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Banking & Finance
| BANKING & FINANCE | Spreading the nCino wealth
Ripples from nCino’s initial President and CEO Natalie English earnings for lifestyle upgrades or public offering last July may said in an email. “Strong economic even 401(k) or college fund investbe lapping at the shores of growth in any local economic sector ments, he said, “A lot will be capital the local economy. generally leads to improved econom- that goes into the next venture, to
The banking software company’s ic conditions across the board. As grow more companies. Investors are post-IPO lockup period ended Jan. local industries like our fintech sector simply getting their capital return 11. That means that initial investors, continue to report growing output, and are going to [invest] again. And directors and employees are free to local businesses’ revenue should that is beneficial to the economy.” sell shares they have held during that increase, which can spur wage and For entrepreneurs at nCino and time. And numerous nCino (Nasdaq: employment growth in other areas. elsewhere, Jones added, “The piece NCNO) officials and employees are “The specific growth in income re- that’s exciting in life is building those doing just that, according to reports lated to this, and future, IPOs will be companies, those teams. They are fofiled with the Securities and Ex- felt across our community through cused on a completely different game change Commission on Jan. 11 and investments in real estate, entrepre- from the rest of us. They use [postJENNY CALLISON afterward. Some of these recent transac- price and sell them at higher current neurial endeavors and our community’s nonprofit organizations working to create a better place to live, work IPO returns] to generate money for seed capital for their next project or to invest in companies of their emtions represent market rates. and play.” ployees. There will be [employee-genshareholders This can put new money into the Adam Jones, regional economist erated ideas] that don’t quite fit in the exercising stock local economy for tangible purchases with the University of North Caro- scope of what nCino is going to do options, or the (a new car, a new house) or it can lina Wilmington, notes the absence but for which the employee has talent ability to buy or provide money for further business of much research on the effect of – so a spinout.” sell shares at a investments, from seed money for post-lockup activity on local econo- In the economic development specified price for startups to venture capital for matur- mies. He theorizes that shareholders world, Jones said, people talk a great a specified period ing companies. who gain liquidity might spread out deal about industry clusters and how of time. nCino “I’m extremely excited about the their purchases over time, meaning they get started. employees, for positive economic impact nCino’s the local market is “not going to have “Some start around universities example, might be able to purchase IPO will have on our community,” some big blip.” where there are one or two specific a certain number of shares at a low Wilmington Chamber of Commerce While some shareholders will use faculty members who have ideas
ADAM JONES regional economist, UNCW
founded in 1961
as a general contractor and real estate developer
#34
ENR Ranking
for Southeast Top Contractors
17-year award-winner
of NC Dept. of Labor Gold Safety Award
Robust
MWBE Program
for minority participation and mentorship on projects
Building Structures. Building Relationships.
to commercialize, and others spin off around it. We are seeing that in Wilmington, not from the university, but driven by a small group of entrepreneurs. The cluster takes on a life of its own.”
When we think about assets generated by an IPO, sometimes we miss the big picture, Jones pointed out.
“The big picture impact is the company,” he said. “It’s going to keep people hired and keep spitting out jobs and paying salaries.” nCino, which boasts more than 1,200 customers and employs more than 900 people – the majority of whom work at its Wilmington headquarters – has shown rapid growth since it was spun off from Live Oak Bank in late 2011. In an indicator of its continuing growth, plans were filed in late January for construction of another 90,000-square-foot office building.
Live Oak talks loan generation, PPP activity
In a conference call Jan. 28, Live Oak Bancshares officials elaborated on the company’s fourth-quarter and year-end financial reports. The company’s fiscal year ended Dec. 31.
Live Oak Bancshares, parent of Wilmington-based Live Oak Bank (Nasdaq: LOB), posted quarterly net income of nearly $29.6 million, which translates to earnings per share of $0.68. The Zacks Consensus Estimate for EPS was $0.52 per share.
Net income for the quarter was below expectations, however, falling roughly $4.2 million below that of the third quarter of 2020.
Net earnings for the company’s fiscal year totaled $59.5 million, or $1.43 per diluted share, up 32% from those of the previous fiscal year.
“Our mission to be America’s small business bank has never been more important. The past year was incredibly challenging for our country’s entrepreneurs, and their drive and determination reinforce why we want to fundamentally shift the way banking is done,” Chairman and CEO James “Chip” Mahan said in a news release Jan. 27. “As our efforts to drive rapid change in financial technology gained momentum in 2020, our teams continued their relentless focus on supporting customers in a time unequaled in recent history.
“In 2020, we grew assets by $3 billion by serving small businesses across the U.S. and significantly increased net income,” his statement continued. “Our balance sheet and funding model position us very well to serve America’s small businesses in the coming year.”
During the subsequent conference call, Mahan and other officials stressed the 76% year-over-year increase in loan and lease production, from $3.6 billion in 2019 to $6.3 billion at the end of 2020. Paycheck Protection Program lending contributed to this past year’s numbers.
“The total loan and lease portfolio of $6.32 billion is comprised of $1.50 billion of Paycheck Protection Program (“PPP”) loans, net of deferred fees and costs, at December 31, 2020,” the company’s release stated.
Excluding PPP loans, Live Oak originated about 1,000 loans, totaling $1.75 billion, during the second half of the year, Live Oak Bank President Huntley Garriott said during the conference call.
Mahan is bullish about continued growth in loan and lease generation.
“Over the last six quarters we’ve averaged origination of about $500 million. In the last two quarters, about $879 million. “[I am] very excited about year-over-year growth of originations from $2 billion to $2.7 billion, that’s a 34% increase. All the time around this place we talk about 15%, whether it’s originations or EPS, a wonderful thing about 15% as it doubles every five years. So yeah, that’s right: $3 billion to $3.1 billion, that’s doable for 2021, and we’re excited about it.”
A key aspect of the earnings call was a discussion of Live Oak Bank’s role in connecting small businesses with available federal COVID-19 relief, especially PPP financing.
The bank also designated a team, headed by business development officer Kay Anderson, to help borrowers in six industries – dubbed the “Covid 6” by Mahan – that have been most affected by coronavirus restrictions.
Anderson spoke of her largely successful efforts to improve the financial picture for borrowers in those six industries: entertainment centers, hotels, wine and craft beverages, educational services, fitness centers and quick-service restaurants.
“We have been examining the characteristics of these borrowers, which make up 17% of our borrowers,” she said. “It’s noteworthy that their classified assets have pretty much stabilized.”
