- Origin Bancorp (OBK, Financial) reports a 57% increase in net income to $22.4 million for Q1 2025.
- Net interest margin expanded by 11 basis points; total deposits grew by 1.4% to $8.34 billion.
- Credit quality metrics show increases in past due, nonperforming, and classified loans.
Origin Bancorp, Inc. (OBK) recorded a significant rise in profitability for the first quarter of 2025. The company's net income surged by 57% to $22.4 million, translating to $0.71 diluted earnings per share (EPS), compared to $14.3 million and $0.46 EPS in the final quarter of 2024. This impressive performance was accompanied by a modest 0.2% increase in loans held for investment, totaling $7.59 billion, and a 1.4% uptick in total deposits, which reached $8.34 billion.
The bank's net interest income marked an incremental rise of $78.5 million, with the net interest margin expanding by 11 basis points to 3.44%. The increase was attributed to a 34 basis point reduction in the rates paid on interest-bearing liabilities, offsetting a 12 basis point decline in asset yields.
In a strategic move, Origin Bancorp launched the "Optimize Origin" initiative in January 2025, aiming to achieve a ROAA (Return on Average Assets) run rate of over 1% by the fourth quarter of 2025. The strategy focuses on branch consolidations, headcount reductions, and other efficiency measures, anticipated to improve annual pre-tax pre-provision earnings by $23.4 million.
Despite these positive developments, the credit quality of Origin Bancorp's loan portfolio showed some areas of concern. The past due loans increased by 71.5% to $72.8 million, while nonperforming loans rose by 8.5% to $81.4 million. Classified loans also saw an increase of 7.5% to $127.7 million in Q1 2025. The bank attributed part of the deterioration in credit quality to litigation involving a former banker in their East Texas market.
Overall, while Origin Bancorp (OBK, Financial) reported solid financial performance and strategic initiative progress, the rising trends in problematic loans suggest a need for continued focus on credit management and risk mitigation.
