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 interest income reached $78.5 million, the highest in eight quarters.

• 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.

• Recognized as a Best Bank to Work For by American Banker for 12 consecutive years, with strong employee engagement and an 84% retention rate in 2024.

Financial highlights

• Net interest margin (NIM-FTE) expanded 11 bps sequentially and 25 bps year-over-year to 3.44%, with net interest income up 7% year-over-year.

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

• Noninterest expense decreased to $62.1 million from $65.4 million in Q4 2024; adjusted expense was $60.0 million.

• Book value per share was $37.77; tangible book value per share was $32.43, marking the 10th consecutive quarter of growth.

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

Outlook and guidance

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

• 2025 guidance: NIM of 3.45%–3.50%, mid- to high-single digit loan growth (ex-warehouse), mid-single digit deposit growth, and noninterest expense down low single digits.

• Noninterest income run rate expected to decrease by $400K-$500K per quarter from Q3 due to mortgage restructuring.

• Tax rate guidance is ~21.5%.

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