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Live Oak Bancshares, Inc. Reports Fourth Quarter 2023 Results
المصدر: Nasdaq GlobeNewswire / 24 يناير 2024 16:30:01 America/New_York
WILMINGTON, N.C., Jan. 24, 2024 (GLOBE NEWSWIRE) -- Live Oak Bancshares, Inc. (NYSE: LOB) (“Live Oak” or “the Company”) today reported fourth quarter of 2023 net income of $16.2 million, or $0.36 per diluted share. Net income for the year ended December 31, 2023, totaled $73.9 million, or $1.64 per diluted share.
“Live Oak Bank spent 2023 doing what we do best -- growing loans, deposits, and revenue in our mission to support small business owners, our employees and our shareholders,” said Live Oak Chairman and CEO James S. (Chip) Mahan III. “When looking back at 2023, it is clear that our customers and our model were extraordinarily resilient. We are proud to serve America’s small business owners through all cycles and believe our fourth quarter results, and the historical performance of our bank, continue to demonstrate our strength in the market.”
Year Over Year Highlights
(Dollars in thousands, except per share data) Increase (Decrease) 2023 2022 Dollars Percent Total revenue(1) $ 457,038 $ 565,493 $ (108,455 ) (19)% Total noninterest expense 322,885 314,226 8,659 3 Income before taxes 82,830 210,324 (127,494 ) (61 ) Effective tax rate 10.8 % 16.2 % n/a n/a Net income $ 73,898 $ 176,208 $ (102,310 ) (58)% Diluted earnings per share 1.64 3.92 (2.28 ) (58 ) Loan and lease production: Loans and leases originated $ 3,946,873 $ 4,007,621 $ (60,748 ) (2)% % Fully funded 55.1 % 58.8 % n/a n/a Total loans and leases: $ 9,020,884 $ 7,898,788 $ 1,122,096 14 % Total assets: 11,271,423 9,855,498 1,415,925 14 Total deposits: 10,275,019 8,884,928 1,390,091 16 (1) Total revenue consists of net interest income and total noninterest income.
Fourth Quarter 2023 Key Measures
(Dollars in thousands, except per share data) Increase (Decrease) 4Q 2023 3Q 2023 Dollars Percent 4Q 2022 Total revenue(1) $ 119,683 $ 127,301 $ (7,618 ) (6)% $ 104,973 Total noninterest expense 93,204 74,262 18,942 26 84,585 Income before taxes 17,484 42,760 (25,276 ) (59 ) 717 Effective tax rate 7.6 % 6.9 % n/a n/a (149.9)% Net income $ 16,163 $ 39,793 $ (23,630 ) (59)% $ 1,792 Diluted earnings per share 0.36 0.88 (0.52 ) (59 ) 0.04 Loan and lease production: Loans and leases originated $ 981,703 $ 1,073,255 $ (91,552 ) (9)% $ 1,177,688 % Fully funded 49.0 % 52.2 % n/a n/a 58.1 % (1) Total revenue consists of net interest income and total noninterest income.
Loans and Leases
At December 31, 2023, the total loan and lease portfolio was $9.02 billion, 2.8% above its level at September 30, 2023 and 14.2% above its level at December 31, 2022. This growth was driven by strong origination volumes. Compared to the third quarter of 2023, loans and leases held for investment increased $431.2 million, or 5.3%, to $8.63 billion while loans held for sale decreased $185.6 million, or 32.4%, to $387.0 million. Average loans and leases were $8.84 billion during the fourth quarter of 2023 compared to $8.58 billion during the third quarter of 2023.
The total loan and lease portfolio at December 31, 2023, and September 30, 2023 was comprised of 37.8% and 39.0% of guaranteed loans and leases, respectively.
Loan and lease originations totaled $981.7 million during the fourth quarter of 2023, a decrease of $91.6 million, or 8.5%, from the third quarter of 2023.
Deposits
Total deposits increased to $10.28 billion at December 31, 2023, an increase of $271.4 million compared to September 30, 2023, and an increase of $1.39 billion compared to December 31, 2022. The increase in total deposits from the prior periods provides support for the growth in the loan and lease portfolio.
Average total interest-bearing deposits for the fourth quarter of 2023 increased $137.5 million, or 1.4%, to $9.84 billion, compared to $9.70 billion for the third quarter of 2023. The ratio of average total loans and leases to average interest-bearing deposits was 89.9% for the fourth quarter of 2023 compared to 88.5% for the third quarter of 2023.
Borrowings
Borrowings totaled $23.4 million at December 31, 2023, compared to $25.8 million and $83.2 million at September 30, 2023 and December 31, 2022, respectively. The decrease from the fourth quarter of 2022 was principally due to paying off the Company’s Fed Funds line of credit.
Net Interest Income
Net interest income for the fourth quarter of 2023 increased to $89.6 million compared to $89.4 million for the third quarter of 2023 and $85.9 million for the fourth quarter of 2022.
The net interest margin for the fourth and third quarters of 2023 was 3.32% and 3.37%, respectively, a decrease of 5 basis points quarter over quarter. This decrease was principally the result of growth in loan yields being outpaced by the cost of deposits. The primary mitigant to loan yields in the fourth quarter of 2023 arose from the accelerated recognition of a large deferred expense, as a result of early payoffs on two loans, which was recognized as a reduction to interest income. The increase in cost of deposits was primarily driven by a large certificate of deposit maturity event in the fourth quarter renewing at higher current market rates. During the fourth quarter of 2023, the average cost of interest-bearing liabilities increased by 18 basis points while the average yield on interest-earning assets increased by 11 basis points.
The increase in net interest income for the fourth quarter of 2023 compared to the fourth quarter of 2022 was driven by growth in the total loan and lease portfolio. Partially mitigating this increase was a decrease in the net interest margin arising from an increase in interest-bearing liabilities combined with average cost of funds outpacing the average yield on interest-earning assets.
Noninterest Income
Noninterest income for the fourth quarter of 2023 decreased to $30.1 million compared to $37.9 million for the third quarter of 2023 and increased from $19.1 million for the fourth quarter of 2022. The primary drivers behind changes in noninterest income are outlined below.
The loan servicing asset revaluation resulted in a loss of $4.0 million for the fourth quarter of 2023 compared to a gain of $11.3 million for the third quarter of 2023 and loss of $5.0 million for the fourth quarter of 2022. The $15.3 million quarter over quarter negative change in servicing asset revaluation was principally due to the third quarter of 2023 one-time positive adjustment of $13.7 million, arising from the Company’s change in valuation techniques used to estimate the fair value of servicing rights.
Net gains on sales of loans was $12.9 million, a $216 thousand increase compared to the third quarter of 2023 and a $5.5 million increase compared to the fourth quarter of 2022. The increase in net gains on sales of loans compared to the fourth quarter of 2022 was largely the result of a higher volume of loan sales. The average guaranteed loan sale premium was stable for all compared periods at 105% for the fourth quarter of 2023, third quarter of 2023 and fourth quarter of 2022. The volume of guaranteed loans sold was $239.1 million for the fourth quarter of 2023 compared to $225.6 million sold in the third quarter of 2023 and $144.3 million sold in the fourth quarter of 2022.
Other noninterest income for the fourth quarter of 2023 totaled $8.6 million compared to $3.5 million for the third quarter of 2023 and $5.1 million for the fourth quarter of 2022. The increase in noninterest income for both comparative periods was principally driven by a $4.4 million gain arising from the sale of one of the Company’s aircraft in the fourth quarter of 2023.
Noninterest Expense
Noninterest expense for the fourth quarter of 2023 totaled $93.2 million compared to $74.3 million for the third quarter of 2023 and $84.6 million for the fourth quarter of 2022. The primary drivers in the noninterest expense changes are outlined below.
Salaries and employee benefits for the fourth quarter of 2023 increased $1.3 million compared to the third quarter of 2023 and increased $1.7 million compared to the fourth quarter of 2022. Included in the fourth quarter of 2023 was a special employee bonus of $4.5 million. Excluding this special bonus, total salaries and employee benefits for the fourth quarter of 2023 decreased $3.2 million compared to the third quarter of 2023 and decreased $2.8 million compared to the fourth quarter of 2022.
The Company incurred impairment charges related to a new renewable energy tax credit investment transaction of $14.6 million in the fourth quarter of 2023 compared to none in the third quarter of 2023 and $8.4 million in the fourth quarter of 2022. Investments of this type generate a return primarily through the realization of income tax credits and other benefits; accordingly, impairment of the investment amount is recognized in conjunction with the realization of related tax benefits. These investments generated federal investment tax credits in the fourth quarters of 2023 and 2022 of $16.4 million and $10.3 million, respectively, which are reflected in the Company’s effective tax rate for each respective year. Investments of this nature are part of the Company’s ongoing initiative to promote renewable energy sources.
Asset Quality
During the fourth quarter of 2023, the Company recognized net charge-offs for loans carried at historical cost of $4.4 million compared to $9.1 million in the third quarter of 2023 and $1.4 million in the fourth quarter of 2022. Net charge-off activity in the fourth quarter of 2023 was largely related to four loans spread across three verticals. Net charge-offs as a percentage of average held for investment loans and leases carried at historical cost, annualized, for the quarters ended December 31, 2023, September 30, 2023 and December 31, 2022, was 0.22%, 0.48% and 0.09%, respectively. Net charge-offs as a percentage of total average held for investment loans and leases carried at historical cost for the years ended December 31, 2023 and 2022, were 0.29% and 0.14%, respectively.
Unguaranteed nonperforming (nonaccrual) loans and leases, excluding $7.2 million and $6.5 million accounted for under the fair value option at December 31, 2023, and September 30, 2023, respectively, increased to $39.3 million, or 0.48% of loans and leases held for investment which are carried at historical cost, at December 31, 2023, compared to $33.3 million, or 0.43%, at September 30, 2023.
Provision for Loan and Lease Credit Losses
The provision for loan and lease credit losses for the fourth quarter of 2023 totaled $9.0 million compared to $10.3 million for the third quarter of 2023 and $19.7 million for the fourth quarter of 2022. The lower provision expense in the fourth quarter of 2023 compared to the fourth quarter of 2022 was primarily the result of a decline in reserves related to loans individually evaluated for impairment.
The allowance for credit losses on loans and leases totaled $125.8 million at December 31, 2023, compared to $121.3 million at September 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 1.53% and 1.56% at December 31, 2023, and September 30, 2023, respectively.
Income Tax
Income tax expense (benefit) and related effective tax rate was $1.3 million and 7.6% for the fourth quarter of 2023, $3.0 million and 6.9% for the third quarter of 2023, and $(1.1) million and (149.9)% for the fourth quarter of 2022, respectively. The higher level of income tax expense for the fourth quarter of 2023 compared to the fourth quarter of 2022 was primarily the result of a higher level of pretax income combined with higher levels of investment tax credits related to renewable energy investment transactions in the fourth quarter of 2023 in conjunction with recognition of a research credit recognized during the fourth quarter of 2022.
Conference Call
Live Oak will host a conference call to discuss the company's financial results and business outlook tomorrow, January 25, 2024, at 9:00 a.m. ET. The call will be accessible by telephone and webcast using Conference ID: 19103652. 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 RequiredLive Webcast Log-In
Webcast Link: investor.liveoakbank.com
Registration: Name and Email Required
Multi-Factor Code: Provided After RegistrationImportant 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:
Walter J. Phifer, CFO | Investor Relations | 910.202.6926
Claire Parker | Corporate Communications | Media Relations | 910.597.1592Live Oak Bancshares, Inc.
Quarterly Statements of Income (unaudited)
(Dollars in thousands, except per share data)Three Months Ended 4Q 2023 Change vs. 4Q 2023 3Q 2023 2Q 2023 1Q 2023 4Q 2022 3Q 2023 4Q 2022 Interest income % % Loans and fees on loans $ 169,531 $ 162,722 $ 152,362 $ 139,052 $ 127,310 4.2 33.2 Investment securities, taxable 8,746 8,701 8,503 7,547 6,716 0.5 30.2 Other interest earning assets 8,259 9,188 8,847 4,817 2,584 (10.1 ) 219.6 Total interest income 186,536 180,611 169,712 151,416 136,610 3.3 36.5 Interest expense Deposits 96,695 90,914 85,003 67,595 50,357 6.4 92.0 Borrowings 265 287 407 1,804 351 (7.7 ) (24.5 ) Total interest expense 96,960 91,201 85,410 69,399 50,708 6.3 91.2 Net interest income 89,576 89,410 84,302 82,017 85,902 0.2 4.3 Provision for loan and lease credit losses 8,995 10,279 13,028 19,021 19,671 (12.5 ) (54.3 ) Net interest income after provision for loan and lease credit losses 80,581 79,131 71,274 62,996 66,231 1.8 21.7 Noninterest income Loan servicing revenue 7,342 6,990 6,687 6,380 6,296 5.0 16.6 Loan servicing asset revaluation (3,974 ) 11,335 (2,831 ) 356 (5,016 ) (135.1 ) 20.8 Net gains on sales of loans 12,891 12,675 10,804 10,175 7,362 1.7 75.1 Net (loss) gain on loans accounted for under the fair value option (170 ) (568 ) 1,728 (4,529 ) 571 70.1 (129.8 ) Equity method investments income (loss) 47 (1,034 ) (2,055 ) (2,952 ) (1,818 ) 104.5 102.6 Equity security investments (losses) gains, net (384 ) (783 ) 121 77 868 51.0 (144.2 ) Lease income 2,439 2,498 2,535 2,535 2,555 (2.4 ) (4.5 ) Management fee income 3,309 3,277 3,266 3,472 3,200 1.0 3.4 Other noninterest income 8,607 3,501 3,901 4,065 5,053 145.8 70.3 Total noninterest income 30,107 37,891 24,156 19,579 19,071 (20.5 ) 57.9 Noninterest expense Salaries and employee benefits 44,274 42,947 43,066 44,765 42,560 3.1 4.0 Travel expense 1,544 2,197 2,770 2,411 1,872 (29.7 ) (17.5 ) Professional services expense 3,052 1,762 1,996 927 2,453 73.2 24.4 Advertising and marketing expense 2,501 3,446 3,009 3,603 3,892 (27.4 ) (35.7 ) Occupancy expense 2,231 2,129 2,205 1,925 3,469 4.8 (35.7 ) Technology expense 8,402 7,722 8,005 7,729 8,849 8.8 (5.1 ) Equipment expense 3,480 3,676 4,023 3,818 3,759 (5.3 ) (7.4 ) Other loan origination and maintenance expense 3,937 3,498 3,442 3,927 3,657 12.6 7.7 Renewable energy tax credit investment impairment 14,575 — — 69 8,446 100.0 72.6 FDIC insurance 4,091 4,115 5,061 3,403 2,923 (0.6 ) 40.0 Contributions and donations — — — — 33 — (100.0 ) Other expense 5,117 2,770 2,880 6,385 2,672 84.7 91.5 Total noninterest expense 93,204 74,262 76,457 78,962 84,585 25.5 10.2 Income before taxes 17,484 42,760 18,973 3,613 717 (59.1 ) 2,338.5 Income tax expense (benefit) 1,321 2,967 1,429 3,215 (1,075 ) (55.5 ) 222.9 Net income $ 16,163 $ 39,793 $ 17,544 $ 398 $ 1,792 (59.4 ) 802.0 Earnings per share Basic $ 0.36 $ 0.89 $ 0.40 $ 0.01 $ 0.04 (59.6 ) 800.0 Diluted $ 0.36 $ 0.88 $ 0.39 $ 0.01 $ 0.04 (59.1 ) 800.0 Weighted average shares outstanding Basic 44,516,646 44,408,997 44,327,474 44,157,156 44,005,220 Diluted 45,306,506 45,268,745 44,835,089 44,964,616 44,794,941 Live Oak Bancshares, Inc.
Quarterly Balance Sheets (unaudited)
(Dollars in thousands)As of the quarter ended 4Q 2023 Change vs. 4Q 2023 3Q 2023 2Q 2023 1Q 2023 4Q 2022 3Q 2023 4Q 2022 Assets % % Cash and due from banks $ 582,540 $ 534,774 $ 808,131 $ 463,186 $ 280,239 8.9 107.9 Federal funds sold — — — — 136,397 — (100.0 ) Certificates of deposit with other banks 250 3,750 4,000 4,000 4,000 (93.3 ) (93.8 ) Investment securities available-for-sale 1,126,160 1,099,878 1,133,146 1,149,691 1,014,719 2.4 11.0 Loans held for sale 387,037 572,604 523,776 533,292 554,610 (32.4 ) (30.2 ) Loans and leases held for investment(1) 8,633,847 8,202,631 7,836,398 7,686,987 7,344,178 5.3 17.6 Allowance for credit losses on loans and leases (125,840 ) (121,273 ) (120,116 ) (108,242 ) (96,566 ) 3.8 30.3 Net loans and leases 8,508,007 8,081,358 7,716,282 7,578,745 7,247,612 5.3 17.4 Premises and equipment, net 257,881 258,041 269,485 268,138 263,290 (0.1 ) (2.1 ) Foreclosed assets 6,481 6,701 — — — (3.3 ) 100.0 Servicing assets 48,591 47,127 31,042 29,357 26,323 3.1 84.6 Other assets 354,476 346,227 333,334 337,888 328,308 2.4 8.0 Total assets $ 11,271,423 $ 10,950,460 $ 10,819,196 $ 10,364,297 $ 9,855,498 2.9 14.4 Liabilities and Shareholders’ Equity Liabilities Deposits: Noninterest-bearing $ 259,270 $ 239,536 $ 229,833 $ 176,439 $ 194,100 8.2 33.6 Interest-bearing 10,015,749 9,764,106 9,649,278 9,245,555 8,690,828 2.6 15.2 Total deposits 10,275,019 10,003,642 9,879,111 9,421,994 8,884,928 2.7 15.6 Borrowings 23,354 25,847 28,317 30,767 83,203 (9.6 ) (71.9 ) Other liabilities 70,384 70,603 79,280 88,729 76,334 (0.3 ) (7.8 ) Total liabilities 10,368,757 10,100,092 9,986,708 9,541,490 9,044,465 2.7 14.6 Shareholders’ equity Preferred stock, no par value, 1,000,000 shares authorized, none issued or outstanding — — — — — — — Class A common stock (voting) 344,568 340,929 341,032 334,672 330,854 1.1 4.1 Class B common stock (non-voting) — — — — — — — Retained earnings 642,817 627,759 589,036 572,530 572,497 2.4 12.3 Accumulated other comprehensive (loss) income (84,719 ) (118,320 ) (97,580 ) (84,395 ) (92,318 ) (28.4 ) (8.2 ) Total shareholders’ equity 902,666 850,368 832,488 822,807 811,033 6.2 11.3 Total liabilities and shareholders’ equity $ 11,271,423 $ 10,950,460 $ 10,819,196 $ 10,364,297 $ 9,855,498 2.9 14.4 (1) Includes $388.0 million, $410.1 million, $441.8 million, $467.0 million and $494.5 million measured at fair value for the quarters ended December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, respectively.
Live Oak Bancshares, Inc.
Statements of Income (unaudited)
(Dollars in thousands, except per share data)Twelve Months Ended December 31, 2023 December 31, 2022 Interest income Loans and fees on loans $ 623,667 $ 418,545 Investment securities, taxable 33,497 19,667 Other interest earning assets 31,111 6,261 Total interest income 688,275 444,473 Interest expense Deposits 340,207 115,035 Borrowings 2,763 1,937 Total interest expense 342,970 116,972 Net interest income 345,305 327,501 Provision for loan and lease credit losses 51,323 40,943 Net interest income after provision for loan and lease credit losses 293,982 286,558 Noninterest income Loan servicing revenue 27,399 25,359 Loan servicing asset revaluation 4,886 (16,577 ) Net gains on sales of loans 46,545 43,244 Net (loss) gain on loans accounted for under the fair value option (3,539 ) 1,046 Equity method investments (loss) income (5,994 ) 144,250 Equity security investments (losses) gains, net (969 ) 3,355 Lease income 10,007 10,084 Management fee income 13,324 10,090 Other noninterest income 20,074 17,141 Total noninterest income 111,733 237,992 Noninterest expense Salaries and employee benefits 175,052 170,822 Travel expense 8,922 8,499 Professional services expense 7,737 11,737 Advertising and marketing expense 12,559 10,543 Occupancy expense 8,490 11,088 Technology expense 31,858 28,434 Equipment expense 14,997 15,120 Other loan origination and maintenance expense 14,804 13,168 Renewable energy tax credit investment impairment 14,644 16,217 FDIC insurance 16,670 9,756 Contributions and donations — 6,462 Other expense 17,152 12,380 Total noninterest expense 322,885 314,226 Income before taxes 82,830 210,324 Income tax expense 8,932 34,116 Net income $ 73,898 $ 176,208 Earnings per share Basic $ 1.67 $ 4.02 Diluted $ 1.64 $ 3.92 Weighted average shares outstanding Basic 44,353,708 43,862,291 Diluted 45,094,879 44,906,310 Live Oak Bancshares, Inc.
Quarterly Selected Financial Data
(Dollars in thousands, except per share data)As of and for the three months ended 4Q 2023 3Q 2023 2Q 2023 1Q 2023 4Q 2022 Income Statement Data Net income $ 16,163 $ 39,793 $ 17,544 $ 398 $ 1,792 Per Common Share Net income, diluted $ 0.36 $ 0.88 $ 0.39 $ 0.01 $ 0.04 Dividends declared 0.03 0.03 0.03 0.03 0.03 Book value 20.23 19.12 18.77 18.58 18.41 Tangible book value(1) 20.15 19.04 18.69 18.50 18.32 Performance Ratios Return on average assets (annualized) 0.58 % 1.46 % 0.66 % 0.02 % 0.08 % Return on average equity (annualized) 7.36 18.68 8.26 0.19 0.88 Net interest margin 3.32 3.37 3.29 3.46 3.76 Efficiency ratio(1) 77.88 58.34 70.49 77.72 80.58 Noninterest income to total revenue 25.16 29.76 22.27 19.27 18.17 Selected Loan Metrics Loans and leases originated $ 981,703 $ 1,073,255 $ 861,033 $ 1,030,882 $ 1,177,688 Outstanding balance of sold loans serviced 4,238,328 4,028,575 3,813,852 3,616,701 3,481,885 Asset Quality Ratios Allowance for credit losses to loans and leases held for investment(3) 1.53 % 1.56 % 1.62 % 1.50 % 1.41 % Net charge-offs(3) $ 4,428 $ 9,122 $ 1,154 $ 6,669 $ 1,396 Net charge-offs to average loans and leases held for investment(2) (3) 0.22 % 0.48 % 0.06 % 0.38 % 0.09 % Nonperforming loans and leases at historical cost(3) Unguaranteed $ 39,285 $ 33,255 $ 44,899 $ 22,002 $ 18,784 Guaranteed 95,678 65,837 66,322 63,696 54,608 Total 134,963 99,092 111,221 85,698 73,392 Unguaranteed nonperforming historical cost loans and leases, to loans and leases held for investment(3) 0.48 % 0.43 % 0.61 % 0.30 % 0.27 % Nonperforming loans at fair value(4) Unguaranteed $ 7,230 $ 6,518 $ 8,602 $ 8,193 $ 6,678 Guaranteed 41,244 39,378 45,114 43,968 38,212 Total 48,474 45,896 53,716 52,161 44,890 Unguaranteed nonperforming fair value loans to loans held for investment(4) 1.86 % 1.59 % 1.95 % 1.75 % 1.35 % Capital Ratios Common equity tier 1 capital (to risk-weighted assets) 11.73 % 11.63 % 11.55 % 11.67 % 12.46 % Tier 1 leverage capital (to average assets) 8.58 8.56 8.46 8.70 9.26 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 Ended
December 31, 2023Three Months Ended
September 30, 2023Average
BalanceInterest Average
Yield/RateAverage
BalanceInterest Average
Yield/RateInterest-earning assets: Interest-earning balances in other banks $ 598,720 $ 8,259 5.47 % $ 677,857 $ 9,188 5.38 % Investment securities 1,251,467 8,746 2.77 1,257,740 8,701 2.74 Loans held for sale 477,155 10,825 9.00 602,109 13,271 8.74 Loans and leases held for investment(1) 8,363,881 158,706 7.53 7,978,870 149,451 7.43 Total interest-earning assets 10,691,223 186,536 6.92 10,516,576 180,611 6.81 Less: Allowance for credit losses on loans and leases (120,257 ) (119,941 ) Noninterest-earning assets 482,615 499,508 Total assets $ 11,053,581 $ 10,896,143 Interest-bearing liabilities: Interest-bearing checking $ 300,064 $ 4,262 5.64 % $ 300,059 $ 4,217 5.58 % Savings 4,633,563 47,192 4.04 4,588,085 45,778 3.96 Money market accounts 128,486 198 0.61 136,879 202 0.59 Certificates of deposit 4,775,497 45,043 3.74 4,675,075 40,717 3.46 Total deposits 9,837,610 96,695 3.90 9,700,098 90,914 3.72 Borrowings 24,887 265 4.22 27,425 287 4.15 Total interest-bearing liabilities 9,862,497 96,960 3.90 9,727,523 91,201 3.72 Noninterest-bearing deposits 240,009 237,545 Noninterest-bearing liabilities 72,272 78,930 Shareholders' equity 878,803 852,145 Total liabilities and shareholders' equity $ 11,053,581 $ 10,896,143 Net interest income and interest rate spread $ 89,576 3.02 % $ 89,410 3.09 % Net interest margin 3.32 3.37 Ratio of average interest-earning assets to average interest-bearing liabilities 108.40 % 108.11 % (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 4Q 2023 3Q 2023 2Q 2023 1Q 2023 4Q 2022 Total shareholders’ equity $ 902,666 $ 850,368 $ 832,488 $ 822,807 $ 811,033 Less: Goodwill 1,797 1,797 1,797 1,797 1,797 Other intangible assets 1,721 1,759 1,797 1,835 1,873 Tangible shareholders’ equity (a) $ 899,148 $ 846,812 $ 828,894 $ 819,175 $ 807,363 Shares outstanding (c) 44,617,673 44,480,215 44,351,715 44,290,840 44,061,244 Total assets $ 11,271,423 $ 10,950,460 $ 10,819,196 $ 10,364,297 $ 9,855,498 Less: Goodwill 1,797 1,797 1,797 1,797 1,797 Other intangible assets 1,721 1,759 1,797 1,835 1,873 Tangible assets (b) $ 11,267,905 $ 10,946,904 $ 10,815,602 $ 10,360,665 $ 9,851,828 Tangible shareholders’ equity to tangible assets (a/b) 7.98 % 7.74 % 7.66 % 7.91 % 8.20 % Tangible book value per share (a/c) $ 20.15 $ 19.04 $ 18.69 $ 18.50 $ 18.32 Efficiency ratio: Noninterest expense (d) $ 93,204 $ 74,262 $ 76,457 $ 78,962 $ 84,585 Net interest income 89,576 89,410 84,302 82,017 85,902 Noninterest income 30,107 37,891 24,156 19,579 19,071 Total revenue (e) $ 119,683 $ 127,301 $ 108,458 $ 101,596 $ 104,973 Efficiency ratio (d/e) 77.88 % 58.34 % 70.49 % 77.72 % 80.58 % This press release presents the 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.
