Highlights

  • 89.23% one-year basic EPS growth, P/E of 12.53 and PEG of 0.00.
  • Third quarter net income to common shareholders was $24.3 million, or $0.52 per diluted share.
  • Net interest income was $133,009 thousand, up 6.1% from the second quarter.
  • Provision for credit losses was $54.7 million, including $17.0 million tied to distilleries.

One-year earnings growth of 89.23%, paired with a trailing twelve-month P/E of 12.53 and an expected-basis PEG of 0.00, puts Live Oak Bancshares (NYSE:LOB) among undervalued growth stocks, with shares trading at USD 34.40 on October 28, 2026, down 0.98%. On the company's side, the Wilmington-based financial holding company recorded third quarter 2026 loan production of $2.1 billion, booked a provision for credit losses of $54.7 million, and reported net income attributable to common shareholders of $24.3 million on October 21.

Live Oak Bancshares is headquartered in Wilmington, North Carolina, and incorporated in North Carolina. It is a financial holding company and the parent of Live Oak Bank, which partners with businesses focused on service and technology. Its lending centers on Small Business Administration (SBA) loans, including a small-dollar Section 7(a) product called Live Oak Express, and it also has a commercial banking unit. Total assets were $17.0 billion at September 30, 2026.

Growth: Third Quarter Earnings, Revenue and Loan Production

Net income attributable to common shareholders was $24,260 thousand in the third quarter against $25,562 thousand a year earlier and $34,701 thousand in the second quarter. Basic earnings per common share were $0.52 against $0.56, and diluted earnings per common share were $0.52 against $0.55. For the nine months, net income attributable to common shareholders was $86,907 thousand against $58,707 thousand, and diluted earnings per share were $1.86 against $1.28.

Net interest income was $133,009 thousand, up 6.1% from the second quarter and 15.2% from the third quarter of 2025. Total revenue was $175,646 thousand, up 12.5% and 23.4%, while noninterest expense was $85,720 thousand, up 1.4% and 2.6%. Pre-provision net revenue, a non-GAAP measure, was $89,926 thousand against $58,814 thousand a year earlier.

Loan and lease production was $2,133,637 thousand, and total loans and leases were $13,869,854 thousand, up 16.4% from a year earlier. Total deposits were $15,468,175 thousand, up $920.6 million from June 30.

Valuation: P/E of 12.53, PEG of 0.00 and Book Value

The P/E ratio of 12.53 is measured on trailing twelve-month earnings, and the PEG ratio of 0.00 on an expected basis. Book value per common share was $26.13 against $24.03 a year earlier, and tangible book value per common share, a non-GAAP measure, was $26.05. Annualized return on average common equity was 7.70% against 9.32%.

In the earnings release, Chairman and Chief Executive Officer James S. (Chip) Mahan III said Live Oak Express continues to accelerate and the deposit franchise is gaining momentum. On the earnings call, management said third quarter earnings per share were reduced by additional provision on the exited distillery portfolio.

Capital, Deposits and Balance Sheet

Total shareholders' equity was $1,312,234 thousand at September 30, 2026, including preferred stock of $96,266 thousand. Common equity tier 1 capital to risk-weighted assets was 9.94% against 10.42% at June 30, and the Tier 1 leverage ratio was 8.23% against 8.59%. Tangible common shareholders' equity to tangible assets, a non-GAAP measure, was 7.12%.

The company declared a common dividend of $0.03 per share, and preferred stock dividends were $2,093 thousand. Borrowings were $99,793 thousand, and the allowance for credit losses on loans and leases was $213,630 thousand, or 1.62% of loans and leases held for investment.

Disclosed Risks and Outlook

Net income attributable to common shareholders fell 30.1% from the second quarter and 5.1% from a year earlier. The provision for credit losses rose $28.9 million and $32.5 million, which the company attributed primarily to $17.0 million of action on a stressed distillery portfolio and reserves to support loan growth. Net charge-offs were $32,087 thousand, or 1.00% of average loans and leases held for investment, against 0.80% in the second quarter. Unguaranteed nonperforming fair value loans were 5.36% of fair value loans held for investment against 2.85%.

On the call, management said it exited the distillery vertical in 2024, that the portfolio is in workout only, and that spirits demand declines have reduced collateral values. The release lists changes in SBA rules or products, including the Section 7(a) program, among the factors that could cause results to differ.

Management said on the call that it expects the net interest margin to remain relatively stable and net interest income to grow at the pace of the balance sheet. It said volume growth remains the primary driver of net interest income, with funding competition a key variable for the margin. Its stated target for Live Oak Express is more than $750 million of annual originations.