EX-99.1 2 lob-ex991_6.htm EX-99.1 lob-ex991_6.htm

Exhibit 99.1

LIVE OAK BANCSHARES, INC. REPORTS FIRST QUARTER 2022 RESULTS

Wilmington, NC, April 27, 2022 - Live Oak Bancshares, Inc. (Nasdaq: LOB) (“Live Oak” or “the Company”) today reported first quarter of 2022 net income of $34.5 million, or $0.76 per diluted share.

“Live Oak Bank continues to focus on soundness, profitability and growth – in that order – and this quarter sustains the momentum of our franchise with strong balance sheet growth, credit quality and a differentiated model dedicated to America’s small business owners,” said Live Oak Chairman and CEO James S. (Chip) Mahan, III. “The beginning of 2022 provided continued indications that the small business market is robust and there remain many exciting opportunities for Live Oak to serve American entrepreneurs on a next-generation platform.”

First Quarter 2022 Key Measures

 

(Dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

Increase (Decrease)

 

 

 

 

 

 

 

1Q 2022

 

 

4Q 2021

 

 

Dollars

 

 

Percent

 

 

1Q 2021

 

Total revenue (1)

 

$

110,447

 

 

$

111,394

 

 

$

(947

)

 

 

(1

)%

 

$

101,007

 

Total noninterest expense

 

 

65,714

 

 

 

59,698

 

 

 

6,016

 

 

 

10

 

 

 

58,272

 

Income before taxes

 

 

42,897

 

 

 

47,778

 

 

 

(4,881

)

 

 

(10

)

 

 

43,608

 

Effective tax rate

 

 

19.6

%

 

 

36.9

%

 

n/a

 

 

n/a

 

 

 

9.6

%

Net income

 

$

34,509

 

 

$

30,147

 

 

$

4,362

 

 

 

14

%

 

$

39,427

 

Diluted earnings per share

 

 

0.76

 

 

 

0.66

 

 

 

0.10

 

 

 

15

 

 

 

0.88

 

Loan and lease production:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases originated

 

$

865,063

 

 

$

1,083,623

 

 

$

(218,560

)

 

 

(20

)%

 

$

1,180,219

 

% Fully funded

 

 

55.9

%

 

 

54.1

%

 

n/a

 

 

n/a

 

 

 

77.7

%

Total loans and leases:

 

$

6,766,876

 

 

$

6,637,781

 

 

$

129,095

 

 

 

2

%

 

$

6,533,495

 

Total loans and leases, excluding PPP loans:

 

 

6,636,056

 

 

 

6,375,903

 

 

 

260,153

 

 

 

4

 

 

 

5,088,437

 

Total assets:

 

 

8,619,966

 

 

 

8,213,393

 

 

 

406,573

 

 

 

5

 

 

 

8,417,875

 

Total deposits:

 

 

7,637,163

 

 

 

7,112,044

 

 

 

525,119

 

 

 

7

 

 

 

6,316,004

 

 

(1) Total revenue consists of net interest income and total noninterest income.

Loans and Leases

As of March 31, 2022, the total loan and lease portfolio was $6.77 billion, 3.6% above its level a year ago and 1.9% above its level at December 31, 2021. Compared to the fourth quarter of 2021, loans and leases held for investment increased $217.0 million, or 3.9%, to $5.74 billion while loans held for sale decreased $87.9 million, or 7.9%, to $1.03 billion. Average loans and leases were $6.72 billion during the first quarter of 2022 compared to $6.45 billion during the fourth quarter of 2021. Excluding Paycheck Protection Program (“PPP”) loans, the total loan and lease portfolio increased by $1.55 billion, or 30.4%, compared to March 31, 2021, and $260.2 million, or 4.1%, compared to December 31, 2021.

The total loan and lease portfolio of $6.77 billion includes $130.8 million of PPP loans, net of deferred fees and costs, at March 31, 2022, which are carried at historical cost classified as held for investment. The total loan and lease portfolio at March 31, 2022, and December 31, 2021, of $6.77 billion and $6.64 billion, respectively, was comprised of 54.9% and 51.6% of unguaranteed loans and leases, respectively.

Loan and lease originations totaled $865.1 million during the first quarter of 2022, a decrease of $218.6 million, or 20.2%, from the fourth quarter of 2021. Excluding PPP loans, loan and lease originations increased $192.6 million, or 28.6%, from the first quarter of 2021.

1

Deposits

Total deposits increased to $7.64 billion at March 31, 2022, an increase of $1.32 billion compared to March 31, 2021, and an increase of $525.1 million compared to December 31, 2021. The increase in total deposits from the prior quarters provides support for the growth in the loan and lease portfolio.  

Average total interest-bearing deposits for the first quarter of 2022 increased $343.2 million, or 5.0%, to $7.25 billion, compared to $6.91 billion for the fourth quarter of 2021. The ratio of average total loans and leases to average interest-bearing deposits was 92.8% for the first quarter of 2022, compared to 93.4% for the fourth quarter of 2021.

Borrowings

Borrowings totaled $196.9 million at March 31, 2022, compared to $1.47 billion and $318.3 million at March 31, 2021, and December 31, 2021, respectively.  During the first quarter of 2022, the Company decreased borrowings by $121.4 million and $1.27 billion as compared to December 31, and March 31, 2021, respectively, primarily by reducing the outstanding balance in the Federal Reserve’s Paycheck Protection Program Liquidity Facility (“PPPLF”) to $136.5 million as of March 31, 2022. The PPPLF has a 100% advance rate equal to the principal amount of PPP loans pledged as security and carries an interest rate of 0.35%, and loans financed under the PPPLF have a neutral impact on regulatory leverage capital ratios.

Net Interest Income

Net interest income for the first quarter of 2022 increased to $77.8 million compared to $70.0 million for the first quarter of 2021 and $77.6 million for the fourth quarter of 2021.

The increase for the first quarter of 2022 compared to the first quarter of 2021 was driven by the significant growth in the total loan and lease portfolio combined with the reduction in the average rate on interest bearing liabilities from 1.02% for the first quarter of 2021 to 0.81% for the first quarter of 2022.

The net interest margin remained level compared to the fourth quarter of 2021 at 4.02%, with the yield on interest earning assets increasing by two basis points to 4.79% while the average cost of interest-bearing liabilities also increased by two basis points to 0.81%.

Noninterest Income

Noninterest income for the first quarter of 2022 increased to $32.7 million compared to $31.1 million for the first quarter of 2021 and decreased compared to $33.8 million for the fourth quarter of 2021.  The primary drivers in noninterest income changes are outlined below.

The loan servicing asset revaluation resulted in a loss of $1.6 million for the first quarter of 2022 compared to a gain of $1.5 million for the first quarter of 2021 and a loss of $4.2 million for the fourth quarter of 2021.  The decrease in the loan servicing asset revaluation from the first quarter of 2021 was largely related to prepayment speeds increasing over the prior year.  The reduction of loss in the loan servicing asset revaluation from the fourth quarter of 2021 was principally the result of positive market pricing movements.

Net gains on sales of loans increased $9.0 million compared to the first quarter of 2021 and $720 thousand compared to the fourth quarter of 2021.  The primary driver for the increase was the volume of guaranteed loans sold which increased to $219.7 million for the first quarter of 2022 compared to $199.0 million sold in the fourth quarter of 2021 and $136.7 million sold in the first quarter of 2021.  The volume of loan sales in the first quarter of 2022 was influenced by current market considerations. The average net gain on sale premium was 109%, 110% and 110% for the first quarter of 2022, fourth quarter of 2021 and first quarter of 2021, respectively.

The net gain on loans accounted for under the fair value option totaled $516 thousand for the first quarter of 2022, a $3.7 million decrease compared to the $4.2 million net gain for the first quarter of 2021. The $3.7 million decrease in the gain was largely the result of significant economic forecasts improvements experienced during the first quarter of 2021.

2

Equity method investments had a net loss totaling $2.1 million for the first quarter of 2022, a $967 thousand higher net loss than the first quarter of 2021 and $5.1 million higher net loss than the fourth quarter of 2021.  The increased level of net losses from equity method investments was largely a product of the Company’s pro rata portion of losses recognized by fintech oriented investment funds.

Noninterest Expense

Noninterest expense for the first quarter of 2022 totaled $65.7 million compared to $58.3 million for the first quarter of 2021 and $59.7 million for the fourth quarter of 2021.  The primary drivers in noninterest expense changes are outlined below.

Salaries and employee benefits for the first quarter of 2022 increased to $38.5 million compared to $31.4 million for the first quarter of 2021 and $32.5 million for the fourth quarter of 2021.  The increase in salaries and employee benefits was principally related to continued investment in human resources to support strategic and growth initiatives.

Travel expense for the first quarter of 2022 increased to $1.9 million compared to $659 thousand for the first quarter of 2021 and $1.8 million for the fourth quarter of 2021. The increase in travel expenses over the first quarter of 2021 was largely related to supporting both loan origination volume and the customer base as travel restrictions continued to ease.

Advertising and marketing expense increased to $1.7 million for the first quarter of 2022 compared to $652 thousand for the first quarter of 2021 and decreased compared to $1.8 million for the fourth quarter of 2021. The $1.0 million increase over the first quarter of 2021 was largely driven by renewed marketing events.

Technology expense is a new line item which replaces data processing expense in previous income statements.  This new line item includes data processing expense and other non-compensation related costs reclassified from equipment expense and other expense line items for software, computer and telecommunications.  This reclassification was made primarily to improve the clarity of expenses related to the Company’s ongoing technology initiatives and is reflected in all comparative periods of this release.  Technology expense for the first quarter of 2022 was $6.1 million, a $1.2 million increase over the first quarter of 2021.  This increase was primarily related to enhanced investments in the Company’s technology resources.

Partially offsetting the increase in noninterest expense for the first quarter of 2022 compared to the first quarter of 2021 was decreased impairment charges of $3.1 million related to renewable energy tax credit investments during the prior year combined with decreased professional services expense of $1.1 million largely driven by lower legal fees.

Asset Quality

During the first quarter of 2022, the Company recognized net charge-offs for loans carried at historical cost of $2.4 million compared to net recoveries of $984 thousand in the first quarter of 2021 and net charge-offs of $15 thousand in the fourth quarter of 2021. The increase in net charge-offs for the first quarter of 2022 was principally related to one relationship that was fully reserved for in the fourth quarter of 2021.  Net charge-offs (recoveries) as a percentage of average held for investment loans and leases carried at historical cost, annualized, for the quarters ended March 31, 2022 and 2021, and December 31, 2021, was 0.19%, (0.09)% and 0.00%, respectively.

Unguaranteed nonperforming (nonaccrual) loans and leases, excluding $4.5 million and $4.8 million accounted for under the fair value option at March 31, 2022, and December 31, 2021, respectively, increased to $19.5 million, or 0.38% of loans and leases held for investment which are carried at historical cost, at March 31, 2022, compared to $16.0 million, or 0.33%, at December 31, 2021.

Provision for (Recovery of) Loan and Lease Credit Losses

The provision for loan and lease credit losses for the first quarter of 2022 totaled $1.8 million compared to a recovery of $873 thousand for the first quarter of 2021 and provision of $3.9 million for the fourth quarter of 2021.  The level of provision expense in the first quarter of 2022 was primarily the result of continued improvement in forecasts related to employment and default expectations combined with the effect of higher than usual recoveries in certain verticals and overall growth in the loan and lease portfolio.

3

The allowance for credit losses on loans and leases totaled $63.1 million at March 31, 2022, compared to $63.6 million at December 31, 2021. 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 1.23% and 1.30% at March 31, 2022, and December 31, 2021, respectively.

Income Tax

Income tax expense and related effective tax rate was $8.4 million and 19.6% for the first quarter of 2022, $4.2 million and 9.6% for the first quarter of 2021, and $17.6 million and 36.9% for the fourth quarter of 2021, respectively. The effective tax rate for the first quarter of 2022 was principally influenced by anticipated renewable energy tax credits associated with investments expected in 2021 but delayed to 2022 due to supply chain issues.

The higher level of income tax expense for the first quarter of 2022 compared to the first quarter of 2021 was primarily driven by vesting of restricted stock unit awards with market price conditions during the first three months of 2021.

The lower level of income tax expense for the first quarter of 2022 compared to the fourth quarter of 2021 was primarily the product of the above mentioned recognition of fewer investment tax credits in the last quarter of 2021 than the Company had anticipated in its annual effective tax rate for that year.

Shareholders’ Equity

Total shareholders’ equity decreased by $1.8 million, or 0.3%, during the first quarter of 2022.  This decrease was primarily due to $38.5 million of negative market impacts on the Company’s available-for-sale investment portfolio included in accumulated other comprehensive loss and largely offset by net income of $34.5 million.

During the first quarter of 2022, all of the remaining shares of Class B common stock (non-voting) amounting to 125,024 shares were converted to Class A common stock (voting) in connection with private sales.

Conference Call

Live Oak will host a conference call to discuss quarterly results at 9:00 a.m. ET tomorrow morning (April 28, 2022). 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 8584099. 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 conference call will also be available until May 5, 2022 and can be accessed by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID 8584099.

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 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; 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; 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. (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:

William C. (BJ) Losch, III | CFO | Investor Relations | 910.765.9966

Claire Parker | SVP Corporate Communications | Media Relations | 910.597.1592

5

Live Oak Bancshares, Inc.

Quarterly Statements of Income (unaudited)

(Dollars in thousands, except per share data)

 

 

 

Three months ended

 

 

1Q 2022 Change vs.

 

 

 

1Q 2022

 

 

4Q 2021

 

 

3Q 2021

 

 

2Q 2021

 

 

1Q 2021

 

 

4Q 2021

 

 

1Q 2021

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

%

 

 

%

 

Loans and fees on loans

 

$

89,198

 

 

$

88,577

 

 

$

89,388

 

 

$

84,780

 

 

$

84,993

 

 

 

0.7

 

 

 

4.9

 

Investment securities, taxable

 

 

3,399

 

 

 

3,455

 

 

 

3,147

 

 

 

2,975

 

 

 

2,929

 

 

 

(1.6

)

 

 

16.0

 

Other interest earning assets

 

 

185

 

 

 

171

 

 

 

224

 

 

 

244

 

 

 

303

 

 

 

8.2

 

 

 

(38.9

)

Total interest income

 

 

92,782

 

 

 

92,203

 

 

 

92,786

 

 

 

87,999

 

 

 

88,225

 

 

 

0.6

 

 

 

5.2

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

14,348

 

 

 

13,817

 

 

 

14,159

 

 

 

14,820

 

 

 

16,944

 

 

 

3.8

 

 

 

(15.3

)

Borrowings

 

 

655

 

 

 

748

 

 

 

892

 

 

 

1,717

 

 

 

1,331

 

 

 

(12.4

)

 

 

(50.8

)

Total interest expense

 

 

15,003

 

 

 

14,565

 

 

 

15,051

 

 

 

16,537

 

 

 

18,275

 

 

 

3.0

 

 

 

(17.9

)

Net interest income

 

 

77,779

 

 

 

77,638

 

 

 

77,735

 

 

 

71,462

 

 

 

69,950

 

 

 

0.2

 

 

 

11.2

 

Provision for (recovery of) loan and lease credit

   losses

 

 

1,836

 

 

 

3,918

 

 

 

4,319

 

 

 

7,846

 

 

 

(873

)

 

 

(53.1

)

 

 

(310.3

)

Net interest income after provision for (recovery of)

   loan and lease credit losses

 

 

75,943

 

 

 

73,720

 

 

 

73,416

 

 

 

63,616

 

 

 

70,823

 

 

 

3.0

 

 

 

7.2

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan servicing revenue

 

 

6,356

 

 

 

6,289

 

 

 

6,278

 

 

 

6,218

 

 

 

6,434

 

 

 

1.1

 

 

 

(1.2

)

Loan servicing asset revaluation

 

 

(1,569

)

 

 

(4,160

)

 

 

(5,878

)

 

 

(3,181

)

 

 

1,493

 

 

 

62.3

 

 

 

(205.1

)

Net gains on sales of loans

 

 

20,977

 

 

 

20,257

 

 

 

18,860

 

 

 

16,234

 

 

 

11,929

 

 

 

3.6

 

 

 

75.8

 

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

   value option

 

 

516

 

 

 

(66

)

 

 

(1,030

)

 

 

1,135

 

 

 

4,218

 

 

 

881.8

 

 

 

(87.8

)

Equity method investments income (loss)

 

 

(2,124

)

 

 

2,969

 

 

 

(1,250

)

 

 

(2,278

)

 

 

(1,157

)

 

 

(171.5

)

 

 

(83.6

)

Equity security investments gains (losses), net

 

 

(44

)

 

 

218

 

 

 

176

 

 

 

44,253

 

 

 

105

 

 

 

(120.2

)

 

 

(141.9

)

Lease income

 

 

2,503

 

 

 

2,521

 

 

 

2,527

 

 

 

2,616

 

 

 

2,599

 

 

 

(0.7

)

 

 

(3.7

)

Management fee income

 

 

1,488

 

 

 

1,482

 

 

 

1,489

 

 

 

1,473

 

 

 

1,934

 

 

 

0.4

 

 

 

(23.1

)

Other noninterest income

 

 

4,565

 

 

 

4,246

 

 

 

4,104

 

 

 

3,641

 

 

 

3,502

 

 

 

7.5

 

 

 

30.4

 

Total noninterest income

 

 

32,668

 

 

 

33,756

 

 

 

25,276

 

 

 

70,111

 

 

 

31,057

 

 

 

(3.2

)

 

 

5.2

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

38,507

 

 

 

32,464

 

 

 

28,202

 

 

 

32,900

 

 

 

31,366

 

 

 

18.6

 

 

 

22.8

 

Travel expense

 

 

1,897

 

 

 

1,782

 

 

 

1,819

 

 

 

1,549

 

 

 

659

 

 

 

6.5

 

 

 

187.9

 

Professional services expense

 

 

2,791

 

 

 

3,724

 

 

 

4,251

 

 

 

3,329

 

 

 

3,831

 

 

 

(25.1

)

 

 

(27.1

)

Advertising and marketing expense

 

 

1,729

 

 

 

1,844

 

 

 

1,631

 

 

 

875

 

 

 

652

 

 

 

(6.2

)

 

 

165.2

 

Occupancy expense

 

 

2,327

 

 

 

2,045

 

 

 

2,042

 

 

 

2,224

 

 

 

2,112

 

 

 

13.8

 

 

 

10.2

 

Technology expense

 

 

6,053

 

 

 

6,489

 

 

 

6,150

 

 

 

5,131

 

 

 

4,878

 

 

 

(6.7

)

 

 

24.1

 

Equipment expense

 

 

3,816

 

 

 

3,741

 

 

 

3,706

 

 

 

3,721

 

 

 

3,701

 

 

 

2.0

 

 

 

3.1

 

Other loan origination and maintenance expense

 

 

3,113

 

 

 

3,406

 

 

 

3,489

 

 

 

3,307

 

 

 

3,327

 

 

 

(8.6

)

 

 

(6.4

)

Renewable energy tax credit investment impairment

 

 

—

 

 

 

—

 

 

 

60

 

 

 

—

 

 

 

3,127

 

 

 

—

 

 

 

(100.0

)

FDIC insurance

 

 

1,972

 

 

 

1,931

 

 

 

1,670

 

 

 

1,704

 

 

 

1,765

 

 

 

2.1

 

 

 

11.7

 

Other expense

 

 

3,509

 

 

 

2,272

 

 

 

2,439

 

 

 

2,818

 

 

 

2,854

 

 

 

54.4

 

 

 

23.0

 

Total noninterest expense

 

 

65,714

 

 

 

59,698

 

 

 

55,459

 

 

 

57,558

 

 

 

58,272

 

 

 

10.1

 

 

 

12.8

 

Income before taxes

 

 

42,897

 

 

 

47,778

 

 

 

43,233

 

 

 

76,169

 

 

 

43,608

 

 

 

(10.2

)

 

 

(1.6

)

Income tax expense

 

 

8,388

 

 

 

17,631

 

 

 

9,394

 

 

 

12,587

 

 

 

4,181

 

 

 

(52.4

)

 

 

100.6

 

Net income

 

$

34,509

 

 

$

30,147

 

 

$

33,839

 

 

$

63,582

 

 

$

39,427

 

 

 

14.5

 

 

 

(12.5

)

Earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.79

 

 

$

0.69

 

 

$

0.78

 

 

$

1.48

 

 

$

0.92

 

 

 

14.5

 

 

 

(14.1

)

Diluted

 

$

0.76

 

 

$

0.66

 

 

$

0.76

 

 

$

1.41

 

 

$

0.88

 

 

 

15.2

 

 

 

(13.6

)

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

43,701,943

 

 

 

43,492,172

 

 

 

43,329,889

 

 

 

43,173,312

 

 

 

42,673,615

 

 

 

 

 

 

 

 

 

Diluted

 

 

45,227,536

 

 

 

45,474,530

 

 

 

45,040,690

 

 

 

45,062,392

 

 

 

44,696,850

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

Live Oak Bancshares, Inc.

Quarterly Balance Sheets (unaudited)

(Dollars in thousands)

 

 

 

As of the quarter ended

 

 

1Q 2022 Change vs.

 

 

 

1Q 2022

 

 

4Q 2021

 

 

3Q 2021

 

 

2Q 2021

 

 

1Q 2021

 

 

4Q 2021

 

 

1Q 2021

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

%

 

 

%

 

Cash and due from banks

 

$

477,778

 

 

$

187,203

 

 

$

336,362

 

 

$

428,907

 

 

$

630,081

 

 

 

155.2

 

 

 

(24.2

)

Federal funds sold

 

 

29,993

 

 

 

16,547

 

 

 

10,672

 

 

 

9,917

 

 

 

5,461

 

 

 

81.3

 

 

 

449.2

 

Certificates of deposit with other banks

 

 

4,250

 

 

 

4,750

 

 

 

6,000

 

 

 

6,000

 

 

 

6,500

 

 

 

(10.5

)

 

 

(34.6

)

Investment securities available-for-sale

 

 

844,577

 

 

 

906,052

 

 

 

861,377

 

 

 

817,896

 

 

 

775,177

 

 

 

(6.8

)

 

 

9.0

 

Loans held for sale (1)

 

 

1,028,635

 

 

 

1,116,519

 

 

 

1,042,756

 

 

 

1,064,911

 

 

 

1,076,741

 

 

 

(7.9

)

 

 

(4.5

)

Loans and leases held for investment (2)

 

 

5,738,241

 

 

 

5,521,262

 

 

 

5,418,611

 

 

 

5,441,423

 

 

 

5,456,754

 

 

 

3.9

 

 

 

5.2

 

Allowance for credit losses on loans and leases

 

 

(63,058

)

 

 

(63,584

)

 

 

(59,681

)

 

 

(57,848

)

 

 

(52,417

)

 

 

0.8

 

 

 

(20.3

)

Net loans and leases

 

 

5,675,183

 

 

 

5,457,678

 

 

 

5,358,930

 

 

 

5,383,575

 

 

 

5,404,337

 

 

 

4.0

 

 

 

5.0

 

Premises and equipment, net

 

 

254,865

 

 

 

240,196

 

 

 

244,212

 

 

 

249,069

 

 

 

253,774

 

 

 

6.1

 

 

 

0.4

 

Foreclosed assets

 

 

198

 

 

 

620

 

 

 

883

 

 

 

1,793

 

 

 

4,185

 

 

 

(68.1

)

 

 

(95.3

)

Servicing assets

 

 

36,286

 

 

 

33,574

 

 

 

33,968

 

 

 

36,966

 

 

 

37,744

 

 

 

8.1

 

 

 

(3.9

)

Other assets

 

 

268,201

 

 

 

250,254

 

 

 

242,181

 

 

 

244,152

 

 

 

223,875

 

 

 

7.2

 

 

 

19.8

 

Total assets

 

$

8,619,966

 

 

$

8,213,393

 

 

$

8,137,341

 

 

$

8,243,186

 

 

$

8,417,875

 

 

 

5.0

 

 

 

2.4

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

86,342

 

 

$

89,279

 

 

$

77,026

 

 

$

89,768

 

 

$

75,794

 

 

 

(3.3

)

 

 

13.9

 

Interest-bearing

 

 

7,550,821

 

 

 

7,022,765

 

 

 

6,739,587

 

 

 

6,431,065

 

 

 

6,240,210

 

 

 

7.5

 

 

 

21.0

 

Total deposits

 

 

7,637,163

 

 

 

7,112,044

 

 

 

6,816,613

 

 

 

6,520,833

 

 

 

6,316,004

 

 

 

7.4

 

 

 

20.9

 

Borrowings

 

 

196,911

 

 

 

318,289

 

 

 

575,021

 

 

 

1,012,431

 

 

 

1,465,961

 

 

 

(38.1

)

 

 

(86.6

)

Other liabilities

 

 

72,565

 

 

 

67,927

 

 

 

56,284

 

 

 

52,575

 

 

 

45,550

 

 

 

6.8

 

 

 

59.3

 

Total liabilities

 

 

7,906,639

 

 

 

7,498,260

 

 

 

7,447,918

 

 

 

7,585,839

 

 

 

7,827,515

 

 

 

5.4

 

 

 

1.0

 

Shareholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

   authorized, none issued or outstanding

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Class A common stock (voting)

 

 

315,607

 

 

 

310,970

 

 

 

304,085

 

 

 

299,809

 

 

 

298,525

 

 

 

1.5

 

 

 

5.7

 

Class B common stock (non-voting)

 

 

—

 

 

 

1,324

 

 

 

5,404

 

 

 

5,404

 

 

 

7,330

 

 

 

(100.0

)

 

 

(100.0

)

Retained earnings

 

 

434,226

 

 

 

400,893

 

 

 

371,869

 

 

 

339,011

 

 

 

275,377

 

 

 

8.3

 

 

 

57.7

 

Accumulated other comprehensive (loss) income

 

 

(36,506

)

 

 

1,946

 

 

 

8,065

 

 

 

13,123

 

 

 

9,128

 

 

 

(1,976.0

)

 

 

(499.9

)

Total shareholders' equity

 

 

713,327

 

 

 

715,133

 

 

 

689,423

 

 

 

657,347

 

 

 

590,360

 

 

 

(0.3

)

 

 

20.8

 

Total liabilities and shareholders’ equity

 

$

8,619,966

 

 

$

8,213,393

 

 

$

8,137,341

 

 

$

8,243,186

 

 

$

8,417,875

 

 

 

5.0

 

 

 

2.4

 

 

(1)

Includes $25.1 million, $25.3 million, $27.4 million, $29.0 million and $35.9 million measured at fair value for the quarters ended March 31, 2022, December 31, 2021, September 30, 2021, June 30, 2021 and March 31, 2021, respectively.

(2)

Includes $600.6 million, $645.2 million, $698.0 million, $743.2 million and $790.8 million measured at fair value for the quarters ended March 31, 2022, December 31, 2021, September 30, 2021, June 30, 2021 and March 31, 2021, respectively.

7

Live Oak Bancshares, Inc.

Quarterly Selected Financial Data

(Dollars in thousands, except per share data)

 

 

As of and for the three months ended

 

 

 

1Q 2022

 

 

4Q 2021

 

 

3Q 2021

 

 

2Q 2021

 

 

1Q 2021

 

Income Statement Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

34,509

 

 

$

30,147

 

 

$

33,839

 

 

$

63,582

 

 

$

39,427

 

Per Common Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income, diluted

 

$

0.76

 

 

$

0.66

 

 

$

0.76

 

 

$

1.41

 

 

$

0.88

 

Dividends declared

 

 

0.03

 

 

 

0.03

 

 

 

0.03

 

 

 

0.03

 

 

 

0.03

 

Book value

 

 

16.29

 

 

 

16.39

 

 

 

15.89

 

 

 

15.19

 

 

 

13.74

 

Tangible book value (1)

 

 

16.20

 

 

 

16.31

 

 

 

15.80

 

 

 

15.10

 

 

 

13.65

 

Performance Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (annualized)

 

 

1.65

%

 

 

1.47

%

 

 

1.64

%

 

 

3.01

%

 

 

1.98

%

Return on average equity (annualized)

 

 

18.94

 

 

 

16.80

 

 

 

19.67

 

 

 

41.30

 

 

 

26.89

 

Net interest margin

 

 

4.02

 

 

 

4.02

 

 

 

3.99

 

 

 

3.63

 

 

 

3.81

 

Efficiency ratio (1)

 

 

59.50

 

 

 

53.59

 

 

 

53.84

 

 

 

40.66

 

 

 

57.69

 

Noninterest income to total revenue

 

 

29.58

 

 

 

30.30

 

 

 

24.54

 

 

 

49.52

 

 

 

30.75

 

Selected Loan Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases originated

 

$

865,063

 

 

$

1,083,623

 

 

$

1,063,190

 

 

$

1,153,693

 

 

$

1,180,219

 

Outstanding balance of sold loans serviced

 

 

3,381,883

 

 

 

3,298,828

 

 

 

3,212,271

 

 

 

3,134,068

 

 

 

3,216,727

 

Asset Quality Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses to loans and leases held for

   investment (3)

 

 

1.23

%

 

 

1.30

%

 

 

1.26

%

 

 

1.23

%

 

 

1.12

%

Net charge-offs (recoveries) (3)

 

$

2,362

 

 

$

15

 

 

$

2,485

 

 

$

2,417

 

 

$

(984

)

Net charge-offs (recoveries) to average loans and leases

   held for investment (2) (3)

 

 

0.19

%

 

 

0.00

%

 

 

0.21

%

 

 

0.21

%

 

 

(0.09

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans and leases at historical cost (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unguaranteed

 

$

19,475

 

 

$

15,987

 

 

$

20,450

 

 

$

22,458

 

 

$

24,738

 

Guaranteed

 

 

32,828

 

 

 

26,546

 

 

 

28,888

 

 

 

25,551

 

 

 

32,633

 

Total

 

 

52,303

 

 

 

42,533

 

 

 

49,338

 

 

 

48,009

 

 

 

57,371

 

Unguaranteed nonperforming historical cost loans and

   leases, to loans and leases held for investment (3)

 

 

0.38

%

 

 

0.33

%

 

 

0.43

%

 

 

0.48

%

 

 

0.53

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans at fair value (4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unguaranteed

 

$

4,451

 

 

$

4,791

 

 

$

6,303

 

 

$

5,503

 

 

$

5,838

 

Guaranteed

 

 

30,850

 

 

 

33,471

 

 

 

36,708

 

 

 

34,323

 

 

 

34,396

 

Total

 

 

35,301

 

 

 

38,262

 

 

 

43,011

 

 

 

39,826

 

 

 

40,234

 

Unguaranteed nonperforming fair value loans to loans

    held for investment (4)

 

 

0.74

%

 

 

0.74

%

 

 

0.90

%

 

 

0.74

%

 

 

0.74

%

Capital Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital (to risk-weighted assets)

 

 

12.10

%

 

 

12.38

%

 

 

12.56

%

 

 

12.45

%

 

 

12.16

%

Tier 1 leverage capital (to average assets)

 

 

8.87

 

 

 

8.87

 

 

 

8.82

 

 

 

8.70

 

 

 

8.50

 

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).

8

Live Oak Bancshares, Inc.

Quarterly Average Balances and Net Interest Margin

(Dollars in thousands)

 

 

 

Three Months Ended

March 31, 2022

 

 

Three Months Ended

December 31, 2021

 

 

 

Average Balance

 

 

Interest

 

 

Average Yield/Rate

 

 

Average Balance

 

 

Interest

 

 

Average Yield/Rate

 

Interest earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning balances in other banks

 

$

223,638

 

 

$

179

 

 

 

0.32

%

 

$

331,077

 

 

$

168

 

 

 

0.20

%

Federal funds sold

 

 

9,197

 

 

 

6

 

 

 

0.26

 

 

 

8,515

 

 

 

3

 

 

 

0.14

 

Investment securities

 

 

895,592

 

 

 

3,399

 

 

 

1.54

 

 

 

879,138

 

 

 

3,455

 

 

 

1.56

 

Loans held for sale

 

 

1,115,441

 

 

 

15,183

 

 

 

5.52

 

 

 

1,059,672

 

 

 

14,661

 

 

 

5.49

 

Loans and leases held for investment (1)

 

 

5,609,338

 

 

 

74,015

 

 

 

5.35

 

 

 

5,391,283

 

 

 

73,916

 

 

 

5.44

 

Total interest earning assets

 

 

7,853,206

 

 

 

92,782

 

 

 

4.79

 

 

 

7,669,685

 

 

 

92,203

 

 

 

4.77

 

Less: allowance for credit losses on loans and

   leases

 

 

(62,732

)

 

 

 

 

 

 

 

 

 

 

(59,088

)

 

 

 

 

 

 

 

 

Non-interest earning assets

 

 

588,171

 

 

 

 

 

 

 

 

 

 

 

569,493

 

 

 

 

 

 

 

 

 

Total assets

 

$

8,378,645

 

 

 

 

 

 

 

 

 

 

$

8,180,090

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings

 

$

3,605,905

 

 

$

4,840

 

 

 

0.54

%

 

$

3,470,813

 

 

$

4,487

 

 

 

0.51

%

Money market accounts

 

 

91,463

 

 

 

54

 

 

 

0.24

 

 

 

97,230

 

 

 

61

 

 

 

0.25

 

Certificates of deposit

 

 

3,551,310

 

 

 

9,454

 

 

 

1.08

 

 

 

3,337,399

 

 

 

9,269

 

 

 

1.10

 

Total interest bearing deposits

 

 

7,248,678

 

 

 

14,348

 

 

 

0.80

 

 

 

6,905,442

 

 

 

13,817

 

 

 

0.79

 

Borrowings

 

 

262,485

 

 

 

655

 

 

 

1.01

 

 

 

427,044

 

 

 

748

 

 

 

0.69

 

Total interest bearing liabilities

 

 

7,511,163

 

 

 

15,003

 

 

 

0.81

 

 

 

7,332,486

 

 

 

14,565

 

 

 

0.79

 

Non-interest bearing deposits

 

 

86,570

 

 

 

 

 

 

 

 

 

 

 

79,479

 

 

 

 

 

 

 

 

 

Non-interest bearing liabilities

 

 

51,940

 

 

 

 

 

 

 

 

 

 

 

50,190

 

 

 

 

 

 

 

 

 

Shareholders' equity

 

 

728,972

 

 

 

 

 

 

 

 

 

 

 

717,935

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

8,378,645

 

 

 

 

 

 

 

 

 

 

$

8,180,090

 

 

 

 

 

 

 

 

 

Net interest income and interest rate spread

 

 

 

 

 

$

77,779

 

 

 

3.98

%

 

 

 

 

 

$

77,638

 

 

 

3.98

%

Net interest margin

 

 

 

 

 

 

 

 

 

 

4.02

 

 

 

 

 

 

 

 

 

 

 

4.02

 

Ratio of average interest-earning assets to average

   interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

104.55

%

 

 

 

 

 

 

 

 

 

 

104.60

%

 

(1)Average loan and lease balances include non-accruing loans.

9

Live Oak Bancshares, Inc.  

GAAP to Non-GAAP Reconciliation

(Dollars in thousands)

 

 

 

As of and for the three months ended

 

 

 

1Q 2022

 

 

4Q 2021

 

 

3Q 2021

 

 

2Q 2021

 

 

1Q 2021

 

Total shareholders’ equity

 

$

713,327

 

 

$

715,133

 

 

$

689,423

 

 

$

657,347

 

 

$

590,360

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

1,797

 

 

 

1,797

 

 

 

1,797

 

 

 

1,797

 

 

 

1,797

 

Other intangible assets

 

 

1,988

 

 

 

2,026

 

 

 

2,065

 

 

 

2,103

 

 

 

2,141

 

Tangible shareholders’ equity (a)

 

$

709,542

 

 

$

711,310

 

 

$

685,561

 

 

$

653,447

 

 

$

586,422

 

Shares outstanding (c)

 

 

43,787,660

 

 

 

43,619,070

 

 

 

43,381,014

 

 

 

43,264,460

 

 

 

42,951,344

 

Total assets

 

$

8,619,966

 

 

$

8,213,393

 

 

$

8,137,341

 

 

$

8,243,186

 

 

$

8,417,875

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

1,797

 

 

 

1,797

 

 

 

1,797

 

 

 

1,797

 

 

 

1,797

 

Other intangible assets

 

 

1,988

 

 

 

2,026

 

 

 

2,065

 

 

 

2,103

 

 

 

2,141

 

Tangible assets (b)

 

$

8,616,181

 

 

$

8,209,570

 

 

$

8,133,479

 

 

$

8,239,286

 

 

$

8,413,937

 

Tangible shareholders’ equity to tangible assets (a/b)

 

 

8.23

%

 

 

8.66

%

 

 

8.43

%

 

 

7.93

%

 

 

6.97

%

Tangible book value per share (a/c)

 

$

16.20

 

 

$

16.31

 

 

$

15.80

 

 

$

15.10

 

 

$

13.65

 

Efficiency ratio:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense (d)

 

$

65,714

 

 

$

59,698

 

 

$

55,459

 

 

$

57,558

 

 

$

58,272

 

Net interest income

 

 

77,779

 

 

 

77,638

 

 

 

77,735

 

 

 

71,462

 

 

 

69,950

 

Noninterest income

 

 

32,668

 

 

 

33,756

 

 

 

25,276

 

 

 

70,111

 

 

 

31,057

 

Less: gain on sale of securities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Adjusted operating revenue (e)

 

$

110,447

 

 

$

111,394

 

 

$

103,011

 

 

$

141,573

 

 

$

101,007

 

Efficiency ratio (d/e)

 

 

59.50

%

 

 

53.59

%

 

 

53.84

%

 

 

40.66

%

 

 

57.69

%

 

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.

 

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