In a recent shake-up of its financial oversight, Live Oak Bancshares (NYSE:LOB), Inc. has announced a change in its certifying accountant. The company's Audit Committee approved the appointment of KPMG LLP to audit its consolidated financial statements for the year 2024, replacing Forvis Mazars, LLP. This change follows a competitive proposal process and is contingent on KPMG completing standard client acceptance procedures and the execution of an engagement letter.
The decision to switch auditors was made by the Audit Committee on Monday. Forvis Mazars, LLP, which audited Live Oak Bancshares' financial statements for the year 2023, was dismissed on the same day, with no disagreements or reportable events cited that would necessitate disclosure under SEC regulations.
Forvis Mazars' audit reports for the years ending December 31, 2023, and 2022, were free of adverse opinions or disclaimers and did not contain any qualifications regarding uncertainty, audit scope, or accounting principles. In accordance with regulatory requirements, Live Oak Bancshares provided Forvis Mazars with the disclosures it intended to make in its SEC filing and has requested that Forvis Mazars issue a letter to the SEC confirming their agreement with these disclosures.
In other recent news, Live Oak Bancshares reported strong Q2 2024 results, with core earnings per share (EPS) of $0.56 exceeding expectations due to effective cost management. The bank's revenue grew by 10%, and it reported near-record loan originations of $1.2 billion.
JPMorgan analysts maintained an Overweight rating on Live Oak Bancshares, raising the price target to $55 from $45, citing the bank's disciplined cost control as a key factor. Piper Sandler also adjusted its view on Live Oak Bancshares, increasing the price target to $46.00 from the previous $36.00 while maintaining a Neutral rating on the stock.
On the other hand, Live Oak Bancshares' Q1 2024 results showed a decrease in loan originations to $805 million, but a record-high pipeline for future loans suggests potential growth. The bank is actively hiring revenue generators and forecasts high-single-digit expense growth for 2024. Live Oak Bancshares is investing in several initiatives such as embedded banking, business checking, small dollar SBA loans, additional revenue producers, and artificial intelligence applications.
InvestingPro Insights
In light of Live Oak Bancshares' recent auditor change, a review of current financial metrics and analyst insights from InvestingPro offers additional context for investors. The company's current P/E ratio stands at 15.78, suggesting a valuation that may be attractive relative to its near-term earnings growth, a point also highlighted in an InvestingPro Tip that the stock is trading at a low P/E ratio in comparison to its expected earnings growth. With a PEG ratio of just 0.22, this further indicates potential value in terms of growth-adjusted earnings.
InvestingPro Data shows a robust revenue growth of 14.14% for the last twelve months as of Q2 2024, with an even more impressive quarterly revenue growth of 18.98% for Q2 2024. These figures are particularly relevant for stakeholders monitoring the company's financial progress and may be seen as a positive sign in the wake of the auditor transition. However, it's worth noting an InvestingPro Tip that points out the company's weak gross profit margins, which could be a concern for investors focused on profitability and operational efficiency.
For those interested in the company's stock performance and dividends, Live Oak Bancshares has maintained dividend payments for 10 consecutive years, with a modest dividend yield of 0.3%. The company's stock has also experienced a strong return over the last month, as indicated by a 17.01% one-month price total return. This could resonate well with both income and growth investors.
For further insights and a comprehensive list of InvestingPro Tips, interested parties can explore InvestingPro, which includes additional tips that could guide investment decisions regarding Live Oak Bancshares.
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