Origin Bancorp (OBK) Q3 2024 earnings summary

Executive summary

• Net income for Q3 2024 was $18.6 million ($0.60 diluted EPS), down from $21.0 million ($0.67 EPS) in Q2 2024 and 23.5% lower year-over-year; PTPP earnings were $28.3 million, down from $32.0 million sequentially.

• Total loans held for investment reached $7.96 billion at September 30, 2024, up 3.9% from December 31, 2023; total deposits were $8.49 billion, up 2.9% in the same period.

• Book value per common share increased to $36.76, and tangible book value per share rose to $31.37, both up sequentially and year-over-year.

• Texas franchise remains a key growth driver, representing 73% of loans and 56% of deposits, with Southeast expansion ahead of plan.

• Strategic investments in people, technology, and risk management have pressured short-term profitability but are expected to drive long-term value.

Financial highlights

• Net interest income for Q3 2024 was $74.8 million, up 1.2% from Q2 2024 and 0.9% year-over-year; NIM-FTE was 3.18%, up 1 basis point sequentially and 4 basis points year-over-year.

• Noninterest income was $16.0 million, down 11.8% year-over-year and 28.8% sequentially, mainly due to lower fair value of equity investments and mortgage banking revenue.

• Noninterest expense was $62.5 million, up 6.6% year-over-year but down 2.9% sequentially; notable items included legal fees related to questioned activity.

• Tangible book value per share grew 5% quarter over quarter and 17% year over year.

• Return on average assets (ROAA) was 0.74%; return on average tangible common equity (ROATCE) was 7.74%; efficiency ratio was 68.86%.

Outlook and guidance

• Management is focused on returning to peer-level profitability by the end of next year, with more details to be provided in January.

• Expect loan growth in low single digits for the year, with deposit growth to match.

• Net interest margin expected to compress by ~10 basis points in Q4 due to Fed rate cuts, but to expand once rate cuts slow or pause.

• Management expects to remain well-capitalized and to monitor growth to maintain regulatory capital standards.

• Q4 fee income and expenses expected to be similar to Q2 and Q4 2023, with mid-single digit full-year expense growth (excluding notable items).