Origin Doubles Profit as Credit Costs Recede
Net interest margin widened 21 basis points from the prior quarter to 3.92%.
Origin Bancorp (OBK), a regional bank, more than doubled second-quarter net income to $33.8 million from $14.6 million a year earlier, while diluted earnings rose to $1.09 from $0.47 a share.
The result also marked a sequential acceleration. Net income rose 22.2% from the first quarter, and pre-tax, pre-provision earnings increased 7.3% to $43.2 million, more than twice the year-earlier level.
Net interest income rose 5.7% sequentially and 12.3% from a year earlier to $92.2 million. Higher average loan balances added $5.1 million of loan-interest income, while higher yields and an additional calendar day each contributed $1.3 million. Interest expense declined $529,000 from the prior quarter.
Loans held for investment grew 2.7% sequentially to $8.07 billion, led by commercial real estate, construction and mortgage warehouse lending. Deposits declined 0.6% to $8.70 billion as a seasonal drop in public funds outweighed a $356.7 million increase in business deposits, though noninterest-bearing accounts rose to 26.0% of deposits from 23.6%.
Credit costs provided another lift. The provision for credit losses fell to $65,000 from $5.0 million in the first quarter, while net charge-offs dropped 83.7% to $454,000. Nonperforming loans declined 10.0% to $78.5 million, and loans 30 to 89 days past due fell 70.5% to $5.2 million.
Noninterest income declined $1.4 million to $15.4 million as seasonal insurance commissions and fees fell, while noninterest expense increased 1.0% to $64.4 million. Revenue growth still outpaced expenses, lowering the efficiency ratio to 59.87% from 61.32% in the prior quarter and 74.23% a year earlier.
Origin reiterated its target for an annualized return on average assets run rate of at least 1.15% by the fourth quarter of 2026 after producing 1.35% in the second quarter. The bank raised its quarterly dividend 67% to $0.25 a share, and its board added $100 million of repurchase authority in July, leaving $121.6 million available.