Live Oak Raises Adjusted Pre-Provision Earnings 33% to $88 Million in Third Quarter
Key Facts
Live Oak Bancshares reported net income available to common shareholders of $24.3 million, or $0.52 per diluted share, in the third quarter of 2026, according to results released on October 21. Adjusted pre-provision earnings rose to $88 million, up 33% year over year, based on figures in The Motley Fool's report on the bank's results. Reported pre-provision earnings were $89.9 million, up 52.9% year over year. The difference between the growth rates reflects two separate figures, one adjusted and one reported, rather than a 33% increase in operating revenue. The results put broad growth in revenue and lending alongside higher credit provisions tied to a distillery portfolio.
Total revenue was $175,646 thousand, up 23.4% from the year-earlier period, while noninterest expense rose 2.6% to $85,720 thousand, according to the company's release. Chief Executive James S. “Chip” Mahan III said revenue growth “is outpacing expenses by a considerable margin,” linking it to improved operating leverage. He added that operating leverage is improving, Live Oak Express continues to accelerate, and the deposit franchise is gaining momentum. These figures provide context for growth in pre-provision earnings, as revenue rose faster than noninterest expense. But the bank also recorded a credit provision that included the resolution of a troubled portfolio and reserves supporting continued loan growth.
Live Oak said its third-quarter provision for credit losses was primarily affected by a decisive $17 million action involving a troubled distillery portfolio, along with reserves to support continued loan growth. This credit component sits alongside revenue and production growth, as stronger operating indicators coincided with provision costs tied to a specific portfolio. The company did not link the provisions in its release to a broad slowdown in loan production; it explicitly said the reserves included support for continued lending growth. Net interest margin was 3.30% during the quarter, down 3 basis points from 3.33% in the second quarter of 2026 and the third quarter of 2025. The decline in the margin compared with the two prior periods highlights a funding challenge alongside growth in the scale of activity.
Loan and lease production reached $2,133,637 thousand, up 29.4% year over year, while total loans and leases were $13,869,854 thousand as of September 30, up 16.4% from a year earlier. Live Oak Express, the small-business lending division within the Small Business Administration program, was one of the quarter's activity drivers: loans originated through it jumped 173% year over year to $107 million. The Motley Fool reported that sales of the guaranteed portions of those loans generated $7 million in gain-on-sale revenue during the quarter. The combination of growth in originations and revenue from sales of guaranteed portions points to Express's role in lending activity and fee revenue. Mahan described the unit as continuing to accelerate, without providing a numerical forecast for coming periods in the cited release.
Deposits were $15,468,175 thousand as of September 30, up 16.4% year over year, and the bank added $920.6 million in deposits during the quarter. Business checking balances exceeded $500 million, up 39% from a year earlier, according to The Motley Fool's report. Mahan said the bank's deposit franchise is gaining momentum, while lending also grew during the period. The share of customers with both a loan and a deposit account rose to 25%, compared with 20% a year earlier. These figures show the deposit and business-account base expanding alongside loan growth, while the sources do not specify the cost of deposits or their effect on net interest margin.
The company released its results on October 21, 2026, then held its third-quarter earnings call on October 22 at 9:00 a.m. U.S. Eastern time. On the call, the company presented results that included growth in net income, revenue and lending, alongside the distillery portfolio provision and a decline in net interest margin. Management also discussed improved operating leverage, acceleration at Live Oak Express and deposit momentum, according to its statements in the release. LOB shares closed at $35.15 on October 23, 2026, according to EL7 data. The close came after the results announcement and the call; the evidence does not include a reference price for comparison or details about the stock's performance during the session.