Origin Surpasses 1% ROA Target, Hints at Aggressive Banker Hiring

Date of Call: Jan 29, 2026

Financials Results

• EPS: $0.95 per diluted share

Guidance:

• Net interest margin expected to compress slightly in Q1 due to timing differences in repricing; anticipated to be 3.70% to 3.80% in Q4, with bias to the higher end.
• Net interest income growth expected in the mid- to high single digits for both the full year and Q4 over Q4.
• Noninterest income growth expected in the mid- to high single digits for the full year, with Q4 over Q4 growth in the low to mid-single digits.
• Noninterest expense outlook is for mid-single-digit growth, both for the full year and on a Q4-over-Q4 basis after excluding notable items.
• Run rate return on average assets (ROA) expected to be at least 1.15% in Q4.
• Pretax pre-provision run rate ROA expected to exceed 1.72%.
• Targeting loan and deposit growth in the mid- to high single digits for the year, with loan growth more weighted to the second half.
• Full year expense outlook assumes an investment of roughly $10 million in new bankers and banking teams.

Business Commentary:

Optimize Origin and ROA Target:

• Origin Bancorp achieved a 1.19% return on average assets (ROA) for Q4 2025, surpassing their near-term target of 1% or greater.
• The company focused on executing the "Optimize Origin" strategy, which aimed to simplify operations, sharpen execution, and eliminate friction to enhance financial performance.

Loan Growth and Market Disruption:

• Loan originations increased by approximately $500 million or 37% year-over-year in Q4 2025.
• Growth was driven by capitalizing on market disruption caused by recent M&A activity, leading to strategic investments in new production bankers, particularly in Houston and Dallas-Fort Worth.

Net Interest Margin and Rate Environment:

• The net interest margin (NIM) expanded by 8 basis points to 3.73% in Q4 2025.
• This was attributed to disciplined deposit repricing following recent Fed rate cuts, with expectations of slight margin compression in Q1 2026 due to timing differences in loan versus deposit repricing.

Expense Management and Growth:

• Noninterest expense, excluding notable items, was down 0.7%, reflecting continued efforts in expense reduction.
• Despite plans for mid-single-digit expense growth in 2026 to invest in production, the company remains focused on optimizing costs and improving profitability through strategic personnel investments.

Sentiment Analysis:

Overall Tone: Positive

• Management expressed strong optimism, noting 'significant momentum,' 'unprecedented opportunity,' and being 'officially on the offensive.' The tone was confident, citing achieved goals like a 1%+ ROA run rate, sound credit metrics, and a strategic focus on capitalizing on market disruption with planned investments in new bankers.

Q&A:

• Question from Matt Olney (Stephens Inc.): Any more color about how many producers the $10 million expense guidance implies targeting for the year? Is it those 10? Or do you expect additional hires? Any volatility in the expense line item?
  Response: The $10 million is a 'war chest' with dry powder to hire more bankers; specific number is not fixed. Expense run rate in Q1 is expected to be around $64 million plus or minus $1 million, with fluctuations from new hires and technology contract renegotiations.

• Question from Matt Olney (Stephens Inc.): As far as the new hires and loan growth guidance for 2026, do you expect them to impact loan growth this year or more in 2027?
  Response: Known hires are budgeted to impact loan growth more in the back half of 2026, with unknown hires likely impacting the 2027 loan growth run rate.

• Question from Matt Olney (Stephens Inc.): Clarification on the net interest margin in Q4 and expectations for Q1.
  Response: Q4 margin expansion was ahead of expectations. Q1 will see slight compression due to timing differences in deposit and loan repricing following Fed cuts, but 2026 has tailwinds from higher-yielding asset replacements.

• Question from Michael Rose (Raymond James & Associates): What types of lenders are you targeting for hire? Will the pace of hiring persist? Does expense growth potentially slow in 2027?
  Response: Targeting C&I lenders, private bankers, and treasury management officers. Hiring is expected to continue, but expense management will also continue to cut costs, providing positive operating leverage.

• Question from Michael Rose (Raymond James & Associates): Should ROA stagnate in 2027, and why not lean into buybacks more given meaningful capital build?
  Response: ROA is expected to continue ramping in 2027 through Optimize Origin initiatives. Buybacks are part of capital deployment, but dividends are also a focus, targeting 20% of earnings for dividends.

• Question from Wood Lay (Keefe, Bruyette, & Woods): Do you feel the impact of market disruption on loan competition? Is competition as intense as ever?
  Response: Competition is highly competitive but not irrational, with some tighter margins on SOFR quotes, but discipline remains to grow profitably.

• Question from Wood Lay (Keefe, Bruyette, & Woods): Are we at a point where incremental deposit rate cuts get more difficult? Can deposit betas continue?
  Response: There is still opportunity to lower deposit costs, but it may get harder to beat historical betas; the focus is on exceeding expectations.

• Question from Wood Lay (Keefe, Bruyette, & Woods): Does the top end of the NIM range depend on loan growth strength?
  Response: Yes, a fair characterization; pressures from promotional acquiring banks could push NIM to the lower end of the range, but current bias is to the higher end.

• Question from Stephen Scouten (Piper Sandler): How do you think about the earn-back period for new hires and how do you compete for these folks?
  Response: Targeting an earn-back period of 12-15 months; competitive advantage comes from a strong C&I focus, award-winning culture, entrepreneurial model, and geographic presence.

• Question from Stephen Scouten (Piper Sandler): How has the use of data changed the bank's lending focus and composition?
  Response: Data-driven decisions have transformed the bank, enabling ROA enhancements by focusing on top-performing bankers, client profitability, and optimizing loan mix and deposit strategies.

• Question from Stephen Scouten (Piper Sandler): With NPLs elevated, is there anything to migrate credit issues down quicker?
  Response: Focus is on shifting towards loans that are criticized; progress on reducing nonperforming assets was made, with continued efforts expected in 2026.

• Question from Gary Tenner (D.A. Davidson): Any unusual reason behind the minimal swap activity in Q4 given rate cuts?
  Response: Swap activity was extraordinary in Q3 and normalized in Q4; full-year swap and loan fees were up 59% year-over-year.

• Question from Gary Tenner (D.A. Davidson): With stronger loan growth, is there room to reduce the securities portfolio to fund loans, or is reinvestment assumed?
  Response: The securities portfolio is maintained at 11%-12% of assets; if loan growth accelerates, the portfolio would build accordingly, but there is significant liquidity for potential deployment into loans.

Contradiction Point 1

Net Interest Margin (NIM) Outlook and Drivers

The NIM guidance range shifts from 3.55%-3.70% in 2025Q2 to 3.70%-3.80% in 2025Q4, with differing primary drivers.

What were the Q4 NIM results and Q1 expectations? - Matt Olney (Stephens Inc.)

2025Q4: The full-year NIM outlook is 3.70%-3.80%, with a bias to the higher end. Tailwinds include replacing ~$150M in securities with higher-yielding investments and renewing $350-$400M in loans at higher yields. - William Wallace(CFO)

What are the expectations for the net interest margin (NIM) in Q3 and the path to 3.70% by Q4, and what are the key drivers? - Matt Olney (Stephens Inc.)

2025Q2: Forward guidance assumes 2 Fed rate cuts. Potential for margin expansion depends on loan growth; if growth accelerates, margin pressure could push it to the lower end of the guidance range (3.55%-3.70%). - William Wallace(CFO)

Contradiction Point 2

Loan Growth Outlook and Impact on Net Interest Margin (NIM)

Guidance on loan growth's effect on NIM shifts from a clear tailwind to a potential pressure point.

Is the NIM range (3.70%-3.80%) influenced by loan growth, and would stronger growth push it toward the lower end? - Wood Lay (Keefe, Bruyette, & Woods, Inc.)

2025Q4: Yes, that is a fair interpretation. The range accounts for uncertainty around how acquisitive banks will be, which could pressure loan spreads. - William Wallace(CFO)

How do you expect the benefits from this dynamic to compare to recent periods by 2026 and 2027? - Matt Olney (Stephens Inc., Research Division)

2025Q3: There is still a $300 million+ loan runoff in 2026 yielding in the mid-4s, while new loans are funded at 6.9%-7%. A margin expansion of 10-15 basis points is still expected over the next five quarters. - William Wallace(CFO)

Contradiction Point 3

ROA Outlook for 2027

Stance on ROA progression changes from a focus on continuous improvement to a warning of potential stagnation.

Will ROA stagnate in 2027, and why aren't buybacks being increased more given the strong capital position? - Michael Rose (Raymond James & Associates, Inc.)

2025Q4: The focus for 2027 is on continuing to optimize and fine-tune to achieve top-quartile ROA. - Drake Mills(CEO)

Is the major work on Optimize Origin completed by 2026, and will balance sheet growth become a priority? - Unknown Analyst (Raymond James)

2025Q3: The heavy lifting is not behind them. Optimize Origin is a continuous process with many opportunities remaining. - Martin Hall(CEO)

Contradiction Point 4

Net Interest Margin (NIM) Outlook and Rate Sensitivity

Contradiction on NIM trajectory and impact of interest rate changes.

Clarify Q4's net interest margin (NIM) performance and Q1 expectations? - Matt Olney (Stephens Inc.)

2025Q4: Tailwinds for margin expansion in 2026 include replacing ~$150M in securities with higher-yielding investments (+50-75 bps) and renewing $350-$400M in loans at yields of 4.8% (old) vs. low-to-mid 6% (new). The full-year NIM outlook is 3.70%-3.80%, with a bias to the higher end. - William Wallace(CFO)

Can you clarify the NIM trajectory for the second half of 2024, including potential expansion in a flat rate scenario and how expectations change with Fed rate cuts? - Matt Olney (Stephens, Inc.)

2023Q4: The margin expansion in the back half is considered in a flat rate scenario. The fixed-rate commercial loan repricing in H2 2024 is expected to be a 'relief valve' against margin pressure from potential Fed cuts. If the Fed cuts, Origin is asset-sensitive, so initial cuts (the first 2-4) would pressure the margin. - William Wallace(CFO)

Contradiction Point 5

Strategy for Funding Loan Growth

Contradiction on whether securities portfolio will be reduced to fund loan growth.

Given $150M in securities cash flow, can this be used to fund stronger loan growth by reducing the portfolio, or is reinvestment the base case? - Gary Tenner (D.A. Davidson & Co.)

2025Q4: The securities portfolio is already maintained at a target size of 11%-12% of assets. If loan growth accelerates, the securities portfolio would build in line with asset growth, not shrink. - William Wallace(CFO) and Martin Hall(CEO)

How quickly can the capital from the bond sale be deployed, and how sensitive is the EPS/NII outlook to the deployment timeline? - Unknown Analyst (Raymond James)

2023Q4: Deployment is expected to be fast. The proceeds will fund the unfunded loan gap in the new Southeast market and support loan growth in other markets (especially Texas). Since the loans are funded from the sale proceeds (not brokered deposits), the capital can be deployed quickly. - William Wallace(CFO)