Origin Bank(OBK) - 2023 Q4 - Annual Report

Cautionary Note Regarding Forward-Looking Statements This section cautions that forward-looking statements in the 10-K are subject to inherent uncertainties and risks, with actual results potentially differing due to economic, industry, and regulatory factors - Forward-looking statements are based on current expectations, estimates, and projections, but are not guarantees of future performance and are subject to difficult-to-predict risks, assumptions, and uncertainties[12] - Key factors that could cause actual results to differ materially include economic uncertainty, adverse developments in the banking industry (e.g., bank failures), ability to comply with capital and liquidity requirements, fluctuating interest rates, and the impact of inflation[13] - Other significant risks include credit risk from loan portfolios (especially commercial real estate), natural disasters, system failures, cybersecurity threats, risks associated with mergers and acquisitions, and changes in laws, regulations, or accounting rules[13][15] PART I Item 1. Business Origin Bancorp, Inc. is a financial holding company providing diverse financial services across Texas, Louisiana, and Mississippi, emphasizing organic growth and sound asset quality under extensive regulation - Origin Bancorp, Inc. is a financial holding company, and its wholly-owned subsidiary, Origin Bank, was founded in 1912, providing personalized, relationship banking services[19][20] Key Financial Metrics (as of December 31, 2023) | Metric | Amount (in billions) | | :---------------------- | :------------------- | | Total Assets | $9.72 | | Total Loans Held for Investment (LHFI) | $7.66 | | Total Deposits | $8.25 | | Total Stockholders' Equity | $1.06 | - The company's common stock transferred its listing from Nasdaq to the New York Stock Exchange (NYSE) on May 22, 2023, trading under the new stock symbol 'OBK'[21] - Competitive strengths include a talented team, diverse footprint in stable and growth-oriented markets, differentiated service, a core deposit franchise, and leveraging infrastructure and technology[22] - The company's strategic plan has led to significant growth, integrating four bank acquisitions since 2005, expanding product offerings, and entering new markets, including South Alabama and the Florida Panhandle in January 2024[25] Loan Portfolio Composition (as of December 31, 2023) | Loan Type | Amount (in thousands) | Percentage of Total LHFI | | :-------------------------------- | :-------------------- | :----------------------- | | Real estate: | | | | Commercial real estate | $2,442,734 | 31.9 % | | Construction/land/land development | $1,070,225 | 14.0 % | | Residential real estate | $1,734,935 | 22.6 % | | Total real estate | $5,247,894 | 68.5 % | | Commercial and industrial | $2,059,460 | 26.9 % | | Mortgage warehouse lines of credit | $329,966 | 4.3 % | | Consumer | $23,624 | 0.3 % | | Total LHFI | $7,660,944 | 100.0 % | Interest Income by Loan Type (Years Ended December 31) | Loan Type | 2023 (in millions) | 2022 (in millions) | 2021 (in millions) | | :-------------------------------- | :----------------- | :----------------- | :----------------- | | Commercial real estate | $135.1 | $88.2 | $61.8 | | Construction/land/land development | $69.6 | $36.4 | $21.9 | | Consumer and residential real estate | $83.9 | $51.1 | $38.0 | | Commercial and industrial | $155.8 | $90.5 | $67.1 | | Mortgage warehouse loans | $21.5 | $18.7 | $27.5 | - At December 31, 2023, total deposits were $8.25 billion, with 89.0% classified as core deposits, and the cost of total deposits was 2.38% for the year[32][51] Mortgage Banking Revenue (Years Ended December 31) | Metric | 2023 (in millions) | 2022 (in millions) | 2021 (in millions) | | :----------------------- | :----------------- | :----------------- | :----------------- | | Mortgage banking revenue | $3.4 | $6.7 | $12.9 | Insurance Commission and Fee Income (Years Ended December 31) | Metric | 2023 (in millions) | 2022 (in millions) | 2021 (in millions) | | :-------------------------------- | :----------------- | :----------------- | :----------------- | | Insurance commission and fee income | $25.1 | $22.9 | $13.1 | - The company had 1,041 full-time equivalent employees at December 31, 2023, and has been recognized as a 'Best Bank to Work For' by American Banker magazine for 11 consecutive years[61][72] - Origin Bancorp is a financial holding company regulated by the Federal Reserve and the Louisiana Office of Financial Institutions, while Origin Bank is supervised by the Federal Reserve and the FDIC[77][106][107] Regulatory Capital Ratios (as of December 31, 2023) | Capital Ratio | Origin Bancorp, Inc. | Origin Bank | Minimum for Well Capitalized Bank | | :------------------------------------ | :------------------- | :---------- | :------------------------------ | | Common Equity Tier 1 to Risk-Weighted Assets | 11.83 % | 11.95 % | 6.50 % | | Tier 1 Capital to Risk-Weighted Assets | 12.01 % | 11.95 % | 8.00 % | | Total Capital to Risk-Weighted Assets | 15.02 % | 13.92 % | 10.00 % | | Tier 1 Capital to Average Total Consolidated Assets (Leverage Ratio) | 10.50 % | 10.45 % | 5.00 % | - The company expects to exceed $10 billion in total consolidated assets during 2024, which will subject it to additional regulatory requirements, including the Volcker Rule and debit interchange fee restrictions[89][120] - The company has fully transitioned its LIBOR-based contracts to other indices, primarily SOFR, as of December 31, 2023[136] Our Company Our Competitive Strengths and Banking Strategy Our Markets Our Banking Services Information Technology Systems Competition Human Capital Management Corporate Information Supervision, Regulation and Other Factors Item 1A. Risk Factors This section details business, regulatory, and investment risks, including economic uncertainty, interest rate volatility, credit quality, operational vulnerabilities, and heightened regulatory requirements - Current uncertain economic conditions, inflation, and rapid interest rate changes pose significant challenges, potentially impacting profitability, loan demand, funding costs, and asset values[142][146][155] - The value of mortgage servicing rights (MSRs) is highly sensitive to interest rate changes, which can increase earnings volatility[152][153] - The company faces credit risk from its loan portfolio, particularly substantial amounts of commercial real estate, construction and land development, and commercial loans, and its allowance for credit losses may prove insufficient[159][162][165][166] - Geographic concentration in Texas, Louisiana, and Mississippi makes the company more sensitive to adverse changes in the local economy[164] - Cybersecurity threats, fraud, and reliance on third-party service providers for key infrastructure components pose significant operational and reputational risks[169][173][208] - Intense competition to attract and retain customers and profitable bankers could impair growth, decrease profitability, or result in loss of market share[174][181] - Rapid growth, de novo branching, and future acquisitions expose the company to financial, execution, and operational risks[187][189][191] - The company is susceptible to natural disasters (e.g., hurricanes) and adverse weather events, which could disrupt operations and increase loan losses[194] - Operating in a highly regulated environment, the company is subject to stringent capital requirements, Bank Secrecy Act/AML compliance, CRA evaluations, and increased FDIC insurance premiums, with non-compliance potentially leading to penalties and restrictions[218][219][221][222][223] - If total assets exceed $10 billion, the company will be subject to heightened regulatory requirements, including reduced debit interchange income and Volcker Rule limitations[176][177] - The market price of the common stock may be highly volatile, and the dividend policy may change without notice, with future dividend payments subject to restrictions and dependence on the bank's earnings[224][228][229] - An investment in the company's common stock is not an insured deposit and is subject to the risk of loss[230] Summary Risks Related to Our Business Risks Related to the Regulation of Our Industry Risks Related to Investing in Our Common Stock Item 1B. Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments[231] Item 1C. Cybersecurity Origin Bancorp maintains a comprehensive information security program with employee training, technical controls, and board oversight, having experienced no material cybersecurity incidents to date - Origin's information security program is designed to protect the security, availability, integrity, and confidentiality of its computer systems, networks, software, and information assets, including client data[232] - The program includes mandatory employee training on client information confidentiality and regular testing for phishing susceptibility, with additional training for susceptible employees[233][234] - Technical controls, regular risk assessments, vulnerability scans, penetration tests by third-party vendors, and due diligence for third-party service providers are integral to the cybersecurity strategy[235][236] - An Information and Cybersecurity Incident Response Plan is in place, outlining processes for responding to cybersecurity incidents, with escalation and reporting procedures to senior management[237][238] - To date, the company has not experienced a cybersecurity incident that has materially impacted its business strategy, results of operations, or financial condition[239] - The Board of Directors, primarily through its Risk Committee, oversees cybersecurity threats, with management-level Cyber Risk and Information Technology Committees governing day-to-day operations[240] - The Information Security Officer (ISO) is responsible for the information security program, manages day-to-day cybersecurity operations, and provides updates to the Risk Committee[241] Cybersecurity Risk Management and Strategy Cybersecurity Governance Item 2. Properties Origin Bancorp's executive offices and Origin Bank are in Ruston, Louisiana, operating over 60 locations across Texas, Louisiana, and Mississippi, with owned and leased facilities - Executive offices and Origin Bank are located at 500 South Service Road East, Ruston, Louisiana[242] - The company operated through over 60 locations, including banking centers and loan production offices, in Texas, Louisiana, and Mississippi at December 31, 2023[242] - Origin Bank owned its main office building and 31 banking centers, as well as a controlling interest in its operations center, with remaining facilities occupied under lease agreements[242] - Insurance holdings operated through 12 leased offices primarily located in Louisiana[243] Item 3. Legal Proceedings Origin Bancorp is routinely involved in legal actions, which management expects will not materially impact financial position, though they are costly and divert attention - The company is subject to various legal actions that arise from time to time in the ordinary course of business[244] - Management does not expect any pending proceedings, individually or in aggregate, to have a material adverse effect on consolidated financial position or results of operations[244] - Legal matters are costly, divert management's attention, and may materially adversely affect reputation, even if resolved favorably[244] Item 4. Mine Safety Disclosures This item is not applicable to Origin Bancorp, Inc - This item is not applicable[245] PART II Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities This section details Origin Bancorp's common stock listing on NYSE, shareholder count, dividend policy, and a $50 million stock repurchase program with full capacity remaining - The company's common stock is listed on the New York Stock Exchange (NYSE) under the symbol 'OBK', having transferred from Nasdaq on May 22, 2023[21][247][251] - As of February 15, 2024, there were approximately 7,247 holders of record of the common stock[248] - The company intends to pay quarterly cash dividends, subject to board approval, earnings, capital requirements, financial condition, and regulatory restrictions, with dividends from Origin Bank being the primary source[249] Stock Performance Comparison (May 9, 2018 - December 31, 2023) | | May 9, 2018 | Dec 31, 2018 | Dec 31, 2019 | Dec 31, 2020 | Dec 31, 2021 | Dec 31, 2022 | Dec 31, 2023 | | :-------------------------- | :---------- | :----------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Origin Bancorp, Inc. | $100.00 | $100.48 | $112.41 | $65.87 | $128.80 | $113.57 | $112.16 | | Nasdaq Composite Index | $100.00 | $90.40 | $122.24 | $175.34 | $213.15 | $142.60 | $204.52 | | Nasdaq OMX ABA Community Bank TR Index | $100.00 | $79.43 | $98.17 | $88.00 | $118.81 | $109.08 | $106.99 | - In July 2022, the Board authorized a stock repurchase program for up to $50 million of common stock, with $50.0 million of capacity remaining at December 31, 2023, as no repurchases were made during the year[254][255] Stock Performance Graph Stock Repurchases Item 6. [Reserved] This item is reserved and contains no information - This item is reserved and contains no information[256] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes Origin Bancorp's financial performance and condition, covering critical accounting policies, net interest income, credit losses, noninterest items, and balance sheet components, highlighting interest rate impacts and liquidity - Critical accounting estimates include the Allowance for Loan Credit Losses (ALCL), Loan Acquisition Accounting (especially for Purchase Credit Deteriorated (PCD) loans), and Mortgage Servicing Rights (MSRs) valuation[262][264][266] - The company elected a two-year delay (2020-2021) and a subsequent three-year transition period (2022-2024) for CECL's impact on regulatory capital[265] Net Income and Financial Ratios (Years Ended December 31) | Metric | 2023 | 2022 | 2021 | | :------------------- | :----- | :----- | :----- | | Net income (in thousands) | $83,800 | $87,715 | $108,546 | | Return on Average Assets (ROAA) | 0.84 % | 1.01 % | 1.45 % | | Return on Average Equity (ROAE) | 8.38 % | 10.81 % | 15.79 % | | Book value per common share | $34.30 | $30.90 | $30.75 | - Net interest income increased by $24.3 million (8.8%) to $299.6 million in 2023, driven by higher interest rates and average interest-earning assets, but partially offset by a $172.5 million increase in interest expense[273] - The fully tax-equivalent net interest margin (NIM-FTE) decreased by 19 basis points to 3.23% in 2023, primarily due to a 240 basis point increase in interest rates paid on liabilities, partially offset by a 157 basis point increase in asset yields[280] - Strategic sales of available-for-sale investment securities in 2023 (totaling $260.8 million with $11.8 million realized loss) were undertaken to pay down FHLB advances and support loan growth, with an estimated positive forward impact on NIM-FTE[278][279][298] Net Interest Income Rate/Volume Analysis (Year Ended December 31, 2023 vs. 2022) | (Dollars in thousands) | Volume Change | Yield/Rate Change | Total Change | | :------------------------------------------------- | :------------ | :---------------- | :----------- | | Interest-earning assets: | | | | | Loans receivable | $72,684 | $107,981 | $180,665 | | Investment securities-taxable | $(3,738) | $7,625 | $3,887 | | Investment securities-non-taxable | $(1,496) | $(578) | $(2,074) | | Non-marketable equity securities | $293 | $1,313 | $1,606 | | Interest-bearing deposits in banks | $(326) | $13,029 | $12,703 | | Total interest-earning assets | $67,417 | $129,370 | $196,787 | | Interest-bearing liabilities: | | | | | Savings and interest-bearing transaction accounts | $4,703 | $110,596 | $115,299 | | Time deposits | $5,694 | $41,955 | $47,649 | | FHLB advances & other borrowings | $(2,470) | $10,317 | $7,847 | | Subordinated indebtedness | $1,090 | $623 | $1,713 | | Total interest-bearing liabilities | $9,017 | $163,491 | $172,508 | | Net interest income | $58,400 | $(34,121) | $24,279 | - Provision for credit losses decreased by $7.9 million to $16.8 million in 2023, primarily due to a $14.9 million provision in 2022 related to the BTH merger, offset by loan growth and increased reserves on individually evaluated loans in 2023[289] - Nonperforming LHFI increased by $20.2 million in 2023, mainly from commercial and industrial loans and residential real estate loans, leading to a decrease in the ALCL to nonperforming LHFI ratio from 876.87% to 321.66%[289][337] Noninterest Income (Years Ended December 31) | Noninterest income (in thousands) | 2023 | 2022 | 2021 | $ Change (2023 vs 2022) | % Change (2023 vs 2022) | | :-------------------------------- | :----- | :----- | :----- | :---------------------- | :---------------------- | | Insurance commission and fee income | $25,085 | $22,869 | $13,098 | $2,216 | 9.7 % | | Service charges and fees | $18,803 | $17,669 | $15,049 | $1,134 | 6.4 % | | Mortgage banking revenue | $3,356 | $6,722 | $12,927 | $(3,366) | (50.1)% | | Other fee income | $3,871 | $3,530 | $2,879 | $341 | 9.7 % | | Swap fee income | $1,277 | $457 | $814 | $820 | N/M | | (Loss) gain on sales of securities, net | $(11,635) | $1,664 | $1,748 | $(13,299) | N/M | | Limited partnership investment gain (loss) income | $405 | $(199) | $5,701 | $604 | N/M | | Gain (loss) on sales and disposals of other assets, net | $64 | $(175) | $(185) | $239 | N/M | | Change in fair value of equity investments | $10,096 | $0 | $0 | $10,096 | N/A | | Other income | $7,013 | $4,737 | $10,162 | $2,276 | 48.0 % | | Total noninterest income | $58,335 | $57,274 | $62,193 | $1,061 | 1.9 % | Noninterest Expense (Years Ended December 31) | Noninterest expense (in thousands) | 2023 | 2022 | 2021 | $ Change (2023 vs 2022) | % Change (2023 vs 2022) | | :--------------------------------- | :----- | :----- | :----- | :---------------------- | :---------------------- | | Salaries and employee benefits | $138,819 | $118,971 | $93,026 | $19,848 | 16.7 % | | Occupancy and equipment, net | $26,783 | $20,203 | $17,347 | $6,580 | 32.6 % | | Data processing | $11,590 | $10,456 | $9,117 | $1,134 | 10.8 % | | Intangible asset amortization | $9,628 | $5,488 | $844 | $4,140 | 75.4 % | | Office and operations | $10,834 | $8,120 | $6,399 | $2,714 | 33.4 % | | Professional services | $5,931 | $3,813 | $3,644 | $2,118 | 55.5 % | | Loan-related expenses | $5,035 | $6,097 | $7,688 | $(1,062) | (17.4)% | | Advertising and marketing | $5,986 | $4,431 | $3,438 | $1,555 | 35.1 % | | Electronic banking | $4,712 | $3,958 | $3,563 | $754 | 19.1 % | | Franchise tax expense | $3,334 | $3,582 | $2,538 | $(248) | (6.9)% | | Regulatory assessments | $6,456 | $3,547 | $2,904 | $2,909 | 82.0 % | | Communications | $1,527 | $1,246 | $1,574 | $281 | 22.6 % | | Merger-related expense | $0 | $6,171 | $0 | $(6,171) | (100.0)% | | Other expenses | $4,581 | $4,336 | $4,697 | $245 | 5.7 % | | Total noninterest expense | $235,216 | $200,419 | $156,779 | $34,797 | 17.4 % | - Total assets increased by $36.5 million (0.4%) to $9.72 billion at December 31, 2023, driven by an $570.9 million (8.1%) increase in loans held for investment (LHFI)[310] - Total deposits increased by $475.4 million (6.1%) to $8.25 billion at December 31, 2023, primarily due to increases in brokered time deposits and money market deposits, partially offset by a decrease in noninterest-bearing demand deposits[311][350] - FHLB advances and other borrowings decreased by $555.6 million (86.9%) to $83.6 million at December 31, 2023[311][359] Loan Portfolio Held for Investment (as of December 31) | (Dollars in thousands) | 2023 | 2022 | $ Change | % Change | | :-------------------------------- | :---------------- | :---------------- | :------- | :------- | | Real estate: | | | | | | Commercial real estate | $2,442,734 | $2,304,678 | $138,056 | 6.0 % | | Construction/land/land development | $1,070,225 | $945,625 | $124,600 | 13.2 % | | Residential real estate | $1,734,935 | $1,477,538 | $257,397 | 17.4 % | | Total real estate | $5,247,894 | $4,727,841 | $520,053 | 11.0 % | | Commercial and industrial | $2,059,460 | $2,051,161 | $8,299 | 0.4 % | | Mortgage warehouse lines of credit | $329,966 | $284,867 | $45,099 | 15.8 % | | Consumer | $23,624 | $26,153 | $(2,529) | (9.7)% | | Total LHFI | $7,660,944 | $7,090,022 | $570,922 | 8.1 % | Nonperforming Assets (as of December 31) | (Dollars in thousands) | 2023 | 2022 | | :-------------------------------- | :---------------- | :---------------- | | Total nonperforming LHFI | $30,115 | $9,940 | | Total nonperforming loans | $30,115 | $13,873 | | Total repossessed assets owned | $3,929 | $806 | | Total nonperforming assets | $34,044 | $14,679 | | Ratio of nonperforming LHFI to total LHFI | 0.39 % | 0.14 % | | Ratio of nonperforming assets to total assets | 0.35 % | 0.15 % | Allowance for Loan Credit Losses (ALCL) Analysis (Years Ended December 31) | (Dollars in thousands) | 2023 | 2022 | | :-------------------------------- | :---------------- | :---------------- | | Balance at beginning of period | $87,161 | $64,586 | | ALCL - BTH merger | $0 | $5,527 | | Provision for loan credit losses | $17,514 | $21,613 | | Net charge-offs | $7,807 | $4,565 | | Balance at end of period | $96,868 | $87,161 | | Ratio of ALCL to Nonperforming LHFI | 321.66 % | 876.87 % | | Ratio of ALCL to LHFI | 1.26 % | 1.23 % | | Net charge-offs as a percentage of Average LHFI | 0.10 % | 0.08 % | - The securities portfolio totaled $1.27 billion at December 31, 2023, a decrease of $387.1 million (23.3%) from 2022, primarily due to sales, maturities, and calls[341] Deposit Mix (as of December 31) | (Dollars in thousands) | 2023 Balance | 2023 % of Total | 2022 Balance | 2022 % of Total | | :----------------------- | :------------- | :-------------- | :------------- | :-------------- | | Noninterest-bearing demand | $1,919,638 | 23.3 % | $2,482,475 | 32.0 % | | Money market | $2,772,807 | 33.6 % | $2,442,559 | 31.4 % | | Interest-bearing demand | $1,875,864 | 22.7 % | $1,737,158 | 22.3 % | | Time deposits | $967,901 | 11.7 % | $781,880 | 10.0 % | | Brokered time deposits | $444,989 | 5.4 % | $5,407 | 0.1 % | | Savings | $269,926 | 3.3 % | $326,223 | 4.2 % | | Total deposits | $8,251,125 | 100.0 % | $7,775,702 | 100.0 % | - Estimated uninsured/uncollateralized deposits were $2.73 billion (33.1% of total deposits) at December 31, 2023, down from $3.43 billion (44.1%) in 2022[358] Borrowings (as of December 31) | (Dollars in thousands) | 2023 | 2022 | | :-------------------------------- | :---------------- | :---------------- | | Short-term FHLB advances | $70,000 | $550,000 | | Long-term FHLB advances | $6,474 | $6,740 | | GNMA repurchase liability | $0 | $24,569 | | Overnight repurchase agreements with depositors | $7,124 | $27,921 | | Correspondent short-term borrowings | $0 | $30,000 | | Total FHLB advances and other borrowings | $83,598 | $639,230 | | Subordinated indebtedness, net | $194,279 | $201,765 | - The company and Origin Bank were in compliance with all applicable regulatory capital requirements and classified as 'well capitalized' at December 31, 2023[387] Regulatory Capital Ratios (as of December 31, 2023) | Capital Ratio | Origin Bancorp, Inc. | Origin Bank | | :------------------------------------ | :------------------- | :---------- | | Common Equity Tier 1 Capital to Risk-Weighted Assets | 11.83 % | 11.95 % | | Tier 1 Capital to Risk-Weighted Assets | 12.01 % | 11.95 % | | Total Capital to Risk-Weighted Assets | 15.02 % | 13.92 % | | Tier 1 Capital to Average Total Consolidated Assets (Leverage Ratio) | 10.50 % | 10.45 % | Critical Accounting Policies and Estimates General Results of Operations Net Interest Income and Net Interest Margin Provision for Credit Losses Noninterest Income Noninterest Expense Income Tax Expense Comparison of Financial Condition at December 31, 2023, and December 31, 2022 Loan Portfolio Nonperforming Assets Potential Problem Loans Allowance for Loan Credit Losses Securities Deposits Borrowings Holding Company Line of Credit Subordinated Indebtedness Liquidity and Capital Resources Stockholders' Equity Stock Repurchases Regulatory Capital Requirements Item 7A. Quantitative and Qualitative Disclosures about Market Risk This section details the management of interest rate risk through ALCO, derivative instruments, and simulation models, outlining policy limits for net interest income sensitivity and addressing inflation impacts - The company's primary component of market risk is interest rate volatility, managed by the Bank's Asset-Liability Management Committee (ALCO) through balance sheet structuring and derivative financial instruments[389][391][392] - Interest rate risk simulation models and shock analyses are used to test the sensitivity of net interest income and fair value of equity to changes in market interest rates[394] - Internal policy specifies limits for estimated net interest income at risk for instantaneous parallel shifts of the yield curve, e.g., not more than 8.0% decline for a 100 basis point shift[395] Simulated Impact of Interest Rate Changes on Net Interest Income and Fair Value of Equity (December 31, 2023) | Change in Interest Rates (basis points) | % Change in Net Interest Income | % Change in Fair Value of Equity | | :------------------------------------ | :------------------------------ | :------------------------------- | | +400 | 15.9 % | 4.1 % | | +300 | 11.9 % | 3.5 % | | +200 | 8.0 % | 3.0 % | | +100 | 0.3 % | (1.1)% | | Base | | | | -100 | (4.5)% | (2.6)% | | -200 | (0.8)% | (0.1)% | | -300 | (0.8)% | (1.4)% | | -400 | (1.0)% | (2.9)% | - Inflation affects financial institutions by increasing costs of goods, services, salaries, and benefits, and generally decreases the market value of investments and loans[402] - The company has fully transitioned its LIBOR-based contracts to other indices, primarily SOFR, as of December 31, 2023, following the discontinuation of LIBOR[136][405] Item 8. Financial Statements and Supplementary Data This section presents Origin Bancorp's audited consolidated financial statements for 2021-2023, including balance sheets, income statements, and cash flows, with an unqualified audit opinion from FORVIS, LLP - The consolidated financial statements for the years ended December 31, 2023, 2022, and 2021 include the Consolidated Balance Sheets, Statements of Income, Comprehensive Income (Loss), Changes in Stockholders' Equity, and Cash Flows[408] - FORVIS, LLP, the independent registered public accounting firm, issued an unqualified opinion on the consolidated financial statements and on the effectiveness of internal control over financial reporting as of December 31, 2023[410][411] - The valuation of the Allowance for Credit Losses (ACL) was identified as a critical audit matter due to the high degree of subjectivity in management's estimates[415][419] - Key accounting policies include those for the Allowance for Credit Losses (ALCL), Loan Acquisition Accounting (including Purchase Credit Deteriorated (PCD) loans), and Mortgage Servicing Rights (MSRs) valuation[468][460][480] - Basic earnings per common share was $2.72 in 2023, $3.29 in 2022, and $4.63 in 2021; diluted earnings per common share was $2.71 in 2023, $3.28 in 2022, and $4.60 in 2021[531] Consolidated Balance Sheet Highlights (as of December 31) | (Dollars in thousands) | 2023 | 2022 | | :-------------------------------- | :---------------- | :---------------- | | Total cash and cash equivalents | $280,441 | $358,972 | | Total securities | $1,272,054 | $1,659,127 | | Loans, net of ALCL | $7,564,076 | $7,002,861 | | Total assets | $9,722,584 | $9,686,067 | | Total deposits | $8,251,125 | $7,775,702 | | FHLB advances, repurchase obligations and other borrowings | $83,598 | $639,230 | | Subordinated indebtedness, net | $194,279 | $201,765 | | Total liabilities | $8,659,679 | $8,736,124 | | Total stockholders' equity | $1,062,905 | $949,943 | Consolidated Statements of Income Highlights (Years Ended December 31) | (Dollars in thousands) | 2023 | 2022 | 2021 | | :-------------------------------- | :---------------- | :---------------- | :---------------- | | Total interest and dividend income | $523,391 | $326,604 | $241,656 | | Total interest expense | $223,834 | $51,326 | $25,404 | | Net interest income | $299,557 | $275,278 | $216,252 | | Provision for credit losses | $16,753 | $24,691 | $(10,765) | | Total noninterest income | $58,335 | $57,274 | $62,193 | | Total noninterest expense | $235,216 | $200,419 | $156,779 | | Income before income tax expense