Origin Bancorp (OBK) Q1 2025 earnings summary

Executive summary

• Net income for Q1 2025 was $22.4 million ($0.71 diluted EPS), up 57% from Q4 2024, with PTPP earnings rising to $32.0 million from $12.6 million sequentially; net income was down 1% year-over-year.

• The "Optimize Origin" initiative, launched in January 2025, targets >1% ROAA by Q4 2025, focusing on productivity, balance sheet optimization, and culture, with an expected $23.4 million annual PTPP earnings improvement.

• Total loans held for investment reached $7.59 billion and total deposits grew to $8.34 billion as of March 31, 2025.

• Texas and Southeast markets remain strategic growth areas, with Texas representing 71% of loans and 55% of deposits.

• Strong employee engagement and culture, with top 10% global benchmark in internal surveys and 84% employee retention rate in 2024.

Financial highlights

• Net interest income for Q1 2025 was $78.5 million, the highest in eight quarters, up 7% year-over-year and 0.1% sequentially; NIM-FTE expanded 25 bps year-over-year and 11 bps sequentially to 3.44%.

• Noninterest income was $15.6 million, up from Q4 2024 due to higher insurance fees and absence of prior quarter's securities loss, but down 9.6% year-over-year due to lower mortgage banking revenue.

• Noninterest expense decreased to $60.0 million (excluding notable items), down from $61.9 million in Q4, with a sequential decrease of $3.4 million (5.1%).

• Book value per share rose to $37.77; tangible book value per share increased to $32.43; stockholders' equity rose to $1.18 billion.

• Core efficiency ratio improved to 65.33% from 82.79% in Q4 2024; reported efficiency ratio was 65.99%.

Outlook and guidance

• 2025 targets include mid- to high-single digit loan growth (ex-warehouse), mid-single digit deposit growth, and NIM of 3.45%–3.50%.

• Noninterest income expected to be flat to down low single digits, with noninterest expense down low single digits; tax rate guidance is ~21.5%.

• Near-term goal is a >1% ROAA run rate by Q4 2025, with an ultimate target of top quartile ROAA.

• Noninterest income run rate expected to be $400,000–$500,000 lower per quarter from Q3 due to mortgage restructuring.

• Redemption of $70 million in subordinated debentures is expected to save $2.1 million in annualized interest expense.