10-K: Origin Bancorp Reports Full Year 2023 Results, Exceeds $9.7 Billion in Assets

Origin Bancorp's full year 2023 results show a slight decrease in net income, but the company's total assets grew to over $9.7 billion.

Summary

• Origin Bancorp's net income for 2023 was $83.8 million, a slight decrease from $87.7 million in 2022.
• Total assets reached $9.72 billion at the end of 2023, up from $9.69 billion in 2022.
• Loans held for investment increased to $7.66 billion, a rise of $570.9 million from the previous year.
• Total deposits grew to $8.25 billion, an increase of $475.4 million from 2022.
• The net interest margin decreased to 3.23% for 2023, down from 3.42% in 2022.
• The company announced expansion into South Alabama and the Florida Panhandle with two new banking locations planned.
• The company sold available for sale investment securities with a book value of $260.8 million, and realized a loss of $11.8 million.
• The company plans to sell approximately $17.4 million in mortgage servicing rights, representing approximately $1.39 billion in unpaid principal balances.

Sentiment

Score: 5

Explanation: The document presents a mixed picture with some positive growth metrics offset by declining profitability and increased risks. The sentiment is neutral to slightly negative.

Positives

• The company experienced significant growth in loans and deposits.
• The company is expanding its footprint into new markets.
• The company has a strong focus on customer service and relationship banking.
• The company has a diverse loan portfolio.

Negatives

• Net income decreased slightly compared to the previous year.
• Net interest margin decreased due to rising interest rates.
• The company realized a loss of $11.8 million on the sale of investment securities.
• The company recognized an impairment of $1.8 million on mortgage servicing rights.

Risks

• The company is exposed to risks related to economic uncertainty and potential recession.
• Changes in interest rates could negatively impact the company's profitability.
• The company faces credit risk associated with its loan portfolio.
• The company is subject to cybersecurity threats and data breaches.
• The company is subject to regulatory risks and compliance requirements.
• The company is exposed to risks related to inflation and rising prices.
• The company is exposed to risks related to natural disasters and adverse weather events.

Future Outlook

The company expects to exceed $10 billion in total consolidated assets during 2024 and is focused on expanding its presence in the Southeast market.

Management Comments

• The company is committed to building unique client experiences through a strong culture, experienced leadership team and a focus on delivering unmatched customer service.
• The company has historically been able to demonstrate its ability to grow its loans and deposits organically.
• The company intends to continue pursuing selective acquisition opportunities that it expects will enhance its business model.

Industry Context

The company operates in a highly competitive banking industry and faces significant competition from both traditional banks and fintech companies. The company's expansion into new markets is a strategic move to increase its market share and revenue.

Comparison to Industry Standards

• The company's net interest margin of 3.23% is below the industry average for community banks, which is around 3.5%.
• The company's loan growth of 8.1% is above the industry average for community banks, which is around 5%.
• The company's deposit growth of 6.1% is above the industry average for community banks, which is around 4%.
• The company's return on assets (ROAA) of 0.84% is below the industry average for community banks, which is around 1.0%.
• The company's return on equity (ROAE) of 8.38% is below the industry average for community banks, which is around 10.0%.
• The company's efficiency ratio of 68.5% is above the industry average for community banks, which is around 60%.
• The company's nonperforming assets to total assets ratio of 0.35% is below the industry average for community banks, which is around 0.5%.

Related Party Transactions

• Loans to executive officers, directors, and their affiliates totaled $71.1 million at December 31, 2023.

Stakeholder Impact

• Shareholders may be concerned about the slight decrease in net income and the decline in net interest margin.
• Employees may be affected by the company's expansion and potential changes in operations.
• Customers may benefit from the company's expansion into new markets and its focus on customer service.
• Creditors may be concerned about the company's exposure to credit risk and potential economic downturns.

Next Steps

• The company plans to open two new banking locations in South Alabama and the Florida Panhandle.
• The company plans to sell approximately $17.4 million in mortgage servicing rights.
• The company will continue to monitor and manage its interest rate risk.

Key Dates

Keywords

Origin Bancorp, financial results, bank, loans, deposits, net interest margin, asset quality, mortgage servicing rights, capital, expansion, interest rates, credit risk, cybersecurity, regulatory, inflation