EX-99.1 2 lob-20231025exx991.htm EX-99.1 Document

Exhibit 99.1
liveoakbancshareslogo.jpg
LIVE OAK BANCSHARES, INC. REPORTS THIRD QUARTER 2023 RESULTS
Wilmington, NC, October 25, 2023 - 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 Quarter 2023 Key Measures
(Dollars in thousands, except per share data)Increase (Decrease)
3Q 20232Q 2023DollarsPercent3Q 2022
Total revenue (1)
$127,301 $108,458 $18,843 17 %$141,610 
Total noninterest expense74,262 76,457 (2,195)(3)83,048 
Income before taxes42,760 18,973 23,787 125 44,393 
Effective tax rate6.9 %7.5 %n/an/a3.4 %
Net income$39,793 $17,544 $22,249 127 %$42,868 
Diluted earnings per share0.88 0.39 0.49 126 0.96 
Loan and lease production:
Loans and leases originated$1,073,255 $861,033 $212,222 25 %$1,005,235 
% Fully funded52.2 %49.4 %n/an/a54.0 %
Total loans and leases:$8,775,235 $8,360,174 $415,061 5 %$7,391,031 
Total assets:10,950,460 10,819,196 131,264 1 9,314,650 
Total deposits:10,003,642 9,879,111 124,531 1 8,404,909 
(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. 
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.
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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.
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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
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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
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Live Oak Bancshares, Inc.
Quarterly Statements of Income (unaudited)
(Dollars in thousands, except per share data)
Three Months Ended3Q 2023 Change vs.
3Q 20232Q 20231Q 20234Q 20223Q 20222Q 20233Q 2022
Interest income%%
Loans and fees on loans$162,722 $152,362 $139,052 $127,310 $107,880 6.8 50.8 
Investment securities, taxable8,701 8,503 7,547 6,716 5,506 2.3 58.0 
Other interest earning assets9,188 8,847 4,817 2,584 2,448 3.9 275.3 
Total interest income180,611 169,712 151,416 136,610 115,834 6.4 55.9 
Interest expense 
Deposits90,914 85,003 67,595 50,357 31,553 7.0 188.1 
Borrowings287 407 1,804 351 395 (29.5)(27.3)
Total interest expense91,201 85,410 69,399 50,708 31,948 6.8 185.5 
Net interest income89,410 84,302 82,017 85,902 83,886 6.1 6.6 
Provision for loan and lease credit losses10,279 13,028 19,021 19,671 14,169 (21.1)(27.5)
Net interest income after provision for loan and lease credit losses79,131 71,274 62,996 66,231 69,717 11.0 13.5 
Noninterest income
Loan servicing revenue6,990 6,687 6,380 6,296 6,230 4.5 12.2 
Loan servicing asset revaluation11,335 (2,831)356 (5,016)(1,324)500.4 956.1 
Net gains on sales of loans12,675 10,804 10,175 7,362 9,275 17.3 36.7 
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 income2,498 2,535 2,535 2,555 2,516 (1.5)(0.7)
Management fee income3,277 3,266 3,472 3,200 2,844 0.3 15.2 
Other noninterest income3,501 3,901 4,065 5,053 3,751 (10.3)(6.7)
Total noninterest income37,891 24,156 19,579 19,071 57,724 56.9 (34.4)
Noninterest expense
Salaries and employee benefits42,947 43,066 44,765 42,560 43,479 (0.3)(1.2)
Travel expense2,197 2,770 2,411 1,872 2,372 (20.7)(7.4)
Professional services expense1,762 1,996 927 2,453 2,505 (11.7)(29.7)
Advertising and marketing expense3,446 3,009 3,603 3,892 2,621 14.5 31.5 
Occupancy expense2,129 2,205 1,925 3,469 2,519 (3.4)(15.5)
Technology expense7,722 8,005 7,729 8,849 7,770 (3.5)(0.6)
Equipment expense3,676 4,023 3,818 3,759 3,761 (8.6)(2.3)
Other loan origination and maintenance expense3,498 3,442 3,927 3,657 3,376 1.6 3.6 
Renewable energy tax credit investment impairment— — 69 8,446 7,721 — (100.0)
FDIC insurance4,115 5,061 3,403 2,923 2,697 (18.7)52.6 
Contributions and donations— — — 33 191 — (100.0)
Other expense2,770 2,880 6,385 2,672 4,036 (3.8)(31.4)
Total noninterest expense74,262 76,457 78,962 84,585 83,048 (2.9)(10.6)
Income before taxes42,760 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 94.6 
Net income$39,793 $17,544 $398 $1,792 $42,868 126.8 (7.2)
Earnings per share
Basic$0.89 $0.40 $0.01 $0.04 $0.97 122.5 (8.2)
Diluted$0.88 $0.39 $0.01 $0.04 $0.96 125.6 (8.3)
Weighted average shares outstanding
Basic44,408,997 44,327,474 44,157,156 44,005,220 43,914,920 
Diluted45,268,745 44,835,089 44,964,616 44,794,941 44,797,109 
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Live Oak Bancshares, Inc.
Quarterly Balance Sheets (unaudited)
(Dollars in thousands)
As of the quarter ended3Q 2023 Change vs.
3Q 20232Q 20231Q 20234Q 20223Q 20222Q 20233Q 2022
Assets%%
Cash and due from banks$534,774 $808,131 $463,186 $280,239 $335,046 (33.8)59.6 
Federal funds sold— — — 136,397 68,324 — (100.0)
Certificates of deposit with other banks3,750 4,000 4,000 4,000 4,250 (6.3)(11.8)
Investment securities available-for-sale1,099,878 1,133,146 1,149,691 1,014,719 1,005,372 (2.9)9.4 
Loans held for sale
572,604 523,776 533,292 554,610 537,649 9.3 6.5 
Loans and leases held for investment (1)
8,202,631 7,836,398 7,686,987 7,344,178 6,853,382 4.7 19.7 
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 leases8,081,358 7,716,282 7,578,745 7,247,612 6,775,091 4.7 19.3 
Premises and equipment, net258,041 269,485 268,138 263,290 260,285 (4.2)(0.9)
Foreclosed assets6,701 — — — 1,178 100.0 468.8 
Servicing assets47,127 31,042 29,357 26,323 29,081 51.8 62.1 
Other assets346,227 333,334 337,888 328,308 298,374 3.9 16.0 
Total assets$10,950,460 $10,819,196 $10,364,297 $9,855,498 $9,314,650 1.2 17.6 
Liabilities and shareholders’ equity
Liabilities
Deposits:
Noninterest-bearing$239,536 $229,833 $176,439 $194,100 $170,336 4.2 40.6 
Interest-bearing9,764,106 9,649,278 9,245,555 8,690,828 8,234,573 1.2 18.6 
Total deposits10,003,642 9,879,111 9,421,994 8,884,928 8,404,909 1.3 19.0 
Borrowings25,847 28,317 30,767 83,203 35,616 (8.7)(27.4)
Other liabilities70,603 79,280 88,729 76,334 71,957 (10.9)(1.9)
Total liabilities10,100,092 9,986,708 9,541,490 9,044,465 8,512,482 1.1 18.7 
Shareholders’ equity
Preferred stock, no par value, 1,000,000 shares authorized, none issued or outstanding— — — — — — — 
Class A common stock (voting)340,929 341,032 334,672 330,854 325,632 — 4.7 
Class B common stock (non-voting)— — — — — — — 
Retained earnings627,759 589,036 572,530 572,497 571,778 6.6 9.8 
Accumulated other comprehensive loss(118,320)(97,580)(84,395)(92,318)(95,242)21.3 24.2 
Total shareholders' equity850,368 832,488 822,807 811,033 802,168 2.1 6.0 
Total liabilities and shareholders’ equity$10,950,460 $10,819,196 $10,364,297 $9,855,498 $9,314,650 1.2 17.6 
(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.
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Live Oak Bancshares, Inc.
Statements of Income (unaudited)
(Dollars in thousands, except per share data)
Nine Months Ended
September 30, 2023September 30, 2022
Interest income
Loans and fees on loans$454,136 $291,235 
Investment securities, taxable24,751 12,951 
Other interest earning assets22,852 3,677 
Total interest income501,739 307,863 
Interest expense
Deposits243,512 64,678 
Borrowings2,498 1,586 
Total interest expense246,010 66,264 
Net interest income255,729 241,599 
Provision for loan and lease credit losses42,328 21,272 
Net interest income after provision for loan and lease credit losses213,401 220,327 
Noninterest income
Loan servicing revenue20,057 19,063 
Loan servicing asset revaluation8,860 (11,561)
Net gains on sales of loans33,654 35,882 
Net (loss) gain on loans accounted for under the fair value option(3,369)475 
Equity method investments (loss) income(6,041)146,068 
Equity security investments (losses) gains, net(585)2,487 
Lease income7,568 7,529 
Management fee income10,015 6,890 
Other noninterest income11,467 12,088 
Total noninterest income81,626 218,921 
Noninterest expense
Salaries and employee benefits130,778 128,262 
Travel expense7,378 6,627 
Professional services expense4,685 9,284 
Advertising and marketing expense10,058 6,651 
Occupancy expense6,259 7,619 
Technology expense23,456 19,585 
Equipment expense11,517 11,361 
Other loan origination and maintenance expense10,867 9,511 
Renewable energy tax credit investment impairment69 7,771 
FDIC insurance12,579 6,833 
Contributions and donations— 6,429 
Other expense12,035 9,708 
Total noninterest expense229,681 229,641 
Income before taxes65,346 209,607 
Income tax expense7,611 35,191 
Net income$57,735 $174,416 
Earnings per share
Basic$1.30 $3.98 
Diluted$1.28 $3.88 
Weighted average shares outstanding
Basic44,298,798 43,814,648 
Diluted45,023,739 44,943,432 
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Live Oak Bancshares, Inc.
Quarterly Selected Financial Data
(Dollars in thousands, except per share data)
As of and for the three months ended
3Q 20232Q 20231Q 20234Q 20223Q 2022
Income Statement Data
Net income$39,793 $17,544 $398 $1,792 $42,868 
Per Common Share
Net income, diluted$0.88 $0.39 $0.01 $0.04 $0.96 
Dividends declared0.03 0.03 0.03 0.03 0.03 
Book value19.12 18.77 18.58 18.41 18.24 
Tangible book value (1)
19.04 18.69 18.50 18.32 18.15 
Performance Ratios
Return on average assets (annualized)1.46 %0.66 %0.02 %0.08 %1.86 %
Return on average equity (annualized)18.68 8.26 0.19 0.88 20.79 
Net interest margin3.37 3.29 3.46 3.76 3.84 
Efficiency ratio (1)
58.34 70.49 77.72 80.58 58.65 
Noninterest income to total revenue29.76 22.27 19.27 18.17 40.76 
Selected Loan Metrics
Loans and leases originated$1,073,255 $861,033 $1,030,882 $1,177,688 $1,005,235 
Outstanding balance of sold loans serviced4,028,575 3,813,852 3,616,701 3,481,885 3,345,907 
Asset Quality Ratios
Allowance for credit losses to loans and leases held for investment (3)
1.56 %1.62 %1.50 %1.41 %1.23 %
Net charge-offs (3)
$9,122 $1,154 $6,669 $1,396 $1,741 
Net charge-offs to average loans and leases held for investment (2) (3)
0.48 %0.06 %0.38 %0.09 %0.12 %
Nonperforming loans and leases at historical cost (3)
Unguaranteed$33,255 $44,899 $22,002 $18,784 $14,334 
Guaranteed65,837 66,322 63,696 54,608 45,730 
Total99,092 111,221 85,698 73,392 60,064 
Unguaranteed nonperforming historical cost loans and leases, to loans and leases held for investment (3)
0.43 %0.61 %0.30 %0.27 %0.23 %
Nonperforming loans at fair value (4)
Unguaranteed$6,518 $8,602 $8,193 $6,678 $2,736 
Guaranteed39,378 45,114 43,968 38,212 25,169 
Total45,896 53,716 52,161 44,890 27,905 
Unguaranteed nonperforming fair value loans to fair value loans held for investment (4)
1.59 %1.95 %1.75 %1.35 %0.53 %
Capital Ratios
Common equity tier 1 capital (to risk-weighted assets)11.63 %11.55 %11.67 %12.46 %13.16 %
Tier 1 leverage capital (to average assets)8.56 8.46 8.70 9.26 9.49 
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).
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Live Oak Bancshares, Inc.
Quarterly Average Balances and Net Interest Margin
(Dollars in thousands)
Three Months Ended
September 30, 2023
Three Months Ended
June 30, 2023
Average BalanceInterestAverage Yield/RateAverage BalanceInterestAverage Yield/Rate
Interest-earning assets:
Interest-earning balances in other banks$677,857 $9,188 5.38 %$731,427 $8,847 4.85 %
Investment securities1,257,740 8,701 2.74 1,252,320 8,503 2.72 
Loans held for sale602,109 13,271 8.74 516,378 12,153 9.44 
Loans and leases held for investment (1)
7,978,870 149,451 7.43 7,773,816 140,209 7.23 
Total interest-earning assets10,516,576 180,611 6.81 10,273,941 169,712 6.63 
Less: Allowance for credit losses on loans and leases(119,941)(108,552)
Noninterest-earning assets499,508 499,661 
Total assets$10,896,143 $10,665,050 
Interest-bearing liabilities:
Interest-bearing checking$300,059 $4,217 5.58 %$300,046 $3,968 5.30 %
Savings4,588,085 45,778 3.96 4,277,850 41,930 3.93 
Money market accounts136,879 202 0.59 121,382 184 0.61 
Certificates of deposit4,675,075 40,717 3.46 4,792,289 38,921 3.26 
Total deposits9,700,098 90,914 3.72 9,491,567 85,003 3.59 
Borrowings27,425 287 4.15 37,997 407 4.30 
Total interest-bearing liabilities9,727,523 91,201 3.72 9,529,564 85,410 3.59 
Noninterest-bearing deposits237,545 205,741 
Noninterest-bearing liabilities78,930 80,427 
Shareholders' equity852,145 849,318 
Total liabilities and shareholders' equity$10,896,143 $10,665,050 
Net interest income and interest rate spread$89,410 3.09 %$84,302 3.04 %
Net interest margin3.37 3.29 
Ratio of average interest-earning assets to average interest-bearing liabilities108.11 %107.81 %
(1)Average loan and lease balances include non-accruing loans and leases.
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Live Oak Bancshares, Inc.
GAAP to Non-GAAP Reconciliation
(Dollars in thousands)
As of and for the three months ended
3Q 20232Q 20231Q 20234Q 20223Q 2022
Total shareholders’ equity$850,368 $832,488 $822,807 $811,033 $802,168 
Less:
Goodwill1,797 1,797 1,797 1,797 1,797 
Other intangible assets1,759 1,797 1,835 1,873 1,912 
Tangible shareholders’ equity (a)$846,812 $828,894 $819,175 $807,363 $798,459 
Shares outstanding (c)44,480,215 44,351,715 44,290,840 44,061,244 43,981,350 
Total assets$10,950,460 $10,819,196 $10,364,297 $9,855,498 $9,314,650 
Less:
Goodwill1,797 1,797 1,797 1,797 1,797 
Other intangible assets1,759 1,797 1,835 1,873 1,912 
Tangible assets (b)$10,946,904 $10,815,602 $10,360,665 $9,851,828 $9,310,941 
Tangible shareholders’ equity to tangible assets (a/b)7.74 %7.66 %7.91 %8.20 %8.58 %
Tangible book value per share (a/c)$19.04 $18.69 $18.50 $18.32 $18.15 
Efficiency ratio:
Noninterest expense (d)$74,262 $76,457 $78,962 $84,585 $83,048 
Net interest income89,410 84,302 82,017 85,902 83,886 
Noninterest income37,891 24,156 19,579 19,071 57,724 
Total revenue (e)$127,301 $108,458 $101,596 $104,973 $141,610 
Efficiency ratio (d/e)58.34 %70.49 %77.72 %80.58 %58.65 %
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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