Origin Bank(OBK) - 2025 Q2 - Quarterly Results

Executive Summary & Strategic Initiatives This section summarizes Q2 2025 earnings and the 'Optimize Origin' initiative for financial and cultural enhancement Second Quarter 2025 Earnings Highlights Origin Bancorp, Inc. reported decreased net income and diluted EPS for Q2 2025, while advancing the 'Optimize Origin' plan for financial enhancement | Metric | Q2 2025 (Millions) | Q1 2025 (Millions) | Change (Millions) | % Change | | :----------------------- | :------------------ | :------------------ | :---------------- | :------- | | Net Income | $14.6 | $22.4 | $(7.8) | -34.8% | | Diluted EPS | $0.47 | $0.71 | $(0.24) | -33.8% | | PTPP Earnings | $21.5 | $32.0 | $(10.5) | -32.8% | - Net interest income reached $82.1 million, an increase of $3.7 million (4.7%) from the linked quarter, marking its highest level in the past nine quarters[3] Optimize Origin Initiative The 'Optimize Origin' initiative aims to achieve elite financial performance and enhance company culture through strategic pillars - The initiative is built on three primary pillars: - Productivity, Delivery & Efficiency - Balance Sheet Optimization - Culture & Employee Engagement[4] - Near-term target: greater than a 1% ROAA run rate by Q4 2025, with an ultimate target of top quartile ROAA[4] - Actions taken are expected to drive an annual earnings improvement of approximately $34.2 million on a pre-tax pre-provision basis, an increase of $10.8 million since the last quarterly update due to additional benefits from increasing Argent Financial ownership and further securities portfolio optimization[4] Results of Operations for the Quarter Ended June 30, 2025 This section details Q2 2025 financial performance, including net interest income, credit quality, and noninterest income and expenses Net Interest Income and Net Interest Margin Net interest income and fully tax equivalent net interest margin expanded in Q2 2025, driven by higher loan income and strategic bond portfolio optimization | Metric | Q2 2025 | Q1 2025 | Change | | :--------------------------------- | :------ | :------ | :----- | | Net Interest Income (Millions) | $82.1 | $78.4 | $3.7 | | NIM-FTE | 3.61% | 3.44% | +17 bps| | Yield on Interest-Earning Assets | 5.87% | 5.79% | +8 bps | | Rate Paid on Interest-Bearing Liabilities | 3.25% | 3.30% | -5 bps | - The increase in net interest income was primarily driven by a $4.1 million increase in interest income earned on LHFI and decreases of $1.6 million and $1.1 million in interest expense paid on interest-bearing deposits and subordinated debentures, respectively[5] - A bond portfolio optimization strategy involved selling $215.8 million of lower-yielding securities (2.60% yield) and purchasing $201.8 million of higher-yielding securities (5.23% yield), resulting in a $14.4 million realized loss but an estimated annual increase in net interest income of $5.6 million and a 6 basis point positive impact to NIM-FTE over twelve months[9][13] Credit Quality Credit quality showed mixed results in Q2 2025, with decreased past due loans but increased nonperforming loans, alongside reduced provision for credit losses | Metric | Q2 2025 (Thousands) | Q1 2025 (Thousands) | Change (Thousands) | % Change | | :-------------------------------- | :------------------ | :------------------ | :----------------- | :------- | | Past due LHFI | $67,626 | $72,774 | $(5,148) | -7.1% | | Past due 30-89 days and still accruing | $12,495 | $42,587 | $(30,092) | -70.7% | | Total nonperforming LHFI | $85,315 | $81,368 | $3,947 | +4.9% | | Provision for credit losses | $2,862 | $3,444 | $(582) | -16.9% | | Net charge-offs | $2,300 | $2,728 | $(428) | -15.7% | - Nonperforming LHFI to LHFI ratio increased to 1.11% in Q2 2025 from 1.07% in Q1 2025[15][17] - Allowance for loan credit losses (ALCL) to nonperforming LHFI decreased to 108.33% from 113.08% in the linked quarter[15] Noninterest Income Noninterest income significantly decreased in Q2 2025 due to a loss on securities sales, partially offset by increased swap fee income | Metric | Q2 2025 (Millions) | Q1 2025 (Millions) | Change (Millions) | % Change | | :-------------------------------- | :------------------ | :------------------ | :---------------- | :------- | | Noninterest Income | $1.4 | $15.6 | $(14.2) | -91.2% | | Loss on sales of securities, net | $(14.4) | $0.0 | $(14.4) | N/A | | Insurance commission and fee income | $6.7 | $7.9 | $(1.2) | -15.2% | | Swap fee income | $1.4 | $0.5 | $0.9 | +180.0% | - The loss on sales of securities was a direct result of the bond portfolio optimization strategy[20] - Swap fee income increased due to a favorable interest rate environment and increased focus on marketing customer swaps as part of 'Optimize Origin'[22] Noninterest Expense Noninterest expense remained stable in Q2 2025, with decreases in occupancy costs offset by increases in salaries and data processing expenses | Metric | Q2 2025 (Millions) | Q1 2025 (Millions) | Change (Thousands) | % Change | | :-------------------------- | :------------------ | :------------------ | :----------------- | :------- | | Noninterest Expense | $62.0 | $62.1 | $(85) | -0.1% | | Occupancy and equipment, net | $7.2 | $8.5 | $(1,357) | -15.9% | | Salaries and employee benefits | $38.3 | $37.7 | $549 | +1.5% | | Data processing | $3.4 | $3.0 | $475 | +15.8% | - The decrease in occupancy and equipment costs was primarily due to expenses incurred in the linked quarter related to banking center closures as part of 'Optimize Origin'[24] - The increase in salaries and employee benefit expense was mainly due to an adjustment of the incentive compensation accrual in the linked quarter[24] Financial Condition This section reviews the company's balance sheet at June 30, 2025, focusing on changes in loans, securities, deposits, and borrowings Loans Total loans held for investment increased in Q2 2025, driven by growth in mortgage warehouse lines and multi-family real estate | Metric | June 30, 2025 (Billions) | March 31, 2025 (Billions) | Change (Millions) | % Change | | :-------------------------------- | :------------------------ | :------------------------ | :---------------- | :------- | | Total LHFI | $7.68 | $7.59 | $98.9 | +1.3% | | MW LOC | $574.7 | $404.1 | $170.6 | +42.2% | | Multi-family real estate | $529.9 | $489.8 | $40.1 | +8.2% | | Construction/land/land development | $653.7 | $798.6 | $(144.9) | -18.1% | Securities Total securities decreased in Q2 2025 due to maturities and net sales from a bond portfolio optimization strategy, improving comprehensive loss | Metric | June 30, 2025 (Billions) | March 31, 2025 (Billions) | Change (Millions) | % Change | | :-------------------------------- | :------------------------ | :------------------------ | :---------------- | :------- | | Total Securities | $1.14 | $1.18 | $(34.9) | -3.0% | | Accumulated other comprehensive loss, net of taxes | $(73.6) | $(90.4) | $16.9 | -18.6% | | Weighted average effective duration | 4.52 years | 4.10 years | +0.42 years | +10.2% | - The decrease in securities was primarily due to maturities of short-term investments and net sales of available-for-sale securities during the current quarter[28] Deposits Total deposits decreased in Q2 2025, influenced by seasonal public fund movements and declines in interest-bearing demand and time deposits | Metric | June 30, 2025 (Billions) | March 31, 2025 (Billions) | Change (Millions) | % Change | | :-------------------------------- | :------------------------ | :------------------------ | :---------------- | :------- | | Total Deposits | $8.12 | $8.34 | $(215.4) | -2.6% | | Noninterest-bearing deposits | $1.84 | $1.89 | $(47.1) | -2.5% | | Interest-bearing demand deposits | N/A | N/A | $(159.0) | N/A | | Money market deposits | N/A | N/A | $92.6 | N/A | - Noninterest-bearing deposits as a percentage of total deposits remained stable at 22.7% at both June 30, 2025, and March 31, 2025[28] Borrowings FHLB advances and other borrowings significantly increased in Q2 2025 to meet current liquidity needs | Metric | June 30, 2025 (Millions) | March 31, 2025 (Millions) | Change (Millions) | % Change | | :-------------------------------- | :------------------------ | :------------------------ | :---------------- | :------- | | FHLB advances and other borrowings | $127.8 | $12.5 | $115.3 | +922.4% | | Average FHLB advances | $104.5 | $6.2 | $98.3 | +1585.5% | | Average rate paid on FHLB advances and other borrowings | 4.36% | 2.75% | +1.61% | +58.5% | - The increase in FHLB advances was primarily due to an increase in FHLB short-term borrowings of $115.0 million used primarily to meet current liquidity needs[34] Company Information This section details the Q2 2025 earnings call, company overview, and disclosures on non-GAAP measures and forward-looking statements Conference Call Details Origin Bancorp, Inc. will host a conference call on July 24, 2025, to discuss its Q2 2025 financial results - Conference call to discuss Q2 2025 results on Thursday, July 24, 2025, at 8:00 a.m. Central Time[29] - Access via phone: +1 (888) 700-7550 (U.S. Toll Free), Conference ID: 05905. Webcast available at www.origin.bank under investor relations[29] About Origin Bancorp, Inc. Origin Bancorp, Inc. is a Louisiana-headquartered financial holding company providing personalized banking services across multiple states through Origin Bank - Origin Bancorp, Inc. is a financial holding company headquartered in Ruston, Louisiana[31] - Origin Bank, founded in 1912, provides personalized relationship banking and operates over 55 locations in multiple states[31] Non-GAAP Financial Measures The company uses supplemental non-GAAP financial measures like PTPP earnings and tangible book value for additional performance insights - Non-GAAP measures used include PTPP earnings, PTPP ROAA, tangible book value per common share, ROATCE, and core efficiency ratio[32] - These measures are supplemental and should be viewed in addition to, not as an alternative for, GAAP reported results[32] Forward-Looking Statements This section contains forward-looking statements subject to various risks and uncertainties, and readers are cautioned against undue reliance - Forward-looking statements cover future financial performance, business and growth strategies, projected plans, and objectives[35] - Key risk factors include economic conditions, changes in benchmark interest rates, deterioration of asset quality, regulatory requirements, and operational risks[35] - The company does not undertake any obligation to publicly update or review any forward-looking statement[35] Financial Tables (Unaudited) This section presents unaudited financial tables, covering quarterly and year-to-date data, consolidated statements, balance sheets, loan data, and non-GAAP reconciliations Selected Quarterly Financial Data This table summarizes key quarterly financial performance metrics and balance sheet data for Origin Bancorp, Inc | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------------------- | :------ | :------ | :------ | | Net income (thousands) | $14,647 | $22,411 | $20,989 | | Diluted EPS | $0.47 | $0.71 | $0.67 | | Total LHFI (thousands) | $7,684,446 | $7,585,526 | $7,959,171 | | Total deposits (thousands) | $8,123,036 | $8,338,412 | $8,510,842 | | NIM-FTE | 3.61% | 3.44% | 3.17% | | ROAA (annualized) | 0.60% | 0.93% | 0.84% | | Tangible book value per common share | $33.33 | $32.43 | $29.77 | Selected Year-To-Date Financial Data This table provides a year-to-date overview of Origin Bancorp, Inc.'s financial performance for the six months ended June 30, 2025 | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net interest income (thousands) | $160,595 | $147,213 | | Net income (thousands) | $37,058 | $43,621 | | Diluted EPS | $1.18 | $1.40 | | NIM-FTE | 3.52% | 3.18% | | ROAA (annualized) | 0.77% | 0.88% | | Core efficiency ratio | 69.29% | 65.40% | Consolidated Quarterly Statements of Income This section details consolidated quarterly statements of income, breaking down interest income, expenses, and net income over five quarters | Metric (Thousands) | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------------------- | :------ | :------ | :------ | | Total interest and dividend income | $134,637 | $132,543 | $141,794 | | Total interest expense | $52,501 | $54,084 | $67,904 | | Net interest income | $82,136 | $78,459 | $73,890 | | Provision for credit losses | $2,862 | $3,444 | $5,231 | | Total noninterest income (loss) | $1,368 | $15,602 | $22,465 | | Total noninterest expense | $61,983 | $62,068 | $64,388 | | Net income | $14,647 | $22,411 | $20,989 | Consolidated Balance Sheets This table presents the consolidated balance sheets for Origin Bancorp, Inc. over five quarters, detailing assets, liabilities, and equity | Metric (Thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------- | :------------ | | Total assets | $9,678,158 | $9,750,372 | $9,947,182 | | Total LHFI | $7,684,446 | $7,585,526 | $7,959,171 | | Total securities | $1,144,032 | $1,178,974 | $1,178,163 | | Total deposits | $8,123,036 | $8,338,412 | $8,510,842 | | FHLB advances and other borrowings | $127,843 | $12,488 | $40,737 | | Total stockholders' equity | $1,205,769 | $1,180,177 | $1,095,894 | Loan Data This section provides detailed loan data, including composition, nonperforming assets, past due loans, and credit loss allowance over five quarters | Metric (Thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------- | :------------ | | Total LHFI | $7,684,446 | $7,585,526 | $7,959,171 | | Total nonperforming LHFI | $85,315 | $81,368 | $75,812 | | ALCL | $92,426 | $92,011 | $100,865 | | ALCL to nonperforming LHFI | 108.33% | 113.08% | 133.05% | | Net charge-offs (recoveries) to total average LHFI (annualized) | 0.12% | 0.15% | 0.15% | Average Balances and Yields/Rates This table presents average balances, yields, and rates for interest-earning assets and liabilities, offering insights into net interest spread and margin | Metric | Q2 2025 Average Balance (Thousands) | Q2 2025 Yield/Rate | Q1 2025 Average Balance (Thousands) | Q1 2025 Yield/Rate | Q2 2024 Average Balance (Thousands) | Q2 2024 Yield/Rate | | :-------------------------------- | :-------------------------------- | :----------------- | :-------------------------------- | :----------------- | :-------------------------------- | :----------------- | | Total interest-earning assets | $9,193,833 | 5.87% | $9,282,898 | 5.79% | $9,441,190 | 6.04% | | Total interest-bearing liabilities | $6,479,644 | 3.25% | $6,649,167 | 3.30% | $6,866,542 | 3.98% | | Net interest spread | N/A | 2.62% | N/A | 2.49% | N/A | 2.06% | | NIM-FTE | N/A | 3.61% | N/A | 3.44% | N/A | 3.17% | Notable Items This section details specific notable financial items and their impact on diluted earnings per share for quarterly and year-to-date periods Quarterly Notable Items (Q2 2025): | Item | $ Impact (Thousands) | EPS Impact | | :-------------------------------- | :------------------- | :--------- | | Loss on sales of securities, net | $(14,448) | $(0.36) | | Operating expense related to strategic Optimize Origin initiatives | $(428) | $(0.01) | | Total notable items | $(15,564) | $(0.39) | Year-To-Date Notable Items (Six Months Ended June 30, 2025): | Item | $ Impact (Thousands) | EPS Impact | | :-------------------------------- | :------------------- | :--------- | | Loss on sales of securities, net | $(14,448) | $(0.36) | | Operating expense related to strategic Optimize Origin initiatives | $(2,043) | $(0.05) | | Total notable items | $(17,819) | $(0.45) | Non-GAAP Financial Measures Reconciliations This section provides detailed reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures for various periods PTPP Earnings Reconciliation (Q2 2025): | Metric (Thousands) | Amount | | :----------------------- | :----- | | Net income | $14,647 | | Provision for credit losses | $2,862 | | Income tax expense | $4,012 | | PTPP earnings (non-GAAP) | $21,521 | Tangible Book Value Per Common Share Reconciliation (June 30, 2025): | Metric (Thousands) | Amount | | :----------------------- | :----- | | Total common stockholders' equity | $1,205,769 | | Goodwill | $(128,679) | | Other intangible assets, net | $(36,444) | | Tangible common equity | $1,040,646 | | Common shares outstanding | 31,224,718 | | Tangible book value per common share (non-GAAP) | $33.33 | Core Efficiency Ratio Reconciliation (Q2 2025): | Metric (Thousands) | Amount | | :----------------------- | :----- | | Total noninterest expense | $61,983 | | Adjusted total noninterest expense | $53,523 | | Adjusted total revenue | $72,550 | | Core efficiency ratio (non-GAAP) | 73.77% |