Origin Bank(US:OBK)2024-04-25 19:00Financial Data and Key Metrics Changes - The company reported diluted earnings per share of $0.73 for Q1, with pretax pre-provision earnings of $31.9 million [54][66] - Tangible book value increased by 2% to $29.24, and the TCE ratio remained flat at 9.3% [54][11] - The allowance for credit losses increased by $1.5 million to $98.4 million, resulting in a slight percentage change from the prior quarter [7] Business Line Data and Key Metrics Changes - Gross loans held for investment grew by 3.1% during the quarter, with a 2.3% increase excluding mortgage warehouse [87] - Noninterest income for Q1 was reported at $17.3 million, up from $14.6 million in Q4, driven by seasonal strength in the insurance business and increased mortgage production [68] - Noninterest expense decreased to $58.7 million in Q1 from $60.9 million in Q4 [69] Market Data and Key Metrics Changes - Total deposits grew by 3.1% during the quarter, with a 1.3% increase excluding brokered deposits [9] - The net interest margin remained flat at 3.19%, with expectations for slight improvement moving forward [10] - The company anticipates continued pressure on the noninterest-bearing deposit mix but expects it to remain above 20% [9] Company Strategy and Development Direction - The company is focused on improving profitability and driving revenue through strategic investments in new markets, such as South Alabama and the Florida Panhandle [79] - A strategic decision was made to realign the treasury management model to better serve geographic strategies and enhance efficiency [4] - The company aims to maintain a disciplined approach to loan pricing while focusing on core deposit growth [39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about deposit growth and the ability to achieve loan growth in the mid-single digits for the year [47][88] - The company is preparing to cross the $10 billion asset threshold and is focused on managing expenses while seeking growth opportunities [2][96] - Management highlighted the importance of maintaining a strong culture and building long-term relationships with clients as a competitive differentiator [62] Other Important Information - The company successfully sold its MSR asset, which is expected to reduce volatility in earnings and regulatory risk [55] - Nonperforming loans increased by $10.3 million, but levels remain within historically acceptable ranges [64] - The company has implemented robotic process automation, saving approximately 3,100 hours of manual work in Q1 2024 [5] Q&A Session Summary Question: What are the expectations on deposit costs moving forward? - Management indicated that while interest-bearing deposit costs were up 13 basis points, they expect some easing from recent levels and are focused on maintaining net interest margin [14][15] Question: Can you provide insights on noninterest-bearing deposits? - Management noted a shift in the noninterest-bearing deposit mix but expressed optimism about stabilizing trends and maintaining levels above 20% [18][104] Question: What are the expectations for loan and deposit growth? - Management reiterated expectations for loan growth in the mid-single digits, with deposit growth expected to match this [47][88] Question: How is the company managing expenses? - Management highlighted effective expense management in Q1 but cautioned against over-optimism, maintaining guidance at the appropriate level [29] Question: What are the thoughts on capital deployment and M&A? - Management expressed confidence in capital flexibility for future opportunities, including potential M&A, while focusing on organic growth in new markets [94][96]