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Origin Bancorp, Inc. (OBK)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 GAAP diluted EPS was $0.47, pressured by a $14.4M realized loss on securities; normalized EPS (S&P “Primary EPS”) was ~$0.86, reflecting $0.39 EPS headwind from notable items .
  • Net interest margin (FTE) expanded 17 bps to 3.61% QoQ on higher asset yields, lower liability costs, and a favorable asset mix; management raised margin guidance to 3.70% (Q4’25) and 3.55% for FY25 (±5 bps) .
  • Total “revenue” (NII + noninterest income) fell QoQ and YoY due to the securities-loss; deposits declined 2.6% QoQ on public funds seasonality and customer cash paydowns, partly backfilled with short-term FHLB borrowings .
  • Capital deployment catalysts: new $50M share repurchase authorization and stated plan to redeem ~$75M sub-debt in Q4; TBV/share rose to $33.33 and TCE ratio to 10.9% .
  • Strategic positioning strengthened: “Optimize Origin” annual PTPP benefit now ~$34.2M, and Argent Financial ownership increased to 20% (equity method) to boost noninterest income beginning in 2H’25/2026 .

What Went Well and What Went Wrong

What Went Well

  • NIM-FTE up 17 bps to 3.61% on 8 bps higher asset yield, 5 bps lower liability cost, and loans rising to 83.6% of average earning assets; “highest NII in nine quarters” at $82.1M .
  • Management elevated margin outlook and detailed “Optimize Origin” with identified ~$34.2M annual PTPP benefit; CEO: “we are well-positioned…my full confidence that our employees will continue delivering exceptional value” .
  • TBV/share up to $33.33 and TCE ratio to 10.94%; new $50M buyback authorization and 136,399 shares repurchased at $31.84 avg price in Q2 .

What Went Wrong

  • GAAP noninterest income fell to $1.4M (–$14.2M QoQ) primarily from the $14.4M realized loss on AFS securities; GAAP EPS $0.47 vs $0.71 in Q1 .
  • Deposits declined 2.6% QoQ (seasonal public funds –$99.7M and customer cash paydowns), prompting short-term FHLB usage; total FHLB/other borrowings rose to $127.8M .
  • Credit metrics mixed: NPLs up $3.9M QoQ (NPL/LHFI to 1.11%), though annualized NCOs improved to 0.12% and provision eased to $2.9M .

Financial Results

Revenue defined as Net Interest Income (NII) + Noninterest Income (company reported).

MetricQ2 2024Q1 2025Q2 2025
Net Interest Income ($MM)$73.9 $78.5 $82.1
Noninterest Income ($MM)$22.5 $15.6 $1.4
Total “Revenue” (NII + Noninterest) ($MM)$96.36 $94.06 $83.50
Diluted EPS (GAAP) ($)$0.67 $0.71 $0.47
NIM - FTE (%)3.17 3.44 3.61
Efficiency Ratio (%)66.82 65.99 74.23

Key KPIs

KPIQ2 2024Q1 2025Q2 2025
LHFI ($MM)$7,959.2 $7,585.5 $7,684.4
LHFI ex MW LOC ($MM)$7,452.7 $7,181.4 $7,109.7
Total Deposits ($MM)$8,510.8 $8,338.4 $8,123.0
NIB Deposits (% of total)21.9% 22.7% 22.7%
Provision for Credit Losses ($MM)$5.23 $3.44 $2.86
NCOs / Avg LHFI (annualized) (%)0.15 0.15 0.12
NPL / LHFI (%)0.95 1.07 1.11
ALCL / LHFI (%)1.27 1.21 1.20

Vs. Wall Street Consensus (S&P Global)

MetricEstimateActual
Primary EPS (Normalized) – Q2 2025 ($)0.778*0.8575*
Revenue – Q2 2025 ($)97.58MM*80.64MM*

Values retrieved from S&P Global.*

Context:

  • Management disclosed notable items totaling ~$0.39 EPS headwind in Q2, consistent with S&P’s higher normalized EPS vs GAAP reported .
  • “Revenue” here reflects S&P’s definition; company GAAP noninterest income was depressed by the securities-loss .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
NIM (FTE)Q4 20253.50% ±10 bps 3.70% ±5 bps Raised
NIM (FTE)FY 20253.45% ±10 bps 3.55% ±5 bps Raised
Loan Growth (ex Warehouse)Yr/YrMid–High single digits Low single digits Lowered
Deposit GrowthYr/YrMid single digits Low single digits Lowered
Noninterest Income GrowthQ4 2025 vs Q4 2024Flat to down low single digits Low double digits Raised
Noninterest Expense GrowthYr/YrFlat to down slightly Flat to down slightly Maintained
Tax RateYr/Yr~21.5% ~21.0% Slightly Lower
DividendQuarterly$0.15/share $0.15/share (declared Jul 23) Maintained
Capital ActionsMulti-yearPrior plan expiring New $50M buyback (3 yrs) New Authorization

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 & Q1’25)Current Period (Q2’25)Trend
Net Interest Margin trajectoryNIM-FTE up 15 bps in Q4’24; +11 bps in Q1’25 on deposit cost declines Raised NIM guidance; tailwinds from loan/securities repricing; two Fed cuts modeled (Sep/Dec) Improving and more confident
Loan growth & pipelinesOptimization exits and paydowns; muted growth; mid/high single-digit ambitions Clients used cash, utilization fell 53%→50% (–$83M); expect muted 2–2.5% annualized 2H’25 and mid/high single-digit in 2026 Near-term muted, medium-term constructive
Deposit costs & betasBetas tracking historical; NIB ~23% Costs trending in line; NIB stable 22–23% through 2025 Stable
Securities optimizationLarge-loss trade Q4’24 (+NIM benefit) Executed $215.8M AFS sale; loss $14.4M; +6 bps 12-month NIM impact; no more large trades planned Strategy largely complete
Argent Financial (20% ownership)Considering >20% ownership Equity method now; ~$7M write-up expected in Q3; ~$6M annual income in 2026 New noninterest income lever
<$10B asset threshold (Durbin)Caution on crossing; costs prepared Will remain under $10B in 2025; defers ~$6M Durbin hit one year Deferred regulatory headwind
Tariffs/macro uncertaintyAffected Q4’24 outlook Tariffs and rate uncertainty delaying projects; some clients self-funding Ongoing headwind
Expenses/efficiencyBranch consolidation; ERC; core eff. ratio improved in Q1’25 Back-half expense run-rate “flat”; ongoing data/automation/process projects Controlled; structural initiatives continue

Management Commentary

  • Strategy: “We believe the actions we have taken have put us in a position to achieve [>1% ROA run rate by 4Q25] ahead of schedule…approximately $34 million in annual earnings improvement on a pre-tax, pre-provision basis.” .
  • Margin & outlook: “We increased our margin guidance…to 3.70% in Q4 2025 and 3.55% for the full year…tailwinds from loan and securities repricing.” .
  • Capital deployment: “We repurchased 136,399 shares…authorized a new $50 million repurchase plan…plan to redeem $75 million of sub debt in Q4.” .
  • Loan dynamics: “Utilization rates went from 53% to 50%…about $83 million reduction in line utilization…customers used cash to pay for projects.” .
  • Argent: “Increasing our ownership…to 20%…will drive additional income of approximately $6 million next year.” .

Q&A Highlights

  • NIM ramp: CFO detailed drivers (loan/securities repricing, modeled Fed cuts) and framed Q3→Q4 path to ~3.70% NIM-FTE with competitive spread pressure as a watch item .
  • Loan growth normalization: President explained near-term muted growth amid tariffs and self-funding, targeting mid/high single-digit in 2026; treasury and swap fees strong, with C&I focus .
  • Securities trade rationale: CFO described timing (volatility around tariff announcements) and economics; no additional large-loss trades planned .
  • Capital allocation & M&A posture: CEO highlighted planned sub-debt redemption and preference for lift-outs over whole-bank M&A; open to core deposit acquisitions .
  • <$10B strategy: CEO expects to stay under $10B YE 2025, deferring Durbin (~$6M impact) while keeping teams focused on profitable growth .
  • Argent accounting: CFO indicated ~$7M investment write-up in Q3 and equity method earnings ramp in 2026, pending final valuation and deal closing .

Estimates Context

  • Q2 2025 EPS (Normalized, S&P Primary EPS): Beat – $0.8575* vs $0.778* estimate, aligned with management’s $0.39 EPS notable-item headwind on GAAP .
  • Q2 2025 Revenue (S&P definition): Miss – $80.64MM* vs $97.58MM* estimate, driven by the $14.4MM securities loss depressing GAAP noninterest income .

Values retrieved from S&P Global.*

Where estimates may adjust:

  • Upward bias to EPS estimates for 2H’25–2026 as margin guidance raised and equity-method income from Argent begins .
  • Revenue estimates should reflect lower GAAP noninterest income near-term from the securities-loss, but offset by swap fees, mortgage seasonality, and Argent contributions later in 2025/2026 .

Key Takeaways for Investors

  • NIM expansion is the core story; raised guidance and structural repricing tailwinds support a stronger margin trajectory into Q4’25 and 2026 .
  • Ignore GAAP EPS noise: normalized EPS beat consensus; the $14.4M securities-loss negatively skews GAAP optics but improves forward NII and NIM (6 bps 12-month NIM benefit) .
  • Deposit seasonality and customer cash paydowns weighed on deposits and utilization; watch mix shifts and FHLB usage as liquidity levers in 2H’25 .
  • Credit quality is manageable: slight uptick in NPLs, but lower NCOs and modest provisioning; portfolio optimization (client selection, exits) continues .
  • Capital actions are supportive: $50M buyback authorization, planned $75M sub-debt redemption, and TBV growth offer downside support and optionality .
  • New income driver: 20% Argent stake (equity method) adds durable noninterest income; near-term write-up, medium-term earnings accretion .
  • Trading lens: Expect positive reaction to margin guidance and normalized EPS beat, tempered by GAAP headline misses; catalysts include buyback execution, sub-debt redemption, and confirmation of Argent income timing .
Notes:
- “Revenue” refers to Net Interest Income + Noninterest Income as presented in company reports.
- S&P Global figures are marked with * and provided via analyst consensus data.