Live Oak Bancshares, Inc. · NYSE:LOB
Live Oak Bancshares — Q4 2019 Earnings Presentation
29 slides from Live Oak Bancshares's earnings presentation, Jan 23, 2020
Slide 1: Fourth Quarter 2019
Fourth Quarter 2019 January 23, 2020 © 2020 Live Oak Bancshares Inc. All Rights Reserved
Slide 2: Forward Looking Statements
L I V E O A K B A N C S H A R E S | F O R WA R D L O O K I N G S TAT E M E N T S 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,
Slide 3: Fun Facts Since Becoming Public
FUN FACTS SINCE BECOMING PUBLIC $1.05 $4.81 358% $41.7 $168.1 303% billion billion increase million million increase 1 Total Assets Total Assets Recurring Revenue Recurring Revenue As of December 31, 2015 As of December 31, 2019 FY 2015 FY 2019 $199.5 $532.4 167% $71.7 $164.9 130% million million in
Slide 4: Firing on All Cylinders
FIRING ON ALL CYLINDERS 2019 vs. 2018 42.8% 1 Total Loan & Strategic Pivot Lease Portfolio YE 2019 vs. YE 2018 2.6x Guaranteed Loans Eligible for Sale YE 2019 vs. YE 2018 32.0% Net Interest Income Q4 2019 vs. Q4 2018 29.7% Net Interest Income FY 2019 vs. FY 2018 1. See Appendix for GAAP to Non-GAAP
Slide 5: Organic Growth Drives Bottom Line
ORGANIC GROWTH DRIVES BOTTOM LINE 5 1. Total loans and leases held for sale and held for investment growth from previous quarter 2. Weighted average yield on loans and leases held for sale and held for investment in the quarter minus weighted average rate on interest bearing liabilities in the quart
Slide 6: Credit Trends
CREDIT TRENDS $3.8 $48.2 $564 million million million FY 2019 Net Charge-Offs Allowance for Loan & FY 2019 Increase in Lease Losses, as of Eligible for Sale December 31, 2019 Guaranteed Loans 6
Slide 7: We Believe Now Is the Time to Build a Meaningful Position in the Future
Y O U A R E AT T E N D I N G T O D AY ' S C A L L F O R 1 O F 2 REASONS § You are seeking data as a Live Oak investor to: Buy | Hold | Sell § You are comparing: Traditional community banks v. Future of community banking We believe now is the time to build a meaningful position in the future of banki
Slide 8: The Current Community Bank Investment Presentation Is Completely Predictable
THE CURRENT COMMUNITY BANK INVESTMENT P R E S E N TAT I O N I S C O M P L E T E LY P R E D I C TA B L E § SECTION 1 – LOCATION OF OFFICES or BRANCHES § SECTION 2 – “DIVERSIFIED” LOAN PORTFOLIO • SINGLE FAMILY RESIDENTIAL—(REAL ESTATE) • CRE (REAL ESTATE) • MULTI-FAMILY (REAL ESTATE) • CONSTRUCTION A
Slide 9: Live Oak Investment Value
L I V E O A K I N V E S T M E N T VA L U E Comparable1 Live Oak Bank Bank3 Median2 Comparable NIMs without the fixed Number of Branches 39 N/A branch infrastructure that adds Footprint (States) 2 50 ~1% to 2% to the cost of funds5 Full-time Employees 823 603 Higher growth in what we Net Interest Mar
Slide 10: What Is the Community Bank of the Future Going to Look Like
W H AT I S T H E C O M M U N I T Y B A N K O F T H E FUTURE GOING TO LOOK LIKE “Inertia is the most pernicious of the ailments that face the consumer who is failing to address their financial well-being”1 - Adam Dell, head of product at Marcus by Goldman Sachs IN OUR CASE THE OWNERS OF A SMALL BUSIN
Slide 11: Financial Technology
FINANCIAL TECHNOLOGY 11
Slide 12: Live Oak Fintech Investments – Connecting the Dots
Financial Technology LIVE OAK FINTECH INVESTMENTS – CONNECTING THE DOTS Equity Method Investments: Apiture, Finxact, and Payrailz Equity Security Investments: DefenseStorm, Greenlight, and Kwipped 12
Slide 13: Canapi Ventures – The Journey Continues
Financial Technology CANAPI VENTURES – THE JOURNEY CONTINUES Targeting $600M across two fintech-focused venture capital funds. 13
Slide 14: Fintech at Live Oak Bank – On to the Numbers
Financial Technology F I N T E C H AT L I V E O A K B A N K – O N T O T H E N U M B E R S Banking versus FinTech Activities: Impact on Earnings ($ in thousands) 14
Slide 15: Our Strategy – The Logic
Financial Technology O U R S T R AT E G Y – T H E L O G I C Customers / Channels Digital Loan Mobile/Online Branch / Account Opening Origination Banking Teller Bank Customers Bank Users’ Access & Data APIs + Bank Payments / Transfers CRM / Cust. Data Middleware DocMan / Credit Memo ACH Deposit Admin
Slide 16: Performance
PERFORMANCE 16
Slide 17: FY 2019 Highlights
Performance FY 2019 HIGHLIGHTS 43% increase versus YE 2018 31% Increase versus YE 2018 15% increase versus YE 2018 Loans and Leases HFS and HFI Total Assets Managed Portfolio 1 $3.61 billion $4.81 billion $6.58 billion 23% FY 2019 versus FY 2018 10% FY 2019 versus FY 2018 65% 3 Held portion of guara
Slide 18: Strong Diversified Loan & Lease Origination
Performance S T R O N G D I V E R S I F I E D 2 0 1 9 L O A N & L E A S E O R I G I N AT I O N $2.00 FY 2019 billion Originations FY 2019 Across 49 States Across 33 Verticals $1.6 million Average Loan Size 18
Slide 19: Total Portfolio Diversification
Performance T O TA L P O R T F O L I O D I V E R S I F I C AT I O N As of December 31, 2019 $3.61 billion Portfolio Balance Growth through Diversification 45.6% Guaranteed Portfolio Percentage $1.65 billion $2.97 billion Sold & Serviced Loan Portfolio 19
Slide 20: Credit Quality Remains Strong
Performance CREDIT QUALITY REMAINS STRONG $6.2 million 17 bps 1.82% versus FY 2018 of 31 bps versus Q3 2019 of $7.2 million versus Q3 2019 of 1.76% Provision for loan and lease losses FY 2019 Net CO to ALLL to Loans & Leases HFI Average Loans & Leases HFI $19.0 million 40 bps 6.77% versus Q3 2019 of
Slide 21: Highly Efficient Deposit Platform
Performance H I G H LY E F F I C I E N T D E P O S I T P L AT F O R M $3.07 billion Retail Deposits1 95% Savings Retention FY 2019 73% CD Retention FY 2019 $811.5 million CD Maturities Q1 2020 1. As of December 31, 2019 21
Slide 22: Strong Recurring Revenue Growth
Performance STRONG RECURRING REVENUE GROWTH 14.5% Managed Portfolio YE 2019 vs. YE 2018 22.4% Recurring Revenue Q4 2019 vs. Q4 2018 22.6% Recurring Revenue FY 2019 vs. FY 2018 22
Slide 23: Secondary Market Loan Sales
Performance SECONDARY MARKET LOAN SALES 2019 Target 2019 Actuals 2:1 Sell ~ 100%USDA Guaranteed Sell ~ 25% SBA Guaranteed Hold ~ 65% of eligible for sale guaranteed loans Hold:Sell Hold $2 of guaranteed loans eligible Percentage held of $972.2 million of guaranteed loans that for sale for every $1 s
Slide 24: Volatility Subsides & Predictability Increases
Performance V O L AT I L I T Y S U B S I D E S & P R E D I C TA B I L I T Y I N C R E A S E S 24
Slide 25: Expense Discipline
Performance EXPENSE DISCIPLINE $162.9 million FY 2019 Noninterest Expense, $36.7 1 as adjusted* 1 $14.3 million Increase vs. FY 2018 Noninterest Expense, as adjusted* $6.6 million Increase in Noninterest Expense vs FY 2018 associated with incentive compensation * See Appendix for Non-GAAP Reconcilia
Slide 26: High Performing Bank Metrics
Performance HIGH PERFORMING BANK METRICS As of and for the quarter ending December 31, 2019 Q3 2019 Q1 2019 $ 8B $ 7B Asset Size $4.81 B $4.60B $4.06B 3.75% 3.50% NIM 3.55% 3.74% 3.63% Income 25% Noninterest 33.1% 29.9% 30% to total revenue 36.2% 60% 76.2% 87.6% Efficiency Ratio1 75.3% 1.25% 1.75% R
Slide 27: Appendix
APPENDIX 27
Slide 28: Non-GAAP Reconciliation
Appendix N O N - G A A P R E C O N C I L I AT I O N NON-GAAP NONINTEREST EXPENSE, AS ADJUSTED AND AS MODIFIED; EFFICIENCY RATIO 28
Slide 29: © 2020 Live Oak Bancshares Inc. All Rights Reserved
© 2020 Live Oak Bancshares Inc. All Rights Reserved