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Origin Bancorp, Inc. Reports Earnings for Fourth Quarter and 2019 Full Year


RUSTON, Louisiana (January 22, 2020) - Origin Bancorp, Inc. (Nasdaq: OBNK) ("Origin" or the "Company"), the holding company for Origin Bank (the "Bank"), today announced net income of $12.8 million for the quarter ended December 31, 2019. This represents a decrease of $1.8 million from the quarter ended September 30, 2019, and a decrease of $351,000 from the quarter ended December 31, 2018. Diluted earnings per share for the quarter ended December 31, 2019, was $0.55, down $0.07 from the linked quarter and flat compared to the quarter ended December 31, 2018.

Net income for the year ended December 31, 2019, was $53.9 million, representing an increase of $2.3 million compared to the year ended December 31, 2018, reflecting a year-over-year increase in net interest income, offset by higher provision and noninterest expense. Diluted earnings per share for the year ended December 31, 2019, was $2.28, representing an increase of $0.08 from diluted earnings per share of $2.20 for the year ended December 31, 2018.

"We are pleased with what we have accomplished in 2019, and are proud of how our team was able to adapt to a changing rate environment, grow deposits and loans in a meaningful way and manage our company to build long-term value," said Drake Mills, Chairman, President and CEO of Origin Bancorp, Inc. "We remain committed to the successful execution of our strategy by driving deposit and loan growth, leveraging operational efficiencies and delivering shareholder value in 2020."

Financial Highlights

• Diluted earnings per share for the quarter ended December 31, 2019, was $0.55, and $2.28 for the year ended December 31, 2019.

• Net interest income was $44.1 million for the quarter ended December 31, 2019, compared to $44.6 million for linked quarter and $42.1 million for the quarter ended December 31, 2018. The net interest margin, fully tax equivalent, was 3.58% for the quarter ended December 31, 2019, compared to 3.69% for the linked quarter and 3.82% for the quarter ended December 31, 2018.

• Tangible book value per common share was $24.18 at December 31, 2019, an 11.0% increase from $21.79 at December 31, 2018.

• Total loans held for investment were $4.14 billion, a decrease of $45.3 million, or 1.1%, from September 30, 2019, and an increase of $354.1 million, or 9.3%, from December 31, 2018.

• Total deposits decreased by $55.7 million, or 1.3%, from September 30, 2019, and increased by $445.5 million, or 11.8%, from December 31, 2018. Total deposits without brokered deposits increased $122.1 million, or 3.1%, from September 30, 2019, and increased $625.3 million, or 18.1%, from December 31, 2018.

• For the seventh consecutive year Origin Bank was named one of the best banks to work for in the U.S. by American Banker and Best Companies Group, which identifies U.S. banks for outstanding employee satisfaction.

Results of Operations for the Three Months Ended December 31, 2019

Net Interest Income and Net Interest Margin

Net interest income for the quarter ended December 31, 2019, was $44.1 million, reflecting a decrease of $527,000, or 1.2%, compared to the linked quarter. The decrease was primarily driven by a decline in yields earned on loans held for investment, and was partially offset by a decrease in rates paid on interest-bearing liabilities and an increase in the overall average balance of loans held for investment. The aggregate 75 basis point decrease in the Federal Reserve target fed funds rate during the second half of 2019 have impacted the yields earned on our commercial and industrial and residential real estate loan portfolios.

Interest-bearing deposit expense decreased to $11.1 million during the current quarter, compared to $11.6 million for the quarter ended September 30, 2019. The $567,000 decrease in interest-bearing deposit expense was primarily driven by falling interest rates and was partially offset by an increase in the average balance of savings and interest-bearing deposit accounts. Average savings and interest-bearing deposit transaction accounts increased by $176.9 million, or 8.5% and $315.9 million, or 16.3%, compared to the linked quarter and quarter ended December 31, 2018, respectively. Average noninterestbearing deposits increased by $74.0 million, or 6.9%, compared to the linked quarter and by $149.3 million, or 14.9%, compared to December 31, 2018.

The fully tax-equivalent net interest margin ("NIM") was 3.58% for the fourth quarter of 2019, an 11 basis point decrease from the third quarter of 2019 and a 24 basis point decrease from the fourth quarter of 2018. The decline in the NIM was primarily caused by rate partially offset by a change in the mix of earning asset types. The rate paid on total interestbearing liabilities for the quarter ended December 31, 2019, was 1.46%, representing a decrease of 19 basis points and an increase of seven basis points compared to the linked quarter and the quarter ended December 31, 2018, respectively. The yield earned on interest-earning assets decreased 25 basis points and 19 basis points compared to the linked quarter and the quarter ended December 31, 2018, respectively. The margin compression the Company experienced on a linked quarter basis was primarily caused by declining loan yields driven by interest rate cuts by the Federal Reserve in the second half of 2019 that were more fully reflected in loan yields during the fourth quarter of 2019 than during the third quarter of 2019, causing a linked quarter decline in NIM.

Noninterest Income

Noninterest income for the quarter ended December 31, 2019, was $10.8 million, a decrease of $2.1 million, or 16.0%, from the linked quarter. The decrease from the linked quarter was primarily driven by decreases of $1.2 million and $775,000 in swap fee income and insurance commission and fee income, respectively. Lower transaction volume during the current quarter drove the decline in swap fee income compared to the linked quarter. The decrease in insurance commission and fee income was caused by the seasonality of policy renewals.

Noninterest Expense

Noninterest expense for the quarter ended December 31, 2019, was $36.5 million, an increase of $1.5 million, or 4.2%, compared to the linked quarter. The increase from the linked quarter was largely driven by increases of $1.1 million and $551,000 in regulatory assessments and salaries and employee benefits, respectively. During the linked quarter the Company received a FDIC assessment credit of approximately $1.0 million from the FDIC insurance fund, without the receipt of a comparable credit in the current quarter. The increase in salaries and employee benefits expense over the linked quarter was largely driven by a $755,000 increase in self-insured medical expense, partially offset by a decrease in incentive compensation expense.

Financial Condition

Loans

Total loans held for investment at December 31, 2019, were $4.14 billion, a decrease of $45.3 million, or 1.1%, compared to $4.19 billion at September 30, 2019, and an increase of $354.1 million, or 9.3%, compared to $3.79 billion at December 31, 2018. The decrease in loans held for investment when compared to September 30, 2019, was primarily reflected in Mortgage Warehouse Lines of Credit and Commercial and Industrial loans, which decreased $30.3 million and $24.1 million, respectively. The decrease in Mortgage Warehouse Lines of Credit is primarily due to the seasonality of these loans.

For the quarter ended December 31, 2019, average loans held for investment were $4.17 billion, an increase of $100.6 million, or 2.5%, from $4.07 billion for the linked quarter.

Deposits

Total deposits at December 31, 2019, were $4.23 billion, a decrease of $55.7 million, or 1.3%, compared to $4.28 billion at September 30, 2019, and an increase of $445.5 million, or 11.8%, compared to $3.78 billion, at December 31, 2018. Brokered deposits contributed a decrease of $177.8 million when compared to the linked quarter, and a decrease of $179.8 million when compared to December 31, 2018. The decreases were partially offset by increases in money market deposits of $126.7 million when compared to the linked quarter and $461.1 million when compared to December 31, 2018. Noninterest-bearing deposits decreased $77.0 million, or 6.7%, compared to the linked quarter and increased $126.7 million, or 13.3%, compared to the quarter ended December 31, 2018.

Average total deposits for the quarter ended December 31, 2019, increased by $225.3 million, or 5.7%, over the linked quarter, led by increases of $212.1 million in average business deposits.

For the quarter ended December 31, 2019, average noninterest-bearing deposits as a percentage of total average deposits was 27.4%, compared to 27.1% for the quarter ended September 30, 2019, and 26.9% for the quarter ended December 31, 2018.

Borrowings

Average borrowings for the quarter ended December 31, 2019, decreased by $133.9 million, or 28.1%, compared to the quarter ended September 30, 2019, and decreased by $16.8 million, or 4.7% over the quarter ended December 31, 2018. The decrease in average borrowings in the fourth quarter of 2019 compared to the linked quarter was due to the calling of the $100.0 million long-term Federal Home Loan Bank advance in the fourth quarter.

Stockholders' Equity

Stockholders' equity was $599.3 million at December 31, 2019, an increase of $10.9 million, or 1.9%, compared to $588.4 million at September 30, 2019, and an increase of $49.5 million, or 9.0%, compared to $549.8 million at December 31, 2018.

Credit Quality

The Company recorded provision expense of $2.4 million for the quarter ended December 31, 2019, compared to provision expense of $4.2 million for the linked quarter and $1.7 million for the quarter ended December 31, 2018. The decrease in provision expense from the linked quarter was primarily driven by a decrease in charge-offs and, to a lesser extent, a decrease in the general reserve due to the decrease in the loan portfolio. During the quarter ended December 31, 2019, the Company had net charge-offs of $2.8 million compared to net charge-offs of $3.0 million for the linked quarter.

The Company's net charge-off ratio for the year ended December 31, 2019, is 0.15%, compared to 0.13% for the year ended December 31, 2018. Total nonperforming loans held for investment were $31.1 million at December 31, 2019, compared to $31.5 million and $31.9 million at September 30, 2019, and December 31, 2018, respectively.

Allowance for loan losses as a percentage of total loans held for investment was 0.91% at December 31, 2019, compared to 0.89% and 0.90% at September 30, 2019, and December 31, 2018, respectively. Allowance for loan losses as a percentage of nonperforming loans held for investment was 120.46% at December 31, 2019, compared to 117.97% and 107.37% at September 30, 2019, and December 31, 2018, respectively.

Total past due loans held for investment, defined as loans 30 days past due or more, as a percentage of loans held for investment, was 0.72% at both December 31, 2019, and September 30, 2019, and 0.90% at December 31, 2018.

Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

The Company expects to recognize a one-time cumulative effect adjustment to the allowance for loan losses at the beginning of the first quarter of 2020 due to the adoption of Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, increasing the allowance for credit losses by approximately $1.1 million. The Company does not expect its held-to-maturity or available for sale securities to be materially affected by the adoption of this ASU due to the nature of the portfolios. Our adjustment to the allowance for credit losses at the transition date may vary from our estimate due to refinements in the loss estimation models or factors.

Conference Call

Origin will hold a conference call to discuss its fourth quarter 2019 results on Thursday, January 23, 2020, at 8:00 a.m. Central Time (9:00 a.m. Eastern Time). To participate in the live conference call, please dial (844) 695-5516; International: (412) 902-6750 and request to be joined into the Origin Bancorp, Inc. (OBNK) call. A simultaneous audio-only webcast may be accessed via Origin's website at www.origin.bank under the Investor Relations, News & Events, Events & Presentations link or directly by visiting https://services.choruscall.com/links/obnk200123.html.

If you are unable to participate during the live webcast, the webcast will be archived on the Investor Relations section of Origin's website at www.origin.bank, under Investor Relations, News & Events, Events & Presentations.

About Origin Bancorp, Inc.

Origin is a financial holding company for Origin Bank, headquartered in Ruston, Louisiana, which provides a broad range of financial services to small and medium-sized businesses, municipalities, high net-worth individuals and retail clients from 43 banking centers, located from Dallas/Fort Worth, Texas across North Louisiana to Central Mississippi, as well as in Houston, Texas. For more information, visit www.origin.bank.

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information regarding Origin's future financial performance, business and growth strategy, projected plans and objectives, including any expected purchases of its outstanding common stock, and related transactions and other projections based on macroeconomic and industry trends, including expectations regarding interest rate cuts by the Federal Reserve and the impact of those cuts on Origin's results of operations, and expectations regarding the Company's liquidity, including in connection with advances obtained from the FHLB, which are all subject to change and may be inherently unreliable due to the multiple factors that impact broader economic and industry trends, and any such changes may be material. Such forward-looking statements are based on various facts and derived utilizing important assumptions and current expectations, estimates and projections about Origin and its subsidiaries, any of which may change over time and some of which may be beyond Origin's control. Statements preceded by, followed by or that otherwise include the words "assuming," "believes," "expects," "anticipates," "intends," "projects," "estimates," "plans" and similar expressions or future or conditional verbs such as "will," "should," "would," "may" and "could" are generally forward-looking in nature and not historical facts, although not all forwardlooking statements include the foregoing words. Further, certain factors that could affect Origin's future results and cause actual results to differ materially from those expressed in the forward-looking statements include: deterioration of Origin's asset quality; changes in real estate values and liquidity in Origin's primary market areas; the financial health of Origin's commercial borrowers and the success of construction projects that Origin finances; changes in the value of collateral securing Origin's loans; business and economic conditions generally and in the financial services industry, nationally and within Origin's primary market areas; Origin's ability to prudently manage its growth and execute its strategy; changes in management personnel; Origin's ability to maintain important deposit customer relationships; volatility and direction of market interest rates, which may increase funding costs or reduce interest-earning asset yields thus reducing margin; increased competition in the financial services industry, particularly from regional and national institutions; difficult market conditions and unfavorable economic trends in the United States generally, and particularly in the market areas in which Origin operates and in which its loans are concentrated, including the effects of declines in housing markets; an increase in unemployment levels and slowdowns in economic growth; Origin's level of nonperforming assets and the costs associated with resolving any problem loans including litigation and other costs; the credit risk associated with the substantial amount of commercial real estate, construction and land development, and commercial loans in Origin's loan portfolio; the extensive federal and state regulation, supervision and examination governing almost every aspect of Origin's operations including changes in regulations affecting financial institutions, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations being issued in accordance with this statute and potential expenses associated with complying with such regulations; Origin's ability to comply with applicable capital and liquidity requirements, including its ability to generate liquidity internally or raise capital on favorable terms, including continued access to the debt and equity capital markets; changes in the utility of Origin's non-GAAP liquidity measurements and its underlying assumptions or estimates; possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies, and similar organizations; and the effects of weather and natural disasters such as floods, droughts, wind, tornadoes and hurricanes as well as effects from geopolitical instability and manmade disasters. For a discussion of these and other risks that may cause actual results to differ from expectations, please refer to the sections titled "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" in Origin's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") and any updates to those sections set forth in Origin's subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if Origin's underlying assumptions prove to be incorrect, actual results may differ materially from what Origin anticipates. Accordingly, you should not place undue reliance on any forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and Origin does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New risks and uncertainties arise from time to time, and it is not possible for Origin to predict those events or how they may affect Origin. In addition, Origin cannot assess the impact of each factor on Origin's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this communication are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Origin or persons acting on Origin's behalf may issue. Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.

Contact:
Chris Reigelman, Origin Bancorp, Inc.
318-497-3177 / chris@origin.bank

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