Newtek Business Services Reports Record Revenue

Newtek Business Services, Inc. (www.newtekbusinessservices.com), a direct distributor to the small to medium-sized business market, today announced earnings of $0.35 per diluted share for the year ended December 31, 2004, compared to $0.37 per diluted share in 2003. After tax net income increased from $9.6 million in 2003 to $10.6 million in 2004.

Excluding extraordinary gains, the company earned $0.35 per diluted share for the year ended December 31, 2004, compared to $0.36 per diluted share in 2003. Revenue for the year increased 15.9% to $70.1 million from $60.5 million in the prior year. The decline in EPS was caused by the sale of 6.9 million shares through a secondary registered stock offering.

Barry Sloane, chairman and CEO, stated, "Revenues increased by 15.9% from 2003 to 2004 with revenues in our underlying business segments also growing strongly. Merchant services and small business lending revenues both grew by 204%, and 40%.

Web hosting, small business lending and merchant services earned pre-tax income of $2.1 million, $2.6 million and $1.2 million respectively, up from a loss of $169,000 the year prior. Newtek's reported EPS of $.35 per share exceeding Wall Street consensus EPS estimate of $.32 per share by 9%.

The company will discuss its results in more detail, including guidance for 2005, during its shareholder conference call this afternoon at 4:10 EST, which is accessible by dialing 1-800-659-2037 and providing the pass code 61536308. Listeners are encouraged to ask any questions that they may have during the call. A PowerPoint presentation has been added to the company's homepage.

The conference call will also be broadcast over the Internet through our website at http://www.newtekbusinessservices.com.