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Banking & Finance

Live Oak Reports Lower Quarterly Numbers But Year-to-year Growth

By Jenny Callison, posted Jan 26, 2023
Several of Live Oak Bancshares’ key indicators slid during the fourth quarter of its recently ended fiscal year, but overall, the company showed growth across the board during its 2022 fiscal year, which ended Dec. 31, 2022. That’s according to Live Oak’s earnings report released Wednesday.
 
The company, parent of Live Oak Bank, saw its total fourth-quarter revenue dip to just under $105 million from over $141 million in the third quarter, a 26% change. Diluted earnings per share for Q4 were $.04, compared with $.96 per share at the end of Q3.
 
Its total noninterest expense edged 2% higher, quarter over quarter. Part of this came from the bank’s decision to increase its provision for credit losses in anticipation of a possible recession in 2023. The quarter-over-quarter increase was $6 million, from $14 million in Q3 to $20 million in Q4.

“Our loan portfolio remains healthy and we're committed to staying close to our existing small business borrowers, and we're optimistic as they navigate a slower growth economy,” Live Oak Bank President Huntley Garriott said in an earnings conference call Thursday. “That said, we still see tremendous opportunity to continue to lend prudently, especially if history repeats itself and lenders pull back from small businesses in choppier times.”

Live Oak's loan and lease production rose in the fourth quarter: it was nearly $1.2 billion, up from just over $1 billion in the third quarter.

“Our credit quality remains quite strong, despite the uncertainty of the economic outlook,” Chief Financial Officer William Losch said in the call. “And of course, our history of successful incubation and investment in FinTech ventures again served us well, generating significant gains in organic capital for future growth. All of this led to significant tangible book value per share growth as well as 12% year-over-year.”

Looking at yearly figures for FY22 gives an overall picture of growth for the Wilmington-based financial institution, which is the nation’s largest SBA lender. Its total revenues rose 24% year over year, from about $455 million to about $565 million, although total noninterest expenses rose 36% as well. Its net income in FY22 was just over $176 million, up from $167 million in FY21, a 6% increase.
 
Although Live Oak’s loan and lease production decreased 11% year over year, from about $4.5 billion in FY21 to just over $4 billion in FY22, its total portfolio of loans and leases grew 19% to $7.9 billion this past year.
 
Live Oak closed out its fiscal year with total assets of $9.9 billion, up 20% from the FY21 total, and with $8.9 billion in total deposits, an increase of 25% over the previous fiscal year’s total.

“Live Oak closed 2022 with a strong quarter as our teams once again produced more than $1 billion in loan originations, ending a banner year that also reflected continued deposit growth and $96 million in organic capital growth,” Live Oak Chairman and CEO James “Chip” Mahan III said in the earnings release.
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