Origin Bank(US:OBK)2022-01-27 23:18Financial Data and Key Metrics Changes - The company reported record net income of $28.3 million for Q4 2021, translating to $1.20 diluted earnings per share, and a full-year net income of $108.5 million or $4.60 diluted earnings per share [11][12] - The net interest margin (NIM) was 3.06% on a tax-equivalent basis, with an efficiency ratio of 56.92% [11][12] - Pre-tax pre-provision earnings increased by 17% year-over-year to $122 million for 2021 [12] Business Line Data and Key Metrics Changes - Loans grew by 5.7% quarter-over-quarter, excluding PPP and mortgage warehouse, which annualizes to 23% [9][18] - Year-over-year loan growth was 9.9%, amounting to an increase of $404 million [10][18] - Average non-interest bearing deposits increased by $145 million quarter-over-quarter and $425 million year-over-year, representing a 25.2% increase [20][22] Market Data and Key Metrics Changes - The Texas market was a significant driver of growth, with loans increasing by $373 million and deposits by $558 million in 2021 [13][14] - The company achieved a compound annual growth rate of over 21% in loans and 28% in deposits over the last five years [14] Company Strategy and Development Direction - The company focuses on creating sustainable long-term value through efficient expense management and strategic investments in people and infrastructure [7][13] - There is a strong emphasis on growing non-interest bearing deposits and leveraging technology to enhance client experience and operational efficiency [20][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving high single-digit loan growth in 2022, with a budgeted target of 10% loan growth [52][54] - The company is closely monitoring economic conditions, including the impact of the Omicron variant and inflationary pressures, but remains pleased with the stability of its portfolio [29][39] Other Important Information - The company completed the acquisition of the remaining 62% of the Lincoln insurance agency, resulting in a $5.2 million fair value gain [39] - The allowance for credit losses was reduced to $64.6 million, reflecting improved credit quality and economic forecasts [28] Q&A Session Summary Question: What drove the loan growth in Q4 and expectations for 2022? - Management noted that Texas was the primary driver of loan growth, with a pipeline of $300 million entering Q4 and a budgeted target of 10% loan growth for 2022 [51][52] Question: How sticky is the deposit growth and expectations for 2022? - Management indicated that non-interest bearing deposits have increased to 33% of total deposits and that they expect continued growth despite seasonal fluctuations [55][56] Question: What are the expectations for fee income in Q1? - Insurance income is expected to increase to about $20 million in 2022, with mortgage income projected to grow by 6% [61][62] Question: What is the outlook for expenses in 2022? - The company anticipates a 3.1% increase in core bank expenses, with an additional 3.4% increase due to insurance acquisitions [70][72] Question: How does the company view traditional bank M&A? - Management remains open to traditional bank M&A but emphasizes a disciplined approach focused on partnerships that enhance existing market positions [98][99]