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NCino, Live Oak Roots Spread Wider

By Jenny Callison, posted Sep 22, 2017
Trisha Price, nCino’s executive vice president of product development and engineering, is shown above at the company’s existing office, where the pace of hiring has led nCino officials to make plans for additional office space. (Photo by Chris Brehmer)
The growth of two Wilmington companies continues to make news. Both Live Oak Bancshares and its now-independent offspring, nCino, maintain rapid rates of growth, adding both customers and capabilities.

Both also are raising significant new capital to support that growth: Live Oak is in the midst of a stock offering that could yield $100 million or more, and nCino has completed a private equity offering that netted nearly $18 million.

They have, however, mapped out different expansion strategies.

While Live Oak focuses on diversifying its products and services, nCino has just one product – its Bank Operating System. That system is being tailored to serve a wide range of financial institutions and to support varied functions within those institutions.

Trisha Price, executive vice president of product development and engineering, reflected recently on nCino’s steady expansion from its launch in 2012, when its first customers were community banks and credit unions. Those customers are still an important part of nCino’s portfolio, but the company has developed broader capabilities.

“We’re now able to deliver the Bank Operating System to the largest banks in the country, whose complexities you don’t see in the local and regional market,” she said, adding that the system can support the “biggest, most complex deals” in banking.

nCino CEO Pierre Naudé noted that nCino’s 170-plus customers include nine of the largest banks in the U.S.

The Bank Operating System’s flexibility is also being demonstrated in a new arena this year: the international banking market. Attracting international financial institutions as customers has required the system to adapt to different currencies, languages and cultures, Price said.

This growth and product development have demanded an escalating workforce.

nCino now employs about 350 people and anticipates being at about 400 employees by year’s end, according to Naudé. Earlier this month, the company announced it was at capacity in its current 57,000-squarefoot space on Parker Farm Drive in the Mayfaire area and is leasing an additional 17,000 square feet on the third floor of The Offices at Mayfaire IV. It also recently opened a London office that employs 15.

“The quality of talent we’ve found in Wilmington is outstanding, and recruitment to Wilmington is becoming easier,” with interested individuals from outside the area starting to contact nCino, Naudé said. “We’re focused on building our company in Wilmington, with some exceptions.”

According to Price, nCino has successfully lured hires from such cities as San Diego; Austin, Texas; and Jacksonville, Florida.

“We’ve been able to find and attract a wealth of tech talent. What Wilmington has to offer in terms of quality of life is an enhancement,” she said.

Live Oak, now at about 400 employees with plans to eventually expand at its Tiburon Drive campus, is likewise sprouting new growth.

The banking company, the only public company headquartered in Wilmington, is adding more niche industries to its small business lending portfolio and by finding new lending products to offer to companies within those verticals.

“This year, we’ve launched six new verticals,” said Greg Thompson, the company’s COO.

He explained that four of these verticals are specific industries: tax credit leasing for renewable energy projects, early education services, senior care and professional services.
The other two “verticals” are actually “horizontals”: lending to companies for mergers and acquisitions and providing financing for equipment leasing. The intended loan customers are companies within Live Oak’s existing portfolio of verticals.

To prepare for its just-launched move into mergers and acquisitions lending, Thompson said, “We hired a couple of folks who are expert at identifying really good quality [transactions]. In equipment leasing, we’re lending to businesses that need new equipment but don’t necessarily want to buy it. The loans would be in the $150,000 to $350,000 range.”

Live Oak’s role in the equipment leasing business will go beyond just providing the financing, Thompson added. In addition to having a lending relationship with the company leasing the equipment, Live Oak would identify the equipment provider and handle the transaction.

“We would have the financing relationship with the people who build that equipment,” he said. “The lease could have a seven- or 10-year term. At the end of the lease period, there could be a modest buy-out.”

It’s all about diversifying Live Oak’s offerings, from the types of government-backed loans it offers to the company’s lending profile. Having sunk its roots into the small business lending terrain through SBA loans when Live Oak Bank launched in 2007, the bank expanded into USDA loans when it added the renewable energy industry to its verticals.

Opportunities for leasing financing came with that territory as well.

“Think of it as one business: We finance renewable energy projects. Sometimes it’s best to do that with a lease, and sometimes it’s best with a USDA loan,” Thompson said. “It depends on the nature, size and location of the project.”

Even as it continues its lending push, Live Oak is looking at the other side of the ledger to deposit growth through individual savings accounts. A new savings product launched June 21, adding to LOB’s CD offerings and accelerating the bank’s increasing savings totals.

“We’re opening 37 accounts a day. Average balance [is] $54,000 per account, picking up at right at $2 million in new deposit business a day,” Live Oak Bank President Scott Custer said during its Q2 earnings call.

Live Oak’s consumer savings product has a competitive rate of interest and is easy to open, thanks to a new customer portal launched in early 2017, Thompson said.

“The ease of opening an account has attracted a lot of our depositors who had historically been [our] CD customers,” he said.

Within the online portal, deposit customers can link to their accounts at other banks so they can see all their assets in one place and fund their Live Oak Bank accounts with monies from other banks, Thompson explained. The hope, of course, is that these customers will steer more and more of their assets to Live Oak.

In his earnings call comments, Custer emphasized that there is more to come.

“We’re not really done there. We’ve got new products on the horizon, all supported by great technology that’s being advanced every day,” he said.

nCino is also drawing on technology to adapt its Bank Operating System to additional functions. It has just added consumer banking capabilities to the system, so a bank can now use that platform to serve customers who want consumer loans or deposit accounts, Naudé said. The system works on mobile devices, bringing loan applications and account access to individuals’ phones. Mortgage lending capabilities will come soon.

“It’s a strategic advantage to the institution, allowing them to shape their branch infrastructure and capital outlay so they can become the kind of bank they want to be,” Naudé added. “Banks run one program [the Bank Operating System] across all functions, improving speed and efficiency.”
 
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