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What changed in Origin Bancorp, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Origin Bancorp, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+427 added−426 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-22)

Top changes in Origin Bancorp, Inc.'s 2023 10-K

427 paragraphs added · 426 removed · 315 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

87 edited+20 added−12 removed166 unchanged
Biggest changeThese laws and regulations include, among numerous other things, provisions that: • limit the interest and other charges collected or contracted for by Origin Bank, including rules respecting the terms of credit cards and of debit card overdrafts; • govern Origin Bank’s disclosures of credit terms to consumer borrowers; • require Origin Bank to provide information to enable the public and public officials to determine whether it is fulfilling its obligation to help meet the housing needs of the communities it serves; • prohibit Origin Bank from discriminating on the basis of race, creed or other prohibited factors when it makes decisions to extend credit; • govern the manner in which Origin Bank may collect consumer debts; and • prohibit unfair, deceptive or abusive acts or practices in the provision of consumer financial products and services.
Biggest changeThese laws and regulations include, among numerous other things, provisions that: • limit the interest and other charges collected or contracted for by Origin Bank, including rules respecting the terms of credit cards and of debit card overdrafts; • govern Origin Bank’s disclosures of credit terms to consumer borrowers; • require Origin Bank to provide information to enable the public and public officials to determine whether it is fulfilling its obligation to help meet the housing needs of the communities it serves; • prohibit Origin Bank from discriminating on the basis of race, creed or other prohibited factors when it makes decisions to extend credit; • govern the manner in which Origin Bank may collect consumer debts; and • prohibit unfair, deceptive or abusive acts or practices in the provision of consumer financial products and services. 23 Table of Contents Mortgage Regulation The Consumer Financial Protection Bureau (“CFPB”) adopted a rule that implements the ability-to-repay and qualified mortgage provisions of the Dodd-Frank Act (the “ATR/QM rule”), which requires lenders to consider, among other things, income, employment status, assets, payment amounts, and credit history before approving a mortgage, and provides a compliance “safe harbor” for lenders that issue certain “qualified mortgages.” The ATR/QM rule defines a “qualified mortgage” to have certain specified characteristics, and generally prohibits loans with negative amortization, interest-only payments, balloon payments, or terms exceeding 30 years from being qualified mortgages.
We have grown our assets, deposits, and business primarily organically by building relationships through our lending products, expanding our deposit products and delivery capabilities, opening new branches, and hiring experienced bankers with existing customer relationships in our market areas.
We have primarily grown our assets, deposits, and business organically by building relationships through our lending products, expanding our deposit products and delivery capabilities, opening new branches, and hiring experienced bankers with existing customer relationships in our market areas.
Our consumer loan portfolio is primarily composed of secured and unsecured loans that we originate. The largest component of our consumer loan portfolio is for residential real estate purposes. We originate one-to-four family, owner-occupied residential mortgage loans generally secured by property located in our primary market areas.
Consumer Loans and Residential Real Estate Loans. Our consumer loan portfolio is primarily composed of secured and unsecured loans that we originate. The largest component of our consumer loan portfolio is for residential real estate purposes. We originate one-to-four family, owner-occupied residential mortgage loans generally secured by property located in our primary market areas.
Under this authority, our regulators can require us or our subsidiaries to enter into informal or formal supervisory agreements, including board resolutions, memoranda of understanding, written agreements and consent or cease and desist orders, pursuant to which we would be required to take identified corrective actions to address cited concerns and to refrain from taking certain actions. 13 Table of Contents If we become subject to and are unable to comply with the terms of any regulatory actions or directives, supervisory agreements, or orders, then we could become subject to additional, heightened supervisory actions and orders, possibly including prompt corrective action restrictions and/or other regulatory actions, including prohibitions on the payment of dividends on our common stock and preferred stock.
Under this authority, our regulators can require us or our subsidiaries to enter into informal or formal supervisory agreements, including board resolutions, memoranda of understanding, written agreements and consent or cease and desist orders, pursuant to which we would be required to take identified corrective actions to address cited concerns and to refrain from taking certain actions. 14 Table of Contents If we become subject to and are unable to comply with the terms of any regulatory actions or directives, supervisory agreements, or orders, then we could become subject to additional, heightened supervisory actions and orders, possibly including prompt corrective action restrictions and/or other regulatory actions, including prohibitions on the payment of dividends on our common stock and preferred stock.
Our executive management team has extensive knowledge of the bank regulatory landscape, significant experience navigating interest rate and credit cycles and a long history of collaboration, which we believe may help us avoid or mitigate unforeseen losses. 6 Table of Contents Expanding Revenue Sources We offer commercial and retail customers a wide range of products and services that provide us with a diversified revenue stream and help us to solidify customer relationships.
Our executive management team has extensive knowledge of the bank regulatory landscape, significant experience navigating interest rate and credit cycles and a long history of collaboration, which we believe may help us avoid or mitigate unforeseen losses. 7 Table of Contents Expanding Revenue Sources We offer commercial and retail customers a wide range of products and services that provide us with a diversified revenue stream and help us to solidify customer relationships.
Under the regulations, if a regulator determines that a bank fails to meet any standards prescribed by the guidelines, the regulator may require the bank to submit an acceptable plan to achieve compliance, consistent with deadlines for the submission and review of such safety and soundness compliance plans. 19 Table of Contents Anti-Money Laundering A continued focus of governmental policy relating to financial institutions in recent years has been combating money laundering and terrorist financing.
Under the regulations, if a regulator determines that a bank fails to meet any standards prescribed by the guidelines, the regulator may require the bank to submit an acceptable plan to achieve compliance, consistent with deadlines for the submission and review of such safety and soundness compliance plans. 20 Table of Contents Anti-Money Laundering A continued focus of governmental policy relating to financial institutions in recent years has been combating money laundering and terrorist financing.
These buffer requirements must be met for a bank or bank holding company to be able to pay dividends, engage in share buybacks or make discretionary bonus payments to executive management without restriction. 16 Table of Contents The FDICIA, among other things, requires the federal bank regulatory agencies to take “prompt corrective action” regarding depository institutions that do not meet minimum capital requirements.
These buffer requirements must be met for a bank or bank holding company to be able to pay dividends, engage in share buybacks or make discretionary bonus payments to executive management without restriction. 17 Table of Contents The FDICIA, among other things, requires the federal bank regulatory agencies to take “prompt corrective action” regarding depository institutions that do not meet minimum capital requirements.
Origin Bank is subject to certain legal lending limits under the Louisiana Banking Law and Federal Reserve Regulation O. At December 31, 2022, we had established a general in-house lending limit ranging between $30.0 million and $35.0 million to any one borrower, excluding mortgage warehouse lines of credit, based upon our internal risk rating of the relationship.
Origin Bank is subject to certain legal lending limits under the Louisiana Banking Law and Federal Reserve Regulation O. At December 31, 2023, we had established a general in-house lending limit ranging between $30.0 million and $35.0 million to any one borrower, excluding mortgage warehouse lines of credit, based upon our internal risk rating of the relationship.
We believe that our relations with our employees are good. 12 Table of Contents Corporate Information We were organized as a business corporation in 1991 under the laws of the state of Louisiana. Our principal executive offices are located at 500 South Service Road East, Ruston, Louisiana 71270, and our telephone number is (318) 255-2222. Our website is www.origin.bank.
We believe that our relations with our employees are good. 13 Table of Contents Corporate Information We were organized as a business corporation in 1991 under the laws of the state of Louisiana. Our principal executive offices are located at 500 South Service Road East, Ruston, Louisiana 71270, and our telephone number is (318) 255-2222. Our website is www.origin.bank.
Subject to Federal Reserve approval and certain state filing requirements, Origin Bank is permitted under federal law to branch on a de novo basis across state lines wherever the laws of that state would permit a bank chartered by that state to establish a branch. 18 Table of Contents Transactions with Affiliates and Insiders Origin Bank is subject to restrictions on extensions of credit and certain other transactions between Origin Bank and the Company or any nonbank affiliate.
Subject to Federal Reserve approval and certain state filing requirements, Origin Bank is permitted under federal law to branch on a de novo basis across state lines wherever the laws of that state would permit a bank chartered by that state to establish a branch. 19 Table of Contents Transactions with Affiliates and Insiders Origin Bank is subject to restrictions on extensions of credit and certain other transactions between Origin Bank and the Company or any nonbank affiliate.
Origin Bank is an FDIC-insured depository institution and thus subject to these requirements. 14 Table of Contents Acquisitions The BHC Act permits acquisitions of banks by bank holding companies, such that we and any other bank holding company, whether located in Louisiana or elsewhere, may acquire a bank located in any other state, subject to certain deposit-percentage, age of bank charter requirements, and other restrictions.
Origin Bank is an FDIC-insured depository institution and thus subject to these requirements. 15 Table of Contents Acquisitions The BHC Act permits acquisitions of banks by bank holding companies, such that we and any other bank holding company, whether located in Louisiana or elsewhere, may acquire a bank located in any other state, subject to certain deposit-percentage, age of bank charter requirements, and other restrictions.
We also have access to secondary sources of funding, including advances from the Federal Home Loan Bank of Dallas, borrowings at the Federal Reserve Discount Window and other borrowings. 9 Table of Contents Mortgage Banking We are also engaged in the residential mortgage banking business, which primarily generates income from the sale of mortgage loans as well as the servicing of residential mortgage loans for others.
We also have access to secondary sources of funding, including advances from the Federal Home Loan Bank of Dallas, borrowings at the Federal Reserve Discount Window and other borrowings. 10 Table of Contents Mortgage Banking We are also engaged in the residential mortgage banking business, which primarily generates income from the sale of mortgage loans as well as the servicing of residential mortgage loans for others.
We also provide advanced leadership development via our Leadership Academy classes, which provide structured training, collaboration with other aspiring leaders throughout the organization, and mentoring relationships. In addition, we provide a senior-level two-year class called the Origin Leadership Academy, which focuses on the development of next-generation executives. Participants in the Origin Leadership Academy are appointed by senior management.
We also provide advanced leadership development via our Leadership Academy classes, which provide structured training, collaboration with other aspiring leaders throughout the organization, and mentoring relationships. Included in the Academy, we provide a senior-level two-year class called the Origin Leadership Academy, which focuses on the development of next-generation executives. Participants in the Origin Leadership Academy are appointed by senior management.
We launched a nationally-recognized financial wellness program (“SmartDollar”) during 2021 that is designed to assist our employees in becoming debt-free and saving money for emergencies and retirement, empowering them to become better financially prepared for their future, which during 2022, had an over 40% participation rate.
We launched a nationally-recognized financial wellness program (“SmartDollar”) during 2021 that is designed to assist our employees in becoming debt-free and saving money for emergencies and retirement, empowering them to become better financially prepared for their future, which during 2023, had an over 40% participation rate.
Mortgage warehouse loans have contributed interest income of $18.7 million and $27.5 million for the years ended December 31, 2022 and 2021, respectively. Credit Risks . The principal economic risk associated with each category of loans we make is the creditworthiness of the borrower and the ability of the borrower to repay the relevant loan.
Mortgage warehouse loans have contributed interest income of $21.5 million, $18.7 million and $27.5 million for the years ended December 31, 2023, 2022 and 2021, respectively. Credit Risks . The principal economic risk associated with each category of loans we make is the creditworthiness of the borrower and the ability of the borrower to repay the relevant loan.
Failure to meet minimum capital requirements could also result in restrictions on the Company’s or Origin Bank’s ability to pay dividends or otherwise distribute capital or to receive regulatory approval of applications or other restrictions on its growth. In 2022, the Company’s and Origin Bank’s regulatory capital ratios were above the applicable well-capitalized standards and met the capital conservation buffer.
Failure to meet minimum capital requirements could also result in restrictions on the Company’s or Origin Bank’s ability to pay dividends or otherwise distribute capital or to receive regulatory approval of applications or other restrictions on its growth. In 2023, the Company’s and Origin Bank’s regulatory capital ratios were above the applicable well-capitalized standards and met the capital conservation buffer.
In addition, the securitizer of asset-backed securities must retain not less than 5% of the credit risk of the assets collateralizing the asset-backed securities, unless subject to an exemption for asset-backed securities that are collateralized exclusively by residential mortgages that qualify as “qualified residential mortgages.” 22 Table of Contents The CFPB has also issued rules to implement requirements of the Dodd-Frank Act pertaining to mortgage loan origination (including with respect to loan originator compensation and loan originator qualifications) as well as integrated mortgage disclosure rules.
In addition, the securitizer of asset-backed securities must retain not less than 5% of the credit risk of the assets collateralizing the asset-backed securities, unless subject to an exemption for asset-backed securities that are collateralized exclusively by residential mortgages that qualify as “qualified residential mortgages.” The CFPB has also issued rules to implement requirements of the Dodd-Frank Act pertaining to mortgage loan origination (including with respect to loan originator compensation and loan originator qualifications) as well as integrated mortgage disclosure rules.
In addition, we are also subject to federal regulatory capital requirements that effectively limit the amount of cash dividends that we may pay. 17 Table of Contents The primary sources of funds for our payment of dividends to our shareholders are cash on hand and dividends from Origin Bank and our non-bank subsidiaries.
In addition, we are also subject to federal regulatory capital requirements that effectively limit the amount of cash dividends that we may pay. 18 Table of Contents The primary sources of funds for our payment of dividends to our shareholders are cash on hand and dividends from Origin Bank and our non-bank subsidiaries.
We have also established a corporate loan committee with authority to approve loans up to the legal lending limit of Origin Bank. During 2022, credit relationships of $8.0 million or greater were generally presented to the corporate loan committee for approval or ratification of approval prior to committing to the loan.
We have also established a corporate loan committee with authority to approve loans up to the legal lending limit of Origin Bank. During 2023, credit relationships of $8.0 million or greater were generally presented to the corporate loan committee for approval or ratification of approval prior to committing to the loan.
On November 18, 2021, the federal banking agencies issued a new rule effective in 2022 that requires banks to notify their primary federal regulator within 36 hours of a “computer-security incident” that rises to the level of a “notification incident.” The federal banking regulators regularly issue guidance regarding cybersecurity intended to enhance cyber risk management standards among financial institutions.
On November 18, 2021, the federal banking agencies issued a new rule effective in 2022 that requires banks to notify their primary federal regulator within 36 hours of a “computer-security incident” that rises to the level of a “notification incident.” 22 Table of Contents The federal banking regulators regularly issue guidance regarding cybersecurity intended to enhance cyber risk management standards among financial institutions.
As of December 31, 2022, these rules have not been implemented. Further, the capital conservation buffer described above would limit discretionary bonus payments to bank executives if the institution's regulatory capital ratios failed to exceed certain thresholds.
As of December 31, 2023, these rules have not been implemented. Further, the capital conservation buffer described above would limit discretionary bonus payments to bank executives if the institution’s regulatory capital ratios failed to exceed certain thresholds.
Employee Engagement Our Dream Manager® program assists our employees in meeting their own personal and professional goals in addition to helping them improve physically, emotionally, intellectually, and spiritually. Over 250 employees have participated in this program since 2019.
Employee Engagement Our Dream Manager® program assists our employees in meeting their own personal and professional goals in addition to helping them improve physically, emotionally, intellectually, and spiritually. Over 300 employees have participated in this program since 2019.
As further described below, each of the Company and Origin Bank is well-capitalized under applicable regulatory standards as of December 31, 2022, and Origin Bank has an overall rating of “Satisfactory” in its most recent CRA evaluation.
As further described below, each of the Company and Origin Bank is well-capitalized under applicable regulatory standards as of December 31, 2023, and Origin Bank has an overall rating of “Satisfactory” in its most recent CRA evaluation.
Commercial and industrial loans have contributed interest income of $90.5 million and $67.1 million for the years ended December 31, 2022 and 2021, respectively. 8 Table of Contents Mortgage Warehouse Loans. Mortgage warehouse loans are extended to mortgage companies and secured by loan participations in mortgages that are typically sold within 15 to 25 days.
Commercial and industrial loans have contributed interest income of $155.8 million, $90.5 million and $67.1 million for the years ended December 31, 2023, 2022 and 2021, respectively. 9 Table of Contents Mortgage Warehouse Loans. Mortgage warehouse loans are extended to mortgage companies and secured by loan participations in mortgages that are typically sold within 15 to 25 days.
A general discussion of the range of financial services we offer follows. 7 Table of Contents Lending Activities We originate loans primarily secured by single and multi-family real estate, residential construction and commercial buildings. In addition, we make loans to small and mid-sized businesses, as well as to consumers for a variety of purposes.
A general discussion of the range of financial services we offer follows. 8 Table of Contents Lending Activities We originate loans secured by single and multi-family real estate, residential construction and commercial buildings. In addition, we make loans to small and mid-sized businesses, as well as to consumers for a variety of purposes.
Member banks do not have any control over the Federal Reserve System as a result of owning the stock and the stock cannot be sold or traded. The annual dividend rate for member banks with $10 billion or less in total assets is fixed at 6%, which currently applies to us.
Member banks do not have any control over the Federal Reserve System as a result of owning the stock and the stock cannot be sold or traded. The annual dividend rate for member banks with $12.517 billion or less in total assets is fixed at 6%, which currently applies to us.
This allows senior leaders in our organization to set goals and monitor progress by assessing, measuring, benchmarking, and managing diversity and inclusion by the dimensions of their choice, such as race/ethnicity and gender.
This allows senior leaders in our organization to monitor progress by assessing, measuring, benchmarking, and managing diversity and inclusion by the dimensions of their choice, such as race/ethnicity and gender.
Consumer loans also include closed-end second mortgages, home equity lines of credit and our mortgage loans held for sale. Consumer and residential real estate loans have contributed interest income of $51.1 million and $38.0 million for the years ended December 31, 2022 and 2021, respectively. Commercial and Industrial Loans.
Consumer loans also include closed-end second mortgages, home equity lines of credit and our mortgage loans held for sale. Consumer and residential real estate loans have contributed interest income of $83.9 million, $51.1 million and $38.0 million for the years ended December 31, 2023, 2022 and 2021, respectively. Commercial and Industrial Loans.
Based on current estimates, we believe that the Company and Origin Bank will continue to exceed all applicable well-capitalized regulatory capital requirements and the capital conservation buffer in 2023.
Based on current estimates, we believe that the Company and Origin Bank will continue to exceed all applicable well-capitalized regulatory capital requirements and the capital conservation buffer in 2024.
As of December 31, 2022, our CRE loan concentrations were below the Guidance thresholds discussed above. 20 Table of Contents Debit Interchange Fees Debit card interchange fee restrictions set forth in the Durbin Amendment, as implemented by regulations of the Federal Reserve, cap the maximum debit interchange fee that a debit card issuer may receive per transaction.
As of December 31, 2023, our CRE loan concentrations were below the Guidance thresholds discussed above. 21 Table of Contents Debit Interchange Fees Debit card interchange fee restrictions set forth in the Durbin Amendment, as implemented by regulations of the Federal Reserve, cap the maximum debit interchange fee that a debit card issuer may receive per transaction.
However, the annual dividend rate for member banks with total assets in excess of $10 billion, is based on a floating dividend rate tied to10-year U.S. Treasuries with the maximum dividend rate capped at 6%.
However, the annual dividend rate for member banks with total assets in excess of $12.517 billion, is based on a floating dividend rate tied to10-year U.S. Treasuries with the maximum dividend rate capped at 6%.
All loans, advances and other extensions of credit made by the Federal Home Loan Bank of Dallas to Origin Bank are secured by a portion of Origin Bank's mortgage loan portfolio, certain other investments and the capital stock of the Federal Home Loan Bank of Dallas held by Origin Bank. 23 Table of Contents
All loans, advances and other extensions of credit made by the Federal Home Loan Bank of Dallas to Origin Bank are secured by a portion of Origin Bank’s mortgage loan portfolio, certain other investments and the capital stock of the Federal Home Loan Bank of Dallas held by Origin Bank.
Please see Note 18 - Capital and Regulatory Matters in the notes to the consolidated financial statements for consolidated capital ratios of the Company and Origin Bank as of December 31, 2022. Payment of Dividends We are a legal entity separate and distinct from Origin Bank and our other subsidiaries.
Please see Note 17 — Capital and Regulatory Matters in the notes to the consolidated financial statements for consolidated capital ratios of the Company and Origin Bank as of December 31, 2023. Payment of Dividends We are a legal entity separate and distinct from Origin Bank and our other subsidiaries.
We originate residential mortgage loans in our markets as a service to our existing customers and as a way to develop relationships with new customers in order to support our core banking strategy. Revenue from our mortgage banking activities was $6.7 million, $12.9 million and $29.6 million for the years ended December 31, 2022, 2021 and 2020, respectively.
We originate residential mortgage loans in our markets as a service to our existing customers and as a way to develop relationships with new customers in order to support our core banking strategy. Revenue from our mortgage banking activities was $3.4 million, $6.7 million and $12.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.
In 2023, Origin Bank announced our newly formed Diversity Council, which consists of 18 diverse employees that will collectively advance our Diversity, Equity, and Inclusion efforts in a way that makes a difference within our workplace and in the communities we serve.
In 2023, Origin Bank announced the formation of the Diversity Council, which consists of 18 diverse employees that collectively advance our Diversity, Equity, and Inclusion efforts in a way that makes a difference within our workplace and in the communities we serve.
We are subject to vigorous competition in all aspects of our business from banks, savings banks, savings and loan associations, finance companies, credit unions, technology companies, and other financial service providers, such as money market funds, fintech companies, brokerage firms, consumer finance companies, asset-based nonbank lenders, insurance companies and certain other non-financial entities, including retail stores which may maintain their own credit programs and certain governmental organizations which may offer more favorable financing than we can.
We are subject to vigorous competition in all aspects of our business from banks, savings banks, savings and loan associations, finance companies, credit unions, technology companies, and other financial service providers, such as money market funds, fintech companies, brokerage firms, consumer finance companies, asset-based nonbank lenders, insurance companies and certain other non-financial entities, including retail stores which may maintain their own credit programs and certain governmental organizations which may offer more favorable financing than we can. 11 Table of Contents Many other commercial banks, savings institutions and credit unions have offices in our primary market areas.
Other Regulatory Matters We and our subsidiaries are subject to oversight by the SEC, the PCAOB, the Nasdaq, and various state securities and insurance regulators. We and our subsidiaries have from time to time received requests for information from regulatory authorities in various states, including state attorneys general, securities regulators and other regulatory authorities, concerning our business practices.
Other Regulatory Matters We and our subsidiaries are subject to oversight by the SEC, the New York Stock Exchange, and various state securities and insurance regulators. We and our subsidiaries have from time to time received requests for information from regulatory authorities in various states, including state attorneys general, securities regulators and other regulatory authorities, concerning our business practices.
A bank holding company will not be permitted to become or remain a financial holding company and no new activities authorized under GLB may be commenced by a holding company or by a bank financial subsidiary if any of its bank subsidiaries received less than a “satisfactory” CRA rating in its latest CRA examination.
A bank holding company will not be permitted to become or remain a financial holding company and no new activities authorized under the Gramm-Leach-Bliley Act (“GLB”) may be commenced by a holding company or by a bank financial subsidiary if any of its bank subsidiaries received less than a “satisfactory” CRA rating in its latest CRA examination.
Additionally, all employees participate in diversity training and managers have additional, in-depth training on recognizing unconscious biases and access to brand new micro learning lessons every week to help respond to current needs around diversity and inclusion. Also, we recently introduced VIBE Central in Workday. VIBE stands for Value, Inclusion, Belonging and Equity.
Additionally, all employees participate in diversity training and managers have additional, in-depth training on recognizing unconscious biases and access to brand new micro learning lessons every week to help respond to current needs around diversity and inclusion. Also, we continue to use VIBE Central at Origin, where VIBE stands for Value, Inclusion, Belonging and Equity.
The DOJ has increased its efforts to prosecute what it regards as violations of the ECOA and FHA. Effect of Governmental Monetary Policies. The commercial banking business is affected not only by general economic conditions but also by U.S. fiscal policy and the monetary policies of the Federal Reserve.
The Department of Justice has increased its efforts to prosecute what it regards as violations of the Equal Credit Opportunity Act and the FHA. Effect of Governmental Monetary Policies. The commercial banking business is affected not only by general economic conditions but also by U.S. fiscal policy and the monetary policies of the Federal Reserve.
Commercial real estate loans have contributed interest income of $88.2 million and $61.8 million for the years ended December 31, 2022 and 2021, respectively, while construction/land/land development loans have contributed interest income of $36.4 million and $21.9 million for the years ended December 31, 2022 and 2021, respectively. Consumer Loans and Residential Real Estate Loans.
Commercial real estate loans have contributed interest income of $135.1 million, $88.2 million and $61.8 million for the years ended December 31, 2023, 2022 and 2021, respectively, while construction/land/land development loans have contributed interest income of $69.6 million, $36.4 million and $21.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.
At December 31, 2022, approximately 32.0% of our deposits were noninterest-bearing demand deposits, and our cost of total deposits was 0.47% for the year ended December 31, 2022. Our Markets We currently operate in the markets of Dallas/Fort Worth, Houston, East Texas, North Louisiana and Mississippi, all of which offer attractive combinations of diversity, growth and stability.
At December 31, 2023, approximately 23.3% of our deposits were noninterest-bearing demand deposits, and our cost of total deposits was 2.38% for the year ended December 31, 2023. Our Markets We currently operate in the markets of Dallas/Fort Worth, Houston, East Texas, North Louisiana and Mississippi, all of which offer attractive combinations of diversity, growth and stability.
At December 31, 2022, our loans held for investment ("LHFI") portfolio was comprised of 32.9% commercial and industrial loans including mortgage warehouse loans, and 45.8% commercial real estate loans, including construction/land/land development loans. 34.1% of our total commercial real estate and construction/land/land development is owner occupied and 65.9% in non-owner occupied.
At December 31, 2023, our loans held for investment ("LHFI") portfolio was comprised of 31.2% commercial and industrial loans including mortgage warehouse loans, and 45.9% commercial real estate loans, including construction/land/land development loans. 34.5% of our total commercial real estate and construction/land/land development is owner occupied and 65.5% is non-owner occupied.
Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and providing detailed requirements with respect to these programs, including data encryption requirements. Many states have also recently implemented or modified their data breach notification and data privacy requirements.
State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations. Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and providing detailed requirements with respect to these programs, including data encryption requirements. Many states have also recently implemented or modified their data breach notification and data privacy requirements.
Our success has been based on (1) a talented team of relationship bankers, executives and directors; (2) a diverse footprint with stable and growth-oriented markets; (3) differentiated and customized delivery and service; (4) our core deposit franchise and (5) an ability to significantly leverage our infrastructure and technology.
Our success has been based on (1) a talented team of relationship bankers, executives and directors; (2) a diverse footprint with stable and growth-oriented markets; (3) differentiated and customized delivery and service; (4) our core deposit franchise and (5) an ability to significantly leverage our infrastructure and technology. 6 Table of Contents Successful execution of our strategic plan has produced significant growth in our franchise.
We offer a wide range of deposit services, including checking, savings, money market accounts and time deposits. We obtain most of our deposits from individuals, small businesses and municipalities in our market areas. At December 31, 2022, 54.2% of our deposits were business deposits, 35.6% were consumer deposits and 10.2% were public fund deposits.
We offer a wide range of deposit services, including checking, savings, money market accounts and time deposits. We obtain most of our deposits from individuals, small businesses and municipalities in our market areas. At December 31, 2023, 52.3% of our deposits were business deposits, 31.7% were consumer deposits and 10.7% were public fund deposits.
Safe Work Environment Throughout our history, we have been committed to employee and customer health and safety. This focus was magnified with the impact of COVID-19 and employee and customer health and safety continues to be one of our top priorities. While COVID-19 variants have evolved and changed our support of our employees and customer health has remained unwavering.
This focus was magnified with the impact of COVID-19 and employee and customer health and safety continues to be one of our top priorities. While COVID-19 variants have evolved and changed our support of our employees and customer health has remained unwavering.
The CARES Act granted certain forbearance rights and protection against foreclosure to borrowers with a “federally backed mortgage loan,” including certain first or subordinate lien loans designed principally for the occupancy of one to four families. These consumer protections continued during the COVID-19 pandemic emergency.
The CARES Act granted certain forbearance rights and protection against foreclosure to borrowers with a “federally backed mortgage loan,” including certain first or subordinate lien loans designed principally for the occupancy of one to four families.
As of December 31, 2022, no such regulations have been proposed. Economic Sanctions The OFAC is responsible for helping to ensure that U.S. entities do not engage in transactions with certain prohibited parties, as defined by various Executive Orders and acts of Congress.
Economic Sanctions The OFAC is responsible for helping to ensure that U.S. entities do not engage in transactions with certain prohibited parties, as defined by various Executive Orders and acts of Congress.
The loans are underwritten by the approved mortgage company using agency or investor guidelines. The loans are then committed to a secondary market investor and are primarily made up of agency-eligible conventional loans (Fannie Mae, Freddie Mac), government loans (Ginnie Mae, FHA loans, VA loans, USDA Rural Housing Development loans) and qualified jumbo loans.
The loans are underwritten by the approved mortgage company using agency or investor guidelines. The loans are then committed to a secondary market investor and are primarily made up of agency-eligible conventional loans (Fannie Mae, Freddie Mac), government loans (Federal Housing Administration (“FHA”) loans, Veterans Administration loans, U.S. Department of Agriculture Rural Housing Development loans) and qualified jumbo loans.
Insurance We offer a wide variety of commercial and personal property and casualty insurance products through our wholly-owned insurance subsidiary, Davison Insurance Agency, LLC, which conducts business under the trade names Lincoln Agency, LLC, Lincoln Agency Transportation Insurance, Pulley-White Insurance Agency, Reeves, Coon & Funderburg, Simoneaux & Wallace Agency and Thomas & Farr Agency.
Insurance We offer a wide variety of commercial and personal property and casualty insurance products through our wholly-owned insurance subsidiary, Forth Insurance, formerly known as Davison Insurance Agency, LLC and doing business as Lincoln Agency, LLC, Lincoln Agency Transportation Insurance, Pulley-White Insurance Agency, Reeves, Coon & Funderburg, Simoneaux & Wallace Agency and Thomas & Farr Agency.
This ranking is based on feedback from surveys given directly to the American Banker magazine from our employees. We have built our success on valued relationships beginning with our employees, who then build long-term, customer-focused relationships throughout our footprint. None of our employees are represented by any collective bargaining unit or are parties to a collective bargaining agreement.
We have built our success on valued relationships beginning with our employees, who then build long-term, customer-focused relationships throughout our footprint. None of our employees are represented by any collective bargaining unit or are parties to a collective bargaining agreement.
The North Louisiana markets offer a stable economic climate with lower costs associated with deposit gathering and our operational platform. Our footprint in Mississippi comprises areas of significant commercial investment and additional growth opportunities. We believe all of our markets throughout Texas, Louisiana and Mississippi provide favorable business climates and continued opportunity for growth.
The North Louisiana markets offer a stable economic climate with lower costs associated with deposit gathering and our operational platform. Our footprint in Mississippi comprises areas of significant commercial investment and additional growth opportunities.
Governance and Financial Reporting Obligations We are required to comply with various corporate governance and financial reporting requirements under the Sarbanes-Oxley Act of 2002, as well as rules and regulations adopted by the SEC, the Public Company Accounting Oversight Board ("PCAOB"), and the Nasdaq.
Governance and Financial Reporting Obligations We are required to comply with various corporate governance and financial reporting requirements under the Sarbanes-Oxley Act of 2002, as well as rules and regulations adopted by the SEC and the New York Stock Exchange.
A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations if a critical service provider of the institution falls victim to this type of cyber-attack.
A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations if a critical service provider of the institution falls victim to this type of cyber-attack. Our information security protocols are designed in part to adhere to the requirements of this guidance.
The Dallas/Fort Worth and Houston markets represent two of the largest and fastest-growing metropolitan areas in the country. These markets provide attractive economic environments and offer significant deposit and lending opportunities as they are home to many large and mid-size corporations across a wide range of industries that include healthcare, manufacturing, higher education, agriculture, energy, transportation and technology.
These markets provide attractive economic environments and offer significant deposit and lending opportunities as they are home to many large and mid-size corporations across a wide range of industries that include healthcare, manufacturing, construction, higher education, agriculture, energy, transportation and technology.
We seek to maintain sound asset quality by moderating credit risk, adhering to prudent lending practices and promoting a relationship-based approach to commercial and consumer banking.
Concentration on Sound Asset Quality We believe that asset quality is a key to long-term financial success. We seek to maintain sound asset quality by moderating credit risk, adhering to prudent lending practices and promoting a relationship-based approach to commercial and consumer banking.
At December 31, 2022, we held $7.78 billion of total deposits and have grown deposits at a compound annual growth rate of 18.8% since December 31, 2003. At December 31, 2022, 95.8% of our total deposits were core deposits (defined as total deposits excluding time deposits greater than $250,000 and brokered deposits).
At December 31, 2023, we held $8.25 billion of total deposits and have grown deposits at a compound annual growth rate of 18.1% since December 31, 2003. At December 31, 2023, 89.0% of our total deposits were core deposits (defined as total deposits excluding time deposits greater than $250,000, brokered and Certificate of Deposit Account Registry Service deposits).
The final rule identifies replacement benchmark rates based on SOFR to replace overnight, one-month, three-month, six-month, and 12-month LIBOR in contracts subject to the LIBOR Act. Federal Home Loan Bank System.
The final rule identifies replacement benchmark rates based on SOFR to replace overnight, one-month, three-month, six-month, and 12-month LIBOR in contracts subject to the LIBOR Act. The Company and the Bank have fully transitioned its LIBOR-based contracts to other indices, primarily SOFR, as of December 31, 2023. Federal Home Loan Bank System.
Our competitors often have greater resources, have broader geographic markets, have higher lending limits, offer various services that we may not currently offer and make broader use of media advertising, support services and electronic technology than we do.
These institutions include many of the largest banks operating in Texas, Louisiana and Mississippi, including various national banks. Our competitors often have greater resources, have broader geographic markets, have higher lending limits, offer various services that we may not currently offer and make broader use of media advertising, support services and electronic technology than we do.
With over 30 years of growth in the insurance industry and approximately 120 experienced professionals, our agency has primary market locations across Louisiana, but also serves customers in Texas, Mississippi, Arkansas and other states across the United States. In December 2021, we acquired the remaining 62% interest in the Lincoln Agency, bringing our total ownership to 100% ownership.
With over 30 years of growth in the insurance industry and approximately 125 experienced professionals, our agency has primary market locations across Louisiana, but also serves customers in Texas, Mississippi, Arkansas and other states across the United States.
Origin has been recognized as a “Best Bank to Work For” by American Banker magazine for ten consecutive years and was named the 2nd "Best Bank to Work For" in America in 2022, which we believe is attributable to our deep commitment to corporate culture, and our focus on initiatives to support and develop our employees.
Origin has been recognized as a “Best Bank to Work For” by American Banker magazine for 11 consecutive years, which we believe is attributable to our deep commitment to corporate culture, and our focus on initiatives to support and develop our employees. This ranking is based on feedback from surveys given directly to the American Banker magazine from our employees.
Additionally, in one specific initiative designed to help the communities we serve, our Project Enrich program provides employees with up to twenty hours of paid time off to volunteer in their communities. In 2022, the employees of Origin volunteered 2,874 hours in the community during bank time, not including many more on personal time.
Additionally, in one specific initiative designed to help the communities we serve, our Project Enrich program provides employees with up to twenty hours of paid time off to volunteer in their communities.
LIBOR On March 15, 2022, Congress enacted the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”) to address references to LIBOR in contracts that (i) are governed by U.S. law; (ii) will not mature before June 30, 2023; and (iii) lack fallback provisions providing for a clearly defined and practicable replacement for LIBOR.
We cannot predict the nature of future fiscal and monetary policies or the effect of these policies on our operations and activities, financial condition, results of operations, growth plans or future prospects. 24 Table of Contents LIBOR On March 15, 2022, Congress enacted the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”) to address references to LIBOR in contracts that (i) are governed by U.S. law; (ii) will not mature before June 30, 2023; and (iii) lack fallback provisions providing for a clearly defined and practicable replacement for LIBOR.
Successful execution of our strategic plan has produced significant growth in our franchise. Since 2005, we have enhanced our growth by integrating four bank acquisitions, entering de novo into several expansion markets, expanding our product offerings in mortgage lending and servicing as well as in insurance and private banking.
Since 2005, we have enhanced our growth by integrating four bank acquisitions, entering de novo into several expansion markets, expanding our product offerings in mortgage lending as well as in insurance and private banking. We have supported our markets by hiring a number of experienced in-market bankers and banking teams.
Banking organizations, such as us, with $10 billion or less in total consolidated assets and with total trading assets and liabilities of less than 5% of total consolidated assets are exempt from the Volcker Rule. 15 Table of Contents Incentive Compensation The Dodd-Frank Act required the federal banking agencies and the SEC to establish joint rules or guidelines for financial institutions with more than $1 billion in assets, such as us and Origin Bank, which prohibit incentive compensation arrangements that the agencies determine to encourage inappropriate risks by the institution.
At December 31, 2023, we had total assets of $9.72 billion and our expectation is that we will exceed $10 billion in total consolidated assets during 2024. 16 Table of Contents Incentive Compensation The Dodd-Frank Act required the federal banking agencies and the SEC to establish joint rules or guidelines for financial institutions with more than $1 billion in assets, such as us and Origin Bank, which prohibit incentive compensation arrangements that the agencies determine to encourage inappropriate risks by the institution.
Talent Development Talent development at Origin begins with our comprehensive recruitment program and continues throughout the employee life cycle. Beginning in 2021 and continuing throughout 2022, we implemented the Giving Interns Valuable Experience (g.i.v.e.) program, and welcomed a very diverse (both in gender and race) group of 27 interns from 17 different universities.
Beginning in 2021 and continuing throughout 2023, we implemented the Giving Interns Valuable Experience (g.i.v.e.) program, and welcomed a very diverse (both in gender and race) group of 42 interns from 23 different universities.
At Origin, our culture has always been the foundation of our success. We work to define our culture in everything we do. It is in our attitudes, our diversity, our core values; it is in our interactions with our customers and communities. Culture is the soul of who we are as a company, and it starts with our employees.
It is in our attitudes, our diversity, our core values; it is in our interactions with our customers and communities. Culture is the soul of who we are as a company, and it starts with our employees. Safe Work Environment Throughout our history, we have been committed to employee and customer health and safety.
We provide a broad range of financial services and currently operate 59 banking centers located in Dallas/Fort Worth, East Texas, Houston, North Louisiana and Mississippi. At December 31, 2022, we had total assets of $9.69 billion, total loans held for investment ("LHFI") of $7.09 billion, total deposits of $7.78 billion and total stockholders' equity of $949.9 million.
We provide a broad range of financial services and currently have over 60 locations from Dallas/Fort Worth, East Texas and Houston, across North Louisiana and into Mississippi . At December 31, 2023, we had total assets of $9.72 billion, total loans held for investment ("LHFI") of $7.66 billion, total deposits of $8.25 billion and total stockholders’ equity of $1.06 billion.
These policies influence to a significant extent the overall growth of bank loans, investments, and deposits and the interest rates charged on loans or paid on deposits. We cannot predict the nature of future fiscal and monetary policies or the effect of these policies on our operations and activities, financial condition, results of operations, growth plans or future prospects.
These policies influence to a significant extent the overall growth of bank loans, investments, and deposits and the interest rates charged on loans or paid on deposits.
The program was successful at promoting Origin’s brand and resulted in strong experiential feedback while also creating job opportunities for four of the 27 interns during 2021 and 2022. 11 Table of Contents We utilize assessment tools and provide multiple resources and venues, such as our Career Development Center, for employees to determine what career path is the best fit for them in order to help them grow and enhance their promotional opportunities.
We utilize assessment tools and provide multiple resources and venues, such as our Career Development Center, for employees to determine what career path is the best fit for them in order to help them grow and enhance their promotional opportunities.
Our loan portfolio at the dates indicated was comprised as follows: (Dollars in thousands) December 31, Real estate: 2022 2021 Owner occupied commercial real estate $ 843,006 $ 523,655 Non-owner occupied commercial real estate 1,461,672 1,169,857 Total commercial real estate 2,304,678 1,693,512 Owner occupied construction/land/land development 265,838 160,131 Non-owner occupied construction/land/land development 679,787 369,952 Total construction/land/land development 945,625 530,083 Residential real estate 1,477,538 909,739 Total real estate 4,727,841 3,133,334 Commercial and industrial 2,051,161 1,454,235 Mortgage warehouse lines of credit 284,867 627,078 Consumer loans 26,153 16,684 Total LHFI $ 7,090,022 $ 5,231,331 Commercial Real Estate Loans and Construction/Land/Land Development Loans .
Our loan portfolio at the dates indicated was comprised as follows: (Dollars in thousands) December 31, Real estate: 2023 2022 Owner occupied commercial real estate $ 953,822 $ 843,006 Non-owner occupied commercial real estate 1,488,912 1,461,672 Total commercial real estate 2,442,734 2,304,678 Owner occupied construction/land/land development 256,658 265,838 Non-owner occupied construction/land/land development 813,567 679,787 Total construction/land/land development 1,070,225 945,625 Residential real estate 1,734,935 1,477,538 Total real estate 5,247,894 4,727,841 Commercial and industrial 2,059,460 2,051,161 Mortgage warehouse lines of credit 329,966 284,867 Consumer loans 23,624 26,153 Total LHFI $ 7,660,944 $ 7,090,022 Commercial Real Estate Loans and Construction/Land/Land Development Loans .
The Volcker Rule also specifies certain limited activities in which banking organizations may continue to engage and requires us to maintain a compliance program.
The Volcker Rule also specifies certain limited activities in which banking organizations may continue to engage and requires us to maintain a compliance program. Banking organizations, such as us, with $10 billion or less in total consolidated assets and with total trading assets and liabilities of less than 5% of total consolidated assets are exempt from the Volcker Rule.
Trust, encouraging strong work ethic, innovation, flexibility, forward-thinking, genuine respect for others, commitment to our community, and never compromising our integrity are our values, and are the foundation of our company. Concentration on Sound Asset Quality We believe that asset quality is a key to long-term financial success.
We believe by aligning our processes, philosophy, technology, and culture; we create a seamless experience that goes beyond the transactional and becomes transformational. Trust, encouraging strong work ethic, innovation, flexibility, forward-thinking, genuine respect for others, commitment to our community, and never compromising our integrity are our values, and are the foundation of our company.
This webinar event occurs monthly and features speakers (internal and external) for our employees on a wide range of topics promoting, among other things, employee engagement and satisfaction. The employees are able to submit questions for the speakers in advance of the webinar.
We also have continued a practice that was implemented at the beginning of the pandemic called “The Origin Insider”. This webinar event occurs monthly and features speakers (internal and external) for our employees on a wide range of topics promoting, among other things, employee engagement and satisfaction.
The FDIC could further increase the deposit insurance assessments for certain insured depository institutions, including Origin Bank, if the DIF reserve ratio is not restored as projected.
The FDIC could further increase the deposit insurance assessments for certain insured depository institutions, including Origin Bank, if the DIF reserve ratio is not restored as projected. In November 2023, the FDIC approved a final rule to implement a special assessment to recover the loss to the DIF associated with several bank failures that occurred during early 2023.
We completed an initial public offering of our common stock in May 2018. Our common stock is listed on the Nasdaq Global Select Market under the symbol "OBNK." We are committed to building unique client experiences through a strong culture, experienced leadership team and a focus on delivering unmatched customer service throughout Texas, Louisiana and Mississippi.
We are committed to building unique client experiences through a strong culture, experienced leadership team and a focus on delivering unmatched customer service throughout Texas, Louisiana and Mississippi.
Our relationship bankers are motivated to increase the size of their loan and deposit portfolios and generate fee income while maintaining strong credit quality. To promote our organic growth, we strategically locate banking centers within our markets and employ highly experienced relationship bankers who proactively develop valuable relationships within the communities that we serve.
To promote our organic growth, we strategically locate banking centers within our markets and employ highly experienced relationship bankers who proactively develop valuable relationships within the communities that we serve. Through these relationships, our bankers are able to meet our customers’ needs and capitalize on loan demand across a wide range of industries.
We regularly receive hundreds of written comments each quarter that in turn are used to improve processes, policies, or programs in an effort to show tangible affirmation of those comments. We also have continued a practice that was implemented at the beginning of the pandemic called “The Origin Insider”.
Our employees consistently rank Origin in the top 10% of Glint’s global customer base with regard to employee engagement. We regularly receive hundreds of written comments each quarter that in turn are used to improve processes, policies, or programs in an effort to show tangible affirmation of those comments.
We also intend to continue pursuing selective acquisition opportunities that we expect will enhance our business model within our attractive geographic footprint and other complementary markets. A Unique from Within Client Experience Our mission is to passionately pursue ways to make banking and insurance more rewarding for our employees, customers, communities, and stockholders.
A Unique from Within Client Experience Our mission is to passionately pursue ways to make banking and insurance more rewarding for our employees, customers, communities, and stockholders. We have a deep commitment to providing an unmatched client experience that exceeds our customers’ expectations.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese risks are discussed more fully after the summary, and risks include, but are not limited to, the following: • Current uncertain economic conditions (both domestic and international) pose challenges, and could adversely affect our business, financial condition and results of operations; • Changes in interest rates could have an adverse impact on our results of operations and financial condition including decreased net interest margin, impact on loan demand, competition for, and increased cost of funding, deposits, and the value of our securities portfolio (including any losses recognized); • We are subject to risks related to inflation, rising prices and the government and Federal Reserve response to the same; • We may not be able to adequately measure and limit our credit risk; • Our allowance for loan credit losses may prove to be insufficient to absorb losses inherent in our loan portfolio and our earnings could decrease; • Negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing certain of our loans; • The deterioration in value of receivables, inventory, equipment or other commercial collateral could expose us to credit losses; • The geographic concentration of our markets in Texas, Louisiana and Mississippi makes us more sensitive than our more geographically diversified competitors to adverse changes in the local economy; • Our loan portfolio contains a number of large loans to certain borrowers, and deterioration in the financial condition of these borrowers could have a significant adverse impact on our asset quality; • We are subject to various risks associated with COVID-19; • The loss of executive management or other key employees, as well as our ability to attract and retain profitable bankers, could adversely impact our business or reputation; • Unauthorized access, cyber-crime and other threats to data security may cause harm to our business; 24 Table of Contents • The discontinuation of LIBOR could result in financial, operational, legal, reputational or compliance risks to us; • We may have exposure to tax liabilities that are larger than we anticipate; • The small to medium-sized businesses that we lend to may have fewer resources to weather adverse business developments, which may impair our borrowers' ability to repay loans; • We face significant competition to attract and retain customers, which could impair our growth, decrease our profitability or result in loss of market share; • Our ability to maintain our reputation is critical to the success of our business; • Risks related to environmental, social and governance ("ESG") strategies and initiatives, the scope and pace of which could alter our reputation and shareholder, associate, customer and third-party affiliations; • Our business has grown rapidly, and we may not be able to maintain our historical rate of growth, which could have an adverse effect on our ability to successfully implement our business strategy; • We may pursue acquisitions or new lines of business in the future, which could expose us to financial, execution and operational risks; • We are susceptible to environmental risks, such as hurricanes and other natural disasters, adverse weather and climate change effects; • We have a continuing need for technological change, and we may not have the resources to effectively implement new technology, or we may experience operational challenges when implementing new technology; • The effectiveness of derivative financial instruments and hedging activities to manage risks; • We are subject to various liquidity risks, credit, and market risks; • Risks related to the extensive use, reliability, disruption, and accuracy of the models and data we rely on; • Our ability to maintain adequate internal controls over financial reporting; • Our reliance on third parties to provide key components of our business infrastructure; • Risks related to potential claims, damages, penalties, fines and reputational damage resulting from pending or future litigation, regulatory proceedings and enforcement actions; • We operate in a highly regulated environment and the laws and regulations that govern our operations, including accounting policies, standards, and interpretations, could subject us to regulatory consequences; • We are subject to stringent capital requirements, which may result in lower returns on equity, require us to raise additional capital, limit growth opportunities or result in regulatory restrictions; • The market price of our common stock may be subject to substantial fluctuations and is subject to risk of loss; and • Other factors and risks described under “Risk Factors” herein and in any of our subsequent reports filed with the SEC and available on our website at www.sec.gov . 25 Table of Contents Risks Related to Our Business Current uncertain economic conditions pose challenges, and could adversely affect our business, financial condition and results of operations.
Biggest changeThese risks are discussed more fully after the summary, and risks include, but are not limited to, the following: • Current uncertain economic conditions (both domestic and international) pose challenges, and could adversely affect our business, financial condition and results of operations; • Changes in interest rates could have an adverse impact on our results of operations and financial condition including decreased net interest margin, impact on loan demand, competition for, and increased cost of funding, deposits, and the value of our securities portfolio (including any losses recognized); • We are subject to risks related to inflation, rising prices and the government and Federal Reserve response to the same; • We may not be able to adequately measure and limit our credit risk; • Our allowance for loan credit losses may prove to be insufficient to absorb losses inherent in our loan portfolio and our earnings could decrease; 25 Table of Contents • Negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing certain of our loans; • The deterioration in value of receivables, inventory, equipment or other commercial collateral could expose us to credit losses; • The geographic concentration of our markets in Texas, Louisiana and Mississippi makes us more sensitive than our more geographically diversified competitors to adverse changes in the local economy; • Our loan portfolio contains a number of large loans to certain borrowers, and deterioration in the financial condition of these borrowers could have a significant adverse impact on our asset quality; • The loss of executive management or other key employees, as well as our ability to attract and retain profitable bankers, could adversely impact our business or reputation; • Fraud, unauthorized access, cyber-crime and other threats to data security has impacted and may cause harm to our business; • We may have exposure to tax liabilities that are larger than we anticipate; • The small to medium-sized businesses that we lend to may have fewer resources to weather adverse business developments, which may impair our borrowers’ ability to repay loans; • We face significant competition to attract and retain customers, which could impair our growth, decrease our profitability or result in loss of market share; • Our ability to maintain our reputation is critical to the success of our business; • Risks related to environmental, social and governance ("ESG") strategies and initiatives, the scope and pace of which could alter our reputation and shareholder, associate, customer and third-party affiliations; • Our business has grown rapidly, and we may not be able to maintain our historical rate of growth, which could have an adverse effect on our ability to successfully implement our business strategy; • We may pursue acquisitions or new lines of business in the future, which could expose us to financial, execution and operational risks; • We are susceptible to environmental risks, such as hurricanes and other natural disasters, adverse weather and climate change effects; • We have a continuing need for technological change, and we may not have the resources to effectively implement new technology, or we may experience operational challenges when implementing new technology; • The effectiveness of derivative financial instruments and hedging activities to manage risks; • We are subject to various liquidity risks, credit, and market risks; • Risks related to the extensive use, reliability, disruption, and accuracy of the models and data we rely on; • Our ability to maintain adequate internal controls over financial reporting; • Our reliance on third parties to provide key components of our business infrastructure; • Risks related to potential claims, damages, penalties, fines and reputational damage resulting from pending or future litigation, regulatory proceedings and enforcement actions; • We operate in a highly regulated environment and the laws and regulations that govern our operations, including accounting policies, standards, and interpretations, could subject us to regulatory consequences; • We are subject to stringent capital requirements, which may result in lower returns on equity, require us to raise additional capital, limit growth opportunities or result in regulatory restrictions; 26 Table of Contents • The market price of our common stock may be subject to substantial fluctuations and is subject to risk of loss; and • Other factors and risks described under “Risk Factors” herein and in any of our subsequent reports filed with the SEC and available on our website at www.sec.gov .
Such estimates rely upon complex modeling inputs and judgments, including forecasts of economic conditions, which may be rendered inaccurate and/or no longer subject to accurate forecasting; • our ability to assess the creditworthiness of our borrowers may be impaired if the models and approaches we use to select, manage, and underwrite loans become less predictive of future charge-offs; • regulatory scrutiny of the industry could increase, leading to increased regulation of the industry that could lead to a higher cost of compliance, limit our ability to pursue business opportunities and increase our exposure to litigation or fines; • ineffective monetary policy or other market conditions could cause rapid changes in interest rates and asset values that would have a materially adverse impact on our profitability and overall financial condition; • erosion in the fiscal condition of the U.S.
Such estimates rely upon complex modeling inputs and judgments, including forecasts of economic conditions, which may be rendered inaccurate and/or no longer subject to accurate forecasting; • our ability to assess the creditworthiness of our borrowers may be impaired if the models and approaches we use to select, manage, and underwrite loans become less predictive of future charge-offs; • regulatory scrutiny of the industry has increased and could continue to increase, leading to increased regulation of the industry that could lead to a higher cost of compliance, limit our ability to pursue business opportunities and increase our exposure to litigation or fines; • ineffective monetary policy or other market conditions could cause rapid changes in interest rates and asset values that would have a materially adverse impact on our profitability and overall financial condition; • erosion in the fiscal condition of the U.S.
There are many factors that may impact the market price and trading volume of our common stock, including, without limitation: • actual or anticipated fluctuations in our operating results, financial condition or asset quality; • changes in economic or business conditions; • the effects of, and changes in, trade, monetary and fiscal policies, including the interest rate policies of the Federal Reserve, or in laws or regulations affecting us; • the public reaction to our press releases, our other public announcements and our filings with the SEC; • changes in accounting standards, policies, guidance, interpretations or principles; • the number (if any) of securities analysts covering us; • publication of research reports about us, our competitors, or the financial services industry generally, or changes in, or failure to meet, securities analysts' estimates of our financial and operating performance, or lack of research reports by industry analysts or ceasing of coverage; • changes in market valuations or earnings of companies that investors deem comparable to us; • the trading volume of our common stock; • future issuances of our common stock or other securities; • future sales of our common stock by us or our directors, executive officers or significant stockholders; • additions or departures of key personnel; • perceptions in the marketplace regarding our competitors and us; • significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving our competitors or us; • other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services; and • other news, announcements or disclosures (whether by us or others) related to us, our competitors, our core market or the financial services industry.
There are many factors that may impact the market price and trading volume of our common stock, including, without limitation: • actual or anticipated fluctuations in our operating results, financial condition or asset quality; • changes in economic or business conditions; • the effects of, and changes in, trade, monetary and fiscal policies, including the interest rate policies of the Federal Reserve, or in laws or regulations affecting us; • the public reaction to our press releases, our other public announcements and our filings with the SEC; 44 Table of Contents • changes in accounting standards, policies, guidance, interpretations or principles; • the number (if any) of securities analysts covering us; • publication of research reports about us, our competitors, or the financial services industry generally, or changes in, or failure to meet, securities analysts’ estimates of our financial and operating performance, or lack of research reports by industry analysts or ceasing of coverage; • changes in market valuations or earnings of companies that investors deem comparable to us; • the trading volume of our common stock; • future issuances of our common stock or other securities; • future sales of our common stock by us or our directors, executive officers or significant stockholders; • additions or departures of key personnel; • perceptions in the marketplace regarding our competitors and us; • significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving our competitors or us; • other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services; and • other news, announcements or disclosures (whether by us or others) related to us, our competitors, our core market or the financial services industry.
If our customers move money out of deposits and into other investments such as money market funds, we would lose a relatively low-cost source of funds, increasing our funding costs and reducing our net interest income and net income.
If our customers move money out of deposits and into other investments such as money market funds, we would lose a relatively low-cost source of funds, increasing our funding costs and reducing our net interest margin, net interest income and net income.
We could also face the following risks in connection with the following events: • inflationary pressures remained elevated throughout 2022 and are likely to continue into 2023; • market developments and economic stagnation or slowdown may affect consumer confidence levels and may cause adverse changes in payment patterns, resulting in increased delinquencies and default rates on loans and other credit facilities; • the processes we use to estimate the allowance for credit losses and other reserves may prove to be unreliable.
We could also face the following risks in connection with the following events: • inflationary pressures remained elevated throughout 2022 and 2023, and may to continue into 2024; • market developments and economic stagnation or slowdown may affect consumer confidence levels and may cause adverse changes in payment patterns, resulting in increased delinquencies and default rates on loans and other credit facilities; • the processes we use to estimate the allowance for credit losses and other reserves may prove to be unreliable.
We may be adversely affected by the soundness of other financial institutions. Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services companies are interrelated as a result of trading, clearing, counterparty, and other relationships.
Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services companies are interrelated as a result of trading, clearing, counterparty, and other relationships.
A disaster could, therefore, result in decreased revenue and loan losses that could have an adverse effect on our business, financial condition and results of operations. 37 Table of Contents We have a continuing need for technological change, and we may not have the resources to effectively implement new technology, or we may experience operational challenges when implementing new technology.
A disaster could, therefore, result in decreased revenue and loan losses that could have an adverse effect on our business, financial condition and results of operations. We have a continuing need for technological change, and we may not have the resources to effectively implement new technology, or we may experience operational challenges when implementing new technology.
Increased market volatility could have an adverse effect on the market price of our common stock, which could make it difficult to sell your shares at the volume, prices and times desired. 44 Table of Contents Our dividend policy may change without notice, our future ability to pay dividends is subject to restrictions, and we may not pay dividends in the future.
Increased market volatility could have an adverse effect on the market price of our common stock, which could make it difficult to sell your shares at the volume, prices and times desired. Our dividend policy may change without notice, our future ability to pay dividends is subject to restrictions, and we may not pay dividends in the future.
Past, present and future litigation has included or could include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. We are also involved from time to time in other reviews, investigations and proceedings 41 Table of Contents (both formal and informal) by governmental, law enforcement and self-regulatory agencies regarding our business.
Past, present and future litigation has included or could include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. We are also involved from time to time in other reviews, investigations and proceedings (both formal and informal) by governmental, law enforcement and self-regulatory agencies regarding our business.
Further, such losses could be realized into earnings should liquidity and/or business strategy necessitate the sales of securities in a loss position. Additionally, an increase in interest rates may, among other things, reduce the demand for loans and our ability to originate loans and decrease loan repayment rates.
Further, such losses could be realized into earnings should liquidity and/or business strategy necessitate the sales of securities in a loss position. Additionally, further increases in interest rates may, among other things, reduce the demand for loans and our ability to originate loans and decrease loan repayment rates.
As a result, our inability to successfully manage credit risk could have an adverse effect on our business, financial condition and results of operations. Our allowance for loan credit losses may prove to be insufficient to absorb losses inherent in our loan portfolio and our earnings could decrease.
As a result, our inability to successfully manage credit risk could have an adverse effect on our business, financial condition and results of operations. 30 Table of Contents Our allowance for loan credit losses may prove to be insufficient to absorb losses inherent in our loan portfolio and our earnings could decrease.
In addition, the Louisiana Office of Financial Institutions or the Federal Reserve may direct us to restrain our growth. We may not be able to manage the risks associated with our anticipated growth and expansion through de novo branching.
In addition, the Louisiana Office of Financial Institutions or the Federal Reserve may direct us to restrain our growth. 36 Table of Contents We may not be able to manage the risks associated with our anticipated growth and expansion through de novo branching.
It is possible that we could have exposure to liability and suffer losses as a result of a security breach or cyber-attack that occurred through no fault of our own. Further, the probability of a successful cyber-attack against us or one of our third-party services providers cannot be predicted.
It is possible that we could have exposure to liability and suffer losses as a result of a security breach or cyber-attack that occurred through no fault of our own. Further, the probability of a successful cyber-attack against us or one of our third-party services providers cannot be predicted, and in some cases, prevented.
If the bank is unable to pay dividends to us for any reason, we may be unable to satisfy our holding company level obligations, which include funding operating expenses and debt service obligations. 39 Table of Contents We may need to raise additional capital in the future, and if we fail to maintain sufficient capital, we may not be able to maintain regulatory compliance.
If the bank is unable to pay dividends to us for any reason, we may be unable to satisfy our holding company level obligations, which include funding operating expenses and debt service obligations. We may need to raise additional capital in the future, and if we fail to maintain sufficient capital, we may not be able to maintain regulatory compliance.
If these conditions or similar ones continue to exist or worsen, we could experience adverse effects on our financial condition. Changes in interest rates could have an adverse impact on our results of operations and financial condition.
If these conditions or similar ones continue to exist or worsen, we could experience adverse effects on our financial condition. 27 Table of Contents Changes in interest rates could have an adverse impact on our results of operations and financial condition.
Accordingly, we may lose customers seeking new technology-driven products and services to the extent we are unable to provide such products and services. New lines of business, products, product enhancements or services may subject us to additional risks.
Accordingly, we may lose customers seeking new technology-driven products and services to the extent we are unable to provide such products and services. 38 Table of Contents New lines of business, products, product enhancements or services may subject us to additional risks.
Cyber-security risks appear to be growing and, as a result, the cyber-resilience of banking organizations is of increased importance to federal and state banking agencies and other regulators.
Cyber-security risks are growing and, as a result, the cyber-resilience of banking organizations is of increased importance to federal and state banking agencies and other regulators.
If we are unable to efficiently replace ineffective service providers, or if we experience a significant, sustained or repeated, system failure or service denial, it could compromise our ability to operate effectively, damage our reputation, result in a loss of customer business, and subject us to additional regulatory scrutiny and possible financial liability, any of which could have an adverse effect on our business, financial condition and results of operations.
If we are unable to efficiently replace ineffective service providers, or if we experience a significant, sustained or repeated, system failure or service denial, it could compromise our ability to operate effectively, damage our reputation, result in a loss of customer business, and subject us to additional regulatory scrutiny and possible financial liability, any of which could have an adverse effect on our business, financial condition and results of operations. 41 Table of Contents We are subject to environmental liability risk associated with our lending activities.
Our acquisition activities could be material to our business and involve a number of risks, including those associated with: • the identification of suitable institutions or assets for acquisition; • the diversion of management attention from the operation of our existing business to identify, evaluate and negotiate potential transactions; • the ability to attract funding to support additional growth within acceptable risk tolerances; • the use of inaccurate estimates and judgments to evaluate credit, operations, management and market risks with respect to the target institution or assets; • the ability to maintain asset quality; 36 Table of Contents • the adequacy of due diligence and the potential exposure to unknown or contingent liabilities related to the acquisition; • the retention of customers and key personnel, including bankers; • the timing and uncertainty associated with obtaining necessary regulatory approvals; • the incurrence of an impairment of goodwill associated with an acquisition and adverse effects on our results of operations; • the ability to successfully integrate acquired businesses; • litigation risk; and • the maintenance of adequate regulatory capital.
Our acquisition activities could be material to our business and involve a number of risks, including those associated with: • the identification of suitable institutions or assets for acquisition; • the diversion of management attention from the operation of our existing business to identify, evaluate and negotiate potential transactions; • the ability to attract funding to support additional growth within acceptable risk tolerances; • the use of inaccurate estimates and judgments to evaluate credit, operations, management and market risks with respect to the target institution or assets; • the ability to maintain asset quality; • the adequacy of due diligence and the potential exposure to unknown or contingent liabilities related to the acquisition; • the retention of customers and key personnel, including bankers; • the timing and uncertainty associated with obtaining necessary regulatory approvals; • the incurrence of an impairment of goodwill associated with an acquisition and adverse effects on our results of operations; • the ability to successfully integrate acquired businesses; • litigation risk; and • the maintenance of adequate regulatory capital. 37 Table of Contents The market for acquisition targets is highly competitive, which may adversely affect our ability to find acquisition candidates that fit our strategy and standards at acceptable prices.
We are subject to environmental liability risk associated with our lending activities. In the course of our business, we may purchase real estate, or we may foreclose on and take title to real estate. As a result, we could be subject to environmental liabilities with respect to these properties.
In the course of our business, we may purchase real estate, or we may foreclose on and take title to real estate. As a result, we could be subject to environmental liabilities with respect to these properties.
The federal Bank Secrecy Act, USA Patriot Act of 2001 and other laws and regulations require financial institutions, among other duties, to institute and maintain effective anti-money laundering programs and file suspicious activity and currency transaction reports as appropriate.
We face a risk of noncompliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations. The federal Bank Secrecy Act, USA Patriot Act of 2001 and other laws and regulations require financial institutions, among other duties, to institute and maintain effective anti-money laundering programs and file suspicious activity and currency transaction reports as appropriate.
The geographic concentration of our markets in Texas, Louisiana and Mississippi makes us more sensitive than our more geographically diversified competitors to adverse changes in the local economy.
The geographic concentration of our markets in Texas, Louisiana, Mississippi, and most recently into Alabama and Florida makes us more sensitive than our more geographically diversified competitors to adverse changes in the local economy.
Our general business strategy may be adversely affected by any such economic downturn, volatile business environment, hostile third-party action or continued unpredictable and unstable market conditions. 28 Table of Contents We may not be able to adequately measure and limit our credit risk, which could lead to unexpected losses.
Our general business strategy may be adversely affected by any such economic downturn, volatile business environment, hostile third-party action or continued unpredictable and unstable market conditions. We may not be able to adequately measure and limit our credit risk, which could lead to unexpected losses. Our business depends on our ability to successfully measure and manage credit risk.
Compliance with current or future privacy, data protection and information security laws to which we are subject could result in higher compliance and technology costs and could restrict our ability to provide certain products and services, which could materially and adversely affect our profitability.
Compliance with current or future privacy, data protection and information security laws to which we are subject could result in higher compliance and technology costs and could restrict our ability to provide certain products and services, which could materially and adversely affect our profitability. 33 Table of Contents Our business is susceptible to fraud.
If a court rules adversely to our defense of any class action lawsuits, or if we enter into a settlement agreement in connection with any class action lawsuit, we could be exposed to monetary damages, reputational harm, or subject to limits on our ability to operate our business, which could have an adverse effect on our financial condition and operating results.
However, if a court rules adversely to our defense of any class action lawsuits, or if we enter into a settlement agreement in connection with any class action lawsuit, we could be exposed to monetary damages, reputational harm, or subject to limits on our ability to operate our business, which could have an adverse effect on our financial condition and operating results. 42 Table of Contents We may be adversely affected by the soundness of other financial institutions.
At December 31, 2022, our mortgage servicing rights had a fair value of $20.8 million, compared to $16.2 million at December 31, 2021. Changes in fair value of our mortgage servicing rights are recorded to earnings in each period.
At December 31, 2023, our mortgage servicing rights had a fair value of $15.6 million, compared to $20.8 million at December 31, 2022. Changes in fair value of our mortgage servicing rights are recorded to earnings in each period.
Our business depends on our ability to successfully measure and manage credit risk. As a lender, we are exposed to the risk that the principal of, or interest on, a loan will not be repaid timely or at all or that the value of any collateral supporting a loan will be insufficient to cover our outstanding exposure.
As a lender, we are exposed to the risk that the principal of, or interest on, a loan will not be repaid timely or at all or that the value of any collateral supporting a loan will be insufficient to cover our outstanding exposure.
Our ability to compete successfully will depend on a number of factors, including, among other things: • our ability to develop, maintain and build long-term customer relationships based on top quality service, high ethical standards and safe, sound assets; • our scope, relevance and pricing of products and services offered to meet customer needs and demands; • the rate at which we introduce new products and services relative to our competitors; • customer satisfaction with our level of service; • our ability to expand our market position; • industry and general economic trends; and • our ability to keep pace with technological advances and to invest in new technology.
Our ability to compete successfully will depend on a number of factors, including, among other things: • our ability to develop, maintain and build long-term customer relationships based on top quality service, high ethical standards and safe, sound assets; • our scope, relevance and pricing of products and services offered to meet customer needs and demands; • the rate at which we introduce new products and services relative to our competitors; • customer satisfaction with our level of service; • our ability to expand our market position; • industry and general economic trends; and • our ability to keep pace with technological advances and to invest in new technology. 35 Table of Contents Increased competition could require us to increase the rates we pay on deposits or lower the rates we offer on loans, which could reduce our profitability.
Our ability to attract and retain profitable bankers is critical to the success of our business strategy. Our ability to retain and grow our loans, deposits and fee income depends upon the business generation capabilities, reputation and relationship management skills of our bankers.
Our ability to retain and grow our loans, deposits and fee income depends upon the business generation capabilities, reputation and relationship management skills of our bankers.
Unlike larger financial institutions that are more geographically diversified, we are a regional bank concentrated in the Interstate 20 Corridor between the Dallas/Fort Worth metropolitan area, East Texas, North Louisiana and Jackson, Mississippi, as well as in Houston, Texas.
Unlike larger financial institutions that are more geographically diversified, we are a regional bank concentrated in the Interstate 20 Corridor between the Dallas/Fort Worth metropolitan area, East Texas, North Louisiana and Jackson, Mississippi, as well as in Houston, Texas. Recently, we expanded our presence into Mobile, Alabama and Fort Walton Beach, Florida.
Any reduction in interchange income as a result of the loss of the exemption for small issuers under the Durbin Amendment could have a significant adverse effect on our business, financial condition and results of operations. Our interchange fees for the year ended December 31, 2022, were $7.7 million.
Any reduction in interchange income as a result of the loss of the exemption for small issuers under the Durbin Amendment could have a significant adverse effect on our business, financial condition and results of operations.
Banking institutions are also increasingly the target of class action lawsuits. Most recently there has been an increase in class action lawsuits filed claiming deceptive practices or violations of account terms in connection with non-sufficient funds or overdraft charges.
Banking institutions are also increasingly the target of class action lawsuits. Most recently there has been an increase in class action lawsuits filed claiming deceptive practices or violations of account terms in connection with non-sufficient fees or overdraft charges. We have successfully defended and resolved similar class action lawsuits in the past.
The decline in the fair value of our available for sale investment securities during the year ended December 31, 2022, negatively impacted total stockholders' equity, primarily due to the steepening of the short end of the yield curve that occurred during the first three quarters of 2022.
The decline in the fair value of our available for sale investment securities portfolio during the year ended December 31, 2022, and continuing into the year ended December 31, 2023, negatively impacted total stockholders’ equity, primarily due to the steepening of the short end of the yield curve.
Unstable global economic conditions may have serious adverse consequences on our business, financial condition, and operations. The global credit and financial markets have from time to time experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, high rates of inflation, and uncertainty about economic stability.
The global credit and financial markets have from time to time experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, high rates of inflation, and uncertainty about economic stability.
Adverse changes affecting real estate values and the liquidity of real estate in one or more of our markets could increase the credit risk associated with our loan portfolio, and could result in losses that adversely affect our business, financial condition, and results of operation.
We also make loans secured by real estate as a supplemental source of collateral. Adverse changes affecting real estate values and the liquidity of real estate in one or more of our markets could increase the credit risk associated with our loan portfolio, and could result in losses that adversely affect our business, financial condition, and results of operation.
These activities strongly influence our rate of return on certain investments, our hedge effectiveness for mortgage servicing and our mortgage origination pipeline, as well as our costs of funds for lending and investing, all of which may adversely impact our liquidity, results of operations, financial condition and capital position.
These activities strongly influence our rate of return on certain investments, our hedge effectiveness for mortgage servicing and our mortgage origination pipeline, as well as our costs of funds for lending and investing, all of which may adversely impact our liquidity, results of operations, financial condition and capital position. 29 Table of Contents Unstable global economic conditions may have serious adverse consequences on our business, financial condition, and operations.
As of December 31, 2022, our net interest income simulations projected that 100 and 200 basis point increases in interest rates would result in a positive variance in net interest income of 3.64% and 7.10%, respectively, relative to the base case over the next 12 months, while decreases in interest rates of 100 and 200 basis points would result in a negative variance in net interest income of 2.26% and 6.72%, respectively, relative to the base case over the next 12 months.
As of December 31, 2023, our net interest income simulations projected that 100 and 200 basis point increases in interest rates would result in a positive variance in net interest income of 0.3% and 8.0%, respectively, relative to the base case over the next 12 months, while decreases in interest rates of 100 and 200 basis points would result in a negative variance in net interest income of 4.5% and 0.8%, respectively, relative to the base case over the next 12 months.
The collateral securing such loans generally includes movable property, such as equipment and inventory, which may decline in value more rapidly than we anticipate, exposing us to increased credit risk.
Additionally, the repayment of commercial loans is subject to the ongoing business operations of the borrower. The collateral securing such loans generally includes movable property, such as equipment and inventory, which may decline in value more rapidly than we anticipate, exposing us to increased credit risk.
If we are unable to attract and retain profitable bankers, or if our bankers fail to meet our expectations in terms of customer relationships and profitability, we may be unable to execute our business strategy, which could have an adverse effect on our business, financial condition and results of operations. 32 Table of Contents The discontinuation of LIBOR could result in financial, operational, legal, reputational or compliance risks to us.
If we are unable to attract and retain profitable bankers, or if our bankers fail to meet our expectations in terms of customer relationships and profitability, we may be unable to execute our business strategy, which could have an adverse effect on our business, financial condition and results of operations.
At December 31, 2022, the size of our average loan held for investment was approximately $523,987. Further, at December 31, 2022, our 20 largest borrowing relationships, excluding mortgage loans held for sale, represented 10.8% of our outstanding loan portfolio, and 12.1% of our total commitments to extend credit.
At December 31, 2023, the size of our average loan held for investment was approximately $538,170. Further, at December 31, 2023, our 20 largest borrowing relationships, excluding mortgage loans held for sale, represented 10.6% of our outstanding loan portfolio, and 11.2% of our total commitments to extend credit.
Inflationary pressures and rising prices may affect our results of operations and financial condition. Inflation rose in 2022 at levels not seen for over 40 years. Inflationary pressures are likely to continue into 2023. Inflation could lead to increased costs to our customers, making it more difficult for them to repay their loans or other obligations increasing our credit risk.
Inflation rose throughout 2022 and 2023 to levels not seen for over 40 years. Inflationary pressures may continue into 2024. Inflation could lead to increased costs to our customers, making it more difficult for them to repay their loans or other obligations increasing our credit risk.
The tax laws applicable to our business activities are subject to interpretation and may change over time. From time to time, legislative initiatives, such as corporate tax rate changes, which may impact our effective tax rate and could adversely affect our deferred tax assets or our tax positions or liabilities, may be enacted.
From time to time, legislative initiatives, such as corporate tax rate changes, which may impact our effective tax rate and could adversely affect our deferred tax assets or our tax positions or liabilities, may be enacted.
At December 31, 2022, 66.1% of our total loans (by dollar amount), excluding mortgage warehouse lines of credit, were made to borrowers who reside or conduct business in Texas, 20.5% attributable to Louisiana and 7.3% attributable to Mississippi, and substantially all of our real estate loans are secured by properties located in these states.
At December 31, 2023, 67.9% of our total loans (by dollar amount), excluding mortgage warehouse lines of credit, were made to borrowers who reside or conduct business in Texas, 19.2% attributable to Louisiana and 6.5% attributable to Mississippi, and majority of our real estate loans are secured by properties located in these states.
If general economic conditions negatively impact the markets in which we operate and small to medium-sized businesses are adversely affected or our borrowers are otherwise harmed by adverse business developments, this, in turn, could have an adverse effect on our business, financial condition and results of operations. 34 Table of Contents We face significant competition to attract and retain customers, which could impair our growth, decrease our profitability or result in loss of market share.
If general economic conditions negatively impact the markets in which we operate and small to medium-sized businesses are adversely affected or our borrowers are otherwise harmed by adverse business developments, this, in turn, could have an adverse effect on our business, financial condition and results of operations.
We rely on our ability to generate deposits and effectively manage the repayment and maturity schedules of our loans and investment securities, respectively, to ensure that we have adequate liquidity to fund our operations.
Liquidity is essential to our business, and we monitor our liquidity and manage our liquidity risk at the holding company and bank levels daily. We rely on our ability to generate deposits and effectively manage the repayment and maturity schedules of our loans and investment securities, respectively, to ensure that we have adequate liquidity to fund our operations.
The process for determining if a security has a credit loss often requires complex, subjective judgments about whether there has been a significant deterioration in the financial condition of the issuer, whether management has the intent or ability to hold a security for a period of time sufficient to allow for any anticipated recovery in fair value, the future financial performance and liquidity of the issuer and any collateral underlying the security, and other relevant factors. 40 Table of Contents We rely on third parties to provide key components of our business infrastructure, and a failure of these parties to perform for any reason could disrupt our operations.
The process for determining if a security has a credit loss often requires complex, subjective judgments about whether there has been a significant deterioration in the financial condition of the issuer, whether management has the intent or ability to hold a security for a period of time sufficient to allow for any anticipated recovery in fair value, the future financial performance and liquidity of the issuer and any collateral underlying the security, and other relevant factors.
We measure and carry our residential mortgage servicing rights using the fair value measurement method. Fair value is determined as the present value of estimated future net servicing income, calculated based on a number of variables, including assumptions about the likelihood of prepayment by borrowers.
Fair value is determined as the present value of estimated future net servicing income, calculated based on a number of variables, including assumptions about the likelihood of prepayment by borrowers.
If the services of any of our key personnel should become unavailable for any reason, we may not be able to identify and hire qualified persons on terms acceptable to us, or at all, which could have an adverse effect on our business, financial condition and results of operations. 31 Table of Contents Unauthorized access, cyber-crime and other threats to data security may require significant resources, harm our reputation, and otherwise cause harm to our business.
If the services of any of our key personnel should become unavailable for any reason, we may not be able to identify and hire qualified persons on terms acceptable to us, or at all, which could have an adverse effect on our business, financial condition and results of operations.
Our ability to maintain our reputation is critical to the success of our business. Our business plan emphasizes relationship focused banking. We have benefited from strong relationships with and among our customers. As a result, our reputation is one of the most valuable components of our business.
We have benefited from strong relationships with and among our customers. As a result, our reputation is one of the most valuable components of our business.
We necessarily collect, use and hold personal and financial information concerning individuals and businesses with which we have a banking relationship. This information includes non-public, personally-identifiable information that is protected under applicable federal and state laws and regulations. Additionally, certain of our data processing functions are not handled by us directly, but are outsourced to third-party providers.
This information includes non-public, personally-identifiable information that is protected under applicable federal and state laws and regulations. Additionally, certain of our data processing functions are not handled by us directly, but are outsourced to third-party providers.
As a consequence of these various limitations and restrictions, we may not be able to make, or may have to reduce or eliminate, the payment of dividends on our common stock. Any change in the level of our dividends or the suspension of the payment thereof could have a material adverse effect on the market price of our common stock.
As a consequence of these various limitations and restrictions, we may not be able to make, or may have to reduce or eliminate, the payment of dividends on our common stock.
Conversely, decreases in interest rates could result in an acceleration of loan prepayments. The increased market interest rates could also adversely affect the ability of our floating-rate borrowers to meet their higher payment obligations.
Conversely, decreases in interest rates could result in an acceleration of loan prepayments. The increased market interest rates could also adversely affect the ability of our floating-rate borrowers to meet their higher payment obligations. If this occurred, it could cause an increase in nonperforming assets and charge offs, which could adversely affect our business.
If any of our largest borrowers become unable to repay their loan obligations as a result of economic or market conditions or personal circumstances, our nonperforming loans and our provision for loan losses could increase significantly, which could have an adverse effect on our business, financial condition and results of operations.
If any of our largest borrowers become unable to repay their loan obligations as a result of economic or market conditions or personal circumstances, our nonperforming loans and our provision for loan losses could increase significantly, which could have an adverse effect on our business, financial condition and results of operations. 32 Table of Contents We rely heavily on our executive management team and other key employees, and the loss of any of these individuals could adversely impact our business or reputation.
An investment in our common stock is not an insured deposit and is subject to risk of loss. Your investment in our common stock will not be a bank deposit and will not be insured or guaranteed by the FDIC or any other government agency.
Your investment in our common stock will not be a bank deposit and will not be insured or guaranteed by the FDIC or any other government agency. Your investment will be subject to investment risk, and you must be capable of affording the loss of your entire investment. Item 1B. Unresolved Staff Comments None.
Sanctions imposed by the United States and other countries in response to such conflict could further adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability.
Sanctions imposed by the United States and other countries in response to such conflicts could further adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability. There can be no assurance that further deterioration in markets and confidence in economic conditions will not occur.
If Origin Bank does not meet minimum capital requirements, it will be subject to prompt corrective action by the Federal Reserve. Prompt corrective action can include progressively more restrictive constraints on operations, management and capital distributions. Failure to exceed the capital conservation buffer will result in certain limitations on dividends, capital repurchases, and discretionary bonus payments to executive officers.
If Origin Bank does not meet minimum capital requirements, it will be subject to prompt corrective action by the Federal Reserve. Prompt corrective action can include progressively more restrictive constraints on operations, management and capital distributions.
The failure of these systems, or the termination of a third-party software license or service agreement on which any of these systems is based, could interrupt our operations.
Our business depends on the successful and uninterrupted functioning of our information technology and telecommunications systems and third-party servicers. The failure or breach of these systems, or the termination of a third-party software license or service agreement on which any of these systems is based, could interrupt our operations.
The fair value of our investment securities can fluctuate due to factors outside of our control. At December 31, 2022, the fair value of our portfolio of available for sale investment securities was approximately $1.64 billion, which included a net unrealized loss of approximately $203.5 million, before taxes.
At December 31, 2023, the fair value of our portfolio of available for sale investment securities was approximately $1.25 billion, which included a net unrealized loss of approximately $154.0 million, before taxes.
Unexpected deterioration in the credit quality of our commercial real estate loan portfolio would require us to increase our provision for loan losses, which would reduce our profitability, and could materially adversely affect our business, financial condition and results of operations. 30 Table of Contents A large portion of our loan portfolio is comprised of commercial loans secured by receivables, inventory, equipment or other commercial collateral, the deterioration in value of which could expose us to credit losses.
Unexpected deterioration in the credit quality of our commercial real estate loan portfolio would require us to increase our provision for loan losses, which would reduce our profitability, and could materially adversely affect our business, financial condition and results of operations.
The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict, including the current conflict between Russia and Ukraine, which is increasing volatility in commodity and energy prices, creating supply chain issues and causing instability in financial markets.
The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict, including the ongoing wars in the Ukraine and the Middle East, which have increased volatility in commodity and energy prices, created supply chain issues and caused instability in financial markets, all of which may continue or worsen in the future.
We were not required to repurchase any material amount of mortgage loans sold into the secondary market during 2022, 2021 or 2020. A lack of liquidity could impair our ability to fund operations. Liquidity is essential to our business, and we monitor our liquidity and manage our liquidity risk at the holding company and bank levels daily.
We were not required to repurchase any material amount of mortgage loans sold into the secondary market during 2023, 2022 or 2021. 39 Table of Contents A lack of liquidity could impair our ability to fund operations.
We may be unable to execute on aspects of our growth strategy to sustain our historical rate of growth or we may be unable to grow at all.
Furthermore, our primary strategy focuses on organic growth, supplemented by acquisitions of banking teams or other financial institutions. We may be unable to execute on aspects of our growth strategy to sustain our historical rate of growth or we may be unable to grow at all.
We are subject to stringent capital requirements, which may result in lower returns on equity, require us to raise additional capital, limit growth opportunities or result in regulatory restrictions.
See the discussion above at Supervision, Regulation, and Other Factors for an additional discussion of the extensive regulation and supervision the Company and the Bank are subject to. We are subject to stringent capital requirements, which may result in lower returns on equity, require us to raise additional capital, limit growth opportunities or result in regulatory restrictions.
Additionally, investors and shareholder advocates are placing ever increasing emphasis on how corporations address ESG issues in their business strategy when making investment decisions and when developing their investment theses and proxy recommendations.
Additionally, investors and shareholder advocates are placing ever increasing emphasis on how corporations address ESG issues in their business strategy when making investment decisions and when developing their investment theses and proxy recommendations. We may incur meaningful costs with respect to our ESG efforts and if such efforts are negatively perceived, our reputation and stock price may suffer.
Interest rates are highly sensitive to many factors including: • The rate of inflation; • Economic conditions; • Federal monetary policies; and • Stability of domestic and foreign markets. Changes in interest rates can increase or decrease our net interest income, because different types of assets and liabilities may react differently, and at different times, to market interest rate changes.
Changes in interest rates can increase or decrease our net interest income, because different types of assets and liabilities may react differently, and at different times, to market interest rate changes.
Accordingly, changes in levels of market interest rates could materially and adversely affect our net interest income and our net interest margin, asset quality, loan and lease origination volume, liquidity, and overall profitability. We cannot assure you that we can minimize our interest rate risk. In addition, we originate residential mortgage loans for sale and for our portfolio.
Accordingly, changes in levels of market interest rates could materially and adversely affect our net interest income and our net interest margin, asset quality, loan and lease origination volume, liquidity, and overall profitability.
Moreover, our loss of eligibility under the exemption for small issuers could adversely affect or reduce our ability to maintain certain of our fee-sharing prepaid card partnerships, which have the right to terminate our agreement with respect to certain financial services under such circumstances. We may have exposure to tax liabilities that are larger than we anticipate.
Our interchange fees for the year ended December 31, 2023, were $8.4 million. 34 Table of Contents Moreover, our loss of eligibility under the exemption for small issuers could adversely affect or reduce our ability to maintain certain of our fee-sharing prepaid card partnerships, which have the right to terminate our agreement with respect to certain financial services under such circumstances.
Largely unregulated “fintech” businesses have increased their participation in the lending and payments businesses, and have increased competition in these businesses. This trend is expected to continue for the foreseeable future.
The effective use of technology increases efficiency and enables financial institutions to reduce costs as well as service our customers better. Largely unregulated “fintech” businesses have increased their participation in the lending and payments businesses, and have increased competition in these businesses. This trend is expected to continue for the foreseeable future.
Accordingly, we cannot assure you that we will be able to raise additional capital if needed or on terms acceptable to us. If we fail to maintain capital to meet regulatory requirements, we could be subject to enforcement actions or other regulatory consequences, which could have an adverse effect on our business, financial condition and results of operation.
If we fail to maintain capital to meet regulatory requirements, we could be subject to enforcement actions or other regulatory consequences, which could have an adverse effect on our business, financial condition and results of operation. 40 Table of Contents By engaging in derivative transactions, we are exposed to additional credit and market risk.
While we are not currently subject to annual Dodd-Frank Act stress testing and the Comprehensive Capital Analysis and Review submissions, we currently utilize stress testing for capital, credit and liquidity purposes and anticipate that model-derived testing may become more extensively implemented by regulators in the future. 38 Table of Contents We anticipate data-based modeling will penetrate further into bank decision-making, particularly risk management efforts, as the capacities developed to meet rigorous stress testing requirements are able to be employed more widely and in differing applications.
While we are not currently subject to annual Dodd-Frank Act stress testing and the Comprehensive Capital Analysis and Review submissions, we currently utilize stress testing for capital, credit and liquidity purposes and anticipate that model-derived testing may become more extensively implemented by regulators in the future.
These problems, losses or defaults could have an adverse effect on our business, financial condition and results of operations.
These problems, losses or defaults could have an adverse effect on our business, financial condition and results of operations. Recent negative developments affecting the banking industry, and resulting media coverage, have eroded customer confidence in the banking system.
Any future special assessments, increases in assessment rates or premiums, or required prepayments in FDIC insurance premiums could reduce our profitability or limit our ability to pursue certain business opportunities, which could materially and adversely affect our business, financial condition, and results of operations. 43 Table of Contents Risks Related to Investing in Our Common Stock The market price of our common stock may be subject to substantial fluctuations, which may make it difficult for you to sell your shares at the volume, prices and times desired.
Any future special assessments, increases in assessment rates or premiums, or required prepayments in FDIC insurance premiums could reduce our profitability or limit our ability to pursue certain business opportunities, which could materially and adversely affect our business, financial condition, and results of operations.
If the population, employment or income growth in one of our markets is negative or slower than projected, income levels, deposits and real estate development could be adversely impacted. Some of our larger competitors that are more geographically diverse may be better able to manage and mitigate risks posed by adverse conditions impacting only local or regional markets.
If the population, employment or income growth in one of our markets is negative or slower than projected, income levels, deposits and real estate development could be adversely impacted.
The transition away from LIBOR as the interest rate benchmark for derivatives, including interest rate swaps, also may present market risk. The existence of credit and market risk associated with our derivative instruments could adversely affect our net interest income and, therefore, could have an adverse effect on our business, financial condition and results of operations.
The existence of credit and market risk associated with our derivative instruments could adversely affect our net interest income and, therefore, could have an adverse effect on our business, financial condition and results of operations. The fair value of our investment securities can fluctuate due to factors outside of our control.
If this occurred, it could cause an increase in nonperforming assets and charge offs, which could adversely affect our business. 26 Table of Contents Further, our earnings and financial condition are dependent to a large degree upon net interest income, which is the difference or spread, between interest earned on interest-earning assets and interest paid on interest-bearing liabilities.
Further, our earnings and financial condition are dependent to a large degree upon net interest income, which is the difference or spread, between interest earned on interest-earning assets and interest paid on interest-bearing liabilities. When market rates of interest change, the interest we receive on our assets and the interest we pay on our liabilities may fluctuate.
The market for acquisition targets is highly competitive, which may adversely affect our ability to find acquisition candidates that fit our strategy and standards at acceptable prices. We face significant competition in pursuing acquisition targets from other banks and financial institutions, many of which possess greater financial, human, technical and other resources than we do.
We face significant competition in pursuing acquisition targets from other banks and financial institutions, many of which possess greater financial, human, technical and other resources than we do.
Third parties provide key components of our business infrastructure such as data processing, internet connections, network access, core application processing, statement production, account analysis and mortgage servicing. Our business depends on the successful and uninterrupted functioning of our information technology and telecommunications systems and third-party servicers.
We rely on third parties to provide key components of our business infrastructure, and a failure of these parties to perform for any reason could disrupt our operations. Third parties provide key components of our business infrastructure such as data processing, internet connections, network access, core application processing, statement production, account analysis and mortgage servicing.
The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services and an established and growing demand for mobile and other phone and computer banking applications. The effective use of technology increases efficiency and enables financial institutions to reduce costs as well as service our customers better.
The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services (including those related to or involving artificial intelligence, machine learning, blockchain and other distributed ledger technologies) and an established and growing demand for mobile and other phone and computer banking applications.
If we are required to materially increase our level of allowance for loan credit losses for any reason, such increases could have an adverse effect on our business, financial condition and results of operations. 29 Table of Contents Because a significant portion of our loan portfolio is comprised of real estate loans, negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing certain of our loans and result in loan and other losses.
If we are required to materially increase our level of allowance for loan credit losses for any reason, such increases could have an adverse effect on our business, financial condition and results of operations.
Continued economic uncertainty and a recessionary or stagnant economy could result in financial stress on our borrowers, which could adversely affect our business, financial condition and results of operations.
Continued economic uncertainty and an inflationary, recessionary or stagnant economy could result in financial stress on our borrowers, which could adversely affect our business, financial condition and results of operations. Deteriorating conditions in the regional economies we serve, or in certain sectors of those economies, could drive losses beyond that which is provided for in our allowance for credit losses.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties At December 31, 2022, our executive offices and those of Origin Bank were located at 500 South Service Road East, Ruston, Louisiana 71270 and we operated through 59 banking centers in Texas, Louisiana and Mississippi.
Biggest changeItem 2. Properties At December 31, 2023, our executive offices and those of Origin Bank were located at 500 South Service Road East, Ruston, Louisiana 71270 and we operated through over 60 locations in Texas, Louisiana and Mississippi, including loan production offices.
At December 31, 2022, Origin Bank owned its main office building and 30 of its banking centers, as well as a controlling interest in its operations center. The remaining facilities were occupied under lease agreements, the terms of which range from month to month to 30 years.
At December 31, 2023, Origin Bank owned its main office building and 31 of its banking centers, as well as a controlling interest in its operations center. The remaining facilities were occupied under lease agreements, the terms of which range from month to month to 30 years.
We believe that our banking and other offices are in good condition and are suitable and adequate to our needs. At December 31, 2022, our insurance holdings operated through 12 leased offices primarily located in Louisiana.
We believe that our banking and other offices are in good condition and are suitable and adequate to our needs. At December 31, 2023, our insurance holdings operated through 12 leased offices primarily located in Louisiana.
At December 31, 2022, we had 19 banking centers in North Louisiana, 16 banking centers and two loan production offices in the Dallas-Fort Worth metroplex area, nine banking centers in East Texas, nine banking centers in the Houston metroplex, and six banking centers in the Ridgeland, Mississippi area.
At December 31, 2023, we had 18 banking centers in North Louisiana, 16 banking centers in the Dallas-Fort Worth metroplex area, nine banking centers in East Texas, ten banking centers in the Houston metroplex, and six banking centers in the Ridgeland, Mississippi area.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Safety Disclosures Not applicable. 45 Table of Contents PART II
Biggest changeMine Safety Disclosures Not applicable. 47 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 45 PART II 46 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 46 Item 6. [Reserved] 48 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 49 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 73 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 47 PART II 48 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 48 Item 6. [Reserved] 49 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 50 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 75 Item 8.
Removed
Financial Statements and Supplementary Data 76 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 146 Item 9A. Controls and Procedures 147

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMay 9, 2018 Jun 30, 2018 Dec 31, 2018 Jun 30, 2019 Dec 31, 2019 Jun 30, 2020 Dec 31, 2020 Jun 30, 2021 Dec 31, 2021 Jun 30, 2022 Dec 31, 2022 Origin Bancorp, Inc. $ 100.00 $ 120.51 $ 100.48 $ 97.49 $ 112.41 $ 65.87 $ 83.80 $ 128.80 $ 131.00 $ 119.25 $ 113.57 Nasdaq Composite Index 100.00 102.32 90.40 109.08 122.24 137.04 175.34 197.60 213.15 150.26 142.60 Nasdaq U.S.
Biggest changeMay 9, 2018 Jun 30, 2018 Dec 31, 2018 Jun 30, 2019 Dec 31, 2019 Jun 30, 2020 Dec 31, 2020 Jun 30, 2021 Dec 31, 2021 Jun 30, 2022 Dec 31, 2022 Jun 30, 2023 Dec 31, 2023 Origin Bancorp, Inc. $ 100.00 $ 120.51 $ 100.48 $ 97.49 $ 112.41 $ 65.87 $ 83.80 $ 128.80 $ 131.00 $ 119.25 $ 113.57 $ 91.54 $ 112.16 Nasdaq Composite Index 100.00 102.32 90.40 109.08 122.24 137.04 175.34 197.60 213.15 150.26 142.60 187.85 204.52 Nasdaq OMX ABA Community Bank TR Index 100.00 99.32 79.43 89.43 98.17 68.32 88.00 109.88 118.81 101.64 109.08 83.20 106.99 Stock Repurchases In July 2022, the Board of Directors of the Company authorized a stock repurchase program pursuant to which the Company may, from time to time, purchase up to $50 million of its outstanding common stock.
The stock repurchase program is intended to expire in three years but may be terminated or amended by the Board of Directors at any time. The stock repurchase program does not obligate the Company to purchase any shares at any time. At December 31, 2022, there remained $50.0 million of capacity under the stock repurchase program.
The stock repurchase program is intended to expire in three years but may be terminated or amended by the Board of Directors at any time. The stock repurchase program does not obligate the Company to purchase any shares at any time. At December 31, 2023, there remained $50.0 million of capacity under the stock repurchase program.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on the Nasdaq Global Select Market under the symbol "OBNK". Our common stock began trading on the Nasdaq Global Select Market on May 9, 2018. Prior to that date, there was no public trading market for our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on the New York Stock Exchange under the symbol "OBK". Our common stock began trading on the Nasdaq Global Select Market on May 9, 2018. Prior to that date, there was no public trading market for our common stock.
There were no stock repurchases during the year ended December 31, 2022.
There were no stock repurchases during the year ended December 31, 2023.
Business - Regulation and Supervision" above and see Note 18 - Capital and Regulatory Matters contained in Item 8 of this report. Equity Compensation Plans See "Item 12.
Business - Regulation and Supervision" above and see Note 17 — Capital and Regulatory Matters contained in Part II, Item 8 of this report. Equity Compensation Plans See "Item 12.
At February 6, 2023, there were approximately 6,311 holders of record of our common stock as reported by our transfer agent. We intend to pay quarterly cash dividends on our common stock, subject to approval by our board of directors. Although we expect to pay dividends according to our dividend policy, we may elect not to pay dividends.
At February 15, 2024, there were approximately 7,247 holders of record of our common stock as reported by our transfer agent. We intend to pay quarterly cash dividends on our common stock, subject to approval by our board of directors. Although we expect to pay dividends according to our dividend policy, we may elect not to pay dividends.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" 46 Stock Performance Graph The following graph compares the cumulative total stockholder return on our common stock to the cumulative total stockholder return for the Nasdaq Composite Index, the Nasdaq U.S.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" 48 Table of Contents Stock Performance Graph The following graph compares the cumulative total stockholder return on our common stock to the cumulative total stockholder return for the Nasdaq Composite Index and the Nasdaq OMX ABA Community Bank TR index (collectively the "Indices") for the period beginning on May 9, 2018, the first day of trading of our common stock, through December 31, 2023.
The following reflects index values as of close of trading, assumes $100.00 invested on May 9, 2018, in our common stock, and the Indices and assumes the reinvestment of dividends, if any. The historical price of our common stock represented in this graph represents past performance and is not necessarily indicative of future performance.
Our stock was previously traded on Nasdaq under the symbol "OBNK", and is currently listed on the New York Stock Exchange under the symbol “OBK”. The following reflects index values as of close of trading, assumes $100.00 invested on May 9, 2018, in our common stock, and the Indices and assumes the reinvestment of dividends, if any.
Removed
Benchmark Banks TR Index and the Nasdaq OMX ABA Community Bank TR index (collectively the "Indices") for the period beginning on May 9, 2018, the first day of trading of our common stock on the Nasdaq Global Select Market under the symbol "OBNK", through December 31, 2022.
Added
The historical price of our common stock represented in this graph represents past performance and is not necessarily indicative of future performance.
Removed
Benchmark Banks TR Index 100.00 95.30 81.39 94.85 111.66 73.29 97.37 126.7 133.69 103.47 110.61 Nasdaq OMX ABA Community Bank TR Index 100.00 99.32 79.43 89.43 98.17 68.32 88.00 109.88 118.81 101.64 109.08 47 Unregistered Sales of Equity Securities and Use of Proceeds Stock Repurchases In July 2019, the Company's board of directors authorized a stock repurchase program pursuant to which the Company was authorized purchase up to $40 million of its outstanding common stock.
Removed
The stock repurchase program was approved for a period of three years and expired in June 2022, having repurchased a total of $28.0 million of outstanding common stock.
Removed
In July 2022, the Board of Directors of the Company authorized a stock repurchase program pursuant to which the Company may, from time to time, purchase up to $50 million of its outstanding common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeNoninterest Expense The following table presents the significant components of noninterest expense for the periods indicated: (Dollars in thousands) Year Ended December 31, 2022 vs. 2021 2021 vs. 2020 Noninterest expense: 2022 2021 2020 $ Change % Change $ Change % Change Salaries and employee benefits $ 118,971 $ 93,026 $ 91,105 $ 25,945 27.9 % $ 1,921 2.1 % Occupancy and equipment, net 20,203 17,347 17,022 2,856 16.5 325 1.9 Data processing 10,456 9,117 8,321 1,339 14.7 796 9.6 Office and operations 8,120 6,399 5,624 1,721 26.9 775 13.8 Loan-related expenses 6,097 7,688 6,316 (1,591) (20.7) 1,372 21.7 Professional services 3,813 3,644 3,975 169 4.6 (331) (8.3) Electronic banking 3,958 3,563 3,686 395 11.1 (123) (3.3) Advertising and marketing 4,431 3,438 3,710 993 28.9 (272) (7.3) Franchise tax expense 3,582 2,538 2,186 1,044 41.1 352 16.1 Regulatory assessments 3,547 2,904 3,826 643 22.1 (922) (24.1) Intangible asset amortization 5,488 844 1,060 4,644 N/M (216) (20.4) Communications 1,246 1,574 1,767 (328) (20.8) (193) (10.9) Merger-related expense 6,171 — — 6,171 N/A — — Other expenses 4,336 4,697 3,337 (361) (7.7) 1,360 40.8 Total noninterest expense $ 200,419 $ 156,779 $ 151,935 $ 43,640 27.8 $ 4,844 3.2 ____________________________ N/M = Not meaningful.
Biggest changeThe $2.3 million increase in other noninterest income was primarily due to a positive fair value adjustment of our municipal securities of $726,000 for the year ended December 31, 2023, compared to a negative fair value adjustment of $854,000 for the year ended December 31, 2022. 58 Table of Contents Noninterest Expense The following table presents the significant components of noninterest expense for the periods indicated: (Dollars in thousands) Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 Noninterest expense: 2023 2022 2021 $ Change % Change $ Change % Change Salaries and employee benefits $ 138,819 $ 118,971 $ 93,026 $ 19,848 16.7 % $ 25,945 27.9 % Occupancy and equipment, net 26,783 20,203 17,347 6,580 32.6 2,856 16.5 Data processing 11,590 10,456 9,117 1,134 10.8 1,339 14.7 Intangible asset amortization 9,628 5,488 844 4,140 75.4 4,644 N/M Office and operations 10,834 8,120 6,399 2,714 33.4 1,721 26.9 Professional services 5,931 3,813 3,644 2,118 55.5 169 4.6 Loan-related expenses 5,035 6,097 7,688 (1,062) (17.4) (1,591) (20.7) Advertising and marketing 5,986 4,431 3,438 1,555 35.1 993 28.9 Electronic banking 4,712 3,958 3,563 754 19.1 395 11.1 Franchise tax expense 3,334 3,582 2,538 (248) (6.9) 1,044 41.1 Regulatory assessments 6,456 3,547 2,904 2,909 82.0 643 22.1 Communications 1,527 1,246 1,574 281 22.6 (328) (20.8) Merger-related expense — 6,171 — (6,171) (100.0) 6,171 N/A Other expenses 4,581 4,336 4,697 245 5.7 (361) (7.7) Total noninterest expense $ 235,216 $ 200,419 $ 156,779 $ 34,797 17.4 $ 43,640 27.8 ____________________________ N/M = Not meaningful.
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 allowance for loan credit losses, it could materially and adversely affect our earnings.
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 ALCL, it could materially and adversely affect our earnings.
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 allowance for loan credit losses, it would materially and adversely affect our earnings.
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.
The stock repurchase program is intended to expire in three years but may be terminated or amended by the Board of Directors at any time. The stock repurchase program does not obligate the Company to purchase any shares at any time. There were no stock repurchases during the year ended December 31, 2022.
The stock repurchase program is intended to expire in three years but may be terminated or amended by the Board of Directors at any time. The stock repurchase program does not obligate the Company to purchase any shares at any time. There were no stock repurchases during the year ended December 31, 2023 or 2022.
Allowance for Loan Credit Losses The allowance for loan credit losses 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.
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 believe that the judgments, estimates and assumptions used in the preparation of the financial statements are appropriate. Allowance for Loan Credit Losses. The allowance for loan credit losses represents the estimated losses for loans accounted for on an amortized cost basis.
We believe that the judgments, estimates and assumptions used in the preparation of the financial statements are appropriate. Allowance for Loan Credit Losses. The allowance for loan credit losses (“ALCL”) represents the estimated losses for loans accounted for on an amortized cost basis.
The amount of the allowance for loan credit losses 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.
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.
Factors that could cause such differences are discussed in the sections titled "Cautionary Note Regarding Forward-Looking Statements" and "Item 1A. Risk Factors." We assume no obligation to update any of these forward-looking statements. Discussion in this Form 10-K includes results of operations and financial condition for 2022 and 2021 and year-over-year comparisons between 2022 and 2021.
Factors that could cause such differences are discussed in the sections titled "Cautionary Note Regarding Forward-Looking Statements" and "Item 1A. Risk Factors." We assume no obligation to update any of these forward-looking statements. Discussion in this Form 10-K includes results of operations and financial condition for 2023 and 2022 and year-over-year comparisons between 2023 and 2022.
Management continually monitors, forecasts and tests our liquidity and non-core dependency ratios to ensure compliance with targets established by our Asset-Liability Management Committee and approved by our board of directors. 70 Table of Contents 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.
Management continually monitors, forecasts and tests our liquidity and non-core dependency ratios to ensure compliance with targets established by our Asset-Liability Management Committee and approved by our board of directors. 72 Table of Contents 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.
Interest is charged at the prevailing market rate on federal funds purchased and FHLB advances. Additionally, we had the ability to borrow at the discount window of the FRB using our commercial and industrial loans as collateral. There were no borrowings against this line at December 31, 2022.
Interest is charged at the prevailing market rate on federal funds purchased and FHLB advances. Additionally, we had the ability to borrow at the discount window of the FRB using our commercial and industrial loans as collateral. There were no borrowings against this line at December 31, 2023.
We also had unsecured federal funds lines of credit available to us, with no amounts outstanding at either December 31, 2022 or 2021. These lines of credit primarily provide short-term liquidity and in order to ensure availability of these funds, we test these lines of credit at least annually.
We also had unsecured federal funds lines of credit available to us, with no amounts outstanding at either December 31, 2023 or 2022. These lines of credit primarily provide short-term liquidity and in order to ensure availability of these funds, we test these lines of credit at least annually.
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 applied a probability of default, loss given default loss methodology to the loan pools at December 31, 2022.
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 applied a probability of default, loss given default loss methodology to the loan pools at December 31, 2023.
The Company, which is a separate legal entity apart from the Bank, must provide for its own liquidity, including to fund payment of any dividends that may be declared for our common stockholders and interest and principal on any outstanding debt or trust preferred securities incurred by the Company.
The Company, which is a separate legal entity apart from the Bank, must provide for its own liquidity, including the funding of the payment of any dividends that may be declared for our common stockholders and interest and principal on any outstanding debt or trust preferred securities incurred by the Company.
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. See Note 12 - Borrowings to our consolidated financial statements contained in Item 8 of this report for additional borrowing capacity and outstanding advances at the FHLB.
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. See Note 11 — Borrowings to our consolidated financial statements contained in Part II, Item 8 of this report for additional borrowing capacity and outstanding advances at the FHLB.
Subsequent changes to the allowance for loan credit losses are recorded through the provision for credit losses. 62 Table of Contents 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.
Subsequent changes to the ALCL are recorded through the provision for credit losses. 64 Table of Contents 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.
For discussion on results of operations and financial condition pertaining to 2021 and 2020 and year-over-year comparisons between 2021 and 2020, please refer to “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 23, 2022.
For discussion on results of operations and financial condition pertaining to 2022 and 2021 and year-over-year comparisons between 2022 and 2021, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 22, 2023.
Year Ended December 31, 2021 (Dollars in thousands) Interest-earning assets Increase (Decrease) due to Change in Loans: Volume Yield/Rate Total Change Commercial real estate $ 18,491 $ 7,880 $ 26,371 Construction/land/land development 7,468 6,970 14,438 Residential real estate 9,186 3,404 12,590 Commercial and industrial 2,005 21,430 23,435 Mortgage warehouse lines of credit (12,137) 3,399 (8,738) Consumer 240 232 472 Loans held for sale (1,336) 137 (1,199) Loans receivable 23,917 43,452 67,369 Investment securities-taxable 9,671 3,569 13,240 Investment securities-non-taxable (214) 1,049 835 Non-marketable equity securities held in other financial institutions 229 392 621 Interest-bearing deposits in banks (131) 3,014 2,883 Total interest-earning assets 33,472 51,476 84,948 Interest-bearing liabilities Savings and interest-bearing transaction accounts 1,035 19,148 20,183 Time deposits 64 (156) (92) FHLB advances & other borrowings 1,482 3,275 4,757 Subordinated indebtedness 873 201 1,074 Total interest-bearing liabilities 3,454 22,468 25,922 Net interest income $ 30,018 $ 29,008 $ 59,026 54 Table of Contents Year Ended December 31, 2021 vs.
Year Ended December 31, 2021 (Dollars in thousands) Interest-earning assets Increase (Decrease) due to Change in Loans: Volume Yield/Rate Total Change Commercial real estate $ 18,491 $ 7,880 $ 26,371 Construction/land/land development 7,468 6,970 14,438 Residential real estate 9,186 3,404 12,590 Commercial and industrial 2,005 21,430 23,435 Mortgage warehouse lines of credit (12,137) 3,399 (8,738) Consumer 240 232 472 Loans held for sale (1,336) 137 (1,199) Loans receivable 23,917 43,452 67,369 Investment securities-taxable 9,671 3,569 13,240 Investment securities-non-taxable (214) 1,049 835 Non-marketable equity securities held in other financial institutions 229 392 621 Interest-bearing deposits in banks (131) 3,014 2,883 Total interest-earning assets 33,472 51,476 84,948 Interest-bearing liabilities Savings and interest-bearing transaction accounts 1,035 19,148 20,183 Time deposits 64 (156) (92) FHLB advances & other borrowings 1,482 3,275 4,757 Subordinated indebtedness 873 201 1,074 Total interest-bearing liabilities 3,454 22,468 25,922 Net interest income $ 30,018 $ 29,008 $ 59,026 56 Table of Contents Provision for Credit Losses We recorded a provision expense of $16.8 million for the year ended December 31, 2023, a $7.9 million decrease from $24.7 million for the year ended December 31, 2022.
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 allowance for loan credit losses is determined using the same methodology as other individually evaluated loans.
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.
Additionally, we do not hold any Fannie Mae or Freddie Mac preferred stock, collateralized debt obligations, structured investment vehicles or second lien elements in the investment portfolio, nor does the investment portfolio contain any securities that are directly backed by subprime or Alt-A mortgages. 66 Table of Contents Securities Carried at Fair Value through Income At December 31, 2022 and 2021, we held one fixed rate community investment bond of $6.4 million and $7.5 million, respectively.
Additionally, we do not hold any Fannie Mae or Freddie Mac preferred stock, collateralized debt obligations, structured investment vehicles or second lien elements in the investment portfolio, nor does the investment portfolio contain any securities that are directly backed by subprime or Alt-A mortgages. 68 Table of Contents Securities Carried at Fair Value through Income At December 31, 2023 and 2022, we held one fixed rate community investment bond of $6.8 million and $6.4 million, respectively.
Please see Note 5 - Loans to our consolidated financial statements contained in Item 8 of this report for more information on nonperforming loans. 61 Table of Contents 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.
Please see Note 4 — Loans to our consolidated financial statements contained in Part II, Item 8 of this report for more information on nonperforming loans. 63 Table of Contents 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.
An allowance for credit losses is determined using the same methodology as other individually evaluated loans. Subsequent changes to the allowance for credit losses are recorded through the provision for credit losses. We held approximately $48.1 million of unpaid principal balance PCD loans at December 31, 2022, and no PCD loans at December 31, 2021.
An allowance for credit losses is determined using the same methodology as other individually evaluated loans. Subsequent changes to the allowance for credit losses are recorded through the provision for credit losses. We held approximately $34.8 million of unpaid principal balance PCD loans at December 31, 2023, and $48.1 million of unpaid principal balance PCD loans at December 31, 2022.
This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Credit losses are charged against the allowance for loan credit losses when management believes the loss is confirmed. 49 Table of Contents Loan Acquisition Accounting.
This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Credit losses are charged against the ALCL when management believes the loss is confirmed. 50 Table of Contents Loan Acquisition Accounting.
Loans classified as loss are charged-off and we have low expectations for the recovery of any payments in respect to loans rated as loss. Information regarding the internal risk ratings of our loans at December 31, 2022, is included in Note 5 - Loans to our consolidated financial statements contained in Item 8 of this report.
Loans classified as loss are charged-off and we have low expectations for the recovery of any payments in respect to loans rated as loss. Information regarding the internal risk ratings of our loans at December 31, 2023, is included in Note 4 — Loans to our consolidated financial statements contained in Part II, Item 8 of this report.
At December 31, 2022 and 2021, 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.
At December 31, 2023 and 2022, 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.
These commitments are discussed in more detail in Note 19 - Commitments and Contingencies to our consolidated financial statements contained in Item 8 of this report. 71 Table of Contents Stockholders' Equity Stockholders' equity provides a source of permanent funding, allows for future growth and provides a degree of protection to withstand unforeseen adverse developments.
These commitments are discussed in more detail in Note 18 — Commitments and Contingencies to our consolidated financial statements contained in Part II, Item 8 of this report. 73 Table of Contents Stockholders’ Equity Stockholders’ equity provides a source of permanent funding, allows for future growth and provides a degree of protection to withstand unforeseen adverse developments.
Business - Regulation and Supervision, ". 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.
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.
The amount representing the CECL impact to the Company's regulatory capital that will be ratably transitioning back into regulatory capital over the transition period is $5.1 million and $7.6 million at December 31, 2022 and 2021, respectively. Mortgage Servicing Rights.
The amount representing the CECL impact to the Company’s regulatory capital that will be ratably transitioning back into regulatory capital over the transition period is $2.5 million and $5.1 million at December 31, 2023 and 2022, respectively. Mortgage Servicing Rights.
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 allowance for loan credit losses. Purchased loans that have experienced more than insignificant credit deterioration since origination are purchase credit deteriorated (“PCD”) loans.
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. Purchased loans that have experienced more than insignificant credit deterioration since origination are purchased credit deteriorated (“PCD”) loans.
At December 31, 2022, 78.8% 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 market areas of Texas, North Louisiana, and Mississippi, compared to 82.3% at December 31, 2021.
At December 31, 2023, 77.1% 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 legacy market areas of Texas, North Louisiana, and Mississippi, compared to 78.8% at December 31, 2022.
All average balances are daily average balances. (2) Includes Government National Mortgage Association ("GNMA") repurchase average balances of $33.6 million, $53.9 million and $37.7 million for the year ended December 31, 2022, 2021 and 2020, respectively.
All average balances are daily average balances. (2) Includes Government National Mortgage Association ("GNMA") repurchase average balances of $1.1 million, $33.6 million, $53.9 million for the year ended December 31, 2023, 2022 and 2021, respectively.
At December 31, 2022, we held 28 unfunded letters of credit from the FHLB totaling $277.4 million with expiration dates ranging from January 14, 2023, to September 22, 2027. These letters of credit either support pledges for our public fund deposits or confirm letters of credit we have issued to support our customers' businesses.
At December 31, 2023, we held 31 unfunded letters of credit from the FHLB totaling $693.6 million with expiration dates ranging from January 14, 2024, to September 22, 2027. These letters of credit either support pledges for our public fund deposits or confirm letters of credit we have issued to support our customers’ businesses.
From and including February 15, 2025, to but excluding the maturity date or early redemption date, the interest rate will equal the three-month LIBOR rate (provided that in the event the three-month LIBOR is less than zero, the three-month LIBOR will be deemed to be zero) plus 282 basis points, payable quarterly in arrears, subject to customary fallback provision upon the discontinuation of LIBOR.
From and including February 15, 2025, to but excluding the maturity date or early redemption date, the interest rate will equal the three-month LIBOR rate (provided that in the event the three-month LIBOR is less than zero, the three-month LIBOR will be deemed to be zero) plus 282 basis points, payable quarterly in arrears.
Net interest income is the difference between interest income on interest-earning assets, such as loans, securities and interest-bearing 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.
Net interest income is the difference between interest income on interest-earning assets, such as loans, securities and interest-bearing cash, and interest expense on interest-bearing liabilities, such as deposits and borrowings.
The revolving line of credit matures on October 27, 2023, and the Company had $30.0 million and zero outstanding on this revolving credit loan under the Loan Agreement at December 31, 2022 and 2021, respectively.
The revolving line of credit matures on October 27, 2024, and the Company had no balance outstanding on this revolving credit loan under the Loan Agreement at December 31, 2023, and $30.0 million outstanding at December 31, 2022.
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, interest-bearing and noninterest-bearing liabilities and stockholders' equity, are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income.
Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities. 51 Table of Contents 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, interest-bearing and noninterest-bearing liabilities and stockholders’ equity, are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income.
At December 31, 2022 and 2021, our cash and liquid securities totaled 12.1% and 23.2% of total assets, respectively, providing liquidity to support our existing operations.
At December 31, 2023 and 2022, our cash and liquid securities totaled 10.9% and 12.1% of total assets, respectively, providing liquidity to support our existing operations.
Income Tax Expense For the year ended December 31, 2022, we recognized income tax expense of $19.7 million, compared to $23.9 million for the year ended December 31, 2021. Our effective tax rate was 18.4% for the year ended December 31, 2022, compared to 18.0% for the year ended December 31, 2021.
Income Tax Expense For the year ended December 31, 2023, we recognized income tax expense of $22.1 million, compared to $19.7 million for the year ended December 31, 2022. Our effective tax rate was 20.9% for the year ended December 31, 2023, compared to 18.4% for the year ended December 31, 2022.
The Company evaluates acquired loans for deterioration in credit quality based on any of, but not limited to, the following: (1) nonaccrual status; (2) troubled debt restructured designation; (3) risk ratings of special mention, substandard or doubtful; (4) watchlist credits; and (5) delinquency status, including loans that are current on merger/acquisition date, but had been previously delinquent two times 60 days.
The Company evaluates acquired loans for deterioration in credit quality based on any of, but not limited to, the following: (1) nonaccrual status; (2) borrowers are experiencing financial difficulty which results in modification to the loan terms; (3) risk ratings of special mention, substandard or doubtful; (4) watchlist credits; and (5) delinquency status, including loans that are current on merger/acquisition date, but had previously been 60 days delinquent twice.
Holding Company Line of Credit The Company has a line of credit under the terms of which the loan amount shall not exceed an aggregate principal balance of $100 million, consisting of an initial $50 million extension of credit and any one or more potential incremental revolving loan amounts that the lender may make in its sole discretion, up to an aggregate principal of $50 million, upon the request of the Company.
There were no borrowings against this line at both December 31, 2023 and 2022. 71 Table of Contents Holding Company Line of Credit The Company has a line of credit under the terms of which the loan amount shall not exceed an aggregate principal balance of $100 million, consisting of an initial $50.0 million extension of credit and any one or more potential incremental revolving loan amounts that the lender may make in its sole discretion, up to an aggregate principal of $50.0 million, upon the request of the Company.
For further discussion of the valuation components and classification of investment securities, see Note 1 - Significant Accounting Policies to our consolidated financial statements contained in Item 8 of this report. Our securities portfolio totaled $1.66 billion at December 31, 2022, representing an increase of $124.1 million, or 8.1%, from $1.53 billion at December 31, 2021.
For further discussion of the valuation components and classification of investment securities, see Note 1 — Significant Accounting Policies to our consolidated financial statements contained in Part II, Item 8 of this report. Our securities portfolio totaled $1.27 billion at December 31, 2023, representing a decrease of $387.1 million, or 23.3%, from $1.66 billion at December 31, 2022.
Currently, we believe we have sufficient liquidity from our available on- and off-balance sheet liquidity sources, however, should market conditions change, we may take action to enhance our financial flexibility.
See "Item 1. Business - Regulation and Supervision" above for more information. Currently, we believe we have sufficient liquidity from our available on- and off-balance sheet liquidity sources, however, should market conditions change, we may take action to enhance our financial flexibility.
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.
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.
Merger-related expense. The $6.2 million merger-related expenses during the year ended December 31, 2022, were associated with the BTH merger that closed on August 1, 2022. Intangible asset amortization expense.
The $6.2 million merger-related expenses in 2022 were associated with the BTH merger that was closed on August 1, 2022, while no comparable expense occurred during the year ended December 31, 2023.
Other than securities issued by government agencies or government sponsored enterprises, we did not own securities of any one issuer for which aggregate cost exceeded 10.0% of consolidated stockholders' equity at December 31, 2022 or 2021.
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. Other than securities issued by government agencies or government sponsored enterprises, we did not own securities of any one issuer for which aggregate cost exceeded 10.0% of consolidated stockholders’ equity at December 31, 2023 or 2022.
Past due loans to total LHFI declined to 0.15% at December 31, 2022, compared to 0.49% at December 31, 2021.
Past due loans to total LHFI increased to 0.34% at December 31, 2023, compared to 0.15% at December 31, 2022.
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. Our deposit balances were impacted by the merger with BTH that occurred on August 1, 2022.
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.
The net amounts available under the blanket floating lien at December 31, 2022 and 2021, were $1.29 billion and $982.2 million, respectively. Additionally, at December 31, 2022, we had the ability to borrow $1.23 billion from the discount window at the Federal Reserve Bank of Dallas ("FRB"), with $1.76 billion in commercial and industrial loans pledged as collateral.
Additionally, at December 31, 2023 and 2022, we had the ability to borrow $1.42 billion and $1.23 billion from the discount window at the Federal Reserve Bank of Dallas ("FRB"), with $1.69 billion and $1.76 billion in commercial and industrial loans pledged as collateral, respectively.
Year Ended December 31, 2022 2021 2020 (Dollars in thousands) Assets Average Balance (1) Income/Expense Yield/Rate Average Balance (1) Income/Expense Yield/Rate Average Balance (1) Income/Expense Yield/Rate Commercial real estate $ 1,951,246 $ 88,175 4.52 % $ 1,501,890 $ 61,804 4.12 % $ 1,322,477 $ 59,059 4.47 % Construction/land/land development 708,758 36,352 5.13 528,618 21,914 4.15 554,038 25,255 4.56 Residential real estate 1,143,190 49,635 4.34 916,039 37,045 4.04 769,838 34,147 4.44 Commercial and industrial 1,675,719 90,499 5.40 1,627,077 67,064 4.12 1,710,648 64,619 3.78 Mortgage warehouse lines of credit 420,639 18,732 4.45 753,588 27,470 3.65 574,837 22,320 4.15 Consumer 20,913 1,444 6.91 16,764 972 5.80 18,707 1,195 6.39 LHFI 5,920,465 284,837 4.81 5,343,976 216,269 4.05 4,950,545 206,595 4.17 Loans held for sale 32,272 1,313 4.07 68,917 2,512 3.65 82,178 2,519 3.07 Loans receivable 5,952,737 286,150 4.81 5,412,893 218,781 4.04 5,032,723 209,114 4.16 Investment securities-taxable 1,497,226 27,795 1.86 899,532 14,555 1.62 536,816 11,302 2.11 Investment securities-non-taxable 270,701 7,172 2.65 280,157 6,337 2.26 214,224 5,428 2.53 Non-marketable equity securities held in other financial institutions 58,441 1,802 3.08 48,970 1,181 2.41 42,782 1,055 2.47 Interest-bearing deposits in banks 349,484 3,685 1.05 418,034 802 0.19 276,423 1,803 0.65 Total interest-earning assets 8,128,589 326,604 4.02 7,059,586 241,656 3.42 6,102,968 228,702 3.75 Noninterest-earning assets (2) 557,642 411,341 339,560 Total assets $ 8,686,231 $ 7,470,927 $ 6,442,528 Liabilities and Stockholders' Equity Liabilities Interest-bearing liabilities Savings and interest-bearing transaction accounts $ 4,066,981 $ 29,025 0.71 % $ 3,640,713 $ 8,842 0.24 % $ 2,904,587 $ 15,215 0.52 % Time deposits 616,197 4,484 0.73 607,742 4,576 0.75 735,297 11,935 1.62 Total interest-bearing deposits 4,683,178 33,509 0.72 4,248,455 13,418 0.32 3,639,884 27,150 0.75 FHLB advances & other borrowings 444,426 9,411 2.12 337,076 4,654 1.38 468,974 5,895 1.26 Subordinated indebtedness 176,028 8,406 4.78 157,304 7,332 4.66 88,358 4,121 4.66 Total interest-bearing liabilities 5,303,632 51,326 0.97 4,742,835 25,404 0.54 4,197,216 37,166 0.89 Noninterest-bearing liabilities Noninterest-bearing deposits 2,422,132 1,905,045 1,499,936 Other liabilities (2) 148,984 135,399 120,796 Total liabilities 7,874,748 6,783,279 5,817,948 Stockholders' Equity 811,483 687,648 624,580 Total liabilities and stockholders' equity $ 8,686,231 $ 7,470,927 $ 6,442,528 Net interest spread 3.05 % 2.88 % 2.86 % Net interest income and margin $ 275,278 3.39 $ 216,252 3.06 $ 191,536 3.14 Net interest income and margin - (tax equivalent) (3) $ 278,403 3.42 $ 219,155 3.10 $ 194,196 3.18 ____________________________ 53 Table of Contents (1) Nonaccrual loans are included in their respective loan category for the purpose of calculating the yield earned.
Years Ended December 31, 2023 2022 2021 (Dollars in thousands) Assets Average Balance (1) Income/Expense Yield/Rate Average Balance (1) Income/Expense Yield/Rate Average Balance (1) Income/Expense Yield/Rate Commercial real estate $ 2,404,530 $ 135,117 5.62 % $ 1,951,246 $ 88,175 4.52 % $ 1,501,890 $ 61,804 4.12 % Construction/land/land development 1,015,178 69,630 6.86 708,758 36,352 5.13 528,618 21,914 4.15 Residential real estate 1,629,589 81,964 5.03 1,143,190 49,635 4.34 916,039 37,045 4.04 Commercial and industrial 2,054,081 155,842 7.59 1,675,719 90,499 5.40 1,627,077 67,064 4.12 Mortgage warehouse lines of credit 314,079 21,476 6.84 420,639 18,732 4.45 753,588 27,470 3.65 Consumer 24,627 1,918 7.79 20,913 1,444 6.91 16,764 972 5.80 LHFI 7,442,084 465,947 6.26 5,920,465 284,837 4.81 5,343,976 216,269 4.05 Loans held for sale 18,055 868 4.81 32,272 1,313 4.07 68,917 2,512 3.65 Loans receivable 7,460,139 466,815 6.26 5,952,737 286,150 4.81 5,412,893 218,781 4.04 Investment securities-taxable 1,295,871 31,682 2.44 1,497,226 27,795 1.86 899,532 14,555 1.62 Investment securities-non-taxable 214,232 5,098 2.38 270,701 7,172 2.65 280,157 6,337 2.26 Non-marketable equity securities held in other financial institutions 67,956 3,408 5.01 58,441 1,802 3.08 48,970 1,181 2.41 Interest-bearing deposits in banks 318,559 16,388 5.14 349,484 3,685 1.05 418,034 802 0.19 Total interest-earning assets 9,356,757 523,391 5.59 8,128,589 326,604 4.02 7,059,586 241,656 3.42 Noninterest-earning assets (2) 584,263 557,642 411,341 Total assets $ 9,941,020 $ 8,686,231 $ 7,470,927 Liabilities and Stockholders’ Equity Liabilities Interest-bearing liabilities Savings and interest-bearing transaction accounts $ 4,725,929 $ 144,324 3.05 % $ 4,066,981 $ 29,025 0.71 % $ 3,640,713 $ 8,842 0.24 % Time deposits 1,398,734 52,133 3.73 616,197 4,484 0.73 607,742 4,576 0.75 Total interest-bearing deposits 6,124,663 196,457 3.21 4,683,178 33,509 0.72 4,248,455 13,418 0.32 FHLB advances & other borrowings 327,792 17,258 5.26 444,426 9,411 2.12 337,076 4,654 1.38 Subordinated indebtedness 198,856 10,119 5.09 176,028 8,406 4.78 157,304 7,332 4.66 Total interest-bearing liabilities 6,651,311 223,834 3.37 5,303,632 51,326 0.97 4,742,835 25,404 0.54 Noninterest-bearing liabilities Noninterest-bearing deposits 2,147,019 2,422,132 1,905,045 Other liabilities (2) 142,786 148,984 135,399 Total liabilities 8,941,116 7,874,748 6,783,279 Stockholders’ Equity 999,904 811,483 687,648 Total liabilities and stockholders’ equity $ 9,941,020 $ 8,686,231 $ 7,470,927 Net interest spread 2.22 % 3.05 % 2.88 % Net interest income and margin $ 299,557 3.20 $ 275,278 3.39 $ 216,252 3.06 Net interest income and margin - (tax equivalent) (3) $ 302,132 3.23 $ 278,403 3.42 $ 219,155 3.10 ____________________________ (1) Nonaccrual loans are included in their respective loan category for the purpose of calculating the yield earned.
We analyze our ability to maximize income generated from interest earning assets and 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.
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 income generated from interest earning assets and 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.
Interest income earned on commercial real estate and commercial and industrial loans contributed $26.4 million and $23.4 million, respectively, of the $68.6 million total increase in interest income earned on LHFI when compared to the year ended December 31, 2021.
Interest income earned on real estate loans and commercial and industrial loans contributed $112.5 million and $65.3 million, respectively, of the $181.1 million total increase in interest income earned on LHFI when compared to the year ended December 31, 2022.
Results of Operations Selected income statement data, returns on average assets and average equity for the comparable periods were as follows: (Dollars in thousands, except per share amounts) At and for the Years Ended December 31, 2022 2021 2020 Net income $ 87,715 $ 108,546 $ 36,357 Financial ratios: ROAA (1) 1.01 % 1.45 % 0.56 % ROAE (1) 10.81 15.79 5.82 Capital ratio: Book value per common share $ 30.90 $ 30.75 $ 27.53 ____________________________ (1) All average balances are calculated using average daily balances.
Results of Operations At and for the Years Ended December 31, (Dollars in thousands, except per share amounts) 2023 2022 2021 Net income $ 83,800 $ 87,715 $ 108,546 Financial ratios: ROAA (1) 0.84 % 1.01 % 1.45 % ROAE (1) 8.38 10.81 15.79 Capital ratio: Book value per common share $ 34.30 $ 30.90 $ 30.75 ____________________________ (1) All average balances are calculated using average daily balances.
The estimated total amount of uninsured deposits at December 31, 2022 and 2021, was $4.19 billion and $3.79 billion, respectively. (Dollars in thousands) Remaining maturity: U.S.
There were no otherwise uninsured time deposits below the FDIC insurance limit at December 31, 2023. The estimated total amount of uninsured deposits at December 31, 2023 and 2022, was $3.58 billion and $4.19 billion, respectively. (Dollars in thousands) Remaining maturity: U.S.
The amount of the allowance for loan credit losses 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.
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.
Average noninterest-bearing deposits at December 31, 2022, were $2.42 billion, compared to $1.91 billion at December 31, 2021, an increase of $517.1 million, or 27.1%, and represented 34.1% and 31.0% of average total deposits for the year ended December 31, 2022 and 2021, respectively.
Average noninterest-bearing deposits during the year ended December 31, 2023, were $2.15 billion, compared to $2.42 billion at December 31, 2022, a decrease of $275.1 million, or 11.4%, and represented 26.0% and 34.1% of average total deposits for the year ended December 31, 2023 and 2022, respectively.
The GNMA repurchase asset and liability are recorded as equal offsetting amounts in the consolidated balance sheets, with the asset included in loans held for sale and the liability included in FHLB advances and other borrowings. For more information on the GNMA repurchase option, see Note 10 - Mortgage Banking in the notes to our consolidated financial statements.
The GNMA repurchase asset and liability are recorded as equal offsetting amounts in the consolidated balance sheets, with the asset included in loans held for sale and the liability included in FHLB advances and other borrowings.
December 31, (Dollars in thousands) 2022 2021 Available for sale: Amount % of Total Amount % of Total State and municipal securities $ 389,477 23.7 % $ 405,818 27.0 % Corporate bonds 82,258 5.0 82,734 5.5 U.S. government and agency securities 248,420 15.1 97,658 6.5 Commercial mortgage-backed securities 91,943 5.6 64,243 4.3 Residential mortgage-backed securities 572,303 34.9 557,801 37.0 Commercial collateralized mortgage obligations 38,813 2.4 19,672 1.3 Residential collateralized mortgage obligations 146,370 8.9 193,740 12.9 Asset-backed securities 71,900 4.4 83,062 5.5 Total $ 1,641,484 100.0 % $ 1,504,728 100.0 % Held to maturity: State and municipal securities, net of allowance $ 11,275 $ 22,767 Securities carried at fair value through income: State and municipal securities $ 6,368 $ 7,497 65 Table of Contents The following table presents the fair value of securities available for sale and amortized cost of securities held to maturity and their corresponding yields at December 31, 2022.
December 31, (Dollars in thousands) 2023 2022 Available for sale: Carrying Amount % of Total Carrying Amount % of Total State and municipal securities $ 282,126 22.5 % $ 389,477 23.7 % Corporate bonds 83,635 6.7 82,258 5.0 U.S. government and agency securities 79,640 6.4 248,420 15.1 Commercial mortgage-backed securities 93,396 7.5 91,943 5.6 Residential mortgage-backed securities 506,502 40.3 572,303 34.9 Commercial collateralized mortgage obligations 35,183 2.8 38,813 2.4 Residential collateralized mortgage obligations 130,144 10.4 146,370 8.9 Asset-backed securities 43,005 3.4 71,900 4.4 Total $ 1,253,631 100.0 % $ 1,641,484 100.0 % Held to maturity: State and municipal securities, net of allowance $ 11,615 $ 11,275 Securities carried at fair value through income: State and municipal securities $ 6,808 $ 6,368 67 Table of Contents The following table presents the fair value of securities available for sale and amortized cost of securities held to maturity and their corresponding yields at December 31, 2023.
These fluctuations can be rapid and may continue to be significant. Therefore, estimating prepayment speed and/or discount rates within ranges that market participants would use in determining the fair value of the MSR requires significant management judgment. General We are a financial holding company headquartered in Ruston, Louisiana.
Estimating prepayment speed and/or discount rates within ranges that market participants would use in determining the fair value of the MSR requires significant management judgment. General We are a financial holding company headquartered in Ruston, Louisiana. Our wholly-owned bank subsidiary, Origin Bank, was founded in 1912 in Choudrant, Louisiana.
The following table presents the allowance for credit loss by loan category: December 31, (Dollars in thousands) 2022 2021 Loans secured by real estate: Amount % (1) Amount % (1) Commercial real estate $ 19,772 32.6 % $ 13,425 32.4 % Construction/land/land development 7,776 13.3 4,011 10.1 Residential real estate 8,230 20.8 6,116 17.4 Commercial and industrial 50,148 28.9 40,146 27.8 Mortgage warehouse lines of credit 379 4.0 340 12.0 Consumer 856 0.4 548 0.3 Total $ 87,161 100.0 % $ 64,586 100.0 % ___________________________ (1) Represents the ratio of each loan type to total LHFI. 63 Table of Contents Our allowance for loan credit losses increased by $22.6 million, or 35.0%, to $87.2 million at December 31, 2022, from $64.6 million at December 31, 2021.
The following table presents the allowance for credit loss by loan category: December 31, (Dollars in thousands) 2023 2022 Loans secured by real estate: Amount % (1) Amount % (1) Commercial real estate $ 19,625 31.9 % $ 19,772 32.6 % Construction/land/land development 9,990 14.0 7,776 13.3 Residential real estate 10,619 22.6 8,230 20.8 Commercial and industrial 55,330 26.9 50,148 28.9 Mortgage warehouse lines of credit 529 4.3 379 4.0 Consumer 775 0.3 856 0.4 Total $ 96,868 100.0 % $ 87,161 100.0 % ___________________________ (1) Represents the ratio of each loan type to total LHFI.
We may use interest rates as a mechanism to attract or deter additional deposits based on our anticipated funding needs and liquidity position.
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.
Interest rates for FHLB long-term advances outstanding at December 31, 2022, ranged from 1.99% to 4.57% and were subject to restrictions or penalties in the event of prepayment. Interest rates for FHLB long-term advances outstanding at December 31, 2021, ranged from 1.65% to 4.57%.
Our long-term debt consists of advances from the FHLB with original maturities greater than one year and the subordinated indebtedness captioned and described below. Interest rates for FHLB long-term advances outstanding at December 31, 2023 and 2022, ranged from 1.99% to 4.57% and were subject to restrictions or penalties in the event of prepayment.
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. 67 Table of Contents The following table reflects the classification of our average deposits and the average rate paid on each deposit category for the periods indicated: Year Ended December 31, 2022 2021 2020 (Dollars in thousands) Average Balance Interest Expense Average Rate Paid Average Balance Interest Expense Average Rate Paid Average Balance Interest Expense Average Rate Paid Interest-bearing demand $ 1,545,581 $ 11,007 0.71 % $ 1,396,805 $ 2,822 0.20 % $ 1,170,913 $ 5,179 0.44 % Money market 2,233,390 17,501 0.78 2,011,827 5,863 0.29 1,553,376 9,816 0.63 Time deposits 616,197 4,484 0.73 607,742 4,576 0.75 735,297 11,935 1.62 Savings 288,010 517 0.18 232,081 157 0.07 180,298 220 0.12 Total interest-bearing 4,683,178 33,509 0.72 4,248,455 13,418 0.32 3,639,884 27,150 0.75 Noninterest-bearing demand 2,422,132 — — 1,905,045 — — 1,499,936 — — Total average deposits $ 7,105,310 $ 33,509 0.47 $ 6,153,500 $ 13,418 0.22 $ 5,139,820 $ 27,150 0.53 Our average deposit balance was $7.11 billion for the year ended December 31, 2022, an increase of $951.8 million, or 15.5%, from $6.15 billion for the year ended December 31, 2021.
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. 69 Table of Contents The following table reflects the classification of our average deposits and the average rate paid on each deposit category for the periods indicated: Years Ended December 31, 2023 2022 2021 (Dollars in thousands) Average Balance Interest Expense Average Rate Paid Average Balance Interest Expense Average Rate Paid Average Balance Interest Expense Average Rate Paid Interest-bearing demand $ 1,788,423 $ 50,033 2.80 % $ 1,545,581 $ 11,007 0.71 % $ 1,396,805 $ 2,822 0.20 % Money market 2,646,447 91,685 3.46 2,233,390 17,501 0.78 2,011,827 5,863 0.29 Time deposits 928,694 27,892 3.00 611,195 4,476 0.73 607,742 4,576 0.75 Brokered time deposits 470,040 24,241 5.16 5,002 8 0.16 — — — Savings 291,059 2,606 0.90 288,010 517 0.18 232,081 157 0.07 Total interest-bearing 6,124,663 196,457 3.21 4,683,178 33,509 0.72 4,248,455 13,418 0.32 Noninterest-bearing demand 2,147,019 — 2,422,132 — 1,905,045 — Total average deposits $ 8,271,682 $ 196,457 2.38 $ 7,105,310 $ 33,509 0.47 $ 6,153,500 $ 13,418 0.22 Our average deposit balance was $8.27 billion for the year ended December 31, 2023, an increase of $1.17 billion, or 16.4%, from $7.11 billion for the year ended December 31, 2022.
Net interest income for the year ended December 31, 2022, was $275.3 million, an increase of $59.0 million compared to the year ended December 31, 2021. Increases in interest rates and average interest-earning assets drove increases of $51.5 million and $33.5 million, respectively, in total interest income.
Net Interest Income and Net Interest Margin Net interest income for the year ended December 31, 2023, was $299.6 million, an increase of $24.3 million, or 8.8%, compared to the year ended December 31, 2022. Increases in interest rates and average interest-earning assets drove increases of $129.4 million and $67.4 million, respectively, in total interest income.
Recently, we have managed our deposit interest expense by the strategic release of non-relationship, higher-rate deposits during 2022; however, our current deposit rates have not yet completely absorbed all of the market interest rate increases that have occurred during the year ended December 31, 2022.
Our current deposit rates have not yet completely absorbed all of the market interest rate increases that have occurred during the year ended December 31, 2023.
(Dollars in thousands) Year Ended December 31, 2022 vs. 2021 2021 vs. 2020 Noninterest income: 2022 2021 2020 $ Change % Change $ Change % Change Service charges and fees $ 17,669 $ 15,049 $ 12,998 $ 2,620 17.4 % $ 2,051 15.8 % Insurance commission and fee income 22,869 13,098 12,746 9,771 74.6 352 2.8 Mortgage banking revenue 6,722 12,927 29,603 (6,205) (48.0) (16,676) (56.3) Other fee income 3,530 2,879 2,253 651 22.6 626 27.8 Gain on sales of securities, net 1,664 1,748 580 (84) (4.8) 1,168 N/M Loss on sales and disposals of other assets, net (175) (185) (1,213) 10 5.4 1,028 (84.7) Limited partnership investment (loss) income (199) 5,701 78 (5,900) (103.5) 5,623 N/M Swap fee income 457 814 2,546 (357) (43.9) (1,732) (68.0) Other income 4,737 10,162 5,061 (5,425) (53.4) 5,101 100.8 Total noninterest income $ 57,274 $ 62,193 $ 64,652 $ (4,919) (7.9) $ (2,459) (3.8) ____________________________ N/M = Not meaningful.
(Dollars in thousands) Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 Noninterest income: 2023 2022 2021 $ Change % Change $ Change % Change Insurance commission and fee income $ 25,085 $ 22,869 $ 13,098 $ 2,216 9.7 % $ 9,771 74.6 % Service charges and fees 18,803 17,669 15,049 1,134 6.4 2,620 17.4 Mortgage banking revenue 3,356 6,722 12,927 (3,366) (50.1) (6,205) (48.0) Other fee income 3,871 3,530 2,879 341 9.7 651 22.6 Swap fee income 1,277 457 814 820 N/M (357) (43.9) (Loss) gain on sales of securities, net (11,635) 1,664 1,748 (13,299) N/M (84) (4.8) Limited partnership investment gain (loss) income 405 (199) 5,701 604 N/M (5,900) (103.5) Gain (loss) on sales and disposals of other assets, net 64 (175) (185) 239 N/M 10 (5.4) Change in fair value of equity investments 10,096 — — 10,096 N/A — N/A Other income 7,013 4,737 10,162 2,276 48.0 (5,425) (53.4) Total noninterest income $ 58,335 $ 57,274 $ 62,193 $ 1,061 1.9 $ (4,919) (7.9) ____________________________ N/M = Not meaningful.
Increases in interest rates contributed $43.3 million to the total increase in interest income earned on total LHFI, while interest rates increased our total deposit interest expense and FHLB and advances and other borrowings interest expense by $19.0 million and $3.3 million, respectively.
Increases in interest rates contributed $107.8 million to the total increase in interest income earned on total LHFI during the year ended December 31, 2023, while rising interest rates increased our total deposit interest expense and FHLB advances and other borrowings interest expense by $152.6 million and $10.3 million, respectively, during the same period.
The trust preferred securities qualify as Tier 1 capital of the Company for regulatory purposes, subject to certain limitations. For additional information regarding our outstanding subordinated indebtedness, including the junior subordinated debentures underlying legacy issuances of trust preferred securities, please see Note 12 - Borrowings in the notes to our consolidated financial statements contained in Item 8 of this report.
For additional information regarding our holding company line of credit, subordinated indebtedness, including the junior subordinated debentures underlying the issuance of trust preferred securities, please see Note 11 — Borrowings in the notes to our consolidated financial statements contained in Part II, Item 8 of this report.
An increase in average balances drove $18.5 million of the $26.4 million increase in interest income earned on commercial real estate, while increases in interest rates drove $21.4 million of the $23.4 million increase in interest income earned on commercial and industrial loans for the comparable periods.
Increases in average balances and interest rates drove $57.3 million and $55.2 million, respectively, of the total increase in interest income earned on real estate loans, while increases in interest rates drove $44.9 million of the $65.3 million increase in interest income earned on commercial and industrial loans for the comparable periods.
The merger with BTH contributed $79.0 million of the $449.4 million growth in average balances in commercial real estate. 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 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.
Qualitative factor changes across the Company's risk pools, which includes the impact of the BTH acquired loans, drove a $22.4 million increase for the year ended December 31, 2022. The following table presents an analysis of the allowance for credit losses and other related data at the periods indicated.
Qualitative factor changes across the Company’s risk pools drove a $6.7 million increase in the ALCL, with the allowance for individually evaluated loans contributing another $4.4 million of the increase for the year ended December 31, 2023, when compared to the year ended December 31, 2022. 65 Table of Contents The following table presents an analysis of the ALCL and other related data at the periods indicated.
N/A = Not applicable. 57 Table of Contents Noninterest expense for the year ended December 31, 2022, increased by $43.6 million, or 27.8%, to $200.4 million, compared to $156.8 million for the year ended December 31, 2021.
N/A = Not applicable. 57 Table of Contents Noninterest income for the year ended December 31, 2023, increased by $1.1 million, or 1.9%, to $58.3 million, compared to $57.3 million for the year ended December 31, 2022.
Our lending focus continues to be on operating companies, including commercial loans and lines of credit, as well as owner-occupied commercial real estate loans. 59 Table of Contents Loan Portfolio Maturity Analysis The table below presents the maturity distribution of our LHFI at December 31, 2022.
Our lending focus continues to be on operating companies, including commercial loans and lines of credit, as well as owner-occupied commercial real estate loans. 60 Table of Contents A significant portion, 31.9%, of our LHFI portfolio at December 31, 2023, consisted of CRE loans secured by real estate properties.
Changes in stockholders' equity is reflected below: (Dollars in thousands) Total Stockholders' Equity Balance at January 1, 2022 $ 730,211 Net income 87,715 Other comprehensive loss, net of tax (165,604) BTH Merger 306,344 Dividends declared - common stock ($0.58 per share) (15,934) Other 7,211 Balance at December 31, 2022 $ 949,943 Stock Repurchases In July 2019, the Company's board of directors authorized a stock repurchase program, pursuant to which the Company was authorized to purchase up to $40 million of its outstanding common stock.
Changes in stockholders’ equity is reflected below: (Dollars in thousands) Total Stockholders’ Equity Balance at January 1, 2023 $ 949,943 Net income 83,800 Other comprehensive income, net of tax 38,852 Dividends declared - common stock ($0.60 per share) (18,797) Other 9,107 Balance at December 31, 2023 $ 1,062,905 Stock Repurchases In July 2022, the Board of Directors of the Company authorized a stock repurchase program pursuant to which the Company may, from time to time, purchase up to $50 million of its outstanding common stock.
The average annualized rate paid on our interest-bearing deposits for the year ended December 31, 2022, was 0.72%, compared to 0.32% for the year ended December 31, 2021. The increase in the average cost of our deposits was primarily the result of the rising interest rate environment experienced during the year ended December 31, 2022.
The average annualized rate paid on our interest-bearing deposits for the year ended December 31, 2023, was 3.21%, compared to 0.72% for the year ended December 31, 2022.
At December 31, 2022, the Federal Funds target rate had range increased 425 basis points on a year-to-date basis. In order to remain competitive as market interest rates increase, interest rates paid on deposits must also increase.
The Federal Funds target rate range had increased 525 basis points starting with the Federal Reserve Board’s first rate increase in 2022, and in order to remain competitive as market interest rates increased, we increased interest rates paid on our deposits.
While we are currently classified as "well capitalized," an extended economic recession could adversely impact our reported and regulatory capital ratios. 72 Table of Contents The following table presents our regulatory capital ratios, as well as those of the Bank, at the dates indicated: (Dollars in thousands) December 31, 2022 December 31, 2021 Origin Bancorp, Inc.
The following table presents our regulatory capital ratios, as well as those of the Bank, at the dates indicated: (Dollars in thousands) December 31, 2023 December 31, 2022 Origin Bancorp, Inc.
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. Year Ended December 31, 2022 vs.
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.
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.
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.
Occupancy and equipment, net. The $2.9 million increase in occupancy and equipment expense was primarily due to the BTH merger that closed on August 1, 2022, which contributed $1.6 million to the total increase.
Occupancy and equipment, net. The $6.6 million increase was primarily due to the BTH merger that closed on August 1, 2022, which contributed $3.3 million to the total increase. Additionally, the increase was due to the addition of two new banking locations and two mortgage production offices being added during the intervening period. Intangible asset amortization expense.
(Dollars in thousands) Year Ended December 31, Allowance for loan credit losses 2022 2021 Balance at beginning of period $ 64,586 $ 86,670 Allowance for loan credit losses - BTH merger 5,527 — Provision for loan credit losses 21,613 (10,798) Charge-offs: Commercial real estate 166 170 Residential real estate 91 78 Commercial and industrial 8,459 11,923 Consumer 43 63 Total charge-offs 8,759 12,234 Recoveries: Commercial real estate 40 65 Construction/land/land development 211 — Residential real estate 102 117 Commercial and industrial 3,825 717 Consumer 16 49 Total recoveries 4,194 948 Net charge-offs 4,565 11,286 Balance at end of period $ 87,161 $ 64,586 Ratio of allowance for loan credit losses to: Nonperforming LHFI 876.87 % 259.35 % LHFI 1.23 1.23 Net charge-offs as a percentage of: Provision for loan credit losses 21.12 N/M Allowance for loan credit losses 5.24 17.47 Average LHFI 0.08 0.21 N/M = Not meaningful. 64 Table of Contents Securities Our securities portfolio is the second largest component of earning assets and provides a significant source of revenue.
(Dollars in thousands) Years Ended December 31, ALCL 2023 2022 Balance at beginning of period $ 87,161 $ 64,586 ALCL - BTH merger — 5,527 Provision for loan credit losses 17,514 21,613 Charge-offs: Commercial real estate 42 166 Residential real estate 27 91 Commercial and industrial 11,833 8,459 Consumer 147 43 Total charge-offs 12,049 8,759 Recoveries: Commercial real estate 140 40 Construction/land/land development 3 211 Residential real estate 17 102 Commercial and industrial 4,068 3,825 Consumer 14 16 Total recoveries 4,242 4,194 Net charge-offs 7,807 4,565 Balance at end of period $ 96,868 $ 87,161 Ratio of ALCL to: Nonperforming LHFI 321.66 % 876.87 % LHFI 1.26 1.23 Net charge-offs as a percentage of: Provision for loan credit losses 44.58 21.12 ALCL 8.06 5.24 Average LHFI 0.10 0.08 The ALCL to nonperforming LHFI decreased to 321.66% at December 31, 2023, compared to 876.87% at December 31, 2022, primarily driven by a $20.2 million increase in nonperforming LHFI at December 31, 2023.
While we may complete transactions subject to the new excise tax, we do not expect a material impact to our financial condition or result of operations. Regulatory Capital Requirements Together with the Bank, we are subject to various regulatory capital requirements administered by federal banking agencies. For further information, these requirements are discussed in greater detail in " Item 1.
There was no impact to our financial condition or result of operations as a result of this tax. Regulatory Capital Requirements Together with the Bank, we are subject to various regulatory capital requirements administered by federal banking agencies.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+11 added−5 removed16 unchanged
Biggest changeThe following table summarizes the impact of an instantaneous, sustained simulated change in net interest income and fair value of equity over a 12-month horizon at the date indicated: December 31, 2022 Change in Interest Rates (basis points) % Change in Net Interest Income % Change in Fair Value of Equity +400 14.2 % (3.5) % +300 10.6 (3.4) +200 7.1 (2.1) +100 3.6 (0.9) Base -100 (2.3) 0.4 -200 (6.7) (1.5) -300 (15.5) (7.2) We have found that, historically, interest rates on deposits change more slowly than changes in the discount and federal funds rates.
Biggest changeDecember 31, 2023 Change in Interest Rates (basis points) % Change in Net Interest Income % Change in Fair Value of Equity +400 15.9 % 4.1 % +300 11.9 3.5 +200 8.0 3.0 +100 0.3 (1.1) Base -100 (4.5) (2.6) -200 (0.8) (0.1) -300 (0.8) (1.4) -400 (1.0) (2.9) We have found that, historically, interest rates on deposits do not change completely in tandem with the changes in the discount and federal funds rates.
The committee formulates strategies based on appropriate levels of interest rate risk. In determining the appropriate level of interest rate risk, the committee considers the impact on earnings and capital of the current outlook on interest rates, potential changes in interest rates, regional economies, liquidity, business strategies and other factors.
In determining the appropriate level of interest rate risk, the committee considers the impact on earnings and capital of the current outlook on interest rates, potential changes in interest rates, regional economies, liquidity, business strategies and other factors.
This assumption is incorporated into the simulation model and is generally not fully reflected in a gap analysis, meaning that process by which we measure the gap between interest rate sensitive assets versus interest rate sensitive liabilities.
Overall, interest rates on deposits typically experience lower rate increases than a cumulative full-cycle rising-rate environment exhibits. This assumption is incorporated into the simulation model and is generally not fully reflected in a gap analysis, meaning that process by which we measure the gap between interest rate sensitive assets versus interest rate sensitive liabilities.
Ongoing higher inflation levels and higher interest rates could have a negative impact on both our consumer and commercial borrowers. 74 Table of Contents 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 and the fair value of our available for sale securities.
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 and the fair value of our available for sale securities.
We employ methodologies to manage interest rate risk, which includes an analysis of relationships between interest-earning assets and interest-bearing liabilities, and an interest rate shock simulation model. 73 Table of Contents We use interest rate risk simulation models and shock analyses to test the interest rate sensitivity of net interest income and fair value of equity, and the impact of changes in interest rates on other financial metrics.
We use interest rate risk simulation models and shock analyses to test the interest rate sensitivity of net interest income and fair value of equity, and the impact of changes in interest rates on other financial metrics.
Interest rates are highly sensitive to many factors that are beyond our control, including changes in the expected rate of inflation, the influence of general and local economic conditions and the monetary and fiscal policies of the United States government, its agencies and various other governmental regulatory authorities.
Interest rates are highly sensitive to many factors that are beyond our control, including changes in the expected rate of inflation, the influence of general and local economic conditions and the monetary and fiscal policies of the United States government, its agencies and various other governmental regulatory authorities. 76 Table of Contents Market Risk In 2017, the United Kingdom’s Financial Conduct Authority announced that after 2021 it would no longer compel banks to submit the rates required to calculate the London Interbank Offered Rate (LIBOR).
We have entered into interest rate swaps to mitigate interest rate risk in limited circumstances, but it is not our policy to enter into such transactions on a regular basis. Our exposure to interest rate risk is managed by the Bank's Asset-Liability Management Committee in accordance with policies approved by the Bank's board of directors.
Our exposure to interest rate risk is managed by the Bank’s Asset-Liability Management Committee in accordance with policies approved by the Bank’s board of directors. The committee formulates strategies based on appropriate levels of interest rate risk.
During 2022, the Federal Reserve increased the federal funds target rate range seven times from 25 to 450 basis points, which is the primary reason for the other comprehensive loss we have experienced during the year ended December 31, 2022. Impact of Inflation Our financial statements included herein have been prepared in accordance with U.S.
The Federal Funds target rate range has increased 525 basis points starting with the Federal Reserve Board’s first rate increase in 2022, and in order to remain competitive as market interest rates increased, we increased interest rates paid on our deposits. Impact of Inflation Our financial statements included herein have been prepared in accordance with U.S.
We continue to monitor our asset sensitivity and evaluate strategies to prevent being significantly impacted by future changes in interest rates.
We continue to monitor our asset sensitivity and evaluate strategies to prevent being significantly impacted by future changes in interest rates. 75 Table of Contents The following table summarizes the impact of an instantaneous, sustained simulated change in net interest income and fair value of equity over a 12-month horizon at the date indicated.
Additionally, the committee reviews liquidity, cash flow flexibility, maturities of deposits and consumer and commercial deposit activity.
Additionally, the committee reviews liquidity, cash flow flexibility, maturities of deposits and consumer and commercial deposit activity. We employ methodologies to manage interest rate risk, which includes an analysis of relationships between interest-earning assets and interest-bearing liabilities, and an interest rate shock simulation model.
Removed
We manage exposure to interest rates by structuring the consolidated balance sheets in the ordinary course of business. Additionally, from time to time, we enter into derivatives and futures contracts to mitigate interest rate risk from specific transactions. Based on the nature of operations, we are not subject to foreign exchange or commodity price risk.
Added
We manage exposure to interest rates by structuring the consolidated balance sheet in the ordinary course of business. We may utilize derivative financial instruments as part of an ongoing effort to mitigate interest rate risk exposure to interest rate fluctuations and facilitate the needs of our customers.
Removed
Contractual maturities and re-pricing opportunities of loans are incorporated in the model, as are prepayment assumptions, maturity data and call options within the investment portfolio. The average life of non-maturity deposit accounts is based on our balance retention rates using a vintage study methodology.
Added
For more information about our derivative financial instruments, see Note 12 — Derivative Financial Instruments in the notes to our consolidated financial statements contained in Part II, Item 8 of this report. Based on the nature of operations, we are not subject to foreign exchange or commodity price risk.
Removed
Market Risk Regulators expect banks to transition away from the use of the London Interbank Offered Rate ("LIBOR") as a reference rate.
Added
Our interest rate risk modeling incorporates a number of assumptions, including the repricing sensitivity of certain assets and liabilities, asset prepayment speeds, and the expected average life of non-maturity deposits.
Removed
It is expected that the transition away from the widespread use of LIBOR to alternative rates will continue to occur over the course of the next several months, ahead of the FCA's announced cessation of the remaining LIBOR settings by June 30, 2023.
Added
Ongoing higher inflation levels and higher interest rates could have a negative impact on both our consumer and commercial borrowers.
Removed
Please see " Item 1A Risk Factors - Risks Related to Our Business" included in this report for further information. 75 Table of Contents
Added
Publication of the one week and two month LIBOR offered rates ceased on December 31, 2021, and the publication of the remaining LIBOR offered rates ceased to be representative on June 30, 2023. The Company discontinued the use of LIBOR for new contracts after December 31, 2021, with limited exceptions as permitted by regulatory guidance and internal policy.
Added
Regulators, industry groups and certain committees (e.g., the Alternative Reference Rates Committee (ARRC)) have, among other things, published recommended fallback language for LIBOR-linked financial instruments, identified recommended alternatives for certain LIBOR rates (e.g., AMERIBOR or the Secured Overnight Financing Rate (SOFR) as the recommended alternative to U.S. Dollar LIBOR), and proposed implementations of the recommended alternatives in floating rate instruments.
Added
Further, the Adjustable Interest Rate (LIBOR) Act, enacted in March 2022, provides a statutory framework to replace U.S. dollar LIBOR with a benchmark rate based on the SOFR for contracts governed by U.S. law that have no or ineffective fallbacks, and in December 2022, the Federal Reserve Board adopted related implementing rules.
Added
In addition, where fallback language allows the Bank to select a benchmark rate, the statutory framework grants the authority to select the Board-selected benchmark replacement as the benchmark replacement, including the safe harbor provisions that, among other things, generally provide that such selection or use will not discharge or excuse performance under, give any person the right to unilaterally terminate or suspend performance under, or constitute a breach, of the contract.
Added
Effective July 1, 2023, all remaining LIBOR instruments were transitioned in accordance with the statutory framework established by the Federal Reserve with no material financial impact to the Company. In general, the Company converted the index rate of variable rate loans based on 1-Month LIBOR to an index rate equal to 1-Month Term SOFR as of June 30, 2023.
Added
In addition, the Company converted the index rates of variable rate loans based on 3-Month LIBOR and 12-Month LIBOR to index rates equal to 3-Month Term SOFR and 12-Month Term SOFR, respectively, as of June 30, 2023, plus the incremental differences between the corresponding LIBOR and Term SOFR index rates on June 30, 2023.
Added
Likewise, all LIBOR-based indexes in the Bank’s swap agreements were converted to appropriate SOFR-based indexes. While we have not had any material issues to-date, the discontinuance of LIBOR could result in customer uncertainty and disputes arising as a consequence of the transition, and could result in damage to our reputation and loss of customers. 77 Table of Contents

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