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Live Oak Bancshares, Inc. Reports Second Quarter 2022 Results
Источник: Nasdaq GlobeNewswire / 27 июл 2022 16:30:01 America/New_York
WILMINGTON, N.C., July 27, 2022 (GLOBE NEWSWIRE) -- Live Oak Bancshares, Inc. (Nasdaq: LOB) (“Live Oak” or “the Company”) today reported second quarter of 2022 net income of $97.0 million, or $2.16 per diluted share. The second quarter of 2022 included a pretax gain of $120.5 million related to the sale of the Company’s investment in Finxact, Inc. (“Finxact”).
“We continue to be optimistic about the future, as the second quarter’s performance indicates there are ample opportunities to serve America’s small businesses on our next-generation platform,” said Live Oak Bancshares Chairman and CEO James S. (Chip) Mahan, III. “The capital gains we recognized this quarter through our Finxact investment add more fuel to our mission, giving Live Oak a unique position to be nimble and innovative while maintaining a focus on safety and soundness.”
Second Quarter 2022 Key Measures
(Dollars in thousands, except per share data) Increase (Decrease) 2Q 2022 1Q 2022 Dollars Percent 2Q 2021 Total revenue (1) $ 208,463 $ 110,447 $ 98,016 89 % $ 141,573 Total noninterest expense 80,879 65,714 15,165 23 57,558 Income before taxes 122,317 42,897 79,420 185 76,169 Effective tax rate 20.7 % 19.6 % n/a n/a 16.5 % Net income $ 97,039 $ 34,509 $ 62,530 181 % $ 63,582 Diluted earnings per share 2.16 0.76 1.40 184 1.41 Loan and lease production: Loans and leases originated $ 959,635 $ 865,063 $ 94,572 11 % $ 1,153,693 % Fully funded 58.6 % 55.9 % n/a n/a 58.6 % Total loans and leases: $ 7,059,943 $ 6,766,876 $ 293,067 4 % $ 6,506,334 Total loans and leases, excluding PPP loans: 6,998,579 6,636,056 362,523 5 5,579,038 Total assets: 9,120,897 8,619,966 500,931 6 8,243,186 Total deposits: 8,155,744 7,637,163 518,581 7 6,520,833 (1) Total revenue consists of net interest income and total noninterest income.
Loans and Leases
As of June 30, 2022, the total loan and lease portfolio was $7.06 billion, 4.3% above its level at March 31, 2022, and 8.5% above its level a year ago. Compared to the first quarter of 2022, loans and leases held for investment increased $122.0 million, or 2.1%, to $5.86 billion while loans held for sale increased $171.1 million, or 16.6%, to $1.20 billion. This growth was the product of strong origination volumes combined with intentionally holding loans available for sale for longer periods of time before sale, as discussed in more detail below. Average loans and leases were $6.93 billion during the second quarter of 2022 compared to $6.72 billion during the first quarter of 2022. Excluding Paycheck Protection Program (“PPP”) loans, the total loan and lease portfolio increased by $362.5 million, or 5.5%, compared to March 31, 2022, and $1.42 billion, or 25.4%, compared to June 30, 2021.
The total loan and lease portfolio of $7.06 billion includes $61.4 million of PPP loans, net of deferred fees and costs, at June 30, 2022, which are carried at historical cost and classified as held for investment. The total loan and lease portfolio at June 30, 2022, and March 31, 2022 was comprised of 55.5% and 54.9% of unguaranteed loans and leases, respectively.
Loan and lease originations totaled $959.6 million during the second quarter of 2022, an increase of $94.6 million, or 10.9%, from the first quarter of 2022. Excluding PPP loans, loan and lease originations decreased $154.3 million, or 13.9%, from the second quarter of 2021.
Deposits
Total deposits increased to $8.16 billion at June 30, 2022, an increase of $518.6 million compared to March 31, 2022, and an increase of $1.63 billion compared to June 30, 2021. The increase in total deposits from the prior periods provides support for the growth in the loan and lease portfolio.
Average total interest-bearing deposits for the second quarter of 2022 increased $453.5 million, or 6.3%, to $7.70 billion, compared to $7.25 billion for the first quarter of 2022. The ratio of average total loans and leases to average interest-bearing deposits was 89.9% for the second quarter of 2022, compared to 92.8% for the first quarter of 2022.
Borrowings
Borrowings totaled $86.2 million at June 30, 2022, compared to $196.9 million and $1.01 billion at March 31, 2022, and June 30, 2021, respectively. During the second quarter of 2022, the Company decreased borrowings by $110.7 million and $926.2 million as compared to March 31, 2022, and June 30, 2021, respectively, primarily by reducing the outstanding balance in the Federal Reserve’s Paycheck Protection Program Liquidity Facility to $48.2 million as of June 30, 2022.
Net Interest Income
Net interest income for the second quarter of 2022 increased to $79.9 million compared to $77.8 million for the first quarter of 2022 and $71.5 million for the second quarter of 2021.
The net interest margin for the second and first quarters of 2022 was 3.89% and 4.02%, respectively, a decrease of thirteen basis points quarter over quarter. This decrease was due to heightened average liquidity levels combined with recent interest rate increases where deposits are repricing more rapidly than the Company’s loan portfolio. During the second quarter of 2022, the average cost of interest-bearing liabilities increased by eighteen basis points while the average yield on interest-earning assets increased by four basis points.
The increase in net interest income for the second quarter of 2022 compared to the second quarter of 2021 was driven by growth in both average yield and volume for the total loan and lease portfolio outpacing moderate growth in interest-bearing liabilities combined with an increase in average cost of funds. The benefit of rising rates on the Company’s cash and loan portfolio was mitigated by the increase in the average cost of funds from 0.86% for the second quarter of 2021 to 0.99% for the second quarter of 2022.
Noninterest Income
Noninterest income for the second quarter of 2022 increased to $128.5 million compared to $32.7 million for the first quarter of 2022 and $70.1 million for the second quarter of 2021. The primary drivers in noninterest income changes are outlined below.
The largest driver of the increase in noninterest income for the second quarter of 2022 arose from equity method investments income of $119.1 million, principally comprised of the $120.5 million gain associated with Fiserv, Inc.’s acquisition of the Company’s ownership in Finxact. In comparison, the second quarter of 2021 had a $44.1 million gain related to the Company’s investment in Greenlight Financial Technologies, which partially offset the overall increase over the prior year.
The loan servicing asset revaluation resulted in a loss of $8.7 million for the second quarter of 2022 compared to $1.6 million for the first quarter of 2022 and $3.2 million for the second quarter of 2021. The increase in the loss on loan servicing asset revaluation for both periods was principally the result of negative market pricing influenced by heightened interest rates and broader movements in market conditions.
Net gains on sales of loans decreased by $15.3 million compared to the first quarter of 2022 and $10.6 million compared to the second quarter of 2021. This decrease was a product of heightened sales in the first quarter of 2022 in advance of expected market premium changes combined with the second quarter of 2022 emergence of the negative market conditions discussed above. The average net gain on sale premium was 108%, 109% and 112% for the second quarter of 2022, first quarter of 2022 and second quarter of 2021, respectively. Based primarily upon these market conditions, the Company decreased the volume of guaranteed loans sold to $68.8 million for the second quarter of 2022 compared to $219.7 million sold in the first quarter of 2022 and $130.9 million sold in the second quarter of 2021.
The net loss on loans accounted for under the fair value option totaled $4.5 million for the second quarter of 2022, a $5.0 million decrease compared to the $516 thousand net gain for the first quarter of 2022 and a $5.6 million decrease compared to the $1.1 million net gain for the second quarter of 2021. The decrease in valuation of loans accounted for under the fair value option compared to both prior periods was largely the result of negative market pricing influences discussed above.
Noninterest Expense
Noninterest expense for the second quarter of 2022 totaled $80.9 million compared to $65.7 million for the first quarter of 2022 and $57.6 million for the second quarter of 2021. The primary drivers in noninterest expense changes are outlined below.
Salaries and employee benefits for the second quarter of 2022 increased $7.8 million compared to the first quarter of 2022 and increased $13.4 million compared to the second quarter of 2021. The increase in salaries and employee benefits compared to both prior periods was principally related to continued investment in human resources to support strategic and growth initiatives. The second quarter of 2022 included an additional $7.5 million bonus accrual related to the earlier discussed Finxact gain, largely comprising the increase over the first quarter of 2022.
Contributions and donations for the second quarter of 2022 increased $4.8 million compared to both the first quarter of 2022 and second quarter of 2021. This increase was related to a special charitable donation during the second quarter of 2022 of $5.0 million made in connection with the Finxact gain discussed earlier.
Asset Quality
During the second quarter of 2022, the Company recognized net charge-offs for loans carried at historical cost of $2.5 million compared to net charge-offs of $2.4 million in both the first quarter of 2022 and second quarter of 2021. 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, 2022, March 31, 2022 and June 30, 2021, was 0.19%, 0.19% and 0.21%, respectively.
Unguaranteed nonperforming (nonaccrual) loans and leases, excluding $3.6 million and $4.5 million accounted for under the fair value option at June 30, 2022, and March 31, 2022, respectively, decreased to $12.0 million, or 0.22% of loans and leases held for investment which are carried at historical cost, at June 30, 2022, compared to $19.5 million, or 0.38%, at March 31, 2022.
Provision for Loan and Lease Credit Losses
The provision for loan and lease credit losses for the second quarter of 2022 totaled $5.3 million compared to $1.8 million for the first quarter of 2022 and $7.8 million for the second quarter of 2021. The level of provision expense in the second quarter of 2022 was primarily the result of charge-off experience from one relationship.
The allowance for credit losses on loans and leases totaled $65.9 million at June 30, 2022, compared to $63.1 million at March 31, 2022. 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 1.24% and 1.23% at June 30, 2022, and March 31, 2022, respectively.
Income Tax
Income tax expense and related effective tax rate was $25.3 million and 20.7% for the second quarter of 2022, $8.4 million and 19.6% for the first quarter of 2022 and $12.6 million and 16.5% for the second quarter of 2021, respectively. The higher level of income tax expense for the second quarter of 2022 compared to the first quarter of 2022 and second quarter of 2021 was primarily from the increased pretax income resulting from the Finxact gain. The higher effective tax rate in 2022 compared to 2021 is principally due to lower levels of expected renewable energy tax credits in 2022 combined with tax benefits arising from the vesting of stock unit awards which vested in 2021.
Shareholders’ Equity
Total shareholders’ equity increased by $78.3 million, or 11.0%, during the second quarter of 2022. This increase was primarily due to $97.0 million in net income partially offset by $22.8 million of negative market impacts on the Company’s available-for-sale investment portfolio included in accumulated other comprehensive loss.
Conference Call
Live Oak will host a conference call to discuss the company's financial results and business outlook tomorrow, July 28, 2022, at 9:00 a.m. ET. To participate via telephone, please register in advance at this link: https://register.vevent.com/register/BI742b362216fb43a0af58bc7251128382. Upon registration, all telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number along with a unique passcode and registrant ID that can be used to access the call. The call can also be accessed via a live audio webcast at http://investor.liveoakbank.com/. After the conference call, a replay will be available until August 4, 2022, at the same audio webcast link.
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 & Chief Banking Officer | Investor Relations | 910.765.9966
Claire Parker | SVP Corporate Communications | Media Relations | 910.597.1592Live Oak Bancshares, Inc.
Quarterly Statements of Income (unaudited)
(Dollars in thousands, except per share data)Three Months Ended 2Q 2022 Change vs. 2Q 2022 1Q 2022 4Q 2021 3Q 2021 2Q 2021 1Q 2022 2Q 2021 Interest income % % Loans and fees on loans $ 94,157 $ 89,198 $ 88,577 $ 89,388 $ 84,780 5.6 11.1 Investment securities, taxable 4,046 3,399 3,455 3,147 2,975 19.0 36.0 Other interest earning assets 1,044 185 171 224 244 464.3 327.9 Total interest income 99,247 92,782 92,203 92,786 87,999 7.0 12.8 Interest expense Deposits 18,777 14,348 13,817 14,159 14,820 30.9 26.7 Borrowings 536 655 748 892 1,717 (18.2 ) (68.8 ) Total interest expense 19,313 15,003 14,565 15,051 16,537 28.7 16.8 Net interest income 79,934 77,779 77,638 77,735 71,462 2.8 11.9 Provision for loan and lease credit losses 5,267 1,836 3,918 4,319 7,846 186.9 (32.9 ) Net interest income after provision for
loan and lease credit losses74,667 75,943 73,720 73,416 63,616 (1.7 ) 17.4 Noninterest income Loan servicing revenue 6,477 6,356 6,289 6,278 6,218 1.9 4.2 Loan servicing asset revaluation (8,668 ) (1,569 ) (4,160 ) (5,878 ) (3,181 ) (452.5 ) (172.5 ) Net gains on sales of loans 5,630 20,977 20,257 18,860 16,234 (73.2 ) (65.3 ) Net (loss) gain on loans accounted for under the fair
value option(4,461 ) 516 (66 ) (1,030 ) 1,135 (964.5 ) (493.0 ) Equity method investments income (loss) 119,056 (2,124 ) 2,969 (1,250 ) (2,278 ) 5,705.3 5,326.3 Equity security investments gains (losses), net 1,655 (44 ) 218 176 44,253 3,861.4 (96.3 ) Lease income 2,510 2,503 2,521 2,527 2,616 0.3 (4.1 ) Management fee income 2,558 1,488 1,482 1,489 1,473 71.9 73.7 Other noninterest income 3,772 4,565 4,246 4,104 3,641 (17.4 ) 3.6 Total noninterest income 128,529 32,668 33,756 25,276 70,111 293.4 83.3 Noninterest expense Salaries and employee benefits 46,276 38,507 32,464 28,202 32,900 20.2 40.7 Travel expense 2,358 1,897 1,782 1,819 1,549 24.3 52.2 Professional services expense 3,988 2,791 3,724 4,251 3,329 42.9 19.8 Advertising and marketing expense 2,301 1,729 1,844 1,631 875 33.1 163.0 Occupancy expense 2,773 2,327 2,045 2,042 2,224 19.2 24.7 Technology expense 5,762 6,053 6,489 6,150 5,131 (4.8 ) 12.3 Equipment expense 3,784 3,816 3,741 3,706 3,721 (0.8 ) 1.7 Other loan origination and maintenance expense 3,022 3,113 3,406 3,489 3,307 (2.9 ) (8.6 ) Renewable energy tax credit investment impairment 50 — — 60 — 100.0 100.0 FDIC insurance 2,164 1,972 1,931 1,670 1,704 9.7 27.0 Contributions and donations 5,515 723 328 523 686 662.8 703.9 Other expense 2,886 2,786 1,944 1,916 2,132 3.6 35.4 Total noninterest expense 80,879 65,714 59,698 55,459 57,558 23.1 40.5 Income before taxes 122,317 42,897 47,778 43,233 76,169 185.1 60.6 Income tax expense 25,278 8,388 17,631 9,394 12,587 201.4 100.8 Net income $ 97,039 $ 34,509 $ 30,147 $ 33,839 $ 63,582 181.2 52.6 Earnings per share Basic $ 2.22 $ 0.79 $ 0.69 $ 0.78 $ 1.48 181.0 50.0 Diluted $ 2.16 $ 0.76 $ 0.66 $ 0.76 $ 1.41 184.2 53.2 Weighted average shares outstanding Basic 43,824,707 43,701,943 43,492,172 43,329,889 43,173,312 Diluted 44,803,278 45,227,536 45,474,530 45,040,690 45,062,392 Live Oak Bancshares, Inc.
Quarterly Balance Sheets (unaudited)
(Dollars in thousands)As of the quarter ended 2Q 2022 Change vs. 2Q 2022 1Q 2022 4Q 2021 3Q 2021 2Q 2021 1Q 2022 2Q 2021 Assets % % Cash and due from banks $ 580,493 $ 477,778 $ 187,203 $ 336,362 $ 428,907 21.5 35.3 Federal funds sold 51,694 29,993 16,547 10,672 9,917 72.4 421.3 Certificates of deposit with other banks 4,250 4,250 4,750 6,000 6,000 — (29.2 ) Investment securities available-for-sale 927,968 844,577 906,052 861,377 817,896 9.9 13.5 Loans held for sale (1) 1,199,734 1,028,635 1,116,519 1,042,756 1,064,911 16.6 12.7 Loans and leases held for investment (2) 5,860,209 5,738,241 5,521,262 5,418,611 5,441,423 2.1 7.7 Allowance for credit losses on loans and leases (65,863 ) (63,058 ) (63,584 ) (59,681 ) (57,848 ) (4.4 ) (13.9 ) Net loans and leases 5,794,346 5,675,183 5,457,678 5,358,930 5,383,575 2.1 7.6 Premises and equipment, net 257,926 254,865 240,196 244,212 249,069 1.2 3.6 Foreclosed assets 191 198 620 883 1,793 (3.5 ) (89.3 ) Servicing assets 28,661 36,286 33,574 33,968 36,966 (21.0 ) (22.5 ) Other assets 275,634 268,201 250,254 242,181 244,152 2.8 12.9 Total assets $ 9,120,897 $ 8,619,966 $ 8,213,393 $ 8,137,341 $ 8,243,186 5.8 10.6 Liabilities and Shareholders’ Equity Liabilities Deposits: Noninterest-bearing $ 119,371 $ 86,342 $ 89,279 $ 77,026 $ 89,768 38.3 33.0 Interest-bearing 8,036,373 7,550,821 7,022,765 6,739,587 6,431,065 6.4 25.0 Total deposits 8,155,744 7,637,163 7,112,044 6,816,613 6,520,833 6.8 25.1 Borrowings 86,209 196,911 318,289 575,021 1,012,431 (56.2 ) (91.5 ) Other liabilities 87,282 72,565 67,927 56,284 52,575 20.3 66.0 Total liabilities 8,329,235 7,906,639 7,498,260 7,447,918 7,585,839 5.3 9.8 Shareholders’ equity Preferred stock, no par value, 1,000,000 shares
authorized, none issued or outstanding— — — — — — — Class A common stock (voting) 320,924 315,607 310,970 304,085 299,809 1.7 7.0 Class B common stock (non-voting) — — 1,324 5,404 5,404 — (100.0 ) Retained earnings 530,021 434,226 400,893 371,869 339,011 22.1 56.3 Accumulated other comprehensive (loss) income (59,283 ) (36,506 ) 1,946 8,065 13,123 62.4 (551.7 ) Total shareholders' equity 791,662 713,327 715,133 689,423 657,347 11.0 20.4 Total liabilities and shareholders’ equity $ 9,120,897 $ 8,619,966 $ 8,213,393 $ 8,137,341 $ 8,243,186 5.8 10.6 (1) Includes $23.5 million, $25.1 million, $25.3 million, $27.4 million and $29.0 million measured at fair value for the quarters ended June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021 and June 30, 2021, respectively. (2) Includes $530.6 million, $600.6 million, $645.2 million, $698.0 million and $743.2 million measured at fair value for the quarters ended June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021 and June 30, 2021, respectively. Live Oak Bancshares, Inc.
Statements of Income (unaudited)
(Dollars in thousands, except per share data)Six Months Ended June 30, 2022 June 30, 2021 Interest income Loans and fees on loans $ 183,355 $ 169,773 Investment securities, taxable 7,445 5,904 Other interest earning assets 1,229 547 Total interest income 192,029 176,224 Interest expense Deposits 33,125 31,764 Borrowings 1,191 3,048 Total interest expense 34,316 34,812 Net interest income 157,713 141,412 Provision for loan and lease credit losses 7,103 6,973 Net interest income after provision for loan and lease credit losses 150,610 134,439 Noninterest income Loan servicing revenue 12,833 12,652 Loan servicing asset revaluation (10,237 ) (1,688 ) Net gains on sales of loans 26,607 28,163 Net (loss) gain on loans accounted for under the fair value option (3,945 ) 5,353 Equity method investments income (loss) 116,932 (3,435 ) Equity security investments gains (losses), net 1,611 44,358 Lease income 5,013 5,215 Management fee income 4,046 3,407 Other noninterest income 8,337 7,143 Total noninterest income 161,197 101,168 Noninterest expense Salaries and employee benefits 84,783 64,266 Travel expense 4,255 2,208 Professional services expense 6,779 7,160 Advertising and marketing expense 4,030 1,527 Occupancy expense 5,100 4,336 Technology expense 11,815 10,009 Equipment expense 7,600 7,422 Other loan origination and maintenance expense 6,135 6,634 Renewable energy tax credit investment impairment 50 3,127 FDIC insurance 4,136 3,469 Contributions and donations 6,238 1,480 Other expense 5,672 4,192 Total noninterest expense 146,593 115,830 Income before taxes 165,214 119,777 Income tax expense 33,666 16,768 Net income $ 131,548 $ 103,009 Earnings per share Basic $ 3.01 $ 2.40 Diluted $ 2.92 $ 2.29 Weighted average shares outstanding Basic 43,763,681 42,924,844 Diluted 45,015,763 44,881,002 Live Oak Bancshares, Inc.
Quarterly Selected Financial Data
(Dollars in thousands, except per share data)As of and for the three months ended 2Q 2022 1Q 2022 4Q 2021 3Q 2021 2Q 2021 Income Statement Data Net income $ 97,039 $ 34,509 $ 30,147 $ 33,839 $ 63,582 Per Common Share Net income, diluted $ 2.16 $ 0.76 $ 0.66 $ 0.76 $ 1.41 Dividends declared 0.03 0.03 0.03 0.03 0.03 Book value 18.05 16.29 16.39 15.89 15.19 Tangible book value (1) 17.97 16.20 16.31 15.80 15.10 Performance Ratios Return on average assets (annualized) 4.40 % 1.65 % 1.47 % 1.64 % 3.01 % Return on average equity (annualized) 46.14 18.94 16.80 19.67 41.30 Net interest margin 3.89 4.02 4.02 3.99 3.63 Efficiency ratio (1) 38.80 59.50 53.59 53.84 40.66 Noninterest income to total revenue 61.66 29.58 30.30 24.54 49.52 Selected Loan Metrics Loans and leases originated $ 959,635 $ 865,063 $ 1,083,623 $ 1,063,190 $ 1,153,693 Outstanding balance of sold loans serviced 3,329,616 3,381,883 3,298,828 3,212,271 3,134,068 Asset Quality Ratios Allowance for credit losses to loans and leases held for
investment (3)1.24 % 1.23 % 1.30 % 1.26 % 1.23 % Net charge-offs (3) $ 2,462 $ 2,362 $ 15 $ 2,485 $ 2,417 Net charge-offs to average loans and leases held for
investment (2) (3)0.19 % 0.19 % 0.00 % 0.21 % 0.21 % Nonperforming loans and leases at historical cost (3) Unguaranteed $ 11,974 $ 19,475 $ 15,987 $ 20,450 $ 22,458 Guaranteed 33,794 32,828 26,546 28,888 25,551 Total 45,768 52,303 42,533 49,338 48,009 Unguaranteed nonperforming historical cost loans and
leases, to loans and leases held for investment (3)0.22 % 0.38 % 0.33 % 0.43 % 0.48 % Nonperforming loans at fair value (4) Unguaranteed $ 3,615 $ 4,451 $ 4,791 $ 6,303 $ 5,503 Guaranteed 27,895 30,850 33,471 36,708 34,323 Total 31,510 35,301 38,262 43,011 39,826 Unguaranteed nonperforming fair value loans to loans
held for investment (4)0.68 % 0.74 % 0.74 % 0.90 % 0.74 % Capital Ratios Common equity tier 1 capital (to risk-weighted assets) 13.14 % 12.10 % 12.38 % 12.56 % 12.45 % Tier 1 leverage capital (to average assets) 9.44 8.87 8.87 8.82 8.70 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). Live Oak Bancshares, Inc.
Quarterly Average Balances and Net Interest Margin
(Dollars in thousands)Three Months Ended
June 30, 2022Three Months Ended
March 31, 2022Average
BalanceInterest Average
Yield/RateAverage
BalanceInterest Average
Yield/RateInterest-earning assets: Interest-earning balances in other banks $ 328,014 $ 848 1.04 % $ 223,638 $ 179 0.32 % Federal funds sold 78,216 196 1.01 9,197 6 0.26 Investment securities 915,106 4,046 1.77 895,592 3,399 1.54 Loans held for sale 1,119,094 15,969 5.72 1,115,441 15,183 5.52 Loans and leases held for investment(1) 5,805,907 78,188 5.40 5,609,338 74,015 5.35 Total interest-earning assets 8,246,337 99,247 4.83 7,853,206 92,782 4.79 Less: allowance for credit losses on loans and leases (62,566 ) (62,732 ) Noninterest-earning assets 644,495 588,171 Total assets $ 8,828,266 $ 8,378,645 Interest-bearing liabilities: Savings $ 3,894,177 $ 7,538 0.78 % $ 3,605,905 $ 4,840 0.54 % Money market accounts 93,072 56 0.24 91,463 54 0.24 Certificates of deposit 3,714,882 11,183 1.21 3,551,310 9,454 1.08 Total interest-bearing deposits 7,702,131 18,777 0.98 7,248,678 14,348 0.80 Borrowings 132,969 536 1.62 262,485 655 1.01 Total interest-bearing liabilities 7,835,100 19,313 0.99 7,511,163 15,003 0.81 Noninterest-bearing deposits 96,123 86,570 Noninterest-bearing liabilities 55,725 51,940 Shareholders' equity 841,318 728,972 Total liabilities and shareholders' equity $ 8,828,266 $ 8,378,645 Net interest income and interest rate spread $ 79,934 3.84 % $ 77,779 3.98 % Net interest margin 3.89 4.02 Ratio of average interest-earning assets to average interest-bearing liabilities 105.25 % 104.55 % (1) Average loan and lease balances include non-accruing loans.
Live Oak Bancshares, Inc.
GAAP to Non-GAAP Reconciliation
(Dollars in thousands)As of and for the three months ended 2Q 2022 1Q 2022 4Q 2021 3Q 2021 2Q 2021 Total shareholders’ equity $ 791,662 $ 713,327 $ 715,133 $ 689,423 $ 657,347 Less: Goodwill 1,797 1,797 1,797 1,797 1,797 Other intangible assets 1,950 1,988 2,026 2,065 2,103 Tangible shareholders’ equity (a) $ 787,915 $ 709,542 $ 711,310 $ 685,561 $ 653,447 Shares outstanding (c) 43,854,011 43,787,660 43,619,070 43,381,014 43,264,460 Total assets $ 9,120,897 $ 8,619,966 $ 8,213,393 $ 8,137,341 $ 8,243,186 Less: Goodwill 1,797 1,797 1,797 1,797 1,797 Other intangible assets 1,950 1,988 2,026 2,065 2,103 Tangible assets (b) $ 9,117,150 $ 8,616,181 $ 8,209,570 $ 8,133,479 $ 8,239,286 Tangible shareholders’ equity to tangible assets (a/b) 8.64 % 8.23 % 8.66 % 8.43 % 7.93 % Tangible book value per share (a/c) $ 17.97 $ 16.20 $ 16.31 $ 15.80 $ 15.10 Efficiency ratio: Noninterest expense (d) $ 80,879 $ 65,714 $ 59,698 $ 55,459 $ 57,558 Net interest income 79,934 77,779 77,638 77,735 71,462 Noninterest income 128,529 32,668 33,756 25,276 70,111 Total revenue (e) $ 208,463 $ 110,447 $ 111,394 $ 103,011 $ 141,573 Efficiency ratio (d/e) 38.80 % 59.50 % 53.59 % 53.84 % 40.66 % 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.