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8-K - 8-K - Live Oak Bancshares, Inc.lob-8k_20200722.htm

Exhibit 99.1

LIVE OAK BANCSHARES, INC. REPORTS SECOND QUARTER 2020 RESULTS

Wilmington, NC, July 22, 2020 - Live Oak Bancshares, Inc. (Nasdaq: LOB) (“Live Oak” or the “Company”) today reported second quarter 2020 net income of $3.8 million, or $0.09 per diluted share, compared to net income of $4.9 million, or $0.12 per diluted share, for the second quarter of 2019.  The second quarter of 2020 was largely impacted by continued risks and uncertainties related to the COVID-19 pandemic.  

“Live Oak leveraged the power of its people and technology platforms in the second quarter of 2020 to deliver in excess of $1.7 billion of loans through the Paycheck Protection Program.  We fully lived out our mission as we provided much needed capital to more than 10,000 small businesses across the U.S.,” said James S. Mahan, III, Chairman and Chief Executive Officer of Live Oak.  “We are honored and humbled by the spirit and fortitude of small businesses to persevere during this unprecedented time. We are more dedicated than ever to transforming financial service technology by providing exceptional customer service and next-generation digital experiences to American small business owners.”

Second Quarter 2020 Key Measures

 

(Dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

Increase (Decrease)

 

 

 

 

 

 

 

2Q 2020

 

 

2Q 2019

 

 

Dollars

 

 

Percent

 

 

1Q 2020

 

Net interest income and servicing revenues

 

$

47,589

 

 

$

40,998

 

 

$

6,591

 

 

 

16

%

 

$

46,583

 

Net income (loss)

 

 

3,777

 

 

 

4,935

 

 

 

(1,158

)

 

 

(23

)

 

 

(7,602

)

Diluted earnings (loss) per share

 

 

0.09

 

 

 

0.12

 

 

 

(0.03

)

 

 

(25

)

 

 

(0.19

)

Non-GAAP net income (loss) (1)

 

 

3,777

 

 

 

5,393

 

 

 

(1,616

)

 

 

(30

)

 

 

(7,602

)

Non-GAAP diluted earnings (loss) per share (1)

 

 

0.09

 

 

 

0.13

 

 

 

(0.04

)

 

 

(31

)

 

 

(0.19

)

Loan and lease production:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases originated

 

$

2,175,055

 

 

$

525,088

 

 

$

1,649,967

 

 

 

314

%

 

$

500,634

 

% Fully funded

 

 

89.8

%

 

 

42.9

%

 

n/a

 

 

n/a

 

 

 

57.6

%

Total loans and leases

 

$

5,626,650

 

 

$

3,066,103

 

 

$

2,560,547

 

 

 

84

%

 

$

3,813,541

 

Total assets

 

 

8,209,154

 

 

 

4,271,473

 

 

 

3,937,681

 

 

 

92

 

 

 

5,273,569

 

Total deposits

 

 

5,873,292

 

 

 

3,718,769

 

 

 

2,154,523

 

 

 

58

 

 

 

4,639,401

 

 

(1) See accompanying GAAP to Non-GAAP Reconciliation.

Loans and Leases

At June 30, 2020, the total loan and lease portfolio increased to $5.63 billion, 83.5% above its level a year ago and 47.5% above its level at March 31, 2020.  Compared to the first quarter of 2020, loans and leases held for investment increased $1.83 billion, or 65.0%, to $4.65 billion while loans held for sale decreased $19.5 million, or 2.0%, to $976.6 million. Loan and lease originations totaled $2.18 billion during the second quarter of 2020, an increase of $1.67 billion, or 334.5%, from the first quarter of 2020.  The total loan and lease portfolio at June 30, 2020, and March 31, 2020, of $5.63 billion and $3.81 billion, respectively, consisted of approximately 38.7% and 54.8% of unguaranteed loans and leases, respectively.

Average loans and leases were $5.13 billion during the second quarter of 2020 compared to $3.77 billion during the first quarter of 2020.

1


Loans and leases held for investment, loan and lease originations, and average loans and leases were significantly influenced by the addition of loans originated through the Paycheck Protection Program (“PPP”).  PPP loans comprised $1.74 billion of the total loans and leases originated during the second quarter of 2020 and are carried at historical cost classified as held for investment at June 30, 2020.  Additionally, the unguaranteed percentage of the total loan and lease portfolio of 38.7% at June 30, 2020, is significantly influenced by the addition of PPP loans carrying a 100% government guarantee.

Deposits

Total deposits increased by $1.23 billion to $5.87 billion at June 30, 2020 from $4.64 billion at March 31, 2020, to support the planned origination of PPP loans and following the defensive strategy to build liquidity during the first quarter of 2020 due to the uncertainty of the effects of COVID-19. Average total interest-bearing deposits for the second quarter of 2020 increased $1.27 billion, or 29.1%, to $5.63 billion, compared to $4.36 billion for the first quarter of 2020. The ratio of average total loans and leases to average interest-bearing deposits was 91.1% for the second quarter of 2020, compared to 86.3% for the first quarter of 2020.

Borrowings

During the second quarter of 2020, the Company increased long term borrowings by $1.72 billion through the Federal Reserve’s Paycheck Protection Program Liquidity Facility (“PPPLF”).  These PPPLF borrowings were used to help fund PPP loans and complement the defensive strategy to build liquidity which commenced in the first quarter of 2020 due to the uncertainty of the effects of COVID-19.  The PPPLF has a 100% advance rate equal to the principal amount of PPP loans pledged as security, carries an interest rate of 0.35% and loans financed under the PPPLF have a neutral impact on regulatory leverage capital ratios.  This increase in borrowings at favorable rates was offset by the repayment of $45.0 million of existing debt at the parent company during the quarter.

Net Interest Income

Net interest income for the second quarter of 2020 rose to $40.9 million compared to $33.9 million for the second quarter of 2019 and $40.2 million for the first quarter of 2020. The increase from the prior year was driven by significant growth in the total loan and lease portfolios reflecting the Company's ongoing initiative to grow recurring revenue sources and strengthen its liquidity profile.  This increase over the prior year was further enhanced by the aforementioned origination of $1.74 billion in PPP loans in the second quarter of 2020.  The increase from the first quarter of 2020 arose from a higher average loan and lease portfolio balance offset with a 99-basis point decline in the net interest margin from 3.55% to 2.56%.  The decrease in interest earning asset yields outpaced the reduction in the average cost of interest-bearing liabilities with the repricing of the loan portfolio on April 1, 2020, following 150 basis points of cuts to the federal funds rate during the first quarter of 2020. Increased liquidity levels for anticipated PPP lending and the resulting PPPLF also depressed the net interest margin during the second quarter of 2020.

Noninterest Income

Noninterest income for the second quarter of 2020 increased to $22.4 million compared to $14.7 million for the second quarter of 2019 and $5.7 million for the first quarter of 2020.  The increase from the prior year was largely driven by a $4.7 million increase in the net gains on sales of loans with the volume of guaranteed loans sold increasing to $155.0 million for the second quarter of 2020 from $71.9 million for the second quarter of 2019. Other noninterest income increased $3.6 million for the second quarter of 2020 compared to the prior year primarily as the result of $2.5 million in revenue resulting from the sale of services from co-developed technology for processing PPP loans. The net loss on the loan servicing asset revaluation totaled $1.6 million for the second quarter of 2020, a decrease from $3.2 million for the second quarter of 2019. Additionally, management fee income earned by Canapi Advisors, the Company’s investment advisor subsidiary, increased by $1.1 million to $1.2 million for the second quarter of 2020 compared to $91 thousand for the second quarter of 2019. Offsetting the increases in noninterest income for the second quarter of 2020, the valuation adjustments related to loans measured at fair value decreased $3.9 million compared to the second quarter of 2019.

2


Noninterest income increased $16.7 million for the second quarter of 2020 compared to the prior quarter.  For the second quarter of 2020, fair value adjustments continued to be negatively impacted by uncertainty and changing conditions related to the COVID-19 pandemic.  The negative valuation adjustment for loans measured at fair value was $1.1 million for the second quarter of 2020, or a decrease of $9.5 million compared to the prior quarter, while the net loss on the loan servicing asset revaluation was $1.6 million over the same period, or a decrease of $3.1 million compared to the prior quarter. The magnitude of COVID-19 related impacts on loan fair value adjustments in the second quarter was dampened by improving market conditions for unguaranteed loans. Additionally, other noninterest income increased $3.0 million from the prior quarter primarily due to the previously discussed $2.5 million in revenue from co-developed technology.

The average net gain on guaranteed loan sales was $66.8 thousand per million sold in the second quarter of 2020 versus $80.1 thousand per million in the second quarter of 2019 and $63.7 thousand per million in the first quarter of 2020.  The decrease in average loan sale pricing from 2019 was driven by the same factors observed in the prior quarter, including the mix of loans sold by the Company, weakening of market conditions for the purchase of guaranteed loans and less favorable fair value adjustments for exchange-traded interest rate futures contracts. The Company recorded $127 thousand in fair value net gains on exchange-traded interest rate futures contracts during the second quarter of 2020 compared to $3.2 million in fair value net losses during the first quarter of 2020.  The decrease in volatility of exchange-traded interest rate futures contracts was the product of the Company preemptively exiting many such contracts in the first quarter.  Excluding fair value gains and losses on exchange-traded interest rate futures contracts, the average net gain on guaranteed loan sales was $65.9 thousand and $93.7 thousand per million sold in the second quarters of 2020 and 2019, respectively, and $83.5 thousand per million sold in the first quarter of 2020.

Noninterest Expense

Noninterest expense for the second quarter of 2020 increased to $48.1 million compared to $39.6 million for the second quarter of 2019 and decreased from $49.5 million for the first quarter of 2020.

Salaries and employee benefits for the second quarter of 2020 increased to $30.8 million compared to $22.0 million for the second quarter of 2019 and $28.1 million for the first quarter of 2020.  The salaries and employee benefits increase over the second quarter of 2019 and first quarter of 2020 was attributable to the Company’s investment in its workforce to support growth and a variety of initiatives including $7.2 million in expense for a performance bonus pool that was available to all employees other than executive officers.  This expense was mitigated by $4.2 million of deferred salary expense for the origination of PPP loans during the second quarter of 2020.

Related to the ongoing effects of the COVID-19 pandemic, travel expense decreased to $364 thousand for the second quarter of 2020 compared to $1.5 million for the second quarter of 2019 and $1.8 million for the first quarter of 2020.  Similarly, advertising and marketing expense decreased to $624 thousand for the second quarter of 2020 compared to $1.7 million for the second quarter of 2019 and $1.4 million for the first quarter of 2020.

Asset Quality

Net charge-offs for loans carried at historical cost decreased to $1.8 million in the second quarter of 2020 compared to $2.8 million in the first quarter of 2020 and increased from $121 thousand in the second quarter of 2019.  Net charge-offs as a percentage of average held for investment loans and leases carried at historical cost, annualized, for the quarters ended June 30, 2020 and 2019 and March 31, 2020, were 0.21%, 0.04% and 0.58%, respectively.  The decline in net charge-offs as a percentage of average held for investment loans and leases was also impacted by the significant addition of PPP loans in the second quarter of 2020.

Unguaranteed nonperforming (nonaccrual) loans and leases, excluding $6.4 million and $8.2 million accounted for under the fair value option at June 30, 2020 and March 31, 2020, respectively, increased to $13.1 million, or 0.34% of loans and leases held for investment which are carried at historical cost, at June 30, 2020, compared to $9.6 million, or 0.48%, at March 31, 2020.  

The unguaranteed exposure of foreclosed assets decreased $279 thousand to $1.2 million at June 30, 2020, compared to March 31, 2020.  Foreclosed assets decreased $1.1 million to $5.7 million at June 30, 2020, from $6.7 million at March 31, 2020.

3


Provision for Loan and Lease Credit Losses

The provision for loan and lease credit losses for the second quarter of 2020 totaled $10.0 million compared to $11.8 million for the first quarter of 2020 and $3.4 million for the second quarter of 2019.  The Company adopted the new current expected credit losses (“CECL”) standard effective January 1, 2020, and accordingly determined to use forecasted levels of unemployment as a primary economic variable in forecasting future expected losses.  Based upon the severity of ongoing developments resulting from the COVID-19 pandemic, the Company’s allowance for credit losses on loans and leases has continued to significantly increase.    

The allowance for credit losses on loans and leases totaled $44.1 million at June 30, 2020, compared to $35.9 million at March 31, 2020. 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 1.16% and 1.81% at June 30, 2020, and March 31, 2020, respectively.  The decline in the allowance for credit losses on loans and leases as a percentage of total loans and leases held for investment carried at historical cost during the second quarter was due to the addition of 100% guaranteed PPP loans.

Income Tax

Income tax expense was $1.5 million in the second quarter of 2020 compared to an income tax expense of $662 thousand in the second quarter of 2019 and an income tax benefit of $7.8 million in the first quarter of 2020. The increase in the second quarter of 2020 over the second quarter of 2019 is primarily due to the absence of expected tax credits during 2020.  The increase in income tax expense in the second quarter of 2020 compared to the first quarter of 2020 is due to a net pre-tax loss for the first quarter of 2020 combined with a tax benefit of $3.7 million in the first quarter of 2020 due to the enactment of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) on March 27, 2020, which allows the carryback of certain net operating losses to each of the five taxable years preceding the taxable year of such losses.

Conference Call

Live Oak will host a conference call to discuss quarterly results at 9:00 a.m. ET tomorrow morning (July 23, 2020). Media representatives, analysts and the public are invited to listen to this discussion by calling (844) 743-2494 (domestic) or (661) 378-9528 (international) with conference ID 3174517. A live webcast of the conference call along with presentation materials referenced during the conference call will be available on the Investor Relations page of the Company’s website at http://investor.liveoakbank.com. A replay of the webcast will be archived on the Company's website for one year.  A replay of the conference call will also be available until 5:00 p.m. ET July 30, 2020 and can be accessed by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international).

CFO Commentary

Additional commentary on the quarter by Brett Caines, Chief Financial Officer of the Company, is available at http://investor.liveoakbank.com in the supporting materials for the conference call.

4


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 potential impacts of the coronavirus 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; 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; the impact of heightened regulatory scrutiny of financial products and services and the Company's ability to comply with regulatory requirements and expectations; 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

Live Oak Bancshares, Inc. (Nasdaq: 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:

Brett Caines | CFO | Investor Relations | 910.796.1645 & Micah Davis | CMO | Media Relations | 910.550.2255

 

 

5


Live Oak Bancshares, Inc.

Quarterly Statements of Income (unaudited)

(Dollars in thousands, except per share data)

 

 

 

Three months ended

 

 

 

2Q 2020

 

 

1Q 2020

 

 

4Q 2019

 

 

3Q 2019

 

 

2Q 2019

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and fees on loans

 

$

62,022

 

 

$

58,961

 

 

$

57,017

 

 

$

55,939

 

 

$

49,914

 

Investment securities, taxable

 

 

3,786

 

 

 

3,762

 

 

 

3,911

 

 

 

4,001

 

 

 

4,116

 

Other interest earning assets

 

 

1,009

 

 

 

750

 

 

 

885

 

 

 

1,167

 

 

 

1,108

 

Total interest income

 

 

66,817

 

 

 

63,473

 

 

 

61,813

 

 

 

61,107

 

 

 

55,138

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

25,121

 

 

 

23,255

 

 

 

23,801

 

 

 

23,576

 

 

 

21,203

 

Borrowings

 

 

798

 

 

 

57

 

 

 

1

 

 

 

 

 

 

 

Total interest expense

 

 

25,919

 

 

 

23,312

 

 

 

23,802

 

 

 

23,576

 

 

 

21,203

 

Net interest income

 

 

40,898

 

 

 

40,161

 

 

 

38,011

 

 

 

37,531

 

 

 

33,935

 

Provision for loan and lease credit losses

 

 

9,958

 

 

 

11,792

 

 

 

4,809

 

 

 

3,960

 

 

 

3,412

 

Net interest income after provision for loan and

   lease credit losses

 

 

30,940

 

 

 

28,369

 

 

 

33,202

 

 

 

33,571

 

 

 

30,523

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan servicing revenue

 

 

6,691

 

 

 

6,422

 

 

 

6,730

 

 

 

6,831

 

 

 

7,063

 

Loan servicing asset revaluation

 

 

(1,571

)

 

 

(4,692

)

 

 

(4,135

)

 

 

(5,161

)

 

 

(3,245

)

Net gains on sales of loans

 

 

10,695

 

 

 

11,112

 

 

 

11,364

 

 

 

7,425

 

 

 

6,015

 

Net (loss) gain on loans accounted for under the fair

   value option

 

 

(1,089

)

 

 

(10,638

)

 

 

1,432

 

 

 

1,102

 

 

 

2,791

 

Equity method investments income (loss)

 

 

(2,243

)

 

 

(2,478

)

 

 

(1,769

)

 

 

(2,370

)

 

 

(1,736

)

Equity security investments gains (losses), net

 

 

161

 

 

 

(64

)

 

 

54

 

 

 

3,343

 

 

 

32

 

Gain (loss) on sale of investment securities

   available-for-sale

 

 

734

 

 

 

(79

)

 

 

528

 

 

 

87

 

 

 

 

Lease income

 

 

2,635

 

 

 

2,624

 

 

 

2,600

 

 

 

2,361

 

 

 

2,369

 

Management fee income

 

 

1,206

 

 

 

1,644

 

 

 

1,556

 

 

 

95

 

 

 

91

 

Construction supervision fee income

 

 

684

 

 

 

390

 

 

 

240

 

 

 

360

 

 

 

386

 

Other noninterest income

 

 

4,508

 

 

 

1,501

 

 

 

1,525

 

 

 

1,355

 

 

 

884

 

Total noninterest income

 

 

22,411

 

 

 

5,742

 

 

 

20,125

 

 

 

15,428

 

 

 

14,650

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

30,782

 

 

 

28,063

 

 

 

24,072

 

 

 

22,717

 

 

 

21,990

 

Travel expense

 

 

364

 

 

 

1,781

 

 

 

2,246

 

 

 

1,934

 

 

 

1,541

 

Professional services expense

 

 

1,385

 

 

 

1,937

 

 

 

983

 

 

 

2,073

 

 

 

1,621

 

Advertising and marketing expense

 

 

624

 

 

 

1,361

 

 

 

1,630

 

 

 

1,277

 

 

 

1,665

 

Occupancy expense

 

 

1,955

 

 

 

2,421

 

 

 

2,528

 

 

 

2,131

 

 

 

1,848

 

Data processing expense

 

 

2,764

 

 

 

3,157

 

 

 

1,847

 

 

 

3,072

 

 

 

1,947

 

Equipment expense

 

 

4,652

 

 

 

4,635

 

 

 

4,402

 

 

 

4,361

 

 

 

4,239

 

Other loan origination and maintenance expense

 

 

2,492

 

 

 

2,456

 

 

 

2,390

 

 

 

3,535

 

 

 

1,708

 

Renewable energy tax credit investment impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

602

 

FDIC insurance

 

 

1,721

 

 

 

1,510

 

 

 

2,012

 

 

 

101

 

 

 

699

 

Other expense

 

 

1,361

 

 

 

2,170

 

 

 

2,300

 

 

 

1,536

 

 

 

1,716

 

Total noninterest expense

 

 

48,100

 

 

 

49,491

 

 

 

44,410

 

 

 

42,737

 

 

 

39,576

 

Income (loss) before taxes

 

 

5,251

 

 

 

(15,380

)

 

 

8,917

 

 

 

6,262

 

 

 

5,597

 

Income tax expense (benefit)

 

 

1,474

 

 

 

(7,778

)

 

 

2,085

 

 

 

2,367

 

 

 

662

 

Net income (loss)

 

$

3,777

 

 

$

(7,602

)

 

$

6,832

 

 

$

3,895

 

 

$

4,935

 

Earnings (loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.09

 

 

$

(0.19

)

 

$

0.17

 

 

$

0.10

 

 

$

0.12

 

Diluted

 

$

0.09

 

 

$

(0.19

)

 

$

0.17

 

 

$

0.09

 

 

$

0.12

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

40,506,671

 

 

 

40,334,179

 

 

 

40,291,867

 

 

 

40,240,740

 

 

 

40,196,662

 

Diluted

 

 

41,122,025

 

 

 

41,074,049

 

 

 

41,178,472

 

 

 

41,113,575

 

 

 

40,998,541

 

6


Live Oak Bancshares, Inc.

Quarterly Balance Sheets (unaudited)

(Dollars in thousands)

 

 

 

As of the quarter ended

 

 

 

2Q 2020

 

 

1Q 2020

 

 

4Q 2019

 

 

3Q 2019

 

 

2Q 2019

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

1,256,958

 

 

$

254,077

 

 

$

124,610

 

 

$

157,359

 

 

$

112,464

 

Federal funds sold

 

 

91,188

 

 

 

158,226

 

 

 

96,787

 

 

 

88,919

 

 

 

68,153

 

Certificates of deposit with other banks

 

 

7,250

 

 

 

7,250

 

 

 

7,250

 

 

 

7,250

 

 

 

7,250

 

Investment securities available-for-sale

 

 

779,794

 

 

 

574,168

 

 

 

540,045

 

 

 

570,795

 

 

 

576,275

 

Loans held for sale (1)

 

 

976,594

 

 

 

996,050

 

 

 

966,447

 

 

 

903,095

 

 

 

857,837

 

Loans and leases held for investment (2)

 

 

4,650,056

 

 

 

2,817,491

 

 

 

2,627,286

 

 

 

2,422,970

 

 

 

2,208,266

 

Allowance for credit losses on loans and leases

 

 

(44,083

)

 

 

(35,906

)

 

 

(28,234

)

 

 

(23,961

)

 

 

(20,841

)

Net loans and leases

 

 

4,605,973

 

 

 

2,781,585

 

 

 

2,599,052

 

 

 

2,399,009

 

 

 

2,187,425

 

Premises and equipment, net

 

 

269,063

 

 

 

274,177

 

 

 

279,099

 

 

 

280,942

 

 

 

281,126

 

Foreclosed assets

 

 

5,660

 

 

 

6,744

 

 

 

5,612

 

 

 

5,702

 

 

 

6,044

 

Servicing assets

 

 

33,834

 

 

 

33,532

 

 

 

35,365

 

 

 

37,583

 

 

 

41,687

 

Operating lease right-of-use assets

 

 

2,886

 

 

 

2,236

 

 

 

2,427

 

 

 

1,890

 

 

 

1,996

 

Other assets

 

 

179,954

 

 

 

185,524

 

 

 

156,134

 

 

 

148,985

 

 

 

131,216

 

Total assets

 

$

8,209,154

 

 

$

5,273,569

 

 

$

4,812,828

 

 

$

4,601,529

 

 

$

4,271,473

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

53,938

 

 

$

51,275

 

 

$

51,965

 

 

$

54,205

 

 

$

52,588

 

Interest-bearing

 

 

5,819,354

 

 

 

4,588,126

 

 

 

4,175,015

 

 

 

3,962,894

 

 

 

3,666,181

 

Total deposits

 

 

5,873,292

 

 

 

4,639,401

 

 

 

4,226,980

 

 

 

4,017,099

 

 

 

3,718,769

 

Borrowings

 

 

1,721,029

 

 

 

50,012

 

 

 

14

 

 

 

1,310

 

 

 

1,361

 

Operating lease liabilities

 

 

3,079

 

 

 

2,416

 

 

 

2,619

 

 

 

2,041

 

 

 

2,162

 

Other liabilities

 

 

63,319

 

 

 

47,968

 

 

 

50,829

 

 

 

52,860

 

 

 

30,195

 

Total liabilities

 

 

7,660,719

 

 

 

4,739,797

 

 

 

4,280,442

 

 

 

4,073,310

 

 

 

3,752,487

 

Shareholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock, no par value, 1,000,000 shares

   authorized, none issued or outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A common stock (voting)

 

 

319,542

 

 

 

314,994

 

 

 

309,526

 

 

 

296,925

 

 

 

284,987

 

Class B common stock (non-voting)

 

 

28,753

 

 

 

28,753

 

 

 

30,871

 

 

 

40,401

 

 

 

49,168

 

Retained earnings

 

 

174,837

 

 

 

172,276

 

 

 

180,265

 

 

 

174,641

 

 

 

171,954

 

Accumulated other comprehensive income

 

 

25,303

 

 

 

17,749

 

 

 

11,724

 

 

 

16,252

 

 

 

12,877

 

Total equity

 

 

548,435

 

 

 

533,772

 

 

 

532,386

 

 

 

528,219

 

 

 

518,986

 

Total liabilities and shareholders’ equity

 

$

8,209,154

 

 

$

5,273,569

 

 

$

4,812,828

 

 

$

4,601,529

 

 

$

4,271,473

 

 

(1)

Includes $32.1 million, $19.2 million, $16.2 million, $14.7 million and $26.6 million measured at fair value for the quarters ended June 30, 2020, March 31,2020, December 31, 2019, September 30, 2019 and June 30, 2019, respectively.

(2)

Includes $834.6 million, $831.4 million, $824.5 million, $831.3 million and $839.1 million measured at fair value for the quarters ended June 30, 2020, March 31, 2020, December 31, 2019, September 30, 2019 and June 30, 2019, respectively.

 

 

 

 

 

 

 

 

7


Live Oak Bancshares, Inc.

Statements of Income (unaudited)

(Dollars in thousands, except per share data)

 

 

 

Six months ended

 

 

 

June 30, 2020

 

 

June 30, 2019

 

Interest income

 

 

 

 

 

 

 

 

Loans and fees on loans

 

$

120,983

 

 

$

94,880

 

Investment securities, taxable

 

 

7,548

 

 

 

7,433

 

Other interest earning assets

 

 

1,759

 

 

 

2,747

 

Total interest income

 

 

130,290

 

 

 

105,060

 

Interest expense

 

 

 

 

 

 

 

 

Deposits

 

 

48,376

 

 

 

40,520

 

Borrowings

 

 

855

 

 

 

 

Total interest expense

 

 

49,231

 

 

 

40,520

 

Net interest income

 

 

81,059

 

 

 

64,540

 

Provision for loan and lease credit losses

 

 

21,750

 

 

 

6,443

 

Net interest income after provision for loan and lease credit losses

 

 

59,309

 

 

 

58,097

 

Noninterest income

 

 

 

 

 

 

 

 

Loan servicing revenue

 

 

13,113

 

 

 

14,473

 

Loan servicing asset revaluation

 

 

(6,263

)

 

 

(7,285

)

Net gains on sales of loans

 

 

21,807

 

 

 

10,213

 

Net (loss) gain on loans accounted for under the fair value option

 

 

(11,727

)

 

 

4,874

 

Equity method investments income (loss)

 

 

(4,721

)

 

 

(3,750

)

Equity security investments gains (losses), net

 

 

97

 

 

 

135

 

Gain on sale of investment securities available-for-sale

 

 

655

 

 

 

5

 

Lease income

 

 

5,259

 

 

 

4,694

 

Management fee income

 

 

2,850

 

 

 

91

 

Construction supervision fee income

 

 

1,074

 

 

 

1,165

 

Other noninterest income

 

 

6,009

 

 

 

3,351

 

Total noninterest income

 

 

28,153

 

 

 

27,966

 

Noninterest expense

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

58,845

 

 

 

43,845

 

Travel expense

 

 

2,145

 

 

 

2,741

 

Professional services expense

 

 

3,322

 

 

 

3,803

 

Advertising and marketing expense

 

 

1,985

 

 

 

3,029

 

Occupancy expense

 

 

4,376

 

 

 

3,457

 

Data processing expense

 

 

5,921

 

 

 

4,346

 

Equipment expense

 

 

9,287

 

 

 

7,564

 

Other loan origination and maintenance expense

 

 

4,948

 

 

 

3,347

 

Renewable energy tax credit investment impairment

 

 

 

 

 

602

 

FDIC insurance

 

 

3,231

 

 

 

1,334

 

Other expense

 

 

3,531

 

 

 

3,709

 

Total noninterest expense

 

 

97,591

 

 

 

77,777

 

(Loss) income before taxes

 

 

(10,129

)

 

 

8,286

 

Income tax (benefit) expense

 

 

(6,304

)

 

 

979

 

Net (loss) income

 

$

(3,825

)

 

$

7,307

 

(Loss) earnings per share

 

 

 

 

 

 

 

 

Basic

 

$

(0.10

)

 

$

0.18

 

Diluted

 

$

(0.10

)

 

$

0.18

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

Basic

 

 

40,420,425

 

 

 

40,178,491

 

Diluted

 

 

41,098,037

 

 

 

40,960,283

 

8


Live Oak Bancshares, Inc.

Quarterly Selected Financial Data

(Dollars in thousands, except per share data)

 

 

 

As of and for the three months ended

 

 

 

2Q 2020

 

 

1Q 2020

 

 

4Q 2019

 

 

3Q 2019

 

 

2Q 2019

 

Income Statement Data