Origin Bancorp, Inc. (OBNK) Q1 2022 Results Earnings Conference Call May 2, 2022 9:00 AM ET Company Participants Chris Reigelman - Head of Investor Relations Drake Mills - Chairman, President and Chief Executive Officer Lance Hall - President and Chief Executive Officer, Origin Bank Jim Crotwell - Chief Risk Officer Stephen Brolly - Chief Financial Officer Conference Call Participants Matt Olney - Stephens, Inc. Kevin Fitzsimmons - D.A. Davidson Companies Operator Good morning and welcome to the Origin Banc ...

ORIGIN BANCORP, INC. ORIGIN BANCORP, INC. _______ 1Q TWENTY22 INVESTOR PRESENTATION FORWARD-LOOKING STATEMENTS AND NON-GAAP MEASURES This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information regarding Origin Bancorp, Inc.'s ("Origin" or the "Company") future financial performance, business and growth strategy, projected plans and objectives, including the Company's loan loss reserve ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to __________ Commission file number 001-38487 Origin Bancorp, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction o ...

ORIGIN BANCORP, INC. _______ ORIGIN BANCORP, INC. 4Q AND FULL YEAR TWENTY21 INVESTOR PRESENTATION FORWARD-LOOKING STATEMENTS AND NON-GAAP MEASURES This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information regarding Origin Bancorp, Inc.'s ("Origin" or the "Company") future financial performance, business and growth strategy, projected plans and objectives, including the Company's loa ...

Origin Bancorp, Inc. (OBNK) Q4 2021 Earnings Conference Call January 27, 2022 9:00 AM ET Company Participants Chris Reigelman - Head of Investor Relations Drake Mills - Chairman, President and Chief Executive Officer Lance Hall - President and Chief Executive Officer of Origin Bank Jim Crotwell - Chief Risk Officer Stephen Brolly - Chief Financial Officer Conference Call Participants Matt Olney - Stephens Bradley Milsaps - Piper Sandler Brady Gailey - KBW Kevin Fitzsimmons - DA Davidson William Wallace - Ra ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to __________ Commission file number 001-38487 Origin Bancorp, Inc. (Exact name of registrant as specified in its charter) (State or other ju ...

Origin Bancorp, Inc. (OBNK) Q3 2021 Earnings Conference Call October 28, 2021 9:00 AM ET Company Participants Chris Reigelman - Head of Investor Relations Drake Mills - Chairman, President and Chief Executive Officer Lance Hall - President and Chief Executive Officer of Origin Bank Jim Crotwell - Chief Risk Officer Stephen Brolly - Chief Financial Officer Conference Call Participants Matt Olney - Stephens Inc. Brady Gailey - Keefe, Bruyette, & Woods, Inc. Bradley Milsaps - Piper Sandler & Co. Kevin Fitzsimm ...

ORIGIN BANCORP, INC. _______ ORIGIN BANCORP, INC. 3Q TWENTY21 INVESTOR PRESENTATION FORWARD-LOOKING STATEMENTS AND NON-GAAP MEASURES This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information regarding Origin Bancorp, Inc.'s ("Origin" or the "Company") future financial performance, business and growth strategy, projected plans and objectives, including the Company's loan loss reserve ...

Financial Performance - Q2 2020 - Total Loans Held For Investment ("LHFI") increased to $5312194 thousand, a 333% year-over-year increase[7] - Total Assets reached $6643909 thousand, a 298% increase compared to the previous year[7] - Total Deposits grew to $5372222 thousand, marking a 394% year-over-year increase[7] - Net Income was $4957 thousand, a 596% decrease year-over-year[7] - Pre-Tax Pre-Provision Earnings ("PTPP") increased to $27146 thousand, a 592% increase compared to the same period last year[7] Financial Performance - 1H 2020 - Net Interest Income increased to $89100 thousand, a 48% increase year-over-year[10] - Provision for Credit Losses significantly increased to $39934 thousand, a 12356% increase compared to the first half of 2019[10] - Net Income decreased to $5710 thousand, a 784% decrease year-over-year[10] - PTPP reached $46003 thousand, a 303% increase compared to the first half of 2019[10] Loan Portfolio and Forbearance - As of June 30, 2020, forbearances represented 21% of total LHFI, excluding PPP loans, which decreased to 8% by August 31, 2020[15] - The company funded $563 million in PPP loans with an average loan size of $185 thousand[17] - The hotel sector had $64043 thousand in outstanding balance, with 864% of loans in forbearance as of August 31, 2020[31] - The energy sector had $62695 thousand in outstanding balance, with 168% of loans in forbearance as of August 31, 2020[40] - The non-essential retail sector had $146566 thousand in outstanding balance, with 344% of loans in forbearance as of August 31, 2020[47]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)%3A) This section presents Origin Bancorp, Inc.'s unaudited consolidated financial statements and condensed notes for periods ended June 30, 2021, and December 31, 2020 [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets%20at%20June%2030%2C%202021%2C%20(unaudited)%2C%20and%20December%2031%2C%202020) Total assets decreased to $7.27 billion at June 30, 2021, from $7.63 billion at December 31, 2020, primarily due to reduced loans, while stockholders' equity increased | Metric | June 30, 2021 (in thousands) | December 31, 2020 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Total assets | $7,268,068 | $7,628,268 | $(360,200) | -4.72% | | Total liabilities | $6,579,833 | $6,981,118 | $(401,285) | -5.75% | | Total stockholders' equity | $688,235 | $647,150 | $41,085 | 6.35% | | Total deposits | $6,028,352 | $5,751,315 | $277,037 | 4.82% | | Loans, net | $5,319,202 | $5,638,103 | $(318,901) | -5.66% | | Cash and cash equivalents | $444,732 | $377,214 | $67,518 | 17.90% | [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202021%20and%202020%2C%20(unaudited)) Net income significantly increased for both three and six months ended June 30, 2021, driven by higher net interest income and a credit loss benefit | Metric | 3 Months Ended June 30, 2021 (in thousands) | 3 Months Ended June 30, 2020 (in thousands) | Change (in thousands) | % Change | | :----------------------------------- | :---------------------------------------- | :---------------------------------------- | :-------------------- | :------- | | Total interest and dividend income | $60,648 | $55,464 | $5,184 | 9.35% | | Total interest expense | $6,356 | $9,174 | $(2,818) | -30.72% | | Net interest income | $54,292 | $46,290 | $8,002 | 17.29% | | Provision for credit losses | $(5,609) | $21,403 | $(27,012) | -126.21% | | Total noninterest income | $12,438 | $19,076 | $(6,638) | -34.79% | | Total noninterest expense | $37,832 | $38,220 | $(388) | -1.02% | | Income before income tax expense | $34,507 | $5,743 | $28,764 | 500.85% | | Income tax expense | $6,774 | $786 | $5,988 | 761.83% | | Net income | $27,733 | $4,957 | $22,776 | 459.47% | | Basic earnings per common share | $1.18 | $0.21 | $0.97 | 461.90% | | Diluted earnings per common share | $1.17 | $0.21 | $0.96 | 457.14% | | Metric | 6 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2020 (in thousands) | Change (in thousands) | % Change | | :----------------------------------- | :---------------------------------------- | :---------------------------------------- | :-------------------- | :------- | | Total interest and dividend income | $122,775 | $110,480 | $12,295 | 11.13% | | Total interest expense | $13,244 | $21,380 | $(8,136) | -38.05% | | Net interest income | $109,531 | $89,100 | $20,431 | 22.93% | | Provision for credit losses | $(4,197) | $39,934 | $(44,131) | -110.51% | | Total noninterest income | $29,569 | $31,220 | $(1,651) | -5.29% | | Total noninterest expense | $77,268 | $74,317 | $2,951 | 3.97% | | Income before income tax expense | $66,029 | $6,069 | $59,960 | 987.97% | | Income tax expense | $12,783 | $359 | $12,424 | 3460.72% | | Net income | $53,246 | $5,710 | $47,536 | 832.50% | | Basic earnings per common share | $2.28 | $0.24 | $2.04 | 850.00% | | Diluted earnings per common share | $2.26 | $0.24 | $2.02 | 841.67% | [Consolidated Statements of Comprehensive Income](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202021%20and%202020%2C%20(unaudited)) Comprehensive income significantly increased for both periods ended June 30, 2021, due to higher net income and changes in other comprehensive income | Metric | 3 Months Ended June 30, 2021 (in thousands) | 3 Months Ended June 30, 2020 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------------- | :---------------------------------------- | :---------------------------------------- | :-------------------- | :------- | | Net income | $27,733 | $4,957 | $22,776 | 459.47% | | Other comprehensive income (loss), net of tax | $6,729 | $4,791 | $1,938 | 40.45% | | Comprehensive income | $34,462 | $9,748 | $24,714 | 253.53% | | Metric | 6 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2020 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Net income | $53,246 | $5,710 | $47,536 | 832.50% | | Other comprehensive income (loss), net of tax | $(6,735) | $14,280 | $(21,015) | -147.16% | | Comprehensive income | $46,511 | $19,990 | $26,521 | 132.67% | [Consolidated Statements of Changes in Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202021%20and%202020%2C%20(unaudited)) Stockholders' equity increased to $688.2 million at June 30, 2021, driven by net income, partially offset by other comprehensive loss and dividends | Metric | January 1, 2021 (in thousands) | June 30, 2021 (in thousands) | Change (in thousands) | | :------------------------------------ | :----------------------------- | :--------------------------- | :-------------------- | | Total Stockholders' Equity | $647,150 | $688,235 | $41,085 | | Net income (6 months) | - | $53,246 | $53,246 | | Other comprehensive income, net of tax (6 months) | - | $(6,735) | $(6,735) | | Dividends declared - common stock (6 months) | - | $(5,394) | $(5,394) | | Repurchase of common stock (6 months) | - | $(1,256) | $(1,256) | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20six%20months%20ended%20June%2030%2C%202021%20and%202020%2C%20(unaudited)) Net cash from operations significantly increased, investing activities shifted to a net provide, and financing activities to a net use, resulting in higher cash and equivalents | Cash Flow Activity | 6 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2020 (in thousands) | Change (in thousands) | | :--------------------------------------- | :---------------------------------------- | :---------------------------------------- | :-------------------- | | Net cash provided by (used in) operating activities | $107,942 | $(15,503) | $123,445 | | Net cash provided by (used in) investing activities | $357,183 | $(1,384,854) | $1,742,037 | | Net cash (used in) provided by financing activities | $(397,607) | $1,265,175 | $(1,662,782) | | Net increase (decrease) in cash and cash equivalents | $67,518 | $(135,182) | $202,700 | | Cash and cash equivalents at end of period | $444,732 | $156,336 | $288,396 | [Condensed Notes to Consolidated Financial Statements](index=12&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) These notes detail accounting policies, earnings per share, securities, loans, fair value, mortgage banking, borrowings, derivatives, compensation, AOCI, capital, and commitments [Note 1 - Significant Accounting Policies](index=12&type=section&id=Note%201%20-%20Significant%20Accounting%20Policies) Origin Bancorp operates as a financial holding company, with unaudited interim statements prepared under U.S. GAAP, and ASU 2019-12 had no material impact - The Company operates **44 banking centers** in Dallas/Fort Worth, Houston, North Louisiana, and Mississippi, primarily in one business segment: community banking[33](index=33&type=chunk) - The consolidated financial statements are unaudited for interim periods and prepared in accordance with U.S. GAAP, with management making estimates and assumptions[35](index=35&type=chunk)[37](index=37&type=chunk) - ASU No. 2019-12, Income Taxes (Topic 740), was implemented effective January 1, 2021, with **no material impact** on the consolidated financial statements or disclosures[38](index=38&type=chunk) [Note 2 - Earnings Per Share](index=13&type=section&id=Note%202%20-%20Earnings%20Per%20Share) Basic and diluted EPS significantly increased for the three months ended June 30, 2021, to $1.18 and $1.17, respectively, from $0.21 in the prior year | Metric | 3 Months Ended June 30, 2021 | 3 Months Ended June 30, 2020 | Change | % Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Net income (basic and diluted) | $27,733 | $4,957 | $22,776 | 459.47% | | Basic earnings per common share | $1.18 | $0.21 | $0.97 | 461.90% | | Diluted earnings per common share | $1.17 | $0.21 | $0.96 | 457.14% | | Metric | 6 Months Ended June 30, 2021 | 6 Months Ended June 30, 2020 | Change | % Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Net income (basic and diluted) | $53,246 | $5,710 | $47,536 | 832.50% | | Basic earnings per common share | $2.28 | $0.24 | $2.04 | 850.00% | | Diluted earnings per common share | $2.26 | $0.24 | $2.02 | 841.67% | [Note 3 - Securities](index=14&type=section&id=Note%203%20-%20Securities) The securities portfolio, comprising AFS, HTM, and fair value through income securities, totaled $1.02 billion at June 30, 2021, with $3.5 million in unrealized AFS losses | Security Type | June 30, 2021 (in thousands) | December 31, 2020 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Available for sale (Fair Value) | $973,948 | $1,004,674 | $(30,726) | -3.06% | | Held to maturity (Net Carrying Amount) | $37,835 | $38,128 | $(293) | -0.77% | | Securities carried at fair value through income | $10,973 | $11,554 | $(581) | -5.03% | | Total Securities | $1,022,756 | $1,054,356 | $(31,600) | -3.00% | | Metric | June 30, 2021 (in thousands) | December 31, 2020 (in thousands) | | :------------------------------------------------- | :----------------------------- | :------------------------------- | | Gross Unrealized Gains (AFS) | $27,727 | $33,972 | | Gross Unrealized Losses (AFS) | $(3,543) | $(893) | | Allowance for credit losses (HTM) | $71 | $66 | - At June 30, 2021, the Company had **84 available for sale debt securities** in an unrealized loss position without an allowance for credit losses, believed to be due to noncredit-related factors[47](index=47&type=chunk) | Metric | 6 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2020 (in thousands) | | :------------------------ | :---------------------------------------- | :---------------------------------------- | | Proceeds from sales/calls | $42,023 | $22,945 | | Gross realized gains | $1,705 | $103 | | Gross realized losses | $(32) | $(49) | [Note 4 - Loans](index=17&type=section&id=Note%204%20-%20Loans) The net loan portfolio decreased to $5.32 billion, driven by declines in mortgage warehouse and PPP loans, while the allowance for credit losses decreased and nonaccrual loans increased [4.1 Loan Composition](index=17&type=section&id=4.1%20Loan%20Composition) The LHFI portfolio decreased by 5.7% to $5.40 billion, primarily due to declines in mortgage warehouse and PPP loans, partially offset by real estate loan growth | Loan Type | June 30, 2021 (in thousands) | December 31, 2020 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Loans held for sale | $124,710 | $191,512 | $(66,802) | -34.88% | | Commercial real estate | $1,475,093 | $1,370,928 | $104,165 | 7.60% | | Construction/land/land development | $497,170 | $531,860 | $(34,690) | -6.52% | | Residential real estate | $966,301 | $885,120 | $81,181 | 9.17% | | Commercial and industrial (incl. PPP) | $1,570,791 | $1,817,862 | $(247,071) | -13.59% | | Mortgage warehouse lines of credit | $865,255 | $1,084,001 | $(218,746) | -20.18% | | Consumer | $16,253 | $17,991 | $(1,738) | -9.66% | | Total loans accounted for at amortized cost | $5,390,863 | $5,707,762 | $(316,899) | -5.55% | | Loans accounted for at fair value | $5,443 | $17,011 | $(11,568) | -68.00% | | Total LHFI | $5,396,306 | $5,724,773 | $(328,467) | -5.74% | | Less: Allowance for loan losses | $77,104 | $86,670 | $(9,566) | -11.04% | | LHFI, net | $5,319,202 | $5,638,103 | $(318,901) | -5.66% | - PPP loans outstanding at June 30, 2021, were approximately **$369.9 million**, with **$416.6 million** already forgiven by the SBA[58](index=58&type=chunk) [4.2 Credit Quality Indicators](index=17&type=section&id=4.2%20Credit%20Quality%20Indicators) The Company employs an internal risk rating system to assess loan credit quality based on financial strength, collateral, and economic conditions - The Company's internal risk rating system categorizes loans from 'Minimal risk' (1) to 'Loss' (0), with 'Watch' (6) indicating potential weakness and 'Substandard' (8) and 'Doubtful' (9) indicating significant risk of non-repayment[62](index=62&type=chunk) - Credit quality indicators include weighted-average risk rating, net charge-offs, non-performing loans, classified loans, and general economic conditions[59](index=59&type=chunk) | Loan Type | Total Loans (June 30, 2021, in thousands) | Pass (in thousands) | Special Mention (in thousands) | Classified (in thousands) | | :-------------------------------- | :-------------------------------------- | :------------------ | :----------------------------- | :------------------------ | | Commercial real estate | $1,475,093 | $1,431,548 | $32,367 | $11,178 | | Construction/land/land development | $497,170 | $472,897 | $11,205 | $13,068 | | Residential real estate | $966,301 | $949,180 | $1,146 | $15,975 | | Commercial and industrial | $1,570,791 | $1,516,023 | $11,635 | $43,133 | | Mortgage Warehouse Lines of Credit | $865,255 | $865,255 | $0 | $0 | | Consumer | $16,253 | $16,211 | $0 | $42 | [4.3 Allowance for Loan Credit Losses](index=24&type=section&id=4.3%20Allowance%20for%20Loan%20Credit%20Losses) The allowance for loan credit losses decreased by $9.6 million to $77.1 million, reflecting improved economic forecasts and a net benefit for credit losses | Metric | 6 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2020 (in thousands) | | :------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Beginning Balance (Jan 1) | $86,670 | $37,520 | | Provision for loan losses | $(3,864) | $39,274 | | Total charge-offs | $6,037 | $8,012 | | Total recoveries | $335 | $438 | | Net charge-offs | $5,702 | $7,574 | | Ending Balance (June 30) | $77,104 | $70,468 | - The decrease in provision expense was primarily due to **improvement in forecasted economic conditions** during the six months ended June 30, 2021, compared to deteriorating conditions in the prior year[83](index=83&type=chunk) | Loss Estimation Methodology | June 30, 2021 (in thousands) | December 31, 2020 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Collectively Evaluated (Probability of Default) | $60,771 | $78,429 | | Individually Evaluated (Fair Value of Collateral) | $8,292 | $2,360 | | Individually Evaluated (Discounted Cash Flow) | $8,041 | $5,881 | | Total Allowance for Loan Credit Losses | $77,104 | $86,670 | [4.4 Nonaccrual Loans and TDRs](index=27&type=section&id=4.4%20Nonaccrual%20Loans%20and%20TDRs) Nonaccrual loans increased to $30.5 million, driven by commercial and industrial and residential real estate loans, while TDRs decreased to $7.6 million | Nonaccrual LHFI Type | June 30, 2021 (in thousands) | December 31, 2020 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Commercial real estate | $1,544 | $3,704 | $(2,160) | -58.32% | | Construction/land/land development | $621 | $2,962 | $(2,341) | -79.03% | | Residential real estate | $10,571 | $6,530 | $4,041 | 61.88% | | Commercial and industrial | $17,723 | $12,897 | $4,826 | 37.42% | | Consumer | $43 | $56 | $(13) | -23.21% | | Total nonaccrual loans | $30,502 | $26,149 | $4,353 | 16.65% | | TDRs | June 30, 2021 (in thousands) | December 31, 2020 (in thousands) | Change (in thousands) | % Change | | :--------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Nonaccrual TDRs | $4,701 | $5,671 | $(970) | -17.10% | | Performing TDRs | $2,917 | $3,314 | $(397) | -11.98% | | Total TDRs | $7,618 | $8,985 | $(1,367) | -15.21% | - **No loans were classified as TDRs** during the six months ended June 30, 2021[98](index=98&type=chunk) [Note 5 - Fair Value of Financial Instruments](index=28&type=section&id=Note%205%20-%20Fair%20Value%20of%20Financial%20Instruments) The Company measures financial instruments at fair value using a three-level hierarchy, with recurring assets totaling $1.09 billion and nonrecurring measurements for specific equity and collateral-dependent loans [5.1 Fair Value Hierarchy](index=28&type=section&id=5.1%20Fair%20Value%20Hierarchy) The Company employs a three-level fair value hierarchy based on input observability, with no transfers between levels during the reporting periods - **Level 1 fair value** is based on unadjusted quoted prices in active markets for identical assets or liabilities[102](index=102&type=chunk) - **Level 2 fair value** is based on significant other observable inputs, such as quoted prices for similar assets/liabilities or inputs derived from observable market data[103](index=103&type=chunk)[108](index=108&type=chunk) - **Level 3 fair value** uses significant unobservable inputs, reflecting the Company's own assumptions about market participant risk premiums and assumptions[105](index=105&type=chunk) [5.2 Recurring Fair Value Measurements](index=29&type=section&id=5.2%20Recurring%20Fair%20Value%20Measurements) Recurring fair value assets decreased to $1.09 billion at June 30, 2021, including securities, loans, and MSRs, with Level 3 assets experiencing specific changes | Asset Type | June 30, 2021 (in thousands) | December 31, 2020 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Securities available for sale | $973,948 | $1,004,674 | | Securities carried at fair value through income | $10,973 | $11,554 | | Loans held for sale | $71,571 | $136,026 | | Loans at fair value | $5,443 | $17,011 | | Mortgage servicing rights | $16,081 | $13,660 | | Other assets - derivatives | $14,817 | $23,694 | | Total recurring fair value measurements - assets | $1,092,833 | $1,206,619 | | Level 3 Asset | Balance at Jan 1, 2021 (in thousands) | Gain (loss) recognized in earnings (in thousands) | Settlements (in thousands) | Balance at June 30, 2021 (in thousands) | | :-------------------------------- | :------------------------------------ | :------------------------------------------------ | :------------------------- | :-------------------------------------- | | Loans at Fair Value | $17,011 | $(125) | $(11,443) | $5,443 | | MSRs | $13,660 | $(772) | $3,193 (Originations) | $16,081 | | Securities Available for Sale | $44,065 | $(595) (AOCI) | $(2,180) | $42,290 | | Securities at Fair Value Through Income | $11,554 | $(316) | $(265) | $10,973 | - The fair value option is elected for certain loans held for sale and commercial real estate loans to effectively offset changes in fair values with derivative instruments[119](index=119&type=chunk) [5.3 Nonrecurring Fair Value Measurements](index=34&type=section&id=5.3%20Nonrecurring%20Fair%20Value%20Measurements) Nonrecurring fair value measurements include equity securities, GNMA repurchase assets, collateral-dependent loans, and foreclosed assets - Equity securities without readily determinable fair values are carried at cost adjusted for observable transactions, less impairment, with **no impairment recorded to date**[128](index=128&type=chunk) - GNMA repurchase assets, included in mortgage loans held for sale, are valued at the lower of cost or market, totaling **$53.1 million** at June 30, 2021[129](index=129&type=chunk) - Collateral-dependent loans with credit losses, where repayment is expected from collateral, are classified within Level 3 and valued at approximately **$5.7 million** at June 30, 2021[130](index=130&type=chunk) - Foreclosed assets held for sale are initially recorded at fair value less estimated costs to sell, with a carrying value of **$4.0 million** at June 30, 2021[131](index=131&type=chunk) [5.4 Financial Instruments Not Recorded at Fair Value](index=34&type=section&id=5.4%20Financial%20Instruments%20Not%20Recorded%20at%20Fair%20Value) Fair values for instruments not recorded at fair value, such as loans and deposits, are estimated using discounted cash flows and market rates - Fair value for variable-rate loans that reprice frequently approximates carrying value, while fixed-rate loans are estimated by discounting future cash flows using exit level pricing[132](index=132&type=chunk) - Fair value for demand deposits approximates carrying value, and fixed-rate deposit liabilities are estimated by discounting future cash flows using FHLB funding rates[135](index=135&type=chunk) | Financial Instrument | Carrying Value (June 30, 2021, in thousands) | Estimated Fair Value (June 30, 2021, in thousands) | | :------------------------------------ | :------------------------------------------- | :----------------------------------------------- | | Cash and cash equivalents | $444,732 | $444,732 | | Securities held to maturity | $37,835 | $40,753 | | LHFI, net | $5,313,759 | $5,293,696 | | Deposits | $6,028,352 | $6,030,832 | | FHLB advances and other borrowings | $314,123 | $308,378 | | Subordinated debentures | $157,298 | $156,510 | [Note 6 - Mortgage Banking](index=36&type=section&id=Note%206%20-%20Mortgage%20Banking) Mortgage banking revenue significantly decreased for both three and six months ended June 30, 2021, primarily due to lower fair value adjustments, despite MSR growth | Metric | 3 Months Ended June 30, 2021 (in thousands) | 3 Months Ended June 30, 2020 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :---------------------------------------- | :---------------------------------------- | :-------------------- | :------- | | Total gross mortgage revenue | $6,195 | $5,756 | $439 | 7.63% | | MSR valuation adjustments, net | $(2,721) | $(2,758) | $37 | -1.34% | | Mortgage HFS and pipeline fair value adjustment | $(1,998) | $5,531 | $(7,529) | -136.12% | | MSR hedge impact | $1,289 | $2,188 | $(899) | -41.10% | | Mortgage banking revenue | $2,765 | $10,717 | $(7,952) | -74.20% | | Metric | 6 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2020 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :---------------------------------------- | :---------------------------------------- | :-------------------- | :------- | | Total gross mortgage revenue | $15,011 | $9,505 | $5,506 | 57.93% | | MSR valuation adjustments, net | $(772) | $(7,987) | $7,215 | -90.34% | | Mortgage HFS and pipeline fair value adjustment | $(5,155) | $6,797 | $(11,952) | -175.85% | | MSR hedge impact | $(1,742) | $5,171 | $(6,913) | -133.69% | | Mortgage banking revenue | $7,342 | $13,486 | $(6,144) | -45.56% | | MSR Activity | January 1, 2021 (in thousands) | June 30, 2021 (in thousands) | Change (in thousands) | | :----------------------- | :----------------------------- | :--------------------------- | :-------------------- | | Fair Value at Beginning of Period | $13,660 | $16,081 | $2,421 | | Originations of MSRs | - | $3,193 | $3,193 | | Valuation adjustments, net | - | $(772) | $(772) | | Fair Value at End of Period | - | $16,081 | $2,421 | - The Company incurred **$50,000** in mortgage loan servicing putback reserve expense for the six months ended June 30, 2021, with a total reserve of **$361,000**[143](index=143&type=chunk) - GNMA repurchase assets, representing delinquent mortgage loans repurchased from securitized pools, totaled **$53.1 million** at June 30, 2021[146](index=146&type=chunk) [Note 7 - Borrowings](index=37&type=section&id=Note%207%20-%20Borrowings) Total FHLB advances and other borrowings significantly decreased to $314.1 million, mainly due to a $650.0 million reduction in short-term FHLB advances | Borrowing Type | June 30, 2021 (in thousands) | December 31, 2020 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Overnight repurchase agreements with depositors | $3,859 | $8,408 | $(4,549) | -54.11% | | Short-term FHLB advances | $0 | $650,000 | $(650,000) | -100.00% | | GNMA repurchase liability | $53,140 | $55,485 | $(2,345) | -4.23% | | Long-term FHLB advances | $257,124 | $270,715 | $(13,591) | -5.02% | | Total FHLB advances and other borrowings | $314,123 | $984,608 | $(670,485) | -68.10% | | Subordinated debentures, net | $157,298 | $157,181 | $117 | 0.07% | - Security for FHLB indebtedness includes a blanket floating lien on first mortgage loans, commercial real estate, other real estate loans, FHLB capital stock, and deposit accounts[147](index=147&type=chunk) - The net amount available under the blanket floating lien from FHLB was **$872.1 million** at June 30, 2021[147](index=147&type=chunk) [Note 8 - Derivative Financial Instruments](index=37&type=section&id=Note%208%20-%20Derivative%20Financial%20Instruments) The Company uses derivatives, including interest rate swaps, to manage risk, with some designated as cash flow hedges and others recognized directly in earnings - The Company uses interest rate swap agreements as cash flow hedges to manage variable cash flows from borrowings, with effective portions of fair value changes recorded in AOCI[149](index=149&type=chunk) - Derivatives not designated as hedges include customer interest rate swaps and mortgage banking derivatives (interest rate lock commitments, forward loan sale commitments, and MSR hedges), with fair value changes recognized in earnings[152](index=152&type=chunk)[154](index=154&type=chunk) | Derivative Type | Fair Value (June 30, 2021, in thousands) | Fair Value (December 31, 2020, in thousands) | | :------------------------------------------------- | :--------------------------------------- | :----------------------------------------- | | Interest rate swaps (cash flow hedges) | $(332) | $(706) | | Interest rate swaps (non-hedging, assets) | $12,670 | $20,207 | | Interest rate swaps (non-hedging, liabilities) | $(13,497) | $(21,321) | | Forward commitments to purchase mortgage-backed securities | $49 | $(317) | | Forward commitments to sell residential mortgage loans | $(123) | $(658) | | Interest rate-lock commitments on residential mortgage loans | $2,098 | $3,487 | | Total Fair Values | $1,188 | $1,380 | - Gains and losses on non-hedging derivatives are largely offset by market fluctuations in mortgage servicing rights[158](index=158&type=chunk) [Note 9 - Stock and Incentive Compensation Plans](index=39&type=section&id=Note%209%20-%20Stock%20and%20Incentive%20Compensation%20Plans) The Company's ESPP was approved in April 2021, and share-based compensation expense was $1.085 million for the six months ended June 30, 2021, with restricted shares and stock options outstanding - An Employee Stock Purchase Plan (ESPP) was approved on April 28, 2021, allowing employees to purchase common stock at a **15% discount**[160](index=160&type=chunk) | Metric | 3 Months Ended June 30, 2021 (in thousands) | 3 Months Ended June 30, 2020 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2020 (in thousands) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Restricted stock expense | $444 | $573 | $1,058 | $1,110 | | ESPP expense | $27 | $0 | $27 | $0 | | Total stock compensation expense | $471 | $573 | $1,085 | $1,110 | - At June 30, 2021, there were **81,749 nonvested restricted shares** outstanding with **$2.1 million** in unrecognized compensation cost, expected to be recognized over **1.8 years**[168](index=168&type=chunk) - At June 30, 2021, **209,200 stock options** were outstanding and exercisable, with a weighted average exercise price of **$10.93** and an aggregate intrinsic value of **$6.6 million**[172](index=172&type=chunk) [Note 10 - Accumulated Other Comprehensive Income](index=41&type=section&id=Note%2010%20-%20Accumulated%20Other%20Comprehensive%20Income) AOCI decreased to $18.9 million, primarily due to a net decrease in unrealized gains on AFS securities, partially offset by cash flow hedge gains | Component | January 1, 2021 (in thousands) | June 30, 2021 (in thousands) | Net Change (in thousands) | | :------------------------------------ | :----------------------------- | :--------------------------- | :------------------------ | | Unrealized Gain (Loss) on AFS Securities | $26,206 | $19,176 | $(7,030) | | Unrealized (Loss) Gain on Cash Flow Hedges | $(557) | $(262) | $295 | | Accumulated Other Comprehensive Income | $25,649 | $18,914 | $(6,735) | [Note 11 - Capital and Regulatory Matters](index=41&type=section&id=Note%2011%20-%20Capital%20and%20Regulatory%20Matters) Origin Bancorp and Origin Bank met all regulatory capital requirements, with the Bank classified as 'well capitalized,' and the Company elected a CECL capital delay - The Company and the Bank met all capital adequacy requirements, including the capital conservation buffer, at June 30, 2021, and December 31, 2020[179](index=179&type=chunk) - Origin Bank was categorized as **'well capitalized'** under regulatory frameworks at both periods[180](index=180&type=chunk) - The Company elected a **two-year delay** (Jan 2020 - Dec 2021) for CECL's adverse effects on regulatory capital, followed by a **three-year transition period** (Jan 2022 - Dec 2024)[180](index=180&type=chunk) | Capital Ratio | Origin Bancorp, Inc. (June 30, 2021) | Origin Bank (June 30, 2021) | | :------------------------------------ | :----------------------------------- | :-------------------------- | | Common Equity Tier 1 Capital to Risk-Weighted Assets | 11.03% | 11.55% | | Tier 1 Capital to Risk-Weighted Assets | 11.19% | 11.55% | | Total Capital to Risk-Weighted Assets | 14.85% | 13.89% | | Leverage Ratio | 8.87% | 9.15% | - Dividends from the Bank to the Company are subject to banking regulations and require approval if they exceed certain thresholds or cause capital to fall below minimum levels[183](index=183&type=chunk) [Note 12 - Commitments and Contingencies](index=43&type=section&id=Note%2012%20-%20Commitments%20and%20Contingencies) The Company has $1.42 billion in credit commitments and $51.0 million in standby letters of credit, with a $2.0 million reserve, and no material adverse effect from legal proceedings is expected | Commitment Type | June 30, 2021 (in thousands) | December 31, 2020 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------- | | Commitments to extend credit | $1,419,247 | $1,341,501 | | Standby letters of credit | $51,026 | $42,911 | - The Company held **40 unfunded letters of credit** from the FHLB totaling **$623.3 million** at June 30, 2021[189](index=189&type=chunk) - The reserve for lending-related commitments was **$2.0 million** at June 30, 2021, included in accrued expenses and other liabilities[191](index=191&type=chunk) - Management does not expect loss contingencies from legal actions to have a **material adverse effect** on the Company's financial position or liquidity[192](index=192&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Origin Bancorp's financial condition and results of operations for periods ended June 30, 2021, and 2020, covering key performance indicators, income, expenses, and balance sheet items [2.1 General Overview](index=45&type=section&id=2.1%20General%20Overview) Origin Bancorp, a financial holding company, generates revenue primarily from interest on loans and investments, with net interest margin as a key profitability metric - Origin Bank, founded in 1912, operates **44 banking centers** across Texas, North Louisiana, and Mississippi[197](index=197&type=chunk) - The majority of revenue comes from interest earned on loans and investments, and service charges and fees on deposit accounts[197](index=197&type=chunk) - Net interest margin is a key performance indicator, calculated as net interest income divided by average interest-earning assets[198](index=198&type=chunk) [2.2 2021 Second Quarter Highlights](index=45&type=section&id=2.2%202021%20Second%20Quarter%20Highlights) Q2 2021 achieved record net income of $27.7 million, driven by increased net interest income and a credit loss benefit, with improved deposit costs and returns | Metric | Q2 2021 (in thousands) | Q2 2020 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :--------------------- | :--------------------- | :-------------------- | :------- | | Net income | $27,733 | $4,957 | $22,776 | 459.47% | | Net interest income | $54,292 | $46,290 | $8,002 | 17.29% | | Provision for credit losses | $(5,609) (benefit) | $21,403 (expense) | $(27,012) | -126.21% | | Cost of total deposits | 0.22% | 0.54% | -0.32% | -59.26% | | Annualized return on average equity | 16.54% | 3.23% | 13.31% | 412.07% | | Annualized return on average assets | 1.49% | 0.31% | 1.18% | 380.65% | | Noninterest-bearing deposits (June 30) | $1,861,016 | $1,607,564 (Dec 31, 2020) | $253,452 | 15.77% | [2.3 Comparison of Results of Operations (Q2 2021 vs. Q2 2020)](index=46&type=section&id=2.3%20Comparison%20of%20Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202021%20and%202020) Q2 2021 saw increased net interest income and a credit loss benefit, but decreased noninterest income, a slight decrease in noninterest expense, and higher income tax expense [2.3.1 Net Interest Income and Net Interest Margin](index=46&type=section&id=2.3.1%20Net%20Interest%20Income%20and%20Net%20Interest%20Margin%20(3%20months)) Net interest income increased by $8.0 million to $54.3 million in Q2 2021, driven by lower deposit interest expense and higher loan interest income, with a slight margin increase - Net interest income increased by **$8.0 million** to **$54.3 million** for the three months ended June 30, 2021, compared to $46.3 million in Q2 2020[203](index=203&type=chunk) - Deposit interest expense decreased by **$3.2 million**, driven by a reduction in deposit interest rates (e.g., savings/interest-bearing transaction accounts down from 0.51% to 0.23%, time deposits down from 1.75% to 0.78%)[204](index=204&type=chunk) - Interest income from mortgage warehouse lines of credit increased by **$3.1 million** due to higher activity and new clients[205](index=205&type=chunk) - PPP deferred fees contributed **$2.9 million** in interest income for Q2 2021 due to SBA forgiveness[205](index=205&type=chunk) - Fully tax-equivalent net interest margin increased by **3 basis points** to **3.12%** for Q2 2021[206](index=206&type=chunk) | Metric | Q2 2021 (in thousands) | Q2 2020 (in thousands) | Change (in thousands) | | :------------------------------------ | :--------------------- | :--------------------- | :-------------------- | | Net interest income | $54,292 | $46,290 | $8,002 | | Fully tax-equivalent net interest margin | 3.12% | 3.09% | 0.03% | | Yield on interest-earning assets | 3.44% | 3.65% | -0.21% | | Rate paid on total interest-bearing liabilities | 0.53% | 0.89% | -0.36% | [2.3.2 Provision for Credit Losses](index=48&type=section&id=2.3.2%20Provision%20for%20Credit%20Losses%20(3%20months)) A $5.6 million credit loss benefit was recorded in Q2 2021, a $27.0 million decrease from prior year's expense, reflecting improved economic conditions and lower net charge-offs - Provision for credit losses was a **$5.6 million benefit** for Q2 2021, compared to a **$21.4 million expense** for Q2 2020, a **$27.0 million decrease**[215](index=215&type=chunk) - This decrease reflects an **improvement in forecasted economic conditions** compared to worsening conditions at June 30, 2020[215](index=215&type=chunk) - Net charge-offs were **$2.8 million** in Q2 2021, down from **$6.5 million** in Q2 2020, mainly due to fewer large commercial and industrial loan charge-offs[215](index=215&type=chunk) - The Company adopted CECL on January 1, 2020, and elected a **two-year delay** for its impact on regulatory capital[216](index=216&type=chunk)[217](index=217&type=chunk) [2.3.3 Noninterest Income](index=50&type=section&id=2.3.3%20Noninterest%20Income%20(3%20months)) Noninterest income decreased by $6.6 million to $12.4 million in Q2 2021, primarily due to lower mortgage banking and swap fee income, partially offset by other gains | Noninterest Income Component | Q2 2021 (in thousands) | Q2 2020 (in thousands) | $ Change (in thousands) | % Change | | :------------------------------------ | :--------------------- | :--------------------- | :---------------------- | :------- | | Mortgage banking revenue | $2,765 | $10,717 | $(7,952) | -74.2% | | Swap fee income | $24 | $1,527 | $(1,503) | -98.4% | | Loss on sales and disposals of other assets, net | $(42) | $(908) | $866 | -95.4% | | Limited partnership investment income | $801 | $9 | $792 | N/M | | Service charges and fees | $3,739 | $2,990 | $749 | 25.1% | | Total noninterest income | $12,438 | $19,076 | $(6,638) | -34.8% | - The decrease in mortgage banking revenue was mainly due to a **$7.5 million decrease** in the mortgage held for sale and pipeline fair value adjustment[224](index=224&type=chunk) - The decrease in swap fee income was due to higher volume of back-to-back swaps in Q2 2020[225](index=225&type=chunk) - Limited partnership investment income increased due to net valuation increases from investment performance[227](index=227&type=chunk) [2.3.4 Noninterest Expense](index=51&type=section&id=2.3.4%20Noninterest%20Expense%20(3%20months)) Noninterest expense slightly decreased by $388,000 to $37.8 million in Q2 2021, mainly due to lower salaries and benefits, partially offset by increased loan-related expenses | Noninterest Expense Component | Q2 2021 (in thousands) | Q2 2020 (in thousands) | $ Change (in thousands) | % Change | | :------------------------------------ | :--------------------- | :--------------------- | :---------------------- | :------- | | Salaries and employee benefits | $22,354 | $24,045 | $(1,691) | -7.0% | | Loan related expenses | $2,154 | $1,509 | $645 | 42.7% | | Total noninterest expense | $37,832 | $38,220 | $(388) | -1.0% | - The decrease in salaries and employee benefits was due to lower medical self-insurance cost (**$1.1 million**), incentive bonus (**$1.0 million**), and commissions (**$726,000**), partially offset by a **$1.2 million decrease** in loan origination cost deferrals related to PPP loans[231](index=231&type=chunk) - Loan related expenses increased by **$645,000**, driven by higher legal fees (**$327,000**) and repossession expenses (**$213,000**)[232](index=232&type=chunk) [2.3.5 Income Tax Expense](index=51&type=section&id=2.3.5%20Income%20Tax%20Expense%20(3%20months)) Income tax expense significantly increased to $6.8 million in Q2 2021, with the effective tax rate rising to 19.6% due to higher pre-tax income | Metric | Q2 2021 (in thousands) | Q2 2020 (in thousands) | $ Change (in thousands) | % Change | | :-------------------- | :--------------------- | :--------------------- | :---------------------- | :------- | | Income tax expense | $6,774 | $786 | $5,988 | 761.8% | | Effective tax rate | 19.6% | 13.7% | 5.9% | 43.1% | - The increase in effective tax rate was due to higher pre-tax income, which reduced the proportional impact of tax-exempt items[233](index=233&type=chunk) - The Company used the actual effective tax rate method for interim reporting due to significant variations in income tax expense and unreliable estimates of ordinary income under the annual effective tax rate method[234](index=234&type=chunk) [2.4 Comparison of Results of Operations (H1 2021 vs. H1 2020)](index=52&type=section&id=2.4%20Comparison%20of%20Results%20of%20Operations%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202021%20and%202020) H1 2021 saw increased net interest income and a credit loss benefit, but decreased noninterest income, increased noninterest expense, and substantially higher income tax expense [2.4.1 Net Interest Income and Net Interest Margin](index=52&type=section&id=2.4.1%20Net%20Interest%20Income%20and%20Net%20Interest%20Margin%20(6%20months)) Net interest income increased by $20.4 million to $109.5 million in H1 2021, driven by lower deposit interest and higher loan income, though net interest margin slightly decreased - Net interest income increased by **$20.4 million** to **$109.5 million** for the six months ended June 30, 2021, compared to $89.1 million in H1 2020[237](index=237&type=chunk) - Deposit interest expense decreased by **$9.7 million**, driven by a reduction in deposit rates (e.g., interest-bearing deposit accounts down from 0.77% to 0.25%, time deposits down from 1.87% to 0.86%)[238](index=238&type=chunk) - Interest income on mortgage warehouse lines of credit increased by **$9.4 million** due to higher activity and new clients[239](index=239&type=chunk) - PPP loans contributed an additional **$8.6 million** in interest income[239](index=239&type=chunk) - Fully tax-equivalent net interest margin decreased by **8 basis points** to **3.17%** for H1 2021, primarily due to decreasing loan yields[240](index=240&type=chunk) | Metric | H1 2021 (in thousands) | H1 2020 (in thousands) | Change (in thousands) | | :------------------------------------ | :--------------------- | :--------------------- | :-------------------- | | Net interest income | $109,531 | $89,100 | $20,431 | | Fully tax-equivalent net interest margin | 3.17% | 3.25% | -0.08% | | Yield on interest-earning assets | 3.51% | 3.98% | -0.47% | | Rate paid on total interest-bearing liabilities | 0.55% | 1.11% | -0.56% | [2.4.2 Provision for Credit Losses](index=54&type=section&id=2.4.2%20Provision%20for%20Credit%20Losses%20(6%20months)) A $4.2 million credit loss benefit was recorded in H1 2021, a $44.1 million decrease from prior year's expense, reflecting improved economic conditions and lower net charge-offs - Provision for credit losses was a **$4.2 million benefit** for H1 2021, compared to a **$39.9 million expense** for H1 2020, a **$44.1 million decrease**[247](index=247&type=chunk) - This decrease reflects an **improvement in forecasted economic conditions** compared to worsening conditions at June 30, 2020[247](index=247&type=chunk) - Net charge-offs were **$5.7 million** in H1 2021, down from **$7.6 million** in H1 2020[247](index=247&type=chunk) - The allowance for loan credit losses was **1.43% of total LHFI** at June 30, 2021, and **252.78% of nonperforming LHFI**[247](index=247&type=chunk) [2.4.3 Noninterest Income](index=55&type=section&id=2.4.3%20Noninterest%20Income%20(6%20months)) Noninterest income decreased by $1.7 million to $29.6 million in H1 2021, primarily due to lower mortgage banking and swap fee income, partially offset by investment and security gains | Noninterest Income Component | H1 2021 (in thousands) | H1 2020 (in thousands) | $ Change (in thousands) | % Change | | :------------------------------------ | :--------------------- | :--------------------- | :---------------------- | :------- | | Mortgage banking revenue | $7,342 | $13,486 | $(6,144) | -45.6% | | Swap fee income | $372 | $2,203 | $(1,831) | -83.1% | | Limited partnership investment income (loss) | $2,573 | $(420) | $2,993 | N/M | | Gains on sales of securities, net | $1,673 | $54 | $1,619 | N/M | | Loss on sales and disposals of other assets, net | $(80) | $(933) | $853 | -91.4% | | Total noninterest income | $29,569 | $31,220 | $(1,651) | -5.3% | - The decrease in mortgage banking revenue was primarily due to decreases of **$12.0 million** in mortgage held for sale and pipeline fair value adjustment and **$6.9 million** in MSR hedge impact[252](index=252&type=chunk) - Limited partnership investment income increased due to valuation increases from investment performance[254](index=254&type=chunk) - Gains on sales of securities increased due to movement out of lower yielding securities, with funds used to prepay FHLB advances[255](index=255&type=chunk) [2.4.4 Noninterest Expense](index=56&type=section&id=2.4.4%20Noninterest%20Expense%20(6%20months)) Noninterest expense increased by $3.0 million to $77.3 million in H1 2021, driven by FHLB prepayment fees and loan-related expenses, partially offset by lower salaries and benefits | Noninterest Expense Component | H1 2021 (in thousands) | H1 2020 (in thousands) | $ Change (in thousands) | % Change | | :------------------------------------ | :--------------------- | :--------------------- | :---------------------- | :------- | | Other expenses | $3,070 | $1,284 | $1,786 | 139.1% | | Loan related expenses | $3,859 | $2,651 | $1,208 | 45.6% | | Salaries and employee benefits | $44,679 | $46,033 | $(1,354) | -2.9% | | Total noninterest expense | $77,268 | $74,317 | $2,951 | 4.0% | - Other noninterest expense increased by **$1.8 million**, including **$1.6 million** in prepayment fees for early termination of long-term FHLB advances[259](index=259&type=chunk) - Loan related expenses increased by **$1.2 million**, driven by higher legal fees (**$578,000**) and repossession expenses (**$409,000**)[260](index=260&type=chunk) - Salaries and employee benefits decreased by **$1.4 million**, due to lower medical self-insurance costs and a combined decrease in incentive compensation and bonuses[261](index=261&type=chunk) [2.4.5 Income Tax Expense](index=56&type=section&id=2.4.5%20Income%20Tax%20Expense%20(6%20months)) Income tax expense substantially increased to $12.8 million in H1 2021, with the effective tax rate rising to 19.4% due to significantly higher pre-tax income | Metric | H1 2021 (in thousands) | H1 2020 (in thousands) | $ Change (in thousands) | % Change | | :-------------------- | :--------------------- | :--------------------- | :---------------------- | :------- | | Income tax expense | $12,783 | $359 | $12,424 | 3460.7% | | Effective tax rate | 19.4% | 5.9% | 13.5% | 228.8% | - The increase in effective tax rate was primarily due to the increase in pre-tax income, which made the proportional effect of tax-exempt items smaller[262](index=262&type=chunk) [2.5 Comparison of Financial Condition (June 30, 2021 vs. Dec 31, 2020)](index=57&type=section&id=2.5%20Comparison%20of%20Financial%20Condition%20at%20June%2030%2C%202021%2C%20and%20December%2031%2C%202020) Total assets decreased to $7.27 billion, driven by loan portfolio decline, while nonperforming assets increased, allowance for loan losses decreased, deposits grew, and borrowings significantly reduced [2.5.1 General Financial Condition](index=57&type=section&id=2.5.1%20General%20Financial%20Condition) Total assets decreased by $360.2 million to $7.27 billion, primarily due to reduced LHFI and loans held for sale, partially offset by increased cash - Total assets decreased by **$360.2 million (4.7%)** to **$7.27 billion** at June 30, 2021, from $7.63 billion at December 31, 2020[264](index=264&type=chunk) - The decrease was primarily attributable to a **$328.5 million decrease** in LHFI and a **$66.8 million decrease** in loans held for sale[264](index=264&type=chunk) - This was partially offset by a **$67.5 million increase** in cash and cash equivalents[264](index=264&type=chunk) [2.5.2 Loan Portfolio](index=57&type=section&id=2.5.2%20Loan%20Portfolio) The LHFI portfolio decreased by $328.5 million to $5.40 billion, driven by declines in mortgage warehouse and PPP loans, partially offset by real estate loan growth - LHFI decreased by **$328.5 million (5.7%)** to **$5.40 billion** at June 30, 2021, from $5.72 billion at December 31, 2020[267](index=267&type=chunk) - Key decreases: mortgage warehouse lines of credit (**$218.7 million**) and PPP loans (**$176.6 million**)[267](index=267&type=chunk) - Key increases: commercial real estate (**$92.6 million**) and residential real estate loans (**$81.2 million**)[267](index=267&type=chunk) - At June 30, 2021, **$369.9 million** in PPP loans were outstanding, with **$390.6 million** already forgiven[268](index=268&type=chunk) | Loan Type | June 30, 2021 (in thousands) | December 31, 2020 (in thousands) | $ Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Commercial real estate | $1,480,536 | $1,387,939 | $92,597 | 6.7% | | Construction/land/land development | $497,170 | $531,860 | $(34,690) | -6.5% | | Residential real estate | $966,301 | $885,120 | $81,181 | 9.2% | | PPP | $369,910 | $546,519 | $(176,609) | -32.3% | | Commercial and industrial (excl. PPP) | $1,200,881 | $1,271,343 | $(70,462) | -5.5% | | Mortgage warehouse lines of credit | $865,255 | $1,084,001 | $(218,746) | -20.2% | | Consumer | $16,253 | $17,991 | $(1,738) | -9.7% | | Total LHFI | $5,396,306 | $5,724,773 | $(328,467) | -5.7% | [2.5.3 Nonperforming Assets](index=58&type=section&id=2.5.3%20Nonperforming%20Assets) Total nonperforming assets increased to $36.8 million, with nonperforming LHFI rising by $4.4 million, primarily due to commercial and industrial and residential real estate loans - Total nonperforming assets increased to **$36.8 million** at June 30, 2021, from $28.8 million at December 31, 2020[278](index=278&type=chunk) - Nonperforming LHFI increased by **$4.4 million (16.6%)** to **$30.5 million**, driven by a **$7.0 million** commercial and industrial loan and two residential real estate loans totaling **$4.5 million**[278](index=278&type=chunk) | Nonperforming Asset Type | June 30, 2021 (in thousands) | December 31, 2020 (in thousands) | $ Change (in thousands) | % Change | | :------------------------------------ | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Total nonperforming LHFI | $30,502 | $26,149 | $4,353 | 16.6% | | Nonperforming loans held for sale | $1,606 | $681 | $925 | 135.8% | | Total nonperforming loans | $32,108 | $26,830 | $5,278 | 19.7% | | Total other real estate owned | $4,035 | $1,584 | $2,451 | 154.7% | | Other repossessed assets owned | $688 | $343 | $345 | 100.6% | | Total nonperforming assets | $36,831 | $28,757 | $8,074 | 28.1% | | Ratio of nonperforming LHFI to total LHFI | 0.57% | 0.46% | 0.11% | 23.9% | | Ratio of nonperforming assets to total assets | 0.51% | 0.38% | 0.13% | 34.2% | [2.5.4 Allowance for Loan Losses](index=59&type=section&id=2.5.4%20Allowance%20for%20Loan%20Losses) The allowance for loan credit losses decreased by $9.6 million to $77.1 million, reflecting improved economic forecasts, with the ratio to total LHFI at 1.43% - The allowance for loan credit losses decreased by **$9.6 million (11.0%)** to **$77.1 million** at June 30, 2021, from $86.7 million at December 31, 2020[288](index=288&type=chunk) - The ratio of allowance for loan credit losses to total LHFI was **1.43%** at June 30, 2021, compared to 1.51% at June 30, 2020[288](index=288&type=chunk) - The decrease in the allowance was primarily due to **improved forecasted economic conditions**[283](index=283&type=chunk) | Metric | June 30, 2021 (in thousands) | December 31, 2020 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Balance at beginning of period | $86,670 | $37,520 | | Provision for loan losses (6 months) | $(3,864) | $39,274 | | Net charge-offs (6 months) | $5,702 | $7,574 | | Balance at end of period | $77,104 | $86,670 | | Ratio of allowance for loan credit losses to Nonperforming LHFI | 252.8% | 331.45% | | Ratio of allowance for loan credit losses to LHFI | 1.43% | 1.51% | [2.5.5 Securities](index=61&type=section&id=2.5.5%20Securities) The securities portfolio decreased by $31.6 million to $1.02 billion, due to sales of lower-yielding securities and declining AFS values from rising interest rates - The securities portfolio totaled **$1.02 billion** at June 30, 2021, a decrease of **$31.6 million (3.0%)** from $1.05 billion at December 31, 2020[290](index=290&type=chunk) - The decrease was due to sales of lower-yielding securities and a decline in the value of available-for-sale securities from rising long-term interest rates[290](index=290&type=chunk) [2.5.6 Deposits](index=62&type=section&id=2.5.6%20Deposits) Total deposits increased by $277.0 million to $6.03 billion, driven by money market and noninterest-bearing demand deposits, with a decreased average cost of interest-bearing deposits - Total deposits increased by **$277.0 million (4.8%)** to **$6.03 billion** at June 30, 2021, from $5.75 billion at December 31, 2020[294](index=294&type=chunk) - Increases in money market (**$294.2 million**) and noninterest-bearing demand deposits (**$253.5 million**) drove the growth, partially offset by a **$244.1 million decline** in interest-bearing demand deposits[294](index=294&type=chunk) | Deposit Type | June 30, 2021 (in thousands) | December 31, 2020 (in thousands) | $ Change (in thousands) | % Change | | :-------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Noninterest-bearing demand | $1,861,016 | $1,607,564 | $253,452 | 15.8% | | Interest-bearing demand | $1,234,762 | $1,478,818 | $(244,056) | -16.5% | | Money market | $2,089,119 | $1,794,915 | $294,204 | 16.4% | | Time deposits | $612,909 | $664,766 | $(51,857) | -7.8% | | Savings | $230,546 | $205,252 | $25,294 | 12.3% | | Total deposits | $6,028,352 | $5,751,315 | $277,037 | 4.8% | - The average annualized rate paid on interest-bearing deposits decreased to **0.34%** for H1 2021 from 1.03% for H1 2020, due to falling interest rates and increased lower-cost Louisiana market deposits[296](index=296&type=chunk) [2.5.7 Borrowings](index=63&type=section&id=2.5.7%20Borrowings) Short-term FHLB advances decreased by $650.0 million, and long-term advances declined, driven by PPP forgiveness and increased deposits, improving liquidity - Short-term FHLB advances decreased by **$650.0 million** at June 30, 2021, compared to December 31, 2020[298](index=298&type=chunk) - Long-term FHLB advances declined by **$13.6 million**[298](index=298&type=chunk) - The decrease in FHLB advances was due to PPP forgiveness payments, increases in non-brokered deposits, and declines in warehouse loan balances, enhancing liquidity[298](index=298&type=chunk) - The Company prepaid **$13.1 million** in long-term FHLB advances, incurring **$1.6 million** in prepayment fees[298](index=298&type=chunk) - At June 30, 2021, the Company was eligible to borrow an additional **$872.1 million** from the FHLB[299](index=299&type=chunk) [2.5.8 Liquidity and Capital Resources](index=63&type=section&id=2.5.8%20Liquidity%20and%20Capital%20Resources) Management actively monitors liquidity, with cash and liquid securities increasing to 15.8% of total assets, and maintains significant off-balance sheet commitments - Management monitors liquidity daily and weekly, considering on-balance sheet and off-balance sheet sources and demands for funds[301](index=301&type=chunk) - Cash and liquid securities as a percentage of total assets increased to **15.8%** at June 30, 2021, from 13.6% at December 31, 2020[304](index=304&type=chunk) - Key liquidity sources include core deposits, investment securities, cash and cash equivalents, loan repayments, federal funds lines of credit, and FHLB advances[305](index=305&type=chunk) | Commitment Type | Less than One Year (in thousands) | One-Three Years (in thousands) | Three-Five Years (in thousands) | Greater than Five Years (in thousands) | Total (in thousands) | | :------------------------------------ | :------------------------------ | :----------------------------- | :------------------------------ | :----------------------------------- | :------------------- | | FHLB advances | $0 | $0 | $508 | $256,616 | $257,124 | | Time deposits | $467,050 | $136,730 | $9,129 | $0 | $612,909 | | Subordinated debentures | $0 | $0 | $0 | $160,826 | $160,826 | | Operating lease obligations | $4,678 | $8,126 | $4,523 | $11,113 | $28,440 | | Commitments to extend credit | $695,464 | $469,447 | $212,740 | $41,596 | $1,419,247 | | Standby letters of credit | $41,346 | $9,680 | $0 | $0 | $51,026 | [2.5.9 Stockholders' Equity](index=65&type=section&id=2.5.9%20Stockholders'%20Equity) Stockholders' equity increased to $688.2 million, driven by net income, partially offset by other comprehensive loss and dividends, with $28.0 million remaining for stock repurchases | Metric | January 1, 2021 (in thousands) | June 30, 2021 (in thousands) | Change (in thousands) | | :------------------------------------ | :----------------------------- | :--------------------------- | :-------------------- | | Total Stockholders' Equity | $647,150 | $688,235 | $41,085 | | Net income | - | $53,246 | $53,246 | | Other comprehensive income, net of tax | - | $(6,735) | $(6,735) | | Dividends declared - common stock | - | $(5,402) | $(5,402) | - During Q1 2021, the Company repurchased **37,568 shares** of common stock for **$1.3 million** at an average price of **$33.42 per share**[321](index=321&type=chunk) - As of June 30, 2021, approximately **$28.0 million** remained authorized for repurchase under the stock buyback program[321](index=321&type=chunk) [2.5.10 Regulatory Capital Requirements](index=66&type=section&id=2.5.10%20Regulatory%20Capital%20Requirements) Both Origin Bancorp and Origin Bank complied with all regulatory capital requirements, with the Bank classified as 'well capitalized,' and growth is controlled to maintain capital levels - The Company and the Bank were in compliance with all applicable regulatory capital requirements at June 30, 2021, and December 31, 2020[322](index=322&type=chunk) - Origin Bank was classified as **'well capitalized'** for prompt corrective action regulations[322](index=322&type=chunk) | Capital Ratio | Origin Bancorp, Inc. (June 30, 2021) | Origin Bank (June 30, 2021) | | :------------------------------------ | :----------------------------------- | :-------------------------- | | Common equity Tier 1 capital (to risk-weighted assets) | 11.03% | 11.55% | | Tier 1 capital (to risk-weighted assets) | 11.19% | 11.55% | | Total capital (to risk-weighted assets) | 14.85% | 13.89% | | Tier 1 capital (to average assets) | 8.87% | 9.15% | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=67&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section discusses the Company's primary market risk, interest rate volatility, managed through balance sheet structuring and derivatives, and addresses inflation and LIBOR transition [3.1 Interest Rate Sensitivity and Market Risk](index=67&type=section&id=3.1%20Interest%20Rate%20Sensitivity%20and%20Market%20Risk) The Company's primary market risk is interest rate volatility, managed by the ALM Committee, but current modeling indicates vulnerability to declining interest rates outside policy limits - The primary component of market risk is **interest rate volatility**, which impacts income, expense, and market value of assets and liabilities[324](index=324&type=chunk)[325](index=325&type=chunk) - Interest rate risk is managed by the Bank's Asset-Liability Management Committee, which uses simulation models and shock analyses[327](index=327&type=chunk)[329](index=329&type=chunk) - Internal policy specifies that estimated net interest income at risk for a one-year period should not decline by more than **8.0% for a 100 basis point shift**, **15.0% for a 200 basis point shift**, etc[330](index=330&type=chunk) - The Company is modeling **outside policy** in the down 100 and down 200 basis point rate scenarios, indicating potential vulnerability to declining interest rates[330](index=330&type=chunk) | Change in Interest Rates (basis points) | % Change in Net Interest Income (June 30, 2021) | % Change in Fair Value of Equity (June 30, 2021) | | :-------------------------------------- | :---------------------------------------------- | :--------------------------------------------- | | +400 | 20.3% | 3.2% | | +300 | 14.4% | 1.8% | | +200 | 9.4% | 1.7% | | +100 | 4.3% | 1.1% | | -100 | (9.3)% | (5.9)% | | -200 | (16.1)% | (2.2)% | [3.2 Impact of Inflation](index=68&type=section&id=3.2%20Impact%20of%20Inflation) Inflation increases costs, but interest rates more significantly affect performance, potentially decreasing investment and loan market values, impacting liquidity, earnings, and equity - Inflation generally increases the costs of funds and operating overhead[333](index=333&type=chunk) - Interest rates generally have a more significant effect on a financial institution's performance than general levels of inflation[333](index=333&type=chunk) - Inflation and related increases in interest rates can decrease the market value of investments and loans, potentially affecting liquidity, earnings, and stockholders' equity[333](index=333&type=chunk) [3.3 Market Risk (LIBOR transition)](index=68&type=section&id=3.3%20Market%20Risk%20(LIBOR%20transition)) The transition away from LIBOR to alternative reference rates is a market risk, with its impact on the Company's business being monitored - Regulators are encouraging a transition away from LIBOR to alternative reference rates, expected to continue over the next twenty-four months[334](index=334&type=chunk) - The impact of any replacement alternatives for LIBOR on the Company's business is a market risk[334](index=334&type=chunk) [Item 4. Controls and Procedures](index=68&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of June 30, 2021 - Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2021[335](index=335&type=chunk) - They concluded that the disclosure controls and procedures were effective, providing reasonable assurance of achieving control objectives[335](index=335&type=chunk) Part II - OTHER INFORMATION [Item 1. Legal Proceedings](index=69&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings information is referenced in Note 12 - Commitments and Contingencies - Loss Contingencies - Legal proceedings information is cross-referenced to Note 12 - Commitments and Contingencies - Loss Contingencies[337](index=337&type=chunk) [Item 1A. Risk Factors](index=69&type=section&id=Item%201A.%20Risk%20Factors) Investors should carefully consider the risk factors disclosed in Part I, Item 1A of the Company's 2020 Form 10-K - Investors should consider risk factors disclosed in Part I, Item 1A of the 2020 Form 10-K[338](index=338&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=69&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company's board authorized a $40 million stock buyback program in July 2019, with no repurchases in Q2 2021 and $28.0