LOB Stock Forecast & Price Target

Live Oak Bancshares is attractive because its core earnings power is accelerating, with 2Q26 core EPS of $0.77 topping estimates as strong NIM expansion of 6 bps and balance sheet growth drove a better PTPP result across NII, fees, and expenses. The outlook is further supported by stable NIM guidance in the 3.30%-3.35% range, low-teens loan growth, and rapidly expanding noninterest-bearing deposits, which should sustain double-digit NII growth in FY26 and likely beyond. While credit still needs monitoring after non-guaranteed NPAs rose 23% q/q, the adjusted normalized NCO rate near 40 bps and expected $20-25mm quarterly provision suggest the worst of the small business credit cycle is likely behind it.

Live Oak Bancshares is facing a softer earnings outlook as 2026 EPS was cut to $2.80 from $3.01 and 2027 EPS to $3.80 from $4.04, reflecting lower net interest income, reduced gain-on-sale revenue, and a higher provision in 3Q26. The company’s SBA-driven model remains a growth engine, with $1.55B of loans originated and $319M of guaranteed loan sales, but recent distillery portfolio exit impacts, exposure to higher-risk SBA segments, and potential rate-driven credit pressure could lift charge-offs and provisions. While expenses were modestly contained and CET1 stood at 10.42% in 2Q, the combination of peer multiple contraction, interest-rate risk, and a weaker small-business backdrop supports a negative stance.