ORIGIN BANCORP(OBNK) - 2025 Q2 - Quarterly Report

FORM 10-Q Filing Information This report is a Quarterly Report on Form 10-Q for the period ended June 30, 2025, filed by Origin Bancorp, Inc. (OBK) - This is a Quarterly Report on Form 10-Q for the period ended June 30, 2025, filed by Origin Bancorp, Inc. (OBK) on the New York Stock Exchange[2][3] - As of July 31, 2025, 31,224,718 shares of Common Stock, par value $5.00 per share, were issued and outstanding[3] Index This section provides a navigational index to the various parts and items within the Form 10-Q report Cautionary Note Regarding Forward-Looking Statements This section warns that the report contains forward-looking statements subject to risks and uncertainties - The report contains forward-looking statements that are not guarantees of future performance and are subject to difficult-to-predict risks, assumptions, and uncertainties[6] - Key factors that could cause actual results to differ materially include economic uncertainty, technological change, adverse banking industry developments, fluctuating interest rates, and regulatory changes[7][8][10] PART I - FINANCIAL INFORMATION This part presents the unaudited consolidated financial statements and management's discussion and analysis for the company Item 1. Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for the quarter ended June 30, 2025 Consolidated Balance Sheets This statement provides a snapshot of the company's assets, liabilities, and stockholders' equity at specific points in time | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Total assets | $9,678,158 | $9,678,702 | $(544) | (0.01)% | | Total liabilities | $8,472,389 | $8,533,457 | $(61,068) | (0.72)% | | Total stockholders' equity | $1,205,769 | $1,145,245 | $60,524 | 5.28% | | Cash and cash equivalents | $334,111 | $470,249 | $(136,138) | (28.95)% | | Loans, net | $7,592,020 | $7,482,653 | $109,367 | 1.46% | | Total deposits | $8,123,036 | $8,223,120 | $(100,084) | (1.22)% | | Subordinated indebtedness, net | $89,657 | $159,943 | $(70,286) | (43.94)% | Consolidated Statements of Income This statement reports the company's revenues, expenses, and net income over specific periods, reflecting profitability | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :-------------------- | :------- | | Total interest and dividend income | $134,637 | $141,794 | $(7,157) | (5.05)% | | Total interest expense | $52,501 | $67,904 | $(15,403) | (22.68)% | | Net interest income | $82,136 | $73,890 | $8,246 | 11.16% | | Provision for credit losses | $2,862 | $5,231 | $(2,369) | (45.29)% | | Total noninterest income | $1,368 | $22,465 | $(21,097) | (93.91)% | | Total noninterest expense | $61,983 | $64,388 | $(2,405) | (3.73)% | | Net income | $14,647 | $20,989 | $(6,342) | (30.22)% | | Basic EPS | $0.47 | $0.68 | $(0.21) | (30.88)% | | Diluted EPS | $0.47 | $0.67 | $(0.20) | (29.85)% | | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :-------------------- | :------- | | Total interest and dividend income | $267,180 | $280,495 | $(13,315) | (4.75)% | | Total interest expense | $106,585 | $133,282 | $(26,697) | (20.03)% | | Net interest income | $160,595 | $147,213 | $13,382 | 9.09% | | Provision for credit losses | $6,306 | $8,243 | $(1,937) | (23.49)% | | Total noninterest income | $16,970 | $39,720 | $(22,750) | (57.27)% | | Total noninterest expense | $124,051 | $123,095 | $956 | 0.78% | | Net income | $37,058 | $43,621 | $(6,563) | (15.05)% | | Basic EPS | $1.19 | $1.41 | $(0.22) | (15.60)% | | Diluted EPS | $1.18 | $1.40 | $(0.22) | (15.71)% | Consolidated Statements of Comprehensive Income This statement presents net income and other comprehensive income items, reflecting the total change in equity from non-owner sources | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :-------------------- | | Net income | $14,647 | $20,989 | $(6,342) | | Other comprehensive income (loss), net of tax | $16,850 | $(2,275) | $19,125 | | Comprehensive income | $31,497 | $18,714 | $12,783 | | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :-------------------- | | Net income | $37,058 | $43,621 | $(6,563) | | Other comprehensive income (loss), net of tax | $32,468 | $(6,161) | $38,629 | | Comprehensive income | $69,526 | $37,460 | $32,066 | Consolidated Statements of Changes in Stockholders' Equity This statement details changes in stockholders' equity, including net income, dividends, and stock transactions | Metric | January 1, 2025 (in thousands) | June 30, 2025 (in thousands) | Change (in thousands) | % Change | | :----------------------------- | :----------------------------- | :--------------------------- | :-------------------- | :------- | | Total Stockholders' Equity | $1,145,245 | $1,205,769 | $60,524 | 5.28% | | Net income | N/A | $37,058 | N/A | N/A | | Other comprehensive income, net of tax | N/A | $32,468 | N/A | N/A | | Dividends declared - common stock | N/A | $(9,522) | N/A | N/A | | Repurchase of common stock | N/A | $(4,382) | N/A | N/A | Consolidated Statements of Cash Flows This statement reports cash inflows and outflows from operating, investing, and financing activities over specific periods | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :-------------------- | :------- | | Net cash provided by operating activities | $56,194 | $39,029 | $17,165 | 43.98% | | Net cash used in investing activities | $(121,711) | $(204,479) | $82,768 | (40.48)% | | Net cash (used by) provided by financing activities | $(70,621) | $173,059 | $(243,680) | (140.81)% | | Net increase in cash and cash equivalents | $(136,138) | $7,609 | $(143,747) | (1889.21)% | | Cash and cash equivalents at end of period | $334,111 | $288,050 | $46,061 | 15.99% | Condensed Notes to Consolidated Financial Statements These notes provide additional information and explanations for the amounts presented in the consolidated financial statements Note 1 — Significant Accounting Policies This note outlines the company's nature of operations, basis of presentation, operating segments, and impact of accounting standards - Origin Bancorp, Inc. is a financial holding company operating through its wholly-owned subsidiary, Origin Bank, providing personalized banking services across multiple states[34][223] - The company's senior executive management evaluates financial performance on a Company-wide basis, aggregating all community banking services into one reportable operating segment[38] - Implementation of ASU No. 2023-02 and ASU No. 2023-07 did not materially impact the Company's financial statements or disclosures[43][44] - The Company is evaluating the impact of newly issued ASU No. 2023-09 and ASU No. 2024-03 on its consolidated financial statements and disclosures[45][48] Note 2 — Earnings Per Share This note details the calculation of basic and diluted earnings per common share, including weighted average shares and dilutive effects | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net income (in thousands) | $14,647 | $20,989 | $37,058 | $43,621 | | Basic earnings per common share | $0.47 | $0.68 | $1.19 | $1.41 | | Diluted earnings per common share | $0.47 | $0.67 | $1.18 | $1.40 | | Weighted average common shares outstanding | 31,192,622 | 31,042,527 | 31,199,151 | 31,011,930 | | Dilutive effect of stock-based awards | 135,196 | 89,302 | 176,653 | 98,817 | - Anti-dilutive stock-based awards, primarily due to exercise/grant price exceeding the average market price, excluded from EPS calculation were 303,140 shares for the three months and 186,446 shares for the six months ended June 30, 2025[49] Note 3 — Securities This note summarizes the amortized cost, fair value, and unrealized gains/losses for available-for-sale and held-to-maturity securities | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Total securities available for sale (Fair Value) | $1,126,721 | $1,102,528 | $24,193 | 2.19% | | Total securities held to maturity (Carrying Amount) | $11,093 | $11,095 | $(2) | (0.02)% | | Total securities carried at fair value through income | $6,218 | $6,512 | $(294) | (4.51)% | | Gross unrealized losses (AFS) | $(97,226) | $(135,591) | $38,365 | (28.29)% | - At June 30, 2025, the Company had 426 individual securities in an unrealized loss position, primarily due to noncredit-related factors like interest rate changes, with no intent to sell before recovery[57][58] - Proceeds from sales and calls of available-for-sale securities for the six months ended June 30, 2025, were $214.98 million, resulting in gross realized losses of $14.45 million[63] Note 4 — Loans This note details the loan portfolio composition, credit quality indicators, allowance for credit losses, and loan modifications | Loan Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Loans held for sale | $8,878 | $10,494 | $(1,616) | (15.40)% | | Commercial real estate | $2,428,559 | $2,477,431 | $(48,872) | (1.97)% | | Construction/land/land development | $653,748 | $864,011 | $(210,263) | (24.34)% | | Residential real estate | $1,995,434 | $1,857,589 | $137,845 | 7.42% | | Commercial and industrial | $2,011,178 | $2,002,634 | $8,544 | 0.43% | | Mortgage warehouse lines of credit | $574,748 | $349,081 | $225,667 | 64.64% | | Consumer | $20,779 | $22,967 | $(2,188) | (9.53)% | | Total LHFI | $7,684,446 | $7,573,713 | $110,733 | 1.46% | | Allowance for loan credit losses (ALCL) | $92,426 | $91,060 | $1,366 | 1.50% | - Total LHFI increased by $110.7 million (1.5%) at June 30, 2025, driven by mortgage warehouse lines of credit and residential real estate loans, partially offset by decreases in construction/land/land development and commercial real estate loans[293] - Nonaccrual LHFI increased to $85.3 million at June 30, 2025, from $75.0 million at December 31, 2024, primarily due to six new loan relationships totaling $17.3 million[93][306] - For the six months ended June 30, 2025, the provision for loan credit losses was $6.39 million, and net charge-offs were $5.03 million[88][318] Note 5 — Fair Value of Financial Instruments This note explains fair value measurement methodologies, including the three-level hierarchy, for assets and liabilities - The Company utilizes a three-level hierarchy for fair value measurements, with Level 2 inputs predominantly used for securities available for sale[127][128] - Changes in Level 3 assets measured at fair value on a recurring basis for the six months ended June 30, 2025, included a $50,000 loss in AOCI for available-for-sale securities and a $21,000 gain in earnings for fair value through income securities[130] - The fair value option for loans held for sale was discontinued in Q1 2025, with all unsold loans funded in 2025 now valued at the lower of cost or market[139] - The net effect of investment income or loss and related compensation expense or benefit from Rabbi Trust assets has no impact on the Company's net income or cash balances[141] Note 6 — Mortgage Banking This note details mortgage banking revenue components and activity in Mortgage Servicing Rights (MSR) assets | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Mortgage banking revenue | $1,369 | $1,878 | $2,284 | $4,276 | | Gain on sale of loans held for sale | $1,503 | $1,337 | $2,463 | $2,301 | | MSR asset valuation adjustments, net | $0 | $0 | $0 | $450 | | Gain on sale of MSR asset | $0 | $0 | $0 | $410 | - The Company sold substantially all of its MSR asset, recording a $410,000 gain in the six months ended June 30, 2024, and no longer retains servicing on sold loans[152] - The reserve for mortgage loan putback expenses totaled $104,000 at June 30, 2025, and $103,000 at December 31, 2024[155] Note 7 — Borrowings This note summarizes the company's borrowed funds, including FHLB advances, repurchase agreements, and subordinated indebtedness | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Short-term FHLB advances | $115,000 | $0 | $115,000 | N/A | | Long-term FHLB advances | $6,057 | $6,198 | $(141) | (2.27)% | | Overnight repurchase agreements | $6,786 | $6,262 | $524 | 8.37% | | Total FHLB advances and other borrowings | $127,843 | $12,460 | $115,383 | 926.03% | | Subordinated indebtedness, net | $89,657 | $159,943 | $(70,286) | (43.94)% | - Origin Bank redeemed $70.0 million in 4.25% fixed-to-floating rate subordinated notes on February 15, 2025, as part of its Optimize Origin initiative[156][335] - The Company strategically manages liquidity by funding mortgage warehouse lines of credit with short-term FHLB advances, avoiding more expensive brokered deposits[334] Note 8 — Derivative Financial Instruments This note describes the company's use of derivative financial instruments for risk management, including cash flow and fair value hedges - The Company uses interest rate swaps as fair value hedges to mitigate changes in the fair value of fixed-rate available-for-sale securities due to benchmark interest rate fluctuations[161] - During Q4 2024, the Company terminated cash flow swap agreements, locking in an after-tax gain of $537,000 to be accreted into earnings[160] - Notional amounts of derivatives not designated as hedging instruments totaled $981.3 million at June 30, 2025, up from $757.0 million at December 31, 2024[172] - For the three months ended June 30, 2025, fair value hedging instruments resulted in a $700,000 gain in interest income on available-for-sale securities, offset by a $700,000 loss on interest rate swaps[176] Note 9 — Stock and Incentive Compensation Plans This note details the company's stock and incentive compensation plans, including award activity for RSAs, RSUs, PSUs, and stock options - The Omnibus Plan, approved in April 2024, allows for the issuance of 675,000 shares, with 330,259 shares available for grant at June 30, 2025[179] - The Employee Stock Purchase Plan (ESPP) allows employees to purchase common stock at a 15% discount, with 58,568 shares purchased during the six months ended June 30, 2025[182][183] - Total unrecognized compensation cost related to nonvested RSA, RSU, and PSU shares was $439,000, $11.1 million, and $5.0 million, respectively, at June 30, 2025[188] - Stock-based compensation expense charged to income for the six months ended June 30, 2025, was $3.88 million, up from $3.77 million in the prior year[192] Note 10 — Accumulated Other Comprehensive (Loss) Income This note summarizes the components of Accumulated Other Comprehensive (Loss) Income (AOCI), primarily unrealized gains and losses | Metric | January 1, 2025 (in thousands) | June 30, 2025 (in thousands) | Change (in thousands) | | :------------------------------------ | :----------------------------- | :--------------------------- | :-------------------- | | Unrealized Loss on AFS Securities | $(106,535) | $(73,957) | $32,578 | | Unrealized Gain on Cash Flow Hedges | $506 | $396 | $(110) | | Total Accumulated Other Comprehensive Loss | $(106,029) | $(73,561) | $32,468 | - AOCI improved by $32.47 million during the six months ended June 30, 2025, primarily due to a $32.58 million reduction in unrealized losses on available-for-sale securities[198] Note 11 — Capital and Regulatory Matters This note discusses the company's and the bank's compliance with regulatory capital requirements and the stock repurchase program - Both Origin Bancorp, Inc. and Origin Bank met all capital adequacy requirements and were categorized as 'well capitalized' at June 30, 2025, and December 31, 2024[201][202][350] | Ratio | Origin Bancorp, Inc. (Actual) | Origin Bank (Actual) | Minimum Required (Basel III) | Well Capitalized (Prompt Corrective Action) | | :------------------------------------ | :---------------------------- | :----------------------- | :--------------------------- | :------------------------------------------ | | Common Equity Tier 1 to Risk-Weighted Assets | 13.47% | 13.13% | 7.00% | 6.50% | | Tier 1 Capital to Risk-Weighted Assets | 13.67% | 13.13% | 8.50% | 8.00% | | Total Capital to Risk-Weighted Assets | 15.68% | 14.27% | 10.50% | 10.00% | | Leverage Ratio | 11.70% | 11.24% | 4.00% | 5.00% | - The Company repurchased 136,399 shares of common stock for $4.4 million during Q2 2025, and a new $50.0 million stock repurchase program was approved in July 2025[207][351] Note 12 — Commitments and Contingencies This note discloses credit-related commitments and loss contingencies, including a specific issue involving questioned activity by a former banker | Commitment Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Commitments to extend credit | $1,889,215 | $1,671,603 | $217,612 | 13.02% | | Standby letters of credit | $217,844 | $234,260 | $(16,416) | (7.01)% | | Total off-balance sheet commitments | $2,107,059 | $1,905,863 | $201,196 | 10.56% | - The Company has a contingency reserve of $2.8 million at June 30, 2025, related to questioned activity by a former banker, which led to a $4.1 million provision for loan credit losses in 2024[216] - Management believes any ultimate loss from the questioned activity will not be material to the financial position, but acknowledges a reasonable possibility of additional unestimable loss[217] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes the company's financial condition, results of operations, and key performance drivers for the periods presented General This subsection reaffirms Origin Bancorp, Inc. as a financial holding company and introduces key financial metrics - The Company's primary revenue sources are interest earned on loans and investments, and service charges and fees on deposit accounts[223] - Net interest margin (NIM) is net interest income divided by average interest-earning assets, and net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities[224] 2025 Second Quarter Highlights This subsection summarizes key financial and operational achievements for the second quarter of 2025 - Net interest income increased by $8.2 million (11.2%) to $82.1 million for Q2 2025 compared to the prior year[230] - Fully tax equivalent net interest margin (NIM-FTE) increased 44 basis points for Q2 2025, driven by a 73 basis point reduction in rates paid on interest-bearing liabilities[230] - A bond portfolio optimization strategy resulted in a $14.4 million loss on securities sales but is estimated to increase annual net interest income by $5.6 million and contribute six basis points to NIM-FTE over twelve months[230][234] - Total loans held for investment (LHFI) increased by $110.7 million (1.5%) to $7.68 billion at June 30, 2025, compared to December 31, 2024[230] - Book value per common share increased by $1.91 (5.2%) to $38.62 at June 30, 2025, compared to December 31, 2024[230] Results of Operations This section analyzes the company's net income, net interest income, provision for credit losses, noninterest income, and noninterest expense Net Interest Income and Net Interest Margin (Three Months) This subsection analyzes changes in net interest income and net interest margin for the three months ended June 30, 2025 - Net interest income increased by $8.2 million (11.2%) to $82.1 million for Q2 2025, primarily due to a $15.4 million decrease in interest expense, partially offset by a $7.2 million decrease in total interest income[228] - Interest expense on interest-bearing deposits decreased by $15.3 million, with $10.6 million from lower interest rates (average rate declined 75 bps to 3.20%) and $4.7 million from lower average balances[229] - Interest income earned on LHFI decreased by $8.6 million, with $4.8 million due to lower average LHFI balances and $3.8 million due to lower yields[231] - The fully tax equivalent net interest margin (NIM-FTE) increased 44 basis points to 3.61% for Q2 2025, driven by a 73-basis-point decline in the average cost of total interest-bearing liabilities, exceeding the 17-basis-point decline in yield on interest-earning assets[233] Rate/Volume Analysis (Three Months) This subsection breaks down changes in interest income and expense, attributing them to volume or rate changes for the three months ended June 30, 2025 | Category | Volume Change (in thousands) | Yield/Rate Change (in thousands) | Total Change (in thousands) | | :------------------------------------------------- | :--------------------------- | :------------------------------- | :-------------------------- | | Total interest-earning assets | $(4,470) | $(2,687) | $(7,157) | | Total interest-bearing liabilities | $(4,734) | $(10,669) | $(15,403) | | Net interest income | $264 | $7,982 | $8,246 | Provision for Credit Losses (Three Months) This subsection discusses the decrease in total provision expense for the three months ended June 30, 2025, and changes in net charge-offs - Total provision expense decreased by $2.4 million to $2.9 million for the three months ended June 30, 2025, primarily due to a $2.7 million decrease in loan credit loss provision[242] - Net charge-offs decreased by $646,000 to $2.3 million for the three months ended June 30, 2025[243] - The allowance for loan credit losses (ALCL) to nonperforming LHFI was 108.33% at June 30, 2025, compared to 133.05% at June 30, 2024, primarily driven by a $9.5 million increase in nonperforming LHFI[243] Noninterest Income (Three Months) This subsection explains the significant decrease in noninterest income for the three months ended June 30, 2025 - Total noninterest income decreased by $21.1 million (93.9%) to $1.4 million for the three months ended June 30, 2025[246] - This decrease was primarily due to a $14.4 million loss on sales of securities, a $5.2 million decrease in fair value of equity investments, and a $2.0 million decrease in limited partnership investment income[246][247][248][249] - Swap fee income increased by $1.4 million, driven by an attractive interest rate environment and increased focus on customer swaps as part of the Optimize Origin initiative[251] Noninterest Expense (Three Months) This subsection details the decrease in noninterest expense for the three months ended June 30, 2025 - Total noninterest expense decreased by $2.4 million (3.7%) to $62.0 million for the three months ended June 30, 2025[252] - Key drivers of the decrease include a $1.5 million reduction in other expense, a $497,000 decrease in regulatory assessments, and a $408,000 decrease in loan-related expenses[252][253][254][255] Comparison of Results of Operations (Six Months) This subsection provides an overview of the company's net income performance for the six months ended June 30, 2025 - Net income decreased by $6.6 million (15.0%) to $37.1 million for the six months ended June 30, 2025[256] - Diluted EPS decreased to $1.18 per share for the six months ended June 30, 2025, from $1.40 per share in the prior year[256] Net Interest Income and Net Interest Margin (Six Months) This subsection analyzes changes in net interest income and net interest margin for the six months ended June 30, 2025 - Net interest income increased by $13.4 million (9.1%) to $160.6 million for the six months ended June 30, 2025[257] - This increase was primarily driven by a $26.4 million decrease in interest expense on interest-bearing deposits and increases in interest income from investment securities ($2.9 million) and interest-earning deposits in banks ($2.3 million)[257][258][259][260] - Interest income earned on LHFI decreased by $18.6 million, due to lower average balances ($10.6 million) and lower market interest rates ($8.1 million)[261] - The fully tax equivalent net interest margin (NIM-FTE) increased 34 basis points to 3.52% for the six months ended June 30, 2025, as the 66-basis-point decline in average rate on interest-bearing liabilities exceeded the 18-basis-point decline in yield on interest-earning assets[262] Rate/Volume Analysis (Six Months) This subsection presents a rate/volume analysis for the six months ended June 30, 2025, showing the impact on interest income and expense | Category | Volume Change (in thousands) | Yield/Rate Change (in thousands) | Total Change (in thousands) | | :------------------------------------------------- | :--------------------------- | :------------------------------- | :-------------------------- | | Total interest-earning assets | $(6,599) | $(6,716) | $(13,315) | | Total interest-bearing liabilities | $(7,097) | $(19,600) | $(26,697) | | Net interest income | $498 | $12,884 | $13,382 | Provision for Credit Losses (Six Months) This subsection discusses the decrease in provision expense for the six months ended June 30, 2025, and changes in net charge-offs - Total provision expense decreased by $1.9 million to $6.3 million for the six months ended June 30, 2025, driven by a $3.1 million decrease in loan credit loss provision, partially offset by a $1.2 million increase in the provision for off-balance sheet commitments[269] - Net charge-offs decreased by $500,000 to $5.0 million for the six months ended June 30, 2025, primarily due to a $1.2 million decline in net charge-offs in the commercial and industrial loans portfolio[270] Noninterest Income (Six Months) This subsection explains the significant decrease in noninterest income for the six months ended June 30, 2025 - Total noninterest income decreased by $22.8 million (57.3%) to $17.0 million for the six months ended June 30, 2025[273] - Major contributors to the decrease include a $14.0 million increase in loss on sales of securities, a $5.2 million decrease in fair value of equity investments, a $3.8 million decrease in limited partnership investment gain, and a $2.0 million decrease in mortgage banking revenue[274][275][276][277] - Swap fee income increased by $1.9 million, driven by an attractive interest rate environment and increased focus on customer swaps as part of the Optimize Origin initiative[278] Noninterest Expense (Six Months) This subsection details the slight increase in noninterest expense for the six months ended June 30, 2025 - Total noninterest expense increased by $956,000 (0.8%) to $124.1 million for the six months ended June 30, 2025[281] - Increases were seen in salaries and employee benefits ($2.1 million), occupancy and equipment ($2.1 million), and office and operations ($735,000)[282][283][284] - Decreases were seen in other expense ($1.2 million), regulatory assessments ($839,000), intangible asset amortization ($745,000), and loan-related expenses ($714,000)[285][286][287] Comparison of Financial Condition at June 30, 2025, and December 31, 2024 This section analyzes changes in the balance sheet components, including assets, liabilities, and equity, between June 30, 2025, and December 31, 2024 General (Financial Condition) This subsection provides an overview of changes in total assets, cash, loans, securities, liabilities, deposits, and borrowings - Total assets remained stable at $9.68 billion at June 30, 2025[288] - Cash and cash equivalents decreased by $136.1 million (29.0%) to $334.1 million[288] - Total liabilities decreased by $61.1 million (0.7%) to $8.47 billion, while total deposits decreased by $100.1 million (1.2%) to $8.12 billion[289] - Subordinated debentures decreased by $70.3 million (43.9%) due to redemptions, while FHLB advances and other borrowings increased by $115.4 million[289] Loan Portfolio This subsection details the composition and changes within the loan portfolio, emphasizing growth and decreases in specific categories - Total loans held for investment (LHFI) increased by $110.7 million (1.5%) to $7.68 billion at June 30, 2025[293] - Growth was driven by mortgage warehouse lines of credit (up $225.7 million or 64.6%) and residential real estate loans (up $137.8 million or 7.4%)[293] - Decreases were seen in construction/land/land development loans (down $210.3 million or 24.3%) and commercial real estate loans (down $48.9 million or 2.0%)[293] Loan Portfolio Maturity Analysis This subsection presents the maturity distribution of the LHFI portfolio at June 30, 2025, distinguishing between fixed and variable interest rate loans | Maturity | Total LHFI (in thousands) | Fixed Rates (in thousands) | Variable Rates (in thousands) | | :------------------------------------ | :-------------------------- | :------------------------- | :-------------------------- | | One year or less | $2,488,974 | $569,865 | $1,919,109 | | After one year through five years | $3,826,267 | $1,923,590 | $1,902,677 | | After five years through fifteen years | $472,671 | $307,198 | $165,473 | | After fifteen years | $896,534 | $207,681 | $688,853 | | Total | $7,684,446 | $3,008,334 | $4,676,112 | Nonperforming Assets This subsection defines nonperforming assets and details the increase in nonperforming LHFI, attributing changes to specific loan relationships - Total nonperforming LHFI increased by $10.3 million to $85.3 million at June 30, 2025, compared to $75.0 million at December 31, 2024[304][306] - The ratio of nonperforming LHFI to total LHFI increased to 1.11% at June 30, 2025, from 0.99% at December 31, 2024[304] - The increase in nonperforming loans was primarily driven by six loan relationships totaling $17.3 million, with commercial real estate loans accounting for $8.3 million of this increase[306] - Total nonperforming assets increased to $87.3 million at June 30, 2025, from $78.6 million at December 31, 2024[304] Potential Problem Loans This subsection explains the company's internal loan risk rating system used to manage credit quality and assess default risk - The Company classifies loans using internal risk grades: pass, special mention, substandard, doubtful, or loss, continually evaluated to reflect assessed risk[307][67] - Loans rated 'special mention' exhibit potential weaknesses, while 'substandard' loans have well-defined weaknesses jeopardizing debt repayment[307] - 'Doubtful' loans have questionable full collection with a high probability of loss, and 'loss' loans are charged-off with no expectation of recovery[308] Allowance for Loan Credit Losses This subsection describes the methodology for calculating the Allowance for Loan Credit Losses (ALCL) and its relationship to charge-offs - The ALCL represents estimated losses for loans accounted for on an amortized cost basis, calculated using a probability of default, loss given default methodology applied to loan pools[309] - The ALCL to nonperforming LHFI decreased to 108.33% at June 30, 2025, compared to 121.41% at December 31, 2024, primarily due to a $10.3 million increase in the Company's nonperforming LHFI[319] - Net charge-offs (annualized) as a percentage of average LHFI decreased to 0.13% for the six months ended June 30, 2025, from 0.18% for the year ended December 31, 2024[318] Securities This subsection discusses the increase in the securities portfolio, driven by a bond portfolio optimization strategy - The securities portfolio totaled $1.14 billion at June 30, 2025, representing an increase of $23.9 million (2.1%) from December 31, 2024[320] - A bond portfolio optimization strategy involved selling $215.8 million of lower-yielding available-for-sale securities and purchasing $201.8 million of higher-yielding ones, resulting in a $14.4 million loss[321] - The weighted average duration of the securities portfolio increased to 4.52 years as of June 30, 2025, compared to 4.46 years at December 31, 2024[324] Deposits This subsection describes the deposit mix and changes, noting a decrease in total deposits primarily due to interest-bearing demand and time deposits - Total deposits decreased by $100.1 million (1.2%) to $8.12 billion at June 30, 2025, compared to December 31, 2024[326] - This decrease was driven by decreases of $226.1 million in interest-bearing demand deposits and $135.4 million in time deposits, partially offset by a $371.5 million increase in money market deposits[326] - The average rate paid on interest-bearing deposits decreased to 3.21% for the six months ended June 30, 2025, from 3.90% for the six months ended June 30, 2024, influenced by recent Federal Reserve rate cuts[329][330] - Estimated total uninsured deposits were $3.73 billion at June 30, 2025, including $830.2 million in public fund deposits collateralized by pledged assets[333] Borrowings This subsection summarizes the company's borrowing activities, highlighting increased short-term FHLB advances and decreased subordinated debentures - Total FHLB advances and other borrowings increased by $115.4 million to $127.8 million at June 30, 2025, primarily due to $115.0 million in short-term FHLB advances[334] - Subordinated debentures decreased by $70.3 million (43.9%) to $89.7 million, following the redemption of $70.0 million in debentures as part of the Optimize Origin initiative[335] - The Company had an additional borrowing capacity of $1.79 billion from the FHLB at June 30, 2025[336] Liquidity and Capital Resources This subsection provides an overview of the company's liquidity management, sources of funds, and off-balance sheet commitments - Management oversees the liquidity position to ensure adequate cash and liquid assets support operations and satisfy financial obligations, monitoring liquidity and non-core dependency ratios[337] - Key liquidity sources include core deposits, investment securities, cash and cash equivalents, loan repayments, federal funds lines of credit, and advances from the FHLB[341] - At June 30, 2025, the Company had the ability to borrow $1.35 billion from the discount window at the FRBD, with no outstanding borrowings[346] Stockholders' Equity This subsection presents the changes in total stockholders' equity, including net income, other comprehensive income, dividends, and stock repurchases | Metric | January 1, 2025 (in thousands) | June 30, 2025 (in thousands) | Change (in thousands) | % Change | | :----------------------------- | :----------------------------- | :--------------------------- | :-------------------- | :------- | | Total Stockholders' Equity | $1,145,245 | $1,205,769 | $60,524 | 5.28% | | Net income | N/A | $37,058 | N/A | N/A | | Other comprehensive income, net of tax | N/A | $32,468 | N/A | N/A | | Dividends declared - common stock | N/A | $(9,522) | N/A | N/A | | Repurchase of common stock | N/A | $(4,382) | N/A | N/A | Regulatory Capital Requirements This subsection reaffirms the company's and the bank's compliance with regulatory capital requirements and 'well capitalized' status - Both Origin Bancorp, Inc. and Origin Bank were in compliance with all applicable regulatory capital requirements and classified as 'well capitalized' at June 30, 2025, and December 31, 2024[350] - The Company repurchased 136,399 shares of common stock for $4.4 million during Q2 2025, and a new $50.0 million stock repurchase program was approved in July 2025[351] Critical Accounting Policies and Estimates This subsection refers to the company's 2024 Form 10-K for detailed information on critical accounting policies and estimates - Critical accounting estimates involve significant estimation uncertainty and are reasonably likely to materially impact financial condition or results of operations[352] - Detailed information on critical accounting policies and estimates is available in the Company's 2024 Form 10-K[353] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section discusses the company's primary market risk, interest rate volatility, and its management through financial policies and models Interest Rate Sensitivity and Market Risk This subsection focuses on how the company manages its exposure to interest rate risk through balance sheet structuring and derivative instruments - The primary component of market risk is interest rate volatility, managed by structuring the consolidated balance sheet and utilizing derivative financial instruments[355][357] - The Asset Liability Management Committee (ALCO) uses interest rate risk simulation models and shock analyses to test the interest rate sensitivity of net interest income and fair value of equity[359][360] - Internal policy specifies that estimated net interest income at risk for the subsequent one-year period should not decline by more than 10.0% for a 100-basis point shift in the yield curve[361] | Change in Interest Rates (basis points) | % Change in Net Interest Income | % Change in Fair Value of Equity | | :------------------------------------ | :------------------------------ | :------------------------------- | | +400 | 12.7% | (9.7)% | | +300 | 9.7% | (6.9)% | | +200 | 6.7% | (4.1)% | | +100 | 3.5% | (1.8)% | | Base | N/A | N/A | | -100 | (4.0)% | 1.3% | | -200 | (6.2)% | 2.3% | | -300 | (7.7)% | 3.3% | | -400 | (8.1)% | 4.6% | Impact of Inflation This subsection explains that inflation primarily affects financial institutions through increased operating costs and indirectly through its influence on interest rates - Inflation affects financial institutions by increasing the cost of goods and services, salaries, benefits, and occupancy expenses[367] - Changes in interest rates have a more significant impact on a financial institution's performance than general inflation, though interest rates are influenced by inflation[367] Item 4. Controls and Procedures This section reports on the effectiveness of the company's disclosure controls and procedures and internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[368] - No material changes in internal control over financial reporting occurred during the three-month period ended June 30, 2025[369] - The effectiveness of controls and procedures is subject to inherent limitations, including cost, judgments, human error, and fraud risk, providing only reasonable assurance[370] PART II - OTHER INFORMATION This part contains other information not included in the financial statements, such as legal proceedings, risk factors, and equity sales Item 1. Legal Proceedings This section refers to Note 12 of the condensed financial statements for information regarding legal proceedings and loss contingencies - Additional information regarding legal proceedings and loss contingencies is provided in Note 12 — Commitments and Contingencies in Part I, Item 1 of this report[372] Item 1A. Risk Factors This section states that there were no material changes to the risk factors previously disclosed in the company's 2024 Form 10-K - There were no material changes to the risk factors previously disclosed in the Company's 2024 Form 10-K during the period covered by this report[373] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities This section details the company's stock repurchase program, including shares repurchased during Q2 2025 and a new program approval - The Company repurchased a total of 136,399 shares of its common stock during Q2 2025 at an average price of $32.13 per share, under its July 2022 stock repurchase program[375][376] - In July 2025, the Board approved a new stock repurchase program authorizing the purchase of up to $50.0 million of common stock over the next three years, replacing the expired July 2022 plan[375] | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plan at the End of the Period (in thousands) | | :----------------------------- | :----------------------------- | :--------------------------- | :---------------------------------------------------------------------------------------------------------------- | | April 1, 2025 - April 30, 2025 | 90,636 | $32.08 | $47,092 | | May 1, 2025 - May 31, 2025 | 45,763 | $32.23 | $45,618 | | June 1, 2025 - June 30, 2025 | — | — | $45,618 | | Total | 136,399 | $32.13 | $45,618 | Item 3. Defaults Upon Senior Securities This section states that this item is not applicable to the company for the reporting period - This item is not applicable[377] Item 4. Mine Safety Disclosures This section states that this item is not applicable to the company for the reporting period - This item is not applicable[378] Item 5. Other Information This section reports no directors or executive officers adopted, terminated, or modified Rule 10b5-1 trading arrangements - None of the Company's directors or executive officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[382] Item 6. Exhibits This section lists the exhibits filed as part of the Form 10-Q, including certifications and Inline XBRL financial information - Exhibits filed include certifications by the Chief Executive Officer and Chief Financial Officer (31.1, 31.2, 32.1, 32.2) and financial information formatted in Inline XBRL (101, 104)[383] SIGNATURES This section contains the official signatures of the company's Chairman, President, CEO, and CFO, certifying the report - The report was signed on August 6, 2025, by Drake Mills, Chairman, President and Chief Executive Officer, and William J. Wallace, IV, Senior Executive Officer and Chief Financial Officer[387]