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Live Oak Bancshares, Inc. Reports First Quarter 2025 Results

1. LOB reported Q1 2025 net income of $9.7 million, $0.21 per share. 2. Deposits grew by $635.5 million, total assets increased by 5.0%. 3. Net interest income rose by 3.1%, net interest margin increased to 3.20%. 4. Revenue declined by 1.5% with a 3.4% rise in noninterest expenses. 5. High provision for loan losses at $29 million due to economic pressures.

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Why Bullish?

Despite revenue decline, strong growth in deposits and a slight increase in net interest margin indicate resilience. Historical trends show LOB benefits from positive net income amid operational growth.

How important is it?

The financial highlights indicate operational improvements despite challenges, which may drive interest among investors. Earnings per share and overall profitability are key metrics that impact valuation.

Why Short Term?

The strong quarterly results may influence investor sentiment quickly, but sustained pressures may stabilize the long-term outlook. Short-term performance data tends to have immediate effects on stock prices.

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WILMINGTON, N.C., April 23, 2025 (GLOBE NEWSWIRE) -- Live Oak Bancshares, Inc. (NYSE: LOB) (“Live Oak” or “the Company”) today reported first quarter of 2025 net income attributable to the Company of $9.7 million, or $0.21 per diluted share. Live Oak’s performance in the quarter compared to the fourth quarter of 2024, includes these notable items: Record first quarter production of $1.40 billion accompanied by strong deposit growth of $635.5 million, with total assets growing by 5.0% to $13.60 billionNet interest income increased 3.1% and net interest margin increased 5 basis points from 3.15% to 3.20%1.5% decline in revenue and 3.4% increase in noninterest expenses generated 10% decline in pre-provision net revenue1Provision expense for credit losses of $29.0 million, principally driven by loan growth amid a challenging macroeconomic environment, where elevated interest rates and inflationary pressures placed financial strain on some small business borrowersTwo key initiatives saw positive momentum — non-interest bearing deposit growth and small dollar loan production “Live Oak Bank demonstrated strong growth across our lending and deposit franchises in the first quarter, all while navigating the current small business credit cycle and a backdrop of economic uncertainty,” said Live Oak Chairman and CEO James S. (Chip) Mahan III. “We have an unwavering dedication to small business and staying close to our customers in these turbulent times remains paramount. Small business is the backbone of America, and we continue to support our nation’s entrepreneurs with the capital they need to create jobs, drive innovation, and serve their communities well.” Conference Call Live Oak will host a conference call to discuss the Company's financial results and business outlook tomorrow, April 24, 2025, at 9:00 a.m. ET. The call will be accessible by telephone and webcast using Conference ID: 75855. 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.: 800.549.8228International: +1 646.564.2877 Pass Code: None Required Live Webcast Log-In Webcast Link: investor.liveoakbank.com Registration: Name and Email Required Multi-Factor Code: Provided After Registration (1) See accompanying GAAP to Non-GAAP Reconciliation.   First Quarter 2025 Key Measures   (Dollars in thousands, except per share data)   Increase (Decrease)   1Q 2025 4Q 2024 Dollars Percent 1Q 2024Total revenue (1)$126,113  $128,067  $(1,954) (1.5)% $116,208 Total noninterest expense 84,017   81,257   2,760  3.4   77,737 Income before taxes 13,132   13,229   (97) (0.7)  22,107 Effective tax rate 26.4%  25.6%  n/a  n/a  (24.8)%Net income attributable to Live Oak Bancshares, Inc.$9,717  $9,900  $(183) (1.8)% $27,586 Diluted earnings per share 0.21   0.22   (0.01) (5)  0.60 Loan and lease production:            Loans and leases originated$1,396,223  $1,421,118  $(24,895) (1.8)% $805,129 % Fully funded 46.0%  42.4%  n/a  n/a   43.8%Total loans and leases:$11,061,866  $10,579,376  $482,490  4.6% $9,223,310 Total assets: 13,595,704   12,943,380   652,324  5.0   11,505,569 Total deposits: 12,395,945   11,760,494   635,451  5.4   10,383,361  (1) Total revenue consists of net interest income and total noninterest income. 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 any pandemic or public health situation 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; 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 or those of its third-party service providers; risks relating to the material weakness we identified in our internal control over financial reporting; technological risks and developments, including cyber threats, attacks, or events; 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; changes in tariffs and trade barriers, including potential changes in U.S. and international trade policies and the resulting impact on the Company and its customers; 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.liveoak.bank. Contacts: Walter J. Phifer | CFO | Investor Relations | 910.202.6926Claire Parker | Corporate Communications | Media Relations | 910.597.1592  Live Oak Bancshares, Inc.Quarterly Statements of Income (unaudited)(Dollars in thousands, except per share data)  Three Months Ended 1Q 2025 Change vs. 1Q 2025 4Q 2024 3Q 2024 2Q 2024 1Q 2024 4Q 2024 1Q 2024Interest income          % %Loans and fees on loans$195,616  $194,821  $192,170  $181,840  $176,010  0.4  11.1 Investment securities, taxable 11,089   10,490   9,750   9,219   8,954  5.7  23.8 Other interest earning assets 6,400   7,257   7,016   7,389   7,456  (11.8) (14.2)Total interest income 213,105   212,568   208,936   198,448   192,420  0.3  10.7 Interest expense             Deposits 110,888   113,357   110,174   105,358   101,998  (2.2) 8.7 Borrowings 1,685   1,737   1,762   1,770   311  (3.0) 441.8 Total interest expense 112,573   115,094   111,936   107,128   102,309  (2.2) 10.0 Net interest income 100,532   97,474   97,000   91,320   90,111  3.1  11.6 Provision for loan and lease credit losses 28,964   33,581   34,502   11,765   16,364  (13.7) 77.0 Net interest income after provision for loan and lease credit losses 71,568   63,893   62,498   79,555   73,747  12.0  (3.0)Noninterest income             Loan servicing revenue 8,298   8,524   8,040   7,347   7,624  (2.7) 8.8 Loan servicing asset revaluation (4,728)  (2,326)  (4,207)  (2,878)  (2,744) (103.3) (72.3)Net gains on sales of loans 18,648   18,356   16,646   14,395   11,502  1.6  62.1 Net (loss) gain on loans accounted for under the fair value option (1,034)  195   2,255   172   (219) (630.3) (372.1)Equity method investments (loss) income (2,239)  (2,739)  (1,393)  (1,767)  (5,022) 18.3  55.4 Equity security investments (losses) gains, net 20   12   909   161   (529) 66.7  (103.8)Lease income 2,573   2,456   2,424   2,423   2,453  4.8  4.9 Management fee income —   —   1,116   3,271   3,271  —  (100.0)Other noninterest income 4,043   6,115   7,142   11,035   9,761  (33.9) (58.6)Total noninterest income 25,581   30,593   32,932   34,159   26,097  (16.4) (2.0)Noninterest expense             Salaries and employee benefits 48,008   45,214   44,524   46,255   47,275  6.2  1.6 Travel expense 2,795   2,628   2,344   2,328   2,438  6.4  14.6 Professional services expense 3,024   2,797   3,287   3,061   1,878  8.1  61.0 Advertising and marketing expense 3,665   1,979   2,473   3,004   3,692  85.2  (0.7)Occupancy expense 2,737   2,558   2,807   2,388   2,247  7.0  21.8 Technology expense 9,251   9,406   9,081   7,996   7,723  (1.6) 19.8 Equipment expense 3,745   3,769   3,472   3,511   3,074  (0.6) 21.8 Other loan origination and maintenance expense 4,585   4,812   4,872   3,659   3,911  (4.7) 17.2 Renewable energy tax credit investment (recovery) impairment —   1,172   115   170   (927) (100.0) (100.0)FDIC insurance 3,551   3,053   1,933   2,649   3,200  16.3  11.0 Other expense 2,656   3,869   2,681   2,635   3,226  (31.4) (17.7)Total noninterest expense 84,017   81,257   77,589   77,656   77,737  3.4  8.1 Income before taxes 13,132   13,229   17,841   36,058   22,107  (0.7) (40.6)Income tax expense 3,464   3,386   4,816   9,095   (5,479) 2.3  (163.2)Net income 9,668   9,843   13,025   26,963   27,586  (1.8) (65.0)Net loss attributable to non-controlling interest 49   57   —   —   —  (14.0) 100.0 Net income attributable to Live Oak Bancshares, Inc.$9,717  $9,900  $13,025  $26,963  $27,586  (1.8) (64.8)Earnings per share             Basic$0.21  $0.22  $0.28  $0.60  $0.62  (4.5) (66.1)Diluted$0.21  $0.22  $0.28  $0.59  $0.60  (4.5) (65.0)Weighted average shares outstanding             Basic 45,377,965   45,224,470   45,073,482   44,974,942   44,762,308     Diluted 45,754,499   46,157,979   45,953,947   45,525,082   45,641,210       Live Oak Bancshares, Inc.Quarterly Balance Sheets (unaudited)(Dollars in thousands)  As of the quarter ended 1Q 2025 Change vs. 1Q 2025 4Q 2024 3Q 2024 2Q 2024 1Q 2024 4Q 2024 1Q 2024Assets          % %Cash and due from banks$744,263  $608,800  $666,585  $615,449  $597,394  22.3  24.6 Certificates of deposit with other banks 250   250   250   250   250  —  — Investment securities available-for-sale 1,312,680   1,248,203   1,233,466   1,151,195   1,120,622  5.2  17.1 Loans held for sale 367,955   346,002   359,977   363,632   310,749  6.3  18.4 Loans and leases held for investment (1) 10,693,911   10,233,374   9,831,891   9,172,134   8,912,561  4.5  20.0 Allowance for credit losses on loans and leases (190,184)  (167,516)  (168,737)  (137,867)  (139,041) (13.5) (36.8)Net loans and leases 10,503,727   10,065,858   9,663,154   9,034,267   8,773,520  4.4  19.7 Premises and equipment, net 259,113   264,059   267,032   267,864   258,071  (1.9) 0.4 Foreclosed assets 2,108   1,944   8,015   8,015   8,561  8.4  (75.4)Servicing assets 56,911   56,144   52,553   51,528   49,343  1.4  15.3 Other assets 348,697   352,120   356,314   376,370   387,059  (1.0) (9.9)Total assets$13,595,704  $12,943,380  $12,607,346  $11,868,570  $11,505,569  5.0  18.2 Liabilities and shareholders’ equity             Liabilities             Deposits:             Noninterest-bearing$386,108  $318,890  $258,844  $264,013  $226,668  21.1  70.3 Interest-bearing 12,009,837   11,441,604   11,141,703   10,443,018   10,156,693  5.0  18.2 Total deposits 12,395,945   11,760,494   11,400,547   10,707,031   10,383,361  5.4  19.4 Borrowings 110,247   112,820   115,371   117,745   120,242  (2.3) (8.3)Other liabilities 58,065   66,570   83,672   82,745   74,248  (12.8) (21.8)Total liabilities 12,564,257   11,939,884   11,599,590   10,907,521   10,577,851  5.2  18.8 Shareholders’ equity             Preferred stock, no par value, 1,000,000 shares authorized, none issued or outstanding —   —   —   —   —  —  — Class A common stock (voting) 370,513   365,607   361,925   356,381   349,648  1.3  6.0 Class B common stock (non-voting) —   —   —   —   —  —  — Retained earnings 724,215   715,767   707,026   695,172   669,307  1.2  8.2 Accumulated other comprehensive loss (67,698)  (82,344)  (61,195)  (90,504)  (91,237) 17.8  25.8 Total shareholders' equity attributed to Live Oak Bancshares, Inc. 1,027,030   999,030   1,007,756   961,049   927,718  2.8  10.7 Non-controlling interest 4,417   4,466   —   —   —  (1.1) 100.0 Total shareholders' equity 1,031,447   1,003,496   1,007,756   961,049   927,718  2.8  11.2 Total liabilities and shareholders’ equity$13,595,704  $12,943,380  $12,607,346  $11,868,570  $11,505,569  5.0  18.2  (1) Includes $316.8 million, $328.7 million, $343.4 million, $363.0 million and $379.2 million measured at fair value for the quarters ended March 31, 2025, December 31, 2024, September 30, 2024, June 30, 2024, and March 31, 2024 respectively.  Live Oak Bancshares, Inc.Quarterly Selected Financial Data(Dollars in thousands, except per share data)  As of and for the three months ended 1Q 2025 4Q 2024 3Q 2024 2Q 2024 1Q 2024Income Statement Data         Net income attributable to Live Oak Bancshares, Inc.$9,717  $9,900  $13,025  $26,963  $27,586 Per Common Share         Net income, diluted$0.21  $0.22  $0.28  $0.59  $0.60 Dividends declared 0.03   0.03   0.03   0.03   0.03 Book value 22.62   22.12   22.32   21.35   20.64 Tangible book value (1) 22.55   22.05   22.24   21.28   20.57 Performance Ratios         Return on average assets (annualized) 0.30%  0.31%  0.43%  0.93%  0.98%Return on average equity (annualized) 3.78   3.85   5.21   11.39   11.93 Net interest margin 3.20   3.15   3.33   3.28   3.33 Efficiency ratio (1) 66.62   63.45   59.72   61.89   66.89 Noninterest income to total revenue 20.28   23.89   25.35   27.22   22.46 Selected Loan Metrics         Loans and leases originated$1,396,223  $1,421,118  $1,757,856  $1,171,141  $805,129 Outstanding balance of sold loans serviced 4,949,962   4,715,895   4,452,750   4,292,857   4,329,097 Asset Quality Ratios         Allowance for credit losses to loans and leases held for investment (3) 1.83%  1.69%  1.78%  1.57%  1.63%Net charge-offs (3)$6,774  $33,566  $1,710  $8,253  $3,163 Net charge-offs to average loans and leases held for investment (2) (3) 0.27%  1.39%  0.08%  0.38%  0.15%          Nonperforming loans and leases at historical cost (3)         Unguaranteed$99,907  $81,412  $49,398  $37,340  $43,117 Guaranteed 322,993   222,885   166,177   122,752   105,351 Total 422,900   304,297   215,575   160,092   148,468 Unguaranteed nonperforming historical cost loans and leases, to loans and leases held for investment (3) 0.96%  0.82%  0.52%  0.42%  0.51%          Nonperforming loans at fair value (4)         Unguaranteed$9,938  $9,115  $8,672  $9,590  $7,942 Guaranteed 58,100   54,873   49,822   51,570   47,620 Total 68,038   63,988   58,494   61,160   55,562 Unguaranteed nonperforming fair value loans to fair value loans held for investment (4) 3.14%  2.77%  2.53%  2.64%  2.09%          Capital Ratios         Common equity tier 1 capital (to risk-weighted assets) 10.70%  11.04%  11.19%  11.85%  11.89%Tier 1 leverage capital (to average assets) 8.03   8.21   8.60   8.71   8.69  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)  Three Months EndedMarch 31, 2025 Three Months EndedDecember 31, 2024 Average Balance Interest Average Yield/Rate Average Balance Interest Average Yield/RateInterest-earning assets:           Interest-earning balances in other banks$581,267  $6,400 4.47% $603,758  $7,257 4.78%Investment securities 1,379,797   11,089 3.26   1,340,027   10,490 3.11 Loans held for sale 407,953   8,612 8.56   339,394   7,361 8.63 Loans and leases held for investment (1) 10,388,872   187,004 7.30   10,030,353   187,460 7.44 Total interest-earning assets 12,757,889   213,105 6.77   12,313,532   212,568 6.87 Less: Allowance for credit losses on loans and leases (165,320)      (155,498)    Noninterest-earning assets 534,133       551,265     Total assets$13,126,702      $12,709,299     Interest-bearing liabilities:           Interest-bearing checking$350,491  $3,929 4.55% $350,304  $4,350 4.94%Savings 5,540,147   51,604 3.78   5,333,338   52,308 3.90 Money market accounts 127,908   120 0.38   138,021   176 0.51 Certificates of deposit 5,563,004   55,235 4.03   5,376,290   56,523 4.18 Total deposits 11,581,550   110,888 3.88   11,197,953   113,357 4.03 Borrowings 111,919   1,685 6.11   114,561   1,737 6.03 Total interest-bearing liabilities 11,693,469   112,573 3.90   11,312,514   115,094 4.05 Noninterest-bearing deposits 342,482       281,874     Noninterest-bearing liabilities 58,739       83,373     Shareholders' equity 1,027,547       1,028,426     Non-controlling interest 4,465       3,112     Total liabilities and shareholders' equity$13,126,702      $12,709,299     Net interest income and interest rate spread  $100,532 2.87%   $97,474 2.82%Net interest margin    3.20      3.15 Ratio of average interest-earning assets to average interest-bearing liabilities    109.10%     108.85% (1) Average loan and lease balances include non-accruing loans and leases.  Live Oak Bancshares, Inc.GAAP to Non-GAAP Reconciliation(Dollars in thousands)  As of and for the three months ended 1Q 2025 4Q 2024 3Q 2024 2Q 2024 1Q 2024Total shareholders’ equity$1,031,447  $1,003,496  $1,007,756  $961,049  $927,718 Less:         Goodwill 1,797   1,797   1,797   1,797   1,797 Other intangible assets 1,529   1,568   1,606   1,644   1,682 Tangible shareholders’ equity (a)$1,028,121  $1,000,131  $1,004,353  $957,608  $924,239 Shares outstanding (c) 45,589,633   45,359,425   45,151,691   45,003,856   44,938,673 Total assets$13,595,704  $12,943,380  $12,607,346  $11,868,570  $11,505,569 Less:         Goodwill 1,797   1,797   1,797   1,797   1,797 Other intangible assets 1,529   1,568   1,606   1,644   1,682 Tangible assets (b)$13,592,378  $12,940,015  $12,603,943  $11,865,129  $11,502,090 Tangible shareholders’ equity to tangible assets (a/b) 7.56%  7.73%  7.97%  8.07%  8.04%Tangible book value per share (a/c)$22.55  $22.05  $22.24  $21.28  $20.57 Efficiency ratio:         Noninterest expense (d)$84,017  $81,257  $77,589  $77,656  $77,737 Net interest income 100,532   97,474   97,000   91,320   90,111 Noninterest income 25,581   30,593   32,932   34,159   26,097 Total revenue (e)$126,113  $128,067  $129,932  $125,479  $116,208 Efficiency ratio (d/e) 66.62%  63.45%  59.72%  61.89%  66.89%Pre-provision net revenue (e-d)$42,096  $46,810  $52,343  $47,823  $38,471                      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.

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