Origin Bancorp (OBK) Q2 2024 earnings summary

Executive summary

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

• Loans held for investment reached $7.96B at June 30, 2024, up 0.7% from Q1 and 3.9% from year-end, with growth in mortgage warehouse, residential, and commercial real estate loans.

• Total deposits increased to $8.51B, up 0.1% sequentially and 3.1% from year-end, driven by brokered and money market deposits.

• Noninterest income hit a record $22.5M, up 30.2% from Q1 and 43.7% year-over-year, mainly due to a $5.2M positive valuation adjustment on a non-marketable equity security.

• Book value per share rose to $35.23 (+1.3% sequentially, +2.7% from year-end); tangible book value per share increased to $29.77 (+1.8%).

Financial highlights

• Net interest income for Q2 2024 was $73.9M, with NIM-FTE at 3.17%, down 2 bps sequentially; would have been 3.22% excluding a $1.2M interest reversal.

• Noninterest expense rose to $64.4M, driven by higher salaries, benefits, and $1.5M in costs related to the East Texas incident.

• Provision for credit losses was $5.2M, with $7.3M tied to the questioned activity.

• Efficiency ratio was 66.82%, up from 64.81% in Q1; core efficiency ratio was 65.55%.

• PTPP earnings were $32.0M, nearly flat sequentially.

Outlook and guidance

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

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

• Expenses for 2024 now expected at the low end of the high single-digit range, with elevated professional fees likely to persist due to the ongoing investigation.

• Strategic focus remains on deposit growth, prudent loan origination, and monitoring of economic and rate conditions.

• Loan growth for next year projected at mid-single digits, focusing on ROA enhancement and profitable relationships.