Origin Bancorp, Inc. (OBK) Q2 2024 Earnings Call Transcript

Origin Bancorp, Inc. recently held its second quarter 2024 earnings call, providing investors and stakeholders with a comprehensive update on the company's financial performance and strategic direction. The call, led by Chairman, President and CEO Drake Mills, highlighted several key themes and trends that underscore the bank's ongoing momentum and strategic initiatives.

Financial Performance and Challenges

The earnings call began with Drake Mills expressing satisfaction with the company's momentum, particularly in the face of highly competitive markets. Despite facing challenges in deposit growth, Origin Bank has seen success in new customer acquisition and expanding current relationships. On a core operating basis, the bank's second quarter results were in line with expectations, but were negatively impacted by a $0.25 hit to EPS related to questioned activity in the East Texas market. This activity, which involved a former banker facilitating advances among customers without proper documentation, has been subject to ongoing dispute, with the bank actively working to resolve the issues. Despite these challenges, Origin remains confident that the financial impact of the activity will not be material to its financial position.

Strategic Focus and Growth

Lance Hall, President and CEO of Origin Bank, highlighted the bank's strategic positioning and focus on deposit growth governing loan growth. While deposits were essentially flat during the quarter, non-interest bearing deposits showed growth, reflecting the bank's successful client selection strategy. Origin is positioning itself for strategic growth, particularly in the southeast, where it has received regulatory approval for its Mobile and Fort Walton Beach locations. The bank is also focusing on building a uniquely successful organization, with an award-winning corporate culture that attracts and retains top talent. This strategic approach is expected to enhance client experience, improve bank margins, and drive long-term value for stakeholders.

Credit Quality and Risk Management

Jim Crotwell, Chief Risk Officer, provided insights into the bank's credit quality and risk management. The bank reported a slight increase in past due loans and classified loans, driven primarily by the questioned activity in the East Texas market. However, Crotwell expressed confidence in the bank's ability to manage these risks, noting that the bank has taken proactive steps to address the situation and that the overall credit quality of the portfolio remains strong.

Future Outlook and Strategic Direction

Wally Wallace, CFO, provided a detailed overview of the bank's financial performance, highlighting the stability of the balance sheet and the bank's strong capital position. The bank is strategically focusing on client selection and is taking steps to enhance its return profile. While there are challenges, such as potential Fed rate cuts and the ongoing dispute in the East Texas market, Origin remains optimistic about its future prospects. The bank is positioned to capitalize on opportunities in dynamic markets, particularly in Texas, and is committed to driving sustainable excellence and long-term value for its stakeholders.

In summary, Origin Bancorp's second quarter 2024 earnings call underscored the bank's resilience and strategic focus, despite facing challenges in certain areas. With a strong capital position, a clear strategic direction, and a commitment to delivering long-term value, Origin is well-positioned to navigate the evolving banking landscape and capitalize on opportunities for growth.