Risk Factors Update Summary

• The company participated in the PPP, funding 10,570 loans totaling $1.19 billion during the PPP duration.
• Increased use of mobile and cloud technologies heightens operational risks due to remote work.
• Risks related to operation as a financial holding company were significantly expanded, including loss of pass-through tax treatment reducing net assets and income available for dividends.
• The Federal Reserve raised interest rates in 2022 and 2023, impacting future monetary policy uncertainty.
• SEC rules now require disclosure of material cybersecurity incidents within four business days.
• The company is now subject to stringent capital and liquidity regulations, impacting the ability to process clients effectively.
• Increased competition in the lending market may lead to lower loan origination fees and reduced profitability.
• Changes in government-guaranteed loan programs could negatively affect loan origination volume and profitability.
• The company issued various Notes, including $115.0 million in 2026 Notes and $40.0 million in 2028 Notes.
• Failure to comply with SBA regulations could transfer liability on SBA guaranty to NSBF or Newtek Bank.
• Risks related to the economy were detailed, including the impact of global economic conditions, inflation, and terrorist attacks on business operations.
• Climate change poses physical and financial risks, affecting energy use and financial conditions.
• Changes to the SBA Section 7(a) Program may negatively impact SBA 7(a) loan origination volume.
• The CEO beneficially owns approximately 5.3% of the company's common stock as of December 31, 2023.
• Dependence on the Federal Government to maintain the SBA 7(a) Program poses a significant risk.
• The company may redeem outstanding Notes, impacting holders' ability to reinvest at higher rates.
• Loss of PLP status could adversely impact marketing efforts and loan origination volume.
• The company agreed to terminate NTS activities within two years of becoming a financial holding company.
• The company's ability to issue additional equity securities may dilute per share book value.
• The company faces risks related to cybersecurity breaches and cyberattacks, impacting operations.