Origin Bancorp (OBK) Q2 2025 Earnings Call July 24, 2025 09:00 AM ET Speaker0Morning, and welcome to the Origin Bancorp Inc. Second Quarter Earnings Conference Call. My name is Tom, and I'll be your Evercore Coordinator. The format of the call includes prepared remarks from the company followed by a question and answer session. All attendees will be on a listen only mode until the Q and A portion of the call.Please note this event is being recorded. I would now like to turn the conference call over to Chris ...

RUSTON, La., July 23, 2025 (GLOBE NEWSWIRE) -- Origin Bancorp, Inc. (NYSE: OBK) (“Origin,” “we,” “our” or the “Company”), the holding company for Origin Bank (the “Bank”), today announced net income of $14.6 million, or $0.47 diluted earnings per share (“EPS”) for the quarter ended June 30, 2025, compared to net income of $22.4 million, or $0.71 diluted earnings per share, for the quarter ended March 31, 2025. Pre-tax, pre-provision (“PTPP”)(1) earnings were $21.5 million for the quarter ended June 30, 2025 ...

Financial Data and Key Metrics Changes - In Q1 2025, diluted earnings per share were reported at $0.71, with net interest margin expanding by 11 basis points to 3.44% [23][27] - Annualized return on assets (ROA) was 93 basis points, with a target of reaching a run rate of 1% or greater by Q4 2025 [9][7] - Deposits increased by 1.4% during the quarter, with core deposits growing 7.2% on an annualized basis [24][14] Business Line Data and Key Metrics Changes - The mortgage business is undergoing restructuring, expected to improve annual pre-tax earnings by approximately $1.5 million starting in the second half of the year [8] - Non-interest income increased to $15.6 million in Q1, driven by seasonal improvements in the insurance business [29] - Non-interest expense decreased to $62.1 million in Q1 from $65.4 million in Q4, benefiting from Optimize Origin efforts [30] Market Data and Key Metrics Changes - The company anticipates mid to high-single-digit loan growth in 2025, supported by deposit growth [13] - Past due loans held for investment increased to 0.96%, while classified loans rose to 1.68% of total loans [18][19] - Non-interest-bearing deposits were stable at about 23% of total deposits, with year-over-year growth noted for the first time since Q4 2022 [25] Company Strategy and Development Direction - The company is focused on the "Optimize Origin" initiative to achieve elite-level financial performance and improve operational efficiency [7][10] - A partnership model in the mortgage business is expected to enhance efficiency and profitability [8] - The company is committed to deepening customer relationships to drive long-term shareholder value [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth opportunities despite macroeconomic uncertainties, citing strong customer relationships and market positioning [34][48] - The company is prepared to navigate potential market challenges and capitalize on opportunities, drawing on past experiences during economic downturns [34][108] - Management remains focused on maintaining a disciplined approach to loan growth and deposit management [27][59] Other Important Information - The tangible book value grew to $32.43, marking the tenth consecutive quarter of linked quarter growth [33] - The company has plans for share repurchase activity and capital deployment opportunities [88] Q&A Session Summary Question: Loan growth outlook amidst macro uncertainty - Management remains optimistic about loan growth, citing energized bankers and building pipelines despite some project delays due to macroeconomic factors [41][42][44] Question: Impact of mortgage restructuring on bottom line - The company anticipates a portion of savings from the Optimize Origin initiative will flow to the bottom line while still investing in growth opportunities [51][52] Question: Competition in deposit pricing and loan yields - Loan yields remain stable in the 7.3% to 7.5% range, with management pleased about the competitive landscape [93] Question: Update on hiring efforts and regional performance - The company is actively hiring productive commercial bankers and is optimistic about growth in the Southeast region [74] Question: Potential for share buybacks - Management views current share prices as attractive and plans to engage in share repurchase activity [88]

Financial Data and Key Metrics Changes - The company reported diluted earnings per share of $0.71 for Q1, with a net expense impact of $2,300,000 equivalent to $0.06 in EPS pressure [16][18] - Net interest margin expanded by 11 basis points to 3.44%, exceeding expectations due to better loan yields and deposit costs [18][19] - Annualized return on assets (ROA) was 93 basis points, with a target of reaching a run rate of 1% or greater by Q4 [6][7] Business Line Data and Key Metrics Changes - The mortgage business is undergoing restructuring, expected to improve annual pretax earnings by approximately $1,500,000 starting in the second half of the year [6][10] - Non-interest income for Q1 was reported at $15,600,000, an increase from $14,100,000 in Q4, primarily due to seasonal factors in the insurance business [18][19] - Non-interest expense decreased to $62,100,000 in Q1 from $65,400,000 in Q4, with further reductions anticipated due to the Optimize Origin initiative [18][19] Market Data and Key Metrics Changes - Deposits, excluding brokered deposits, grew by 7.2% on an annualized basis, setting the stage for anticipated loan growth [10][17] - Non-interest bearing deposits remained stable at about 23% of total deposits, with expectations to maintain this range through 2025 [17] - The loan-to-deposit ratio, excluding mortgage warehouse, was reported at 86.1%, below the 90% target [17] Company Strategy and Development Direction - The company is focused on the "Optimize Origin" initiative to achieve elite financial performance and improve operational efficiency [5][8] - A strategic goal is to maintain mid to high single-digit loan growth in 2025, supported by core deposit growth [10][18] - The company is exploring opportunities for share buybacks and capital deployment to enhance shareholder value [59][60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth opportunities despite macroeconomic uncertainties, citing strong customer relationships and market positioning [21][75] - The company is adjusting loan growth expectations to the lower end of the previous guidance due to macroeconomic factors but remains confident in achieving growth [22][29] - Management highlighted the importance of maintaining a strong credit culture and proactive client selection to optimize the portfolio [11][30] Other Important Information - The company has successfully exited approximately $200,000,000 in client relationships that did not fit its selection criteria [12][30] - The tangible book value grew sequentially to $32.43, marking the tenth consecutive quarter of growth [20] - Regulatory capital levels remain above well-capitalized standards, providing flexibility for future growth initiatives [20] Q&A Session Summary Question: Loan growth outlook amidst macro uncertainty - Management acknowledged optimism in loan growth despite adjusting expectations to the lower end of the previous guidance, citing strong pipelines and customer engagement [22][24][29] Question: Impact of Optimize Origin initiative on bottom line - Management indicated that a portion of the savings from the Optimize Origin initiative would flow to the bottom line while also investing in growth opportunities [31][32] Question: Deposit pricing competition and loan yields - Management reported stable loan yields in the 7.3% to 7.5% range, with proactive communication with customers regarding deposit pricing [64][66] Question: Update on hiring efforts and team performance - Management confirmed ongoing strategic hiring efforts, particularly in North Texas and the Southeast, with positive performance reported from the Houston team [45][48] Question: Mortgage segment restructuring and revenue outlook - Management noted that restructuring the mortgage segment would lower expenses but also impact revenue, with expectations for some offsetting tailwinds [49][50]

Core Viewpoint - Origin Bancorp, Inc. reported strong financial results for the first quarter of 2025, with significant increases in net income and pre-tax, pre-provision earnings, reflecting the effectiveness of its strategic initiatives aimed at enhancing financial performance and operational efficiency [1][2][5]. Financial Highlights - Net income for the quarter ended March 31, 2025, was $22.4 million, or $0.71 diluted EPS, up from $14.3 million, or $0.46 diluted EPS, in the previous quarter, marking a 57.0% increase [1][4]. - Pre-tax, pre-provision earnings were $32.0 million for the quarter, compared to $12.6 million for the linked quarter [1][4]. - Net interest income reached $78.5 million, a slight increase of $110,000, or 0.1%, from the previous quarter, the highest level in eight quarters [4][7]. - The fully tax equivalent net interest margin (NIM-FTE) expanded by 11 basis points to 3.44% for the quarter [4][13]. - Return on average assets (ROAA) was 0.93%, a 63.2% increase from 0.57% in the linked quarter [4][47]. Optimize Origin Initiative - The "Optimize Origin" initiative aims to drive elite financial performance through three pillars: Productivity, Delivery & Efficiency; Balance Sheet Optimization; and Culture & Employee Engagement [2][5]. - The initiative targets a return on average assets (ROAA) run rate of greater than 1% by Q4 2025, with expected annual earnings improvement of approximately $23.4 million on a pre-tax, pre-provision basis [5][39]. Loan and Deposit Performance - Total loans held for investment (LHFI) were $7.59 billion, reflecting a slight increase of $11.8 million, or 0.2%, from the previous quarter [4][31]. - Total deposits increased to $8.34 billion, up $115.3 million, or 1.4%, compared to the linked quarter [6][39]. - Noninterest-bearing deposits as a percentage of total deposits were 22.7%, a slight decrease from 23.1% in the previous quarter [39]. Credit Quality - Past due loans increased by $30.3 million compared to the linked quarter, primarily due to residential and commercial real estate loans [17]. - Nonperforming loans rose to 1.07% of LHFI, up from 0.99% in the previous quarter, driven by increases in residential real estate loans [18]. - The allowance for loan credit losses (ALCL) was $92.0 million, with a provision for credit losses of $3.4 million during the quarter [20][14]. Noninterest Income and Expense - Noninterest income for the quarter was $15.6 million, a significant increase from the linked quarter, primarily due to the absence of losses on sales of securities [23][24]. - Noninterest expense decreased by $3.4 million, or 5.1%, driven by reductions in various expense categories, despite an increase in salaries and employee benefits [25][26].