Origin Bank(US:OBK)2023-08-02 18:54Financial Performance - Total loans held for investment (LHFI) were $7.09 billion at June 30, 2023, an increase of $279.9 million, or 4.1%, compared to December 31, 2022[217]. - Total deposits reached $8.49 billion at June 30, 2023, reflecting an increase of $714.3 million, or 9.2%, compared to December 31, 2022[217]. - Net interest income was $75.3 million for the three months ended June 30, 2023, an increase of $15.8 million, or 26.5%, compared to the same period in 2022[222]. - Net income increased by $449,000, or 2.1%, to $21.8 million for the three months ended June 30, 2023, compared to $21.3 million for the same period in 2022[221]. - Total assets reached $10,190,356 thousand as of June 30, 2023, compared to $7,944,720 thousand a year earlier, reflecting a growth of 28.3%[229]. - Net interest income for the six months ended June 30, 2023, was $152.4 million, an increase of $40.4 million, or 36.1%, compared to the same period in 2022[248]. - Noninterest income increased by $1.9 million, or 6.3%, to $32.0 million for the six months ended June 30, 2023, compared to $30.1 million for the same period in 2022[264]. Interest Rates and Margins - The net interest margin (NIM) was 3.16% for the three months ended June 30, 2023, a decrease of seven basis points from 3.23% for the same period in 2022[226]. - The yield on interest-earning assets increased to 5.50%, a 197 basis point increase from 3.53% for the three months ended June 30, 2022[226]. - The rate paid on total deposits increased to 2.26%, a 207 basis point increase from 0.19% for the same period in 2022[226]. - The fully tax-equivalent net interest margin was 3.29% for the six months ended June 30, 2023, a 25 basis point increase from 3.04% for the same period in 2022[253]. - The average annualized rate paid on interest-bearing deposits increased to 2.78% for the six months ended June 30, 2023, compared to 0.27% for the same period in 2022[314]. Loan and Credit Quality - The provision for credit losses increased to $4.3 million in Q2 2023, up from $3.5 million in Q2 2022, marking a rise of 24.4%[234]. - Nonperforming loans increased by $31.2 million, with the allowance for loan credit losses to nonperforming loans at 280.74% as of June 30, 2023, down from 448.16% a year earlier[234]. - Nonperforming loans increased by $23.7 million to $33.6 million as of June 30, 2023, with significant increases in commercial and industrial loans and residential real estate loans[290]. - The ratio of nonperforming LHFI to total LHFI rose to 0.44% from 0.14% at the end of 2022, indicating a deterioration in loan performance[290]. - The total charge-offs for the six months ended June 30, 2023, were $5.04 million, compared to $4.59 million for the same period in 2022[302]. Expenses and Employee Costs - Noninterest expense for the three months ended June 30, 2023, increased by $14.7 million, or 33.4%, to $58.9 million compared to $44.2 million for the same period in 2022[242]. - Salaries and employee benefits rose by $7.2 million, primarily due to an increase in full-time equivalent employees from 841 to 1,017, with the BTH merger contributing 94 employees[243]. - Total noninterest expense increased by $28.7 million, or 33.0%, to $115.6 million for the six months ended June 30, 2023, compared to $86.9 million for the same period in 2022[270]. Mergers and Acquisitions - Total noninterest income rose to $15,636 thousand in Q2 2023, a 10.0% increase from $14,216 thousand in Q2 2022, primarily due to the merger with BTH[237]. - The BTH merger contributed $1.3 million in incentive compensation and 94 new full-time positions, impacting salaries and employee benefits expenses significantly[273]. - Intangible asset amortization expense rose by $2.0 million, primarily due to the core deposit intangible established with the BTH merger[245]. Liquidity and Capital - The common equity Tier 1 capital ratio was 11.01% as of June 30, 2023, compared to 10.93% at December 31, 2022[217]. - The company borrowed approximately $700.0 million to hold excess cash for contingency liquidity during the quarter ended June 30, 2023[220]. - The loan to deposit ratio was 89.8% at June 30, 2023, compared to 91.2% at December 31, 2022[330]. - The Company declared dividends of $0.30 per share, totaling $9.4 million for the period[333]. Economic and Market Conditions - Economic conditions are currently affected by record inflation and recessionary concerns, which have slowed the single-family housing market and impacted economic growth[349]. - Inflation has increased costs for goods, services, salaries, and occupancy, adversely affecting liquidity, earnings, and stockholders' equity[353]. Interest Rate Risk Management - The company’s interest rate risk management includes simulation models that estimate the impact of interest rate changes on net interest income and fair value of equity[344]. - The company has entered into interest rate swaps to mitigate interest rate risk in specific transactions, although it is not a regular practice[341]. - The Asset-Liability Management Committee regularly reviews the sensitivity of assets and liabilities to interest rate changes and adjusts strategies accordingly[342].