Origin Bancorp Q2 Earnings Call Highlights

Origin Bancorp delivered its strongest quarterly earnings since late 2021, with diluted EPS of $1.09 and net income of $33.8 million.

Management said its “Optimize Origin” initiative is driving better profitability, disciplined growth and improved client acquisition.

Loan and deposit trends remained solid, led by Texas and Southeast markets.

Loans grew 2.7% sequentially, noninterest-bearing deposits rose to 26% of total deposits, and management said deposit account openings surged as the bank won more primary relationships.

Margins, credit quality and capital returns all improved.

Net interest margin expanded to 3.92%, credit metrics reached five-quarter highs for quality, and Origin continued buybacks and dividend growth while raising its share repurchase authorization.

Origin Bancorp NYSE: OBK reported stronger second-quarter earnings as management said its “Optimize Origin” initiative is translating into improved profitability, disciplined growth and stronger client acquisition across its footprint.

The company reported diluted earnings per share of $1.09 and net income of $33.8 million for the second quarter.

Chief Financial Officer Wally Wallace said the result represented Origin’s strongest quarterly earnings performance since the fourth quarter of 2021.

Return on average assets was 1.35%, above the company’s near-term run-rate objective of 1.15%, while pre-tax, pre-provision return on average assets was 1.73%.

Chairman, President and Chief Executive Officer Drake Mills said the quarter reflected progress from work begun about 18 months ago under Optimize Origin, which he described as a strategy focused on stronger financial performance, capital allocation, technology investment, talent recruitment and client service.

President and CEO of Origin Bank Lance Hall said the company continued to benefit from what management described as disruption across its markets, particularly in banker and client acquisition.

Since April 1, Origin added 12 experienced bankers, following 15 additions in the first quarter.

The company also expanded into Birmingham, Alabama, with a local team of experienced bankers and added production talent in North Texas, Houston, East Texas and Mississippi.

Hall said year-to-date growth included $196 million in commercial and industrial and owner-occupied commercial real estate loans, $167 million in other commercial real estate categories and $61 million in mortgage warehouse lending.

Through the first half of the year, Texas and Southeast markets generated $323 million of loan growth, including about $250 million from Texas on approximately $860 million of new loan production.

Wallace said total loans grew 2.7% sequentially in the quarter and 1.9% excluding mortgage warehouse loans.

Management said it continues to target loan and deposit growth in the mid- to high-single-digit range for the year, while tracking toward the higher end of that range.

During the question-and-answer session, Hall said the primary drivers of loan growth were Texas and the Southeast, though all markets contributed.

He said more than 50% of year-to-date loan growth has come from C&I lending, and that the company’s average loan size remains about $590,000.

Hall said new loans in the most recent month were coming in at about 6.4%.

Hall also said the company is seeing pricing and term pressure from competitors, including more frequent offers of non-recourse structures, but said Origin intends to remain conservative in its credit approach.