Good day, ladies and gentlemen, and welcome to the Newtek Business Services Full Year 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions will follow at that time. 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 and welcome investors to our first call ever as Newtek Business Services Corporation, a new business development corporation that was established on November 12, 2014. Our prior company Newtek Business Services Inc. was merged into Maryland Shell to form Newtek Business Services Corp. and that is how we are beginning our new life as a BDC. What I’d 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 result of operations is intended to assist any understanding and assessment of significant changes in trends related to the results of operations and financial position of the company together with the subsidiaries and maybe forward-looking statements. This discussion and analysis should be read in conjunction with the consolidated financial statements 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 or suggested by the forward-looking statements. Such risks and uncertainties include among others, intensified competition, operating problems and their impacts 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’d 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 2/25/2014 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 BDC, our market capitalization went from $129 million to $200 million from 11/12/2014 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 then 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. Just a 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. If you take a look at our holders, we now got 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 with a…

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 report an adjusted net NII because 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 on loans originated in December and those were held over the end of the year. So although, that affected our net asset value, because it was an unrealized gain, it did not record an 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 probably prefer to report more income in 2015 and 2014. This was a hold over and I think some of these vagaries will shake itself out going forward. But I would like to suggest just to skip Slide 11 and to go to Slide number 12 which continues this important aspect to 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 gain – our loan sale premium income trends obviously continued to go up. 2014 looks a little flat, obviously, December is our biggest – I should say the fourth quarter and December is our pretty biggest month always for loan originations of all the payment processing business. But in the event that we didn’t hold those over and actually under C Corp accounting that would have gone into the gain. But we have 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 could 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’ll get our money back within 10 days. This is re-occurring income from us. We operate the 7(a) business very similar to have a mortgage banker in the residential business, who runs their business. So, this is real important to us and you’ll be seeing this in our performance and capital gains income, Jenny, is good income right?

Correct.

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) is steady and it is re-occurring. Another important aspect of this is the price of the governments. Slide 13 is a good important comparison; we will 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 or 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 try to depict is the maturity in loans. Longer maturity loans typically trade at significantly higher prices than shorter maturity loans. What we have excluded here is loans that are in between the 10 and 25 year. We’ve also excluded size, smaller loans and larger loans. Believe it or not larger loans trade at deeper discounts 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 approved pending closing, that is a very high close rate, $43 million, loans in underwriting, $39 million, pre-call $32 million, open referrals $230 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…

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 technologies 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 mark-to-market each quarter. Clear part of the schedule of investment 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 periods. 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 as a BDC and it’s also not comparable to the prior year balance sheet which included the account 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 at 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 is 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 equal $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, pre-tax 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] Our first question comes from Mickey Schleien with Ladenburg. Your line – I am sorry, the first question comes from Adam Morton with RBC. Your line is open.

Hey, Jennifer, Barry, congrats on the first quarter as a BDC. Good work. Stock has been great and I see the reported NAV at $16.31, stocks trading over that. I would be remised to ask you guys if a capital raise is in the future if you guys might comment 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 will 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 a 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 road show, a whole question of capital raise is being dilutive and we raised capital of $12.50 and I stood in front of people and I said, are you going to raise money again, and I said, yes and they said why, and 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. Well, I think that’s what the market has recognized. So if we could take this capital and employ 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 that I talked about earlier and take the capital and put it into existing operating businesses and create the best technology and efficiency 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 on investors that can’t buy $200 million market cap companies, but can buy quarter of a billion or half a billion and go on from there. So, we’ve been very prudent. We’ve been in business over the course of almost 15 years publicly longer than that privately – we are not crazy. Our major equity has taken the business. So, growing things at an appropriate way and 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.

Our next question comes from Robert Brock with West Family Investments. Your line is open.

Yes, it’s actually Tim 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 at, at this stage and would you consider a strategic acquisition or must all of our acquisition criteria meet that the – that an acquisition would be accretive in its first year?

The first one is going to be real good one. So, not that they hold on 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 nice if we get done that will be a nice buy size and we’ll 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 world wind from the capital raise to getting things in place, 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’ll start to do that in the near future. So, there is not a big pipeline. I don’t think you are going to see a lot of them. Maybe you’ll 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’ll just fit and keep growing organically. We’ll be very opportunistic.

And what about the financially accretive in year one or would be willing to accept dilution in year one?

Explain – if you can explain what you mean by financially treated versus dilution, what do you mean?

Well, with 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 that will have a – two things, number one, the buy things that are greater than – it’s a good question, that will be accretive to market clearing dividends, okay, so that’s number one. And number two, when you buy it, you are buying it at a valuation that’s going to wind up going on your books. Now would you hope to be able to do 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, 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 in 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, just perfecting the way to call into customers without disturbing them in a professional way. So, put it this way, unlike other CEOs 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, bigger companies to get bigger bases and bigger bonuses; my reward is in the stock. So, one of the guiding principles for the Board which has to approve acquisition is, is this accretive to the dividend and is this accretive to NAV.

Thank you. Our next question comes from Mark Silk with Silk Investment Advisors. Your line is open.

Hey Barry, congratulations on your first quarter as a BDC. I got a few questions for you. So given that you have changed to a BDC and an RIC, how does that change, how you charge-off loans?

Thanks, Mark. In the BDC, okay, in the C Corp structure which this actually did have somewhat of a effect in the fourth quarter and the C Corp structure if you had a loan that went to a non-performing 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 the personal guarantee, you may collect on reselling the business, or it’s – Mark, we collect on stuff three, four, five years down the road. I think one of the things we need to do is frankly internally when you 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 realize. 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 not affect income, they do affect NAV. So that’s a bit of a difference and some of the accounting – to look at things differently from November 11 and November 12.

Okay, so that sounds like a net positive for us at this venue. So you mentioned on a BDC and as you know, I’ve been a shareholder since 2006, so I am new to the BDC game. So, as far as comps, so you basically said a lot of NAV – a lot of BDCs trade $1.4 at NAV, so you at $16.31 equals $22.83, so that’s one benchmark. Looking at where your stock close today and your dividend not including the special dividend, say $1.81, $18.27, so you are giving off a 9.9% yield where CDs are giving basically nothing and then if I go very conservative you have a PE less than 10. So kind of, I am new to this, so how can we rank a BDC as far as – 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. I think that’s an important differential and internally managed BDC. I would also tell you, we are not like the other four internally managed BDCs in a sense that, our five business lines the lender, the processing business, the payroll business, the insurance agency and the cloud computing business, overall operating businesses that we operate everyday. 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 changes in value, ticket rate and the credit gets better, maybe it tighten, that’s not where we get value. So I think it was important to take a look at the growth of book to NAV over the five years, look how we’ve 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, - type valuations, Go Daddy type valuations, Endurance type valuations by being bigger, as well as getting better operating leverages 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 you go look at an on debt capital and go look at an Lending Club, they are valued at some goodwill value based upon the infrastructure that they’ve created. We’ve been doing this…

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 saying in the sense of - are people not even going to banks, they are going right to you and how will that play out as interest rates start moving up?

I think it was William Tell said I cannot tell a lie. Banks are coming back. And 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 all of a sudden saying, hey you got to put more loans on the books. So, we are seeing banks come back into the market, the markets 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 inverse bond fund. Putting those 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 in the full, 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 of 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. So it doesn’t like 5%, 10% inflation in prices. I am not saying we are going there by they and I don’t know if anybody on this call believes in the government, PPI or CPI, I don’t, but if you actually look at real inflation out there, our re-occurring revenue stream businesses frankly do well in that type of scenario. So we have a nice balance. When you invest in Newtek, you also have the credit aspect to it, but unlike most BDCs which are very heavily weighted in credit, we’ve also got this re-occurring revenue stream from 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?

That’s a tough question. Well, I think the area that will surprise most is we do in the acquisition space. We are now one 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 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 was everyone is in love with small business lending and I am too. But that’ll come a point in time when that’s just less attractive it will have the other businesses that, 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 at a cloud that they have no idea where it is. So, yes, I think the big surprise will be that, three, four, five years from now we’d be having conversations about the business services unit, really being equally important to the lending business.

Okay and my last comment, Barry, is, as you looked 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 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.

Yes.

Our next question comes from Mickey Schleien with Ladenburg. Your line is open.

Good afternoon, Barry. How are you?

Good, Mickey. How are you? You are better in Florida, so that’s…

So, Barry a big - 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 ten years ago, given that they are relatively small and these are floating rate loans?

It’s a great question, Mickey. I think that the key issue with respect to – the behavior is, number one the magnitude of the rise and I hate to say it, but it’s been such a long time since rates rise like – have risen, I’ve got to test my memory a little bit, but, we’ve really haven’t had major sharp spikes. I’d have to go back and think about probably it was, I think 2006, 2007 rates, spiked a couple of points. Listen, I think, the good businesses are able to survive that. I mean, 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 in lending is we want to lend the businesses that are not to point of liquidity. So what does that mean? We want businesses that have got hard assets, that have got other liquid assets. So, I mean, one of the things that’s really important when you are lending is, you got to make sure that business has got some dry powder. So, yes, our business is to get stress 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. And, 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 five or four loan program. We’ll be doing larger loans 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 of 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, where we are just not seeing the banks compete other than, maybe a small revolver collateralized by receivables or inventory. In your world, is it 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? Is that - am I understanding that correctly?

It’s a good understanding. If you surveyed 2000 or 3000 banks, and said how many of you like cash flow loans with no hard collateral, you 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 doesn’t, that’s not always happening, that’s not I guess snap in the fingers, but that borrower can go today to a community bank and probably get a fixed rate loan. Now, they won’t get a long-end schedule that probably have a loan that’s due in three years or five years. Okay, our loans with the same collateral with 25 year. 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 specifically 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 can attest to that. All lot of advantages to the SBA loan, I don’t want to exaggerate that this is like a lay down refy. We have never seen that, even with the rates rising or collateral values increasing.

I understand. 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 non-recurring 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 was it - or something else, just broadly speaking?

It was driven by cash raise and some very minor re-evaluations in portfolio companies.

Okay. Thanks for your time this afternoon.

Thank you, Mickey.

Our next question comes from Michael Kitlinski with UBS. Your line is open.

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

Thank you. Our next question comes from Hannah Kim with JMP Securities. Your line is open.

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?

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?

I am not sure how you draw the conclusion. I think what you might be looking at is, the issue of gain on sale. And somewhere around, I don’t what you are getting…

Sure, so the origination volume I think on the last call, you’ve 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 30 – of roughly $30 million. So this implies that November had a origination volume that was only about $10 million. So, I was just trying to maybe get - trying to understand why November origination volume is much lighter compared to October and December?

Hannah, I am inviting you to my management meetings once a week, when I speak to Peter Downs and Bob Rabucks, because I ask them the same questions. I will tell you that, it’s somewhat random. I mean, I could tell – these are closings. So, I mean, I could say that it’s a Thanksgiving factor, 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 as a mad rush to close loans in December, that’s…

So that's seasonal.

There is clearly, Hannah, by the way, I am going to bring in this up because I know I am not answering your question. We clearly are a seasonal business. Most loans close – we have a much bigger closing ratio in December and in the fourth quarter, but particularly 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 shouldn’t – there really shouldn’t be a rational reason why November was light, it just was.

Okay, great. Thank you.

Thank you very much.

Our next question comes from Ralph Toburg [Ph] a private investor. Please go ahead.

Hi my question has to do with – I have really two questions. The first one is, I don’t quite understand why the price of stock dropped $1.5 when the dividend is like $0.39. The second question is, there is a special dividend coming about in 2015 and I am 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 it might have a situation where there – my understanding of the BDC market is there are lot of people that buy stock, leading up to a dividend and today we are ex-dividend. So you just could have had – and 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 in internal and external tax people will do their work to calculate what the tax position of the company was and that’s obviously not an easy thing to do. It’s not just, Jenny, correct me if I am wrong, in such as tax for 2014, we 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 – it’s 14 years of tax work. So, we will come up with a number. The Board will make a decision as to what makes most sense for stock holders in terms of when to declare it, when to distribute it, it must be distributed in calendar year 2015. So, that’s now we have sense and buds that’s to maintain our RIC status I believe, so.

Okay, I appreciate that. Thank you very much.

Thank you Ralph

And I look forward to the growth of your company. I am very excited about it.

I appreciate the call. Thank you.

Thank you. Good bye.

Thank you. Our next question comes from Gregg Hillman with First Wilshire Securities. Your line is open.

Yes, hi, good afternoon. Barry, can you first talk about to your businesses, cloud computing and payment processing and particularly how they are differentiated from the competitors? And also, for payment processing, can you talk about the risk of MasterCard and Visa being dis-intermediated and being toasted by other, 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 and I haven’t looked it in the last quarter or so, but, for the last many, many years, it’s done very, very well and they’ve got great franchise and great valuation and effectively our payments business. As we sit here today, it’s very much of a reseller of Visa and MasterCard. There is a Federal Reserve report out there talking about security in the 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 developed a relationship with the 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 the Visa and MasterCard, customers on our Visa, MasterCard number and it basically ACHes money from a consumer’s account to a business account by 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 offline. It’s a fairly lengthy conversation, but, mobile payments as you say, people are going to be using phones, they are going to pay that way and there is going to be a 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, it has the payments gateway and the processor doesn’t exist. We need to do a better job going forward of bundling these services to customers, making that offering and letting people know we are in place to go to get this business done. And the payments business is becoming more and more of technological solution put that aside, our payments business exists in Wisconsin. It’s got a sound 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 a financial technology, new tracker, which you can read about, you can call me about, it’s like the salesforce.com for a business referral process. So we are not using independent agents to acquire businesses. We are not using typical feet on the street sales and 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 and marketing these different businesses.

Okay and the cloud business, how are you differentiated there, cloud computing?

Well, I mean, the comps basically, my payments business, historically, if you take a couple of one-timers out there, $8 million or $9 million of pre-tax 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 – when you do these acquisitions, you pick up better technology, you pick up better talent, pay for them, you pick up distribution. So, we’ve been in these businesses ten 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 multiples, it’s accretive to the basic market clearing dividend. Right, so nobody is going to complaint about that. And then you get margin expansion. So, 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, in this management team, I think we’ve got a decent chance and not only doing things that are accretive to the dividend, but also accretive to valuation. And that’s what we are attempting to do.

Okay, and okay, on 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 is there for 61 years. It typically is zero budget item, meaning that the premium that the SBA gets for losses has been offset by the losses that it’s incurred. Depending upon the given year or some years there are no cap 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 J.P. Morgan Chase and they are like $900 million give or take and given the size of those entities, this business could never move the needle.

Okay, okay and then 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?

Yes, 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 new relationship base. We are also looking to do a better job penetrating existing relationships with getting better co-operations from alliance partners

Okay. Thanks for your comments.

Thank you

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 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 have 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 the management team that cares and it’s an incentive. So, we’ve 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.