is going to be accretive to the dividend that clears the market. I think that's what the market has recognized. So if we could take this capital and deploy it in the SBA 7(a) business, which is generating very high returns on equity; and we can take this capital and do acquisitions in the business services space at those types of EBITDA multiples I talked about earlier, and take the capital and put it into existing operating businesses, and create the best technology and efficiencies and the ability to cross-sell and cross-market, we are going to keep raising capital. We are going to be a much bigger BDC. The stock is going to trade on a more liquid basis. We are going to show up on the radar screens of investors that can't buy $200 million market cap companies but can buy a $0.25 billion or $0.5 billion and go on from there. So we've been very prudent. We've been in business for over the course of almost 15 years publicly, longer than that privately. We are not crazy men. I've got a major equity stake in the business. So growing things at an appropriate rate in a controlled manner is sort of where we are at. So we will be out in the market raising additional capital in the future. But we are going to try to push that off as far as we can.

Fantastic. Thank you.

Robert Brock, West Family Investments.

It's actually Jim Young for Rob. But my question, Barry, is -- you had mentioned acquisitions a couple different times. Could you talk about the pipeline that you are looking that at this stage? And would you consider a strategic acquisition, or must all of your acquisition criteria meet -- that the acquisition would be accretive in its first year?

The first one is going to be a real good one, so -- not that they all won't be good. I think that we've got one in mind that we are looking at that we know pretty well. And it's going to be -- if we get it done, it will be a nice bite size. And we will put a little bit of debt on it and get the types of numbers that we talked about. To be honest with you it's been a bit of a whirlwind, from the capital raise to getting things in place. We have talked about a lot of things on this call. So I really have not started to get out there and work with the investment banks to get a feel for what is out there. We will start to do that in the near future, so -- but there's not a big pipeline. I don't think you are going to see a lot of them. Maybe you will see one in 2015, maybe a second one toward the end of the year if we see something interesting. But we are not compelled to do anything. I think that's important. In our business model if it doesn't fit, we will just sit and keep growing it organically. We will be very opportunistic.

And what about the -- about being financially accretive in year one? Or would you be willing to accept dilution in year one?

If you could explain what you mean by financially traded versus dilution? What do you mean?

The price that you pay for the Company -- would it be dilutive to book value? Would it be dilutive to earnings per share?

No. The goal, obviously, is things that will have a -- two things. Number one, to buy things that are greater than -- it's a good question -- that will be accretive to what I'll call the market clearing dividend. Okay. So that's number one. Number two, when you buy it, you are buying it at a valuation that's going to wind up going on your books. Now, what you hope to be able to do is buy things in certain silos; certain acquisitions might be expense-related. Some of them might be growth-related. Some of them might be synergistic to other portfolio opportunities. So if I buy a portfolio of payroll opportunities, I now have the ability to sell insurance and payment processing and lending into the book of business. So all of these things are very much accretive to the overall strategy of what we are doing here at Newtek. I would say currently we do not do a very good job of mining the database, cross-selling and cross-marketing. That's one of the things that we will be focusing on over the next several years, is perfecting the way to call into customers without disturbing them in a professional way. So put it this way: unlike other CEOs that do not have a major stake in the Company, I have no interest in growing this Company for the sake of growing it. Most CEOs grow companies because bigger companies can get paid bigger bases and bigger bonuses. My reward is in the stock. So one of the guiding principles for the Board, which has to approve every acquisition, is: is this accretive to the dividend? And is this accretive to NAV?

Marc Silk, Silk Investment Advisors.

Hi, Barry. Congratulations on your first quarter as a BDC. I've got a few questions for you. So given that you've changed to a BDC and an RIC, how does that change how you charge off loans?

Thanks, Marc. In the BDC -- okay, in the C Corp. structure, which is actually -- it did have somewhat of an effect in the fourth quarter -- in the C Corp. structure, if you had a loan that went into a nonperforming category, even though it wasn't resolved; you wrote it down and it affected your income -- even though over the course of time you may collect on a personal guarantee, you may collect on reselling the business, or it's -- Marc, we collect on stuff three, four, five years down the road. I think one of the things we need to do is, frankly, internally we need to do a better job of making sure we could state that case and document it better. I'll say that. In a BDC, going forward, losses occur when they are realized. So we are going to act more like a bank; that's kind of how banks do things. We think we've got a pretty clean position now going into 2015 relative to the concept of losses, and realization, and things of that nature. But there clearly is a difference. So the big difference in the BDC world is your income is affected when there is realizations. Unrealized losses and unrealized gains do not affect income. They do affect NAV. So that is a bit of a difference. And some of the accounting caused us to look at things differently from November 11 to November 12.

Okay. So that sounds like a net positive for this venue. So you mentioned that on a BDC -- and as you know, I've been a shareholder since 2006, so I'm new to the BDC game. So as far as comps, you basically said a lot of BDCs trade at 1.4 of NAV. So you at $16.31 equals $22.83, so that's one benchmark. Looking at where your stock closed today and your dividend, not including the special dividend -- so $1.81, $18.27 -- so you are giving off a 9.9% yield versus CDs that are giving basically nothing. Then, if I go very conservative, you have a PE of less than 10. So I'm new to this. How can we rank a BDC as far as -- you know, some people look at dividend yield; some people obviously look at NAV, but also PE ratios?

I think it's a good question. Number one, just to clarify, the 1.4 is internally managed, and I picked four of them. So I think that's an important differential. We are an internally-managed BDC. I'll also tell you: we are not like the other four internally-managed BDCs in the sense that our five business lines -- the lender, the processing business, the payroll business, the insurance agency, and the cloud computing business are all operating businesses that we operate every day. So they are not like venture capital investments. They are not static pools of loans that are managed by somebody buying loans. Because when you buy a loan, if rates move up and down, it changes in value; or if you pick it great, the credit gets better, or maybe it tightens. That's not where we get value. So I think it was important to take a look at the growth of our book-to-NAV over the five years, and look how we have created value. So when you look at us, you are going to say, hey -- do I think this Company and this management team, with its strategy, can actually create value? Creating value would be: number one, growing the cash flow from the dividend. Two, being able to make attractive acquisitions to bulk up within these footprints and get Heartland-type valuations, which is in the presentation; Vantiv-type valuations, Go Daddy-type valuations; Endurance-type valuations -- by being bigger, as well as getting better operating leverage from an expense perspective. When you look at our lender, our lender is primarily valued on the books based upon the schedule of investments, right? Then go look at and On Deck Capital and go look at a Lending Club -- they are valued at some enterprise or goodwill value based upon the infrastructure that they have created. Well, we have been doing this for 11 years; they have been doing it for three or four. So I look at what we have in our lending operation, which I think is a real retail ability to acquire business credit -- it's a more controlled growth. We are just not growing by, like, 500%, or 800%, or 900%. Right? I would rather grow 15% to 20% a year, take what I've got. And in the game of Risk, you sort of take one continent at a time. So I think when you look at us -- yes, we are a BDC, so we have a nice tax-advantaged nature to what we are doing. But you have to look underneath at the underlying businesses and say, do I think this Company can grow the dividend and to grow the total valuation of the businesses that are underlying that? That's really -- that's how I think you should look at us. So it's a little harder. I went around the Street; I talked to a lot of analysts, talked to investors. Thank God -- I'll be honest with you. We were so pleased at the roadshow and the investor reception of some very smart institutions that have listened to what we said. Listen, it takes a little work to invest in Newtek, but historically, it's been worth it.

True that, my friend. So an industry question: so banks versus Newtek, where Dodd-Frank is obviously hindering these banks -- but also, with interest rates being so low, banks might not want to take the risk of some of these loans at these levels. So kind of what are you seeing in the sense of -- are people not even going to banks; they are going right to you? How will that play out as interest rates start moving up?

I think it was William Tell that said, I cannot tell a lie. Banks are coming back. This is the first time I've said this in a call in three or four years. So they are coming back. They are forced to put money out in the market, and the regulators have -- all of a sudden saying, hey, you've got to put more loans on the books. So we are seeing banks come back into the market. The market has yet gotten more competitive. We still feel very good about where we are, and our ability to grow the business and get loans, but clearly they are getting more competitive.Also along those lines, rates rising is not good for anything, except if you have an inverse bond fund. Putting that aside, we have a floating rate portfolio. It's almost exclusively floating rate. We have certain assets and aspects to our business that if the economy heats up, if inflation heats up, if rates rise, we will have less severity when we have a default. You might have a greater frequency, because borrowers may not be able to pay the higher rate of interest, but most likely there will be other people to take on the business. The collateral value -- most of our loans are backed by real estate -- will be higher. So that is beneficial. When you look at things like the processing business, inflation is great for the processing business. There is nothing like 5%, 10% inflation in prices. I'm not saying we're going there by the way, and I don't know if anybody on this call believes in the government PPI or CPIs. I don't. But if you actually look at real inflation out there, our reoccurring revenue stream businesses, frankly, do well in that type of scenario. So we have a nice balance. When you invest in Newtek, yes, there is a credit aspect to it; but unlike most BDCs, which are very heavily weighted in credit, we've also got this reoccurring revenue stream for business services. And it grows very nicely together.

Okay. And my last question: excluding the SBA, in your opinion -- again, this is your opinion -- over the next two or three years, what part of the business or what part of Newtek could pleasantly surprise investors, and why?

Wow, that's a tough question. I think the area that will surprise most is what we do in the acquisition space. We are now an investment company in addition to being an operator; and, frankly, I think we've been a very good operator. And I think what's going to surprise people is we actually know how to acquire other businesses, integrate them into what we are doing. And I think that will be the surprise, because I think a lot of people look at Newtek right now for the 7(a) business. Just like in 2009 and 2010, when the world was coming to an end, and people would say, what are you doing in lending? You should just grow the payments business and the cloud business -- well, I think the surprise for most people on this call right now is everyone is in love with small business lending. And I am, too. But there will come a point in time when that is just less attractive, and we will have the other businesses. When you ask me, Barry, do I think the electronic payment processing business has got great growth potential? With mobile payments and the way transactions are going to change, absolutely. Cloud computing -- I still talk to people about having a server, and most small businesses still have their server in a closet or have no idea where it is. So yes, I think the big surprise will be that three, four, or five years from now, we will be having conversations about the business services units really being equally important to the lending business.

Okay. And my last comment, Barry, is as you look for different investments, it's always good to know that there is a management team that has skin in the game. And you definitely have a lot of skin in the game. So I think when people are making the decision between should I buy stock A or stock B, it definitely weighs in your favor. So keep up the good work, and I look forward to future calls.

Thank you, from the class of 2006. It was a very good year.

Mickey Schleien, Ladenburg.

Good afternoon, Barry. How are you?

Good, Mickey. How are you? You are better in Florida.

So, Barry, one big-picture question, a couple of smaller ones. I think you briefly already talked about a question on my mind, which is: how did your customers on the loan side behave the last time the Fed raised interest rates, which is, what, roughly 10 years ago, given that they're relatively small, and these are floating-rate loans?

It's a great question, Mickey. I think that the key issue with respect to their behavior is, number one, the magnitude of the rise. I hate to say it, but it's been such a long time since rates have risen, I've got to test my memory a little bit. But we really haven't had major sharp spikes. I'd have to go back and think about -- that probably was -- I think 2006/2007 rates spiked a couple of points. Listen, I think the good businesses are able to survive that. We stress test our loans to be able to survive 200, 300 basis point spikes in rates. Most of those spikes in rates are also driven by inflation. From our standpoint, Mickey, one of the reasons why we have been good and lending is we want to lend to businesses that are not devoid of liquidity. So what does that mean? We want businesses that have got hard assets and have got other liquid assets. So one of the things that's really important when you are lending is you've got to make sure that business has got some dry powder. So our businesses do get stressed. If they were to see a 200 to 300 basis point rise in rates -- I don't particularly see that in the near future, particularly on the short end of the curve -- I just don't see it, at least in the next couple of years that are in front of us. They do complain -- they do look for the exits. But most of them cannot qualify for a fixed-rate opportunity. Now, one of the things that we'll be looking at going forward is to be more active, maybe, in the 504 loan program. We'll be doing larger bones with a fixed-rate option for new originations. I think that will be very useful. We are well positioned to do that. But it's not a panic problem for our customers to have a couple hundred basis points rise in rates, based upon most of them having some form of liquid collateral that they can rely upon to be able to make the higher rate increases.

Okay. I understand. Barry, you talked about banks becoming more competitive. And generally, with the more conventional BDCs, we are just not seeing the banks compete -- other than maybe a small revolver collateralized by receivables or inventory. In your world, is a because a large proportion of your loans have real estate as collateral, and that makes the banks more comfortable in lending to this market, and therefore more of a threat to you? Am I understanding that correctly?

It's a good understanding. If you surveyed 2,000 or 3,000 banks and said, how many of you like cash flow loans with no hard collateral? You would get a very small response rate. So the reality of that is just -- from an industry perspective, that exists. In our market, if we happen to have a situation where the value of the collateral now has given a 20% to 30% equity cushion, that borrower -- and that -- by the way, that's not always happening. That's not like a snap of the fingers. But that borrower can go today to a Community Bank and probably get a fixed-rate loan. Now, it won't get a long am schedule. They will probably have a loan that's due in three years or five years. Okay? Our loan is with the same collateral at 25-year am. So for a company that's really concerned about the cash flow, we went out on amortization all day long. And our loans do not have the covenants that, typically, bank loans have. A lot less onerous once the loan is on the books than dealing with a typical bank. As a bank borrower, I could attest to that. So there are a lot of advantages to the SBA loan. I don't want to exaggerate that this is like a lay-down refi. We have never seen that, even with rates rising or collateral values increasing.

I understand. A couple of more -- questions more on the modeling side. Of the G&A that you are showing for the sort of month and a half that you were a BDC last year, $2.2 million, was there anything nonrecurring in there that we should be aware of?

No.

Okay. And, lastly, could you walk us through the increase in NAV from sort of the middle of the year to the end of the year? Was that being driven by revaluation of the portfolio companies, or something else, just broadly speaking?

It was driven by the cash raise and some very minor revaluations in portfolio companies.

Okay. Thanks for your time this afternoon.

Michael Kitlinski, UBS. Michael KitlinskiActually, it was asked and answered. But thank you.

Hannah Kim, JMP Securities.

Good afternoon. Thanks for taking my questions. I am calling in for Chris York this afternoon. So, Barry, I just wanted to ask you if you could provide additional color on why origination volume in November seems to be a lot lighter compared to October and December?

I'm not sure how you draw the conclusion. I think what you might be looking at is the issue of gain on sale. Somewhere around -- I don't know what you're getting --

Sure. So the origination volume -- I think on the last call you mentioned for the month of October it was $25 million. In the press release today it said that the fourth-quarter origination volume was $65.2 million, and also highlighted that December had a record level of roughly $30 million. So this implies that November had an origination volume that was only about $10 million. So I was just trying to maybe -- trying to understand why November origination volume is much lighter compared to October and December?

Hannah, I'm inviting you to my management meetings once a week, when I speak to Peter Downs and Bob Rabuck, because I ask them the same questions. I will tell you that it is somewhat random. I mean, I could tell you -- oh, these are closings. So I could say that it's a Thanksgiving factor; you know, week before, week after -- that's kind of a tough thing, because a lot of people vacation around then. I will tell you -- let me put October aside for the moment. December: everybody has a mad rush to close loans in December. That's --

So that's seasonal.

Yes. There's clearly -- and by the way, I'm glad you are bringing this up, because I know I am not answering your question. We clearly are a seasonal business. Most loans close -- you know, we have a much bigger closing ratio in December and in the fourth quarter, but typically December than any other month. In the processing business, because of the retail tilt, we have much more processing volume in the fourth quarter. Now, there really shouldn't be a rational reason why November was light. It just was.

Okay. Great. Thank you.

Ralph Torberg, Private Investor.

My question has to do with -- I have really two questions. The first one is: I don't quite understand why the price of the stock dropped $1.50 today when the dividend is like $0.39. The second question is: there's a special dividend coming out in 2015. And I'm wondering if you can tell me a little bit more about what size that will be? Thank you.

Sure. On the first question, Ralph, I don't really have a good answer for it, either. I try not to predict things. I think you might have a situation where -- my understanding of the BDC market is there are a lot of people that buy the stock leading up to a dividend. Today we are ex-dividend. So you just could have had -- so do we have an efficient market on a $200 million market cap stock today? I don't know. I have to ask the market makers that. But I think people that are paying attention to this call, looking at a company that does do things for the long-term -- if you think that's wrong, this could be a buying opportunity. But there is no other reason to explain the price action today. Relative to the concept of the special dividend, the accounting internal and external tax people will do their work to calculate what the tax position of the Company was. It's obviously not an easy thing to do. Because it's not just -- Jenny, correct me if I am wrong -- it's not just tax for 2014. We've got to go back over, like, the history of the Company.

Correct.

And it is a very intense calculation. And it's essentially our distribution of the retained earnings on a tax basis. So it is 14 years of tax work. So we'll come up with a number; the Board will make a decision as to what makes most sense for stockholders in terms of when to declare it, when to distribute it. It must be distributed in calendar year 2015. So no ifs, ands, and buts. That's to maintain our RIC status, I believe.

I appreciate that. Thank you very much. And I look forward to the growth of your Company. I am very excited about it.

I appreciate the call. Thank you.

Gregg Hillman, First Wilshire Securities.

Barry, can you first talk about -- to your businesses, cloud computing and payment processing, and particularly how they are differentiated from the competitors? Also, for payment processing, can you talk about the risk of MasterCard and Visa being disintermediated and being toasted by other -- you know, people that will charge the merchants less, and how that might affect you?

Sure. I'll do the second one first. The issue with Visa and MasterCard is interesting. Visa and MasterCard stock -- I haven't looked at it in the last quarter or so, but for the last many, many years, it's done very, very well. And they've got a great franchise and great valuation. Effectively, our payments business, as we sit here today, is very much of a reseller of Visa and MasterCard. There's a Federal Reserve report out there talking about the security of payments business, and it really sort of emphasizes that the Fed is interested in promoting ACHing. I think that we, although we haven't started yet, we've developed a relationship with a company called SEQR. SEQR is owned by a Swedish company called Seamless that has a very interesting, mobile-based payment solution which is more secure than a Visa/MasterCard, because it doesn't have a Visa/MasterCard number; and it's basically ACH's money from a consumer's account into a business account at about half the cost of debit. So I think what you are going to see is more electronic money moving in lieu of debit. Debit is a big part of, currently, the Visa/MasterCard system. So we can talk about that off-line. It's a fairly lengthy conversation, but mobile payments is here to stay. People are going to be using phones. They are going to pay that way. And there is going to -- need to be more secure solutions, because the amount of breaches that we are having with credit cards just doesn't really work. Looking at our businesses, the payments business and people buying things -- it's moving more and more to online. So I would challenge anyone to find a company that is in the hosting business, can design a site, has the payments gateway to the processor. It doesn't exist. We need to do a better job going forward of bundling these services to customers, making that offering, letting people know we are the place to go to get this business done. The payments business is becoming more and more of a technological solution. Putting that aside, our payments business exists in Wisconsin. It's got its own separate management team. It's got its own -- these are two separate, different entities, but we think we've got significant competitive advantages. Most importantly, the way in which we acquire a client using financial technology, NewTracker, which you can read about, you can call me about. It's like a salesforce.com for a business referral process. So we are not using independent agents to acquire businesses. We are not using, typically, feet-on-the-street salesmen. We are using technology. So what makes Newtek different is the ability to acquire customers cost-effectively on a direct basis, and to process the business remotely, and really to be a solutions provider and not just a seller of a product. That's really where we sit sort of in the eco-chain in marketing these different businesses.

Okay. And the cloud business -- how are you differentiated there? Cloud computing?

Well, the cost, basically -- you know, my payments business historically -- if you take a couple of one-timers out there, it's -- call it $8 million or $9 million of pretax or EBITDA. And then you go look at something like a Heartland, that's $90 million or $100 million. It's double the valuation, right? So I am a believer that just by getting bigger and getting bigger economies, you are going to have multiple expansion in addition to cost reduction and movement to the bottom line. In addition to -- you know, when you do these acquisitions, you pick up better technology; you can pick up better talent. You don't pay for them. You pick up distribution. So we've been in these businesses 10 years. We know them. We have good management teams. We know how to operate them. Getting larger -- and, by the way, so if you are buying these with an EBITDA multiple that's accretive to the basic margin-clearing dividend, right? So nobody is going to complain about that. And then you get margin expansion. So look, I am indicating that we've got a decent chance, right? Because you are trying to figure out whether or not you can invest in this Company and this management team. I think we've got a decent chance at not only of doing things that accretive to the dividend, but also accretive to valuation. That's what we are attempting to do.

Okay. And just on two other notes -- just in the protocol environment, is there a limit to what the government will guarantee for SBA bonds?

The SBA program has been around for 61 years. It typically is a zero-budget item, meaning that the premium that the SBA gets for losses has been offset by the losses that it has incurred. Depending upon the given year or some years, there are no caps. Some year there is budget. We have not had a budgetary issue in six years.

And who is the largest SBA lender in the United States?

Who is the largest? I believe it's either Wells Fargo or JPMorgan Chase. They are, like, $900 million, give or take. Given the size of those entities, this business could never move the needle.

Okay. And Barry, finally, just in marketing, do you have any strategic alliances? Or maybe you can talk about how you go to marketing, and whether you could do any strategic alliances that will have marketing or loan originations accelerate?

Most of our business comes in through strategic alliances with entities like Morgan Stanley, Credit Union National Association, The Hartford, New York Community Bank. We have a lot of them. We need to do a better job penetrating them, and we'll get better growth out of the existing business model as well as bringing on new relationships. So we are constantly looking to grow the relationship base. We are also looking at to do a better job penetrating existing relationships. We are getting better cooperation from alliance partners.

Okay. Thanks for your comments.

Thank you. We show no other questions in queue. I'll turn it back to management for closing remarks.

Well, I want to thank everybody. That was a terrific call. I really appreciate the participation. Obviously, we have a lot of new investors in the Company, in the stock, both institutionally and in retail that participated today. It's an exciting time. I guess to reiterate: we finished this call with the last GAAP number being our NAV at $16.31, Jenny? With an expected dividend this year subject to Board approval -- I've been told many times to keep saying that -- so subject to Board approval, of $1.81. Not a lot of leverage on this business. Good cash in the bank to be able to execute on our business strategy and a management team that cares and is incented. So we have appreciated your participation and certainly welcome the new investors as well as the old ones. Thank you very much.

Ladies and gentlemen, thanks for participating in today's program. This concludes the program. You may all disconnect.