What changed in this filing

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Item 1. Financial Statements

2025-11-17 compared with 2025-08-05 · 327 added, 205 removed, 1050 unchanged (34% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

As of June 30, 2025 (unaudited) and December 31, 2024

As of September 30, 2025 (unaudited) and December 31, 2024

(Dollars in thousands)

September 30,

2025 December 31,

21 unchanged sentences

Shareholders’ equity

Preferred stock, no par value, 1,000,000 shares authorized, none issued or outstanding at June 30, 2025 and December 31, 2024

Class A common stock, no par value, 100,000,000 shares authorized, 45,686,081 and 45,359,425 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively

Series A Preferred stock, no par value, 1,000,000 shares authorized, 100,000 shares and 0 shares, issued and outstanding at September 30, 2025 and December 31, 2024, respectively

Class A common stock, no par value, 100,000,000 shares authorized, 45,855,739 and 45,359,425 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

383,288 365,607

Class B common stock, no par value, 10,000,000 shares authorized, none issued or outstanding at June 30, 2025 and December 31, 2024

Retained earnings 770,820 715,767

8 unchanged sentences

Condensed Consolidated Statements of Income

For the three and six months ended June 30, 2025 and 2024 (unaudited)

For the three and nine months ended September 30, 2025 and 2024 (unaudited)

(Dollars in thousands, except per share data)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

15 unchanged sentences

Net gains on sales of loans 20,868 16,646 61,157 42,543

Net gain (loss) on loans accounted for under the fair value option 1,082 172 48 ( 47 )

Net (loss) gain on loans accounted for under the fair value option ( 350 ) 2,255 ( 302 ) 2,208

Equity method investments (loss) income ( 1,470 ) ( 1,393 ) ( 6,425 ) ( 8,182 )

13 unchanged sentences

Other loan origination and maintenance expense 4,777 4,872 13,552 12,442

Renewable energy tax credit investment (recovery) impairment 270 170 270 ( 757 )

Renewable energy tax credit investment impairment (recovery) 336 115 606 ( 642 )

FDIC insurance 3,643 1,933 10,739 7,782

7 unchanged sentences

26,516 13,025 59,661 67,574

Preferred stock dividends 954 — 954 —

Net income attributable to common shareholders $ 25,562 $ 13,025 $ 58,707 $ 67,574

Basic earnings per share $ 0.56 $ 0.28 $ 1.29 $ 1.50

3 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

For the three and six months ended June 30, 2025 and 2024 (unaudited)

For the three and nine months ended September 30, 2025 and 2024 (unaudited)

(Dollars in thousands)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Net income $ 26,466 $ 13,025 $ 59,521 $ 67,574

Other comprehensive income (loss) before tax:

Net unrealized gain (loss) on investment securities available-for-sale during the period 8,137 964 27,408 ( 7,612 )

Other comprehensive income before tax:

Net unrealized gain on investment securities available-for-sale during the period 12,319 38,565 39,727 30,953

Reclassification adjustment for gain on sale of securities available-for-sale included in net income — — — —

Other comprehensive income (loss) before tax 8,137 964 27,408 ( 7,612 )

Income tax (expense) benefit ( 1,953 ) ( 231 ) ( 6,578 ) 1,827

Other comprehensive income (loss), net of tax 6,184 733 20,830 ( 5,785 )

Other comprehensive income before tax 12,319 38,565 39,727 30,953

Income tax expense ( 2,956 ) ( 9,256 ) ( 9,534 ) ( 7,429 )

Other comprehensive income, net of tax 9,363 29,309 30,193 23,524

Total comprehensive income 35,829 42,334 89,714 91,098

5 unchanged sentences

Condensed Consolidated Statements of Changes in Shareholders’ Equity

For the three and six months ended June 30, 2025 and 2024 (unaudited)

For the three and nine months ended September 30, 2025 and 2024 (unaudited)

(Dollars in thousands)

Three Months Ended

Common stock Retained

Preferred Stock Common stock Retained

earnings Accumulated

1 unchanged sentence

(loss) income Non-controlling interest Total

Shares Amount

Class A Class B

Balance at March 31, 2025

Shares Amount Shares Amount

Series A Class A Class B

Balance at June 30, 2025

— $ — 45,686,081 — $ 377,953 $ 746,450 $ ( 61,514 ) $ 4,376 $ 1,067,265

2 unchanged sentences

Issuance of restricted stock — — 80,886 — — — — — —

Issuance of Series A preferred stock, net of issuance costs 100,000 96,266 — — — — — — 96,266

Tax withholding related to vesting of restricted stock and other

— — — — ( 2,080 ) — — — ( 2,080 )

Employee stock purchase program — — 15,403 — 562 — — — 562

Stock option exercises — — 73,369 — 951 — — — 951

1 unchanged sentence

Transfer from retained earnings to other assets for pro rata portion of equity method investee stock compensation expense — — — — — 183 — — 183

Cash dividends ($ 0.03 per share)

Cash dividends - preferred — — — — — ( 954 ) — — ( 954 )

Cash dividends ($ 0.03 per share) - common

— — — — — ( 1,375 ) — — ( 1,375 )

Balance at June 30, 2025

Balance at September 30, 2025

100,000 $ 96,266 45,855,739 — $ 383,288 $ 770,820 $ ( 52,151 ) $ 4,326 $ 1,202,549

Balance at March 31, 2024

Balance at June 30, 2024

— $ — 45,003,856 — $ 356,381 $ 695,172 $ ( 90,504 ) $ — $ 961,049

4 unchanged sentences

— — — — ( 2,356 ) — — — ( 2,356 )

Employee stock purchase program — — 16,445 — 747 — — — 747

Stock option exercises — — 52,988 — 539 — — — 539

2 unchanged sentences

— — — — — 183 — — 183

Cash dividends ($ 0.03 per share)

Cash dividends ($ 0.03 per share) - common

— — — — — ( 1,354 ) — — ( 1,354 )

Balance at June 30, 2024

Balance at September 30, 2024

— $ — 45,151,691 — $ 361,925 $ 707,026 $ ( 61,195 ) $ — $ 1,007,756

1 unchanged sentence

Condensed Consolidated Statements of Changes in Shareholders’ Equity (Continued)

For the three and six months ended June 30, 2025 and 2024 (unaudited)

For the three and nine months ended September 30, 2025 and 2024 (unaudited)

(Dollars in thousands)

Six Months Ended

Common stock Retained

Nine Months Ended

Preferred Stock Common stock Retained

earnings Accumulated

2 unchanged sentences

Non-controlling interest Total

Shares Amount

Class A Class B

Shares Amount Shares Amount

Series A Class A Class B

Balance at December 31, 2024

3 unchanged sentences

Issuance of restricted stock — — 261,390 — — — — — —

Issuance of Series A preferred stock, net of issuance costs 100,000 96,266 — — — — — — 96,266

Tax withholding related to vesting of restricted stock and other

4 unchanged sentences

Transfer from retained earnings to other assets for pro rata portion of equity method investee stock compensation expense — — — — — 457 — — 457

Cash dividends ($ 0.06 per share)

Cash dividends - preferred — — — — — ( 954 ) — — ( 954 )

Cash dividends ($ 0.09 per share) - common

— — — — — ( 4,111 ) — — ( 4,111 )

Balance at June 30, 2025

Balance at September 30, 2025

100,000 $ 96,266 45,855,739 — $ 383,288 $ 770,820 $ ( 52,151 ) $ 4,326 $ 1,202,549

10 unchanged sentences

Transfer from retained earnings to other assets for pro rata portion of equity method investee stock compensation expense — — — — — 684 — — 684

Cash dividends ($ 0.06 per share)

Cash dividends ($ 0.09 per share) - common

— — — — — ( 4,049 ) — — ( 4,049 )

Balance at June 30, 2024

Balance at September 30, 2024

— $ — 45,151,691 — $ 361,925 $ 707,026 $ ( 61,195 ) $ — $ 1,007,756

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows

For the six months ended June 30, 2025 and 2024 (unaudited)

For the nine months ended September 30, 2025 and 2024 (unaudited)

(Dollars in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities

4 unchanged sentences

Accretion of discount on securities, net ( 445 ) ( 631 )

Deferred tax benefit ( 843 ) ( 278 )

Deferred tax expense (benefit) 3,577 ( 8,989 )

Originations of loans held for sale ( 1,044,930 ) ( 744,286 )

1 unchanged sentence

Net gains on sale of loans held for sale ( 61,157 ) ( 42,543 )

Net loss on impairment or sale of foreclosed assets 12 9

Net (gains) loss on loans accounted for under fair value option ( 48 ) 47

Net (gain) loss on impairment or sale of foreclosed assets ( 33 ) 9

Net loss (gain) on loans accounted for under fair value option 302 ( 2,208 )

Net change in servicing assets ( 6,347 ) ( 3,962 )

28 unchanged sentences

Condensed Consolidated Statements of Cash Flows (Continued)

For the six months ended June 30, 2025 and 2024 (unaudited)

For the nine months ended September 30, 2025 and 2024 (unaudited)

(Dollars in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from financing activities

4 unchanged sentences

Employee stock purchase program 1,221 1,449

Proceeds from the issuance of preferred stock, net 96,266 —

Tax withholding related to vesting of restricted stock and other ( 5,551 ) ( 5,750 )

Shareholder dividend distributions ( 2,736 ) ( 2,695 )

Shareholder dividend distributions - preferred ( 954 ) —

Shareholder dividend distributions - common ( 4,111 ) ( 4,049 )

Net cash provided by financing activities 1,611,822 1,211,140

6 unchanged sentences

Supplemental disclosures of noncash investing and financing activities

Unrealized holding gains (losses) on investment securities available-for-sale, net of taxes $ 20,830 $ ( 5,785 )

Unrealized holding gains on investment securities available-for-sale, net of taxes $ 30,193 $ 23,524

Transfers from loans and leases to foreclosed real estate and other repossessions or SBA receivable

35,421 10,351

Net transfers between foreclosed assets and SBA receivable 33 —

21 unchanged sentences

The Bank also lends more broadly to select borrowers outside of those verticals.

As of June 30, 2025, t he Company’s wholly owned material subsidiaries are the Bank, Government Loan Solutions, Inc.

As of September 30, 2025, t he Company’s wholly owned material subsidiaries are the Bank, Government Loan Solutions, Inc.

(“GLS”), Live Oak Grove, LLC (“Grove”), and Live Oak Ventures, Inc.

25 unchanged sentences

In the opinion of management, all adjustments necessary for a fair presentation of the financial position and results of operations for the periods presented have been included, and all intercompany transactions have been eliminated in consolidation.

Results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2025.

The Condensed Consolidated Balance Sheet as of December 31, 2024 has been derived from the audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Securities Exchange Commission ( “ SEC ” ) on March 18, 2025 (SEC File No.

001-37497) (the “ 2024 Form 10-K ” ).

A summary description of the significant accounting policies followed by the Company is set forth in Note 1 of the Notes to Consolidated Financial Statements in the Company’s 2024 Form 10-K.

These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and footnotes in the Company's 2024 Form 10-K.

Results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2025.

The Condensed Consolidated Balance Sheet as of December 31, 2024 has been derived from the audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2024, filed with the Securities Exchange Commission ( “ SEC ” ) on November 17, 2025 (SEC File No.

001-37497) (the “ 2024 Form 10-K/A ” ).

A summary description of the significant accounting policies followed by the Company is set forth in Note 1 of the Notes to Consolidated Financial Statements in the Company’s 2024 Form 10-K/A.

These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and footnotes in the Company's 2024 Form 10-K/A.

The preparation of financial statements in conformity with United States ( “ U.S.

6 unchanged sentences

and the Bank.

In determining the appropriateness of segment definition, the Company considers the components of the business about which financial information is available and components the chief operating decision maker regularly evaluates relative to resource allocation and performance assessment.

In determining the appropriateness of the segment definition, the Company considers the components of the business about which financial information is available and components the chief operating decision maker regularly evaluates relative to resource allocation and performance assessment.

Management has determined that the Company has one significant operating segment, which is providing a banking platform for small businesses nationwide.

9 unchanged sentences

Actual results could differ from those estimates.

The allowance for credit losses is a material estimate that is particularly susceptible to significant change in the near term.

The allowance for credit losses (“ACL”) is a material estimate that is particularly susceptible to significant change in the near term.

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Changes in Accounting Estimates

During the second quarter of 2024, the Company made enhancements to the qualitative framework of the allowance for credit losses.

During the third quarter of 2025, the Company made enhancements to the quantitative and qualitative components of the ACL estimate.

Within the quantitative component, the Company updated the method used to forecast the probability of default during a reasonable and supportable forecast period.

The Company changed the economic variable used in forecasting default rates from the national unemployment rate to the Baa-rated Corporate Bond Yield utilizing a logistic regression and changed the default rate forecast starting point from 36 month historical default performance to the most recent 12 month trailing average default performance.

These changes were based on a statistical analysis of historical defaults and macroeconomic factors.

In conjunction with the enhancements made to the probability of default methodology, the Company made enhancements to the qualitative framework to introduce weighting of quantifiable credit metrics used in the qualitative ACL estimate to put more weight on the metrics that are the strongest indicators of credit risk in the portfolio.

The cumulative effect of these changes was not material.

During the second quarter of 2024, the Company made enhancements to the qualitative framework of the ACL.

The enhanced framework leverages quantifiable credit risk metrics as well as current and forecasted economic conditions to determine possible portfolio outcomes that are not captured in quantitatively modeled results.

1 unchanged sentence

The result of these changes was not material.

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

These refinements have been accounted for as changes in accounting estimates under Financial Accounting Standards Board ( “ FASB ” ) Accounting Standards Codification ( “ ASC ” ) 250, Accounting Changes and Error Corrections , with prospective application beginning in the period of change.

6 unchanged sentences

During the third quarter of 2024, the building and land were sold for a gain of $ 2.4 million.

Reclassifications

Certain reclassifications have been made to the prior period's Unaudited Condensed Consolidated Financial Statements to place them on a comparable basis with the current year.

Net income and shareholders' equity previously reported were not affected by these reclassifications.

Preferred Stock

On August 4, 2025, the Company issued and sold 4,000,000 depositary shares (the “Depositary Shares”), each representing a 1/40th interest in a share of the Company’s 8.375 % Fixed Rate Series A Non-Cumulative Perpetual Preferred Stock, no par value per share (the “Series A Preferred Stock”), with a liquidation preference of $ 1,000 per share of Series A Preferred Stock (equivalent to $ 25 per Depositary Share), which represents $ 100,000,000 in aggregate liquidation preference.

Net proceeds, after underwriting discounts and expenses, totaled $ 96.3 million.

Holders of the Series A Preferred Stock and Depositary Shares will not have voting rights, except with respect to certain changes in the terms of the preferred stock, certain dividend non-payments and as otherwise required by applicable law.

The Company may redeem the Series A Preferred Stock at its option, (i) in whole or in part, from time to time, on any dividend payment date on or after September 15, 2030 or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event, in either case at a redemption price equal to $ 1,000 per share (equivalent to $ 25 per depositary share), plus any declared and unpaid dividends.

During three months ended September 30, 2025, a cash dividend of $ 0.23845 per Depositary Share of its Series A Preferred Stock was declared and paid.

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Correction of Error

Subsequent to the issuance of the Company's March 31, 2025 and June 30, 2025 Quarterly Consolidated Financial Statements on May 5, 2025 and August 5, 2025, respectively, an error was identified in the historical Condensed Consolidated Statements of Cash Flows related to the classification of cash flows between operating and investing activities associated with the proceeds received from the sale of loan participations and the related supplemental disclosures of non-cash operating, investing, and financing activities related to these loans.

Accordingly, the Company has restated the Condensed Consolidated Statements of Cash Flows to reflect the error correction for the three months ended March 31, 2025 and 2024, six months ended June 30, 2025 and 2024 and nine months ended September 30, 2024.

Net income, retained earnings and shareholders' equity previously reported were not affected by the error correction.

The effect of the above error on previously reported Condensed Consolidated Statements of Cash Flows is presented below:

As reported Corrections As restated

Condensed consolidated statement of cash flows for the three months ended March 31, 2025

Operating activities:

Proceeds from sales of loans held for sale $ 422,294 $ ( 137,954 ) $ 284,340

Net cash provided by (used in) operating activities 104,977 ( 137,954 ) ( 32,977 )

Investing activities:

Loan and lease originations and principal collections, net $ ( 524,894 ) $ 137,954 $ ( 386,940 )

Net cash used by investing activities ( 599,264 ) 137,954 ( 461,310 )

Net increase in cash and cash equivalents $ 135,463 $ — $ 135,463

Supplemental disclosures of noncash operating, investing, and financing activities

Transfer of loans held for sale to loans and leases held for investment $ 205,385 $ ( 137,370 ) $ 68,015

Transfer of loans and leases held for investment to loans held for sale 283,718 ( 274,740 ) 8,978

Condensed consolidated statement of cash flows for the six months ended June 30, 2025

Operating activities:

Proceeds from sales of loans held for sale $ 924,481 $ ( 296,882 ) $ 627,599

Net cash provided by operating activities 313,146 ( 296,882 ) 16,264

Investing activities:

Loan and lease originations and principal collections, net $ ( 984,384 ) $ 296,882 $ ( 687,502 )

Net cash used by investing activities ( 1,084,324 ) 296,882 ( 787,442 )

Net increase in cash and cash equivalents $ 53,955 $ — $ 53,955

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

As reported Corrections As restated

Supplemental disclosures of noncash operating, investing, and financing activities

Transfer of loans held for sale to loans and leases held for investment $ 408,925 $ ( 295,599 ) $ 113,326

Transfer of loans and leases held for investment to loans held for sale 610,907 ( 591,199 ) 19,708

Condensed consolidated statement of cash flows for the three months ended March 31, 2024

Operating activities:

Proceeds from sales of loans held for sale $ 258,708 $ ( 60,725 ) $ 197,983

Net cash provided by operating activities 90,893 ( 60,725 ) 30,168

Investing activities:

Loan and lease originations and principal collections, net $ ( 228,713 ) $ 60,725 $ ( 167,988 )

Net cash used by investing activities ( 278,698 ) 60,725 ( 217,973 )

Net increase in cash and cash equivalents $ 14,854 $ — $ 14,854

Supplemental disclosures of noncash operating, investing, and financing activities

Transfer of loans and leases held for investment to loans held for sale $ 63,508 $ ( 60,552 ) $ 2,956

Condensed consolidated statement of cash flows for the six months ended June 30, 2024

Operating activities:

Proceeds from sales of loans held for sale $ 577,817 $ ( 115,071 ) $ 462,746

Net cash provided by operating activities 174,769 ( 115,071 ) 59,698

Investing activities:

Loan and lease originations and principal collections, net $ ( 577,457 ) $ 115,071 $ ( 462,386 )

Net cash used by investing activities ( 664,282 ) 115,071 ( 549,211 )

Net increase in cash and cash equivalents $ 32,909 $ — $ 32,909

Supplemental disclosures of noncash operating, investing, and financing activities

Transfer of loans and leases held for investment to loans held for sale $ 178,482 $ ( 114,800 ) $ 63,682

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

As reported Corrections As restated

Condensed consolidated statement of cash flows for the nine months ended September 30, 2024

Operating activities:

Proceeds from sales of loans held for sale $ 1,003,740 $ ( 258,677 ) $ 745,063

Net cash provided by operating activities 365,783 ( 258,677 ) 107,106

Investing activities:

Loan and lease originations and principal collections, net $ ( 1,341,740 ) $ 258,677 $ ( 1,083,063 )

Net cash used by investing activities ( 1,492,878 ) 258,677 ( 1,234,201 )

Net increase in cash and cash equivalents $ 84,045 $ — $ 84,045

Supplemental disclosures of noncash operating, investing, and financing activities

Transfer of loans and leases held for investment to loans held for sale $ 340,121 $ ( 257,770 ) $ 82,351

Recent Accounting Pronouncements

25 unchanged sentences

Notes to Unaudited Condensed Consolidated Financial Statements

In September 2025, the FASB issued ASU 2025-06 “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software” (“ASU 2025-06”).

ASU 2025-06 indicates an entity should start capitalizing software costs when both of the following occur:

(i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended.

The amendments in this standard will be effective for the Company on January 1, 2028.

The Company is currently evaluating the impact the amendments will have on the consolidated financial statements.

In September 2025, the FASB issued ASU 2025-07 “Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606):

Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract” (“ASU 2025-07”).

ASU 2025-07 adds a scope exception from derivative accounting for nonexchange traded contracts with underlyings based on operations or activities specific to one of the parties to the contract.

It also clarifies that the revenue guidance in ASC 606 applies initially to share-based noncash consideration received from a customer for the transfer of goods or services.

The guidance in other ASCs, including derivatives (ASC 815) and equity securities (ASC 321), is not applied unless and until the entity’s right to receive or retain the share-based noncash consideration is unconditional under ASC 606.The amendments in this standard will be effective for the Company on January 1, 2027.

The Company is currently evaluating the impact the amendments will have on the consolidated financial statements.

Legislative Developments

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

Basic earnings per share:

Net income attributable to Live Oak Bancshares, Inc.

$ 23,428 $ 26,963 $ 33,145 $ 54,549

Net income attributable to common shareholders $ 25,562 $ 13,025 $ 58,707 $ 67,574

Weighted-average basic shares outstanding 45,780,794 45,073,482 45,632,313 44,937,409

1 unchanged sentence

Diluted earnings per share:

Net income attributable to Live Oak Bancshares, Inc., for diluted earnings per share $ 23,428 $ 26,963 $ 33,145 $ 54,549

Net income attributable to common shareholders $ 25,562 $ 13,025 $ 58,707 $ 67,574

Total weighted-average basic shares outstanding 45,780,794 45,073,482 45,632,313 44,937,409

3 unchanged sentences

Anti-dilutive stock options and restricted stock grants 490,788 297,730 1,389,056 567,464

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Available-for-Sale

The carrying amount of investments and their approximate fair values are reflected in the following table:

June 30, 2025 Amortized

September 30, 2025 Amortized

government agencies $ 13,596 $ 25 $ 30 $ 13,591

9 unchanged sentences

Total $ 1,356,549 $ 1,083 $ 109,429 $ 1,248,203

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

During the three months ended June 30, 2025, four securities totaling $ 11.3 million were settled and one security totaling $ 4.0 million matured.

During the six months ended June 30, 2025, seven securities totaling $ 16.9 million were settled and one security totaling $ 4.0 million matured.

During the three months ended June 30, 2024, one security totaling $ 155 thousand was settled and one security totaling $ 3.0 million matured.

During the six months ended June 30, 2024, two securities totaling $ 14.8 million were settled, one security totaling $ 2.5 million was called and one security totaling $ 3.0 million matured.

Accrued interest receivable on available-for-sale securities totaled $ 4.7 million and $ 4.2 million at June 30, 2025 and December 31, 2024, respectively, and is included in other assets in the accompanying Unaudited Condensed Consolidated Balance Sheets.

During the three months ended September 30, 2025, six securities totaling $ 12.5 million were settled and one security totaling $ 3.0 million matured.

During the nine months ended September 30, 2025, thirteen securities totaling $ 29.4 million were settled and two securities totaling $ 7.0 million matured.

During the three months ended September 30, 2024, four securities totaling $ 3.7 million were settled.

During the nine months ended September 30, 2024, six securities totaling $ 18.5 million were settled, one security totaling $ 2.5 million was called and one security totaling $ 3.0 million matured.

Accrued interest receivable on available-for-sale securities totaled $ 4.8 million and $ 4.2 million at September 30, 2025 and December 31, 2024, respectively, and is included in other assets in the accompanying Unaudited Condensed Consolidated Balance Sheets.

The following tables show debt securities available-for-sale in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.

Less Than 12 Months 12 Months or More Total

June 30, 2025 Fair

September 30, 2025 Fair

government agencies $ 2,993 $ 7 $ 2,957 $ 23 $ 5,950 $ 30

8 unchanged sentences

Total $ 273,970 $ 4,362 $ 872,653 $ 105,067 $ 1,146,623 $ 109,429

At June 30, 2025, there were 395 mortgage-backed securities, two U.S.

government agencies and one municipal bond in unrealized loss positions for greater than 12 months.

There were 35 mortgage-backed securities and two municipal bonds in unrealized loss positions for less than 12 months.

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

At September 30, 2025, there were 385 mortgage-backed securities, one U.S.

government agency and one municipal bond in unrealized loss positions for greater than 12 months.

There were 15 mortgage-backed securities, one U.S.

government agency and two municipal bonds in unrealized loss positions for less than 12 months.

Unrealized losses at December 31, 2024 were comprised of 404 mortgage-backed securities, three U.S.

4 unchanged sentences

Since none of the unrealized losses relate to the issuers' ability to honor redemption obligations, and the Company does not intend to sell the related securities and does not believe it is more likely than not that it will be required to sell the securities before recovery of amortized cost, none of the losses have been recognized in the Company’s Unaudited Condensed Consolidated Statements of Income.

All mortgage-backed securities in the Company’s portfolio at June 30, 2025 and December 31, 2024 were backed by U.S.

All mortgage-backed securities in the Company’s portfolio at September 30, 2025 and December 31, 2024 were backed by U.S.

government sponsored enterprises (“GSEs”).

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The following is a summary of investment securities by maturity:

June 30, 2025

September 30, 2025

Available-for-Sale

1 unchanged sentence

government agencies

Within one year $ 3,000 $ 2,996

One to five years $ 3,727 $ 3,707

14 unchanged sentences

Actual results will differ as the loans underlying the mortgage-backed securities may prepay sooner than scheduled.

At June 30, 2025, investment securities with a fair value of $ 597.0 million and amortized cost of $ 654.2 million were pledged to support unused borrowing capacity.

At September 30, 2025, investment securities with a fair value of $ 580.2 million and amortized cost of $ 630.2 million were pledged to support unused borrowing capacity.

At December 31, 2024, investment securities with a fair value of $ 621.4 million and amortized cost of $ 695.1 million were pledged to support unused borrowing capacity.

5 unchanged sentences

Equity Method Accounting

The carrying amount and ownership percentage of each equity method investment at June 30, 2025 and December 31, 2024 is reflected in the following table:

June 30, 2025 December 31, 2024

The carrying amount and ownership percentage of each equity method investment at September 30, 2025 and December 31, 2024 is reflected in the following table:

September 30, 2025 December 31, 2024

Amount Ownership % Amount Ownership %

15 unchanged sentences

Total $ 84,799 $ 91,003

(1) Investment unfunded commitments of $ 4.8 million and $ 5.0 million as of June 30, 2025 and December 31, 2024, respectively.

(2) Investment unfunded commitments of $ 472 thousand and $ 492 thousand as of June 30, 2025 and December 31, 2024, respectively.

(3) Investment unfunded commitments of $ 4.5 million and $ 5.2 million as of June 30, 2025 and December 31, 2024, respectively.

(4) Investment unfunded commitments of $ 6.1 million and $ 6.5 million as of June 30, 2025 and December 31, 2024, respectively.

(1) On October 21, 2025, the Company sold all interest in Apiture, Inc.

Please refer to Note 11.

Subsequent Event for details.

(2) Investment unfunded commitments of $ 4.8 million and $ 5.0 million as of September 30, 2025 and December 31, 2024, respectively.

(3) Investment unfunded commitments of $ 472 thousand and $ 492 thousand as of September 30, 2025 and December 31, 2024, respectively.

(4) Investment unfunded commitments of $ 4.0 million and $ 5.2 million as of September 30, 2025 and December 31, 2024, respectively.

(5) Investment unfunded commitments of $ 5.8 million and $ 6.5 million as of September 30, 2025 and December 31, 2024, respectively.

(6) Investee is accounted for under equity method due to the Company's potential influence with investment advisor.

2 unchanged sentences

As of December 31, 2024, the Company had an unfunded commitment of $ 1.7 million in Estrella Landing.

There was no unfunded commitment as of June 30, 2025.

There was no unfunded commitment as of September 30, 2025.

(8) Solar tax credit investments includes Green Sun Tenant LLC (“Green Sun”), SVA 2021-2 TE Holdco LLC (“Sun Vest”), EG5 CSP1 Holding LLC (“HEP”), and HRE Lessee I, LLC (“Heelstone”), which the Company holds a 99.0 % limited member interest in all investments.

4 unchanged sentences

Equity Security Accounting

The carrying amount of the Company’s investments in non-marketable equity securities with no readily determinable fair value and amounts recognized in earnings on a cumulative basis as of June 30, 2025 and as of and for the six months ended June 30, 2025 and 2024 is reflected in the following table:

As of and for the six month period ended

Cumulative Adjustments June 30, 2025 June 30, 2024

The carrying amount of the Company’s investments in non-marketable equity securities with no readily determinable fair value for the nine months ended September 30, 2025 and 2024 is reflected in the following table:

As of and for the nine month period ended

September 30, 2025 September 30, 2024

Carrying value (1)

3 unchanged sentences

Upward changes for observable prices (2)

52,029 1,128 56

Downward changes for observable prices ( 158 ) ( 369 )

Net upward (downward) change $ 970 $ 40

(1) Investment unfunded commitments of $ 5.3 million and $ 2.7 million as of June 30, 2025, and June 30, 2024, respectively.

(2) Cumulative adjustments excludes $ 13.9 million in realized gains for sale of an investment in the second quarter of 2021.

For the three and six months ended June 30, 2025, the Company recognized unrealized gains on all equity securities held at the reporting date of $ 959 thousand and $ 966 thousand, respectively.

For the three and six months ended June 30, 2024, the Company recognized unrealized gains (losses) on all equity securities held at the reporting date of $ 31 thousand and $( 269 ) thousand, respectively.

(1) Investment unfunded commitments of $ 6.9 million and $ 4.4 million as of September 30, 2025, and September 30, 2024, respectively.

(2) The equity securities portfolio has recognized cumulative adjustments of $ 49.7 million over the life of the equity security portfolio as of September 30, 2025.

For the three and nine months ended September 30, 2025, the Company recognized unrealized gains on all equity securities held at the reporting date of $ 5 thousand and $ 986 thousand, respectively.

For the three and nine months ended September 30, 2024, the Company recognized unrealized gains on all equity securities held at the reporting date of $ 383 thousand and $ 114 thousand, respectively.

Variable Interest Entities (“VIE”s)

28 unchanged sentences

Notes to Unaudited Condensed Consolidated Financial Statements

The following table provides a summary of the VIEs that the Company has not consolidated as of June 30, 2025 and December 31, 2024:

June 30, 2025 Investment Carrying Amount Maximum Exposure to Loss Liability Recognized Classification

The following table provides a summary of the VIEs that the Company has not consolidated as of September 30, 2025 and December 31, 2024:

September 30, 2025 Investment Carrying Amount Maximum Exposure to Loss Liability Recognized Classification

Solar tax credit investments $ 4,250 $ 27,691 $ — Other assets (1)

26 unchanged sentences

Total Loans and Leases

June 30, 2025

September 30, 2025

Commercial & Industrial

13 unchanged sentences

Small Business Banking 665,053 4,850 5,459 10,309 675,362 25,016 700,378

Commercial Banking 596 — — — 596 — 596

Total 665,649 4,850 5,459 10,309 675,958 25,016 700,974

38 unchanged sentences

The following tables present asset quality indicators by portfolio class and origination year.

Loans and Leases Held for Investment and Credit Quality in the Company’s 2024 Form 10-K for additional discussion around the asset quality indicators that the Company uses to manage and monitor credit risk.

Loans and Leases Held for Investment and Credit Quality in the Company’s 2024 Form 10-K/A for additional discussion around the asset quality indicators that the Company uses to manage and monitor credit risk.

Live Oak Bancshares, Inc.

4 unchanged sentences

Converted to Term Total (1)

June 30, 2025

September 30, 2025

Small Business Banking

41 unchanged sentences

Total $ 652 $ 4,215 $ 23,806 $ 6,447 $ 4,218 $ 3,481 $ 5,090 $ 170 $ 48,079

(1) Excludes $ 303.8 million and $ 328.7 million of loans accounted for under the fair value option as of June 30, 2025 and December 31, 2024, respectively.

(1) Excludes $ 280.3 million and $ 328.7 million of loans accounted for under the fair value option as of September 30, 2025 and December 31, 2024, respectively.

The following tables present guaranteed and unguaranteed loan and lease balances by asset quality indicator:

June 30, 2025 Loan and Lease

September 30, 2025 Loan and Lease

Guaranteed Balance Unguaranteed Balance % Guaranteed

9 unchanged sentences

Total $ 9,934,609 $ 3,162,994 $ 6,771,615 31.8 %

(1) Excludes $ 303.8 million and $ 328.7 million of loans accounted for under the fair value option as of June 30, 2025 and December 31, 2024, respectively.

(1) Excludes $ 280.3 million and $ 328.7 million of loans accounted for under the fair value option as of September 30, 2025 and December 31, 2024, respectively.

Live Oak Bancshares, Inc.

1 unchanged sentence

Nonaccrual Loans and Leases

As of June 30, 2025 and December 31, 2024 there were no loans greater than 90 days past due and still accruing.

There was no interest income recognized on nonaccrual loans and leases during the three and six months ended June 30, 2025 and 2024.

Accrued interest receivable on loans totaled $ 79.8 million and $ 80.7 million at June 30, 2025 and December 31, 2024 , respectively, and is included in other assets in the accompanying Unaudited Condensed Consolidated Balance Sheets.

Nonaccrual loans and leases held for investment as of June 30, 2025 and December 31, 2024 are as follows:

June 30, 2025 Loan and Lease

As of September 30, 2025 and December 31, 2024 there were no loans greater than 90 days past due and still accruing.

There was no interest income recognized on nonaccrual loans and leases during the three and nine months ended September 30, 2025 and 2024.

Accrued interest receivable on loans totaled $ 81.8 million and $ 80.7 million at September 30, 2025 and December 31, 2024 , respectively, and is included in other assets in the accompanying Unaudited Condensed Consolidated Balance Sheets.

Nonaccrual loans and leases held for investment as of September 30, 2025 and December 31, 2024 are as follows:

September 30, 2025 Loan and Lease

Balance Unguaranteed Balance Unguaranteed

Exposure with No Allowance for Credit Losses (“ACL”)

Exposure with No ACL

Commercial & Industrial

37 unchanged sentences

The following table summarizes the amount of accrued interest reversed during the periods presented:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

Commercial & Industrial $ 1,292 $ 950 $ 2,333 $ 1,924

5 unchanged sentences

Fair Value of Financial Instruments for additional information.

The following table presents the amortized cost basis of collateral-dependent loans and leases, which are individually evaluated to determine expected credit losses, as of June 30, 2025 and December 31, 2024:

The following table presents the amortized cost basis of collateral-dependent loans and leases, which are individually evaluated to determine expected credit losses, as of September 30, 2025 and December 31, 2024:

Total Collateral-Dependent Loans Unguaranteed Portion

June 30, 2025 Real Estate Business Assets Real Estate Business Assets Allowance for Credit Losses

September 30, 2025 Real Estate Business Assets Real Estate Business Assets Allowance for Credit Losses

Commercial & Industrial

4 unchanged sentences

Small Business Banking 79,131 — 22,246 — 527

Total 48,859 — 12,604 — 186

Commercial Land

Small Business Banking 1,608 — 168 — —

Commercial Banking 5,570 — 516 — —

Total 84,701 — 22,762 — 527

16 unchanged sentences

Allowance for Credit Losses - Loans and Leases

Organization and Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements in the Company’s 2024 Form 10-K for a description of the methodologies used to estimate the ACL.

Basis of Presentation above and Note 1.

Organization and Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements in the Company’s 2024 Form 10-K/A for a description of the methodologies used to estimate the ACL.

The following table details activity in the ACL by portfolio segment allowance for the periods presented:

3 unchanged sentences

Real Estate Commercial

June 30, 2025

September 30, 2025

Beginning Balance $ 138,960 $ 6,036 $ 34,248 $ 2,987 $ 182,231

1 unchanged sentence

Recoveries 1,010 — 31 83 1,124

Provision (Recovery) 19,166 324 5,098 ( 1,096 ) 23,492

Provision 12,662 304 6,438 881 20,285

Ending Balance $ 137,863 $ 6,340 $ 37,546 $ 3,951 $ 185,700

June 30, 2024

September 30, 2024

Beginning Balance $ 108,166 $ 3,694 $ 23,540 $ 2,467 $ 137,867

1 unchanged sentence

Recoveries 41 — 269 8 318

Provision (Recovery) 17,972 ( 563 ) ( 7,977 ) ( 2,353 ) 7,079

Provision 26,580 291 4,437 1,272 32,580

Ending Balance $ 133,048 $ 3,985 $ 27,973 $ 3,731 $ 168,737

Six Months Ended Commercial

Nine Months Ended Commercial

& Industrial Construction &

1 unchanged sentence

Real Estate Commercial

June 30, 2025

September 30, 2025

Beginning Balance $ 129,007 $ 4,943 $ 29,501 $ 4,065 $ 167,516

3 unchanged sentences

Ending Balance $ 137,863 $ 6,340 $ 37,546 $ 3,951 $ 185,700

June 30, 2024

September 30, 2024

Beginning Balance $ 87,581 $ 4,717 $ 28,864 $ 4,678 $ 125,840

3 unchanged sentences

Ending Balance $ 133,048 $ 3,985 $ 27,973 $ 3,731 $ 168,737

During the three months ended June 30, 2025, the ACL decreased primarily as a result of moderating credit trends and net charge-offs of individually evaluated loans with specific reserves recorded in prior periods.

During the six months ended June 30, 2025, the ACL increased as a result of growth in the loan and lease portfolio, the impact of the macroeconomic environment on our small business and commercial borrowers, and changes in the macroeconomic outlook.

Loss rates are adjusted for twelve month forecasted unemployment followed by a twelve-month straight-line reversion period.

During the three months ended June 30, 2024, the ACL decreased primarily as a result of a decrease in specific reserves on loans individually evaluated for impairment.

During the six months ended June 30, 2024, the ACL increased as a result of loan growth and changes in the macroeconomic outlook.

During the three months ended September 30, 2025, the ACL increased primarily as a result of loan growth and moderating credit trends.

During the nine months ended September 30, 2025, the ACL increased primarily as a result of loan growth and the impact of charge offs amid a challenging macroeconomic environment.

Elevated interest rates and inflationary pressures have placed financial strain on some small business and commercial borrowers which resulted in a continued increase in charge-offs.

Loss rates are adjusted for twelve month forecasted Baa-rated corporate bond yields followed by a twelve-month straight-line reversion period.

During the three months ended September 30, 2024, the ACL increased primarily as a result of an increase in specific reserves on loans individually evaluated for impairment.

During the nine months ended September 30, 2024, the ACL increased as a result of specific reserve changes on individually evaluated loans and continued growth of the loan and lease portfolio.

Loss rates are adjusted for twelve month forecasted unemployment followed by a twelve-month straight-line reversion period.

5 unchanged sentences

The Company typically does not offer principal forgiveness.

The following tables summarize the amortized cost basis of loans that were modified during the three and six months ended June 30, 2025 and June 30, 2024, respectively:

Three Months Ended June 30, 2025 Other-Than-Insignificant

Payment Delay Term Extension

The following tables summarize the amortized cost basis of loans that were modified during the three and nine months ended September 30, 2025 and September 30, 2024, respectively:

Three Months Ended September 30, 2025 Other-Than-Insignificant

Payment Delay Term Extension Interest Rate Reduction Combination - Other-Than-Insignificant Payment Delay & Interest Rate Reduction

Combination - Term Extension & Interest Rate Reduction % of Total Class of

3 unchanged sentences

Total $ 13,220 $ 5,701 $ 2,015 $ 6,019 $ 8,066 0.79 %

Six Months Ended June 30, 2025 Other-Than-Insignificant

Payment Delay Term Extension Interest Rate Reduction Combination - Term Extension, Other-Than-Insignificant Payment Delay & Interest Rate Reduction Combination - Term Extension & Other-Than-Insignificant Payment Delay Combination - Term Extension & Interest Rate Reduction % of Total Class of

Nine Months Ended September 30, 2025 Other-Than-Insignificant

Payment Delay Term Extension Interest Rate Reduction Combination - Term Extension, Other-Than-Insignificant Payment Delay & Interest Rate Reduction Combination - Other-Than-Insignificant Payment Delay & Interest Rate Reduction Combination - Term Extension & Other-Than-Insignificant Payment Delay Combination - Term Extension & Interest Rate Reduction % of Total Class of

Financing Receivable

2 unchanged sentences

Total $ 18,747 $ 19,949 $ 11,807 $ 2,906 $ 6,019 $ 3,009 $ 17,953 1.55 %

Three Months Ended June 30, 2024 Other-Than-Insignificant

Payment Delay % of Total Class of

Three Months Ended September 30, 2024 Other-Than-Insignificant

Payment Delay Interest Rate Reduction Combination - Term Extension & Interest Rate Reduction % of Total Class of

Financing Receivable

2 unchanged sentences

Total $ 2,014 $ 3,478 $ 2,500 0.19 %

Six Months Ended June 30, 2024 Other-Than-Insignificant

Payment Delay % of Total Class of

Nine Months Ended September 30, 2024 Other-Than-Insignificant

Payment Delay Interest Rate Reduction Combination - Term Extension & Interest Rate Reduction % of Total Class of

Financing Receivable

2 unchanged sentences

Total $ 8,278 $ 3,478 $ 2,500 0.30 %

As of June 30, 2025, the Company had commitments to lend additional funds to these borrowers totaling $ 28 thousand.

As of September 30, 2025, the Company had commitments to lend additional funds to these borrowers totaling $ 28 thousand.

As of December 31, 2024, the Company had commitments to lend additional funds to these borrowers totaling $ 6.3 million.

The following table presents an aging analysis of loans that were modified within the twelve months ended June 30, 2025 and June 30, 2024, respectively:

June 30, 2025 Current 30-89 Days

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The following table presents an aging analysis of loans that were modified within the twelve months ended September 30, 2025 and September 30, 2024, respectively:

September 30, 2025 Current 30-89 Days

Past Due 90 Days or More Past Due Total Past Due

2 unchanged sentences

Total $ 90,366 $ 423 $ 2,243 $ 2,666

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2024 Current 30-89 Days

September 30, 2024 Current 30-89 Days

Past Due 90 Days or More Past Due Total Past Due

3 unchanged sentences

The following tables summarize the financial impacts of loan modifications made to borrowers experiencing financial difficulty during the periods presented:

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

Weighted Average

2 unchanged sentences

Small Business Banking 2.25 % 65

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

Weighted Average

2 unchanged sentences

Small Business Banking 3.47 % 55

There were no financial impacts related to the loan modifications related to the loan modifications made to borrowers experiencing financial difficulty during the three and six months ended June 30, 2024.

Additionally, there were no loans that were modified within the twelve months ended June 30, 2025 and June 30, 2024 that subsequently defaulted during the periods presented.

Three Months Ended September 30, 2024

Weighted Average

Interest Rate Reduction Weighted Average

Term Extension (in Months)

Commercial Lending 5.00 % 7

Nine Months Ended September 30, 2024

Weighted Average

Interest Rate Reduction Weighted Average

Term Extension (in Months)

Commercial Lending 5.00 % 7

Additionally, there were no loans that were modified within the twelve months ended September 30, 2025 and September 30, 2024 that subsequently defaulted during the periods presented.

The Company’s ACL is estimated using lifetime historical loan performance adjusted to reflect current conditions and reasonable and supportable forecasts.

2 unchanged sentences

As a result, the impact of loss mitigation strategies is captured in the estimates of PD and LGD.

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Lessor Equipment Leasing

7 unchanged sentences

The net investment in direct finance leases included in loans and leases held for investment are as follows:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Gross direct finance lease payments receivable $ 250 $ 961

1 unchanged sentence

Net investment in direct financing leases $ 247 $ 922

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Future minimum lease payments to be received under finance leases are as follows:

As of June 30, 2025

Interest income of $ 12 thousand and $ 48 thousand was recognized in the three months ended June 30, 2025 and 2024, respectively.

Interest income of $ 29 thousand and $ 66 thousand was recognized in the six months ended June 30, 2025 and 2024, respectively.

As of September 30, 2025

Interest income of $ 7 thousand and $ 29 thousand was recognized in the three months ended September 30, 2025 and 2024, respectively.

Interest income of $ 36 thousand and $ 95 thousand was recognized in the nine months ended September 30, 2025 and 2024, respectively.

Operating Leases

9 unchanged sentences

Repair and maintenance costs that do not extend the lives of the rental equipment are charged to equipment expense at the time the costs are incurred.

As of June 30, 2025 and December 31, 2024, the Company had a net investment of $ 81.2 million and $ 93.4 million, respectively, in assets included in premises and equipment, net that are subject to operating leases.

Of the net investment, the gross balance of the assets was $ 142.4 million and $ 159.7 million as of June 30, 2025 and December 31, 2024, respectively.

Accumulated depreciation was $ 61.2 million and $ 66.2 million as of June 30, 2025 and December 31, 2024, respectively.

Depreciation expense recognized on these assets was $ 2.5 million and $ 2.4 million for the three months ended June 30, 2025 and 2024.

Depreciation expense recognized on these assets was $ 5.1 million and $ 4.7 million for the six months ended June 30, 2025 and 2024, respectively.

Lease income of $ 3.0 million and $ 2.3 million was recognized in the three months ended June 30, 2025 and 2024, respectively.

Lease income of $ 5.5 million and $ 4.7 million was recognized in the six months ended June 30, 2025 and 2024, respectively.

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

As of September 30, 2025 and December 31, 2024, the Company had a net investment of $ 79.1 million and $ 93.4 million, respectively, in assets included in premises and equipment, net that are subject to operating leases.

Of the net investment, the gross balance of the assets was $ 142.4 million and $ 159.7 million as of September 30, 2025 and December 31, 2024, respectively.

Accumulated depreciation was $ 63.3 million and $ 66.2 million as of September 30, 2025 and December 31, 2024, respectively.

Depreciation expense recognized on these assets was $ 2.2 million and $ 2.4 million for the three months ended September 30, 2025 and 2024.

Depreciation expense recognized on these assets was $ 7.2 million and $ 7.1 million for the nine months ended September 30, 2025 and 2024, respectively.

Lease income of $ 2.0 million and $ 2.3 million was recognized in the three months ended September 30, 2025 and 2024, respectively.

Lease income of $ 7.5 million and $ 7.1 million was recognized in the nine months ended September 30, 2025 and 2024, respectively.

A maturity analysis of future minimum lease payments to be received under non-cancelable operating leases is as follows:

As of June 30, 2025

As of September 30, 2025

Thereafter 7,309

Total $ 32,447

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Servicing Assets

Loans serviced for others are not included in the accompanying Unaudited Condensed Consolidated Balance Sheets.

The unpaid principal balance of loans serviced for others requiring recognition of a servicing asset was $ 3.76 billion and $ 3.46 billion at June 30, 2025 and December 31, 2024, respectively.

The unpaid principal balance for all loans serviced for others was $ 5.32 billion and $ 4.72 billion at June 30, 2025 and December 31, 2024, respectively.

The unpaid principal balance of loans serviced for others requiring recognition of a servicing asset was $ 3.93 billion and $ 3.46 billion at September 30, 2025 and December 31, 2024, respectively.

The unpaid principal balance for all loans serviced for others was $ 5.56 billion and $ 4.72 billion at September 30, 2025 and December 31, 2024, respectively.

The following table summarizes the activity pertaining to servicing rights measured at fair value:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

6 unchanged sentences

Fair Value of Financial Instruments for further details about servicing assets measured at fair value.

The fair value of servicing rights was determined using a weighted average discount rate of 13.5 % on June 30, 2025 and 14.5 % on June 30, 2024.

The fair value of servicing rights was determined using a weighted average prepayment speed of 16.0 % on June 30, 2025 and 15.7 % on June 30, 2024, with the actual rate depending on the stratification of the specific right.

The fair value of servicing rights was determined using a weighted average discount rate of 13.3 % on September 30, 2025 and 14.5 % on September 30, 2024.

The fair value of servicing rights was determined using a weighted average prepayment speed of 16.1 % on September 30, 2025 and 15.7 % on September 30, 2024, with the actual rate depending on the stratification of the specific right.

Changes to fair value are reported in loan servicing asset revaluation within the Unaudited Condensed Consolidated Statements of Income.

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The table below reflects the sensitivity of the current fair value of servicing assets to immediate adverse changes in the above key assumptions with all other assumptions remaining static:

As of September.

30, 2025 As of December.

11 unchanged sentences

Changes in one factor may result in changes in another.

As of June 30, 2025 and December 31, 2024, the Company had servicing assets related to conventional commercial loans carried at amortized cost of $ 274 thousand and $ 356 thousand, respectively.

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

As of September 30, 2025 and December 31, 2024, the Company had servicing assets related to conventional commercial loans carried at amortized cost of $ 170 thousand and $ 356 thousand, respectively.

Total outstanding borrowings consisted of the following:

September 30,

2025 December 31,

10 unchanged sentences

(1) Includes finance leases.

As of June 30, 2025 and December 31, 2024, the Company’s unused borrowing capacity was $ 3.78 billion and $ 3.55 billion, respectively, based upon securities and loans identified as available for collateral.

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

As of September 30, 2025 and December 31, 2024, the Company’s unused borrowing capacity was $ 3.90 billion and $ 3.55 billion, respectively, based upon securities and loans identified as available for collateral.

Unused borrowing capacity consists of access through the Federal Reserve Bank's discount window, available lines of credit with the Federal Home Loan Bank and other correspondent banks, and access to a repurchase agreement.

If additional collateral is available, the Company's aggregate borrowing capacity with all of the above sources is $ 6.48 billion and $ 6.10 billion as of June 30, 2025 and December 31, 2024, respectively.

If additional collateral is available, the Company's aggregate borrowing capacity with all of the above sources is $ 6.59 billion and $ 6.10 billion as of September 30, 2025 and December 31, 2024, respectively.

Fair Value of Financial Instruments

6 unchanged sentences

Financial instruments are considered Level 3 when their values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable and when determination of the fair value requires significant management judgment or estimation.

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Recurring Fair Value

The table below provides a rollforward of the Level 3 equity warrant asset fair values:

Three Months Ended June 30, Six Months Ended June 30,

The table below provides a rollforward of the fair value of the Level 3 equity warrant assets:

Three Months Ended September 30, Nine Months Ended September 30,

Equity Warrant Assets 2025 2024 2025 2024

5 unchanged sentences

The tables below present the recorded amount of assets and liabilities measured at fair value on a recurring basis.

June 30, 2025 Total Level 1 Level 2 Level 3

September 30, 2025 Total Level 1 Level 2 Level 3

Investment securities available-for-sale

4 unchanged sentences

Loans held for investment (2)

280,291 — — 280,291

Servicing assets (3)

3 unchanged sentences

Total assets at fair value $ 1,722,464 $ — $ 1,373,316 $ 349,148

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

December 31, 2024 Total Level 1 Level 2 Level 3

5 unchanged sentences

Loans held for investment (2)

328,746 — — 328,746

Servicing assets (3)

3 unchanged sentences

Total assets at fair value $ 1,640,357 $ — $ 1,248,578 $ 391,779

(1) During the three and six months ended June 30, 2025 and June 30, 2024 there were no level 3 fair value adjustment gains or losses.

(1) During the three and nine months ended September 30, 2025, the Company recorded a principal paydown of $ 1 thousand.

During the three and nine months ended September 30, 2024 there were no level 3 fair value adjustment gains or losses.

(2) Loans accounted for under the fair value option.

(3) See Note 7 for a rollforward of recurring Level 3 fair values for servicing assets.

1 unchanged sentence

For additional information on the valuation techniques and significant inputs for Level 2 and Level 3 assets and liabilities that are measured at fair value on a recurring basis, see Note 10.

Fair Value of Financial Instruments in the Company’s 2024 Form 10-K.

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Fair Value of Financial Instruments in the Company’s 2024 Form 10-K/A.

Fair Value Option

5 unchanged sentences

In accordance with GAAP, any loans for which fair value was previously elected continue to be measured as such.

There were no loans accounted for under the fair value option that were 90 days or more past due and still accruing interest at June 30, 2025 or December 31, 2024.

The unpaid principal balance of unguaranteed exposure for nonaccruals was $ 9.9 million and $ 10.0 million at June 30, 2025 and December 31, 2024, respectively.

The following tables provide more information about the fair value carrying amount and the unpaid principal outstanding of loans accounted for under the fair value option at June 30, 2025 and December 31, 2024.

June 30, 2025

There were no loans accounted for under the fair value option that were 90 days or more past due and still accruing interest at September 30, 2025 or December 31, 2024.

The unpaid principal balance of unguaranteed exposure for nonaccruals was $ 8.2 million and $ 10.0 million at September 30, 2025 and December 31, 2024, respectively.

The following tables provide more information about the fair value carrying amount and the unpaid principal outstanding of loans accounted for under the fair value option at September 30, 2025 and December 31, 2024.

September 30, 2025

Total Loans Nonaccruals 90 Days or More Past Due

8 unchanged sentences

$ 280,291 $ 291,530 $ ( 11,239 ) $ 61,662 $ 63,489 $ ( 1,827 ) $ 50,312 $ 51,612 $ ( 1,300 )

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

December 31, 2024

10 unchanged sentences

The following table presents the net gains (losses) from changes in fair value.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

Gains (Losses) on Loans Accounted for under the Fair Value Option 2025 2024 2025 2024

1 unchanged sentence

$ ( 350 ) $ 2,255 $ ( 302 ) $ 2,208

Live Oak Bancshares, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The following tables summarize the activity pertaining to loans accounted for under the fair value option:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

Loans held for investment 2025 2024 2025 2024

7 unchanged sentences

The Company has no liabilities recorded at fair value on a non-recurring basis.

June 30, 2025 Total Level 1 Level 2 Level 3

September 30, 2025 Total Level 1 Level 2 Level 3

Collateral-dependent loans $ 15,409 $ — $ — $ 15,409

6 unchanged sentences

For additional information on the valuation techniques and significant inputs for Level 2 and Level 3 assets that are measured at fair value on a non-recurring basis, see Note 10.

Fair Value of Financial Instruments in the Company’s 2024 Form 10-K.

Fair Value of Financial Instruments in the Company’s 2024 Form 10-K/A.

Live Oak Bancshares, Inc.

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Level 3 Analysis

For Level 3 assets measured at fair value on a recurring or non-recurring basis as of June 30, 2025 and December 31, 2024, the significant unobservable inputs used in the fair value measurements were as follows:

June 30, 2025

For Level 3 assets measured at fair value on a recurring or non-recurring basis as of September 30, 2025 and December 31, 2024, the significant unobservable inputs used in the fair value measurements were as follows:

September 30, 2025

Level 3 Assets with Significant Unobservable Inputs

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Foreclosed assets $ 1,944 Discounted appraisals Appraisal adjustments (2)

10.0 % 10.0 %

(1) Weighted averages are determined by the relative fair value of the instruments or the relative contribution to the instruments fair value.

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The carrying amounts and estimated fair values of the Company’s financial instruments not measured at fair value on a recurring or non-recurring basis are as follows:

June 30, 2025 Carrying

September 30, 2025 Carrying

Identical Assets/Liabilities

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A summary of the Company’s commitments is as follows:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Commitments to extend credit (1) (2)

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(1) Includes unfunded overdraft protection.

(2) Includes $ 1.77 billion and $ 1.20 billion at June 30, 2025 and December 31, 2024, respectively, for which loan commitment letters have been issued.

(2) Includes $ 1.62 billion and $ 1.20 billion at September 30, 2025 and December 31, 2024, respectively, for which loan commitment letters have been issued.

Such letters do not represent a present obligation to extend credit due to the variety of conditions contained in the letters.

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Collateral held varies as specified above and is required in instances which the Company deems necessary.

The allowance for off-balance-sheet credit exposures was $ 12.9 million and $ 13.6 million at June 30, 2025 and December 31, 2024, respectively.

During the three and six months ended June 30, 2025, the Company recorded $ 240 thousand and $ 718 thousand in recoveries related to the allowance for off-balance-sheet credit exposures, respectively.

During the three and six months ended June 30, 2024, the Company recorded $ 4.7 million and $ 5.6 million in expense related to the allowance for off-balance-sheet credit exposures, respectively.

The allowance for off-balance-sheet credit exposures was $ 14.8 million and $ 13.6 million at September 30, 2025 and December 31, 2024, respectively.

During the three and nine months ended September 30, 2025, the Company recorded $ 1.9 million and $ 1.2 million in expense related to the allowance for off-balance-sheet credit exposures, respectively.

During the three and nine months ended September 30, 2024, the Company recorded $ 1.9 million and $ 7.5 million in expense related to the allowance for off-balance-sheet credit exposures, respectively.

Beginning in the second quarter of 2024, this expense was presented in the provision for credit losses.

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Other Commitments

Investments for unfunded commitments to provide capital contributions for equity fund investments as of June 30, 2025 and December 31, 2024.

Investments for unfunded commitments to provide capital contributions for equity fund investments as of September 30, 2025 and December 31, 2024.

Concentrations of Credit Risk

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Geographic Concentration s

The following table presents the geographic concentration of the Company's loan and lease portfolio at June 30, 2025:

The following table presents the geographic concentration of the Company's loan and lease portfolio at September 30, 2025:

Geographic Regions (1)

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Subsequent Event

On August 4, 2025, the Company issued and sold 4,000,000 depositary shares (the “Depositary Shares”), each representing a 1/40th interest in a share of the Company’s 8.375 % Fixed Rate Series A Non-Cumulative Perpetual Preferred Stock, no par value per share (the “Series A Preferred Stock”), with a liquidation preference of $ 1,000 per share of Series A Preferred Stock (equivalent to $ 25 per depositary Share), which represents $ 100,000,000 in aggregate liquidation preference.

Net proceeds, after underwriting discounts and estimated expenses, total approximately $ 96.2 million.

Holders of the Series A Preferred Stock will not have voting rights, except with respect to certain changes in the terms of the preferred stock, certain dividend non-payments and as otherwise required by applicable law.

On October 21, 2025, Computer Services Inc., (“CSI”) acquired all of the ownership interests in Apiture, Inc.

(“Apiture”) that it did not already own (the “Transaction”), including the interest of the Company, pursuant to the previously announced definitive agreement between CSI and Apiture.

The Company received initial cash proceeds of $ 67.0 million, and the Transaction resulted in a pre-tax gain of approximately $ 24.0 million which will be included in the Company’s noninterest income for the fourth quarter of 2025.

Table of Conten t s

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements