Origin Bancorp Inc.

11/06/2026 | Press release | Distributed by Public on 11/06/2026 13:40

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
Unless the context indicates otherwise, references in this report to "we," "us," "our," "our company," "the Company" or "Origin" refer to Origin Bancorp, Inc., a Louisiana corporation, and its consolidated subsidiaries. All references to "Origin Bank" or "the Bank" refer to Origin Bank, our wholly-owned bank subsidiary.
The following discussion and analysis presents our financial condition and results of operations on a consolidated basis. However, we conduct all of our material business operations through our wholly-owned bank subsidiary, Origin Bank, the discussion and analysis that follows primarily relates to activities conducted at the Bank level.
The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and related condensed notes contained in Item 1 of this report. To the extent that this discussion describes prior performance, the descriptions relate only to the periods listed, which may not be indicative of our future financial outcomes. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause results to differ materially from management's expectations. Factors that could cause such differences are discussed in the sections titled "Cautionary Note Regarding Forward-Looking Statements" and "Item 1A. Risk Factors" and in the section titled "Risk Factors" in our 2025 Form 10-K. We assume no obligation to update any of these forward-looking statements.
General
We are a financial holding company headquartered in Ruston, Louisiana. Origin's wholly owned bank subsidiary, Origin Bank (the "Bank"), was founded in 1912 in Choudrant, Louisiana. Deeply rooted in Origin's history is a culture committed to providing personalized relationship banking to businesses, municipalities, and personal clients to enrich the lives of the people in the communities it serves. Origin provides a broad range of financial services and currently operates more than 57 locations in Dallas/Fort Worth, East Texas, Houston, North Louisiana, Mississippi, Alabama and the Florida Panhandle. In addition, Origin provides a broad range of insurance agency products and services through its wholly owned insurance agency subsidiary, Forth Insurance, LLC. As a financial holding company operating through one segment, we generate the majority of our revenue from interest earned on loans and investments, service charges and fees on deposit accounts.
We incur interest expense on deposits and other borrowed funds and noninterest expense, such as salaries and employee benefits and occupancy expenses. We analyze our ability to maximize the income generated from interest-earning assets and minimize expense of our liabilities through our net interest margin. Net interest margin is a ratio calculated as net interest income divided by average interest-earning assets. Net interest income is the difference between interest income on interest-earning assets, such as loans, securities and interest-earning cash, and interest expense on interest-bearing liabilities, such as deposits and borrowings. Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
Changes in market interest rates and the interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as in the volume and types of interest-earning assets and interest-bearing liabilities are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income.
Our Optimize Origin initiative, announced in January 2025 and designed to drive elite financial performance and enhance our award-winning culture, remains an integral part of our corporate DNA.
•Built on three primary pillars:
◦Productivity, Delivery & Efficiency
◦Balance Sheet Optimization
◦Culture & Employee Engagement
•We continue to work towards our ultimate top quartile ROAA target.
2026 Third Quarter Key Metrics
•Net income was $37.8 million three months ended September 30, 2026, reflecting an increase of $29.2 million, or 338.1%, compared to the three months ended September 30, 2025.
•Net interest income was $95.1 million for the three months ended September 30, 2026, reflecting an increase of $11.4 million, or 13.7%, compared to the three months ended September 30, 2025.
•Our fully tax equivalent net interest margin ("NIM-FTE") increased 29 basis points for the quarter ended September 30, 2026, compared to the quarter ended September 30, 2025. This expansion was driven primarily by a 52-basis point reduction in rates paid on interest-bearing liabilities, offset by a 13-basis point decline in our yield earned on interest-earning assets.
•Total loans held for investment ("LHFI") were $8.09 billion at September 30, 2026, reflecting an increase of $423.3 million, or 5.5%, compared to December 31, 2025. LHFI, excluding mortgage warehouse lines of credit, were $7.65 billion at September 30, 2026, reflecting an increase of $512.4 million, or 7.2%, compared to December 31, 2025.
•Total deposits were $8.67 billion at September 30, 2026, reflecting an increase of $365.9 million, or 4.4%, compared to December 31, 2025. Noninterest-bearing deposits were $2.18 billion, reflecting an increase of $196.6 million, or 9.9%, compared to December 31, 2025.
•During the quarter ended September 30, 2026, we repurchased 272,927 shares of our common stock at an average price of $54.21 per share, including broker commissions and applicable excise taxes.
•In October 2026, our board approved an increase in our quarterly dividend from $0.25 to $0.28 per share, a 12% increase. Combined with the $0.10 per share increase approved in April 2026, the quarterly dividend has increased from $0.15 to $0.28 per share, or 87%, reflecting our strong balance sheet and durable earnings.
Comparison of Results of Operations for the Three Months Ended September 30, 2026 and 2025
Our net income increased $29.2 million, or 338.1%, to $37.8 million for the three months ended September 30, 2026, from $8.6 million for the three months ended September 30, 2025. Diluted EPS increased $0.95 to $1.22 per share for the three months ended September 30, 2026, compared to $0.27 per share for the three months ended September 30, 2025. The increase was primarily due to a decrease of $34.2 million in provision expense for credit losses and an increase of $11.4 million in pre-provision net interest income, partially offset by an $8.0 million decrease in noninterest income and an $8.0 million increase in income tax expense for the three months ended September 30, 2026, compared to the three months ended September 30, 2025.
Net Interest Income and Net Interest Margin
Net interest income for the three months ended September 30, 2026, was $95.1 million, an increase of $11.4 million, or 13.7%, compared to the three months ended September 30, 2025. The increase was due to a $7.5 million decrease in interest expense and an increase of $3.9 million in total interest income during the three months ended September 30, 2026, compared to three months ended September 30, 2025.
The $7.5 million decrease in interest expense was mainly due to decreases of $6.9 million and $892,000 in interest expense on interest-bearing deposits and subordinated indebtedness, respectively. Of the $6.9 million decline in interest on interest-bearing deposits, $8.7 million was attributable to lower interest rates, partially offset by a $1.7 million net increase resulting from higher net average balances, during the three months ended September 30, 2026, compared to the three months ended September 30, 2025. The $8.7 million decrease in interest expense due to lower rates was primarily due to decreases of $5.6 million and $2.2 million in interest expense on money market and interest-bearing demand deposits, respectively. The benefit of these lower rates was partially offset by a $2.4 million increase in interest expense on money market deposit balances attributable to an increase of $267.8 million in average money market deposit balances for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. In addition, interest expense on subordinated debentures decreased $892,000 primarily due to the redemption of $74.0 million in principal amount of subordinated debentures during the quarter ended December 31, 2025, which reduced the average balance of subordinated debenture to $16.6 million for the three months ended September 30, 2026, from $89.7 million for the three months ended September 30, 2025.
Interest income increased $3.9 million for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to an increase of $5.4 million in interest income on LHFI, partially offset by a $1.7 million decrease in interest income on interest-earning balances due from banks. The $5.4 million increase in interest income on LHFI was primarily due to a $9.0 million increase in interest income due to higher average balances partially offset by a $3.6 million decrease due to lower yields. The $9.0 million increase in interest income attributable to higher average LHFI balances was primarily due to increases in average balances of $169.9 million, $193.3 million and $97.6 million in commercial and industrial, commercial real estate, and construction/land/land development loans, respectively. The impact of higher average balances was partially offset by $3.6 million due to lower yields primarily attributable to commercial and industrial loans, which declined to 6.67% for the three months ended September 30, 2026, from 7.22% for the three months ended September 30, 2025, and reduced interest income by $3.0 million.
The Federal Reserve Board sets various benchmark rates, including the federal funds rate, and thereby influences the general market rates of interest, including the loan and deposit rates offered by financial institutions. The Federal Reserve Board reduced the federal funds target rate range three times, for a total of 75 basis points, during the second half of 2025, to a range of 3.50% to 3.75%. On September 16, 2026, the Federal Reserve Board raised the federal funds target rate range by 25 basis points, to a range of 3.75% to 4.00%.
The NIM-FTE was 3.94% for the three months ended September 30, 2026, a 29-basis point increase from 3.65% for the three months ended September 30, 2025. The improvement was mainly driven by an expanding interest rate spread, as the 52-basis-point decline in the average cost of total interest-bearing liabilities exceeded the 13-basis-point decline in the yield earned on interest-earning assets for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. The average rate on total interest-bearing liabilities for the three months ended September 30, 2026, was 2.70%, compared to 3.22% for the three months ended September 30, 2025. The average yield earned on total interest-earning assets for the three months ended September 30, 2026, was 5.76%, compared to 5.89% for the three months ended September 30, 2025.
The following table presents average balance sheet information, interest income, interest expense and the corresponding average yields earned, and rates paid for the three months ended September 30, 2026 and 2025.
Three Months Ended September 30,
2026 2025
(Dollars in thousands)
Assets
Average Balance(1)
Income/Expense
Yield/Rate(2)
Average Balance(1)
Income/Expense
Yield/Rate(2)
Commercial real estate $ 2,643,416 $ 39,273 5.89 % $ 2,450,148 $ 36,101 5.85 %
Construction/land/land development 742,095 12,654 6.77 644,455 11,454 7.05
Single-family residential real estate 1,432,824 19,917 5.51 1,460,412 20,004 5.43
Multifamily residential real estate 578,468 9,086 6.23 532,354 8,428 6.28
Commercial and industrial 2,164,704 36,393 6.67 1,994,755 36,283 7.22
Mortgage warehouse lines of credit 479,308 7,776 6.44 420,848 7,393 6.97
Consumer 18,859 336 7.07 20,652 385 7.40
LHFI 8,059,674 125,435 6.17 7,523,624 120,048 6.33
Loans held for sale 1,201 23 7.60 2,918 48 6.53
Loans receivable 8,060,875 125,458 6.17 7,526,542 120,096 6.33
Investment securities-taxable 969,386 8,844 3.62 951,758 8,767 3.65
Investment securities-non-taxable 196,079 1,632 3.30 176,051 1,523 3.43
Non-marketable equity securities held in other financial institutions 37,256 574 6.11 34,652 542 6.21
Interest-earning deposits in banks 375,478 3,527 3.73 473,352 5,211 4.37
Total interest-earning assets 9,639,074 140,035 5.76 9,162,355 136,139 5.89
Noninterest-earning assets 554,817 565,059
Total assets $ 10,193,891 $ 9,727,414
Liabilities and Shareholders' Equity
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits $ 1,812,819 $ 10,883 2.38 % $ 1,827,758 $ 13,170 2.86 %
Money market deposits 3,637,422 26,427 2.88 3,369,582 29,695 3.50
Savings deposits 309,898 918 1.18 314,112 1,194 1.51
Savings and interest-bearing transaction accounts 5,760,139 38,228 2.63 5,511,452 44,059 3.17
Time deposits 764,344 5,880 3.05 819,692 6,967 3.37
Total interest-bearing deposits 6,524,483 44,108 2.68 6,331,144 51,026 3.20
FHLB advances & other borrowings 57,246 543 3.76 30,702 273 3.53
Subordinated indebtedness 16,608 244 5.83 89,692 1,136 5.02
Total interest-bearing liabilities 6,598,337 44,895 2.70 6,451,538 52,435 3.22
Noninterest-bearing liabilities
Noninterest-bearing deposits 2,160,353 1,901,116
Other liabilities 147,406 147,329
Total liabilities 8,906,096 8,499,983
Shareholders' Equity 1,287,795 1,227,431
Total liabilities and shareholders' equity $ 10,193,891 $ 9,727,414
Net interest spread 3.06 % 2.67 %
Net interest income and margin $ 95,140 3.92 $ 83,704 3.62
Net interest income and margin - (tax equivalent)(3)
$ 95,628 3.94 $ 84,230 3.65
___________________
(1)Nonaccrual loans are included in their respective loan category for the purpose of calculating the yield earned. All average balances are daily average balances.
(2)Yields/Rates are calculated on an actual/actual day count basis.
(3)In order to present pre-tax income and resulting yields on tax-exempt investments comparable to those on taxable investments, a tax-equivalent adjustment has been computed. This adjustment also includes income tax credits received on Qualified School Construction Bonds and income from tax-exempt investments, and tax credits were computed using a federal income tax rate of 21%.
Rate/Volume Analysis
The following table presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. It distinguishes between the changes related to outstanding balances and those due to changes in interest rates. The change in interest attributable to rate changes has been determined by applying the change in rate between periods to average balances outstanding in the earlier period. The change in interest due to volume has been determined by applying the rate from the earlier period to the change in average balances outstanding between periods. For purposes of this table, changes attributable to both rate and volume that cannot be segregated, including the difference in day count, have been allocated to rate.
Three Months Ended September 30, 2026 vs. Three Months Ended September 30, 2025
(Dollars in thousands)
Interest-earning assets
Increase (Decrease) Due To Change In
Loans: Volume Yield/Rate Total Change
Commercial real estate $ 2,848 $ 324 $ 3,172
Construction/land/land development 1,735 (535) 1,200
Single-family residential real estate (378) 291 (87)
Multifamily residential real estate 730 (72) 658
Commercial and industrial 3,091 (2,981) 110
Mortgage warehouse lines of credit 1,027 (644) 383
Consumer (33) (16) (49)
Loans held for sale (28) 3 (25)
Loans receivable 8,992 (3,630) 5,362
Investment securities-taxable 162 (85) 77
Investment securities-non-taxable 173 (64) 109
Non-marketable equity securities held in other financial institutions 41 (9) 32
Interest-earning deposits in banks (1,077) (607) (1,684)
Total interest-earning assets 8,291 (4,395) 3,896
Interest-bearing liabilities
Interest-bearing demand deposits (108) (2,179) (2,287)
Money market deposits 2,360 (5,628) (3,268)
Savings deposits (16) (260) (276)
Time deposits (501) (586) (1,087)
FHLB advances & other borrowings 236 34 270
Subordinated indebtedness (926) 34 (892)
Total interest-bearing liabilities 1,045 (8,585) (7,540)
Net interest income $ 7,246 $ 4,190 $ 11,436
Provision for Credit Losses
The provision for credit losses, which includes the provisions for loan credit losses, off-balance sheet commitments credit losses and security credit losses, is based on management's assessment of the adequacy of our allowance for credit losses ("ACL") for loans, securities, and our reserve for off-balance-sheet lending commitments. Factors impacting the provision include inherent risk characteristics in our loan and security portfolios, the level of nonperforming loans and net charge-offs, both current and historic, local economic and credit conditions, the direction of the change in collateral values, reasonable and supportable forecasts, and the funding probability on unfunded lending commitments. The provision for credit losses is charged against earnings in order to maintain our ACL, which reflects management's best estimate of the life of loan/investment security credit losses inherent in our loan/security portfolios at the balance sheet date, and our reserve for off-balance-sheet lending commitments, which reflects management's best estimate of losses inherent in our legally binding lending-related commitments. The allowance is increased by the provision for loan credit losses and decreased by charge-offs, net of recoveries.
Total provision expense decreased by $34.2 million, to $2.6 million for the three months ended September 30, 2026, from $36.8 million for the three months ended September 30, 2025, due to decreases of $32.4 million and $1.8 million in provision expense for loan credit losses and off-balance sheet commitments, respectively. The elevated provision expense for loan credit losses recorded during the three months ended September 30, 2025, was largely due to the borrower fraud impacting the Tricolor Holdings, LLC loan relationship, which resulted in a $29.5 million increase in total provision expense, including a $28.0 million provision for loan credit losses and a $1.5 million provision for off-balance sheet commitments. The remaining decrease was primarily the result of lower risk embedded in our loan portfolio, reflected in favorable net credit migration. Net credit migration reflects the combined impact of loan risk rating changes, specific reserve adjustments, and loan balance movements, such as loan balance changes and payoffs.
Net charge-offs decreased $28.7 million, to $2.7 million for the three months ended September 30, 2026, from $31.4 million for the three months ended September 30, 2025. Of the decrease, $28.4 million was attributable to net charge-offs recognized in the three months ended September 30, 2025, related to the borrower fraud as discussed above. The allowance for loan credit losses to nonperforming LHFI increased to 135.77% for the three months ended September 30, 2026, compared to 109.04% for the three months ended September 30, 2025. The increase in the ratio is primarily the result of a $15.8 million decrease in nonperforming LHFI, primarily due to decreases of $4.9 million, $4.8 million and $2.4 million in nonperforming single-family residential real estate, commercial and industrial and multi-family residential real estate loans, respectively. $2.3 million of the decline in nonperforming LHFI was a result of net paydowns or payoffs of nonperforming loans, primarily in the construction/land/land development sector, impacted by the questioned banker activity first disclosed during the quarter ended June 30, 2024.
Noninterest Income
The table below presents the various components of and changes in our noninterest income for the periods indicated.
(Dollars in thousands) Three Months Ended September 30,
Noninterest income: 2026 2025 $ Change % Change
Insurance commission and fee income $ 7,335 $ 6,598 $ 737 11.2 %
Service charges and fees 5,324 4,965 359 7.2
Other fee income 2,639 2,262 377 16.7
Mortgage banking revenue 591 726 (135) (18.6)
Swap fee income 402 1,387 (985) (71.0)
Change in fair value of equity investments - 6,972 (6,972) (100.0)
Loss on sales of securities, net (30) - (30) N/M
Equity method investment income 1,059 550 509 92.5
Other income 760 2,668 (1,908) (71.5)
Total noninterest income $ 18,080 $ 26,128 $ (8,048) (30.8)
____________________________
N/M = Not meaningful.
Noninterest income for the three months ended September 30, 2026, decreased by $8.0 million to $18.1 million, compared to $26.1 million for the three months ended September 30, 2025. The decrease was primarily driven by a $7.0 million decrease in the change in fair value of equity investments, a $1.9 million decrease in other income, and a decrease of $985,000 in swap fee income. These decreases were partially offset by increases of $737,000 and $509,000 in insurance commission and fee income and equity method investment income, respectively.
Change in fair value of equity investments. The decrease of $7.0 million in the change of fair value of equity investments was primarily due to a fair value adjustment during the three months ended September 30, 2025, associated with our additional investment in Argent Financial. Our additional investment during the three months ended September 30, 2025, increased our ownership percentage above the threshold required to apply the equity method of accounting, which required the investment to be recorded at fair value immediately prior to the additional investment.
Other income. The $1.9 million decrease in other income was primarily due to the prior-year recognition of $2.1 million in insurance recoveries related to the questioned banker activity first disclosed during the quarter ended June 30, 2024.
Swap fee income. The $985,000 decrease in swap fee income was the result of lower customer swap activity during the current quarter and a change in the interest rate environment, reflecting reduced demand for hedging solutions compared to the three months ended September 30, 2025.
Insurance commission and fee income. The $737,000 increase in insurance commission and fee income is primarily the result of an increase of $544,000 in property and casualty insurance commission income during the three months ended September 30, 2026, compared to the three months ended September 30, 2025.
Equity method investment income. The $509,000 increase in equity method investment income was primarily attributable to a $613,000 increase in income recognized from the Company's equity method investment in Argent Financial during the three months ended September 30, 2026.
Noninterest Expense
The following table presents the significant components of noninterest expense for the periods indicated:
(Dollars in thousands) Three Months Ended September 30,
Noninterest expense: 2026 2025 $ Change % Change
Salaries and employee benefits $ 40,521 $ 37,863 $ 2,658 7.0 %
Occupancy and equipment, net 7,322 7,079 243 3.4
Data processing 3,854 3,526 328 9.3
Office and operations 3,040 3,184 (144) (4.5)
Professional services 1,266 1,395 (129) (9.2)
Intangible asset amortization 1,333 1,583 (250) (15.8)
Electronic banking 944 1,470 (526) (35.8)
Advertising and marketing 1,516 1,524 (8) (0.5)
Regulatory assessments 1,184 1,269 (85) (6.7)
Loan-related expenses 740 979 (239) (24.4)
Other expense 769 2,156 (1,387) (64.3)
Total noninterest expense $ 62,489 $ 62,028 $ 461 0.7
Noninterest expense for the three months ended September 30, 2026, increased by $461,000, or 0.7%, to $62.5 million, compared to $62.0 million for the three months ended September 30, 2025, primarily due to an increase of $2.7 million in salaries and employee benefits. The increase was offset by decreases of $1.4 million and $526,000 in other expense and electronic banking, respectively.
Salaries and employee benefits. The $2.7 million increase in salaries and employee benefits was primarily due to a $1.6 million increase in incentive compensation expense, including a $1.4 million increase in bonuses driven by improved performance. Also contributing to the increase was a net increase in salaries of $1.4 million primarily due to annual merit increases and a net increase of 6 full-time equivalent ("FTE") employees.
Other noninterest expense. The $1.4 million decrease in other noninterest expense was primarily due to a $2.2 million release of litigation reserve which was offset by an $883,000 charge, both of which relate to the settlement of certain litigation involving the questioned banker activity first disclosed during the quarter ended June 30, 2024.
Electronic banking. The $526,000 decrease in electronic banking expense was primarily driven by a total decrease of $388,000 in mobile banking and card processing expenses, predominantly as a result of contract renegotiations as part of Optimize Origin.
Income Tax Expense
For the three months ended September 30, 2026, we recognized income tax expense of $10.3 million, compared to $2.4 million for the three months ended September 30, 2025. The effective tax rate for both the three months ended September 30, 2026, and the three months ended September 30, 2025, was 21.5%.
Comparison of Results of Operations for the Nine Months Ended September 30, 2026 and 2025
Our net income increased $53.6 million, or 117.4%, to $99.3 million for the nine months ended September 30, 2026, from $45.7 million for the nine months ended September 30, 2025. On a diluted EPS basis, we reported $3.19 per share for the nine months ended September 30, 2026, compared to $1.46 per share for the nine months ended September 30, 2025.
Net Interest Income and Net Interest Margin
Net interest income for the nine months ended September 30, 2026, was $274.6 million, an increase of $30.3 million, or 12.4%, compared to the nine months ended September 30, 2025. The increase in net interest income was predominantly driven by a $26.6 million decrease in interest expense and a $3.7 million increase in interest income.
The $26.6 million decrease in interest expense was mainly attributable to decreases of $23.1 million and $3.8 million in interest expense on interest-bearing deposits and subordinated indebtedness, respectively. The decrease in interest expense on interest-bearing deposits was primarily driven by lower rates, which reduced interest expense on money market, interest-bearing demand and time deposits by $16.1 million, $7.5 million and $2.5 million, respectively. The benefit from lower deposit rates was partially offset by a $7.3 million increase in interest expense on money market deposits due to higher average balances, while lower average time deposit balances reduced interest expense by $3.1 million. The $3.8 million decrease in interest expense on subordinated indebtedness was primarily attributable to the redemption of $145.1 million in principal amount of subordinated debentures during the year ended December 31, 2025, which reduced the average balance of subordinated debentures to $16.6 million for the nine months ended September 30, 2026, from $101.0 million for the nine months ended September 30, 2025.
Total interest income increased $3.7 million for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to increases of $3.4 million and $2.8 million in interest income earned on LHFI and total investment securities, respectively. These increases were partially offset by a decrease of $1.3 million in interest income earned on interest-earning balances due from banks. The increase in interest income on LHFI was primarily attributable to a $15.6 million net increase due to higher average balances, which was offset by a $12.2 million net decrease due to lower yields. Of the $15.6 million increase due to higher average balances, $7.1 million, $5.9 million, $3.1 million and $3.1 million were attributable to commercial and industrial, commercial real estate, mortgage warehouse lines of credit and multifamily residential real estate, respectively. Of the $12.2 million decrease in interest income attributable to lower yields, $10.4 million and $1.9 million were attributable to commercial and industrial loans and mortgage warehouse lines of credit, respectively. The increase in interest income on investment securities was primarily driven by improved yields resulting from the execution of our bond portfolio optimization strategy during the intervening period with the most recent transaction occurring in June 2025, in conjunction with our Optimize Origin initiative, as well as, an increase in yields on principal cashflows that has been reinvested in higher yielding securities. The decrease in interest income on interest-earning balances due from banks was primarily attributed to $2.4 million due to lower yields, offset by $1.1 million increase due to higher average balances.
The NIM-FTE was 3.86% for the nine months ended September 30, 2026, a 29-basis point increase from 3.57% for the nine months ended September 30, 2025. The improvement was mainly driven by an expanding interest rate spread, as the 58-basis-point decline in the average rate on total interest-bearing liabilities exceeded the 16-basis-point decline in the yield on interest-earning assets for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The average rate on total interest-bearing liabilities for the nine months ended September 30, 2026, was 2.68%, compared to 3.26% for the nine months ended September 30, 2025. The average yield on total interest-earning assets for the nine months ended September 30, 2026, was 5.69%, compared to 5.85% for the nine months ended September 30, 2025.
The following table presents average consolidated balance sheet information, interest income, interest expense and the corresponding average yields earned, and rates paid for the nine months ended September 30, 2026 and 2025.
Nine Months Ended September 30,
2026 2025
(Dollars in thousands)
Assets
Average Balance(1)
Income/Expense
Yield/Rate(2)
Average Balance(1)
Income/Expense
Yield/Rate(2)
Commercial real estate $ 2,571,587 $ 111,692 5.81 % $ 2,435,301 $ 105,880 5.81 %
Construction/land/land development 682,276 34,660 6.79 734,621 38,126 6.94
Single-family residential real estate 1,436,645 59,309 5.52 1,453,765 59,213 5.45
Multifamily residential real estate 566,771 25,878 6.10 499,242 22,635 6.06
Commercial and industrial 2,151,773 106,977 6.65 2,022,286 110,323 7.29
Mortgage warehouse lines of credit 456,508 21,850 6.40 397,466 20,657 6.95
Consumer 19,277 1,032 7.16 21,730 1,200 7.38
LHFI 7,884,837 361,398 6.13 7,564,411 358,034 6.33
Loans held for sale 1,689 78 6.17 7,622 376 6.60
Loans receivable 7,886,526 361,476 6.13 7,572,033 358,410 6.33
Investment securities-taxable 993,036 26,659 3.59 984,440 24,535 3.33
Investment securities-non-taxable 188,586 4,635 3.29 164,138 3,916 3.19
Non-marketable equity securities held in other financial institutions 35,987 1,366 5.07 61,051 2,234 4.89
Interest-earning deposits in banks 465,076 12,918 3.71 430,924 14,224 4.41
Total interest-earning assets 9,569,211 407,054 5.69 9,212,586 403,319 5.85
Noninterest-earning assets 551,065 537,635
Total assets $ 10,120,276 $ 9,750,221
Liabilities and Shareholders' Equity
Liabilities
Interest-bearing liabilities
Interest-bearing demand deposits $ 1,923,858 $ 33,835 2.35 % $ 1,931,569 $ 41,457 2.87 %
Money market deposits 3,515,637 75,701 2.88 3,235,416 84,461 3.49
Savings deposits 305,081 2,636 1.16 319,422 3,775 1.58
Savings and interest-bearing transaction accounts 5,744,576 112,172 2.61 5,486,407 129,693 3.16
Time deposits 780,518 17,639 3.02 886,298 23,264 3.51
Total interest-bearing deposits 6,525,094 129,811 2.66 6,372,705 152,957 3.21
FHLB advances & other borrowings 71,675 1,937 3.61 52,328 1,585 4.05
Subordinated indebtedness 16,583 722 5.82 101,026 4,478 5.93
Total interest-bearing liabilities 6,613,352 132,470 2.68 6,526,059 159,020 3.26
Noninterest-bearing liabilities
Noninterest-bearing deposits 2,073,612 1,873,494
Other liabilities 156,217 155,609
Total liabilities 8,843,181 8,555,162
Shareholders' Equity 1,277,095 1,195,059
Total liabilities and shareholders' equity $ 10,120,276 $ 9,750,221
Net interest spread 3.01 % 2.59 %
Net interest income and margin $ 274,584 3.84 $ 244,299 3.55
Net interest income and margin - (tax equivalent)(3)
$ 276,044 3.86 $ 245,703 3.57
____________________________
(1)Nonaccrual loans are included in their respective loan category for the purpose of calculating the yield earned. All average balances are daily average balances.
(2)Yields/Rates are calculated on an actual/actual day count basis.
(3)In order to present pre-tax income and resulting yields on tax-exempt investments comparable to those on taxable investments, a tax-equivalent adjustment has been computed. This adjustment also includes income tax credits received on Qualified School Construction Bonds and income from tax-exempt investments, and tax credits were computed using a federal income tax rate of 21%.
Rate/Volume Analysis
The following tables present the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. It distinguishes between the changes related to outstanding balances and those due to changes in interest rates. The change in interest attributable to rate changes has been determined by applying the change in rate between periods to average balances outstanding in the earlier period. The change in interest due to volume has been determined by applying the rate from the earlier period to the change in average balances outstanding between periods. For purposes of the below table, changes attributable to both rate and volume that cannot be segregated, including the difference in day count, have been allocated to rate.
Nine Months Ended September 30, 2026 vs. Nine Months Ended September 30, 2025
(Dollars in thousands)
Interest-earning assets
Increase (Decrease) due to Change in
Loans: Volume Yield/Rate Total Change
Commercial real estate $ 5,925 $ (113) $ 5,812
Construction/land/land development (2,717) (749) (3,466)
Single-family residential real estate (697) 793 96
Multifamily residential real estate 3,062 181 3,243
Commercial and industrial 7,064 (10,410) (3,346)
Mortgage warehouse lines of credit 3,069 (1,876) 1,193
Consumer (135) (33) (168)
Loans held for sale (293) (5) (298)
Loans receivable 15,278 (12,212) 3,066
Investment securities-taxable 214 1,910 2,124
Investment securities-non-taxable 583 136 719
Non-marketable equity securities held in other financial institutions (917) 49 (868)
Interest-earning deposits in banks 1,127 (2,433) (1,306)
Total interest-earning assets 16,285 (12,550) 3,735
Interest-bearing liabilities
Interest-bearing demand deposits (166) (7,456) (7,622)
Money market deposits 7,315 (16,075) (8,760)
Savings deposits (169) (970) (1,139)
Time deposits (3,117) (2,508) (5,625)
FHLB advances & other borrowings 586 (234) 352
Subordinated indebtedness (3,743) (13) (3,756)
Total interest-bearing liabilities 706 (27,256) (26,550)
Net interest income $ 15,579 $ 14,706 $ 30,285
Provision for Credit Losses
Total provision expense decreased by $35.5 million to $7.6 million for the nine months ended September 30, 2026, from $43.1 million for the nine months ended September 30, 2025, due to decreases of $34.1 million and $1.4 million in provision expense for loan credit losses and off-balance sheet commitments, respectively. The decrease was primarily attributable to the provision recorded during the nine months ended September 30, 2025, related to the borrower fraud impacting the Tricolor Holdings, LLC loan relationship, as discussed above.
Net charge-offs decreased $30.5 million, to $5.9 million for the nine months ended September 30, 2026, from $36.4 million for the nine months ended September 30, 2025, primarily due to net charge-offs related to the borrower fraud recognized during the nine months ended September 30, 2025, as discussed above. Net charge-offs to total average LHFI decreased to 0.10% for the nine months ended September 30, 2026, from 0.64% for the nine months ended September 30, 2025.
Noninterest Income
The table below presents the various components of and changes in our noninterest income for the periods indicated.
(Dollars in thousands) Nine Months Ended September 30,
2026 vs. 2025
Noninterest income: 2026 2025 $ Change % Change
Insurance commission and fee income $ 23,815 $ 21,186 $ 2,629 12.4 %
Service charges and fees 15,609 14,608 1,001 6.9
Other fee income 7,255 7,372 (117) (1.6)
Mortgage banking revenue 2,002 3,010 (1,008) (33.5)
Swap fee income 488 3,355 (2,867) (85.5)
Change in fair value of equity investments - 6,972 (6,972) (100.0)
Loss on sales of securities, net (29) (14,448) 14,419 99.8
Equity method investment loss (1,070) (3,051) 1,981 64.9
Other income 2,198 4,094 (1,896) (46.3)
Total noninterest income $ 50,268 $ 43,098 $ 7,170 16.6
Noninterest income for the nine months ended September 30, 2026, increased by $7.2 million, or 16.6%, to $50.3 million, compared to $43.1 million for the nine months ended September 30, 2025. The increase was primarily due to improvements of $14.4 million, $2.6 million and $2.0 million in loss on sales of securities, net, insurance commission and fee income and equity method investment loss, respectively. These increases were partially offset by decreases of $7.0 million, $2.9 million and $1.9 million in change in fair value of equity investments, swap fee income and other income, respectively.
Loss on sales of securities, net. The increase in loss on sales of securities, net, resulted from a $14.4 million loss recognized during the nine months ended September 30, 2025, as a result of our bond portfolio optimization strategy in conjunction with our Optimize Origin initiative.
Insurance commission and fee income. The $2.6 million increase in insurance commission and fee income is the result of new business production, combined with strong renewal retention rates, primarily in property and casualty direct bill market sector.
Equity method investment loss. The $2.0 million decrease in equity method investment loss was primarily driven by an increase of $3.0 million in Argent Financial equity investment income recognized during the nine months ended September 30, 2026, partially offset by a $1.1 million increase in limited partnership investment losses recognized during the nine months ended September 30, 2026, compared to the same period in 2025.
Change in fair value of equity investments. The $7.0 million decrease in the change in fair value of equity investments was primarily due to the impact of our additional investment in Argent Financial during the nine months ended September 30, 2025. Our additional investment resulted in the application of the equity method of accounting and required an upward adjustment to fair value immediately prior to the purchase. There was no comparable adjustment for the nine months ended September 30, 2026.
Swap fee income. The $2.9 million decrease in swap fee income was the result of lower customer swap activity during the nine months ended September 30, 2026, and a change in the interest rate environment, reflecting reduced demand for hedging solutions compared to the nine months ended September 30, 2025.
Other income. The $1.9 million decrease in other income was primarily due to the prior-year recognition of $2.1 million in insurance recoveries related to the questioned banker activity first disclosed during the quarter ended June 30, 2024.
Noninterest Expense
The following table presents the significant components of noninterest expense for the periods indicated:
(Dollars in thousands) Nine Months Ended September 30,
2026 vs. 2025
Noninterest expense: 2026 2025 $ Change % Change
Salaries and employee benefits $ 119,292 $ 113,874 $ 5,418 4.8 %
Occupancy and equipment, net 21,507 22,810 (1,303) (5.7)
Data processing 11,642 9,915 1,727 17.4
Office and operations 9,151 9,493 (342) (3.6)
Professional services 5,724 3,930 1,794 45.6
Intangible asset amortization 4,302 5,112 (810) (15.8)
Electronic banking 3,321 4,183 (862) (20.6)
Advertising and marketing 4,526 3,815 711 18.6
Regulatory assessments 3,883 4,006 (123) (3.1)
Loan-related expenses 2,680 2,247 433 19.3
Other expense 4,670 6,694 (2,024) (30.2)
Total noninterest expense $ 190,698 $ 186,079 $ 4,619 2.5
Noninterest expense for the nine months ended September 30, 2026, increased by $4.6 million, or 2.5%, to $190.7 million, compared to $186.1 million for the nine months ended September 30, 2025, primarily due to increases of $5.4 million, $1.8 million and $1.7 million in salaries and employee benefits, professional services and data processing, respectively. These increases were offset by decreases of $2.0 million, $1.3 million and $862,000, in other expense, occupancy and equipment, net, and electronic banking, respectively.
Salaries and employee benefits. The $5.4 million increase in salaries and employee benefits expense was primarily driven by an increase of $4.9 million in incentive compensation, including a $3.5 million increase in bonuses driven by improved performance. Also contributing to the increase was a net increase in salaries of $2.7 million primarily due to annual merit increases and a net increase of 6 FTE employees. These increases were partially offset by a reduction of $2.5 million in medical costs primarily due to favorable adjustments to prior estimates.
Professional services. The $1.8 million increase in professional services expense was primarily due to a $1.2 million increase in consultant fees for the nine months ended September 30, 2026, compared to nine months ended September 30, 2025, related to contract renegotiations that occurred during the first half of the 2026 fiscal year.
Data processing. The $1.7 million increase in data processing expense was primarily due to an increase of $1.5 million in software-related costs resulting from higher contract fees and the implementation of new loan origination and relationship management software.
Other noninterest expense. The $2.0 million decrease in other noninterest expense was primarily due to a decrease of $2.6 million during the nine months ended September 30, 2026, as a result of the release of litigation reserves related to the questioned banker activity first disclosed during the quarter ended June 30, 2024.
Occupancy and equipment, net. The $1.3 million decrease in occupancy and equipment, net expense was primarily driven by a decrease of $1.2 million in depreciation expense. Of this decrease, $1.0 million was attributed to leasehold improvements and $429,000 attributed to furniture, fixtures and equipment depreciation, both primarily as a result of the closure of six branch locations during 2025 in conjunction with Optimize Origin.
Electronic banking. The $862,000 decrease in electronic banking is primarily due to a $767,000 total decrease in card processing and mobile banking expenses for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.
Income Tax Expense
For the nine months ended September 30, 2026, we recognized income tax expense of $27.2 million, compared to $12.5 million for the nine months ended September 30, 2025. Our effective tax rate was 21.5% for both the nine months ended September 30, 2026 and 2025.
Comparison of Financial Condition at September 30, 2026, and December 31, 2025
General
Total assets increased by $380.4 million, or 3.9%, to $10.11 billion at September 30, 2026, from $9.72 billion at December 31, 2025. The increase was primarily driven by an increase of $423.3 million in LHFI. LHFI was $8.09 billion at September 30, 2026, an increase of 5.5% from $7.67 billion at December 31, 2025.
Total liabilities increased by $363.4 million, or 4.3%, to $8.84 billion at September 30, 2026, from $8.48 billion at December 31, 2025. The increase was primarily driven by increases of $365.9 million in total deposits. Total deposits were $8.67 billion at September 30, 2026, an increase of 4.4% from $8.31 billion at December 31, 2025, primarily due to increases of $334.1 million and $196.6 million in money market and noninterest-bearing deposits, respectively. These increases were partially offset by a $104.5 million and a $59.8 million decrease in interest-bearing demand deposits and time deposits, respectively.
Loan Portfolio
Our loan portfolio is our largest category of interest-earning assets, and interest income earned on our loan portfolio is our primary source of income. At September 30, 2026, 74.9% of the loan portfolio held for investment was comprised of commercial and industrial loans, including mortgage warehouse lines of credit, commercial real estate and construction/land/land development loans, which were primarily originated within our existing market areas, compared to 73.7% at December 31, 2025.
The following table presents the ending balance of our loan portfolio held for investment at the dates indicated.
(Dollars in thousands) September 30, 2026 December 31, 2025
2026 vs. 2025
Real estate: Amount Percent Amount Percent $ Change % Change
Commercial real estate ("CRE")(1)
$ 2,722,473 33.7 % $ 2,523,905 32.9 % $ 198,568 7.9 %
Construction/land/land development
776,682 9.6 611,220 8.0 165,462 27.1
Single-family residential real estate 1,437,148 17.8 1,444,611 18.8 (7,463) (0.5)
Multifamily residential real estate 577,102 7.1 553,149 7.2 23,953 4.3
Total real estate 5,513,405 68.2 5,132,885 66.9 380,520 7.4
Commercial and industrial 2,122,572 26.2 1,989,218 25.9 133,354 6.7
Mortgage warehouse lines of credit 439,677 5.4 528,781 6.9 (89,104) (16.9)
Consumer 18,518 0.2 20,033 0.3 (1,515) (7.6)
Total LHFI $ 8,094,172 100.0 % $ 7,670,917 100.0 % $ 423,255 5.5
______________________
(1)Includes owner-occupied commercial real estate of $1.12 billion and $1.00 billion at September 30, 2026, and December 31, 2025, respectively.
At September 30, 2026, total LHFI were $8.09 billion, an increase of $423.3 million, or 5.5%, compared to $7.67 billion at December 31, 2025. The increase was primarily driven by growth of $198.6 million, $165.5 million and $133.4 million in commercial real estate loans, construction/land/land development loans, commercial and industrial loans, respectively. The growth was partially offset by a decline of $89.1 million in mortgage warehouse lines of credit loans. Total LHFI at September 30, 2026, excluding mortgage warehouse lines of credit, were $7.65 billion, reflecting an increase of $512.4 million, or 7.2%, compared to December 31, 2025.
A significant portion, 33.7%, of our LHFI portfolio at September 30, 2026, consisted of commercial real estate loans secured by real estate properties. Such loans can involve high principal loan amounts, and the repayment of these loans is dependent, in large part, on a borrower's ongoing business operations or on income generated from the properties that are leased to third parties.
The table below sets forth the commercial real estate loan portfolio, by portfolio industry sector and collateral location as of September 30, 2026.
September 30, 2026
(Dollars in thousands) Texas Louisiana Mississippi Alabama and Florida All Other States Total
Non-owner-occupied CRE:
Office building $ 293,636 $ 20,509 $ 29,911 $ 2,060 $ 19,645 $ 365,761
Retail shopping 310,218 28,240 24,916 33,222 79,045 475,641
Real estate & construction 198,303 59,986 10,017 7,020 21,376 296,702
Healthcare 93,440 33,481 5,464 - 14,399 146,784
Hotels 22,465 43,226 36,336 - 8,500 110,527
All other sectors 139,819 17,941 748 198 53,014 211,720
Total non-owner-occupied CRE 1,057,881 203,383 107,392 42,500 195,979 1,607,135
Owner-occupied CRE:
Real estate & construction 175,516 68,005 11,801 14,745 43,355 313,422
Retail shopping 150,872 16,873 6,575 19,000 2,147 195,467
Restaurants 76,031 14,149 1,950 2,901 2,649 97,680
Healthcare 50,755 20,895 861 400 3,999 76,910
Consumer services 39,014 16,607 124 3,327 - 59,072
Entertainment & recreation 36,855 14,584 - - - 51,439
All other sectors 179,271 80,466 20,359 8,817 32,435 321,348
Total owner-occupied CRE 708,314 231,579 41,670 49,190 84,585 1,115,338
Total commercial real estate loans $ 1,766,195 $ 434,962 $ 149,062 $ 91,690 $ 280,564 $ 2,722,473
Loan Portfolio Maturity Analysis
The table below presents the maturity distribution of our LHFI at September 30, 2026. The table also presents the portion of our loans that have fixed interest rates, rather than interest rates that fluctuate over the life of the loans, based on changes in the interest rate environment.
September 30, 2026
(Dollars in thousands) One Year or Less After One Year
Through Five Years 		After Five Years Through Fifteen Years After Fifteen Years Total
Real estate:
Commercial real estate $ 682,079 $ 1,830,665 $ 209,729 $ - $ 2,722,473
Construction/land/land development 224,274 482,584 68,699 1,125 776,682
Single-family residential real estate 160,253 390,863 35,177 850,855 1,437,148
Multifamily residential real estate 267,465 294,501 15,136 - 577,102
Total real estate 1,334,071 2,998,613 328,741 851,980 5,513,405
Commercial and industrial 935,134 1,098,866 88,572 - 2,122,572
Mortgage warehouse lines of credit 439,677 - - - 439,677
Consumer 7,410 10,703 345 60 18,518
Total LHFI $ 2,716,292 $ 4,108,182 $ 417,658 $ 852,040 $ 8,094,172
Amounts with fixed rates $ 882,712 $ 1,694,875 $ 294,137 $ 187,915 $ 3,059,639
Amounts with variable rates 1,833,580 2,413,307 123,521 664,125 5,034,533
Total $ 2,716,292 $ 4,108,182 $ 417,658 $ 852,040 $ 8,094,172
Nonperforming Assets
Nonperforming assets consist of nonperforming/nonaccrual loans and property acquired through foreclosures or repossession, as well as bank-owned property not in use and listed for sale.
Loans are placed on nonaccrual status when management believes that the borrower's financial condition, after giving consideration to economic and business conditions, and collection efforts, is such that collection of interest is doubtful, or generally when loans are 90 days or more past due. Loans may be placed on nonaccrual status even if the contractual payments are not past due if information becomes available that causes substantial doubt about the borrower's ability to meet the contractual obligations of the loan. When accrual of interest is discontinued, all unpaid accrued interest is reversed. Past due status is based on the contractual terms of the loan. Interest income on nonaccrual loans may be recognized to the extent cash payments are received, but payments received are usually applied to principal. Nonaccrual loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. If a loan is determined by management to be uncollectible, regardless of size, the portion of the loan determined to be uncollectible is then charged to the ALCL.
We manage the quality of our lending portfolio in part through a disciplined underwriting policy and through continual monitoring of loan performance and borrowers' financial condition. There can be no assurance, however, that our loan portfolio will not become subject to losses due to declines in economic conditions or deterioration in the financial condition of our borrowers.
The following table shows our nonperforming loans and nonperforming assets at the dates indicated:
(Dollars in thousands)
Nonperforming LHFI:
September 30, 2026 December 31, 2025
Commercial real estate $ 9,773 $ 13,212
Construction/land/land development 15,319 16,388
Single-family residential real estate 37,100 39,480
Commercial and industrial 10,213 11,919
Consumer 56 185
Total nonperforming LHFI
72,461 81,184
Other real estate owned:
Commercial and industrial, Commercial real estate 1,976 -
Residential real estate 665 650
Total other real estate owned
2,641 650
Other repossessed assets owned
- 44
Total repossessed assets owned
2,641 694
Total nonperforming assets
$ 75,102 $ 81,878
Total LHFI
$ 8,094,172 $ 7,670,917
Ratio of nonperforming LHFI to total LHFI
0.90 % 1.06 %
Ratio of nonperforming assets to total assets
0.74 0.84
As explained in detail in Part I, Note 11 - Commitments and Contingencies under Loss Contingencies, and as discussed in previous filings, our classified and nonperforming LHFI were negatively impacted beginning in the second quarter of 2024 as a result of certain questioned activity involving a former banker in our East Texas market. During the quarter ended September 30, 2026, the Company fully released the remaining contingency reserve in connection with a settlement in August 2026 of certain litigation involving the questioned banker activity.
Nonperforming LHFI decreased $8.7 million at September 30, 2026, compared to December 31, 2025, and nonperforming LHFI to LHFI decreased to 0.90% compared to 1.06%. The decrease in nonperforming LHFI was driven by lower nonperforming LHFI balances across multiple loan sectors. Additionally, the decrease was impacted by a $2.0 million decrease in nonperforming LHFI related to the questioned activity discussed above. Please see Note 4 - Loans to our consolidated financial statements contained in Part I, Item 1 of this report for more information on nonperforming loans.
Potential Problem Loans
From a credit risk standpoint, we classify loans using risk grades which fall into one of five categories: pass, special mention, substandard, doubtful or loss. The classifications of loans reflect a judgment about the risks of default and loss associated with the loan. We review the ratings on loans and adjust them to reflect the degree of risk and loss that is felt to be inherent or expected in each loan. The methodology is structured, so that reserve allocations are increased in accordance with deterioration in credit quality (and a corresponding increase in risk and loss) or decreased in accordance with improvement in credit quality (and a corresponding decrease in risk and loss). Loans rated special mention reflect borrowers who exhibit credit weaknesses or downward trends deserving close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Bank's credit position at some future date. While potentially weak, no loss of principal or interest is envisioned, and these borrowers currently do not pose sufficient risk to warrant adverse classification. Loans rated substandard are those borrowers with deteriorating trends and well-defined weaknesses that jeopardize the orderly liquidation of debt. A substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or by the collateral pledged, if any, and where normal repayment from the borrower might be in jeopardy.
Loans rated as doubtful have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full questionable, and there is a high probability of loss based on currently existing facts, conditions and values. Loans classified as loss are charged-off, and we have no expectation of the recovery of any payments with respect to loans rated as loss. Information regarding the internal risk ratings of our loans at September 30, 2026, is included in Note 4 - Loans to our consolidated financial statements contained in Part I, Item 1 of this report.
Allowance for Loan Credit Losses
The ALCL represents the estimated losses for loans accounted for on an amortized cost basis. Expected losses are calculated using relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. We evaluate LHFI on a pool basis with pools of loans characterized by loan type, collateral, industry, internal credit risk rating and FICO score. We apply a probability of default, loss given default loss methodology, to the loan pools at September 30, 2026. Historical loss rates for each pool are calculated based on charge-off and recovery data beginning with the second quarter of 2012. These loss rates are adjusted for the effects of certain economic variables forecast over a one-year period, particularly for differences between current period conditions and the conditions existing during the historical loss period. Subsequent to the forecast effects, historical loss rates are used to estimate losses over the estimated remaining lives of the loans. The estimated remaining lives consist of the contractual lives, adjusted for estimated prepayments. Loans that exhibit characteristics different from their pool characteristics are evaluated on an individual basis. Certain of these loans are considered to be collateral dependent, with the borrower experiencing financial difficulty. For these loans, the fair value of collateral practical expedient is elected whereby the allowance is calculated as the amount by which the amortized cost exceeds the fair value of collateral, less costs to sell (if applicable). Those individual loans that are not collateral dependent are evaluated based on a discounted cash flow methodology.
The amount of the ALCL is affected by loan charge-offs, which decrease the allowance, recoveries on loans previously charged off, which increase the allowance, as well as the provision for loan credit losses charged to income, which increases the allowance. In determining the provision for loan credit losses, management monitors fluctuations in the allowance resulting from actual charge-offs and recoveries and periodically reviews the size and composition of the loan portfolio in light of current and forecasted economic conditions. If actual losses exceed the amount of the ALCL, it would materially and adversely affect our earnings.
As a general rule, when it becomes evident that the full principal and accrued interest of a loan may not be collected, or at 90 days past due, we will reflect that loan as nonperforming. It will remain nonperforming until it performs in a manner that it is reasonable to expect that we will collect principal and accrued interest in full. When the amount or likelihood of a loss on a loan has been confirmed, a charge-off will be taken in the period it is determined.
We establish general allocations for each major loan category and credit quality. The general allocation is based, in part, on historical charge-off experience and loss given default methodology, derived from our internal risk rating process. Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data. We give consideration to trends, changes in loan mix, delinquencies, prior losses, reasonable and supportable forecasts and other related information.
In connection with the review of our loan portfolio, we consider risk elements attributable to particular loan types or categories in assessing the quality of individual loans. Some of the risk elements we consider include:
•for commercial real estate loans, the debt service coverage ratio, operating results of the owner in the case of owner-occupied properties, the loan to value ratio, the age and condition of the collateral and the volatility of income, property value and future operating results typical of properties of that type;
•for construction, land and land development loans, the perceived feasibility of the project, including the ability to sell developed lots or improvements constructed for resale or the ability to lease property constructed for lease, the quality and nature of contracts for presale or prelease, if any, experience and ability of the developer and loan to value ratio;
•for residential mortgage loans, the borrower's ability to repay the loan, including a consideration of the debt to income ratio and employment and income stability, the loan-to-value ratio, and the age, condition and marketability of the collateral;
•for commercial and industrial loans, the debt service coverage ratio (income from the business in excess of operating expenses compared to loan repayment requirements), the operating results of the commercial, industrial or professional enterprise, the borrower's business, professional and financial ability and expertise, the specific risks and volatility of income and operating results typical for businesses in that category and the value, nature and marketability of collateral; and
•for mortgage warehouse loans, the borrower's adherence to agency or investor underwriting guidelines, while the risk associated with the underlying consumer mortgage loan repayments, similar to other consumer loans, depends on the borrower's financial stability and are more likely than commercial loans to be adversely affected by divorce, job loss, illness and other personal hardships.
Acquisition Accounting and Acquired Loans. We account for our mergers/acquisitions under Financial Accounting Standards Board ("FASB") ASC Topic 805, Business Combinations, which requires the use of the acquisition method of accounting. All identifiable assets acquired, including loans, are recorded at fair value. In accordance with ASC 326, we record a discount or premium, and also an allowance for credit losses on acquired loans. All purchased loans are recorded at fair value in accordance with the fair value methodology prescribed in FASB ASC Topic 820, Fair Value Measurements. The fair value estimates associated with the loans include estimates related to expected prepayments and the amount and timing of undiscounted expected principal, interest and other cash flows.
Purchased loans that have experienced more than insignificant credit deterioration since origination are PCD loans. An ALCL is determined using the same methodology as other individually evaluated loans. The sum of the loan's purchase price and allowance for credit losses becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a non-credit discount or premium, which is amortized or accreted into interest income over the life of the loan. Subsequent changes to the ALCL are recorded through the provision for credit losses.
The following table presents the allowance for credit loss by loan category at the following dates:
September 30, December 31, September 30,
(Dollars in thousands)
2026 2025 2025
Loans secured by real estate:
Amount
%(1)
Amount
%(1)
Amount
%(1)
Commercial real estate $ 18,533 33.7 % $ 18,929 32.9 % $ 18,176 33.2 %
Construction/land/land development 7,230 9.6 7,219 8.0 7,741 8.2
Single-family residential real estate 9,906 17.8 9,525 18.8 9,664 19.3
Multifamily residential real estate 6,847 7.1 4,963 7.2 4,700 7.2
Commercial and industrial 54,399 26.2 54,496 25.9 54,482 25.5
Mortgage warehouse lines of credit 852 5.4 913 6.9 827 6.3
Consumer 611 0.2 737 0.3 669 0.3
Total $ 98,378 100.0 % $ 96,782 100.0 % $ 96,259 100.0 %
__________________________
(1)Represents the ratio of each loan type to total LHFI.
The following table presents an analysis of the ALCL and other related data at the periods indicated.
(Dollars in thousands) Nine Months Ended September 30, Year Ended December 31,
ALCL 2026 2025 2025
Balance at beginning of period $ 96,782 $ 91,060 $ 91,060
Provision for loan credit losses 7,488 41,610 45,303
Charge-offs:
Commercial real estate 2,029 728 728
Single-family residential real estate 620 119 489
Commercial and industrial 6,812 39,740 43,691
Consumer 222 167 174
Total charge-offs 9,683 40,754 45,082
Recoveries:
Commercial real estate 1 18 18
Single-family residential real estate 2 14 17
Multifamily residential real estate - 42 43
Commercial and industrial 3,674 4,244 5,392
Consumer 114 25 31
Total recoveries 3,791 4,343 5,501
Net charge-offs 5,892 36,411 39,581
Balance at end of period $ 98,378 $ 96,259 $ 96,782
Ratio of ALCL to:
Nonperforming LHFI 135.77 % 109.04 % 119.21 %
LHFI 1.22 1.28 1.26
Net charge-offs (annualized) as a percentage of:
Provision for loan credit loss 78.69 87.51 87.37
ALCL 8.01 50.57 40.90
Average LHFI 0.10 0.64 0.52
The ALCL to nonperforming LHFI increased to 135.77% at September 30, 2026, compared to 119.21% at December 31, 2025, primarily driven by a decrease of $8.7 million in the Company's nonperforming LHFI as explained in the preceding Nonperforming Assets section, during the nine months ended September 30, 2026.
Securities
Our securities portfolio totaled $1.15 billion at September 30, 2026, representing an increase of $12.0 million, or 1.1% from $1.13 billion at December 31, 2025. The increase reflects the net effect of new purchases, sales, calls, maturities, principal paydowns, and changes in fair value during the nine months ended September 30, 2026.
Our available for sale portfolio totaled $1.12 billion at September 30, 2026, and represented 97.5% of our total security portfolio and was comprised of 39.2% mortgage-backed, 24.9% municipal, 30.3% collateralized mortgage obligations, 4.5% corporate and 1.1% treasury/agency securities. Our available for sale portfolio totaled $1.12 billion at December 31, 2025, and represented 98.5% of our total security portfolio and was comprised of 42.0% mortgage-backed, 26.4% municipal, 26.3% collateralized mortgage obligations, 5.0% corporate and 0.3% treasury/agency securities.
All of our mortgage-backed securities and collateralized mortgage obligations are issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored entities. We do not hold any Fannie Mae or Freddie Mac preferred stock, collateralized debt obligations, collateralized loan obligations, structured investment vehicles, private label collateralized mortgage obligations, subprime, Alt-A, or second lien elements in our investment portfolio. As of September 30, 2026, our investment portfolio did not contain any securities that are directly backed by subprime or Alt-A mortgages.
The securities portfolio had a weighted average effective duration of 4.65 years at September 30, 2026, compared to 4.15 years at December 31, 2025. For additional information regarding our securities portfolio, please see Note 3 - Securities in the condensed notes to our consolidated financial statements contained in Part I, Item 1 of this report.
Deposits
Deposits are the primary funding source used to fund our loans, investments and operating needs. We offer a variety of products designed to attract and retain both consumer and commercial deposit customers. These products consist of noninterest and interest-bearing checking accounts, savings deposits, money market accounts and time deposits. Deposits are primarily gathered from individuals, partnerships and corporations in our market areas. We also obtain deposits from local municipalities and state agencies.
Total deposits increased $365.9 million, or 4.4%, at September 30, 2026, compared to December 31, 2025, with increases of $334.1 million and $196.6 million in money market and noninterest-bearing demand deposits, respectively, partially offset by decreases of $104.5 million and $59.8 million in interest-bearing demand and time deposits, respectively. The increase in deposits from December 31, 2025, was driven in part by the repurchase on January 2, 2026, of $215.0 million in money market deposits that were sold on December 31, 2025. The increase in money market deposits at September 30, 2026, excluding the $215.0 million repurchase, was $119.1 million, or 3.4%, compared to December 31, 2025.
The following table presents our deposit mix at the dates indicated:
September 30, 2026 December 31, 2025
(Dollars in thousands) Balance % of Total Balance % of Total $ Change % Change
Noninterest-bearing demand
$ 2,176,440 25.1 % $ 1,979,875 23.8 % $ 196,565 9.9 %
Money market
3,615,817 41.7 3,281,708 39.5 334,109 10.2
Interest-bearing demand
1,813,185 20.9 1,917,658 23.1 (104,473) (5.4)
Time deposits
769,702 8.9 829,452 10.0 (59,750) (7.2)
Savings
298,030 3.4 298,554 3.6 (524) (0.2)
Total deposits
$ 8,673,174 100.0 % $ 8,307,247 100.0 % $ 365,927 4.4
We manage our interest expense on deposits through specific deposit product pricing that is based on competitive pricing, economic conditions and current and anticipated funding needs. We may use interest rates as a mechanism to attract or deter additional deposits based on our anticipated funding needs and liquidity position. We also consider potential interest rate risk caused by extended maturities of time deposits when setting the interest rates in periods of future economic uncertainty.
The following table reflects the classification of our average deposits, and the average rate paid on each deposit category for the periods indicated:
Nine Months Ended September 30,
2026 2025
(Dollars in thousands) Average Balance Interest Expense Average Rate Paid Average Balance Interest Expense Average Rate Paid
Interest-bearing demand
$ 1,923,858 $ 33,835 2.35 % $ 1,931,569 $ 41,457 2.87 %
Money market
3,515,637 75,701 2.88 3,235,416 84,461 3.49
Time deposits
780,518 17,639 3.02 853,020 22,019 3.45
Brokered deposits(1)
- - - 33,278 1,245 5.00
Savings
305,081 2,636 1.16 319,422 3,775 1.58
Total interest-bearing
6,525,094 129,811 2.66 6,372,705 152,957 3.21
Noninterest-bearing demand
2,073,612 - 1,873,494 -
Total average deposits
$ 8,598,706 $ 129,811 2.02 $ 8,246,199 $ 152,957 2.48
______________________
(1)Average brokered deposits include average brokered time deposits and average brokered interest-bearing demand of $33.3 million and $1,000, respectively, for the nine months ended September 30, 2025.
Our average deposit balances were $8.60 billion for the nine months ended September 30, 2026, an increase of $352.5 million, or 4.3%, from $8.25 billion for the nine months ended September 30, 2025. The average rate paid on our interest-bearing deposits for the nine months ended September 30, 2026, was 2.66%, compared to 3.21% for the nine months ended September 30, 2025.
The Federal Reserve Board sets various benchmark rates, including the federal funds rate, and thereby influences the general market rates of interest, including loan and deposit rates offered by financial institutions. The Federal Reserve Board reduced the federal funds target rate range three times, for a total of 75 basis points, during the second half of 2025, to a range of 3.50% to 3.75%. On September 16, 2026, the Federal Reserve Board raised the federal funds target rate range by 25 basis points, to a range of 3.75% to 4.00%.
Average noninterest-bearing deposits were $2.07 billion for the nine months ended September 30, 2026, an increase of $200.1 million, or 10.7%, from $1.87 billion for the nine months ended September 30, 2025, and represented 24.1% and 22.7% of average total deposits for the nine months ended September 30, 2026 and 2025, respectively.
The amount of deposits in excess of the FDIC insurance limit at September 30, 2026, and December 31, 2025 was $4.03 billion and $3.93 billion, respectively, including $671.7 million and $860.0 million in public fund deposits collateralized by pledged assets, respectively.
Borrowings
Borrowed funds are summarized as follows:
(Dollars in thousands) September 30, 2026 December 31, 2025
Long-term FHLB advances $ 5,280 $ 5,913
Overnight repurchase agreements with depositors 10,097 13,137
Total FHLB advances and other borrowings $ 15,377 $ 19,050
Subordinated indebtedness, net $ 16,619 $ 16,544
Holding Company Line of Credit
During the quarter ended June 30, 2026, the Company entered into a Loan Agreement (the "Loan Agreement"), along with certain ancillary instruments, with a correspondent financial institution ("Lender") pursuant to which the Company has the ability to borrow up to $30.0 million under a revolving credit loan. Advances under the Loan Agreement bear interest at a variable rate equal to the then-applicable Prime Rate (as defined in the Loan Agreement) minus 1.00%, subject to a 4.00% floor. The loan matures on June 30, 2027, and is secured by a pledge of the common stock of Origin Bank. The Company can use the proceeds of any advance for general corporate purposes, including, but not limited to, repurchase of stock, operating expenses, strategic investments and acquisitions. The Company had no balance outstanding on this revolving credit loan under the Loan Agreement at September 30, 2026.
Liquidity and Capital Resources
Overview
Management oversees our liquidity position to ensure adequate cash and liquid assets are available to support our operations and satisfy current and future financial obligations, including demand for loan funding and deposit withdrawals. Management continually monitors, forecasts and tests our liquidity and non-core dependency ratios to ensure compliance with targets established by our Asset Liability Committee and approved by our board of directors.
Management measures our liquidity position by giving consideration to both on-balance sheet and off-balance sheet sources of, and demands for, funds on a daily and weekly basis.
The Company, which is a separate legal entity apart from the Bank, must provide for its own liquidity, including payment of any dividends that may be declared for its common stockholders and interest and principal on any outstanding debt or trust preferred securities incurred by the Company. The cash held at the holding company is available for general corporate purposes described above, as well as providing capital support to the Bank.
The table below shows the liquidity measures for the Company at the dates indicated:
(Dollars in thousands)
September 30, 2026 December 31, 2025
Available cash balances at the holding company (unconsolidated)
$ 14,108 $ 32,731
Cash and liquid securities as a percentage of total consolidated assets
10.3 % 8.4 %
There are regulatory restrictions on the ability of the Bank to pay dividends under federal and state laws, regulations and policies; please see Note 10 - Capital and Regulatory Matters in the condensed notes to our consolidated financial statements for more information on the availability of Bank dividends.
Liquidity Sources
In addition to cash generated from operations, we utilize a number of funding sources to manage our liquidity, including core deposits, investment securities, cash and cash equivalents, loan repayments, federal funds lines of credit available from other financial institutions, as well as advances from the FHLB. We also have access to the Federal Reserve discount window as a source of short-term funding.
Core deposits, which are total deposits excluding time deposits greater than $250,000, brokered, and Certificate of Deposit Account Registry Service deposits, are a major source of funds used to meet our cash flow needs. Maintaining the ability to acquire these funds as needed in a variety of markets is the key to assuring our liquidity.
Our investment portfolio is another source for meeting our liquidity needs. Monthly payments on mortgage-backed securities are used for short-term liquidity, and our investments are generally traded in active markets that offer a readily available source of cash liquidity through sales, if needed. Securities in our investment portfolio are also used to secure certain deposit types, such as deposits from state and local municipalities, and can be pledged as collateral for other borrowing sources.
Other sources available for meeting liquidity needs include long- and short-term advances from the FHLB, a holding company revolving credit loan and unsecured federal funds lines of credit. Long-term funds obtained from the FHLB are primarily used as an alternative source to fund long-term growth of the balance sheet by supporting growth in loans and other long-term interest-earning assets. We typically rely on such funding when the cost of such borrowings compares favorably to the rates that we would be required to pay for other funding sources, including certain deposits.
We also had unsecured federal funds lines of credit available to us, with no amounts outstanding at either September 30, 2026, or December 31, 2025. These lines of credit primarily provide short-term liquidity and, in order to ensure the availability of these funds, we test these lines of credit at least annually. Interest is charged at the prevailing market rate on federal funds purchased and FHLB advances.
We were eligible to borrow an additional $2.45 billion and $2.39 billion from the FHLB at September 30, 2026 and December 31, 2025, respectively.
Additionally, at September 30, 2026, we had the ability to borrow $1.26 billion from the discount window at the FRBD, with $1.56 billion in commercial and industrial loans pledged as collateral. There were no borrowings against this line at September 30, 2026, or December 31, 2025.
During the quarter ended June 30, 2026, we entered into a $30.0 million revolving credit loan with no amounts outstanding at September 30, 2026. For more information on the holding company line of credit please see the Borrowings section immediately above this Liquidity and Capital Resource section.
In the normal course of business as a financial services provider, we enter into financial instruments, such as certain contractual obligations and commitments to extend credit and letters of credit, to meet the financing needs of our customers. These commitments involve elements of credit risk, interest rate risk and liquidity risk. Some instruments may not be reflected in our consolidated financial statements until they are funded, and a significant portion of commitments to extend credit may expire without being drawn, although they expose us to varying degrees of credit risk and interest rate risk in much the same way as funded loans. Please see Note 11 - Commitments and Contingencies in the condensed notes to our consolidated financial statements for more information on our off-balance sheet commitments.
Shareholders' Equity
Shareholders' equity provides a source of permanent funding, allows for future growth and provides a degree of protection to withstand unforeseen adverse developments. Changes in shareholders' equity are reflected below:
(Dollars in thousands) Total Shareholders' Equity
Balance at January 1, 2026
$ 1,246,685
Net income 99,317
Other comprehensive loss, net of tax (42,269)
Dividends declared - common stock ($0.65 per share)
(20,396)
Stock-based compensation, net 12,089
Repurchase of common stock (31,739)
Balance at September 30, 2026
$ 1,263,687
Please see Part II, Item 2. "Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities" below for information on the Company's share repurchase program.
Regulatory Capital Requirements
Together with the Bank, we are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements may result in certain actions by regulators that, if enforced, could have a direct material effect on our financial statements. At September 30, 2026, and December 31, 2025, we and the Bank were in compliance with all applicable regulatory capital requirements, and the Bank was classified as "well capitalized" for purposes of the prompt corrective action regulations of the Federal Reserve. As we deploy capital and continue to grow operations, regulatory capital levels may decrease depending on the level of earnings. However, we expect to monitor and control growth in order to remain "well capitalized" under applicable regulatory guidelines and in compliance with all applicable regulatory capital standards. While we are currently classified as "well capitalized," an extended economic recession could adversely impact our reported and regulatory capital ratios.
The following table presents our regulatory capital ratios, as well as those of the Bank, at the dates indicated:
(Dollars in thousands)
September 30, 2026 December 31, 2025
Origin Bancorp, Inc.
Amount
Ratio
Amount
Ratio
Common equity Tier 1 capital (to risk-weighted assets)
$ 1,203,300 13.74 % $ 1,139,627 13.54 %
Tier 1 capital (to risk-weighted assets)
1,212,674 13.85 1,155,628 13.73
Total capital (to risk-weighted assets)
1,319,761 15.07 1,255,717 14.91
Tier 1 capital (to average total consolidated assets)
1,212,674 11.98 1,155,628 11.86
Origin Bank
Common equity Tier 1 capital (to risk-weighted assets)
$ 1,134,963 13.06 % $ 1,054,279 12.62 %
Tier 1 capital (to risk-weighted assets)
1,134,963 13.06 1,054,279 12.62
Total capital (to risk-weighted assets)
1,236,688 14.23 1,154,368 13.82
Tier 1 capital (to average total consolidated assets)
1,134,963 11.30 1,054,279 10.91
In July 2025, the Board of Directors of the Company authorized a share repurchase program pursuant to which the Company may, from time to time, purchase up to $50.0 million of its outstanding common stock. In July 2026, our Board of Directors approved a $100.0 million increase in repurchase authority under this share repurchase program. The shares may be repurchased in the open market or in privately negotiated transactions from time to time, depending upon market conditions and other factors, and in accordance with applicable regulations of the Securities and Exchange Commission. The share repurchase program is intended to expire in July 2028 but may be terminated or amended by the Board of Directors at any time. The share repurchase program does not obligate the Company to purchase any shares at any time.
During the three months ended September 30, 2026, the Company repurchased a total of 272,927 shares of its common stock pursuant to its July 2025 share repurchase program at an average price per share of $54.21, for an aggregate purchase price of $14.8 million, including broker commissions and applicable excise taxes. Year-to-date share repurchases through September 30, 2026, totaled 655,461 shares of common stock at an average price per share of $48.42, for an aggregate purchase price of $31.7 million, including broker commissions and applicable excise taxes. There was $106.8 million remaining available for repurchase at September 30, 2026.
During the third quarter of 2025, the Company repurchased a total of 265,248 shares of its common stock pursuant to its July 2025 share repurchase program at an average price per share of $35.85, for an aggregate purchase price of $9.5 million, including broker commissions and applicable excise taxes. Year-to-date 2025 share repurchases totaled 401,647 shares of common stock at an average price per share of $34.59, for an aggregate purchase price of $13.9 million, including broker commissions and applicable excise taxes.
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