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New Verticals, Products Helped Bolster Live Oak’s First Quarter

By Jenny Callison, posted May 1, 2017
Live Oak Bancshares officials have announced what they regard as successful results for the first quarter of calendar 2017.
The Wilmington-based company, parent of Live Oak Bank, logged first quarter net earnings available to common shareholders of about $6.1 million, or $0.17 per diluted share, according to a news release late last week.
Net earnings for Q1 exceeded the $4.7 million and $0.13 per diluted share that Live Oak Bancshares posted in the first quarter of 2016. First quarter results were higher also than those of the fourth quarter of 2016, when Live Oak net earnings came in at nearly $5.5 million and $0.16 per diluted share.
“We are very pleased with the first quarter’s results,” Live Oak Bancshares CEO Chip Mahan said in the release. “Loan and lease originations of $469 million have us well on our way to our 2017 target range of $1.8 [billion] to $1.9 billion. Our recent continued focus in the renewable energy space helped drive strong loan and lease origination performance as well as provide investment tax credits through our solar panel leasing program.
“We believe the renewable energy business will continue to be a performance driver for years to come,” Mahan continued. “As reflected in the recent acquisition of Reltco, a national title agency, our platform continues to evolve and allows us to provide best-in-class service to small businesses across the U.S.”
The $15.8 million purchase of St. Petersburg, Florida-based Reltco was completed in Q1 of this year. Merger-related costs totaled $516,000, the release stated.
In Live Oak’s subsequent earnings conference call, Mahan elaborated on the first quarter numbers.
“We are excited about 2017, and we’re particularly excited about Q1, which is historically a slow quarter for us,” he said. “Originations [in the first quarter of] this year were up 65 percent year over year: $285 million in 2016, $469 million in 2017, and we did these through new verticals, new products. We are no longer a one-trick [SBA] 7(a) pony; we are now in the [SBA] 504 and USDA [loan] business. And we also acquired a new business, a title agency in St. Pete, Florida that helps us close loans faster,” he said, referring to the Reltco purchase.
Other highlights of the first-quarter results included a 10.5 percent quarter-over-quarter increase of total deposits, from $1.49 billion as of Dec. 31 to $1.64 billion as of March 31. The company attributes the increase to successful deposit gathering campaigns.
The quality of Live Oak’s assets also improved. As an example, officials noted in the release that total nonperforming loans decreased to $22.5 million in the first quarter of 2017 from $23.8 million at the end of the prior quarter. Total unguaranteed nonperforming loans as a percentage of total loans and leases held for investment declined to 0.36 percent by the end of Q1 of 2017, compared to 0.53 percent at the end of Q4 of 2016.

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