OBK — Origin Bancorp, Inc.

Summary of Origin Bancorp, Inc. Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Earnings Per Share (EPS): Reported at $0.27, impacted by notable items totaling a net expense of $23.3 million, equating to a $0.59 EPS pressure.
• Pretax Pre-Provision Earnings: Increased to $39.9 million from $37.1 million, excluding notable items.
• Net Interest Margin (NIM): Expanded to 3.65%, driven by increased interest income from the securities portfolio.
• Total Revenue: Excluding notable items, revenue increased by 10%.
• Loan Growth: Loans decreased by 1.9% sequentially; however, loan originations were up 19.2% year-to-date compared to the previous year.
• Deposits: Total deposits grew by 2.6%, with noninterest-bearing deposits increasing by 8.6% quarter-over-quarter.
• Charge-offs: Net charge-offs for the quarter totaled $31.4 million, with $28.4 million attributed to Tricolor.

2. Strategic Updates and Business Highlights

• Optimize Origin Initiative: The company is ahead of its goals, with significant improvements in ROA (up 48 basis points to 1.63%) and a focus on relationship expansion leading to increased fee income.
• Market Positioning: The bank is capitalizing on M&A-driven disruption in Texas, with 15 bank acquisitions this year, and is optimistic about growth opportunities in its DFW and Southeast markets.
• Credit Management Enhancements: Following the Tricolor incident, Origin is enhancing its credit management processes and creating a new internal group focused on credit oversight.

3. Forward Guidance and Outlook

• Loan Growth: Guidance for loan growth has been reduced from low single digits to essentially flat for the year, with expectations for a return to growth in Q4.
• Deposit Growth: Maintaining guidance for low single-digit growth in deposits for the year.
• NIM Guidance: Tightened to 3.65% for Q4 and 3.60% for the full year, with expectations of further Fed rate cuts impacting margins.
• 2026 Outlook: Management is optimistic about mid- to high single-digit loan growth in 2026, supported by a strong origination pipeline.

4. Bad News, Challenges, or Points of Concern

• Tricolor Fraud Incident: The charge-off of the entire $28.4 million debt related to Tricolor due to fraud allegations has raised concerns about credit risk management.
• Credit Quality Metrics: Classified loans increased to 1.84% of total loans, and nonperforming assets rose to 1.18%, indicating potential credit quality deterioration.
• Loan Paydowns: Elevated paydowns and payoffs have masked strong origination levels, leading to a decline in reported loan balances.
• Market Competition: Increased competition in Texas due to recent bank acquisitions may pose challenges for market share growth.

5. Notable Q&A Insights

• Credit Exposure: Management confirmed that subprime auto loans constitute only 0.2% of the total portfolio and are performing well. The NBFI portfolio is stable with no past dues.
• Recovery from Tricolor: Management is pursuing recovery avenues but cannot quantify the potential recovery amount or timeline due to ongoing bankruptcy proceedings.
• Optimize Origin Progress: The initiative is ongoing, with management indicating there are still significant opportunities for improvement and growth.
• Capital Deployment: The priority remains on organic growth, with stock buybacks considered if the stock price remains attractive, while M&A is not a current focus.

This summary encapsulates the key points from the earnings call, highlighting both the positive developments and the challenges faced by Origin Bancorp.