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Banking & Finance

Live Oak Bancshares: Q4 Results Off; Yearly Trends Up

By Jenny Callison, posted Jan 23, 2025
In its fourth-quarter and year-end earnings release this week, Live Oak Bancshares reported a mixed bag of results. Total revenue and earnings per share, along with loan and lease origination, were down from the previous quarter and missed analysts’ targets. Compared with those measures from a year ago, however, the company showed growth in key areas.

“Live Oak enters 2025 with some really excellent business momentum,” Live Oak President BJ Losch said at the start of Thursday's earnings call. “We're seeing small business sentiment and activity on the rise. Our loan pipelines are still near all-time highs and our key growth initiatives such as Live Oak Express, which is our small dollar SBA 7(a) loan offering and acquiring checking relationships are continuing to ramp. Our ability to grow the company was on full display in 2024.”
 
Live Oak (NYSE: LOB) on Wednesday reported total revenue of nearly $128.1 million for the fourth quarter, which ended Dec. 31. That figure, down about 1% from the third-quarter revenue of nearly $130 million, missed those analysts’ expectations by about $1.2 million, according to Seeking Alpha. The Zacks Consensus Estimate for Live Oak Q4 revenues was more modest, at $125.9 million, so Zacks Investment Research saw the reported revenue figure as “a surprise of +1.72%.”
 
Earnings per share of $0.22 were down from the previous quarter’s $0.28 and fell short of Seeking Alpha’s analyst projections by $0.27.
 
Analysts believe that Live Oak’s trimmed returns for the fourth quarter of 2024 are due in part to its beefing up reserves for possible credit losses.
 
“(Credit) Provisions jumped 273.3% to $33.58 million compared to $8.99 million in Q4 2023,” Motley Fool observed. “This was primarily due to the bank's record loan growth and macroeconomic pressures on credit quality. Notably, its net income also fell 38.7% to $9.9 million from the prior-year period's $16.16 million.”
 
The company’s loan and lease production in Q4 fell to just over $1.4 billion, down from nearly $1.8 billion the previous quarter, a 19% drop.
 
Live Oak’s year-over-year results show a positive arc. Total revenue grew 9%, from $457 million at the end of the company’s 2023 fiscal year to almost $500 million at the end of 2024. Earnings per share grew 3%, from $1.64 to $1.69.
 
The bank’s deposits showed annual growth of 14%, increasing from about $10.3 billion at the end of FY 2023 to about $11.8 billion at the end of FY 2024.
 
Loan and lease origination increased 31% year-over-year, from just under $4 billion to $5.2 billion. The value of total loans and leases at the end of FY 2024 was about $10.6 billion, up from about $9 billion at the end of FY 2023.

“Not only did we have record loan production in 2024, but . . .  pipelines have steadily increased as well, meaning, as we have closed business, we've more than replenished the pipeline with new activity, which continues to support our optimistic outlook for balance sheet and revenue growth in 2025,” Losch said during the call.

Motley Fool saw the bright side as well.

Despite the bank's challenges, the advisory said, “Live Oak achieved an annual record of $5.16 billion in loan production. Quarterly originations of $1.421 billion represented a 44.8% rise from the prior-year period, although it was a decline of 19% from the third quarter, suggesting volatility in lending conditions. The company’s total assets increased by 14.8% year over year to $12.94 billion, with deposits growing by $1.49 billion.”

The investment advisory firm also noted that “effective cost controls” enabled Live Oak to reduce its noninterest expenses by 3% year over year, although its share of non-performing loans increased, especially in “unguaranteed segments, reflecting the macroeconomic challenges faced by certain borrower groups.”

As of press time Thursday, shares of Live Oak Bancshares stock were trading at $35.02 on the New York Stock Exchange, down from $38 at the market opening.
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