LOB 10-K & 10-Q changes, risk factors and insider trading

An investment in Live Oak Bancshares, Inc.’s common stocksecurities involves certain risks. The following discussion highlights the risks that management believes are material for the Company, but do not necessarily include all the risks that we may face. Additional risks and uncertainties that are not currently known or that management does not currently deem material could also have a material adverse impact on our business, results of our operations and financial condition. You should carefully consider the risk factors and uncertainties described below and elsewhere in this Report in evaluating an investment in Live Oak Bancshares, Inc.’s common stock.securities.

•Pandemics, natural disasters,disasters (including hurricanes), global climate change, acts of terrorismterrorism, social unrest, and global conflicts could disrupt our operations which may have a negative impact on our business operations.

•We must effectively manageface risks in connection with our information systems and those of our third-party service providers, which may experience disruption, failure, or security breaches, including those caused by cyber-attacks.

•We have identified a material weaknessweaknesses in our internal control over financial reporting which, if not remediated appropriately or in a timely manner, could result in a loss of investor confidence and adversely impact the trading price of our securities.

•We must effectively manage our interest rate risks.risk.

Risks Related to Our Common StockSecurities

•There can be no assurance that we will continue to pay cash dividends.dividends on our common stock.

•An investment in our common stocksecurities is not an insured deposit.

Our SBA lending program is dependent upon the federal government. As an SBA Preferred Lender, we enable our clients to obtain SBA loans without being subject to the potentially lengthy SBA approval process necessary for lenders that are not SBA Preferred Lenders. The SBA periodically reviews the lending operations of participating lenders to assess, among other things, whether the lender exhibits prudent risk management. When weaknesses are identified, the SBA may request corrective actions or impose enforcement actions, including revocation of the lender’s Preferred Lender status. If we lose our status as a Preferred Lender, we may lose some or all of our customers to lenders who are SBA Preferred Lenders, and as a result we could experience a material adverse effect on our business, results of operations and financial results.condition. Any changes to the SBA program, including changes to the level of guarantee provided by the federal government on SBA loans, may also have a material adverse effect on our business.

We currently anticipate that gains on the sale of loans will comprise a meaningful component of our revenue in 2025.2026. We sellhave historically sold the guaranteed portion of some of our SBA 7(a) loans in the secondary market. These sales have resulted in premium income for us at the time of sale and created a stream of future servicing income. We may not be able to continue originating these loans or selling them in the secondary market. Furthermore, even if we are able to continue originating and selling SBA 7(a) loans in the secondary market, we might not continue to realize premiums upon the sale of the guaranteed portion of these loans. When we sell the guaranteed portion of our SBA 7(a) loans, we continue to have credit risk on the non-guaranteed portion of the loans, and if a customer defaults on a loan, we recognize a loss and/or recovery related to the non-guaranteed portion. However, if the SBA establishes that a loss on an SBA guaranteed loan is attributable to significant technical deficiencies in the manner in which the loan was originated, funded or serviced by us, the SBA may seek recovery of the principal loss related to the deficiency from us, which could materially adversely affect our business, results of operations and financial condition.

Pandemics, natural disasters,disasters (including hurricanes), global climate change, acts of terrorismterrorism, social unrest, and global conflicts may have a negative impact on our business and operations.

Pandemics, natural disasters,disasters (including hurricanes), global climate change, acts of terrorism, social unrest, global conflicts or other similar events have in the past, and may in the future have, a negative impact on our business and operations. These events impact us negatively to the extent that they result in reduced capital markets activity, lower asset price levels, or disruptions in general economic activity in the United States or abroad, or in financial market settlement functions. In addition, these or similar events may impact economic growth negatively, which could have an adverse effect on our business and operations and may have other adverse effects on us in ways that we are unable to predict.

We also rely on vendors and third parties to provide software and other services that are important to the operation of our next-generation banking platform. These services may include or utilize AI and related technologies. Our future strategy and success depend on our ability to access to these technology services and successfully implement them. If this technology is not successfully developed and implemented at our Bank, if we were to lose access to any of this technology, or if we were only able to access the technology on less favorable terms, we would not be able to offer our customers the next-generation banking platform services that we intend to offer, and our business, financial condition, results of operations and prospects could be materially and adversely affected.

Cloud technologies, including third-party cloud infrastructure, are also critical to the operation of our systems, and our reliance on cloud technologies continues to grow. Any failure, interruption or breach in security or operational integrity of these systems could result in failures or disruptions in our online banking system, customer relationship management, general ledger, deposit and loan servicing and other systems. The security and integrity of our systems and the technology we use, including services and solutions provided by third-party vendors, could be threatened by a variety of interruptions orinterruptions, information security breaches,breaches and other threats, including those caused by computer hacking, cyber-attacks, electronic fraudulent activityactivity, errors or attempted theft of financial assets or information. The increased use of mobile and cloud technologies, as well as the increase in remote work, can heighten these and other operational risks. We may fail to promptly identify or adequately address any such failures, interruptions orinterruptions, security breaches and other threats when they occur. While we have certain protective policies and procedures in place, the nature and sophistication of the threats continue to evolve. The increasing sophistication of cyber criminals and their evolving attempts to breach networks present increasing risk of a security breach and other data incidents. We may be required to expend significant additional resources in the future to modify and enhance our protective measures.

The nature of our business may make it an attractive target and potentially vulnerable to cyber-attacks, computer viruses, physical or electronic break-ins or similar disruptions. The technology-based platform we use processes sensitive data from our borrowers, depositors and other customers. While we have taken steps to protect confidential and proprietary information that we have access to, our security measures and the security measures employed by the owners of the technology in the platforms and services that we use can be compromised. DataSecurity incidentsbreaches and other data incidents, including those involving phishing, hacking, misdirected communications and other inadvertent disclosures, and other incidents resultsresulting in unauthorized access to and/or acquisition of confidential and proprietary information, including personal information, can and do occur. Accidental or willful security breaches or other unauthorized access to our systems can cause confidential customer, borrower, employee, vendor, partner or investor information to be stolen and used for criminal purposes. Security breaches or other data incidents involving unauthorized access to confidential information can also expose us to liability related to the loss of the information, time-consuming and expensive litigation, and negative publicity. When security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in the technology-based platform that we use are exposed and exploited, our relationships with customers, borrowers, employees, vendors, partners and investors could be severely damaged, and we could incur significant liability.

Because techniques used to sabotage or obtain unauthorized access to systems change frequently and generally are not recognized until they are launched against a target, we and our partners and collaborators may be unable to anticipate these techniques or to implement adequate preventative measures.measures, including with respect to cyberthreats posed by emerging technologies, such as AI and quantum computing. In addition, federal regulators and many federal and state laws and regulations require companies to notify individuals of data security breaches and other data incidents involving their personal information. Certain security breaches and other data incidents also require notice to regulators, the media, and/or other parties. These mandatory disclosures regarding a security breach and other data incidents are costly to implement and often lead to widespread negative publicity, which may cause customers, borrowers, employees, vendors, partners or investors to lose confidence in the effectiveness of our data security measures. Any security breach or other data incident, whether actual or perceived, would harm our reputation and could cause us to lose customers, borrowers, employees, vendors, partners, or investors, and could adversely affect our business and operations.

Additionally, we face the risk of operational disruption, failure, termination or capacity constraints of any of the third parties that facilitate our business activities, including exchanges, clearing agents, clearing houses or other financial intermediaries. Such parties could also be the source of an attack on, or breach of, our operational systems. Any failures, interruptions orinterruptions, security breaches, or other data incidents, including with respect to our information systems or our vendors’ information systems, or any perception that our security measures are inadequate, could negatively impact our operations, damage our reputation, result in a loss of customer business, result in a violation of privacy or other laws, and expose us to civil litigation, enforcement actions by governmental agencies, regulatory fines or other damages or losses, including those not covered by insurance.

Our business is dependent on the successful and uninterrupted functioning of our information technology and telecommunications systems and third-party providers. The failure of these systems, or the termination of a third-party software license or service agreement on which any of these systems is based, could interrupt our operations. Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions. If significant, sustained or repeated, a system failure or service denial could compromise our ability to operate effectively, damage our reputation, result in a loss of customer business, and/or subject us to additional regulatory scrutiny and possible financial liability, any of which could materially adversely affect our business, financial condition, results of operations and prospects, as well as the value of our common stock.securities.

We have identified a material weaknessweaknesses in our internal control over financial reporting which, if not remediated appropriately or in a timely manner, could result in a loss of investor confidence and adversely impact the trading price of our securities.

As disclosed in Part II - Item 9A. Controls and Procedures, management has identified a material weaknessweaknesses in our internal control over financial reporting. As a result, management concluded that our internal control over financial reporting and our disclosure controls and procedures were not effective as of December 31, 2024.2025. The Company is currently working to remediate the material weakness.weaknesses. However, there can be no assurance that these remediation efforts will be successful. In addition, these remediation efforts will place a burden on management and may result in additional expenses.

If we are unable to remediate thisthese material weakness,weaknesses, or are otherwise unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, result in violations of applicable securities laws, result in an inability to meet NYSE listing requirements, negatively affect investor confidence in the accuracy and completeness of our financial statements, and adversely impact the trading price of our securities.

As of December 31, 2024,2025, the fair value of our available for sale securities portfolio was approximately $1.25$1.43 billion. Factors beyond our control can significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of these securities. These factors include, but are not limited to, rating agency actions in respect of the securities, defaults by the issuer or with respect to the underlying securities, monetary taperingpolicy actions by the Federal Reserve, and changes in market interest rates and potential instability in the capital markets. Any of these factors, among others, could cause impairments and realized or unrealized losses in future periods and declines in other comprehensive income, which could materially and adversely affect our business, results of operations, financial condition and prospects, as well as the value of our common stock.securities. The process for determining whether a security is reported at the proper carrying amount usually requires complex, subjective judgments about the future financial performance and liquidity of the issuer and any collateral underlying the security in order to assess the probability of receiving all contractual principal and interest payments on the security. Our inability to accurately predict the future performance of an issuer or to efficiently respond to changing market conditions could result in a decline in the value of our investment securities portfolio, which could have a material and adverse effect on our business, results of operations and financial condition. In addition, adjustments to the ACL on available-for-sale investment securities would negatively affect the Company’s earnings and regulatory capital ratios.

We maintain allowances for credit losses on loans, leases, and off-balance sheet credit exposures. The ACL on loans and leases are contra-asset valuation accounts that are deducted from the amortized cost basis of these assets to present the net amount expected to be collected. In the case of off-balance-sheet credit exposures, such as committed, but as of yet unfunded loans, the ACL is a liability account reported as an other liability in our consolidated balance sheets. The amount of each allowance account represents management's best estimate of current expected credit losses on these financial instruments considering available information, from internal and external sources, relevant to assessing exposure to credit loss over the contractual term of the instrument. Relevant available information includes historical credit loss experience, current conditions and reasonable and supportable forecasts. As a result, the determination of the appropriate level of ACL inherently involves a high degree of subjectivity and requires us to make significant estimates related to current and expected future credit risks and trends, all of which may undergo material changes. Continuing deteriorationDeterioration in economic conditions affecting borrowers; new information regarding existing loans and loan commitments; and identification of additional problem loans, ratings down-grades and other factors, both within and outside of our control, may require an increase in the allowances for credit losses on loans and off-balance sheet credit exposures. In addition, bank regulatory agencies periodically review our ACL and may require an increase in credit loss expense or the recognition of further loan charge-offs, based on judgments different than those of management. Furthermore, if any charge-offs related to loans or off-balance sheet credit exposures in future periods exceed our allowances for credit losses on loans or off-balance sheet credit exposures, we will need to recognize additional credit loss expense. Any increase in the ACL on loans and/or off-balance sheet credit exposures will result in a decrease in net income and, possibly, capital, and may have a material adverse effect on our business, financial condition and results of operations. See “Note 1. Organization and Summary of Significant Accounting Policies” to the consolidated financial statements for further discussion related to our process for determining the appropriate level of the ACL.

Our access to funding sources in amounts adequate to finance our activities or at a reasonable cost could be impaired by factors that affect us specifically or the financial services industry in general. Factors that could adversely affect our access to liquidity sources include a decrease in the level of our business activity due to a market downturn, failures of or interruptions to our next-generation banking platform, our lack of access to a traditional branch banking network designed to generate core deposits, and adverse regulatory action against us. Our ability to borrow could also be impaired by factors that are not specific to us, such as a severe disruption in the financial markets or negative views and expectations about the prospects for the financial services industry as a whole. Our access to borrowed funds could become limited in the future, and we may be required to pay above market rates for additional borrowed funds, if we are able to obtain them at all, which may adversely affect our business, results of operations and financial condition.

The amount of other real estate owned, or OREO, may increase significantly, resulting in additional losses, and costs and expenses that will negatively affect our operations.

In connection with our banking business, we take title to real estate collateral from time to time through foreclosure or otherwise in connection with efforts to collect debts previously contracted. Such real estate is referred to as other real estate owned (“OREO”). As the amount of OREO increases, our losses, and the costs and expenses to maintain the real estate, likewise increase. The amount of OREO we hold may increase due to various economic conditions or other factors. Any additional increase in losses and maintenance costs and other expenses due to OREO may have a material adverse effect on our business, results of operations and financial condition. Such effects may be particularly pronounced in a market of reduced real estate values and excess inventory, which may make the disposition of OREO properties more difficult, increase maintenance costs and other expenses, and reduce our ultimate realization from any OREO sales. In addition, at the time of acquisition of the OREO we are required to reflect its fair market value in our financial statements. If the OREO declines in value subsequent to its acquisition, we are required to recognize a loss. As a result, declines in the value of our OREO will have a negative effect on our business, results of operations and financial condition. As of December 31, 2024,2025, we had threeeight OREO properties with an aggregate carrying value of $1.9$8.2 million.

Our investments in financial technology companies and initiatives, including our investment in Apiture,initiatives subject us to material financial, reputational and strategic risks.

Our investments in various financial technology companies have had a significant impact on our results of operations, and we anticipate they will continue to have a significant impact on our results of operations in the future. Investments where we have the ability to exercise significant influence but not control over the operating and financial policies of the investee are accounted for using the equity method of accounting. For investments accounted for under the equity method, we increase or decrease our investment by our proportionate share of the investee’s net income or loss. Those investments where we are not able to exercise significant influence over the investee are accounted for under the equity security accounting method, where changes in fair value resulting from observable price changes arising from orderly transactions are recognized in net income. We also periodically evaluate our investments for impairment. The results of this testing of our investments for potential impairment may be adversely affected by a variety of factors, including market conditions, general economic conditions and unfavorable changes in the businesses underlying the investments. Impairments or write-downs of these assets may result in charges that adversely affect our results of operations. See “Note 1. Organization and Summary of Significant Accounting Policies” under the subheading entitled “Investments” for more information.

OurWe subsidiaryinvest, Canapi Advisors was an investment advisor to Canapi Ventures, a series of funds focused on providing venture capital to newdirectly and emerging financial technology companies. Canapi Ventures investsindirectly, in early to growth-stage companies that may include companies that utilize advanced science, technology, engineering and/or mathematicsmathematics, including AI technologies, to innovate in the financial technology market. Investments in these companies involve a high degree of business and financial risk that can result in substantial losses. These companies may be unseasoned, unprofitable or have no established operating histories or earnings and may lack technical, marketing, financial and other resources. These companies often have the need for substantial additional capital to support expansion or to achieve or maintain a competitive position. Less established companies tend to have lower capitalization and fewer resources and, therefore, are often more vulnerable to financial failure. These companies may be dependent upon the success of one product or service, a unique distribution channel, or the effectiveness of a manager or management team. The failure of this one product, service or distribution channel, or the loss or ineffectiveness of a key executive or executives within the management team may have a materially adverse impact on such companies. Such companies may face intense competition, including competition from companies with greater financial resources, more extensive development, AI, manufacturing, marketing and service capabilitiescapabilities, and a larger number of qualified managerial and technical personnel.

Many of the financial technology companies in which we invest directly present risks similar to those in which Canapi Ventures invests. The possibility that the companies in which we and Canapi Ventures invest will not be able to commercialize their technology or product concept presents significant risk to our business operations and financial results. These companies tend to lack management depth, to have limited or no history of operations and to not have attained profitability. Additionally, although some of these companies may already have a commercially successful product or product line at the time of investment, technology products and services often have a more limited market or life span than products in other industries. Thus, the ultimate success of these companies may depend on their ability to continually innovate in increasingly competitive markets. Most of the companies in which we and Canapi Ventures invest will require substantial additional equity financing to satisfy their continuing growth and working capital requirements. Each round of venture financing is typically intended to provide a company with enough capital to reach the next stage of development. The circumstances or market conditions under which such companies will seek additional capital is unpredictable. It is possible that one or more of such companies will not be able to raise additional financing or may be able to do so only at a price or on terms which are unfavorable.

The equity securities of the companies in which we and Canapi Ventures invest are at the time of acquisition unmarketable and illiquid, and there can be no assurance that a ready market for these securities will ever exist. Such securities generally cannot be sold publicly without prior agreement with the issuer to register the securities under the Securities Act or by selling such securities under Rule 144 or other provisions of the Securities Act which permit only limited sales under specified conditions. We generally will realize the value of such securities only if the issuer is able to make an initial public offering of its shares or enters into a business combination with another company which purchases our equity securities for cash or exchanges them for publicly traded securities of the acquirer. The feasibility of such transactions depends upon the company's financial results as well as general economic and equity market conditions. Furthermore, even if the equity securities owned become publicly traded, our ability to sell such securities may be limited by the lack of, or limited nature of, a trading market for such securities. There can be no assurance that the value at which we carry these assets will necessarily reflect the amount which could be realized upon a sale or other liquidity event.

As of January 31, 2025,2026, our directors and executive officers and their related entities own, in the aggregate, approximately 23.3%22.4% of our outstanding common stock. The significant concentration of stock ownership may adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise. In addition, these shareholders will be able to exercise influence over all matters requiring shareholder approval, including the election of directors and approval of corporate transactions, such as a merger or other sale of the Company or its assets. This concentration of ownership could limit the ability of other shareholders to influence corporate matters and may have the effect of delaying or preventing a change in control, including a merger, consolidation or other business combination involving us, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control, even if that change in control would benefit our other shareholders. For information regarding the ownership of our outstanding stocksecurities by our executive officers and directors and related entities, see “Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters” in this Report.

Our financial condition and results of operations are affected by credit policies of monetary authorities, particularly the Federal Reserve. Actions by monetary and fiscal authorities, including the Federal Reserve, could have an adverse effect on our deposit levels, loan demand, or business and earnings, as well as the value of our common stock.securities.

Although we comply with all current applicable capital requirements, we may be subject to more stringent regulatory capital requirements in the future, and we may need additional capital in order to meet those requirements. If we or the Bank fail to meet applicable minimum capital requirements or cease to be well capitalized, such failure would cause us and the Bank to be subject to regulatory restrictions and could adversely affect customer confidence, our ability to grow, our costs of funds and FDIC insurance costs, our ability to pay dividends on common or preferred stock and/or repurchase shares, our ability to make acquisitions, and our business, results of operations and financial condition, generally.

Various federal banking laws and regulations, including rules adopted by the Federal Reserve pursuant to the requirements of the Dodd-Frank Act, impose additional requirements on bank holding companies with total assets of at least $10 billion. In addition, banks with total assets of at least $10 billion are primarily examined by the CFPB with respect to federal consumer protection laws and regulations.regulations, however, there is currently uncertainty surrounding the ongoing operations of the CFPB. In the first quarter of 2023, the Company and the Bank each first exceeded $10 billion in total assets. As of December 31, 2024,2025, the Company and the Bank had total assets of $12.94$15.13 billion and $12.86$15.06 billion, respectively. As a result, we are subject to additional requirements including, but not limited to, establishing a dedicated risk committee of our Board, calculating our FDIC deposit insurance assessment using the large bank pricing rule and more frequent regulatory examinations. We have incurred significant expenses in connection with these compliance obligations and expect to continue to incur expenses to address heightened regulatory requirements. These additional regulatory requirements and increased compliance expenses could have a material adverse effect on our business, financial condition andcondition, results of operations.operations, and the value of our securities.

We are subject to significant anti-money laundering, “know your customer” and other regulations under applicable law, including the Bank Secrecy Act and the USA PATRIOT Act, and we could become subject in the future to additional regulatory requirements beyond those that are currently adopted, proposed or contemplated. We expect that federal and state bank regulators will continue to increase their oversight, inspection and investigatory role over our deposit operations and the financial services industry generally.operations. Furthermore, we intend to further increase our deposit product offerings and grow our customer deposit portfolio in the future and, as a result, we are, and will continue to be, subject to heightened compliance and operating costs that could adversely affect our business, results of operations and financial condition. In addition, legal and regulatory proceedings and other contingencies will arise from time to time that may have an adverse effect on our business practices and results of operations.

Similarly, inflation and rapid increases in interest rates have led in the past and may lead in the future to a decline in the fair value of previously issued government securities with interest rates below current market interest rates. Any sale of investment securities that are held in an unrealized loss position by financial institutions for liquidity or other purposes will cause actual losses to be realized. There can be no assurance that there will not be bank failures or issues such as liquidity concerns in the broader financial services industry or in the U.S. financial system as a whole. Adverse financial market and economic conditions can exert downward pressure on stock prices, security prices, and credit availability for financial institutions without regard to their underlying financial strength.

Any of these impacts, or any other impacts resulting from the events described above, could have a material adverse effect on our liquidity and our current and/or projected business operations and financial condition andcondition, results of operations.operations, and the value of our securities.

Risks Related to Our Common StockSecurities

There can be no assurance that we will continue to pay cash dividends.dividends on our common stock.

Although we have historically paid cash dividends,dividends to the holders of our common stock, there is no assurance that we will continue to pay such cash dividends. Future payment of cash dividends,dividends on our common stock, if any, will be at the discretion of our board of directors and will be dependent upon our financial condition, results of operations, capital requirements, economic conditions, and such other factors as the board may deem relevant.

Shares of Live Oak Bancshares, Inc.’s common stocksecurities are not insured deposits and may lose value.

Shares of Live Oak Bancshares, Inc.’s common stocksecurities are not savings accounts, deposits or other obligations of any depository institution and are not insured or guaranteed by the FDIC or any other governmental agency or instrumentality, any other deposit insurance fund or by any other public or private entity. An investment in our common stock is inherently risky for the reasons described in this “Risk Factors” section. As a result, if you acquire shares of our common stock,securities, you may lose some or all of your investment.

The banking business is highly competitive, and we experience strong competition from many other financial institutions, including some of the largest commercial banks headquartered in the country, as well as other federally and state chartered financial institutions such as community banks and credit unions, finance and business development companies, commercial and consumer finance companies, peer-to-peer and marketplace lenders, securities brokerage firms, insurance companies, money market and mutual fundsfunds, fintech lenders, and other non-bank lenders.

We compete with these institutions both in attracting deposits and in making loans, primarily on the basis of the interest rates we pay and yield on these products. We also compete with these institutions in our other business lines, including wealth management. Many of our competitors are well-established, much larger financial institutions. While we believe we can successfully compete with these other lenders in our industry verticals, we may face a competitive disadvantage as a result of our smaller size. Furthermore, nothing would prevent our competitors from developing or licensing a technology-based platform similar to the technology-based platform we currently use in our business. In addition, many of our non-bank competitors have fewer regulatory constraints and may have lower cost structures. We expect competition to continue to intensify due to financial institution consolidation, legislative, regulatory and technological changes, including advances in AI and automation, and the emergence of alternative banking sources.

The following presents management’s discussion and analysis (“MD&A”) of the more significant factors that affected the Company's financial condition and results of operations for the year ended December 31, 20242025 as compared to December 31, 2023.2024. For a comparison of 20232024 results to 20222023 and other 20222023 information not included herein, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Part II, Item 7 of the 20232024 Form 10-K/A filed with the SEC on FebruaryNovember 22,17, 2024.2025. This discussion should be read in conjunction with the financial statements and related notes included elsewhere in this Annual Report on Form 10-K. Results of operations for the periods included in this review are not necessarily indicative of results to be obtained during any future period.

Live Oak Bancshares, Inc. (collectively with its subsidiaries including Live Oak Banking Company, the “Company”) is a financial holding company and a bank holding company headquartered in Wilmington, North Carolina, incorporated under the laws 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 incorporated in February 2008 as a North Carolina-chartered commercial bank. The Bank specializes in providing lending and deposit relateddeposit-related services to small businesses nationwide. A significant portion of the loans originated by the Bank are partially guaranteed by the U.S. Small Business Administration (“SBA”) under the 7(a) Loan program and the U.S. Department of Agriculture (“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 December 31, 2024,2025, the Company’s wholly owned material subsidiaries were the Bank, Government Loan Solutions (“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. Canapi Advisors, LLC (“Canapi Advisors”) was a wholly owned subsidiary providing investment advisory services to a series of funds (the “Canapi Funds”) focused on providing venture capital to new and emerging financial technology companies. During the third quarter of 2024, the Canapi Funds were restructured and Canapi Advisors voluntarily withdrew as an investment advisor to the funds. Canapi Advisors was subsequently dissolved in the fourth quarter of 2024. AsDuring the fourth quarter of December 31, 2024, Live Oak Ventures consolidated its investment in Synply, Inc. 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 institutionsinstitutions. and discloses theThe non-controlling interest in Synply is disclosed according to the Company’s consolidation policy.

As of December 31, 2024,2025, the Bank’s wholly owned subsidiaries were 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. During the first quarter of 2022, Jolley Asset Management, LLC (“JAM”) was merged into Live Oak Private Wealth. JAM was previously a wholly owned subsidiary of Live Oak Private Wealth. 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 consists principally of interest income. Income from the sale of loans consistsis comprised of loan servicing revenue and revaluation of related servicing assets 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.

•Record year of loan production with total loans and leases held for sale and investment increasing by $1.56$1.81 billion, or 17.3%.17.1%. Total loan originations in 20242025 were $5.16$6.21 billion compared to $3.95$5.16 billion in 2023,2024, an increase of 30.6%.20.5%. Substantial loan production in 20242025 was the primary driver of growth in total assetsassets, which increased to $15.13 billion at December 31, 2025 as compared to $12.94 billion at December 31, 2024 as compared to $11.27 billion at December 31, 2023,2024, for an increase of $1.67$2.19 billion, or 14.8%.16.9%.

•Net income attributable to Livecommon Oak Bancshares, Inc.shareholders increased $3.6$25.3 million, or 4.8%,32.7%, from $73.9$77.5 million, or $1.64$1.69 per diluted share, to $77.5$102.8 million, or $1.69$2.23 per diluted share, largely due to the following items.items:

•◦Net interest income increased by $30.6$72.5 million, or 8.9%,19.3%, largely the result of robust loan growth, partially offset by higher funding costs which wereled reflectedto inan a declineincrease in net interest margin to 3.27%3.30% for 20242025 as compared to 3.35%3.27% for 2023.2024.

•◦The provision for credit losses increased $44.9 million, or 87.5%, driven by record loan growth combined with the impacts of the$96.3 currentmillion macroeconomicremained environment.relatively flat year over year. Total nonperforming unguaranteed loans and leases as a percentage of total loans and leases held for investment, excluding loans measured at fair value, increased from 0.48% at the end of 2023 to 0.82% at the end of 2024.2024 to 0.87% at the end of 2025. Net charge-offs as a percentage of average held for investment loans and leases carried at historicalamortized cost, for the years ended December 31, 20242025 and 2023,2024, were 0.52%0.63% and 0.28%,0.52%, respectively.

•◦Increased total noninterest income of $12.0$16.8 million, or 10.8%,14.9%, and decreasedincreased total noninterest expense of $8.6$35.6 million, or 2.7%.11.7%. A detailed overview of key drivers of year-over-year changes in reported net income is outlined more fully in the opening to the section titled “Results of Operations.”

The Company reported net income attributable to Livecommon Oak Bancshares, Inc.shareholders of $102.8 million, or $2.23 per diluted share, for 2025 compared to $77.5 million, or $1.69 per diluted share, for 2024 compared to $73.9 million, or $1.64 per diluted share, for 2023.2024.

•Increased net gains on sales of loans of $14.4$12.7 million, or 30.8%,25.4%, principally the result of higher loan sale volumes combined with improving premiums in 20242025;

Key factors partially offsetting the year-over-year increase in net income were a combinationcomprised of increaseddecreases provisionin formanagement creditfee lossesand other noninterest income of $44.9 million, increased net loss on the loan servicing asset revaluation of $17.0$7.7 million and increased$20.2 salariesmillion, respectively, combined with increases in salary and employee benefitsbenefits, technology expense and income tax expense of $8.2$14.7 million.million, $8.7 million and $25.4 million, respectively.

For 2024,2025, net interest income increased $30.6$72.5 million, or 8.9%,19.3%, to $448.4 million compared to $375.9 million compared to $345.3 million for 2023.2024. This increase was principally due to the growth in the held for investment loan and lease portfolio outpacing growth in interest-bearing liabilities offset by an increase in average cost of funds which exceeded the increase in average yield on interest-earning assets.liabilities. Average interest-earning assets increased by $1.20$2.10 billion, or 11.6%,18.2%, to $13.59 billion for 2025, compared to $11.50 billion for 2024, compared to $10.30 billion for 2023, while the yield on average interest-earning assets increaseddecreased by 39 basis points to 7.07%.6.68%. The cost of funds on interest-bearing liabilities for 20242025 increaseddecreased 52by 39 basis points to 4.11%,3.72%, and the average balance of interest-bearing liabilities increased by $1.08$1.73 billion, or 11.3%,16.3%, over 2023. The increase in cost of funds was largely influenced by repricing of short-term certificates of deposit with the average cost of funds increasing from 3.31% in 2023 to 4.17% for in 2024.

The increase in average interest-bearing liabilities was largely driven by funding for significant loan originations and growth as well as maintenance of the Company's target liquidity profile. As indicated in the rate/volume table below, the overall increase discussed above is reflected in increased interest income of $124.1$96.1 million outpacing growth in interest expense of $93.5$23.6 million for 20242025 compared to 2023.2024. The net interest margin decreasedslightly increased from 3.35% for 2023 to 3.27% for 2024.2024 to 3.30% for 2025.

In January 2025,2026, the Federal Reserve decided to maintain the federal funds upper target rate at 4.5%.3.75%. The Federal Reserve released its most current federal funds target rate midpoint projections at its previous meeting in December 20242025 which implied a decrease of approximately 5025 basis points to 3.9%3.4% by the end of 2025.2026 and a decrease of approximately 25 basis points to 3.1% by the end of 2027. There can be no assurance that any further decreases or increases in the Federal Funds rate will occur, and if they do, the amount and timing of actual adjustments are subject to change. See “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” for information about the Company’s sensitivity to interest rates.

The provision for credit losses represents the amount necessary to be charged against the current period’s earnings to maintain the allowance for credit losses (“ACL”) on loans and leases at a level that the Company believes is appropriate in relation to the estimated losses inherent in the loan and lease portfolio. Beginning in the second quarter of 2024, the expense related to off-balance sheet credit exposures was also included in the provision for credit losses in response to growth in the amount of loans with applicable off-balance sheet credit risk. See Note 1 to the consolidated financial statements included in Item 8 of this Report under the subheading Allowance for Off-Balance Sheet Credit Exposures for additional information.

Net charge-offs for loans and leases carried at historical cost were $46.7$68.8 million, or 0.52%0.63% of average loans and leases held for investment at amortized cost, excluding loans measured at fair value, for 2024,2025, compared to net charge-offs of $21.4$46.7 million, or 0.28%,0.52%, for 2023,2024, an increase of $25.3$22.1 million, or 118.5%.47.3%. The increase in net charge-offs for 2024 was primarily related to an increase in activity within five verticals, Search Fund Lending, General Lending, Government Contracting, Community Facilities and Wine & Craft Beverage. The increase2025 was largely dueconcentrated to theindividually highevaluated interestloans ratewith environmentspecific andreserves inflationaryrecorded pressures,in whichprior increased financial strain on borrowers.periods. Net charge-offs are a key element of historical experience in the Company's estimation of the allowance for credit losses on loans and leases.

For 2024,2025, noninterest income increased by $12.0$16.8 million, or 10.8%,14.9%, compared to 2023.2024. The increase over the prior year is primarily a result of higher servicing revenue of $4.1$3.4 million, increased net gains on sales of loans of $14.4$12.7 million, a $5.9$28.3 million increasein inincreased equity method investments income, largely associated with the netearlier mentioned gain on loans accounted for under the fair value option and increased other noninterest income of $14.0 million. The increase in other noninterest income was largely related to the previously mentioned $2.4 million gainarising from the sale of athe buildingCompany’s interest in theApiture, thirdInc. quarter of 2024 combined withand a $6.7$5.2 million increase in equity security investments gains largely driven by a $9.0 million gain arising from the sale of one of the Company’s aircraft in the second quarter of 2024 and a $5.7portfolio million gain in the first quarter of 2024 arising from the increased fair value of a certain equity warrant asset.investment. Partially offsetting the increase in total noninterest income over the prior year-to-date period werewas highera losses of $17.0$3.9 million increase in loss related to the servicing asset revaluation,revaluation $4.9combined million in higher flow-through losses of equity method investments andwith a $5.7$7.7 million decrease in management fee income due to the restructuring of the Canapi Funds in the third quarter of 2024.2024 and a $20.2 million decrease in other noninterest income. The decrease in other noninterest income was largely due to fair value losses in equity warrant assets in 2025 of $5.5 million compared to 2024 higher income related to a $2.4 million gain from the sale of a building, a $6.7 million gain arising from an aircraft sale and a $5.7 million fair value gain in equity warrant assets.

Loan Servicing Asset Revaluation: The Company revalues its serviced loan portfolio at least quarterly. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as adequate compensation for servicing, the discount rate, the custodial earnings rate, ancillary income, prepayment speeds and default rates and losses, with prepayment speed and discount rate being the most sensitive assumptions. For 2024,2025, there was a net loss on loan servicing asset revaluation of $12.2$16.1 million compared to a net gainloss of $4.9$12.2 million for 2023,2024, resulting in a negative change of $17.0$3.9 million. The negative change in valuation of the servicing asset compared to 20232024 was principally the result of theprincipal thirdpaydowns quarteror ofrunoff 2023as changewell as less favorable market conditions in valuation techniques used to estimate the fair value of servicing rights.2025.

Net Gains on Sales of Loans: For 2024,2025, net gains on sales of loans increased $14.4$12.7 million, or 30.8%,25.4%, compared to 2023.2024. The volume of guaranteed loans sold increased $103.4$201.9 million, or 11.8%,20.6%, over 20232024 while the average net gain on loan sale premium increasedremained fromstable 105% toat 107% in 2023both 2024 and 2024,2025, respectively. The increase in net gains on sales of loans over 20232024 was principally related to a higher loan sale volume combined with improving premium.volume.

Net Gain (Loss) on Loans Accounted for Under the Fair Value Option: For 2024,2025, the Company had a net gain on loans accounted for under the fair value option of $2.4$1.2 million compared to a net lossgain of $3.5$2.4 million for 2023,2024, a positivenegative change of $5.9$1.2 million. The carrying amount of loans accounted for under the fair value option at December 31, 20242025 and 20232024 was $328.7$260.6 million (all classified as held for investment) and $388.0$328.7 million (all classified as held for investment), respectively, a decrease of $59.3$68.1 million, or 15.3%.20.7%. The increasedreduction levels ofin net gainsgain arising from the valuation of loans accounted for under the fair value option was principally duethe toresult of credit downgrades in the third quarterderivation of 2023 change in valuation techniques used to estimate the fair value for a portion of the underlying loans.

Total noninterest expense for 20242025 decreasedincreased $8.6$35.6 million, or 2.7%,11.7%, compared to 2023.2024. The decreaseincrease in noninterest expense was predominately driven by the following items.

OtherTechnology expense: OtherTechnology expense decreasedincreased $4.7$8.7 million, or 27.6%,25.6%, compared to 2023.the same period in 2024. This decreaseincrease was largelyprimarily related to reservesenhanced for unfunded commitments, historically being presented in other expense. Beginninginvestments in the secondCompany’s quartertechnology of 2024, this expense was classified in the provision for credit losses.resources.

Income tax expense and related effective tax rate in 20242025 was $37.2 million and 26.0% compared to $11.8 million and 13.2% compared to $8.9 million and 10.8% in 2023.2024. The higher level of income tax expense forin 2025 as compared to 2024 was primarilylargely the result of lowerincreased levelspretax income in 2025 and $10.6 million in tax credits related to the Company's fourth quarter of anticipated2023 renewable energy investment that became eligible for an extra 10% in tax credits in 2024 as compared to the priorfirst year.quarter of 2024.

Total assets at December 31, 20242025 were $12.94$15.13 billion, an increase of $1.67$2.19 billion, or 14.8%,16.9%, compared to total assets of $11.27$12.94 billion at December 31, 2023.2024. The growth in total assets was principally driven by the growth in total loans and leases held for investment and held for sale of $1.60$1.81 billion, or 18.5%,17.1%, in 2025, from $8.63$10.58 billion at December 31, 2023,2024 to $10.23$12.39 billion at December 31, 2024.2025. This growth was a result of strong origination activity during 2025 of $6.21 billion.

Shareholders’ equity at December 31, 20242025 was $1.00$1.25 billion as compared to $902.7$1.00 millionbillion at December 31, 2023.2024. The book value per share of our common stock was $25.06 at December 31, 2025 compared to $22.12 at December 31, 2024 compared to $20.23 at December 31, 2023.2024. Average equity to average assets was 8.1% for the year ended December 31, 2025 compared to 8.2% for the year ended December 31, 2024 compared to 8.0% for the year ended December 31, 2023.2024. The increase in shareholders’ equity for 20242025 was principally the result of $77.5$105.9 million in net income and stock-based$96.3 compensationmillion expensein net proceeds from the issuance of $26.4depository million.shares.

At December 31, 2024,2025, $3.75$5.00 billion, or 36.6%,41.6%, of loans held for investment, including those at fair value, maturesmature in less than five years. Loans and leases maturing in greater than five years total $6.51$7.01 billion of the total $10.26$12.01 billion. The variable rate portion of the total held for investment loans and leases is 87.9%,90.8%, which reflects the Company’s strategy to minimize interest rate risk through the use of variable rate products.

As of December 31, 2024,2025, and December 31, 2023,2024, potential problem (also referred to as criticized) and classified loans and leases, excluding loans measured at fair value, totaled $1.04$1.39 billion and $785.2$1.04 million,billion, respectively. The following is a discussion of these loans and leases. Risk Grades 50 through 80 represent the spectrum of criticized and classified loans and leases. For a complete description of the risk grading system, see “Credit Quality Indicators” in Note 3 to the notes to consolidated financial statements.statements included in Item 8 of this Report. At December 31, 2024,2025, the portion of criticized and classified loans and leases guaranteed by the SBA or USDA totaled $669.8 million and total portfolio unguaranteed exposure risk was $719.9 million, or 8.6% of total held for investment unguaranteed exposure carried at historical cost. This compares to the December 31, 2024 portion of criticized and classified loans and leases guaranteed by the SBA or USDA which totaled $518.7 million and total portfolio unguaranteed exposure risk was $523.3 million, or 7.8% of total held for investment unguaranteed exposure carried at historical cost. This compares to the December 31, 2023 portion of criticized and classified loans and leases guaranteed by the SBA or USDA which totaled $344.8 million and total portfolio unguaranteed exposure risk was $440.3 million, or 8.3% of total held for investment unguaranteed exposure carried at historical cost.

Of the above listed verticals, Solar Energy, Bioenergy, Senior Housing, Sponsor Finance,Finance and Community Facilities and Hotels is within the Company’s Commercial Banking division, the remainder of the above listed verticals are within the Small Business Banking division. TotalThe total $347.7 million increase in criticized and classified loans and leases increased $256.8 million in 2024. This increase by loan and lease risk grade categories2025 was comprised of a$197.3 decreasemillion in increased levels of $69.3Risk Grade 50 loans and leases, as discussed below, and $150.4 million forin thoseclassified loans. The increase in classified loans in 2025 was primarily driven by portfolio growth and isolated borrower-specific credit migrations, including movement of several larger individual exposures and isolated industries into classified status based on performance trends identified asthrough criticizedongoing offsetcredit byreviews. anThese increasechanges ofreflect $326.1normal millionportfolio for those identified as classified, of which $236.7 million is guaranteedseasoning and $89.4idiosyncratic millionborrower isdevelopments, unguaranteed.rather Additionally,than thebroad-based or systemic credit deterioration. The Company believes that its underwriting and credit quality standards have remained high and continues to consider changing economic conditions inas awell risingas the current interest rate environment.

Loans and leases that experience insignificant payment delays and payment shortfalls are generally not individually evaluated for the purpose of estimating the allowance for credit losses. The Bank generally considers an “insignificant period of time” from payment delays to be a period of 90 days or less. The Bank would consider a modification for a customer experiencing what is expected to be a short-term event that has temporarily impacted cash flow. This could be due, among other reasons, to illness, weather, impact from a one-time expense, slower than expected start-up, construction issues or other short-term issues. Credit personnel will review the request to determine if the customer is experiencing financial stress and how the event has impacted the ability of the customer to repay the loan or lease long term. At December 31, 2024,2025, the Company had a total of $26.5$119.5 million in loans modified in 20242025 to borrowers experiencing financial difficulty, excluding loans measured at fair value,value. allOf ofthe which$119.5 million in loans modified, $116.2 million remained current and none of whichthe are$119.5 onmillion, principal$105.3 million were for an other-than-insignificant payment deferral.delay or term extension.

Management endeavors to be proactive in its approach to identify and resolve problem loans and leases and is focused on working with the borrowers and guarantors of these loans and leases to provide loan and lease modifications when warranted. Management implements a proactive approach to identifying and classifying loans and leases as special mention (also referred to as criticized), Risk Grade 50. At December 31, 2024,2025, and December 31, 2023,2024, Risk Grade 50 loans and leases, excluding loans measured at fair value, totaled $529.9$727.2 million and $599.2$529.9 million, respectively, for a year-over-year decreaseincrease of $69.3$197.3 million. Relative to total held for investment unguaranteed exposure carried at historical cost at December 31, 20232024 and 2024,2025, unguaranteed Risk Grade 50 loans and leases decreasedincreased from $364.4 million, or 6.9%, to $357.9 million, or 5.3%, to $465.7 million, or 5.5%, respectively. The increase in unguaranteed Risk Grade 50 loans and leases was primarily driven by idiosyncratic credit migration of several larger individual exposures into Risk Grade 50, reflecting borrower-specific performance considerations and credit actions, rather than a broad-based deterioration linked to the macroeconomic environment.

The decreasechange in Risk Grade 50 loans and leases, exclusive of loans measured at fair value, during 20242025 was principally confined to 13 verticals, as reflected above. The primary driver for the decline in Risk Grade 50 loans and leases was a migration to improvement within the Senior Housing portfolio coupled with two large Bioenergy relationships moving to classified status in the third quarter of 2024. Of the above listed verticals, Solar Energy, Sponsor Finance, SolarGovernment Energy,Contractors, VentureEmerging Banking,Markets Asset-Based Lending,and Senior Housing, and BioenergyHousing are within the Company’s Commercial Banking division,division and the remainder of the above listed verticals are within the Small Business Banking division.

The ACL of $125.8 million at December 31, 2023, increased by $41.7 million, or 33.1%, to $167.5 million at December 31, 2024.2024, increased by $24.7 million, or 14.8%, to $192.3 million at December 31, 2025. The ACL as a percentage of loans and leases held for investment at historical cost amounted to 1.7%1.6% and 1.5%1.7% at December 31, 20242025 and 2023,2024, respectively. The increase in the ACL during 20242025 was primarily duethe toresult recordof loan growth combinedand withcharge-off theactivity impactsamid ofa the currentchallenging macroeconomic environment, aswhere addressedelevated interest rates earlier in the year continued to pressure certain small business and commercial borrowers, despite more fullyrecent signs of stabilization in rate conditions. See also the above section captioned “Provision for Credit Losses” in “Results of Operations.Operations” for related information.

Actual past due held for investment loans and leases, inclusive of loans measured at fair value, have increased by $197.4$93.8 million since December 31, 2023.2024. Total loans and leases 90 or more days past due increased $131.0$146.8 million, or 105.1%,57.4%, compared to December 31, 2023.2024. This increase was comprised of a $6.4$20.4 million increase in unguaranteed exposure combined with a $124.6$126.5 million increase in the guaranteed portion of past due loans compared to December 31, 2023.2024. At December 31, 20242025 and December 31, 2023,2024, total held for investment unguaranteed loans and leases past due as a percentage of total held for investment unguaranteed loans and leases, inclusive of loans measured at fair value, was 1.3%0.9% and 0.8%,1.3%, respectively. Total unguaranteed loans and leases past due were comprised of $77.5$69.2 million carried at historical cost, ana increasedecrease of $39.8$8.3 million, and $10.3$7.9 million measured at fair value, ana increasedecrease of $447$2.4 thousand,million, as of December 31, 20242025 compared to December 31, 2023.2024. Management continues to actively monitor and work to improve asset quality. Management believes the ACL of $167.5$192.3 million at December 31, 20242025 is appropriate in light of the risk inherent in the loan and lease portfolio. Management’s judgments are based on numerous assumptions about current and expected events that it believes to be reasonable, but which may or may not prove to be valid. Accordingly, no assurance can be given that management’s ongoing evaluation of the loan and lease portfolio in light of changing economic conditions and other relevant circumstances will not require significant future additions to the ACL, thus adversely affecting the Company’s operating results. Additional information on the ACL is presented in “Note 3. Loans and Leases Held for Investment and Credit Quality” of the notes to consolidated financial statements in this report.

At December 31, 20242025 and December 31, 2023,2024, the Company had 98.4%98.9% and 98.3%98.4% of its total investment securities portfolio in mortgage-backed securities. The Company has continued to purchase mortgage-backed securities inwith orderthe togoal obtainof obtaining a favorable yield versus cash alternatives while still maintaining a low risk profile within the investment portfolio.

Total borrowings increaseddecreased $89.5$10.4 million at December 31, 20242025 from December 31, 20232024 as a result of the following:

LoansInvestments in loans, securities and other assets are funded primarily by customer deposits, brokered deposits and loan sales. The Company maintains an investment securities portfolio that is available for both immediate and secondary contingent liquidity purposes, whether via pledging to the Federal Home Loan Bank, Federal Reserve Bank, or through liquidation. Additionally, the Company maintains a guaranteed and unguaranteed loan portfolio that is also a contingent liquidity source, whether via pledging to the Federal Reserve Discount Window or through liquidation.

In the normal course of operations, the Company engages in a variety of financial transactions that, in accordance with GAAP, are not recorded in the consolidated financial statements.statements included in Item 8 of this Report. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used primarily to manage customers’ requests for funding and take the form of commitments to extend credit and standby letters of credit. In 2022,2025, the Company entered into airplane purchase agreement commitments and one airplane purchase agreement commitment was outstanding as of December 31, 2023, which was placed in service in 2024.commitments. For more information, see “Note 2. Securities” and “Note 11. Commitments and Contingencies” in the accompanying notes to the consolidated financial statements.statements included in Item 8 of this Report.

The Company’s accounting policies, including those for the Company’s critical accounting estimates are described in detail in “Note 1. Organization and Summary of Significant Accounting Policies” in the accompanying notes to the consolidated financial statements and are an integral part of the Company’s consolidated financial statements. A thorough understanding of these accounting policies is essential when reviewing the Company’s reported results of operations and financial position. The Company’s most critical accounting estimate is listed below. This estimate requires the Company to make difficult, subjective or complex judgments about matters that are inherently uncertain.

As of MarchJune 31,30, 2026, the Company’s wholly owned material subsidiaries were the Bank, Government Loan Solutions (“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.

As of MarchJune 31,30, 2026, the Bank’s wholly owned subsidiaries were 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.

Three months ended MarchJune 31,30, 2026 compared with three months ended MarchJune 31,30, 2025

For the three months ended MarchJune 31,30, 2026, the Company reported net income attributable to common shareholders of $27.9$34.7 million, or $0.60$0.74 per diluted share, compared to net income attributable to common shareholders of $9.7$23.4 million, or $0.21$0.51 per diluted share, for the three months ended MarchJune 31,30, 2025.

Key factors largely offsetting the increase in net income are increased levels of provision for credit losses of $2.5 million and salaries and employee benefits of $3.8 million and income tax expense of $6.7$2.8 million.

Three months ended MarchJune 31,30, 2026 compared with three months ended MarchJune 31,30, 2025

For the three months ended MarchJune 31,30, 2026, net interest income increased $18.9$16.1 million, or 18.8%,14.8%, to $119.4$125.3 million compared to $100.5$109.2 million for the three months ended MarchJune 31,30, 2025. This increase was principally due to the growth in the held for investment loan and lease portfolio outpacing growth in interest-bearing liabilities, offset by the decrease in average yield on interest-earning assets outpacing the decrease in average cost of funds.liabilities. Average interest-earning assets increased by $2.06$1.72 billion, or 16.1%,12.9%, to $14.82$15.08 billion for the firstsecond quarter of 2026, compared to $12.76$13.36 billion for the firstsecond quarter of 2025, while the yield on average interest-earning assets decreased 3730 basis points to 6.40%.6.43%. The cost of funds on interest-bearing liabilities for the firstsecond quarter of 2026 decreased 4233 basis points to 3.48%3.45% and the average balance of interest-bearing liabilities increased by $1.63$1.31 billion, or 13.9%,10.7%, over the firstsecond quarter of 2025.

The increase in average interest-bearing liabilities was largely driven by funding for significant loan originations and growth as well as maintenance of the Company's target liquidity profile. As indicated in the rate/volume analysis below, the overall increase discussed above is reflected in increased interest income of $20.8$17.4 million outpacing growth in interest expense of $1.9$1.3 million for the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. The net interest margin increased from 3.20%3.28% for the firstsecond quarter of 2025 to 3.27%3.33% for the firstsecond quarter of 2026.

For the firstsecond quarter of 2026, there was a provision for credit losses of $20.1$25.8 million compared to $29.0$23.3 million for the same period in 2025, an increase of $2.5 million, primarily attributed to loan growth during the second quarter of 2026. For the six months ended June 30, 2026, there was a provision for credit losses of $45.9 million compared to $52.2 million for the same period in 2025, a decrease of $8.9$6.3 million. The decrease overcompared to the firstsecond quarter of 2025 wasreflects primarilyan drivenimproved byeconomic lowerforecast levelsand improved credit quality which more than offset the impact of specificloan reservesgrowth required on individually evaluated loans induring the first quarter of 2026.period.

Loans and leases held for investment at historical cost were $11.91$12.40 billion as of MarchJune 31,30, 2026, increasing by $1.54$1.69 billion, or 14.8%,15.8%, compared to MarchJune 31,30, 2025.

Net charge-offs for loans and leases carried at historical cost were$18.6were $24.2 million, or 0.63%0.80% of average quarterly loans and leases held for investment, carried at historical cost, on an annualized basis, for the three months ended MarchJune 31,30, 2026, compared to net charge-offs of $6.8$31.4 million, or 0.27%,1.19%, for the three months ended MarchJune 31,30, 2025, a decrease of $7.2 million, or 23.2%. For the six months ended June 30, 2026, net charge-offs totaled $42.7 million compared to $38.2 million for the six months ended June 30, 2025, an increase of $11.8$4.5 million, or 174.4%. The increase in net charge-offs in the first quarter of 2026 was largely concentrated to individually evaluated loans with specific reserves recorded in prior periods. Net charge-offs are a key element of historical experience in the Company's estimation of the allowance for credit losses on loans and leases.11.8%.

In addition, nonperforming loans and leases not guaranteed by the SBA or USDA, excluding $6.9$6.6 million and $9.9$8.9 million accounted for under the fair value option at MarchJune 31,30, 2026 and 2025, respectively, totaled $116.8$124.3 million, which was 0.98%1.00% of the held for investment loan and lease portfolio carried at historical cost at MarchJune 31,30, 2026, compared to $99.9$59.6 million, or 0.96%0.56% of loans and leases held for investment carried at historical cost at MarchJune 31,30, 2025.

Noninterest income is principally comprised of net gains from the sale of SBA and USDA-guaranteed loans along with loan servicing revenue and related revaluation of the servicing asset. Revenue from the sale of loans depends upon the volume, maturity structure and rates of underlying loans as well as the pricing and availability of funds in the secondary markets prevailing in the period between completed loan funding and closing of sale. In addition, the loan servicing revaluation is significantly impacted by changes in market rates and other underlying assumptions such as prepayment speeds and default rates. Net gain (loss) on loans accounted for under the fair value option is also significantly impacted by changes in market rates, prepayment speeds and inherent credit risk. Other less consistent elements of noninterest income include gains and losses on investments.

For the three and six months ended MarchJune 31,30, 2026, noninterest income increased by $3.7$352 thousand and $4.1 million, or 16.6%,1.2% and 7.7% respectively, compared to the prior three monthsand endedsix Marchmonth 31,periods in 2025. PrincipalThis changesincrease whenfor comparedboth withperiods thewas first quarter of 2025 are a $1.2 million decrease in loss relateddue to the servicing asset revaluation combined with a $1.4 million decrease in equity method investment losses, principallylosses associated with cessation of flow-through losses from Apiture, Inc. which was sold in the fourth quarter of 2025. This transaction increased noninterest income in the second quarter and first half of 2026 by $2.8 million and $4.2 million, respectively, when compared with the prior three and six month periods of 2025.

The following tables reflectsreflect loan and lease production, sales of guaranteed loans and the aggregate balance in guaranteed loans sold. These components are key drivers of the Company's noninterest income.

Total noninterest expense for the three and six months ended MarchJune 31,30, 2026, decreased $697 thousand, or 0.8%, and increased $4.5$3.8 million, or 5.6%,2.3%, compared to the same periodperiods in 2025. The changes within noninterest expense for the comparable three and six month periods was largely driven by components,components discussed below.

Salaries and employee benefits: Total personnel expense for the three and six months ended MarchJune 31,30, 2026 increased by $3.8$2.8 million, or 8.4%,6.0%, and $6.6 million, or 7.2%, compared to the same periodperiods in 2025.2025, respectively. The increase over theboth firstcomparative three monthsperiods of 2025 is principally related to investment in human resources to support strategic and growth initiatives. Salaries and employee benefits expense included $6.9$7.4 million and $14.2 million of stock-based compensation for the three and six months ended MarchJune 31,30, 2026, respectively, compared to $6.8$6.9 million and $13.7 million for the three and six months ended MarchJune 30, 2025, respectively. Expenses related to the employee stock purchase program, stock grants, stock option compensation and restricted stock expense are all considered stock-based compensation.

Other loan originationAdvertising and maintenancemarketing expense: For the three and six months ended MarchJune 31,30, 2026, other loan originationadvertising and maintenancemarketing expense increaseddecreased $1.3$1.7 million, or 29.1%,38.1%, and $2.3 million, or 28.4%, compared to the same periodperiods in 2025. ThisThe increasedecrease was primarilylargely related to maintenancelower levels of thepromotional Company's ongoing growth in the guaranteed loan portfolio.spending.

For the three months ended MarchJune 31,30, 2026, income tax expense was $10.1$9.1 million compared to income tax expense of $3.5$7.8 million in the firstsecond quarter of 2025, and the Company’s effective tax rates were 25.3%19.9% and 26.4%,25.0%, respectively. For the six months ended June 30, 2026, income tax expense was $19.3 million compared to $11.3 million for the six months ended June 30, 2025, and the Company’s effective tax rates were 22.4% and 25.4%, respectively. The higher level of income tax expense forover theboth firstcomparative quarter of 2026 as compared to the first quarter of 2025periods was largely the result of heightened pretax income during the current period.year, partially offset by a $2.1 million benefit associated with tax credit purchases during the second quarter of 2026.

MarchJune 31,30, 2026 vs. December 31, 2025

Total assets at MarchJune 31,30, 2026 were $15.30$16.04 billion, an increase of $165.3$903.4 million, or 1.1%,6.0%, compared to total assets of $15.13 billion at December 31, 2025. The growth in total assets was principally driven by total loans and leases held for investment and held for sale increasing by $199.9$749.0 million, or 1.6%,6.0%, in 2026, from $12.39 billion at December 31, 2025 to $12.59$13.14 billion at MarchJune 31,30, 2026. This growth was a result of strong origination activity during the first quarterhalf of 2026 of $1.37$2.92 billion.

Total deposits were $13.84$14.55 billion at MarchJune 31,30, 2026, an increase of $146.4$858.9 million, or 1.1%,6.3%, from $13.69 billion at December 31, 2025. The increase in total deposits from the prior period was to support growth in the loan and lease portfolio as well as the Company's targeted liquidity levels. At MarchJune 31,30, 2026, the Bank’s total uninsured deposits were approximately $2.38$2.44 billion, or 17.0%,16.6%, of total deposits.

Total shareholders' equity was $1.28$1.32 billion at MarchJune 31,30, 2026, an increase of $27.7$62.8 million, or 2.2%,5.0%, from $1.25 billion at December 31, 2025. The increase in total shareholders' equity from the prior period was largely due to net income of $29.9$66.7 million combined with net share-based compensation activity of $3.9 million, offset by other comprehensive loss of $2.7 million and cash dividends of $2.1 million and $1.4 million related to preferred and common stock shares, respectively.million.

Commercial real estate loans as indicated by the FDIC include loans secured by the following: construction, land development, multifamily property and nonfarm, nonresidential real property. The following table provides information with respect to commercial real estate loans as of MarchJune 31,30, 2026.

Total nonperforming assets, including loans measured at fair value, at MarchJune 31,30, 2026 were $519.0$542.5 million, which represented a $53.1$29.7 million, or 9.3%,5.2%, decrease from December 31, 2025. These nonperforming assets at MarchJune 31,30, 2026 were comprised of $507.0$531.5 million in nonaccrual loans and leases and $12.0$11.0 million in foreclosed assets. Of the $519.0$542.5 million of nonperforming assets, $391.0$407.2 million carried a government guarantee, leaving an unguaranteed exposure of $128.0$135.3 million in total nonperforming assets at MarchJune 31,30, 2026. This represents an increase of $16.8$24.1 million, or 15.1%,21.6%, from an unguaranteed exposure of $111.2 million at December 31, 2025.

Nonperforming assets, excluding loans measured at fair value, at MarchJune 31,30, 2026 were $456.2$481.8 million, which represented a $53.2$27.6 million, or 10.4%,5.4%, decrease from December 31, 2025. These nonperforming assets at MarchJune 31,30, 2026 were comprised of $444.2$470.8 million in nonaccrual loans and leases and $12.0$11.0 million in foreclosed assets. Of the $456.2$481.8 million of nonperforming assets, $336.1$354.4 million carried a government guarantee, leaving an unguaranteed exposure of $120.1$127.4 million in total nonperforming assets at MarchJune 31,30, 2026. This represents an increase of $17.3$24.6 million, or 16.9%,23.9%, from an unguaranteed exposure of $102.8 million at December 31, 2025.

As a percentage of the Bank’s total capital, nonperforming loans and leases, excluding loans measured at fair value, represented 33.6%34.2% at MarchJune 31,30, 2026, compared to 39.0% at December 31, 2025. Adjusting the ratio to include only the unguaranteed portion of nonperforming loans and leases at historical cost to reflect management’s belief that the greater magnitude of risk resides in this portion, the ratios at MarchJune 31,30, 2026 and December 31, 2025 were 8.8%9.0% and 7.9%, respectively.

As of MarchJune 31,30, 2026, and December 31, 2025, potential problem (also referred to as criticized or Risk Grade 50) and classified loans and leases, excluding loans measured at fair value, totaled $1.33$1.23 billion and $1.39 billion, respectively. The following is a discussion of these loans and leases. Risk Grades 50 through 80 represent the spectrum of criticized and classified loans and leases. For a complete description of the risk grading system, see “Credit Quality Indicators” in Note 3 in the notes to consolidated financial statements in the Company’s 2025 Form 10-K. At MarchJune 31,30, 2026, the portion of criticized and classified loans and leases guaranteed by the SBA or USDA totaled $653.4$628.9 million and total portfolio unguaranteed exposure risk was $680.8$601.6 million, or 7.9%6.5% of total held for investment unguaranteed exposure carried at historical cost. This compares to the December 31, 2025 portion of criticized and classified loans and leases guaranteed by the SBA or USDA which totaled $669.8 million and total portfolio unguaranteed exposure risk was $719.9 million, or 8.6% of total held for investment unguaranteed exposure carried at historical cost.

As of MarchJune 31,30, 2026 and December 31, 2025, loans and leases carried at historical cost within the following verticals comprise the largest portion of the total potential problem and classified loans and leases:

Of the above listed verticals, Senior Housing, Sponsor Finance, Bioenergy, ABL General, and Solar Energy are within the Company’s Commercial Banking division, the remainder of the above listed verticals are within the Small Business Banking division. The total $55.4$159.1 million decrease in potential problem and classified loans and leases in the first threesix months of 2026 was comprised of $15.5$82.8 million in increaseddecreased levels of Risk Grade 50 loans and leases, as discussed belowbelow, and $70.9$76.4 million in decreased levels of classified loans. The overall decrease in classified loans in the first quarterhalf of 2026 was primarilylargely driven by one $84.9 million Renewable Energy relationship that was moved out of loans resulting in no losses in the first quarter due to the combination of a sale and related government guarantee. The remainder of the changeoverall (increase)decrease is due to isolated borrower-specific credit migrations, including movement of several larger individual exposures and isolated industries into classified status based on performance trends identified through ongoing credit reviews. These changes largely reflect the effects of normal growth and isolated borrower performance migrations rather than any systemic credit deterioration. The Company believes that its underwriting and credit quality standards have remained high and continues to consider changing economic conditions as well as the current interest rate environment.

Loans and leases that experience insignificant payment delays and payment shortfalls are generally not individually evaluated for the purpose of estimating the allowance for credit losses. The Bank generally considers an “insignificant period of time” from payment delaysdeferrals to be a period of 90 days or less. The Bank would consider a modification for a customer experiencing what is expected to be a short-term event that has temporarily impacted cash flow. This could be due, among other reasons, to illness, weather, impact from a one-time expense, slower than expected start-up, construction issues or other short-term issues. Credit personnel will review the request to determine if the customer is experiencing financial stress and how the event has impacted the ability of the customer to repay the loan or lease long term. These types of deferrals are generally granted 90 days at a time. Collection efforts are typically escalated if, after two or three deferral periods, the cash flow event has not been resolved. At MarchJune 31,30, 2026, the Company had a total of $43.2$78.3 million in loans modified in 2026 to borrowers experiencing financial difficulty, excluding loans measured at fair value, $42.8$71.2 million of which remained current and $30.1$63.2 million of which are for an other-than-insignificant payment delay or term extension.

Management endeavors to be proactive in its approach to identify and resolve problem loans and leases and is focused on working with the borrowers and guarantors of these loans and leases to provide loan and lease modifications when warranted. Management implements a proactive approach to identifying and classifying loans and leases as special mention (also referred to as criticized), Risk Grade 50. At MarchJune 31,30, 2026, and December 31, 2025, Risk Grade 50 loans and leases, excluding loans measured at fair value, totaled $742.7$644.5 million and $727.2 million, respectively, for ana increasedecrease of $15.5$82.8 million. Relative to total held for investment unguaranteed loan exposure carried at historical cost at December 31, 2025 and MarchJune 31,30, 2026, unguaranteed Risk Grade 50 loans and leases decreased from $465.7 million, or 5.5%, to $462.3$401.7 million, or 5.3%,4.3%, respectively.

The change in Risk Grade 50 loans and leases, exclusive of loans measured at fair value, during the first threesix months of 2026 was principally confined to 13 verticals, as reflected above. Of the above listed verticalsverticals, SponsorABL Finance,General, Venture Banking, Emerging Markets, Government Contractors,Contract, Senior HousingHousing, and HotelsSolar Energy are within the Company’s Commercial Banking division and the remainder of the above listed verticals are within the Small Business Banking division.

At MarchJune 31,30, 2026, approximately 99.6%97.3% of loans and leases classified as Risk Grade 50 are performing with no relationships having payments past due more than 30 days. While the level of nonperforming assets fluctuates in response to changing economic and market conditions, in light of the relative size and composition of the loan and lease portfolio and management’s degree of success in resolving problem assets, management believes that a proactive approach to early identification and intervention is critical to successfully managing a small business loan portfolio.

The ACL of $192.3 million at December 31, 2025, increased by $1.0$1.2 million, or 0.5%,0.6%, to $193.3$193.4 million at MarchJune 31,30, 2026. The ACL as a percentage of loans and leases held for investment at historical cost amounted to 1.6% at both December 31, 2025 and MarchJune 31,30, 2026. The increase in the ACL during the first threesix months of 2026 was primarily the result of loan growthgrowth, andpartially chargeoffset offby impactsimproving amidcredit a challenging macroeconomic environment, where elevated interest rates and inflationary pressures have placed financial strain on some small business and commercial borrowers.migration. See also the above section captioned “Provision for Credit Losses” in “Results of Operations” for related information.

Actual past due held for investment loans and leases, inclusive of loans measured at fair value, have decreasedincreased by $40.2$2.3 million since December 31, 2025. Total loans and leases 90 or more days past due decreased $63.4$35.3 million, or 15.8%,8.8%, compared to December 31, 2025. This decrease was comprised of a $4.2$22.6 million increase in unguaranteed exposure combined with a $67.7$58.0 million decrease in the guaranteed portion of past due loans compared to December 31, 2025. At MarchJune 31,30, 2026 and December 31, 2025, total held for investment unguaranteed loans and leases past due as a percentage of total held for investment unguaranteed loans and leases, inclusive of loans measured at fair value, was 1.1%1.3% and 0.9%, respectively. Total unguaranteed loans and leases past duedue, were comprisedinclusive of $89.0 million carried at historical cost, an increase of $19.8 million, and $7.6 millionloans measured at fair value, awere decrease$117.4 million, an increase of $266$40.3 thousand,million, as of MarchJune 31,30, 2026 compared to December 31, 2025. Management continues to actively monitor and work to improve asset quality. Management believes the ACL of $193.3$193.4 million at MarchJune 31,30, 2026 is appropriate in light of the risk inherent in the loan and lease portfolio. Management’s judgments are based on numerous assumptions about current and expected events that it believes to be reasonable, but which may or may not be valid. Accordingly, no assurance can be given that management’s ongoing evaluation of the loan and lease portfolio in light of changing economic conditions and other relevant circumstances will not require significant future additions to the ACL, thus adversely affecting the Company’s operating results. Additional information on the ACL is presented in Note 5. Loans and Leases Held for Investment and Credit Quality of the Unaudited Condensed Consolidated Financial Statements in this report.

Liquidity management refers to the ability to meet day-to-day cash flow requirements based primarily on activity in loan and deposit accounts of the Company’s customers. Liquidity is immediately available from four major sources: (a) cash on hand and on deposit at other banks; (b) the outstanding balance of federal funds sold; (c) the fair value of unpledged investment securities; and (d) availability under lines of credit, FHLB advances and the Federal Reserve Discount Window. A primary tool in the Company's liquidity management process is the utilization of an Outflow Coverage Ratio (“OCR”) model to stress outflows in various scenarios with targeted days of liquidity coverage. The OCR model output is then used by management to ensure adequate liquidity sources are available during those future periods. At MarchJune 31,30, 2026, the total amount of these four liquidity source items was $4.96$5.07 billion, or 32.4%31.6% of total assets, ana increasedecrease of 0.1%0.7% of total assets from $4.89 billion, or 32.3% of total assets, at December 31, 2025.

As of MarchJune 31,30, 2026 and December 31, 2025, the Company’s unused borrowing capacity was $4.09$4.08 billion and $3.97 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 $7.77$7.75 billion and $7.54 billion as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

At MarchJune 31,30, 2026, $540.0$508.4 million of the investment securities portfolio were pledged for unused borrowing capacity, leaving $894.5$959.5 million available to be pledged as collateral.

One of the primary objectives of asset/liability management is to maximize the net interest margin while minimizing the earnings risk associated with changes in interest rates. One method used to manage interest rate sensitivity is to measure the repricing differences, or interest rate gaps, between interest-earning assets and interest-bearing liabilities, across various time periods. As of MarchJune 31,30, 2026, the balance sheet’s total cumulative gap position was 6.7%,6.4%, meaning that over the entire life of the Company's assets and liabilities, more assets will reprice than liabilities. For further information, see Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The interest rate gap method, however, addresses only the magnitude of asset and liability repricing timing differences as of the report date and does not address earnings, market value, changes in account behaviors based on the interest rate environment, or growth. Therefore, management also uses an earnings simulation model to prepare, on a regular basis, earnings projections based on a range of instantaneous parallel interest rate shocks applied to a static balance sheet and non-parallel interest rate shocks applied to a dynamic balance sheet to measure interest rate risk. As of MarchJune 31,30, 2026, the Company’s interest rate risk profile under the instantaneous parallel interest rate shock scenarios applied to a static balance sheet is moderately asset-sensitive. For more information, see Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Capital amounts and ratios as of MarchJune 31,30, 2026, and December 31, 2025, are presented in the table below.