Live Oak Bancshares, Inc. Files 2023 Annual Report on Form 10-K

TL;DR

<b>Live Oak Bancshares, Inc. filed its 2023 10-K report detailing financial performance and operational data.</b>

AI Summary

Live Oak Bancshares, Inc. (LOB-PA) filed a Annual Report (10-K) with the SEC on February 22, 2024. Live Oak Bancshares, Inc. reported its 2023 fiscal year results on February 22, 2024. The company is classified under "STATE COMMERCIAL BANKS" with IRS number 264596286. The filing covers the period ending December 31, 2023. Key financial data points such as revenue, net income, and EPS for 2023 are detailed within the report. The report includes financial statements and disclosures for the fiscal years 2023, 2022, and 2021.

Why It Matters

For investors and stakeholders tracking Live Oak Bancshares, Inc., this filing contains several important signals. This 10-K filing provides a comprehensive overview of Live Oak Bancshares' financial health and strategic direction for the fiscal year 2023, crucial for investors assessing its performance. The detailed financial statements and risk factors outlined in the report are essential for understanding the bank's operational landscape and potential challenges in the current economic environment.

Risk Assessment

Risk Level: medium — Live Oak Bancshares, Inc. shows moderate risk based on this filing. The company operates in the highly regulated banking sector, which presents inherent risks related to compliance, economic downturns, and competitive pressures, as detailed in the risk factors section of the 10-K.

Analyst Insight

Investors should review the detailed financial statements and risk factor disclosures in the 10-K to assess Live Oak Bancshares' financial stability and future growth prospects.

Key Numbers

• 2023-12-31 — Fiscal Year End (Conformed period of report)
• 2024-02-22 — Filing Date (Date the report was filed)
• 6022 — SIC Code (Standard Industrial Classification for State Commercial Banks)

Key Players & Entities

• Live Oak Bancshares, Inc. (company) — Filer and subject of the report
• 2023 (date) — Fiscal year end
• 2024-02-22 (date) — Filing date
• NC (location) — State of incorporation
• Wilmington (location) — Business and mailing address city

FAQ

Risk Factors

• Regulatory Environment [medium — regulatory]: The banking industry is subject to extensive regulation, which can impact operations and profitability.
• Economic Conditions [medium — market]: Adverse economic conditions can negatively affect loan demand, credit quality, and overall financial performance.
• Operational Risks [medium — operational]: Risks associated with technology, cybersecurity, and business continuity are critical for a financial institution.
• Credit Risk [high — financial]: The risk of loss due to borrowers' inability to repay loans is a primary concern for banks.

Industry Context

Live Oak Bancshares operates within the commercial banking sector, a highly competitive and regulated industry characterized by interest rate sensitivity and credit risk.

Regulatory Implications

As a bank holding company, Live Oak Bancshares is subject to oversight from federal and state banking regulators, including the Federal Reserve and North Carolina banking authorities.

What Investors Should Do

1. Analyze the detailed financial statements for revenue, net income, and EPS trends.
2. Review the risk factors section for specific threats to the company's operations and profitability.
3. Compare key financial metrics with industry peers to gauge competitive positioning.

Key Dates

• 2023-12-31: Fiscal Year End — Marks the end of the reporting period for the 2023 financial year.
• 2024-02-22: Filing Date — Date Live Oak Bancshares, Inc. submitted its 10-K report.

Year-Over-Year Comparison

This filing represents the annual 10-K report for the fiscal year ended December 31, 2023, providing updated financial data and disclosures compared to previous filings.

Filing Documents

• lob-20231231.htm (10-K) — 4910KB
• lob-20231231xexx1044.htm (EX-10.4 4) — 8KB
• lob-2023x1231xexx10533.htm (EX-10.5 33) — 19KB
• lob-20231231xexx1069.htm (EX-10.6 9) — 11KB
• lob-20231231xexx211.htm (EX-21.1) — 3KB
• lob-20231231xexx231.htm (EX-23.1) — 2KB
• lob-20231231xexx311.htm (EX-31.1) — 10KB
• lob-20231231xexx312.htm (EX-31.2) — 10KB
• lob-20231231xexx32.htm (EX-32) — 7KB
• lob-20231231xexx97.htm (EX-97) — 25KB
• image_0.jpg (GRAPHIC) — 674KB
• image_01a.jpg (GRAPHIC) — 55KB
• lob-20231231_g1.jpg (GRAPHIC) — 26KB
• 0001462120-24-000014.txt (&nbsp;) — 24299KB
• lob-20231231.xsd (EX-101.SCH) — 116KB
• lob-20231231_cal.xml (EX-101.CAL) — 171KB
• lob-20231231_def.xml (EX-101.DEF) — 698KB
• lob-20231231_lab.xml (EX-101.LAB) — 1399KB
• lob-20231231_pre.xml (EX-101.PRE) — 1047KB
• lob-20231231_htm.xml (XML) — 5025KB

Business

Business 1 Item 1A.

Risk Factors

Risk Factors 16 Item 1B. Unresolved Staff Comments 35 Item 1C. Cybersecurity 35 Item 2.

Properties

Properties 38 Item 3.

Legal Proceedings

Legal Proceedings 38 Item 4. Mine Safety Disclosures 38 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 39 Item 6. [Reserved] 40 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 41 Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 71 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 73 Report of Independent Registered Public Accounting Firm 74 Consolidated Balance Sheets as of December 31, 2023 and 2022 79 Consolidated Statements of Income for the Years Ended December 31, 2023, 2022 and 2021 80 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2023, 2022 and 202 1 81 Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31, 2023, 2022 and 202 1 82 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022, and 2021 83

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 85 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 141 Item 9A.

Controls and Procedures

Controls and Procedures 141 Item 9B. Other Information 142 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 142 PART III Item 10. Directors, Executive Officers and Corporate Governance 143 Item 11.

Executive Compensation

Executive Compensation 143 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 143 Item 13. Certain Relationships and Related Transactions, and Director Independence 143 Item 14. Principal Accountant Fees and Services 143 PART IV Item 15. Exhibits and Financial Statement Schedules 144 Item 16 Form 10-K Summary 147

Signatures

Signatures 148 Table of Contents Important Note Regarding Forward-Looking Statements This Annual Report on Form 10-K (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. The

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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