OBK - Earnings call transcript Q3 2024

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Operator

Ladies and gentlemen, good morning, and welcome to the Origin Bancorp, Inc.

Third Quarter Earnings Conference Call. My name is David, and I will be your Evercall coordinator. [Operator Instructions] Also, please note that this event is being recorded. I would now like to turn the call over to Chris Reigelman, Director of Investor Relations. Please go ahead.

Chris Reigelman

you us thank and morning, for today. joining Good refer release a our use measures. to copy issued we along our includes which Page and afternoon, safe press earnings will that slide presentation on We X of of call. Please presentation, statements yesterday is financial harbor a statements slide of during forward-looking our non-GAAP to this with which refer website, our available regarding

our Officer, website by Bank, joined those happy Wallace; morning of Risk available presentation subject on Crotwell; yours. CEO comments CEO, our For Bancorp's are to our Officer, to call by and the Preston will Credit Wally presentation is our questions may with that All call note earnings Moore. phone, on filed Financial address Accounting the during President SEC the in of are have. Drake, Brolly; Origin slide and President Jim www.ir.origin.bank. Please slide the at the this safe presentation, Chief joining is be you please X After earnings statements Drake safe and note release Mills; we and today's Banking statements Chairman, Steve release. I'm Lance made yesterday. also available harbor Page Officer, and Officer, Chief any Chief Hall; Origin Chief harbor

Drake Mills

that Thanks, Chris, and developed a I've I'd believe of thanks the reputation transparent to on for direct. being like being and call.

we award-winning have new and attracts in in and prepared went growing markets to enter front great that to and of we but in in we billion we deal drive bankers, long-term public strategic processes significant how a investments knew $XX Louisiana billion expanded $X.X would accomplished diligently We've in in talented built upper prepare we we profitability. Florida since profitability, in Panhandle, Alabama South We've the people and market impact with to understand value. assets. We've Texas, XXXX create been us have for in us cross assets. prepare crossing made presence an the short-term in billion quartile culture We in these successes, work clearly $XX very were share our assets. Even Mississippi, that when would

rate to While we've I right foundation to environment drive to profitability, ability a invested few. in am enhanced to and long-term and strengthened we team. capabilities our analyze and management pressured have confident name lay to preparation decisions made improved our We've decision-making, have our build our the value. we've We technology, this gather management the strategic data risk

on to it's our focus time Now profitability. near-term sharpen

a the We strategic to acceptable are year. laser-focused on profitability initiative next of by to return end levels

initiative around We provide this results full year when detailed will in report our metrics January. we

the at level into party our and granular process a well peers. are benchmark a are working We with third us to actively to

specific begun a the term, also expense levels and need to with to path we them. profitability peers revenue in have achieve near at with We our opportunities our line outperform outlining goals. to defined In operate

to the it quarter through the to turn I'll Now results. and team over Lance talk

Martin Hall

morning. and good Thanks,

our expanding about driving focus talked bankers' and Over core I've the past consistent deposit several growth relationships. quarters, on

Southeast success XX%. I trends quarter. directly Texas X.X% want for put markets. the has opportunities, up quarter. also the the environment our up, on to to new growth X.X% particularly I'm quarter-over-quarter, markets pressure in stable capitalize Also, seen deposits brokered, X mix we've were which sheet bankers showed in and deposits, we balance will rate deposits as our Noninterest-bearing speak across the a deposits, remained NIB to having growing our Texas strongest percent years. in our total were confident market. Total we're with the is at pleased While the the banking excluding I'm industry, trends these in our continue, Metro on third and will

tremendous teams continue drive the place $XXX state Texas, we million, to We grown that business. and grown throughout see have Texas to loans in grow deposits million. in $XXX the growth. Our to infrastructure our Year-to-date, opportunity meaningful bankers continue and have

detailing is profitability While look quarter, next to Drake initiative focus. that forward a operating improving always mentioned the we efficiencies

As an we example, is efficiencies had area process robotics success in One building automation in platform. have our

equivalent Our more RPA manual over the has to approximately add bank about growing full-time than equivalents. I'm X value on manual by within hours focused optimistic to are X,XXX markets team bankers our the team quarter. momentum and relationships. how profitable saving continues hours of this our we're saved X,XXX third in the Year-to-date, of to work work that seeing just

Now I'll turn it over to Jim.

Jim Crotwell

Thanks, Lance.

past over experience are portfolio. quarters, classified continue in we as decreases well nonperforming With the as pleased the report to that within As we loan said, for quarter. dues, we loans normalization to discussed past several our loans,

investment year-to-date While quarter, the X.XX% an loans due as we for did of in be from experience charge-offs quarter. charge-offs past end came in decreasing September of X.XX% at in first increase of XX, due in the net for as held of line XX, levels of as X.XX% and June to with with expectations. Past net line continue the

a increase As June East dues Texas part former as banker of you the as identified in XX, the and of to relationships question past activity market. in will was recall, attributed of our

of primarily of of the as XX, these down work including loans to as X.XX% June loans $XX.X loans. settlement to as million quarter end, million the of ongoing loans those $XX through decreased of X.XX% to payment acquired write-down well loans million as of with X.XX% as X dispute. Classified on the while prior of from X in end. The classified this a by X.XX% decrease $X.X both from to nonperforming million quarter customers, $XX.X September decreased as continue relationships loans was in our nonperforming issue We down driven subject and XX,

up prior totaled to $X.X loans, by totaling of the reductions million, from loans. X As from for partially offset million, $X.X these acquired the X which of classified charge-offs $X relationships, downgrades were million were Net quarter quarter.

are net and expectations. year-to-date X.XX%, QX with charge-offs were in net While line for charge-offs were X.XX%,

expense in decrease considering resulted to a credit million compared quarter, reduction for the was The was previously million of allowance million from the X.XX% Our provision the charge-offs from X.XX% a a of prior the to utilization X.XX% basis, and $X.X $XX in decreased reserve established net net $X.X the to X.XX% for $X.X driven quarter for million. mortgage after allowance to On total reserves. as by and percentage percentage our of primarily held investments and warehouse. loans in

of external to resulting which our completed in we no and loans. review were of net quarter, XX% family results or the of classified X-X review, covered approximately The loans loan residential the positive, loans. downgrades criticized recommended consumer During

we last million focus an client to in on And selection. QX, we discussed continue reductions. quarter, saw As desired during additional $XX

will manage We continue portfolio. our and closely to monitor

on office, we detail Slide nonowner-occupied provide XX, focus the With sector on market's within continue shows the which our this added of CRE to performance portfolio. resiliency continued and

loan a segment. We this $XXX.X million, average weighted million, classifieds loans of of weighted dues, X.XXx, average charge-offs no segment within end, loan-to-value service and quarter $X.X of had nonperforming and totaled no a past this XX.XX%. As debt minimum size average of only and coverage no

capital Wally. funded exposure which over with closely growth. I'll CRE, the we CRE total provide strategic total XXX%, and and flexibility at Origin to ADC risk-based quarter and a our overall our now monitor ADC turn of to to end customers and positions it to support reflect total of XX% continue and As

William Wallace

good and morning, Jim, everyone. Thanks,

share earnings reported In Turning to the we financials. $X.XX. diluted QX, per of

the pressure. see you notable impact As the in can quarter equivalent expense on to combined during $XXX,XXX, equated financial Slide of EPS items XX, net of $X.XX a to

discussion on with balance a sheet start quarter. I the during X.X% deposits, will side, the On down were which

quarter, as quarter, Excluding broker though, strong deposits quarter the Lance in X.X% a since quarter, deposits NIBs mentioned. grew grew of XXXX. noninterest-bearing Furthermore, X.X% linked growth first linked

flat XX% mix noninterest-bearing of total deposits stabilization deposits remaining to continue at deposits. our We see with in

On strategic loans held excluding the investment gross as mortgage essentially result quarter warehouse, on in focus planned continues as selection to loan during side, both and client growth for some our Jim discussed. growth, reductions, flat the were in

As ex-mortgage continue some loan could to the client target growth ratio growth our digits XX.X%. selection single essentially deposit in anticipate expect with to in XX% a matching. QX, growth below the result, our our We warehouse year, at we process but for remains pressure continued add low loan-to-deposit

than primary higher as driver quarter deposits basis did from that the as adjusted of this our forecasted in margin from pressures expansion an XQ. Moving X was Net below shortfall new mid-single-digit to for costs guidance, we The during expanded relative to were X.XX% anticipated which expectations of interest across markets. was the income our as ease base statement. X.XX%, to deposit much our pricing point not

current basis December margin in anticipated considered a measured expansion cuts, versus from of we cut cuts, lagged and pressures point XX year. This November includes despite the the in compression roughly brief pressures points, basis model, of period While basis additional basis already Fed portfolio. our September results the and cuts which now point our in XX rate loan point XX cadence NIM models from XX benefits this prior our scenario as repricing announced rate potential asset floating of of from a

asset slows a with in previous to drive easing, anticipate we quarter on million of stops in $XXX,XXX The Fed QX. sale repricing reported income. gain our still noninterest expansion benefit the to included line Assuming NIM or expectations. Shifting We securities. $XX.X

in seasonality benefit $XX.X Excluding income noninterest we mortgage our both $X.X in normal to QX, due item and million businesses levels items to to from seasonal this notable mortgage to QX, of $XX.X in million similar XXXX. notable fee normal net drive pressures million QX to and expect income the QX, declined in our insurance business. In QX primarily

to Our $XX.X million QX. from noninterest expense declined million in QX $XX.X in

declined million from QX in expense notable $XXX,XXX Excluding of $X.X items $XX.X QX, $XX.X to million in noninterest million. and

services levels QX, an anticipated, levels were expense and professional QX remain earlier. to related which expense QX will accounting While associated Jim legal of discussed at still with expectation includes we better than activity expect the similar

in digits. As notable full when year excluding mid-single XXXX growth, is such, the to be items the still expense our expected mentioned,

on regulatory year-over-year. Furthermore, X% continued Lastly, note of bank report per pleased levels capital our ended holding tangible remain in at and up of from the turning share book Slide investor we our value Also, both X.X% company well of easing QX were as from TCE to and XX.X%, capital. XX QX. in to our levels ratio AOCI at quarter-over-quarter contribution capitalized. all earnings, the that considered and due to pressures growth presentation, our XX% above of shown We

take back to opportunities we deployment Drake. flexibility such, our advantage now turn the drive that of confident have we capital to future potential I'll shareholders. With any that, value As to for remain it

Drake Mills

Wally. Thanks,

performance a strong earlier, up of markets best-in-class be bankers, open committed have on satisfied a are spent has Origin that doing in a mentioned where take to for the my country, employees, I to the dynamic I footprint successful. most of every geographic history confident culture our we that serves while for intention with company. Thank elite We'll it be have has increase steps some it I an customers As not is career management financial performer. Origin from deeply organization, and the has for and building shareholders, us for our standpoint, questions. I'm see the call. strong necessary being what extremely delivering communities. value I'm takes ability and our this attracted to a growth to you team this in to

Operator

Stephens from [Operator at Matt Instructions] Our first question comes Inc.

Matt Olney

net that in to want deposit definitely were the it's on loan high real costs change quarter. like tax, interest margin. the I in is third it's It there, repricing sounds but no story -- the start the

there rates? deposit around you to more drivers part does X, of And specific other was assumptions pushback more Just get then pause you than it pricing? down drill for appreciate want into Or with pushback expected give trying betas that. Did kind deposit you to down your forward, moving the there. categories? with on exception Just

William Wallace

thanks. Matt,

there the negative as no So question, as were real on surprises. beta deposit far surprises

was than look was at If you growth and deposit balances, actually that concentrated interest-bearing our in our anticipated, we accounts. deposit growth higher

going we've pressure would our and as in to stabilization adds to even as Fed in costs. What have overall in far We're had that cost. down deposit declines moves, continued anticipate We been seeing. trends efforts. remain the So slow pricing, seen anticipated we what our the gathering not they deposit we line with potentially to overall prior

our of the take of being grow we governs a want get that said, growth quarter to back as because our portfolio. we deposit growing ability loan now deposit than to we what into and anticipated growth we've pretty business loans, will consistently So higher is

X beta with So cuts, have that would conservative then And we in been we the as pressure there Fed view a be temporary. models. modeling rate be this to our

models. with what in So saw than line betas our are we far basis historical, on September, point is which the in with non-maturity our around XX%, interest-bearing better deposit XX our so deposits cut,

gives to that keep that deposit up be side confidence us the cut. So continues on we'll the if able Fed to

Matt Olney

to clarify And for that, outlook from here. Wally. Thanks the margin Okay. just

some bps fourth said besides basis also what XX quarter. about think December. And commentary And mid-single-digit into a Or guess think point that? need some the another you in start in digits. year? Do to September, that of margin to XX compression was and margin then mid-single expansion we you there see about November then margin Fed expanding see assumes you I next could I Fed do that in the early pause got you cut

William Wallace

We in anywhere cuts is the floats. is price rate meeting, where all to need expands points need cuts a to cadence levels so basis What from We've basis And that a X of Matt. have measured do When modeled preferably. XX% portfolio not far cuts. margin essentially above from Fed down been more XX year-to-date. pause, rate no X scenarios, XX cuts, more we in immediately. cuts XX% loan Our this our Fed we

are that they're maturing the throughout loans maturing, quarter. Our

takes it offset to time basis cut. a the of XX those for point what So benefits of pressure day we on repricing see X that the

cuts, the just kick the up same offsets end if then would Fed cuts, the benefits you short-term the of soon point of in. So of loan yields. get But pressure we following repricing on XX asset cadence our And as see end at the It's continued basis to the slows quarter, of to repricing. lagging the because continue as or pauses we a point. those expect effect matter then

Matt Olney

if remarks right. then prepared just Understood. I All And Drake. interesting question for and sneak Drake, were in more can your helpful. X Okay.

do upper at Is metrics peer an within have some pure there's you then like term, think consider mentioned quartile It achieving specific And and or you're quarter. What focused ROA quartile near on you'll also point. metrics? and those more the this working And peer what board you achieving next is on? I within profitability details, the in peer us the the and mention then sounds profitability still a you efficiency? for on? are focused levels, upper of

Drake Mills

the X% want to in plan puts get to of And into only not back what this but returns. And profitability. And a Currently, communicating, to we we we Yes. January, own to the grow with every aspect or as accomplish whatever in next we're in that, is. profitability of next as looking do quarters, once said remarks we X be for were across 'XX metrics X to revenue to a do anxious right at in what using in now, sitting always us also position we've several that's end the we're and company to is and all we that, that X, But drive us internal at, X peer then as lines get prepared looking about, -- growth are position at 'XX. number what expense But going to think the puts X a X we like, we'll our peer-like we've built planned that. to talked year. that XX% it

we adjusting get upper an are then us that accelerator profitability. be growth, to to once We But that get back to quartile that. that for back will

Operator

next Raymond Our comes from question James. Tim at

Tim

Tim, This Michael. Good for everyone. is morning, in

Just follow deposits Matt's on want question to up and around betas.

portfolio at? with there there on that's there want a would down a just Any the much where from relief the CDs be CDs to to few come as rate appreciated. indexed? quarters? you're Are portfolio putting next Just I roll-off Is rates. Is a what color from the the of want get big understand release kind repricing as in now could to of possible, certain you grow sense mix of the but there

William Wallace

now, of portfolio. to our the would of There's it's the about portfolio, to to That's of noninterest-bearing inflows Right segment course the the deposit stable range would of brokered do products. throughout any continue improvements of deposit measured and cost balance of where to We repricing across we price a is magic bullet I that I kind allow time would as measured deposit in deposits. But deposits it anticipate no our roll It's total really lumpy Yes. the think seen really XX% our year. year. We've quarter. the just a the kind given going deposits be pace benefit any relief highest of all in in cadence throughout our really deposit think off use continued what sheet. deposit pretty

Martin Hall

I and clear of actively, back for kind maybe do partners, deposit understanding actively if make managed. This and every we marketplace. worked management clients from plans Lance, all could. you have perspective of We're retail presidents, in of our kind markets, is competition Yes, to pricing is single them want touching This something I to that sorry treasury regard the partners, is one in and Matt's we've that accounts. a it go being profitability that question. with to of across to interest-bearing the ongoing

each a do not managed us think, job for where solution, it's be. going So in need a actively effective one-size-fits-all costs of deposit getting but very markets is I and to, to which our throughout our they

Tim

That's of you sense Alabama. hired get to a in back out the to earlier then strategic want January. expense actions in the down South great. I on year side, And this it. team kind you I might a just appreciate here lay

meaningfully. maybe some in to get the horizons. you on lift spend over look move that be assets, technology team you $XX It some billion more more number As want might past out,

now? those to lie the opportunities where as get want base think at expense a look sense, right Just just you you do

Drake Mills

Yes.

in planning For it's me our us, look this of the amazing investments go strategic go. of impact we to been back the the recognize technology for direction and we through -- as process, process we on

us profitability institution, the all using of it meaningful. I like that efficiency can have pleased create streams better continue much team able more accurately above working of from expansion in positioning organization that that But a and to we are what the we're planning our this They we feel to 'XX today have Nate plan. in we number behind and I slightly gives across, going aspects am and from are are and opportunity extremely standpoint. to we expand still year, take the revenue I good credit his that us at our Southeast in standpoint, a think in as data and ourselves looking So do a we things. areas and be with on. to said, off what's are sure next to everything areas point make at launch really

Martin Hall

is this to in Lance. this And question, impact I data to think Yes. meaningful company is evolution to that the more kind the Maybe team that, have much add on the to way. Wally his and of in ability use of brought part your of a

So profitability, the optimization as our deeply business everything on is as I table plan, product looked branch banker we think we of lines. into profitability, profitability, launch have the

All this and over from turn on of both that kind analyzed at of need a a like the we and profitability point that billion being growth consistently what to understand is the we once as jets and looks deeply cross $XX we threshold perspective.

Tim

Okay. more And Great. one that. I could piggyback if on

to a to guys? of I how matter conceptually, appreciate more that Or to at or returning you Is XX% you want macro to growth it environment to of kind X% get going return talked posture. for to lower the just to take? is 'XX or just just it what's guidance time. asking specific improving over I'm You anything, rates? not 'XX it an but about range

Martin Hall

this Drake expand is little bit. on Lance, may a to and a have This answer different Yes.

pretty had liquidity. things that pulled our been governor core ratio I have X it's selection our as strict me, the through about presidents. been process. really back we've It's -- work We've For consistently that of on. client loan-to-deposit really That's we this sort that's said with driving and been

proud out, to Durbin X liquidity what quarter, that to So XX of and what mean do growth, push about sheet. it's deposit months very reduce into the could we strengthen for If for then it to I really and me. been balance been we've our just able this XXB under does broker quarter, ability deposits. XXB in to stay the more

have really loan-to-deposit So increasing CRE on we're here trends sitting -- good liquidity, ADC. we with ratio positive and

So year cross over we if liquidity. early next strong are with positioning XXB we ourselves

in of bit grow what I sort our Southeast. think Texas us off takes the that do a we and really and allows shackles do, to specifically little is which the with footprint

Operator

concludes Instructions] Handing for session. Mills this the to it and Ladies gentlemen, question-and-answer any back Drake additional [Operator remarks.

Drake Mills

lot was take a Yes. basically each event quarter, reduced on on. by It -- that do I we've one deterioration, gets Thank to that. and Two We fully driven driven of and this reduced a personal. can declined, charge-offs past certainly, activity. nonperformers, But it's -- In back comment there of for about credit look of you a being you, has that that, credit our exception points: by noncredit and I past was questionable the classifies most, dues. were through nonperformers, reserved. been classifieds driven a One,

$XX I So deposit really very credit have credits. that reduction position true another commitment this million to indication push The positioning is. into for strong we fit been quarter being of in our broker diligently nonperforming our necessarily credits a growth. a last through to go with -- point, profile. The pleased client We really quite 'XX out selection extremely year of It's we've process this that don't saw not ourselves credit us, that am deposits. worked with gone a a where

us. said, in efforts But year push trying it the XXB has through this we're Durbin Our 'XX. past reality like on have is been almost shackles Lance of really to

we So XXB this we've that under worked diligently stay to year. ensure

Our capacity is grow intact. to well

cleaner a much quickly profile that footprint pay On through country. a very starting gone in the footprint, we've able to top Liquidity And the past strong accomplish year. to of off what is our against for very us We've it put this into up that's Our selection that credit continues which strong ADC I would strict to 'XX. Southeast 'XX. increase. us the in we've had position. and up cohesiveness And said, CRE client for I puts is very work the our team, going experience, in that, really a been in sets any

thank again, and for So the on call, soon. you each of you one look seeing to forward I being most of

Operator

and day. great Evercall. Thank you, this gentlemen, Ladies a concludes and today's have

Origin Bancorp (OBK) 24 Oct 242024 Q3 Earnings call transcript