Live Oak(LOB) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Earnings Highlights Live Oak Bancshares achieved significant Q2 2025 financial growth, driven by record loan production, healthy revenue, and reduced credit loss provisions Q2 2025 Performance Overview Live Oak Bancshares achieved significant financial growth in Q2 2025, with substantial increases in net income and diluted EPS, driven by record loan production, healthy revenue, and reduced provision for credit losses - The company achieved net income of $23.4 million and diluted earnings per share of $0.51 in Q2 2025[1] - CEO James S. (Chip) Mahan III stated that Live Oak Bank performed exceptionally in Q2, benefiting from outstanding growth, healthy revenue, and lower provision expenses[1] Key Performance Indicators In Q2 2025, the company achieved strong growth in loan production, deposits, total assets, net interest income, and pre-tax net income, alongside a decrease in the provision for credit losses - Record loan production of $1.53 billion in the second quarter[3] - Deposits grew by $198.8 million, with total assets increasing 1.7% to $13.83 billion[3] - Net interest income increased by 8.6%, and the net interest margin rose from 3.20% to 3.28%[3] - Revenue grew by 14.0%, non-interest expense by 6.3%, and pre-tax net income by 29.4%[3] - Provision for credit losses was $23.3 million, a decrease of $5.7 million, influenced by moderating credit trends, loan growth, and the macroeconomic environment[3] Summary of Key Financial Measures Live Oak Bancshares demonstrated strong financial performance in Q2 2025, with significant year-over-year and quarter-over-quarter growth in total revenue and net income, a substantial increase in diluted EPS, and robust loan and lease production Key Financial Measures Summary (Thousands of USD, except per share data) | Metric (Thousands of USD, except per share data) | 2Q 2025 | 1Q 2025 | 2Q 2024 | 2Q 2025 vs 1Q 2025 (%) | 2Q 2025 vs 2Q 2024 (%) | | :------------------------------------------- | :------ | :------ | :------ | :----------------------- | :----------------------- | | Total Revenue | 143,747 | 126,113 | 125,479 | 14.0 | 14.6 | | Non-interest Expense | 89,293 | 84,017 | 77,656 | 6.3 | 15.0 | | Pre-tax Income | 31,202 | 13,132 | 36,058 | 137.6 | -13.5 | | Net Income Attributable to Live Oak Bancshares | 23,428 | 9,717 | 26,963 | 141.1 | -13.1 | | Diluted Earnings Per Share | 0.51 | 0.21 | 0.59 | 142.9 | -13.6 | | Loan and Lease Production | 1,526,592 | 1,396,223 | 1,171,141 | 9.3 | 30.4 | | Total Loans and Leases | 11,364,846 | 11,061,866 | 9,535,766 | 2.7 | 19.2 | | Total Assets | 13,831,208 | 13,595,704 | 11,868,570 | 1.7 | 16.5 | | Total Deposits | 12,594,790 | 12,395,945 | 10,707,031 | 1.6 | 17.6 | Conference Call Information Live Oak Bancshares will host a conference call on July 24, 2025, to discuss the company's financial results and business outlook, with details provided for dial-in and webcast access - The conference call will be held on July 24, 2025, at 9:00 AM ET, to discuss the company's financial results and business outlook[2] - Participation is available via phone (US: 800.549.8228, International: +1 646.564.2877, no password required) and webcast (investor.liveoakbank.com, registration required)[2][3] Important Disclosures This section outlines forward-looking statements, company background, and contact information Forward-Looking Statements This press release contains forward-looking statements regarding future events or decisions, which are not guarantees of future performance, as actual results may differ materially due to various risks and uncertainties including SBA rule changes, pandemic impacts, banking industry developments, technological risks, competition, and market and economic conditions - Forward-looking statements are not guarantees of future performance, and actual results may differ materially due to factors such as SBA rules, pandemics, banking industry developments, technological risks, competition, and market and economic conditions[6] - The company explicitly disclaims any obligation to update forward-looking statements, except as required by law[6] About Live Oak Bancshares, Inc. Live Oak Bancshares, Inc. is a financial holding company and the parent of Live Oak Bank, dedicated to redefining banking through service and technological innovation - Live Oak Bancshares, Inc. (NYSE: LOB) is a financial holding company and the parent company of Live Oak Bank[7] - The company and its subsidiaries partner with businesses focused on service and technology to redefine banking[7] Contacts Contact information for investor relations and media relations is provided - Investor Relations Contact: Walter J. Phifer (CFO), Phone: 910.202.6926[8] - Media Relations Contact: Claire Parker (Corporate Communications), Phone: 910.597.1592[8] Financial Statements This section presents detailed quarterly and six-month financial statements, including income, balance sheets, and selected financial data Quarterly Statements of Income In Q2 2025, Live Oak Bancshares saw significant growth in both net interest income and non-interest income, driving a substantial increase in net income, with provision for credit losses decreasing quarter-over-quarter but increasing significantly year-over-year Key Quarterly Statements of Income Data (Thousands of USD) | Metric | 2Q 2025 | 1Q 2025 | 2Q 2024 | 2Q 2025 vs 1Q 2025 (%) | 2Q 2025 vs 2Q 2024 (%) | | :----------------------------------------- | :------ | :------ | :------ | :----------------------- | :----------------------- | | Total Interest Income | 224,284 | 213,105 | 198,448 | 5.2 | 13.0 | | Total Interest Expense | 115,063 | 112,573 | 107,128 | 2.2 | 7.4 | | Net Interest Income | 109,221 | 100,532 | 91,320 | 8.6 | 19.6 | | Provision for Credit Losses | 23,252 | 28,964 | 11,765 | -19.7 | 97.6 | | Net Interest Income (after provision for credit losses) | 85,969 | 71,568 | 79,555 | 20.1 | 8.1 | | Total Non-interest Income | 34,526 | 25,581 | 34,159 | 35.0 | 1.1 | | Total Non-interest Expense | 89,293 | 84,017 | 77,656 | 6.3 | 15.0 | | Pre-tax Income | 31,202 | 13,132 | 36,058 | 137.6 | -13.5 | | Net Income Attributable to Live Oak Bancshares | 23,428 | 9,717 | 26,963 | 141.1 | -13.1 | | Diluted Earnings Per Share | 0.51 | 0.21 | 0.59 | 142.9 | -13.6 | Quarterly Balance Sheets As of Q2 2025, the company achieved robust quarter-over-quarter and year-over-year growth in total assets and deposits, with significant expansion in loans and leases held for investment, while the allowance for loan and lease losses decreased sequentially but increased year-over-year Key Quarterly Balance Sheet Data (Thousands of USD) | Metric | 2Q 2025 | 1Q 2025 | 2Q 2024 | 2Q 2025 vs 1Q 2025 (%) | 2Q 2025 vs 2Q 2024 (%) | | :----------------------------------------- | :--------- | :--------- | :--------- | :----------------------- | :----------------------- | | Cash and Due from Banks | 662,755 | 744,263 | 615,449 | -11.0 | 7.7 | | Loans and Leases Held for Investment | 11,014,055 | 10,693,911 | 9,172,134 | 3.0 | 20.1 | | Allowance for Loan and Lease Losses | (182,231) | (190,184) | (137,867) | 4.2 | -32.2 | | Net Loans and Leases | 10,831,824 | 10,503,727 | 9,034,267 | 3.1 | 19.9 | | Total Assets | 13,831,208 | 13,595,704 | 11,868,570 | 1.7 | 16.5 | | Non-interest-bearing Deposits | 393,393 | 386,108 | 264,013 | 1.9 | 49.0 | | Interest-bearing Deposits | 12,201,397 | 12,009,837 | 10,443,018 | 1.6 | 16.8 | | Total Deposits | 12,594,790 | 12,395,945 | 10,707,031 | 1.6 | 17.6 | | Borrowings | 107,659 | 110,247 | 117,745 | -2.3 | -8.6 | | Total Liabilities | 12,763,943 | 12,564,257 | 10,907,521 | 1.6 | 17.0 | | Total Stockholders' Equity Attributable to Live Oak Bancshares | 1,062,889 | 1,027,030 | 961,049 | 3.5 | 10.6 | | Total Liabilities and Stockholders' Equity | 13,831,208 | 13,595,704 | 11,868,570 | 1.7 | 16.5 | Six Months Ended Statements of Income For the six months ended June 30, 2025, the company reported year-over-year growth in total interest income and net interest income, but pre-tax income and net income decreased due to a substantial increase in the provision for credit losses Key Six Months Ended Statements of Income Data (Thousands of USD) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------- | :----------------------------- | :----------------------------- | | Total Interest Income | 437,389 | 390,868 | | Total Interest Expense | 227,636 | 209,437 | | Net Interest Income | 209,753 | 181,431 | | Provision for Credit Losses | 52,216 | 28,129 | | Net Interest Income (after provision for credit losses) | 157,537 | 153,302 | | Total Non-interest Income | 60,107 | 60,256 | | Total Non-interest Expense | 173,310 | 155,393 | | Pre-tax Income | 44,334 | 58,165 | | Net Income Attributable to Live Oak Bancshares | 33,145 | 54,549 | | Diluted Earnings Per Share | 0.72 | 1.20 | Quarterly Selected Financial Data In Q2 2025, the company saw growth in diluted EPS and book value, with improved return on assets and equity quarter-over-quarter but a year-over-year decline; net interest margin and efficiency ratio improved sequentially, while net charge-offs significantly increased quarter-over-quarter, and total nonperforming loans decreased sequentially but substantially increased year-over-year Key Quarterly Selected Financial Data | Metric | 2Q 2025 | 1Q 2025 | 2Q 2024 | | :--------------------------------------------------------- | :--------- | :--------- | :--------- | | Diluted Net Income Per Share | $0.51 | $0.21 | $0.59 | | Dividends Declared | $0.03 | $0.03 | $0.03 | | Book Value | $23.36 | $22.62 | $21.35 | | Tangible Book Value | $23.29 | $22.55 | $21.28 | | Return on Average Assets (Annualized) | 0.68 % | 0.30 % | 0.93 % | | Return on Average Equity (Annualized) | 8.85 % | 3.78 % | 11.39 % | | Net Interest Margin | 3.28 % | 3.20 % | 3.28 % | | Efficiency Ratio | 62.12 % | 66.62 % | 61.89 % | | Non-interest Income to Total Revenue | 24.02 % | 20.28 % | 27.22 % | | Loan and Lease Production | $1,526,592 | $1,396,223 | $1,171,141 | | Allowance for Loan and Lease Losses to Loans and Leases Held for Investment | 1.70 % | 1.83 % | 1.57 % | | Net Charge-offs | $31,445 | $6,774 | $8,253 | | Net Charge-offs to Average Loans and Leases Held for Investment (Annualized) | 1.19 % | 0.27 % | 0.38 % | | Total Nonperforming Loans and Leases (Historical Cost) | $396,332 | $422,900 | $160,092 | | Common Equity Tier 1 Capital (to Risk-Weighted Assets) | 10.67 % | 10.67 % | 11.85 % | | Tier 1 Leverage Capital (to Average Assets) | 7.90 % | 8.03 % | 8.71 % | Quarterly Average Balances and Net Interest Margin In Q2 2025, the company experienced growth in both average interest-earning assets and average interest-bearing liabilities, with net interest income increasing sequentially and net interest margin rising from 3.20% to 3.28%, indicating improved profitability Key Quarterly Average Balances and Net Interest Margin Data (Thousands of USD) | Metric | 2Q 2025 Average Balance | 2Q 2025 Interest | 2Q 2025 Average Yield/Rate | 1Q 2025 Average Balance | 1Q 2025 Interest | 1Q 2025 Average Yield/Rate | | :----------------------------------------- | :---------------------- | :--------------- | :------------------------- | :---------------------- | :--------------- | :------------------------- | | Interest-earning Bank Deposits | 727,715 | 8,123 | 4.48 % | 581,267 | 6,400 | 4.47 % | | Investment Securities | 1,408,942 | 11,648 | 3.32 % | 1,379,797 | 11,089 | 3.26 % | | Loans Held for Sale | 381,531 | 8,008 | 8.42 % | 407,953 | 8,612 | 8.56 % | | Loans and Leases Held for Investment | 10,843,303 | 196,505 | 7.27 % | 10,388,872 | 187,004 | 7.30 % | | Total Interest-earning Assets | 13,361,491 | 224,284 | 6.73 % | 12,757,889 | 213,105 | 6.77 % | | Total Interest-bearing Deposits | 12,113,282 | 113,380 | 3.75 % | 11,581,550 | 110,888 | 3.88 % | | Borrowings | 109,463 | 1,683 | 6.17 % | 111,919 | 1,685 | 6.11 % | | Total Interest-bearing Liabilities | 12,222,745 | 115,063 | 3.78 % | 11,693,469 | 112,573 | 3.90 % | | Net Interest Income | | 109,221 | 2.95 % | | 100,532 | 2.87 % | | Net Interest Margin | | | 3.28 % | | | 3.20 % | Non-GAAP Reconciliation This section provides a reconciliation of GAAP to non-GAAP financial measures, offering additional insights into company performance GAAP to Non-GAAP Reconciliation The company provides a reconciliation of GAAP to non-GAAP financial measures, including tangible stockholders' equity, tangible assets, tangible book value per share, and efficiency ratio, which management uses to assess performance and provide comparable information to investors and analysts Key GAAP to Non-GAAP Reconciliation Data (Thousands of USD) | Metric | 2Q 2025 | 1Q 2025 | 2Q 2024 | | :----------------------------------------- | :---------- | :---------- | :---------- | | Total Stockholders' Equity | $1,067,265 | $1,031,447 | $961,049 | | Less: Goodwill | 1,797 | 1,797 | 1,797 | | Less: Other Intangible Assets | 1,491 | 1,529 | 1,644 | | Tangible Stockholders' Equity | $1,063,977 | $1,028,121 | $957,608 | | Tangible Book Value Per Share | $23.29 | $22.55 | $21.28 | | Total Assets | $13,831,208 | $13,595,704 | $11,868,570 | | Tangible Assets | $13,827,920 | $13,592,378 | $11,865,129 | | Tangible Stockholders' Equity to Tangible Assets | 7.69 % | 7.56 % | 8.07 % | | Efficiency Ratio | 62.12 % | 66.62 % | 61.89 % | | Pre-tax Net Income | $54,454 | $42,096 | $47,823 | - The company believes these non-GAAP measures provide a meaningful basis for period-to-period comparisons, assisting regulators, investors, and analysts in analyzing the company's operating performance or financial condition[16]