Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Origin Bancorp Inc (OBK, Financial) reported continued growth in net interest income and expansion in net interest margin.
- The company successfully acquired new customers and expanded existing relationships, contributing to stable core operating results.
- Regulatory approval was received for new locations in Mobile and Fort Walton Beach, enhancing their market presence in the Southeast.
- Origin Bancorp Inc (OBK) maintained a strong geographic footprint, particularly in desirable markets like Texas and the Southeast.
- The company has a strategic focus on enhancing return on assets (ROA) and improving margin efficiency through data analytics and technology investments.
Negative Points
- Earnings per share (EPS) were negatively impacted by $0.25 due to questionable activities by a terminated banker in East Texas.
- There was an increase in past due loans, classified loans, and non-performing loans, primarily due to the aforementioned questionable activities.
- Non-interest expense increased significantly due to elevated legal and accounting fees related to the questionable activities.
- Loan growth was slower than expected, with a strategic focus on client selection impacting overall growth.
- The company anticipates continued pressure on loan growth and expects it to be in the low single digits for the year.
Q & A Highlights
Q: Can you clarify the impact of the suspicious activity on the bank's financials and whether there will be any losses?
A: Drake Mills, CEO, explained that the suspicious activity is not considered a credit issue but rather an internal issue that led to a dispute. The financial impact was a $0.25 reduction in EPS for the quarter. Mills emphasized confidence in resolving the matter without material losses to the bank's financial position.
Q: Can you disclose the dollar amount of the loans involved in the suspicious activity?
A: Drake Mills, CEO, refrained from disclosing specific dollar amounts due to the ongoing dispute. He assured that the non-accrual amount reflects the extent of the impact and that the bank has been diligent in identifying and managing the situation.
Q: How does the recent incident affect Origin's strategic focus on organic growth versus M&A?
A: Drake Mills, CEO, stated that the incident does not change the bank's strategic focus. Origin remains committed to organic growth, particularly in the Southeast, while also being open to M&A opportunities with quality institutions.
Q: What are the expectations for net interest margin (NIM) moving forward?
A: William Wallace, CFO, indicated that the NIM would have been 3.22% excluding the impact of the interest reversal. The bank expects mid-single-digit expansion per quarter in the NIM, driven by asset repricing and stabilization in deposit costs.
Q: How is Origin approaching loan growth and client selection?
A: Martin Hall, COO, emphasized a focus on return profiles over sheer growth. The bank is prioritizing profitable relationships with strong deposit profiles, aiming for mid-single-digit loan growth next year to enhance ROA and margin.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
