Live Oak Bancshares, Inc. · NYSE:LOB
Live Oak Bancshares — Q3 2017 Earnings Presentation
21 slides from Live Oak Bancshares's earnings presentation, Oct 26, 2017
Slide 1: Live Oak Bancshares Third Quarter 2017
Live Oak Bancshares Third Quarter 2017
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: The Live Oak Franchise
The Live Oak Franchise • Strong Balance Sheet • Credit Monitoring & Customer Relationships • Capital Generation: Renewable Energy Leasing & The “Treasure Chest” • Technology • Joint Venture with First Data Corporation • API Banking Ecosystem • Growth Indicators & Drivers • Loan & Lease Originations
Slide 4: Who We Are, What We Have Done
Who We Are What We Have Done 2nd Largest SBA Lender $6.8 Billion Originated Since Inception Specialized Lending Focus 39% Origination Growth Across a National Footprint Across Verticals Tremendous Growth <1% Net Charge-Offs Track Record Highly Profitable, Flexible 1.8% YTD 2017 ROAA Business Model 4
Slide 5: Capital Raise: Secondary Offering Completed in August 2017
Capital Raise Secondary Offering Completed in August 2017 Capital Fortification $113 million Loan Portfolio Growth Asset Diversification Net Proceeds Strategic Investments Total Capital 18.9% 5,175,000 CET1 Capital 17.8% Shares Issued Tier 1 Capital 17.8% Tier 1 Leverage 14.0% Capital Ratios of Live
Slide 6: A Strong Balance Sheet
A Strong Balance Sheet $365 million $1.1 Total Equity billion Unguaranteed Total Equity + Reserve $21 million Loan Exposure Unguaranteed Exposure Loan Loss Reserve $3.3 34% $2.4 million Nonperforming Coverage billion Loans, Unguaranteed Total Assets 6
Slide 7: Disciplined Underwriting Practices
Disciplined Underwriting Practices ü ü ü ü Lending officers are not Senior management No loan authority outside No employee incentive commission-based and commitment credit administration compensation for volume most own stock ü ü ü ü Industry concentration Credit training mandatory Identify good li
Slide 8: Credit Quality & Monitoring
Credit Quality & Monitoring Business Advisory Group: BAG 3,500 100 Mission Statement Relationships Relationships MAINTAINING SAFETY AND SOUNDNESS WHILE PROMOTING PROFITABILITY, PERSONAL AND PROFESSIONAL GROWTH Managed* Per RM* Quarterly Watchlist Meetings with Credit Department Annual Reviews: Compl
Slide 9: Treasure Chest
Treasure Chest $270 Favorable Risk- million Adjusted Return Guaranteed Loans Via Interest Income $297 Earnings Consistency million Reduced Reliance on Gain on Sale Liquidity Injection1 Revenue $30 Renewable Energy Leasing million Enhances Opportunity to Build Capital Injection2 the Treasure Chest 9
Slide 10: Renewable Energy Loans & Leases Investment
Renewable Energy Loans & Leases Investment Robust Pipeline Tax Credits $350 $13 million million TTM Closed YTD 2017 Lending: Utility Grade Renewable Energy Projects - USDA REAP Program Leasing: Not a financial engineering tax equity play • Reduces our effective tax rate and builds capital • Off-take
Slide 11: Financial Technology Investments
Financial Technology Investments Code Writing Began: Ownership Spun Out in June 2014 2012 10.7% * 2014 19.7% * 2017 33.0% * 2017 50.0% * 1997 * Represents total equity ownership, including non-voting equity where applicable. Does not reflect potential dilution for management equity. All 11 percentag
Slide 12: First Data Corporation + Live Oak Joint Venture
First Data Corporation + Live Oak Joint Venture Financial Services Online & Mobile Platforms • New digital banking solutions & cloud-based • Digital Bill Payments & Funds Transfer technologies • Balance Inquiries • Consumer & small business banking software • Mobile Check Deposit • API Based Archite
Slide 13: APPS – Digital Banking 4.0
APPS – Digital Banking 4.0 Channel • Wearables Partners • Internet of Things Connected • TV Banking Home Alexa • Chat-Bots • Personal Assistants • Fintech • Practice Management Practice DIGITAL Apple Software Mgmt Software BANK 4.0 TV FinTech CLOVER FB Messenger/ Chatbots 13
Slide 14: Robust Loan & Lease Origination
Robust Loan & Lease Origination 39% 42% CAGR Growth 2012-2016 14
Slide 15: Proven Scalable Business Model
Proven Scalable Business Model Live Oak 1.0 (2008-2014) Live Oak 2.0 (2015-2016) Live Oak 3.0 (2017+) Veterinary Wine and Craft Beverages Solar Panel Leasing Healthcare Self-Storage Equipment Leasing Pharmacies Independent Insurance Early Education Services Death Care Hotels Senior Care Investment A
Slide 16: Growing Recurring Revenue
Growing Recurring Revenue Year-Over-Year Year-Over-Year 57% Recurring Revenue1 Growth 67% Portfolio Growth 47% 47% 52% 55% 60% 34% 33% 37% 38% 39% Recurring Revenue as a percent of Total Revenue Guaranteed Loans as a percent of Total Loans & Leases 1. Net Interest Income plus Loan Servicing Revenue
Slide 17: YTD Model Leverage | Live Oak 1.0 vs. 2.0
YTD Model Leverage | Live Oak 1.0 vs. 2.0 YTD 2017 Originations (Verticals 1.0) YTD 2017 Originations (Verticals 2.0) $728 million $643 million Direct Operating Cost1 per $1 million Originations Direct Operating Cost1 per $1 million Originations $20.7 thousand $13.3 thousand Direct Operating1 Cost D
Slide 18: Online Savings Ramp Continues | Q3 2017
Online Savings Ramp Continues | Q3 2017 Q3 Savings Growth Deposits Portfolio as of 9/30/17: $393 million $2.1 billion 4,192 accounts 10% Q3 Growth / 28% YTD Growth Portfolio Stats: 46 $4.3 million $89k 15,338 77% / 23% 1.30% Avg Daily Avg Daily New Average Balance Open Accounts Core vs. Brokered Cos
Slide 19: Third Quarter 2017 | Financial Highlights
Third Quarter 2017 | Financial Highlights 4% increase versus Q3 2016 57% increase versus Q3 2016 67% increase versus Q3 2016 Loan & Lease Originations Net Interest Income & Total Loans & Leases Loan Servicing Revenue $396 million $1.9 billion $28 million 22% decrease versus Q3 2016 58% increase vers
Slide 20: Proactive Approach to Credit Decisions & Monitoring
Proactive Approach to Credit Decisions & Monitoring 34 bps Versus Q2 2017 of 7 bps 1.80% Versus Q2 2017 of 1.80% Annualized Net CO to ALLL to Loans & Leases HFI Average Loans & Leases HFI $3.7 million Versus Q2 2017 of $3.9 million 15 bps Versus Q2 2017 of 18 bps Unguaranteed Nonperforming Loans & U
Slide 21: Live Oak Bancshares
LIVE OAK BANCSHARES ©2017 Live Oak Bancshares. All rights reserved.