Origin Bancorp Q4 Earnings Call Highlights

Origin Bancorp (NYSE:OBK) executives used the company’s latest earnings call to highlight progress under its “Optimize Origin” initiative, improved profitability metrics, and what management described as an unusual growth opportunity created by merger activity across its markets.

Management frames 2025 as a turning point under “Optimize Origin”

Chairman, President and CEO Drake Mills said the company introduced Optimize Origin last year as an evolution in how Origin connects its culture with performance goals, including a near-term target of reaching a 1% return on assets (ROA) by the fourth quarter of 2025. Mills said the company’s momentum entering 2026 reflects three themes: executing on Optimize Origin, focusing on market disruption from recent M&A activity, and preparing to grow past $10 billion in assets without “barriers to growth.”

President and CEO of Origin Bank Lance Hall said the company’s focus in 2025 included balance sheet management and expense reduction, while 2026 will bring an intensified focus on the “client delivery model” aimed at revenue growth. Hall pointed to steps taken during 2025, including achieving 20% ownership of Argent Financial, consolidating banking centers, restructuring mortgage delivery, and reducing full-time equivalent headcount by nearly 7%.

Hall also noted performance metrics he attributed to execution under Optimize, including net interest income growth of 10.2% and revenue growth of 8.8% excluding notable items, while non-interest expense excluding notable items declined 0.7%.

Quarterly profitability and notable items

Chief Financial Officer Wally Wallace said the company reported fourth-quarter diluted earnings per share of $0.95 and net income of $29.5 million. He said those results translated to a 1.19% run rate ROA on average assets, which he described as well above the company’s targeted 1%+ near-term run rate outlined last January.

Wallace said notable items in the quarter equated to a net expense of $1.7 million, or about $0.04 of EPS pressure. On a pre-tax, pre-provision basis, Origin reported $40.6 million in the fourth quarter. Excluding notable items, Wallace said pre-tax, pre-provision earnings increased to $42.2 million from $39.9 million, and annualized pre-tax, pre-provision ROA increased to 1.7% from 1.63%.

Balance sheet trends, margin outlook, and growth targets

Wallace said loans grew 1.8% sequentially and 1.1% excluding mortgage warehouse. Total deposits declined 0.3% during the quarter, though he emphasized that Origin sold $215 million of interest-bearing deposits on the last day of the year and repurchased them two days later. Excluding that transaction, Wallace said deposits would have increased 2.3% during the quarter.

Noninterest-bearing deposits declined 1.0% sequentially, but Wallace said they increased 5.3% on an average basis and ended the quarter at 23% of total deposits after adjusting to include the deposits sold and repurchased.

Looking ahead, Wallace said the company is targeting mid- to high-single-digit loan and deposit growth for the year, with loan growth expected to be more weighted toward the second half.

Net interest margin expanded 8 basis points in the fourth quarter to 3.73%, which Wallace said was ahead of expectations. He said the company expects “slight margin compression” in the first quarter due to timing differences between loan and deposit repricing following recent Federal Reserve rate cuts, but by the fourth quarter management anticipates net interest margin in a 3.70% to 3.80% range, with current bias toward the higher end. The outlook assumes 25 basis point Fed cuts in March and June.

In response to analyst questions, Wallace explained that deposit costs were adjusted quickly after rate cuts, while floating-rate loans reprice with a billing-cycle lag, creating near-term pressure. He also cited tailwinds from assets repricing, including approximately $150 million of securities rolling off in 2026 and $350 million to $400 million of loans maturing during the year, with new yields higher than the average yield on maturing loans.

Fees, expenses, and investment in hiring amid market disruption

Wallace reported non-interest income of $16.7 million in the fourth quarter. Excluding notable items, he said non-interest income declined to $16.3 million from $17.1 million, driven largely by a reduction in swap fee income and “normal seasonality” in the insurance segment. Management expects full-year non-interest income growth in the mid- to high-single digits, with low- to mid-single-digit growth for fourth-quarter-over-fourth-quarter comparisons when excluding notable items.

Non-interest expense was $62.8 million in the fourth quarter. Excluding notable items, Wallace said non-interest expense increased to $61.5 million from $61.1 million. For 2026, Origin’s expense outlook calls for mid-single-digit growth after excluding notable items, which management tied to increased investment in production staff to capitalize on disruption in the company’s footprint.

Hall said Origin has added more than 10 production bankers in Houston and Dallas-Fort Worth in recent months and expects additional opportunities. Management’s guidance assumes roughly $10 million of investment in new bankers and banking teams during the year. Hall described that amount as “dry powder” and said it could fund additional hires beyond the initial group, though he did not specify a precise number.

During Q&A, Wallace provided additional detail on near-term expense dynamics, pointing to merit increases, payroll tax resets in the first quarter, and costs tied to renegotiating large technology contracts. He said renegotiations can include a sizable upfront fee followed by run-rate savings, and suggested modeling a roughly $64 million quarterly expense run rate plus or minus $1 million in the first quarter, with potential benefits later in the year depending on the timing of negotiations and new hires.

Executives characterized hiring as targeted and relationship-focused. Hall said the company is primarily pursuing C&I-focused bankers with an emphasis on deposits and treasury services, adding that recent hires included private bankers, treasury management officers, and C&I lenders. Mills said the company remains focused on “profitable growth” and disciplined relationship selection, rather than maximizing raw growth.

Credit metrics, capital, and shareholder returns

Chief Risk Officer Jim Crotwell said credit metrics remained sound at year-end. Total past dues were 0.96% of total loans, unchanged from the prior quarter. Past dues 30 to 89 days were 0.19%, up from 0.10% at Sept. 30 and compared favorably to 0.24% at the prior year-end. Net charge-offs were $3.2 million, or a 0.17% annualized charge-off rate for the quarter.

Crotwell said non-performing assets declined from 1.18% to 1.07% at year-end, reflecting about a $7 million reduction, while total classifieds increased to 1.92% of total loans, driven primarily by downgraded relationships. The allowance for credit losses increased $523,000 to $98 million, remaining stable at 1.34% of total loans and warehouse, with the increase primarily attributed to loan growth.

On capital, Wallace said tangible book value per share rose to $35.04, marking the 13th consecutive quarter of growth, and the tangible common equity ratio increased to 11.3% from 10.9% in the third quarter. He also said Origin redeemed about $145 million in sub-debt during 2025 and repurchased about $16 million in common stock while maintaining well-capitalized regulatory ratios, which management said provides continued capital flexibility.

Mills said the company remains focused on shareholder value, including dividends and buybacks, and reiterated an emphasis on returning about 20% of earnings through dividends, while viewing buybacks as an ongoing part of capital deployment.

About Origin Bancorp (NYSE:OBK)

Origin Bancorp, Inc (NYSE: OBK) is a bank holding company based in Atlanta, Georgia, and is the parent of Origin Bank, a full-service commercial banking franchise. The company provides a broad range of financial products and services to individuals, small and middle-market businesses, and institutional clients across the southeastern United States.

Through Origin Bank, the company offers a variety of deposit products, including checking and savings accounts, money market accounts, and certificates of deposit.