Understanding Loan Origination and Market Dynamics

This is Matt Reustle. Today we are breaking down Live Oak Bank. Our guest is Stephen Vafier, the Founder of Storri Labs Capital Partners. Live Oak is a bank that received a charter right before the financial crisis. It does not have the a 100+ year histories of many of the banks that we know so well today, JP Morgan, Goldman Sachs, and the other too-big-to-fail banks. 

This is a new story with very interesting DNA in terms of how they built up this bank. They targeted specific industries and the SBA loan program and they had technology in their inception. Live Oak has done some unique things to build assets on the balance sheet to build equity in this bank and really build a name within a sector that is incredibly difficult to break into. This is an interesting case study on how you can think about out-dated industries, which seemingly have massive barriers to entry. Please enjoy this breakdown of Live Oak Bank.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Show Notes

(00:02:16) - (First question) - The unique market opportunity that the founders saw when starting this business

(00:04:39) - How Live Oak differentiated its approach to make a more successful business model

(00:06:03) - How they approached the SBA loan program differently

(00:09:04) - The Live Oak sales strategy 

(00:10:06) - Their strategy for trading partially guaranteed government-backed loans 

(00:12:12) - Overcoming challenges to attract clients to specialized loans

(00:15:44) - A brief history of Chip Mahan’s career

(00:20:23) - Chip’s technology-centric approach without relying on physical locations

(00:22:49) - Traditional banking security with high-upside ventures, contrasting with neo banks 

(00:27:51) - The balance between the traditional lending business and technology-focused ventures

(00:31:48) - How Live Oak intends to scale the business 

(00:36:52) - How the surge in SBA programs during COVID impacted Live Oak

(00:40:02) - Handling the effects of the Silicon Valley Bank collapse

(00:42:32) - The strategy for deposit growth and how pivotal is it for the bank's competitiveness

(00:46:13) - How Live Oak navigates threats from entities employing similar strategies 

(00:53:36) - The significance of Chip Mahan's role and his influence on the organization's future 

(00:56:43) - Potential risks that Live Oak faces

(00:59:44) - Lessons learned from researching Live Oak