Live Oak Bancshares, Inc. 10-Q

Item 1. Financial Statements Live Oak Bancshares, Inc. Condensed Consolidated Balance Sheets As of March 31, 2026 (unaudited) and December 31, 2025 (Dollars in thousands) March 31, 2026 December 31, 2025 Assets Cash and due from banks $ 816,135 $ 864,904 Certificates of deposit with other banks 250 250 Investment securities available-for-sale 1,434,538 1,427,401 Loans held for sale 435,313 420,055 Loans and leases held for investment (includes $ 244,940 and $ 260,625 measured at fair value, respectively) 12,158,216 11,973,622 Allowance for credit losses on loans and leases ( 193,279 ) ( 192,264 ) Net loans and leases 11,964,937 11,781,358 Premises and equipment, net 235,329 240,203 Foreclosed assets 12,005 8,208 Servicing assets (includes $ 64,520 and $ 62,941 measured at fair value, respectively) 64,677 63,155 Other assets 336,849 329,244 Total assets $ 15,300,033 $ 15,134,778 Liabilities and shareholders’ equity Liabilities Deposits: Noninterest-bearing $ 510,917 $ 515,051 Interest-bearing 13,324,141 13,173,608 Total deposits 13,835,058 13,688,659 Borrowings 99,746 102,404 Other liabilities 83,468 89,609 Total liabilities 14,018,272 13,880,672 Shareholders’ equity Series A Preferred stock, no par value, 1,000,000 shares authorized, 100,000 shares, issued and outstanding at March 31, 2026 and December 31, 2025 96,266 96,266 Class A common stock, no par value, 100,000,000 shares authorized, 46,240,691 and 46,032,402 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively 392,258 388,389 Retained earnings 836,444 809,885 Accumulated other comprehensive loss ( 47,352 ) ( 44,672 ) Total shareholders' equity attributed to Live Oak Bancshares, Inc. 1,277,616 1,249,868 Non-controlling interest 4,145 4,238 Total shareholders’ equity 1,281,761 1,254,106 Total liabilities and shareholders’ equity $ 15,300,033 $ 15,134,778 See Notes to Unaudited Condensed Consolidated Financial Statements 1 Live Oak Bancshares, Inc. Condensed Consolidated Statements of Income For the three months ended March 31, 2026 and 2025 (unaudited) (Dollars in thousands, except per share data) Three Months Ended March 31, 2026 2025 Interest income Loans and fees on loans $ 214,129 $ 195,616 Investment securities, taxable 13,009 11,089 Other interest earning assets 6,726 6,400 Total interest income 233,864 213,105 Interest expense Deposits 112,847 110,888 Borrowings 1,617 1,685 Total interest expense 114,464 112,573 Net interest income 119,400 100,532 Provision for credit losses 20,100 28,964 Net interest income after provision for credit losses 99,300 71,568 Noninterest income Loan servicing revenue 9,094 8,298 Loan servicing asset revaluation ( 3,487 ) ( 4,728 ) Net gains on sales of loans 15,425 15,438 Net loss on loans accounted for under the fair value option ( 1,165 ) ( 1,034 ) Equity method investments (loss) income ( 817 ) ( 2,239 ) Equity security investments gains, net — 20 Lease income 2,135 2,573 Other noninterest income 4,889 4,043 Total noninterest income 26,074 22,371 Noninterest expense Salaries and employee benefits 49,354 45,529 Travel expense 1,463 2,064 Professional services expense 2,516 3,024 Advertising and marketing expense 3,051 3,665 Occupancy expense 2,410 2,737 Technology expense 9,749 9,251 Equipment expense 3,693 3,745 Other loan origination and maintenance expense 5,919 4,585 FDIC insurance 4,401 3,551 Other expense 2,737 2,656 Total noninterest expense 85,293 80,807 Income before taxes 40,081 13,132 Income tax expense 10,134 3,464 Net income 29,947 9,668 Net loss attributable to non-controlling interest 93 49 Net income attributable to Live Oak Bancshares, Inc. 30,040 9,717 Preferred stock dividends 2,094 — Net income attributable to common shareholders $ 27,946 $ 9,717 Basic earnings per share $ 0.61 $ 0.21 Diluted earnings per share $ 0.60 $ 0.21 See Notes to Unaudited Condensed Consolidated Financial Statements 2 Table of Contents Live Oak Bancshares, Inc. Condensed Consolidated Statements of Comprehensive Income For the three months ended March 31, 2026 and 2025 (unaudited) (Dollars in thousands) Three Months Ended March 31, 2026 2025 Net income $ 29,947 $ 9,668 Other comprehensive (loss) income before tax: Net unrealized (loss) gain on investment securities available-for-sale during the period ( 3,526 ) 19,271 Other comprehensive (loss) income before tax ( 3,526 ) 19,271 Income tax benefit (expense) 846 ( 4,625 ) Other comprehensive (loss) income, net of tax ( 2,680 ) 14,646 Total comprehensive income 27,267 24,314 Comprehensive loss attributable to non-controlling interest 93 49 Total comprehensive income attributable to Live Oak Bancshares, Inc. $ 27,360 $ 24,363 See Notes to Unaudited Condensed Consolidated Financial Statements 3 Table of Contents Live Oak Bancshares, Inc. Condensed Consolidated Statements of Changes in Shareholders’ Equity For the three months ended March 31, 2026 and 2025 (unaudited) (Dollars in thousands) Three Months Ended Preferred Stock Common stock Retained earnings Accumulated other comprehensive (loss) income Non-controlling interest Total equity Shares Amount Shares Amount Series A Class A Class B Balance at December 31, 2025 100,000 $ 96,266 46,032,402 — $ 388,389 $ 809,885 $ ( 44,672 ) $ 4,238 $ 1,254,106 Net income (loss) — — — — — 30,040 — ( 93 ) 29,947 Other comprehensive loss — — — — — — ( 2,680 ) — ( 2,680 ) Issuance of restricted stock — — 154,541 — — — — — — Tax withholding related to vesting of restricted stock and other — — — — ( 3,994 ) — — — ( 3,994 ) Employee stock purchase program — — 17,665 — 484 — — — 484 Stock option exercises — — 36,083 — 499 — — — 499 Restricted stock compensation expense — — — — 6,880 — — — 6,880 Cash dividends - preferred — — — — — ( 2,094 ) — — ( 2,094 ) Cash dividends ($ 0.03 per share) - common — — — — — ( 1,387 ) — — ( 1,387 ) Balance at March 31, 2026 100,000 $ 96,266 46,240,691 — $ 392,258 $ 836,444 $ ( 47,352 ) $ 4,145 $ 1,281,761 Balance at December 31, 2024 — $ — 45,359,425 — $ 365,607 $ 715,767 $ ( 82,344 ) $ 4,466 $ 1,003,496 Net income (loss) — — — — — 9,717 — ( 49 ) 9,668 Other comprehensive income — — — — — — 14,646 — 14,646 Issuance of restricted stock — — 143,784 — — — — — — Tax withholding related to vesting of restricted stock and other — — — — ( 3,178 ) — — — ( 3,178 ) Employee stock purchase program — — 23,015 — 659 — — — 659 Stock option exercises — — 63,409 — 758 — — — 758 Restricted stock compensation expense — — — — 6,667 — — — 6,667 Transfer from retained earnings to other assets for pro rata portion of equity method investee stock compensation expense — — — — — 98 — — 98 Cash dividends ($ 0.03 per share) - common — — — — — ( 1,367 ) — — ( 1,367 ) Balance at March 31, 2025 — $ — 45,589,633 — $ 370,513 $ 724,215 $ ( 67,698 ) $ 4,417 $ 1,031,447 4 Table of Contents Live Oak Bancshares, Inc. Condensed Consolidated Statements of Cash Flows For the three months ended March 31, 2026 and 2025 (unaudited) (Dollars in thousands) Three Months Ended March 31, 2026 2025 Cash flows from operating activities Net income $ 29,947 $ 9,668 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,940 6,974 Provision for credit losses 20,100 28,964 Accretion of discount on securities, net ( 155 ) ( 83 ) Deferred tax benefit ( 598 ) ( 1,009 ) Originations of loans held for sale ( 325,627 ) ( 349,091 ) Proceeds from sales of loans held for sale 294,218 284,340 Net gains on sale of loans held for sale ( 15,425 ) ( 15,438 ) Net loss on impairment or sale of foreclosed assets 140 34 Net loss on loans accounted for under fair value option 1,165 1,034 Net change in servicing assets ( 1,522 ) ( 767 ) Net loss on disposal of property and equipment — 24 Proceeds received from government guaranteed receivables 73,948 5,169 Equity method investments loss (income) 817 2,239 Equity security investments (gains) losses, net — ( 20 ) Net (gain) loss on equity warrant assets ( 26 ) 304 Restricted stock compensation expense 6,880 6,667 Stock based compensation excess tax deficiency ( 48 ) ( 156 ) Lease right-of-use assets and liabilities, net ( 26 ) ( 14 ) Changes in assets and liabilities: Other assets 3,341 ( 705 ) Other liabilities ( 6,685 ) ( 7,901 ) Net cash provided by (used in) operating activities 87,384 ( 29,767 ) Cash flows from investing activities Purchases of investment securities available-for-sale ( 58,702 ) ( 76,965 ) Proceeds from maturities, calls, and principal paydowns of investment securities available-for-sale 48,194 31,842 Proceeds from sale of foreclosed assets 227 — Loan and lease originations and principal collections, net ( 262,125 ) ( 413,757 ) Purchases of equity security investments ( 66 ) ( 3,433 ) Purchases of equity method investments — ( 424 ) Proceeds from sale of equity security investments 358 160 Proceeds from sale of equity method investments 759 129 Proceeds from sale of premises and equipment — 222 Purchases of premises and equipment, net ( 2,047 ) ( 2,294 ) Net cash used by investing activities ( 273,402 ) ( 464,520 ) 5 Table of Contents Live Oak Bancshares, Inc. Condensed Consolidated Statements of Cash Flows (Continued) For the three months ended March 31, 2026 and 2025 (unaudited) (Dollars in thousands) Three Months Ended March 31, 2026 2025 Cash flows from financing activities Net increase in deposits $ 146,399 $ 635,451 Proceeds from borrowings 36 43 Repayment of borrowings ( 2,694 ) ( 2,616 ) Stock option exercises 499 758 Employee stock purchase program 484 659 Tax withholding related to vesting of restricted stock and other ( 3,994 ) ( 3,178 ) Shareholder dividend distributions - preferred ( 2,094 ) — Shareholder dividend distributions - common ( 1,387 ) ( 1,367 ) Net cash provided by financing activities 137,249 629,750 Net increase in cash and cash equivalents ( 48,769 ) 135,463 Cash and cash equivalents, beginning 864,904 608,800 Cash and cash equivalents, ending $ 816,135 $ 744,263 Supplemental disclosures of cash flow information Interest paid $ 114,351 $ 112,098 Income tax paid, net 291 172 Supplemental disclosures of noncash investing and financing activities Unrealized holding (losses) gains on investment securities available-for-sale, net of taxes $ ( 2,680 ) $ 14,646 Transfers from loans and leases to foreclosed real estate and other repossessions or government guaranteed receivable 84,979 3,648 Net transfers between foreclosed assets and government guaranteed receivable 214 — Transfer of loans held for sale to loans and leases held for investment 32,153 68,015 Transfer of loans and leases held for investment to loans held for sale 890 8,978 Transfer from retained earnings to other assets for pro rata portion of equity method investee stock compensation expense — 98 See Notes to Unaudited Condensed Consolidated Financial Statements 6 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements Note 1. Basis of Presentation Nature of Operations Live Oak Bancshares, Inc. (collectively with its subsidiaries including Live Oak Banking Company, the “Company”) is a bank holding company headquartered in Wilmington, North Carolina incorporated under the laws of the State of North Carolina in December 2008. The Company conducts business operations primarily through its commercial bank subsidiary, Live Oak Banking Company (the “Bank”). The Bank was organized and incorporated under the laws of the State of North Carolina on February 25, 2008 and commenced operations on May 12, 2008. The Bank specializes in providing lending and deposit related services to small businesses nationwide. A significant portion of the loans originated by the Bank are partially guaranteed by the Small Business Administration (“SBA”) under the 7(a) Loan Program and the U.S. Department of Agriculture’s (“USDA”) Rural Energy for America Program (“REAP”), Water and Environmental Program (“WEP”), Business & Industry (“B&I”) and Community Facilities loan programs. These loans are to small businesses and professionals with what the Bank believes are lower risk characteristics. Industries, or “verticals,” on which the Bank focuses its lending efforts are carefully selected. The Bank also lends more broadly to select borrowers outside of those verticals. As of March 31, 2026, 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. (“Live Oak Ventures”). GLS is a management and technology consulting firm that advises and offers solutions and services to participants in the government guaranteed lending sector. GLS primarily provides services in connection with the settlement, accounting, and securitization processes for government guaranteed loans, including loans originated under the SBA 7(a) loan programs and USDA guaranteed loans. The Grove provides Company employees and business visitors with on-site dining at the Company's Wilmington, North Carolina headquarters. Live Oak Ventures’ purpose is investing in businesses that align with the Company's strategic initiative to be a leader in financial technology. During the fourth quarter of 2024, Live Oak Ventures consolidated its investment in Synply, Inc. ( “ Synply ” ) as a result of its controlling interest in that entity. Synply is a cloud-based technology platform designed to simplify the loan syndication process for financial institutions. The non-controlling interest in Synply is disclosed according to the Company’s consolidation policy. The Bank’s wholly owned subsidiaries are Live Oak Number One, Inc., Live Oak Clean Energy Financing LLC (“LOCEF”), Live Oak Private Wealth, LLC (“Live Oak Private Wealth”) and Tiburon Land Holdings, LLC (“TLH”). Live Oak Number One, Inc. holds properties foreclosed on by the Bank. LOCEF provides financing to entities for renewable energy applications. Live Oak Private Wealth provides high-net-worth individuals and families with strategic wealth and investment management services. TLH holds land adjacent to the Bank's headquarters consisting of wetlands and other protected property for the use and enjoyment of the Bank's employees and customers. The Company generates revenue primarily from net interest income and secondarily through the origination and sale of government guaranteed loans. Income from the retention of loans is comprised principally of interest income. Income from the sale of loans is comprised of loan servicing revenue and revaluation of related servicing rights along with net gains on sales of loans. Offsetting these revenues are the cost of funding sources, provision for credit losses, any costs related to foreclosed assets and other operating costs such as salaries and employee benefits, travel, professional services, advertising and marketing and tax expense. The Company also has less routinely generated gains and losses arising from its financial technology investments. 7 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements General 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 months ended March 31, 2026 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2026. The Condensed Consolidated Balance Sheet as of December 31, 2025 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, 2025, filed with the Securities Exchange Commission ( “ SEC ” ) on February 27, 2025 (SEC File No. 001-37497) (the “ 2025 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 2025 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 2025 Form 10-K. The preparation of financial statements in conformity with United States ( “ U.S. ” ) generally accepted accounting principles ( “ GAAP ” ) requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. Amounts in all tables in the Notes to Unaudited Condensed Consolidated Financial Statements have been presented in thousands, except percentage, time period, share and per share data or where otherwise indicated. Business Segments Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the President of Live Oak Bancshares, Inc. and the Bank. 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 businesses nationwide. The banking platform generates revenue primarily from net interest income and secondarily through the origination and sale of government guaranteed loans. The chief operating decision maker assesses performance and decides how to allocate resources based on net income which is reported on the consolidated statements of income. The chief operating decision maker uses net income to evaluate income generated from total assets (return on assets) and profitability of the segment in relation to total shareholders’ equity (return on equity). The measures of segment assets and equity are reported on the consolidated balance sheets as total assets and total shareholders’ equity. Net income is also used to monitor budget versus actual results. All of these elements are used in assessing performance of the segment. Significant segment expenses are reported on the consolidated statements of income. Use of Estimates In preparing unaudited condensed consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The allowance for credit losses (“ACL”) is a material estimate that is particularly susceptible to significant change in the near term. 8 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements Changes in Accounting Estimates During the first quarter of 2026, the Company enhanced both the quantitative and qualitative components of its ACL estimation process. The Company changed the quantitative component from a discounted cash flow model to a probability of default ("PD") x loss given default ("LGD") x exposure at default ("EAD") based credit loss forecasting model to estimate expected credit losses, which incorporates a two-year reasonable-and-supportable forecast period influenced by multiple economic variables followed by a one-year reversion to long-run assumptions. Prior to the change, the Company forecasted losses over a one-year reasonable-and-supportable forecast period using a single economic variable. In connection with the implementation of this model, the Company enhanced its qualitative framework to better incorporate and align qualitative adjustments with the updated model. The cumulative effect of these changes was not material. 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 PD 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 PD 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. The above 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. 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 March 31, 2026, a cash dividend of $ 0.52344 per Depositary Share of its Series A Preferred Stock was declared and paid. Revision of Previously Issued Financial Statements As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, certain immaterial prior-period amounts in the Unaudited Condensed Consolidated Statements of Income have been revised and are reflected below. Specifically, there was a decrease in the line item for net gains on sales of loans, which was fully offset by a decrease in salaries and employee benefits, and travel expense. The changes were presentation only and had no impact on previously reported net income, total assets, total liabilities, or shareholders’ equity. 9 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements The effect of the above revision on previously reported financial statements is presented below: As previously reported Impact of revision As revised Consolidated statement of income for the three months ended March 31, 2025 Net gains on sales of loans $ 18,648 $ ( 3,210 ) $ 15,438 Total noninterest income 25,581 ( 3,210 ) 22,371 Salaries and employee benefits $ 48,008 $ ( 2,479 ) $ 45,529 Travel expense 2,795 ( 731 ) 2,064 Total noninterest expense 84,017 ( 3,210 ) 80,807 Consolidated statement of cash flows for the three months ended March 31, 2025 Operating activities: Net gains on sale of loans held for sale $ ( 18,648 ) $ 3,210 $ ( 15,438 ) Net cash provided by operating activities ( 32,977 ) 3,210 ( 29,767 ) Investing activities: Net change in loans and leases $ ( 410,547 ) $ ( 3,210 ) $ ( 413,757 ) Net cash used by investing activities ( 461,310 ) ( 3,210 ) ( 464,520 ) 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. Note 2. Recent Accounting Pronouncements Accounting Standards Issued But Not Currently Effective In November 2024, the FASB issued Accounting Standards Update (“ASU”) 2024-03 “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”). ASU 2024-03 requires disaggregation of certain expense captions into specified categories within the footnotes. The amendments in this standard will be effective for the Company on January 1, 2027. The guidance may be applied on a prospective or retrospective basis. The Company is currently evaluating the impact the amendments will have on the consolidated financial statements and related disclosures. 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 guidance may be applied on a prospective, modified, or retrospective transition basis. The Company is currently evaluating the impact the amendments will have on the consolidated financial statements. 10 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed 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 guidance may be applied on a prospective or modified retrospective basis. The Company is currently evaluating the impact the amendments will have on the consolidated financial statements. In December 2025, the FASB issued ASU 2025-11 “Interim Reporting (Topic 270): Narrow-Scope Improvements” (“ASU 2025-11”). The amendments clarify interim disclosure requirements and when Topic 270 applies as well as the addition of a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The amendments in this standard will be effective for the Company on January 1, 2028. The guidance may be applied on a prospective or retrospective basis. The Company is currently evaluating the impact the amendments will have on the consolidated financial statements. In December 2025, the FASB issued ASU 2025-12 “Codification Improvements” (“ASU 2025-12”). The amendments represent changes to the Codification to make incremental improvements to GAAP including technical corrections, clarifications, and minor improvements. The amendments in this standard will be effective for the Company on January 1, 2027. The guidance may generally be applied, by issue, on a prospective or retrospective basis. The Company does not believe this standard will have a material impact on its consolidated financial statements. Note 3. Earnings Per Share Basic and diluted earnings per share are computed based on the weighted-average number of shares outstanding during each period. Diluted earnings per share reflects the potential dilution that could occur upon the exercise of stock options or upon the vesting of restricted stock grants, any of which would result in the issuance of common stock that would then share in the net income of the Company. Three Months Ended March 31, 2026 2025 Basic earnings per share: Net income attributable to common shareholders $ 27,946 $ 9,717 Weighted-average basic shares outstanding 46,138,609 45,377,965 Basic earnings per share $ 0.61 $ 0.21 Diluted earnings per share: Net income attributable to common shareholders $ 27,946 $ 9,717 Total weighted-average basic shares outstanding 46,138,609 45,377,965 Add effect of dilutive stock options and restricted stock grants 370,431 376,534 Total weighted-average diluted shares outstanding 46,509,040 45,754,499 Diluted earnings per share $ 0.60 $ 0.21 Anti-dilutive stock options and restricted stock grants 574,708 1,499,126 11 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements Note 4. Investments Available-for-Sale The amortized cost, estimated fair value and unrealized gains (losses) are reflected in the following table: March 31, 2026 Amortized Cost Unrealized Gains Unrealized Losses Fair Value U.S. government agencies $ 20,274 $ 18 $ 38 $ 20,254 Mortgage-backed securities 1,473,438 6,378 68,596 1,411,220 Municipal bonds 3,145 — 81 3,064 Total $ 1,496,857 $ 6,396 $ 68,715 $ 1,434,538 December 31, 2025 Amortized Cost Unrealized Gains Unrealized Losses Fair Value U.S. government agencies $ 13,603 $ 27 $ 13 $ 13,617 Mortgage-backed securities 1,469,440 8,327 67,088 1,410,679 Municipal bonds 3,151 — 46 3,105 Total $ 1,486,194 $ 8,354 $ 67,147 $ 1,427,401 During the three months ended March 31, 2026, ten securities totaling $ 18.0 million were settled. During the three months ended March 31, 2025, three securities totaling $ 5.6 million were settled. Accrued interest receivable on available-for-sale securities totaled $ 5.2 million and $ 5.1 million at March 31, 2026 and December 31, 2025, 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 March 31, 2026 Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. government agencies $ 9,788 $ 23 $ 2,971 $ 15 $ 12,759 $ 38 Mortgage-backed securities 332,876 2,733 641,838 65,863 974,714 68,596 Municipal bonds 707 5 2,357 76 3,064 81 Total $ 343,371 $ 2,761 $ 647,166 $ 65,954 $ 990,537 $ 68,715 Less Than 12 Months 12 Months or More Total December 31, 2025 Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. government agencies $ — $ — $ 2,970 $ 13 $ 2,970 $ 13 Mortgage-backed securities 120,039 613 709,710 66,475 829,749 67,088 Municipal bonds 3,022 34 83 12 3,105 46 Total $ 123,061 $ 647 $ 712,763 $ 66,500 $ 835,824 $ 67,147 12 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements At March 31, 2026, there were 340 mortgage-backed securities, one U.S. government agency and two municipal bonds in unrealized loss positions for greater than 12 months. There were 55 mortgage-backed securities, two U.S. government agencies and one municipal bond in unrealized loss positions for less than 12 months. Unrealized losses at December 31, 2025 were comprised of 357 mortgage-backed securities, one U.S. government agency and one municipal bond in unrealized loss positions for greater than 12 months. There were 18 mortgage-backed securities and two municipal bonds in unrealized loss positions for less than 12 months. These unrealized losses are primarily the result of non-credit-related volatility in the market and market interest rates. 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 March 31, 2026 and December 31, 2025 were backed by U.S. government sponsored enterprises (“GSEs”). The following is a summary of investment securities by maturity: March 31, 2026 Available-for-Sale Amortized Cost Fair Value U.S. government agencies One to five years $ 3,463 $ 3,450 Five to ten years 16,811 16,804 Total 20,274 20,254 Mortgage-backed securities Within one year 35,542 35,304 One to five years 232,369 225,174 Five to ten years 170,883 159,877 After 10 years 1,034,644 990,865 Total 1,473,438 1,411,220 Municipal bonds Five to ten years 3,050 2,981 After 10 years 95 83 Total 3,145 3,064 Total $ 1,496,857 $ 1,434,538 The table above reflects contractual maturities. Actual results will differ as the loans underlying the mortgage-backed securities may prepay sooner than scheduled. At March 31, 2026, investment securities with a fair value of $ 540.0 million and amortized cost of $ 583.5 million were pledged to support unused borrowing capacity. At December 31, 2025, investment securities with a fair value of $ 565.8 million and amortized cost of $ 610.1 million were pledged to support unused borrowing capacity. Equity Investments Equity investments, largely comprised of non-marketable equity investments, are generally accounted for under either the equity method or equity security accounting and are included in other assets in the accompanying Unaudited Condensed Consolidated Balance Sheets. The below tables provide additional information related to investments accounted for under these two methods. 13 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements Equity Method Accounting The carrying amount and ownership percentage of each equity method investment at March 31, 2026 and December 31, 2025 is reflected in the following table: March 31, 2026 December 31, 2025 Amount Ownership % Amount Ownership % Canapi Ventures SBIC Fund, LP (1) (5) $ 11,126 2.9 % $ 11,250 2.9 % Canapi Ventures Fund, LP (2) (5) 1,356 1.5 1,374 1.5 Canapi Ventures Fund II, LP (3) (5) 3,479 1.6 3,558 1.6 Canapi Ventures SBIC Fund II, LP (4) (5) 2,570 2.9 2,625 2.9 Affordable housing (6) 13,216 Various 13,457 Various Solar tax credit investments (7) 3,550 99.0 4,203 99.0 Other (8) 105 Various 231 Various Total $ 35,402 $ 36,698 (1) Investment unfunded commitments of $ 4.8 million as of March 31, 2026 and December 31, 2025. (2) Investment unfunded commitments of $ 472 thousand as of March 31, 2026 and December 31, 2025. (3) Investment unfunded commitments of $ 3.6 million as of March 31, 2026 and December 31, 2025. (4) Investment unfunded commitments of $ 4.9 million as of March 31, 2026 and December 31, 2025. (5) Investee is accounted for under equity method due to the Company's potential influence with investment advisor. (6) Affordable Housing includes low income housing tax credit (“LIHTC”) in Estrella Landing Apartments LLC (“Estrella Landing”), in which the Company holds a 99.9 % limited member interest. Also included are Cape Fear Collective Impact Opportunity 1 LLC (“Cape Fear Collective 1”) and Cape Fear Collective Impact Opportunity 2 LLC (“Cape Fear Collective 2”) which the Company holds 91.0 % and 32.3 % of limited member interests, respectively. (7) 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. (8) Other investments includes OTR Fund I, LLC (“OTR”) which the Company holds 5.9 % of limited member interests. This investment category also includes the carried interest security related to Canapi Ventures Fund I, L.P. 14 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements Equity Security Accounting The carrying amount of the Company’s investments in non-marketable equity securities with no readily determinable fair value for the three months ended March 31, 2026 and 2025 is reflected in the following table: As of and for the three month period ended March 31, 2026 March 31, 2025 Carrying value (1) $ 79,861 $ 83,069 Carrying value adjustments: Impairment — — Upward changes for observable prices (2) — — Downward changes for observable prices — — Net upward (downward) change $ — $ — (1) Investment unfunded commitments of $ 6.0 million and $ 5.4 million as of March 31, 2026, and March 31, 2025, respectively. (2) The equity securities portfolio has recognized cumulative adjustments of $ 59.3 million over the life of the equity security portfolio as of March 31, 2026. For the three months ended March 31, 2026, the Company did not recognize any unrealized gains on equity securities held at the reporting date. For the three months ended March 31, 2025, the Company recognized unrealized gains on all equity securities held at the reporting date of $ 8 thousand. Variable Interest Entities (“VIE”s) Variable interests are defined as contractual ownership or other interests in an entity that change with fluctuations in the fair value of an entity's net asset value. The primary beneficiary consolidates the VIE. The primary beneficiary is defined as the enterprise that has both the power to direct the activities of the VIE that most significantly impact the entity's economic performance and the obligation to absorb losses or the right to receive benefits that could be significant to the VIE. Solar Renewable Energy Tax Credit Investments The Company has equity interests in several limited liability companies that own and operate solar renewable energy projects which are accounted for as equity method investments. Over the course of the investments, the Company will receive federal and state tax credits, tax-related benefits, and excess cash available for distribution, if any. The Company may be called to sell its interest in the limited partnerships through a call option once all investment tax credits have been recognized. Affordable Housing The Company has an equity investment in a limited liability company LIHTC that qualifies as an affordable housing project, managed by an unrelated general partner. The Company accounts for the investment under the proportional amortization method. Under this method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance as a component of income tax expense. The Company also has equity interests in two limited liability companies that invest in the acquisition, rehabilitation, or new construction of local qualified housing projects which are accounted for as equity method investments. Canapi Funds The Company’s limited partnership investments in the Canapi Funds focus on providing venture capital to new and emerging financial technology companies. After the initial commitment and over the course of the investment period, the Company will make capital contributions and receive profit and return of capital distributions as a result of fund performance until the funds wind down. 15 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements Non-marketable and Other Equity Investments The Company also has limited interests in several non-marketable funds, including Small Business Investment Company (“SBIC”), venture capital funds, and a reciprocal deposit network, all of which are accounted for as equity security investments. For fund investments, after the initial commitment and over the course of the investment period, the Company will make capital contributions and receive profit and return of capital distributions as a result of fund performance until the funds wind down. While the partnership agreements allow the Company to remove the general partner, this right is not deemed to be substantive as the general partner can only be removed for cause. All investments are generally non-redeemable and distributions are expected to be received through the liquidation of the underlying investments throughout the life of the investment fund. Investments may only be sold or transferred subject to the notice and approval provisions of the underlying investment agreement. The above investments meet the criteria of a VIE, however, the Company is not the primary beneficiary of the entities, as it does not have the power to direct the activities that most significantly impact the economic performance of the entities. The Company’s investment in the unconsolidated VIEs are carried in other assets on the Unaudited Condensed Consolidated Balance Sheets. The Company’s maximum exposure to loss from unconsolidated VIEs includes the investment recorded on the Company’s Unaudited Condensed Consolidated Balance Sheets and unfunded commitment. For solar tax credit investments, the balance sheet figures are net of any impairment recognized, and includes previously recorded tax credits which remain subject to recapture by taxing authorities based on compliance features required to be met at the project level. While the Company believes the potential for loss from these investments is remote, the maximum exposure for solar tax credit investments was determined by assuming a scenario where related tax credits were recaptured. 16 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements The following table provides a summary of the VIEs that the Company has not consolidated as of March 31, 2026 and December 31, 2025: March 31, 2026 Investment Carrying Amount Maximum Exposure to Loss Liability Recognized Classification Solar tax credit investments $ 3,550 $ 17,634 $ — Other assets (1) Affordable housing 13,216 14,158 — Other assets (2) Canapi Funds 18,636 32,455 — Other assets (3) Non-marketable and other equity investments 4,580 10,619 — Other assets (4) December 31, 2025 Investment Carrying Amount Maximum Exposure to Loss Liability Recognized Classification Solar tax credit investments $ 4,203 $ 27,644 $ — Other assets (5) Affordable housing 13,457 14,399 — Other assets (6) Canapi Funds 19,039 32,858 — Other assets (7) Non-marketable and other equity investments 4,872 10,976 — Other assets (8) (1) Maximum exposure to loss includes $ 3.6 million of current investments and a scenario in which related tax credits are recaptured, collectively totaling $ 14.0 million. (2) Maximum exposure to loss includes $ 13.2 million of current investments and a scenario in which $ 941 thousand in related tax credits are recaptured. (3) Maximum exposure to loss includes $ 18.6 million of current investments and $ 13.8 million in unfunded commitments. (4) Maximum exposure to loss includes $ 4.6 million of current investments and $ 6.0 million in unfunded commitments. (5) Maximum exposure to loss includes $ 4.2 million of current investments and a scenario in which related tax credits are recaptured, collectively totaling $ 23.4 million. (6) Maximum exposure to loss includes $ 13.5 million of current investments and a scenario in which $ 941 thousand in related tax credits are recaptured. (7) Maximum exposure to loss includes $ 19.0 million of current investments and $ 13.8 million in unfunded commitments. (8) Maximum exposure to loss includes $ 4.9 million of current investments and $ 6.1 million in unfunded commitments. 17 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements Note 5. Loans and Leases Held for Investment and Credit Quality The following tables present total loans and leases held for investment and an aging analysis for the Company’s portfolio segments. Loans and leases are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Current or Less than 30 Days Past Due 30-89 Days Past Due 90 Days or More Past Due Total Past Due Total Carried at Amortized Cost Loans Accounted for Under the Fair Value Option (1) Total Loans and Leases March 31, 2026 Commercial & Industrial Small Business Banking $ 2,385,254 $ 29,234 $ 127,717 $ 156,951 $ 2,542,205 $ 79,425 $ 2,621,630 Commercial Banking 2,997,549 4,298 38,053 42,351 3,039,900 40,011 3,079,911 Total 5,382,803 33,532 165,770 199,302 5,582,105 119,436 5,701,541 Construction & Development Small Business Banking 705,561 2,072 2,561 4,633 710,194 — 710,194 Commercial Banking 70,974 — — — 70,974 — 70,974 Total 776,535 2,072 2,561 4,633 781,168 — 781,168 Commercial Real Estate Small Business Banking 3,474,441 30,573 90,179 120,752 3,595,193 87,717 3,682,910 Commercial Banking 1,273,900 7,920 27,671 35,591 1,309,491 13,490 1,322,981 Total 4,748,341 38,493 117,850 156,343 4,904,684 101,207 5,005,891 Commercial Land Small Business Banking 677,434 2,140 3,279 5,419 682,853 24,297 707,150 Total 677,434 2,140 3,279 5,419 682,853 24,297 707,150 Total $ 11,585,113 $ 76,237 $ 289,460 $ 365,697 $ 11,950,810 $ 244,940 $ 12,195,750 Retained Loan Discount and Net Deferred Costs $ ( 37,534 ) Loans and Leases, Net $ 12,158,216 Guaranteed Balance $ 2,972,452 $ 44,866 $ 231,802 $ 276,668 $ 3,249,120 $ 67,614 $ 3,316,734 % Guaranteed 25.7 % 58.9 % 80.1 % 75.7 % 27.2 % 27.6 % 27.2 % 18 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements Current or Less than 30 Days Past Due 30-89 Days Past Due 90 Days or More Past Due Total Past Due Total Carried at Amortized Cost Loans Accounted for Under the Fair Value Option (1) Total Loans and Leases December 31, 2025 Commercial & Industrial Small Business Banking $ 2,370,184 $ 23,406 $ 127,090 $ 150,496 $ 2,520,680 $ 87,532 $ 2,608,212 Commercial Banking 2,833,724 9 112 121 2,954,283 41 2,995,115 Total 5,203,908 32,108 238,947 271,055 5,474,963 128,364 5,603,327 Construction & Development Small Business Banking 749,117 — 1,025 1,025 750,142 — 750,142 Commercial Banking 69,538 — — — 69,538 — 69,538 Total 818,655 — 1,025 1,025 819,680 — 819,680 Commercial Real Estate Small Business Banking 3,267,787 12,640 88,089 100,729 3,368,516 91,876 3,460,392 Commercial Banking 1,383,615 4,613 23,257 27,870 1,411,485 15,912 1,427,397 Total 4,651,402 17,253 111,346 128,599 4,780,001 107,788 4,887,789 Commercial Land Small Business Banking 670,725 — 3,840 3,840 674,565 24,473 699,038 Total 670,725 — 3,840 3,840 674,565 24,473 699,038 Total $ 11,344,690 $ 49,361 $ 355,158 $ 404,519 $ 11,749,209 $ 260,625 $ 12,009,834 Retained Loan Discount and Net Deferred Costs $ ( 36,212 ) Loans and Leases, Net $ 11,973,622 Guaranteed Balance $ 2,974,552 $ 33,597 $ 301,737 $ 335,334 $ 3,309,886 $ 69,445 $ 3,379,331 % Guaranteed 26.2 % 68.1 % 85.0 % 82.9 % 28.2 % 26.6 % 28.1 % (1) Retained portions of government guaranteed loans sold prior to January 1, 2021 are carried at fair value under FASB ASC Subtopic 825-10, Financial Instruments: Overall . See Note 7. Fair Value of Financial Instruments for additional information. 19 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements Credit Quality Indicators The following tables present asset quality indicators by portfolio class and origination year. See Note 3. Loans and Leases Held for Investment and Credit Quality in the Company’s 2025 Form 10-K for additional discussion around the asset quality indicators that the Company uses to manage and monitor credit risk. Term Loans and Leases Amortized Cost Basis by Origination Year 2026 2025 2024 2023 2022 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total (1) March 31, 2026 Small Business Banking Pass $ 321,192 $ 1,625,580 $ 1,213,414 $ 889,433 $ 927,780 $ 1,459,411 $ 168,292 $ 47,640 $ 6,652,742 Special Mention 300 19,060 71,508 63,721 120,549 129,151 13,045 3,937 421,271 Substandard — 32,542 69,217 82,384 109,558 138,067 22,311 2,353 456,432 Total 321,492 1,677,182 1,354,139 1,035,538 1,157,887 1,726,629 203,648 53,930 7,530,445 Commercial Banking Pass 242,374 1,354,678 766,280 379,858 225,877 194,580 597,731 202,423 3,963,801 Special Mention — 13,013 63,444 95,976 74,633 42,506 18,844 13,027 321,443 Substandard — 19,207 8,339 — 23,581 52,368 21,718 9,908 135,121 Total 242,374 1,386,898 838,063 475,834 324,091 289,454 638,293 225,358 4,420,365 Total $ 563,866 $ 3,064,080 $ 2,192,202 $ 1,511,372 $ 1,481,978 $ 2,016,083 $ 841,941 $ 279,288 $ 11,950,810 Year-To-Date Gross Charge-offs Small Business Banking $ — $ 1,524 $ 3,993 $ 6,085 $ 1,471 $ 6,179 $ 1,216 $ 254 $ 20,722 Commercial Banking — — — — — 155 1,107 — 1,262 Total $ — $ 1,524 $ 3,993 $ 6,085 $ 1,471 $ 6,334 $ 2,323 $ 254 $ 21,984 20 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements Term Loans and Leases Amortized Cost Basis by Origination Year 2025 2024 2023 2022 2021 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total (1) December 31, 2025 Small Business Banking Pass $ 1,513,435 $ 1,245,114 $ 936,083 $ 1,000,904 $ 828,468 $ 738,567 $ 154,210 $ 42,701 $ 6,458,577 Special Mention 17,102 68,453 64,411 93,132 50,885 80,251 8,763 6,721 389,718 Substandard 30,291 63,432 75,658 115,556 73,330 81,077 23,591 1,768 464,703 Total 1,560,828 1,376,999 1,076,152 1,209,592 952,683 899,895 186,564 51,190 7,312,997 Commercial Banking Pass 1,434,615 763,382 405,425 248,636 150,616 105,386 581,047 210,917 3,900,024 Special Mention 18,187 73,787 79,971 79,401 40,071 17,734 12,627 15,743 337,521 Substandard 9,000 5,419 — 23,919 107,596 30,552 14,562 6,713 197,761 Total 1,461,802 842,588 485,396 351,956 298,283 153,672 608,236 233,373 4,435,306 Total $ 3,022,630 $ 2,219,587 $ 1,561,548 $ 1,561,548 $ 1,250,966 $ 1,053,567 $ 794,800 $ 284,563 $ 11,749,209 Year-To-Date Gross Charge-offs Small Business Banking $ 3,472 $ 5,518 $ 14,763 $ 12,693 $ 5,188 $ 5,453 $ 4,352 $ 2,523 $ 53,962 Commercial Banking — — — 3,386 9,772 171 337 6,547 20,213 Total $ 3,472 $ 5,518 $ 14,763 $ 16,079 $ 14,960 $ 5,624 $ 4,689 $ 9,070 $ 74,175 (1) Excludes $ 244.9 million and $ 260.6 million of loans accounted for under the fair value option as of March 31, 2026 and December 31, 2025, respectively. The following tables present guaranteed and unguaranteed loan and lease balances by asset quality indicator: March 31, 2026 Loan and Lease Balance (1) Guaranteed Balance Unguaranteed Balance % Guaranteed Pass $ 10,616,543 $ 2,595,739 $ 8,020,804 24.4 % Special Mention 742,714 280,454 462,260 37.8 Substandard 591,553 372,928 218,625 63.0 Total $ 11,950,810 $ 3,249,121 $ 8,701,689 27.2 % December 31, 2025 Loan and Lease Balance (1) Guaranteed Balance Unguaranteed Balance % Guaranteed Pass $ 10,359,506 $ 2,590,030 $ 7,769,476 25.0 % Special Mention 727,239 261,506 465,733 36.0 Substandard 662,464 458,350 204,114 69.2 Total $ 11,749,209 $ 3,309,886 $ 8,439,323 28.2 % (1) Excludes $ 244.9 million and $ 260.6 million of loans accounted for under the fair value option as of March 31, 2026 and December 31, 2025, respectively. 21 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements Nonaccrual Loans and Leases As of March 31, 2026 and December 31, 2025 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 months ended March 31, 2026 and 2025. Accrued interest receivable on loans totaled $ 83.8 million and $ 85.0 million at March 31, 2026 and December 31, 2025 , respectively, and is included in other assets in the accompanying Unaudited Condensed Consolidated Balance Sheets. Nonaccrual loans and leases held for investment as of March 31, 2026 and December 31, 2025 are as follows: March 31, 2026 Loan and Lease Balance (1) Guaranteed Balance Unguaranteed Balance Unguaranteed Exposure with No ACL Commercial & Industrial Small Business Banking $ 190,033 $ 168,255 $ 21,778 $ 13,234 Commercial Banking 54,641 29,936 24,705 19,378 Total 244,674 198,191 46,483 32,612 Construction & Development Small Business Banking 12,915 10,481 2,434 1,042 Total 12,915 10,481 2,434 1,042 Commercial Real Estate Small Business Banking 146,514 103,341 43,173 25,483 Commercial Banking 35,591 11,274 24,317 16,397 Total 182,105 114,615 67,490 41,880 Commercial Land Small Business Banking 4,506 4,122 384 145 Total 4,506 4,122 384 145 Total $ 444,200 $ 327,409 $ 116,791 $ 75,679 December 31, 2025 Loan and Lease Balance (1) Guaranteed Balance Unguaranteed Balance Unguaranteed Exposure with No ACL Commercial & Industrial Small Business Banking $ 195,342 $ 169,818 $ 25,524 $ 7,438 Commercial Banking 122,847 111,103 11,744 2,142 Total 318,189 280,921 37,268 9,580 Construction & Development Small Business Banking 13,282 10,620 2,662 1,342 Total 13,282 10,620 2,662 1,342 Commercial Real Estate Small Business Banking 127,141 91,099 36,042 17,207 Commercial Banking 36,098 11,454 24,644 16,417 Total 163,239 102,553 60,686 33,624 Commercial Land Small Business Banking 6,447 5,692 755 533 Total 6,447 5,692 755 533 Total $ 501,157 $ 399,786 $ 101,371 $ 45,079 (1) Excludes loans accounted for under the fair value option. See Note 7. Fair Value of Financial Instruments for additional information. 22 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements When a loan or lease is placed on nonaccrual status, any accrued interest is reversed from loan interest income. The following table summarizes the amount of accrued interest reversed during the periods presented: Three Months Ended March 31, 2026 (1) 2025 (1) Commercial & Industrial $ 886 $ 444 Commercial Real Estate 392 490 Commercial Land 19 — Construction & Development 215 — Total $ 1,512 $ 934 (1) Excludes loans accounted for under the fair value option. See Note 7. 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 March 31, 2026 and December 31, 2025: Total Collateral-Dependent Loans Unguaranteed Portion March 31, 2026 Real Estate Business Assets Real Estate Business Assets Allowance for Credit Losses Commercial & Industrial Small Business Banking $ 22,421 $ 7,991 $ 6,252 $ 3,476 $ 50 Commercial Banking — 22,619 — 17,661 — Total 22,421 30,610 6,252 21,137 50 Construction & Development Small Business Banking 96 — 96 — 11 Total 96 — 96 — 11 Commercial Real Estate Small Business Banking 112,163 — 38,070 — 322 Commercial Banking 27,754 5,098 24,063 314 7 Total 139,917 5,098 62,133 314 329 Total $ 162,434 $ 35,708 $ 68,481 $ 21,451 $ 390 Total Collateral-Dependent Loans Unguaranteed Portion December 31, 2025 Real Estate Business Assets Real Estate Business Assets Allowance for Credit Losses Commercial & Industrial Small Business Banking $ 17,477 $ 4,107 $ 4,937 $ 374 $ 824 Commercial Banking — 87,319 — 3,744 600 Total 17,477 91,426 4,937 4,118 1,424 Construction & Development Small Business Banking 277 — 277 — — Total 277 — 277 — — Commercial Real Estate Small Business Banking 85,987 1,990 27,813 690 266 Commercial Banking 20,389 — 15,425 — — Total 106,376 1,990 43,238 690 266 Total $ 124,130 $ 93,416 $ 48,452 $ 4,808 $ 1,690 23 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements Allowance for Credit Losses - Loans and Leases See Note 1. Basis of Presentation above for a description of enhancements made to the ACL during the first quarter of 2026 and Note 1. Organization and Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements in the Company’s 2025 Form 10-K for a description of the methodologies used to estimate the ACL prior to January 1, 2026. The following table details activity in the ACL by portfolio segment allowance for the periods presented: Three Months Ended Commercial & Industrial Construction & Development Commercial Real Estate Commercial Land Total March 31, 2026 Beginning Balance $ 144,188 $ 7,224 $ 37,362 $ 3,490 $ 192,264 Charge offs ( 18,657 ) ( 209 ) ( 3,118 ) — ( 21,984 ) Recoveries 2,971 50 378 — 3,399 Provision 10,709 409 9,921 ( 1,439 ) 19,600 Ending Balance $ 139,211 $ 7,474 $ 44,543 $ 2,051 $ 193,279 March 31, 2025 Beginning Balance $ 129,007 $ 4,943 $ 29,501 $ 4,065 $ 167,516 Charge offs ( 5,987 ) — ( 936 ) — ( 6,923 ) Recoveries 40 — 91 18 149 Provision 26,856 769 1,639 178 29,442 Ending Balance $ 149,916 $ 5,712 $ 30,295 $ 4,261 $ 190,184 During the three months ended March 31, 2026, the ACL increased primarily as a result of loan growth and charge off impacts amid a challenging macroeconomic environment, where elevated interest rates and inflationary pressures have placed financial strain on some small business and commercial borrowers. Loss rates are adjusted for multiple two year forecasted economic variables followed by a twelve-month straight-line reversion period. During the three months ended March 31, 2025, the ACL increased as a result of loan growth amid a challenging macroeconomic environment which included specific reserve changes on individually evaluated loans. Loss rates are adjusted for twelve month forecasted unemployment followed by a twelve-month straight-line reversion period. 24 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements Loan Modifications for Borrowers Experiencing Financial Difficulty The Company may agree to modify the contractual terms of a loan to a borrower experiencing financial difficulty as a part of ongoing loss mitigation strategies. These modifications may result in an interest rate reduction, term extension, an other-than-insignificant payment delay, or a combination thereof. The Company typically does not offer principal forgiveness. The following tables summarize the amortized cost basis of loans that were modified during the three months ended March 31, 2026 and March 31, 2025, respectively: Three Months Ended March 31, 2026 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 Total Modifications % of Total Class of Financing Receivable Small Business Banking $ 6,837 $ 13,610 $ 13,127 $ 7,774 $ 1,141 $ 42,489 0.56 % Commercial Banking 738 — — — — 738 0.02 Total $ 7,575 $ 13,610 $ 13,127 $ 7,774 $ 1,141 $ 43,227 0.58 % Three Months Ended March 31, 2025 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 Total Modifications % of Total Class of Financing Receivable Small Business Banking $ 3,601 $ 2,243 $ 3,057 $ 3,009 $ 193 $ 12,103 0.20 % Total $ 3,601 $ 2,243 $ 3,057 $ 3,009 $ 193 $ 12,103 0.20 % As of March 31, 2026, the Company had commitments to lend additional funds to these borrowers totaling $ 698 thousand. As of March 31, 2025, the Company had commitments to lend additional funds to these borrowers totaling $ 28 thousand. The following table presents an aging analysis of loans that were modified within the twelve months ended March 31, 2026 and March 31, 2025, respectively: March 31, 2026 Current 30-89 Days Past Due 90 Days or More Past Due Total Past Due Small Business Banking $ 117,347 $ 3,287 $ 390 $ 3,677 Commercial Banking 6,121 — — — Total $ 123,468 $ 3,287 $ 390 $ 3,677 March 31, 2025 Current 30-89 Days Past Due 90 Days or More Past Due Total Past Due Small Business Banking $ 17,644 $ — $ 2,243 $ 2,243 Commercial Banking 17,576 — — — Total $ 35,220 $ — $ 2,243 $ 2,243 25 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements The following tables summarize the financial impacts of loan modifications made to borrowers experiencing financial difficulty during the periods presented: Three Months Ended March 31, 2026 Weighted Average Interest Rate Reduction Weighted Average Term Extension (in Months) Small Business Banking 5.99 % 37 Three Months Ended March 31, 2025 Weighted Average Interest Rate Reduction Weighted Average Term Extension (in Months) Small Business Banking 1.81 % 44 The following table presents the loans that were modified during the preceding twelve months and subsequently defaulted during the period. Three Months Ended March 31, 2026 Other-Than-Insignificant Payment Delay Term Extension Interest Rate Reduction Total Small Business Banking $ 4,997 $ — $ — $ 4,997 Commercial Banking — 2,336 — 2,336 Total $ 4,997 $ 2,336 $ — $ 7,333 At March 31, 2025, there were no loans that defaulted after being modified during the preceding twelve months. The Company’s ACL is estimated using lifetime historical loan performance adjusted to reflect current conditions and reasonable and supportable forecasts. Upon determination that a modified loan, or portion of a modified loan, has subsequently been deemed uncollectible, the uncollectible portion is written off. The amortized cost basis is reduced by the uncollectible amount and the ACL is adjusted by the same amount. As a result, the impact of loss mitigation strategies is captured in the estimates of PD and LGD. Note 6. 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 $ 4.09 billion and $ 3.96 billion at March 31, 2026 and December 31, 2025, respectively. The unpaid principal balance for all loans serviced for others was $ 5.94 billion and $ 5.60 billion at March 31, 2026 and December 31, 2025, respectively. The following table summarizes the activity pertaining to servicing rights measured at fair value: Three Months Ended March 31, 2026 2025 Balance at beginning of period $ 62,941 $ 55,788 Additions, net 5,066 5,624 Fair value changes: Due to changes in valuation inputs or assumptions 39 ( 1,095 ) Decay due to increases in principal paydowns or runoff ( 3,526 ) ( 3,633 ) Balance at end of period $ 64,520 $ 56,684 See Note 7. Fair Value of Financial Instruments for further details about servicing assets measured at fair value. 26 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements The fair value of servicing rights was determined using a weighted average discount rate of 12.8 % at March 31, 2026 and 13.5 % at March 31, 2025. The fair value of servicing rights was determined using a weighted average prepayment speed of 16.6 % at March 31, 2026 and 16.0 % at March 31, 2025, 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. 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 March 31, 2026 As of December 31, 2025 Fair value of servicing rights $ 64,520 $ 62,941 Incremental Increase (Decrease) in Value Incremental Increase (Decrease) in Value Prepayment Speed 20% increase ($ 3,960 ) ($ 3,794 ) 10% increase ( 1,928 ) ( 1,830 ) Discount Rate 200 basis point increase ( 2,678 ) ( 2,586 ) 100 basis point increase ( 1,248 ) ( 1,189 ) The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the fair value of the servicing rights is calculated without changing any other assumption. Changes in one factor may result in changes in another. As of March 31, 2026 and December 31, 2025, the Company had servicing assets related to conventional commercial loans carried at amortized cost of $ 157 thousand and $ 214 thousand, respectively. Note 7. Fair Value of Financial Instruments Fair Value Hierarchy There are three levels of inputs in the fair value hierarchy that may be used to measure fair value. Financial instruments are considered Level 1 when valuation can be based on quoted prices in active markets for identical assets or liabilities. Level 2 financial instruments are valued using quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or models using inputs that are observable or can be corroborated by observable market data of substantially the full term of the assets or liabilities. 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. Recurring Fair Value The table below provides a rollforward of the fair value of the Level 3 equity warrant assets: Three Months Ended March 31, Equity Warrant Assets 2026 2025 Balance at beginning of period $ 1,775 $ 7,162 New equity warrant assets 118 217 Changes in fair value, net 26 ( 304 ) Settlements ( 3 ) ( 40 ) Balance at end of period $ 1,916 $ 7,035 27 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements The tables below present the recorded amount of assets and liabilities measured at fair value on a recurring basis. March 31, 2026 Total Level 1 Level 2 Level 3 Investment securities available-for-sale U.S. government agencies $ 20,254 $ — $ 20,254 $ — Mortgage-backed securities 1,411,220 — 1,411,220 — Municipal bonds (1) 3,064 — 2,981 83 Loans held for investment (2) 244,940 — — 244,940 Servicing assets (3) 64,520 — — 64,520 Equity warrant assets 1,916 — — 1,916 Total assets at fair value $ 1,745,914 $ — $ 1,434,455 $ 311,459 December 31, 2025 Total Level 1 Level 2 Level 3 Investment securities available-for-sale U.S. government agencies $ 13,617 $ — $ 13,617 $ — Mortgage-backed securities 1,410,679 — 1,410,679 — Municipal bonds (1) 3,105 — 3,022 83 Loans held for investment (2) 260,625 — — 260,625 Servicing assets (3) 62,941 — — 62,941 Mutual fund (4) 19 — 19 — Equity warrant assets 1,775 — — 1,775 Total assets at fair value $ 1,752,761 $ — $ 1,427,337 $ 325,424 (1) During the three months ended March 31, 2026 and 2025 there were no level 3 fair value adjustment gains or losses. (2) Loans accounted for under the fair value option. (3) See Note 6 for a rollforward of recurring Level 3 fair values for servicing assets. (4) Included in other assets in the accompanying Unaudited Condensed Consolidated Balance Sheets. 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 2025 Form 10-K. Fair Value Option Until the first quarter of 2021, the Company had historically elected to account for retained participating interests of all government guaranteed loans under the fair value option in order to align the accounting presentation with the Company’s viewpoint of the economics of the loans. Interest income is recognized in the same manner on loans reported at fair value as on non-fair value loans, except in regard to origination fees and costs which are recognized immediately upon fair value election. Not electing fair value generally results in a larger discount being recorded on the date of the sale. This discount is subsequently accreted into interest income over the underlying loan’s remaining term using the effective interest method. Management made this change of election in alignment with its ongoing effort to reduce volatility and drive more predictable revenue. 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 March 31, 2026 or December 31, 2025. The unpaid principal balance of unguaranteed exposure for nonaccruals was $ 8.0 million and $ 8.5 million at March 31, 2026 and December 31, 2025, respectively. 28 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements 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 March 31, 2026 and December 31, 2025. March 31, 2026 Total Loans Nonaccruals 90 Days or More Past Due Fair Value Carrying Amount Unpaid Principal Balance Difference Fair Value Carrying Amount Unpaid Principal Balance Difference Fair Value Carrying Amount Unpaid Principal Balance Difference Fair Value Option Elections Loans held for investment $ 244,940 $ 253,668 $ ( 8,728 ) $ 61,563 $ 62,839 $ ( 1,276 ) $ 48,109 $ 49,087 $ ( 978 ) $ 244,940 $ 253,668 $ ( 8,728 ) $ 61,563 $ 62,839 $ ( 1,276 ) $ 48,109 $ 49,087 $ ( 978 ) December 31, 2025 Total Loans Nonaccruals 90 Days or More Past Due Fair Value Carrying Amount Unpaid Principal Balance Difference Fair Value Carrying Amount Unpaid Principal Balance Difference Fair Value Carrying Amount Unpaid Principal Balance Difference Fair Value Option Elections Loans held for investment $ 260,625 $ 269,851 $ ( 9,226 ) $ 61,602 $ 62,824 $ ( 1,222 ) $ 45,784 $ 46,824 $ ( 1,040 ) $ 260,625 $ 269,851 $ ( 9,226 ) $ 61,602 $ 62,824 $ ( 1,222 ) $ 45,784 $ 46,824 $ ( 1,040 ) The following table presents the net losses from changes in fair value. Three Months Ended March 31, Losses on Loans Accounted for under the Fair Value Option 2026 2025 Loans held for investment $ ( 1,165 ) $ ( 1,034 ) $ ( 1,165 ) $ ( 1,034 ) The following tables summarize the activity pertaining to loans accounted for under the fair value option: Three Months Ended March 31, Loans held for investment 2026 2025 Balance at beginning of period $ 260,625 $ 328,746 Repurchases 2,945 6,252 Fair value changes ( 1,165 ) ( 1,034 ) Settlements ( 17,465 ) ( 17,157 ) Balance at end of period $ 244,940 $ 316,807 Non-Recurring Fair Value The tables below present the recorded amount of assets measured at fair value on a non-recurring basis. The Company has no liabilities recorded at fair value on a non-recurring basis. March 31, 2026 Total Level 1 Level 2 Level 3 Collateral-dependent loans $ 36,054 $ — $ — $ 36,054 Foreclosed assets 9,550 — — 9,550 Total assets at fair value $ 45,604 $ — $ — $ 45,604 29 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2025 Total Level 1 Level 2 Level 3 Collateral-dependent loans $ 20,619 $ — $ — $ 20,619 Foreclosed assets 6,877 — — 6,877 Equity security investment with a non-readily determinable fair value 2,101 — — 2,101 Total assets at fair value $ 29,597 $ — $ — $ 29,597 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 2025 Form 10-K. Level 3 Analysis For Level 3 assets measured at fair value on a recurring or non-recurring basis as of March 31, 2026 and December 31, 2025, the significant unobservable inputs used in the fair value measurements were as follows: March 31, 2026 Level 3 Assets with Significant Unobservable Inputs Fair Value Valuation Technique Significant Unobservable Inputs Range Weighted Average (1) Recurring fair value Municipal bond $ 83 Discounted expected cash flows Discount rate 7.0 % N/A Prepayment speed 5.0 % N/A Loans held for investment $ 244,940 Discounted expected cash flows Loss rate 0.0 % - 5.5 % 1.1 % Discount rate 6.6 % - 18.0 % 8.8 % Prepayment speed 16.2 % - 24.1 % 18.2 % Servicing assets $ 64,520 Discounted expected cash flows Discount rate 12.8 % 12.8 % Prepayment speed 12.2 % - 19.1 % 16.6 % Equity warrant assets $ 1,916 Black-Scholes option pricing model Volatility 13.1 % - 104.4 % 58.4 % Risk-free interest rate 3.9 % - 4.3 % 4.3 % Marketability discount 20.0 % - 100.0 % 20.4 % Remaining life 2.3 - 11.8 years 8.0 years Non-recurring fair value Collateral-dependent loans $ 36,054 Discounted appraisals Appraisal adjustments (2) 6.1 % - 90.3 % 33.2 % Foreclosed assets $ 9,550 Discounted appraisals Appraisal adjustments (2) 7.1 % - 10.0 % 10.0 % 30 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements December 31, 2025 Level 3 Assets with Significant Unobservable Inputs Fair Value Valuation Technique Significant Unobservable Inputs Range Weighted Average (1) Recurring fair value Municipal bond $ 83 Discounted expected cash flows Discount rate 7.0 % N/A Prepayment speed 5.0 % N/A Loans held for investment $ 260,625 Discounted expected cash flows Loss rate 0.0 % - 4.6 % 1.1 % Discount rate 6.7 % - 10.0 % 8.6 % Prepayment speed 15.1 % - 21.2 % 17.2 % Servicing assets $ 62,941 Discounted expected cash flows Discount rate 12.8 % 12.8 % Prepayment speed 12.0 % - 18.8 % 16.2 % Equity warrant assets $ 1,775 Black-Scholes option pricing model Volatility 13.1 % - 104.4 % 58.3 % Risk-free interest rate 3.7 % - 4.2 % 4.2 % Marketability discount 20.0 % - 100.0 % 20.4 % Remaining life 2.5 - 11.5 years 8.2 years Non-recurring fair value Collateral-dependent loans $ 20,619 Discounted appraisals Appraisal adjustments (2) 10.0 % - 82.7 % 39.7 % Foreclosed assets $ 6,877 Discounted appraisals Appraisal adjustments (2) 10.0 % 10.0 % Equity security investment with a non-readily determinable fair value $ 2,101 Market Approach Revenue Multiple 3.75 N/A (1) Weighted averages are determined by the relative fair value of the instruments or the relative contribution to the instruments fair value. (2) Appraisals may be adjusted by management for customized discounting criteria, estimated sales costs, and other qualitative adjustments. Estimated Fair Value of Other Financial Instruments GAAP also requires disclosure of the fair value of financial instruments carried at book value on the Unaudited Condensed Consolidated Balance Sheets. 31 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements 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: March 31, 2026 Carrying Amount Quoted Price In Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value Financial assets Cash and due from banks $ 816,135 $ 816,135 $ — $ — $ 816,135 Certificates of deposit with other banks 250 250 — — 250 Loans held for sale 435,313 — — 460,878 460,878 Loans and leases held for investment, net of allowance for credit losses on loans and leases 11,719,997 — — 11,548,151 11,548,151 Financial liabilities Deposits 13,835,058 — 13,181,865 — 13,181,865 Borrowings 99,746 — — 107,267 107,267 December 31, 2025 Carrying Amount Quoted Price In Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value Financial assets Cash and due from banks $ 864,904 $ 864,904 $ — $ — $ 864,904 Certificates of deposit with other banks 250 250 — — 250 Loans held for sale 420,055 — — 440,928 440,928 Loans and leases held for investment, net of allowance for credit losses on loans and leases 11,520,733 — — 11,329,479 11,329,479 Financial liabilities Deposits 13,688,659 — 13,096,941 — 13,096,941 Borrowings 102,404 — — 110,782 110,782 Note 8. Commitments and Contingencies Litigation In the normal course of business, the Company is involved in various legal proceedings. Management believes that the outcome of such proceedings will not materially affect the financial position, results of operations or cash flows of the Company. Financial Instruments with Off-Balance-Sheet Risk The Company is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, credit risk in excess of the amount recognized in the balance sheet. 32 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as for on-balance-sheet instruments. A summary of the Company’s commitments is as follows: March 31, 2026 December 31, 2025 Commitments to extend credit (1) (2) $ 4,419,656 $ 4,099,313 Standby letters of credit 15,944 51,842 Airplane purchase agreement commitments 48,636 48,636 Total unfunded off-balance-sheet credit risk $ 4,484,236 $ 4,199,791 (1) Includes unfunded overdraft protection. (2) Includes $ 1.65 billion and $ 1.27 billion at March 31, 2026 and December 31, 2025, 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. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the party. Collateral held varies, but may include accounts receivable, inventory, property and equipment, residential real estate and income-producing commercial properties. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. 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 $ 16.9 million and $ 16.4 million at March 31, 2026 and December 31, 2025, respectively. During the three months ended March 31, 2026 and 2025, the Company recorded $ 500 thousand in expense and $ 478 thousand in recoveries related to the allowance for off-balance-sheet credit exposures, respectively. Other Commitments See Note 4. Investments for unfunded commitments to provide capital contributions for equity fund investments as of March 31, 2026 and December 31, 2025. Concentrations of Credit Risk The distribution of commitments to extend credit approximates the distribution of loans outstanding. The Company generally does not have a significant number of credits to any single borrower or group of related borrowers whereby their retained unguaranteed exposure exceeds $ 20.0 million, except for 77 relationships that have a retained unguaranteed exposure of $ 3.01 billion of which $ 2.37 billion of the unguaranteed exposure has been disbursed. The Company from time-to-time may have cash and cash equivalents on deposit with other financial institutions that exceed federally-insured limits. 33 Table of Contents Live Oak Bancshares, Inc. Notes to Unaudited Condensed Consolidated Financial Statements Geographic Concentration s The following table presents the geographic concentration of the Company's loan and lease portfolio at March 31, 2026: % of Total Geographic Regions (1) Midwest 12.9 % Northeast 18.7 Southeast 31.0 Southwest 13.9 West 23.0 Non-U.S. 0.5 Total 100.0 % (1) Concentrations are stated as a percentage of total unguaranteed loans held for investment. Midwest consists of ND, SD, NE, KS, MN, IA,WI, MO, IL, IN, MI and OH. Northeast consists of MD, DE, PA, NJ, NY, CT, RI, MA, VT, ME and NH. Southeast consists of AR, LA, MS, TN, AL, GA, FL, SC, KY, NC, VA, WV, DC, PR and VI. Southwest consists of AZ, NM, TX and OK. West consists of WA, OR, CA, NV, ID, MT, WY, CO, UT, AK and HI. Non-U.S. includes addressees with foreign domicile. Domicile is determined by the principal resident or business address of the entity. Note 9. Stock Plans On March 20, 2015, the Company adopted the 2015 Omnibus Stock Incentive Plan (as amended and currently in effect, the “2015 Omnibus Stock Incentive Plan”) which replaced the previously existing Amended Incentive Stock Option Plan and Nonstatutory Stock Option Plan. Subsequently on May 24, 2016, the 2015 Omnibus Stock Incentive Plan was amended and restated, and on May 15, 2018, the 2015 Omnibus Stock Incentive Plan was amended, to authorize awards covering a maximum of 7,000,000 and 8,750,000 common voting shares, respectively. On May 11, 2021, the Amended and Restated 2015 Omnibus Stock Incentive Plan was amended to authorize awards covering a maximum of 10,750,000 common voting shares. Subsequently on May 16, 2023, the 2015 Omnibus Stock Incentive Plan was amended to authorize awards covering a maximum of 13,750,000 common voting shares. Options or restricted shares granted under the 2015 Omnibus Stock Incentive Plan expire no more than 10 years from date of grant. Exercise prices under the 2015 Omnibus Stock Incentive Plan are set by the Board of Directors at the date of grant but shall not be less than 100 % of fair market value of the related stock at the date of the grant. Forfeitures are recognized as they occur. Restricted Stock Restricted stock awards are authorized in the form of restricted stock awards or units (“RSU”s). RSUs have a restriction based on the passage of time and may also have a restriction based on a non-market-related performance criteria. The fair value of the RSUs is based on the closing price on the date of the grant. For the three months ended March 31, 2026, 786,525 RSUs were granted with a weighted average grant date fair value of $ 41.12 . At March 31, 2026, unrecognized compensation costs relating to RSUs amounted to $ 77.7 million which will be recognized over a weighted average period of 3.68 years. 34 Table of Contents