Live Oak Bancshares, Inc. · NYSE:LOB
Live Oak Bancshares — Q3 2018 Earnings Presentation
17 slides from Live Oak Bancshares's earnings presentation, Oct 25, 2018
Slide 1: Live Oak Bancshares Third Quarter 2018
Live Oak Bancshares Third Quarter 2018
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 • The Hurricane • Tech update - SunTrust invests in Apiture • Soundness, Profitability, and Growth - A credit quality update and a comment on Geographic, Industry and Concentration Diversity • My view on a noisy quarter • Introduce Huntley Garriott and his thoughts on our business 3
Slide 4: Impact of Hurricane Florence
Impact of Hurricane Florence • Following Hurricane Matthew in 2016 ($11 billion in damage) • IT spent 24 months moving to Cloud-Only infrastructure • Live Oak completed Cloud-Only transition July 18th, 2018 • Hurricane Florence made landfall in Wilmington the morning of September 14, 2018 4
Slide 5: Response During Days of Disaster Recovery
Response During 12 Days of Disaster Recovery 300+ Folks Relocated 700 Customer Calls 360 Support Tickets to multiple states and Operated in the Cloud $94MM Loans Approved $39MM Loans Closed September Loan Leads were down 9% Year over Year following an all-time high in August 5
Slide 6: Tech Update
Tech Update • Moving to Finxact 2.0 Beyond Friends & Family • Apiture – SunTrust Investment • Allows the open API-banking platform to further develop and accelerate its product roadmap • Pleased with repositioning on AWS • To create best in class digital banking experiences 6
Slide 7: Third Quarter 2018 – Credit Quality
Third Quarter 2018 – Credit Quality 57 bps Versus Q2 2018 of 21 bps 1.64% Versus Q2 2018 of 1.91% Annualized Net CO to ALLL to Loans & Leases HFI Average Loans & Leases HFI $13.1 million Versus Q2 2018 of $11.7 million 38 bps Versus Q2 2018 of 34 bps Unguaranteed Nonperforming Loans & Unguaranteed N
Slide 8: Concentration Risk Mitigation
Concentration Risk Mitigation 8
Slide 9: Concentration Risk Mitigation
Concentration Risk Mitigation 9 Size of block corresponds to Total Unguaranteed Exposure as of 9/30/18
Slide 10: Noisy Quarter
Noisy Quarter • Noise: • Disposition of Reltco - $2.7 million • Loan Loss Provision Credit - $243 thousand • Servicing Asset Revaluation - $9.4 million • Secondary Market has repriced 1.1181 to 1.0851 (down 25% to 30%) • Important Stuff: • Our strong credit focus will remain. This point of the cycle
Slide 11: Therefore we are going to…
Therefore we are going to… • We are committed to our guiding principles: • We will not chase poor pricing • We will stick to our credit standards • Originations in 2018 will be closer to $1.7BB - $1.8BB • We still believe that a properly priced SBA 7(a) loan is the finest loan a bank can make • As t
Slide 12: Live Oak Bank – Executing Today & Building for Tomorrow
Live Oak Bank – Executing Today & Building for Tomorrow Historic Live Oak Bank Live Oak Bank Today Future Roadmap Theory of Verticality Elite In-Market Bankers How We Reach Partner Banking Small Businesses SBA 7(a) CDs USDA • Conventional • Leasing • CRE • ABL Savings • Wealth Management Banking Pro
Slide 13: Third Quarter 2018 | Highlights
Third Quarter 2018 | Highlights 28% increase versus Q3 2017 42% increase versus Q3 2017 Net Interest Income & Income before Taxes Loan Servicing Revenue $35.2 million $11.1 million LENDER BY VOLUME SBA Fiscal Year 2018 21% increase versus Q3 2017 18% improved diversification versus Q3 2017 Managed P
Slide 14: Growing Recurring Revenue Quarterly
Growing Recurring Revenue Quarterly Year-Over-Year Year-Over-Year 28% Recurring Revenue1 Growth 21% Managed Portfolio3 Growth 52 55 60 58 57 59 68 36 38 39 39 39 38 36 Recurring Revenue as a percent of Total Revenue2 Guaranteed Loans as a percent of Total Loans & Leases On-Book 1. Net Interest Incom
Slide 15: The Power of The Deposit Platform
The Power of The Deposit Platform YTD 2018 New Online Savings/CD YTD 2018 Maturing YTD 2018 Consumer Savings Originations CD Retention Retention1 $960 million $430 million 90% 17,940 new accounts 81% Renewal Rate Balance retention over the same time period was 75% 17,636 (115%) net account growth si
Slide 16: SBA Secondary Market
SBA Secondary Market Source: Government Loan Solutions 16
Slide 17: All Rights Reserved
©2018 Live Oak Bancshares Inc. All Rights Reserved