Wire Stories

Live Oak Bancshares, Inc. Reports Third Quarter 2023 Results

4a86efd9c373d76862de8d5450b27db9ea78e62677059a35128a97456f1f6868
Posted on

WILMINGTON, N.C., Oct. 25, 2023 (GLOBE NEWSWIRE) — Live Oak Bancshares, Inc. (NYSE: LOB) (“Live Oak” or “the Company”) today reported third quarter of 2023 net income of $39.8 million, or $0.88 per diluted share.

“The success of our quarter shows that Live Oak Bank remains on a path of sustainable and sound growth to fulfill our mission to be America’s small business bank,” said Live Oak Chairman and CEO James S. (Chip) Mahan III. “Our products continue to be delivered with a focus on high-touch service, and our branchless technology-driven platform is an efficient way to get capital into the hands of small business owners.”

Third QuarterÂ2023 Key Measures

(Dollars in thousands, except per share data)ÂÂÂIncrease (Decrease)ÂÂ
Â3Q 2023Â2Q 2023ÂDollarsÂPercentÂ3Q 2022
Total revenue (1)$        127,301ÂÂÂ$        108,458ÂÂÂ$        18,843        17Â%Â$        141,610ÂÂ
Total noninterest expense        74,262        76,457        (2,195)        (3)        83,048ÂÂ
Income before taxes        42,760        18,973        23,787        125        44,393ÂÂ
Effective tax rate        6.9Â%        7.5Â%Ân/aÂn/a        3.4Â%
Net income$        39,793ÂÂÂ$        17,544ÂÂÂ$        22,249        127Â%Â$        42,868ÂÂ
Diluted earnings per share        0.88        0.39        0.49        126        0.96ÂÂ
Loan and lease production:ÂÂÂÂÂÂÂÂÂ
Loans and leases originated$        1,073,255ÂÂÂ$        861,033ÂÂÂ$        212,222        25Â%Â$        1,005,235ÂÂ
% Fully funded        52.2Â%        49.4Â%Ân/aÂn/a        54.0Â%
Total loans and leases:$        8,775,235ÂÂÂ$        8,360,174ÂÂÂ$        415,061        5Â%Â$        7,391,031ÂÂ
Total assets:        10,950,460        10,819,196        131,264        1        9,314,650ÂÂ
Total deposits:        10,003,642        9,879,111        124,531        1        8,404,909ÂÂ

(1)Total revenue consists of net interest income and total noninterest income.


Loans and Leases

As of September 30, 2023, the total loan and lease portfolio was $8.78 billion, 5.0% above its level at June 30, 2023, and 18.7% above its level a year ago. This growth was the product of strong origination volumes. Compared to the second quarter of 2023, loans and leases held for investment increased $366.2 million, or 4.7%, to $8.20 billion while loans held for sale increased $48.8 million, or 9.3%, to $572.6 million. Average loans and leases were $8.58 billion during the third quarter of 2023 compared to $8.29 billion during the second quarter of 2023.Â

The total loan and lease portfolio at September 30, 2023, and June 30, 2023, was comprised of 39.0% and 39.6% of guaranteed loans and leases, respectively.

Loan and lease originations totaled $1.07 billion during the third quarter of 2023, an increase of $212.2 million, or 24.6%, from the second quarter of 2023. Loan and lease originations increased $68.0 million, or 6.8%, from the third quarter of 2022.

Deposits

Total deposits increased to $10.00 billion at September 30, 2023, an increase of $124.5 million compared to June 30, 2023, and an increase of $1.60 billion compared to September 30, 2022. The increase in total deposits from prior periods was to support growth in the loan and lease portfolio combined with strong deposit inflows.

Average total interest-bearing deposits for the third quarter of 2023 increased $208.5 million, or 2.2%, to $9.70 billion, compared to $9.49 billion for the second quarter of 2023. The ratio of average total loans and leases to average interest-bearing deposits was 88.5% for the third quarter of 2023, compared to 87.3% for the second quarter of 2023.

Net Interest Income

Net interest income for the third quarter of 2023 was $89.4 million compared to $84.3 million for the second quarter of 2023 and $83.9 million for the third quarter of 2022. The net interest margin for the third quarter of 2023 and second quarter of 2023 was 3.37% and 3.29%, respectively, an increase of 8 basis points quarter over quarter. This increase was due to higher average loan balances and yields outpacing increases in both volume and cost of deposits. During the third quarter of 2023, the average cost of interest-bearing liabilities increased by 13 basis points while the average yield on interest-earning assets increased by 18 basis points.

The increase in net interest income for the third quarter of 2023 compared to the third quarter of 2022 was driven by growth in average loans and leases held for investment. Partially mitigating this increase was a decrease in the net interest margin by 47 basis points arising from an increase in deposits combined with the increase in average cost of funds outpacing the increase in average yield on interest-earning assets.

Noninterest Income

Noninterest income for the third quarter of 2023 was $37.9 million, an increase of $13.7 million compared to the second quarter of 2023, and a decrease of $19.8 million compared to the third quarter of 2022. The primary drivers in noninterest income changes are outlined below.

The Company changed the valuation techniques used to estimate the fair value of servicing rights and loans measured at fair value as a result of rising interest rates and their impacts on market conditions. These revisions provide estimates that the Company believes are more representative of fair value. These estimate changes were implemented as of July 1, 2023, and resulted in one-time adjustments on that date to increase the estimated value of the servicing asset by $13.7 million and loans measured at fair value by $1.3 million, or a total impact to noninterest income of $15.0 million.

The loan servicing asset revaluation resulted in a gain of $11.3 million for the third quarter of 2023 (inclusive of the one-time adjustment discussed above) compared to a $2.8 million loss for the second quarter of 2023 and a $1.3 million loss for the third quarter of 2022. The increase in the servicing asset revaluation for both comparative periods was principally the result of the above discussed third quarter of 2023 change in estimate.

Net gains on sales of loans for the third quarter of 2023 was $12.7 million, a $1.9 million increase compared to the second quarter of 2023, and a $3.4 million increase compared to the third quarter of 2022. The increase in net gains on sales of loans compared to the second quarter of 2023 was principally the result of the above discussed change in estimate effective during the third quarter of 2023, resulting in incrementally higher servicing asset values recognized when loans are sold and corresponding higher gains on sale. The increase in net gains on sales of loans compared to the third quarter of 2022 was principally the result of a higher volume of loan sales in the third quarter of 2023. The volume of guaranteed loans sold was $225.6 million for the third quarter of 2023, compared to $245.1 million sold in the second quarter of 2023, and $148.1 million sold in the third quarter of 2022. Partially mitigating the increase in net gains on loan sales was lower premiums in the third quarter of 2023 compared to the third quarter of 2022. The average gain on sale premium of guaranteed loans was 105%, 105% and 108% for the third quarter of 2023, second quarter of 2023 and third quarter of 2022, respectively.

Loans accounted for under the fair value option had a net loss of $568 thousand for the third quarter of 2023 (inclusive of the one-time adjustment discussed above), a $1.7 million net gain for the second quarter of 2023, and a $4.4 million net gain for the third quarter of 2022. The decrease in valuation of loans accounted for under the fair value option compared to the second quarter of 2023 was largely the result of credit losses partially offset by the previously discussed change in estimate. The decrease compared to the third quarter of 2022 was principally the result of negative market trends between the comparative periods.

Equity method investment losses totaled $1.0 million for the third quarter of 2023, a $30.2 million decrease from the net gain of $29.1 million in the third quarter of 2022. The decrease was principally related to the $28.4 million gain arising in the third quarter of 2022 associated with the acquisition of the Company’s ownership in Payrailz, LLC.

Noninterest Expense

Noninterest expense for the third quarter of 2023 totaled $74.3 million compared to $76.5 million for the second quarter of 2023 and $83.0 million for the third quarter of 2022. The primary driver for the decrease compared to the third quarter of 2022 was $7.7 million of impairment charges in the third quarter of 2022 primarily related to a new renewable energy tax credit investment.

Asset Quality

During the third quarter of 2023, the Company recognized net charge-offs for loans carried at historical cost of $9.1 million, compared to $1.2 million in the second quarter of 2023 and $1.7 million in the third quarter of 2022. The increase in net charge-offs was primarily related to a single borrower relationship for which a significant portion was reserved in the second quarter of 2023. Net charge-offs as a percentage of average held for investment loans and leases carried at historical cost, annualized, for the quarters ended September 30, 2023, June 30, 2023 and September 30, 2022, was 0.48%, 0.06% and 0.12%, respectively.

Unguaranteed nonperforming (nonaccrual) loans and leases, excluding $6.5 million and $8.6 million accounted for under the fair value option at September 30, 2023, and June 30, 2023, respectively, decreased to $33.3 million, or 0.43%, of loans and leases held for investment which are carried at historical cost, at September 30, 2023, compared to $44.9 million, or 0.61%, at June 30, 2023.

Provision for Loan and Lease Credit Losses

The provision for loan and lease credit losses for the third quarter of 2023 totaled $10.3 million compared to $13.0 million for the second quarter of 2023 and $14.2 million for the third quarter of 2022. The provision expense in the third quarter of 2023 was primarily the result of continued growth of the loan and lease portfolio combined with specific reserve changes on individually evaluated loans and charge-off related impacts.

The allowance for credit losses on loans and leases totaled $121.3 million at September 30, 2023, compared to $120.1 million at June 30, 2023. The allowance for credit losses on loans and leases as a percentage of total loans and leases held for investment carried at historical cost was 1.56% and 1.62% at September 30, 2023, and June 30, 2023, respectively.

Income Tax

Income tax expense and related effective tax rate was $3.0 million and 6.9% for the third quarter of 2023, $1.4 million and 7.5% for the second quarter of 2023 and $1.5 million and 3.4% for the third quarter of 2022, respectively. The higher level of income tax expense for the third quarter of 2023 compared to the second quarter of 2023 was principally related to increased pretax income. The higher level of income tax expense in the third quarter of 2023 compared to the third quarter of 2022 was primarily the result of higher than anticipated investment tax credits in the third quarter of 2022 related to renewable energy investments, arising from the impacts of the passage of the Inflation Reduction Act of 2022 combined with higher than expected costs, as a result of the inflationary environment.

Conference Call

Live Oak will host a conference call to discuss the company’s financial results and business outlook tomorrow, October 26, 2023, at 9:00 a.m. ET. The call will be accessible by telephone and webcast using Conference ID: 73371580. A supplementary slide presentation will be posted to the website prior to the event, and a replay will be available for 12 months following the event. The conference call details are as follows:

Live Telephone Dial-In

U.S.: 888.259.6580
International: +1 416.764.8624
Pass Code: None Required

Live Webcast Log-In

Webcast Link: investor.liveoakbank.com
Registration: Name and Email Required
Multi-Factor Code: Provided After Registration

Important Note Regarding Forward-Looking Statements

Statements in this press release that are based on other than historical data or that express the Company’s plans or expectations regarding future events or determinations are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Statements based on historical data are not intended and should not be understood to indicate the Company’s expectations regarding future events. Forward-looking statements provide current expectations or forecasts of future events or determinations. These forward-looking statements are not guarantees of future performance or determinations, nor should they be relied upon as representing management’s views as of any subsequent date. Forward-looking statements involve significant risks and uncertainties, and actual results may differ materially from those presented, either expressed or implied, in this press release. Factors that could cause actual results to differ materially from those expressed in the forward-looking statements include changes in Small Business Administration (“SBA”) rules, regulations or loan products, including the Section 7(a) program, changes in SBA standard operating procedures or changes in Live Oak Banking Company’s status as an SBA Preferred Lender; changes in rules, regulations or procedures for other government loan programs, including those of the United States Department of Agriculture; the impacts of global health crises and pandemics, such as the Coronavirus Disease 2019 (COVID-19) pandemic, on trade (including supply chains and export levels), travel, employee productivity and other economic activities that may have a destabilizing and negative effect on financial markets, economic activity and customer behavior; recent adverse developments in the banking industry highlighted by high-profile bank failures and the potential impact of such developments on customer confidence, liquidity, and regulatory responses to these developments; a reduction in or the termination of the Company’s ability to use the technology-based platform that is critical to the success of its business model, including a failure in or a breach of operational or security systems; competition from other lenders; the Company’s ability to attract and retain key personnel; market and economic conditions and the associated impact on the Company; operational, liquidity and credit risks associated with the Company’s business; changes in political and economic conditions, including any prolonged U.S. government shutdown; the impact of heightened regulatory scrutiny of financial products and services and the Company’s ability to comply with regulatory requirements and expectations; a deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S. government may take to avoid exceeding the debt ceiling, and uncertainties surrounding the debt ceiling and the federal budget; adverse results, including related fees and expenses, from pending or future lawsuits, government investigations or private actions; and the other factors discussed in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) and available at the SEC’s Internet site (http://www.sec.gov). Except as required by law, the Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.

About Live Oak Bancshares, Inc.

Live Oak Bancshares, Inc. (NYSE: LOB) is a financial holding company and the parent company of Live Oak Bank. Live Oak Bancshares and its subsidiaries partner with businesses that share a groundbreaking focus on service and technology to redefine banking. To learn more, visit www.liveoakbank.com.

Contacts:

William C. (BJ) Losch, III | President & CFO | Investor Relations | 910.202.6926
Claire Parker | Corporate Communications | Media Relations | 910.597.1592


Live Oak Bancshares, Inc.
Quarterly Statements of Income (unaudited)
(Dollars in thousands, except per share data)

ÂThree Months EndedÂ3Q 2023 Change vs.
Â3Q 2023Â2Q 2023Â1Q 2023Â4Q 2022Â3Q 2022Â2Q 2023Â3Q 2022
Interest incomeÂÂÂÂÂÂÂÂÂÂ%Â%
Loans and fees on loans$        162,722ÂÂ$        152,362ÂÂ$        139,052ÂÂ$        127,310ÂÂ$        107,880        6.8        50.8Â
Investment securities, taxable        8,701        8,503        7,547        6,716        5,506        2.3        58.0Â
Other interest earning assets        9,188        8,847        4,817        2,584        2,448        3.9        275.3Â
Total interest income        180,611        169,712        151,416        136,610        115,834        6.4        55.9Â
Interest expenseÂÂÂÂÂÂÂÂÂÂÂÂÂ
Deposits        90,914        85,003        67,595        50,357        31,553        7.0        188.1Â
Borrowings        287        407        1,804        351        395        (29.5)        (27.3)
Total interest expense        91,201        85,410        69,399        50,708        31,948        6.8        185.5Â
Net interest income        89,410        84,302        82,017        85,902        83,886        6.1        6.6Â
Provision for loan and lease credit losses        10,279        13,028        19,021        19,671        14,169        (21.1)        (27.5)
Net interest income after provision for loan and lease credit losses        79,131        71,274        62,996        66,231        69,717        11.0        13.5Â
Noninterest incomeÂÂÂÂÂÂÂÂÂÂÂÂÂ
Loan servicing revenue        6,990        6,687        6,380        6,296        6,230        4.5        12.2Â
Loan servicing asset revaluation        11,335        (2,831)        356        (5,016)        (1,324)        500.4        956.1Â
Net gains on sales of loans        12,675        10,804        10,175        7,362        9,275        17.3        36.7Â
Net (loss) gain on loans accounted for under the fair value option        (568)        1,728        (4,529)        571        4,420        (132.9)        (112.9)
Equity method investments (loss) income        (1,034)        (2,055)        (2,952)        (1,818)        29,136        49.7        (103.5)
Equity security investments (losses) gains, net        (783)        121        77        868        876        (747.1)        (189.4)
Lease income        2,498        2,535        2,535        2,555        2,516        (1.5)        (0.7)
Management fee income        3,277        3,266        3,472        3,200        2,844        0.3        15.2Â
Other noninterest income        3,501        3,901        4,065        5,053        3,751        (10.3)        (6.7)
Total noninterest income        37,891        24,156        19,579        19,071        57,724        56.9        (34.4)
Noninterest expenseÂÂÂÂÂÂÂÂÂÂÂÂÂ
Salaries and employee benefits        42,947        43,066        44,765        42,560        43,479        (0.3)        (1.2)
Travel expense        2,197        2,770        2,411        1,872        2,372        (20.7)        (7.4)
Professional services expense        1,762        1,996        927        2,453        2,505        (11.7)        (29.7)
Advertising and marketing expense        3,446        3,009        3,603        3,892        2,621        14.5        31.5Â
Occupancy expense        2,129        2,205        1,925        3,469        2,519        (3.4)        (15.5)
Technology expense        7,722        8,005        7,729        8,849        7,770        (3.5)        (0.6)
Equipment expense        3,676        4,023        3,818        3,759        3,761        (8.6)        (2.3)
Other loan origination and maintenance expense        3,498        3,442        3,927        3,657        3,376        1.6        3.6Â
Renewable energy tax credit investment impairment        —        —        69        8,446        7,721        —        (100.0)
FDIC insurance        4,115        5,061        3,403        2,923        2,697        (18.7)        52.6Â
Contributions and donations        —        —        —        33        191        —        (100.0)
Other expense        2,770        2,880        6,385        2,672        4,036        (3.8)        (31.4)
Total noninterest expense        74,262        76,457        78,962        84,585        83,048        (2.9)        (10.6)
Income before taxes        42,760        18,973        3,613        717        44,393        125.4        (3.7)
Income tax expense (benefit)        2,967        1,429        3,215        (1,075)        1,525        107.6        94.6Â
Net income$        39,793ÂÂ$        17,544ÂÂ$        398ÂÂ$        1,792ÂÂ$        42,868        126.8        (7.2)
Earnings per shareÂÂÂÂÂÂÂÂÂÂÂÂÂ
Basic$        0.89ÂÂ$        0.40ÂÂ$        0.01ÂÂ$        0.04ÂÂ$        0.97        122.5        (8.2)
Diluted$        0.88ÂÂ$        0.39ÂÂ$        0.01ÂÂ$        0.04ÂÂ$        0.96        125.6        (8.3)
Weighted average shares outstandingÂÂÂÂÂÂÂÂÂÂÂÂÂ
Basic        44,408,997        44,327,474        44,157,156        44,005,220        43,914,920ÂÂÂÂÂ
Diluted        45,268,745        44,835,089        44,964,616        44,794,941        44,797,109ÂÂÂÂÂ


Live Oak Bancshares, Inc.
Quarterly Balance Sheets (unaudited)
(Dollars in thousands)

ÂAs of the quarter endedÂ3Q 2023 Change vs.
Â3Q 2023Â2Q 2023Â1Q 2023Â4Q 2022Â3Q 2022Â2Q 2023Â3Q 2022
AssetsÂÂÂÂÂÂÂÂÂÂ%Â%
Cash and due from banks$        534,774ÂÂ$        808,131ÂÂ$        463,186ÂÂ$        280,239ÂÂ$        335,046        (33.8)        59.6Â
Federal funds sold        —        —        —        136,397        68,324        —        (100.0)
Certificates of deposit with other banks        3,750        4,000        4,000        4,000        4,250        (6.3)        (11.8)
Investment securities available-for-sale        1,099,878        1,133,146        1,149,691        1,014,719        1,005,372        (2.9)        9.4Â
Loans held for sale        572,604        523,776        533,292        554,610        537,649        9.3        6.5Â
Loans and leases held for investment (1)        8,202,631        7,836,398        7,686,987        7,344,178        6,853,382        4.7        19.7Â
Allowance for credit losses on loans and leases        (121,273)        (120,116)        (108,242)        (96,566)        (78,291)        (1.0)        (54.9)
Net loans and leases        8,081,358        7,716,282        7,578,745        7,247,612        6,775,091        4.7        19.3Â
Premises and equipment, net        258,041        269,485        268,138        263,290        260,285        (4.2)        (0.9)
Foreclosed assets        6,701        —        —        —        1,178        100.0        468.8Â
Servicing assets        47,127        31,042        29,357        26,323        29,081        51.8        62.1Â
Other assets        346,227        333,334        337,888        328,308        298,374        3.9        16.0Â
Total assets$        10,950,460ÂÂ$        10,819,196ÂÂ$        10,364,297ÂÂ$        9,855,498ÂÂ$        9,314,650        1.2        17.6Â
Liabilities and shareholders’ equityÂÂÂÂÂÂÂÂÂÂÂÂÂ
LiabilitiesÂÂÂÂÂÂÂÂÂÂÂÂÂ
Deposits:ÂÂÂÂÂÂÂÂÂÂÂÂÂ
Noninterest-bearing$        239,536ÂÂ$        229,833ÂÂ$        176,439ÂÂ$        194,100ÂÂ$        170,336        4.2        40.6Â
Interest-bearing        9,764,106        9,649,278        9,245,555        8,690,828        8,234,573        1.2        18.6Â
Total deposits        10,003,642        9,879,111        9,421,994        8,884,928        8,404,909        1.3        19.0Â
Borrowings        25,847        28,317        30,767        83,203        35,616        (8.7)        (27.4)
Other liabilities        70,603        79,280        88,729        76,334        71,957        (10.9)        (1.9)
Total liabilities        10,100,092        9,986,708        9,541,490        9,044,465        8,512,482        1.1        18.7Â
Shareholders’ equityÂÂÂÂÂÂÂÂÂÂÂÂÂ
Preferred stock, no par value, 1,000,000 shares authorized, none issued or outstanding        —        —        —        —        —        —        —Â
Class A common stock (voting)        340,929        341,032        334,672        330,854        325,632        —        4.7Â
Class B common stock (non-voting)        —        —        —        —        —        —        —Â
Retained earnings        627,759        589,036        572,530        572,497        571,778        6.6        9.8Â
Accumulated other comprehensive loss        (118,320)        (97,580)        (84,395)        (92,318)        (95,242)        21.3        24.2Â
Total shareholders’ equity        850,368        832,488        822,807        811,033        802,168        2.1        6.0Â
Total liabilities and shareholders’ equity$        10,950,460ÂÂ$        10,819,196ÂÂ$        10,364,297ÂÂ$        9,855,498ÂÂ$        9,314,650        1.2        17.6Â

(1)Includes $410.1 million, $441.8 million, $467.0 million, $494.5 million and $512.2 million measured at fair value for the quarters ended September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022, and September 30, 2022 respectively.

Live Oak Bancshares, Inc.
Statements of Income (unaudited)
(Dollars in thousands, except per share data)

ÂNine Months Ended
ÂSeptember 30, 2023ÂSeptember 30, 2022
Interest incomeÂÂÂ
Loans and fees on loans$        454,136ÂÂ$        291,235Â
Investment securities, taxable        24,751        12,951Â
Other interest earning assets        22,852        3,677Â
Total interest income        501,739        307,863Â
Interest expenseÂÂÂ
Deposits        243,512        64,678Â
Borrowings        2,498        1,586Â
Total interest expense        246,010        66,264Â
Net interest income        255,729        241,599Â
Provision for loan and lease credit losses        42,328        21,272Â
Net interest income after provision for loan and lease credit losses        213,401        220,327Â
Noninterest incomeÂÂÂ
Loan servicing revenue        20,057        19,063Â
Loan servicing asset revaluation        8,860        (11,561)
Net gains on sales of loans        33,654        35,882Â
Net (loss) gain on loans accounted for under the fair value option        (3,369)        475Â
Equity method investments (loss) income        (6,041)        146,068Â
Equity security investments (losses) gains, net        (585)        2,487Â
Lease income        7,568        7,529Â
Management fee income        10,015        6,890Â
Other noninterest income        11,467        12,088Â
Total noninterest income        81,626        218,921Â
Noninterest expenseÂÂÂ
Salaries and employee benefits        130,778        128,262Â
Travel expense        7,378        6,627Â
Professional services expense        4,685        9,284Â
Advertising and marketing expense        10,058        6,651Â
Occupancy expense        6,259        7,619Â
Technology expense        23,456        19,585Â
Equipment expense        11,517        11,361Â
Other loan origination and maintenance expense        10,867        9,511Â
Renewable energy tax credit investment impairment        69        7,771Â
FDIC insurance        12,579        6,833Â
Contributions and donations        —        6,429Â
Other expense        12,035        9,708Â
Total noninterest expense        229,681        229,641Â
Income before taxes        65,346        209,607Â
Income tax expense        7,611        35,191Â
Net income$        57,735ÂÂ$        174,416Â
Earnings per shareÂÂÂ
Basic$        1.30ÂÂ$        3.98Â
Diluted$        1.28ÂÂ$        3.88Â
Weighted average shares outstandingÂÂÂ
Basic        44,298,798        43,814,648Â
Diluted        45,023,739        44,943,432Â


Live Oak Bancshares, Inc.
Quarterly Selected Financial Data
(Dollars in thousands, except per share data)

ÂAs of and for the three months ended
Â3Q 2023Â2Q 2023Â1Q 2023Â4Q 2022Â3Q 2022
Income Statement DataÂÂÂÂÂÂÂÂÂ
Net income$        39,793ÂÂÂ$        17,544ÂÂÂ$        398ÂÂÂ$        1,792ÂÂÂ$        42,868ÂÂ
Per Common ShareÂÂÂÂÂÂÂÂÂ
Net income, diluted$        0.88ÂÂÂ$        0.39ÂÂÂ$        0.01ÂÂÂ$        0.04ÂÂÂ$        0.96ÂÂ
Dividends declared        0.03        0.03        0.03        0.03        0.03ÂÂ
Book value        19.12        18.77        18.58        18.41        18.24ÂÂ
Tangible book value (1)        19.04        18.69        18.50        18.32        18.15ÂÂ
Performance RatiosÂÂÂÂÂÂÂÂÂ
Return on average assets (annualized)        1.46Â%        0.66Â%        0.02Â%        0.08Â%        1.86Â%
Return on average equity (annualized)        18.68        8.26        0.19        0.88        20.79ÂÂ
Net interest margin        3.37        3.29        3.46        3.76        3.84ÂÂ
Efficiency ratio (1)        58.34        70.49        77.72        80.58        58.65ÂÂ
Noninterest income to total revenue        29.76        22.27        19.27        18.17        40.76ÂÂ
Selected Loan MetricsÂÂÂÂÂÂÂÂÂ
Loans and leases originated$        1,073,255ÂÂÂ$        861,033ÂÂÂ$        1,030,882ÂÂÂ$        1,177,688ÂÂÂ$        1,005,235ÂÂ
Outstanding balance of sold loans serviced        4,028,575        3,813,852        3,616,701        3,481,885        3,345,907ÂÂ
Asset Quality RatiosÂÂÂÂÂÂÂÂÂ
Allowance for credit losses to loans and leases held for investment (3)        1.56Â%        1.62Â%        1.50Â%        1.41Â%        1.23Â%
Net charge-offs (3)$        9,122ÂÂÂ$        1,154ÂÂÂ$        6,669ÂÂÂ$        1,396ÂÂÂ$        1,741ÂÂ
Net charge-offs to average loans and leases held for investment (2) (3)        0.48Â%        0.06Â%        0.38Â%        0.09Â%        0.12Â%
ÂÂÂÂÂÂÂÂÂÂ
Nonperforming loans and leases at historical cost (3)ÂÂÂÂÂÂÂÂÂ
Unguaranteed$        33,255ÂÂÂ$        44,899ÂÂÂ$        22,002ÂÂÂ$        18,784ÂÂÂ$        14,334ÂÂ
Guaranteed        65,837        66,322        63,696        54,608        45,730ÂÂ
Total        99,092        111,221        85,698        73,392        60,064ÂÂ
Unguaranteed nonperforming historical cost loans and leases, to loans and leases held for investment (3)        0.43Â%        0.61Â%        0.30Â%        0.27Â%        0.23Â%
ÂÂÂÂÂÂÂÂÂÂ
Nonperforming loans at fair value (4)ÂÂÂÂÂÂÂÂÂ
Unguaranteed$        6,518ÂÂÂ$        8,602ÂÂÂ$        8,193ÂÂÂ$        6,678ÂÂÂ$        2,736ÂÂ
Guaranteed        39,378        45,114        43,968        38,212        25,169ÂÂ
Total        45,896        53,716        52,161        44,890        27,905ÂÂ
Unguaranteed nonperforming fair value loans to fair value loans held for investment (4)        1.59Â%        1.95Â%        1.75Â%        1.35Â%        0.53Â%
ÂÂÂÂÂÂÂÂÂÂ
Capital RatiosÂÂÂÂÂÂÂÂÂ
Common equity tier 1 capital (to risk-weighted assets)        11.63Â%        11.55Â%        11.67Â%        12.46Â%        13.16Â%
Tier 1 leverage capital (to average assets)        8.56        8.46        8.70        9.26        9.49ÂÂ

Notes to Quarterly Selected Financial Data
(1)See accompanying GAAP to Non-GAAP Reconciliation.
(2)Quarterly net charge-offs as a percentage of quarterly average loans and leases held for investment, annualized.
(3)Loans and leases at historical cost only (excludes loans measured at fair value).
(4)Loans accounted for under the fair value option only (excludes loans and leases carried at historical cost).

Live Oak Bancshares, Inc.
Quarterly Average Balances and Net Interest Margin
(Dollars in thousands)

ÂThree Months Ended
September 30, 2023		ÂThree Months Ended
June 30, 2023
ÂAverage BalanceÂInterestÂAverage Yield/RateÂAverage BalanceÂInterestÂAverage Yield/Rate
Interest-earning assets:ÂÂÂÂÂÂÂÂÂÂÂ
Interest-earning balances in other banks$        677,857ÂÂ$        9,188        5.38Â%Â$        731,427ÂÂ$        8,847        4.85Â%
Investment securities        1,257,740        8,701        2.74        1,252,320        8,503        2.72ÂÂ
Loans held for sale        602,109        13,271        8.74        516,378        12,153        9.44ÂÂ
Loans and leases held for investment (1)        7,978,870        149,451        7.43        7,773,816        140,209        7.23ÂÂ
Total interest-earning assets        10,516,576        180,611        6.81        10,273,941        169,712        6.63ÂÂ
Less: Allowance for credit losses on loans and leases        (119,941)        (108,552)ÂÂÂÂ
Noninterest-earning assets    499,508        499,661ÂÂÂÂÂ
Total assets$        10,896,143ÂÂÂÂÂÂ$        10,665,050ÂÂÂÂÂ
Interest-bearing liabilities:ÂÂÂÂÂÂÂÂÂÂÂ
Interest-bearing checking$        300,059ÂÂ$        4,217        5.58Â%Â$        300,046ÂÂ$        3,968        5.30Â%
Savings        4,588,085        45,778        3.96        4,277,850        41,930        3.93ÂÂ
Money market accounts        136,879        202        0.59        121,382        184        0.61ÂÂ
Certificates of deposit        4,675,075        40,717        3.46        4,792,289        38,921        3.26ÂÂ
Total deposits        9,700,098        90,914        3.72        9,491,567        85,003        3.59ÂÂ
Borrowings        27,425        287        4.15        37,997        407        4.30ÂÂ
Total interest-bearing liabilities        9,727,523        91,201        3.72        9,529,564        85,410        3.59ÂÂ
Noninterest-bearing deposits        237,545        205,741ÂÂÂÂÂ
Noninterest-bearing liabilities        78,930        80,427ÂÂÂÂÂ
Shareholders’ equity        852,145        849,318ÂÂÂÂÂ
Total liabilities and shareholders’ equity$        10,896,143ÂÂÂÂÂÂ$        10,665,050ÂÂÂÂÂ
Net interest income and interest rate spreadÂÂ$        89,410        3.09Â%ÂÂÂ$        84,302        3.04Â%
Net interest margin        3.37        3.29ÂÂ
Ratio of average interest-earning assets to average interest-bearing liabilities        108.11Â%        107.81Â%

(1)Average loan and lease balances include non-accruing loans and leases.

Live Oak Bancshares, Inc.
GAAP to Non-GAAP Reconciliation
(Dollars in thousands)

ÂAs of and for the three months ended
Â3Q 2023Â2Q 2023Â1Q 2023Â4Q 2022Â3Q 2022
Total shareholders’ equity$        850,368ÂÂÂ$        832,488ÂÂÂ$        822,807ÂÂÂ$        811,033ÂÂÂ$        802,168ÂÂ
Less:ÂÂÂÂÂÂÂÂÂ
Goodwill        1,797        1,797        1,797        1,797        1,797ÂÂ
Other intangible assets        1,759        1,797        1,835        1,873        1,912ÂÂ
Tangible shareholders’ equity (a)$        846,812ÂÂÂ$        828,894ÂÂÂ$        819,175ÂÂÂ$        807,363ÂÂÂ$        798,459ÂÂ
Shares outstanding (c)        44,480,215        44,351,715        44,290,840        44,061,244        43,981,350ÂÂ
Total assets$        10,950,460ÂÂÂ$        10,819,196ÂÂÂ$        10,364,297ÂÂÂ$        9,855,498ÂÂÂ$        9,314,650ÂÂ
Less:ÂÂÂÂÂÂÂÂÂ
Goodwill        1,797        1,797        1,797        1,797        1,797ÂÂ
Other intangible assets        1,759        1,797        1,835        1,873        1,912ÂÂ
Tangible assets (b)$        10,946,904ÂÂÂ$        10,815,602ÂÂÂ$        10,360,665ÂÂÂ$        9,851,828ÂÂÂ$        9,310,941ÂÂ
Tangible shareholders’ equity to tangible assets (a/b)        7.74Â%        7.66Â%        7.91Â%        8.20Â%        8.58Â%
Tangible book value per share (a/c)$        19.04ÂÂÂ$        18.69ÂÂÂ$        18.50ÂÂÂ$        18.32ÂÂÂ$        18.15ÂÂ
Efficiency ratio:ÂÂÂÂÂÂÂÂÂ
Noninterest expense (d)$        74,262ÂÂÂ$        76,457ÂÂÂ$        78,962ÂÂÂ$        84,585ÂÂÂ$        83,048ÂÂ
Net interest income        89,410        84,302        82,017        85,902        83,886ÂÂ
Noninterest income        37,891        24,156        19,579        19,071        57,724ÂÂ
Total revenue (e)$        127,301ÂÂÂ$        108,458ÂÂÂ$        101,596ÂÂÂ$        104,973ÂÂÂ$        141,610ÂÂ
Efficiency ratio (d/e)        58.34Â%        70.49Â%        77.72Â%        80.58Â%        58.65Â%

This press release presents non-GAAP financial measures. The adjustments to reconcile from the non-GAAP financial measures to the applicable GAAP financial measure are included where applicable in financial results presented in accordance with GAAP. The Company considers these adjustments to be relevant to ongoing operating results. The Company believes that excluding the amounts associated with these adjustments to present the non-GAAP financial measures provides a meaningful base for period-to-period comparisons, which will assist regulators, investors, and analysts in analyzing the operating results or financial position of the Company. The non-GAAP financial measures are used by management to assess the performance of the Company’s business for presentations of Company performance to investors, and for other reasons as may be requested by investors and analysts. The Company further believes that presenting the non-GAAP financial measures will permit investors and analysts to assess the performance of the Company on the same basis as that applied by management. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although non-GAAP financial measures are frequently used by shareholders to evaluate a company, they have limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of results reported under GAAP.

Live Oak Bancshares Inc

Related Items:
To Top