third quarter of 2026
Filed Oct 21, 2026Live Oak reported third quarter of 2026 net income attributable to common shareholders of $24.3 million, or $0.52 per diluted common share, as revenue growth and loan production were offset by a higher provision for credit losses.
Total revenue increased 12.5% sequentially and 23.4% year over year while noninterest expense increased 1.4% and 2.6%, respectively, but provision for credit losses rose to $54,700 and net income attributable to common shareholders fell 30.1% sequentially and 5.1% year over year.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| 3Q 2026 total revenueother | $175.6M | 12.5 % | 23.4 % |
| 3Q 2026 net interest incomeGAAP | 133,009 | 6.1 | 15.2 |
| 3Q 2026 total noninterest incomeGAAP | 42,637 | 38.4 | 58.8 |
| 3Q 2026 provision for credit lossesGAAP | 54,700 | 112.0 | 145.9 |
| 3Q 2026 total noninterest expenseGAAP | 85,720 | 1.4 | 2.6 |
| 3Q 2026 income before taxesGAAP | 35,226 | (23.1) | (3.7) |
| 3Q 2026 effective tax rateGAAP | 25.4 % | – | – |
| 3Q 2026 net incomeGAAP | 26,265 | (28.4) | (0.8) |
| 3Q 2026 net income attributable to common shareholdersGAAP | $24.26M | (30.1) | (5.1) |
| 3Q 2026 diluted earnings per common shareGAAP | $ 0.52 | (29.7) | (5.5) |
| 3Q 2026 basic earnings per common shareGAAP | $ 0.52 | (30.7) | (7.1) |
| 3Q 2026 loan and lease productionother | 2,133,637 | 37.8 | 29.4 |
| 3Q 2026 loans and leases originatedother | $2.13B | – | – |
| 3Q 2026 total loans and leasesGAAP | 13,869,854 | 5.5 | 16.4 |
| 3Q 2026 total assetsGAAP | $16.97B | 5.8 | 15.7 |
| 3Q 2026 total depositsGAAP | 15,468,175 | 6.3 | 16.4 |
| 3Q 2026 net interest marginGAAP | 3.30 | – | – |
| 3Q 2026 pre-provision net revenuenon-GAAP | $89.93M | 25.6% | 52.9% |
| 3Q 2026 efficiency rationon-GAAP | 48.80 % | – | – |
| 3Q 2026 return on average assets (annualized)other | 0.59 % | – | – |
| 3Q 2026 return on average common equity (annualized)other | 7.70 | – | – |
| 3Q 2026 net charge-offsother | $32.09M | – | – |
| 3Q 2026 net charge-offs to average loans and leases held for investmentother | 1.00 % | – | – |
| 3Q 2026 allowance for credit losses on loans and leases held for investmentother | 1.62 % | – | – |
| 3Q 2026 total nonperforming loans and leases at historical costother | 508,689 | – | – |
| 3Q 2026 unguaranteed nonperforming historical cost loans and leasesother | 138,422 | – | – |
| 3Q 2026 total nonperforming loans at fair valueother | 57,907 | – | – |
| 3Q 2026 common equity tier 1 capital (to risk-weighted assets)other | 9.94 % | – | – |
| 3Q 2026 Tier 1 leverage capital (to average assets)other | 8.23 | – | – |
| Nine months ended September 30, 2026 net interest incomeGAAP | 377,747 | – | – |
| Nine months ended September 30, 2026 provision for credit lossesGAAP | 100,600 | – | – |
| Nine months ended September 30, 2026 total noninterest incomeGAAP | 99,518 | – | – |
| Nine months ended September 30, 2026 total noninterest expenseGAAP | 255,538 | – | – |
| Nine months ended September 30, 2026 net income attributable to common shareholdersGAAP | $86.91M | – | – |
| Nine months ended September 30, 2026 diluted earnings per common shareGAAP | $ 1.86 | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Capital returns
- Dividends declared - common: 0.03
- Preferred stock dividends: 2,093
What drove it
- Net interest income increased 6.1% compared to the second quarter of 2026 and 15.2% compared to the third quarter of 2025.
- Total noninterest income was 42,637, compared with 30,807 in 2Q 2026 and 26,845 in 3Q 2025.
- Net gains on sales of loans were 20,893, compared with 17,554 in 2Q 2026 and 17,099 in 3Q 2025.
- Other noninterest income was 14,637, compared with 5,734 in 2Q 2026 and 4,917 in 3Q 2025.
- Loan and lease production was 2,133,637, compared with 1,548,432 in 2Q 2026 and 1,648,711 in 3Q 2025.
- Deposits grew by 920,649 during the third quarter of 2026 compared to June 30, 2026.
Concerns
- Provision for credit losses was 54,700, increasing 28,900 from 2Q 2026 and 32,458 from 3Q 2025. The Company said the provision was primarily driven by decisive action of 17.0 million related to the stressed distillery portfolio and reserves to support continued loan growth.
- Net income attributable to common shareholders declined to $ 24,260 from $ 34,701 in 2Q 2026 and $ 25,562 in 3Q 2025.
- Net interest margin was 3.30, compared with 3.33 in both 2Q 2026 and 3Q 2025.
- Net charge-offs increased to $ 32,087 from $ 24,162 in 2Q 2026 and $ 16,816 in 3Q 2025.
- Total nonperforming loans and leases at historical cost were 508,689, compared with 470,755 in 2Q 2026 and 456,268 in 3Q 2025.
- Common equity tier 1 capital (to risk-weighted assets) was 9.94 %, compared with 10.42 % in 2Q 2026 and 10.51 % in 3Q 2025.
What to watch
- The scale and credit consequences of the stressed distillery-related portfolio.
- Whether loan and lease production of $ 2,133,637 and deposit growth of 920,649 continue.
- Net interest margin after its decline to 3.30 from 3.33 in 2Q 2026 and 3Q 2025.
- Provision for credit losses, net charge-offs, and nonperforming loan trends.
- Whether revenue growth continues to outpace noninterest expense growth.
Balance sheet and cash flow
- Cash and due from banks: $ 1,099,902, compared with $ 927,630 as of 2Q 2026 and $ 892,445 as of 3Q 2025.
- Total deposits: 15,468,175, compared with 14,547,526 as of 2Q 2026 and 13,290,723 as of 3Q 2025.
- Borrowings: 99,793, compared with 99,766 as of 2Q 2026 and 105,045 as of 3Q 2025.
- Total shareholders' equity: 1,312,234, compared with 1,316,918 as of 2Q 2026 and 1,202,549 as of 3Q 2025.
- Loans and leases held for investment: 13,373,047, compared with 12,630,859 as of 2Q 2026 and 11,554,818 as of 3Q 2025.
- Allowance for credit losses on loans and leases: (213,630), compared with (193,417) as of 2Q 2026 and (185,700) as of 3Q 2025.
Analysis
Live Oak produced strong top-line and balance-sheet growth in the third quarter. Total revenue was $ 175,646, up 12.5% from 2Q 2026 and 23.4% from 3Q 2025. Net interest income increased 6.1% sequentially and 15.2% year over year, while total noninterest income increased 38.4% sequentially and 58.8% year over year. Loan and lease production reached $ 2,133,637, and total deposits increased by 920,649 from the prior quarter to 15,468,175.
Operating leverage improved materially. Total noninterest expense of 85,720 rose 1.4% sequentially and 2.6% year over year, substantially below reported revenue growth. The non-GAAP efficiency ratio improved to 48.80 % from 54.13 % in 2Q 2026 and 58.68 % in 3Q 2025, while non-GAAP pre-provision net revenue increased to $ 89,926 from $ 71,620 and $ 58,814, respectively. Higher net gains on sales of loans and other noninterest income supported the expansion in noninterest income.
Credit costs were the principal drag on bottom-line earnings. Provision for credit losses increased to 54,700 from 25,800 in the prior quarter and 22,242 a year earlier. Management attributed the quarter's provision primarily to decisive action of 17.0 million related to the stressed distillery portfolio and reserves supporting continued loan growth. Net charge-offs were $ 32,087, total nonperforming loans and leases at historical cost were 508,689, and unguaranteed nonperforming historical cost loans and leases increased to 138,422.
The higher provision more than offset the revenue and expense performance. Net income attributable to common shareholders was $ 24,260, down 30.1% sequentially and 5.1% year over year, and diluted earnings per common share were $ 0.52. Net interest margin was 3.30, down from 3.33 in both comparison periods. Total assets increased to $ 16,965,575, while total shareholders' equity was 1,312,234, slightly below 1,316,918 in 2Q 2026.
The filing did not provide forward financial guidance. The immediate focus is the trajectory of credit costs and the distillery-related portfolio against continued loan production, deposit growth, and operating leverage. Capital ratios declined sequentially, with common equity tier 1 capital at 9.94 % and Tier 1 leverage capital at 8.23.
Management, verbatim
The fundamental story at Live Oak is that our franchise is getting stronger. Our operating leverage is improving, Live Oak Express continues to accelerate, and our deposit franchise is marching with gaining momentum.
James S. (Chip) Mahan III, Chairman and CEO
The earnings power of this business is expanding because revenue growth is meaningfully outpacing expenses, our loan origination engine is running strong, and our strategic initiatives are delivering results.
James S. (Chip) Mahan III, Chairman and CEO
This operating leverage momentum has aided in absorbing the elevated provision expense in the quarter, which primarily supported record loan growth while also our continued efforts to decisively act to address stress in our distillery-related portfolio.
James S. (Chip) Mahan III, Chairman and CEO
Not in the filing
stated, not guessed- Forward financial guidance was not provided.
- Prior-period guidance was not provided.
- Operating cash flow was not provided.
- Free cash flow was not provided.
- Share repurchases were not provided.
- Gross margin was not provided.
- A total debt metric was not provided.
- Segment reporting was not provided.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.