Live Oak Bancshares, Inc. Reports Third Quarter 2020 Results
WILMINGTON, N.C., Oct. 21, 2020 (GLOBE NEWSWIRE) -- Live Oak Bancshares, Inc. (Nasdaq: LOB) (Live Oak or the Company) today reported third quarter 2020 net income of $33.8 million, or $0.81 per diluted share, compared to net income of $3.9 million, or $0.09 per diluted share, for the third quarter of 2019. The third quarter of 2020 included non-cash gains of $15.2 million related to the Companys financial technology investments.
We understand what a challenging year this has been for everyone, and we are pleased to report that our performance during the third quarter of 2020 successfully displayed our ability to help American small business owners in a time of real need, said James S. Mahan, III, Chairman and Chief Executive Officer of Live Oak. We greatly exceeded our previous quarterly maximum for loan and lease origination at nearly $1 billion, excluding the work we accomplished for the Paycheck Protection Program. Our core business has shown scale and efficiency thanks to previous investments in infrastructure and talent, and our position as a financial technology change leader was further validated with the increased valuations on several of our investments. We believe our way of business is proving itself to be a bold and successful way of providing next-generation banking experiences to American small business owners.
Third Quarter 2020 Key Measures
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
| Increase (Decrease) |
|
|
|
|
| |||||
|
| 3Q 2020 |
|
| 3Q 2019 |
|
| Dollars |
|
| Percent |
|
| 2Q 2020 |
| |||||
Net interest income and servicing revenues |
| $ | 58,166 |
|
| $ | 44,362 |
|
| $ | 13,804 |
|
|
| 31 | % |
| $ | 47,589 |
|
Net income |
|
| 33,780 |
|
|
| 3,895 |
|
|
| 29,885 |
|
|
| 767 |
|
|
| 3,777 |
|
Diluted earnings per share |
|
| 0.81 |
|
|
| 0.09 |
|
|
| 0.72 |
|
|
| 800 |
|
|
| 0.09 |
|
Non-GAAP net income (1) |
|
| 34,554 |
|
|
| 3,895 |
|
|
| 30,659 |
|
|
| 787 |
|
|
| 3,777 |
|
Non-GAAP diluted earnings per share (1) |
|
| 0.83 |
|
|
| 0.09 |
|
|
| 0.74 |
|
|
| 822 |
|
|
| 0.09 |
|
Loan and lease production: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and leases originated |
| $ | 966,499 |
|
| $ | 562,259 |
|
| $ | 404,240 |
|
|
| 72 | % |
| $ | 2,175,055 |
|
% Fully funded |
|
| 72.9 | % |
|
| 51.3 | % |
| n/a |
|
| n/a |
|
|
| 89.8 | % | ||
Total loans and leases |
| $ | 6,227,399 |
|
| $ | 3,326,065 |
|
| $ | 2,901,334 |
|
|
| 87 | % |
| $ | 5,626,650 |
|
Total assets |
|
| 8,093,381 |
|
|
| 4,601,529 |
|
|
| 3,491,852 |
|
|
| 76 |
|
|
| 8,209,154 |
|
Total deposits |
|
| 5,706,044 |
|
|
| 4,017,099 |
|
|
| 1,688,945 |
|
|
| 42 |
|
|
| 5,873,292 |
|
(1) See accompanying GAAP to Non-GAAP Reconciliation.
Loans and Leases
At September 30, 2020, the total loan and lease portfolio increased to $6.23 billion, 87.2% above its level a year ago and 10.7% above its level at June 30, 2020. Compared to the second quarter of 2020, loans and leases held for investment increased $387.3 million, or 8.3%, to $5.04 billion while loans held for sale increased $213.4 million, or 21.9%, to $1.19 billion. Loan and lease originations totaled $966.5 million during the third quarter of 2020, a decrease of $1.21 billion, or 55.6%, from the second quarter of 2020. The total loan and lease portfolio at September 30, 2020, and June 30, 2020, of $6.23 billion and $5.63 billion, respectively, consisted of approximately 37.9% and 38.7% of unguaranteed loans and leases, respectively.
Excluding loan originations as part of the Paycheck Protection Program (PPP), loan and lease originations totaled $948.8 million during the third quarter of 2020, an increase of $518.7 million, or 120.6%, from the second quarter of 2020. Average loans and leases were $5.87 billion during the third quarter of 2020 compared to $5.13 billion during the second quarter of 2020.
Loans and leases held for investment, loan and lease originations, and average loans and leases were impacted by PPP loans originated in the second and third quarters of 2020. The unguaranteed percentage of the total loan and lease portfolio for each of the second and third quarters of 2020 was significantly influenced by the addition of PPP loans carrying a 100% government guarantee. The total loan and lease portfolio at September 30, 2020, was comprised of $1.71 billion of PPP loans, net of deferred fees and costs. PPP loans comprised $17.7 million of the total loans and leases originated during the third quarter of 2020, compared to $1.74 billion of PPP loans originated in the second quarter of 2020, and are carried at historical cost classified as held for investment.
Deposits
Total deposits decreased by $167.2 million to $5.71 billion at September 30, 2020, from $5.87 billion at June 30, 2020, as excess deposits began to runoff following the defensive strategy to build liquidity during the first quarter of 2020 due to the uncertainty of the effects of COVID-19. Average total interest-bearing deposits for the third quarter of 2020 increased $54.7 million, or 1.0%, to $5.69 billion, compared to $5.63 billion for the second quarter of 2020. The ratio of average total loans and leases to average interest-bearing deposits was 103.1% for the third quarter of 2020, compared to 91.1% for the second quarter of 2020. The ratio is influenced by average PPP loan volume and the use of the Federal Reserves Paycheck Protection Program Liquidity Facility (PPPLF) classified as long-term borrowings.
Borrowings
Borrowings totaled $1.75 billion at September 30, 2020. During the third quarter of 2020, the Company increased long-term borrowings by $26.1 million through the Federal Reserves PPPLF to $1.74 billion. The PPPLF has a 100% advance rate equal to the principal amount of PPP loans pledged as security and carries an interest rate of 0.35% and loans financed under the PPPLF have a neutral impact on regulatory leverage capital ratios.
Net Interest Income
Net interest income for the third quarter of 2020 rose to $51.4 million compared to $37.5 million for the third quarter of 2019 and $40.9 million for the second quarter of 2020. The increase from the prior year was driven by significant growth in the held for investment loan and lease portfolio reflecting the Company's ongoing initiative to grow recurring revenue sources and strengthen its liquidity profile. This increase over the prior year was further enhanced by the origination of $1.76 billion in PPP loans in the second and third quarters of 2020 and a year-to-date loan and lease originations for 2020 of $1.88 billion, excluding PPP loans.
The increase from the second quarter of 2020 arose principally from a higher average loan and lease portfolio balance enhanced by a 21-basis point improvement in the net interest margin from 2.56% to 2.77%. The decrease in interest earning asset yields of 14 basis points was outpaced by the 38-basis point reduction in the average cost of interest-bearing liabilities from 1.65% in the second quarter of 2020, to 1.27% in the third quarter of 2020. The reduction in the cost of interest bearing liabilities was a product of a lag in deposit repricing from the first quarter of 2020 cuts in fed funds rates combined with runoff of higher rate maturing deposits and the lower cost of PPPLF funds.
Noninterest Income
Noninterest income for the third quarter of 2020 increased to $47.0 million compared to $15.4 million for the third quarter of 2019 and $22.4 million for the second quarter of 2020.
Noninterest income increased $31.6 million, or 204.9%, compared to the third quarter of 2019. The net gains on sales of loans increased by $5.3 million as the average net gain on sale of guaranteed loans increased to $110.2 thousand per million sold for the third quarter of 2020 compared to $80.5 thousand per million sold during the third quarter of 2019. The volume of guaranteed loans sold increased to $114.7 million for the third quarter of 2020 from $100.5 million for the third quarter of 2019. The revaluation of the loan servicing asset resulted in a gain of $2.1 million for the third quarter of 2020, an increase of $7.2 million from the third quarter of 2019. The valuation adjustments related to loans measured at fair value resulted in a net gain of $3.4 million for the third quarter of 2020, a $2.3 million increase compared to the third quarter of 2019. The valuation of loans and loan servicing assets in the third quarter of 2020 was favorably impacted by greater stability and improvement of market conditions.
Net losses on equity method investments decreased to $1.2 million for the third quarter of 2020 compared to $2.4 million for the third quarter of 2019, partially due to a non-cash gain recognized in that portfolio. Equity security investments resulted in a gain of $14.7 million for the third quarter of 2020 compared to $3.3 million for the third quarter of 2019 and was primarily driven by a $13.7 million increase in the observable fair market value of the Companys investment in Greenlight Financial Technology, Inc. (Greenlight), arising from orderly transactions in Greenlights securities. Additionally, management fee income earned by Canapi Advisors, the Companys investment advisor subsidiary, increased by $1.2 million to $1.3 million for the third quarter of 2020 compared to $95 thousand for the third quarter of 2019.
Noninterest income increased $24.6 million, or 109.9%, compared to the second quarter of 2020. For the third quarter of 2020, fair value adjustments were impacted by the above-mentioned improved market conditions by recouping a portion of the losses recognized earlier in 2020 related to the COVID-19 pandemic. The valuation adjustment for loans measured at fair value for the third quarter of 2020 improved $4.5 million compared to the second quarter of 2020, while the loan servicing asset revaluation improved $3.6 million over the same period. The average net gain on guaranteed loan sales was $110.2 thousand per million sold in the third quarter of 2020 versus $66.8 thousand per million in the second quarter of 2020 also as a result of improving market conditions for the purchase of guaranteed loans and favorable fair value adjustments for exchange-traded interest rate futures contracts. The Company recorded $252 thousand in fair value net gains on exchange-traded interest rate futures contracts during the third quarter of 2020 compared to $127 thousand in fair value net gains during the second quarter of 2020. Excluding fair value gains on exchange-traded interest rate futures contracts, the average net gain on guaranteed loan sales was $108.0 thousand per million and $65.9 thousand per million sold in the third quarter of 2020 and the second quarter of 2020, respectively.
Equity security investments income increased by $14.5 million for the third quarter of 2020 compared to the prior quarter and was primarily driven by the aforementioned non-cash gain arising from the increase in the market value of the Companys investment in Greenlight. Other noninterest income decreased by $2.4 million compared to the prior quarter primarily due to $2.5 million in revenue from co-developed technology recognized during the second quarter of 2020.
Noninterest Expense
Noninterest expense for the third quarter of 2020 totaled $42.7 million compared to $42.7 million for the third quarter of 2019 and $48.1 million for the second quarter of 2020.
Salaries and employee benefits for the third quarter of 2020 increased $1.5 million, or 6.5%, to $24.2 million compared to $22.7 million for the third quarter of 2019 and decreased $6.5 million, or 21.4%, from $30.8 million for the second quarter of 2020. The salaries and employee benefits increase over the third quarter of 2019 was attributable to the Companys investment in its workforce to support growth and a variety of initiatives, offset by increased levels of deferred salary expense for the increased loan originations compared to the prior year. The decrease of $6.5 million for the third quarter of 2020 was driven primarily by $7.2 million in expense for a performance bonus pool that was available to all employees other than executive officers during the second quarter of 2020.
Operational adaptations due to the impact of the COVID-19 pandemic resulted in travel expense decreasing to $250 thousand for the third quarter of 2020 compared to $1.9 million for the third quarter of 2019 and $364 thousand for the second quarter of 2020. Similarly, advertising and marketing expense decreased to $552 thousand for the third quarter of 2020 compared to $1.3 million for the third quarter of 2019 and $624 thousand for the second quarter of 2020.
Compared to the third quarter of 2019, FDIC insurance increased $2.0 million for the third quarter of 2020.
Asset Quality
Net charge-offs for loans carried at historical cost increased to $10.1 million in the third quarter of 2020 compared to $1.8 million in the second quarter of 2020 and increased from $840 thousand in the third quarter of 2019. The increase in net charge-offs during the third quarter of 2020 was principally driven by the reclassification of fifteen hotel loans aggregating $81.2 million in net investment from held for investment to held for sale during the quarter. After charge-offs, discussed more fully below, ten of these loans were sold for the adjusted net investment of $45.7 million prior to quarter end. These loans were marked to the lower of cost or fair value upon reclassification with the write down of $9.8 million reflected in charge-offs. At September 30, 2020, the Company still held five of these loans for sale with an aggregate net investment balance of $25.7 million; however, these unsold loans have been written down to an agreed upon price. Net charge-offs as a percentage of average held for investment loans and leases carried at historical cost, annualized, for the quarters ended September 30, 2020 and 2019 and June 30, 2020, were 1.03%, 0.23% and 0.21%, respectively.
Unguaranteed nonperforming (nonaccrual) loans and leases, excluding $7.5 million and $6.4 million accounted for under the fair value option at September 30, 2020 and June 30, 2020, respectively, and excluding one loan for $6.1 million included in the above hotel loans still held for sale as of September 30, 2020, increased to $20.2 million, or 0.48% of loans and leases held for investment which are carried at historical cost, at September 30, 2020, compared to $13.1 million, or 0.34%, at June 30, 2020. The increase in unguaranteed nonperforming loans and leases was primarily driven by loans in the entertainment center vertical.
The unguaranteed exposure of foreclosed assets decreased $557 thousand to $642 thousand at September 30, 2020, compared to June 30, 2020. Foreclosed assets decreased $2.4 million to $3.3 million at September 30, 2020, from $5.7 million at June 30, 2020.
Provision for Loan and Lease Credit Losses
The provision for loan and lease credit losses for the third quarter of 2020 totaled $10.3 million compared to $4.0 million for the third quarter of 2019 and $10.0 million for the second quarter of 2020. The Company adopted the new current expected credit losses (CECL) standard effective January 1, 2020, and accordingly determined to use forecasted levels of unemployment as a primary economic variable in forecasting future expected losses. Ongoing developments including charge-offs and changing economic forecasts related to the COVID-19 pandemic significantly influences the Companys allowance for credit losses on loans and leases.
The allowance for credit losses on loans and leases totaled $44.2 million at September 30, 2020, compared to $44.1 million at June 30, 2020. The allowance for credit losses on loans and leases as a percentage of total loans and leases held for investment carried at historical cost was 1.05% and 1.16% at September 30, 2020, and June 30, 2020, respectively. The allowance for credit losses on loans and leases as a percentage of total loans and leases held for investment carried at historical cost during the third quarter is heavily influenced by the PPP loans.
Income Tax
Income tax expense was $11.7 million in the third quarter of 2020 compared to an income tax expense of $2.4 million in the third quarter of 2019 and $1.5 million in the second quarter of 2020. The increase in the third quarter of 2020 over the third quarter of 2019 and second quarter of 2020 is primarily due to a significant increase in income before taxes. Also influencing the increase over the third quarter of 2019 is the absence of expected tax credits during 2020.
Shareholders Equity
During the first nine months of 2020, 450,000 shares of Class B common stock (non-voting) were converted to Class A common stock (voting) in connection with private sales. The conversion decreased the value of Class B common stock (non-voting) and increased the value of Class A common stock (voting) by $4.8 million.
Conference Call
Live Oak will host a conference call to discuss quarterly results at 9:00 a.m. ET tomorrow morning (October 22, 2020). Media representatives, analysts and the public are invited to listen to this discussion by calling (844) 743-2494 (domestic) or (661) 378-9528 (international) with conference ID 4575196. A live webcast of the conference call along with presentation materials referenced during the conference call will be available on the Investor Relations page of the Companys website at http://investor.liveoakbank.com. A replay of the webcast will be archived on the Company's website for one year. A replay of the conference call will also be available until October 29, 2020 and can be accessed by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID 4575196.
CFO Commentary
Additional commentary on the quarter by Brett Caines, Chief Financial Officer of the Company, is available at http://investor.liveoakbank.com in the supporting materials for the conference call.
Important Note Regarding Forward-Looking Statements
Statements in this press release that are based on other than historical data or that express the Companys 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 Companys 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 managements 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 Small Business Administration (SBA) rules, regulations or loan products, including the Section 7(a) program, changes in SBA standard operating procedures or changes in Live Oak Banking Company's status as an SBA Preferred Lender; changes in rules, regulations or procedures for other government loan programs, including those of the United States Department of Agriculture; the potential impacts of the Coronavirus Disease 2019 (COVID-19) pandemic on trade (including supply chains and export levels), travel, employee productivity and other economic activities that may have a destabilizing and negative effect on financial markets, economic activity and customer behavior; a reduction in or the termination of the Company's ability to use the technology-based platform that is critical to the success of its business model, including a failure in or a breach of operational or security systems; competition from other lenders; the Company's ability to attract and retain key personnel; market and economic conditions and the associated impact on the Company; operational, liquidity and credit risks associated with the Company's business; the impact of heightened regulatory scrutiny of financial products and services and the Company's ability to comply with regulatory requirements and expectations; and the other factors discussed in the Companys Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) and available at the SECs Internet site (http://www.sec.gov). Except as required by law, the Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.
About Live Oak Bancshares
Live Oak Bancshares, Inc. (Nasdaq: LOB) is a financial holding company and the parent company of Live Oak Bank. Live Oak Bancshares and its subsidiaries partner with businesses that share a groundbreaking focus on service and technology to redefine banking. To learn more, visit www.liveoakbank.com.
Contacts:
Brett Caines | CFO | Investor Relations | 910.796.1645 & Claire Parker | SVP | Media Relations | 910.550.2255
Live Oak Bancshares, Inc.
Quarterly Statements of Income (unaudited)
(Dollars in thousands, except per share data)
|
| Three months ended |
| |||||||||||||||||
|
| 3Q 2020 |
|
| 2Q 2020 |
|
| 1Q 2020 |
|
| 4Q 2019 |
|
| 3Q 2019 |
| |||||
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and fees on loans |
| $ | 70,621 |
|
| $ | 62,022 |
|
| $ | 58,961 |
|
| $ | 57,017 |
|
| $ | 55,939 |
|
Investment securities, taxable |
|
| 4,123 |
|
|
| 3,786 |
|
|
| 3,762 |
|
|
| 3,911 |
|
|
| 4,001 |
|
Other interest earning assets |
|
| 334 |
|
|
| 1,009 |
|
|
| 750 |
|
|
| 885 |
|
|
| 1,167 |
|
Total interest income |
|
| 75,078 |
|
|
| 66,817 |
|
|
| 63,473 |
|
|
| 61,813 |
|
|
| 61,107 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
| 22,155 |
|
|
| 25,121 |
|
|
| 23,255 |
|
|
| 23,801 |
|
|
| 23,576 |
|
Borrowings |
|
| 1,560 |
|
|
| 798 |
|
|
| 57 |
|
|
| 1 |
|
|
|
| |
Total interest expense |
|
| 23,715 |
|
|
| 25,919 |
|
|
| 23,312 |
|
|
| 23,802 |
|
|
| 23,576 |
|
Net interest income |
|
| 51,363 |
|
|
| 40,898 |
|
|
| 40,161 |
|
|
| 38,011 |
|
|
| 37,531 |
|
Provision for loan and lease credit losses |
|
| 10,274 |
|
|
| 9,958 |
|
|
| 11,792 |
|
|
| 4,809 |
|
|
| 3,960 |
|
Net interest income after provision for loan and |
|
| 41,089 |
|
|
| 30,940 |
|
|
| 28,369 |
|
|
| 33,202 |
|
|
| 33,571 |
|
Noninterest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan servicing revenue |
|
| 6,803 |
|
|
| 6,691 |
|
|
| 6,422 |
|
|
| 6,730 |
|
|
| 6,831 |
|
Loan servicing asset revaluation |
|
| 2,061 |
|
|
| (1,571 | ) |
|
| (4,692 | ) |
|
| (4,135 | ) |
|
| (5,161 | ) |
Net gains on sales of loans |
|
| 12,690 |
|
|
| 10,695 |
|
|
| 11,112 |
|
|
| 11,364 |
|
|
| 7,425 |
|
Net gain (loss) on loans accounted for under the fair |
|
| 3,403 |
|
|
| (1,089 | ) |
|
| (10,638 | ) |
|
| 1,432 |
|
|
| 1,102 |
|
Equity method investments income (loss) |
|
| (1,231 | ) |
|
| (2,243 | ) |
|
| (2,478 | ) |
|
| (1,769 | ) |
|
| (2,370 | ) |
Equity security investments gains (losses), net |
|
| 14,705 |
|
|
| 161 |
|
|
| (64 | ) |
|
| 54 |
|
|
| 3,343 |
|
Gain (loss) on sale of investment securities |
|
| 1,225 |
|
|
| 734 |
|
|
| (79 | ) |
|
| 528 |
|
|
| 87 |
|
Lease income |
|
| 2,634 |
|
|
| 2,635 |
|
|
| 2,624 |
|
|
| 2,600 |
|
|
| 2,361 |
|
Management fee income |
|
| 1,296 |
|
|
| 1,206 |
|
|
| 1,644 |
|
|
| 1,556 |
|
|
| 95 |
|
Construction supervision fee income |
|
| 1,365 |
|
|
| 684 |
|
|
| 390 |
|
|
| 240 |
|
|
| 360 |
|
Other noninterest income |
|
| 2,093 |
|
|
| 4,508 |
|
|
| 1,501 |
|
|
| 1,525 |
|
|
| 1,355 |
|
Total noninterest income |
|
| 47,044 |
|
|
| 22,411 |
|
|
| 5,742 |
|
|
| 20,125 |
|
|
| 15,428 |
|
Noninterest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
| 24,203 |
|
|
| 30,782 |
|
|
| 28,063 |
|
|
| 24,072 |
|
|
| 22,717 |
|
Travel expense |
|
| 250 |
|
|
| 364 |
|
|
| 1,781 |
|
|
| 2,246 |
|
|
| 1,934 |
|
Professional services expense |
|
| 1,346 |
|
|
| 1,385 |
|
|
| 1,937 |
|
|
| 983 |
|
|
| 2,073 |
|
Advertising and marketing expense |
|
| 552 |
|
|
| 624 |
|
|
| 1,361 |
|
|
| 1,630 |
|
|
| 1,277 |
|
Occupancy expense |
|
| 2,079 |
|
|
| 1,955 |
|
|
| 2,421 |
|
|
| 2,528 |
|
|
| 2,131 |
|
Data processing expense |
|
| 3,009 |
|
|
| 2,764 |
|
|
| 3,157 |
|
|
| 1,847 |
|
|
| 3,072 |
|
Equipment expense |
|
| 4,314 |
|
|
| 4,652 |
|
|
| 4,635 |
|
|
| 4,402 |
|
|
| 4,361 |
|
Other loan origination and maintenance expense |
|
| 2,669 |
|
|
| 2,492 |
|
|
| 2,456 |
|
|
| 2,390 |
|
|
| 3,535 |
|
FDIC insurance |
|
| 2,095 |
|
|
| 1,721 |
|
|
| 1,510 |
|
|
| 2,012 |
|
|
| 101 |
|
Other expense |
|
| 2,133 |
|
|
| 1,361 |
|
|
| 2,170 |
|
|
| 2,300 |
|
|
| 1,536 |
|
Total noninterest expense |
|
| 42,650 |
|
|
| 48,100 |
|
|
| 49,491 |
|
|
| 44,410 |
|
|
| 42,737 |
|
Income (loss) before taxes |
|
| 45,483 |
|
|
| 5,251 |
|
|
| (15,380 | ) |
|
| 8,917 |
|
|
| 6,262 |
|
Income tax expense (benefit) |
|
| 11,703 |
|
|
| 1,474 |
|
|
| (7,778 | ) |
|
| 2,085 |
|
|
| 2,367 |
|
Net income (loss) |
| $ | 33,780 |
|
| $ | 3,777 |
|
| $ | (7,602 | ) |
| $ | 6,832 |
|
| $ | 3,895 |
|
Earnings (loss) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | 0.83 |
|
| $ | 0.09 |
|
| $ | (0.19 | ) |
| $ | 0.17 |
|
| $ | 0.10 |
|
Diluted |
| $ | 0.81 |
|
| $ | 0.09 |
|
| $ | (0.19 | ) |
| $ | 0.17 |
|
| $ | 0.09 |
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
| 40,542,696 |
|
|
| 40,506,671 |
|
|
| 40,334,179 |
|
|
| 40,291,867 |
|
|
| 40,240,740 |
|
Diluted |
|
| 41,549,632 |
|
|
| 41,122,025 |
|
|
| 41,074,049 |
|
|
| 41,178,472 |
|
|
| 41,113,575 |
|
Live Oak Bancshares, Inc.
Quarterly Balance Sheets (unaudited)
(Dollars in thousands)
|
| As of the quarter ended |
| |||||||||||||||||
|
| 3Q 2020 |
|
| 2Q 2020 |
|
| 1Q 2020 |
|
| 4Q 2019 |
|
| 3Q 2019 |
| |||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
| $ | 608,826 |
|
| $ | 1,256,958 |
|
| $ | 254,077 |
|
| $ | 124,610 |
|
| $ | 157,359 |
|
Federal funds sold |
|
| 25,924 |
|
|
| 91,188 |
|
|
| 158,226 |
|
|
| 96,787 |
|
|
| 88,919 |
|
Certificates of deposit with other banks |
|
| 7,250 |
|
|
| 7,250 |
|
|
| 7,250 |
|
|
| 7,250 |
|
|
| 7,250 |
|
Investment securities available-for-sale |
|
| 765,777 |
|
|
| 779,794 |
|
|
| 574,168 |
|
|
| 540,045 |
|
|
| 570,795 |
|
Loans held for sale (1) |
|
| 1,190,200 |
|
|
| 976,594 |
|
|
| 996,050 |
|
|
| 966,447 |
|
|
| 903,095 |
|
Loans and leases held for investment (2) |
|
| 5,037,199 |
|
|
| 4,650,056 |
|
|
| 2,817,491 |
|
|
| 2,627,286 |
|
|
| 2,422,970 |
|
Allowance for credit losses on loans and leases |
|
| (44,210 | ) |
|
| (44,083 | ) |
|
| (35,906 | ) |
|
| (28,234 | ) |
|
| (23,961 | ) |
Net loans and leases |
|
| 4,992,989 |
|
|
| 4,605,973 |
|
|
| 2,781,585 |
|
|
| 2,599,052 |
|
|
| 2,399,009 |
|
Premises and equipment, net |
|
| 253,737 |
|
|
| 269,063 |
|
|
| 274,177 |
|
|
| 279,099 |
|
|
| 280,942 |
|
Foreclosed assets |
|
| 3,264 |
|
|
| 5,660 |
|
|
| 6,744 |
|
|
| 5,612 |
|
|
| 5,702 |
|
Servicing assets |
|
| 37,831 |
|
|
| 33,834 |
|
|
| 33,532 |
|
|
| 35,365 |
|
|
| 37,583 |
|
Operating lease right-of-use assets |
|
| 2,697 |
|
|
| 2,886 |
|
|
| 2,236 |
|
|
| 2,427 |
|
|
| 1,890 |
|
Other assets |
|
| 204,886 |
|
|
| 179,954 |
|
|
| 185,524 |
|
|
| 156,134 |
|
|
| 148,985 |
|
Total assets |
| $ | 8,093,381 |
|
| $ | 8,209,154 |
|
| $ | 5,273,569 |
|
| $ | 4,812,828 |
|
| $ | 4,601,529 |
|
Liabilities and Shareholders Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing |
| $ | 58,771 |
|
| $ | 53,938 |
|
| $ | 51,275 |
|
| $ | 51,965 |
|
| $ | 54,205 |
|
Interest-bearing |
|
| 5,647,273 |
|
|
| 5,819,354 |
|
|
| 4,588,126 |
|
|
| 4,175,015 |
|
|
| 3,962,894 |
|
Total deposits |
|
| 5,706,044 |
|
|
| 5,873,292 |
|
|
| 4,639,401 |
|
|
| 4,226,980 |
|
|
| 4,017,099 |
|
Borrowings |
|
| 1,747,083 |
|
|
| 1,721,029 |
|
|
| 50,012 |
|
|
| 14 |
|
|
| 1,310 |
|
Operating lease liabilities |
|
| 2,931 |
|
|
| 3,079 |
|
|
| 2,416 |
|
|
| 2,619 |
|
|
| 2,041 |
|
Other liabilities |
|
| 53,159 |
|
|
| 63,319 |
|
|
| 47,968 |
|
|
| 50,829 |
|
|
| 52,860 |
|
Total liabilities |
|
| 7,509,217 |
|
|
| 7,660,719 |
|
|
| 4,739,797 |
|
|
| 4,280,442 |
|
|
| 4,073,310 |
|
Shareholders equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, no par value, 1,000,000 shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Class A common stock (voting) |
|
| 325,753 |
|
|
| 319,542 |
|
|
| 314,994 |
|
|
| 309,526 |
|
|
| 296,925 |
|
Class B common stock (non-voting) |
|
| 26,106 |
|
|
| 28,753 |
|
|
| 28,753 |
|
|
| 30,871 |
|
|
| 40,401 |
|
Retained earnings |
|
| 207,400 |
|
|
| 174,837 |
|
|
| 172,276 |
|
|
| 180,265 |
|
|
| 174,641 |
|
Accumulated other comprehensive income |
|
| 24,905 |
|
|
| 25,303 |
|
|
| 17,749 |
|
|
| 11,724 |
|
|
| 16,252 |
|
Total shareholders' equity |
|
| 584,164 |
|
|
| 548,435 |
|
|
| 533,772 |
|
|
| 532,386 |
|
|
| 528,219 |
|
Total liabilities and shareholders equity |
| $ | 8,093,381 |
|
| $ | 8,209,154 |
|
| $ | 5,273,569 |
|
| $ | 4,812,828 |
|
| $ | 4,601,529 |
|
(1) | Includes $30.4 million, $32.1 million, $19.2 million, $16.2 million and $14.7 million measured at fair value for the quarters ended September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019 and September 30, 2019, respectively. |
(2) | Includes $845.7 million, $834.6 million, $831.4 million, $824.5 million and $831.3 million measured at fair value for the quarters ended September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019 and September 30, 2019, respectively. |
Live Oak Bancshares, Inc.
Statements of Income (unaudited)
(Dollars in thousands, except per share data)
|
| Nine months ended |
| |||||
|
| September 30, 2020 |
|
| September 30, 2019 |
| ||
Interest income |
|
|
|
|
|
|
|
|
Loans and fees on loans |
| $ | 191,604 |
|
| $ | 150,819 |
|
Investment securities, taxable |
|
| 11,671 |
|
|
| 11,434 |
|
Other interest earning assets |
|
| 2,093 |
|
|
| 3,914 |
|
Total interest income |
|
| 205,368 |
|
|
| 166,167 |
|
Interest expense |
|
|
|
|
|
|
|
|
Deposits |
|
| 70,531 |
|
|
| 64,096 |
|
Borrowings |
|
| 2,415 |
|
|
|
| |
Total interest expense |
|
| 72,946 |
|
|
| 64,096 |
|
Net interest income |
|
| 132,422 |
|
|
| 102,071 |
|
Provision for loan and lease credit losses |
|
| 32,024 |
|
|
| 10,403 |
|
Net interest income after provision for loan and lease credit losses |
|
| 100,398 |
|
|
| 91,668 |
|
Noninterest income |
|
|
|
|
|
|
|
|
Loan servicing revenue |
|
| 19,916 |
|
|
| 21,304 |
|
Loan servicing asset revaluation |
|
| (4,202 | ) |
|
| (12,446 | ) |
Net gains on sales of loans |
|
| 34,497 |
|
|
| 17,638 |
|
Net (loss) gain on loans accounted for under the fair value option |
|
| (8,324 | ) |
|
| 5,976 |
|
Equity method investments income (loss) |
|
| (5,952 | ) |
|
| (6,120 | ) |
Equity security investments gains (losses), net |
|
| 14,802 |
|
|
| 3,478 |
|
Gain on sale of investment securities available-for-sale, net |
|
| 1,880 |
|
|
| 92 |
|
Lease income |
|
| 7,893 |
|
|
| 7,055 |
|
Management fee income |
|
| 4,146 |
|
|
| 186 |
|
Construction supervision fee income |
|
| 2,439 |
|
|
| 1,525 |
|
Other noninterest income |
|
| 8,102 |
|
|
| 4,706 |
|
Total noninterest income |
|
| 75,197 |
|
|
| 43,394 |
|
Noninterest expense |
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
| 83,048 |
|
|
| 66,562 |
|
Travel expense |
|
| 2,395 |
|
|
| 4,675 |
|
Professional services expense |
|
| 4,668 |
|
|
| 5,876 |
|
Advertising and marketing expense |
|
| 2,537 |
|
|
| 4,306 |
|
Occupancy expense |
|
| 6,455 |
|
|
| 5,588 |
|
Data processing expense |
|
| 8,930 |
|
|
| 7,418 |
|
Equipment expense |
|
| 13,601 |
|
|
| 11,925 |
|
Other loan origination and maintenance expense |
|
| 7,617 |
|
|
| 6,882 |
|
Renewable energy tax credit investment impairment |
|
|
|
|
| 602 |
| |
FDIC insurance |
|
| 5,326 |
|
|
| 1,435 |
|
Other expense |
|
| 5,664 |
|
|
| 5,245 |
|
Total noninterest expense |
|
| 140,241 |
|
|
| 120,514 |
|
Income before taxes |
|
| 35,354 |
|
|
| 14,548 |
|
Income tax expense |
|
| 5,399 |
|
|
| 3,346 | |
Live Oak Bancshares, Inc.
Quarterly Selected Financial Data (unaudited)
(Dollars in thousands, except per share data)
As of and for the three months ended | ||||||||||||||||||||
3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | ||||||||||||||||
Income Statement Data | ||||||||||||||||||||
Net income (loss) | $ | 33,780 | $ | 3,777 | $ | (7,602 | ) | $ | 6,832 | $ | 3,895 | |||||||||
Per Common Share | ||||||||||||||||||||
Net income (loss), basic | $ | 0.83 | $ | 0.09 | $ | (0.19 | ) | $ | 0.17 | $ | 0.10 | |||||||||
Net income (loss), diluted | 0.81 | 0.09 | (0.19 | ) | 0.17 | 0.09 | ||||||||||||||
Dividends declared | 0.03 | 0.03 | 0.03 | 0.03 | 0.03 | |||||||||||||||
Book value | 14.69 | 13.53 | 13.22 | 13.20 | 13.12 | |||||||||||||||
Tangible book value (1) | 14.30 | 13.43 | 13.22 | 13.20 | 13.12 | |||||||||||||||
Performance Ratios | ||||||||||||||||||||
Return on average assets (annualized) | 1.67 | % | 0.22 | % | (0.61 | )% | 0.58 | % | 0.35 | % | ||||||||||
Return on average equity (annualized) | 23.64 | 2.68 | (5.64 | ) | 5.06 | 2.94 | ||||||||||||||
Net interest margin | 2.77 | 2.56 | 3.55 | 3.57 | 3.75 | |||||||||||||||
Efficiency ratio (1) | 43.89 | 76.87 | 107.63 | 77.09 | 80.83 | |||||||||||||||
Noninterest income to total revenue | 47.15 | 34.64 | 12.66 | 34.02 | 29.02 | |||||||||||||||
Selected Loan Metrics | ||||||||||||||||||||
Loans and leases originated | $ | 966,499 | $ | 2,175,055 | $ | 500,634 | $ | 523,688 | $ | 562,259 | ||||||||||
Guaranteed loans sold | 114,731 | 154,980 | 162,297 | 105,002 | 100,498 | |||||||||||||||
Average net gain on sale of guaranteed loans | 110.19 | 66.76 | 63.71 | 106.16 | 80.51 | |||||||||||||||
Adjusted average net gain on sale of guaranteed loans (2) | 107.99 | 65.94 | 83.48 | 94.86 | 94.98 | |||||||||||||||
Outstanding balance of sold loans serviced: | ||||||||||||||||||||
Guaranteed | 2,878,664 | 2,840,429 | 2,761,015 | 2,746,480 | 2,802,073 | |||||||||||||||
Unguaranteed | 264,829 | 231,602 | 223,587 | 224,127 | 211,095 | |||||||||||||||
Total | 3,143,493 | 3,072,031 | 2,984,602 | 2,970,607 | 3,013,168 | |||||||||||||||
Asset Quality Ratios | ||||||||||||||||||||
Allowance for credit losses to loans and leases held for | 1.05 | % | 1.16 | % | 1.81 | % | 1.57 | % | 1.51 | % | ||||||||||
Net charge-offs (4) | $ | 10,147 | $ | 1,781 | $ | 2,799 | $ | 536 | $ | 840 | ||||||||||
Net charge-offs to average loans and leases held for | 1.03 | % | 0.21 | % | 0.58 | % | 0.13 | % | 0.23 | % | ||||||||||
Nonperforming loans and leases (4) (5) | $ | 46,749 | $ | 40,275 | $ | 34,088 | $ | 21,937 | $ | 22,300 | ||||||||||
Foreclosed assets | 3,264 | 5,660 | 6,744 | 5,612 | 5,702 | |||||||||||||||
Nonperforming loans and leases (unguaranteed | 20,153 | 13,122 | 9,623 | 7,224 | 7,842 | |||||||||||||||
Foreclosed assets (unguaranteed exposure) | 642 | 1,199 | 1,478 | 1,120 | 1,142 | |||||||||||||||
Nonperforming loans and leases not guaranteed by the | $ | 20,795 | $ | 14,321 | $ | 11,101 | $ | 8,344 | $ | 8,984 | ||||||||||
Nonperforming loans, leases and foreclosures, not | 0.29 | % | 0.20 | % | 0.25 | % | 0.21 | % | 0.24 | % | ||||||||||
Nonperforming loans accounted for under the fair value | $ | 47,434 | $ | 46,221 | $ | 60,558 | $ | 49,739 | $ | 54,024 | ||||||||||
Nonperforming loans accounted for under the fair | 7,495 | 6,352 | 8,193 | 6,700 | 8,214 | |||||||||||||||
Capital Ratios | ||||||||||||||||||||
Common equity tier 1 capital (to risk-weighted assets) | 13.09 | % | 12.84 | % | 13.81 | % | 14.90 | % | 15.28 | % | ||||||||||
Total capital (to risk-weighted assets) | 14.19 | 13.99 | 14.83 | 15.74 | 16.03 | |||||||||||||||
Tier 1 risk based capital (to risk-weighted assets) | 13.09 | 12.84 | 13.81 | 14.90 | 15.28 | |||||||||||||||
Tier 1 leverage capital (to average assets) | 8.47 | 7.96 | 9.94 | 10.65 | 11.12 | |||||||||||||||
Notes to Quarterly Selected Financial Data
(1) See accompanying GAAP to Non-GAAP Reconciliation.
(2) Excludes fair value gain/loss on exchange-traded interest rate futures contracts.
(3) Quarterly net charge-offs as a percentage of quarterly average loans and leases held for investment, annualized.
(4) Excludes loans measured at fair value.
(5) The quarter ended September 30, 2020 excludes one $6.1 million hotel loan classified as held for sale.
Live Oak Bancshares, Inc.
Quarterly Average Balances and Net Interest Margin
(Dollars in thousands)
Three Months Ended | Three Months Ended | |||||||||||||||||||||||
Average Balance | Interest | Average Yield/Rate | Average Balance | Interest | Average Yield/Rate | |||||||||||||||||||
Interest earning assets: | ||||||||||||||||||||||||
Federal funds sold and interest earning | $ | 736,387 | $ | 334 | 0.18 | % | $ | 711,916 | $ | 1,009 | 0.57 | % | ||||||||||||
Investment securities | 755,412 | 4,123 | 2.17 | 556,014 | 3,786 | 2.73 | ||||||||||||||||||
Loans held for sale | 1,084,024 | 14,399 | 5.27 | 921,956 | 13,115 | 5.71 | ||||||||||||||||||
Loans and leases held for investment (1) | 4,782,075 | 56,222 | 4.66 | 4,208,109 | 48,907 | 4.66 | ||||||||||||||||||
Total interest earning assets | 7,357,898 | 75,078 | 4.05 | 6,397,995 | 66,817 | 4.19 | ||||||||||||||||||
Less: allowance for credit losses on loans and | (44,054 | ) | (35,875 | ) | ||||||||||||||||||||
Non-interest earning assets | 778,826 | 603,610 | ||||||||||||||||||||||
Total assets | $ | 8,092,670 | $ | 6,965,730 | ||||||||||||||||||||
Interest bearing liabilities: | ||||||||||||||||||||||||
Interest bearing checking | $ | 500,007 | $ | 747 | 0.59 | % | $ | 462,977 | $ | 646 | 0.56 | % | ||||||||||||
Savings | 1,669,199 | 3,674 | 0.87 | 1,398,378 | 4,814 | 1.38 | ||||||||||||||||||
Money market accounts | 95,151 | 83 | 0.35 | 82,908 | 89 | 0.43 | ||||||||||||||||||
Certificates of deposit | 3,423,643 | 17,651 | 2.05 | 3,689,041 | 19,572 | 2.13 | ||||||||||||||||||
Total interest bearing deposits | 5,688,000 | 22,155 | 1.55 | 5,633,304 | 25,121 | 1.79 | ||||||||||||||||||
Borrowings | 1,733,805 | 1,560 | 0.36 | 676,849 | 798 | 0.47 | ||||||||||||||||||
Total interest bearing liabilities | 7,421,805 | 23,715 | 1.27 | 6,310,153 | 25,919 | 1.65 | ||||||||||||||||||
Non-interest bearing deposits | 43,993 | 41,218 | ||||||||||||||||||||||
Non-interest bearing liabilities | 55,353 | 50,554 | ||||||||||||||||||||||
Shareholders' equity | 571,519 | 563,805 | ||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 8,092,670 | $ | 6,965,730 | ||||||||||||||||||||
Net interest income and interest rate spread | $ | 51,363 | 2.78 | % | $ | 40,898 | 2.54 | % | ||||||||||||||||
Net interest margin | 2.77 | 2.56 | ||||||||||||||||||||||
Ratio of average interest-earning assets to average | 99.14 | % | 101.39 | % | ||||||||||||||||||||
(1) Average loan and lease balances include non-accruing loans and leases.
Live Oak Bancshares, Inc.
GAAP to Non-GAAP Reconciliation
(Dollars in thousands)
As of and for the three months ended | ||||||||||||||||||||
3Q 2020 | 2Q 2020 | 1Q 2020 | 4Q 2019 | 3Q 2019 | ||||||||||||||||
Total shareholders’ equity | $ | 584,164 | $ | 548,435 | $ | 533,772 | $ | 532,386 | $ | 528,219 | ||||||||||
Less: | ||||||||||||||||||||
Goodwill | 1,797 | 1,797 | — | — | — | |||||||||||||||
Other intangible assets | 2,218 | 2,294 | — | — | — | |||||||||||||||
Tangible shareholders’ equity (a) | $ | 580,149 | $ | 544,344 | $ | 533,772 | $ | 532,386 | $ | 528,219 | ||||||||||
Shares outstanding (c) | 40,575,982 | 40,525,632 | 40,380,201 | 40,316,974 | 40,272,908 | |||||||||||||||
Total assets | $ | 8,093,381 | $ | 8,209,154 | $ | 5,273,569 | $ | 4,812,828 | $ | 4,601,529 | ||||||||||
Less: | ||||||||||||||||||||
Goodwill | 1,797 | 1,797 | — | — | — | |||||||||||||||
Other intangible assets | 2,218 | 2,294 | — | — | — | |||||||||||||||
Tangible assets (b) | $ | 8,089,366 | $ | 8,205,063 | $ | 5,273,569 | $ | 4,812,828 | $ | 4,601,529 | ||||||||||
Tangible shareholders’ equity to tangible assets (a/b) | 7.17 | % | 6.63 | % | 10.12 | % | 11.06 | % | 11.48 | % | ||||||||||
Tangible book value per share (a/c) | $ | 14.30 | $ | 13.43 | $ | 13.22 | $ | 13.20 | $ | 13.12 | ||||||||||
Efficiency ratio: | ||||||||||||||||||||
Noninterest expense (d) | $ | 42,650 | $ | 48,100 | $ | 49,491 | $ | 44,410 | $ | 42,737 | ||||||||||
Net interest income | 51,363 | 40,898 | 40,161 | 38,011 | 37,531 | |||||||||||||||
Noninterest income | 47,044 | 22,411 | 5,742 | 20,125 | 15,428 | |||||||||||||||
Less: gain (loss) on sale of securities | 1,225 | 734 | (79 | ) | 528 | 87 | ||||||||||||||
Adjusted operating revenue (e) | $ | 97,182 | $ | 62,575 | $ | 45,982 | $ | 57,608 | $ | 52,872 | ||||||||||
Efficiency ratio (d/e) | 43.89 | % | 76.87 | % | 107.63 | % | 77.09 | % | 80.83 | % | ||||||||||
Live Oak Bancshares, Inc.
GAAP to Non-GAAP Reconciliation (Continued)
(Dollars in thousands, except per share data)
Three Months Ended | Nine Months Ended | |||||||||||||||||||
3Q 2020 | 2Q 2020 | 3Q 2019 | 3Q 2020 | 3Q 2019 | ||||||||||||||||
Reconciliation of net income to non-GAAP net income: | ||||||||||||||||||||
Net income | $ | 33,780 | $ | 3,777 | $ | 3,895 | $ | 29,955 | $ | 11,202 | ||||||||||
Gain on sale of aircraft | — | — | — | — | (357 | ) | ||||||||||||||
Impairment on aircraft held for sale | 1,019 | — | — | 1,019 | — | |||||||||||||||
Renewable energy tax credit investment impairment | — | — | — | — | 602 | |||||||||||||||
Income tax effects and adjustments for non-GAAP | (245 | ) | — | — | (245 | ) | (58 | ) | ||||||||||||
Non-GAAP net income | $ | 34,554 | $ | 3,777 | $ | 3,895 | $ | 30,729 | $ | 11,389 | ||||||||||
* Estimated at 24.0% | ||||||||||||||||||||
Non-GAAP earnings per share: | ||||||||||||||||||||
Basic | $ | 0.85 | $ | 0.09 | $ | 0.10 | $ | 0.76 | $ | 0.28 | ||||||||||
Diluted | $ | 0.83 | $ | 0.09 | $ | 0.09 | $ | 0.74 | $ | 0.28 | ||||||||||
Weighted-average shares outstanding: | ||||||||||||||||||||
Basic | 40,542,696 | 40,506,671 | 40,240,740 | 40,461,479 | 40,199,468 | |||||||||||||||
Diluted | 41,549,632 | 41,122,025 | 41,113,575 | 41,248,866 | 41,011,608 | |||||||||||||||
Reconciliation of financial statement line items as reported | ||||||||||||||||||||
Noninterest income, as reported | $ | 47,044 | $ | 22,411 | $ | 15,428 | $ | 75,197 | $ | 43,394 | ||||||||||
Gain on sale of aircraft | — | — | — | — | (357 | ) | ||||||||||||||
Noninterest income, non-GAAP | $ | 47,044 | $ | 22,411 | $ | 15,428 | $ | 75,197 | $ | 43,037 | ||||||||||
Noninterest expense, as reported | $ | 42,650 | $ | 48,100 | $ | 42,737 | $ | 140,241 | $ | 120,514 | ||||||||||
Impairment on aircraft held for sale | (1,019 | ) | — | — | (1,019 | ) | — | |||||||||||||
Renewable energy tax credit investment impairment | — | — | — | — | (602 | ) | ||||||||||||||
Noninterest expense, non-GAAP | $ | 41,631 | $ | 48,100 | $ | 42,737 | $ | 139,222 | $ | 119,912 | ||||||||||
Income before taxes, as reported | $ | 45,483 | $ | 5,251 | $ | 6,262 | $ | 35,354 | $ | 14,548 | ||||||||||
Gain on sale of aircraft | — | — | — | — | (357 | ) | ||||||||||||||
Impairment on aircraft held for sale | 1,019 | — | — | 1,019 | — | |||||||||||||||
Renewable energy tax credit investment impairment | — | — | — | — | 602 | |||||||||||||||
Income before taxes, non-GAAP | $ | 46,502 | $ | 5,251 | $ | 6,262 | $ | 36,373 | $ | 14,793 | ||||||||||
Income tax expense, as reported | $ | 11,703 | $ | 1,474 | $ | 2,367 | $ | 5,399 | $ | 3,346 | ||||||||||
Income tax effects and adjustments for non-GAAP | 245 | — | — | 245 | 58 | |||||||||||||||
Income tax expense, non-GAAP | $ | 11,948 | $ | 1,474 | $ | 2,367 | $ | 5,644 | $ | 3,404 | ||||||||||
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.
