Origin Bancorp Q3 Earnings Conference Call

In the recent third-quarter earnings conference call, Origin Bancorp (NYSE:OBK), Inc. (ticker: OBNK) executives shared insights into the company's financial performance and strategic initiatives.

CEO Drake Mills highlighted the company's asset growth from $4.2 billion at its public inception in 2018 to nearly $10 billion, while also acknowledging the challenges in achieving top-tier profitability. The company is strategically focusing on improving profitability by the end of 2024, with a detailed plan set to be unveiled in January.

Key Takeaways

• Origin Bancorp, Inc. is nearing $10 billion in assets, with significant growth since going public.
• President Lance Hall reported a 2.3% increase in total deposits and a rise in non-interest-bearing deposits by 1.5%.
• Texas markets have shown substantial growth with $241 million in deposits and $154 million in loans.
• Loan portfolio health has improved, with a decrease in past dues to 0.49% and nonperforming loans to 0.81%.
• Net charge-offs increased to $9.5 million for the quarter.
• Diluted earnings per share for Q3 were $0.60, with a slight decrease in net interest margin to 3.18%.
• Non-interest income for Q3 was $16.0 million, with a decline due to seasonal trends.
• The tangible common equity ratio is at 10.0%, with a 5% quarter-over-quarter increase in tangible book value per share.

Company Outlook

• Management remains optimistic about growth potential and improving financial metrics.
• The company has adjusted its model to include anticipated Federal Reserve rate cuts, expecting a temporary net interest margin compression.
• Non-interest income is slightly down from Q2 due to seasonal trends.
• Non-interest expenses decreased, with expectations for Q4 expenses to remain similar to Q2 levels.

Bearish Highlights

• The company faces profitability pressures and challenges in achieving upper quartile profitability.
• There has been an increase in net charge-offs for the quarter.

Bullish Highlights

• Management is confident in capital flexibility for future opportunities.
• There is a commitment to achieving peer-level profitability and growth of 8% to 10% annually.
• Technology investments have positively impacted planning and efficiency, particularly in the Southeast expansion.

Misses

• Net interest margin has slightly decreased due to higher-than-expected deposit costs.
• Non-interest income has declined from the previous quarter due to seasonal trends.

Q&A Highlights

• Executives addressed concerns about credit deterioration, noting improvements in credit metrics.
• The company is actively working to push the Durbin Amendment impact to 2026.
• Origin Bancorp is committed to maintaining a strong credit profile as it approaches 2025.

Overall, Origin Bancorp, Inc. is experiencing a period of growth with a strategic focus on improving profitability. Despite some challenges, the company's management is taking active steps to manage expenses, optimize profitability, and maintain a strong credit profile as it approaches a significant asset threshold.

InvestingPro Insights

Origin Bancorp, Inc. (OBNK) continues to demonstrate financial resilience and growth potential, as evidenced by both its recent earnings call and additional data from InvestingPro. The company's P/E ratio of 11.81 suggests that it may be undervalued compared to industry peers, aligning with management's focus on improving profitability by the end of 2024.

InvestingPro data shows that OBNK has a Price to Book ratio of 0.88, indicating that the stock might be trading below its book value. This could present an opportunity for value investors, especially considering the company's growth trajectory from $4.2 billion in assets at its public inception to nearly $10 billion now.

An InvestingPro Tip highlights that OBNK has raised its dividend for 6 consecutive years, which may appeal to income-focused investors. The current dividend yield stands at 1.87%, providing a steady income stream alongside potential capital appreciation.

Another relevant InvestingPro Tip notes that analysts predict the company will be profitable this year, supporting management's optimistic outlook on growth potential and improving financial metrics. This aligns with the company's reported diluted earnings per share of $0.60 for Q3 and its commitment to achieving peer-level profitability.

For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights. Currently, there are 5 more InvestingPro Tips available for OBNK, which could provide further depth to the investment thesis for this growing regional bank.

Full transcript – Origin Bancorp Inc (OBK) Q3 2024

Operator: Ladies and gentlemen, good morning and welcome to the Origin Bancorp, Inc. Third Quarter Earnings Conference Call. My name is David, and I will be your Evercall coordinator. The format of this call includes prepared remarks from the company, followed by a question-and-answer session. Please note that all attendees will be on listen-only mode until the Q&A portion of the call. Please note that this event is being recorded…

Summary: In Q3 2024 earnings call, Origin Bancorp reviewed asset growth, profitability challenges, deposit increases, and strategic plans for enhanced financial performance by 2024.