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Origin Bancorp, Inc. (OBK)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 showed strong core performance but GAAP earnings were hit by a large credit provision tied to suspected borrower fraud; diluted EPS was $0.27 while pre-tax, pre-provision (PTPP) earnings surged to $47.8M as NIM-FTE expanded to 3.65% and net interest income reached a 10-quarter high .
  • Primary EPS (SPGI) appears to have beaten consensus ($0.86 vs $0.69) on a normalized basis, while SPGI “Revenue” missed ($70.9M vs $100.6M); note definitional differences versus bank-reported totals and a material non-GAAP/GAAP gap this quarter due to notable items (see tables and context) [Values retrieved from S&P Global].
  • Management tightened margin guidance (Q4 2025 NIM 3.65% ±3 bps vs prior 3.70% ±5 bps) and lowered 2025 loan growth (ex-warehouse) to “flat,” while maintaining low-single-digit deposit growth and signaling full redemption of ~$74–75M sub debt on Nov 1, saving ~$3M net annually .
  • Balance sheet mix improved: deposits rose to $8.33B (+2.6% q/q) with noninterest-bearing deposits up 8.6% q/q, FHLB/other borrowings fell sharply, and book/tangible book per share increased again; share repurchases continued .
  • Near-term stock catalysts: credit resolution/recovery efforts, NIM execution versus tighter guidance, sustained deposit traction in Texas/Southeast, and capital actions (sub debt redemption/buybacks) .

What Went Well and What Went Wrong

What Went Well

  • Core momentum: Net interest income rose to $83.7M (+1.9% q/q) and NIM-FTE expanded 4 bps to 3.65%, driven by improved funding mix, lower liability costs, and portfolio optimization .
  • Deposit strength: Total deposits grew to $8.33B (+$208.8M, +2.6% q/q) with noninterest-bearing deposits up $158.6M (+8.6%), improving mix and reducing wholesale funding needs .
  • Strategic investments: Additional stake in Argent Financial triggered a $7.0M fair value adjustment and $1.2M equity method income; management projects ~$6.0M pre-tax annualized benefit starting Q4 2025 .

Quotes:

  • “I am extremely proud of how we have executed on Optimize Origin… we are ahead of pace on our stated plan and are creating real traction on our goal of being a top quartile ROA performer.” – Drake Mills, CEO .
  • “We are maintaining our deposit growth guidance… and tightened our margin guidance… due primarily to an additional Fed rate cut.” – Wally Wallace, CFO .

What Went Wrong

  • Credit event: Provision for credit losses spiked to $36.8M (vs $2.9M in Q2), including ~$29.5M related to suspected borrower fraud tied to Tricolor Holdings, LLC; net charge-offs rose to $31.4M (annualized NCO 1.65%) .
  • Loan contraction: Total LHFI fell to $7.54B (-$147.3M, -1.9% q/q), led by declines in mortgage warehouse and C&I balances; management lowered 2025 loan growth (ex-warehouse) to “flat” .
  • Mortgage and fee headwinds: Mortgage banking revenue fell $0.6M q/q; noninterest income benefited from one-time items (Argent, insurance recovery), masking underlying softness in some fee lines .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Net Interest Income ($USD Millions)$74.8 $82.1 $83.7
Noninterest Income ($USD Millions)$16.0 $1.4 $26.1
Provision for Credit Losses ($USD Millions)$4.6 $2.9 $36.8
Diluted EPS ($USD)$0.60 $0.47 $0.27
NIM-FTE (%)3.18% 3.61% 3.65%
ROAA (Annualized, %)0.74% 0.60% 0.35%
Efficiency Ratio (%)68.86% 74.23% 56.48%

Balance sheet and per-share metrics:

MetricQ3 2024Q2 2025Q3 2025
Total LHFI ($USD Billions)$7.96 $7.68 $7.54
Total Deposits ($USD Billions)$8.49 $8.12 $8.33
Noninterest-Bearing Deposits ($USD Billions)$1.89 $1.84 $2.00
Book Value Per Share ($USD)$36.76 $38.62 $39.23
Tangible Book Value Per Share ($USD)$31.37 $33.33 $33.95

Credit KPIs:

MetricQ3 2024Q2 2025Q3 2025
Nonperforming LHFI / LHFI (%)0.81% 1.11% 1.17%
Past Due LHFI / LHFI (%)0.49% 0.88% 0.96%
ALCL / Total LHFI (%)1.21% 1.20% 1.28%
Annualized Net Charge-Offs / Avg LHFI (%)0.48% 0.12% 1.65%

Segment/Lending mix (selected):

Category ($USD Millions)Q2 2025Q3 2025
C&I$2,011 $1,920
Mortgage Warehouse LOC$575 $473
Non-Owner Occ CRE$1,456 $1,520
Construction/Land/Dev$654 $616
Single-Family Resi RE$1,466 $1,461

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
NIM-FTEQ4 20253.70% ±5 bps 3.65% ±3 bps Lowered/tightened
NIM-FTEFY 20253.55% ±5 bps 3.60% ±3 bps Raised/tightened
Loan Growth (ex-Warehouse)FY 2025Low-single digits Flat Lowered
Deposit GrowthFY 2025Low-single digits Low-single digits Maintained
Noninterest Income GrowthQ4 2025Low-double digits (ex-notables) Low-double digits (ex-notables) Maintained
Noninterest Income GrowthFY 2025Flat Flat Maintained
Noninterest Expense GrowthFY 2025Flat to down slightly Down low-single digits Improved
Tax RateFY 2025~21.0% ~21.0% Maintained
DividendQ3 2025$0.15/share (declared) $0.15/share (declared) Maintained
Capital ActionQ4 2025—Redeem ~$74–75M sub debt 11/1; save ~$3M net ann. New action

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Optimize Origin (efficiency, balance sheet)Identified ~$23–34M pre-tax benefits; mortgage restructure; deposit mix progress Execution ahead of pace; PTPP ROAA up; continued margin lift; new Argent equity method benefit Strengthening
Margin/NIM trajectoryNIM-FTE up 11–17 bps in Q1/Q2; guided higher for Q4/FY NIM-FTE +4 bps to 3.65%; guidance tightened to 3.65% (Q4) / 3.60% (FY) Positive but more conservative
Loan growth outlookMid-single-digit targets tempered by paydowns and tariffs; pipelines constructive Lowered to “flat” for 2025 ex-warehouse; expecting Q4 growth resume; bullish for 2026 Near-term cautious
Deposit mix/fundingBrokered roll-off; NIB stable ~22–23%; money market gains NIB +8.6% q/q; total deposits +2.6%; reduced FHLB/borrowings Improving
Credit qualityStable in Q1/Q2 with modest NPL rise; client selection exits One-off fraud event drove large provision/NCOs; management pursuing recoveries; core credit stable ex-event Transitory shock; underlying steady
Capital actionsNew $50M buyback; TBV rising; capital well above “well-capitalized” Buybacks continued; sub debt full redemption planned 11/1; TBVPS up to $33.95 Accretive deployment

Management Commentary

Key messages:

  • “Our decision to charge off the entire Tricolor outstanding debt is extremely conservative… We do anticipate recoveries… [but] it’s extremely difficult to quantify.” – Drake Mills .
  • “Loan growth will return in Q4; we reduced loan growth guidance to essentially flat for the year. Deposit growth low-single digits maintained.” – Wally Wallace .
  • “We are excited about increasing Argent ownership above 20%, resulting in equity method accounting… a ~$6M pre-tax annualized benefit beginning in Q4 2025.” – Management .
  • “We remain optimistic that pipelines are building… focus on C&I and owner-occupied real estate, treasury management, and swap fees.” – Lance Hall .

Q&A Highlights

  • Credit event details and recovery path: Full Tricolor charge-off (~$28.4M); recoveries expected but timing/amount uncertain; collateral/scrub processes enhanced; minimal indirect exposure disclosed .
  • Loan growth pacing: Elevated paydowns/payoffs masked strong originations (avg ~$685M/qtr past 4 quarters); 2025 ex-warehouse lowered to flat; expecting ~2% q/q in Q4 and mid–high single-digit growth in 2026 .
  • Margin sensitivity: Tailwinds from loan/securities repricing persist; with modeled Fed cuts, see 10–15 bps potential NIM expansion over next 5 quarters; tightening guidance reflects macro .
  • Expenses and Optimize: Run-rate flat in H2; more efficiency/revenue projects underway; not cutting to the bone; focus on revenue lift (treasury/cards) and process improvements .

Estimates Context

MetricQ1 2025Q2 2025Q3 2025
Primary EPS Consensus Mean ($)0.688*0.778*0.690*
Primary EPS Actual ($) (SPGI)0.7698*0.8575*0.8593*
GAAP Diluted EPS ($) (Company)0.71 0.47 0.27
Revenue Consensus Mean ($USD)93,608,400*97,584,400*100,577,250*
Revenue Actual ($USD) (SPGI)90,617,000*80,642,000*70,912,000*

Values retrieved from S&P Global.

Implications:

  • SPGI “Primary EPS” actual suggests beat vs consensus in Q3 ($0.86 vs $0.69), but company GAAP diluted EPS was $0.27 due to $0.59/share notable items (fraud provision, other) – highlighting substantial non-GAAP vs GAAP divergence this quarter .
  • SPGI “Revenue” (definition differs from bank total net revenue) missed consensus materially; investors should anchor to bank-reported NII and noninterest income and reconcile definitional differences .

Key Takeaways for Investors

  • Core profitability trending up (NIM, NII, PTPP) despite temporary credit shock; watch recovery progress and whether NCOs revert to ex-Tricolor levels (0.16% annualized) .
  • The balance sheet is improving: deposit growth/NIB mix, reduced borrowings, and rising tangible book provide resilience and optionality for capital deployment .
  • Guidance prudently tightened: margin guide narrowed; loan growth pulled to flat in 2025 ex-warehouse; focus remains on spread/pricing discipline over growth-for-growth .
  • Near-term catalysts: sub debt redemption (Nov 1) lifts run-rate earnings (~$3M net annually); continued buybacks; Argent equity method income begins to accrue (with ~$6M annualized benefit) .
  • Revenue/earnings estimates likely to adjust: expect sell-side to reconcile GAAP vs normalized EPS and align “revenue” definitions to bank-reported totals; watch Q4 fee seasonality and treasury/swap contributions .
  • Regional positioning (Texas/Southeast) and lift-out strategy remain structural tailwinds; pipelines strong into 2026, with expected normalization of paydowns and utilization supporting loan growth .
  • Risk monitor: credit migration and NDFI exposure (currently ~5% of loans, no past dues), CRE concentrations within policy, and execution on fraud recovery efforts .