Live Oak Bancshares (LOB) AI Stock Analysis

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Live Oak Bancshares

(NYSE:LOB)

66Neutral

Live Oak Bancshares displays strong financial stability with revenue growth and a debt-free balance sheet. However, cash flow challenges and technical indicators signal caution. Earnings call highlights growth but economic uncertainties and high provisions temper optimism. The stock is moderately valued with limited income return potential.

Live Oak Bancshares (LOB) vs. S&P 500 (SPY)

Market Cap

$1.22B

Dividend Yield0.46%

Average Volume (3M)510.92K

Price to Earnings (P/E)20.5

Beta (1Y)1.31

Revenue Growth12.30%

EPS Growth-41.81%

CountryUS

Employees1,008

SectorFinancial

Sector Strength88

IndustryBanks - Regional

Share Statistics

EPS (TTM)1.30

Shares Outstanding45,588,604

10 Day Avg. Volume451,849

30 Day Avg. Volume510,919

Financial Highlights & Ratios

PEG Ratio4.11

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap0.49

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit0.73

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$32.00

Price Target Upside22.42% Upside

Rating ConsensusHold

Number of Analyst Covering2

Live Oak Bancshares Business Overview & Revenue Model

Company DescriptionLive Oak Bancshares, Inc. is a financial services company headquartered in Wilmington, North Carolina. It operates as the bank holding company for Live Oak Banking Company, which provides various commercial banking products and services. The bank specializes in offering lending solutions to small businesses across various industries, including veterinary, pharmacy, agriculture, and healthcare sectors. Live Oak Bank is known for its technology-driven approach to banking, which includes online banking services and a focus on customer-centric solutions.

How the Company Makes MoneyLive Oak Bancshares primarily generates revenue through interest income from its diverse loan portfolio. The company focuses on providing Small Business Administration (SBA) loans, which are partially guaranteed by the government, reducing the bank's risk exposure. Additionally, Live Oak earns money through interest and fees on its loan services, as well as from investment securities. The bank also benefits from partnerships with financial technology companies, which enhance its service offerings and expand its customer reach. Fee income from deposit-related services and other banking activities further contribute to the company's earnings.

Live Oak Bancshares Financial Statement Overview

Summary

Live Oak Bancshares shows strong revenue growth and a robust balance sheet with no debt, but faces challenges in cash flow generation with negative operating and free cash flows. The company's financial stability is solid but addressing cash flow issues is crucial for long-term sustainability.

Income Statement

Positive

Live Oak Bancshares has demonstrated a strong improvement in revenue with a significant increase from 2022 to 2023. The gross profit margin remains robust at 100%, indicating that the company efficiently controls its cost of goods sold. However, the net profit margin is lower, which suggests higher operating or other expenses affecting profitability. The EBIT margin is strong, highlighting effective management of operating expenses.

Balance Sheet

Positive

The balance sheet is solid with a high equity ratio, indicating financial stability and lower reliance on debt. The company has no total debt as of the latest report, which is a positive indicator of financial health. Return on equity is healthy, reflecting effective use of shareholder funds to generate income. The company's substantial cash reserves add to its financial stability.

Cash Flow

Neutral

The cash flow statement shows some areas of concern, mainly the negative operating and free cash flows in the latest period. However, the company has shown an ability to generate significant cash from financing activities, which may provide some buffer. The negative free cash flow growth rate suggests potential challenges in cash generation from core operations.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
812.37M	119.49M	391.86M	441.99M	284.62M
	Gross Profit
812.37M	119.49M	391.86M	441.99M	284.62M
	EBIT
801.22M	103.47M	327.30M	210.79M	47.39M
	EBITDA
0.00	104.10M	231.11M	232.15M	69.08M
	Net Income Common Stockholders
77.47M	73.90M	176.21M	167.00M	59.54M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.86B	89.52M	1.30B	1.10B	1.05B
	Total Assets
12.94B	11.27B	9.86B	8.21B	7.87B
	Total Debt
112.82M	23.35M	133.20M	318.29M	1.54B
	Net Debt
-496.23M	-559.44M	-151.04M	126.34M	1.24B
	Total Liabilities
11.94B	10.37B	9.04B	7.50B	7.30B
	Stockholders Equity
999.03M	902.67M	811.03M	715.13M	567.85M
Cash Flow		Free Cash Flow
-7.21M	573.23M	80.73M	-122.80M	-293.98M
	Operating Cash Flow
-7.21M	620.07M	124.48M	-119.72M	-272.99M
	Investing Cash Flow
-97.31M	-1.77B	-1.44B	-149.80M	-2.61B
	Financing Cash Flow
78.76M	1.32B	1.53B	154.95M	2.98B

Live Oak Bancshares Technical Analysis

Technical Analysis Sentiment

Negative

Last Price26.14

Price Trends

50DMA

27.50

Negative

100DMA

33.23

Negative

200DMA

38.78

Negative

Market Momentum

MACD

-0.33

Negative

RSI

50.38

Neutral

STOCH

84.86

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LOB, the sentiment is Negative. The current price of 26.14 is above the 20-day moving average (MA) of 24.90, below the 50-day MA of 27.50, and below the 200-day MA of 38.78, indicating a neutral trend. The MACD of -0.33 indicates Negative momentum. The RSI at 50.38 is Neutral, neither overbought nor oversold. The STOCH value of 84.86 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LOB.

Live Oak Bancshares Risk Analysis

Live Oak Bancshares disclosed 48 risk factors in its most recent earnings report. Live Oak Bancshares reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Live Oak Bancshares Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BY	73 Outperform	$1.18B	9.48	11.08%	1.43%	7.68%	-1.13%
STBA	70 Outperform	$1.26B	9.65	9.84%	3.72%	1.26%	―
DCOM	70 Outperform	$1.12B	39.98	2.47%	3.89%	-2.81%	-64.23%
TCBK	68 Neutral	$1.29B	11.42	9.38%	3.42%	3.01%	4.55%
LOB	66 Neutral	$1.22B	20.52	6.10%	0.46%	12.30%	-41.81%
Sector *	63 Neutral	$12.46B	9.56	8.14%	17044.64%	12.63%	-4.25%

* Financial Sector Average

Performance Comparison

LOB

Live Oak Bancshares

26.68

-8.02

-23.11%

DCOM

Dime Community Bancshares

25.87

7.24

38.86%

STBA

S&T Bancorp

36.62

6.18

20.30%

TCBK

Trico Bancshares

39.13

3.09

8.57%

Byline Bancorp

25.76

3.28

14.59%

Live Oak Bancshares Earnings Call Summary

Earnings Call Date:Apr 23, 2025

(Q1-2025)

% Change Since: 5.49%|

Next Earnings Date:Jul 23, 2025

Earnings Call Sentiment Neutral

The earnings call presents a mixed outlook, with significant achievements in loan and deposit growth, net interest income milestones, and improved credit quality trends. However, these positives are tempered by challenges related to elevated provision expenses, economic uncertainty, increased non-accruing loans, and the impact of SBA rule changes. The bank remains cautiously optimistic, emphasizing proactive credit management and strategic initiatives.

Q1-2025 Updates

Positive Updates

Record Loan Originations

Q1 2025 loan originations totaled approximately $1.4 billion, marking the largest Q1 loan production in bank history, with a 73% increase year over year.

Strong Deposit Growth

Customer deposits grew by 8% quarter-over-quarter, nearly double the Q1 growth experienced in 2024.

Net Interest Income Milestone

Quarterly net interest income surpassed $100 million for the first time in bank history, with a 3% linked quarter growth and 12% compared to Q1 2024.

Growth in Business Checking Products

Noninterest-bearing balances in business checking increased by 31% quarter-over-quarter.

Improved Credit Quality Trends

Consecutive quarters of low past dues at $10 million or approximately nine basis points of the total held for investment loan portfolio.

Negative Updates

Elevated Provision Expense

Continued high provision expenses due to ongoing work through the small business credit cycle, with an increase in allowance for credit losses of $51 million over the last five quarters.

Economic Uncertainty Impact

Uncertainty in the economic environment, including inflation, tariffs, and interest rates, affecting the small business credit cycle and overall cautious outlook.

Non-Accruing Loans Increase

An increase in non-accruing classified loans quarter-over-quarter, though the rate of increase has slowed compared to the previous year.

Impact of SBA Rule Changes

Reinstatement of small dollar borrower fees and other rule changes, potentially affecting the profitability and time to close for small dollar loans.

Company Guidance

During the Q1 2025 earnings call for Live Oak Bancshares, multiple metrics and guidance were provided, demonstrating strong momentum across several areas. The company reported a significant increase in checking balances, which stood at $279 million by the quarter's end, a fourfold increase from the previous year. Loan originations reached a record $1.4 billion, marking a 73% year-over-year increase, with a notable 55% rise in SBA 7(a) loans. Deposits also grew by 8% quarter-over-quarter. Despite an uncertain economic environment and ongoing small business credit cycle challenges, the bank maintained elevated provision levels, resulting in a $51 million increase in the allowance for credit losses over the past five quarters. Net interest income hit a record high of approximately $101 million, while the net interest margin expanded by five basis points to 3.2%. The bank also achieved a 27% year-over-year increase in core pre-provision net revenue (PPNR), totaling $50 million. Overall, the bank emphasized its strong credit quality, with 33% of loans government-guaranteed and a well-diversified portfolio, while maintaining a healthy capital position with a Mahan ratio of nearly 17%.

Live Oak Bancshares Corporate Events

Executive/Board ChangesShareholder Meetings

Diane B. Glossman to Leave Live Oak Bancshares Board

Neutral

Feb 14, 2025

On February 11, 2025, Diane B. Glossman announced she will not stand for re-election to the Live Oak Bancshares Board of Directors at the 2025 Annual Meeting, and she will also step down from the Live Oak Banking Company board. This decision was not due to any disagreements with the company. Additionally, on February 10, 2025, the Compensation Committee approved cash bonuses and restricted stock units (RSUs) for key executives under the 2015 Omnibus Stock Incentive Plan. These awards aim to align executive interests with shareholder interests, as seen in the substantial stock ownership of CEO James S. Mahan III.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.