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Origin Bancorp (OBK)

OBK Q4 2024: guides mid-high single-digit loan growth, $21M savings

Reported on Jan 23, 2025 (After Market Close)
Pre-Earnings Price$37.06Last close (Jan 23, 2025)
Post-Earnings Price$37.33Open (Jan 24, 2025)
Price Change
$0.27(+0.73%)

What went well

  • Accelerated Loan Growth: Management expressed strong confidence in shifting from conservative balance‐sheet management to mid- to high single-digit loan growth in 2025, driven by a focused loan pipeline and improved client selection.
  • Cost Efficiency Enhancements: Initiatives such as branch consolidation, banker optimization, and sub debt redemption are expected to create about $21 million in annual pretax pre-provision benefits, enhancing margins and underscoring effective expense management.
  • Strategic Capital Utilization: The firm’s emphasis on maintaining strong capital, leveraging a $50 million buyback tool, and keeping options open for M&A or organic lift-outs signals a proactive approach to enhancing shareholder value.

Q&A Summary

  1. Loan Growth
    Q: How will loans grow in '25?
    A: Management expects mid- to high single-digit loan growth in 2025 as the bank returns to its typical organic growth after a period of strict asset control, supported by strong pipelines and market focus in key areas.

  2. ROA & Savings
    Q: How will $21M savings boost ROA?
    A: The savings stem from branch consolidation, banker optimization, a securities trade, sub-debt redemption, and liquidity improvements, all aimed at driving a 1% ROA run rate by Q4 2025, with further upside potential from additional initiatives.

  3. Savings Timing
    Q: When are the savings benefits received?
    A: Cost benefits are staggered, with significant impacts already seen in late Q4 and the full run rate of these savings materializing by Q1 and Q2 2025.

  4. Margin Outlook
    Q: How do deposit betas affect margins?
    A: Improved deposit pricing now reflects a 50% beta on nonmaturity deposits, which, combined with steady market conditions, should support favorable net interest margins even after Fed rate adjustments.

  5. Capital & Buyback
    Q: What is the capital allocation strategy?
    A: The bank will maintain strong capital as a runway for organic growth and targeted M&A, using a $50M buyback tool while carefully managing assets to remain under the $10B threshold until appropriate opportunities arise.

  6. Argent Equity
    Q: How does increased Argent ownership affect accounting?
    A: Achieving over 20% ownership will trigger the equity method of accounting for Argent, potentially offsetting some of the Durbin impact, with the transaction anticipated as a Q2 event.

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