Live Oak Bancshares, Inc. Reports Fourth Quarter 2018 Results
During the fourth quarter of 2018, the Company implemented a strategic decision to retain a larger portion of its loans eligible for sale on balance sheet in order to reduce earnings volatility and maximize long-term profitability with what the Company believes is a more predictable earnings model.
“We are very pleased with the contributions Live Oak made in 2018 to the success of small business owners and to the changing landscape of the financial services industry. We exited the year having originated just under
Year over Year Highlights
(Dollars in thousands, except per share data) | Increase (Decrease) | |||||||||||||||
2018 | 2017 | Dollars | Percent | |||||||||||||
Net interest income and servicing revenues | $ | 137,164 | $ | 102,622 | $ | 34,542 | 34 | % | ||||||||
Net income | 51,448 | 100,499 | (49,051 | ) | (49 | ) | ||||||||||
Diluted earnings per share | 1.24 | 2.65 | (1.41 | ) | (53 | ) | ||||||||||
Non-GAAP net income (1) | 54,571 | 47,187 | 7,384 | 16 | ||||||||||||
Non-GAAP diluted earnings per share (1) | 1.32 | 1.25 | 0.07 | 5 | ||||||||||||
Total assets | 3,670,449 | 2,758,474 | 911,975 | 33 | ||||||||||||
Total loans and leases | 2,530,812 | 2,024,427 | 506,385 | 25 | ||||||||||||
Loan and lease production: | ||||||||||||||||
Loans and leases originated | $ | 1,765,680 | $ | 1,934,238 | $ | (168,558 | ) | (9 | )% | |||||||
% Fully funded | 56.5 | % | 50.9 | % | n/a | n/a | ||||||||||
Loan sales: | ||||||||||||||||
Guaranteed loans sold | $ | 945,178 | $ | 787,926 | $ | 157,252 | 20 | % | ||||||||
Net gains on sales of guaranteed loans | 76,473 | 79,090 | (2,617 | ) | (3 | ) | ||||||||||
Average net gain on sale of guaranteed loans, per million sold | 80.91 | 100.38 | (19.47 | ) | (19 | ) | ||||||||||
(1) See accompanying GAAP to Non-GAAP Reconciliation. | ||||||||||||||||
Fourth Quarter 2018 Key Measures
(Dollars in thousands, except per share data) | Increase (Decrease) | |||||||||||||||||||
Q4 2018 | Q4 2017 | Dollars | Percent | Q3 2018 | ||||||||||||||||
Net interest income and servicing revenues | $ | 36,547 | $ | 28,977 | $ | 7,570 | 26 | % | $ | 35,230 | ||||||||||
Net income | 10,490 | 71,730 | (61,240 | ) | (85 | ) | 14,252 | |||||||||||||
Diluted earnings per share | 0.26 | 1.74 | (1.48 | ) | (85 | ) | 0.34 | |||||||||||||
Non-GAAP net income (1) | 10,764 | 16,875 | (6,111 | ) | (36 | ) | 16,562 | |||||||||||||
Non-GAAP diluted earnings per share (1) | 0.26 | 0.41 | (0.15 | ) | (36 | ) | 0.40 | |||||||||||||
Loan and lease production: | ||||||||||||||||||||
Loans and leases originated | $ | 498,987 | $ | 483,422 | $ | 15,565 | 3 | % | $ | 377,337 | ||||||||||
% Fully funded | 49.8 | % | 42.9 | % | n/a | n/a | 48.2 | % | ||||||||||||
Loan sales: | ||||||||||||||||||||
Guaranteed loans sold | $ | 104,646 | $ | 211,654 | $ | (107,008 | ) | (51 | )% | $ | 298,073 | |||||||||
Net gains on sales of guaranteed loans | 6,261 | 23,314 | (17,053 | ) | (73 | ) | 21,406 | |||||||||||||
Average net gain on sale of guaranteed loans, per million sold | 59.83 | 110.15 | (50.32 | ) | (46 | ) | 71.81 | |||||||||||||
(1) See accompanying GAAP to Non-GAAP Reconciliation. | ||||||||||||||||||||
Loans and Leases
At
Average loans and leases were
Deposits
Total deposits increased by
Net Interest Income
Net interest income for the fourth quarter of 2018 rose to
Noninterest Income
Noninterest income for the fourth quarter of 2018 decreased to
The primary driver of the decrease in noninterest income compared to the fourth quarter of 2017 was the
Also, largely contributing to the decrease in noninterest income compared to the fourth quarter of 2017 and third quarter of 2018 were lower net gains on sales of loans. The Company’s net gains on sales of loans decreased to
Partially offsetting the overall decline in noninterest income compared to the fourth quarter of 2017 and third quarter of 2018 were increases in loan servicing revenues, lower losses from the loan servicing asset revaluation and higher lease income.
Loan servicing revenues of
Lease income from solar panels contributed
Noninterest Expense
Noninterest expense for the fourth quarter of 2018 decreased to
Salaries and employee benefits for the fourth quarter of 2018 decreased to
Another factor contributing to the lower noninterest expense level was the absence of impairment expense related to Reltco which was
Partially offsetting the decrease in noninterest expense from the fourth quarter of 2017 were increases in travel expense of
Asset Quality
The unguaranteed exposure of nonperforming loans increased to
The unguaranteed exposure of foreclosed assets decreased to
Net charge-offs of
Provision for Loan and Lease Losses
The provision for loan and lease losses for the fourth quarter of 2018 totaled
The allowance for loan and lease losses totaled
Income Tax
There was a net income tax benefit in the fourth quarter of 2018 of
Conference Call
Live Oak will host a conference call to discuss quarterly results at
CFO Commentary
Additional commentary on the quarter by
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
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Quarterly Statements of Income (unaudited)
(Dollars in thousands, except per share data)
Three months ended | ||||||||||||||||||||
4Q 2018 | 3Q 2018 | 2Q 2018 | 1Q 2018 | 4Q 2017 | ||||||||||||||||
Interest income | ||||||||||||||||||||
Loans and fees on loans | $ | 40,628 | $ | 37,724 | $ | 36,267 | $ | 32,691 | $ | 29,343 | ||||||||||
Investment securities, taxable | 2,558 | 2,528 | 2,530 | 1,117 | 468 | |||||||||||||||
Other interest earning assets | 1,568 | 1,638 | 2,179 | 1,215 | 725 | |||||||||||||||
Total interest income | 44,754 | 41,890 | 40,976 | 35,023 | 30,536 | |||||||||||||||
Interest expense | ||||||||||||||||||||
Deposits | 15,959 | 14,165 | 13,927 | 10,418 | 7,330 | |||||||||||||||
Borrowings | — | 1 | 1 | 129 | 230 | |||||||||||||||
Total interest expense | 15,959 | 14,166 | 13,928 | 10,547 | 7,560 | |||||||||||||||
Net interest income | 28,795 | 27,724 | 27,048 | 24,476 | 22,976 | |||||||||||||||
Provision for (recovery of) loan and leases losses | 6,822 | (243 | ) | 2,087 | 4,392 | 4,055 | ||||||||||||||
Net interest income after provision for loan and lease losses | 21,973 | 27,967 | 24,961 | 20,084 | 18,921 | |||||||||||||||
Noninterest income | ||||||||||||||||||||
Loan servicing revenue | 7,752 | 7,506 | 6,965 | 6,898 | 6,001 | |||||||||||||||
Loan servicing asset revaluation | (627 | ) | (9,380 | ) | (3,670 | ) | (5,088 | ) | (6,307 | ) | ||||||||||
Net gains on sales of loans | 5,687 | 22,004 | 23,061 | 24,418 | 23,314 | |||||||||||||||
Lease income | 2,244 | 2,194 | 1,920 | 1,608 | 1,165 | |||||||||||||||
Gain on contribution to equity method investment | — | — | — | — | 68,000 | |||||||||||||||
Construction supervision fee income | 323 | 578 | 597 | 779 | 699 | |||||||||||||||
Title insurance income | — | 479 | 996 | 1,300 | 1,762 | |||||||||||||||
Other noninterest income | 2,686 | 950 | 744 | 841 | 807 | |||||||||||||||
Total noninterest income | 18,065 | 24,331 | 30,613 | 30,756 | 95,441 | |||||||||||||||
Noninterest expense | ||||||||||||||||||||
Salaries and employee benefits | 14,503 | 20,553 | 22,146 | 20,209 | 18,982 | |||||||||||||||
Travel expense | 3,269 | 2,003 | 2,041 | 1,843 | 2,089 | |||||||||||||||
Professional services expense | 1,233 | 1,228 | 1,119 | 1,298 | 709 | |||||||||||||||
Advertising and marketing expense | 1,023 | 1,462 | 1,868 | 1,662 | 1,386 | |||||||||||||||
Occupancy expense | 1,738 | 1,588 | 1,882 | 1,857 | 2,177 | |||||||||||||||
Data processing expense | 2,606 | 3,661 | 2,906 | 2,837 | 2,913 | |||||||||||||||
Equipment expense | 3,630 | 3,649 | 3,368 | 3,077 | 2,474 | |||||||||||||||
Other loan origination and maintenance expense | 1,482 | 1,742 | 1,414 | 1,329 | 1,383 | |||||||||||||||
Renewable energy tax credit investment impairment | — | — | — | — | 690 | |||||||||||||||
FDIC insurance | 547 | 1,105 | 1,010 | 572 | 898 | |||||||||||||||
Title insurance closing services expense | — | 114 | 372 | 426 | 541 | |||||||||||||||
Impairment expense on goodwill and other intangibles, net | — | 2,680 | — | — | 3,648 | |||||||||||||||
Other expense | 2,527 | 1,459 | 2,704 | 2,962 | 3,134 | |||||||||||||||
Total noninterest expense | 32,558 | 41,244 | 40,830 | 38,072 | 41,024 | |||||||||||||||
Income before taxes | 7,480 | 11,054 | 14,744 | 12,768 | 73,338 | |||||||||||||||
Income tax expense (benefit) | (3,010 | ) | (3,198 | ) | 491 | 315 | 1,608 | |||||||||||||
Net income | $ | 10,490 | $ | 14,252 | $ | 14,253 | $ | 12,453 | $ | 71,730 | ||||||||||
Earnings per share | ||||||||||||||||||||
Basic | $ | 0.26 | $ | 0.36 | $ | 0.36 | $ | 0.31 | $ | 1.80 | ||||||||||
Diluted | $ | 0.26 | $ | 0.34 | $ | 0.34 | $ | 0.30 | $ | 1.74 | ||||||||||
Weighted average shares outstanding | ||||||||||||||||||||
Basic | 40,148,115 | 40,119,561 | 40,027,336 | 39,926,781 | 39,879,345 | |||||||||||||||
Diluted | 41,075,864 | 41,688,430 | 41,619,647 | 41,399,930 | 41,184,793 | |||||||||||||||
Quarterly Balance Sheets (unaudited)
(Dollars in thousands)
As of the quarter ended | ||||||||||||||||||||
4Q 2018 | 3Q 2018 | 2Q 2018 | 1Q 2018 | 4Q 2017 | ||||||||||||||||
Assets | ||||||||||||||||||||
Cash and due from banks | $ | 316,823 | $ | 368,565 | $ | 392,941 | $ | 527,952 | $ | 295,271 | ||||||||||
Certificates of deposit with other banks | 7,250 | 750 | 2,250 | 2,250 | 3,000 | |||||||||||||||
Investment securities available-for-sale | 380,490 | 374,284 | 382,890 | 376,453 | 93,355 | |||||||||||||||
Loans held for sale | 687,393 | 646,475 | 757,494 | 720,511 | 680,454 | |||||||||||||||
Loans and leases held for investment | 1,843,419 | 1,631,337 | 1,534,368 | 1,442,077 | 1,343,973 | |||||||||||||||
Allowance for loan and lease losses | (32,434 | ) | (26,797 | ) | (29,350 | ) | (28,050 | ) | (24,190 | ) | ||||||||||
Net loans and leases | 1,810,985 | 1,604,540 | 1,505,018 | 1,414,027 | 1,319,783 | |||||||||||||||
Premises and equipment, net | 262,524 | 263,861 | 234,817 | 216,831 | 178,790 | |||||||||||||||
Foreclosed assets | 1,094 | 1,429 | 1,725 | 1,519 | 1,281 | |||||||||||||||
Servicing assets | 47,641 | 49,261 | 52,689 | 53,120 | 52,298 | |||||||||||||||
Other assets | 156,249 | 135,592 | 143,145 | 148,200 | 134,242 | |||||||||||||||
Total assets | $ | 3,670,449 | $ | 3,444,757 | $ | 3,472,969 | $ | 3,460,863 | $ | 2,758,474 | ||||||||||
Liabilities and Shareholders’ Equity | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Noninterest-bearing | $ | 53,993 | $ | 48,622 | $ | 46,192 | $ | 48,755 | $ | 57,868 | ||||||||||
Interest-bearing | 3,095,590 | 2,875,666 | 2,923,044 | 2,924,586 | 2,202,395 | |||||||||||||||
Total deposits | 3,149,583 | 2,924,288 | 2,969,236 | 2,973,341 | 2,260,263 | |||||||||||||||
Long term borrowings | 1,457 | 1,506 | 3,385 | 3,489 | 26,564 | |||||||||||||||
Other liabilities | 25,849 | 41,733 | 37,362 | 35,197 | 34,714 | |||||||||||||||
Total liabilities | 3,176,889 | 2,967,527 | 3,009,983 | 3,012,027 | 2,321,541 | |||||||||||||||
Shareholders’ equity | ||||||||||||||||||||
Preferred stock, no par value, 1,000,000 shares authorized, none issued or outstanding | — | — | — | — | — | |||||||||||||||
Class A common stock (voting) | 278,945 | 276,831 | 274,043 | 271,451 | 268,557 | |||||||||||||||
Class B common stock (non-voting) | 49,168 | 49,168 | 49,168 | 49,168 | 49,168 | |||||||||||||||
Retained earnings | 167,124 | 157,839 | 144,791 | 131,739 | 120,241 | |||||||||||||||
Accumulated other comprehensive loss | (1,677 | ) | (6,608 | ) | (5,016 | ) | (3,522 | ) | (1,033 | ) | ||||||||||
Total equity | 493,560 | 477,230 | 462,986 | 448,836 | 436,933 | |||||||||||||||
Total liabilities and shareholders’ equity | $ | 3,670,449 | $ | 3,444,757 | $ | 3,472,969 | $ | 3,460,863 | $ | 2,758,474 | ||||||||||
Statements of Income (unaudited)
(Dollars in thousands, except per share data)
Twelve months ended | ||||||||
December 31, 2018 | December 31, 2017 | |||||||
Interest income | ||||||||
Loans and fees on loans | $ | 147,310 | $ | 99,633 | ||||
Investment securities, taxable | 8,733 | 1,432 | ||||||
Other interest earning assets | 6,600 | 2,407 | ||||||
Total interest income | 162,643 | 103,472 | ||||||
Interest expense | ||||||||
Deposits | 54,469 | 24,223 | ||||||
Borrowings | 131 | 1,215 | ||||||
Total interest expense | 54,600 | 25,438 | ||||||
Net interest income | 108,043 | 78,034 | ||||||
Provision for loan and lease losses | 13,058 | 9,536 | ||||||
Net interest income after provision for loan and lease losses | 94,985 | 68,498 | ||||||
Noninterest income | ||||||||
Loan servicing revenue | 29,121 | 24,588 | ||||||
Loan servicing asset revaluation | (18,765 | ) | (13,171 | ) | ||||
Net gains on sales of loans | 75,170 | 78,590 | ||||||
Lease income | 7,966 | 1,856 | ||||||
Gain on contribution to equity method investment | — | 68,000 | ||||||
Construction supervision fee income | 2,277 | 1,776 | ||||||
Title insurance income | 2,775 | 7,565 | ||||||
Other noninterest income | 5,221 | 3,717 | ||||||
Total noninterest income | 103,765 | 172,921 | ||||||
Noninterest expense | ||||||||
Salaries and employee benefits | 77,411 | 74,669 | ||||||
Travel expense | 9,156 | 8,124 | ||||||
Professional services expense | 4,878 | 4,937 | ||||||
Advertising and marketing expense | 6,015 | 6,363 | ||||||
Occupancy expense | 7,065 | 6,195 | ||||||
Data processing expense | 12,010 | 8,449 | ||||||
Equipment expense | 13,724 | 7,479 | ||||||
Other loan origination and maintenance expense | 5,967 | 4,970 | ||||||
Renewable energy tax credit investment impairment | — | 690 | ||||||
FDIC insurance | 3,234 | 3,206 | ||||||
Title insurance closing services expense | 912 | 2,418 | ||||||
Impairment expense on goodwill and other intangibles, net | 2,680 | 3,648 | ||||||
Other expense | 9,652 | 12,017 | ||||||
Total noninterest expense | 152,704 | 143,165 | ||||||
Income before taxes | 46,046 | 98,254 | ||||||
Income tax benefit | (5,402 | ) | (2,245 | ) | ||||
Net income | $ | 51,448 | $ | 100,499 | ||||
Earnings per share | ||||||||
Basic | $ | 1.28 | $ | 2.75 | ||||
Diluted | $ | 1.24 | $ | 2.65 | ||||
Weighted average shares outstanding | ||||||||
Basic | 40,056,230 | 36,592,893 | ||||||
Diluted | 41,446,750 | 37,859,535 | ||||||
Quarterly Selected Financial Data
(Dollars in thousands, except per share data)
As of and for the three months ended | ||||||||||||||||||||
4Q 2018 | 3Q 2018 | 2Q 2018 | 1Q 2018 | 4Q 2017 | ||||||||||||||||
Income Statement Data | ||||||||||||||||||||
Net income | $ | 10,490 | $ | 14,252 | $ | 14,253 | $ | 12,453 | $ | 71,730 | ||||||||||
Per Common Share | ||||||||||||||||||||
Net income, basic | $ | 0.26 | $ | 0.36 | $ | 0.36 | $ | 0.31 | $ | 1.80 | ||||||||||
Net income, diluted | 0.26 | 0.34 | 0.34 | 0.30 | 1.74 | |||||||||||||||
Dividends declared | 0.03 | 0.03 | 0.03 | 0.03 | 0.03 | |||||||||||||||
Book value | 12.29 | 11.89 | 11.55 | 11.23 | 10.95 | |||||||||||||||
Tangible book value (1) | 12.29 | 11.89 | 11.45 | 11.13 | 10.85 | |||||||||||||||
Performance Ratios | ||||||||||||||||||||
Return on average assets (annualized) | 1.20 | % | 1.65 | % | 1.61 | % | 1.64 | % | 11.21 | % | ||||||||||
Return on average equity (annualized) | 8.64 | 12.08 | 12.34 | 11.08 | 68.33 | |||||||||||||||
Net interest margin | 3.72 | 3.61 | 3.46 | 3.72 | 4.07 | |||||||||||||||
Efficiency ratio (1) | 69.48 | 79.23 | 70.81 | 68.93 | 34.64 | |||||||||||||||
Noninterest income to total revenue | 38.55 | 46.74 | 53.09 | 55.69 | 80.60 | |||||||||||||||
Selected Loan Metrics | ||||||||||||||||||||
Loans and leases originated | $ | 498,987 | $ | 377,337 | $ | 491,797 | $ | 397,559 | $ | 483,422 | ||||||||||
Guaranteed loans sold | 104,646 | 298,073 | 295,216 | 247,243 | 211,654 | |||||||||||||||
Average net gain on sale of guaranteed loans | 59.83 | 71.81 | 82.61 | 98.76 | 110.15 | |||||||||||||||
Held for sale guaranteed loans (note amount) (2) | 914,354 | 896,464 | 1,075,801 | 1,068,886 | 1,087,636 | |||||||||||||||
Outstanding balance of sold loans serviced: | ||||||||||||||||||||
Guaranteed | 3,045,460 | 3,102,820 | 2,951,379 | 2,812,108 | 2,680,641 | |||||||||||||||
Unguaranteed | 174,066 | 170,784 | 155,939 | 174,867 | 169,355 | |||||||||||||||
Total | 3,219,526 | 3,273,604 | 3,107,318 | 2,986,975 | 2,849,996 | |||||||||||||||
Asset Quality Ratios | ||||||||||||||||||||
Allowance for loan losses to loans and leases held for investment | 1.76 | % | 1.64 | % | 1.91 | % | 1.95 | % | 1.80 | % | ||||||||||
Net charge-offs | $ | 1,185 | $ | 2,310 | $ | 787 | $ | 532 | $ | 892 | ||||||||||
Net charge-offs to average loans and leases held for investment (3) | 0.28 | % | 0.57 | % | 0.21 | % | 0.15 | % | 0.28 | % | ||||||||||
Nonperforming loans | $ | 57,690 | $ | 52,709 | $ | 46,105 | $ | 36,776 | $ | 23,480 | ||||||||||
Foreclosed assets | 1,094 | 1,429 | 1,725 | 1,519 | 1,281 | |||||||||||||||
Nonperforming loans (unguaranteed exposure) | 14,488 | 12,897 | 11,466 | 7,386 | 3,610 | |||||||||||||||
Foreclosed assets (unguaranteed exposure) | 148 | 158 | 197 | 101 | 90 | |||||||||||||||
Nonperforming loans not guaranteed by the SBA and foreclosures | $ | 14,636 | $ | 13,055 | $ | 11,663 | $ | 7,487 | $ | 3,700 | ||||||||||
Nonperforming loans and foreclosures, not guaranteed by the SBA, to total assets | 0.40 | % | 0.38 | % | 0.34 | % | 0.22 | % | 0.13 | % | ||||||||||
Capital Ratios | ||||||||||||||||||||
Common equity tier 1 capital (to risk-weighted assets) | 15.92 | % | 16.95 | % | 16.78 | % | 16.36 | % | 17.81 | % | ||||||||||
Total capital (to risk-weighted assets) | 17.12 | 18.01 | 17.97 | 17.51 | 18.91 | |||||||||||||||
Tier 1 risk based capital (to risk-weighted assets) | 15.92 | 16.95 | 16.78 | 16.36 | 17.81 | |||||||||||||||
Tier 1 leverage capital (to average assets) | 12.53 | 12.53 | 11.81 | 13.32 | 15.53 | |||||||||||||||
Notes to Quarterly Selected Financial Data
(1) See accompanying GAAP to Non-GAAP Reconciliation.
(2) Includes the entire note amount, including undisbursed funds for the multi-advance loans.
(3) Quarterly net charge-offs as a percentage of quarterly average loans and leases held for investment, annualized.
Quarterly Average Balances and Net Interest Margin
(Dollars in thousands)
Three months ended December 31, 2018 | Three months ended September 30, 2018 | |||||||||||||||||||||||
Average Balance | Interest | Average Yield/Rate | Average Balance | Interest | Average Yield/Rate | |||||||||||||||||||
Interest earning assets: | ||||||||||||||||||||||||
Interest earning balances in other banks | $ | 284,320 | $ | 1,568 | 2.19 | % | $ | 349,739 | $ | 1,638 | 1.86 | % | ||||||||||||
Investment securities | 384,481 | 2,558 | 2.64 | 388,520 | 2,528 | 2.58 | ||||||||||||||||||
Loans held for sale | 684,013 | 11,555 | 6.70 | 693,517 | 11,270 | 6.45 | ||||||||||||||||||
Loans and leases held for investment (1) | 1,716,023 | 29,073 | 6.72 | 1,612,699 | 26,454 | 6.51 | ||||||||||||||||||
Total interest earning assets | 3,068,837 | 44,754 | 5.79 | 3,044,475 | 41,890 | 5.46 | ||||||||||||||||||
Less: allowance for loan and lease losses | (26,816 | ) | (29,266 | ) | ||||||||||||||||||||
Non-interest earning assets | 448,074 | 434,963 | ||||||||||||||||||||||
Total assets | $ | 3,490,095 | $ | 3,450,172 | ||||||||||||||||||||
Interest bearing liabilities: | ||||||||||||||||||||||||
Interest bearing checking | $ | 18,975 | $ | 52 | 1.09 | % | $ | 31,950 | $ | 87 | 1.08 | % | ||||||||||||
Savings | 881,280 | 4,151 | 1.87 | 943,958 | 4,026 | 1.69 | ||||||||||||||||||
Money market accounts | 85,479 | 155 | 0.72 | 120,702 | 314 | 1.03 | ||||||||||||||||||
Certificates of deposit | 1,952,833 | 11,601 | 2.36 | 1,810,040 | 9,738 | 2.13 | ||||||||||||||||||
Total interest bearing deposits | 2,938,567 | 15,959 | 2.15 | 2,906,650 | 14,165 | 1.93 | ||||||||||||||||||
Other borrowings | 1,521 | — | 0.00 | 3,365 | 1 | 0.12 | ||||||||||||||||||
Total interest bearing liabilities | 2,940,088 | 15,959 | 2.15 | 2,910,015 | 14,166 | 1.93 | ||||||||||||||||||
Non-interest bearing deposits | 45,696 | 46,272 | ||||||||||||||||||||||
Non-interest bearing liabilities | 18,474 | 21,804 | ||||||||||||||||||||||
Shareholders' equity | 485,837 | 472,081 | ||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 3,490,095 | $ | 3,450,172 | ||||||||||||||||||||
Net interest income and interest rate spread | $ | 28,795 | 3.64 | % | $ | 27,724 | 3.53 | % | ||||||||||||||||
Net interest margin | 3.72 | 3.61 | ||||||||||||||||||||||
Ratio of average interest-earning assets to average interest-bearing liabilities | 104.38 | % | 104.62 | % | ||||||||||||||||||||
(1) Average loan and lease balances include non-accruing loans. |
GAAP to Non-GAAP Reconciliation
(Dollars in thousands)
As of and for the three months ended | ||||||||||||||||||||
4Q 2018 | 3Q 2018 | 2Q 2018 | 1Q 2018 | 4Q 2017 | ||||||||||||||||
Total shareholders’ equity | $ | 493,560 | $ | 477,230 | $ | 462,986 | $ | 448,836 | $ | 436,933 | ||||||||||
Less: | ||||||||||||||||||||
Goodwill | — | — | — | — | — | |||||||||||||||
Other intangible assets | — | — | 3,980 | 4,122 | 4,264 | |||||||||||||||
Tangible shareholders’ equity (a) | $ | 493,560 | $ | 477,230 | $ | 459,006 | $ | 444,714 | $ | 432,669 | ||||||||||
Shares outstanding (c) | 40,155,792 | 40,140,417 | 40,086,409 | 39,974,148 | 39,895,583 | |||||||||||||||
Total assets | $ | 3,670,449 | $ | 3,444,757 | $ | 3,472,969 | $ | 3,460,863 | $ | 2,758,474 | ||||||||||
Less: | ||||||||||||||||||||
Goodwill | — | — | — | — | — | |||||||||||||||
Other intangible assets | — | — | 3,980 | 4,122 | 4,264 | |||||||||||||||
Tangible assets (b) | $ | 3,670,449 | $ | 3,444,757 | $ | 3,468,989 | $ | 3,456,741 | $ | 2,754,210 | ||||||||||
Tangible shareholders’ equity to tangible assets (a/b) | 13.45 | % | 13.85 | % | 13.23 | % | 12.87 | % | 15.71 | % | ||||||||||
Tangible book value per share (a/c) | $ | 12.29 | $ | 11.89 | $ | 11.45 | $ | 11.13 | $ | 10.85 | ||||||||||
Efficiency ratio: | ||||||||||||||||||||
Noninterest expense (d) | $ | 32,558 | $ | 41,244 | $ | 40,830 | $ | 38,072 | $ | 41,024 | ||||||||||
Net interest income | 28,795 | 27,724 | 27,048 | 24,476 | 22,976 | |||||||||||||||
Noninterest income | 18,065 | 24,331 | 30,613 | 30,756 | 95,441 | |||||||||||||||
Less: gain on sale of securities | — | — | — | — | — | |||||||||||||||
Adjusted operating revenue (e) | $ | 46,860 | $ | 52,055 | $ | 57,661 | $ | 55,232 | $ | 118,417 | ||||||||||
Efficiency ratio (d/e) | 69.48 | % | 79.23 | % | 70.81 | % | 68.93 | % | 34.64 | % | ||||||||||
GAAP to Non-GAAP Reconciliation (Continued)
(Dollars in thousands)
Three months ended | Twelve months ended | |||||||||||||||||||
4Q 2018 | 3Q 2018 | 4Q 2017 | 4Q 2018 | 4Q 2017 | ||||||||||||||||
Reconciliation of net income to non-GAAP net income for non-routine income and expenses: |
||||||||||||||||||||
Net income | $ | 10,490 | $ | 14,252 | $ | 71,730 | $ | 51,448 | $ | 100,499 | ||||||||||
Gain on contribution to equity method investment | — | — | (68,000 | ) | — | (68,000 | ) | |||||||||||||
Stock based compensation expense for restricted stock awards with an effective grant date of May 24, 2016, as discussed in Note 10 of our March 31, 2016 Form 10-Q |
360 | 360 | 360 | 1,429 | 1,370 | |||||||||||||||
Merger costs associated with Reltco acquisition and Apiture investment |
— | — | 1,718 | — | 2,874 | |||||||||||||||
Trade-in loss on aircraft | — | — | — | — | 206 | |||||||||||||||
Impairment expense on goodwill and other intangibles, net | — | 2,680 | 3,648 | 2,680 | 3,648 | |||||||||||||||
Contract modification of Reltco | — | — | 1,600 | — | 1,600 | |||||||||||||||
Renewable energy tax credit investment income, impairment and loss |
— | — | 710 | — | 690 | |||||||||||||||
Income tax effects and adjustments for non-GAAP items * | (86 | ) | (730 | ) | 23,986 | (986 | ) | 23,045 | ||||||||||||
Deferred tax liability revaluation | — | — | (18,921 | ) | — | (18,921 | ) | |||||||||||||
Other renewable energy tax expense | — | — | 44 | — | 176 | |||||||||||||||
Non-GAAP net income | $ | 10,764 | $ | 16,562 | $ | 16,875 | $ | 54,571 | $ | 47,187 | ||||||||||
* Estimated at 24.0% for 2018 and 40.0% for 2017 | ||||||||||||||||||||
Non-GAAP earnings per share: | ||||||||||||||||||||
Basic | $ | 0.27 | $ | 0.41 | $ | 0.42 | $ | 1.36 | $ | 1.29 | ||||||||||
Diluted | $ | 0.26 | $ | 0.40 | $ | 0.41 | $ | 1.32 | $ | 1.25 | ||||||||||
Weighted-average shares outstanding: | ||||||||||||||||||||
Basic | 40,148,115 | 40,119,561 | 39,879,345 | 40,056,230 | 36,592,893 | |||||||||||||||
Diluted | 41,075,864 | 41,688,430 | 41,184,793 | 41,446,750 | 37,859,535 | |||||||||||||||
Reconciliation of financial statement line items as reported to adjusted for non-routine income and expenses: |
||||||||||||||||||||
Noninterest income, as reported | $ | 18,065 | $ | 24,331 | $ | 95,441 | $ | 103,765 | $ | 172,921 | ||||||||||
Gain on contribution to equity method investment | — | — | (68,000 | ) | — | (68,000 | ) | |||||||||||||
Renewable energy tax credit investment income | — | — | 20 | — | — | |||||||||||||||
Noninterest income, as adjusted | $ | 18,065 | $ | 24,331 | $ | 27,461 | $ | 103,765 | $ | 104,921 | ||||||||||
Noninterest expense, as reported | $ | 32,558 | $ | 41,244 | $ | 41,024 | $ | 152,704 | $ | 143,165 | ||||||||||
Stock based compensation expense | (360 | ) | (360 | ) | (360 | ) | (1,429 | ) | (1,370 | ) | ||||||||||
Merger costs associated with Reltco acquisition and Apiture investment |
— | — | (1,718 | ) | — | (2,874 | ) | |||||||||||||
Trade-in loss on aircraft | — | — | — | — | (206 | ) | ||||||||||||||
Impairment expense on goodwill and other intangibles, net | — | (2,680 | ) | (3,648 | ) | (2,680 | ) | (3,648 | ) | |||||||||||
Contract modification of Reltco | — | — | (1,600 | ) | — | (1,600 | ) | |||||||||||||
Renewable energy tax credit investment impairment and loss |
— | — | (690 | ) | — | (690 | ) | |||||||||||||
Noninterest expense, as adjusted | $ | 32,198 | $ | 38,204 | $ | 33,008 | $ | 148,595 | $ | 132,777 | ||||||||||
Income before taxes, as reported | $ | 7,480 | $ | 11,054 | $ | 73,338 | $ | 46,046 | $ | 98,254 | ||||||||||
Gain on contribution to equity method investment | — | — | (68,000 | ) | — | (68,000 | ) | |||||||||||||
Renewable energy tax credit investment income | — | — | 20 | — | — | |||||||||||||||
Stock based compensation expense | 360 | 360 | 360 | 1,429 | 1,370 | |||||||||||||||
Merger costs associated with Reltco acquisition and Apiture investment |
— | — | 1,718 | — | 2,874 | |||||||||||||||
Trade-in loss on aircraft | — | — | — | — | 206 | |||||||||||||||
Impairment expense on goodwill and other intangibles, net | — | 2,680 | 3,648 | 2,680 | 3,648 | |||||||||||||||
Contract modification of Reltco | — | — | 1,600 | — | 1,600 | |||||||||||||||
Renewable energy tax credit investment impairment and loss | — | — | 690 | — | 690 | |||||||||||||||
Income before taxes, as adjusted | $ | 7,840 | $ | 14,094 | $ | 13,374 | $ | 50,155 | $ | 40,642 | ||||||||||
Income tax expense (benefit), as reported | $ | (3,010 | ) | $ | (3,198 | ) | $ | 1,608 | $ | (5,402 | ) | $ | (2,245 | ) | ||||||
Income tax effects and adjustments for non-recurring income and expenses | 86 | 730 | (23,986 | ) | 986 | (23,045 | ) | |||||||||||||
Deferred tax liability revaluation | — | — | 18,921 | — | 18,921 | |||||||||||||||
Other renewable energy tax expense | — | — | (44 | ) | — | (176 | ) | |||||||||||||
Income tax expense (benefit), as adjusted | $ | (2,924 | ) | $ | (2,468 | ) | $ | (3,501 | ) | $ | (4,416 | ) | $ | (6,545 | ) | |||||
This press release presents the non-GAAP financial measures previously shown. The adjustments to reconcile from the applicable GAAP financial measure to the non-GAAP financial measures 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.
Source: Live Oak Bancshares, Inc.