Earnings call transcript: Origin Bancorp reports Q2 2025 earnings miss

Origin Bancorp Inc. (OBK), a regional bank with a market capitalization of $1.16 billion, reported disappointing Q2 2025 earnings, with EPS falling short of expectations at $0.47 compared to a forecasted $0.78. Revenue also missed projections, coming in at $83.5 million against the expected $97.58 million. Following these results, the stock saw a slight decline of 0.25%, closing at $37.66. According to InvestingPro analysis, the stock currently appears undervalued based on its Fair Value estimate.

Key Takeaways

• EPS of $0.47 missed forecasts by 39.74%.
• Revenue of $83.5 million fell short of expectations by 14.43%.
• Stock price decreased by 0.25% post-earnings announcement.
• Net interest margin improved to 3.61%.
• Strategic initiatives underway, including "Optimize Origin."

Company Performance

Origin Bancorp’s Q2 2025 performance was marked by a substantial earnings miss, with both EPS and revenue falling short of expectations. Despite this, the company reported a 1.3% increase in loans and an improved net interest margin, reflecting some operational strengths. However, declining deposits and economic uncertainty pose challenges.

Financial Highlights

• Revenue: $83.5 million, down from the forecasted $97.58 million.
• Earnings per share: $0.47, below the $0.78 forecast.
• Net interest margin: 3.61%, up 17 basis points.
• Tangible book value: $33.33, continuing its growth trend.
• Tangible Common Equity ratio: 10.9%, up from 10.6%.

Earnings vs. Forecast

Origin Bancorp’s Q2 2025 results were below expectations, with EPS missing by 39.74% and revenue by 14.43%. This significant miss contrasts with previous quarters, where the company had shown more stable performance.

Market Reaction

Following the earnings announcement, Origin Bancorp’s stock price fell by 0.25% to $37.66. This decline is relatively modest given the earnings miss, suggesting that investors may be weighing other factors, such as strategic initiatives and market conditions. The stock has demonstrated resilience with a 5.42% return over the past year, while maintaining profitable operations with a return on equity of 7%.

Dive deeper into Origin Bancorp’s valuation metrics and growth potential with a comprehensive Pro Research Report, available exclusively on InvestingPro. The platform offers extensive financial analysis and peer comparison tools for over 1,400 US stocks.

Outlook & Guidance

Looking ahead, Origin Bancorp has revised its 2025 loan and deposit growth guidance to low single digits, with an anticipated net interest margin increase to 3.7% by Q4 2025. The company is also targeting a 1% ROA run rate by the end of the year.

Executive Commentary

Lance Hall, President and CFO, emphasized, "We are singularly focused on our ROA run rate, and so pricing discipline is critical." CEO Drake Mills added, "Our future is bright. Very excited about where we are." These statements reflect a focus on strategic growth despite current challenges.

Risks and Challenges

• Economic uncertainty impacting loan growth.
• Declining deposits could affect liquidity.
• Potential Fed rate cuts may influence margins.
• Market consolidation and competition in key regions.
• Execution risks associated with strategic initiatives.

Q&A

During the earnings call, analysts queried about loan growth challenges and the company’s securities portfolio restructuring. The management also detailed their investment strategy in Argent Financial and addressed capital utilization concerns.

Full transcript - Origin Bancorp Inc (OBK) Q2 2025:

Tom, Evercore Coordinator, Evercore: Morning, and welcome to the Origin Bancorp Inc. Second Quarter Earnings Conference Call. My name is Tom, and I’ll be your Evercore Coordinator. The format of the call includes prepared remarks from the company followed by a question and answer session. All attendees will be on a listen only mode until the Q and A portion of the call.

Please note this event is being recorded. I would now like to turn the conference call over to Chris Riegelman, Director of Investor Relations. Please go ahead.

Chris Riegelman, Director of Investor Relations, Origin Bancorp: Good morning, and thank you for joining us today. We issued our earnings press release yesterday afternoon, a copy of which is available on our website, along with a slide presentation that we will refer to during this call. Please refer to page two of our slide presentation, which includes our Safe Harbor statements regarding forward looking statements and the use of non GAAP financial measures. For those joining by phone, please note the slide presentation is available on our website at www.ir.origin.bank. Please also note that our Safe Harbor statements are available on page seven of our earnings release filed with the SEC yesterday.

All comments made during today’s call are subject to the Safe Harbor statements in slide presentation and earnings release. I’m joined this morning by Origin Bancorp’s Chairman, President and CEO, Drake Mills President and CEO of Origin Bank, Lance Hall our Chief Financial Officer, Wally Wallace Chief Risk Officer, Jim Crotwell our chief accounting officer, Steve Brawley and our chief credit and banking officer, Preston Moore. After this presentation, we’ll be happy to address any questions you may have. Drake, the call is yours.

Drake Mills, Chairman, President and CEO, Origin Bancorp: Thanks, Chris, and thanks for being with us this morning. At the beginning of this year, we introduced Optimize Origin, our plan to deliver sustainable elite level financial performance. We laid out a near term goal of achieving a 1% ROA run rate by the 2025 and an ultimate target for our ROA to be in the top quartile of our peers. As we cross the halfway point of the year, we believe the actions we have taken have put us in a position to achieve this near term goal ahead of schedule. In just a short time, we have created efficiencies within our branch network, improved the overall profitability of our commercial banking team, restructured our mortgage business, and taken multiple actions to optimize our balance sheet.

These actions are the primary drivers of approximately $34,000,000 in annual earnings improvement on a pretax, pre provision basis. I’m proud of the results and how they position us moving forward. Our focus remains on being a top quartile performer and driving value for our employees, customers, communities, and shareholders. On July 1, we took an additional step towards our goal of high level profitability by increasing our ownership of Argent Financial to 20%, which triggers the equity method of accounting. Next year, we anticipate this will drive additional income of approximately $6,000,000 We’ve also identified several opportunities that we believe will drive additional earnings improvement towards our ultimate profitability goal.

Some of these are projects that are currently underway, others are in the early stages of implementation, and a number are in the planning phase. Areas of focus include product delivery, streamline organizational structure, enhanced data management, and improved expense management. Lance will provide more detail later in the presentation. As you can see, we are laser focused on our plan and delivering results that drive value. While we acknowledge the economic uncertainty exists, we know the actions we have taken position Origin for near term and long term success.

Now I’ll turn it over to Lance and the team.

Lance Hall, President and Chief Financial Officer, Origin Bank: Thanks, Drake, and good morning. I want to start with our insight into our work around optimizing our commercial banking teams and the positive results that it is having on portfolio mix, portfolio risk, margin expansion, and production. Since the end of 02/2024, Origin has reduced our FTE headcount by 8% across the bank and by 18% in our commercial banking teams with an emphasis on data driven decisions, profitability models, and alignment around our key bankers. Our team achieved strong C and I production in q two, where on an average basis, our C and I loans grew at an annualized rate of nearly 13%. These strong C and I production levels are hidden from a point to point growth perspective by large paydowns in the last two weeks of the quarter.

Where we clearly see the enhancement in C and I client growth is in our continued lift in loan origination and swap fees, as well as our growing treasury management revenue for the quarter. While economic uncertainty around tariffs and interest rate levels has clearly slowed origin and industry expectations for loan growth, I like our momentum of originations, fees, margin, and remain encouraged by our pipelines. Optimize is not just about expense reduction. It is a blueprint to drive return levels through deeper insight into data, alignment of processes with strategic investments in technology, automation, and people. Origin’s culture and geographic model creates a platform that strategically allows us to attract talented bankers who have a shared vision and purpose, delivery, and relationships.

As we have reduced FTE levels, we continue to identify and recruit bankers that are centers of influence, and it can drive significant profitable growth throughout our markets. In 2025, we’ve been successful in hiring highly effective business development bankers in Louisiana, Houston, and our Southeast market, while we also recently added a strong market leader in Fort Worth. Through Origin’s history, we have shown an ability to attract bankers and lift out teams as a significant growth strategy during periods of market disruption. We believe we are well positioned to take advantage of any opportunities that will arise from bank mergers throughout our markets. As Drake mentioned, we continue to execute on our detailed plan to optimize Origin.

Using our data driven approach, we believe that we have opportunities to further enhance revenues in our treasury management and our commercial card programs. This was a takeaway from our third party benchmarking project. Furthermore, we believe we have significant efficiency opportunities by improving our organizational structure, which will be a sizable undertaking that we are in the early stages of developing. We believe this structure change can enhance our speed, responsiveness, and nimbleness around delivery to our clients, more effectively utilize technology, create scalable processes, improve efficiencies, and ultimately drive growth and profitability. An important part of Optimize Origin has been to better utilize data to improve strategic decision making.

This has been seen through our branch efficiency, banker profitability, and the restructuring of our mortgage business. Additionally, we are in the early stages of a large plan to centralize data within our organization to improve processes and outputs throughout our company. There are multiple strategic projects underway that should result in lower expenses and increased revenue. So far, we have identified approximately 4 to $5,000,000 of annualized pretax earning benefits from these projects. I’m proud of our team and their commitment toward embracing Optimize Origin.

I’m confident that we have the right focus as we head into the second half of the year. Now I’ll turn it over to Jim.

Jim Crotwell, Chief Accounting Officer, Origin Bancorp: Thanks, Lance. As I’ve shared on prior calls, beginning the second quarter of last year, we began to proactively exit relationships that were determined to not fit our client selection criteria. During the second quarter, we achieved approximately $50,000,000 in additional desired reductions, bringing the total targeted reductions to approximately $250,000,000 since we began this initiative. While this has been a headwind to portfolio growth, this optimization of our portfolio will serve us well moving forward. Total past due loans held for investment decreased to 0.88% at quarter end compared to 0.96% for Q1 twenty twenty five.

Classified loans as percent of total loans were stable for the quarter, decreasing to 1.66% at quarter end from 1.68% as of March 31. Non performing loans increased moderately to 1.11% of total loans compared to 1.07% for the prior quarter, primarily driven by four relationships being placed on non accrual during the quarter, offset by the payoff in payments in two non accrual relationships. Net charge offs for the quarter came in at $2,300,000 net of $1,400,000 in recoveries, a reduction from the $2,700,000 in net charge offs reported for Q1. On an annualized basis, net charge offs were 0.12% for the quarter and 0.13% annualized year to date. For the quarter, our allowance for credit losses increased $415,000 and ended the quarter at $92,400,000 On a percentage basis, our allowance increased from 1.28% to 1.29% net of mortgage warehouse.

We continue to focus on the Moody’s S-two scenario as the basis of our economic forecast within our CECL model. While we continue to make minor adjustments to the economic forecast portion of the reserve, we did not experience any significant changes in our CECL model since current economic headwinds are factored into this scenario. Lastly, as to total ADC and CRE, we continue to have ample capacity to meet the needs of our clients and grow this segment of our portfolio, reflecting funding to total risk based capital of 49% for ADC and 228% for CRE. We continue to be pleased with the performance of our portfolio and are well positioned to support our customers and provide strategic growth. I’ll now turn it over to Wally.

Wally Wallace, Chief Risk Officer, Origin Bancorp: Thanks, Jim, and good morning, everyone. Turning to the financial highlights. In Q2, we reported diluted earnings per share of $0.47 As you can see on slide 25, the combined financial impact of notable items during the quarter equated to a net expense of $15,600,000 equivalent to $0.39 in EPS pressure. On the balance sheet side, loans increased 1.3% sequentially, but decreased 1% when excluding mortgage warehouse. Total deposits declined 2.6% during the quarter and excluding brokered declined 2.3.

While non interest bearing deposits declined 2.5% sequentially, we note they remain stable at about 23% of total deposits, and we continue to anticipate they will remain in the 22% to 23% range through 2025. And looking at the decline in total deposits during the quarter, about 45% was driven by what we attribute to normal seasonality in our public funds customers. We also believe uncertainty in the current environment has led to some customers utilizing excess cash on hand to pay down outstanding loan balances, causing some pressure on both sides of the balance sheet. Given the loan and deposit declines on a year to date basis, we have reduced twenty twenty five growth guidance to low single digits for both. Turning to the income statement.

Net interest margin expanded 17 basis points during the quarter to 3.61%. Included in margin this quarter was Argent’s annual shareholder dividend, which was a four basis point benefit to NIM. As Drake mentioned, we are very excited that we increased our ownership in Argent to 20% in July. As a result, moving forward with the equity method of accounting, we will no longer be recording this dividend through net interest income. Rather, we will be recording our portion of Argent ownership through our noninterest income line.

We remain pleased that deposit costs continue to trend in line with our historical beta trends, and loan pricing remains disciplined across our markets. Moving forward, as you can see in our outlook on slide four, due primarily to a higher starting point in Q3 twenty twenty five, we increased our margin guidance by 20 basis points to 3.7% in 4Q twenty twenty five and by 10 basis points to 3.55% for the full year, plus or minus five basis points. Our modeling now considers 25 basis point Fed funds rate cuts in September and December. Shifting to noninterest income, we reported $1,400,000 in Q1. Excluding $14,600,000 in net pressures from notable items in 2Q and $100,000 in net benefits in Q1, noninterest income increased to $16,000,000 from $15,500,000 in Q1, due in large part to normal seasonality in our mortgage business and continued strength in our customer swap business, partially offset by a timing related decline in fee income in our insurance business.

Primarily as a result of triggering the equity method of accounting for our Argent ownership, we have increased our guidance, excluding notable items, to growth of low double digits for Q4 twenty twenty five over Q4 twenty twenty four. Our noninterest expense decreased slightly to $62,000,000 in 2Q from $62,100,000 in 1Q. Excluding $1,000,000 of notable items in Q2 and $2,100,000 in Q1, noninterest expense increased slightly to $61,000,000 from $60,000,000 in Q1, slightly better than our expectations. In the back half of twenty twenty five, we anticipate our expense run rate will be relatively flat compared to Q2, and we are maintaining our prior expense guidance. Lastly, turning to capital, we note that Q2 tangible book value grew sequentially to $33.33 the eleventh consecutive quarter of growth, and the TCE ratio ended the quarter at 10.9%, up from 10.6% in Q1.

Consistent with prior commentary, we believe our capital levels provide us with flexibility to deploy capital opportunistically. And during the quarter, we repurchased 136,399 shares at an average price of $31.84 Yesterday, we announced the authorization of a new $50,000,000 repurchase plan effective through July 2028. As shown on Slide 24, all of our regulatory capital levels at both the bank and holding company levels remain above levels considered well capitalized. As such, we remain confident that we have continued capital flexibility to take advantage of any additional future capital employment opportunities to drive value for our shareholders. With that, I will now turn it back to Drake.

Drake Mills, Chairman, President and CEO, Origin Bancorp: Thanks, Wally. I’m very proud of the work our team is doing to optimize Origin. As we head into the back half of twenty twenty five, we are well positioned in the nation’s most dynamic markets, and I have full confidence that our employees will continue to deliver exceptional value to all our stakeholders. I believe there is tremendous opportunity ahead of us, and I’m excited about our ability to capitalize on that opportunity. I wanna thank you for your support, and we’ll open it up for questions.

Tom, Evercore Coordinator, Evercore: Thank you, team. Ladies and gentlemen, at this time, we will conduct the question and answer session. Session. Our first question comes from Matt with Stephens. Matt, your line is open.

You may proceed.

Matt, Analyst, Stephens: Hey, good morning. Thanks for taking the question. I’ll start with the net interest margin. And while you mentioned you’re expecting that margin to approach that 3.7% level by the fourth quarter, which obviously implies some good expansion from these levels, can you just kind of walk us through the expectations for the third quarter? And just trying to appreciate the ramp into the fourth quarter.

And what are some key items we should be thinking about that can get us to the 3.7% level from the 2Q levels? Thanks,

Wally Wallace, Chief Risk Officer, Origin Bancorp: Matt. So I’ll first point out that the second quarter did have the benefit of our annual dividend from Argent, which was which was a four basis point benefit. Outside of that, we’ve had tailwinds all year from our loans repricing at spreads that are relatively strong, but at, you know, loan pricing overall that’s significantly higher from loans that were booked, say, three, four years ago. That’s a tailwind that we continue to expect moving forward, not just third quarter and fourth quarter, but through next year. In our modeling, we put two Fed cuts in.

We had a cut in June and September. Those moved to September and December in our modeling. The forward curve suggests there’s another two cuts, and it’s close to three cuts through next year. We put those in our modeling, but the tailwind from the loan repricing and the securities repricing through next year would suggest that one will have benefits in the back half of this year, and we think we can hold the line through next year with those cuts. It’s probably worth acknowledging that there are some pricing pressures in the market from competition on spreads.

So if we if we see loan growth accelerating, you could see margin coming in kinda towards the lower end of that guidance range that we put in the deck. But but if if not, then we could come in towards the higher end. I I think that’s the way I would steer you as you think about your modeling.

Matt, Analyst, Stephens: Okay. Thanks for the color, Wally. And then just as a follow-up, I guess, kind of switching gears, want to ask more about the loan growth. And Lance mentioned the paydowns in the final weeks of quarter from some customers, just lower utilization. Any more details behind that as you talk with the customers as far as kind why they decided to do that now?

And then longer term, you’ve talked about getting back to a high single digit growth level or even low double digit at some point. Just talk more about the longer term investments you’ve made and when do you expect a more normalized kind of typical origin level of loan growth to start kicking in? Thanks.

Lance Hall, President and Chief Financial Officer, Origin Bank: Yeah. Hey. Thanks. Good morning. Appreciate the question very much.

Yeah. So very optimistic on our ability to continue to drive loan growth. You are correct And that what our presidents and our banking teams have kind of been dealing with is, you know, just a little unsurety around what tariffs we’re gonna do on large commercial projects. I think we had a lot of clients that expected rates to be decreased by now, which has put some projects on hold. We actually saw an interesting dynamic, you know, this quarter, but a little bit in the first quarter too of some customers that had really large deposit balances make the decision to reduce that cash and paper projects versus using debt, and it was stuff that we had in the pipelines.

And so that’s some headwinds that that we faced, in that regard. You know, that being said, as I kinda study and look at production, our our our rigid we’ve had nice growth in our origination volumes, and that has really kinda led to really nice growth in loan and swap fee revenue, nice lifts, on the C and I side specifically as our focus has really been around C and I and, owner occupied real estate. And so we’ve had sort of the best quarter we’ve had in treasury management revenue, swap revenue, and and so I’m very bullish on how that continues to grow. As I think about the second half of this year, I mean, it’s still a little bit muted, from the size of projects. You know, we’re probably thinking, you know, mid single digit annualized.

I think two to two and a half percent probably growth from the markets on commercial growth, the back half of this year. And then, you know, I would conservatively kind of think through mid to high single digits for 2026. Now that being said, as I think about what’s going on in the industry from a consolidation perspective, I mean, that creates tremendous opportunity for us. I mean, you know our our history and our story. If if we’ve done anything well over the years, it is to build a culture, that is attractive to dynamic bankers and banking teams.

And as we are already seeing acquisition consolidation, you know, in Texas and North Louisiana and Mississippi, you know, I think that creates tremendous opportunity for for Origin, in the way that we like to do it. I mean, we we wanna be a lift out strategy organization, and I think that falls right into our benefit. So, I think that’s gonna continue to drive real opportunity. You know? All that being said, we are singularly focused on our ROA run rate, and so pricing discipline is critical.

The use of our pricing models, Wally and his team have done an amazing job of bringing us access to information that we’ve not had before. And so, you know, it is not gonna be growth for growth’s sake for us. This is really gonna be around the right kind of growth, the right kind of industries, the right kind of credit profile, the right kind of pricing discipline around relationships, and, I feel very confident we can do both.

Drake Mills, Chairman, President and CEO, Origin Bancorp: Hey, Matt. This is Drake. I wanna add to that. An example of some, I guess, growth headwinds on the loan side is utilization rates went from 53% to 50, and that was based on cash utilization. Our clients, you know, utilized during that, which represented about $83,000,000 in reduction in in line utilization.

So, again, glad that our our clients are have strength and are, you know, taking those opportunities. It also hits us on the deposit side.

Matt, Analyst, Stephens: Okay. I’ll hop back in the queue, but appreciate the update, and congrats on the results.

Tom, Evercore Coordinator, Evercore: Our next question comes from Michael with Raymond James.

Michael, Analyst, Raymond James: Maybe maybe I’ll just start a easy one just on the on the buyback. It looks like you guys put you know, bought back a little bit of stock. It looks like it was below tangible book, new new $50,000,000, you know, program. You guys are now over tangible book, you know, hopefully moving higher. But wanted to kind of gauge the the appetite here, and just kinda circle up, capital.

And maybe if I can dovetail that with you know, just because we have seen some m and a, it doesn’t seem like that’s near term priority for you guys. But as the landscape plays out, I assume you’re still talking to you have conversations with banks. What what would be kind of your intermediate to longer term appetite for m and a? Thanks.

Drake Mills, Chairman, President and CEO, Origin Bancorp: Yeah. And let me address the first part of your question. From the standpoint of capital utilization, we we feel pretty comfortable that, we have an opportunity to redeem $75,000,000 yeah. $75,000,000 of sub debt in the fourth quarter that is, beneficial to to our process of optimized origin. So we we, feel very comfortable, and that puts us basically, through last year and this year redeeming a 145,000,000, out of cash.

So awesome opportunity for us to to reduce leverage and take care of, you know, some of the opportunities we have for cash. So capital utilization, I feel very good about. That’ll put us still very good capital levels. And, you know, as far as m and a, we we love m and a. We were laughing about it.

When m and a is in our backyard, we seem to really flourish, you know, through our lift out strategies, and we have conversations moving on, and we just we we love to grow this institution through lift out. But not to say that we are not going to turn our back on opportunities. They just have to be quality deposit opportunities or core deposit opportunities for us, but we’ll have we continue to have those conversations.

Michael, Analyst, Raymond James: Helpful, Drake. And then maybe just given the reduction in growth expectations, it does look like you are going to be able to stay under $10,000,000,000 in assets. Is that kind of the plan? And then can you just remind us on maybe the thresholds could be moved? There’s been some talk around the $10,000,000,000 and what that could mean.

It doesn’t seem like Durbin would go away, though. So just any sort of considerations we should think about, $10,000,000,000 by the end of the year. And then when you do cross it, I think you you have all the the expenses kind of in place and the run rate, but just anything we should be thinking about related to crossing? Thanks.

Drake Mills, Chairman, President and CEO, Origin Bancorp: Well, I I can’t sit here and say that I’m I’m tickled that we’re gonna stay under 10 because it’s at the expense of what we thought would be stronger growth this year. I am very pleased with with everyone that we have we’re so focused on ROA growth that I think we’re making the right decisions, but allows us to push off, Durbin, which is about 6,000,000 for us another year. But right now, the model shows that we’ll be right at that 10,000,000,000 at year end with with expected growth. So we’ll we’ll stay under that this year and, start to move forward. But, again, we’re we’re not holding our teams back, or we’re not doing things to to focus on any type of loss of opportunity through trying to stay under 10 b at this point.

Michael, Analyst, Raymond James: Alright. Thanks for taking my questions. I’ll step back.

Tom, Evercore Coordinator, Evercore: Thank you again, Michael. Our next question comes from Woody with KBW. Woody, your line is open. You may proceed.

Woody, Analyst, KBW: Hey, good morning, guys. Wanted to follow-up on capital utilization and touch on the securities restructure we saw in the quarter. Just wanted to get your thoughts on sort of why this quarter to execute on the restructure. Is it a reflection of loan growth pulling back? And then how do you evaluate future restructures from here?

Wally Wallace, Chief Risk Officer, Origin Bancorp: Hey, Woody. We actually had this restructure trade teed up in the first quarter. We like we like the payback math on it. We we felt like we had the capital levels to absorb the impact on the regulatory capital levels. Obviously, it’s already carried carried in the tangible capital levels.

We backed off of the trade when the markets got extremely volatile around the tariff announcements. We saw an opportunity early in the second quarter to take advantage of some spread changes where we’d executed a small portion of the trade, and then we saw volatility improve significantly as the quarter played on. So we decided to go ahead and bring that trade back to the table. This is one that we’d been considering as part of Optimize Origin, since the end of last year. The payback math, as you can see, is a little bit higher than it was in the one that we executed towards the end of last year.

As far as large loss trades go, this is is it. We don’t see any other opportunity in our portfolio. That said, we monitor markets on a daily basis. And if there’s any spread opportunities that create opportunity for us to, on the margin, make decisions that improve the risk profile or improve the, earnings profile of the portfolio, then then we will discuss and, make a decision on whether or to execute those. But I think that we’re not looking at any large scale trades from here.

Woody, Analyst, KBW: Got it. That that’s helpful. Maybe and then maybe shifting over to Arjun. I mean, seeing the announcement was was great to see. Is there an opportunity going forward to to increase ownership which would which would boost forward fee income, or are you pretty content with, the current level of ownership?

Lance Hall, President and Chief Financial Officer, Origin Bank: Yeah. Hey, Woody. This is Lance. Good morning. No.

I I I think you’re gonna see us stay consistent kind of in that 20 to 25% ownership level, and and, you never know what happens in the future, but that’s our that’s our and argent strategic plan for the moment.

Woody, Analyst, KBW: Got it. And then maybe just last for me. You called out some, you’re continuing to re underwrite expenses. Just wanted some high level thoughts on sort of how that process is going and sort of timing of additional expense opportunities?

Drake Mills, Chairman, President and CEO, Origin Bancorp: Yeah. I I think through Optimize Origin, we’re looking at as much revenue enhancement as we are, you know, expense cuts. We we we’ve communicated openly that, we are working with a third party benchmarking firm to look at reorganization of the company. We think there are some opportunities for us to, consolidate some market expenses, you know, to be able to reduce or be a little bit more efficient. But the projects are really around revenue enhancement, you know, data models to to better utilize data to make better decisions and to also allow our relationship managers to to be more responsive and and really focus on ROEs through relationships more than anything else.

Process improvement is gonna be, I think, one of the areas that we could potentially see some reduced expenses. We still are using robotics to, manage our manual processes, reduce manual processes, which we see creating efficiency. You know, AI is certainly part of going beyond robotics and and increasing technology that allows us to make better decisions through data. But, you know, ultimately, growth to enhance and banker capacity is where I think the ultimate drive for us. In other words, we we think we can the percentage of time in front of our clients can be significantly enhanced and and grown through these processes we’re going through.

So it’s gonna be a combination of revenue enhancement, expense management, and, growth in revenue streams that that you’ll see in the next coming months. But Optimize Origin is is, on its way. We’ve had some excellent progress. Feel very comfortable that you’ll see some additional progress as we go through the quarters.

Woody, Analyst, KBW: It’s great to hear. Alright.

Tom, Evercore Coordinator, Evercore: If I could I

Wally Wallace, Chief Risk Officer, Origin Bancorp: would just add, Woody, that in the in the script script, you might have heard the, the comment I made that our expectation for expenses in the back half of the year are flat run rate from the second quarter after notable items. I wouldn’t expect to see declines in expenses.

Woody, Analyst, KBW: Got it. All right. That’s helpful. Thanks for taking my questions.

Tom, Evercore Coordinator, Evercore: Thank you again, Woody. Our next question comes from Manuel with D. A. Davidson. Manuel, your line is open.

You may proceed.

Manuel, Analyst, D.A. Davidson: Hey. I just had to it’s hard to kind of learn a lot more about Arjun. Can you talk a little bit about what you you your expectations on growth there? And potentially, would there be a write up? I just haven’t heard, if that could be something that happens in the third quarter.

Lance Hall, President and Chief Financial Officer, Origin Bank: So, yeah, hey. This is Lance. Thanks thanks for the question. Wally and I, then obviously, Drake’s very intimate with the real understanding the relationship. I mean, it’s a little bit sensitive for us.

That is a, you know, a private company that we are an investor in. We don’t own or control, Argent. So, you know, sharing their information, you know, other than sort of high level is probably not something that we’re completely at our liberty to do, although we have a great working relationship with management. There there was recently some public information out around, their acquisition of Huntington’s corporate trust business where they were, projecting to be about 175,000,000,000 in assets under administration. Wally works closely with their CFO, which is sort of where they were able to kinda get to the, you know, pro form a $6,000,000 flowing into our income statement in 2026.

And so, you know, we’ll we’ll we’ll, over the years, kinda work with them to kinda give you the meaningful information that you need, and we’ll we’ll commit to that.

Manuel, Analyst, D.A. Davidson: Potential for a write up?

Wally Wallace, Chief Risk Officer, Origin Bancorp: Yeah. So in the in the third quarter financials, due to the the the transactions that occurred that we were a part of, we did we weren’t the only transaction, the valuation that those transactions occurred in will result in a wreck write up of the final, if you will, carrying value of of our investment in Arjun. That write up equates to about $7,000,000. Moving forward, with the equity method accounting, the the write up of the investment will occur through the income statement, and that’s the $6,000,000 annualized benefit kinda starting in 02/1926. We still have some accounting work to do where where we gotta do a final valuation to help us understand the impact of customer intangibles to us and the acquisition that Lance mentioned has to close before we get kind of final expectations on how that will impact earnings.

So so, yes, there will be a write up in the third quarter, plus we will we expect to accrue for earnings, and then any further changes in the valuation will occur through the income statement, not through write ups or or write downs.

Manuel, Analyst, D.A. Davidson: I I appreciate any of these preliminary comments. I totally understand there’s a lot of moving parts here. Separately, can I have a little bit of a regional update? I’m just always intrigued by the Southeast Region with the Alabama and Florida business. How is that ramping?

But but just any any kind of regional update would be fantastic.

Lance Hall, President and Chief Financial Officer, Origin Bank: Yeah. This this is Lance again. Really, really pleased with Dayton, Robin, and Steve and the whole team that we have down in the Southeast. We’re seeing nice progress on that. Kinda like we’ve seen a little bit of the markets, a little bit of delay in sort of pipelines getting executed because of some of the tariff concerns, but the pipelines remain strong.

We continue to be incredibly bullish in in Texas, obviously, in how that economy is working. We have dynamic teams. Again, as I as I look you know, it’s a little muted because of sort of the lack of growth, but you look at where the production’s coming from. We’re continuing to see nice C and I production in in Houston specifically, but also in North Texas. Louisiana and Mississippi are actually ahead of budget this year.

We’ve actually had about 8% growth in Louisiana and about 5% growth in Mississippi, which were greater than we had anticipated. So, you know, we get some understanding kind of what what the tariffs are gonna be. We get some norm normal levels of utilization on our lines. I think it creates tremendous opportunity.

Manuel, Analyst, D.A. Davidson: I I appreciate that commentary. Thank you.

Tom, Evercore Coordinator, Evercore: Thank you again, there are currently no further questions. Handing it back to Drake Mills for any final remarks.

Drake Mills, Chairman, President and CEO, Origin Bancorp: I wanna thank everyone for being on the call. At this point, am extremely pleased with our progress the teams have made in optimizing Origin. We we are extremely focused on profitable growth, which I think is underlying to the change in culture. Utilization of technology to minimize expense growth has been leader in the process of Optimize Origin, expanding current relationships with, for better customer ROEs, continue to leverage our rural deposit base to lower our funding costs, and a strong focus on strengthening credit culture, through client selection has been the early wins this year as we continue to go through the second half. So our future is bright.

Very excited about where we are, and I’m pretty confident that we’re gonna be successful. I appreciate each one of your support, the time on this call, and, we’re available for questions if anybody needs to, have a conversation with us. So, again, thank you for your time. Thank you for your support.

Tom, Evercore Coordinator, Evercore: Ladies and gentlemen, this concludes today’s Evercore. Thank you, and have a great day.

Chris Riegelman, Director of Investor Relations, Origin Bancorp0: The host has ended this call. Goodbye.

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