Profile: Newtek Business Services Inc (NEWT.OQ)
Newtek Business Services, Inc. (Newtek) is a holding company. The Company provides financial and business services to the small- and medium-sized business market. The Company’s operates in six segments: Electronic Payment Processing, Managed Technology Solutions, Small Business Finance, All Other, Corporate Activities and Capcos. During the year ended December 31, 2011, the Company derived revenue through the sale of a business service or product to over 100,000 business accounts.
Electronic Payment Processing
Newtek Merchant Solutions (NMS) markets credit and debit card processing services, check approval services and ancillary processing equipment and software to merchants who accept credit cards, debit cards, checks and other non-cash forms of payment. The Company's primary focus is on developing merchant sales leads as a result of internal sales efforts and the Company's direct marketing under The Small Business Authority brand. NMS has targeted the marketing of its array of services under agreements with alliance partners, which are principally financial institutions, including banks, credit unions and other related businesses that are able to refer potential customers to NMS through Newtek's NewTracker referral system.
The Company maintains two main customer service and sales support offices in Milwaukee, Wisconsin and Brownsville, Texas. The Company is registered with Visa and MasterCard through the sponsorship of two banks that are members of the card associations. The Company's electronic payment processing businesses rely on the Company's ability to obtain data processing services. There are two aspects to the processing: the initial authorization of a payment (referred to as the front-end processing) and the merchant credit and cardholder charge transaction (the back end processing). During 2011, the Company made an investment in Secure Gateway Services, LLC, which has the software and experience to provide a processing gateway facility for its payment processing business, and should lead to reduced processing costs.
Managed Technology Solutions
Through Newtek's subsidiary, CrystalTech Web Hosting, Inc. doing business as (d/b/a) Newtek Technology Services (NTS), the Company provides Website hosting, dedicated server hosting, cloud hosting, Web design and development, Internet marketing, e-commerce, data storage and backup, and other related services to more than 144,000 customer accounts in over 115 countries. NTS provides a suite of outsourced information technology (IT) infrastructure services, including shared server hosting, dedicated server hosting, and cloud server (virtual) instances under the Newtek Technology Services, Newtek Web Services, Newtek Web Hosting, and CrystalTech brands, for which it receives recurring monthly fees, as well as other fees, such as set-up fees, consulting fees, domain name registration, among others. 90% of all fees are paid in advance by credit card.
NTS delivers services not just to customers seeking hosting, but also to wholesalers, resellers, and Web developers by offering a range of tools for them to build, resell, and deliver their Web content. NTS primarily uses the Microsoft Windows 2008 R2 platform to power its technology. NTS also offers Linux-based Web hosting services. NTS has also launched a hosting service to meet financial institution needs for dedicated servers, hosting and/or data storage.
Small Business Finance
The Company originates small business administration (SBA) loans and offers accounts receivable financing and other lending products essential for small- and medium-sized businesses. In addition, the Company provides small business loan servicing and consulting to the Federal Deposit Insurance Corporation (FDIC). Newtek Small Business Finance, Inc. (NSBF) specializes in originating, servicing and selling small business loans guaranteed by the SBA for the purpose of acquiring commercial real estate, machinery, equipment and inventory and to refinance debt and fund franchises, working capital and business acquisitions. The Company also offers accounts receivable financing and management services through CDS Business Services, Inc. d/b/a Newtek Business Credit (NBC). In addition, NBC offers back office receivables services for small businesses, such as billing and cash collections. In addition, the Company offers merchant cash advance services to Newtek's small business customers, under which merchants obtain cash by selling future credit card receivables at a discount. The Company offers these services as an agent for third party providers and is not taking on credit risk in connection with these services.
All Other: Insurance and Payroll Processing Services
The Company offers small business insurance products and services through Newtek Insurance Agency, LLC (NIA).The Company serves as a retail and wholesale agency specializing in the sale of personal, commercial and health/benefits lines insurance products to customers of all its affiliated companies, as well as Newtek's alliance partners. The Company offers insurance products from multiple insurance carriers providing a wide range of choice for its customers. The Company has formed an alliance with Chartis, Inc. (Chartis) to provide agent services to small business clients. Based in New York, Newtek Payroll Services has built up Newtek's business to approximately 72 customers in 25 states with total payroll under management of approximately 700 employees. These payroll services are being marketed through all of the Company's available channels including the alliance partnerships and its direct marketing campaigns.
Corporate implements business strategy, directs marketing, provides technology oversight and guidance, coordinates and integrates activities of the segments, contracts with alliance partners, acquires customer opportunities and owns Newtek's NewTracker referral system .This segment includes revenue and expenses not allocated to other segments, including interest income, Capco management fee income and corporate operations expenses.
The Company competes with Heartland Payment Systems, First National Bank of Omaha and Paymentech, L.P. The Company's Web hosting segment competes with 1&1, Hosting.com, Discount ASP, Maxum ASP, GoDaddy, Yahoo!, BlueHost, iPowerWeb, Microsoft Live and Intuit.
Newtek Business Services Inc
SECOND FLOOR, 212 WEST 35TH STRE
NEW YORK NY 10001