Barry Sloane - President and CEO Jenny Eddelson - CAO

Matthew Paul - Sidoti & Company Harold Elish - UBS Peter Lee - Plough Penny Partners Frank DiLorenzo - Singular Research Igor Novgorodtsev - Lares Capital LLC

Good day, ladies and gentlemen, and welcome to the Newtek Business Services Second Quarter 2013 earnings call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference is being recorded. I will now turn the call over to your host, Barry Sloane, CEO and Chairman. Please go ahead.

Thank you very much operator and welcome to our second quarter 2013 financial results conference call. Joining me on the call today and I am Barry Sloane, President and CEO of Newtek Business Services, stock symbol NEWT, is Jenny Eddelson, our Chief Accounting Officer. And I’d like to ask Jenny to help read the safe harbor statement.

The statements in this slide presentation including statements regarding anticipated future financial performance, Newtek's beliefs, expectorations, intentions or strategies for the future maybe forward-looking statements under the Private Securities Litigation Reform Act of 1995. 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 things, 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 to the PowerPoint presentation, which can be found on our website at thesba.com in the Investor Relations section, and obviously the audio version of this call to be archived on this site as well as long as the PowerPoint presentation but you can follow along with us by turning to page three of that presentation. Looking at the Q2 2013 financial highlights, we’re happy to report that 2013 diluted earnings per share increased by 66% to $0.05 for the quarter. We do anticipate achieving at least 20% growth in diluted EPS for the full year of 2013. We’re real happy with where our financial results came in. We believe it’s a function of being in the three right key markets; one, Small Business Lending; two, Electronic Payment Processing; and three, offering Managed Technology Solutions for small and medium size businesses, all across United States. In addition, we obviously have a quality management team, and these are all significant growth segments in the market today. In the Small Business Finance segment, our results were driven by the fact that we funded approximately 43 million loans in the second quarter, a 103.7% increase over Q2 2012, and the company is on track to fund approximately $175 million of SBA 7(a) loans in the full year of 2013. In the Electronic Payment Processing segment, our pretax income increased by nearly 30%, and revenues were increased by 10% for the quarter back to double digits that we’re real happy with. We expect to process about $4.5 billion of annualized electronic payment processing transactions on run rate by the end of this year. In our Managed Technology Solutions segment, Q2 2013 revenue increased by approximately 1% to 4.6 million, now as a sequential increase in both revenue and pretax income over Q1 2013. As you’ll see in the presentation our Managed Technology Solutions segment has been a little bit behind the curve. We believe we’re extremely well positioned to take care of major trends in the market with a shift towards Linux and Open Architecture type software where we offer managed technology solutions for customers, both in hardware, software and hosting solutions, as well as cloud computing solutions. our overall revenue for the quarter; operating revenues on a consolidated basis increased by 14.5% to 37 million in Q2 2013. Looking at some of the operational highlight that drove the financial revenues, we’re very well positioned going forward. As of June 30, 2013, the total pipeline of loan opportunities increased by approximately 102% to $309 million year-over-year. On a run rate, we expect to receive between $4.5 billion to $5 billion of gross referrals in the lending business alone for 2013, that’s an increase of approximately two plus times the amount of referrals received in 2012. We announced within the quarter that we received their extension on our warehouse lines of credit from Capital One bank. Those warehouse lines allow us to make SBA loans and sell up the government guarantee pieces and then hold enough to do securitizations on the uninsured pieces and then receive our cash back. We also added approximately $55 million of external servicing, and we’re doing that servicing on small business commercial loans for Valley National Bank. In the Electronic Payment Processing segment, we’re looking forward to a significant increase in revenue in the second half of the year, part of that is seasonal. But we also think that our ISO program, headed by Randy Sagar, William Berry and Mike Valerio at Louisville should start to bring in a lot more ISO contracts and units coming in underneath those independent selling organizations. We also recently announced that we made a terrific hire of Tom Harkins as Chief Credit and Risk Officer for the Electronic Payment Processing division, Tom joins Eric Terrell in that particular unit and we are excited about Tom joining us. He has over 20 years of experience in the risk area and a significant amount of experience with MasterCard in the risk area working for them. So, this is a great hire, we are really happy to have him and he is going to do a great job adding to the team. In the managed technology solutions business, we talked about in the last several calls that we have had our repositioning strategy where the company had predominantly focused on Microsoft Windows only type solutions. We have with the change in management brought on by C. J. Brunet (ph) who will join at our Phoenix operations approximately a year and half ago began to reposition the company both in marketing product and most importantly back-end customer service to be able to really service the emerging market both in architecture type software products. With that, our average cloud compared with Q2 2013 versus Q2 2012 increased revenue per user by 26%, our cloud service account increased by 31% approximately 28,000 accounts and the average number of cloud instances increased by about 8%. Switching to slide number five, you can see graphical presentation of the growth that we are experiencing. On a consolidated basis revenues increased by 14.5%, pre-tax net income up by 48% from 1.9 million and 2.9 million, net income by 48.2% from 1.2 million to 1.8 million and modified EBITDA 39% increase quarter over quarter from 3.7 million to 5.2 million. On the earnings front for the quarter, we reported $0.05 of share versus $0.03 last year during the quarter, 66 and two-thirds percent increase, and if you take a look at the first six months of the year, we are currently $0.04 from the first, $0.05 from the second, that’s $0.09 that’s on target to bring $0.18 in diluted EPS for 2013 which will give us a 20% growth rate. Looking at our balance sheet, we are in very good shape; there you could on slide number seven, the growth of the equity component from the end of the year 2012 of 68.9 million to total equity of 72.4 million. Cash balances are fairly stable, nice increase in equity, reduced once again the asset liability side of our legacy capital business credits and notes payables on those cash which balance each other off declined by 3.4 million. Away from collateralized debt which is loans, they are sitting in a securitization unit or loan sitting in a Capital One Bank line; we have $10 million of debt that the Summit partners Boston up in Boston and a $1 million approximately to Capital One Bank. So, we really have very little debt away from the cloud or like I said in the lending business, we think our business has very little financial leverage. From an interest rate risk prospective, our loans are floating rate over prime, our liability to fund that at floating rate over prime. Looking at our operating segment performance, on a segmented basis, slow business lending revenue up 40.5%, 8.4 million pretax income increased by 37.3% to 2 million, the payment processing business revenue, close to a 10% increase of 9.7% 23.4 million, pre-tax income of 28.4% to 2.5 million. Managed technology solutions we are happy to say revenue increased last quarter that was down 10% year over year on a quarterly basis and pretax income declined by 6.5% to a million but the decline in the first quarter was significantly greater I believe was down by 20% to 25%. So we are starting to reverse that trend in the managed technology solutions business and we are happy about that. We think the cloud computing solutions and outsourced managed technology solutions will be a big business and big opportunity for us and for small business all over the United States that are looking to move, their hardware and software solutions and to a military strength proof facility to get the server out of the closet, to get the tower out from underneath their desk, to improve their security and to reduce their cost at the same time. So we are really happy with that particular business and we are excited about its future prospects. In the small business finance unit drilling down a little bit deeper, we saw that revenue increased by 40.5% for the quarter, we funded a healthy $43 million of loans in Q2, we talked about the extension on the warehouse lines with Capital One Bank and we are pretty excited about the opportunities in small business lending particularly our 7(a) program. On the next page you could see an example of what we do when we make a 7(a) loan and I think the important aspect of what we do in this particular business, we make loans 75% of it is full faith and credit U.S. government guarantee, 25% is uninsured but not subordinated. We typically sell the government guarantee piece off and receive a net premium (inaudible) of about 12.5%. We are then able to securitize the uninsured pieces and in the last transaction we did in the first quarter of this year, we've got a 71% advanced rate on the uninsured piece. So we take the premium on three quarters of the loan and you get an advanced rate of 71% term financing on the uninsured fees to create approximately 11.2% in pre-tax cash. This is obviously different than most lenders that put equity up but lever themselves and then equity stays on the line and they put coupons on a differential. In our example, we booked a percentage of the cash gain upfront, we take a percentage of the cash gain and loaded into a discount on the loans that we keep on the books and the securitization; loans in the books on our securitization go in at 92.5. So loans that are sitting on our books are 92.5 with a 6% prime based floating rate coupon, we think that's an attractive yield. In our last securitization went off to investors at 4%. That income is yet to be recognized over the course of time. We also have a servicing asset that gets recognized over the course of time and we get to gaining up front. It's an attractive business, it's a cash generator on a pretax basis and actually on an after tax basis once we do our securitization at the current advance rates. We're excited about the future prospects of this business, our total pipeline is increasing significantly, our open referrals are up by about a 104%, our pre-qualified volume is up by 47%, loans and underwriting up by 212% and approved credit in closing up by 99%. We talked about the amount of referrals that we received and this was back into us as we potentially look to expand into other sources of business funding. Obviously with those kind of referrals we have a very high rejection rate and we're able to do so cost effectively by the basis of their smart technology and the new tracker system and the way that we acquire clients, by pick from a going forward business looking at Newtek and Newtek's small business finance as a franchise, we believe because of our new tracker system we may have the only national origination franchise that doesn't use brokered loans, that acquires loans cost effectively, deals directly with borrowers to assembling, package, underwriting and service, so as we seek to grow this business and provide other types of financing products that size on a referral base is extremely important. Mind you we also get many clients that go into the database that we can cross sell and market other products and services to. It's always great to have increasing loan volumes but as a lender you don't want to have increasing loan volumes if you're cutting into credit quality. This is a typical classical mistake of most other non-bank lenders and in this particular segment Newtek Small Business Finance. We are a non-bank lender. So looking at slide number 12 you could see the comparative loan portfolio and the increase in quality. From December 31st 2010, 53.9% of our portfolio is existing businesses, 20% were startups, as of 6/30/2013, 82% of existing businesses, 6% startups, obviously startups much more risky. Primary collateral, primarily commercial real estate loans, we think that's the best form of collateral, gone from 45% to 49%, first lean percentage on commercial real estate gone from 84% to 93%. Mean average FICO on the guarantor that's important to all loans, have at least one guarantee, any 20% equity owner or larger must guarantee the loan, means FICO score coming in significantly higher at 7.01 versus 6.75 relative to the portfolio concentration issues, on 12/31/2010, 10.6% restaurants, 6/30/13 8.5% restaurants, from a state standpoint 21% in Florida, that concentration has now been knocked down to 9% in Florida, and 12% in New York, 7 in California, so it's a nice diverse portfolio. With respect to this particular division, we get a lot of reoccurring revenue and income from our servicing portfolio and is broken out in our financials, we service loans that we have made ourselves and we also service for others. The total loan servicing portfolio is approximately 640 million at the end of the quarter. it's an increase of 33.7% that's our own portfolio. Now loan service for others actually declined. We are a servicer for the FDIC. They sold a significant portfolio of loans that were on our books last year in this particular quarter that caused some of the decrease. however we did pick up a $55 million portfolio for Valley National bank that came in at the very end of the second quarter, so you'll start to see more revenue pick up from that. We anticipate that we'll be at least $700 million of total loans in the servicing portfolio by 12/31/2013. We do have a nice pipeline of opportunities; we are excited about announcements to be made in this particular area in the third quarter of 2013. In the Electronic Payment Processing segment we're excited about getting our revenues back up to, close to 10% in double digits. We’re seeing a significant amount of increase in our average processing volume per merchant, an increase of over 8%, we’re at fairly significant processor processing by the end of the year we anticipate about $4.5 billion of electronic payments and we also think our pipeline can start to pick up from the ISO channel. Looking at the Managed Technology Solutions business, once again we went over some of these metrics. We real excited about the reversal of trends sequentially in this segment from the first quarter to the second, and we're excited about the future prospect of offering cloud computing solutions, analytics and open architecture type software solutions for small businesses. We'll be managing their hardware and their software remotely in a military shrink proof facility at a fraction of the cost that they're currently doing and what we believe is a safer environment and available 24-7 to help our customers. This is a very exciting opportunity for us and we think we’ve got the right management team, products and service going forward. Switching forward to slide number 17, part of this repositioning has been announced to, what I’ll call the wholesale market designers, developers and resellers and we’ve seen a nice trend reversal in referrals in Q2 2012, 2,655 referrals in Q2 2013, almost 4,400. And our closed MTS referrals have gone from 1,854, 3,106. We’re very excited about those growth rates and think this business has a bright and exciting future for us. Looking at our consolidated guidance going forward for 2013, we’re still forecasting and maintaining approximately 148 million in the midpoint for revenues. Our pretax income mid-point of $11.5 million diluted EPS of $0.18 that’s 20% increase and modified EBITDA rounding up $21 million, that’s an increase of 25%. Where we think we’re going to get this growth from? We’re going to get this growth from our distribution channels. Historically, the NewTracker of technology and operational methodology which we received and patent on and in our own words is really the salesforce.com over business referral process is going to continue to grow and been an important function of what we’re doing. We get opportunities incrementing like mortgage family, (inaudible) bank, many, many Credit Union National Association endorsement. They provide leads on businesses, financial products and services that they currently don’t want to provide. We also do business with friendly groups like the General Motors Automobile Dealers Association or business owners who are seeking out state of the art, cloud computing solutions, payment processing solutions, insurance solutions all things of that nature. So the NewTracker system has been our historic work force, we believe it’s going to continue to be the work for us in the future as we had more lines according to that distribution channel. We talked about the (inaudible) that will be an independent selling agent, primarily in the merchant processing space, (inaudible) group, we're excited about this group adding margin to our existing EPS infrastructure, we have allowed up side in that business, obviously there is no capital expenditure just cash flows coming in from residual income from independent selling agents to drive their small business clients. And then we are excited about the opportunity to cross market and cross sell into an ever growing existing customer base created by the distribution channel. Our national TV champagne which is on typically from 7 am to 7 pm on CNN, Fox, Fox Business News is doing real well. It’s generating (inaudible), we’re excited about that, we increased our spent leading the third quarter and we think that just starts to show some good dividend. We may start to experiment with some different commercials and different product segments going out into 2013 and is currently on the white board. We’re also excited about our efforts in the social media. For those of you who aren’t aware, we have a regular blog on Forbes. We have our market survey that gets published by CNBC and Bloomberg and we also have SB Authority Small Business Index page published by CNBC and Bloomberg. Our Forbes blog are drawing a lot of attention, we actually have one blog that's got over 300,000 views and I think our fifth largest blog has over 80,000 views. So, we welcome you to take a look at it on Forbes.com under The Small Business Authority blog. And looking at the marketplace for businesses that are sort of comparable to what we do, Anthony Glyke (ph) n Deck Capital Lending Club attracting a lot of attention, companies like Digital River that purchased LMLP, Universal Business Payments Solution, UBPS. Lot of people are in this space right now and we're excited about the attention. I think people are realizing that non-bank lending is going to be a terrific trend for the future particularly with the recent issues with the (inaudible) as well as the FDIC indicating higher capital ratios for banks, the bottom line is banks and bank assets are going to be shrinking in the foreseeable future and we do not see them as increased competitors going forward, we see them as decreased competitors and that leaves us in this particular market space and we’re happy about that. So, alternative lending through things like BDC, specially finance companies, non-bank lenders great segment to be in. In the merchant payment processing space, we see a tremendous amount of turnover and churn particularly with POS, point of sale systems, changing and converting to more tablet based systems that are more cost effective for restaurants, mobile payments. We are very well positioned for that as a technological solutions provider. So, we think we’re going to be able to attract churn, grow market share and continue our growth in the double digits. And we talked about the growth to managed technology solutions, every major consolidated like Gartner is forecasting 35% to 40% growth rates year-over-year for the next several years with many, many small businesses looking for cloud computing solutions. We think we’re very well positioned for that. Looking at our company, we've been publically traded since September of 2000. Our interest are very much aligned with shareholders, you could see all the senior managers do own quite a bit of stock. We traded a little bit more than 3.5 times 2013 forecasted modified EBITDA, I will take it as based on yesterday’s stock price, not today if I have to recalculate that because we did have quite a significant move today. We were trading at around 1.1 times book value. We’re growing at about 13% that is our forecast in revenues for 2013 bottom-line at 20%, there are companies out there that are growing their bottom-lines because they are cutting expenses but not many of them are actually growing their top line at double digits as well. We're looking at a marketplace with over 27 million small businesses to penetrate and we're pretty excited about that. One of the things I did before this call is I went back and took a look at history on August 6th. On August 6th, 2009 the high price of the stock was 52; the low price was 38, closed at 50. In August 6th, 2008 the high price for the stock was $0.98, I should say cents not dollars. $0.52, $0.38, 50 mid-point August 6th, 2009, August 6th 2008 $0.98 high, $0.72 low, $0.95 close. Interesting date today, we appreciate all your support sticking with us. We're not done, we have a lot to do, tomorrow is a new day and we're excited about tomorrow and we're excited about continuing to deliver the type of financial and operational performance, financial performance of the market, operational performance to our customers. That will keep us on the right path. Jenny would you like to present the financial review?

Sure, thank you Barry. To summarize our consolidated results for the quarter operating revenue was $37 million, an increase of 14.5% over the second quarter of 2012; consolidated pretax income was $2.9 for the quarter, a 48% increase over the year ago period. And net income attributable to new tax was 1.8 million a 48% improvement and we reported EPS of $0.05 per share, a 67% increase over the second quarter of 2012. Please turn to slide 25 for a summary of the second quarter 2013 segment results compared to the second quarter of 2012. In the electronic payment processing segment revenue grew 10% to $23.4 million, the overall increase in revenue between years was due to growth in processing volumes which on average increased by 8% on merchants, partially offset by lower average pricing between years. Pretax income for the segment increased by 28% to $2.5 million for the quarter, principally due to the margin dollar increase of $292,000 and a reduction in salaries and benefits and depreciation and amortization between the years. In the small business finance segment, revenue grew by 40% to $8.4 million in the second quarter of 2013 and pretax income increased by 37% to $2 million for the quarter. The primary contributor to the increase in total revenue for the segment was premium income which more than doubled for the quarter to $4.9 million, due to an increase in the total amount of loans originated and sold. The average sale price on guarantee loan sales was 12.5 with 1% servicing and we funded $42.8 in FDA loans during the quarter doubling our volume in loans funded from the $21 million funded during the second quarter of 2012. Total servicing income decreased by $412,000 period-over-period. External servicing portfolio income decreased by 39% which was partially offset by 34% increase in servicing income earned from the FPF portfolio. The aggregate servicing portfolio increased by 13% from $566 million in loans serviced at June 30, 2012 to 640 million at June 30, 2013. Segment expenses increased by 47% between periods, due primarily to increases in salaries and benefits, loan origination costs and interest expense, all of which are commensurate with increases in loan originations and the growth in our servicing portfolio. In the Managed Technology Solutions segment, revenue between periods increased slightly or by 1% to $4.6 million in the second quarter of 2013. Pretax income for the segment was $1 million, a decrease of 7% driven by an increase in total expenses in particular salaries and benefits as well as depreciation and professional fees. The all other segment which primarily represents results from our insurance and payable subsidiaries of revenue of $657,000 for the quarter, a 46% increase over the prior year quarter and primarily driven by an increase in insurance commission resulting from the purchase of health and benefits book of business which occurred in December 2012. This segment had a pretax loss of $439,000 a $201,000 increase in loss over the same period in 2012. Contributing to the increase with $128,000 loss reported by our payroll processing company as well as the $123,000 loss generated by a startup company offering web based security solutions which began consolidating as (inaudible) in December 2012. The corporate and capital segments reflected a combined improvement in pretax loss of $111,000 quarter-over-quarter. Increases in salaries and benefits and professional fees were offset by reductions in general and administrative costs. And finally slide 26 is the detail of our 2013 guidance by segment which was discussed earlier on the call. I would now like to turn the call back to Barry.

Operator we'd like to take some questions now.

(Operator Instructions). Our first question comes from Matthew Paul with Sidoti & Company. Your line is open. Matthew Paul - Sidoti & Company: In regards to the Technology segment, how much if possible can you attribute to the cross marketing, cross selling strategy been employing. In other words how many I guess customers that are coming through leads from the finance segment are you able to sell some of your technology solutions to?

I think that in looking at Managed Technology Solutions being the benefit of cross selling and cross marketing, only a limited amount comes from the lending segment at this point and I want to explain that. Our lending customer base is the smallest customer base, probably if you take our own serving and serving for other it's probably 1,400 or 1,500 client currently; however, many of those clients we are having conversation with from a serving perspective how you doing, how is the business, and we’re setting up calls with those business owners and our technology growth and we recently done some nice transactions and opportunities in that segment. From a unit perspective, the bigger portion of cross selling for Managed Technology Solutions really comes from electronic payment processing space and we think that there is prospectively a myriad of cross selling opportunities when you talk about eCommerce and people using payment gateways, hosting solutions, point of sales terminals, and have those solutions hosted in the cloud. So from a peer customer count, more cross selling comes from probably the Payment Processing segment but we recently had a client that was a lending client of ours, move all their servers to us, represented approximately $12,000 a month of recurring revenue and we think we’re going to get more and more of that. cloud is a very underutilized product in the small and medium size independent business owner space and frankly we can save most business owners a significant amount of money by moving their products into our cloud environment, getting their servers out of the closet, getting their towers from under their desk and being able to service their hardware and software remotely 27x7 in a paper what you use environment.

Our next question comes from Igor Novgorodtsev of Lares Capital LLC. Your line is open. Igor Novgorodtsev - Lares Capital LLC: Hello Barry, thank you for taking my question. Well first of all great quarter and I’m sure a lot of shareholders today were happy, but I would like to ask a couple of sort of more detailed questions. First of all, do you see any threat to Electronic Processes Services segment from a startup such as Square and Intuit has a solution where you can use your iPad or an iPhone to run the payment? Do you think that in a couple of years you maybe in the situation based given there is no need for a middle man such as Newtek and everyone who has a smartphone will be able to directly run the payment via the credit card or as a direct payment?

I have looked at that, studied it, and run my hands over it for the last several years and at this point I will be honest with you I’ve come to the conclusion I don’t have any concerns over that, and my reason is for this, number one, Square is really focusing at the low end of the market, small payments mobile users not big users and that’s not really the bulk of the payment processing space. I think that there will always be a need for the intermediaries like ourselves that know how to deal with small business clients. As a matter of fact, America Express just went the other way and introduced their AMEX One Point product which is a similar model to what a MasterCard do where historically you couldn’t get residual off of AMEX, they’re embracing entities like ours to break clients to them to actually earn residuals and what they recognize is, at the medium size business owner needs an intermediary to A, help them get setup, have the right technology, have the right security and manage the risk, because they’re not positioned to do that, that’s just not what they do and importantly service their customers' needs on the backend. So I don’t have any concerns over the giants that are remediating us. Our competition will be the Heartland Payment Systems, the (inaudible), the intermediaries that are super ISOs and processors like us and we just think we’re just better positioned because of obviously we’ve got companies that can do technological aspect as well as do the payments aspect and products becoming more and more the technological solution. Igor Novgorodtsev - Lares Capital LLC: Okay great and if I may, another hopefully short question, there is going to be a top budget negotiations coming up in Congress and I know especially in the house, SBA program does not have a lot of fans, especially on the republican side, do you see any threat coming out of Congress in the fall, threat being program being curtailed or changed in some way?

I think that when you talk about the SBA, obviously we are focused on SBA 7(a) so we are not focused on 504, disaster loans, SBI fees or other areas. The 7(a) program has been around for 53 years, the premiums that the treasury takes in versus the loss rates on 7(a) have a zero budget effect, so the SBA 7(a) program is not in the budget it’s one of the few government programs that actually does well and returns money to the treasury historically. And the other interesting thing of that obviously the 7(a) programs small business is clearly a republican as well as a democratic issue, it’s probably one of the few areas where there is positive by partisan support. I would say yes, the program typically is more of a democratic winning program than a republican program but there are some very strong sponsors of the SBA 7(a) program from the republican side. So in the past I had probably more concerns about the SBA program in general but unlike Fannie Mae Freddie Mac or other programs that have actually cost the government historically overtime the 7(a) program isn’t even in the budget.

Our next question comes from Harold Elish with UBS. Your line is open. Harold Elish - UBS: Barry with respect to the joint ventures you are doing on the processing side with Valley National and other things you have been announcing recently, where does Newtek stand in terms of its back office capacity to be able to handle that? is there a level at which if you begin to ramp that up more, there is going to be a corresponding increase in cost in terms of investment in the back office?

The Valley National transaction which went on at the very end of June, we moved load servicing assets over from them. We recently took on an additional 11,000 square feet in our Hampstead operation. that real estate is already in our budget and there is plenty of capacity there. We have been adding additional servicing talent and recovery staff to the servicing group really on a variable basis. So it’s a very easy manageable product for us. In this particular space Harold there is 14 7(a) non-meg learning licenses out there, there is probably only two or three of them that are actually active. So the amount of talent in the market that exists in the space is plentiful and also we have been FDIC contractors. so we have really been able to scale the business up on an (inaudible) basis so we are pretty excited about that. So from a real estate standpoint, human resource standpoint we are very comfortable with our ability to scale up on a variable basis so, so far so good… Harold Elish - UBS: And the pricing is such that as it comes on, the variability, obviously it continues to be a profitable addition every time you bolt something on?

For sure.

Our next question comes from Peter Lee with Plough Penny. Your line is open. Peter Lee - Plough Penny Partners: Guys your growth expectations for this year are very good relative to the market. Can you just recap the specific drivers of this growth that you expect and what has to happen and how are you going to make it happen on the non-lending businesses in order to sustain this kind of growth heading into 2014 and then moving forward?

So the consolidated growth for 2013 is 13%. So you are okay with the lending, you just want to address the payment processing and the managed tech solutions? Peter Lee - Plough Penny Partners: Yes.

In the payment side, we've added a group of Lewisville that's focusing on independent selling organizations known as ISOs and Randy Sagar heads that group up and his team of William Berry and Mike Valerio underneath them are dealing with agent bank relationships and independent agents. When this group formerly had worked at entities like NPC with syndicated Bank of America which syndicates (inaudible). At times in the market they were bringing 7,000 clients a month. Obviously that's far greater than where we are in the business. If we were able to add a fraction of that, we're probably bringing in right now on the add somewhere between 350 to 400 a month. So as this group starts to get its feet underneath them, which is about now because it took a while to get them situated, get out of the market, get the contracts done and obviously we had significant change over in our management staff and we are walking with Eric Turille joining and now Tom Harkins joining Eric, we anticipate picking up some growth in this space in the second half of the year. In addition to that we believe we are better positioned technologically by owning our own gateway, by being a hosting company and being able to offer our products in the cloud through the Newtek advantage product. So that’s where we see our growth and we think that we are going to wind up being a winner in a market that does churn and consolidate in the payment processing space. Also for the most part, the horse of our business is the NewTracker system. So we are bringing in the independent Asian market which is lower margin, just to add customer account and grow the business but the NewTracker model that we’ve historically relied upon has got pretty big margins. So we're excited about the opportunity in this particular space. In the Managed Technology Solution space, huge trend in cloud-computing and we've got to get the message out and let people know that we have these solutions and the marketing message to 27 million independent business owners is pretty simple. Cut your ID cost; be in a more secure environment. We actually own the trademark for things like insured webhosting. We have a surveillance product that we may release to the market where people would be able to have their website surveyed and protected for a fairly low price point on a monthly basis. So I feel extremely confident and good about where we are in these other two spaces and as we position ourselves in the market as a small business authority; we are going to get that message out. Our national TV campaign is also constructive. We may have some of the commercials focus on these particular areas. So I feel pretty good about our growth rates in these segments.

(Operator Instructions) Our next question comes from Frank DiLorenzo with Singular Research, your line is open. Frank DiLorenzo - Singular Research: Being that you’ve had a very strong first half and it looks as though there was good momentum going into the second half of 2013, I was wondering why you decided to leave the guidance unchanged for the year. Thanks.

Frank that's a good question. Look I think from our perspective, we are building our business, we are hiring important staff, for example, we recently hired Tom Harkins, hired Head of Human Resources, hired Petrosky; so we are adding a lot of staff to be able to fuel the growth. So we are very comfortable with the $0.18 number and that’s why we left the guidance there. We are hopeful that we'll continue to hit our strides. Typically we have stated that the second half of the year is typically stronger than the first half of the year. At this point in time we have made an adjustment. We look at this all the time. And maybe we will need to take a look at this somewhere in the third quarter, to take a closer look, but at this point in time we are going to stick to the $0.18 which is 20% growth in EPS, and the 13% growth in revenues. Frank DiLorenzo - Singular Research: One other quick question with regards to The Valley National deal, do you see any impact in the second quarters, like the second half of that?

That’s almost all second half. That had practically no effect in the second quarter. It is on probably two days. Frank DiLorenzo - Singular Research: Okay, great, just to follow on to that, do you have any visibility for a potentially additional deal similar to that Valley National deal going forward?

We do, and we have a nice pipeline. But at the end of the day, done is done. But we have a nice pipeline of servicing deal which is why we forecasted year end of sharing on a million now. You could take a look at where we are at and then you can add the remaining originations which we feel good about. Then you got put and takes, you might have people itself there, portfolio and service for others and we may pick up some others. So, we feel pretty comfortable at the $700 million number, but there could be some upside to that. And I don’t mean to be obtuse, there could be some downside. But I think you could get a feel for where we are in this side of the business. We addressed it because we think it’s important, its significant and it’s a good growth opportunity for us. We are unique, we are S&P rated servicer. We are one of only two servicers that are named as Select for Company Guarantee Loan Obligations.

And I am showing no further questions. I will turn the call back over to Berry Sloane for closing remarks.

Operator, thank you very much and we appreciate the opportunity to present today, and the real good questions from the audience and investor support. So we look forward to going back to work tomorrow and producing good results for the third quarter. Thank you very much.

Thank you ladies and gentlemen. That does conclude today’s conference. You may all disconnect and have a wonderful day.