Banking & Finance

Live Oak Posts Healthy Financials, Eyes Positive Trends

By Jenny Callison, posted Apr 22, 2021
Live Oak Bancshares’ balance sheet for the first quarter of 2021 looks robust. In their comments upon release of the financial data, company officials expressed confidence that the trends will continue.
“It has been a healthy and noisy quarter,” Live Oak’s chairman and CEO James “Chip” Mahan said during the company’s earnings call Thursday. He was referring, in part, to the high level of activity stemming from the most recent round of Paycheck Protection Program (PPP) loans.
Huntley Garriott, president of Live Oak Bancshares' subsidiary Live Oak Bank, said during the call that the bank’s overall growth trends “remain strong.”
And Neil Underwood, president of Live Oak Bancshares, said of the company’s investments, “Things are tracking nicely in the Live Oak Ventures portfolio.”
Both revenues and earnings per share beat analysts' expectations. The company’s net earnings for the quarter were just over $76 million, 64% more than the $46.5 million it earned in the first quarter of 2020, and about $7.5 million more than earnings in the fourth quarter of 2020. Diluted earnings per share reflected that increase, at $0.88, compared with an EPS of negative $0.19 a year ago and a return to investors of $0.68 per share at the end of Q4 2020.
Net interest income made up almost $40 million of the $76 million total.
Live Oak Bancshares’ quarterly report shows that drivers of healthy net earnings included a jump in loan and lease originations, an increase in total deposits and a decrease in borrowings compared with the previous quarter. These factors mitigated Live Oak Bancshares’ slight rise in noninterest expenses incurred in the first quarter, resulting partly from increases in salary and benefits as well as in professional services.
Loan and lease originations in Q1 totaled nearly $1.2 billion, up 136% over the $500 million in originations the company logged in Q1 2020, and up substantially from last quarter’s $808 million in originations. Currently, the company’s loan and lease portfolio totals $6.5 billion, which includes $1.5 billion of PPP loans.  
Average total interest-bearing deposits for the first quarter of 2021 – almost $5.9 billion – were 5.7% higher than those at the end of the previous quarter, which totaled $5.5 billion.
“The increase in total deposits from the prior quarter provides support for the growth in the loan and lease portfolio and origination activities during the first quarter of 2021,” Wednesday’s news release from the company stated.

“Live Oak continued to serve America’s small businesses during the first quarter of 2021 and delivered strong results with $1.2 billion in loan and lease originations,” Mahan stated in the release. “The reopening of the Paycheck Protection Program allowed us to deliver just over $500 million in relief to small businesses during what is hopefully the end of this challenging period for our nation’s entrepreneurs. Our net income grew to nearly $40 million for the quarter as our focus on providing solutions for small business owners and changing the financial technology landscape promoted our growth and advanced our core earnings.”
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