Earnings call transcript: Origin Bancorp Q3 2025 misses EPS forecast, stock drops

Origin Bancorp (OBK) reported Q3 2025 EPS of $0.27, significantly missing the $0.80 forecast due to a $30.1 million fraud-related charge-off, which led to a 9.78% premarket stock decline. Despite this earnings miss, revenue surpassed expectations at $109.83 million, and the company demonstrated continued growth in tangible book value and an expanded net interest margin. Management revised 2025 loan growth guidance to flat but expressed optimism for mid-to-high single-digit growth in 2026, citing strategic initiatives and market opportunities despite elevated loan paydowns.

Analysis

Origin Bancorp (OBK) reported Q3 2025 diluted EPS of $0.27, a significant 66.25% miss against the $0.80 forecast, primarily driven by a $30.1 million charge-off related to an isolated fraud event with Tricolor. Despite revenue exceeding expectations at $109.83 million, the market reacted negatively, with the stock declining 9.78% in premarket trading to $31, approaching its 52-week low. This sharp decline reflects investor concern over the substantial earnings miss and the impact of the fraud.

Beneath the headline EPS miss, the company demonstrated mixed operational performance, with net interest margin expanding 4 basis points to 3.65% and tangible book value growing for the twelfth consecutive quarter to $33.95. Management revised 2025 loan growth guidance to flat, a reduction from prior expectations, but projected mid-to-high single-digit loan growth for 2026, citing strong pipelines and strategic initiatives like "Optimize Origin." Non-interest bearing deposits also grew 8.6% sequentially.

The fraud-related charge-off and revised loan growth guidance present immediate concerns regarding profitability and future revenue streams. However, executives emphasized the Tricolor incident as isolated, with no significant credit deterioration observed in the broader portfolio (ex-Tricolor net charge-offs at 0.16%). The company maintains a strong capital position with a 10.9% TCE ratio and has actively repurchased shares, indicating confidence in its long-term value, while InvestingPro analysis suggests OBK is undervalued with a P/E of 14.57x.

Key Decisions for Investors

• Investors should monitor the company's progress on recovering funds from the Tricolor fraud event and assess any potential long-term reputational or operational impacts.
• Evaluate the execution of the "Optimize Origin" plan and the company's ability to achieve its mid-to-high single-digit loan growth targets for 2026, given the revised flat guidance for 2025.
• Consider the company's strong capital levels, consistent tangible book value growth, and share repurchase activity as potential buffers against short-term earnings volatility and market sentiment.