Live Oak Bancshares, Inc. · NYSE:LOB
Live Oak Bancshares — Q1 2019 Earnings Presentation
24 slides from Live Oak Bancshares's earnings presentation, Apr 22, 2019
Slide 1: Live Oak Bancshares First Quarter 2019
Live Oak Bancshares First Quarter 2019
Slide 2: Forward Looking Statements
LIVE OAK BANCSHARES | FORWARD LOOKING STATEMENTS Information in this presentation may contain “forward-looking statements” within the Private Securities Litigation Reform Act of 1995. These statements generally relate to our financial condition, results of operations, plans, objectives, future perfo
Slide 3: Today's Agenda
Today’s Agenda • CEO Comments • Safety & Soundness Increasing recurring revenue by prudently growing the balance sheet • Expenses Being mindful about expenses • Lending Investing in the platform – people and infrastructure • Quarterly Results Discussion • Q&A 3
Slide 4: Safety & Soundness
Safety & Soundness Texas Ratio (Live Oak vs Peers) 8.58% 8.42% Live Oak Bancshares (1) 8.08% 7.72% Average Peer (2) 3.80% 2.59% 2.78% 2.39% 1.58% Q118 Q218 Q318 Q418 Q119 (1) LOB Texas Ratio equals unguaranteed nonperforming loans + foreclosures / Tangible shareholders’ equity + Allowance for loan a
Slide 5: Safety & Soundness (cont.)
Safety & Soundness (cont.) Classified Assets* / Tier 1 Capital + ALLL 5.61% 5.68% 5.39% 4.67% 4.17% 4.29% 3.18% 3.30% 2.83% Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 * Classified assets consist of loans and leases internally classified as a risk grade 6 or worse 5
Slide 6: Safety & Soundness (cont.)
Safety & Soundness (cont.) Total Capital to Unguaranteed Loans and Leases 1,800 ($ in millions) Total Capital Ungtd Loans Total Capital / Ungtd Loans 60.0% 1,600 1,648 1,570 1,400 1,466 1,414 50.0% 1,326 1,200 1,000 40.0% 33.6% 32.7% 32.9% 800 31.8% 30.8% 30.0% 600 482 499 508 400 446 463 20.0% 200
Slide 7: Growing Net Interest Income & Improving Operating Leverage
Growing Net Interest Income & Improving Operating Leverage 1. Noninterest expense, as adjusted excluding Q4 2018 accrued incentive compensation reversal 7
Slide 8: Continuing to Grow Through Verticality
Continuing to Grow Through Verticality 2008-2014 2015-2016 2017-2019 Veterinary Wine and Craft Beverages Solar Panel Leasing Fitness Centers Healthcare Self-Storage Early Education Services Quick Serve Restaurants Pharmacies Independent Insurance Service Contractors Senior Care Death Care Hotels Pro
Slide 9: Diversification & Expansion
Diversification & Expansion Lisa Forrest Seth Vander Woude Bill Harrigan Jay Steiner John Randall Seattle, WA Minneapolis, MN Milwaukee, WI Chicago, IL Indianapolis, IN Kelly Mears Bend, OR 11 SBA General Lenders Jim Vigna Glen Ridge, NJ 17 Average Years Working Heather Endresen in SBA Lending Los A
Slide 10: Organic Loan and Lease Growth Drives Earnings Growth
Organic Loan and Lease Growth Drives Earnings Growth Q418 Incremental Impact $253 Million X 4.56% (1 - 10%) $10.4 Million / $0.25 Q418 Loan and Lease Q418 Net Spread2 X Assumed Tax Rate = Incremental Annual Impact on Net Income / Diluted EPS3 Growth1 Q119 Incremental Impact $244 Million X 4.44% (1 -
Slide 11: Q1 2019 Highlights
Q1 2019 Highlights 28% increase versus Q1 2018 17% Increase versus Q1 2018 15% increase versus Q1 2018 Loans and Leases HFS and HFI Total Assets Managed Portfolio (1) $2.77 billion $4.06 billion $5.91 billion 21% Q1 2019 versus Q1 2018 0.3% Q1 2019 versus Q1 2018 72% Guaranteed loans held as a perce
Slide 12: Strong Balance Sheet Growth
Strong Balance Sheet Growth 28.3% Year-over-Year Growth 9.6% Growth Over Prior Quarter 12
Slide 13: Diversified Loan Portfolio and Production
Diversified Loan Portfolio and Production Industry Diversification1 As of 3/31/2019 Product Diversification2 SBA 7(a) USDA Conventional 18% 8% 74% 1. Balance sheet diversity of loans and leases HFS and HFI as of 3/31/2019 13 2. Q1 2019 loan origination diversity by product
Slide 14: Granular, Diversified Portfolio Mitigates Risk
Granular, Diversified Portfolio Mitigates Risk Average Unguaranteed Exposure per Customer by Vertical ($ in thousands) Unguaranteed Loan Exposure per Geographical Region *Total Unguaranteed Loan Exposure as of 3/31/19 Size of block corresponds to Total Unguaranteed Loan Exposure as of 3/31/19 14
Slide 15: First Quarter 2019 – Credit Quality
First Quarter 2019 – Credit Quality $2.7 million versus Q4 2018 of $6.8 million 1 bp versus Q4 2018 of 28 bps 1.75% versus Q4 2018 of 1.76% Provision for (recovery of) loan and lease losses Annualized Net CO to ALLL to Loans & Leases HFI Average Loans & Leases HFI $20.4 million versus Q4 2018 of $14
Slide 16: Deposit Platform Continues to Perform
Deposit Platform Continues to Perform $2.6 Billion Retail Deposits 99% Savings Retention YTD 2019 71% CD Retention YTD 2019 16
Slide 17: Increasing Recurring Revenue Streams
Increasing Recurring Revenue Streams 17
Slide 18: Reduced Dependence on Volatile Earnings
Reduced Dependence on Volatile Earnings 18
Slide 19: Increased Focus on Expense Mindfulness
Increased Focus on Expense Mindfulness $36.7 1 * See Appendix for Non-GAAP Reconciliation 19 1. Noninterest expense, as adjusted excluding Q4 2018 accrued incentive compensation reversal
Slide 20: Technology Infrastructure Framework
Technology Infrastructure Framework BILL PAY PAYMENTS NOTICES CARDS CHANNELS COMMS ALERTS TRANSFERS MERCHANT MARKETING ACH MOBILE COMPLIANCE DEPOSIT CAPTURE WEB DELIVERY ITEM PROCESSING BRANCH STATEMENTS CALL CENTER PREFERENCES VOICE / IOT ADMIN RISK CYBER API WORKFLOW BACK OFFICE AML MANAGEMENT SER
Slide 21: High Performing Bank Metrics
High Performing Bank Metrics as of and for the quarter ended 3/31/2019 vs. Q4 2018 $ 8B $ 7B Asset Size $4.06 B $3.67B 3.75% 3.50% NIM 3.63% 3.72% 25% Noninterest Income 30% to total revenue 29.9% 38.6% 60% Efficiency Ratio1 87.6% 69.5% 1.25% 1.75% ROA 0.25% 1.20% 8.64% 20% 15% ROE 1.88% 8.5% 13.40%
Slide 22: Appendix
APPENDIX ape WE
Slide 23: Non-GAAP Reconciliation
Non-GAAP Reconciliation Non-Gaap noninterest expense, as adjusted and efficiency ratio 23
Slide 24: All Rights Reserved
© 2019 Live Oak Bancshares Inc. All Rights Reserved