Travis Hoium

Thanks for listening to Motley Fool Money.

We'll see you here tomorrow.

I will admit that over my 15 years as an investor and as a Fool, I've certainly become more Tom than David.

That means that I might not have to give up my Fool card for this one,

But the stock that I'm going to talk about is one that Tom actually sold out of almost all of his services in 2024, and that's Live Oak Bank shares.

It's a combination of specialization, but also extremely high-quality origination.

This is a bank.

It's a little bit anachronistic because they count on the people that give them capital, the depositors, to be a different group than they're lending to.

Their depositors are basically online savers.

They pay high yield in their online savings and CDs, but they lend to small businesses.

But it's the combination of specialization and extremely high-quality origination that I really like.

Lenders make mistakes by either going into markets they truly don't understand, or just staying at the table or staying on the dance floor while the music's playing, and then making bad loans as a result.

Live Oak's founder and CEO, Chip Mahan, he's one of the OGs in online banking.

But it wasn't just building the tech and the platforms and moving banking out from behind the teller desk and moving it to the internet.

It was also building lenders that don't make bad loans.

For Live Oak, it lends to small businesses, but it just focuses on specific verticals.

It actually builds out a team of in-house experts

on those verticals before it starts to ramp up its lending.

As a result, not only does it lend responsively, but it has another benefit, especially against community bankers and also against a lot of large bankers that don't really do the same thing.

Let's say you're a vet, and you own a couple of vet clinics, and you want to borrow some money to improve your technology.