Live Oak(LOB) - 2025 Q3 - Quarterly Results

Third Quarter 2025 Earnings Release Overview Live Oak Bancshares reported strong Q3 2025 financial results, driven by robust loan and deposit growth, improved net interest income, and strategic capital strengthening initiatives Third Quarter 2025 Financial Highlights Live Oak Bancshares reported $25.6 million net income and $0.55 diluted EPS for Q3 2025, with 16% YoY asset growth to $14.67 billion and a $24.0 million pre-tax gain from the Apiture sale strengthening capital | Metric | 3Q 2025 | 2Q 2025 | 3Q 2024 | | :----------------------------------- | :------ | :------ | :------ | | Net income attributable to common shareholders (in millions) | $25.6 | $23.4 | $13.0 | | Diluted earnings per common share | $0.55 | $0.51 | $0.28 | | Total assets (in billions) | $14.67 | $13.83 | $12.61 | | Loan and lease production (in billions) | $1.65 | $1.53 | $1.76 | | Total deposits (in billions) | $13.29 | $12.59 | $11.40 | - Subsequent to September 30, 2025, the Company completed its sale of Apiture, Inc., resulting in a pre-tax gain of approximately $24.0 million[1] - Net interest income increased 5.7% compared to Q2 2025 and 19.1% compared to Q3 2024[5] - Net interest margin increased five basis points during Q3 2025 from 3.28% to 3.33%, remaining flat compared to Q3 2024[5] - $96.3 million in capital was raised from a preferred stock offering in Q3 2025[5] Management Commentary Management highlighted strong core banking operations, leading SBA 7(a) lender status, and strategic capital strengthening through a preferred stock offering and the Apiture sale for continued growth - Live Oak's third quarter results reflect the strength of core banking operations and continued commitment to serving small businesses[2] - The company was named the SBA's leading 7(a) lender by dollar amount[2] - Strategic moves, including a successful preferred stock offering and the Apiture sale, strengthened the capital position for continued growth and resilience[2] Corporate Information This section provides details on the upcoming conference call, forward-looking statements disclaimer, company overview, and contact information for investor and media relations Conference Call Details A conference call to discuss Q3 2025 financial results and business outlook is scheduled for October 23, 2025, at 9:00 a.m. ET, with telephone and webcast access available - A conference call to discuss financial results and business outlook is scheduled for October 23, 2025, at 9:00 a.m. ET[3] - Access is available via telephone (U.S.: 800.549.8228, International: +1 646.564.2877) and webcast (investor.liveoakbank.com) using Conference ID: 72227[3][4] - A supplementary slide presentation will be posted, and a replay will be available for 12 months[3] Forward-Looking Statements Disclaimer This disclaimer highlights that forward-looking statements are subject to risks, including SBA rule changes, industry developments, technological risks, competition, and economic conditions, with no obligation to update - Forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties[7] - Factors causing material differences include changes in SBA rules, banking industry developments, technological risks, competition, and market and economic conditions[7] - The Company specifically disclaims any obligation to update any forward-looking statements[7] About Live Oak Bancshares, Inc. Live Oak Bancshares, Inc. (NYSE: LOB) is a financial holding company and parent of Live Oak Bank, focused on redefining banking through service and technology partnerships - Live Oak Bancshares, Inc. (NYSE: LOB) is a financial holding company and the parent company of Live Oak Bank[8] - The company partners with businesses focused on service and technology to redefine banking[8] Contacts Contact information is provided for investor relations (Walter J. Phifer, CFO) and media relations (Claire Parker, Corporate Communications) - Investor Relations: Walter J. Phifer, CFO, 910.202.6926[9] - Media Relations: Claire Parker, Corporate Communications, 910.597.1592[9] Financial Statements and Key Metrics This section presents detailed quarterly and year-to-date income statements, balance sheets, selected financial data, average balances, net interest margin, and GAAP to non-GAAP reconciliations Quarterly Statements of Income (Unaudited) Q3 2025 quarterly income statements show net interest income growth of 5.7% QoQ and 19.1% YoY, with net income attributable to common shareholders increasing 9.1% QoQ | Metric (Dollars in thousands) | 3Q 2025 | 2Q 2025 | 3Q 2024 | 3Q 2025 Change vs. 2Q 2025 (%) | 3Q 2025 Change vs. 3Q 2024 (%) | | :---------------------------- | :------ | :------ | :------ | :------------------------------ | :------------------------------ | | Total interest income | 231,428 | 224,284 | 208,936 | 3.2 | 10.8 | | Total interest expense | 115,943 | 115,063 | 111,936 | 0.8 | 3.6 | | Net interest income | 115,485 | 109,221 | 97,000 | 5.7 | 19.1 | | Provision for credit losses | 22,242 | 23,252 | 34,502 | (4.3) | (35.5) | | Total noninterest income | 30,614 | 34,526 | 32,932 | (11.3) | (7.0) | | Total noninterest expense | 87,285 | 89,293 | 77,589 | (2.2) | 12.5 | | Income before taxes | 36,572 | 31,202 | 17,841 | 17.2 | 105.0 | | Net income attributable to common shareholders | 25,562 | 23,428 | 13,025 | 9.1 | 96.3 | | Diluted EPS | 0.55 | 0.51 | 0.28 | 7.8 | 96.4 | Quarterly Balance Sheets (Unaudited) Q3 2025 balance sheets show total assets growing 6.0% QoQ to $14.67 billion, with loans and leases up 4.9% QoQ and total deposits increasing 5.5% QoQ, notably noninterest-bearing deposits up 25.6% QoQ | Metric (Dollars in thousands) | 3Q 2025 | 2Q 2025 | 3Q 2024 | 3Q 2025 Change vs. 2Q 2025 (%) | 3Q 2025 Change vs. 3Q 2024 (%) | | :---------------------------- | :------ | :------ | :------ | :------------------------------ | :------------------------------ | | Total assets | 14,665,902 | 13,831,208 | 12,607,346 | 6.0 | 16.3 | | Loans and leases held for investment | 11,554,818 | 11,014,055 | 9,831,891 | 4.9 | 17.5 | | Net loans and leases | 11,369,118 | 10,831,824 | 9,663,154 | 5.0 | 17.7 | | Total deposits | 13,290,723 | 12,594,790 | 11,400,547 | 5.5 | 16.6 | | Noninterest-bearing deposits | 494,019 | 393,393 | 258,844 | 25.6 | 90.9 | | Interest-bearing deposits | 12,796,704 | 12,201,397 | 11,141,703 | 4.9 | 14.9 | | Total shareholders' equity | 1,202,549 | 1,067,265 | 1,007,756 | 12.7 | 19.3 | | Preferred stock | 96,266 | — | — | — | — | Statements of Income (Unaudited) - Nine Months Ended September 30 For the nine months ended September 30, 2025, net interest income increased 16.8%, while net income attributable to common shareholders decreased 13.1% due to higher credit loss provisions and increased noninterest expenses | Metric (Dollars in thousands) | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | Change (%) | | :---------------------------- | :-------------------------- | :-------------------------- | :--------- | | Total interest income | 668,817 | 599,804 | 11.5 | | Total interest expense | 343,579 | 321,373 | 6.9 | | Net interest income | 325,238 | 278,431 | 16.8 | | Provision for credit losses | 74,458 | 62,631 | 18.9 | | Total noninterest income | 90,721 | 93,188 | (2.6) | | Total noninterest expense | 260,595 | 232,982 | 11.8 | | Income before taxes | 80,906 | 76,006 | 6.4 | | Net income attributable to common shareholders | 58,707 | 67,574 | (13.1) | | Diluted EPS | 1.28 | 1.48 | (13.6) | Quarterly Selected Financial Data Q3 2025 key financial data shows improved profitability with Return on Average Assets at 0.72% and Return on Average Common Equity at 9.32%, an efficiency ratio of 59.74%, and increased unguaranteed nonperforming historical cost loans | Metric | 3Q 2025 | 2Q 2025 | 3Q 2024 | | :------------------------------------------ | :------ | :------ | :------ | | Diluted net income per common share | $0.55 | $0.51 | $0.28 | | Dividends declared - common | $0.03 | $0.03 | $0.03 | | Book value per common share | $24.03 | $23.36 | $22.32 | | Return on average assets (annualized) | 0.72 % | 0.68 % | 0.43 % | | Return on average common equity (annualized)| 9.32 % | 8.85 % | 5.21 % | | Net interest margin | 3.33 % | 3.28 % | 3.33 % | | Efficiency ratio | 59.74 % | 62.12 % | 59.72 % | | Loans and leases originated (in thousands) | $1,648,711 | $1,526,592 | $1,757,856 | | Allowance for credit losses to loans and leases held for investment | 1.65 % | 1.70 % | 1.78 % | | Net charge-offs (in thousands) | $16,816 | $31,445 | $1,710 | | Unguaranteed nonperforming historical cost loans and leases (in thousands) | $76,887 | $59,555 | $49,398 | | Common equity tier 1 capital | 10.51 % | 10.67 % | 11.19 % | | Tier 1 leverage capital | 8.57 % | 7.90 % | 8.60 % | Quarterly Average Balances and Net Interest Margin (Unaudited) Q3 2025 average balances show interest-earning assets at $13.77 billion and net interest margin improving to 3.33% from 3.28% QoQ, with an interest rate spread of 2.99% | Metric (Dollars in thousands) | 3Q 2025 Average Balance | 3Q 2025 Interest | 3Q 2025 Average Yield/Rate | 2Q 2025 Average Balance | 2Q 2025 Interest | 2Q 2025 Average Yield/Rate | | :---------------------------- | :---------------------- | :--------------- | :------------------------- | :---------------------- | :--------------- | :------------------------- | | Total interest-earning assets | 13,765,187 | 231,428 | 6.67 % | 13,361,491 | 224,284 | 6.73 % | | Total deposits | 12,379,653 | 114,266 | 3.66 % | 12,113,282 | 113,380 | 3.75 % | | Total interest-bearing liabilities | 12,486,397 | 115,943 | 3.68 % | 12,222,745 | 115,063 | 3.78 % | | Net interest income | | 115,485 | | | 109,221 | | | Net interest margin | | | 3.33 % | | | 3.28 % | | Interest rate spread | | | 2.99 % | | | 2.95 % | GAAP to Non-GAAP Reconciliation This section reconciles GAAP to non-GAAP financial measures, including tangible common shareholders' equity, tangible assets, tangible book value per common share, and the efficiency ratio, used for performance assessment and comparability | Metric | 3Q 2025 | 2Q 2025 | 3Q 2024 | | :------------------------------------------ | :------ | :------ | :------ | | Total common shareholders' equity (in thousands) | $1,101,957 | $1,067,265 | $1,007,756 | | Tangible common shareholders' equity (a) (in thousands) | $1,098,707 | $1,063,977 | $1,004,353 | | Tangible assets (b) (in thousands) | $14,662,652 | $13,827,920 | $12,603,943 | | Tangible common shareholders' equity to tangible assets (a/b) | 7.49 % | 7.69 % | 7.97 % | | Tangible book value per common share (a/c) | $23.96 | $23.29 | $22.24 | | Efficiency ratio | 59.74 % | 62.12 % | 59.72 % | | Pre-provision net revenue (in thousands) | $58,814 | $54,454 | $52,343 | - Non-GAAP financial measures are used by management to assess performance and provide a meaningful base for period-to-period comparisons for regulators, investors, and analysts, acknowledging their inherent limitations[18]