I found Live Oak Bank (LOB) by accident. In hunting for a job along the Carolina Coast (cause who doesn't want to live at the beach?), I stumbled upon a listing for the bank. No, they didn't hire me, but I won't hold it against them. I actually bought their stock this morning.
In the Q1 results released yesterday, Live Oak Bank's net interest income (including servicing revenues) grew 45% year over year, while the net income from that interest jumped 104% to $12.45 million. What does all this mean to shareholders? It means a 76% increase in diluted earnings per share to $0.30 a share. That's pretty nice stuff.
I've been a fan of the bank for awhile. They've been quietly building a loan portfolio consisting primarily of small business loans. It's a no brainer that higher interest rates will benefit banks' loan portfolios as they bring in higher yields. I like Live Oak as a play on rates due the consistent success of its expansion. They're adding onto their headquarters (which is really cool by the way) to make room for their growing business. The income numbers justify the construction. Outside of small banks like this, where will you find 76% increases in earnings per share? You can't, and that's why I'm drawn to them. There's real growth potential for the stock price as long as we don't see dilution.
