Origin Bancorp, Inc. Reports Earnings for Third Quarter 2020

Origin Bancorp, Inc.
44 min read
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RUSTON, La., Oct. 28, 2020 (GLOBE NEWSWIRE) -- Origin Bancorp, Inc. (Nasdaq: OBNK) ("Origin" or the "Company"), the holding company for Origin Bank (the "Bank"), today announced net income of $13.1 million for the quarter ended September 30, 2020. This represents an increase of $8.1 million from the quarter ended June 30, 2020, and a decrease of $1.5 million from the quarter ended September 30, 2019. Diluted earnings per share for the quarter ended September 30, 2020, were $0.56, up $0.35 from the linked quarter and down $0.06 from the quarter ended September 30, 2019. Pre-tax pre-provision earnings for the quarter were $29.9 million, a 10.3% increase on a linked quarter basis, and a 33.4% increase on a prior year quarter basis, while the efficiency ratio improved to 56.4%, a 206 basis point decline from the linked quarter.

“Origin delivered strong third quarter results reflecting historic pre-tax, pre-provision earnings,” said Drake Mills, chairman, president and CEO of Origin Bancorp, Inc. “Our teams across Louisiana, Texas and Mississippi continue to work to help our customers and communities through the current environment. While much uncertainty remains, we believe our company has shown amazing resiliency, and we are strategically positioned to build sustainable, long term value for our stakeholders and help facilitate the economic recovery across our footprint."

Financial Highlights

  • Net income for the quarter ended September 30, 2020, was $13.1 million, compared to $5.0 million for the linked quarter and $14.6 million for the quarter ended September 30, 2019.

  • Pre-tax pre-provision earnings continue to achieve historic heights, reaching $29.9 million for the quarter ended September 30, 2020, compared to $27.1 million for the linked quarter and $22.4 million for the quarter ended September 30, 2019.

  • Diluted earnings per share for the quarter ended September 30, 2020, were $0.56, compared to $0.21 for the linked quarter and $0.62 for the quarter ended September 30, 2019.

  • Net interest income was $50.6 million for the quarter ended September 30, 2020, compared to $46.3 million for the linked quarter and $44.6 million for the quarter ended September 30, 2019. The fully tax-equivalent net interest margin ("NIM") was 3.18% for the current quarter, a nine basis point improvement from the linked quarter and a 51 basis point decrease from the quarter ended September 30, 2019.

  • Provision expense was $13.6 million for the quarter ended September 30, 2020, compared to provision expense of $21.4 million for the linked quarter and $4.2 million for the quarter ended September 30, 2019. The allowance for credit losses to nonperforming loans held for investment ("LHFI") increased to 270.09%, compared to 234.53% on a linked quarter basis and compared to 117.97% at September 30, 2019.

  • Total LHFI were $5.61 billion at September 30, 2020, an increase of $300.5 million, or 5.7%, from June 30, 2020, and an increase of $1.42 billion, or 34.0%, from September 30, 2019. LHFI, excluding Paycheck Protection Program ("PPP") loans, net of deferred fees and costs, increased $297.3 million, or 6.2%, compared to June 30, 2020, and $871.8 million, or 20.8%, compared to September 30, 2019.

  • Total deposits at September 30, 2020, were $5.94 billion, an increase of $563.7 million, or 10.5%, from June 30, 2020, and an increase of $1.65 billion, or 38.6%, from September 30, 2019.

  • The Company completed an offering of $80 million in aggregate principal amount of subordinated notes due 2030 in October 2020. The notes qualify as Tier 2 capital for the Company and approximately $64.8 million of Tier 1 capital for regulatory capital purposes for Origin Bank.

Coronavirus (COVID-19)

Origin has continued to meet customers' needs while keeping the safety and well-being of the Company's employees and customers as its top priority. The Company implemented a hotline and a temporary pandemic Paid Time Off policy to assist employees and the Company's offices and branches all remain open with all drive-thrus fully operational. The Company has maintained social distancing measures for its employees working in the Company's offices, including appointment-only restricted lobby access and requiring employees to wear face masks unless working in an office or other location that permits social distancing. The Company has also enhanced its sanitation protocols, implemented return to work screening protocols following potential exposures, as well as other measures consistent with applicable federal, state, and local guidelines to promote the safety and health of its employees and customers. To allow for more normalized customer operations, the Company has installed thermal kiosks for temperature checks at the entrance of each location and is currently evaluating additional safety protocols to allow unrestricted lobby access in the future, if the circumstances allow.

Credit Quality

The COVID-19 pandemic has continued to have a severe impact on the U.S. economy leading to elevated unemployment levels and a recession. Our results for the first three quarters of 2020 have been impacted by elevated provision expense and increases in allowance for credit loss due to the COVID-19 health care crisis and the uncertainty surrounding the economic outlook.

The Company recorded a provision expense of $13.6 million for the quarter ended September 30, 2020, compared to provision expense of $21.4 million for the linked quarter and $4.2 million for the quarter ended September 30, 2019. The decrease in provision expense compared to the linked quarter reflects more stable credit trends. The increase from September 30, 2019, was primarily due to the decline in overall economic conditions and the change in accounting methods from incurred loss to expected loss under the implementation of Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("CECL"). The key business sectors affected by the economic uncertainty are discussed below.

As the Company has previously reported, the Company continues to closely monitor those industry sectors that could experience a more protracted recovery from the current economic down turn, specifically the sectors of hotels, energy, non-essential retail, restaurants, and assisted living. Excluding PPP loans, at September 30, 2020, the Company had $551.2 million, or 11.0%, of its LHFI invested in these sectors and, while the Company has increased its allowance for credit losses, the allowance is a current estimate and may be subject to change. Excluding PPP loans, nonperforming LHFI in these sectors were $7.3 million at September 30, 2020, while past due LHFI, excluding PPP loans, defined as loans 30 days or more past due, as a percentage of LHFI in these sectors, excluding PPP loans, was 1.3% at September 30, 2020. For more information on Origin’s COVID-19 impacted sectors, please see the Investor Presentation furnished to the SEC on October 28, 2020, and on Origin's website at www.origin.bank under the Investor Relations, News & Events, Events & Presentations link.

Total LHFI 30 days or more past due as a percentage of LHFI, was 0.52% (0.58% excluding PPP loans) at September 30, 2020, compared to 0.45% (0.50% excluding PPP loans) at June 30, 2020, and 0.72% at September 30, 2019. The ratio of past due LHFI to LHFI excluding PPP loans does not include delinquent GNMA loans that we service of which approximately $60.1 million are available for repurchase and are included in Loans held for sale on the consolidated balance sheet. When GNMA loans available for repurchase, which are past due 90 days or greater, are included, the ratio of Past due loans/Total loans was 1.68% at September 30, 2020.

During the quarter ended September 30, 2020, the Company had net charge-offs of $1.8 million compared to net charge-offs of $6.5 million for the linked quarter. The Company's net charge-off ratio to average LHFI for the quarter ended September 30, 2020, was 0.13%, compared to 0.53% for the quarter ended June 30, 2020. Total nonperforming LHFI were stable at $30.2 million at September 30, 2020, compared to $30.0 million and $31.5 million at June 30, 2020, and September 30, 2019, respectively.

Allowance for credit losses on loans as a percentage of total LHFI was 1.45% at September 30, 2020, compared to 1.33% and 0.89% at June 30, 2020, and September 30, 2019, respectively. Excluding PPP loans and mortgage warehouse lines of credit, the allowance for credit losses on loans as a percentage of LHFI was 2.00% at September 30, 2020, and 1.75% for the linked quarter. The allowance for credit losses on loans as a percentage of nonperforming LHFI was 270.09% at September 30, 2020, compared to 234.53% and 117.97% at June 30, 2020, and September 30, 2019, respectively. The increase in the allowance for credit losses was primarily due to the estimated impact of the COVID-19 pandemic on the Company's loan portfolio combined with an extension of the reversion period during the current quarter. Classified assets remained stable on a linked quarter basis, at $101.6 million at September 30, 2020, compared to $100.3 million at June 30, 2020. The increase in classified assets from $73.5 million at September 30, 2019, is due to the financial condition of borrowers impacted by the COVID-19 pandemic. Excluding PPP loans, classified loans as a percentage of LHFI and as a percentage of total risk-based capital (at the Origin Bancorp, Inc. level) were 1.99% and 13.67%, respectively, at September 30, 2020, reflecting an increase from 1.65% and 11.51%, respectively, at September 30, 2019.

Results of Operations for the Three Months Ended September 30, 2020

Net Interest Income and Net Interest Margin

Net interest income for the quarter ended September 30, 2020, was $50.6 million, an increase of $4.3 million, or 9.3%, compared to the linked quarter. The increase was primarily due to a $2.7 million increase in income from mortgage warehouse lines of credit during the current quarter compared to the linked quarter, combined with a $922,000 decrease in total interest-bearing deposit expenses.

Interest-bearing deposit expense was $5.7 million during the current quarter, compared to $6.6 million for the quarter ended June 30, 2020, primarily due to a reduction in deposit rates. The average rate on savings and interest-bearing transaction accounts was 0.39% for the current quarter, down from 0.51% for the linked quarter, accounting for $900,000 of the decrease in interest expense from the linked quarter. This reduction was partially offset by a $377.9 million increase in the average balance of savings and interest-bearing transaction accounts. The decrease in the cost of interest-bearing deposit accounts was primarily due to the Company's efforts to reduce rates on deposit accounts to offset the continued low-rate environment impact on asset yields. The average balance of Federal Home Loan Bank ("FHLB") advances and other borrowings decreased by $124.6 million primarily due to a $300.0 million short-term FHLB advance obtained in March 2020 that matured on June 25, 2020, but was offset by an increase in the Company's utilization of the Federal Reserve's PPP Lending Facility ("PPPLF") during the quarter.

The fully tax-equivalent net interest margin ("NIM") was 3.18% for the current quarter, a nine basis point improvement from the linked quarter and a 51 basis point decrease from the quarter ended September 30, 2019. Excluding PPP loans, the fully tax-equivalent NIM was 3.28%, a 13 basis point increase from the linked quarter. The yield earned on interest-earning assets was 3.64%, a one basis point and a 117 basis point decrease compared to the linked quarter and the quarter ended September 30, 2019, respectively. Excluding PPP loans, the yield earned on interest-earning assets was 3.75%, a three basis point increase compared to the linked quarter. The rate paid on total interest-bearing liabilities for the quarter ended September 30, 2020, was 0.75%, representing a decrease of 14 basis points and 90 basis points compared to the linked quarter and the quarter ended September 30, 2019, respectively. The Company has experienced margin compression since the quarter ended September 30, 2019, primarily caused by decreasing loan yields driven by declining short-term interest rates over the last several quarters.

Noninterest Income

Noninterest income for the quarter ended September 30, 2020, was $18.1 million, a decrease of $1.0 million, or 5.4%, from the linked quarter. The decrease from the linked quarter was primarily driven by a decrease of $1.4 million in swap fee income and a $1.2 million decrease in mortgage banking revenue, offset by a $661,000 decrease in the loss on sales and disposal of other assets.

The decrease in swap fees income was due to lower transaction volume during the quarter ended September 30, 2020, compared to the linked quarter. The decrease in mortgage banking revenue compared to the linked quarter was primarily due to a reduction in the volume of loans funded and sold.

The decrease in loss on sales and disposals of other assets was primarily due to the decline in value and subsequent write down of two commercial real estate owned properties during the quarter ended June 30, 2020.

Noninterest Expense

Noninterest expense for the quarter ended September 30, 2020, was $38.7 million, an increase of $514,000, or 1.3%, compared to the linked quarter. The increase from the linked quarter was largely driven by increases of $671,000, $544,000, $482,000, and $300,000 in advertising and marketing expense, regulatory assessment expense, other noninterest expense, and loan related expense, respectively.

The increase in advertising and marketing expense was primarily driven by $550,000 in donations and contributions made to various institutions as part of our initiative to invest a portion of our PPP loan income within the community. The increase in regulatory assessment expense was largely driven by significant growth in our assets during the last six months. The increase in other expenses was driven by a $475,000 reserve for a judgment, currently on appeal. The increase in loan related expense was driven by $255,000 in one-time charges on deemed uncollectible receivables from our mortgage servicing portfolio.

These increases were offset by a $1.4 million decrease in salaries and employee benefits expense. Medical self-insurance costs decreased $487,000 primarily due to lower medical claims. Commissions decreased $317,000 due to lower mortgage production compared to the linked quarter.

Financial Condition

Loans

Total LHFI at September 30, 2020, were $5.61 billion, an increase of $300.5 million, or 5.7%, compared to $5.31 billion at June 30, 2020, and an increase of $1.42 billion, or 34.0%, compared to $4.19 billion at September 30, 2019. The increase in LHFI when compared to June 30, 2020, was primarily driven by a $248.3 million increase in mortgage warehouse lines of credit, which was primarily due to increased mortgage activity due to the continued low interest rate environment, but also coupled with additional mortgage warehouse clients being onboarded and funding loans in the last six months. The increase in LHFI when compared to September 30, 2019, was primarily due to an increase of $552.3 million in PPP loans.

For the quarter ended September 30, 2020, average LHFI were $5.29 billion, an increase of $373.1 million, or 7.6%, from $4.92 billion for the linked quarter. The increase in average LHFI was caused by the same drivers that were discussed in the immediately preceding paragraph.

Deposits

Total deposits at September 30, 2020, were $5.94 billion, an increase of $563.7 million, or 10.5%, compared to $5.37 billion at June 30, 2020, and an increase of $1.65 billion, or 38.6%, compared to $4.28 billion, at September 30, 2019. Interest-bearing demand deposits increased $598.7 million, or 19.7%, compared to the linked quarter and $1.33 billion, or 57.6%, compared to the quarter ended September 30, 2019. Brokered and money market deposits contributed an increase of $345.0 million and $188.3 million, respectively, compared to the linked quarter and $505.5 million and $551.0 million, respectively, when compared to the quarter ended September 30, 2019. Noninterest-bearing deposits increased $14.7 million and $444.8 million compared to the quarter ended June 30, 2020, and September 30, 2019, respectively.

Average total deposits for the quarter ended September 30, 2020, increased by $411.5 million, or 8.3%, over the linked quarter primarily due to an increase of $117.3 million in average business money market deposits and $82.9 million in average brokered deposits.

For the quarter ended September 30, 2020, average noninterest-bearing deposits as a percentage of total average deposits was 30.4%, compared to 31.8% for the quarter ended June 30, 2020, and 27.1% for the quarter ended September 30, 2019.

Borrowings

Average FHLB advances and other borrowings for the quarter ended September 30, 2020, decreased by $124.6 million, or 19.0%, compared to the quarter ended June 30, 2020, and increased by $56.8 million, or 11.9% over the quarter ended September 30, 2019. The Company entered into a total of $400.0 million in short-term FHLB advances in March 2020, of which $380.0 million matured and were not replaced with new advances as of September 30, 2020. The maturities of the advances caused the average balance of FHLB advances and borrowings to decline $329.1 million in the current quarter compared to the linked quarter. During the quarter ended September 30, 2020, the Company more significantly utilized the PPPLF which caused an increase in borrowings of $199.4 million, partially offsetting the decline due to FHLB advance maturities. By September 30, 2020, the Company had repaid all advances outstanding under the PPPLF and replaced the advances with brokered deposits ranging in cost from one to five basis points.

The Company announced the completion of an offering of $80 million in aggregate principal amount of 4.50% fixed-to floating rate subordinated notes due 2030 (the “Notes”) in October 2020. The Notes will initially bear interest at a fixed annual rate of 4.50% for five years then adjusts to a floating rate which is expected to be the three-month term Secured Overnight Financing Rate ("SOFR") plus 432 basis points. The Notes qualify as Tier 2 capital for regulatory capital purposes for the Company, and approximately $64.8 million will be passed downstream as Tier 1 capital for regulatory capital purposes to Origin Bank.

Stockholders' Equity

Stockholders' equity was $627.6 million at September 30, 2020, an increase of $12.9 million, or 2.1%, compared to $614.8 million at June 30, 2020, and an increase of $39.3 million, or 6.7%, compared to $588.4 million at September 30, 2019. The increase from the linked quarter was primarily due to net income for the quarter of $13.1 million. The increase from the September 30, 2019, quarter was primarily caused by retained earnings and other comprehensive income during the intervening period.

Conference Call

Origin will hold a conference call to discuss its third quarter 2020 results on Thursday, October 29, 2020, at 8:00 a.m. Central Time (9:00 a.m. Eastern Time). To participate in the live conference call, please dial (844) 695-5516; International: (412) 902-6750 and request to be joined into the Origin Bancorp, Inc. (OBNK) call. A simultaneous audio-only webcast may be accessed via Origin's website at www.origin.bank under the Investor Relations, News & Events, Events & Presentations link or directly by visiting https://services.choruscall.com/links/obnk201029.html.

If you are unable to participate during the live webcast, the webcast will be archived on the Investor Relations section of Origin's website at www.origin.bank, under Investor Relations, News & Events, Events & Presentations.

About Origin Bancorp, Inc.

Origin is a financial holding company headquartered in Ruston, Louisiana. Origin's wholly owned bank subsidiary, Origin Bank, was founded in 1912. Deeply rooted in Origin's history is a culture committed to providing personalized, relationship banking to its clients and communities. Origin provides a broad range of financial services to businesses, municipalities, high net-worth individuals and retail clients. Origin currently operates 43 banking centers located from Dallas/Fort Worth, Texas across North Louisiana to Central Mississippi, as well as in Houston, Texas. For more information, visit www.origin.bank.

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information regarding Origin's future financial performance, business and growth strategy, projected plans and objectives, including the Company’s loan loss reserves and allowance for credit losses related to the COVID-19 pandemic and any expected purchases of its outstanding common stock, and related transactions and other projections based on macroeconomic and industry trends, including expectations regarding efforts to respond to the COVID-19 pandemic and continued low interest rates or interest rate cuts by the Federal Reserve and the resulting impact on Origin's results of operations, estimated forbearance amounts and expectations regarding the Company's liquidity, including in connection with advances obtained from the FHLB, which are all subject to change and may be inherently unreliable due to the multiple factors that impact broader economic and industry trends, and any such changes may be material. Such forward-looking statements are based on various facts and derived utilizing important assumptions and current expectations, estimates and projections about Origin and its subsidiaries, any of which may change over time and some of which may be beyond Origin's control. Statements or statistics preceded by, followed by or that otherwise include the words "anticipates," "believes," "estimates," "expects," “foresees,” "intends," "plans," "projects," and similar expressions or future or conditional verbs such as "could," "may," “might,” "should," "will," and "would" or variations of such terms are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. Further, certain factors that could affect Origin's future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to: the continuing duration and impacts of the COVID-19 global pandemic and efforts to contain its transmission, including the effect of these factors on Origin’s business, customers and economic conditions generally, as well as the impact of the actions taken by governmental authorities to address the impact of COVID-19 on the United States economy, including, without limitation, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”); deterioration of Origin's asset quality; factors that can impact the performance of Origin’s loan portfolio, including real estate values and liquidity in Origin's primary market areas; the financial health of Origin's commercial borrowers and the success of construction projects that Origin finances; changes in the value of collateral securing Origin's loans; Origin’s ability to anticipate interest rate changes and manage interest rate risk; the effectiveness of Origin’s risk management framework and quantitative models; Origin’s inability to receive dividends from Origin Bank and to service debt, pay dividends to Origin’s common stockholders, repurchase Origin’s shares of common stock and satisfy obligations as they become due; business and economic conditions generally and in the financial services industry, nationally and within Origin's primary market areas; changes in Origin’s operation or expansion strategy or Origin's ability to prudently manage its growth and execute its strategy; changes in management personnel; Origin's ability to maintain important customer relationships, reputation or otherwise avoid liquidity risks; increasing costs as Origin grows deposits; operational risks associated with Origin’s business; volatility and direction of market interest rates; increased competition in the financial services industry, particularly from regional and national institutions; difficult market conditions and unfavorable economic trends in the United States generally, and particularly in the market areas in which Origin operates and in which its loans are concentrated; an increase in unemployment levels and slowdowns in economic growth; Origin's level of nonperforming assets and the costs associated with resolving any problem loans including litigation and other costs; the credit risk associated with the substantial amount of commercial real estate, construction and land development, and commercial loans in Origin's loan portfolio; changes in the laws, rules, regulations, interpretations or policies relating to financial institutions, and potential expenses associated with complying with such regulations, periodic changes to the extensive body of accounting rules and best practices; further government intervention in the U.S. financial system; compliance with governmental and regulatory requirements, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and others relating to banking, consumer protection, securities and tax matters; Origin's ability to comply with applicable capital and liquidity requirements, including its ability to generate liquidity internally or raise capital on favorable terms, including continued access to the debt and equity capital markets; changes in the utility of Origin's non-GAAP liquidity measurements and its underlying assumptions or estimates; uncertainty regarding the future of the London Interbank Offered Rate and the impact of any replacement alternatives on Origin’s business; possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies and similar organizations; natural disasters and adverse weather events, acts of terrorism, an outbreak of hostilities, regional or national protests and civil unrest (including any resulting branch closures or property damage), widespread illness or public health outbreaks or other international or domestic calamities, and other matters beyond Origin’s control; and system failures, cybersecurity threats or security breaches and the cost of defending against them. For a discussion of these and other risks that may cause actual results to differ from expectations, please refer to the sections titled "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" in Origin's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission and any updates to those sections set forth in Origin's subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if Origin's underlying assumptions prove to be incorrect, actual results may differ materially from what Origin anticipates. Accordingly, you should not place undue reliance on any forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and Origin does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

New risks and uncertainties arise from time to time, and it is not possible for Origin to predict those events or how they may affect Origin. In addition, Origin cannot assess the impact of each factor on Origin's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Furthermore, many of these risks and uncertainties are currently amplified by and may continue to be amplified by or may, in the future, be amplified by, the recent outbreak of the COVID-19 pandemic and the impact of varying governmental responses, including the CARES Act, that affect Origin's customers and the economies where they operate. All forward-looking statements, expressed or implied, included in this communication are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Origin or persons acting on Origin's behalf may issue. Annualized, pro forma, adjusted, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.

Contact:

Chris Reigelman, Origin Bancorp, Inc.

318-497-3177 / chris@origin.bank


Origin Bancorp, Inc.
Selected Quarterly Financial Data

At and for the three months ended

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

Income statement and share amounts

(Dollars in thousands, except per share amounts, unaudited)

Net interest income

$

50,617

$

46,290

$

42,810

$

44,095

$

44,622

Provision for credit losses

13,633

21,403

18,531

2,377

4,201

Noninterest income

18,051

19,076

12,144

10,818

12,880

Noninterest expense

38,734

38,220

36,097

36,534

35,064

Income before income tax expense

16,301

5,743

326

16,002

18,237

Income tax (benefit) expense

3,206

786

(427

)

3,175

3,620

Net income

$

13,095

$

4,957

$

753

$

12,827

$

14,617

Pre-tax, pre-provision ("PTPP") earnings (1)

$

29,934

$

27,146

$

18,857

$

18,379

$

22,438

Basic earnings per common share

0.56

0.21

0.03

0.55

0.62

Diluted earnings per common share

0.56

0.21

0.03

0.55

0.62

Dividends declared per common share

0.0925

0.0925

0.0925

0.0925

0.0925

Weighted average common shares outstanding - basic

23,374,496

23,347,744

23,353,601

23,323,292

23,408,499

Weighted average common shares outstanding - diluted

23,500,596

23,466,326

23,530,212

23,529,862

23,606,956

Balance sheet data

Total LHFI

$

5,612,666

$

5,312,194

$

4,481,185

$

4,143,195

$

4,188,497

Total assets

7,101,338

6,643,909

6,049,638

5,324,626

5,396,928

Total deposits

5,935,925

5,372,222

4,556,246

4,228,612

4,284,317

Total stockholders' equity

627,637

614,781

606,631

599,262

588,363

Performance metrics and capital ratios

Yield on LHFI

4.02

%

4.09

%

4.85

%

4.95

%

5.23

%

Yield on interest earnings assets

3.64

3.65

4.37

4.56

4.81

Rate on interest bearing deposits

0.61

0.79

1.28

1.44

1.59

Rate on total deposits

0.42

0.54

0.95

1.04

1.16

Net interest margin, fully tax equivalent

3.18

3.09

3.44

3.58

3.69

Net interest margin, excluding PPP loans, fully tax equivalent (2)

3.28

3.15

N/A

N/A

N/A

Return on average stockholders' equity (annualized)

8.28

3.23

0.50

8.51

9.85

Return on average assets (annualized)

0.77

0.31

0.06

0.97

1.12

PTPP return on average stockholders' equity (annualized) (1)

18.92

17.67

12.41

12.19

15.13

PTPP return on average assets (annualized) (1)

1.77

1.69

1.40

1.38

1.72

Efficiency ratio (3)

56.41

58.47

65.69

66.53

60.98

Book value per common share

$

26.70

$

26.16

$

25.84

$

25.52

$

25.06

Tangible book value per common share (1)

25.39

24.84

24.51

24.18

23.70

Common equity tier 1 to risk-weighted assets (4)

9.93

%

10.35

%

10.86

%

11.74

%

11.43

%

Tier 1 capital to risk-weighted assets (4)

10.08

10.52

11.04

11.94

11.63

Total capital to risk-weighted assets (4)

12.47

12.91

13.38

12.76

12.45

Tier 1 leverage ratio (4)

9.19

9.10

10.71

10.91

10.88

____________________________
(1) PTPP earnings, PTPP return on average stockholders' equity, PTPP return on average assets and tangible book value per common share are non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to their comparable GAAP measures, please see page 14.
(2) Net interest margin, excluding PPP loans, fully tax equivalent is calculated by removing average PPP loans from average interest earning assets, and removing the associated interest income (net of 35 basis points assumed cost of funds on average PPP loan balances) from net interest income.
(3) Calculated by dividing noninterest expense by the sum of net interest income plus noninterest income.
(4) September 30, 2020, ratios are estimated and calculated at the Company level, which is subject to the capital adequacy requirements of the Federal Reserve Board.

Origin Bancorp, Inc.
Consolidated Quarterly Statements of Income

Three months ended

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

Interest and dividend income

(Dollars in thousands, except per share amounts, unaudited)

Interest and fees on loans

$

54,150

$

50,722

$

50,049

$

52,331

$

53,932

Investment securities-taxable

2,704

2,732

2,712

2,640

2,786

Investment securities-nontaxable

1,571

1,391

758

772

826

Interest and dividend income on assets held in other financial institutions

375

619

1,497

976

1,262

Total interest and dividend income

58,800

55,464

55,016

56,719

58,806

Interest expense

Interest-bearing deposits

5,698

6,620

10,250

11,056

11,623

FHLB advances and other borrowings

1,564

1,641

1,351

1,428

2,420

Junior subordinated debentures

921

913

605

140

141

Total interest expense

8,183

9,174

12,206

12,624

14,184

Net interest income

50,617

46,290

42,810

44,095

44,622

Provision for credit losses

13,633

21,403

18,531

2,377

4,201

Net interest income after provision for credit losses

36,984

24,887

24,279

41,718

40,421

Noninterest income

Service charges and fees

3,268

2,990

3,320

3,488

3,620

Mortgage banking revenue

9,523

10,717

2,769

3,359

3,092

Insurance commission and fee income

3,218

3,109

3,687

2,428

3,203

Gain on sales of securities, net

301

—

54

—

20

(Loss) on sales and disposals of other assets, net

(247

)

(908

)

(25

)

(38

)

(132

)

Limited partnership investment income (loss)

130

9

(429

)

(267

)

279

Swap fee income

110

1,527

676

151

1,351

Other fee income

576

607

466

440

414

Other income

1,172

1,025

1,626

1,257

1,033

Total noninterest income

18,051

19,076

12,144

10,818

12,880

Noninterest expense

Salaries and employee benefits

22,597

24,045

21,988

22,074

21,523

Occupancy and equipment, net

4,263

4,267

4,221

4,241

4,274

Data processing

2,065

2,075

2,003

1,801

1,763

Electronic banking

954

890

900

936

924

Communications

422

419

477

454

411

Advertising and marketing

1,281

610

711

991

930

Professional services

785

843

1,171

878

956

Regulatory assessments

1,310

766

615

679

(387

)

Loan related expenses

1,809

1,509

1,142

1,400

1,315

Office and operations

1,367

1,344

1,441

1,632

1,712

Intangible asset amortization

237

287

299

302

302

Franchise tax expense

511

514

496

496

683

Other expenses

1,133

651

633

650

658

Total noninterest expense

38,734

38,220

36,097

36,534

35,064

Income before income tax expense

16,301

5,743

326

16,002

18,237

Income tax (benefit) expense

3,206

786

(427

)

3,175

3,620

Net income

$

13,095

$

4,957

$

753

$

12,827

$

14,617

Basic earnings per common share

$

0.56

$

0.21

$

0.03

$

0.55

$

0.62

Diluted earnings per common share

0.56

0.21

0.03

0.55

0.62

Origin Bancorp, Inc.
Selected YTD Financial Data

Nine Months Ended September 30,

(Dollars in thousands, except per share amounts)

2020

2019

Income statement and share amounts

(Unaudited)

(Unaudited)

Net interest income

$

139,717

$

129,617

Provision for credit losses

53,567

7,191

Noninterest income

49,271

35,660

Noninterest expense

113,051

107,540

Income before income tax expense

22,370

50,546

Income tax expense

3,565

9,491

Net income

$

18,805

$

41,055

PTPP earnings (1)

$

75,937

$

57,737

Basic earnings per common share (2)

$

0.81

$

1.75

Diluted earnings per common share(2)

0.80

1.73

Dividends declared per common share

0.278

0.1575

Weighted average common shares outstanding - basic

23,358,672

23,520,438

Weighted average common shares outstanding - diluted

23,498,838

23,722,384

Performance metrics

Yield on LHFI

4.28

%

5.26

%

Yield on interest earning assets

3.85

4.84

Rate on interest bearing deposits

0.87

1.56

Rate on total deposits

0.62

1.15

Net interest margin, fully tax equivalent

3.22

3.73

Net interest margin, excluding PPP loans, fully tax equivalent (3)

3.28

N/A

Return on average stockholders' equity (annualized)

4.05

9.54

Return on average assets (annualized)

0.41

1.09

PTPP return on average stockholders' equity (annualized) (1)

16.37

13.42

PTPP return on average assets (annualized) (1)

1.64

1.53

Efficiency ratio (4)

59.82

65.07

____________________________
(1) PTPP earnings, PTPP return on average stockholders' equity, and PTPP return on average assets are non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to their comparable GAAP measures, please see page 15.
(2) Due to the combined impact of the repurchase of common stock on the quarterly average common shares outstanding calculation compared to the impact of the repurchase of common stock shares on the year-to-date average common outstanding calculation, and the effect of rounding, the sum of the 2019 quarterly earnings per common share will not equal the 2019 year-to-date earnings per common share amount.
(3) Net interest margin, excluding PPP loans, fully tax equivalent is calculated by removing average PPP loans from average interest earning assets, and removing the associated interest income (net of 35 basis points assumed cost of funds on average PPP loan balances) from net interest income.
(4) Calculated by dividing noninterest expense by the sum of net interest income plus noninterest income.

Origin Bancorp, Inc.
Consolidated Balance Sheets

(Dollars in thousands)

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

Assets

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Cash and due from banks

$

61,250

$

57,054

$

91,104

$

62,160

$

79,005

Interest-bearing deposits in banks

160,661

99,282

469,075

229,358

229,757

Total cash and cash equivalents

221,911

156,336

560,179

291,518

308,762

Securities:

Available for sale

797,260

720,616

601,637

501,070

492,461

Held to maturity, net of allowance for credit losses

38,193

38,287

28,383

28,620

28,759

Securities carried at fair value through income

11,813

11,977

12,242

11,513

11,745

Total securities

847,266

770,880

642,262

541,203

532,965

Non-marketable equity securities held in other financial institutions

38,052

41,864

52,267

39,808

49,205

Loans held for sale

155,525

121,541

75,322

64,837

67,122

Loans

5,612,666

5,312,194

4,481,185

4,143,195

4,188,497

Less: allowance for credit losses

81,643

70,468

56,063

37,520

37,126

Loans, net of allowance for credit losses

5,531,023

5,241,726

4,425,122

4,105,675

4,151,371

Premises and equipment, net

79,254

80,025

80,193

80,457

80,921

Mortgage servicing rights

14,322

15,235

16,122

20,697

19,866

Cash surrender value of bank-owned life insurance

37,332

37,102

36,874

37,961

37,755

Goodwill and other intangible assets, net

30,717

30,953

31,241

31,540

31,842

Accrued interest receivable and other assets

145,936

148,247

130,056

110,930

117,119

Total assets

$

7,101,338

$

6,643,909

$

6,049,638

$

5,324,626

$

5,396,928

Liabilities and Stockholders' Equity

Noninterest-bearing deposits

$

1,599,436

$

1,584,746

$

1,115,811

$

1,077,706

$

1,154,660

Interest-bearing deposits

3,640,587

3,041,859

2,673,881

2,360,096

2,309,387

Time deposits

695,902

745,617

766,554

790,810

820,270

Total deposits

5,935,925

5,372,222

4,556,246

4,228,612

4,284,317

FHLB advances and other borrowings

360,325

478,260

716,909

417,190

419,681

Subordinated debentures

78,596

78,567

78,539

9,671

9,664

Accrued expenses and other liabilities

98,855

100,079

91,313

69,891

94,903

Total liabilities

6,473,701

6,029,128

5,443,007

4,725,364

4,808,565

Stockholders' equity

Common stock

117,533

117,506

117,380

117,405

117,409

Additional paid-in capital

236,679

236,156

235,709

235,623

235,018

Retained earnings

251,427

240,506

237,720

239,901

229,246

Accumulated other comprehensive income

21,998

20,613

15,822

6,333

6,690

Total stockholders' equity

627,637

614,781

606,631

599,262

588,363

Total liabilities and stockholders' equity

$

7,101,338

$

6,643,909

$

6,049,638

$

5,324,626

$

5,396,928

Origin Bancorp, Inc.
Loan Data

At and for the three months ended

(Dollars in thousands, unaudited)

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

LHFI

Commercial real estate

$

1,367,916

$

1,323,754

$

1,302,520

$

1,296,847

$

1,305,006

Construction/land/land development

560,857

570,032

563,820

517,688

509,905

Residential real estate

832,055

769,354

703,263

689,555

680,803

Total real estate loans

2,760,828

2,663,140

2,569,603

2,504,090

2,495,714

Paycheck Protection Program ("PPP")

552,329

549,129

—

—

—

Commercial and industrial excl. PPP

1,263,279

1,313,405

1,455,497

1,343,475

1,367,595

Mortgage warehouse lines of credit

1,017,501

769,157

437,257

274,659

304,917

Consumer

18,729

17,363

18,828

20,971

20,271

Total LHFI

5,612,666

5,312,194

4,481,185

4,143,195

4,188,497

Less: allowance for credit losses

81,643

70,468

56,063

37,520

37,126

LHFI, net

$

5,531,023

$

5,241,726

$

4,425,122

$

4,105,675

$

4,151,371

Nonperforming assets

Nonperforming LHFI

Commercial real estate

$

4,669

$

4,717

$

11,306

$

6,994

$

7,460

Construction/land/land development

2,976

3,726

3,850

4,337

860

Residential real estate

8,259

6,713

4,076

5,132

5,254

Commercial and industrial

14,255

14,772

13,619

14,520

17,745

Consumer

69

119

181

163

153

Total nonperforming LHFI

30,228

30,047

33,032

31,146

31,472

Nonperforming loans held for sale

483

734

840

927

1,462

Total nonperforming loans

30,711

30,781

33,872

32,073

32,934

Repossessed assets

718

4,155

5,296

4,753

4,565

Total nonperforming assets

$

31,429

$

34,936

$

39,168

$

36,826

$

37,499

Classified assets

$

101,577

$

100,299

$

79,980

$

69,870

$

73,516

Past due LHFI (1)

29,194

23,751

51,018

29,980

29,965

Allowance for credit losses

Balance at beginning of period

$

70,468

$

56,063

$

37,520

$

37,126

$

36,683

Impact of adopting ASC 326

—

—

1,248

—

—

Provision for loan credit losses

12,970

20,878

18,396

3,167

3,435

Loans charged off

2,293

6,587

1,425

3,268

5,415

Loan recoveries

498

114

324

495

2,423

Net charge-offs

1,795

6,473

1,101

2,773

2,992

Balance at end of period

$

81,643

$

70,468

$

56,063

$

37,520

$

37,126

Origin Bancorp, Inc.
Loan Data - Continued

At and for the three months ended

(Unaudited)

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

Credit quality ratios

Total nonperforming assets to total assets

0.44

%

0.53

%

0.65

%

0.69

%

0.69

%

Total nonperforming loans to total loans

0.53

0.57

0.74

0.76

0.77

Nonperforming LHFI to LHFI

0.54

0.57

0.74

0.75

0.75

Past due LHFI to LHFI

0.52

0.45

1.14

0.72

0.72

Allowance for credit losses to nonperforming LHFI

270.09

234.53

169.72

120.46

117.97

Allowance for credit losses to total LHFI

1.45

1.33

1.25

0.91

0.89

Allowance for credit losses to total LHFI excluding PPP and warehouse loans (2)

2.00

1.75

1.37

0.96

0.95

Net charge-offs (recoveries) to total average LHFI (annualized)

0.13

0.53

0.11

0.26

0.29

____________________________
(1) Past due LHFI are defined as loans 30 days or more past due.
(2) The allowance for credit losses ("ACL") to total LHFI excluding PPP and warehouse loans is calculated by excluding the ACL for warehouse loans from the numerator and excluding the PPP and warehouse loans from the denominator. Mortgage warehouse loans increased significantly during the period, but, due to their low-risk profile, require a disproportionately low allocation of the allowance for credit losses.

Origin Bancorp, Inc.
Average Balances and Yields/Rates

Three months ended

September 30, 2020

June 30, 2020

September 30, 2019

Average Balance

Yield/Rate

Average Balance

Yield/Rate

Average Balance

Yield/Rate

Assets

(Dollars in thousands, unaudited)

Commercial real estate

$

1,344,853

4.29

%

$

1,307,715

4.45

%

$

1,259,274

5.22

%

Construction/land/land development

575,080

4.42

562,233

4.40

533,328

5.48

Residential real estate

787,247

4.35

742,657

4.44

676,650

5.07

Paycheck Protection Program ("PPP")

550,377

2.49

449,680

2.72

—

—

Commercial and industrial excl. PPP

1,295,105

4.09

1,378,898

3.92

1,340,684

5.26

Mortgage warehouse lines of credit

723,876

3.87

462,088

3.79

236,042

4.92

Consumer

18,209

6.27

18,362

6.45

20,959

6.90

LHFI

5,294,747

4.02

4,921,633

4.09

4,066,937

5.23

Loans held for sale

88,811

2.79

91,991

3.10

33,814

4.15

Loans receivable

5,383,558

4.00

5,013,624

4.07

4,100,751

5.22

Investment securities-taxable

539,993

2.00

492,752

2.22

448,766

2.48

Investment securities-nontaxable

252,304

2.49

208,667

2.67

103,053

3.21

Non-marketable equity securities held in other financial institutions

39,229

2.53

51,713

2.29

49,025

2.76

Interest-bearing balances due from banks

204,288

0.24

345,906

0.38

152,580

2.39

Total interest-earning assets

6,419,372

3.64

%

6,112,662

3.65

%

4,854,175

4.81

%

Noninterest-earning assets(1)

327,213

334,864

325,374

Total assets

$

6,746,585

$

6,447,526

$

5,179,549

Liabilities and Stockholders' Equity

Liabilities

Interest-bearing liabilities

Savings and interest-bearing transaction accounts

$

3,011,389

0.39

%

$

2,633,520

0.51

%

$

2,071,990

1.36

%

Time deposits

730,705

1.50

751,607

1.75

828,993

2.16

Total interest-bearing deposits

3,742,094

0.61

3,385,127

0.79

2,900,983

1.59

FHLB advances and other borrowings

532,689

1.17

657,332

1.00

475,860

1.96

Securities sold under agreements to repurchase

10,506

0.10

13,776

0.10

25,302

1.09

Subordinated debentures

78,585

4.69

78,557

4.65

9,661

5.69

Total interest-bearing liabilities

4,363,874

0.75

%

4,134,792

0.89

%

3,411,806

1.65

%

Noninterest-bearing liabilities

Noninterest-bearing deposits

1,633,510

1,578,987

1,076,344

Other liabilities(1)

119,668

115,849

102,895

Total liabilities

6,117,052

5,829,628

4,591,045

Stockholders' Equity

629,533

617,898

588,504

Total liabilities and stockholders' equity

$

6,746,585

$

6,447,526

$

5,179,549

Net interest spread

2.89

%

2.76

%

3.16

%

Net interest margin

3.14

%

3.05

%

3.65

%

Net interest margin - (tax- equivalent)(2)

3.18

%

3.09

%

3.69

%

Net interest margin excluding PPP loans - (tax- equivalent)(3)

3.28

%

3.15

%

N/A

____________________________
(1) Includes Government National Mortgage Association ("GNMA") repurchase average balances of $31.7 million, $29.0 million, and $23.7 million for the three months ended September 30, 2020, June 30, 2020, and September 30, 2019, respectively. The GNMA repurchase asset and liability are recorded as equal offsetting amounts in the consolidated balance sheets, with the asset included in Loans held for sale and the liability included in FHLB advances and other borrowings.
(2) In order to present pre-tax income and resulting yields on tax-exempt investments comparable to those on taxable investments, a tax-equivalent adjustment has been computed. This adjustment also includes income tax credits received on Qualified School Construction Bonds.
(3) Net interest margin, excluding PPP loans, fully tax equivalent is calculated by removing average PPP loans from average interest earning assets, and removing the associated interest income (net of 35 basis points assumed cost of funds on average PPP loan balances) from net interest income.

Origin Bancorp, Inc.
Non-GAAP Financial Measures

(Dollars in thousands, except per share amounts, unaudited)

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

Calculation of Tangible Common Equity:

Total common stockholders' equity

$

627,637

$

614,781

$

606,631

$

599,262

$

588,363

Less: goodwill and other intangible assets, net

30,717

30,953

31,241

31,540

31,842

Tangible Common Equity

$

596,920

$

583,828

$

575,390

$

567,722

$

556,521

Calculation of Tangible Book Value per Common Share:

Divided by common shares outstanding at the end of the period

23,506,586

23,501,233

23,475,948

23,480,945

23,481,781

Tangible Book Value per Common Share

$

25.39

$

24.84

$

24.51

$

24.18

$

23.70

Calculation of PTPP Earnings:

Net Income

$

13,095

$

4,957

$

753

$

12,827

$

14,617

Plus: provision for credit losses

13,633

21,403

18,531

2,377

4,201

Plus: income tax expense

3,206

786

(427

)

3,175

3,620

PTPP Earnings

$

29,934

$

27,146

$

18,857

$

18,379

$

22,438

Calculation of PTPP ROAA and PTPP ROAE:

PTPP Earnings

$

29,934

$

27,146

$

18,857

$

18,379

$

22,438

Divided by number of days in the quarter

92

91

91

92

92

Multiplied by the number of days in the year

366

366

366

365

365

Annualized PTPP Earnings

$

119,085

$

109,181

$

75,842

$

72,917

$

89,020

Divided by total average assets

$

6,746,585

$

6,447,526

$

5,400,704

$

5,271,979

$

5,179,549

PTPP ROAA (annualized)

1.77

%

1.69

%

1.40

%

1.38

%

1.72

%

Divided by total average stockholder's equity

$

629,533

$

617,898

$

611,162

$

597,925

$

588,504

PTPP ROAE (annualized)

18.92

%

17.67

%

12.41

%

12.19

%

15.13

%

Origin Bancorp, Inc.
Non-GAAP Financial Measures

Nine Months Ended September 30,

(Dollars in thousands, except per share amounts, unaudited)

2020

2019

Calculation of PTPP Earnings:

Net Income

$

18,805

$

41,055

Plus: provision for credit losses

53,567

7,191

Plus: income tax expense

3,565

9,491

PTPP Earnings

$

75,937

$

57,737

Calculation of PTPP ROAA and PTPP ROAE:

PTPP Earnings

$

75,937

$

57,737

Divided by number of days in this period

274

273

Multiplied by the number of days in the year

366

365

Annualized PTPP Earnings

$

101,434

$

77,194

Divided by total average assets

$

6,200,273

$

5,032,646

PTPP ROAA (annualized)

1.64

%

1.53

%

Divided by total average stockholder's equity

$

619,567

$

575,223

PTPP ROAE (annualized)

16.37

%

13.42

%


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