Live Oak Bancshares (LOB) risk factors, FY2025 10-K

Risks Related to Our Business

1. 01We may experience increased delinquencies and credit losses, which could have a material adverse effect on our capital, financial condition, and results of operations
2. 02SBA lending and other government guaranteed lending is an important part of our business. These lending programs are dependent upon the federal government, and we face specific risks associated with originating SBA and other government guaranteed loans
3. 03Pandemics, natural disasters (including hurricanes), global climate change, acts of terrorism, social unrest, and global conflicts may have a negative impact on our business and operations36% rewritten
4. 04The deployment and use of artificial intelligence presents risks and challenges that may adversely impact our businessNew
5. 05We are dependent upon the use of intellectual property owned by third parties, and any change in our ability to use, or the terms upon which we may use, this intellectual property could have a material adverse effect on our business
6. 06We have identified material weaknesses 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 securities22% rewritten
7. 07We face risks related to the restatement of our financial statementsNew
8. 08The fair value of our investment securities can fluctuate due to factors outside of our control
9. 09Our ACL may prove to be insufficient to absorb lifetime losses on loans, leases and off-balance sheet credit exposures
10. 10The valuation of our loans measured at fair value is based on estimates and subject to fluctuation based on market conditions and other factors that are beyond our control
11. 11The valuation of our servicing rights is based on estimates and subject to fluctuation based on market conditions and other factors that are beyond our control
12. 12The recognition of gains on the sale of loans reflects certain assumptions
13. 13Our rental equipment is subject to residual value risk upon disposition, and may not sell at the prices or in the quantities we expect
14. 14We are subject to liquidity risk in our operations
15. 15Changes in the interest rate environment could reduce our net interest income, which could reduce our profitability
16. 16The amount of other real estate owned, or OREO, may increase significantly, resulting in additional losses, costs and expenses that will negatively affect our operations
17. 17We are subject to environmental liability risk associated with our lending activities
18. 18Our use of appraisals in deciding whether to make a loan secured by real property or how to value the loan in the future may not accurately reflect the net value of the collateral that we can realize
19. 19We could be subject to losses, regulatory action or reputational harm due to fraudulent and negligent acts on the part of loan applicants, our borrowers, our employees and vendors
20. 20New lines of business or new products and services may subject us to additional risks
21. 21We are subject to risk in connection with our strategic activities, including acquisitions, joint ventures, partnerships, and investments
22. 22Our investments in financial technology companies and initiatives subject us to material financial, reputational and strategic risks33% rewritten
23. 23Our investments in other companies may be illiquid
24. 24Our investments and/or financings in certain tax-advantaged projects may not generate returns as anticipated and may have an adverse impact on our financial results
25. 25Our loan portfolio may be affected by deterioration in real estate markets, including declines in the performance of loans
26. 26Deterioration in the commercial soundness of our counterparties could adversely affect us
27. 27We have different lending risks than larger, more diversified banks
28. 28Insiders have substantial control over us, and this control may limit our shareholders’ ability to influence corporate matters and may delay or prevent a third party from acquiring control over us

Risks Related to Our Regulatory Environment

1. 29We are subject to extensive regulation that could limit or restrict our activities
2. 30Because our total assets exceed $10 billion, we are subject to heightened regulatory requirements, which could have an adverse effect on our financial condition or results of operations29% rewritten
3. 31Our deposit operations are subject to extensive regulation, and we expect additional regulatory requirements to be implemented in the future
4. 32Our FDIC deposit insurance premiums and assessments may increase
5. 33Adverse developments or concerns affecting the financial services industry or specific financial institutions could adversely affect our financial condition and results of operations
6. 34We may incur increased costs to comply with privacy and data security laws and regulations and, to the extent we fail to comply, we could be subject to government enforcement actions, private claims and litigation, adverse publicity, loss of customers, and other negative outcomes

Risks Related to Our Securities

1. 35The low trading volume in our common stock may adversely affect your ability to resell shares at prices that you find attractive or at all
2. 36Future sales of shares of our common stock by existing shareholders could depress the market price of our common stock42% rewritten
3. 37There can be no assurance that we will continue to pay cash dividends on our common stock56% rewritten
4. 38The Company’s common stock is subordinate to the Company’s existing and future preferred stockNew
5. 39The Company is subject to extensive federal and state banking laws, including the BHCA and federal and state banking regulations, that impact the rights and obligations of owners of our common stock, including, for example, its ability to declare and pay dividends on its common stock
6. 40Anti-takeover provisions could adversely affect Live Oak Bancshares, Inc. shareholders
7. 41Live Oak Bancshares, Inc.’s securities are not insured deposits and may lose value29% rewritten
8. 42We face strong competition from a diverse group of competitors
9. 43We rely heavily on our management team and depend on our ability to attract and retain key personnel, and the unexpected loss of any of those personnel could adversely affect our operations
10. 44Our risk management framework may not be effective in mitigating risks and/or losses to us24% rewritten
11. 45Changes in accounting standards and management’s selection of accounting methods, including assumptions and estimates, could materially impact our financial statements
12. 46Our business reputation is important and any damage to it could have a material adverse effect on our business
13. 47Changes in U.S. trade policies, including the imposition of tariffs and retaliatory tariffs, may adversely impact our business, financial condition, and results of operationsNew