Origin Bancorp Earnings Call Summary

Origin Bancorp (NYSE:OBK), Inc. (OBNK) discussed its third-quarter financial results and strategic initiatives during its latest earnings conference call. The company reported a rise in total deposits and non-interest-bearing deposits, significant growth in Texas markets, and improved credit metrics. Despite higher deposit costs affecting net interest margin expectations, the company's tangible common equity ratio increased, reflecting strong capital levels.

Origin Bancorp targets an 8% to 10% growth rate and aims to stay below $10 billion in assets for another quarter to delay the Durbin Amendment's impact. Executives expressed confidence in the company's credit profile and future growth, particularly in Texas and the Southeast.

Key Takeaways

• Total deposits grew by 2.3%, with non-interest-bearing deposits up by 1.5%.
• Texas markets saw a deposit increase of $241 million and loan growth of $154 million.
• Robotics Process Automation saved over 9,600 hours of manual work.
• Improved credit metrics with reduced past dues and nonperforming loans.
• Net charge-offs rose to $9.5 million, diluted earnings per share were $0.60.
• Net interest margin expanded to 3.18%.
• Tangible common equity ratio improved to 10.0%.
• Anticipated Fed rate cuts led to a revised financial outlook.
• Non-interest income for Q3 was slightly down from Q2, and non-interest expenses decreased.
• Management is focused on achieving peer profitability and upper quartile metrics.

Company Outlook

• Origin Bancorp aims to improve profitability by the end of 2024.
• Plans to benchmark against peers and identify revenue and expense opportunities.
• Targeting an 8% to 10% growth rate moving forward.
• The company intends to optimize banker and product profitability.

Bearish Highlights

• Higher deposit costs impacted future net interest margin growth expectations.
• Short-term compression in net interest margin due to expected Fed rate cuts.

Bullish Highlights

• Strong deposit growth, especially in interest-bearing accounts.
• Tangible book value per share increased by 5% quarter-over-quarter and 17% year-over-year.
• Management showed confidence in capital flexibility for future opportunities.

Misses

• Non-interest income for Q3 was reported at $16.0 million, down from $16.4 million in Q2.

Q&A Highlights

• Executives discussed the importance of staying under the $10 billion asset threshold to delay the Durbin Amendment's impact.
• Addressed improvements in loan-to-deposit ratio and core liquidity.
• Reaffirmed strategy to enhance deposit growth while maintaining strict client selection.
• Expressed confidence in the company's operational capabilities for the future.

**Full transcript – Origin Bancorp Inc (OBNK) 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. Also, please note that this event is being recorded. I would now like to turn the conference over to Chris Reigelman, Director of Investor Relations. Please go ahead.

Chris Reigelman: Good morning and thank you for joining us today. We issued our earnings press release yesterday afternoon. A copy is available on our website along with the slide presentation that we will refer to during this call. Refer to Page 2 of our slide presentation for safe harbor statements regarding forward-looking statements and non-GAAP financial measures. For those joining by phone, please note the slide presentation is available on our website at www.ir.origin.bank. Safe harbor statements are also available on Page 5 of our earnings release filed with the SEC yesterday. All comments are subject to the safe harbor statements in our slide presentation and earnings release. I am joined this morning by Origin Bancorp's Chairman, President and CEO, Drake Mills; President and CEO of Origin Bank, Lance Hall; Chief Financial Officer, Wally Wallace; Chief Risk Officer, Jim Crotwell; Chief Accounting Officer, Steve Brolly; and Chief Credit and Banking Officer, Preston Moore. After the presentation, we will be happy to address any questions you may have. Drake, the call is yours.

… [The transcript continues with individual speaker remarks and further details.]