Origin Bancorp, Inc. Q3 FY2024 earnings call

• Expansion and Growth: Origin has expanded presence in Texas, Louisiana, Mississippi, South Alabama, and the Florida Panhandle, and is preparing to cross $10 billion in assets. - Profitability Focus: Laser-focused on returning to acceptable profitability by the end of next year, working with a third party to benchmark against peers and outlining revenue/expense opportunities. - Deposit and Loan Trends: Core deposit growth, with Texas markets showing meaningful growth; Robotics Process Automation platform saved ~3,356 hours of manual work in Q3. - Credit Portfolio: Decreases in past dues, classified loans, and nonperforming loans; net charge-offs up but YTD in line with expectations; allowance reduced; external loan review positive with no recommended downgrades. - Financials: Diluted EPS was $0.60; non-interest income was $16.0M; non-interest expense was $62.5M; TCE ratio ended Q3 at 10.0%, and tangible book value per share increased 5% QoQ and 17% YoY.

Deposits: Excluding brokered, total deposits were up 2.3% quarter-over-quarter, the strongest growth in two years. Non-interest bearing deposits grew 1.5% for the quarter, with NIB mix remaining stable at 22% of total deposits. Loans: Gross loans held for investment and excluding mortgage warehouse were essentially flat. Loan-to-deposit ratio ex-mortgage warehouse was 87.9%, below the 90% target. Net Interest Margin: Expanded 1 basis point to 3.18% in Q3, but deposit costs were higher than anticipated. In terms of revenue contribution, deposits and loans are key segments with deposits contributing significantly to the balance sheet and loans driving interest income.

• Near-term Profitability: Laser-focused on returning to acceptable profitability by the end of next year, with detailed metrics to be provided in January when full year results are reported. - Margin Outlook: Anticipated NIM compression of roughly 10 basis points in Q4 due to Fed rate cuts, but models show margin expansion mid-single digits with a measured cadence of Fed rate cuts. - Growth: Expect loan growth in the low single-digits for the year with deposit growth matching; aim to return to 8%-10% growth range once conditions allow.

• Deposit Costs: Stubbornly high deposit costs impacted the net interest margin in Q3. - Fed Rate Cuts: Uncertainty around deposit betas and the timing of margin expansion as a result of Fed rate cut cadence. - Credit Portfolio: Continued monitoring needed for the non-owner-occupied CRE office segment given market focus on it.

Q: About net interest margin, specifically deposit costs and margin outlook.

A: Deposit growth was higher than anticipated, concentrated in interest-bearing accounts adding pressure to costs; viewed as temporary; deposit betas on non-maturity interest-bearing deposits around 40% in line with historical, giving confidence with Fed cuts.

Q: About expense side and growth return.

A: Expense optimization on table, with analysis of banker, product, branch profitability; positioning for growth in 2025 with strong liquidity from deposit growth and reduced broker deposits.

Q: About returning to 8%-10% growth.

A: Focus on liquidity, loan-to-deposit ratio, and strong balance sheet positioning, with efforts to increase liquidity and strengthen balance sheet to allow growth in Texas and Southeast markets