# EDGAR Filing Document

**Accession Number:** 0001462120
**File Stem:** 0001462120-23-000005
**Filing Date:** 2023-1
**Character Count:** 44471
**Document Hash:** de2cb83c27b10d2abd222e3a15a3e9e6
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001462120-23-000005.hdr.sgml**: 20230125

**ACCESSION NUMBER**: 0001462120-23-000005

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 15

**CONFORMED PERIOD OF REPORT**: 20230125

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230125

**DATE AS OF CHANGE**: 20230125

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Live Oak Bancshares, Inc.
- **CENTRAL INDEX KEY:** 0001462120
- **STANDARD INDUSTRIAL CLASSIFICATION:** STATE COMMERCIAL BANKS [6022]
- **IRS NUMBER:** 264596286
- **STATE OF INCORPORATION:** NC
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-37497
- **FILM NUMBER:** 23552870

**BUSINESS ADDRESS:**
- **STREET 1:** 1741 TIBURON DRIVE
- **CITY:** WILMINGTON
- **STATE:** NC
- **ZIP:** 28403
- **BUSINESS PHONE:** 910-790-5867

**MAIL ADDRESS:**
- **STREET 1:** 1741 TIBURON DRIVE
- **CITY:** WILMINGTON
- **STATE:** NC
- **ZIP:** 28403

?xml version="1.0" ? lob-20230125

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**<u>FORM 8-K</u>** 

**CURRENT REPORT**

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): **January 25, 2023**

![lob-20230125_g1.jpg](lob-20230125_g1.jpg)

---

| |
|:---|
| **LIVE OAK BANCSHARES, INC.** |
| (Exact name of registrant as specified in its charter) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **North Carolina** | **North Carolina** | **North Carolina** | **001-37497** | **26-4596286** |
| (State or other jurisdiction of incorporation) | (State or other jurisdiction of incorporation) | (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| **1741 Tiburon Drive,** | **Wilmington,** | **NC** |  | **28403** |
| (Address of principal executive offices) | (Address of principal executive offices) | (Address of principal executive offices) |  | (Zip Code) |

---

Registrant's Telephone Number, Including Area Code: **(910) 790-5867**

---

| |
|:---|
| **Not Applicable** |
| (Former name or former address, if changed since last report) |

---

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| **Voting Common Stock, no par value per share** | **LOB** | **New York Stock Exchange LLC** |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. □

------

**Item 2.02.&nbsp;&nbsp;&nbsp;&nbsp;Results of Operations and Financial Condition.**

On January 25, 2023, Live Oak Bancshares, Inc. (the "Company") announced financial results for the fourth quarter ended December 31, 2022. A copy of the press release announcing the Company's results for the fourth quarter is attached as Exhibit 99.1 hereto and incorporated by reference herein.

The information contained in this report (including Exhibit 99.1) shall not be deemed "filed" for purposes of section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

**Item 9.01.&nbsp;&nbsp;&nbsp;&nbsp;Financial Statements and Exhibits.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Exhibits

---

| | |
|:---|:---|
| **Exhibit**<br>**Number** | **Description** |
| <u>[99.1](lob-20230125exx991.htm)</u> | <u>[Press release dated January 25, 2023](lob-20230125exx991.htm)</u> |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

------

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

---

| | | |
|:---|:---|:---|
| | **LIVE OAK BANCSHARES, INC.** | **LIVE OAK BANCSHARES, INC.** |
| Date: January 25, 2023 | By: | /s/ J. Wesley Sutherland |
|  |  | J. Wesley Sutherland<br>Chief Accounting Officer |

---

## Exhibit 99.1

**Exhibit 99.1**

![liveoakbancshareslogoa.jpg](liveoakbancshareslogoa.jpg)

**LIVE OAK BANCSHARES, INC. REPORTS FOURTH QUARTER 2022 RESULTS**

Wilmington, NC, January 25, 2023 - Live Oak Bancshares, Inc. (NYSE: LOB) ("Live Oak" or "the Company") today reported fourth quarter of 2022 net income of $1.8 million, or $0.04 per diluted share. Net income for the year ended December 31, 2022, totaled $176.2 million, or $3.92 per diluted share.

"Live Oak closed 2022 with a strong quarter as our teams once again produced more than $1 billion in loan originations, ending a banner year that also reflected continued deposit growth and $96 million in organic capital growth," said Live Oak Chairman and CEO James S. (Chip) Mahan III. "The strength and determination of the small business owners we serve is profound, and we believe our strong balance sheet and approach to lending, deposits, servicing and technology continues to set us apart as we advance our mission to serve the entrepreneurs who support our country's economy."

**Year Over Year Highlights**

---

| | | | | |
|:---|:---|:---|:---|:---|
| (Dollars in thousands, except per share data) | (Dollars in thousands, except per share data) |  | Increase (Decrease) | Increase (Decrease) |
|  | 2022 | 2021 | Dollars | Percent |
| **Total revenue**<sup>(1)</sup> | $565493 | $456985 | $108508 | 24% |
| **Total noninterest expense** | 314226 | 230987 | 83239 | 36 |
| **Income before taxes** | 210324 | 210788 | (464) |  |
| **Effective tax rate** | 16.2% | 20.8% | n/a | n/a |
| **Net income** | $176208 | $166995 | $9213 | 6% |
| **Diluted earnings per share** | 3.92 | 3.71 | 0.21 | 6 |
| **Loan and lease production:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans and leases originated | $4007621 | $4480725 | $(473104) | (11)% |
| &nbsp;&nbsp;&nbsp;&nbsp;% Fully funded | 58.8% | 64.5% | n/a | n/a |
| **Total loans and leases:** | $7898788 | $6637781 | $1261007 | 19% |
| **Total loans and leases, excluding PPP loans:** | 7885895 | 6375903 | 1509992 | 24 |
| **Total assets:** | 9855498 | 8213393 | 1642105 | 20 |
| **Total deposits:** | 8884928 | 7112044 | 1772884 | 25 |

---

(1)Total revenue consists of net interest income and total noninterest income.

**Fourth Quarter 2022 Key Measures**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| (Dollars in thousands, except per share data) | (Dollars in thousands, except per share data) |  | Increase (Decrease) | Increase (Decrease) |  |
|  | 4Q 2022 | 3Q 2022 | Dollars | Percent | 4Q 2021 |
| **Total revenue**<sup>(1)</sup> | $104973 | $141610 | $(36637) | (26)% | $111394 |
| **Total noninterest expense** | 84585 | 83048 | 1537 | 2 | 59698 |
| **Income before taxes** | 717 | 44393 | (43676) | (98) | 47778 |
| **Effective tax rate** | (149.9)% | 3.4% | n/a | n/a | 36.9% |
| **Net income** | $1792 | $42868 | $(41076) | (96)% | $30147 |
| **Diluted earnings per share** | 0.04 | 0.96 | (0.92) | (96) | $0.66 |
| **Loan and lease production:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans and leases originated | $1177688 | $1005235 | $172453 | 17% | $1083623 |
| &nbsp;&nbsp;&nbsp;&nbsp;% Fully funded | 58.1% | 54.0% | n/a | n/a | 54.1% |

---

(1)Total revenue consists of net interest income and total noninterest income.

------

**Loans and Leases**

At December 31, 2022, the total loan and lease portfolio was $7.90 billion, 6.9% above its level at September 30, 2022 and 19.0% above its level at December 31, 2021. This growth was the product of strong origination volumes. Compared to the third quarter of 2022, loans and leases held for investment increased $490.8 million, or 7.2%, to $7.34 billion while loans held for sale increased $17.0 million, or 3.2%, to $554.6 million. Average loans and leases were $7.64 billion during the fourth quarter of 2022 compared to $7.21 billion during the third quarter of 2022. Excluding Paycheck Protection Program ("PPP") loans, the total loan and lease portfolio increased by $1.51 billion, or 23.7%, compared to December 31, 2021, and $518.7 million, or 7.0%, compared to September 30, 2022.

The total loan and lease portfolio of $7.90 billion includes $12.9 million of PPP loans, net of deferred fees and costs, at December 31, 2022. The total loan and lease portfolio at December 31, 2022, and September 30, 2022 was comprised of 57.7% and 56.6% of unguaranteed loans and leases, respectively.

Loan and lease originations totaled $1.18 billion during the fourth quarter of 2022, an increase of $172.5 million, or 17.2%, from the third quarter of 2022.

**Deposits**

Total deposits increased to $8.88 billion at December 31, 2022, an increase of $480.0 million compared to September 30, 2022, and an increase of $1.77 billion compared to December 31, 2021. The increase in total deposits from the prior periods provides support for the growth in the loan and lease portfolio.

Average total interest-bearing deposits for the fourth quarter of 2022 increased $269.0 million, or 3.3%, to $8.36 billion, compared to $8.09 billion for the third quarter of 2022. The ratio of average total loans and leases to average interest-bearing deposits was 91.4% for the fourth quarter of 2022 compared to 89.1% for the third quarter of 2022.

**Borrowings**

Borrowings totaled $83.2 million at December 31, 2022, compared to $35.6 million and $318.3 million at September 30, 2022 and December 31, 2021, respectively. During the fourth quarter of 2022, the Company increased borrowings by $47.6 million primarily related to providing short term support for growth in the loan and lease portfolio. The decrease in borrowings as compared to December 31, 2021 is primarily related to the repayment of the Federal Reserve's Paycheck Protection Liquidity Facility earlier in 2022.

**Net Interest Income**

Net interest income for the fourth quarter of 2022 increased to $85.9 million compared to $83.9 million for the third quarter of 2022 and $77.6 million for the fourth quarter of 2021.

The net interest margin for the fourth and third quarters of 2022 was 3.76% and 3.84%, respectively, a decrease of eight basis points quarter over quarter. This decrease was due to interest rate increases where deposits are repricing more rapidly than the Company's loan portfolio. During the fourth quarter of 2022, the average cost of interest-bearing liabilities increased by 85 basis points while the average yield on interest-earning assets increased by 67 basis points.

The increase in net interest income for the fourth quarter of 2022 compared to the fourth quarter of 2021 was driven by growth in the total loan and lease portfolio. Partially mitigating this increase was a decrease in the net interest margin arising from an increase in interest-bearing liabilities combined with average cost of funds outpacing the average yield on interest-earning assets.

**Noninterest Income**

Noninterest income for the fourth quarter of 2022 decreased to $19.1 million compared to $57.7 million for the third quarter of 2022 and $33.8 million for the fourth quarter of 2021. The primary drivers behind decreased noninterest income are outlined below.

------

The largest driver of the decrease in noninterest income for the fourth quarter of 2022 as compared to the third quarter of 2022 arose from a decrease in equity method investment income of $31.0 million. This quarter over quarter decrease of $31.0 million was principally due to the $28.4 million gain arising in the third quarter of 2022 associated with Jack Henry & Associates, Inc's acquisition of the Company's ownership in Payrailz, LLC ("Payrailz"). The $4.8 million decrease in equity method investment income for the fourth quarter of 2022 as compared to the fourth quarter of 2021 was principally related to higher levels of pro-rata losses of equity method investees in 2022.

The loan servicing asset revaluation resulted in a loss of $5.0 million for the fourth quarter of 2022 compared to a loss of loss of $1.3 million for the third quarter of 2022 and $4.2 million for the fourth quarter of 2021. Higher levels of losses in the loan servicing asset revaluation compared to the prior quarters was largely the result of weaker economic conditions related to the rapidly rising interest rate environment.

Net gains on sales of loans was $7.4 million, a $1.9 million decrease compared to the third quarter of 2022 and a $12.9 million decrease compared to the fourth quarter of 2021. During the second quarter of 2022, the Company began significantly decreasing loan sale volumes due to unusually weak market conditions depressing market premiums. The decrease in net gains on sales of loans compared to the third quarter of 2022 and fourth quarter of 2021 was largely the result of lower volume of loan sales combined with overall weaker market conditions compared to those experienced in the prior periods. The average guaranteed loan sale premium was 105%, 108% and 110% for the fourth quarter of 2022, third quarter of 2022 and fourth quarter of 2021, respectively. The volume of guaranteed loans sold was $144.3 million for the fourth quarter of 2022 compared to $148.1 million sold in the third quarter of 2022 and $199.0 million sold in the fourth quarter of 2021.

The net gain on loans accounted for under the fair value option totaled $571 thousand for the fourth quarter of 2022, a $3.8 million decrease compared to the $4.4 million net gain for the third quarter of 2022. This reduced gain in valuation of loans accounted for under the fair value option was largely the result of the above referenced negative market pricing trends combined with continued amortization of the portfolio of loans accounted for under the fair value option.

**Noninterest Expense**

Noninterest expense for the fourth quarter of 2022 totaled $84.6 million compared to $83.0 million for the third quarter of 2022 and $59.7 million for the fourth quarter of 2021. The primary drivers in the noninterest expense changes are outlined below.

Salaries and employee benefits for the fourth quarter of 2022 decreased $919 thousand compared to the third quarter of 2022 and increased $10.1 million compared to the fourth quarter of 2021. Driving the quarter over quarter decrease was an additional bonus accrual of $3.0 million that was included in the third quarter of 2022 related to the earlier discussed Payrailz gain. The increase over the fourth quarter of 2021 was principally the result of continued investment in human resources to support strategic and growth initiatives.

Advertising and marketing expense increased $1.3 million compared to the third quarter of 2022 and $2.0 million compared to the fourth quarter of 2021 as a continued investment in the Company's lending and deposit market growth.

Technology expenses increased $1.1 million compared to the third quarter of 2022 and $2.4 million compared to the fourth quarter of 2021. The increase for both periods was primarily related to enhanced investments in the Company's technology resources.

The Company incurred impairment charges related to new renewable energy tax credit investment transactions of $8.4 million in the fourth quarter of 2022 compared to $7.7 million in the third quarter of 2022. Investments of this type generate a return primarily through the realization of income tax credits and other benefits; accordingly, impairment of the investment amount is recognized in conjunction with the realization of related tax benefits. These investments generated federal investment tax credits in the fourth and third quarters of 2022 of $10.3 million and $6.1 million, respectively, which are reflected in the Company's 2022 effective tax rate. Investments of this nature are part of the Company's ongoing initiative to promote renewable energy sources.

------

**Asset Quality**

During the fourth quarter of 2022, the Company recognized net charge-offs for loans carried at historical cost of $1.4 million compared to $1.7 million in the third quarter of 2022 and $15 thousand in the fourth quarter of 2021. Net charge-offs as a percentage of average held for investment loans and leases carried at historical cost, annualized, for the quarters ended December 31, 2022, September 30, 2022 and December 30, 2021, was 0.09%, 0.12% and 0.00%, respectively. Net charge-offs as a percentage of total average held for investment loans and leases carried at historical cost for the years ended December 31, 2022 and 2021, were 0.14% and 0.09%, respectively.

Unguaranteed nonperforming (nonaccrual) loans and leases, excluding $6.7 million and $2.7 million accounted for under the fair value option at December 31, 2022, and September 30, 2022, respectively, increased to $18.8 million, or 0.27% of loans and leases held for investment which are carried at historical cost, at December 31, 2022, compared to $14.3 million, or 0.23%, at September 30, 2022.

**Provision for Loan and Lease Credit Losses**

The provision for loan and lease credit losses for the fourth quarter of 2022 totaled $19.7 million compared to $14.2 million for the third quarter of 2022 and $3.9 million for the fourth quarter of 2021. The higher provision expense in the fourth quarter of 2022 was primarily the result of continued growth of the loan and lease portfolio combined with charge-off experience impacts and specific reserve growth related to a small number of relationships.

The allowance for credit losses on loans and leases totaled $96.6 million at December 31, 2022, compared to $78.3 million at September 30, 2022. The allowance for credit losses on loans and leases as a percentage of total loans and leases held for investment carried at historical cost was 1.41% and 1.23% at December 31, 2022, and September 30, 2022, respectively.

**Income Tax**

Income tax benefit and related effective tax rate was $1.1 million and (149.9)% for the fourth quarter of 2022. In comparison, income tax expense and related effective tax rates for the third quarter of 2022 and fourth quarter of 2021 were $1.5 million and 3.4%, and $17.6 million and 36.9%, respectively. The lower level of income tax expense for the fourth quarter of 2022 compared to the third quarter of 2022 was primarily the result of decreased pretax income combined with a research credit recognized during the quarter related to the Company's ongoing investment in developing its technology-based platform. The lower level of income tax expense for the fourth quarter of 2022 compared to the fourth quarter of 2021 was primarily the result of a lower level of pretax income combined with higher levels of investment tax credits related to renewable energy investment transactions and additional impacts discussed above related to research credits.

**Conference Call**

Live Oak will host a conference call to discuss the company's financial results and business outlook tomorrow, January 26, 2023, at 9:00 a.m. ET. To listen to the call via a live audio webcast, visit http://investor.liveoakbank.com/. To participate via telephone, please register in advance at https://register.vevent.com/register/BI38276e2e147f4289a0d59072d04a6f09. Upon registration, participants will receive a confirmation email detailing how to join the conference call, including the dial-in number and unique passcode and that can be used to access the call. After the conference call, a replay will be available until February 2, 2023, at the same audio webcast link.

------

**Important Note Regarding Forward-Looking Statements**

Statements in this press release that are based on other than historical data or that express the Company's plans or expectations regarding future events or determinations are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Statements based on historical data are not intended and should not be understood to indicate the Company's expectations regarding future events. Forward-looking statements provide current expectations or forecasts of future events or determinations. These forward-looking statements are not guarantees of future performance or determinations, nor should they be relied upon as representing management's views as of any subsequent date. Forward-looking statements involve significant risks and uncertainties, and actual results may differ materially from those presented, either expressed or implied, in this press release. Factors that could cause actual results to differ materially from those expressed in the forward-looking statements include changes in Small Business Administration ("SBA") rules, regulations or loan products, including the Section 7(a) program, changes in SBA standard operating procedures or changes in Live Oak Banking Company's status as an SBA Preferred Lender; changes in rules, regulations or procedures for other government loan programs, including those of the United States Department of Agriculture; the potential impacts of the Coronavirus Disease 2019 (COVID-19) pandemic on trade (including supply chains and export levels), travel, employee productivity and other economic activities that may have a destabilizing and negative effect on financial markets, economic activity and customer behavior; a reduction in or the termination of the Company's ability to use the technology-based platform that is critical to the success of its business model, including a failure in or a breach of operational or security systems; competition from other lenders; the Company's ability to attract and retain key personnel; market and economic conditions and the associated impact on the Company; operational, liquidity and credit risks associated with the Company's business; the impact of heightened regulatory scrutiny of financial products and services and the Company's ability to comply with regulatory requirements and expectations; a deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S. government may take to avoid exceeding the debt ceiling, and uncertainties surrounding the debt ceiling and the federal budget; adverse results, including related fees and expenses, from pending or future lawsuits, government investigations or private actions; and the other factors discussed in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") and available at the SEC's Internet site (http://www.sec.gov). Except as required by law, the Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.

**About Live Oak Bancshares, Inc.**

Live Oak Bancshares, Inc. (NYSE: LOB) is a financial holding company and the parent company of Live Oak Bank. Live Oak Bancshares and its subsidiaries partner with businesses that share a groundbreaking focus on service and technology to redefine banking. To learn more, visit www.liveoakbank.com.

**Contacts:**

William C. (BJ) Losch, III \| CFO & Chief Banking Officer \| Investor Relations \| 910.765.9966

Claire Parker \| SVP Corporate Communications \| Media Relations \| 910.597.1592

------

**Live Oak Bancshares, Inc.**

**Quarterly Statements of Income (unaudited)**

(Dollars in thousands, except per share data)

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | Three Months Ended | Three Months Ended | Three Months Ended | Three Months Ended | Three Months Ended | 4Q 2022 Changes vs. | 4Q 2022 Changes vs. |
| | 4Q 2022 | 3Q 2022 | 2Q 2022 | 1Q 2022 | 4Q 2021 | 3Q 2022 | 4Q 2021 |
| **Interest income** |  |  |  |  |  | % | % |
| Loans and fees on loans | $127310 | $107880 | $94157 | $89198 | $88577 | 18.0 | 43.7 |
| Investment securities, taxable | 6716 | 5506 | 4046 | 3399 | 3455 | 22.0 | 94.4 |
| Other interest earning assets | 2584 | 2448 | 1044 | 185 | 171 | 5.6 | 1411.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total interest income | 136610 | 115834 | 99247 | 92782 | 92203 | 17.9 | 48.2 |
| **Interest expense** |  |  |  |  |  |  |  |
| Deposits | 50357 | 31553 | 18777 | 14348 | 13817 | 59.6 | 264.5 |
| Borrowings | 351 | 395 | 536 | 655 | 748 | (11.1) | (53.1) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total interest expense | 50708 | 31948 | 19313 | 15003 | 14565 | 58.7 | 248.1 |
| Net interest income | 85902 | 83886 | 79934 | 77779 | 77638 | 2.4 | 10.6 |
| **Provision for loan and lease credit losses** | 19671 | 14169 | 5267 | 1836 | 3918 | 38.8 | 402.1 |
| Net interest income after provision for loan and lease credit losses | 66231 | 69717 | 74667 | 75943 | 73720 | (5.0) | (10.2) |
| **Noninterest income** |  |  |  |  |  |  |  |
| Loan servicing revenue | 6296 | 6230 | 6477 | 6356 | 6289 | 1.1 | 0.1 |
| Loan servicing asset revaluation | (5016) | (1324) | (8668) | (1569) | (4160) | (278.9) | (20.6) |
| Net gains on sales of loans | 7362 | 9275 | 5630 | 20977 | 20257 | (20.6) | (63.7) |
| Net gain (loss) on loans accounted for under the fair value option | 571 | 4420 | (4461) | 516 | (66) | (87.1) | 965.2 |
| Equity method investments income (loss) | (1818) | 29136 | 119056 | (2124) | 2969 | (106.2) | (161.2) |
| Equity security investments gains (losses), net | 868 | 876 | 1655 | (44) | 218 | (0.9) | 298.2 |
| Lease income | 2555 | 2516 | 2510 | 2503 | 2521 | 1.6 | 1.3 |
| Management fee income | 3200 | 2844 | 2558 | 1488 | 1482 | 12.5 | 115.9 |
| Other noninterest income | 5053 | 3751 | 3772 | 4565 | 4246 | 34.7 | 19.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total noninterest income | 19071 | 57724 | 128529 | 32668 | 33756 | (67.0) | (43.5) |
| **Noninterest expense** |  |  |  |  |  |  |  |
| Salaries and employee benefits | 42560 | 43479 | 46276 | 38507 | 32464 | (2.1) | 31.1 |
| Travel expense | 1872 | 2372 | 2358 | 1897 | 1782 | (21.1) | 5.1 |
| Professional services expense | 2453 | 2505 | 3988 | 2791 | 3724 | (2.1) | (34.1) |
| Advertising and marketing expense | 3892 | 2621 | 2301 | 1729 | 1844 | 48.5 | 111.1 |
| Occupancy expense | 3469 | 2519 | 2773 | 2327 | 2045 | 37.7 | 69.6 |
| Technology expense | 8849 | 7770 | 5762 | 6053 | 6489 | 13.9 | 36.4 |
| Equipment expense | 3759 | 3761 | 3784 | 3816 | 3741 | (0.1) | 0.5 |
| Other loan origination and maintenance expense | 3657 | 3376 | 3022 | 3113 | 3406 | 8.3 | 7.4 |
| Renewable energy tax credit investment impairment | 8446 | 7721 | 50 |  |  | 9.4 | 100.0 |
| FDIC insurance | 2923 | 2697 | 2164 | 1972 | 1931 | 8.4 | 51.4 |
| Contributions and donations | 33 | 191 | 5515 | 723 | 328 | (82.7) | (89.9) |
| Other expense | 2672 | 4036 | 2886 | 2786 | 1944 | (33.8) | 37.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total noninterest expense | 84585 | 83048 | 80879 | 65714 | 59698 | 1.9 | 41.7 |
| **Income before taxes** | 717 | 44393 | 122317 | 42897 | 47778 | (98.4) | (98.5) |
| Income tax (benefit) expense | (1075) | 1525 | 25278 | 8388 | 17631 | (170.5) | (106.1) |
| &nbsp;&nbsp;&nbsp;&nbsp;**Net income** | $1792 | $42868 | $97039 | $34509 | $30147 | (95.8) | (94.1) |
| **Earnings per share** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic | $0.04 | $0.97 | $2.22 | $0.79 | $0.69 | (95.9) | (94.2) |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted | $0.04 | $0.96 | $2.16 | $0.76 | $0.66 | (95.8) | (93.9) |
| **Weighted average shares outstanding** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic | 44005220 | 43914920 | 43824707 | 43701943 | 43492172 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted | 44794941 | 44797109 | 44803278 | 45227536 | 45474530 |  |  |

---

------

**Live Oak Bancshares, Inc.**

**Quarterly Balance Sheets (unaudited)**

(Dollars in thousands)

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | As of the quarter ended | As of the quarter ended | As of the quarter ended | As of the quarter ended | As of the quarter ended | 4Q 2022 Change vs. | 4Q 2022 Change vs. |
| | 4Q 2022 | 3Q 2022 | 2Q 2022 | 1Q 2022 | 4Q 2021 | 3Q 2022 | 4Q 2021 |
| **Assets** |  |  |  |  |  | % | % |
| Cash and due from banks | $280239 | $335046 | $580493 | $477778 | $187203 | (16.4) | 49.7 |
| Federal funds sold | 136397 | 68324 | 51694 | 29993 | 16547 | 99.6 | 724.3 |
| Certificates of deposit with other banks | 4000 | 4250 | 4250 | 4250 | 4750 | (5.9) | (15.8) |
| Investment securities available-for-sale | 1014719 | 1005372 | 927968 | 844577 | 906052 | 0.9 | 12.0 |
| Loans held for sale <sup>(1)</sup> | 554610 | 537649 | 1199734 | 1028635 | 1116519 | 3.2 | (50.3) |
| Loans and leases held for investment <sup>(2)</sup> | 7344178 | 6853382 | 5860209 | 5738241 | 5521262 | 7.2 | 33.0 |
| Allowance for credit losses on loans and leases | (96566) | (78291) | (65863) | (63058) | (63584) | 23.3 | 51.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loans and leases | 7247612 | 6775091 | 5794346 | 5675183 | 5457678 | 7.0 | 32.8 |
| Premises and equipment, net | 263290 | 260285 | 257926 | 254865 | 240196 | 1.2 | 9.6 |
| Foreclosed assets |  | 1178 | 191 | 198 | 620 | (100.0) | (100.0) |
| Servicing assets | 26323 | 29081 | 28661 | 36286 | 33574 | (9.5) | (21.6) |
| Other assets | 328308 | 298374 | 275634 | 268201 | 250254 | 10.0 | 31.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total assets** | $9855498 | $9314650 | $9120897 | $8619966 | $8213393 | 5.8 | 20.0 |
| **Liabilities and Shareholders' Equity** |  |  |  |  |  |  |  |
| ***Liabilities*** |  |  |  |  |  |  |  |
| Deposits: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Noninterest-bearing | $194100 | $170336 | $119371 | $86342 | $89279 | 14.0 | 117.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest-bearing | 8690828 | 8234573 | 8036373 | 7550821 | 7022765 | 5.5 | 23.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total deposits | 8884928 | 8404909 | 8155744 | 7637163 | 7112044 | 5.7 | 24.9 |
| Borrowings | 83203 | 35616 | 86209 | 196911 | 318289 | 133.6 | (73.9) |
| Other liabilities | 76334 | 71957 | 87282 | 72565 | 67927 | 6.1 | 12.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total liabilities** | 9044465 | 8512482 | 8329235 | 7906639 | 7498260 | 6.2 | 20.6 |
| ***Shareholders' equity*** |  |  |  |  |  |  |  |
| Preferred stock, no par value, 1,000,000 shares authorized, none issued or outstanding |  |  |  |  |  |  |  |
| Class A common stock (voting) | 330854 | 325632 | 320924 | 315607 | 310970 | 1.6 | 6.4 |
| Class B common stock (non-voting) |  |  |  |  | 1324 |  | (100.0) |
| Retained earnings | 572497 | 571778 | 530021 | 434226 | 400893 | 0.1 | 42.8 |
| Accumulated other comprehensive (loss) income | (92318) | (95242) | (59283) | (36506) | 1946 | 3.1 | (4844.0) |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total shareholders' equity** | 811033 | 802168 | 791662 | 713327 | 715133 | 1.1 | 13.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total liabilities and shareholders' equity** | $9855498 | $9314650 | $9120897 | $8619966 | $8213393 | 5.8 | 20.0 |

---

(1)Includes $23.5 million, $25.1 million, and $25.3 million measured at fair value for the quarters ended June 30, 2022, March 31, 2022, and December 31, 2021, respectively.

(2)Includes $494.5 million, $512.2 million, $530.6 million, $600.6 million, and $645.2 million measured at fair value for the quarters ended December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022, and December 31, 2021, respectively.

------

**Live Oak Bancshares, Inc.**

**Statements of Income (unaudited)**

(Dollars in thousands, except per share data)

---

| | | |
|:---|:---|:---|
| | Twelve Months Ended | Twelve Months Ended |
| | December 31, 2022 | December 31, 2021 |
| **Interest income** |  |  |
| Loans and fees on loans | $418545 | $347738 |
| Investment securities, taxable | 19667 | 12533 |
| Other interest earning assets | 6261 | 942 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total interest income | 444473 | 361213 |
| **Interest expense** |  |  |
| Deposits | 115035 | 59740 |
| Borrowings | 1937 | 4688 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total interest expense | 116972 | 64428 |
| Net interest income | 327501 | 296785 |
| **Provision for loan and lease credit losses** | 40943 | 15210 |
| Net interest income after provision for loan and lease credit losses | 286558 | 281575 |
| **Noninterest income** |  |  |
| Loan servicing revenue | 25359 | 25219 |
| Loan servicing asset revaluation | (16577) | (11726) |
| Net gains on sales of loans | 43244 | 67280 |
| Net gain on loans accounted for under the fair value option | 1046 | 4257 |
| Equity method investments income (loss) | 144250 | (1716) |
| Equity security investments gains (losses), net | 3355 | 44752 |
| Lease income | 10084 | 10263 |
| Management fee income | 10090 | 6378 |
| Other noninterest income | 17141 | 15493 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total noninterest income | 237992 | 160200 |
| **Noninterest expense** |  |  |
| Salaries and employee benefits | 170822 | 124932 |
| Travel expense | 8499 | 5809 |
| Professional services expense | 11737 | 15135 |
| Advertising and marketing expense | 10543 | 5002 |
| Occupancy expense | 11088 | 8423 |
| Technology expense | 28434 | 22648 |
| Equipment expense | 15120 | 14869 |
| Other loan origination and maintenance expense | 13168 | 13529 |
| Renewable energy tax credit investment impairment | 16217 | 3187 |
| FDIC insurance | 9756 | 7070 |
| Contributions and donations | 6462 | 2331 |
| Other expense | 12380 | 8052 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total noninterest expense | 314226 | 230987 |
| **Income before taxes** | 210324 | 210788 |
| Income tax expense | 34116 | 43793 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Net income** | $176208 | $166995 |
| **Earnings per share** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic | $4.02 | $3.87 |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted | $3.92 | $3.71 |
| **Weighted average shares outstanding** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic | 43862291 | 43169935 |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted | 44906310 | 45071304 |

---

------

**Live Oak Bancshares, Inc.**

**Quarterly Selected Financial Data**

(Dollars in thousands, except per share data)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | As of and for the three months ended | As of and for the three months ended | As of and for the three months ended | As of and for the three months ended | As of and for the three months ended |
| | 4Q 2022 | 3Q 2022 | 2Q 2022 | 1Q 2022 | 4Q 2021 |
| **Income Statement Data** |  |  |  |  |  |
| Net income | $1792 | $42868 | $97039 | $34509 | $30147 |
| **Per Common Share** |  |  |  |  |  |
| Net income, diluted | $0.04 | $0.96 | $2.16 | $0.76 | $0.66 |
| Dividends declared | 0.03 | 0.03 | 0.03 | 0.03 | 0.03 |
| Book value | 18.41 | 18.24 | 18.05 | 16.29 | 16.39 |
| Tangible book value (1) | 18.32 | 18.15 | 17.97 | 16.20 | 16.31 |
| **Performance Ratios** |  |  |  |  |  |
| Return on average assets (annualized) | 0.08% | 1.86% | 4.40% | 1.65% | 1.47% |
| Return on average equity (annualized) | 0.88 | 20.79 | 46.14 | 18.94 | 16.80 |
| Net interest margin | 3.76 | 3.84 | 3.89 | 4.02 | 4.02 |
| Efficiency ratio (1) | 80.58 | 58.65 | 38.80 | 59.50 | 53.59 |
| Noninterest income to total revenue | 18.17 | 40.76 | 61.66 | 29.58 | 30.30 |
| **Selected Loan Metrics** |  |  |  |  |  |
| Loans and leases originated | $1177688 | $1005235 | $959635 | $865063 | $1083623 |
| Outstanding balance of sold loans serviced | 3481885 | 3345907 | 3329616 | 3381883 | 3298828 |
| **Asset Quality Ratios** |  |  |  |  |  |
| Allowance for credit losses to loans and leases held for investment (3) | 1.41% | 1.23% | 1.24% | 1.23% | 1.30% |
| Net charge-offs (3) | $1396 | $1741 | $2462 | $2362 | $15 |
| Net charge-offs to average loans and leases held for investment (2) (3) | 0.09% | 0.12% | 0.19% | 0.19% | —% |
| Nonperforming loans and leases at historical cost (3) |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Unguaranteed | $18784 | $14334 | $11974 | $19475 | $15987 |
| &nbsp;&nbsp;&nbsp;Guaranteed | 54608 | 45730 | 33794 | 32828 | 26546 |
| &nbsp;&nbsp;&nbsp;Total | 73392 | 60064 | 45768 | 52303 | 42533 |
| Unguaranteed nonperforming historical cost loans and leases, to loans and leases held for investment (3) | 0.27% | 0.23% | 0.22% | 0.38% | 0.33% |
| Nonperforming loans at fair value (4) |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Unguaranteed | $6678 | $2736 | $3615 | $4451 | $4791 |
| &nbsp;&nbsp;&nbsp;Guaranteed | 38212 | 25169 | 27895 | 30850 | 33471 |
| &nbsp;&nbsp;&nbsp;Total | 44890 | 27905 | 31510 | 35301 | 38262 |
| Unguaranteed nonperforming fair value loans to loans held for investment (4) | 1.35% | 0.53% | 0.68% | 0.74% | 0.74% |
| **Capital Ratios** |  |  |  |  |  |
| Common equity tier 1 capital (to risk-weighted assets) | 12.46% | 13.16% | 13.14% | 12.10% | 12.38% |
| Tier 1 leverage capital (to average assets) | 9.26 | 9.49 | 9.44 | 8.87 | 8.87 |

---

**Notes to Quarterly Selected Financial Data**

(1)See accompanying GAAP to Non-GAAP Reconciliation.

(2)Quarterly net charge-offs as a percentage of quarterly average loans and leases held for investment, annualized.

(3)Loans and leases at historical cost only (excludes loans measured at fair value).

(4)Loans accounted for under the fair value option only (excludes loans and leases carried at historical cost).

------

**Live Oak Bancshares, Inc.**

**Quarterly Average Balances and Net Interest Margin**

(Dollars in thousands)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31, 2022** | **Three Months Ended<br>December 31, 2022** | **Three Months Ended<br>December 31, 2022** | **Three Months Ended<br>September 30, 2022** | **Three Months Ended<br>September 30, 2022** | **Three Months Ended<br>September 30, 2022** |
| | **Average Balance** | **Interest** | **Average Yield/Rate** | **Average Balance** | **Interest** | **Average Yield/Rate** |
| **Interest-earning assets:** | | | | | | |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest-earning balances in other banks | $138819 | $1063 | 3.04% | $225959 | $1375 | 2.41% |
| &nbsp;&nbsp;&nbsp;&nbsp;Federal funds sold | 160944 | 1521 | 3.75 | 187014 | 1073 | 2.28 |
| &nbsp;&nbsp;&nbsp;&nbsp;Investment securities | 1128105 | 6716 | 2.36 | 1040076 | 5506 | 2.10 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans held for sale | 573280 | 11635 | 8.05 | 1000912 | 16156 | 6.40 |
| &nbsp;&nbsp;&nbsp;Loans and leases held for investment<sup>(1)</sup> | 7066106 | 115675 | 6.49 | 6208447 | 91724 | 5.86 |
| Total interest-earning assets | 9067254 | 136610 | 5.98 | 8662408 | 115834 | 5.31 |
| Less: Allowance for credit losses on loans and leases | (77977) |  |  | (65511) |  |  |
| Noninterest-earning assets | 476204 |  |  | 598220 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $9465481 |  |  | $9195117 |  |  |
| **Interest-bearing liabilities:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Savings | $4096034 | $28587 | 2.77% | $4009928 | $16775 | 1.66% |
| &nbsp;&nbsp;&nbsp;&nbsp;Money market accounts | 117843 | 121 | 0.41 | 100074 | 72 | 0.29 |
| &nbsp;&nbsp;&nbsp;&nbsp;Certificates of deposit | 4143894 | 21649 | 2.07 | 3978793 | 14706 | 1.47 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total deposits | 8357771 | 50357 | 2.39 | 8088795 | 31553 | 1.55 |
| &nbsp;&nbsp;&nbsp;&nbsp;Borrowings | 36264 | 351 | 3.84 | 63207 | 395 | 2.48 |
| Total interest-bearing liabilities | 8394035 | 50708 | 2.40 | 8152002 | 31948 | 1.55 |
| Noninterest-bearing deposits | 182727 |  |  | 133676 |  |  |
| Noninterest-bearing liabilities | 69814 |  |  | 84597 |  |  |
| Shareholders' equity | 818905 |  |  | 824842 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and shareholders' equity | $9465481 |  |  | $9195117 |  |  |
| Net interest income and interest rate spread |  | $85902 | 3.58% |  | $83886 | 3.76% |
| Net interest margin |  |  | 3.76 |  |  | 3.84 |
| Ratio of average interest-earning assets to average interest-bearing liabilities |  |  | 108.02% |  |  | 106.26% |

---

(1)Average loan and lease balances include non-accruing loans and leases.

------

**Live Oak Bancshares, Inc.**

**GAAP to Non-GAAP Reconciliation**

(Dollars in thousands)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | As of and for the three months ended | As of and for the three months ended | As of and for the three months ended | As of and for the three months ended | As of and for the three months ended |
| | 4Q 2022 | 3Q 2022 | 2Q 2022 | 1Q 2022 | 4Q 2021 |
| Total shareholders' equity | $811033 | $802168 | $791662 | $713327 | $715133 |
| Less: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Goodwill | 1797 | 1797 | 1797 | 1797 | 1797 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other intangible assets | 1873 | 1912 | 1950 | 1988 | 2026 |
| Tangible shareholders' equity (a) | $807363 | $798459 | $787915 | $709542 | $711310 |
| Shares outstanding (c) | 44061244 | 43981350 | 43854011 | 43787660 | 43619070 |
| Total assets | $9855498 | $9314650 | $9120897 | $8619966 | $8213393 |
| Less: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Goodwill | 1797 | 1797 | 1797 | 1797 | 1797 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other intangible assets | 1873 | 1912 | 1950 | 1988 | 2026 |
| Tangible assets (b) | $9851828 | $9310941 | $9117150 | $8616181 | $8209570 |
| Tangible shareholders' equity to tangible assets (a/b) | 8.20% | 8.58% | 8.64% | 8.23% | 8.66% |
| Tangible book value per share (a/c) | $18.32 | $18.15 | $17.97 | $16.20 | $16.31 |
| Efficiency ratio: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Noninterest expense (d) | $84585 | $83048 | $80879 | $65714 | $59698 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net interest income | 85902 | 83886 | 79934 | 77779 | 77638 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Noninterest income | 19071 | 57724 | 128529 | 32668 | 33756 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenue (e) | $104973 | $141610 | $208463 | $110447 | $111394 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Efficiency ratio (d/e) | 80.58% | 58.65% | 38.80% | 59.50% | 53.59% |

---

This press release presents the non-GAAP financial measures. The adjustments to reconcile from the non-GAAP financial measures to the applicable GAAP financial measure are included where applicable in financial results presented in accordance with GAAP. The Company considers these adjustments to be relevant to ongoing operating results. The Company believes that excluding the amounts associated with these adjustments to present the non-GAAP financial measures provides a meaningful base for period-to-period comparisons, which will assist regulators, investors, and analysts in analyzing the operating results or financial position of the Company. The non-GAAP financial measures are used by management to assess the performance of the Company's business for presentations of Company performance to investors, and for other reasons as may be requested by investors and analysts. The Company further believes that presenting the non-GAAP financial measures will permit investors and analysts to assess the performance of the Company on the same basis as that applied by management. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although non-GAAP financial measures are frequently used by shareholders to evaluate a company, they have limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of results reported under GAAP.