On January 24, 2024, Origin Bancorp Inc (OBK, Financial) released its 8-K filing, detailing its financial results for the fourth quarter and the full year of 2023. Origin Bancorp Inc is a financial holding company that operates through its subsidiary, Origin Bank, offering a wide range of financial services to various clients, including businesses, municipalities, and individuals. The bank's revenue is primarily derived from interest on loans and investments, as well as service charges and fees on deposit accounts.
Financial Performance and Challenges
Origin Bancorp Inc reported a net income of $13.4 million for Q4 2023, a significant decrease from $24.3 million in the previous quarter. The annual net income also saw a decline, with $83.8 million reported for the full year, down from $87.7 million in the previous year. This decrease in profitability is attributed to several factors, including a strategic decision to sell investment securities at a loss to build liquidity for loan growth, particularly in the new Southeast market. The bank's adjusted pre-tax, pre-provision earnings for Q4 stood at $26.7 million, a decrease from $30.7 million in the linked quarter.
Financial Achievements and Importance
The bank's total loans held for investment grew modestly by 1.2% to $7.66 billion in Q4. This growth reflects the bank's continued focus on expanding its loan portfolio, which is a critical component of its revenue generation. Additionally, the book value per common share increased by 6.1% to $34.30, indicating an improvement in the bank's intrinsic value.
Key Financial Metrics
Origin Bancorp Inc's balance sheet showed a decrease in total deposits by 1.5% to $8.25 billion in Q4, with a notable increase in non-brokered deposits. The provision for credit losses was $2.7 million for the quarter, compared to $3.5 million for the linked quarter, reflecting a stable credit risk profile. The bank's allowance for loan credit losses to nonperforming loans held for investment ratio improved to 321.66%.
"The moves we made in 2023 and the initiatives that we continue to prioritize are all aimed at long-term profitable growth," said Drake Mills, chairman, president, and CEO of Origin Bancorp, Inc. "Our expansion into South Alabama and the Florida Panhandle, along with strengthening the balance sheet give me great confidence as we move into the new year. Our business model is built to last, and more importantly, one that is scalable as we look to continue our growth trajectory."
Analysis of Company's Performance
Despite the decrease in net income and diluted EPS, Origin Bancorp Inc's strategic moves, including market expansion and balance sheet strengthening, position the company for potential long-term growth. The bank's solid loan growth and improved book value per share are positive indicators. However, the challenges posed by the sale of investment securities and the resulting liquidity build for loan growth will need to be managed carefully to ensure sustained profitability.
For detailed financial tables and a complete analysis of Origin Bancorp Inc's performance, please refer to the full 8-K filing.
Investors and stakeholders are encouraged to join Origin's conference call on January 25, 2024, to discuss these results further.
For more comprehensive insights and financial analysis, stay tuned to GuruFocus.com.
Explore the complete 8-K earnings release (here) from Origin Bancorp Inc for further details.
