Live Oak Bancshares, Inc.

the presentation, we will conduct a question and answer session. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. I would now like to turn the conference call over to Greg Seward, Chief Risk Officer and General Counsel. Please go ahead.

Thank you and good morning, everyone. Welcome to Live Oak Second Corps 2025 earnings conference call. We are webcasting live over the Internet and this call is being recorded. To access the call over the Internet and review the presentation materials that we will reference on the call, please visit our website at .liveoakbank.com and go to the events and presentations tab for supporting materials. Our earnings release is also available on our website. Before we get started, I would like to caution you that we may make forward-looking statements during today's call that are subject to risks and uncertainties. Factors that may cause actual results to differ materially from our expectations are detailed in the materials accompanying this call and in our SEC filings. We do not undertake to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of today's call. Information about any non-GAAP financial measures referenced, including reconciliation of those measures, the GAAP measures, can also be found in our SEC filings and in the presentation materials. I will now turn the call over to B.J. Loesch, President of Live Oak Bankers.

Great. Thanks. Good morning, Greg. Good morning, everyone. In the room here, just so you know, I've got Chip, I've got Walt Pfeiffer and Michael Karns to go through some brief comments and answer any questions that you've got. So let's get started on slide four. And I am excited about this quarter. The promise of the Live Oak business model was displayed this quarter, resulting in very positive momentum across all areas of the company, from lending production to checking relationships to credit improvement to importantly revenue, PP&R and DPS growth. Key initiatives such as relationship building through checking accounts continue to both improve our customer experience and provide a tailwind to our funding mix and our net interest margin. Live Oak Express, which is our small dollar loan strategy, continues to ramp up nicely, providing strong gain on sale premiums and a long runway for continued market growth. And as we've discussed, we've seen a bit of a small business credit cycle the last few quarters. By definition, cycles have a beginning and an end. And with key credit indicators showing meaningful improvement, we feel increasingly confident that the end of the current small business credit cycle is near. The tangible result of our efforts is best showcased on slide five. And as you can see, the true earnings power of the company is strong on a -over-year basis, but even stronger quarter to quarter, driven by a top-line revenue growth of 10% link quarter and 20% -over-year. Why are we seeing this? It's three things. First is a focus on what we call keeping the main thing the main thing, generating profitable lending deposit production to drive core earnings. Second is what we call modernizing the engine, how we make it simpler, easier, faster, and more efficient for our people to serve our customers. What that looks like in practice is improving processes, narrowing the focus of our activities to those that really matter, and positioning the company to transform what the employee and customer experience looks like in an AI-driven world. And third is picking our spots with new revenue generating investments that are making the business model profitability and growth opportunity more sustainable and resilient over the medium to long-term. Things like Live Oak Express, the small dollar loan program, which has gone from essentially zero in 2023 to $300 million or more in 2024 with a very long runway to go. Turning to slide six, our other new growth investment has been in checking. Again, starting with virtually zero in 2023, we now have 290 million and almost 7,000 customers. In 2021, the percentage of Live Oak customers with both a loan and deposit relationship was 3%. Today it is 18% growing. And it is not just about new checking accounts. Those customers have also brought an incremental half a billion dollars of interest-bearing deposits. So we are deepening relationships while improving our funding profile. And here again, as with Live Oak Express, we have a long runway of growth to come. And lastly on credit, where our metrics continue to improve, in a few minutes, Walt will highlight some of the positive trends for key indicators of future credit quality, past dues, number of defaults, and non-accruals, and they are all moving in a favorable direction. We proactively moved problem loans through to resolution and significantly stepped up our front-end monitoring of emerging issues. I am very proud of our teams. Over the last few quarters, the excellent performance from our lending and deposit activities that have been driving that strong new customer activity and profitable revenue growth, has been overshadowed by what we have experienced in credit. And as the skies start to clear, the work our people have been doing to continue profitably growing our company, improving the consistency of the business model, and making it simpler, easier, faster, and more efficient to do business with Live Oak is moving back to the forefront, which is where it should be. And there is a lot more to come. Walt, how about running through some of the financial highlights for the quarter?