Billy Young

Billy Young asked for updated thoughts on the funding mix over the next one to two years, given the strong momentum in business checking. He also requested housekeeping details on the Net Interest Income (NII) benefit from holding held-for-sale loans and whether more production was portfolioed in Q4.

Answer

William C. Losch III, President, stated the aspirational goal is to reach 15% non-interest-bearing deposits over time, up from 4% currently, with a trajectory similar to recent growth. He estimated the annual NII benefit from holding $60 million in held-for-sale loans to be in the $1.8-$2.5 million range. He clarified that the additional $60 million would likely be monetized in Q1 rather than portfolioed, providing flexibility for future originations.

Billy Young asked for updated thoughts on Live Oak's funding mix, specifically the trajectory of non-interest-bearing deposits, given the strong momentum in business checking. He also requested details on the Net Interest Income (NII) benefit derived from the decision to hold more gain-on-sale loans in Q4 2025 and whether these loans would be portfolioed.

Answer

B.J. Losch (President, Live Oak Bancshares) stated an aspirational goal of reaching 15% non-interest-bearing deposits over time, up from the current 4%, with a growth trajectory similar to the past year. Walt Phifer (CFO, Live Oak Bancshares) estimated the annual NII benefit from holding approximately $60 million in held-for-sale loans to be in the $1.8 million-$2.5 million range. He clarified that these loans would likely be monetized in Q1 2026 rather than portfolioed, providing flexibility for future originations.