Origin Bancorp, Inc. — Form 10-Q Summary
Business context and reporting period. Origin Bancorp is a Louisiana-based financial holding company operating primarily through Origin Bank, a community bank with 60 banking centers in Texas, Louisiana and Mississippi. The unaudited filing covers the quarter and nine months ended September 30, 2023; balance-sheet comparisons are with December 31, 2022. The BTH acquisition closed in August 2022, so the nine-month comparison includes a different length of acquired-company operations.
Financial performance and condition
| Metric | Q3 2023 / Sept. 30, 2023 | Prior comparable |
|---|---|---|
| Net income | $24.3 million; diluted EPS $0.79 | Q3 2022: $16.2 million; $0.57 diluted EPS |
| Net interest income | $74.1 million | Q3 2022: $78.5 million |
| Net interest margin, fully tax-equivalent | 3.14% | Q3 2022: 3.68% |
| Total assets | $9.73 billion | Dec. 31, 2022: $9.69 billion |
| Loans held for investment | $7.57 billion | Dec. 31, 2022: $7.09 billion |
| Total deposits | $8.37 billion | Dec. 31, 2022: $7.78 billion |
| Cash and cash equivalents | $305.3 million | Dec. 31, 2022: $359.0 million |
| FHLB advances and other borrowings | $12.2 million | Dec. 31, 2022: $639.2 million |
| Stockholders’ equity | $998.9 million | Dec. 31, 2022: $949.9 million |
- Nine-month results: net income was $70.4 million versus $58.2 million; diluted EPS was $2.28 versus $2.30. Net interest income rose 18.9% to $226.6 million, while fully tax-equivalent NIM eased to 3.24% from 3.28%.
- Rate and margin trends: Q3 interest income increased, but deposit interest expense rose substantially as deposit rates repriced faster than asset yields. Q3 average cost of interest-bearing deposits was 3.47%, versus 0.64% a year earlier; the reported average rate on total deposits was 2.61%, versus 0.41%.
- Cash flow, nine months: operating cash flow was $100.5 million; investing cash outflow was $132.8 million and financing cash outflow was $21.4 million. Cash and cash equivalents declined $53.7 million to $305.3 million.
- Credit: nonperforming loans held for investment were $31.6 million, up from $9.9 million at year-end; nonperforming assets were $35.5 million versus $14.7 million. The allowance for loan credit losses was $95.2 million, or 1.26% of loans, and coverage of nonperforming loans was 301%. Nine-month net charge-offs were $5.9 million versus $4.4 million.
- Funding and capital: deposits increased 7.7%, mainly from brokered time and money-market deposits, while noninterest-bearing deposits fell $473.8 million. Estimated uninsured and uncollateralized deposits were $2.75 billion, 32.8% of deposits, down from $3.43 billion, or 44.1%, at year-end. The company’s CET1, Tier 1 leverage and total capital ratios were 11.46%, 10.00% and 14.61%; management said the company and bank met applicable capital requirements and the bank was well capitalized.
Material changes, unusual items and outlook
- In September, Origin sold available-for-sale securities with a $181.9 million book value for $174.7 million and used the proceeds to repay FHLB advances. The $7.2 million loss reduced quarterly EPS by $0.18. Management estimated the transaction could add 11 basis points to forward NIM and about $0.11 to annualized diluted EPS, with a 1.7-year earn-back period; these are estimates, not guidance.
- A $10.1 million positive valuation adjustment on a non-marketable equity investment increased Q3 other income and EPS by $0.26. This was a valuation gain, not recurring operating revenue.
- Q3 net income increased year over year despite lower net interest income, reflecting lower credit-loss provision and higher noninterest income, including the investment valuation gain. Nine-month noninterest expense increased 21.8%, with acquisition-related operating scale, compensation, occupancy, amortization and regulatory assessments among the drivers.
- Management reported $5.09 billion of primary and secondary liquidity sources, eligibility for an additional $2.27 billion of FHLB borrowing, $1.69 billion of Federal Reserve discount-window capacity and approximately $627.1 million of securities eligible for the Bank Term Funding Program. These are stated sources or capacities, not cash on hand.
- No quantified company-wide earnings or revenue guidance is provided in the supplied filing text. Management noted that deposit pricing may continue to catch up with market-rate increases and identified economic uncertainty, higher rates, inflation, and credit exposure—particularly commercial real estate, construction and commercial lending—as risks. Interest-rate sensitivity estimates are model-based and depend on uncertain assumptions.
Important facts for investors to verify
- Whether deposit costs continue rising, and how deposit mix, brokered funding and uninsured balances evolve.
- Whether the securities-sale benefits meet management’s estimated NIM, EPS and earn-back outcomes, and whether further securities sales or borrowing changes occur.
- Trends in nonperforming commercial and industrial and residential loans, charge-offs, loan modifications and allowance adequacy.
- The sustainability of earnings excluding the $10.1 million valuation gain and the $7.2 million securities-sale loss, alongside ongoing expense growth.
- Interest-rate sensitivity, available liquidity under stress, and regulatory capital headroom; management cautions that simulated rate outcomes may differ from actual results.