LOB earnings analysis
What we found in LOB's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Live Oak delivered a strong 2Q26, with $156.145 million of revenue and diluted EPS of $0.74, up from $139.676 million and $0.51 in 2Q25, respectively. Growth in the loan portfolio and lower funding costs expanded net interest income 14.8% and net interest margin to 3.33%, while expense control supported earnings. The principal offsets are rising unguaranteed problem-loan exposure, a $25.8 million quarterly credit-loss provision, and an unresolved material weakness in internal controls.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue and EPS accelerated year over year
- Second-quarter revenue, defined as net interest income plus noninterest income, was $156.145 million ($125.338 million plus $30.807 million), up $16.469 million, or 11.8%, from $139.676 million in 2Q25. Net income attributable to common shareholders increased 48.3% to $34.7 million and diluted EPS rose 45.1% to $0.74 from $0.51.
- Loan growth drove NII and margin expansion
- Net interest income increased $16.1 million, or 14.8%, to $125.3 million as average interest-earning assets grew $1.72 billion, or 12.9%, to $15.08 billion. Net interest margin expanded 5 basis points year over year to 3.33%.
- Production and deposit funding remained strong
- Loan and lease originations were $1.548 billion in 2Q26, while loans and leases held for investment at historical cost grew $1.69 billion, or 15.8%, year over year to $12.40 billion. Total deposits increased $858.9 million, or 6.3%, from year-end to $14.55 billion.
- Quarterly operating expense was controlled
- Noninterest expense declined $0.7 million, or 0.8%, year over year to $84.5 million. Advertising and marketing expense fell $1.7 million, or 38.1%, and other expense declined $3.3 million, or 54.0%, partly offset by a $2.8 million, or 6.0%, increase in salaries and benefits.
- Problem assets and liquidity coverage improved
- Reported nonperforming assets declined $29.7 million, or 5.2%, from year-end to $542.5 million, and total criticized/classified loans and leases decreased $159.1 million to $1.23 billion. Liquidity sources were $5.07 billion, or 31.6% of assets, with $4.08 billion of unused borrowing capacity.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Provision remains elevated despite lower quarterly charge-offs
- Credit costs rose year over year: the 2Q26 provision for credit losses was $25.8 million, up $2.5 million from $23.3 million. Although quarterly net charge-offs declined to $24.2 million from $31.4 million, six-month net charge-offs increased $4.5 million, or 11.8%, to $42.7 million.
- Unguaranteed credit stress increased
- Unguaranteed nonperforming exposure increased to $135.3 million at June 30, 2026, up $24.1 million, or 21.6%, from $111.2 million at December 31, 2025. Unguaranteed loans and leases past due rose $40.3 million to $117.4 million.
- Material weakness remains unresolved
- Disclosure controls were ineffective at June 30, 2026 because of a previously disclosed material weakness involving loan-participation accounting and cash-flow classifications. Management expects remediation by the end of fiscal 2026, but the weakness remains until revised controls operate effectively for a sufficient period.
- Rate cuts could pressure net interest income
- The balance sheet is moderately asset-sensitive: under the static-balance-sheet simulation, a 300-basis-point rate decline would reduce 12-month net interest income by 10.7%, while a 300-basis-point increase would reduce economic value of equity by 5.9%.
- No material risk-factor updates
- The company states there were no material changes to risk factors disclosed in its 2025 Form 10-K. Accordingly, this filing does not identify a newly added or materially revised risk factor.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $0.74
What they said about what is next.
The 10-Q provides no quantitative revenue or EPS outlook. Management states that it expects remediation of the internal-control material weakness to be completed by the end of fiscal 2026, subject to controls operating effectively for a sufficient period.
The filing reads better than the one before it.
What came before.
- 10-Q · May 5, 2026
- Live Oak Bancshares, Inc. reported Q1 2026 results with net income attributable to common shareholders of $27.9 million, or $0.60 EPS, surpassing expectations while revenue of $145.474 million fell short of estimates.…
- 10-K · February 27, 2026
- Live Oak reported stronger 2025 operating performance with revenue of approximately $1.038 billion (quarterly revenues: $239M, $259M, $262M, $278M) and margin expansion culminating in a Q4 gross margin of 58.1% and…
- 10-Q · August 6, 2024
- Live Oak Bancshares reported strong second-quarter results for 2024, with revenue increasing to $233 million, a significant 20% increase year-over-year. Diluted EPS rose to $0.59, up from $0.39 in the same quarter last…
- 10-Q · May 10, 2024
- Live Oak reported materially stronger profitability in Q1 2024 with net income of $27,586,000 versus $398,000 in Q1 2023, driven by higher net interest income and noninterest income. Deposits and loans grew while the…
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