Banking & Finance

Live Oak Bancshares Reports Strong Quarterly Earnings

By Jenny Callison, posted Apr 26, 2018
Live Oak Bancshares officials reported Wednesday that the company’s first-quarter 2018 performance exceeded that of the previous quarter as well as the first quarter of 2017.

Net earnings for the quarter ending March 31 were about $12.5 million, or $0.30 per diluted share, according to the company’s report. That compares favorably with the $6.1 million in net earnings and $0.17 per diluted share of Q1 2017.

“We kicked off the year in fine fashion with a very strong performance in the first quarter,” Live Oak CEO James (Chip) Mahan said in the company’s news release. “We enjoyed 43 percent growth in our loan and lease portfolio compared to one year ago, while significantly boosting our recurring revenues and liquidity position.”

As Mahan indicated, Live Oak’s total loan and lease portfolios have steadily increased in value over the past 15 months, with a portfolio value of $2.1 billion at the end of Q1 2018. That compares with $1.5 billion at the end of Q1 2017 and $2.02 billion at the end of Q4 2017. The value of loan and lease originations for Q1 2018 ($398 million), however, dipped from that of the previous quarter ($483 million) and the first quarter of 2017 ($469 million).

In a note in the report, Live Oak CFO Brett Caines stated he believes the decline in loan originations in the most recent quarter reflects ”increased competitive pressure in the small business lending space,” and added that officials expect originations to rise as the year goes on.
Another key indicator highlighted in the report is Live Oak’s sustained recurring revenue. In terms of net interest income, that revenue has increased year over year from about $15.6 million in Q1 2017 to nearly $24.5 million in the quarter just ended. Servicing revenues have risen from $5.9 million in Q1 2017 to nearly $24.5 million in Q1 2018.

While Live Oak Bank, the Wilmington company’s subsidiary, has long worked to expand its lending activity, more recently it has focused on increasing its deposit side as well. Quarter-over-quarter comparisons in Wednesday’s report demonstrate that those deposit-gathering campaigns have been successful recently.  

The bank’s total deposits increased by $713.1 million, or 31.5 percent, to nearly $3 billion as of March 31, compared to $2.26 billion at the end of the fourth quarter of 2017.

“We are steadily expanding our array of industry verticals and continuing to diversify our product offerings,” Mahan said in the release. “We are intensely focused on serving the needs of small businesses across the U.S. and revolutionizing the financial services industry through innovative technology solutions.”
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