Wilmington-based Live Oak Bank reported its first-quarter earnings for the 2024 fiscal year Wednesday afternoon, followed by a 17% decrease in earnings-per-share, as of press time on Thursday.

In its first quarter ending in March, Live Oak officials reported net income of $16.5 million and $0.36 per diluted share. Total revenue, $116 million, was up 14% year-over-year, however, first-quarter revenue missed Zacks Investment Research analysts’ $119 million expectation.

Thursday morning’s earnings call described the impact of the “higher-for-longer rate environment” on small business borrowers. Walt Phifer, Live Oak’s chief financial officer, said small business borrowers are resilient and maintain “the eye of the tiger mindset.”

Originations were a sizeable pain point, Live Oak CEO Chip Mahan broached the subject in his opening statement. Loan originations came in at $805 million for the first quarter, Mahan said, a $176 million decrease from the previous quarter.

“A number of larger loans slipped at the last minute,” Mahan said. “As of today, many of those (originations) have closed. We expect to catch up to our original budget by the end of this quarter. We expect a nice increase in originations over last year.”

Growing revenue was another focus of the call. Officials mentioned automation as one revenue generator they're pursuing. Live Oak technology teams are working to automate SBA loans, Mahan said. Those automated loans will be sold on the secondary market.

 “Our investments in machine technology allow us to better answer the question we constantly hear from our customers: ‘Am I approved?’ and ‘When do I get the money?’” Mahan said.

The bank has already started originating small dollar SBA loans using machine learning and automation with a small team dedicated to that project, Live Oak President BJ Losch said on the call. Officials have not opened the capability to all their lenders yet, he said. Two projects need to be completed before they open the capability to all lenders – a digital application automating the front end of the loan process and an automated credit scoring feature. The credit scoring will not be fully automated, but bank officials want to streamline the processing of small-dollar loans.

Capital levels are strong and have been for three consecutive quarters, Phifer said. Last year’s banking crisis and interest rate hikes resulted in the bank increasing its deposits by $537 million to support its liquidity profile this time last year, according to the bank’s Q1 2023 earnings report.

According to Zacks Investment Research, Efficiency Ratio, total noninterest income and net gains of sales of loans were down from analysts’ expectations. The average balance of total interest-earning assets, net interest income, loan servicing revenue and other noninterest income beat analysts’ estimations. Net interest margin and net charge-offs to average loans and leases held for investment hit expectations on the nose.