Live Oak Bancshares (NYSE: LOB) reported its third-quarter earnings Wednesday, logging higher revenue but missing analysts’ earnings-per-share expectations, as the Wilmington-based lender recorded a $17 million expense to cover expected losses on loans to distillery businesses.

The company reported total revenue of $175.65 million, up 12.5% from $156.1 million in the previous quarter. Revenue increased 23.4% compared to the third quarter of 2025. Net income attributable to common shareholders totaled $24.3 million, or 52 cents per diluted share, missing earnings-per-share expectations of 64 cents, according to Zacks Equity Research. Adjusted earnings per share were 49 cents.

During a conference call Thursday, executives touted strong loan production of $2.1 billion, up 29% year over year, as well as strong deposit growth of $920 million during the quarter. Total assets grew by 5.8% and 15.7% to $17 billion as of Sept. 30, compared to June 30, 2026, and Sept. 30, 2025, respectively. 

Live Oak Bank was named the top SBA lender by dollar amount for fiscal 2026, and chief financial officer Walt Phifer emphasized the portfolio’s strength and diversification. 

“Q3 originations were well diversified across 34 different industries and totaled $2.1 billion, up 38% linked quarter and 29% year-over-year, and a record quarter of production for the bank,” said Phifer during the call. 

Live Oak Express, the bank’s SBA lending platform for loans up to $350,000, hit record originations of $107 million, up 173% year-over-year, and generated a record $7 million in net gain-on-sale income. 

Net interest income rose 6.1% from the second quarter of 2026 and 15.2% from the third quarter of 2025. At $133.01 million, net interest exceeded analysts' estimate of $129.25 million, according to Zacks Equity Research. 

Adjusted pre-provision earnings reached a record $88 million, up 33% year-over-year, and the adjusted efficiency ratio improved to 49% during the quarter, said Live Oak Bank president BJ Losch. 

Officials also discussed action on the bank’s distillery loan portfolio for businesses in the distillery and spirits industry. According to Losch, the bank stopped actively lending to the distillery industry in 2024 and is working through the remaining credits. The bank recorded a $17 million provision related to its distillery loan portfolio during the quarter – or an expense reflecting estimated potential loan losses. 

“(It’s the) second straight year of declining U.S. spirits demand, resulting in further excess barrel inventory across the industry, which is driving a sharp decline in collateral values,” said Losch during the call. 

Live Oak recognized $29 million in provisions and charge-offs on the portfolio year to date. According to Michael Cairns, Live Oak Bank's chief credit officer, the bank has about $60 million in unreserved loan balances to work through. 

Because the $17 million distillery provision reduced quarterly earnings, officials described it as a $0.27-per-share drag and said adjusted EPS would have been 76 cents excluding the per-share distillery impact. 

“The franchise we have and are building is stronger than the quarter we just reported,” said Losch during the call, “and the quarter we just reported is the proof because it took a $17 million hit and kept moving.”

Officials also underscored the growing role of AI in the company, saying that all employees have access to AI tools and that the company is expanding AI use in areas including credit work and portfolio management. 

“What I like to say about AI is today is not tomorrow,” said Losch. “The technology is advancing rapidly, so we're dreaming big about how to use it to accelerate our strategy.”