Origin Bancorp (OBK) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $21.0 million ($0.67 diluted EPS), down from $22.6 million ($0.73 EPS) in Q1 2024, impacted by a $0.25 per share hit from a questioned activity involving a former banker.

• Total loans held for investment reached $7.96 billion, up 0.7% from Q1 2024; total deposits were $8.51 billion, up 0.1% sequentially.

• Noninterest income hit a record $22.5 million, up 30.2% from Q1 2024, driven by a $5.2 million positive valuation adjustment on a non-marketable equity security.

• Book value per share rose to $35.23 (+1.3%); tangible book value per share increased to $29.77 (+1.8%).

• Notable one-time items included a $1.2 million interest income reversal and $7.3 million in provision expenses related to questioned banker activity in East Texas.

Financial highlights

• Net interest margin (NIM-FTE) was 3.17% in Q2 2024, down 2 bps sequentially; would have been 3.22% excluding the interest reversal.

• Net interest income was $73.9 million, up 0.8% from Q1 2024, but down 1.9% year-over-year.

• Noninterest expense rose to $64.4 million, impacted by $1.5 million in costs related to the internal issue.

• Net charge-offs totaled $2.9 million (0.15%), including $797,000 related to the questioned activity.

• Provision for credit losses was $5.2 million, up $0.9 million year-over-year, with $7.3 million of the provision tied to the questioned activity.

Outlook and guidance

• Loan growth for 2024 is expected in the low single digits, with deposit growth to match.

• NIM is forecasted to expand low to mid-single digits per quarter in the second half, even with anticipated Fed rate cuts.

• Expenses are expected to remain elevated at Q2 levels due to ongoing legal and professional fees, with 2024 expense growth at the low end of the high single-digit range.

• Loan growth for 2025 is projected to be mid-single digits, focusing on ROA enhancement and profitable relationships.

• The company expects to remain below $10 billion in assets for 2024, delaying the Durbin amendment impact.