SBA Loan Sales Decline at Live Oak Bancshares -- Is the Stock Still a Buy?
Despite its relatively small size, the $9.1 billion asset bank Live Oak Bancshares (NASDAQ: LOB) is one of the largest originators of U.S. Small Business Administration (SBA) loans in the country. SBA loans are made to slightly riskier businesses than a bank would normally take on, but the loans are heavily guaranteed by the SBA, making them much more appealing.
Lenders like Live Oak can put these loans on their balance sheet or sell the guaranteed portion of the loan, which is typically around 75% guaranteed by the SBA, into the secondary market, which helps with liquidity. Live Oak has recently seen secondary SBA loan sales slow. Is the stock still a buy? Let's take a look.
In the second quarter, Live Oak only realized a net gain on loan sales of roughly $6 million, which is significantly lower than what has been the norm over the last year. The bank only sold $50 million of SBA loans into the secondary market, down significantly from the $92 million the bank sold in the second quarter of 2021 and the $211 million it sold in the first quarter of the year.
Source Fool.com
