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Banking & Finance

Live Oak Reports Q4 Results

By Jenny Callison, posted Feb 24, 2017
Live Oak Bancshares Inc. ended 2016 with its highest-ever quarterly loan production, CEO Chip Mahan said in the company’s Jan. 25 report to investors.

The company, parent of Live Oak Bank, reported fourth quarter net earnings available to common shareholders of $5.5 million, or $0.16 per diluted share, compared to $5.7 million, or $0.16 per diluted share, for the fourth quarter of 2015. The net year-over-year decrease was attributable, in part, to $3.4 million in expense from stock-based compensation awards and a $1.4 million impairment on an airplane scheduled to be sold.

Live Oak Bank originated more than $1.5 billion in loans in 2016 as a whole, exceeding its $1.5 billion target for the year, Mahan said. That’s an increase from about $1.2 billion the previous year, according to the company’s financial report.

In the fourth quarter of 2016 alone, the bank originated nearly $515 million in loans, substantially more than the nearly $331 million in originations in the fourth quarter of 2015.

Mahan added that Live Oak expects to continue generating strong double-digit growth in origination volumes. In an earnings call Jan. 26, he pointed to the company’s accelerated growth since 2014.

“In 2014, we did about $850 million worth of originations … [in 2016] we did $1.537 billion, so we almost doubled originations the last couple of years,” he said. “Net interest income almost tripled from $15 million to $43 million. Servicing revenue last 24 months was up 60 percent from $13 million to $21 million, so recurring revenue over-doubled from $28 million to $64 million, while our net gain on sale dollars [was] up 50 percent from $50 million to $75 million. So our core business, net recurring revenue plus gain on sale dollars, almost doubled from $78 million to about $140 million.”

In the call, Mahan spoke about the bank’s recent foray into USDA financing, which allows it to provide loans for renewable energy projects. The bank announced that new vertical in September and has found success with lending for solar farms in the Northeastern U.S., where power is more expensive than in the Southeast. The power is being sold to municipalities, Mahan said.

After maintaining a relatively slow pace in adding new industries to its lending portfolio in 2016, Live Oak plans to speed up a bit this year.

“We’re going to step our foot back on the gas this year and looking at two-plus verticals, one of which we’ve already decided is early development child care,” Mahan said in the call. “There are many SBA lenders in that space, but there is nobody as good as we are in terms of speed and taking care of the customers.”

Anticipating significant growth in scope and workforce, Live Oak has also announced plans to expand on its Tiburon Drive campus. As reported late last month in the Greater Wilmington Business Journal, the bank filed plans with the city for three more buildings and a 3.5-story parking garage on its property. The requests are part of a five- to 10-year expansion plan, officials said.

The Wilmington Planning Commission this month unanimously approved those plans, sending them ahead in the approval process.

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