Executive Summary

Q3 2025 delivered solid growth and operating leverage: total revenue rose to $146.10M, diluted EPS was $0.55, NIM expanded 5 bps to 3.33%, and pre-provision net revenue increased 8% q/q and 12% y/y .
Loan production of $1.65B and deposit growth of $695.9M drove total assets to $14.67B (+6% q/q, +16% y/y); noninterest-bearing deposits rose to $494.0M (+26% q/q) and business checking balances reached $363M (≈4% of deposits) .
Provision for credit losses declined for the fourth consecutive quarter to $22.2M as credit normalized; NCOs fell to $16.8M and ACL/loans stood at 1.65% .
Consensus context: S&P Global consensus EPS was $0.60* vs actual Primary EPS of $0.5866* (company diluted EPS $0.55); S&P consensus “Revenue” $147.94M* vs S&P actual $123.52M* (company-reported total revenue $146.10M) — definitional differences for banks likely drove the gap. Values retrieved from S&P Global.
Catalysts: preferred offering (~$96.3M net proceeds) boosts Tier 1 capital; Apiture sale closed post-quarter with ~$24M pre-tax gain, removing ~$6M annual pass-through losses — both accretive to capital and earnings trajectory .

What Went Well and What Went Wrong

What Went Well

Strong production and deposits: $1.65B originations; deposits +$695.9M; assets +6% q/q to $14.67B .
Operating leverage: NII +5.7% q/q (+19.1% y/y); NIM +5 bps to 3.33%; PPNR +8% q/q (+12% y/y) .
Strategic capital actions: ~$96.3M preferred proceeds and ~$24M gain from Apiture sale (closed subsequent to quarter), positioning for continued growth and resilience .
Management quote: “We delivered strong loan production… significant deposit growth… strengthened our capital position… These strategic moves position Live Oak for continued growth and resilience” — James S. (Chip) Mahan III .

What Went Wrong

Noninterest income down 11% q/q with weaker equity securities gains and lease income; loan servicing asset revaluation remained negative .
NPAs rose: nonperforming historical cost loans increased to $456.3M; unguaranteed NPL ratio at historical cost rose to 0.68% .
Salaries and benefits increased 7.5% q/q amid growth investments; tech expense +1.7% q/q; though total noninterest expense fell 2.2% q/q .

Financial Results

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Total Revenue ($USD Thousands)	$129,932	$126,113	$143,747	$146,099
Net Interest Income ($USD Thousands)	$97,000	$100,532	$109,221	$115,485
Diluted EPS ($)	$0.28	$0.21	$0.51	$0.55
Net Interest Margin (%)	3.33	3.20	3.28	3.33
Efficiency Ratio (%)	59.72	66.62	62.12	59.74
Provision for Credit Losses ($USD Thousands)	$34,502	$28,964	$23,252	$22,242
Pre-Provision Net Revenue ($USD Thousands)	$52,343	$42,096	$54,454	$58,814

Segment breakdown: The company highlights strong production across verticals with commercial banking leading Q3 originations and double-digit y/y portfolio growth in both small business and commercial segments, but does not provide formal segment revenue tables .

KPIs

KPI	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Loans & Leases Originated ($USD Thousands)	$1,757,856	$1,396,223	$1,526,592	$1,648,711
Total Loans & Leases ($USD Thousands)	$10,191,868	$11,061,866	$11,364,846	$11,915,511
Total Deposits ($USD Thousands)	$11,400,547	$12,395,945	$12,594,790	$13,290,723
Noninterest-Bearing Deposits ($USD Thousands)	$258,844	$386,108	$393,393	$494,019
Business Checking Balances ($USD Thousands)	—	—	—	$363,000
Outstanding Balance of Sold Loans Serviced ($USD Thousands)	$4,452,750	$4,949,962	$5,321,284	$5,563,363
ACL / Loans (%)	1.78%	1.83%	1.70%	1.65%
Net Charge-Offs ($USD Thousands)	$1,710	$6,774	$31,445	$16,816
NCOs to Avg Loans (Annualized, %)	0.08%	0.27%	1.19%	0.61%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Interest Margin Trajectory	Near-term (rate cut cycle)	Not formally guided	Asset-sensitive; NIM tends to compress with cuts but historically recovers quickly due to short-term funding; focus on NII growth despite margin variation	Commentary update
Deposit Strategy	2025–2026	Not formally guided	Expand low-cost deposits via business checking; checking balances +26% q/q to $363M (~4% of deposits)	Raised strategic priority
Provision Outlook	Near-term	Not formally guided	Comfortable reserves; provision influenced by growth (“good provision”) and portfolio performance; fourth consecutive q/q decline	Commentary update
Capital Actions	Q3/Q4 2025	N/A	~$96.3M preferred proceeds; ~$24M pre-tax gain from Apiture sale; removes ~$6M annual pass-through losses	New accretive actions
Fed Path (Scenario)	2025–2026	N/A	Internal outlook: 25 bps cuts in Oct/Dec 2025, then Mar/Jun/Sep 2026 (scenario-based, not formal guidance)	Scenario shared

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3 2025)	Trend
Operating leverage & NIM	Q1: NIM up 5 bps to 3.20%; revenue −1.5% q/q; PPNR −10% q/q . Q2: NIM 3.28%; PPNR +29% q/q .	NIM 3.33%; PPNR +8% q/q; NII +6% q/q .	Improving, third consecutive quarter of NIM expansion.
Credit cycle normalization	Q1: Elevated provision ($29.0M) amid macro strain . Q2: Provision down to $23.3M (moderating) .	Provision $22.2M; NCOs down; past dues at 14 bps; NPAs manageable; reserve adequate .	Moderating; proactive charge-offs continue.
Deposit growth & checking	Q1: Strong deposit growth; focus on noninterest bearing . Q2: Competitive savings growth .	Business checking balances +26% q/q to $363M; low-cost deposits now ~4% of deposits (2x y/y) .	Strategic expansion of low-cost funding.
SBA leadership & production	Q1/Q2: Record production; strong pipelines .	#1 SBA 7(a) lender FY2025 ($2.8B approvals; 2,280 loans); Q3 originations $1.65B .	Leadership entrenched; robust origination.
AI and automation	Emergent theme	Piloting AI-enabled origination; broader agentic AI adoption to boost productivity and reduce cost growth .	Scaling initiatives; potential operating leverage.
Macro: Fed cuts & funding	Emergent	Asset-sensitive balance sheet; deposit repricing beta ~44% since easing; scenario planning for multiple cuts .	Managed margin volatility; NII growth focus.
Government shutdown preparedness	N/A	PLP reserves (~$900M) to sustain SBA originations; minimal expected impact unless prolonged .	Operational resilience.
Embedded finance & stablecoins	N/A	Pivoted to partner platform; 1 live, several in pipeline; studying stablecoin opportunities (new board member insight) .	Strategic optionality; early innings.

Management Commentary

“We’re proud to be recognized as the number one SBA 7(a) lender… loan production up 22%, loan outstandings up 17%, customer deposit growth up 20%, and PPNR up 24%” — BJ Losch (President) .
“Q3 EPS of $0.55 increased 8% q/q and almost doubled y/y… driven by 6% q/q NII growth, 5 bps margin expansion, and lower provision” — Walt Phifer (CFO) .
“Our business checking balances increased 26% q/q to $363M… low-cost deposits now ~4% of deposits, doubling y/y” — CFO .
“We have an asset-sensitive balance sheet… our blended savings downward beta is ~44% since the Fed began easing” — CFO .
“Piloting an AI-enabled loan origination solution… building agentic AI solutions across the company to drive efficiency” — BJ Losch .

Q&A Highlights

Credit posture: NPAs ticked up but remain manageable; past dues at 14 bps; proactive charge-off philosophy continues; reserves viewed as adequate — Chief Credit Officer commentary .
Government shutdown: PLP pool (~$900M) mitigates near-term SBA impact; secondary market sales timing may slip if shutdown extends past Thanksgiving, otherwise minimal disruption .
Margin trajectory: Asset-sensitive NIM can compress with cuts but historically recovers quickly due to short-term funding base; emphasis on sustaining NII growth regardless of margin variation .
AI/underwriting: Pilots for AI ingestion of financials and market analysis to accelerate credit memo creation; aim to boost productivity and customer experience without sacrificing credit standards .
Strategy: Embedded finance pivot to partner platform; studying stablecoins with board expertise; ventures portfolio harvest (Apiture) complete; Greenlight remains largest venture holding .

Estimates Context

S&P Global consensus EPS: $0.60* vs actual Primary EPS: $0.5866*; company-reported diluted EPS: $0.55 (Primary EPS definition differs from company diluted EPS). Values retrieved from S&P Global.
S&P Global consensus “Revenue”: $147.94M* vs S&P actual: $123.52M*; company total revenue: $146.10M — “Revenue” definitions for banks can diverge (e.g., net interest income-based vs company’s NII + noninterest income), causing apparent misses. Values retrieved from S&P Global.
Implication: Street may adjust models for margin path, loan growth durability, and reserve normalization; definitional reconciliation needed when comparing bank “revenue” in S&P datasets to company-reported totals.

Metric	Q3 2025 Consensus (S&P)	Q3 2025 Actual (S&P)	Company-Reported Actual
Primary EPS ($)	0.60*	0.5866*	0.55 (Diluted)
Revenue ($USD)	147,935,670*	123,521,000*	146,099,000

Values retrieved from S&P Global.

Key Takeaways for Investors

Growth engine intact: strong origination and deposit momentum are supporting NII growth and operating leverage even as rate cuts create near-term NIM variability .
Funding mix improving: business checking and low-cost deposits are scaling, accretive to margin efficiency and relationship depth; this is a multi-quarter earnings lever .
Credit normalization: provision down for the fourth straight quarter, NCOs lower, and reserves viewed as adequate; watch NPAs and servicing outcomes, but trajectory is favorable .
Capital strength: preferred issuance and Apiture gain add capital and remove ~$6M annual losses, supporting growth and potential cushion for volatility .
AI execution: near-term productivity and underwriting enhancements could allow revenue growth with slower expense growth, improving efficiency ratios over time .
Street modeling: clarify “revenue” definitions; the company’s total revenue ($146.10M) differs from S&P’s “Revenue” actual ($123.52M). EPS variance (Primary vs diluted) also needs alignment; expect estimate revisions to reflect growth and credit moderation. Values retrieved from S&P Global.
Event risk: prolonged government shutdown could delay secondary market loan sales timing; management has playbooks and PLP buffers but monitor into Q4 .

Live Oak Bancshares, Inc. (LOB)·Q3 2025 Earnings Summary