Live Oak Bancshares, Inc. · NYSE:LOB
Live Oak Bancshares — Q2 2019 Earnings Presentation
21 slides from Live Oak Bancshares's earnings presentation, Jul 24, 2019
Slide 1: Live Oak Bancshares Second Quarter 2019
Live Oak Bancshares Second Quarter 2019 July 24, 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: Enough is Enough - Live Oak Stock is a Bargain!
Enough is Enough - Live Oak Stock is a Bargain! Price / TBV Live Oak Bancshares: 1.331 Average Peer Bank: 1.472 NO $4 billion bank has Live Oak’s Quality Asset Generating Engine $673 million Government Guaranteed HFS Portfolio Funding Mechanism Multiple Call Options on Next Gen Technology Companies
Slide 4: Firing on All Cylinders Q2 2019 vs. Q3 2018
Firing on All Cylinders Q2 2019 vs. Q3 2018 1 35.3% Total Loan & Lease Portfolio ~3x Guaranteed Loans Eligible for Sale 22.4% Net Interest Income 1.1% Noninterest Strategic Pivot 1. See Appendix for GAAP to Non-GAAP reconciliation. Expense 4
Slide 5: Volatility Subsides Predictability Increases
Volatility Subsides Predictability Increases 5
Slide 6: Organic Growth Drives Bottom Line
Organic Growth Drives Bottom Line 1. Loans and leases held for sale and held for investment growth from previous quarter 2. Weighted average yield on loans and leases held for sale and held for investment in the quarter minus weighted average rate on interest bearing liabilities in the quarter 3. Ne
Slide 7: Eleven Years into a Recovery
Eleven Years into a Recovery Classified Asset Ratio1 of 6.1% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 ($ in thousands) 2017 2017 2018 2018 2018 2018 2019 2019 Net charge-offs $959 $892 $532 $787 $2,310 $1,185 $65 $526 Provision for loan & 2,426 4,055 4,392 2,087 (243) 6,822 2,742 3,463 lease losses Allowance for loa
Slide 8: Q2 2019 Highlights
Q2 2019 Highlights 35% increase versus Q2 2018 23% Increase versus Q2 2018 14% increase versus Q2 2018 Loans and Leases HFS and HFI Total Assets Managed Portfolio (1) $3.08 billion $4.27 billion $6.14 billion 21% 4.6% Q2 2019 versus Q2 2018 70% (3) Q2 2019 versus Q2 2018 Guaranteed loans held that b
Slide 9: Lending Franchise Evolution
Lending Franchise Evolution 2008-2014 2015-2016 2017-2019 Veterinary Wine and Craft Beverages Solar Panel Leasing Fitness Centers Healthcare Self-Storage Educational Services Quick Serve Restaurants Pharmacy Insurance Service Contractors Senior Care Funeral Home & Cemetery Hotels Accounting & Tax Ho
Slide 10: Strong, Diversified Q2 Loan Production
Strong, Diversified Q2 Loan Production 10
Slide 11: Total Portfolio Diversification
Total Portfolio Diversification $3.08 billion Portfolio Balance Growth through Diversification 11
Slide 12: High Quality Loan Book
High Quality Loan Book Average Unguaranteed Exposure per Customer by Vertical ($ in thousands) Unguaranteed Loan Exposure per Geographical Region *Total Unguaranteed Loan Exposure as of 6/30/19 Size of block corresponds to Total Unguaranteed Loan Exposure as of 6/30/19 12
Slide 13: Credit Quality Remains Strong
Credit Quality Remains Strong $3.5 million versus Q1 2019 of $2.7 million 10 bp versus Q1 2019 of 1 bps 1.71% versus Q1 2019 of 1.75% Provision for loan and lease losses Annualized Net CO to ALLL to Loans & Leases HFI Average Loans & Leases HFI $19.6 million versus Q1 2019 of $20.4 million 46 bpsver
Slide 14: Highly Efficient Deposit Platform
Highly Efficient Deposit Platform $2.8 Billion Retail Deposits1 98% Savings Retention YTD 2019 70% CD Retention YTD 2019 1. As of June 30, 2019 14
Slide 15: Strong Recurring Revenue Growth
Strong Recurring Revenue Growth 15
Slide 16: Continued Expense Discipline
Continued Expense Discipline * * $36.7 1 1 16 * See Appendix for Non-GAAP Reconciliation 1. Noninterest expense, as modified. Excludes Q4 2018 accrued incentive compensation reversal of $4.5 million
Slide 17: 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 18: High Performing Bank Metrics
High Performing Bank Metrics as of and for the quarter ended 6/30/2019 vs. Q1 2019 $ 8B $ 7B Asset Size $4.27 B $4.06B 3.75% 3.50% NIM 3.70% 3.63% 25% Noninterest Income 30% to total revenue 30.2% 29.9% 60% Efficiency Ratio1 81.4% 87.6% 1.25% 1.75% ROA 0.48% 0.25% 1.88% 20% 15% ROE 3.85% 8.5% 12.34%
Slide 19: Appendix
APPENDIX ape WE
Slide 20: Non-GAAP Reconciliation
Non-GAAP Reconciliation Non-GAAP Noninterest Expense, as adjusted and Efficiency Ratio Three months ended Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Noninterest expense, as reported $ 38,072 $ 40,830 $ 41,244 $ 32,558 $ 38,201 $ 39,576 Stock based compensation expense (352) (357) (360) (360) (3
Slide 21: © 2019 Live Oak Bancshares Inc. All Rights Reserved
© 2019 Live Oak Bancshares Inc. All Rights Reserved