Origin Bancorp NYSE: OBK reported record third-quarter results as management pointed to continued benefits from its “Optimize Origin” strategy, including higher profitability, margin expansion, loan growth and disciplined expense management.
The company posted record net income of $37.8 million, or $1.22 per diluted share, during the third quarter of 2026. Return on average assets was 1.47%. Excluding notable items, pre-tax, pre-provision earnings totaled $49.6 million and pre-tax, pre-provision return on average assets reached a record 1.93%, according to Chief Financial Officer Wally Wallace.
Chairman, President and CEO Drake Mills said the results reflected the company’s focus on improving relationship selection, risk management, capital allocation and operating performance. He said Origin is performing ahead of the near-term return-on-assets objective it established at the beginning of the year, while its longer-term objective remains becoming a top-quartile ROA performer.
Margin Expansion and Growth Outlook
Net interest margin expanded 2 basis points from the prior quarter to 3.94%. Wallace said the company expects fourth-quarter margin of approximately 4%, plus or minus 5 basis points, based partly on the September rate increase and an assumed additional 25-basis-point Federal Reserve rate hike in December.
The company increased its full-year outlook for net interest income growth to the low-double-digit percentage range and raised its pre-tax, pre-provision ROA outlook to more than 1.85% for the fourth quarter and more than 1.75% for the full year.
Wallace said about 54% to 55% of the loan portfolio is floating rate, allowing loan yields to reprice relatively quickly after a Fed move. He also said Origin has roughly $700 million of fixed-rate loans scheduled to reprice through the end of 2027, with those loans carrying average yields in the high-4% range. New loans originated in September had yields of about 6.60%, he said.
Management also acknowledged pricing pressure in both lending and deposits. Wallace said the company is modeling for competitive pressure while seeking to retain pricing discipline. “Right now, that 4% NIM range holds,” he said, while noting that intensified market competition could affect results.
Loans grew 0.3% sequentially, or 2.3% when excluding Mortgage Warehouse balances. Management is targeting high-single-digit loan growth for the full year. President and CEO of Origin Bank Lance Hall said loans have increased by $512 million year to date excluding Mortgage Warehouse, including $350 million in Texas and $133 million in the Southeast.
Hall said only $82.5 million of year-to-date loan growth came from new hires, adding that recently hired bankers are still ramping up and could become a larger contributor in 2027. He said the company expects loan growth next year to be similar to this year’s pace, supported by market opportunities and banker hiring.
Deposits, Client Acquisition and Fee Revenue
Total deposits declined 0.3% on a period-end basis during the third quarter, but average total deposits increased 2.6%, or approximately $221 million. Average non-interest-bearing deposits increased by about $80 million. Non-interest-bearing deposits represented 25% of total deposits at quarter-end and on an average basis.
Hall said period-end deposit figures were affected by a large deposit from an Argent partner that entered and left the balance sheet near the end of the quarter. He said average balances more accurately reflected underlying deposit momentum. Origin continues to target mid- to high-single-digit deposit growth for the year.
Management cited client-account opening activity as an indicator of relationship acquisition across its markets. Through September, total deposit account openings increased 39% year over year in Mississippi, 23% in Houston and 21% in East Texas. Non-interest-bearing account openings rose 69% in Mississippi, 28% in East Texas and 23% in Houston.
Treasury management revenue rose 20% year over year, according to Hall. He said the business supports Origin’s commercial and industrial strategy by helping the company build recurring fee revenue, strengthen commercial relationships and capture primary operating accounts.
Expenses, Technology and Capital Deployment
Non-interest income was $18.1 million in the third quarter. Excluding notable items, it increased to $18 million from $15.4 million in the prior quarter. Origin now expects low-single-digit growth in full-year non-interest income.
Reported non-interest expense was $62.5 million. Excluding notable items, non-interest expense declined to $63.3 million from $64.3 million in the second quarter, outperforming management’s expectations. The company maintained its outlook for mid-single-digit expense growth for the full year.
Wallace said certain planned technology investments were delayed so that new Chief Innovation and Technology Officer Brad Waldhoff could help determine priorities. The spending is expected to occur, but much of it has shifted into 2027. Management said the timing shift does not change its commitment to technology, automation, artificial intelligence and other investments intended to improve efficiency and banker productivity.
During the quarter, Origin repurchased 272,927 shares at an average price of $54.21. Its tangible common equity ratio was unchanged from the second quarter at 11.1%, while tangible book value per share declined to $36.14 from $36.37, primarily due to increased accumulated other comprehensive income losses.
The board also approved an increase in the quarterly dividend to $0.28 per share from $0.25. Wallace said it was the company’s second dividend increase of the year and reflected capital strength and a more consistent earnings stream.
Credit Metrics Remain Sound
Chief Risk Officer Jim Crotwell said credit performance remained sound. Total past-due loans that were accruing and 30 to 89 days delinquent represented 0.13% of total loans at quarter-end. Net charge-offs were $2.7 million, or an annualized 0.13% of average loans, compared with year-to-date annualized charge-offs of 0.10%.
Nonperforming assets declined by $4.2 million and fell to 0.93% of total loans, the lowest level in five quarters. Classified assets increased moderately to 1.84% of total loans, mainly because of the downgrade of five relationships, partly offset by balance reductions in five other relationships.
The allowance for credit losses increased by $190,000 to $98.4 million, representing 1.27% of loans excluding Mortgage Warehouse balances. Crotwell said the reserve reflected $6.1 million of required reserves for new loan production, partially offset by a $3.9 million release tied to credit migration and payoffs.
About Origin Bancorp (NYSE:OBK)
Origin Bancorp, Inc is a regional bank holding company headquartered in Ruston, Louisiana. Through its primary subsidiary, Origin Bank, the company provides banking and financial services to businesses, individuals and communities.
Origin Bank offers commercial and small-business lending, consumer loans, residential mortgage lending, deposit accounts, treasury management, cash-management services and wealth-related solutions. Its commercial banking activities include financing for operating needs, real estate and other business purposes, while its consumer offerings include personal deposits and lending products.
The bank serves customers through banking locations and digital channels across Louisiana, Texas and Mississippi.
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