Origin Bancorp Q3 Profit Rises 11.6% as Margin Expands

Origin Bancorp, Inc. reported stronger third-quarter profitability as higher net interest income and lower expenses supported an 11.6% sequential increase in net income, while growth in loans excluding mortgage warehouse lines offset a sharp decline in that category.

The Ruston, Louisiana-based bank holding company posted third-quarter 2026 net income of $37.8 million, up from $33.8 million in the second quarter. Diluted earnings per share rose to $1.22 from $1.09, and annualized return on average assets increased to 1.47% from 1.35%.

Pre-tax, pre-provision earnings, a non-GAAP measure, increased to $50.7 million from $43.2 million. The corresponding annualized PTPP return on average assets rose to 1.97% from 1.73%. Non-GAAP return on average tangible common equity was 13.27%, compared with 12.17% in the prior quarter.

Margin and expense trends support earnings

Fully tax-equivalent net interest margin expanded by 2 basis points sequentially and 29 basis points from a year earlier to 3.94%. Net interest income increased by $2.9 million from the second quarter to $95.1 million, reflecting higher contributions from the loan portfolio outside mortgage warehouse lending and investment securities.

The yield on loans held for investment increased to 6.17% from 6.14% in the second quarter. The cost of total deposits edged up to 2.01% from 1.99%, but remained 45 basis points below the year-earlier level.

Total noninterest income was $18.1 million, up from $15.4 million in the second quarter. Major fee-based components included $7.3 million of insurance commission and fee income, $5.3 million of service charges and fees, and $2.6 million of other fee income. Other noninterest income benefited from $1.8 million of Argent investment income, partly offset by a $781,000 limited-partnership investment loss.

Noninterest expense declined to $62.5 million from $64.4 million. The efficiency ratio improved to 55.19% from 59.87%, as other noninterest expenses fell despite a modest increase in salaries and employee benefits. Origin identified $2.1 million of net notable items in the quarter, with an estimated contribution of $0.05 to diluted EPS.

Core lending grows as warehouse balances decline

Loans held for investment totaled $8.09 billion at September 30, up $20.6 million, or 0.3%, from the prior quarter. Excluding mortgage warehouse lines of credit, loans increased by $170.6 million, or 2.3%, to $7.65 billion.

The underlying increase included growth in owner-occupied commercial real estate, construction and land development, non-owner-occupied commercial real estate, and multifamily loans. Mortgage warehouse lines declined by $150.0 million to $439.7 million, while commercial and industrial loans decreased by $19.1 million to $2.12 billion.

Texas remained Origin’s largest market, representing 70% of loans excluding mortgage warehouse lines and 53% of deposits at quarter-end. The company also continued to emphasize investment in Texas and the Southeast, including Alabama and the Florida Panhandle.

Total deposits were $8.67 billion, down 0.3% from $8.70 billion in the second quarter. Money-market deposits increased, while noninterest-bearing and interest-bearing demand deposits declined. Uninsured and uncollateralized deposits were $3.35 billion, or 38.7% of total deposits, compared with 39.4% in the prior quarter.

Origin reported $4.62 billion of additional liquidity sources, plus $347.1 million of cash and cash equivalents. That represented 1.48 times uninsured, non-collateralized deposits. Borrowed funds were 0.36% of total liabilities at quarter-end.

Credit metrics remain mixed

Nonperforming assets decreased by $4.2 million from the second quarter to $75.1 million. They represented 0.93% of loans and other real estate owned, down from 1.18% a year earlier and the lowest percentage reported for the past five quarters.

Other credit indicators moved less favorably. Loans past due 30 to 89 days and still accruing increased to $10.3 million from $5.2 million in the second quarter. Net charge-offs rose to $2.7 million from $454,000, equivalent to an annualized charge-off rate of 0.13%. The provision expense for loan credit losses was $2.9 million, compared with a $373,000 provision benefit in the prior quarter.

The allowance for loan credit losses was $98.4 million, equal to 1.22% of total loans held for investment. Classified assets represented 1.84% of loans and other real estate owned, down from 1.97% in the second quarter.

Outlook targets further margin progression

For the fourth quarter, management expects high-single-digit year-over-year loan growth excluding warehouse lending and mid- to high-single-digit deposit growth. The company projects a fully tax-equivalent net interest margin of 4.00%, plus or minus 5 basis points, and low-double-digit net interest income growth. Its outlook assumes a 25-basis-point interest-rate increase in December 2026.

Origin expects fourth-quarter noninterest income, excluding notable items, to be flat to slightly lower year over year and noninterest expense to grow at a mid-single-digit rate. Management is targeting a PTPP return on average assets above 1.85% for the quarter.

For full-year 2026, the company expects a net interest margin of 3.85%, plus or minus 5 basis points, low-double-digit net interest income growth, and low-single-digit noninterest income growth, excluding notable items. It projects high-single-digit loan growth excluding warehouse lending, mid- to high-single-digit deposit growth, mid-single-digit expense growth and PTPP return on average assets above 1.75%.

Origin repurchased 272,927 shares during the quarter at an average price of $54.21, leaving $106.8 million available under its repurchase authorization. In October, the board increased the quarterly dividend to $0.28 per share from $0.25. The company also transferred its common-stock listing from the NYSE to the Texas Stock Exchange, effective October 13, 2026.

The outlook remains subject to changes in benchmark interest rates, deposit costs, borrower financial stress, real-estate values, credit quality and liquidity conditions. Origin also cited competition, regulatory requirements, cybersecurity threats, operational risks and its exposure to commercial borrowers and construction projects among the factors that could cause results to differ from its expectations.