The largest SBA 7(a) lender by dollar volume, co-designing an AI-native loan origination platform with Casca and telling investors its AI strategy is 'offensive', not a cost play.
How is Live Oak Bank using AI?
Live Oak Bancshares, the Wilmington, North Carolina bank that is the largest US SBA 7(a) lender by dollar volume, uses AI mainly to make small business loans cheaper to originate. Its investment arm, Live Oak Ventures, put money into Casca (Cascading AI) in August 2025, and the bank is a design partner using Casca's AI origination platform for Live Oak Express, its SBA program for loans below $350,000; Express originations were $56 million in the first quarter of 2026 and $82 million in the second, with management targeting at least $750 million a year and a full rollout on the AI-native platform by the end of 2026. On the first-quarter 2026 call management described an 'AI-native framework' with more than 300 employee-built AI agents in use, and by the second quarter said 100% of employees had access to AI tools under an 'offensive' AI strategy meant to rebuild the business model rather than trim costs. Earlier pilots used AI to ingest loan documents and prepare credit memos, with human oversight kept. Its 2025 10-K adds an AI risk factor that names a less common exposure: AI could reduce demand in borrower verticals the bank lends to, such as accounting and investment advisory firms. The bank has not disclosed AI spending or a named AI executive.
Lead bank
Live Oak Banking Company
Assets (lead bank, Jun 30, 2026)
$16 billion
Charter
North Carolina state nonmember bank (FDIC)
Headquarters
Wilmington, NC
Flagship platform
Casca AI loan origination (Live Oak Express)
AI leadership
James S. (Chip) Mahan III · BJ Losch · Walt Phifer · Mike McGinley · Neil Underwood
- Casca is the platform: Live Oak Ventures invested in August 2025; the bank is a design partner and plans to expand Casca 'across the franchise' after Live Oak Express.
- Live Oak Express (SBA loans under $350,000): $56 million originated in Q1 2026 and $82 million in Q2 2026; target of at least $750 million a year 'supported by an AI-native loan origination platform'.
- Speed target: underwriting an Express loan took about two weeks in April 2026; the AI platform is meant to cut application-to-funding to seven to ten days.
- Workforce: more than 300 employee-built AI agents (Q1 2026 call) and AI tools for 100% of employees (Q2 2026 call); executives frame AI as removing tedious work, not cutting staff.
- Credit work: AI pilots ingest loan documents and help prepare credit memos, with humans still deciding (Q3 2025 call).
- 2025 10-K: a dedicated AI risk factor, an evolving AI risk-management framework, and a warning that AI may shrink demand among borrowers such as CPAs and investment advisers.
- Cloud-native from its founding (Amazon Web Services); $1.5 billion of loans originated across 33 industries in Q2 2026.
What is Casca AI loan origination (Live Oak Express)?
Live Oak's AI work is concentrated in one product. Live Oak Express, its program for SBA 7(a) loans below $350,000, runs on the AI loan application and origination platform of Casca (Cascading AI), a 2023 start-up in which Live Oak Ventures invested in August 2025 and with which the bank has been a design partner. Co-founder Neil Underwood told American Banker the bank used to turn such loans down because it 'just didn't have the infrastructure'; generative AI from Casca made the small-dollar product affordable. In April 2026 the bank was still piloting the software: underwriting a Live Oak Express loan took about two weeks once documents were in, and the bank aimed to halve that to seven to ten days from application to funding, with the program fully on the platform by the end of 2026 and later expansion to other verticals.[1][2][3][8]
What has Live Oak done on AI, and when?
- Jul 23, 2026
- Apr 28, 2026
Express pilot: $56 million in a quarter[3]
Live Oak Express originations reach $56 million in Q1 2026 while piloting Casca; the bank aims to halve processing time and finish integration by year-end.
- Apr 23, 2026
Q1 2026 call: 300-plus employee-built agents[7]
Management describes the bank moving to an 'AI-native framework' with over 300 employee-built AI agents in use.
- Feb 27, 2026
2025 10-K adds an AI risk factor[5]
Risks from errors in automated decision-making, third-party models and data, evolving AI law, and AI reducing demand in borrower verticals such as CPAs and investment advisory firms; the risk framework is being evolved for AI.
- Oct 29, 2025
Q3 2025 call: AI in underwriting pilots[6]
AI ingests loan documents and improves credit-memo preparation; executives stress it does not replace human oversight.
- Aug 19, 2025
Small-dollar SBA loans made viable by generative AI[2]
Live Oak plans to roll out Live Oak Express for SBA 7(a) loans below $350,000 in the fourth quarter, using Casca's software to automate much of the process.
- Aug 19, 2025
- Sep 9, 2024
Cloud-native since founding[4]
Live Oak was built on Amazon Web Services from its founding; its president questions whether the cloud truly saves banks money.
Where does Live Oak use AI today?
| System | What it does | Status | Use case |
|---|---|---|---|
| Casca AI loan origination for Live Oak Express[3][1] | AI loan application and origination for SBA 7(a) loans under $350,000; target of seven to ten days from application to funding. | Pilot | Credit scoring & underwriting |
| Loan-document ingestion and credit memos[6] | Pilots in which AI ingests loan documents and helps prepare credit memos, with human review retained. | Pilot | Credit scoring & underwriting |
| Employee-built AI agents[7][10] | More than 300 agents built by employees (Q1 2026); AI tools available to all employees (Q2 2026). | In production | Generative & agentic AI |
| AI risk factor and risk framework[5] | The 10-K describes risks of automated decision-making errors, third-party model opacity and biased data, and an effort to evolve the risk framework for AI. | In production | Model risk management |
| Fintech investments through Live Oak Ventures[1][5] | Investments in early-stage companies including AI firms such as Casca; the 10-K flags the risk of such holdings. | In production | Third-party & vendor AI |
Use-case links open the tracker's rules-by-use-case matrix: which documents govern each system type.
What has Live Oak disclosed in numbers?
| Metric | Value | As of |
|---|---|---|
| Live Oak Express originations, Q1 2026 | $56 million (up from $38 million the prior quarter)[3] | Mar 31, 2026 |
| Live Oak Express originations, Q2 2026 | $82 million, up 63%[9] | Jun 30, 2026 |
| Live Oak Express target | At least $750 million a year[8][3] | Jul 23, 2026 |
| Employee-built AI agents | More than 300[7] | Apr 23, 2026 |
| Employees with AI tools | 100%[8][10] | Jul 23, 2026 |
| Express underwriting time | About two weeks once documents are uploaded; target 7–10 days application to funding[3] | Apr 28, 2026 |
| Loan originations, Q2 2026 | $1.5 billion across 33 industries[9] | Jun 30, 2026 |
“Casca simplifies and accelerates our lending processes while equipping us with the insights needed to build lasting relationships”[1]
James S. (Chip) Mahan III · Chairman and CEO · Aug 19, 2025
“Very few banks are going to underwrite the $200,000 loan, and sadly, small businesses have to turn to merchant cash advances or use credit cards, which have way higher APRs.”[2]
Neil Underwood · Co-founder and board member, Live Oak Bank · Aug 19, 2025
“Once that is fully rolled out, it's going to be so much simpler, easier, faster and more efficient for our people to serve our customers”[3]
BJ Losch · President, Live Oak Bank · Apr 28, 2026
Who runs AI at Live Oak?
Which regulators govern Live Oak's AI?
| Authority | Why it matters here | Documents |
|---|---|---|
| FDIC | Live Oak Banking Company is a North Carolina state nonmember bank; the FDIC is its primary federal supervisor for AI used in lending and operations. | FDIC FIL-29-2023 FDIC FIL-15-2026 |
| Federal Reserve | Live Oak Bancshares is a bank holding company; model-risk and third-party guidance frame the Casca origination platform and employee-built agents. | SR 11-7 SR 23-4 |
| CFPB | Automated small-business credit decisions bring ECOA adverse-action duties, and the bank's 10-K names fair-lending law among the rules AI is subject to. | ECOA / Regulation B adverse action (15 U.S.C. 1691(d); 12 CFR 1002.9) |
What does the public record suggest about Live Oak's AI strategy?
Analysis by BankingNewsAI from the sources cited on this page. Observations, not advice.
01
AI is aimed at a product, not a back office
Most banks of Live Oak's size describe AI as productivity tooling. Live Oak tied it to a revenue line, small-dollar SBA loans it previously declined, with a stated volume target. That makes the program measurable quarter by quarter in Express originations.
02
A vendor it partly owns
Live Oak is both an investor in and a design partner of Casca, which also serves Huntington and Celtic Bank. The arrangement gives it influence over the product but concentrates third-party and model risk in one young vendor, a risk its own 10-K describes in general terms.
03
It names AI as a credit risk among its borrowers
The 10-K's point that AI could shrink demand for accountants and investment advisers, verticals Live Oak lends to, is rarer than the usual AI risk factor and suggests the bank is watching AI's effect on its loan book as well as its operations.
Does Live Oak Bank use AI to approve SBA loans?
It uses Casca's AI loan origination platform to automate the application and underwriting workflow for Live Oak Express, its SBA 7(a) program for loans under $350,000. In April 2026 the software was still in a pilot phase, with full integration planned by the end of 2026; executives said AI improves efficiency in credit work but does not replace human oversight.
What is Casca and how is Live Oak involved?
Casca (Cascading AI) is a 2023 start-up that sells an AI loan application and origination platform. Live Oak Ventures, the bank's investment arm, invested in it in August 2025, and Live Oak Bank is a design partner using it for Live Oak Express. Huntington and Bankwell also invested in Casca's $29 million Series A.
Is Live Oak cutting jobs because of AI?
On its second-quarter 2026 call management said 100% of employees have AI tools and described the strategy as reinvesting efficiency gains into AI and lending; the bank has not announced AI-related job cuts.
- Live Oak Ventures Participates in Financing of Cascading AI, Inc.
- Huntington, Live Oak to invest in, deploy gen AI-based lending
- How AI is quickly overhauling one segment of SBA lending
- Are banks saving money as they migrate to the cloud? What you need to know
- Live Oak Bancshares, Inc. Form 10-K for the fiscal year ended December 31, 2025
- The 5 Most Interesting Analyst Questions From Live Oak Bancshares’s Q3 Earnings Call
- Live Oak Bancshares, Inc. Q1 2026 Earnings Call Summary
- Live Oak Bancshares, Inc. Q2 2026 Earnings Call Summary
- Live Oak Bancshares Q2 Earnings Call Highlights
- Live Oak Bancshares Inc (LOB) Q2 2026 Earnings Call Highlights: Strong EPS Growth and Diversified Loan Originations
- Live Oak Bancshares, Inc. Reports Second Quarter 2026 Results
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