Live Oak(LOB) - 2025 Q1 - Quarterly Results

First Quarter 2025 Financial Highlights Live Oak Bancshares reported a net income of $9.7 million for Q1 2025, driven by strong loan and deposit growth despite increased credit loss provisions and a challenging macroeconomic environment Overview of Q1 2025 Performance Live Oak Bancshares reported a net income of $9.7 million for Q1 2025, impacted by higher credit loss provisions despite strong loan and deposit growth amid economic uncertainty - Live Oak Bancshares reported Q1 2025 net income attributable to the company of $9.7 million, or $0.21 per diluted share[1] - The CEO emphasized strong growth in lending and deposits while navigating the current small business credit cycle and economic uncertainty[1] - Key performance factors included a 1.5% decline in revenue, a 3.4% increase in noninterest expenses, and a $29.0 million provision for credit losses, driven by loan growth and financial strain on small business borrowers from high interest rates and inflation[4] - The company noted positive momentum in two key initiatives: non-interest bearing deposit growth and small dollar loan production[4] Key Financial Metrics Total assets grew 5.0% to $13.60 billion in Q1 2025, driven by strong loan and deposit growth, while net income slightly decreased to $9.7 million Q1 2025 Key Financial Metrics vs. Prior Periods (in thousands, except per share data) | Metric | Q1 2025 | Q4 2024 | Change (QoQ) | Q1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $9,717 | $9,900 | -1.8% | $27,586 | | Diluted EPS | $0.21 | $0.22 | -4.5% | $0.60 | | Total Revenue | $126,113 | $128,067 | -1.5% | $116,208 | | Loans and Leases Originated | $1,396,223 | $1,421,118 | -1.8% | $805,129 | | Total Assets | $13,595,704 | $12,943,380 | +5.0% | $11,505,569 | | Total Deposits | $12,395,945 | $11,760,494 | +5.4% | $10,383,361 | - Net interest margin increased by 5 basis points to 3.20% from 3.15% in Q4 2024[4] Detailed Financial Statements Detailed financial statements reveal Q1 2025 net interest income growth offset by increased credit loss provisions and noninterest expenses, alongside significant asset and deposit expansion Statements of Income Net interest income increased 3.1% to $100.5 million in Q1 2025, but a $29.0 million provision for credit losses and higher noninterest expenses led to a 65.0% YoY net income decrease Q1 2025 Income Statement Highlights (in thousands) | Item | Q1 2025 | Q4 2024 | Change (QoQ) | Q1 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $100,532 | $97,474 | +3.1% | $90,111 | +11.6% | | Provision for Credit Losses | $28,964 | $33,581 | -13.7% | $16,364 | +77.0% | | Total Noninterest Income | $25,581 | $30,593 | -16.4% | $26,097 | -2.0% | | Total Noninterest Expense | $84,017 | $81,257 | +3.4% | $77,737 | +8.1% | | Net Income | $9,668 | $9,843 | -1.8% | $27,586 | -65.0% | - Noninterest expenses increased primarily due to higher salaries and benefits (+6.2% QoQ) and a significant 85.2% QoQ jump in advertising and marketing expense[10] - Net gains on sales of loans increased 1.6% QoQ to $18.6 million, showing continued strength in this area[10] Balance Sheets Total assets grew 5.0% to $13.60 billion as of March 31, 2025, driven by loan and deposit growth, with noninterest-bearing deposits increasing significantly Balance Sheet Highlights (in thousands) | Account | Q1 2025 | Q4 2024 | Change (QoQ) | Q1 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | $13,595,704 | $12,943,380 | +5.0% | $11,505,569 | +18.2% | | Net Loans and Leases | $10,503,727 | $10,065,858 | +4.4% | $8,773,520 | +19.7% | | Total Deposits | $12,395,945 | $11,760,494 | +5.4% | $10,383,361 | +19.4% | | Noninterest-bearing Deposits | $386,108 | $318,890 | +21.1% | $226,668 | +70.3% | | Total Shareholders' Equity | $1,031,447 | $1,003,496 | +2.8% | $927,718 | +11.2% | - The allowance for credit losses on loans and leases increased by 13.5% QoQ to $190.2 million, reflecting the increased provision expense[11] Selected Financial and Operational Data Q1 2025 performance ratios showed a mixed trend with improved net interest margin but worsened efficiency and increased nonperforming loans, indicating rising asset quality stress Key Performance and Asset Quality Ratios | Ratio | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Interest Margin | 3.20% | 3.15% | 3.33% | | Efficiency Ratio (Non-GAAP) | 66.62% | 63.45% | 66.89% | | Return on Average Assets (annualized) | 0.30% | 0.31% | 0.98% | | Unguaranteed Nonperforming Loans to HFI Loans | 0.96% | 0.82% | 0.51% | | Net Charge-offs to Avg HFI Loans (annualized) | 0.27% | 1.39% | 0.15% | - Loans and leases originated in Q1 2025 were $1.40 billion, a slight decrease from $1.42 billion in Q4 2024 but a significant 73.4% increase from $805 million in Q1 2024[12] - Total nonperforming loans at historical cost increased to $422.9 million from $304.3 million in Q4 2024 and $148.5 million in Q1 2024, indicating a deterioration in credit quality[12] Net Interest Margin Analysis Net interest margin expanded by 5 basis points to 3.20% in Q1 2025, driven by a faster decline in interest-bearing liability costs and growth in noninterest-bearing deposits Net Interest Margin Components | Metric | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | | Average Yield on Interest-Earning Assets | 6.77% | 6.87% | | Average Rate on Interest-Bearing Liabilities | 3.90% | 4.05% | | Net Interest Spread | 2.87% | 2.82% | | Net Interest Margin | 3.20% | 3.15% | - The average balance of noninterest-bearing deposits grew significantly to $342.5 million from $281.9 million in Q4 2024, contributing positively to the NIM by lowering the overall cost of funds[14] Non-GAAP Financial Measures and Reconciliation This section provides reconciliation of GAAP to non-GAAP financial measures, including tangible book value per share and efficiency ratio, for enhanced performance analysis Reconciliation of GAAP to Non-GAAP Measures Non-GAAP measures for Q1 2025 show tangible book value per share at $22.55, an increased efficiency ratio of 66.62%, and a decline in pre-provision net revenue Non-GAAP Financial Measures | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Tangible Book Value Per Share | $22.55 | $22.05 | $20.57 | | Efficiency Ratio | 66.62% | 63.45% | 66.89% | | Pre-Provision Net Revenue | $42,096 | $46,810 | $38,471 | - Tangible shareholders' equity, a non-GAAP measure, is calculated by subtracting goodwill ($1.8 million) and other intangible assets ($1.5 million) from total shareholders' equity[16] - The company states that these non-GAAP measures provide a meaningful base for period-to-period comparisons and assist in analyzing operating results[16] Supplementary Information This section provides details on the upcoming conference call, important forward-looking statement disclaimers, and an overview of Live Oak Bancshares, Inc Conference Call Information A conference call to discuss Q1 2025 financial results is scheduled for April 24, 2025, at 9:00 a.m. ET, with access details provided - The conference call to discuss financial results is scheduled for April 24, 2025, at 9:00 a.m. ET[2] - Access is available via telephone (U.S.: 800.549.8228) and webcast on the company's investor relations website[2][3] Forward-Looking Statements This section contains a legal disclaimer regarding forward-looking statements, highlighting inherent risks and uncertainties that could impact future financial performance - The press release contains forward-looking statements subject to risks and uncertainties, as defined by the Private Securities Litigation Reform Act of 1995[7] - Key risk factors include changes in SBA rules, adverse developments in the banking industry, technological threats, competition, and macroeconomic conditions[7] About Live Oak Bancshares, Inc. Live Oak Bancshares, Inc. (NYSE: LOB) is the financial holding company for Live Oak Bank, focused on business partnerships through service and technology - Live Oak Bancshares, Inc. is the parent company of Live Oak Bank and is listed on the NYSE under the ticker LOB[8]