Origin Bank(US:OBK)2023-02-22 21:20Financial Performance - Net income for the year ended December 31, 2022, was $87.7 million, a decrease of 19.2% compared to $108.5 million in 2021[268]. - The return on average assets (ROAA) for 2022 was 1.01%, down from 1.45% in 2021, while the return on average equity (ROAE) decreased to 10.81% from 15.79%[268]. - Noninterest income decreased by $4.9 million, or 7.9%, to $57.3 million for the year ended December 31, 2022, driven by declines in mortgage banking revenue, limited partnership investment income, and other noninterest income[289]. - The company reported a comprehensive loss income of $(77.889) million for 2022, compared to a comprehensive income of $88.626 million in 2021[433]. - Basic earnings per common share decreased to $3.29 in 2022 from $4.63 in 2021, reflecting a decline of 29%[431]. Interest Income and Margin - Net interest income for 2022 was $275.3 million, an increase of $59.0 million compared to 2021, driven by increases in interest rates and average interest-earning assets[270]. - The fully tax-equivalent net interest margin (NIM) for 2022 was 3.42%, a 32 basis point increase from 3.10% in 2021[275]. - The net interest margin improved to 3.39% in 2022, compared to 3.06% in 2021[280]. - The company reported a net interest spread of 3.05% for 2022, up from 2.88% in 2021[278]. - Interest income from loans held for investment (LHFI) increased by $68.6 million in 2022, with commercial real estate and commercial and industrial loans contributing $26.4 million and $23.4 million, respectively[272]. Assets and Loans - Total assets increased to $8,686,231 thousand in 2022, up from $7,470,927 thousand in 2021, representing a growth of 16.3%[278]. - Loans receivable reached $5,952,737 thousand in 2022, up from $5,412,893 thousand in 2021, reflecting an increase of 10%[278]. - The loan portfolio grew to $7.09 billion at December 31, 2022, an increase of $1.86 billion, or 35.5%, with organic growth contributing $619.2 million[313]. - Total LHFI, excluding mortgage warehouse lines of credit, increased by $2.20 billion, or 47.8%, compared to December 31, 2021[313]. - The loan portfolio composition at December 31, 2022, included 78.8% in commercial and industrial loans, down from 82.3% in 2021[311]. Deposits and Liabilities - Total deposits rose by $1.21 billion to $7.78 billion at December 31, 2022, with $1.57 billion attributed to the BTH merger[309]. - Noninterest-bearing deposits grew to $2,422,132 thousand in 2022, compared to $1,905,045 thousand in 2021, indicating a growth of 27.1%[278]. - Total interest-bearing liabilities increased to $5,303,632 thousand in 2022, compared to $4,742,835 thousand in 2021, marking a rise of 11.8%[278]. - The estimated total amount of uninsured deposits increased to $4.19 billion at December 31, 2022, from $3.79 billion in 2021[356]. - Average deposit balance for the year ended December 31, 2022, was $7.105 billion, an increase of $951.8 million, or 15.5%, from $6.153 billion in 2021[353]. Expenses and Provisions - Total noninterest expense rose by $43.6 million, or 27.8%, to $200.4 million, primarily due to increases in salaries and employee benefits, merger-related expenses, and intangible asset amortization[299]. - The provision for credit loss expense increased by $35.5 million to $24.7 million for the year ended December 31, 2022, primarily due to the merger with BTH, which accounted for a $14.9 million provision for loan credit losses[285]. - The allowance for loan credit losses increased by $22.6 million, or 35.0%, to $87.2 million at December 31, 2022, from $64.6 million at December 31, 2021[334]. - The provision for loan credit losses was $21.6 million for the year ended December 31, 2022, compared to a negative provision of $10.8 million in 2021[336]. - Total noninterest expense increased to $200,419 thousand in 2022, compared to $156,779 thousand in 2021, an increase of 27.8%[430]. Mergers and Acquisitions - The merger with BTH resulted in the acquisition of $1.24 billion in loans and $1.57 billion in deposits, significantly impacting net interest income and interest expense categories[269]. - The company recognized goodwill of approximately $94.5 million from the acquisition of BT Holdings, Inc. and its subsidiary on August 1, 2022[418]. - Total assets acquired in the BTH merger amounted to $1,846,598, while total liabilities assumed were $1,633,340[441]. - The company assumed BTH deposits totaling $1.57 billion during the merger on August 1, 2022[349]. - The company recorded a $23.9 million allowance for BTH loans at December 31, 2022[334]. Capital and Regulatory Compliance - Stockholders' equity increased by $219.7 million to $949.9 million at December 31, 2022, driven by $306.3 million related to the BTH merger and $87.7 million in net income[310]. - The company was in compliance with all applicable regulatory capital requirements as of December 31, 2022, and was classified as "well capitalized" by the Federal Reserve[384]. - Common equity Tier 1 capital to risk-weighted assets increased to $906.9 million (10.93%) as of December 31, 2022, compared to $681.0 million (11.20%) in 2021[386]. - Total capital to risk-weighted assets decreased to $1.18 billion (14.23%) in 2022 from $897.5 million (14.77%) in 2021[386]. - The company completed an offering of $70.0 million in aggregate principal amount of 4.25% fixed-to-floating rate subordinated notes due 2030, qualifying as Tier 2 capital[365]. Economic Conditions and Risk Management - Economic conditions are currently affected by record inflation and recessionary concerns, impacting growth prospects and borrower performance[396]. - The Federal Reserve increased the federal funds target rate range seven times during 2022, from 25 to 450 basis points, impacting the company's comprehensive loss[398]. - The company manages interest rate risk through a committee that reviews asset and liability sensitivity to interest rate changes regularly[390]. - The company has entered into interest rate swaps to mitigate interest rate risk in limited circumstances[389]. - Interest rate sensitivity analysis indicates that a 400 basis point increase in interest rates could lead to a 14.2% increase in net interest income[395].