Your call is scheduled to begin shortly. Thank you for standing by. We do appreciate your patience. Good day. Thank you for standing by and welcome to the Newtek Business Services Corporation Q2 2021 Earnings Conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. I would now like to hand the conference over to your speaker today, Barry Sloane. Thank you. Please go ahead.

Thank you very much, operator and welcome everybody to the Newtek Business Services Corp. Second Quarter Financial Results Conference Call. I would also like to announce and welcome Nick Leger, our EVP and Chief Accounting Officer who will share the presentation with me today. I'd like to point out to all listeners that they can follow the presentation by going to our website, Newtekone N-E-W-T-E-K-O-N-E.com. Go to the Investor Relations section and there actually are two decks as part of the presentation. Deck number 1 will be the Second Quarter 2021 Financial Results Conference Call. Deck number 2 will be the Second Addendum to the Investor Presentation dated August 3rd with the current date of August 10th on it. So we'll be using both of those decks today. We're excited to report our first-half earnings as well as our forward look for the second half of the year. Our Company is doing really, really well. We have a bright future. Company in business is extremely well-positioned. We have also addressed some slides to talk about talent pool that we've recently added. And obviously a lot of people are intently focused on the results that we put out last night through the first half and the second half, as well as the recent announcement of a contract to acquire National Bank of New York City. Before I get into our focus today, which obviously we'll be focusing on the Company's performance, as well as the acquisition, I do want to point out that there clearly has been more activity and questions coming into the Company relative to the acquisition. Broadly speaking, because we'll get into this a little bit deeper, we've got the same business, Newtek was the same business a month ago, it will be the same business a month…

Yes, sir.

Okay. Nick, scroll that trap and he's not even back yet. Okay.

Okay.

Operator, any chance you could -- you could try to give him a call?

Hey, Barry. I just thought we could --

Nick is back online.

Okay. Right, Nick. You're up.

Thank you, Barry. Good morning, everyone. You can find a summary of our second quarter 2021 results on Slide 39, as well as a reconciliation of our adjusted net investment income or adjusted NII on Slide number 41 and 42. For second-quarter 2021, we had a net investment income of $15.5 million or $0.69 per share as compared to a net investment income of $29.7 million or a $1.42 per share in the second quarter of 2020. Please note that income related to the PPP is included in investment income. Adjusted NII, which is defined on Slide 40, was $27 million or a $1.20 per share in the Second Quarter of 2021, as compared to 28.5 million or a $1.37 per share for the Second Quarter of 2020. Focusing on Second Quarter 2021 highlights, we recognized 36.6 million in total investment income, a 21.6% decrease over the Second Quarter of 2020 total investment income of $46.7 million. Interest income related to the fees from the PPP was the primary driver for the decrease. We recognize 25.5 million of income related to the origination of PPP loans on 297.6 million PPP loan originations, during the second quarter of 2021 as compared to 34.7 million of income-related in the second quarter of 2020 on 1.1 billion of PPP loan origination. Moving on, the distributions from portfolio companies for the second quarter of 2021, as compared to 2.3 million in the second quarter of 2020. Total expenses increased by $4.1 million quarter-over-quarter, or 24.2%, mainly driven by an increase in SBA 7(a) loan referrals fees due to the higher loan origination volume, also compensation-related costs and other loan administrative expenses. Realized gains recognized from the sale of the guaranteed portions of SBA loans sold during the second quarter totaled 14.1 million as compared to $1.7 million during the same quarter in 2020. In the second quarter of 2021, NSBF sold a 142 loans for $87.4 million at an average premium of 14% as compared to 20 loans sold during the second quarter of 2020 for $19.1 million at an average premium of 7%. The increase in realized gain was attributed to higher SBA. 7(a) loan origination volume in the Second Quarter of 2021, combined with higher average premium prices when comparing to the Second Quarter of 2020. As I mentioned earlier, income related to the PPP is included in investment income, not in realized gains. Realized losses on SBA non-affiliate investments for the Second Quarter of 2021 was $2.7 million, as compared to $2.9 million in the Second Quarter of 2020. Overall, our operating results for the Second Quarter of 2021, resulting in a net increase in net assets of $17.4 million or $0.77 per share, and we ended the Quarter with NAV per share of $16.38. I'd like to turn the call back over to Barry.

Thank you, Nick. Operator, we'll take questions now.

. We will pause for just a moment to compile the Q&A roster. And your first question comes from the line of Mickey Schleien from Ladenburg.

Yes. Good morning, Barry. I hope you're well. Barry, a high-level question about the conversion to a Bank Holding Company. My understanding as part of the rationale for that is to lower your cost of capital by collecting deposits. So could you describe to us how new Newtek will compete for those deposits? For example, do you see yourself competing with online banks who tend to pay more for those deposits than brick-and-mortar banks?

Sure. I think that first of all, Mickey, there is such a, I'll call it delta between currently financing growth with $1 of equity through a share issuance, and 1.3 million of debt, where our baby bonds are 5% or 6%, to being able to raise money at core retail deposits, whether they're at 1% or 1.5%, or even 2%, because it's debt, and using the capital base and the leverage. How do we go after that? We've got 100, 000 referrals a quarter, that's 400, 000 a year. When you look at that NewtekOne Dashboard, which is a aggregating tool for a business. It's the single sign-on, deposits, loans, payroll, Google Analytics, Visa, MasterCard, this day this year, this day last year, this quarter, this year. I mean, we're going to have the tools that others are imagining. Finally, all this stuff is in place. It's just a function easy for me to say, my development guys are probably going to shoot me for this, they just have to put it together, make it work, and present it. So with that said, that's currently being worked on. It's not a fantasy, it's not a dream, and these are tools that we currently use today. We talked about unlocking shareholder value. This is going to unlock shareholder value that you can't see in a BDC. Most BDC investors don't see us as an operating business.

I understand Barry. So if I -- I want to make sure I have your thesis correct. Are you going to go after the small business borrowers that are your target market in terms of their cash management or are you also going to go after the owners of these businesses in terms of their personal cash as well?

So it's a good question, Mickey. We're not intending. And it's a great question actually. We're not intending to be a, well, call it a consumer bank. However, a majority of the deposit money in this country is from business owners of banks that have their commercial account and maybe a personal account in the bank. So well, we might do in accommodation around here or there but we want the business banking relationship, we want to provide those business solutions. We're not going to be in the securities business at all, that's not what we do. We're going to stick to the core things that we do today, lending, payments, insurance, payroll health and benefits, HR solutions, things of that nature. So from that perspective, not that much of a change.

That's helpful. If we think about all those borrowers that are already existing customers of Newtek, you've underwritten their loans, you have a sense of -- well, no, more than a sense, you know their balance sheets, any scope of how much cash is on all those balance sheets that you might be able to capture, at least partially their deposits?

I can't speculate a number, but it's unfathomable. I mean, I want to be careful not to step on our alliance partners and we won't do that, but I'll get 25,000 PPP loans. I've got 100,000 referrals a quarter. I mean, it's just big, big numbers. And we also have a lot of borrowers today, they're coming to us directly. I mean, we've developed a quite -- quite a significant viral marketing plan because of what we're doing. The concept of, at least in today's world, getting $300, $400, $500 million of deposits. That's currently within my imagination that shouldn't be a big deal over a fairly short period of time.

Okay. That's helpful. I understand. I'm wondering, just switch gears a little bit toward the 7(a) market. As we know, the federal government temporarily suspended the 55 basis points guarantee fee and increased the guarantee to 90%. If I'm not mistaken, that expires next month. That's helped drive up the secondary market prices. So I realize that the question I'm going to ask is difficult to answer, but when you think about your -- given your experience, when we think about the 70 market next year with the economy doing well, but without those two catalysts, along with the potential for interest rates to climb, how do you see 7(a) pricing developing next year and how do you see 7(a) volumes next year versus this year, which is going to be a phenomenal growth year for the economy?

Sure. I'll give you a fairly wide range Mickey, which hopefully, it probably won't help you that much, but if you go back and you look at the history, it's a 110.5 to 112 type market, and it depends upon whether you're doing the 10-year paper or the 25-year paper in the mix, plus from our standpoint, we look to enjoy the benefit of expanding our loan products. Those referrals, they don't come to us for 7(a) loans, they come to us for loans, and many of those clients would qualify for bank loans. With lower cost of deposits, you can put that business on and make good money off of it. I think it's important to note, we're still going to focus on obviously, the attractive business that we've been in in 7(a) and 504 and non-conforming, but great growth opportunity for us, and I think the market next year -- I mean one thing that I don't think we need to be afraid of -- well, who knows? I'm not an economist, but people are talking on CNBC this morning about 5% GDP, 9%, big numbers, and you put all this government spending and stimulus out there. Then you got the question of rates rising, which by the way, that's good for banks. That's one reason why you want to buy the out-of-favor bank, because the out-of-favor bank didn't really look good when rates were flat, nobody wanted to buy banks, and people say banks are highly regulated. I would like to point out that the OCC put our and just last week on SBA and small business lending, which we read that they want banks to do this profitably and have the right risk measures in it but it also indicates that they want financial institutions to provide funds to this important segment of the market.

Thanks for that Barry. That's helpful. My last question just sort of looking at next year versus 2019, which as you pointed out in your prepared remarks, was sort of the base here we can think about. How would you compare the time and resources it takes to underwrite a PPP loan versus your non-PPP loans, the ones you've done historically? And how much unit volume do you think the Company can now support with its current headcount, but more employees working remotely compared to 2019?

So it's a good question because PPP loans to assemble and fund, I would say it's probably 30% to 50% of the labor. Now, the backend, however, which is the credit memo, the committee and the funding, you have got to take liens and do a lot of other stuff. It's not just the amount of labor, it's the fallout rate from a PPP loan, once you have it activated, is not very high, so you'll have a greater fallout rate. But when you talk about how we've improved our capacity to do more business, and that's why I go back to that 2019 adjusted NII to current dates, particularly in this construct that will enable us to grow more, These are all very powerful additives that put us in a position for the future that we want to have the best corporate structure to take advantage of it. So I'm going to tell you that -- I'll put it this way. Let's say that 25,000 units -- or just prop a number. And this is not a number that you should rely upon. But let's say it's equivalent to 5,000 units. I mean, The ability to do significantly more loans has been enhanced. And these loans are bigger sizes as well. The average loan size of non-conforming is 5 million. The average loan size, I think, of a PBP was like 50,000. The average loan size of our 7(a) business is about 800,000. So I'm not suggesting that we're going to do $5 million of 7(a) loans, but you can see that with the advancements that we've made in technology, in management changes, we've grown the business significantly and I believe in the right direction, and are well-positioned for growth in the future.

I appreciate your time, Barry. That's it for me this morning. Thank you for taking my questions.

Thank you, Mickey.

And your next question comes from the line of Paul Johnson from KBW.

Good morning, Barry. Thanks for taking my questions. Congrats on a good Quarter and obviously being an important facilitator of a critical program for the U.S. economy. As you approach, I guess the closing date or the proposed closing date of the merger or the acquisition of the bank, do you expect to make any changes to your capital structure along the way in anticipation of the conversion?

No, I don't. I don't expect to see changes in the capital structure. I do not.

Okay. What about loan originations? Is it pretty much business as usual or do you expect to make any changes to, I don't know, the type of yields that you're putting into the book or the type of loans that you're underwriting any changes to your underwriting practices?

Yeah, obviously we're a little bit more selective relative to credits coming to us that we think are pandemic or COVID problematic. Things like gyms and hair salons for example, which we wouldn't have thought twice about, now we do. So we're a little bit more selective in certain categories and other categories, we like a little bit more, so I think it's still a very big diversification box with respect to ZIP codes, industries, and geographies, but narrower. With respect to the mix, no, I think we give a pretty good guidance on what we think the 7(a) book will look like, the 504 book, the NCL book, no. I think business is -- and I think it's a good question because, once again, I want to repeat this: this is the same business that's going to be dropped into a different structure and we're going to add a few product lines to it, but it's going to be -- we're going to be positioned in a different light. Newtek Bank and Trust and Newtek, the Bank Holding Company will be looked at entirely different by customers than Newtek the BDC, particularly with the dashboard.

Sure, it's understandable. And then switching over to the salary expense for the quarter, it's understandable that that's obviously higher quarter-over-quarter. I know you noted that you had increase headcount by about 25% or so. Do you expect salary expense to be running around these levels up into the acquisition or do you expect them to moderate it all post PPP?

Could you repeat that, Paul, I'm sorry. I'm not sure I gathered that.

Sure. Yeah. I'm just asking about the salary expense. Do you expect to be running higher salary or even just higher overall G&A heading into the acquisition at all.

I think you've already got it embedded. So what you've seen through Q1 and Q2, I think you've got it. I think it's already there.

Okay. And then lastly --

It's important to note Paul, we've been adding to staff for growth, and whatever the structure we wind up in, we've added to the staff, we've added to the staff to do PPP, so no I don't see any major change. Frankly, I could tell you expenses that will get reduced from being in the Bank Holding Company and the bank structure than being in a BDC structure. A lot of these entities are going to wind up going into the banks, you don't need tax returns, you don't need independent SOC1s. We've got this well calculated, so no, we don't see expenses going crazy in here.

Do you think that you would have to make any additional hires for prior to closing for, for the bank?

Maybe one or two, but I think the hiring of Nick Young, also, I mentioned in the Second Addendum deck, some of the in-house talent that we have, that have 20, 30 years experience in the bank environment can fill some of these things in. Obviously, we're very well advised, we're very well-schooled across the board from our advisory team. So we know what we need to do, what we need to put in place. We do what we need to do to position ourselves. And obviously, a lot of that will also come out based upon our discussion with the regulators as we go forward but no, I think we're -- I think we've got good estimates out there of the business and whatever form we wind up in.

That makes sense. Thanks for that. And last -- last in my question, either for you or Nick, if he can answer this, but I realize you chose to retain income down to control income or the total Company level for this quarter. I -- we haven't seen the filings yet you would expect to see that -- be showing up, obviously, in slightly higher marks maybe for the control investments but I see there's roughly like 8 million or so of unrealized depreciation in the affiliate investments this quarter. Is there anything in particular that was driving that depreciation?

Nick, can you answer that one?

Yes. I think that was just when we took a look at some of the run rates on some of the portfolio companies, just making sure that the multiples are in line with the forecast. Nothing out of the view.

Got you. Okay, thanks. That's all for me.

Thank you, Paul.

And your next question comes from the line of Scott Sullivan from Raymond James.

Good morning, and congrats on a good quarter.

Thank you, Scott.

You're breaking some interesting barriers in the fintech space here. You're the only one in theory could be serving the middle market business. Pro forma, how do you compare Newtek versus LendingClub, SoFi, Square or even a Live Oak?

They're kind of interesting comparisons, Scott, in that LendingClub, SoFi were non-bank lenders that wound up merging into or acquiring a bank. Live Oak, I believe started off as a bank with a technology bend to it, so they're all a little bit different. LendingClub and SoFi are consumer lenders, Live Oak is probably the closest thing to us, relative to a fairly significant footprint in government-guaranteed loan programs, as well as only having one branch. Their expense ratios are entirely different than ours, which we're proud of ours versus theirs. So I think that they're all very decent comparisons, particularly when the market looks at them and doesn't value them as multiples of tangible book because they all traded 2, 3, 4 times tangible book, not too dissimilar from how we traded at a multiple to a BDC NAV, and at the end of the day, stocks trade based upon, I mentioned, it's the old adage we learned in school, it's future earnings strength. The reason why banks typically traded as low multiples of book, was because they couldn't really grow the business much, because they did very few things and in a competitive environment, no different from a BDC. So the fact that we were different than every other BDC, is what enabled us to get that back price appreciation as people begun to become more comfortable with us and familiar with the model. So those that got in early when we made that transformation did well. And what we're trying to do here is to educate people in the best way as we can with being transparent and give as much information without going too far ahead of ourselves. But I think those are decent comparisons for us because, in all cases, those are organizations that felt that a banking structure in a banking environment reduces risks and improves their ability to grow and diversifies their funding sources.

Fantastic. Thank you. And I don't want to put words in your mouth, but I believe I heard you say CapEx is not going to be materially higher. Can you speak to any development costs with the dashboard or any other technology enhancements you see before you?

Yeah. Obviously, we have begun discussions and -- I should say we will be beginning discussions, I don't know if they've actually taken place yet, with the core platform provider to begin to integrate what they have into the dashboard. Obviously, the payroll software we've got, the insurance agency software we've got, the vault we've got, the NewTracker system we already have, we have the capability to project all that other data that I talked about, the Visa, MasterCard, so these are all pieces that we have. It's really a function of our internal development team putting that product together, and we've actually got some time to do it before opening day, which we forecasted 6 months to 12 months out. We have some work to do, but we've always been a bootstrap Company and we've been able to develop real good technology without spending crazy dollars on it.

That's terrific. Thank you and congratulations. Good luck.

Thank you, Scott.

And your next question comes from the line of Robert Dodd from Raymond James.

Hi Gary -- Barry. Sorry.

It's all right.

My bad. One of the slides -- I mean, you said in 30 to 40 days you'll give some preliminary guidance for the first quarter '22 dividend and the footnote, obviously, it says presuming you're still a BDC. If things go according to your expected time scale, which I recognize is tricky, would you actually expect to still be a BDC in the first quarter? I mean, you said it could take 6 to 12 months to get approval for the bank purchase. And would you leave the BDC election potentially to --, presuming it's approved, to the very end, or would you anticipate doing that earlier in the cycle?

I think it's -- without getting into the precise timing of what transpires, I do think it's more likely than not. So it's a probability. So I'm thinking, it could go either way, but more likely than not, we'll probably be paying a BDC dividend in the first quarter.

Understood. Thank you for that. On one of the questions, a follow-up to Paul's questions. The BDC baby bonds you have outstanding, to your point, they're quite expensive by a lot, certainly compared to . When would you anticipate potentially refinancing those out, or do you currently expect that you're just going to roll those into the bank liability structure?

So thanks for the question, Robert. By the way, that's a great question from a transparency standpoint. My belief is that the covenants in those bonds are really leverage covenants. So that theoretically, as long as we don't violate that leverage covenant, a consolidated basis, they can remain outstanding. One of the bonds is fully callable, the other one I think is callable after February with some kind of a make-whole provision for a 12-month window. I think that we will wind up working through that with bondholders and we've got a lot of options on that. So that isn't a concern, we probably have, and we've had conversations with several of our bank lenders, so we're going to need to make some adjustments on that here and there. But not a big major -- I'm not overly concerned about the baby bonds, or where we're situated with some of our other lenders at this point in time.

I appreciate that, Barry and the covenants are exactly what I was getting at, so understood on that one. And then just a last one if I can, a follow-up to Mickey 's question.

Please. Your questions are good. They actually help me.

On the -- most business deposits in the U.S., there's a lot of them, but they are not typically in time-locked CDs, etc. Would you anticipate that your deposit targeting sourcing and cost of funds, is that anticipated more to be short-term callable deposits or do you expect CDs to play a material role in that? And if so, where are you gonna get the CD source from? Because I typically not gonna be -- I wouldn't think business deposits aren't typically not .

Sure. I think the answer really, Robert, is a little bit of both. Once again, I go back to the dashboard, the relationship that we have with borrowers, and the ability to offer them more than just a rate. So, no, I see us with having developed both core retail deposits, and in some cases, which you've described, which some of the other fintech lenders have tapped into, like Square for example, I believe the entity they acquired was an industrial loan corp. I can't say for sure, but most ILCs are limited and they can't take demand deposits, so those have got to be retail-related in brokerage, so to speak. I think that we'll have a mix of both, but I don't think we're going to -- I do believe we're going to be able to bring in with our reach, core retail deposits as well as a full mixture of funding.

Got it. Thank you. Thank you.

Thank you, Robert.

And your next question comes from the line of Rob Brock from partners.

Congrats on a great Quarter and congrats on your decision to change your corporate structure. I think it's going to create a lot of value for your investors. My question this morning for you, Barry, has to do with the operating businesses, like your Cloud business and your payroll business, how might these change or benefit as part of a Bank Holding Company?

So I think that all of the portfolio companies are projected to be part of the Bank Holding Company. So merchant's solutions, payroll, insurance, tech solutions will be part of the Bank Holding Company. And obviously, we will be having discussions with the regulators. We feel pretty good at this point that what we have will fit into a Bank Holding Company or Financial Holding Company structure. It's conceivable it may not, we'll have to deal with that if that occurs, but we think that going to your financial institution and being able to have all of your organizational documents, your operating agreement, your secretary certificates, your leases, your insurance policies, employment agreements. All your core documents stored there, which is what we do today in our secure file vaults, we take in loans or we take in data using the file vaults through the other services resolutions that we have, is a great value add for customer. So that's where we see that fitting in. Remote work, remote computing, mobile computing, whether it's through a smartphone or a laptop today, really important. And businesses that are 5 to 50 employees, they can't afford a CTO or a CIO. And those are things really -- they can't go to Azure or AWS. They need somebody that can help them. They will pick up the phone, answer questions. That's what we do in managed tech solutions. And it's been -- it always hasn't been a bed of roses but it's been pretty good lately as you can see by the pick-up. And these businesses, tech businesses typically traded really good multiples and derive cash flow and provide other of recurring income, rather than spread income that you get from a bank on coupon versus deposit expense. We're pretty excited about putting new solutions together, and we think we're going to get a lot of traction. We think that there is good reason to be doing this.

Great, thanks Barry, good luck.

Thank you, Rob.

And your next question comes from the line of Arham Khan, from Arham Khan and Partners.

Hi. Good morning. This is Khan, how you doing?

Good morning, Sir.

How's everything? Just wanted to start with some high-level questions for you. Wanted to ask you about diversification as we move out of COVID, we're still in this area where we're vaccinated, but we're not fully protected, and we're still learning. So I wanted to know if there is opportunity that you're not -- that you are looking at now that you might not have looked at 12 months ago that are starting to become attractive?

Is that from a lending perspective or a business opportunity --

Yes, from a lending perspective.

I would say we are cautious because of the delta variant, and although speculatively I think the delta variant will come and go quickly because of the level of vaccination, it's still all over the news. This morning Southwest, for example, reported that they've got a lot of cancellations on flights , which is indicative of the fact that consumers are being concerned and changing some of their behavioral patterns. I just think that, no, we have not -- we still have a bit of a caution flag for things like travel and entertainment and businesses of that nature. So no, as a lender, if we get a coupon, we win. If the business goes bad, you get a haircut. So it's not -- so we try to be cautious from a lending standpoint.

Okay. And then just follow up on that regarding geographic diversification. Are there any regions that you're looking at? Anything that's shaken up over the last couple of years -- the last year that you are seeing? Maybe there's reasons that you want to diversify into that you don't have a presence in. People are moving --

Yeah.

--or any demographic shifts?

That's a -- by the way diversification has been a great asset to Newtek, as we don't have -- I think we've got 1 state that's 11th, and then everything else is below double-digit. So when you take the top 4 states, Texas, New York, Florida, and California, that probably represents about 65% of GDP, and we're probably half of that when you add up all those states for us. You really didn't want to have too much in New York City or too much in LA, and who would have ever believed we were going to have a pandemic?

No one.

Some of the things we're saying or seeing is like, "Who'd ever believe that would ever happen?" But it did which is why diversification is really good. So no, we're not looking to undiversified, we're now looking to concentrate in Texas or a Florida where there's growth. We like diversification. We think that's the best way to manage a risk.

Okay, got it. And then as follow up on somebody else's question that I'd like you to spend some time on, not particularly because I'm interested into it, but because you just can't avoid it at this point and it's about the LendingClubs and many other of these lending platforms, some of which are nothing more than simply just aggregators, some of them do more, as you see, some of them are acquiring banks. But I think that they all tout different things, some of them have predicted modeling, underwriting, just things like that, but the end of the day, what I believe they're really disrupting, is just enabling some technology that certain banks in the past, a lot of them had not embraced. But you're coming in from a BDC structure, but you're already Newtek where you have technology-enabled infrastructure for your clients. Where do you stand in incorporating that technology? Because they are taking some market share away from certain banking institutions, but what they are doing that to, what I believe is, they're coming down on the spreads between, for example, credit cards versus personal loans or just enabling technology. How do you come in and make sure that doesn't happen?

I mean, one could take the position that a credit card, a consolidation loan from a LendingClub, is a term debit-credit card that gives the borrower a benefit because they've got term, reduces their payment, and they're able to utilize technology to come to the same credit decision as they did in the credit card. That's not Newtek. We do full, any loan over 350,000 government and uninsured piece. We're doing a full underwriting, 20 to 25 page credit review. So we use technology to expedite some of the processes that banks have used. For example, we don't need branches and we don't need 200 or 2,000 commercial bankers because of our utilization of technology. However, people that can put credit memos together, lawyers in-house that know how to gather the documents and close the deal and make sure we get all available liens, closures; we don't -- that's not something that we skimp on. So we think that we've actually got the technological solutions that not only our bank can use, but other banks can use to be able to reduce losses now. When you look at some of these other fintech’s, the credit review from a personal standpoint is really not much more different than a consumer loan. So I guess my point being is, I don't know once that activity gets sort of filled, where they go with it? They are taking advantage of that low-hanging fruit, we are too, or would as well, but we do have much more longer-term vision with respect to utilizing technology to acquire clients, to get 100, 000 referrals, to be able to fill up a FileVault securely so that the borrower can connect their lawyer, their internal controller, their tax return preparer. Those are the things that improve a customer experience, but don't cut on being able to underwrite and put a fully-funded package together. That's a major difference between us and them at this point, and we've used our technology -- we don't have a black box, there's no algorithm. It's basically 5 Cs of credit, which can be converted into some of that, but it's still a full underwriting.

Okay. Got it. That goes to all my questions. Thank you very much. Best of luck to you and congratulations on the recent announcements.

Thank you for your interest, I appreciate it. Operator, anymore?

Yes, sir. Your last question comes from the line of Mickey Schleien from Ladenburg.

Sure.

Barry, just a quick follow-up. Do you think the federal regulators are going to require Newtek to appoint a CFO to meet their regulatory requirements?

Yeah. We will most likely have a CFO at the bank level for sure.

And is that -- do you -- well, do you have candidates inside the organization that you can think can take on that role?

I do. I will say that I think, from our perspective, that the candidate or candidates need to have extensive experience dealing with bank regulation, compliance. I think the forms of the 1313 forms for making sure that all the ratios are intact. We have -- we have a pretty good pool of applicants, internal and external, to the Company at this point in time to be ready if that event does take place.

I understand. That's it. Thank you for the update.

Thank you.

And there are no further questions at this time.

Okay. Well, I want to thank everyone for joining the call. I greatly appreciate the interest. I know this was a long one, but very worthwhile and gave us a good opportunity to disseminate a lot of information under Fair Disclosure to all the investors and analysts out there. So thank you very much. Look forward to reporting the third quarter. Have a good day.

This does conclude today's conference call. Thank you for your participation. You may now disconnect.