Origin Bancorp, Inc. Q2 FY2025 earnings call

• Introduced 'Optimize Origin' plan to achieve 1% ROA run rate by Q4 2025 and top quartile ROA, with actions driving ~$34M pretax pre-provision earnings improvement.
• Increased ownership of Argent Financial to 20%, triggering equity method of accounting, expected to drive ~$6M additional income next year.
• In commercial banking, reduced FTE headcount, achieved strong C&I production, and saw growth in loan origination, swap fees, and treasury management revenue.
• Managed credit portfolio with focus on past due, classified, and nonperforming loans, and monitored allowance for credit losses.
• Financial highlights: Diluted EPS of $0.47, net interest margin expanded 17bps to 3.61%, noninterest income $16M, noninterest expense $62M, tangible book value grew sequentially to $33.33, and TCE ratio ended at 10.9%.

Commercial Banking: Origin reduced FTE headcount by 8% across the bank and 18% in commercial banking teams. Achieved strong C&I production in Q2 with annualized C&I loan growth of nearly 13%, and saw lift in loan origination, swap fees, and treasury management revenue. Credit Portfolio: Past due loans held for investment decreased to 0.88% at quarter end, classified loans as a percent of total loans were 1.66%, nonperforming loans were 1.11% of total loans, net charge-offs were $2.3 million, and allowance for credit losses was $92.4 million. Balance Sheet: Loans increased 1.3% sequentially but decreased 1.0% excluding mortgage warehouse; total deposits declined 2.6% during the quarter, with noninterest-bearing deposits remaining stable at ~23% of total deposits.

• Margin guidance: Increased to 3.70% in 4Q 2025 and 3.55% for full year 2025 (±5bps) due to higher starting point in Q3 and modeling 25bp Fed cuts in September and December.
• Noninterest income guidance: Excluding notable items, increased to low double-digit growth for 4Q 2025 over 4Q 2024.
• Expense guidance: Back half of 2025 expense run rate flat compared to 2Q.
• Loan growth guidance: Reduced to low single digits for 2025.

• Economic uncertainty around tariffs and interest rates impacting loan growth.
• Competition on loan spreads potentially affecting margin.
• Market volatility could impact securities restructure decisions.

Q: Net interest margin expectations for third quarter and ramp to 3.70% level.

A: Mentioned loan repricing tailwinds, Fed cuts, but noted competition on spreads could affect margin direction.

Q: Loan growth details, paydowns, longer-term investments.

A: Tariffs and customer deposit usage caused paydowns; expecting mid-single-digit annualized growth in back half of 2025 and mid to high single digits in 2026, with M&A opportunity via lift-out strategies.

Q: Stock buyback, M&A appetite.

A: Redeeming $75M sub debt in 4Q, with interest in M&A for lift-out strategies in markets.

Q: Capital utilization, securities restructure.

A: Restructure executed due to spread changes, monitoring market for future spread opportunities to improve portfolio risk/earnings.

Q: Argent growth, write-up, regional update.

A: Expect write-up in Q3, with regional progress in Southeast, Louisiana (8% growth) and Mississippi (5% growth) ahead of budget.