Origin Bancorp, Inc. Reports Earnings for Third Quarter 2020

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RUSTON, La., Oct. 28, 2020 (GLOBE NEWSWIRE) -- Origin Bancorp, Inc. OBNK ("Origin" or the "Company"), the holding company for Origin Bank (the "Bank"), today announced net income of $13.1 million for the quarter ended September 30, 2020. This represents an increase of $8.1 million from the quarter ended June 30, 2020, and a decrease of $1.5 million from the quarter ended September 30, 2019. Diluted earnings per share for the quarter ended September 30, 2020, were $0.56, up $0.35 from the linked quarter and down $0.06 from the quarter ended September 30, 2019. Pre-tax pre-provision earnings for the quarter were $29.9 million, a 10.3% increase on a linked quarter basis, and a 33.4% increase on a prior year quarter basis, while the efficiency ratio improved to 56.4%, a 206 basis point decline from the linked quarter.

"Origin delivered strong third quarter results reflecting historic pre-tax, pre-provision earnings," said Drake Mills, chairman, president and CEO of Origin Bancorp, Inc. "Our teams across Louisiana, Texas and Mississippi continue to work to help our customers and communities through the current environment. While much uncertainty remains, we believe our company has shown amazing resiliency, and we are strategically positioned to build sustainable, long term value for our stakeholders and help facilitate the economic recovery across our footprint."

Financial Highlights

  • Net income for the quarter ended September 30, 2020, was $13.1 million, compared to $5.0 million for the linked quarter and $14.6 million for the quarter ended September 30, 2019.

  • Pre-tax pre-provision earnings continue to achieve historic heights, reaching $29.9 million for the quarter ended September 30, 2020, compared to $27.1 million for the linked quarter and $22.4 million for the quarter ended September 30, 2019.

  • Diluted earnings per share for the quarter ended September 30, 2020, were $0.56, compared to $0.21 for the linked quarter and $0.62 for the quarter ended September 30, 2019.

  • Net interest income was $50.6 million for the quarter ended September 30, 2020, compared to $46.3 million for the linked quarter and $44.6 million for the quarter ended September 30, 2019. The fully tax-equivalent net interest margin ("NIM") was 3.18% for the current quarter, a nine basis point improvement from the linked quarter and a 51 basis point decrease from the quarter ended September 30, 2019.

  • Provision expense was $13.6 million for the quarter ended September 30, 2020, compared to provision expense of $21.4 million for the linked quarter and $4.2 million for the quarter ended September 30, 2019. The allowance for credit losses to nonperforming loans held for investment ("LHFI") increased to 270.09%, compared to 234.53% on a linked quarter basis and compared to 117.97% at September 30, 2019.

  • Total LHFI were $5.61 billion at September 30, 2020, an increase of $300.5 million, or 5.7%, from June 30, 2020, and an increase of $1.42 billion, or 34.0%, from September 30, 2019. LHFI, excluding Paycheck Protection Program ("PPP") loans, net of deferred fees and costs, increased $297.3 million, or 6.2%, compared to June 30, 2020, and $871.8 million, or 20.8%, compared to September 30, 2019.

  • Total deposits at September 30, 2020, were $5.94 billion, an increase of $563.7 million, or 10.5%, from June 30, 2020, and an increase of $1.65 billion, or 38.6%, from September 30, 2019.

  • The Company completed an offering of $80 million in aggregate principal amount of subordinated notes due 2030 in October 2020. The notes qualify as Tier 2 capital for the Company and approximately $64.8 million of Tier 1 capital for regulatory capital purposes for Origin Bank.

Coronavirus (COVID-19)

Origin has continued to meet customers' needs while keeping the safety and well-being of the Company's employees and customers as its top priority. The Company implemented a hotline and a temporary pandemic Paid Time Off policy to assist employees and the Company's offices and branches all remain open with all drive-thrus fully operational. The Company has maintained social distancing measures for its employees working in the Company's offices, including appointment-only restricted lobby access and requiring employees to wear face masks unless working in an office or other location that permits social distancing. The Company has also enhanced its sanitation protocols, implemented return to work screening protocols following potential exposures, as well as other measures consistent with applicable federal, state, and local guidelines to promote the safety and health of its employees and customers. To allow for more normalized customer operations, the Company has installed thermal kiosks for temperature checks at the entrance of each location and is currently evaluating additional safety protocols to allow unrestricted lobby access in the future, if the circumstances allow.

Credit Quality

The COVID-19 pandemic has continued to have a severe impact on the U.S. economy leading to elevated unemployment levels and a recession. Our results for the first three quarters of 2020 have been impacted by elevated provision expense and increases in allowance for credit loss due to the COVID-19 health care crisis and the uncertainty surrounding the economic outlook.

The Company recorded a provision expense of $13.6 million for the quarter ended September 30, 2020, compared to provision expense of $21.4 million for the linked quarter and $4.2 million for the quarter ended September 30, 2019. The decrease in provision expense compared to the linked quarter reflects more stable credit trends. The increase from September 30, 2019, was primarily due to the decline in overall economic conditions and the change in accounting methods from incurred loss to expected loss under the implementation of Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("CECL"). The key business sectors affected by the economic uncertainty are discussed below.

As the Company has previously reported, the Company continues to closely monitor those industry sectors that could experience a more protracted recovery from the current economic down turn, specifically the sectors of hotels, energy, non-essential retail, restaurants, and assisted living. Excluding PPP loans, at September 30, 2020, the Company had $551.2 million, or 11.0%, of its LHFI invested in these sectors and, while the Company has increased its allowance for credit losses, the allowance is a current estimate and may be subject to change. Excluding PPP loans, nonperforming LHFI in these sectors were $7.3 million at September 30, 2020, while past due LHFI, excluding PPP loans, defined as loans 30 days or more past due, as a percentage of LHFI in these sectors, excluding PPP loans, was 1.3% at September 30, 2020. For more information on Origin's COVID-19 impacted sectors, please see the Investor Presentation furnished to the SEC on October 28, 2020, and on Origin's website at www.origin.bank under the Investor Relations, News & Events, Events & Presentations link.

Total LHFI 30 days or more past due as a percentage of LHFI, was 0.52% (0.58% excluding PPP loans) at September 30, 2020, compared to 0.45% (0.50% excluding PPP loans) at June 30, 2020, and 0.72% at September 30, 2019. The ratio of past due LHFI to LHFI excluding PPP loans does not include delinquent GNMA loans that we service of which approximately $60.1 million are available for repurchase and are included in Loans held for sale on the consolidated balance sheet. When GNMA loans available for repurchase, which are past due 90 days or greater, are included, the ratio of Past due loans/Total loans was 1.68% at September 30, 2020.

During the quarter ended September 30, 2020, the Company had net charge-offs of $1.8 million compared to net charge-offs of $6.5 million for the linked quarter. The Company's net charge-off ratio to average LHFI for the quarter ended September 30, 2020, was 0.13%, compared to 0.53% for the quarter ended June 30, 2020. Total nonperforming LHFI were stable at $30.2 million at September 30, 2020, compared to $30.0 million and $31.5 million at June 30, 2020, and September 30, 2019, respectively.

Allowance for credit losses on loans as a percentage of total LHFI was 1.45% at September 30, 2020, compared to 1.33% and 0.89% at June 30, 2020, and September 30, 2019, respectively. Excluding PPP loans and mortgage warehouse lines of credit, the allowance for credit losses on loans as a percentage of LHFI was 2.00% at September 30, 2020, and 1.75% for the linked quarter. The allowance for credit losses on loans as a percentage of nonperforming LHFI was 270.09% at September 30, 2020, compared to 234.53% and 117.97% at June 30, 2020, and September 30, 2019, respectively. The increase in the allowance for credit losses was primarily due to the estimated impact of the COVID-19 pandemic on the Company's loan portfolio combined with an extension of the reversion period during the current quarter. Classified assets remained stable on a linked quarter basis, at $101.6 million at September 30, 2020, compared to $100.3 million at June 30, 2020. The increase in classified assets from $73.5 million at September 30, 2019, is due to the financial condition of borrowers impacted by the COVID-19 pandemic. Excluding PPP loans, classified loans as a percentage of LHFI and as a percentage of total risk-based capital (at the Origin Bancorp, Inc. level) were 1.99% and 13.67%, respectively, at September 30, 2020, reflecting an increase from 1.65% and 11.51%, respectively, at September 30, 2019.

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Results of Operations for the Three Months Ended September 30, 2020

Net Interest Income and Net Interest Margin

Net interest income for the quarter ended September 30, 2020, was $50.6 million, an increase of $4.3 million, or 9.3%, compared to the linked quarter. The increase was primarily due to a $2.7 million increase in income from mortgage warehouse lines of credit during the current quarter compared to the linked quarter, combined with a $922,000 decrease in total interest-bearing deposit expenses.

Interest-bearing deposit expense was $5.7 million during the current quarter, compared to $6.6 million for the quarter ended June 30, 2020, primarily due to a reduction in deposit rates. The average rate on savings and interest-bearing transaction accounts was 0.39% for the current quarter, down from 0.51% for the linked quarter, accounting for $900,000 of the decrease in interest expense from the linked quarter. This reduction was partially offset by a $377.9 million increase in the average balance of savings and interest-bearing transaction accounts. The decrease in the cost of interest-bearing deposit accounts was primarily due to the Company's efforts to reduce rates on deposit accounts to offset the continued low-rate environment impact on asset yields. The average balance of Federal Home Loan Bank ("FHLB") advances and other borrowings decreased by $124.6 million primarily due to a $300.0 million short-term FHLB advance obtained in March 2020 that matured on June 25, 2020, but was offset by an increase in the Company's utilization of the Federal Reserve's PPP Lending Facility ("PPPLF") during the quarter.

The fully tax-equivalent net interest margin ("NIM") was 3.18% for the current quarter, a nine basis point improvement from the linked quarter and a 51 basis point decrease from the quarter ended September 30, 2019. Excluding PPP loans, the fully tax-equivalent NIM was 3.28%, a 13 basis point increase from the linked quarter. The yield earned on interest-earning assets was 3.64%, a one basis point and a 117 basis point decrease compared to the linked quarter and the quarter ended September 30, 2019, respectively. Excluding PPP loans, the yield earned on interest-earning assets was 3.75%, a three basis point increase compared to the linked quarter. The rate paid on total interest-bearing liabilities for the quarter ended September 30, 2020, was 0.75%, representing a decrease of 14 basis points and 90 basis points compared to the linked quarter and the quarter ended September 30, 2019, respectively. The Company has experienced margin compression since the quarter ended September 30, 2019, primarily caused by decreasing loan yields driven by declining short-term interest rates over the last several quarters.

Noninterest Income

Noninterest income for the quarter ended September 30, 2020, was $18.1 million, a decrease of $1.0 million, or 5.4%, from the linked quarter. The decrease from the linked quarter was primarily driven by a decrease of $1.4 million in swap fee income and a $1.2 million decrease in mortgage banking revenue, offset by a $661,000 decrease in the loss on sales and disposal of other assets.

The decrease in swap fees income was due to lower transaction volume during the quarter ended September 30, 2020, compared to the linked quarter. The decrease in mortgage banking revenue compared to the linked quarter was primarily due to a reduction in the volume of loans funded and sold.

The decrease in loss on sales and disposals of other assets was primarily due to the decline in value and subsequent write down of two commercial real estate owned properties during the quarter ended June 30, 2020.

Noninterest Expense

Noninterest expense for the quarter ended September 30, 2020, was $38.7 million, an increase of $514,000, or 1.3%, compared to the linked quarter. The increase from the linked quarter was largely driven by increases of $671,000, $544,000, $482,000, and $300,000 in advertising and marketing expense, regulatory assessment expense, other noninterest expense, and loan related expense, respectively.

The increase in advertising and marketing expense was primarily driven by $550,000 in donations and contributions made to various institutions as part of our initiative to invest a portion of our PPP loan income within the community. The increase in regulatory assessment expense was largely driven by significant growth in our assets during the last six months. The increase in other expenses was driven by a $475,000 reserve for a judgment, currently on appeal. The increase in loan related expense was driven by $255,000 in one-time charges on deemed uncollectible receivables from our mortgage servicing portfolio.

These increases were offset by a $1.4 million decrease in salaries and employee benefits expense. Medical self-insurance costs decreased $487,000 primarily due to lower medical claims. Commissions decreased $317,000 due to lower mortgage production compared to the linked quarter.

Financial Condition

Loans

Total LHFI at September 30, 2020, were $5.61 billion, an increase of $300.5 million, or 5.7%, compared to $5.31 billion at June 30, 2020, and an increase of $1.42 billion, or 34.0%, compared to $4.19 billion at September 30, 2019. The increase in LHFI when compared to June 30, 2020, was primarily driven by a $248.3 million increase in mortgage warehouse lines of credit, which was primarily due to increased mortgage activity due to the continued low interest rate environment, but also coupled with additional mortgage warehouse clients being onboarded and funding loans in the last six months. The increase in LHFI when compared to September 30, 2019, was primarily due to an increase of $552.3 million in PPP loans.

For the quarter ended September 30, 2020, average LHFI were $5.29 billion, an increase of $373.1 million, or 7.6%, from $4.92 billion for the linked quarter. The increase in average LHFI was caused by the same drivers that were discussed in the immediately preceding paragraph.

Deposits

Total deposits at September 30, 2020, were $5.94 billion, an increase of $563.7 million, or 10.5%, compared to $5.37 billion at June 30, 2020, and an increase of $1.65 billion, or 38.6%, compared to $4.28 billion, at September 30, 2019. Interest-bearing demand deposits increased $598.7 million, or 19.7%, compared to the linked quarter and $1.33 billion, or 57.6%, compared to the quarter ended September 30, 2019. Brokered and money market deposits contributed an increase of $345.0 million and $188.3 million, respectively, compared to the linked quarter and $505.5 million and $551.0 million, respectively, when compared to the quarter ended September 30, 2019. Noninterest-bearing deposits increased $14.7 million and $444.8 million compared to the quarter ended June 30, 2020, and September 30, 2019, respectively.

Average total deposits for the quarter ended September 30, 2020, increased by $411.5 million, or 8.3%, over the linked quarter primarily due to an increase of $117.3 million in average business money market deposits and $82.9 million in average brokered deposits.

For the quarter ended September 30, 2020, average noninterest-bearing deposits as a percentage of total average deposits was 30.4%, compared to 31.8% for the quarter ended June 30, 2020, and 27.1% for the quarter ended September 30, 2019.

Borrowings

Average FHLB advances and other borrowings for the quarter ended September 30, 2020, decreased by $124.6 million, or 19.0%, compared to the quarter ended June 30, 2020, and increased by $56.8 million, or 11.9% over the quarter ended September 30, 2019. The Company entered into a total of $400.0 million in short-term FHLB advances in March 2020, of which $380.0 million matured and were not replaced with new advances as of September 30, 2020. The maturities of the advances caused the average balance of FHLB advances and borrowings to decline $329.1 million in the current quarter compared to the linked quarter. During the quarter ended September 30, 2020, the Company more significantly utilized the PPPLF which caused an increase in borrowings of $199.4 million, partially offsetting the decline due to FHLB advance maturities. By September 30, 2020, the Company had repaid all advances outstanding under the PPPLF and replaced the advances with brokered deposits ranging in cost from one to five basis points.

The Company announced the completion of an offering of $80 million in aggregate principal amount of 4.50% fixed-to floating rate subordinated notes due 2030 (the "Notes") in October 2020. The Notes will initially bear interest at a fixed annual rate of 4.50% for five years then adjusts to a floating rate which is expected to be the three-month term Secured Overnight Financing Rate ("SOFR") plus 432 basis points. The Notes qualify as Tier 2 capital for regulatory capital purposes for the Company, and approximately $64.8 million will be passed downstream as Tier 1 capital for regulatory capital purposes to Origin Bank.

Stockholders' Equity

Stockholders' equity was $627.6 million at September 30, 2020, an increase of $12.9 million, or 2.1%, compared to $614.8 million at June 30, 2020, and an increase of $39.3 million, or 6.7%, compared to $588.4 million at September 30, 2019. The increase from the linked quarter was primarily due to net income for the quarter of $13.1 million. The increase from the September 30, 2019, quarter was primarily caused by retained earnings and other comprehensive income during the intervening period.

Conference Call

Origin will hold a conference call to discuss its third quarter 2020 results on Thursday, October 29, 2020, at 8:00 a.m. Central Time (9:00 a.m. Eastern Time). To participate in the live conference call, please dial (844) 695-5516; International: (412) 902-6750 and request to be joined into the Origin Bancorp, Inc. (OBNK) call. A simultaneous audio-only webcast may be accessed via Origin's website at www.origin.bank under the Investor Relations, News & Events, Events & Presentations link or directly by visiting https://services.choruscall.com/links/obnk201029.html.

If you are unable to participate during the live webcast, the webcast will be archived on the Investor Relations section of Origin's website at www.origin.bank, under Investor Relations, News & Events, Events & Presentations.

About Origin Bancorp, Inc.

Origin is a financial holding company headquartered in Ruston, Louisiana. Origin's wholly owned bank subsidiary, Origin Bank, was founded in 1912. Deeply rooted in Origin's history is a culture committed to providing personalized, relationship banking to its clients and communities. Origin provides a broad range of financial services to businesses, municipalities, high net-worth individuals and retail clients. Origin currently operates 43 banking centers located from Dallas/Fort Worth, Texas across North Louisiana to Central Mississippi, as well as in Houston, Texas. For more information, visit www.origin.bank.

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information regarding Origin's future financial performance, business and growth strategy, projected plans and objectives, including the Company's loan loss reserves and allowance for credit losses related to the COVID-19 pandemic and any expected purchases of its outstanding common stock, and related transactions and other projections based on macroeconomic and industry trends, including expectations regarding efforts to respond to the COVID-19 pandemic and continued low interest rates or interest rate cuts by the Federal Reserve and the resulting impact on Origin's results of operations, estimated forbearance amounts and expectations regarding the Company's liquidity, including in connection with advances obtained from the FHLB, which are all subject to change and may be inherently unreliable due to the multiple factors that impact broader economic and industry trends, and any such changes may be material. Such forward-looking statements are based on various facts and derived utilizing important assumptions and current expectations, estimates and projections about Origin and its subsidiaries, any of which may change over time and some of which may be beyond Origin's control. Statements or statistics preceded by, followed by or that otherwise include the words "anticipates," "believes," "estimates," "expects," "foresees," "intends," "plans," "projects," and similar expressions or future or conditional verbs such as "could," "may," "might," "should," "will," and "would" or variations of such terms are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. Further, certain factors that could affect Origin's future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to: the continuing duration and impacts of the COVID-19 global pandemic and efforts to contain its transmission, including the effect of these factors on Origin's business, customers and economic conditions generally, as well as the impact of the actions taken by governmental authorities to address the impact of COVID-19 on the United States economy, including, without limitation, the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"); deterioration of Origin's asset quality; factors that can impact the performance of Origin's loan portfolio, including real estate values and liquidity in Origin's primary market areas; the financial health of Origin's commercial borrowers and the success of construction projects that Origin finances; changes in the value of collateral securing Origin's loans; Origin's ability to anticipate interest rate changes and manage interest rate risk; the effectiveness of Origin's risk management framework and quantitative models; Origin's inability to receive dividends from Origin Bank and to service debt, pay dividends to Origin's common stockholders, repurchase Origin's shares of common stock and satisfy obligations as they become due; business and economic conditions generally and in the financial services industry, nationally and within Origin's primary market areas; changes in Origin's operation or expansion strategy or Origin's ability to prudently manage its growth and execute its strategy; changes in management personnel; Origin's ability to maintain important customer relationships, reputation or otherwise avoid liquidity risks; increasing costs as Origin grows deposits; operational risks associated with Origin's business; volatility and direction of market interest rates; increased competition in the financial services industry, particularly from regional and national institutions; difficult market conditions and unfavorable economic trends in the United States generally, and particularly in the market areas in which Origin operates and in which its loans are concentrated; an increase in unemployment levels and slowdowns in economic growth; Origin's level of nonperforming assets and the costs associated with resolving any problem loans including litigation and other costs; the credit risk associated with the substantial amount of commercial real estate, construction and land development, and commercial loans in Origin's loan portfolio;  changes in the laws, rules, regulations, interpretations or policies relating to financial institutions, and potential expenses associated with complying with such regulations, periodic changes to the extensive body of accounting rules and best practices; further government intervention in the U.S. financial system; compliance with governmental and regulatory requirements, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and others relating to banking, consumer protection, securities and tax matters; Origin's ability to comply with applicable capital and liquidity requirements, including its ability to generate liquidity internally or raise capital on favorable terms, including continued access to the debt and equity capital markets; changes in the utility of Origin's non-GAAP liquidity measurements and its underlying assumptions or estimates; uncertainty regarding the future of the London Interbank Offered Rate and the impact of any replacement alternatives on Origin's business; possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies and similar organizations; natural disasters and adverse weather events, acts of terrorism, an outbreak of hostilities, regional or national protests and civil unrest (including any resulting branch closures or property damage), widespread illness or public health outbreaks or other international or domestic calamities, and other matters beyond Origin's control; and system failures, cybersecurity threats or security breaches and the cost of defending against them. For a discussion of these and other risks that may cause actual results to differ from expectations, please refer to the sections titled "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" in Origin's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission and any updates to those sections set forth in Origin's subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if Origin's underlying assumptions prove to be incorrect, actual results may differ materially from what Origin anticipates. Accordingly, you should not place undue reliance on any forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and Origin does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

New risks and uncertainties arise from time to time, and it is not possible for Origin to predict those events or how they may affect Origin. In addition, Origin cannot assess the impact of each factor on Origin's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Furthermore, many of these risks and uncertainties are currently amplified by and may continue to be amplified by or may, in the future, be amplified by, the recent outbreak of the COVID-19 pandemic and the impact of varying governmental responses, including the CARES Act, that affect Origin's customers and the economies where they operate. All forward-looking statements, expressed or implied, included in this communication are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Origin or persons acting on Origin's behalf may issue. Annualized, pro forma, adjusted, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.

Contact:
 Chris Reigelman, Origin Bancorp, Inc.
 318-497-3177 / chris@origin.bank


Origin Bancorp, Inc.
Selected Quarterly Financial Data

  
 At and for the three months ended
 September 30,
2020
 June 30,
2020
 March 31,
2020
 December 31,
2019
 September 30,
2019
          
Income statement and share amounts(Dollars in thousands, except per share amounts, unaudited)
Net interest income$50,617  $46,290  $42,810  $44,095  $44,622 
Provision for credit losses13,633  21,403  18,531  2,377  4,201 
Noninterest income18,051  19,076  12,144  10,818  12,880 
Noninterest expense38,734  38,220  36,097  36,534  35,064 
Income before income tax expense16,301  5,743  326  16,002  18,237 
Income tax (benefit) expense3,206  786  (427) 3,175  3,620 
Net income$13,095  $4,957  $753  $12,827  $14,617 
Pre-tax, pre-provision ("PTPP") earnings (1)$29,934  $27,146  $18,857  $18,379  $22,438 
Basic earnings per common share0.56  0.21  0.03  0.55  0.62 
Diluted earnings per common share0.56  0.21  0.03  0.55  0.62 
Dividends declared per common share0.0925  0.0925  0.0925  0.0925  0.0925 
Weighted average common shares outstanding - basic23,374,496  23,347,744  23,353,601  23,323,292  23,408,499 
Weighted average common shares outstanding - diluted23,500,596  23,466,326  23,530,212  23,529,862  23,606,956 
Balance sheet data         
Total LHFI$5,612,666  $5,312,194  $4,481,185  $4,143,195  $4,188,497 
Total assets7,101,338  6,643,909  6,049,638  5,324,626  5,396,928 
Total deposits5,935,925  5,372,222  4,556,246  4,228,612  4,284,317 
Total stockholders' equity627,637  614,781  606,631  599,262  588,363 
Performance metrics and capital ratios         
Yield on LHFI4.02% 4.09% 4.85% 4.95% 5.23%
Yield on interest earnings assets3.64  3.65  4.37  4.56  4.81 
Rate on interest bearing deposits0.61  0.79  1.28  1.44  1.59 
Rate on total deposits0.42  0.54  0.95  1.04  1.16 
Net interest margin, fully tax equivalent3.18  3.09  3.44  3.58  3.69 
Net interest margin, excluding PPP loans, fully tax equivalent (2)3.28  3.15  N/A N/A N/A
Return on average stockholders' equity (annualized)8.28  3.23  0.50  8.51  9.85 
Return on average assets (annualized)0.77  0.31  0.06  0.97  1.12 
PTPP return on average stockholders' equity (annualized) (1)18.92  17.67  12.41  12.19  15.13 
PTPP return on average assets (annualized) (1)1.77  1.69  1.40  1.38  1.72 
Efficiency ratio (3)56.41  58.47  65.69  66.53  60.98 
Book value per common share$26.70  $26.16  $25.84  $25.52  $25.06 
Tangible book value per common share (1)25.39  24.84  24.51  24.18  23.70 
Common equity tier 1 to risk-weighted assets (4)9.93% 10.35% 10.86% 11.74% 11.43%
Tier 1 capital to risk-weighted assets (4)10.08  10.52  11.04  11.94  11.63 
Total capital to risk-weighted assets (4)12.47  12.91  13.38  12.76  12.45 
Tier 1 leverage ratio (4)9.19  9.10  10.71  10.91  10.88 

____________________________
(1)  PTPP earnings, PTPP return on average stockholders' equity, PTPP return on average assets and tangible book value per common share are non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to their comparable GAAP measures, please see page 14.
(2)  Net interest margin, excluding PPP loans, fully tax equivalent is calculated by removing average PPP loans from average interest earning assets, and removing the associated interest income (net of 35 basis points assumed cost of funds on average PPP loan balances) from net interest income.
(3)  Calculated by dividing noninterest expense by the sum of net interest income plus noninterest income.
(4)  September 30, 2020, ratios are estimated and calculated at the Company level, which is subject to the capital adequacy requirements of the Federal Reserve Board.

Origin Bancorp, Inc.
Consolidated Quarterly Statements of Income 

 
 Three months ended
 September 30,
2020
 June 30,
2020
 March 31,
2020
 December 31,
2019
 September 30,
2019
Interest and dividend income(Dollars in thousands, except per share amounts, unaudited)
Interest and fees on loans$54,150  $50,722  $50,049  $52,331  $53,932 
Investment securities-taxable2,704  2,732  2,712  2,640  2,786 
Investment securities-nontaxable1,571  1,391  758  772  826 
Interest and dividend income on assets held in other financial institutions375  619  1,497  976  1,262 
Total interest and dividend income58,800  55,464  55,016  56,719  58,806 
Interest expense         
Interest-bearing deposits5,698  6,620  10,250  11,056  11,623 
FHLB advances and other borrowings1,564  1,641  1,351  1,428  2,420 
Junior subordinated debentures921  913  605  140  141 
Total interest expense8,183  9,174  12,206  12,624  14,184 
Net interest income 50,617  46,290  42,810  44,095  44,622 
Provision for credit losses13,633  21,403  18,531  2,377  4,201 
Net interest income after provision for credit losses36,984  24,887  24,279  41,718  40,421 
Noninterest income         
Service charges and fees3,268  2,990  3,320  3,488  3,620 
Mortgage banking revenue9,523  10,717  2,769  3,359  3,092 
Insurance commission and fee income3,218  3,109  3,687  2,428  3,203 
Gain on sales of securities, net301    54    20 
(Loss) on sales and disposals of other assets, net(247) (908) (25) (38) (132)
Limited partnership investment income (loss)130  9  (429) (267) 279 
Swap fee income110  1,527  676  151  1,351 
Other fee income576  607  466  440  414 
Other income1,172  1,025  1,626  1,257  1,033 
Total noninterest income18,051  19,076  12,144  10,818  12,880 
Noninterest expense         
Salaries and employee benefits22,597  24,045  21,988  22,074  21,523 
Occupancy and equipment, net4,263  4,267  4,221  4,241  4,274 
Data processing2,065  2,075  2,003  1,801  1,763 
Electronic banking954  890  900  936  924 
Communications422  419  477  454  411 
Advertising and marketing1,281  610  711  991  930 
Professional services785  843  1,171  878  956 
Regulatory assessments1,310  766  615  679  (387)
Loan related expenses1,809  1,509  1,142  1,400  1,315 
Office and operations1,367  1,344  1,441  1,632  1,712 
Intangible asset amortization237  287  299  302  302 
Franchise tax expense511  514  496  496  683 
Other expenses1,133  651  633  650  658 
Total noninterest expense38,734  38,220  36,097  36,534  35,064 
Income before income tax expense16,301  5,743  326  16,002  18,237 
Income tax (benefit) expense3,206  786  (427) 3,175  3,620 
Net income$13,095  $4,957  $753  $12,827  $14,617 
Basic earnings per common share$0.56  $0.21  $0.03  $0.55  $0.62 
Diluted earnings per common share0.56  0.21  0.03  0.55  0.62 
               

Origin Bancorp, Inc.
Selected YTD Financial Data

 
 Nine Months Ended September 30,
(Dollars in thousands, except per share amounts)2020 2019
Income statement and share amounts(Unaudited) (Unaudited)
Net interest income$139,717  $129,617 
Provision for credit losses53,567  7,191 
Noninterest income49,271  35,660 
Noninterest expense113,051  107,540 
Income before income tax expense22,370  50,546 
Income tax expense3,565  9,491 
Net income$18,805  $41,055 
PTPP earnings (1)$75,937  $57,737 
Basic earnings per common share (2)$0.81  $1.75 
Diluted earnings per common share(2)0.80  1.73 
Dividends declared per common share0.278  0.1575 
Weighted average common shares outstanding - basic23,358,672  23,520,438 
Weighted average common shares outstanding - diluted23,498,838  23,722,384 
    
Performance metrics   
Yield on LHFI4.28% 5.26%
Yield on interest earning assets3.85  4.84 
Rate on interest bearing deposits0.87  1.56 
Rate on total deposits0.62  1.15 
Net interest margin, fully tax equivalent3.22  3.73 
Net interest margin, excluding PPP loans, fully tax equivalent (3)3.28  N/A
Return on average stockholders' equity (annualized)4.05  9.54 
Return on average assets (annualized)0.41  1.09 
PTPP return on average stockholders' equity (annualized) (1)16.37  13.42 
PTPP return on average assets (annualized) (1)1.64  1.53 
Efficiency ratio (4)59.82  65.07 

____________________________
(1)   PTPP earnings, PTPP return on average stockholders' equity, and PTPP return on average assets are non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to their comparable GAAP measures, please see page 15.
(2)  Due to the combined impact of the repurchase of common stock on the quarterly average common shares outstanding calculation compared to the impact of the repurchase of common stock shares on the year-to-date average common outstanding calculation, and the effect of rounding, the sum of the 2019 quarterly earnings per common share will not equal the 2019 year-to-date earnings per common share amount.
(3)  Net interest margin, excluding PPP loans, fully tax equivalent is calculated by removing average PPP loans from average interest earning assets, and removing the associated interest income (net of 35 basis points assumed cost of funds on average PPP loan balances) from net interest income.
(4)  Calculated by dividing noninterest expense by the sum of net interest income plus noninterest income.

Origin Bancorp, Inc.
Consolidated Balance Sheets

 
(Dollars in thousands)September 30,
2020
 June 30,
2020
 March 31,
2020
 December 31,
2019
 September 30,
2019
Assets(Unaudited) (Unaudited) (Unaudited)   (Unaudited)
Cash and due from banks$61,250 $57,054 $91,104 $62,160 $79,005 
Interest-bearing deposits in banks160,661 99,282 469,075 229,358 229,757 
Total cash and cash equivalents221,911 156,336 560,179 291,518 308,762 
Securities:         
Available for sale797,260 720,616 601,637 501,070 492,461 
Held to maturity, net of allowance for credit losses38,193 38,287 28,383 28,620 28,759 
Securities carried at fair value through income11,813 11,977 12,242 11,513 11,745 
Total securities847,266 770,880 642,262 541,203 532,965 
Non-marketable equity securities held in other financial institutions38,052 41,864 52,267 39,808 49,205 
Loans held for sale155,525 121,541 75,322 64,837 67,122 
Loans5,612,666 5,312,194 4,481,185 4,143,195 4,188,497 
Less: allowance for credit losses81,643 70,468 56,063 37,520 37,126 
Loans, net of allowance for credit losses5,531,023 5,241,726 4,425,122 4,105,675 4,151,371 
Premises and equipment, net79,254 80,025 80,193 80,457 80,921 
Mortgage servicing rights14,322 15,235 16,122 20,697 19,866 
Cash surrender value of bank-owned life insurance37,332 37,102 36,874 37,961 37,755 
Goodwill and other intangible assets, net30,717 30,953 31,241 31,540 31,842 
Accrued interest receivable and other assets145,936 148,247 130,056 110,930 117,119 
Total assets$7,101,338 $6,643,909 $6,049,638 $5,324,626 $5,396,928 
Liabilities and Stockholders' Equity         
Noninterest-bearing deposits$1,599,436 $1,584,746 $1,115,811 $1,077,706 $1,154,660 
Interest-bearing deposits3,640,587 3,041,859 2,673,881 2,360,096 2,309,387 
Time deposits695,902 745,617 766,554 790,810 820,270 
Total deposits5,935,925 5,372,222 4,556,246 4,228,612 4,284,317 
FHLB advances and other borrowings360,325 478,260 716,909 417,190 419,681 
Subordinated debentures78,596 78,567 78,539 9,671 9,664 
Accrued expenses and other liabilities98,855 100,079 91,313 69,891 94,903 
Total liabilities6,473,701 6,029,128 5,443,007 4,725,364 4,808,565 
Stockholders' equity         
Common stock117,533 117,506 117,380 117,405 117,409 
Additional paid-in capital236,679 236,156 235,709 235,623 235,018 
Retained earnings251,427 240,506 237,720 239,901 229,246 
Accumulated other comprehensive income21,998 20,613 15,822 6,333 6,690 
Total stockholders' equity627,637 614,781 606,631 599,262 588,363 
Total liabilities and stockholders' equity$7,101,338 $6,643,909 $6,049,638 $5,324,626 $5,396,928 
 

Origin Bancorp, Inc.
Loan Data

 
 At and for the three months ended
(Dollars in thousands, unaudited)September 30,
2020
 June 30,
2020
 March 31,
2020
 December 31,
2019
 September 30,
2019
LHFI         
Commercial real estate$1,367,916 $1,323,754 $1,302,520 $1,296,847 $1,305,006 
Construction/land/land development560,857 570,032 563,820 517,688 509,905 
Residential real estate832,055 769,354 703,263 689,555 680,803 
Total real estate loans2,760,828 2,663,140 2,569,603 2,504,090 2,495,714 
Paycheck Protection Program ("PPP")552,329 549,129    
Commercial and industrial excl. PPP1,263,279 1,313,405 1,455,497 1,343,475 1,367,595 
Mortgage warehouse lines of credit1,017,501 769,157 437,257 274,659 304,917 
Consumer18,729 17,363 18,828 20,971 20,271 
Total LHFI5,612,666 5,312,194 4,481,185 4,143,195 4,188,497 
Less: allowance for credit losses81,643 70,468 56,063 37,520 37,126 
LHFI, net$5,531,023 $5,241,726 $4,425,122 $4,105,675 $4,151,371 
          
Nonperforming assets         
Nonperforming LHFI         
Commercial real estate$4,669 $4,717 $11,306 $6,994 $7,460 
Construction/land/land development2,976 3,726 3,850 4,337 860 
Residential real estate8,259 6,713 4,076 5,132 5,254 
Commercial and industrial14,255 14,772 13,619 14,520 17,745 
Consumer69 119 181 163 153 
Total nonperforming LHFI30,228 30,047 33,032 31,146 31,472 
Nonperforming loans held for sale483 734 840 927 1,462 
Total nonperforming loans30,711 30,781 33,872 32,073 32,934 
Repossessed assets718 4,155 5,296 4,753 4,565 
Total nonperforming assets$31,429 $34,936 $39,168 $36,826 $37,499 
Classified assets$101,577 $100,299 $79,980 $69,870 $73,516 
Past due LHFI (1)29,194 23,751 51,018 29,980 29,965 
          
Allowance for credit losses         
Balance at beginning of period$70,468 $56,063 $37,520 $37,126 $36,683 
Impact of adopting ASC 326  1,248   
Provision for loan credit losses12,970 20,878 18,396 3,167 3,435 
Loans charged off2,293 6,587 1,425 3,268 5,415 
Loan recoveries498 114 324 495 2,423 
Net charge-offs1,795 6,473 1,101 2,773 2,992 
Balance at end of period$81,643 $70,468 $56,063 $37,520 $37,126 
 

Origin Bancorp, Inc.
Loan Data - Continued

 
 At and for the three months ended
(Unaudited)September 30,
2020
 June 30,
2020
 March 31,
2020
 December 31,
2019
 September 30,
2019
Credit quality ratios         
Total nonperforming assets to total assets0.44% 0.53% 0.65% 0.69% 0.69%
Total nonperforming loans to total loans0.53  0.57  0.74  0.76  0.77 
Nonperforming LHFI to LHFI0.54  0.57  0.74  0.75  0.75 
Past due LHFI to LHFI0.52  0.45  1.14  0.72  0.72 
Allowance for credit losses to nonperforming LHFI270.09  234.53  169.72  120.46  117.97 
Allowance for credit losses to total LHFI1.45  1.33  1.25  0.91  0.89 
Allowance for credit losses to total LHFI excluding PPP and warehouse loans (2)2.00  1.75  1.37  0.96  0.95 
Net charge-offs (recoveries) to total average LHFI (annualized)0.13  0.53  0.11  0.26  0.29 

____________________________
(1)  Past due LHFI are defined as loans 30 days or more past due.
(2)  The allowance for credit losses ("ACL") to total LHFI excluding PPP and warehouse loans is calculated by excluding the ACL for warehouse loans from the numerator and excluding the PPP and warehouse loans from the denominator. Mortgage warehouse loans increased significantly during the period, but, due to their low-risk profile, require a disproportionately low allocation of the allowance for credit losses.

Origin Bancorp, Inc.
Average Balances and Yields/Rates

 
 Three months ended
 September 30, 2020 June 30, 2020 September 30, 2019
 Average Balance Yield/Rate Average Balance Yield/Rate Average Balance Yield/Rate
  
Assets(Dollars in thousands, unaudited)
Commercial real estate$1,344,853 4.29% $1,307,715 4.45% $1,259,274 5.22%
Construction/land/land development575,080 4.42  562,233 4.40  533,328 5.48 
Residential real estate787,247 4.35  742,657 4.44  676,650 5.07 
Paycheck Protection Program ("PPP")550,377 2.49  449,680 2.72    
Commercial and industrial excl. PPP1,295,105 4.09  1,378,898 3.92  1,340,684 5.26 
Mortgage warehouse lines of credit723,876 3.87  462,088 3.79  236,042 4.92 
Consumer18,209 6.27  18,362 6.45  20,959 6.90 
LHFI5,294,747 4.02  4,921,633 4.09  4,066,937 5.23 
Loans held for sale88,811 2.79  91,991 3.10  33,814 4.15 
Loans receivable5,383,558 4.00  5,013,624 4.07  4,100,751 5.22 
Investment securities-taxable539,993 2.00  492,752 2.22  448,766 2.48 
Investment securities-nontaxable252,304 2.49  208,667 2.67  103,053 3.21 
Non-marketable equity securities held in other financial institutions39,229 2.53  51,713 2.29  49,025 2.76 
Interest-bearing balances due from banks204,288 0.24  345,906 0.38  152,580 2.39 
Total interest-earning assets6,419,372 3.64% 6,112,662 3.65% 4,854,175 4.81%
Noninterest-earning assets(1)327,213   334,864   325,374  
Total assets$6,746,585   $6,447,526   $5,179,549  
            
Liabilities and Stockholders' Equity           
Liabilities           
Interest-bearing liabilities           
Savings and interest-bearing transaction accounts$3,011,389 0.39% $2,633,520 0.51% $2,071,990 1.36%
Time deposits730,705 1.50  751,607 1.75  828,993 2.16 
Total interest-bearing deposits3,742,094 0.61  3,385,127 0.79  2,900,983 1.59 
FHLB advances and other borrowings532,689 1.17  657,332 1.00  475,860 1.96 
Securities sold under agreements to repurchase10,506 0.10  13,776 0.10  25,302 1.09 
Subordinated debentures78,585 4.69  78,557 4.65  9,661 5.69 
Total interest-bearing liabilities4,363,874 0.75% 4,134,792 0.89% 3,411,806 1.65%
Noninterest-bearing liabilities           
Noninterest-bearing deposits1,633,510   1,578,987   1,076,344  
Other liabilities(1)119,668   115,849   102,895  
Total liabilities6,117,052   5,829,628   4,591,045  
Stockholders' Equity629,533   617,898   588,504  
Total liabilities and stockholders' equity$6,746,585   $6,447,526   $5,179,549  
Net interest spread  2.89%   2.76%   3.16%
Net interest margin  3.14%   3.05%   3.65%
Net interest margin - (tax- equivalent)(2)  3.18%   3.09%   3.69%
Net interest margin excluding PPP loans - (tax- equivalent)(3)  3.28%   3.15%   N/A

____________________________
(1)  Includes Government National Mortgage Association ("GNMA") repurchase average balances of $31.7 million, $29.0 million, and $23.7 million for the three months ended September 30, 2020, June 30, 2020, and September 30, 2019, respectively. The GNMA repurchase asset and liability are recorded as equal offsetting amounts in the consolidated balance sheets, with the asset included in Loans held for sale and the liability included in FHLB advances and other borrowings.
(2)  In order to present pre-tax income and resulting yields on tax-exempt investments comparable to those on taxable investments, a tax-equivalent adjustment has been computed. This adjustment also includes income tax credits received on Qualified School Construction Bonds.
(3)  Net interest margin, excluding PPP loans, fully tax equivalent is calculated by removing average PPP loans from average interest earning assets, and removing the associated interest income (net of 35 basis points assumed cost of funds on average PPP loan balances) from net interest income.

Origin Bancorp, Inc.
Non-GAAP Financial Measures

 
 
(Dollars in thousands, except per share amounts, unaudited)September 30,
2020
 June 30,
2020
 March 31,
2020
 December 31,
2019
 September 30,
2019
Calculation of Tangible Common Equity:         
Total common stockholders' equity$627,637  $614,781  $606,631  $599,262  $588,363 
Less: goodwill and other intangible assets, net30,717  30,953  31,241  31,540  31,842 
Tangible Common Equity$596,920  $583,828  $575,390  $567,722  $556,521 
          
Calculation of Tangible Book Value per Common Share:        
Divided by common shares outstanding at the end of the period23,506,586  23,501,233  23,475,948  23,480,945  23,481,781 
Tangible Book Value per Common Share$25.39  $24.84  $24.51  $24.18  $23.70 
          
Calculation of PTPP Earnings:        
Net Income$13,095  $4,957  $753  $12,827  $14,617 
Plus: provision for credit losses13,633  21,403  18,531  2,377  4,201 
Plus: income tax expense3,206  786  (427) 3,175  3,620 
PTPP Earnings$29,934  $27,146  $18,857  $18,379  $22,438 
          
Calculation of PTPP ROAA and PTPP ROAE:        
PTPP Earnings$29,934  $27,146  $18,857  $18,379  $22,438 
Divided by number of days in the quarter92  91  91  92  92 
Multiplied by the number of days in the year366  366  366  365  365 
Annualized PTPP Earnings$119,085  $109,181  $75,842  $72,917  $89,020 
          
Divided by total average assets$6,746,585  $6,447,526  $5,400,704  $5,271,979  $5,179,549 
PTPP ROAA (annualized)1.77% 1.69% 1.40% 1.38% 1.72%
          
Divided by total average stockholder's equity$629,533  $617,898  $611,162  $597,925  $588,504 
PTPP ROAE (annualized)18.92% 17.67% 12.41% 12.19% 15.13%
               

Origin Bancorp, Inc.
Non-GAAP Financial Measures

  
 Nine Months Ended September 30,
(Dollars in thousands, except per share amounts, unaudited)2020 2019
Calculation of PTPP Earnings:  
Net Income$18,805  $41,055 
Plus: provision for credit losses53,567  7,191 
Plus: income tax expense3,565  9,491 
PTPP Earnings$75,937  $57,737 
    
Calculation of PTPP ROAA and PTPP ROAE:  
PTPP Earnings$75,937  $57,737 
Divided by number of days in this period274  273 
Multiplied by the number of days in the year366  365 
Annualized PTPP Earnings$101,434  $77,194 
    
Divided by total average assets$6,200,273  $5,032,646 
PTPP ROAA (annualized)1.64% 1.53%
    
Divided by total average stockholder's equity$619,567  $575,223 
PTPP ROAE (annualized)16.37% 13.42%

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