Live Oak Bancshares, Inc. · NYSE:LOB
Live Oak Bancshares — Q4 2018 Earnings Presentation
21 slides from Live Oak Bancshares's earnings presentation, Jan 24, 2019
Slide 1: Live Oak Bancshares Fourth Quarter 2018
Live Oak Bancshares Fourth 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: 2018 Highlights
2018 Highlights 25% increase versus Q4 2017 33% Increase versus Q4 2017 18% increase versus Q4 2017 Loans and Leases HFS and HFI Total Assets Managed Portfolio (1) $2.53 billion $3.67 billion $5.75 billion 34% FY 2018 versus FY 2017 12% FY 2018 versus FY 2017 16% FY 2018 versus FY 2017 Net Interest
Slide 4: Roadmap for Balance Sheet Funding Strategy
Roadmap for Balance Sheet Funding Strategy • Evaluate NPV of buying vs. selling for each guaranteed loan that is eligible for sale as well as incremental factors driving hold strategy • Expected quarterly outcome – hold between 50-75% of guaranteed loans eligible for sale • $104.6 million guaranteed
Slide 5: Growing Recurring Revenue Quarterly
Growing Recurring Revenue Quarterly Year-Over-Year Year-Over-Year Year-Over-Year Year-Over-Year 26% Recurring Revenue1 -2% Reduction in Noninterest 25% Total Loans and 18% Managed Portfolio4 Growth Expense, as adjusted2 Leases Growth Growth 52 55 60 583 57 59 68 78 469 586 396 483 398 492 377 499 Re
Slide 6: Strong, Diversified Loan Production
Strong, Diversified Loan Production $499 million of Q4 2018 loan production Industry Diversification 1 Product Diversification 2 As of 12/31/2018 FY 2018 SBA 7(a) Conventional USDA SBA 504 14% 2% 20% 64% 1. Balance sheet diversity of loans and leases HFS and HFI as of 12/31/2018 6 2. FY 2018 loan or
Slide 7: Fourth Quarter 2018 – Credit Quality
Fourth Quarter 2018 – Credit Quality $6.8 million versus Q3 2018 of ($243) thousand 28 bps versus Q3 2018 of 57 bps 1.76% versus Q3 2018 of 1.64% Provision for (recovery of) loan and lease losses Annualized Net CO to ALLL to Loans & Leases HFI Average Loans & Leases HFI $14.6 million versus Q3 2018
Slide 8: Concentration Risk Mitigation
Concentration Risk Mitigation Average Unguaranteed Exposure per Customer by Vertical ($ in thousands) Unguaranteed Loan Exposure per Geographical Region *Total Unguaranteed Loan Exposure as of 12/31/18 Size of block corresponds to Total Unguaranteed Loan Exposure as of 12/31/18 8
Slide 9: The Power of The Deposit Platform
The Power of The Deposit Platform FY 2018 Net Retail YTD 2018 Maturing FY 2018 Savings Direct Cost2 of Deposits Account Growth CD Retention Account Retention1 at 12/31/2018 18,265 111% increase over Q4 2017 76% Renewal Rate 86% Balance retention over the 13bps with only 4 new Deposit FTEs same time
Slide 10: Technology Initiatives – Building the Model Bank
Technology Initiatives – Building the Model Bank 10
Slide 11: High Performing Bank Metrics
High Performing Bank Metrics1 $ 8B $ 7B Asset Size $3.67 B 3.75% 3.50% NIM 3.72% Non-Interest Income 25% 30% to total revenue 39% 60% Efficiency2 69% 1.25% 1.75% ROA 1.2% 20% 15% ROE 8.6% 8.5% 10% Tier 1 Leverage 12.5% 1. Company results as of and for the quarter ending December 31, 2018 11 2. See A
Slide 12: Government Shutdown
Government Shutdown December 22, 2018 – Currently in Day 33 • No fourth quarter impact • The SBA and the USDA programs are impacted Liquidity Support • Liquidity planning for the first quarter adjusted for no loan sales • Available liquidity sources are robust and expected to cover any foreseeable l
Slide 13: Q4 Financial Detail
Q4 Financial Detail Q4 2017 Q4 2018 FY 2017 FY 2018 Diluted Earnings Per Share $ 1.74 $ 0.26 $ 2.65 $ 1.24 Non-GAAP Diluted Earnings Per Share 1 $ 0.41 $ 0.26 $ 1.25 $ 1.32 Net Interest Income and Servicing Revenues 28,977 36,547 102,622 137,164 Noninterest Expense, as reported 41,024 32,558 143,165
Slide 14: Credit Performance
Credit Performance Top 10 Top 9 Live Oak SBA 7(a) Lenders SBA 7(a) Lenders Excluding Live Oak Banking Company $44.2 billion $38.9 billion $5.3 billion Gross Loan Disbursement Gross Loan Disbursement Gross Loan Disbursement 2008-2017 2008-2017 2008-2017 Charge Off Rate Charge Off Rate Charge Off Rate
Slide 15: In These Volatile Times
In These Volatile Times Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Loan Servicing Asset Revaluation (627) (9,380) (3,670) (5,088) (6,307) 1 Income Before Taxes 7,480 11,054 14,744 12,768 5,338 Loan Servicing Asset Revaluation to Income Before Taxes 8.4% 84.9% 24.9% 39.8% 118.2% Provision for (Recovery
Slide 16: Allowance for Loan & Lease Loss
Allowance for Loan & Lease Loss Transitions from industry-specific to Live Oak-specific losses Vertical Quarter Loss Rate Change Provision Reversed Investment Advisory Q1 2017 -1.57% $1.1 million Chickens Q2 2018 -0.77% $1.6 million FEC Q3 2018 -7.18% $2.9 million 2019: 4 verticals expected to move
Slide 17: Appendix
APPENDIX 17 y shes 3 Oy oft Us Oa 4 | / | \ .
Slide 18: Non-GAAP Reconciliation
Non-GAAP Reconciliation Non-GAAP Net Income, Non-GAAP EPS & Noninterest Expense, as adjusted Three months ended Twelve months ended (Dollars in thousands) 4Q 2018 4Q 2017 4Q 2018 4Q 2017 Reconciliation of net income to non-GAAP net income for non-routine income and expenses: Net income, as reported
Slide 19: Non-GAAP Reconciliation
Non-GAAP Reconciliation Deposits Direct COF Annualized December 2018 Expense (Dollars in thousands) Interest $ 67,521 Personnel 1,657 Travel & Entertainment - Fraud Expense 5 Marketing Expense 1,129 Technology Expense 1,408 Other Expenses 64 Total Direct Deposit Expenses $ 71,784 Total Deposit Balan
Slide 20: Non-GAAP Reconciliation
Non-GAAP Reconciliation Efficiency Ratio Three months (dollars in thousands) ended 12/31/18 Noninterest expense, as reported (a) $ 32,558 Net interest income, as reported 28,795 Noninterest income, as reported 18,065 Less: gain on sale of securities — Adjusted operating revenue (b) $ 46,860 Efficien
Slide 21: © 2019 Live Oak Bancshares Inc. All Rights Reserved
© 2019 Live Oak Bancshares Inc. All Rights Reserved