Live Oak Bancshares (LOB) Q4 2015 earnings summary

Executive summary

• FY15 net income to common shareholders rose 105.3% to $20.6M; diluted EPS was $0.65 vs. $0.41 in 2014.

• Loan production grew 36.6% to $1.16B; guaranteed loan sales rose 47.7% to $640.9M, supporting 40.7% growth in core recurring revenue to $109.1M.

• Four lending verticals were added, bringing the total to 11; an eLending pilot began for smaller business loans, with public launch in Feb. 2016.

Financial highlights

• Net interest income increased 73.9% to $25.6M; noninterest income rose 40.4% to $84.3M, including a $3.8M one-time gain on the sale of the nCino investment.

• Net gains on loan sales increased 34.8% to $67.4M; loan servicing revenue and revaluation totaled $9.9M, including negative servicing revaluation of $6.2M.

• Noninterest expense rose 31.5% to $71.7M, reflecting growth investments; salary and benefits increased 38.3% to $40.3M.

• Adjusted pre-tax net income, excluding non-recurring items, rose 38.5% to $30.6M; comparable reported net income increased 105.3% to $20.6M.

Outlook and guidance

• FY16 loan originations expected at $1.35B, with ~40% fully funded at closing; held-for-sale and held-for-investment portfolios expected to grow.

• Noninterest expense expected to increase as staffing, infrastructure and other investments support higher loan production.

• Online banking platform for small businesses targeted for launch by year-end 2016; digital origination and eLending build-out are strategic priorities.