Financial & Operational Highlights First Quarter 2025 Performance Summary Origin Bancorp reported a strong first quarter of 2025, with significant growth in profitability compared to the previous quarter, driven by an expanded Net Interest Margin and progress on the 'Optimize Origin' initiative Q1 2025 Key Financial Metrics vs. Q4 2024 | Metric | Q1 2025 | Q4 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $22.4 million | $14.3 million | +57.0% | | Diluted EPS | $0.71 | $0.46 | +$0.25 | | PTPP Earnings | $32.0 million | $12.6 million | +154.0% | | Net Interest Margin (FTE) | 3.44% | 3.33% | +11 bps | | ROAA (annualized) | 0.93% | 0.57% | +36 bps | - Total loans held for investment (LHFI) increased slightly by 0.2% to $7.59 billion, while total deposits grew by 1.4% to $8.34 billion compared to the linked quarter12 Optimize Origin Initiative Launched in January 2025, 'Optimize Origin' is a strategic initiative focused on productivity, balance sheet optimization, and culture, aiming to exceed a 1% ROAA run rate by Q4 2025 - The initiative is built on three primary pillars: Productivity, Delivery & Efficiency; Balance Sheet Optimization; and Culture & Employee Engagement4 - Key actions include branch consolidation, headcount reduction, securities and capital optimization, and mortgage restructuring4 - The company believes these actions will drive an estimated annual pre-tax pre-provision earnings improvement of approximately $23.4 million4 Results of Operations Net Interest Income and Net Interest Margin Net interest income for Q1 2025 slightly increased to $78.5 million, with the fully tax equivalent net interest margin expanding by 11 basis points to 3.44% due to reduced cost of liabilities - NII increased by $110,000 QoQ, primarily due to a $7.7 million decrease in interest expense on deposits, partially offset by a $9.9 million decrease in interest income from loans held for investment (LHFI)6 - The average rate on interest-bearing deposits decreased by 38 basis points to 3.23% in Q1 2025 from 3.61% in Q4 20247 - The decrease in LHFI interest income was driven by lower average loan balances, two fewer days in the quarter, and a 14 basis point decline in the average loan yield to 6.33%10 - The Federal Reserve's rate reductions in late 2024, totaling 100 basis points, have influenced market rates, with the target range holding at 4.25% to 4.50% throughout Q1 202511 Noninterest Income Noninterest income significantly increased to $15.6 million, primarily due to the absence of a prior quarter's $14.6 million securities sale loss and a seasonal rise in insurance commission income - The $15.9 million QoQ increase was mainly driven by the absence of the prior quarter's $14.6 million loss on securities sales and a $2.5 million increase in insurance commission and fee income22 - The increase in insurance income was driven by seasonal annual contingency fees recognized in the first quarter23 - These gains were partially offset by a $1.6 million decrease in limited partnership investment income due to fair value adjustments2223 Noninterest Expense Noninterest expense decreased by $3.4 million (5.1%) to $62.1 million, primarily due to the non-recurrence of a prior quarter's contingency expense and reduced professional services and marketing costs - The decrease was primarily driven by a $3.1 million reduction in other noninterest expense (due to a prior quarter contingency reserve), an $814,000 decrease in professional services, and a $796,000 decrease in advertising242526 - Salaries and employee benefit expense increased by $1.3 million, mainly because the prior quarter included a $1.7 million Employee Retention Credit (ERC), which reduced that quarter's expense27 Credit Quality Credit quality metrics weakened in Q1 2025, with increases in past due loans, nonperforming loans, and classified loans, leading to a $3.4 million provision for credit losses Key Credit Quality Metrics (Q1 2025 vs. Q4 2024) | Metric | Q1 2025 | Q4 2024 | Change | | :--- | :--- | :--- | :--- | | Past due LHFI | $72.8M | $42.4M | +$30.4M | | Nonperforming LHFI | $81.4M | $75.0M | +$6.4M | | Classified loans | $127.7M | $118.8M | +$8.9M | | Provision (benefit) for credit losses | $3.4M | ($5.4M) | +$8.8M | | Net charge-offs (recoveries) | $2.7M | ($0.6M) | +$3.3M | | Nonperforming LHFI to LHFI | 1.07% | 0.99% | +0.08% | - The $30.3 million increase in past due loans was primarily attributed to 11 relationships totaling $39.8 million across various real estate and commercial loan types16 - The increase in nonperforming loans was mainly driven by two relationships totaling $8.2 million, primarily in residential real estate17 - Classified and nonperforming loans continue to be negatively impacted by litigation related to a former banker in the East Texas market18 Financial Condition Loans Total loans held for investment (LHFI) at March 31, 2025, reached $7.59 billion, showing minimal growth driven by multi-family and mortgage warehouse loans, offset by commercial real estate and construction loan decreases - Total LHFI increased by $11.8 million QoQ29 - Key growth areas were multi-family real estate (+$64.3 million) and mortgage warehouse (MW LOC) loans (+$55.1 million)29 - These increases were offset by decreases in commercial real estate (-$93.6 million) and construction/land/land development loans (-$65.4 million)29 Securities The total securities portfolio grew by $58.8 million (5.3%) to $1.18 billion, driven by purchases, with an improved unrealized loss position and shortened portfolio duration - Total securities increased by 5.3% QoQ, driven by $73.1 million in purchases35 - Accumulated other comprehensive loss (AOCI) decreased by $15.6 million (14.7%) to $90.4 million35 - The weighted average effective duration of the portfolio decreased from 4.46 years to 4.10 years35 Deposits Total deposits increased by $115.3 million (1.4%) to $8.34 billion, primarily due to a significant rise in money market deposits, despite declines in time and interest-bearing demand deposits - The 1.4% QoQ increase in total deposits was mainly due to a $278.9 million rise in money market deposits35 - This was partially offset by decreases in time deposits (-$78.0 million) and interest-bearing demand deposits (-$67.1 million)35 - Noninterest-bearing deposits as a percentage of total deposits decreased to 22.7% from 23.1% in the prior quarter35 Subordinated Debentures As part of 'Optimize Origin,' the company redeemed $70.0 million in subordinated debentures, reducing the balance by 44.0% to $89.6 million and projecting $2.1 million in annualized interest expense savings - Total subordinated debentures decreased by $70.3 million, or 44.0%, from the linked quarter due to a $70.0 million redemption35 - This redemption is projected to save approximately $2.1 million in annualized interest expense35 Financial Tables Selected Quarterly Financial Data This table provides a five-quarter summary of key financial data, including income statement highlights, balance sheet figures, and key performance and capital ratios, allowing for trend analysis Consolidated Quarterly Statements of Income This table presents the company's detailed consolidated statements of income for the last five quarters, breaking down interest and noninterest income and expenses Consolidated Balance Sheets This table shows the company's detailed consolidated balance sheets at the end of each of the last five quarters, itemizing assets, liabilities, and stockholders' equity Loan Data This section provides a detailed breakdown of the loan portfolio by category, nonperforming assets, past due loans, and a roll-forward of the allowance for loan credit losses over the past five quarters Average Balances and Yields/Rates This table details the average balances for various asset and liability categories and their corresponding annualized yields and rates, providing insight into the components of net interest margin for the current, linked, and prior-year quarters Notable Items This table isolates and quantifies the pre-tax and EPS impact of specific significant or non-recurring items over the past five quarters, such as costs related to questioned banker activity, strategic initiatives, and gains/losses on securities Non-GAAP Reconciliations This section provides detailed reconciliations for non-GAAP financial measures used in the report, such as PTPP earnings, tangible book value per common share, and ROATCE, to their most directly comparable GAAP measures Forward-Looking Statements This section cautions investors that the report contains forward-looking statements subject to numerous risks and uncertainties, including economic conditions, interest rate changes, and regulatory shifts, which could cause actual results to differ materially - The report contains forward-looking statements concerning future financial performance, growth strategies, and other projections which are inherently uncertain40 - A comprehensive list of risk factors is provided, including economic conditions, interest rate volatility, asset quality deterioration, regulatory compliance, and operational risks, which could cause actual results to differ from projections40 - The company advises against placing undue reliance on these statements and does not commit to updating them42
Origin Bank(OBK) - 2025 Q1 - Quarterly Results