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obnk-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to __________

Commission file number 001-38487

Origin Bancorp, Inc.

(Exact name of registrant as specified in its charter)


Louisiana						72-1192928
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

500 South Service Road East

Ruston, Louisiana 71270

(318) 255-2222

(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Exchange on which registered
Common Stock, par value $5.00 per share	OBNK	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: 23,807,677 shares of Common Stock, par value $5.00 per share, were issued and outstanding at July 28, 2022.

ORIGIN BANCORP, INC.

FORM 10-Q

JUNE 30, 2022

INDEX


			Page
PART I - FINANCIAL INFORMATION			5

Item 1. Financial Statements (Unaudited):			5

Consolidated Balance Sheets at June 3 0 , 2022, (unaudited), and December 31, 2021			5
Consolidated Statements of Income for the three an d six months ended June 3 0 , 2022 and 2021, (unaudited)			6
Consolidated Statements of Comprehensive (Loss) Income for the three and six months ended June 30, 2022 and 2021, (unaudited)			8
Consolidated Statements of Changes in Stockholders' Equity for the three and six months ended June 30, 2022 and 2021, (unaudited)			9
Consolidated Statements of Cash Flows for the six months ended June 30 , 2022 and 2021, (unaudited)			10

Condensed Notes to Consolidated Financial Statements			12

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			46

Item 3. Quantitative and Qualitative Disclosures about Market Risk			67

Item 4. Controls and Procedures			69

Part II - OTHER INFORMATION			70

Item 1. Legal Proceedings			70

Item 1A. Risk Factors			70

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			70

Item 3. Defaults Upon Senior Securities			70

Item 4. Mine Safety Disclosures			70

Item 5. Other Information			70

Item 6. Exhibits			71

SIGNATURE PAGE			72

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Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements 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 or negatives of such terms are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. Forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in our forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following:

•business and economic conditions generally and in the financial services industry, nationally and within our local market areas, including the impact of supply-chain disruptions and labor pressures;

•customer income, creditworthiness and confidence, spending and savings that may affect customer bankruptcies, defaults, charge-offs and deposit activity;

•natural disasters and adverse weather events, acts of terrorism, an outbreak of hostilities, (including the impacts related to or resulting from Russia's military action in Ukraine, including the imposition of additional sanctions and export controls, as well as the broader impacts to financial markets and the global macroeconomic and geopolitical environments), 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 our control;

•system failures, cybersecurity threats and/or security breaches and the cost of defending against them;

•the duration and impact of the coronavirus ("COVID-19") pandemic and efforts to contain its transmission, 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 (“CARES Act") and any related future economic stimulus legislation;

•the discontinuation of LIBOR (and its replacement with alternatives) could result in financial, operational, legal, reputational or compliance risks to us;

•deterioration of our asset quality;

•risks associated with widespread inflation or deflation;

•factors that can impact the performance of our loan portfolio, including real estate values and liquidity in our primary market areas, the financial health of our commercial borrowers and the success of construction projects that we finance, including any loans acquired in acquisition transactions;

•the risks of mergers, acquisitions and divestitures, including our ability to continue to identify acquisition targets and successfully acquire and integrate desirable financial institutions;

•changes in the value of collateral securing our loans;

•our ability to anticipate interest rate changes and manage interest rate risk;

•the effectiveness of our risk management framework and quantitative models;

•our inability to receive dividends from our bank subsidiary and to service debt, pay dividends to our common stockholders, repurchase our shares of common stock and satisfy obligations as they become due;

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•changes in our operation or expansion strategy or our ability to prudently manage our growth and execute our strategy;

•changes in management personnel;

•our ability to maintain important deposit customer relationships, our reputation or otherwise avoid liquidity risks;

•increasing costs as we grow deposits;

•operational risks associated with our business;

•volatility and direction of market interest rates and of capital markets;

•increased competition in the financial services industry, particularly from regional and national institutions;

•our level of nonperforming assets and the costs associated with resolving any problem loans, including litigation and other costs;

•our ability to comply with applicable capital and liquidity requirements, including our 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 our non-GAAP liquidity measurements and their underlying assumptions or estimates;

•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, slowdowns in economic growth and threats of recession;

•the credit risk associated with the substantial amount of commercial real estate, construction and land development, and commercial loans in our loan portfolio;

•changes in the laws, rules, regulations, interpretations or policies relating to financial institutions, as well as tax, trade, monetary and fiscal matters;

•periodic changes to the extensive body of accounting rules and best practices, may change the treatment and recognition of critical financial line items and affect our profitability;

•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; and

•our ability to manage the risks involved in the foregoing.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this report. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. In addition, as a result of these and other factors, our past financial performance should not be relied upon as an indication of future performance. 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 we do 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 emerge from time to time, and it is not possible for us to predict those events or how they may affect us. In addition, we cannot assess the impact of each factor on our 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.

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ORIGIN BANCORP, INC.

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)


	June 30, 2022		December 31, 2021
Assets	(Unaudited)
Cash and due from banks	$	123,499	$	133,334
Interest-bearing deposits in banks	200,421		572,284

Total cash and cash equivalents	323,920		705,618

Securities:
Available for sale	1,804,370		1,504,728
Held to maturity, net allowance for credit losses of $892 and $167 at June 30, 2022, and December 31, 2021, respectively (fair value of $5,448 and $25,117 at June 30, 2022, and December 31, 2021, respectively)	4,288		22,767
Securities carried at fair value through income	6,630		7,497
Total securities	1,815,288		1,534,992
Non-marketable equity securities held in other financial institutions	76,822		45,192
Loans held for sale ($31,840 and $37,032 at fair value at June 30, 2022, and December 31, 2021, respectively)	62,493		80,387
Loans, net of allowance for credit losses of $63,123 and $64,586 at June 30, 2022, and December 31, 2021, respectively	5,464,970		5,166,745
Premises and equipment, net	81,950		80,691
Mortgage servicing rights	22,127		16,220
Cash surrender value of bank-owned life insurance	38,742		38,352
Goodwill and other intangible assets, net	50,053		51,330
Accrued interest receivable and other assets	175,159		141,758
Total assets	$	8,111,524	$	7,861,285
Liabilities and Stockholders' Equity
Noninterest-bearing deposits	$	2,214,919	$	2,163,507
Interest-bearing deposits	3,598,417		3,864,058
Time deposits	489,822		543,128
Total deposits	6,303,158		6,570,693

Federal Home Loan Bank ("FHLB") advances, repurchase obligations and other borrowings	894,581		309,801
Subordinated indebtedness, net	157,540		157,417
Accrued expenses and other liabilities	109,872		93,163
Total liabilities	7,465,151		7,131,074
Commitments and contingencies - See Note 12 - Commitments and Contingencies
Stockholders' equity:
Preferred stock, no par value, 2,000,000 shares authorized	—		—


Common stock ($5.00 par value; 50,000,000 shares authorized; 23,807,677 and 23,746,502 shares issued at June 30, 2022, and December 31, 2021, respectively)	119,038		118,733
Additional paid‑in capital	244,368		242,114
Retained earnings	398,946		363,635
Accumulated other comprehensive (loss) income	(115,979)		5,729
Total stockholders' equity	646,373		730,211
Total liabilities and stockholders' equity	$	8,111,524	$	7,861,285

The accompanying notes are an integral part of these consolidated financial statements.

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ORIGIN BANCORP, INC.

Consolidated Statements of Income

(Unaudited)

(Dollars in thousands, except per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Interest and dividend income
Interest and fees on loans	$	55,986	$	55,529	$	107,169	$	112,339
Investment securities-taxable	7,116		3,115		12,229		6,415
Investment securities-nontaxable	1,493		1,590		2,893		3,262
Interest and dividend income on assets held in other financial institutions	1,193		414		1,780		759
Total interest and dividend income	65,788		60,648		124,071		122,775
Interest expense
Interest-bearing deposits	3,069		3,417		5,955		7,206
FHLB advances and other borrowings	1,392		1,106		2,486		2,375
Subordinated indebtedness	1,823		1,833		3,624		3,663
Total interest expense	6,284		6,356		12,065		13,244
Net interest income	59,504		54,292		112,006		109,531
Provision for credit losses	3,452		(5,609)		3,125		(4,197)
Net interest income after provision for credit losses	56,052		59,901		108,881		113,728
Noninterest income
Service charges and fees	4,274		3,739		8,272		7,082
Insurance commission and fee income	5,693		3,050		12,149		6,821
Mortgage banking revenue	2,354		2,765		6,450		7,342
Other fee income	638		623		1,236		1,394

Gain on sales of securities, net	—		5		—		1,673
Loss on sales and disposals of other assets, net	(279)		(42)		(279)		(80)
Limited partnership investment income (loss)	282		801		(81)		2,573
Swap fee income	1		24		140		372

Other income	1,253		1,473		2,235		2,392
Total noninterest income	14,216		12,438		30,122		29,569

The accompanying notes are an integral part of these consolidated financial statements.

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ORIGIN BANCORP, INC.

Consolidated Statements of Income - Continued

(Unaudited)

(Dollars in thousands, except per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Noninterest expense
Salaries and employee benefits	27,319		22,354		53,807		44,679
Occupancy and equipment, net	4,514		4,349		8,941		8,688
Data processing	2,641		2,313		5,127		4,486
Office and operations	2,163		1,498		3,723		2,952
Loan-related expenses	1,517		2,154		2,822		3,859
Professional services	918		836		2,549		1,809
Electronic banking	896		989		1,813		1,950
Advertising and marketing	859		748		1,730		1,428
Franchise tax expense	838		629		1,608		1,248
Regulatory assessments	802		544		1,428		1,714
Intangible asset amortization	525		222		1,062		456
Communications	252		514		533		929
Other expenses	906		682		1,781		3,070
Total noninterest expense	44,150		37,832		86,924		77,268
Income before income tax expense	26,118		34,507		52,079		66,029
Income tax expense	4,807		6,774		10,085		12,783
Net income	$	21,311	$	27,733	$	41,994	$	53,246




Basic earnings per common share	$	0.90	$	1.18	$	1.77	$	2.28
Diluted earnings per common share	0.90		1.17		1.77		2.26

The accompanying notes are an integral part of these consolidated financial statements.

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ORIGIN BANCORP, INC.

Consolidated Statements of Comprehensive (Loss) Income

(Unaudited)

(Dollars in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net income	$	21,311	$	27,733	$	41,994	$	53,246
Other comprehensive (loss) income
Securities available for sale and transferred securities:
Net unrealized holding (loss) gain arising during the period	(63,634)		8,631		(154,848)		(7,221)
Net losses realized as a yield adjustment in interest on investment securities	(3)		(3)		(6)		(5)
Reclassification adjustment for net gain included in net income	—		(5)		—		(1,673)
Change in the net unrealized (loss) gain on investment securities, before tax	(63,637)		8,623		(154,854)		(8,899)
Income tax (benefit) expense related to net unrealized (loss) gain arising during the period	(13,364)		1,811		(32,520)		(1,869)
Change in the net unrealized (loss) gain on investment securities, net of tax	(50,273)		6,812		(122,334)		(7,030)

Cash flow hedges:
Net unrealized gain (loss) arising during the period	216		(155)		729		275
Reclassification adjustment for (loss) included in net income	(18)		(50)		(64)		(99)
Change in the net unrealized gain (loss) on cash flow hedges, before tax	234		(105)		793		374
Income tax expense (benefit) related to net unrealized gain (loss) on cash flow hedges	50		(22)		167		79
Change in net unrealized position on cash flow hedges, net of tax	184		(83)		626		295

Other comprehensive (loss) income, net of tax	(50,089)		6,729		(121,708)		(6,735)
Comprehensive (loss) income	$	(28,778)	$	34,462	$	(79,714)	$	46,511

The accompanying notes are an integral part of these consolidated financial statements.

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ORIGIN BANCORP, INC.

Consolidated Statements of Changes in Stockholders' Equity

(Unaudited)

(Dollars in thousands, except per share amounts)


	Common Shares Outstanding	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (loss)		Total Stockholders' Equity
Balance at January 1, 2021	23,506,312	$	117,532	$	237,341	$	266,628	$	25,649	$	647,150
Net income	—	—		—		25,513		—		25,513
Other comprehensive (loss), net of tax	—	—		—		—		(13,464)		(13,464)
Recognition of stock compensation, net	20,140	100		661		—		—		761
Dividends declared - common stock ($0.10 per share)	—	—		—		(2,349)		—		(2,349)
Repurchase of common stock	(37,568)	(188)		(1,068)		—		—		(1,256)
Balance at March 31, 2021	23,488,884	$	117,444	$	236,934	$	289,792	$	12,185	$	656,355
Net income	—	—		—		27,733		—		27,733
Other comprehensive income, net of tax	—	—		—		—		6,729		6,729
Recognition of stock compensation, net	13,331	67		404		—		—		471
Dividends declared - common stock ($0.13 per share)	—	—		—		(3,053)		—		(3,053)
Balance at June 30, 2021	23,502,215	$	117,511	$	237,338	$	314,472	$	18,914	$	688,235

	Common Shares Outstanding	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (loss)		Total Stockholders' Equity
Balance at January 1, 2022	23,746,502	$	118,733	$	242,114	$	363,635	$	5,729	$	730,211
Net income	—	—		—		20,683		—		20,683
Other comprehensive (loss), net of tax	—	—		—		—		(71,619)		(71,619)
Recognition of stock compensation, net	2,246	11		675		—		—		686
Dividends declared - common stock ($0.13 per share)	—	—		—		(3,096)		—		(3,096)

Balance at March 31, 2022	23,748,748	$	118,744	$	242,789	$	381,222	$	(65,890)	$	676,865
Net income	—	—		—		21,311		—		21,311
Other comprehensive (loss), net of tax	—	—		—		—		(50,089)		(50,089)
Recognition of stock compensation, net	58,929	294		1,579		—		—		1,873
Dividends declared - common stock ($0.15 per share)	—	—		—		(3,587)		—		(3,587)

Balance at June 30, 2022	23,807,677	$	119,038	$	244,368	$	398,946	$	(115,979)	$	646,373

The accompanying notes are an integral part of these consolidated financial statements.

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ORIGIN BANCORP, INC.

Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in thousands)


	Six Months Ended June 30,
Cash flows from operating activities:	2022		2021
Net income	$	41,994	$	53,246
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	3,125		(4,197)
Depreciation and amortization	4,141		3,419
Net amortization on securities	4,831		3,570

Amortization of investments in tax credit funds	951		775
Gain on sale of securities, net	—		(1,673)
Deferred income tax expense	1,611		3,463
Stock-based compensation expense	1,579		1,085
Originations of mortgage loans held for sale	(156,834)		(259,460)
Proceeds from mortgage loans held for sale	164,849		322,028
Gain on mortgage loans held for sale, including origination of mortgage servicing rights	(5,305)		(11,222)
Mortgage servicing rights valuation adjustment	(4,443)		772

Increase in the cash surrender value of life insurance	(390)		(406)

Net losses on sales and write-downs of other real estate owned	279		80

Other operating activities, net	(1,701)		(3,538)
Net cash provided by operating activities	54,687		107,942
Cash flows from investing activities:

Purchases of securities available for sale	(557,069)		(96,563)
Maturities and pay downs of securities available for sale	81,004		72,962
Proceeds from sales and calls of securities available for sale	8,552		42,023

Maturities, pay downs and calls of securities held to maturity	17,750		283
Pay downs of securities carried at fair value	275		265
Net (purchases) sales of non-marketable equity securities held in other financial institutions	(31,562)		21,225
Originations of mortgage warehouse loans	(5,128,940)		(9,387,169)
Proceeds from pay-offs of mortgage warehouse loans	5,224,131		9,605,914
Net (increase) decrease in loans, excluding mortgage warehouse and loans held for sale	(374,841)		98,787

Return of capital and other distributions from limited partnership investments	5,276		—

Capital calls on limited partnership investments	(97)		(225)
Purchase of low-income housing tax credit investments	—		(383)
Purchases of premises and equipment	(4,321)		(1,399)