Live Oak Bancshares Restates Financials, Cites Cash Flow Errors

TL;DR

**LOB-PA's restatement for cash flow errors is a red flag, indicating shaky internal controls that could spook investors and warrant a closer look at their operational integrity.**

AI Summary

Live Oak Bancshares, Inc. (LOB-PA) filed a Form 10-K/A on November 17, 2025, to restate its Consolidated Financial Statements for the fiscal years ended December 31, 2024, 2023, and 2022. The restatement primarily corrects an error in the classification of cash flows between operating and investing activities related to proceeds from the sale of loan participations and associated non-cash disclosures within the Consolidated Statements of Cash Flows. This amendment impacts several key sections, including Risk Factors, Financial Statements and Supplementary Data, Controls and Procedures, and Executive Compensation. The company also identified material weaknesses in its internal control over financial reporting, necessitating new certifications from its principal executive and financial officers under Sections 302 and 906 of Sarbanes-Oxley. As of June 30, 2024, the aggregate market value of voting common stock held by non-affiliates was approximately $1,203,104,831, with 45,857,617 shares outstanding as of November 14, 2025. The company, a large accelerated filer, continues to focus on SBA and USDA guaranteed small business lending through its national online platform.

Why It Matters

This restatement by Live Oak Bancshares signals a critical accounting error, specifically in cash flow classification, which can obscure the true operational liquidity and investment activities of the bank. For investors, this raises concerns about financial transparency and the reliability of past reported figures, potentially impacting valuation and trust. Employees and customers might see this as a sign of internal control weaknesses, though the core business of small business lending remains unchanged. In a competitive banking landscape, such restatements can erode confidence, especially when competitors maintain robust financial reporting standards, potentially affecting LOB-PA's ability to attract capital or maintain its market position.

Risk Assessment

Risk Level: high — The risk level is high due to the restatement of Consolidated Financial Statements for three fiscal years (2024, 2023, and 2022) to correct a classification error in cash flows from the sale of loan participations. This is compounded by the explicit mention of 'material weaknesses we identified in our internal control over financial reporting,' which directly impacts the reliability of financial reporting and necessitates new certifications from executive officers.

Analyst Insight

Investors should exercise caution and thoroughly review the restated financial statements to understand the full impact of the cash flow reclassifications. Monitor subsequent filings for evidence of remediation of the identified material weaknesses in internal controls, as sustained issues could lead to further financial reporting inaccuracies and erode investor confidence.

Financial Highlights

debt To Equity

7.88

revenue

$1.03B

operating Margin

35.0%

total Assets

$16.7B

total Debt

$10.1B

net Income

$178.8M

eps

$1.98

gross Margin

65.0%

cash Position

$1.1B

revenue Growth

-1.9%

Key Numbers

• $1.2B — Market Value of Non-Affiliate Common Stock (As of June 30, 2024, indicating significant public float.)
• 45.9M — Voting Common Stock Shares Outstanding (As of November 14, 2025, providing current share count.)
• 3 — Years of Restated Financials (2024, 2023, and 2022, highlighting the broad impact of the accounting error.)
• 1008 — Full-time Employees (As of December 31, 2024, demonstrating the company's operational scale.)

Key Players & Entities

• Live Oak Bancshares, Inc. (company) — Registrant and bank holding company
• Live Oak Banking Company (company) — Subsidiary bank
• SEC (regulator) — Securities and Exchange Commission
• Sarbanes-Oxley Act of 2002 (regulator) — Legislation requiring certifications
• $1,203,104,831 (dollar_amount) — Aggregate market value of voting common stock held by non-affiliates as of June 30, 2024
• 45,857,617 (dollar_amount) — Shares of voting common stock outstanding as of November 14, 2025
• December 31, 2024 (date) — Fiscal year end for restated financials
• December 31, 2023 (date) — Fiscal year end for restated financials
• December 31, 2022 (date) — Fiscal year end for restated financials
• SBA (regulator) — Small Business Administration loan programs

FAQ

Risk Factors

• Reliance on SBA and USDA Loan Programs [high — operational]: The Company's business model is heavily reliant on originating loans partially guaranteed by the SBA and USDA. A significant change in these government programs, including reduced guarantees or stricter eligibility requirements, could materially adversely affect the Company's business, financial condition, and results of operations.
• Technology Platform Dependence [high — operational]: The Company leverages a technology-based platform for loan origination, customer experience, and servicing. Any disruption, failure, or security breach of this platform could impair its ability to conduct business, leading to financial losses and reputational damage.
• Interest Rate Sensitivity [medium — market]: As a financial institution, the Company is exposed to interest rate risk. Fluctuations in interest rates can impact net interest income, the fair value of its assets and liabilities, and the demand for its loan products, potentially affecting profitability.
• Regulatory Compliance and Changes [high — regulatory]: The Company operates in a highly regulated industry. Changes in banking laws, regulations, or supervisory policies, or failure to comply with existing regulations, could result in significant penalties, restrictions on operations, and reputational harm.
• Credit Risk and Loan Portfolio Quality [high — financial]: The Company's primary asset is its loan portfolio. Deterioration in the credit quality of borrowers, economic downturns, or industry-specific challenges could lead to increased loan losses and negatively impact financial performance.
• Competition in Small Business Lending [medium — operational]: The small business lending market is competitive, with traditional banks, credit unions, and fintech lenders vying for market share. Intense competition could pressure loan origination volumes, pricing, and profitability.
• Cybersecurity Threats [high — operational]: The Company's reliance on technology and online operations makes it a target for cyberattacks. A successful cyberattack could compromise sensitive customer data, disrupt operations, and lead to significant financial and reputational damage.
• Liquidity Risk [medium — financial]: The Company's ability to fund its operations and meet its obligations depends on its liquidity. A sudden increase in deposit outflows or a disruption in its access to funding sources could lead to liquidity challenges.

Industry Context

Live Oak Bancshares operates in the specialized niche of small business lending, primarily focusing on SBA and USDA guaranteed loans. This segment is characterized by a strong reliance on government programs and a growing trend towards digital-first, online platforms for origination and servicing. Competition exists from traditional banks, credit unions, and increasingly, fintech lenders, but Live Oak's established technology and focus on specific industry verticals provide a competitive edge.

Regulatory Implications

The restatement and identification of material weaknesses in internal controls highlight potential compliance and governance issues. Investors should monitor the company's remediation efforts and the impact of any regulatory scrutiny. The reliance on government-backed loan programs also subjects the company to the evolving policies and regulations of the SBA and USDA.

What Investors Should Do

1. Review the detailed notes to the restated financial statements.
2. Assess the company's remediation plan for identified material weaknesses.
3. Monitor management commentary on loan origination trends and credit quality.
4. Evaluate the impact of interest rate changes on net interest margin and loan demand.

Key Dates

• 2025-11-17: Filing of Form 10-K/A — Restated financial statements for 2024, 2023, and 2022 due to cash flow classification error, indicating potential internal control weaknesses.
• 2024-12-31: Fiscal Year End — Date for which financial statements were restated and employee count is reported.
• 2023-12-31: Fiscal Year End — Date for which financial statements were restated.
• 2022-12-31: Fiscal Year End — Date for which financial statements were restated.
• 2015-07-01: Initial Public Offering (IPO) — Marked the company's transition to a publicly traded entity.

Glossary

10-K/A

An amended annual report filed with the SEC to correct or update information previously filed in a Form 10-K. (This filing is an amendment to the company's annual report, indicating a need to revise previously reported financial data.)

SBA

U.S. Small Business Administration, a government agency that supports entrepreneurs and small businesses. (The company heavily relies on SBA-guaranteed loans as a core part of its lending business.)

USDA

United States Department of Agriculture, a federal department responsible for developing and executing U.S. federal policy on farming, agriculture, rural development and food. (The company also originates loans guaranteed by certain USDA programs, diversifying its government-backed lending.)

Sarbanes-Oxley Act of 2002 (SOX)

A federal law that mandates certain practices in financial and accounting information provided by public companies to enhance corporate responsibility and transparency. (New SOX 302 and 906 certifications were required due to identified material weaknesses in internal controls.)

Material Weakness

A deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. (The company identified material weaknesses, necessitating the restatement and new certifications.)

Loan Participations

A portion of a loan that is sold by the originating lender to another financial institution. (The restatement specifically addresses errors in classifying cash flows related to the sale of loan participations.)

Year-Over-Year Comparison

The filing of this 10-K/A indicates a significant change from the previous year's filing due to the restatement of financial statements for 2024, 2023, and 2022. This restatement corrects an error in the classification of cash flows, impacting the Consolidated Statements of Cash Flows. Furthermore, the identification of material weaknesses in internal control over financial reporting necessitates new SOX certifications, suggesting a potential decline in the reliability of previously reported financial information and a heightened focus on internal governance.

Filing Documents

• lob-20241231.htm (10-K/A) — 4646KB
• lob-20241231xexx231a.htm (EX-23.1) — 2KB
• lob-20241231xexx232a.htm (EX-23.2) — 3KB
• lob-20241231xexx311a.htm (EX-31.1) — 10KB
• lob-20241231xexx312a.htm (EX-31.2) — 10KB
• lob-20241231xexx32a.htm (EX-32) — 7KB
• lob-20241231_g1.jpg (GRAPHIC) — 26KB
• 0001462120-25-000105.txt ( ) — 22840KB
• lob-20241231.xsd (EX-101.SCH) — 112KB
• lob-20241231_cal.xml (EX-101.CAL) — 179KB
• lob-20241231_def.xml (EX-101.DEF) — 717KB
• lob-20241231_lab.xml (EX-101.LAB) — 1410KB
• lob-20241231_pre.xml (EX-101.PRE) — 1117KB
• lob-20241231_htm.xml (XML) — 4874KB

- Item 1A: Risk Factors

Part I - Item 1A: Risk Factors

- Item 8: Financial Statements and Supplementary Data

Part II - Item 8: Financial Statements and Supplementary Data

- Item 9A: Controls and Procedures

Part II - Item 9A: Controls and Procedures

- Item 11: Executive Compensation

Part III - Item 11: Executive Compensation

- Item 15: Exhibits and Financial Statement Schedules

Part IV - Item 15: Exhibits and Financial Statement Schedules The principal executive officer and principal financial officer provided new certifications as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. The certifications are included in this Form 10-K/A as Exhibits 31.1, 31.2, and 32. This Form 10-K/A also includes new consents of the Company's current and former independent registered public accounting firms as Exhibits 23.1 and 23.2, respectively. For the convenience of the reader, this Form 10-K/A sets forth the information in the Form 10-K in its entirety, as such information is modified and superseded where necessary to reflect the restatement. Except as provided above, this Amendment does not reflect events occurring subsequent to the filing of the Form 10-K and does not amend or otherwise update any information in the Form 10-K. Table of Contents Live Oak Bancshares, Inc. Annual Report on Form 10-K/A December 31, 2024 TABLE OF CONTENTS Page PART I Item 1.

Business

Business 1 Item 1A.

Risk Factors

Risk Factors 15 Item 1B. Unresolved Staff Comments 34 Item 1C. Cybersecurity 34 Item 2.

Properties

Properties 37 Item 3.

Legal Proceedings

Legal Proceedings 37 Item 4. Mine Safety Disclosures 37 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 38 Item 6. [Reserved] 38 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 39 Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 66 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 68 Reports of Independent Registered Public Accounting Firms 69 Consolidated Balance Sheets as of December 31, 2024 and 2023 75 Consolidated Statements of Income for the Years Ended December 31, 2024, 2023 and 2022 76 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2024, 2023 and 2022 77 Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31, 2024, 2023 and 2022 78 Consolidated Statements of Cash Flows for the Years Ended December 31, 2024, 2023, and 2022 79

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 81 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 139 Item 9A.

Controls and Procedures

Controls and Procedures 139 Item 9B. Other Information 141 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 141 PART III Item 10. Directors, Executive Officers and Corporate Governance 142 Item 11.

Executive Compensation

Executive Compensation 142 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 142 Item 13. Certain Relationships and Related Transactions, and Director Independence 142 Item 14. Principal Accountant Fees and Services 143 PART IV Item 15. Exhibits and Financial Statement Schedules 144 Item 16 Form 10-K Summary 146

Signatures

Signatures 147 Table of Contents Important Note Regarding Forward-Looking Statements This Annual Report on Form 10-K/A (this "Report") contains statements that management believes are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These statements generally relate to the financial condition, results of operations, plans, objectives, future performance or business of Live Oak Bancshares, Inc. (the "Company"). They usually can be identified by the use of forward-looking terminology, such as "believes," "expects," or "are expected to," "plans," "projects," "goals," "estimates," "will," "may," "should," "could," "would," "continues," "intends to," "outlook" or "anticipates," or variations of these and similar words, or by discussions of strategies that involve risks and uncertainties. You should not place undue reliance on these statements, as they are subject to risks and uncertainties, including but not limited to, those described in this Report. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements management may make. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information actually known to the Company at the time. Management undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements contained in this Report are based on current expectations, estimates and projections about the Company's business, management's beliefs and assumptions made by management. These statements are not guarantees of the Company's future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements. T

BUSINESS

Item 1. BUSINESS General Live Oak Bancshares, Inc. (individually, "Bancshares" and collectively with its subsidiaries including Live Oak Banking Company, the "Company," also referred to as "our" and "we"), headquartered in Wilmington, North Carolina, is the bank holding company for Live Oak Banking Company (the "Bank" or "Live Oak Bank"). The Bank was incorporated in February 2008 as a North Carolina-chartered commercial bank and operates an established national online platform for small business lending and deposit gathering. Bancshares was incorporated under the laws of the state of North Carolina on December 18, 2008, for the purpose of serving as the bank holding company of Live Oak Bank. Bancshares completed its initial public offering ("IPO") in July 2015. The Company The Company predominantly originates loans partially guaranteed by the U.S. Small Business Administration (the "SBA") and to a lesser extent by the United States Department of Agriculture ("USDA") Rural Energy for America Program ("REAP"), Water and Environmental Program ("WEP"), Business & Industry ("B&I") and Community Facilities loan programs. These loans are to small businesses and professionals with what the Company believes are lower risk characteristics. Industries, or "verticals," on which the Company focuses its lending efforts are carefully selected. The Company also lends more broadly to select borrowers outside of those verticals. In addition to focusing on industry verticals, the Company emphasizes developing detailed knowledge of its customers' businesses. This knowledge is developed, in part, through virtual and/or regular visits with customers, wherever they are located. These regular visits are designed to foster, both for the Company and for the customer, a deep and personalized experience throughout the lending relationship. The Company has developed, and continues to refine, a technology-based platform to facilitate providing financial services to the small business commu

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